UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________to__________________
Commission File number 1-9487
ATLANTIS PLASTICS, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 06-1088270
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1870 THE EXCHANGE, SUITE 200, ATLANTA, GEORGIA
--------------------------------------------------------
30339 (Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including Area Code) (800) 497-7659
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X. No_____.
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
CLASS SHARES OUTSTANDING AT SEPTEMBER 30, 1999
------------- ---------------------------------
A, $.10 par value 4,801,877
B, $.10 par value 2,790,945
<PAGE>
ATLANTIS PLASTICS, INC.
TABLE OF CONTENTS
PAGE NO.
--------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of
September 30, 1999 and December 31, 1998......................1
Condensed Consolidated Statements of Income for the
Three months and the Nine months ended September 30, 1999
and 1998......................................................2
Consolidated Statements of Cash Flows for the
Nine months ended September 30, 1999 and 1998.................3
Notes to Consolidated Financial Statements....................4
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations..............7
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings..............................................12
Item 4 -Submission of Matters to a Vote of Security-Holders... .........12
Item 6 -Exhibits and Reports on Form 8-K................................12
SIGNATURES.................................................................13
<PAGE>
ATLANTIS PLASTICS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
(UNAUDITED) (NOTE A)
--------- ---------
<S> <C> <C>
ASSETS
Cash and cash equivalents ........................................... $ 3,632 $ 2,879
Accounts receivable, net ............................................ 32,237 25,801
Inventories ......................................................... 17,226 14,918
Other current assets ................................................ 5,683 8,376
--------- ---------
Current assets .................................................. 58,778 51,974
Property and equipment, net ......................................... 62,187 58,403
Goodwill, net of accumulated amortization ........................... 46,211 47,390
Other assets ........................................................ 1,140 1,465
--------- ---------
Total assets .................................................... $ 168,316 $ 159,232
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued expenses ............................... $ 26,557 $ 22,677
Current portion of long-term debt ................................... 3,368 2,538
--------- ---------
Current liabilities ............................................. 29,925 25,215
Long-term debt, less current portion ................................ 81,898 84,620
Deferred income taxes ............................................... 9,911 10,149
Other liabilities ................................................... 189 544
--------- ---------
Total liabilities ............................................... 121,923 120,528
--------- ---------
Commitments and contingencies -- --
Shareholders' equity:
Class A Common Stock, $.10 par value, 20,000,000 shares authorized,
4,801,877 and 4,538,054 shares issued and outstanding in 1999
and 1998 ........................................................ 480 454
Class B Common Stock, $.10 par value, 7,000,000 shares authorized,
2,790,945 and 2,918,043 shares issued and outstanding in 1999
and 1998 ........................................................ 279 292
Additional paid-in capital ........................................ 10,266 9,436
Notes receivable from sale of Common Stock ........................ (1,381) (960)
Retained earnings ................................................. 36,749 29,482
--------- ---------
Total shareholders' equity ...................................... 46,393 38,704
--------- ---------
Total liabilities and shareholders' equity ...................... $ 168,316 $ 159,232
========= =========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED).
1
<PAGE>
<TABLE>
<CAPTION>
ATLANTIS PLASTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED - IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ ------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales ............................................................. $ 65,104 $ 62,954 $ 189,129 $ 191,461
Cost of sales ......................................................... 52,718 51,949 151,107 158,014
--------- --------- --------- ---------
GROSS PROFIT ...................................................... 12,386 11,005 38,022 33,447
Selling, general and administrative expenses .......................... 5,936 6,092 18,926 18,442
--------- --------- --------- ---------
OPERATING INCOME .................................................. 6,450 4,913 19,096 15,005
Net interest expense .................................................. (2,200) (2,592) (6,800) (8,036)
--------- --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES ............ 4,250 2,321 12,296 6,969
Income tax provision ................................................. (1,720) (961) (5,029) (2,346)
--------- --------- --------- ---------
INCOME BEFORE EXTRAORDINARY ITEMS ................................. 2,530 1,360 7,267 4,623
Extraordinary loss on early extinguishment of debt, net ............... -- (390) -- (390)
--------- --------- --------- ---------
NET INCOME ........................................................ $ 2,530 $ 970 $ 7,267 $ 4,233
========= ========= ========= =========
EARNINGS PER COMMON SHARE (BASIC)
Income before extraordinary items ................................. $ 0.33 $ 0.18 $ 0.96 $ 0.62
Extraordinary loss on early extinguishment of debt, net ............... -- (0.05) -- (0.05)
--------- --------- --------- ---------
Net income ........................................................ $ 0.33 $ 0.13 $ 0.96 $ 0.57
========= ========= ========= =========
Weighted -average number of shares outstanding - Basic ................ 7,591 7,479 7,555 7,413
EARNINGS PER COMMON SHARE (DILUTED)
Income before extraordinary items ................................. $ 0.32 $ 0.17 $ 0.92 $ 0.60
Extraordinary loss on early extinguishment of debt, net ............... -- (0.05) -- (0.05)
--------- --------- --------- ---------
Net income ........................................................ $ 0.32 $ 0.12 $ 0.92 $ 0.55
========= ========= ========= =========
Weighted -average number of shares outstanding - Diluted .............. 7,976 7,833 7,872 7,736
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED).
2
<PAGE>
ATLANTIS PLASTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED - IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
1999 1998
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................................ $ 7,267 $ 4,233
-------- --------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation ...................................................... 6,312 5,928
Loss on disposal of assets ........................................ 48 --
Amortization of goodwill .......................................... 1,179 1,193
Loan fee and other amortization ................................... 322 570
Interest receivable from shareholder loans ........................ (71) --
Deferred income taxes ............................................. (238) 807
Changes in operating assets and liabilities, net .................. (2,307) (437)
-------- --------
Total adjustments ............................................. 5,245 8,061
-------- --------
Net cash provided by operating activities ................. 12,512 12,294
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ................................................ (10,144) (5,450)
Proceeds from asset dispositions .................................... -- 206
-------- --------
Net cash used in investing activities ....................... (10,144) (5,244)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit agreements ........................ -- 5,000
Payments on long-term debt .......................................... (1,892) (17,321)
Payments on notes receivable from shareholders ...................... 75 --
Purchase of Common Stock and options ................................ -- (1,818)
Proceeds from exercise of stock options ............................. 202 1,683
-------- --------
Net cash used in financing activities ....................... (1,615) (12,456)
-------- --------
Net increase (decrease) in cash and cash equivalents ................. 753 (5,406)
Cash and cash equivalents at beginning of period ...................... 2,879 8,346
-------- --------
Cash and cash equivalents at end of period ............................ $ 3,632 $ 2,940
======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED).
3
<PAGE>
ATLANTIS PLASTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1999
NOTE A. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the nine month period ended September 30,
1999 are not necessarily indicative of the results that may be expected for the
year ended December 31, 1999.
The balance sheet at December 31, 1998 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Atlantis Plastics, Inc. annual report on Form
10-K for the year ended December 31, 1998.
NOTE B. INVENTORIES
The components of inventory consist of the following:
SEPTEMBER 30 DECEMBER 31
1999 1998
-------- --------
IN THOUSANDS
Raw Materials $ 10,726 $ 7,758
Work in Process 187 95
Finished Products 6,313 7,065
-------- --------
$ 17,226 $ 14,918
======== ========
4
<PAGE>
NOTE C. SEGMENT INFORMATION
The Company has two operating segments: Atlantis Plastic Films and Atlantis
Molded Plastics. Information related to such segments is as follows:
NINE MONTHS
ENDED SEPTEMBER 30, 1999
--------------------------------------------------
ATLANTIS ATLANTIS
PLASTICS MOLDED
FILMS PLASTIC CORPORATE CONSOLIDATED
----- ------- --------- ------------
IN THOUSANDS
Net Sales $129,908 $ 59,221 -- $189,129
Operating Income 14,135 4,961 -- 19,096
Identifiable Assets 117,037 58,741 $ (7,462) 168,316
Capital Expenditures 5,446 2,596 2,102 10,144
Depreciation and
Amortization 3,421 2,377 514 6,312
NINE MONTHS
ENDED SEPTEMBER 30, 1999
--------------------------------------------------
ATLANTIS ATLANTIS
PLASTICS MOLDED
FILMS PLASTIC CORPORATE CONSOLIDATED
----- ------- --------- ------------
IN THOUSANDS
Net Sales $133,541 $ 57,920 -- $191,461
Operating Income 13,361 1,644 -- 15,005
Identifiable Assets 109,349 56,597 (6,714) 159,232
Capital Expenditures 1,739 2,669 1,042 5,450
Depreciation and
Amortization 3,451 2,122 355 5,928
5
<PAGE>
NOTE D. EARNINGS PER SHARE DATA
The following table sets forth the computation of basic and diluted earnings per
share for the periods indicated.
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
1999 1998 1999 1998
------ ------ ------ ------
IN THOUSANDS, EXCEPT PER SHARE DATA
BASIC:
Net income $2,530 $ 970 $7,267 $4,233
Weighted average shares outstanding 7,591 7,479 7,555 7,413
BASIC EARNINGS PER SHARE $ 0.33 $ 0.13 $ 0.96 $ 0.57
====== ====== ====== ======
DILUTED:
Net income $2,530 $ 970 $7,267 $4,233
Weighted average shares outstanding 7,591 7,479 7,555 7,413
Effect of dilutive stock options-based
on treasury stock method 385 354 317 323
------ ------ ------ ------
7,976 7,833 7,872 7,736
DILUTED EARNINGS PER SHARE $ 0.32 $ 0.12 $ 0.92 $ 0.55
====== ====== ====== ======
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
Atlantis is a leading U.S. manufacturer of polyethylene stretch and
custom films used in a variety of industrial and consumer applications and
molded plastic products for the appliance, automotive, building supply, and
recreational vehicle industries.
Atlantis Plastic Films accounts for approximately 70% of the Company's
net sales and produces: (i) stretch films (multilayer plastic films that are
used principally to wrap pallets of materials for shipping or storage), (ii)
custom film products (high-grade laminating films, embossed films, and specialty
film products targeted primarily to industrial and packaging markets), and (iii)
institutional products such as aprons, gloves, and tablecloths which are
converted from polyethylene films.
Atlantis Molded Plastics accounts for approximately 30% of the
Company's net sales and employs two principal technologies, serving a wide
variety of specific market segments, described as follows: (i) injection molded
thermoplastic parts that are sold primarily to original equipment manufacturers
and used in major household goods and appliances, power tools, building
supplies, and agricultural and automotive products, and (ii) a variety of custom
and proprietary extruded plastic parts for both trim and functional applications
(profile extrusion) that are incorporated into a broad range of consumer and
commercial products such as recreational vehicles, residential windows and
doors, office furniture, building supplies, and retail store fixtures.
All material intercompany balances and transactions have been
eliminated. Certain amounts included in prior period financial statements have
been reclassified to conform with the current period presentation.
Selected income statement data for the quarterly periods ended March
31, 1998 through September 30, 1999 are as follows:
($ in millions) 1999 1998
--------------------- -----------------------------
Q3 Q2 Q1 Q4 Q3 Q2 Q1
----- ----- ----- ----- ----- ----- -----
NET SALES
Plastic Films $44.7 $44.5 $40.7 $42.7 $44.3 $44.4 $44.9
Molded Plastics 20.4 20.5 18.3 16.7 18.7 19.7 19.5
----- ----- ----- ----- ----- ----- -----
TOTAL $65.1 $65.0 $59.0 $59.4 $63.0 $64.1 $64.4
===== ===== ===== ===== ===== ===== =====
PERCENTAGE OF NET SALES
GROSS PROFIT
Plastic Films 19% 21% 22% 22% 20% 20% 19%
Molded Plastics 19% 19% 18% 17% 11% 12% 15%
----- ----- ----- ----- ----- ----- -----
TOTAL 19% 20% 21% 21% 17% 17% 18%
===== ===== ===== ===== ===== ===== =====
OPERATING INCOME
Plastic Films 10% 11% 12% 12% 11% 9% 9%
Molded Plastics 10% 9% 7% 7% 1% 4% 6%
----- ----- ----- ----- ----- ----- -----
TOTAL 10% 10% 10% 10% 8% 8% 8%
===== ===== ===== ===== ===== ===== =====
NET INTEREST EXPENSE $ 2.2 $ 2.3 $ 2.3 $ 2.4 $ 2.6 $ 2.7 $ 2.7
===== ===== ===== ===== ===== ===== =====
7
<PAGE>
RESULTS OF OPERATIONS
The Company's 1999 third quarter and year-to-date net sales were $65.1
million and $189.1 million compared with $63.0 million and $191.5 million for
the same periods of 1998. Atlantis Plastic Film volume for the third quarter and
first nine months of 1999 were 8% and 2% below 1998 levels for the same periods.
In the third quarter of 1999, stretch film volume declined 7% from the
comparable 1998 period due to inventory corrections in the market. Despite this
volume decline, the Company's stretch film operating margins for the third
quarter of 1999 improved over 1998 third quarter levels. Net sales for Atlantis
Plastic Films were 3% below 1998 for the first nine months and 1% above 1998 for
the third quarter. Atlantis Plastics Molded Products' net sales for the third
quarter increased 9% from the same period of 1998 to $20.4 million. For the year
to date period, 1999 net sales of $59.2 million represented an increase of 2%
over 1998. These increases reflect both new business generated in the injection
molding business as well as strong demand in the nation's appliance sector.
Atlantis' third quarter and year-to-date gross margins equaled 19% and 20%
respectively compared with 17% for both periods of 1998. Molded plastics
accounted for most of these improvements, with gross margins in the third
quarter and year-to-date 1999 periods of 19%, compared to 11% and 13% for the
same periods of 1998. These improvements were attributed to increased volume as
discussed above, improved first run yields, faster throughput, and reduced
rework/repair. During the third quarter, gross profits in the films segment were
favorably impacted by one time savings of approximately $200,000.
Selling, general, and administrative ("SG&A") expenses for the third
quarter of 1999 were $5.9 million compared with $6.1 million in 1998. For the
first nine months, SG&A expense was $18.9 million compared to $18.4 million for
1998. The year to date increase was primarily attributable to increased
depreciation associated with the Company's new distribution, accounting, and
resource planning system installed to date in 9 of 12 locations, and non
recurring adjustments which reduced 1998 SG&A expense. During the third quarter
of 1999, Atlantis' SG&A expense was favorably impacted by reductions in workman
compensation costs as a result of improved safety experience and favorable
settlement of a potential claim.
Third quarter and year-to-date net interest expense of $2.2 million and
$6.8 million, respectively, was about 15% lower than 1998. These decreases were
a result of reduced debt levels in 1999 and the third quarter 1998 repurchase of
$14.7 million of the Company's Senior Notes. Effective income tax rates differed
from applicable statutory rates in both 1999 and 1998, primarily due to
nondeductible goodwill amortization.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at September 30, 1999 totaled $28.9
million (including cash and cash equivalents of $3.6 million), compared to $26.8
million (including cash and cash equivalents of $2.9 million) at December 31,
1998. On September 30, 1999 there were no borrowings on the Company's revolving
credit facility. Unused availability, net of outstanding letters of credit of
approximately $1.3 million, equaled $13.7 million at September 30, 1999. The
present credit agreement was renewed effective November 12, 1999 at a principal
amount of $20 million and expires May 12, 2000.
As previously announced, the Company is finalizing negotiations for a
lease of an additional stretch film facility to be located on the West Coast.
Delivery of a five-layer 120" cast extrusion line is expected to its stretch
film facility in Sapulpa, OK during the next two months. Two other films lines
are presently being retrofitted and upgraded. Additionally, the Company expects
to order a state of the art coextrusion line for its Mankato, MN custom film
facility within the next three months.
8
<PAGE>
The Company's primary needs for liquidity, on both a short- and
long-term basis, relate to working capital (principally accounts receivable and
inventories), debt service, and capital expenditures. The Company's expansion
and capital expenditure plans (as partially described above) are expected to
result in capital expenditures of approximately $13 million in the next six
months. The Company expects to fund these expenditures and expects to meet its
short- and long-term liquidity needs with cash on hand, funds generated from
operations, and funds available under its revolving credit facility.
CASH FLOWS FROM OPERATING ACTIVITIES
In the first nine months of 1999, net cash provided by operating
activities was approximately $12.5 million, compared to $12.3 million for the
same period last year. Accounts receivable increased $6.4 million year-to-date,
1999 due primarily to higher film prices resulting from a $0.18 per pound
increase in polyethylene resin prices during this period and a change in payment
terms for a large customer within the molded products segment. During the first
nine months of 1998 accounts receivable increased $3.4 million. Inventory levels
increased $2.3 million in the first nine months of 1999 due primarily to (1) the
resin price increases cited above, and (2) increased levels of inventory carried
as a result of announced resin price increases. During the same period of 1998
inventories decreased by $3.9 million as resin prices were falling.
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used in investing activities during the first nine months of
1999 consisted of capital expenditures totaling $10.1 million, compared to
capital expenditures (net of dispositions) of $5.2 million for the same period
last year.
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash used in financing activities for the first nine months of 1999
was $1.6 million, compared to $12.5 million during this period last year.
Proceeds from the exercise of stock options equaled $202,000 during 1999,
compared to $1.7 million during the same period in 1998. During the first nine
months of 1998, $1.8 million was used to repurchase the Company's Common stock
compared to none through the third quarter in 1999.
In November 1996, the Board of Directors authorized the repurchase of
up to one million shares of Class A common stock, or 14% of the Class A and
Class B common shares then outstanding. Through September 30, 1999, the Company
repurchased 542,544 shares, as well as options for 55,125 shares for a total
consideration of $5.1 million. In October 1999 the Company repurchased 162,884
additional shares for a total consideration of $2.3 million.
YEAR 2000 ISSUES
As part of the Company's ongoing capital expenditure program, Atlantis
has been in the process of implementing a new distribution, accounting, and
resource planning ("ERP") system ("QAD") which is designed to improve its
operating and financial controls. QAD is Year 2000 ("Y2K") compliant. To date,
QAD has also been implemented in all of the Company's facilities except three of
the Company's injection molded plants which are operating under another Y2K
compliant ERP system ("DTR"). Therefore, as of this date, all 12 of the
Company's facilities are operating with Y2K compliant ERP systems.
The major phases associated with installing these systems are: (1)
ASSESSMENT, including defining, scoping the problem and solution; (2) FIXING,
including programming and procedure development; (3) TESTING, including
evaluation of the testing phase; and (4) IMPLEMENTATION, including installation
and "going live".
9
<PAGE>
Upgrades to the Company's PC's and client servers necessary to make
them Y2K compliant have been completed. Atlantis' e-mail system was changed to a
Y2K compliant system earlier in 1999 and installed with all users. All of the
Company's telephone systems are now Y2K compliant except for one location which
is scheduled to be upgraded December 1, 1999.
In the Company's 11 manufacturing facilities and its headquarters in
Atlanta, there are approximately 125 types/models of equipment with programmable
logic chips ("PLC's"). The assessment phase has been completed on all of these
devices. The testing, fixing, and implementation (where necessary) phases have
also been completed. Approximately 12 devices and minor programs are still being
evaluated and upgraded. None of these are critical to the Company's ongoing
operations and they are expected to be Y2K compliant by November 30, 1999.
With regard to evaluating the Y2K compliant status of the Company's
significant suppliers and customers, all have been contacted and all are
expected to be fully compliant by the end of 1999. Operational plans for the
period from December 30, 1999 through January 2, 2000 have been developed and
are being finalized. At present, the Company plans to have all 12 facilities
closed the night of December 31, 1999/January 1, 2000.
The Company has evaluated worst case scenarios regarding Y2K
compliance. The Company has two critical suppliers of resin to its stretch film
business. The Company has three critical suppliers of resin to its custom film
business. The Company receives most of its plastic resin via railcar. As noted
in the Company's Form 10-K for the year ended December 31, 1998, Whirlpool
Corporation represented approximately 12% of the Company's net sales for 1998.
The Company's two Tulsa, OK stretch film plants account for approximately 25% of
the Company's sales and production while its Nicholasville, KY stretch film
facility accounts for approximately 20% of the Company's sales and production.
In the unlikely event that one of these resin suppliers could not ship resin,
the railroad system used to deliver resin to the Company's facilities fails to
deliver resin, Whirlpool Corporation is not Y2K compliant by January 1, 2000, or
there is a power outage affecting the above mentioned facilities, and this
unlikely event is of longer than a short term duration, the Company could be
affected in a materially adverse manner. Where practicable, contingency plans
have been developed to cover disruptions that might occur if certain suppliers
and/or customers experience Y2K problems.
As most of the upgrades and systems conversions (including QAD)
discussed above would have been implemented without the Y2K compliance issue,
incremental costs associated with Y2K related changes are not expected to exceed
$0.7 million in 1998 and 1999.
10
<PAGE>
FORWARD LOOKING STATEMENTS
This Form 10-Q contains certain forward-looking statements which are
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements may include, but are not limited
to, projections of revenues, income or losses, capital expenditures, plans for
future operations, financing needs or plans, compliance with financial covenants
in loan agreements, plans for liquidation or sale of assets or businesses, plans
relating to products or services of the Company, assessments of materiality,
predictions of future events, the ability to obtain additional financing, the
Company's ability to meet obligations as they become due, the impact of pending
and possible litigation, as well as assumptions relating to the foregoing. In
addition, when used in this discussion, the words "anticipates," "believes,"
"estimates," "expects," "intends," "plans" and similar expressions are intended
to identify forward-looking statements. Forward-looking statements are
inherently subject to risks and uncertainties, including, but not limited to,
the impact of leverage, dependence on major customers, fluctuating demand for
the Company's products, risks in product and technology development, fluctuating
resin prices, competition, litigation, labor disputes, capital requirements, and
other risk factors detailed in the Company's Securities and Exchange Commission
filings, some of which cannot be predicted or quantified based on current
expectations.
11
<PAGE>
Part II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is not a party to any legal proceeding other than
routine litigation incidental to its business, none of which is
material.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
10.1 * Fourth Amendment, dated August 2, 1999, to Employment Agreement
dated February 1, 1995, between Registrant and Anthony F. Bova.
10.2 * Severance Agreement, dated August 2, 1999, between Registrant and
Anthony F. Bova.
10.3 * Third Amendment, dated August 2, 1999, to Employment Agreement dated
March 6, 1995, between Registrant and Paul Rudovsky.
10.4 * Severance Agreement, dated August 2, 1999, between Registrant and
Paul Rudovsky.
10.5 * Severance Agreement, dated August 2, 1999, between Registrant and
Joseph J. Piccione.
10.6 * Severance Agreement, dated August 2, 1999, between Registrant and
Terry W. Lunt.
10.7 * Severance Agreement, dated August 2, 1999, between Registrant and
John A. Geary.
10.8 * Severance Agreement, dated August 2, 1999, between Registrant and
Gary A. Crutchfield.
10.9 Seventeenth Amendment to Heller Credit Agreement, dated November 12,
1999.
10.10 Amended Revolving Note, dated November 12, 1999, between the
Registrant and Heller Financial, Inc.
27.1 Financial Data Schedule
- ----------
(b) Reports on Form 8-K:
During the quarter for which this Quarterly Report on Form 10-Q is
filed, no reports on Form 8-K were filed by the Registrant.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ATLANTIS PLASTICS, INC.
Date: November 15, 1999 /S/ ANTHONY F. BOVA
-------------------
ANTHONY F. BOVA
President and Chief Executive Officer
Date: November 15, 1999 /S/ PAUL RUDOVSKY
-----------------
PAUL RUDOVSKY
Executive Vice President, Finance and
Administration
13
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
10.1 * Fourth Amendment, dated August 2, 1999, to Employment Agreement
dated February 1, 1995, between Registrant and Anthony F. Bova.
10.2 * Severance Agreement, dated August 2, 1999, between Registrant and
Anthony F. Bova.
10.3 * Third Amendment, dated August 2, 1999, to Employment Agreement dated
March 6, 1995, between Registrant and Paul Rudovsky.
10.4 * Severance Agreement, dated August 2, 1999, between Registrant and
Paul Rudovsky.
10.5 * Severance Agreement, dated August 2, 1999, between Registrant and
Joseph J. Piccione.
10.6 * Severance Agreement, dated August 2, 1999, between Registrant and
Terry W. Lunt.
10.7 * Severance Agreement, dated August 2, 1999, between Registrant and
John A. Geary.
10.8 * Severance Agreement, dated August 2, 1999, between Registrant and
Gary A. Crutchfield.
10.9 Seventeenth Amendment to Heller Credit Agreement, dated as of
November 12, 1999.
10.10 Amended Revolving Note, dated November 12, 1999, between the
Registrant and Heller Financial, Inc.
27.1 Financial Data Schedule
FOURTH AMENDMENT TO EMPLOYMENT AGREEMENT
This Fourth Amendment to Employment Agreement is made and entered into
as of the 2nd day of August, 1999, by and between ATLANTIS PLASTICS, INC., a
Florida corporation (the "COMPANY"), and ANTHONY F. BOVA (the "EXECUTIVE").
PRELIMINARY STATEMENTS:
A. The Company and the Executive are parties to an Employment
Agreement, dated as of February 1, 1995, as amended by (i) a First Amendment to
Employment Agreement, dated as of February 1, 1995, (ii) a letter agreement,
dated April 8, 1996 and (iii) a letter agreement, dated February 14, 1997 (the
"EMPLOYMENT AGREEMENT"), pursuant to which the Executive serves as the President
and Chief Executive Officer of the Company.
B. The parties desire to amend the Employment Agreement as set forth
herein.
C. Section 10 of the Employment Agreement provides that the Employment
Agreement may be modified by an agreement in writing between the parties
thereto.
AGREEMENT:
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. PREAMBLE AND RECITALS; DEFINED TERMS. The preamble and recitals
hereinabove set forth are incorporated herein and made a part hereof. Except as
otherwise provided herein, capitalized terms used in this Fourth Amendment to
Employment Agreement shall have the meanings ascribed thereto in the Employment
Agreement.
2. AMENDMENT TO EMPLOYMENT AGREEMENT.
(a) Section 2.1 of the Employment Agreement is hereby amended by
deleting the reference to "January 31, 2000" therefrom and substituting the date
"January 31, 2001" in its complete place and stead.
(b) Exhibit A to the Employment Agreement, as heretofore amended, is
hereby further amended by deleting the phrase "and 1999" and substituting the
phrase "1999 and 2000" in its complete place and stead.
3. AFFIRMATION. In all other respects the Employment Agreement is
affirmed.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Fourth Amendment
to Employment Agreement to be executed as of the date first written above.
ATLANTIS PLASTICS, INC.
By: ________________________________
Earl W. Powell
Chairman of the Board
---------------------------
ANTHONY F. BOVA
EXHIBIT 10.2
August 2, 1999
Mr. Anthony F. Bova
President and Chief Executive Officer
Atlantis Plastics, Inc.
1870 The Exchange, Suite 200
Atlanta, Georgia 30339
Dear Tony:
Atlantis Plastics, Inc. considers it essential to the best interests of
its stockholders to foster the continuous employment of key management
personnel. In this connection, our Board of Directors (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of the Corporation may exist and that this possibility, and
the uncertainty and questions which it may raise among management, may result in
the departure or distraction of management personnel to the detriment of the
Corporation and its stockholders. The Board has determined that appropriate
steps should be taken to reinforce and encourage the continued attention and
dedication of members of the Corporation's management, including you, to their
assigned duties without the distractions which may arise from the possibility of
a change in control of the Corporation. In order to induce you to remain in the
employ of the Corporation, you shall receive the severance benefits set forth in
this Agreement in the event your employment with the Corporation is terminated
under the circumstances described below subsequent to a Change in Control.
1. INTERPRETATION OF THIS AGREEMENT.
(a) TERMS DEFINED. As used herein, the following terms when used in
this Agreement have the meanings set forth below:
"ACCRUED BONUS" means:
(i) if the Date of Termination occurs on or prior to the last
day of the Corporation's fiscal year ending December 31, 1999, the
amount of Incentive Compensation that would have been payable to you
under the Employment Agreement (without regard to your termination of
employment) assuming that "Adjusted Earnings
<PAGE>
Mr. Anthony F. Bova
August 2, 1999
Page 2
Per Share" (as such term is defined in the Employment Agreement) for
such fiscal year is determined on an annualized basis based on the
actual results of operations of the Corporation and its subsidiaries for
the period beginning January 1, 1999 and ending on the last day of the
fiscal month preceding the date on which the Change in Control occurred,
prorated from January 1, 1999 based on the number of days elapsed from
such date through the Date of Termination; and
(ii) if the Date of Termination occurs after December 31, 1999
an amount equal to the greater of (A) the amount determined under clause
(i) above and (B) the actual amount of incentive compensation received
by you in respect of the Corporation's fiscal year next preceding the
year in which the Date of Termination occurs, in either case prorated
from the beginning of the fiscal year in which the Date of Termination
occurs based on the number of days elapsed from such date through the
Date of Termination.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Exchange Act.
"AGREEMENT" shall have the meaning given to it in the preface
above.
"APPLICABLE RATE" shall have the meaning given to it in Section
5(d) below.
"BOARD" shall have the meaning given to it in the preface above.
"CAUSE" shall have the meaning given to it in Section 4(c)
below.
"CHANGE IN CONTROL" shall have the meaning given to it in
Section 3 below.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONTINUING DIRECTORS" shall have the meaning given to it in
Section 3 below.
"CORPORATION" means Atlantis Plastics, Inc., a Florida
corporation, and any successor to its business and/or assets as set forth in
6(a) below which assumes and agrees to perform this Agreement by operation of
law, or otherwise and, as the context may require withe respect to any provision
of this Agreement other than 3 below, includes any direct or indirect subsidiary
of Atlantis Plastics, Inc.
"DATE OF TERMINATION" shall have the meaning given to it in
Section 4(f) below.
"DISABILITY" shall have the meaning given to it in Section 4(b)
below.
"EMPLOYMENT AGREEMENT" means the Employment Agreement, dated as
of February 1, 1995, as heretofore amended and as the same may hereafter be
supplemented,
<PAGE>
Mr. Anthony F. Bova
August 2, 1999
Page 3
amended or amended and restated at any time prior to the occurrence of a Change
in Control.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCISE TAX" shall have the meaning given to it in Section 5(d)
below.
"GOOD REASON" shall have the meaning given to it in Section 4(d)
below.
"GROSS-UP PAYMENT" shall have the meaning given to it in Section
5(d) below.
"NOTICE OF TERMINATION" shall have the meaning given to it in
Section 4(e) below.
"PERSON" has the meaning set forth in Sections 13(d) and 14(d)
of the Exchange Act.
"RETIREMENT PLANS" means the Atlantis Plastics, Inc. 401(k) Plan
and any supplementary executive retirement plans of the Corporation you may be
covered under, or any successor plans.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SEVERANCE PAYMENTS" shall have the meaning given to it in
Section 5(d) below.
"TRIVEST" means Trivest, Inc., a Delaware corporation.
"WELFARE PLAN BENEFITS" shall have the meaning given to it in
Section 5(c) below.
(b) INTERPRETATION. The words "HEREIN," "HEREUNDER" and other words of
similar import refer to this Agreement as a whole, as the same from time to time
may be amended or supplemented and not any particular section, paragraph,
subparagraph or clause contained in this Agreement. Wherever from the context it
appears appropriate, each term stated in either the singular or plural shall
include the singular and the plural, and pronouns stated in masculine, feminine
or neuter gender shall include the masculine, feminine and the neuter.
2. TERM. This Agreement shall continue in effect through December 31,
2000; provided, however, that beginning on January 1, 2001 and on each
subsequent January 1, the term of this Agreement shall automatically be extended
for one additional year unless, not later than October 1 of the preceding year,
we shall notify you that we do not wish to extend this Agreement; and provided,
further, that if a Change in Control occurs during the original or extended term
of this Agreement, this Agreement shall continue in effect for a period of not
less than one year beyond the last day of the month in which the Change in
Control occurred.
3. CHANGE IN CONTROL. NO BENEFITS WILL BE PAYABLE UNDER THIS
<PAGE>
Mr. Anthony F. Bova
August 2, 1999
Page 4
AGREEMENT UNLESS A CHANGE IN CONTROL OCCURS. For purposes of this Agreement, a
"CHANGE IN CONTROL" shall be deemed to have occurred if: (i) any Person (other
than the Corporation, any trustee or other fiduciary holding securities under an
employee benefit plan of the Corporation, or any affiliate of Trivest) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Corporation representing more
than 50% of the combined voting power of the Corporation's then outstanding
securities eligible to vote, or (ii) during any period of two consecutive years
(not including any period prior to the date of this Agreement), individuals who
at the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an agreement
with the Corporation to effect a transaction described in clause (i), (iii) or
(iv) of this Section 3) whose election by the Board or nomination for election
by the Corporation's stockholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved (the "CONTINUING DIRECTORS"), cease for any reason to
constitute at least a majority of the Board, (iii) the stockholders of the
Corporation approve a merger or consolidation of the Corporation with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Corporation outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the Corporation or such surviving
entity outstanding immediately after such merger or consolidation; provided,
however, that a merger or consolidation effected to implement a recapitalization
of the Corporation (or similar transaction) in which no Person acquires more
than 50% of the combined voting power of the Corporation's then outstanding
securities shall not constitute a Change in Control, or (iv) the stockholders of
the Corporation approve a plan of complete liquidation of the Corporation or an
agreement for the sale or disposition by the Corporation of all or substantially
all of the Corporation's assets (or any transaction having a similar effect).
4. TERMINATION OF EMPLOYMENT FOLLOWING CHANGE IN CONTROL.
(a) GENERAL. If any of the events described in Section 3 above
constituting a Change in Control shall occur, you will be entitled to such
benefits provided in Section 5 below which are applicable upon the subsequent
termination of your employment during the term of this Agreement. In the event
your employment with the Corporation is terminated for any reason prior to the
occurrence of a Change in Control and subsequently a Change in Control shall
occur, you will not be entitled to any benefits under this Agreement.
(b) DISABILITY. If, as a result of your incapacity due to physical or
mental illness, you are absent from the full-time performance of your duties
with the Corporation for 90 consecutive days, and within 30 days after written
notice of termination is given, you have not returned to the full-time
performance of your duties, for purposes of this Agreement your employment may
be terminated for "DISABILITY."
<PAGE>
Mr. Anthony F. Bova
August 2, 1999
Page 5
(c) CAUSE. Termination by the Corporation of your employment for "CAUSE"
means termination (i) upon the willful and continued failure by you to
substantially perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after the issuance of a Notice of Termination
by you for Good Reason), within 10 days after a written demand for substantial
performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, or (ii) the willful engaging by you in
conduct which is clearly and materially injurious to the Corporation, monetarily
or otherwise. For purposes of this Section 4(c), no act, or failure to act, on
your part shall be deemed "willful" unless done, or omitted to be done, by you
in bad faith and without reasonable belief that your action or omission was in
or not opposed to the best interest of the Corporation. Notwithstanding the
foregoing, you will not be deemed to have been terminated for Cause unless and
until there is delivered to you a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the entire membership
of the Board at a meeting of the Board (after reasonable notice to you and an
opportunity for you, together with your counsel, to be heard before the Board),
finding that in the good faith opinion of the Board you were guilty of conduct
set forth above in this Section 4(c) and specifying the particulars thereof in
detail.
(d) GOOD REASON. You shall be entitled to terminate your employment for
Good Reason. For purposes of this Agreement, "GOOD REASON" means, without your
express written consent, the occurrence after a Change in Control of any of the
following circumstances unless, in the case of clauses (i), (v), (vi), (vii) or
(viii) of this Section 4(d), such circumstances are fully corrected prior to the
Date of Termination specified in the Notice of Termination given in respect
thereof: (i) the assignment to you of any duties inconsistent with the status of
the position in the Corporation that you held immediately prior to the Change in
Control or a materially adverse alteration in the nature or status of your
responsibilities or in the quality or amount of office accommodations or
assistance provided to you, from those in effect immediately prior to the Change
in Control, (ii) a reduction by the Corporation in your annual base salary as in
effect on the date immediately prior to the Change in Control or as the same may
be increased from time to time thereafter, (iii) the Corporation's moving you to
be based more than 50 miles from the Corporation's offices at which you are
principally employed immediately prior to the date of the Change in Control
(except for required travel on the Corporation's business to an extent
substantially consistent with your present business travel obligations and
except to the extent that you consent to any such move prior to the date of the
Change of Control), (iv) the failure by the Corporation to pay to you any
portion of your current compensation within seven days of the date such
compensation is due, (v) the failure by the Corporation to continue in effect
any compensation or benefit plan or perquisites in which you participate
immediately prior to the Change in Control which is material to your total
compensation, including but not limited to the Retirement Plans (but excluding
the Atlantis Plastics, Inc. Employee Stock Purchase Plan and any stock option
plan maintained by the Corporation immediately prior to the Change in Control),
unless an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or the failure by the
Corporation to continue your participation therein (or in such substitute or
alternative plan) is on a basis not materially less
<PAGE>
Mr. Anthony F. Bova
August 2, 1999
Page 6
favorable, both in terms of the amount of benefits provided and the level of
your participation relative to other participants, than existed at the time of
the Change in Control, (vi) the failure by the Corporation to continue to
provide you with benefits substantially similar to those enjoyed by you under
any of the Corporation's life insurance, medical, dental, accident or disability
plans in which you were participating at the time of the Change in Control, the
taking of any action by the Corporation which would directly or indirectly
materially reduce any of such benefits, or the failure by the Corporation to
provide you with the number of paid vacation days to which you are entitled on
the basis of your years of service with the Corporation in accordance with the
Corporation's normal vacation policy in effect at the time of the Change in
Control, (vii) the failure of the Corporation to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 6 below, or (viii) any purported termination of your
employment that is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 4(e) below (and, if applicable, the requirements of
Section 4(c) above), which purported termination shall not be effective for
purposes of this Agreement. Your right to terminate your employment pursuant to
this Section 4(d) will not be affected by your incapacity due to physical or
mental illness. Your continued employment will not constitute consent to, or a
waiver of rights with respect to, any circumstance constituting Good Reason
hereunder.
(e) NOTICE OF TERMINATION. Any purported termination of your employment
by the Corporation or by you shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 7 below.
"NOTICE OF TERMINATION" means a notice that shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(f) DATE OF TERMINATION. "DATE OF TERMINATION" means (i) if your
employment is terminated for Disability, 30 days after Notice of Termination is
given (provided that you have not returned to the full-time performance of your
duties during such 30-day period), (ii) if your employment is terminated
pursuant to Section 4(c) or Section 4(d) above, the date specified in the Notice
of Termination (which, in the case of a termination for Good Reason, shall not
be less than 15 nor more than 60 days from the date such Notice of Termination
is given), (iii) in the case of a termination by you for any other reason, the
date specified in the Notice of Termination (which shall not be less than 30
days from the date such Notice of Termination is given), (iv) if your employment
is terminated by the Corporation for any other reason, the date specified in the
Notice of Termination and (v) if your employment is terminated by reason of your
death, the date of your death; provided, however, that if within 15 days after
any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination (other than the Date of
Termination where clause (iv) of this Section 4(f) is applicable) shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (which is not
appealable or with respect to which the time for appeal therefrom has expired
and no appeal has been
<PAGE>
Mr. Anthony F. Bova
August 2, 1999
Page 7
perfected); and provided, further, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
reasonable diligence. Notwithstanding the pendency of any such dispute, the
Corporation will continue to pay you your full compensation in effect when the
notice giving rise to the dispute was given and continue you as a participant in
all Retirement Plans, life insurance, medical, dental, accident or disability
plans and any similar plans in which you were participating when the notice
giving rise to the dispute was given, until the dispute is finally resolved in
accordance with this Section 4(f). Amounts paid under this Section 4(f) are in
addition to all other amounts due under this Agreement, and shall not be offset
against or reduce any other amounts due under this Agreement and shall not be
reduced by any compensation earned by you as the result of employment by another
employer.
5. COMPENSATION DURING DISABILITY OR UPON TERMINATION. Following a
Change in Control, you will be entitled to the following during a period of
Disability or upon termination of your employment, as the case may be, provided
that such period of Disability or termination of employment occurs during the
term of this Agreement:
(a) During any period that you fail to perform your full-time duties
with the Corporation as a result of incapacity due to physical or mental
illness, you will continue to receive your base salary at the rate in effect at
the commencement of any such period, together with all compensation payable to
you under the Corporation's disability plan or program or other similar plan
during such period, until this Agreement is terminated pursuant to Section 4(b)
above. Thereafter, or in the event your employment is terminated by reason of
your death, your benefits will be determined under the Corporation's retirement,
insurance and other compensation programs then in effect in accordance with the
terms of such programs.
(b) If your employment is terminated by the Corporation for Cause or by
you other than for Good Reason, the Corporation will pay you your full base
salary through the Date of Termination at the rate in effect at the time Notice
of Termination is given, plus all other amounts or benefits to which you are
entitled under any Retirement Plan of the Corporation then in effect, and the
Corporation shall have no further obligations to you under this Agreement.
(c) If, your employment is terminated by you for Good Reason or by the
Corporation other than for Cause or Disability, then you will be entitled to the
following: (i) the Corporation will pay to you (1) your full base salary through
the Date of Termination at the rate in effect at the time Notice of Termination
is given, no later than the fifth day following the Date of Termination, and (2)
the amount of your Accrued Bonus (if any), at the time specified in Section 5(e)
below, (ii) in lieu of any further salary payments or bonus payments to you for
periods subsequent to the Date of Termination, the Corporation will pay as
severance pay to you, at the time specified in Section 5(e) below, a lump sum
severance payment equal to two times the amount of your annual salary as in
effect as of your Date of Termination (without regard to any attempted or
purported termination or reduction of such salary), (iii) your rights under the
Retirement Plans will be governed by the terms of those respective plans, (iv)
the Corporation will pay to you all
<PAGE>
Mr. Anthony F. Bova
August 2, 1999
Page 8
legal fees and expenses incurred by you as a result of such termination
(including all such fees and expenses, if any, reasonably incurred in contesting
or disputing by arbitration or otherwise, any such termination or in seeking to
obtain or enforce any right or benefit provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to the
application of Section 4999 of the Code, to any payment or benefit provided
hereunder) and (v) for a two year period after such termination, the Corporation
will arrange to provide you with benefits substantially similar to those which
you were receiving or entitled to receive under the Corporation's life,
disability, accident and group health insurance plans or any similar plans in
which you were participating immediately prior to the Date of Termination
("WELFARE PLAN BENEFITS") at a cost to you which is no greater than that cost to
you in effect at the Date of Termination; provided, however, that to the extent
any such coverage is prohibited by any judicial or legislative authority, the
Corporation shall make alternative arrangements to provide you with Welfare Plan
Benefits, including, but not limited to, providing you with a payment in an
amount equal to your cost of purchasing the Welfare Plan Benefits. Benefits
otherwise receivable by you pursuant to clause (v) above shall be reduced to the
extent comparable benefits are actually received on your behalf during the two
year period following your termination, and such benefits actually received by
you shall be reported to the Corporation.
(d) If any payments under this Agreement or any other payments or
benefits received or to be received by you in connection with a Change in
Control or your termination of employment (whether pursuant to the terms of this
agreement or any other plan, arrangement or agreement with the Corporation, or
any Affiliate of the Corporation) (the "SEVERANCE PAYMENTS"), will be subject to
the tax (the "EXCISE TAX") imposed by Section 4999 of the Code (or any similar
tax that may hereafter be imposed), th Corporation will pay at the time
specified below an additional amount (the "GROSS-UP PAYMENT"), such that the net
amount retained by you, after deduction of any Excise Tax on the Severance
Payments and any federal, state and local income tax and Excise Tax upon the
payment provided for by this 5(d), shall be equal to the Severance Payments. For
purposes of determining whether any of the Severance Payments will be subject to
the Excise Tax and the amount of such Excise Tax, (i) all Severance Payments
shall be treated as "parachute payments" within the meaning of Section
280G(b)(2) of the Code, and all "excess parachute payments" within the meaning
of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax,
unless in the opinion of tax counsel selected by the Corporation's independent
auditors and acceptable to you such Severance Payments (in whole or in part) do
not constitute parachute payments, or such excess parachute payments (in whole
or in part) represent reasonable compensation for services actually rendered
within the meaning of Section 280G(b)(4) of the Code, or are otherwise not
subject to the Excise Tax, (ii) the amount of the Severance Payments which shall
be treated as subject to the Excise Tax shall be equal to the lesser of (1) the
total amount of the Severance Payments or (2) the amount of excess parachute
payments within the meaning of Section 280G(b)(1) of the Code (after applying
clause (i) above), and (iii) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Corporation's independent auditors
in accordance with the principles of Section 280G(d)(3) and (4) of the Code. For
purposes of determining the amount of the Gross-Up Payment, you shall be deemed
to pay federal income taxes at your highest marginal rate of
<PAGE>
Mr. Anthony F. Bova
August 2, 1999
Page 9
federal income taxation in the calendar year in which the Gross-Up Payment is to
be made and state and local income taxes at your highest marginal rate of
taxation in the state and locality of your residence on the Date of Termination,
net of the maximum reduction in federal income taxes which could be obtained
from deduction of such state and local taxes. In the event that the Excise Tax
is subsequently determined to be less than the amount taken into account
hereunder at the time of termination of your employment, you will repay to the
Corporation at the time that the amount of such reduction in Excise Tax is
finally determined the portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment attributable to the Excise
Tax and federal and state and local income tax imposed on the Gross-Up Payment
being repaid by you if such repayment results in a reduction in Excise Tax
and/or a federal and state and local income tax deduction) plus interest on the
amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the
Code (the "APPLICABLE RATE"). In the event that the Excise Tax is determined to
exceed the amount taken into account hereunder at the time of the termination of
your employment (including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-Up Payment), the Corporation
will make an additional Gross-Up Payment in respect of such excess (plus any
interest payable with respect to such excess at the Applicable Rate) at the time
that the amount of such excess is finally determined. Any payment to be made to
you under this Section 5(d) will be payable within five days of your Date of
Termination.
(e) The payments provided for in Section 5(c)(i)(2) and Section 5(c)(ii)
above will be made not later than the fifth day following the Date of
Termination; PROVIDED, HOWEVER, that if the amounts of such payments cannot be
finally determined on or before such day, the Corporation will pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and will pay the remainder of such payments
(together with interest at the Applicable Rate) as soon as the amount thereof
can be determined but in no event later than 30 days after the Date of
Termination. In the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess shall constitute a
loan by the Corporation to you, payable on the fifth day after demand by the
Corporation (together with interest at the Applicable Rate).
(f) Except as required in Section 5(c)(v) above, you shall not be
required to mitigate the amount of any payment provided for in this Section 5 by
seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Section 5 be reduced by any compensation earned by
you as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by you to the Corporation, or
otherwise; PROVIDED, HOWEVER, that if during the one year period subsequent to
your Date of Termination, you directly compete with the Corporation by making
use of trade secrets or other proprietary knowledge you obtained while employed
by the Corporation in violation of the commitment to protect such proprietary or
trade secret information set forth in the Employment Agreement (determined
without regard to the termination of the Employment Agreement pursuant to
Section 12 below), all income earned as a result of such use of information
shall be remitted to the Corporation to the extent payments were made to you
under this Section 5.
<PAGE>
Mr. Anthony F. Bova
August 2, 1999
Page 10
(g) The provisions of this Section 5 shall survive the termination of
this Agreement.
6. Successors; Binding Agreement.
(a) The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation to (i)
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Corporation would be required to perform it if no such
succession had taken place and (ii) agree to notify you of the assumption of the
Agreement within 10 days of such assumption. Failure of the Corporation to
obtain any such assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle you to
compensation from the Corporation in the same amount and on the same terms to
which you would be entitled hereunder if you terminate your employment for Good
Reason following a Change in Control, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.
(b) This Agreement shall inure to the benefit of and be enforceable by
you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
7. NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notice to the Corporation shall be directed to the
attention of the Board with a copy to the Secretar of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. MISCELLANEOUS. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and such officer as may be authorized by the Board. No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar of
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Florida without regard to its conflicts of law principles. All
references to sections of
<PAGE>
Mr. Anthony F. Bova
August 2, 1999
Page 11
the Code shall be deemed also to refer to any successor provisions to such
sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law, except for
any withholding that may be required under Section 4999 of the Code. The
obligations of the Corporation under Section 5 above shall survive the
expiration of the term of this Agreement.
9. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
10. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
11. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by binding
arbitration, conducted before a panel of three arbitrators in the city of
Atlanta, Georgia or, at your option, in the city where you are principally
employed immediately prior to the date of a Change in Control, in accordance
with the rules of the American Arbitration Association then in effect; PROVIDED,
HOWEVER, that you shall be entitled to seek specific performance of your rights
under Section 4(f) during the pendency of any dispute or controversy arising
under or in connection with this Agreement. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.
12. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; PROVIDED, HOWEVER, that
the Employment Agreement shall remain in full force and effect until the
occurrence of a Change in Control, at which time the Employment Agreement shall
be deemed terminated and canceled and of no further force or effect. If this
letter sets forth our agreement on the subject matter hereof, kindly sign and
return this original letter to the Corporation which will then constitute our
agreement on this subject. The enclosed copy is for your personal records.
Sincerely,
Earl W. Powell
Chairman of the Board
ACCEPTED AND AGREED:
<PAGE>
Mr. Anthony F. Bova
August 2, 1999
Page 12
- --------------------------------
Anthony F. Bova
THIRD AMENDMENT TO EMPLOYMENT AGREEMENT
This Third Amendment to Employment Agreement is made and entered into
as of the 2nd day of August, 1999, by and between ATLANTIS PLASTICS, INC., a
Florida corporation (the "COMPANY"), and PAUL RUDOVSKY (the "Executive").
PRELIMINARY STATEMENTS:
A. The Company and the Executive are parties to an Employment
Agreement, dated as of March 6, 1995, as amended by (i) a letter agreement,
dated April 8, 1996 and (ii) a letter agreement, dated February 14, 1997 (the
"EMPLOYMENT AGREEMENT"), pursuant to which the Executive serves as the Executive
Vice President Finance and Chief Financial Officer of the Company.
B. The parties desire to amend the Employment Agreement as set forth
herein.
C. Section 10 of the Employment Agreement provides that the Employment
Agreement may be modified by an agreement in writing between the parties
thereto.
AGREEMENT:
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. PREAMBLE AND RECITALS; DEFINED TERMS. The preamble and recitals
hereinabove set forth are incorporated herein and made a part hereof. Except as
otherwise provided herein, capitalized terms used in this Third Amendment to
Employment Agreement shall have the meanings ascribed thereto in the Employment
Agreement.
2. AMENDMENT TO EMPLOYMENT AGREEMENT.
(a) Section 2.1 of the Employment Agreement is hereby amended by
deleting the reference to "March 5, 2000" therefrom and substituting the date
"MARCH 5, 2001" in its complete place and stead.
(b) Exhibit A to the Employment Agreement, as heretofore amended,
is hereby further amended by deleting the phrase "and 1999" and substituting the
phrase "1999 AND 2000" in its complete place and stead.
3. AFFIRMATION. In all other respects the Employment Agreement is
affirmed.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Third Amendment to
Employment Agreement to be executed as of the date first written above.
ATLANTIS PLASTICS, INC.
By: ________________________________
Earl W. Powell
Chairman of the Board
---------------------------
PAUL RUDOVSKY
EXHIBIT 10.4
August 2, 1999
Mr. Paul Rudovsky
Executive Vice President and Chief Financial Officer
Atlantis Plastics, Inc.
1870 The Exchange, Suite 200
Atlanta, Georgia 30339
Dear Paul:
Atlantis Plastics, Inc. considers it essential to the best interests of
its stockholders to foster the continuous employment of key management
personnel. In this connection, our Board of Directors (the "BOARD") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of the Corporation may exist and that this possibility, and
the uncertainty and questions which it may raise among management, may result in
the departure or distraction of management personnel to the detriment of the
Corporation and its stockholders. The Board has determined that appropriate
steps should be taken to reinforce and encourage the continued attention and
dedication of members of the Corporation's management, including you, to their
assigned duties without the distractions which may arise from the possibility of
a change in control of the Corporation. In order to induce you to remain in the
employ of the Corporation, you shall receive the severance benefits set forth in
this Agreement in the event your employment with the Corporation is terminated
under the circumstances described below subsequent to a Change in Control.
1. INTERPRETATION OF THIS AGREEMENT.
(a) TERMS DEFINED. As used herein, the following terms when used in this
Agreement have the meanings set forth below:
"ACCRUED BONUS" means:
(i) if the Date of Termination occurs on or prior to the last day of
the Corporation's fiscal year ending December 31, 1999, the amount of
Incentive Compensation that would have been payable to you under the
Employment Agreement (without regard to your termination of employment)
assuming that "Adjusted Earnings
<PAGE>
Mr. Paul Rudovsky
August 2, 1999
Page 2
Per Share" (as such term is defined in the Employment Agreement) for
such fiscal year is determined on an annualized basis based on the
actual results of operations of the Corporation and its subsidiaries for
the period beginning January 1, 1999 and ending on the last day of the
fiscal month preceding the date on which the Change in Control occurred,
prorated from January 1, 1999 based on the number of days elapsed from
such date through the Date of Termination; and
(ii) if the Date of Termination occurs after December 31, 1999 an
amount equal to the greater of (A) the amount determined under clause
(i) above and (B) the actual amount of incentive compensation received
by you in respect of the Corporation's fiscal year next preceding the
year in which the Date of Termination occurs, in either case prorated
from the beginning of the fiscal year in which the Date of Termination
occurs based on the number of days elapsed from such date through the
Date of Termination.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Exchange Act.
"AGREEMENT" shall have the meaning given to it in the preface above.
"APPLICABLE RATE" shall have the meaning given to it in Section 5(d)
below.
"BOARD" shall have the meaning given to it in the preface above.
"CAUSE" shall have the meaning given to it in Section 4(c) below.
"CHANGE IN CONTROL" shall have the meaning given to it in Section 3
below.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONTINUING DIRECTORS" shall have the meaning given to it in Section
3 below.
"CORPORATION" means Atlantis Plastics, Inc., a Florida corporation,
and any successor to its business and/or assets as set forth in Section 6(a)
below which assumes and agrees to perform this Agreement by operation of law, or
otherwise and, as the context may require withe respect to any provision of this
Agreement other than Section 3 below, includes any direct or indirect subsidiary
of Atlantis Plastics, Inc.
"DATE OF TERMINATION" shall have the meaning given to it in Section
4(f) below.
"DISABILITY" shall have the meaning given to it in Section 4(b)
below.
"EMPLOYMENT AGREEMENT" means the Employment Agreement, dated as of
March 6, 1995, as heretofore amended and as the same may hereafter be
supplemented, amended or
<PAGE>
Mr. Paul Rudovsky
August 2, 1999
Page 3
amended and restated at any time prior to the occurrence of a Change in Control.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCISE TAX" shall have the meaning given to it in Section 5(d)
below.
"GOOD REASON" shall have the meaning given to it in Section Section
4(d) below.
"GROSS-UP PAYMENT" shall have the meaning given to it in Section
5(d) below.
"NOTICE OF TERMINATION" shall have the meaning given to it in
Section 4(e) below.
"PERSON" has the meaning set forth in Sections 13(d) and 14(d) of
the Exchange Act.
"RETIREMENT PLANS" means the Atlantis Plastics, Inc. 401(k) Plan and
any supplementary executive retirement plans of the Corporation you may be
covered under, or any successor plans.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SEVERANCE PAYMENTS" shall have the meaning given to it in Section
5(d) below.
"TRIVEST" means Trivest, Inc., a Delaware corporation.
"WELFARE PLAN BENEFITS" shall have the meaning given to it in
Section 5(c) below.
(b) INTERPRETATION. The words "HEREIN," "HEREUNDER" and other words of
similar import refer to this Agreement as a whole, as the same from time to time
may be amended or supplemented and not any particular section, paragraph,
subparagraph or clause contained in this Agreement. Wherever from the context it
appears appropriate, each term stated in either the singular or plural shall
include the singular and the plural, and pronouns stated in masculine, feminine
or neuter gender shall include the masculine, feminine and the neuter.
2. TERM. This Agreement shall continue in effect through December 31,
2000; PROVIDED, HOWEVER, that beginning on January 1, 2001 and on each
subsequent January 1, the term of this Agreement shall automatically be extended
for one additional year unless, not later than October 1 of the preceding year,
we shall notify you that we do not wish to extend this Agreement; and PROVIDED,
FURTHER, that if a Change in Control occurs during the original or extended term
of this Agreement, this Agreement shall continue in effect for a period of not
less than six months beyond the last day of the month in which the Change in
Control occurred.
3. CHANGE IN CONTROL. NO BENEFITS WILL BE PAYABLE UNDER THIS
<PAGE>
Mr. Paul Rudovsky
August 2, 1999
Page 4
AGREEMENT UNLESS A CHANGE IN CONTROL OCCURS. For purposes of this Agreement, a
"CHANGE IN CONTROL" shall be deemed to have occurred if: (i) any Person (other
than the Corporation, any trustee or other fiduciary holding securities under an
employee benefit plan of the Corporation, or any affiliate of Trivest) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Corporation representing more
than 50% of the combined voting power of the Corporation's then outstanding
securities eligible to vote, or (ii) during any period of two consecutive years
(not including any period prior to the date of this Agreement), individuals who
at the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an agreement
with the Corporation to effect a transaction described in clause (i), (iii) or
(iv) of this Section 3) whose election by the Board or nomination for election
by the Corporation's stockholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved (the "CONTINUING DIRECTORS"), cease for any reason to
constitute at least a majority of the Board, (iii) the stockholders of the
Corporation approve a merger or consolidation of the Corporation with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Corporation outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the Corporation or such surviving
entity outstanding immediately after such merger or consolidation; PROVIDED,
HOWEVER, that a merger or consolidation effected to implement a recapitalization
of the Corporation (or similar transaction) in which no Person acquires more
than 50% of the combined voting power of the Corporation's then outstanding
securities shall not constitute a Change in Control, or (iv) the stockholders of
the Corporation approve a plan of complete liquidation of the Corporation or an
agreement for the sale or disposition by the Corporation of all or substantially
all of the Corporation's assets (or any transaction having a similar effect).
4. TERMINATION OF EMPLOYMENT FOLLOWING CHANGE IN CONTROL.
(a) GENERAL. If any of the events described in Section 3 above
constituting a Change in Control shall occur, you will be entitled to such
benefits provided in Section 5 below which are applicable upon the subsequent
termination of your employment during the term of this Agreement. In the event
your employment with the Corporation is terminated for any reason prior to the
occurrence of a Change in Control and subsequently a Change in Control shall
occur, you will not be entitled to any benefits under this Agreement.
(b) DISABILITY. If, as a result of your incapacity due to physical or
mental illness, you are absent from the full-time performance of your duties
with the Corporation for 90 consecutive days, and within 30 days after written
notice of termination is given, you have not returned to the full-time
performance of your duties, for purposes of this Agreement your employment may
be terminated for "DISABILITY."
<PAGE>
Mr. Paul Rudovsky
August 2, 1999
Page 5
(c) CAUSE. Termination by the Corporation of your employment for "CAUSE"
means termination (i) upon the willful and continued failure by you to
substantially perform your duties with the Corporation (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure after the issuance of a Notice of Termination
by you for Good Reason), within 10 days after a written demand for substantial
performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, or (ii) the willful engaging by you in
conduct which is clearly and materially injurious to the Corporation, monetarily
or otherwise. For purposes of this Section 4(c), no act, or failure to act, on
your part shall be deemed "willful" unless done, or omitted to be done, by you
in bad faith and without reasonable belief that your action or omission was in
or not opposed to the best interest of the Corporation. Notwithstanding the
foregoing, you will not be deemed to have been terminated for Cause unless and
until there is delivered to you a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the entire membership
of the Board at a meeting of the Board (after reasonable notice to you and an
opportunity for you, together with your counsel, to be heard before the Board),
finding that in the good faith opinion of the Board you were guilty of conduct
set forth above in this Section 4(c) and specifying the particulars thereof in
detail.
(d) GOOD REASON. You shall be entitled to terminate your employment for
Good Reason. For purposes of this Agreement, "GOOD REASON" means, without your
express written consent, the occurrence after a Change in Control of any of the
following circumstances unless, in the case of clauses (i), (v), (vi), (vii) or
(viii) of this Section 4(d), such circumstances are fully corrected prior to the
Date of Termination specified in the Notice of Termination given in respect
thereof: (i) the assignment to you of any duties inconsistent with the status of
the position in the Corporation that you held immediately prior to the Change in
Control or a materially adverse alteration in the nature or status of your
responsibilities or in the quality or amount of office accommodations or
assistance provided to you, from those in effect immediately prior to the Change
in Control, (ii) a reduction by the Corporation in your annual base salary as in
effect on the date immediately prior to the Change in Control or as the same may
be increased from time to time thereafter, (iii) the Corporation's moving you to
be based more than 50 miles from the Corporation's offices at which you are
principally employed immediately prior to the date of the Change in Control
(except for required travel on the Corporation's business to an extent
substantially consistent with your present business travel obligations and
except to the extent that you consent to any such move prior to the date of the
Change of Control), (iv) the failure by the Corporation to pay to you any
portion of your current compensation within seven days of the date such
compensation is due, (v) the failure by the Corporation to continue in effect
any compensation or benefit plan or perquisites in which you participate
immediately prior to the Change in Control which is material to your total
compensation, including but not limited to the Retirement Plans (but excluding
the Atlantis Plastics, Inc. Employee Stock Purchase Plan and any stock option
plan maintained by the Corporation immediately prior to the Change in Control),
unless an equitable arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or the failure by the
Corporation to continue your participation therein (or in such substitute or
alternative plan) is on a basis not materially less
<PAGE>
Mr. Paul Rudovsky
August 2, 1999
Page 6
favorable, both in terms of the amount of benefits provided and the level of
your participation relative to other participants, than existed at the time of
the Change in Control, (vi) the failure by the Corporation to continue to
provide you with benefits substantially similar to those enjoyed by you under
any of the Corporation's life insurance, medical, dental, accident or disability
plans in which you were participating at the time of the Change in Control, the
taking of any action by the Corporation which would directly or indirectly
materially reduce any of such benefits, or the failure by the Corporation to
provide you with the number of paid vacation days to which you are entitled on
the basis of your years of service with the Corporation in accordance with the
Corporation's normal vacation policy in effect at the time of the Change in
Control, (vii) the failure of the Corporation to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 6 below, or (viii) any purported termination of your
employment that is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 4(e) below (and, if applicable, the requirements of
Section 4(c) above), which purported termination shall not be effective for
purposes of this Agreement. Your right to terminate your employment pursuant to
this Section 4(d) will not be affected by your incapacity due to physical or
mental illness. Your continued employment will not constitute consent to, or a
waiver of rights with respect to, any circumstance constituting Good Reason
hereunder.
(e) NOTICE OF TERMINATION. Any purported termination of your employment
by the Corporation or by you shall be communicated by written Notice of
Termination to the other party hereto in accordance with 7 below. "NOTICE OF
TERMINATION" means a notice that shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of your
employment under the provision so indicated.
(f) DATE OF TERMINATION. "DATE OF TERMINATION" means (i) if your
employment is terminated for Disability, 30 days after Notice of Termination is
given (provided that you have not returned to the full-time performance of your
duties during such 30-day period), (ii) if your employment is terminated
pursuant to Sections 4(c) or 4(d) above, the date specified in the Notice of
Termination (which, in the case of a termination for Good Reason, shall not be
less than 15 nor more than 60 days from the date such Notice of Termination is
given), (iii) in the case of a termination by you for any other reason, the date
specified in the Notice of Termination (which shall not be less than 30 days
from the date such Notice of Termination is given), (iv) if your employment is
terminated by the Corporation for any other reason, the date specified in the
Notice of Termination and (v) if your employment is terminated by reason of your
death, the date of your death; PROVIDED, HOWEVER, that if within 15 days after
any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination (other than the Date of
Termination where clause (iv) of this Section 4(f) is applicable) shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (which is not
appealable or with respect to which the time for appeal therefrom has expired
and no appeal has been
<PAGE>
Mr. Paul Rudovsky
August 2, 1999
Page 7
perfected); and PROVIDED, FURTHER, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
reasonable diligence. Notwithstanding the pendency of any such dispute, the
Corporation will continue to pay you your full compensation in effect when the
notice giving rise to the dispute was given and continue you as a participant in
all Retirement Plans, life insurance, medical, dental, accident or disability
plans and any similar plans in which you were participating when the notice
giving rise to the dispute was given, until the dispute is finally resolved in
accordance with this Section 4(f). Amounts paid under this Section 4(f) are in
addition to all other amounts due under this Agreement, and shall not be offset
against or reduce any other amounts due under this Agreement and shall not be
reduced by any compensation earned by you as the result of employment by another
employer.
5. COMPENSATION DURING DISABILITY OR UPON TERMINATION. Following a
Change in Control, you will be entitled to the following during a period of
Disability or upon termination of your employment, as the case may be, provided
that such period of Disability or termination of employment occurs during the
term of this Agreement:
(a) During any period that you fail to perform your full-time duties
with the Corporation as a result of incapacity due to physical or mental
illness, you will continue to receive your base salary at the rate in effect at
the commencement of any such period, together with all compensation payable to
you under the Corporation's disability plan or program or other similar plan
during such period, until this Agreement is terminated pursuant to Section 4(b)
above. Thereafter, or in the event your employment is terminated by reason of
your death, your benefits will be determined under the Corporation's retirement,
insurance and other compensation programs then in effect in accordance with the
terms of such programs.
(b) If your employment is terminated by the Corporation for Cause or by
you other than for Good Reason, the Corporation will pay you your full base
salary through the Date of Termination at the rate in effect at the time Notice
of Termination is given, plus all other amounts or benefits to which you are
entitled under any Retirement Plan of the Corporation then in effect, and the
Corporation shall have no further obligations to you under this Agreement.
(c) If, your employment is terminated by you for Good Reason or by the
Corporation other than for Cause or Disability, then you will be entitled to the
following: (i) the Corporation will pay to you (1) your full base salary through
the Date of Termination at the rate in effect at the time Notice of Termination
is given, no later than the fifth day following the Date of Termination, and (2)
the amount of your Accrued Bonus (if any), at the time specified in Section 5(e)
below, (ii) in lieu of any further salary payments or bonus payments to you for
periods subsequent to the Date of Termination, the Corporation will pay as
severance pay to you, at the time specified in Section 5(e) below, a lump sum
severance payment equal to the amount of your annual salary as in effect as of
your Date of Termination (without regard to any attempted or purported
termination or reduction of such salary), (iii) your rights under the Retirement
Plans will be governed by the terms of those respective plans, (iv) the
Corporation will pay to you all
<PAGE>
Mr. Paul Rudovsky
August 2, 1999
Page 8
legal fees and expenses incurred by you as a result of such termination
(including all such fees and expenses, if any, reasonably incurred in contesting
or disputing by arbitration or otherwise, any such termination or in seeking to
obtain or enforce any right or benefit provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to the
application of Section 4999 of the Code, to any payment or benefit provided
hereunder) and (v) for a one year period after such termination, the Corporation
will arrange to provide you with benefits substantially similar to those which
you were receiving or entitled to receive under the Corporation's life,
disability, accident and group health insurance plans or any similar plans in
which you were participating immediately prior to the Date of Termination
("WELFARE PLAN BENEFITS") at a cost to you which is no greater than that cost to
you in effect at the Date of Termination; PROVIDED, HOWEVER, that to the extent
any such coverage is prohibited by any judicial or legislative authority, the
Corporation shall make alternative arrangements to provide you with Welfare Plan
Benefits, including, but not limited to, providing you with a payment in an
amount equal to your cost of purchasing the Welfare Plan Benefits. Benefits
otherwise receivable by you pursuant to clause (v) above shall be reduced to the
extent comparable benefits are actually received on your behalf during the one
year period following your termination, and such benefits actually received by
you shall be reported to the Corporation.
(d) If any payments under this Agreement or any other payments or
benefits received or to be received by you in connection with a Change in
Control or your termination of employment (whether pursuant to the terms of this
agreement or any other plan, arrangement or agreement with the Corporation, or
any Affiliate of the Corporation) (the "SEVERANCE PAYMENTS"), will be subject to
the tax (the "EXCISE TAX") imposed by Section 4999 of the Code (or any similar
tax that may hereafter be imposed), th Corporation will pay at the time
specified below an additional amount (the "GROSS-UP PAYMENT"), such that the net
amount retained by you, after deduction of any Excise Tax on the Severance
Payments and any federal, state and local income tax and Excise Tax upon the
payment provided for by this 5(d), shall be equal to the Severance Payments. For
purposes of determining whether any of the Severance Payments will be subject to
the Excise Tax and the amount of such Excise Tax, (i) all Severance Payments
shall be treated as "parachute payments" within the meaning of Section
280G(b)(2) of the Code, and all "excess parachute payments" within the meaning
of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax,
unless in the opinion of tax counsel selected by the Corporation's independent
auditors and acceptable to you such Severance Payments (in whole or in part) do
not constitute parachute payments, or such excess parachute payments (in whole
or in part) represent reasonable compensation for services actually rendered
within the meaning of Section 280G(b)(4) of the Code, or are otherwise not
subject to the Excise Tax, (ii) the amount of the Severance Payments which shall
be treated as subject to the Excise Tax shall be equal to the lesser of (1) the
total amount of the Severance Payments or (2) the amount of excess parachute
payments within the meaning of Section 280G(b)(1) of the Code (after applying
clause (i) above), and (iii) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Corporation's independent auditors
in accordance with the principles of Section 280G(d)(3) and (4) of the Code. For
purposes of determining the amount of the Gross-Up Payment, you shall be deemed
to pay federal income taxes at your highest marginal rate of
<PAGE>
Mr. Paul Rudovsky
August 2, 1999
Page 9
federal income taxation in the calendar year in which the Gross-Up Payment is to
be made and state and local income taxes at your highest marginal rate of
taxation in the state and locality of your residence on the Date of Termination,
net of the maximum reduction in federal income taxes which could be obtained
from deduction of such state and local taxes. In the event that the Excise Tax
is subsequently determined to be less than the amount taken into account
hereunder at the time of termination of your employment, you will repay to the
Corporation at the time that the amount of such reduction in Excise Tax is
finally determined the portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment attributable to the Excise
Tax and federal and state and local income tax imposed on the Gross-Up Payment
being repaid by you if such repayment results in a reduction in Excise Tax
and/or a federal and state and local income tax deduction) plus interest on the
amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the
Code (the "APPLICABLE RATE"). In the event that the Excise Tax is determined to
exceed the amount taken into account hereunder at the time of the termination of
your employment (including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-Up Payment), the Corporation
will make an additional Gross-Up Payment in respect of such excess (plus any
interest payable with respect to such excess at the Applicable Rate) at the time
that the amount of such excess is finally determined. Any payment to be made to
you under this 5(d) will be payable within five days of your Date of
Termination.
(e) The payments provided for in Section 5(c)(i)(2) and Section 5(c)(ii)
above will be made not later than the fifth day following the Date of
TERMINATION; PROVIDED, HOWEVER, that if the amounts of such payments cannot be
finally determined on or before such day, the Corporation will pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and will pay the remainder of such payments
(together with interest at the Applicable Rate) as soon as the amount thereof
can be determined but in no event later than 30 days after the Date of
Termination. In the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess shall constitute a
loan by the Corporation to you, payable on the fifth day after demand by the
Corporation (together with interest at the Applicable Rate).
(f) Except as required in Section 5(c)(v) above, you shall not be
required to mitigate the amount of any payment provided for in this Section 5 by
seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Section 5 be reduced by any compensation earned by
you as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by you to the Corporation, or
otherwise; PROVIDED, HOWEVER, that if during the one year period subsequent to
your Date of Termination, you directly compete with the Corporation by making
use of trade secrets or other proprietary knowledge you obtained while employed
by the Corporation in violation of the commitment to protect such proprietary or
trade secret information set forth in the Employment Agreement (determined
without regard to the termination of the Employment Agreement pursuant to
Section 12 below), all income earned as a result of such use of information
shall be remitted to the Corporation to the extent payments were made to you
under this Section 5.
<PAGE>
Mr. Paul Rudovsky
August 2, 1999
Page 10
(g) The provisions of this Section 5 shall survive the termination of
this Agreement.
6. SUCCESSORS; BINDING AGREEMENT.
(a) The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation to (i)
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Corporation would be required to perform it if no such
succession had taken place and (ii) agree to notify you of the assumption of the
Agreement within 10 days of such assumption. Failure of the Corporation to
obtain any such assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle you to
compensation from the Corporation in the same amount and on the same terms to
which you would be entitled hereunder if you terminate your employment for Good
Reason following a Change in Control, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.
(b) This Agreement shall inure to the benefit of and be enforceable by
you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
7. NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notice to the Corporation shall be directed to the
attention of the Board with a copy to the Secretar of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. MISCELLANEOUS. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and such officer as may be authorized by the Board. No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar of
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Florida without regard to its conflicts of law principles. All
references to sections of
<PAGE>
Mr. Paul Rudovsky
August 2, 1999
Page 11
the Code shall be deemed also to refer to any successor provisions to such
sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law, except for
any withholding that may be required under Section 4999 of the Code. The
obligations of the Corporation under Section 5 above shall survive the
expiration of the term of this Agreement.
9. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
10. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
11. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by binding
arbitration, conducted before a panel of three arbitrators in the city of
Atlanta, Georgia or, at your option, in the city where you are principally
employed immediately prior to the date of a Change in Control, in accordance
with the rules of the American Arbitration Association then in effect; PROVIDED,
HOWEVER, that you shall be entitled to seek specific performance of your rights
under Section 4(f) during the pendency of any dispute or controversy arising
under or in connection with this Agreement. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.
12. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; provided, however, that
the Employment Agreement shall remain in full force and effect until the
occurrence of a Change in Control, at which time the Employment Agreement shall
be deemed terminated and canceled and of no further force or effect. If this
letter sets forth our agreement on the subject matter hereof, kindly sign and
return this original letter to the Corporation which will then constitute our
agreement on this subject. The enclosed copy is for your personal records.
Sincerely,
Earl W. Powell
Chairman of the Board
ACCEPTED AND AGREED:
<PAGE>
Mr. Paul Rudovsky
August 2, 1999
Page 12
- --------------------------------
Paul Rudovsky
EXHIBIT 10.5
August 2, 1999
Mr. Joseph J. Piccione
Vice President and General Manager - Stretch Film
Atlantis Plastics, Inc.
1870 The Exchange, Suite 200
Atlanta, Georgia 30339
Dear Joe:
Atlantis Plastics, Inc. considers it essential to the best interests of
its stockholders to foster the continuous employment of key management
personnel. In this connection, our Board of Directors (the "BOARD") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of the Corporation may exist and that this possibility, and
the uncertainty and questions which it may raise among management, may result in
the departure or distraction of management personnel to the detriment of the
Corporation and its stockholders. The Board has determined that appropriate
steps should be taken to reinforce and encourage the continued attention and
dedication of members of the Corporation's management, including you, to their
assigned duties without the distractions which may arise from the possibility of
a change in control of the Corporation. In order to induce you to remain in the
employ of the Corporation, you shall receive the severance benefits set forth in
this Agreement in the event your employment with the Corporation is terminated
under the circumstances described below subsequent to a Change in Control.
1. INTERPRETATION OF THIS AGREEMENT.
(a) TERMS DEFINED. As used herein, the following terms when used in
this Agreement have the meanings set forth below:
"ACCRUED BONUS" means:
(i) if the Date of Termination occurs on or prior to the last
day of the Corporation's fiscal year ending December 31, 1999, the
amount of the bonus that would have been payable to you under the
Corporation's Management Bonus Plan (without
<PAGE>
Mr. Piccione
August 2, 1999
Page 2
regard to your termination of employment), determined on an annualized
basis based on the actual results of operations of the Corporation and
its subsidiaries for the period beginning January 1, 1999 and ending on
the last day of the fiscal month preceding the date on which the Change
in Control occurred, prorated from January 1, 1999 based on the number
of days elapsed from such date through the Date of Termination; and
(ii) if the Date of Termination occurs after December 31, 1999
an amount equal to the greater of (A) the amount determined under
clause (i) above and (B) the actual amount of incentive compensation
received by you in respect of the Corporation's fiscal year next
preceding the year in which the Date of Termination occurs, in either
case prorated from the beginning of the fiscal year in which the Date
of Termination occurs based on the number of days elapsed from such
date through the Date of Termination.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Exchange Act.
"AGREEMENT" shall have the meaning given to it in the preface
above.
"APPLICABLE RATE" means a rate per annum equal to the rate
provided in Section 1274(b)(2)(B) of the Code.
"BOARD" shall have the meaning given to it in the preface
above.
"CAUSE" shall have the meaning given to it Section 4(b) below.
"CHANGE IN CONTROL" shall have the meaning given to it Section
3 below.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONTINUING DIRECTORS" shall have the meaning given to it
Section 3 below.
"CORPORATION" means Atlantis Plastics, Inc., a Florida
corporation, and any successor to its business and/or assets as set forth in
Section 6(a) below which assumes and agrees to perform this Agreement by
operation of law, or otherwise and, as the context may require withe respect to
any provision of this Agreement other than Section 3 below, includes any direct
or indirect subsidiary of Atlantis Plastics, Inc.
"DATE OF TERMINATION" shall have the meaning given to it
Section 4(e) below.
"DISABILITY" means the absence of the Executive from the
full-time performance of his duties with the Corporation, as a result of his
incapacity due to physical or mental illness, for 45 consecutive days.
<PAGE>
Mr. Piccione
August 2, 1999
Page 3
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"GOOD REASON" shall have the meaning given to it Section 4(c)
below.
"NOTICE OF TERMINATION" shall have the meaning given to it
Section 4(d) below.
"PERSON" has the meaning set forth in Sections 13(d) and 14(d)
of the Exchange Act.
"RETIREMENT PLANS" means the Atlantis Plastics, Inc. 401(k)
Plan and any supplementary executive retirement plans of the Corporation you may
be covered under, or any successor plans
"TRIVEST" means Trivest, Inc., a Delaware corporation.
"WELFARE PLAN BENEFITS" shall have the meaning given to it
Section 5(b) below.
(b) INTERPRETATION. The words "HEREIN," "HEREUNDER" and other words of
similar import refer to this Agreement as a whole, as the same from time to time
may be amended or supplemented and not any particular section, paragraph,
subparagraph or clause contained in this Agreement. Wherever from the context it
appears appropriate, each term stated in either the singular or plural shall
include the singular and the plural, and pronouns stated in masculine, feminine
or neuter gender shall include the masculine, feminine and the neuter.
2. TERM. This Agreement shall continue in effect through December 31,
2000; PROVIDED, HOWEVER, that beginning on January 1, 2001 and on each
subsequent January 1, the term of this Agreement shall automatically be extended
for one additional year unless, not later than October 1 of the preceding year,
we shall notify you that we do not wish to extend this Agreement; and PROVIDED,
FURTHER, that if a Change in Control occurs during the original or extended term
of this Agreement, this Agreement shall continue in effect for a period of not
less than 180 days beyond the last day of the month in which the Change in
Control occurred.
3. CHANGE IN CONTROL. NO BENEFITS WILL BE PAYABLE UNDER THIS AGREEMENT
UNLESS A CHANGE IN CONTROL OCCURS. For purposes of this Agreement, a "CHANGE IN
CONTROL" shall be deemed to have occurred if: (i) any Person (other than the
Corporation, any trustee or other fiduciary holding securities under an employee
benefit plan of the Corporation, or any affiliate of Trivest) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Corporation representing more than 50% of
the combined voting power of the Corporation's then outstanding securities
eligible to vote, or (ii) during any period of two consecutive years (not
including any period prior to the date of this Agreement), individuals who at
the beginning of such period constitute the Board, and any new director (other
than a director designated by a person who has entered into an agreement with
the Corporation to effect a transaction described
<PAGE>
Mr. Piccione
August 2, 1999
Page 4
in clause (i), (iii) or (iv) of this ss.3) whose election by the Board or
nomination for election by the Corporation's stockholders was approved by a vote
of at least two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose election or nomination
for election was previously so approved (the "CONTINUING DIRECTORS"), cease for
any reason to constitute at least a majority of the Board, (iii) the
stockholders of the Corporation approve a merger or consolidation of the
Corporation with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than 50% of the combined voting power of the voting securities of
the Corporation or such surviving entity outstanding immediately after such
merger or consolidation; PROVIDED, HOWEVER, that a merger or consolidation
effected to implement a recapitalization of the Corporation (or similar
transaction) in which no Person acquires more than 50% of the combined voting
power of the Corporation's then outstanding securities shall not constitute a
Change in Control, or (iv) the stockholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the Corporation's
assets (or any transaction having a similar effect).
4. TERMINATION OF EMPLOYMENT FOLLOWING CHANGE IN CONTROL.
(a) GENERAL. If any of the events described in Section 3 above
constituting a Change in Control shall occur, you will be entitled to such
benefits provided in Section 5 below which are applicable upon the subsequent
termination of your employment during the term of this Agreement. In the event
your employment with the Corporation is terminated for any reason prior to the
occurrence of a Change in Control and subsequently a Change in Control shall
occur, you will not be entitled to any benefits under this Agreement.
(b) CAUSE. Termination by the Corporation of your employment for
"CAUSE" means termination (i) upon the willful and continued failure by you to
substantially perform your duties with the Corporation (other than any such
failure resulting from your Disability) or any such actual or anticipated
failure after the issuance of a Notice of Termination by you for Good Reason),
within 10 days after a written demand for substantial performance is delivered
to you by the Board, which demand specifically identifies the manner in which
the Board believes that you have not substantially performed your duties, or
(ii) the willful engaging by you in conduct which is clearly and materially
injurious to the Corporation, monetarily or otherwise. For purposes of this
Section 4(b), no act, or failure to act, on your part shall be deemed "willful"
unless done, or omitted to be done, by you in bad faith and without reasonable
belief that your action or omission was in or not opposed to the best interest
of the Corporation. Notwithstanding the foregoing, you will not be deemed to
have been terminated for Cause unless and until there is delivered to you a copy
of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a meeting of the
Board (after reasonable notice to you and an opportunity for you, together with
your counsel, to be heard before the Board), finding that in the good faith
opinion of the Board you were guilty of conduct
<PAGE>
Mr. Piccione
August 2, 1999
Page 5
set forth above in this ss.4(b) and specifying the particulars thereof in
detail.
(c) GOOD REASON. You shall be entitled to terminate your employment for
Good Reason. For purposes of this Agreement, "GOOD REASON" means, without your
express written consent, the occurrence after a Change in Control of any of the
following circumstances unless, in the case of clauses (i), (v), (vi), (vii) or
(viii) of this Section 4(c), such circumstances are fully corrected prior to the
Date of Termination specified in the Notice of Termination given in respect
thereof: (i) the assignment to you of any duties inconsistent with the status of
the position in the Corporation that you held immediately prior to the Change in
Control or a materially adverse alteration in the nature or status of your
responsibilities from those in effect immediately prior to the Change in
Control, (ii) a reduction by the Corporation in your annual base salary as in
effect on the date immediately prior to the Change in Control or as the same may
be increased from time to time thereafter, (iii) the Corporation's moving you to
be based more than 50 miles from the Corporation's offices at which you are
principally employed immediately prior to the date of the Change in Control
(except for required travel on the Corporation's business to an extent
substantially consistent with your present business travel obligations) without
reimbursing you for the costs associated with such move in accordance with the
Corporation's relocation policy as the same exists immediately prior to the
Change in Control, (iv) the failure by the Corporation to pay to you any portion
of your current compensation within seven days of the date such compensation is
due, (v) the failure by the Corporation to continue in effect any compensation
or benefit plan or perquisites in which you participate immediately prior to the
Change in Control which is material to your total compensation, including but
not limited to the Retirement Plans (but excluding the Atlantis Plastics, Inc.
Employee Stock Purchase Plan and any stock option plan maintained by the
Corporation immediately prior to the Change in Control), unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan) has been
made with respect to such plan, or the failure by the Corporation to continue
your participation therein (or in such substitute or alternative plan) is on a
basis not materially less favorable, both in terms of the amount of benefits
provided and the level of your participation relative to other participants,
than existed at the time of the Change in Control, (vi) the failure by the
Corporation to continue to provide you with benefits substantially similar to
those enjoyed by you under any of the Corporation's life insurance, medical,
dental, accident or disability plans in which you were participating at the time
of the Change in Control, the taking of any action by the Corporation which
would directly or indirectly materially reduce any of such benefits, or the
failure by the Corporation to provide you with the number of paid vacation days
to which you are entitled on the basis of your years of service with the
Corporation in accordance with the Corporation's normal vacation policy in
effect at the time of the Change in Control, (vii) the failure of the
Corporation to obtain a satisfactory agreement from any successor to assume and
agree to perform this Agreement, as contemplated in Section 6 below, or (viii)
any purported termination of your employment that is not effected pursuant to a
Notice of Termination satisfying the requirements of Section 4(d) below (and, if
applicable, the requirements of Section 4(b) above), which purported termination
shall not be effective for purposes of this Agreement. Your continued employment
will not constitute consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason hereunder.
<PAGE>
Mr. Piccione
August 2, 1999
Page 6
(d) NOTICE OF TERMINATION. Any purported termination of your employment
by the Corporation or by you shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 7 below.
"NOTICE OF TERMINATION" means a notice that shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(e) DATE OF TERMINATION. "DATE OF TERMINATION" means (i) if your
employment is terminated pursuant to Sections 4(b) or 4(c) above, the date
specified in the Notice of Termination (which, in the case of a termination for
Good Reason, shall not be less than 15 nor more than 60 days from the date such
Notice of Termination is given), (ii) in the case of a termination by you for
any other reason, the date specified in the Notice of Termination (which shall
not be less than 30 days from the date such Notice of Termination is given),
(iii) if your employment is terminated by the Corporation for any other reason,
the date specified in the Notice of Termination and (iv) if your employment is
terminated by reason of your death, the date of your death; PROVIDED, HOWEVER,
that if within 15 days after any Notice of Termination is given, or, if later,
prior to the Date of Termination (as determined without regard to this proviso),
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, then the Date of Termination (other
than the Date of Termination where clause (iii) of this Section 4(e) is
applicable) shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (which
is not appealable or with respect to which the time for appeal therefrom has
expired and no appeal has been perfected); and PROVIDED, FURTHER, that the Date
of Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence. Notwithstanding the pendency of any such
dispute, the Corporation will continue to pay you your full compensation in
effect when the notice giving rise to the dispute was given and continue you as
a participant in all Retirement Plans, life insurance, medical, dental, accident
or disability plans and any similar plans in which you were participating when
the notice giving rise to the dispute was given, until the dispute is finally
resolved in accordance with this Section 4(e). Amounts paid under this Section
4(e) are in addition to all other amounts due under this Agreement, and shall
not be offset against or reduce any other amounts due under this Agreement and
shall not be reduced by any compensation earned by you as the result of
employment by another employer.
5. COMPENSATION UPON TERMINATION. Following a Change in Control, you
will be entitled to the following upon termination of your employment, provided
that such termination of employment occurs during the term of this Agreement:
(a) If your employment is terminated (i) by the Corporation (1) for
Cause or (2) because of your Disability, (ii) by reason of your death or (iii)
by you other than for Good Reason, the Corporation will pay you your full base
salary through the Date of Termination at
<PAGE>
Mr. Piccione
August 2, 1999
Page 7
the rate in effect at the time Notice of Termination is given (or at the time of
your death, as the case may be), plus all other amounts or benefits to which you
are entitled under any Retirement Plan of the Corporation then in effect, and
the Corporation shall have no further obligations to you under this Agreement;
PROVIDED, HOWEVER, that or in the event your employment is terminated by reason
of your death or as a result of your Disability, your benefits will be
determined under the Corporation's retirement, insurance and other compensation
programs then in effect in accordance with the terms of such programs.
(b) If, at any time during the 180 day period following a Change in
Control, your employment is terminated by you for Good Reason or by the
Corporation other than for Cause or by reason of your Disability, then you will
be entitled to the following: (i) the Corporation will pay to you (1) your full
base salary through the Date of Termination at the rate in effect at the time
Notice of Termination is given, no later than the fifth day following the Date
of Termination, and (2) the amount of your Accrued Bonus (if any), at the time
specified in Section 5(c) below, (ii) in lieu of any further salary payments or
bonus payments to you for periods subsequent to the Date of Termination, the
Corporation will pay as severance pay to you, at the time specified in Section
5(c) below, a lump sum severance payment equal to the amount of your annual
salary as in effect as of your Date of Termination (without regard to any
attempted or purported termination or reduction of such salary), (iii) your
rights under the Retirement Plans will be governed by the terms of those
respective plans, (iv) the Corporation will pay to you all legal fees and
expenses incurred by you as a result of such termination (including all such
fees and expenses, if any, reasonably incurred in contesting or disputing by
arbitration or otherwise, any such termination or in seeking to obtain or
enforce any right or benefit provided by this Agreement) and (v) for a 180 day
period after such termination, the Corporation will arrange to provide you with
benefits substantially similar to those which you were receiving or entitled to
receive under the Corporation's life, disability, accident and group health
insurance plans or any similar plans in which you were participating immediately
prior to the Date of Termination ("WELFARE PLAN BENEFITS") at a cost to you
which is no greater than that cost to you in effect at the Date of Termination;
PROVIDED, HOWEVER, that to the extent any such coverage is prohibited by any
judicial or legislative authority, the Corporation shall make alternative
arrangements to provide you with Welfare Plan Benefits, including, but not
limited to, providing you with a payment in an amount equal to your cost of
purchasing the Welfare Plan Benefits. Benefits otherwise receivable by you
pursuant to clause (v) above shall be reduced to the extent comparable benefits
are actually received on your behalf during the 180 day period following your
termination, and such benefits actually received by you shall be reported to the
Corporation.
(c) The payments provided for in Section 5(b)(i)(2) and Section
5(b)(ii) above will be made not later than the fifth day following the Date of
Termination; PROVIDED, HOWEVER, that if the amounts of such payments cannot be
finally determined on or before such day, the Corporation will pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and will pay the remainder of such payments
(together with interest at the Applicable Rate) as soon as the amount thereof
can be determined but in no event later than 30 days after the Date of
Termination. In the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess shall constitute a
<PAGE>
Mr. Piccione
August 2, 1999
Page 8
loan by the Corporation to you, payable on the fifth day after demand by the
Corporation (together with interest at the Applicable Rate).
(d) Except as required in Section 5(b)(v) above, you shall not be
required to mitigate the amount of any payment provided for in this Section 5 by
seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Section 5 be reduced by any compensation earned by
you as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by you to the Corporation, or
otherwise.
6. SUCCESSORS; BINDING AGREEMENT.
(a) The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation to (i)
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Corporation would be required to perform it if no such
succession had taken place and (ii) agree to notify you of the assumption of the
Agreement within 10 days of such assumption. Failure of the Corporation to
obtain any such assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle you to
compensation from the Corporation in the same amount and on the same terms to
which you would be entitled hereunder if you terminate your employment for Good
Reason following a Change in Control, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.
(b) This Agreement shall inure to the benefit of and be enforceable by
you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
7. NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notice to the Corporation shall be directed to the
attention of the Board with a copy to the Secretary of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by
<PAGE>
Mr. Piccione
August 2, 1999
Page 9
you and such officer as may be authorized by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar of dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Florida without regard to its conflicts of law principles. All references to
sections of the Code shall be deemed also to refer to any successor provisions
to such sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law. The
obligations of the Corporation under Section 5 above shall survive the
expiration of the term of this Agreement.
9. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
11. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by binding
arbitration, conducted before a panel of three arbitrators in the city of
Atlanta, Georgia or, at your option, in the city where you are principally
employed immediately prior to the date of a Change in Control, in accordance
with the rules of the American Arbitration Association then in effect; PROVIDED,
HOWEVER, that you shall be entitled to seek specific performance of your rights
under Section 4(e) during the pendency of any dispute or controversy arising
under or in connection with this Agreement. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.
12. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto. If this letter sets
forth our agreement on the subject matter hereof, kindly sign and return this
original letter to the Corporation which will then constitute our agreement on
this subject. The enclosed copy is for your personal records.
Sincerely,
Anthony F. Bova
<PAGE>
Mr. Piccione
August 2, 1999
Page 10
President and Chief Executive Officer
ACCEPTED AND AGREED:
- --------------------------------
Joseph J. Piccione
EXHIBIT 10.6
August 2, 1999
Mr. Terry W. Lunt
Vice President - Human Resources
Atlantis Plastics, Inc.
1870 The Exchange, Suite 200
Atlanta, Georgia 30339
Dear Terry:
Atlantis Plastics, Inc. considers it essential to the best interests of
its stockholders to foster the continuous employment of key management
personnel. In this connection, our Board of Directors (the "BOARD") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of the Corporation may exist and that this possibility, and
the uncertainty and questions which it may raise among management, may result in
the departure or distraction of management personnel to the detriment of the
Corporation and its stockholders. The Board has determined that appropriate
steps should be taken to reinforce and encourage the continued attention and
dedication of members of the Corporation's management, including you, to their
assigned duties without the distractions which may arise from the possibility of
a change in control of the Corporation. In order to induce you to remain in the
employ of the Corporation, you shall receive the severance benefits set forth in
this Agreement in the event your employment with the Corporation is terminated
under the circumstances described below subsequent to a Change in Control.
1. INTERPRETATION OF THIS AGREEMENT.
(a) TERMS DEFINED. As used herein, the following terms when used in
this Agreement have the meanings set forth below:
"ACCRUED BONUS" means:
(i) if the Date of Termination occurs on or prior to the last
day of the Corporation's fiscal year ending December 31, 1999, the
amount of the bonus that would have been payable to you under the
Corporation's Management Bonus Plan (without
<PAGE>
Mr. Lunt
August 2, 1999
Page 2
regard to your termination of employment), determined on an annualized
basis based on the actual results of operations of the Corporation and
its subsidiaries for the period beginning January 1, 1999 and ending on
the last day of the fiscal month preceding the date on which the Change
in Control occurred, prorated from January 1, 1999 based on the number
of days elapsed from such date through the Date of Termination; and
(ii) if the Date of Termination occurs after December 31, 1999
an amount equal to the greater of (A) the amount determined under
clause (i) above and (B) the actual amount of incentive compensation
received by you in respect of the Corporation's fiscal year next
preceding the year in which the Date of Termination occurs, in either
case prorated from the beginning of the fiscal year in which the Date
of Termination occurs based on the number of days elapsed from such
date through the Date of Termination.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Exchange Act.
"AGREEMENT" shall have the meaning given to it in the preface
above.
"APPLICABLE RATE" means a rate per annum equal to the rate
provided in Section 1274(b)(2)(B) of the Code.
"BOARD" shall have the meaning given to it in the preface
above.
"CAUSE" shall have the meaning given to it Section 4(b) below.
"CHANGE IN CONTROL" shall have the meaning given to it Section
3 below.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONTINUING DIRECTORS" shall have the meaning given to it
Section 3 below.
"CORPORATION" means Atlantis Plastics, Inc., a Florida
corporation, and any successor to its business and/or assets as set forth in
Section 6(a) below which assumes and agrees to perform this Agreement by
operation of law, or otherwise and, as the context may require withe respect to
any provision of this Agreement other than Section 3 below, includes any direct
or indirect subsidiary of Atlantis Plastics, Inc.
"DATE OF TERMINATION" shall have the meaning given to it
ss.4(e) below.
"DISABILITY" means the absence of the Executive from the
full-time performance of his duties with the Corporation, as a result of his
incapacity due to physical or mental illness, for 45 consecutive days.
<PAGE>
Mr. Lunt
August 2, 1999
Page 3
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"GOOD REASON" shall have the meaning given to it Section 4(c)
below.
"NOTICE OF TERMINATION" shall have the meaning given to it
Section 4(d) below.
"PERSON" has the meaning set forth in Sections 13(d) and 14(d)
of the Exchange Act.
"RETIREMENT PLANS" means the Atlantis Plastics, Inc. 401(k)
Plan and any supplementary executive retirement plans of the Corporation you may
be covered under, or any successor plans
"TRIVEST" means Trivest, Inc., a Delaware corporation.
"WELFARE PLAN BENEFITS" shall have the meaning given to it
Section 5(b) below.
(b) INTERPRETATION. The words "HEREIN," "HEREUNDER" and other words of
similar import refer to this Agreement as a whole, as the same from time to time
may be amended or supplemented and not any particular section, paragraph,
subparagraph or clause contained in this Agreement. Wherever from the context it
appears appropriate, each term stated in either the singular or plural shall
include the singular and the plural, and pronouns stated in masculine, feminine
or neuter gender shall include the masculine, feminine and the neuter.
2. TERM. This Agreement shall continue in effect through December 31,
2000; PROVIDED, HOWEVER, that beginning on January 1, 2001 and on each
subsequent January 1, the term of this Agreement shall automatically be extended
for one additional year unless, not later than October 1 of the preceding year,
we shall notify you that we do not wish to extend this Agreement; and PROVIDED,
FURTHER, that if a Change in Control occurs during the original or extended term
of this Agreement, this Agreement shall continue in effect for a period of not
less than 180 days beyond the last day of the month in which the Change in
Control occurred.
3. CHANGE IN CONTROL. NO BENEFITS WILL BE PAYABLE UNDER THIS AGREEMENT
UNLESS A CHANGE IN CONTROL OCCURS. For purposes of this Agreement, a "CHANGE IN
CONTROL" shall be deemed to have occurred if: (i) any Person (other than the
Corporation, any trustee or other fiduciary holding securities under an employee
benefit plan of the Corporation, or any affiliate of Trivest) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Corporation representing more than 50% of
the combined voting power of the Corporation's then outstanding securities
eligible to vote, or (ii) during any period of two consecutive years (not
including any period prior to the date of this Agreement), individuals who at
the beginning of such period constitute the Board, and any new director (other
than a director designated by a person who has entered into an agreement with
the Corporation to effect a transaction described
<PAGE>
Mr. Lunt
August 2, 1999
Page 4
in clause (i), (iii) or (iv) of this Section 3) whose election by the Board or
nomination for election by the Corporation's stockholders was approved by a vote
of at least two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose election or nomination
for election was previously so approved (the "CONTINUING DIRECTORS"), cease for
any reason to constitute at least a majority of the Board, (iii) the
stockholders of the Corporation approve a merger or consolidation of the
Corporation with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than 50% of the combined voting power of the voting securities of
the Corporation or such surviving entity outstanding immediately after such
merger or consolidation; PROVIDED, HOWEVER, that a merger or consolidation
effected to implement a recapitalization of the Corporation (or similar
transaction) in which no Person acquires more than 50% of the combined voting
power of the Corporation's then outstanding securities shall not constitute a
Change in Control, or (iv) the stockholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the Corporation's
assets (or any transaction having a similar effect).
4. TERMINATION OF EMPLOYMENT FOLLOWING CHANGE IN CONTROL.
(a) GENERAL. If any of the events described in Section 3 above
constituting a Change in Control shall occur, you will be entitled to such
benefits provided in Section 5 below which are applicable upon the subsequent
termination of your employment during the term of this Agreement. In the event
your employment with the Corporation is terminated for any reason prior to the
occurrence of a Change in Control and subsequently a Change in Control shall
occur, you will not be entitled to any benefits under this Agreement.
(b) CAUSE. Termination by the Corporation of your employment for
"CAUSE" means termination (i) upon the willful and continued failure by you to
substantially perform your duties with the Corporation (other than any such
failure resulting from your Disability) or any such actual or anticipated
failure after the issuance of a Notice of Termination by you for Good Reason),
within 10 days after a written demand for substantial performance is delivered
to you by the Board, which demand specifically identifies the manner in which
the Board believes that you have not substantially performed your duties, or
(ii) the willful engaging by you in conduct which is clearly and materially
injurious to the Corporation, monetarily or otherwise. For purposes of this
Section 4(b), no act, or failure to act, on your part shall be deemed "willful"
unless done, or omitted to be done, by you in bad faith and without reasonable
belief that your action or omission was in or not opposed to the best interest
of the Corporation. Notwithstanding the foregoing, you will not be deemed to
have been terminated for Cause unless and until there is delivered to you a copy
of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a meeting of the
Board (after reasonable notice to you and an opportunity for you, together with
your counsel, to be heard before the Board), finding that in the good faith
opinion of the Board you were guilty of conduct
<PAGE>
Mr. Lunt
August 2, 1999
Page 5
set forth above in this Section 4(b) and specifying the particulars thereof in
detail.
(c) GOOD REASON. You shall be entitled to terminate your employment for
Good Reason. For purposes of this Agreement, "GOOD REASON" means, without your
express written consent, the occurrence after a Change in Control of any of the
following circumstances unless, in the case of clauses (i), (v), (vi), (vii) or
(viii) of this Section 4(c), such circumstances are fully corrected prior to the
Date of Termination specified in the Notice of Termination given in respect
thereof: (i) the assignment to you of any duties inconsistent with the status of
the position in the Corporation that you held immediately prior to the Change in
Control or a materially adverse alteration in the nature or status of your
responsibilities from those in effect immediately prior to the Change in
Control, (ii) a reduction by the Corporation in your annual base salary as in
effect on the date immediately prior to the Change in Control or as the same may
be increased from time to time thereafter, (iii) the Corporation's moving you to
be based more than 50 miles from the Corporation's offices at which you are
principally employed immediately prior to the date of the Change in Control
(except for required travel on the Corporation's business to an extent
substantially consistent with your present business travel obligations) without
reimbursing you for the costs associated with such move in accordance with the
Corporation's relocation policy as the same exists immediately prior to the
Change in Control, (iv) the failure by the Corporation to pay to you any portion
of your current compensation within seven days of the date such compensation is
due, (v) the failure by the Corporation to continue in effect any compensation
or benefit plan or perquisites in which you participate immediately prior to the
Change in Control which is material to your total compensation, including but
not limited to the Retirement Plans (but excluding the Atlantis Plastics, Inc.
Employee Stock Purchase Plan and any stock option plan maintained by the
Corporation immediately prior to the Change in Control), unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan) has been
made with respect to such plan, or the failure by the Corporation to continue
your participation therein (or in such substitute or alternative plan) is on a
basis not materially less favorable, both in terms of the amount of benefits
provided and the level of your participation relative to other participants,
than existed at the time of the Change in Control, (vi) the failure by the
Corporation to continue to provide you with benefits substantially similar to
those enjoyed by you under any of the Corporation's life insurance, medical,
dental, accident or disability plans in which you were participating at the time
of the Change in Control, the taking of any action by the Corporation which
would directly or indirectly materially reduce any of such benefits, or the
failure by the Corporation to provide you with the number of paid vacation days
to which you are entitled on the basis of your years of service with the
Corporation in accordance with the Corporation's normal vacation policy in
effect at the time of the Change in Control, (vii) the failure of the
Corporation to obtain a satisfactory agreement from any successor to assume and
agree to perform this Agreement, as contemplated in Section 6 below, or (viii)
any purported termination of your employment that is not effected pursuant to a
Notice of Termination satisfying the requirements of Section 4(d) below (and, if
applicable, the requirements of Section 4(b) above), which purported termination
shall not be effective for purposes of this Agreement. Your continued employment
will not constitute consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason hereunder.
<PAGE>
Mr. Lunt
August 2, 1999
Page 6
(d) NOTICE OF TERMINATION. Any purported termination of your employment
by the Corporation or by you shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 7 below.
"NOTICE OF TERMINATION" means a notice that shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(e) DATE OF TERMINATION. "DATE OF TERMINATION" means (i) if your
employment is terminated pursuant to Sections 4(b) or 4(c) above, the date
specified in the Notice of Termination (which, in the case of a termination for
Good Reason, shall not be less than 15 nor more than 60 days from the date such
Notice of Termination is given), (ii) in the case of a termination by you for
any other reason, the date specified in the Notice of Termination (which shall
not be less than 30 days from the date such Notice of Termination is given),
(iii) if your employment is terminated by the Corporation for any other reason,
the date specified in the Notice of Termination and (iv) if your employment is
terminated by reason of your death, the date of your death; PROVIDED, HOWEVER,
that if within 15 days after any Notice of Termination is given, or, if later,
prior to the Date of Termination (as determined without regard to this proviso),
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, then the Date of Termination (other
than the Date of Termination where clause (iii) of this Section 4(e) is
applicable) shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (which
is not appealable or with respect to which the time for appeal therefrom has
expired and no appeal has been perfected); and PROVIDED, FURTHER, that the Date
of Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence. Notwithstanding the pendency of any such
dispute, the Corporation will continue to pay you your full compensation in
effect when the notice giving rise to the dispute was given and continue you as
a participant in all Retirement Plans, life insurance, medical, dental, accident
or disability plans and any similar plans in which you were participating when
the notice giving rise to the dispute was given, until the dispute is finally
resolved in accordance with this Section 4(e). Amounts paid under this Section
4(e) are in addition to all other amounts due under this Agreement, and shall
not be offset against or reduce any other amounts due under this Agreement and
shall not be reduced by any compensation earned by you as the result of
employment by another employer.
5. COMPENSATION UPON TERMINATION. Following a Change in Control, you
will be entitled to the following upon termination of your employment, provided
that such termination of employment occurs during the term of this Agreement:
(a) If your employment is terminated (i) by the Corporation (1) for
Cause or (2) because of your Disability, (ii) by reason of your death or (iii)
by you other than for Good Reason, the Corporation will pay you your full base
salary through the Date of Termination at
<PAGE>
Mr. Lunt
August 2, 1999
Page 7
the rate in effect at the time Notice of Termination is given (or at the time of
your death, as the case may be), plus all other amounts or benefits to which you
are entitled under any Retirement Plan of the Corporation then in effect, and
the Corporation shall have no further obligations to you under this Agreement;
PROVIDED, HOWEVER, that or in the event your employment is terminated by reason
of your death or as a result of your Disability, your benefits will be
determined under the Corporation's retirement, insurance and other compensation
programs then in effect in accordance with the terms of such programs.
(b) If, at any time during the 180 day period following a Change in
Control, your employment is terminated by you for Good Reason or by the
Corporation other than for Cause or by reason of your Disability, then you will
be entitled to the following: (i) the Corporation will pay to you (1) your full
base salary through the Date of Termination at the rate in effect at the time
Notice of Termination is given, no later than the fifth day following the Date
of Termination, and (2) the amount of your Accrued Bonus (if any), at the time
specified in Section 5(c) below, (ii) in lieu of any further salary payments or
bonus payments to you for periods subsequent to the Date of Termination, the
Corporation will pay as severance pay to you, at the time specified in Section
5(c) below, a lump sum severance payment equal to the amount of your annual
salary as in effect as of your Date of Termination (without regard to any
attempted or purported termination or reduction of such salary), (iii) your
rights under the Retirement Plans will be governed by the terms of those
respective plans, (iv) the Corporation will pay to you all legal fees and
expenses incurred by you as a result of such termination (including all such
fees and expenses, if any, reasonably incurred in contesting or disputing by
arbitration or otherwise, any such termination or in seeking to obtain or
enforce any right or benefit provided by this Agreement) and (v) for a 180 day
period after such termination, the Corporation will arrange to provide you with
benefits substantially similar to those which you were receiving or entitled to
receive under the Corporation's life, disability, accident and group health
insurance plans or any similar plans in which you were participating immediately
prior to the Date of Termination ("WELFARE PLAN BENEFITS") at a cost to you
which is no greater than that cost to you in effect at the Date of Termination;
PROVIDED, HOWEVER, that to the extent any such coverage is prohibited by any
judicial or legislative authority, the Corporation shall make alternative
arrangements to provide you with Welfare Plan Benefits, including, but not
limited to, providing you with a payment in an amount equal to your cost of
purchasing the Welfare Plan Benefits. Benefits otherwise receivable by you
pursuant to clause (v) above shall be reduced to the extent comparable benefits
are actually received on your behalf during the 180 day period following your
termination, and such benefits actually received by you shall be reported to the
Corporation.
(c) The payments provided for in Section 5(b)(i)(2) and Section
5(b)(ii) above will be made not later than the fifth day following the Date of
Termination; PROVIDED, HOWEVER, that if the amounts of such payments cannot be
finally determined on or before such day, the Corporation will pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and will pay the remainder of such payments
(together with interest at the Applicable Rate) as soon as the amount thereof
can be determined but in no event later than 30 days after the Date of
Termination. In the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess shall constitute a
<PAGE>
Mr. Lunt
August 2, 1999
Page 8
loan by the Corporation to you, payable on the fifth day after demand by the
Corporation (together with interest at the Applicable Rate).
(d) Except as required in Section 5(b)(v) above, you shall not be
required to mitigate the amount of any payment provided for in this Section 5 by
seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this ss.5 be reduced by any compensation earned by you
as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by you to the Corporation, or
otherwise.
6. SUCCESSORS; BINDING AGREEMENT.
(a) The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation to (i)
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Corporation would be required to perform it if no such
succession had taken place and (ii) agree to notify you of the assumption of the
Agreement within 10 days of such assumption. Failure of the Corporation to
obtain any such assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle you to
compensation from the Corporation in the same amount and on the same terms to
which you would be entitled hereunder if you terminate your employment for Good
Reason following a Change in Control, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.
(b) This Agreement shall inure to the benefit of and be enforceable by
you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
7. NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notice to the Corporation shall be directed to the
attention of the Board with a copy to the Secretary of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by
<PAGE>
Mr. Lunt
August 2, 1999
Page 9
you and such officer as may be authorized by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar of dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Florida without regard to its conflicts of law principles. All references to
sections of the Code shall be deemed also to refer to any successor provisions
to such sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law. The
obligations of the Corporation under ss.5 above shall survive the expiration of
the term of this Agreement.
9. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
11. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by binding
arbitration, conducted before a panel of three arbitrators in the city of
Atlanta, Georgia or, at your option, in the city where you are principally
employed immediately prior to the date of a Change in Control, in accordance
with the rules of the American Arbitration Association then in effect; PROVIDED,
HOWEVER, that you shall be entitled to seek specific performance of your rights
under ss.4(e) during the pendency of any dispute or controversy arising under or
in connection with this Agreement. Judgment may be entered on the arbitrator's
award in any court having jurisdiction.
12. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto. If this letter sets
forth our agreement on the subject matter hereof, kindly sign and return this
original letter to the Corporation which will then constitute our agreement on
this subject. The enclosed copy is for your personal records.
Sincerely,
Anthony F. Bova
<PAGE>
Mr. Lunt
August 2, 1999
Page 10
President and Chief Executive Officer
ACCEPTED AND AGREED:
- --------------------------------
Terry W. Lunt
EXHIBIT 10.7
August 2, 1999
Mr. John A. Geary
Vice President and General Manager -
Profile Extrusion and Injection Molding
Atlantis Plastics, Inc.
57500 County Road 3 South
Elkhart, Indiana 46517
Dear John:
Atlantis Plastics, Inc. considers it essential to the best interests of
its stockholders to foster the continuous employment of key management
personnel. In this connection, our Board of Directors (the "BOARD") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of the Corporation may exist and that this possibility, and
the uncertainty and questions which it may raise among management, may result in
the departure or distraction of management personnel to the detriment of the
Corporation and its stockholders. The Board has determined that appropriate
steps should be taken to reinforce and encourage the continued attention and
dedication of members of the Corporation's management, including you, to their
assigned duties without the distractions which may arise from the possibility of
a change in control of the Corporation. In order to induce you to remain in the
employ of the Corporation, you shall receive the severance benefits set forth in
this Agreement in the event your employment with the Corporation is terminated
under the circumstances described below subsequent to a Change in Control.
1. INTERPRETATION OF THIS AGREEMENT.
(a) TERMS DEFINED. As used herein, the following terms when used in this
Agreement have the meanings set forth below:
"ACCRUED BONUS" MEANS:
(i) if the Date of Termination occurs on or prior to the last day of
the Corporation's fiscal year ending December 31, 1999, the amount of
the bonus that would
<PAGE>
Mr. John A. Geary
August 2, 1999
Page 2
have been payable to you under the Corporation's Management Bonus Plan
(without regard to your termination of employment), determined on an
annualized basis based on the actual results of operations of the
Corporation and its subsidiaries for the period beginning January 1,
1999 and ending on the last day of the fiscal month preceding the date
on which the Change in Control occurred, prorated from January 1, 1999
based on the number of days elapsed from such date through the Date of
Termination; and
(ii) if the Date of Termination occurs after December 31, 1999 an
amount equal to the greater of (A) the amount determined under clause
(i) above and (B) the actual amount of incentive compensation received
by you in respect of the Corporation's fiscal year next preceding the
year in which the Date of Termination occurs, in either case prorated
from the beginning of the fiscal year in which the Date of Termination
occurs based on the number of days elapsed from such date through the
Date of Termination.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Exchange Act.
"AGREEMENT" shall have the meaning given to it in the preface above.
"APPLICABLE RATE" means a rate per annum equal to the rate provided
in Section 1274(b)(2)(B) of the Code.
"BOARD" shall have the meaning given to it in the preface above.
"CAUSE" shall have the meaning given to it Section 4(b) below.
"CHANGE IN CONTROL" shall have the meaning given to it Section 3
below.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONTINUING DIRECTORS" shall have the meaning given to it Section 3
below.
"CORPORATION" means Atlantis Plastics, Inc., a Florida corporation,
and any successor to its business and/or assets as set forth in Section 6(a)
below which assumes and agrees to perform this Agreement by operation of law, or
otherwise and, as the context may require withe respect to any provision of this
Agreement other than Section 3 below, includes any direct or indirect subsidiary
of Atlantis Plastics, Inc.
"DATE OF TERMINATION" shall have the meaning given to it Section
4(e) below.
"DISABILITY" means the absence of the Executive from the full-time
performance of his duties with the Corporation, as a result of his incapacity
due to physical or mental illness, for 45 consecutive days.
<PAGE>
Mr. John A. Geary
August 2, 1999
Page 3
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"GOOD REASON" shall have the meaning given to it Section 4(c) below.
"NOTICE OF TERMINATION" shall have the meaning given to it Section
4(d) below.
"PERSON" has the meaning set forth in Sections 13(d) and 14(d) of
the Exchange Act.
"RETIREMENT PLANS" means the Atlantis Plastics, Inc. 401(k) Plan and
any supplementary executive retirement plans of the Corporation you may be
covered under, or any successor plans
"TRIVEST" means Trivest, Inc., a Delaware corporation.
"WELFARE PLAN BENEFITS" shall have the meaning given to it Section
5(b) below.
(b) INTERPRETATION. The words "HEREIN," "HEREUNDER" and other words of
similar import refer to this Agreement as a whole, as the same from time to time
may be amended or supplemented and not any particular section, paragraph,
subparagraph or clause contained in this Agreement. Wherever from the context it
appears appropriate, each term stated in either the singular or plural shall
include the singular and the plural, and pronouns stated in masculine, feminine
or neuter gender shall include the masculine, feminine and the neuter.
2. TERM. This Agreement shall continue in effect through December 31,
2000; PROVIDED, HOWEVER, that beginning on January 1, 2001 and on each
subsequent January 1, the term of this Agreement shall automatically be extended
for one additional year unless, not later than October 1 of the preceding year,
we shall notify you that we do not wish to extend this Agreement; and PROVIDED,
FURTHER, that if a Change in Control occurs during the original or extended term
of this Agreement, this Agreement shall continue in effect for a period of not
less than 180 days beyond the last day of the month in which the Change in
Control occurred.
3. CHANGE IN CONTROL. NO BENEFITS WILL BE PAYABLE UNDER THIS AGREEMENT
UNLESS A CHANGE IN CONTROL OCCURS. For purposes of this Agreement, a "CHANGE IN
CONTROL" shall be deemed to have occurred if: (i) any Person (other than the
Corporation, any trustee or other fiduciary holding securities under an employee
benefit plan of the Corporation, or any affiliate of Trivest) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Corporation representing more than 50% of
the combined voting power of the Corporation's then outstanding securities
eligible to vote, or (ii) during any period of two consecutive years (not
including any period prior to the date of this Agreement), individuals who at
the beginning of such period constitute the Board, and any new director (other
than a director designated by a
<PAGE>
Mr. John A. Geary
August 2, 1999
Page 4
person who has entered into an agreement with the Corporation to effect a
transaction described in clause (i), (iii) or (iv) of this Section 3) whose
election by the Board or nomination for election by the Corporation's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved
(the "CONTINUING DIRECTORS"), cease for any reason to constitute at least a
majority of the Board, (iii) the stockholders of the Corporation approve a
merger or consolidation of the Corporation with any other corporation, other
than a merger or consolidation which would result in the voting securities of
the Corporation outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting power of the voting
securities of the Corporation or such surviving entity outstanding immediately
after such merger or consolidation; provided, however, that a merger or
consolidation effected to implement a recapitalization of the Corporation (or
similar transaction) in which no Person acquires more than 50% of the combined
voting power of the Corporation's then outstanding securities shall not
constitute a Change in Control, or (iv) the stockholders of the Corporation
approve a plan of complete liquidation of the Corporation or an agreement for
the sale or disposition by the Corporation of all or substantially all of the
Corporation's assets (or any transaction having a similar effect).
4. TERMINATION OF EMPLOYMENT FOLLOWING CHANGE IN CONTROL.
(a) GENERAL. If any of the events described in Section 3 above
constituting a Change in Control shall occur, you will be entitled to such
benefits provided in Section 5 below which are applicable upon the subsequent
termination of your employment during the term of this Agreement. In the event
your employment with the Corporation is terminated for any reason prior to the
occurrence of a Change in Control and subsequently a Change in Control shall
occur, you will not be entitled to any benefits under this Agreement.
(b) CAUSE. Termination by the Corporation of your employment for "Cause"
means termination (i) upon the willful and continued failure by you to
substantially perform your duties with the Corporation (other than any such
failure resulting from your Disability) or any such actual or anticipated
failure after the issuance of a Notice of Termination by you for Good Reason),
within 10 days after a written demand for substantial performance is delivered
to you by the Board, which demand specifically identifies the manner in which
the Board believes that you have not substantially performed your duties, or
(ii) the willful engaging by you in conduct which is clearly and materially
injurious to the Corporation, monetarily or otherwise. For purposes of this
Section 4(b), no act, or failure to act, on your part shall be deemed "willful"
unless done, or omitted to be done, by you in bad faith and without reasonable
belief that your action or omission was in or not opposed to the best interest
of the Corporation. Notwithstanding the foregoing, you will not be deemed to
have been terminated for Cause unless and until there is delivered to you a copy
of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a meeting of the
Board (after reasonable notice to you and an opportunity for you, together with
your counsel, to be heard
<PAGE>
Mr. John A. Geary
August 2, 1999
Page 5
before the Board), finding that in the good faith opinion of the Board you were
guilty of conduct set forth above in this Section 4(b) and specifying the
particulars thereof in detail.
(c) GOOD REASON. You shall be entitled to terminate your employment for
Good Reason. For purposes of this Agreement, "GOOD REASON" means, without your
express written consent, the occurrence after a Change in Control of any of the
following circumstances unless, in the case of clauses (i), (v), (vi), (vii) or
(viii) of this Section 4(c), such circumstances are fully corrected prior to the
Date of Termination specified in the Notice of Termination given in respect
thereof: (i) the assignment to you of any duties inconsistent with the status of
the position in the Corporation that you held immediately prior to the Change in
Control or a materially adverse alteration in the nature or status of your
responsibilities from those in effect immediately prior to the Change in
Control, (ii) a reduction by the Corporation in your annual base salary as in
effect on the date immediately prior to the Change in Control or as the same may
be increased from time to time thereafter, (iii) the Corporation's moving you to
be based more than 50 miles from the Corporation's offices at which you are
principally employed immediately prior to the date of the Change in Control
(except for required travel on the Corporation's business to an extent
substantially consistent with your present business travel obligations) without
reimbursing you for the costs associated with such move in accordance with the
Corporation's relocation policy as the same exists immediately prior to the
Change in Control, (iv) the failure by the Corporation to pay to you any portion
of your current compensation within seven days of the date such compensation is
due, (v) the failure by the Corporation to continue in effect any compensation
or benefit plan or perquisites in which you participate immediately prior to the
Change in Control which is material to your total compensation, including but
not limited to the Retirement Plans (but excluding the Atlantis Plastics, Inc.
Employee Stock Purchase Plan and any stock option plan maintained by the
Corporation immediately prior to the Change in Control), unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan) has been
made with respect to such plan, or the failure by the Corporation to continue
your participation therein (or in such substitute or alternative plan) is on a
basis not materially less favorable, both in terms of the amount of benefits
provided and the level of your participation relative to other participants,
than existed at the time of the Change in Control, (vi) the failure by the
Corporation to continue to provide you with benefits substantially similar to
those enjoyed by you under any of the Corporation's life insurance, medical,
dental, accident or disability plans in which you were participating at the time
of the Change in Control, the taking of any action by the Corporation which
would directly or indirectly materially reduce any of such benefits, or the
failure by the Corporation to provide you with the number of paid vacation days
to which you are entitled on the basis of your years of service with the
Corporation in accordance with the Corporation's normal vacation policy in
effect at the time of the Change in Control, (vii) the failure of the
Corporation to obtain a satisfactory agreement from any successor to assume and
agree to perform this Agreement, as contemplated in Section 6 below, or (viii)
any purported termination of your employment that is not effected pursuant to a
Notice of Termination satisfying the requirements of Section 4(d) below (and, if
applicable, the requirements of Section 4(b) above), which purported termination
shall not be effective for purposes of this Agreement. Your continued employment
will not constitute consent to, or a waiver of rights with respect to, any
<PAGE>
Mr. John A. Geary
August 2, 1999
Page 6
circumstance constituting Good Reason hereunder.
(d) NOTICE OF TERMINATION. Any purported termination of your employment
by the Corporation or by you shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 7 below.
"NOTICE OF TERMINATION" means a notice that shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(e) DATE OF TERMINATION. "DATE OF TERMINATION" means (i) if your
employment is terminated pursuant to Sections 4(b) or 4(c) above, the date
specified in the Notice of Termination (which, in the case of a termination for
Good Reason, shall not be less than 15 nor more than 60 days from the date such
Notice of Termination is given), (ii) in the case of a termination by you for
any other reason, the date specified in the Notice of Termination (which shall
not be less than 30 days from the date such Notice of Termination is given),
(iii) if your employment is terminated by the Corporation for any other reason,
the date specified in the Notice of Termination and (iv) if your employment is
terminated by reason of your death, the date of your death; provided, however,
that if within 15 days after any Notice of Termination is given, or, if later,
prior to the Date of Termination (as determined without regard to this proviso),
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, then the Date of Termination (other
than the Date of Termination where clause (iii) of this Section 4(e) is
applicable) shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (which
is not appealable or with respect to which the time for appeal therefrom has
expired and no appeal has been perfected); and provided, further, that the Date
of Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence. Notwithstanding the pendency of any such
dispute, the Corporation will continue to pay you your full compensation in
effect when the notice giving rise to the dispute was given and continue you as
a participant in all Retirement Plans, life insurance, medical, dental, accident
or disability plans and any similar plans in which you were participating when
the notice giving rise to the dispute was given, until the dispute is finally
resolved in accordance with this Section 4(e). Amounts paid under this Section
4(e) are in addition to all other amounts due under this Agreement, and shall
not be offset against or reduce any other amounts due under this Agreement and
shall not be reduced by any compensation earned by you as the result of
employment by another employer.
5. COMPENSATION UPON TERMINATION. Following a Change in Control, you
will be entitled to the following upon termination of your employment, provided
that such termination of employment occurs during the term of this Agreement:
(a) If your employment is terminated (i) by the Corporation (1) for
Cause or (2) because of your Disability, (ii) by reason of your death or (iii)
by you other than for Good Reason, the Corporation will pay you your full base
salary through the Date of Termination at
<PAGE>
Mr. John A. Geary
August 2, 1999
Page 7
the rate in effect at the time Notice of Termination is given (or at the time of
your death, as the case may be), plus all other amounts or benefits to which you
are entitled under any Retirement Plan of the Corporation then in effect, and
the Corporation shall have no further obligations to you under this Agreement;
PROVIDED, HOWEVER, that or in the event your employment is terminated by reason
of your death or as a result of your Disability, your benefits will be
determined under the Corporation's retirement, insurance and other compensation
programs then in effect in accordance with the terms of such programs.
(b) If, at any time during the 180 day period following a Change in
Control, your employment is terminated by you for Good Reason or by the
Corporation other than for Cause or by reason of your Disability, then you will
be entitled to the following: (i) the Corporation will pay to you (1) your full
base salary through the Date of Termination at the rate in effect at the time
Notice of Termination is given, no later than the fifth day following the Date
of Termination, and (2) the amount of your Accrued Bonus (if any), at the time
specified in Section 5(c) below, (ii) in lieu of any further salary payments or
bonus payments to you for periods subsequent to the Date of Termination, the
Corporation will pay as severance pay to you, at the time specified in Section
5(c) below, a lump sum severance payment equal to the amount of your annual
salary as in effect as of your Date of Termination (without regard to any
attempted or purported termination or reduction of such salary), (iii) your
rights under the Retirement Plans will be governed by the terms of those
respective plans, (iv) the Corporation will pay to you all legal fees and
expenses incurred by you as a result of such termination (including all such
fees and expenses, if any, reasonably incurred in contesting or disputing by
arbitration or otherwise, any such termination or in seeking to obtain or
enforce any right or benefit provided by this Agreement) and (v) for a 180 day
period after such termination, the Corporation will arrange to provide you with
benefits substantially similar to those which you were receiving or entitled to
receive under the Corporation's life, disability, accident and group health
insurance plans or any similar plans in which you were participating immediately
prior to the Date of Termination ("WELFARE PLAN BENEFITS") at a cost to you
which is no greater than that cost to you in effect at the Date of Termination;
provided, however, that to the extent any such coverage is prohibited by any
judicial or legislative authority, the Corporation shall make alternative
arrangements to provide you with Welfare Plan Benefits, including, but not
limited to, providing you with a payment in an amount equal to your cost of
purchasing the Welfare Plan Benefits. Benefits otherwise receivable by you
pursuant to clause (v) above shall be reduced to the extent comparable benefits
are actually received on your behalf during the 180 day period following your
termination, and such benefits actually received by you shall be reported to the
Corporation.
(c) The payments provided for in Section 5(b)(i)(2) and Section 5(b)(ii)
above will be made not later than the fifth day following the Date of
Termination; provided, however, that if the amounts of such payments cannot be
finally determined on or before such day, the Corporation will pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and will pay the remainder of such payments
(together with interest at the Applicable Rate) as soon as th amount thereof can
be determined but in no event later than 30 days after the Date of Termination.
In the event that the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall constitute a
<PAGE>
Mr. John A. Geary
August 2, 1999
Page 8
loan by the Corporation to you, payable on the fifth day after demand by the
Corporation (together with interest at the Applicable Rate).
(d) Except as required in Section 5(b)(v) above, you shall not be
required to mitigate the amount of any payment provided for in this Section 5 by
seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Section 5 be reduced by any compensation earned by
you as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by you to the Corporation, or
otherwise.
6. SUCCESSORS; BINDING AGREEMENT.
(a) The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation to (i)
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Corporation would be required to perform it if no such
succession had taken place and (ii) agree to notify you of the assumption of the
Agreement within 10 days of such assumption. Failure of the Corporation to
obtain any such assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle you to
compensation from the Corporation in the same amount and on the same terms to
which you would be entitled hereunder if you terminate your employment for Good
Reason following a Change in Control, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.
(b) This Agreement shall inure to the benefit of and be enforceable by
you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
7. NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notice to the Corporation shall be directed to the
attention of the Board with a copy to the Secretar of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. MISCELLANEOUS. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by
<PAGE>
Mr. John A. Geary
August 2, 1999
Page 9
you and such officer as may be authorized by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar of dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Florida without regard to its conflicts of law principles. All references to
sections of the Code shall be deemed also to refer to any successor provisions
to such sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law. The
obligations of the Corporation under Section 5 above shall survive the
expiration of the term of this Agreement.
9. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
10. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
11. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by binding
arbitration, conducted before a panel of three arbitrators in the city of
Atlanta, Georgia or, at your option, in the city where you are principally
employed immediately prior to the date of a Change in Control, in accordance
with the rules of the American Arbitration Association then in effect; PROVIDED,
HOWEVER, that you shall be entitled to seek specific performance of your rights
under Section 4(e) during the pendency of any dispute or controversy arising
under or in connection with this Agreement. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.
12. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto. If this letter sets
forth our agreement on the subject matter hereof, kindly sign and return this
original letter to the Corporation which will then constitute our agreement on
this subject. The enclosed copy is for your personal records.
Sincerely,
Anthony F. Bova
<PAGE>
Mr. John A. Geary
August 2, 1999
Page 10
President and Chief Executive Officer
ACCEPTED AND AGREED:
- --------------------------------
John A. Geary
EXHIBIT 10.8
August 2, 1999
Mr. Gary A. Crutchfield
Vice-President and General Manager -
Custom and Institutional Film
Atlantis Plastics, Inc.
1870 The Exchange, Suite 200
Atlanta, Georgia 30339
Dear Gary:
Atlantis Plastics, Inc. considers it essential to the best interests of
its stockholders to foster the continuous employment of key management
personnel. In this connection, our Board of Directors (the "BOARD") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of the Corporation may exist and that this possibility, and
the uncertainty and questions which it may raise among management, may result in
the departure or distraction of management personnel to the detriment of the
Corporation and its stockholders. The Board has determined that appropriate
steps should be taken to reinforce and encourage the continued attention and
dedication of members of the Corporation's management, including you, to their
assigned duties without the distractions which may arise from the possibility of
a change in control of the Corporation. In order to induce you to remain in the
employ of the Corporation, you shall receive the severance benefits set forth in
this Agreement in the event your employment with the Corporation is terminated
under the circumstances described below subsequent to a Change in Control.
1. INTERPRETATION OF THIS AGREEMENT.
(a) TERMS DEFINED. As used herein, the following terms when used in this
Agreement have the meanings set forth below:
"ACCRUED BONUS" means:
(i) if the Date of Termination occurs on or prior to the last day of
the Corporation's fiscal year ending December 31, 1999, the amount of
the bonus that would
<PAGE>
Mr. Crutchfield
August 2, 1999
Page 2
have been payable to you under the Corporation's Management Bonus Plan
(without regard to your termination of employment), determined on an
annualized basis based on the actual results of operations of the
Corporation and its subsidiaries for the period beginning January 1,
1999 and ending on the last day of the fiscal month preceding the date
on which the Change in Control occurred, prorated from January 1, 1999
based on the number of days elapsed from such date through the Date of
Termination; and
(ii) if the Date of Termination occurs after December 31, 1999 an
amount equal to the greater of (A) the amount determined under clause
(i) above and (B) the actual amount of incentive compensation received
by you in respect of the Corporation's fiscal year next preceding the
year in which the Date of Termination occurs, in either case prorated
from the beginning of the fiscal year in which the Date of Termination
occurs based on the number of days elapsed from such date through the
Date of Termination.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Exchange Act.
"AGREEMENT" shall have the meaning given to it in the preface above.
"APPLICABLE RATE" means a rate per annum equal to the rate provided
in Section 1274(b)(2)(B) of the Code.
"BOARD" shall have the meaning given to it in the preface above.
"CAUSE" shall have the meaning given to it Section 4(b) below.
"CHANGE IN CONTROL" shall have the meaning given to it Section 3
below.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONTINUING DIRECTORS" shall have the meaning given to it Section 3
below.
"CORPORATION" means Atlantis Plastics, Inc., a Florida corporation,
and any successor to its business and/or assets as set forth in 6(a) below which
assumes and agrees to perform this Agreement by operation of law, or otherwise
and, as the context may require withe respect to any provision of this Agreement
other than 3 below, includes any direct or indirect subsidiary of Atlantis
Plastics, Inc.
"DATE OF TERMINATION" shall have the meaning given to it Section
4(e) below.
"DISABILITY" means the absence of the Executive from the full-time
performance of his duties with the Corporation, as a result of his incapacity
due to physical or mental illness, for 45 consecutive days.
<PAGE>
Mr. Crutchfield
August 2, 1999
Page 3
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"GOOD REASON" shall have the meaning given to it Section 4(c) below.
"NOTICE OF TERMINATION" shall have the meaning given to it Section
4(d) below.
"PERSON" has the meaning set forth in Sections 13(d) and 14(d) of
the Exchange Act.
"RETIREMENT PLANS" means the Atlantis Plastics, Inc. 401(k) Plan and
any supplementary executive retirement plans of the Corporation you may be
covered under, or any successor plans
"TRIVEST" means Trivest, Inc., a Delaware corporation.
"WELFARE PLAN BENEFITS" shall have the meaning given to it 5(b)
below.
(b) INTERPRETATION. The words "HEREIN," "HEREUNDER" and other words of
similar import refer to this Agreement as a whole, as the same from time to time
may be amended or supplemented and not any particular section, paragraph,
subparagraph or clause contained in this Agreement. Wherever from the context it
appears appropriate, each term stated in either the singular or plural shall
include the singular and the plural, and pronouns stated in masculine, feminine
or neuter gender shall include the masculine, feminine and the neuter.
2. TERM. This Agreement shall continue in effect through December 31,
2000; PROVIDED, HOWEVER, that beginning on January 1, 2001 and on each
subsequent January 1, the term of this Agreement shall automatically be extended
for one additional year unless, not later than October 1 of the preceding year,
we shall notify you that we do not wish to extend this Agreement; and PROVIDED,
FURTHER, that if a Change in Control occurs during the original or extended term
of this Agreement, this Agreement shall continue in effect for a period of not
less than 180 days beyond the last day of the month in which the Change in
Control occurred.
3. CHANGE IN CONTROL. NO BENEFITS WILL BE PAYABLE UNDER THIS AGREEMENT
UNLESS A CHANGE IN CONTROL OCCURS. For purposes of this Agreement, a "CHANGE IN
CONTROL" shall be deemed to have occurred if: (i) any Person (other than the
Corporation, any trustee or other fiduciary holding securities under an employee
benefit plan of the Corporation, or any affiliate of Trivest) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Corporation representing more than 50% of
the combined voting power of the Corporation's then outstanding securities
eligible to vote, or (ii) during any period of two consecutive years (not
including any period prior to the date of this Agreement), individuals who at
the beginning of such period constitute the Board, and any new director (other
than a director designated by a
<PAGE>
Mr. Crutchfield
August 2, 1999
Page 4
person who has entered into an agreement with the Corporation to effect a
transaction described in clause (i), (iii) or (iv) of this Section 3) whose
election by the Board or nomination for election by the Corporation's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved
(the "CONTINUING DIRECTORS"), cease for any reason to constitute at least a
majority of the Board, (iii) the stockholders of the Corporation approve a
merger or consolidation of the Corporation with any other corporation, other
than a merger or consolidation which would result in the voting securities of
the Corporation outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting power of the voting
securities of the Corporation or such surviving entity outstanding immediately
after such merger or consolidation; PROVIDED, HOWEVER, that a merger or
consolidation effected to implement a recapitalization of the Corporation (or
similar transaction) in which no Person acquires more than 50% of the combined
voting power of the Corporation's then outstanding securities shall not
constitute a Change in Control, or (iv) the stockholders of the Corporation
approve a plan of complete liquidation of the Corporation or an agreement for
the sale or disposition by the Corporation of all or substantially all of the
Corporation's assets (or any transaction having a similar effect).
4. TERMINATION OF EMPLOYMENT FOLLOWING CHANGE IN CONTROL.
(a) GENERAL. If any of the events described in Section 3 above
constituting a Change in Control shall occur, you will be entitled to such
benefits provided in Section 5 below which are applicable upon the subsequent
termination of your employment during the term of this Agreement. In the event
your employment with the Corporation is terminated for any reason prior to the
occurrence of a Change in Control and subsequently a Change in Control shall
occur, you will not be entitled to any benefits under this Agreement.
(b) CAUSE. Termination by the Corporation of your employment for "CAUSE"
means termination (i) upon the willful and continued failure by you to
substantially perform your duties with the Corporation (other than any such
failure resulting from your Disability) or any such actual or anticipated
failure after the issuance of a Notice of Termination by you for Good Reason),
within 10 days after a written demand for substantial performance is delivered
to you by the Board, which demand specifically identifies the manner in which
the Board believes that you have not substantially performed your duties, or
(ii) the willful engaging by you in conduct which is clearly and materially
injurious to the Corporation, monetarily or otherwise. For purposes of this
Section 4(b), no act, or failure to act, on your part shall be deemed "willful"
unless done, or omitted to be done, by you in bad faith and without reasonable
belief that your action or omission was in or not opposed to the best interest
of the Corporation. Notwithstanding the foregoing, you will not be deemed to
have been terminated for Cause unless and until there is delivered to you a copy
of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a meeting of the
Board (after reasonable notice to you and an opportunity for you, together with
your counsel, to be heard
<PAGE>
Mr. Crutchfield
August 2, 1999
Page 5
before the Board), finding that in the good faith opinion of the Board you were
guilty of conduct set forth above in this Section 4(b) and specifying the
particulars thereof in detail.
(c) GOOD REASON. You shall be entitled to terminate your employment for
Good Reason. For purposes of this Agreement, "GOOD REASON" means, without your
express written consent, the occurrence after a Change in Control of any of the
following circumstances unless, in the case of clauses (i), (v), (vi), (vii) or
(viii) of this Section 4(c), such circumstances are fully corrected prior to the
Date of Termination specified in the Notice of Termination given in respect
thereof: (i) the assignment to you of any duties inconsistent with the status of
the position in the Corporation that you held immediately prior to the Change in
Control or a materially adverse alteration in the nature or status of your
responsibilities from those in effect immediately prior to the Change in
Control, (ii) a reduction by the Corporation in your annual base salary as in
effect on the date immediately prior to the Change in Control or as the same may
be increased from time to time thereafter, (iii) the Corporation's moving you to
be based more than 50 miles from the Corporation's offices at which you are
principally employed immediately prior to the date of the Change in Control
(except for required travel on the Corporation's business to an extent
substantially consistent with your present business travel obligations) without
reimbursing you for the costs associated with such move in accordance with the
Corporation's relocation policy as the same exists immediately prior to the
Change in Control, (iv) the failure by the Corporation to pay to you any portion
of your current compensation within seven days of the date such compensation is
due, (v) the failure by the Corporation to continue in effect any compensation
or benefit plan or perquisites in which you participate immediately prior to the
Change in Control which is material to your total compensation, including but
not limited to the Retirement Plans (but excluding the Atlantis Plastics, Inc.
Employee Stock Purchase Plan and any stock option plan maintained by the
Corporation immediately prior to the Change in Control), unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan) has been
made with respect to such plan, or the failure by the Corporation to continue
your participation therein (or in such substitute or alternative plan) is on a
basis not materially less favorable, both in terms of the amount of benefits
provided and the level of your participation relative to other participants,
than existed at the time of the Change in Control, (vi) the failure by the
Corporation to continue to provide you with benefits substantially similar to
those enjoyed by you under any of the Corporation's life insurance, medical,
dental, accident or disability plans in which you were participating at the time
of the Change in Control, the taking of any action by the Corporation which
would directly or indirectly materially reduce any of such benefits, or the
failure by the Corporation to provide you with the number of paid vacation days
to which you are entitled on the basis of your years of service with the
Corporation in accordance with the Corporation's normal vacation policy in
effect at the time of the Change in Control, (vii) the failure of the
Corporation to obtain a satisfactory agreement from any successor to assume and
agree to perform this Agreement, as contemplated in Section 6 below, or (viii)
any purported termination of your employment that is not effected pursuant to a
Notice of Termination satisfying the requirements of 4(d) below (and, if
applicable, the requirements of Section 4(b) above), which purported termination
shall not be effective for purposes of this Agreement. Your continued employment
will not constitute consent to, or a waiver of rights with respect to, any
<PAGE>
Mr. Crutchfield
August 2, 1999
Page 6
circumstance constituting Good Reason hereunder.
(d) NOTICE OF TERMINATION. Any purported termination of your employment
by the Corporation or by you shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 7 below.
"NOTICE OF TERMINATION" means a notice that shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(e) DATE OF TERMINATION. "DATE OF TERMINATION" means (i) if your
employment is terminated pursuant to Section 4(b) or Section 4(c) above, the
date specified in the Notice of Termination (which, in the case of a termination
for Good Reason, shall not be less than 15 nor more than 60 days from the date
such Notice of Termination is given), (ii) in the case of a termination by you
for any other reason, the date specified in the Notice of Termination (which
shall not be less than 30 days from the date such Notice of Termination is
given), (iii) if your employment is terminated by the Corporation for any other
reason, the date specified in the Notice of Termination and (iv) if your
employment is terminated by reason of your death, the date of your death;
PROVIDED, HOWEVER, that if within 15 days after any Notice of Termination is
given, or, if later, prior to the Date of Termination (as determined without
regard to this proviso), the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, then the Date
of Termination (other than the Date of Termination where clause (iii) of this
Section 4(e) is applicable) shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected); and
PROVIDED, FURTHER, that the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Corporation will continue
to pay you your full compensation in effect when the notice giving rise to the
dispute was given and continue you as a participant in all Retirement Plans,
life insurance, medical, dental, accident or disability plans and any similar
plans in which you were participating when the notice giving rise to the dispute
was given, until the dispute is finally resolved in accordance with this Section
4(e). Amounts paid under this Section 4(e) are in addition to all other amounts
due under this Agreement, and shall not be offset against or reduce any other
amounts due under this Agreement and shall not be reduced by any compensation
earned by you as the result of employment by another employer.
5. COMPENSATION UPON TERMINATION. Following a Change in Control, you
will be entitled to the following upon termination of your employment, provided
that such termination of employment occurs during the term of this Agreement:
(a) If your employment is terminated (i) by the Corporation (1) for
Cause or (2) because of your Disability, (ii) by reason of your death or (iii)
by you other than for Good Reason, the Corporation will pay you your full base
salary through the Date of Termination at
<PAGE>
Mr. Crutchfield
August 2, 1999
Page 7
the rate in effect at the time Notice of Termination is given (or at the time of
your death, as the case may be), plus all other amounts or benefits to which you
are entitled under any Retirement Plan of the Corporation then in effect, and
the Corporation shall have no further obligations to you under this Agreement;
PROVIDED, HOWEVER, that or in the event your employment is terminated by reason
of your death or as a result of your Disability, your benefits will be
determined under the Corporation's retirement, insurance and other compensation
programs then in effect in accordance with the terms of such programs.
(b) If, at any time during the 180 day period following a Change in
Control, your employment is terminated by you for Good Reason or by the
Corporation other than for Cause or by reason of your Disability, then you will
be entitled to the following: (i) the Corporation will pay to you (1) your full
base salary through the Date of Termination at the rate in effect at the time
Notice of Termination is given, no later than the fifth day following the Date
of Termination, and (2) the amount of your Accrued Bonus (if any), at the time
specified in Section 5(c) below, (ii) in lieu of any further salary payments or
bonus payments to you for periods subsequent to the Date of Termination, the
Corporation will pay as severance pay to you, at the time specified in Section
5(c) below, a lump sum severance payment equal to the amount of your annual
salary as in effect as of your Date of Termination (without regard to any
attempted or purported termination or reduction of such salary), (iii) your
rights under the Retirement Plans will be governed by the terms of those
respective plans, (iv) the Corporation will pay to you all legal fees and
expenses incurred by you as a result of such termination (including all such
fees and expenses, if any, reasonably incurred in contesting or disputing by
arbitration or otherwise, any such termination or in seeking to obtain or
enforce any right or benefit provided by this Agreement) and (v) for a 180 day
period after such termination, the Corporation will arrange to provide you with
benefits substantially similar to those which you were receiving or entitled to
receive under the Corporation's life, disability, accident and group health
insurance plans or any similar plans in which you were participating immediately
prior to the Date of Termination ("Welfare Plan Benefits") at a cost to you
which is no greater than that cost to you in effect at the Date of Termination;
provided, however, that to the extent any such coverage is prohibited by any
judicial or legislative authority, the Corporation shall make alternative
arrangements to provide you with Welfare Plan Benefits, including, but not
limited to, providing you with a payment in an amount equal to your cost of
purchasing the Welfare Plan Benefits. Benefits otherwise receivable by you
pursuant to clause (v) above shall be reduced to the extent comparable benefits
are actually received on your behalf during the 180 day period following your
termination, and such benefits actually received by you shall be reported to the
Corporation.
(c) The payments provided for in Section 5(b)(i)(2) and Section 5(b)(ii)
above will be made not later than the fifth day following the Date of
Termination; PROVIDED, HOWEVER, that if the amounts of such payments cannot be
finally determined on or before such day, the Corporation will pay to you on
such day an estimate, as determined in good faith by the Corporation, of the
minimum amount of such payments and will pay the remainder of such payments
(together with interest at the Applicable Rate) as soon as th amount thereof can
be determined but in no event later than 30 days after the Date of Termination.
In the event that the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall constitute a
<PAGE>
Mr. Crutchfield
August 2, 1999
Page 8
loan by the Corporation to you, payable on the fifth day after demand by the
Corporation (together with interest at the Applicable Rate).
(d) Except as required in Section 5(b)(v) above, you shall not be
required to mitigate the amount of any payment provided for in this Section 5 by
seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Section 5 be reduced by any compensation earned by
you as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by you to the Corporation, or
otherwise.
6. SUCCESSORS; BINDING AGREEMENT.
(a) The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation to (i)
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Corporation would be required to perform it if no such
succession had taken place and (ii) agree to notify you of the assumption of the
Agreement within 10 days of such assumption. Failure of the Corporation to
obtain any such assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle you to
compensation from the Corporation in the same amount and on the same terms to
which you would be entitled hereunder if you terminate your employment for Good
Reason following a Change in Control, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.
(b) This Agreement shall inure to the benefit of and be enforceable by
you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
7. NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notice to the Corporation shall be directed to the
attention of the Board with a copy to the Secretar of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. MISCELLANEOUS. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by
<PAGE>
Mr. Crutchfield
August 2, 1999
Page 9
you and such officer as may be authorized by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar of dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Florida without regard to its conflicts of law principles. All references to
sections of the Code shall be deemed also to refer to any successor provisions
to such sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law. The
obligations of the Corporation under Section 5 above shall survive the
expiration of the term of this Agreement.
9. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
10. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
11. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by binding
arbitration, conducted before a panel of three arbitrators in the city of
Atlanta, Georgia or, at your option, in the city where you are principally
employed immediately prior to the date of a Change in Control, in accordance
with the rules of the American Arbitration Association then in effect; provided,
however, that you shall be entitled to seek specific performance of your rights
under Section 4(e) during the pendency of any dispute or controversy arising
under or in connection with this Agreement. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.
12. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto. If this letter sets
forth our agreement on the subject matter hereof, kindly sign and return this
original letter to the Corporation which will then constitute our agreement on
this subject. The enclosed copy is for your personal records.
Sincerely,
Anthony F. Bova
<PAGE>
Mr. Crutchfield
August 2, 1999
Page 10
President and Chief Executive Officer
ACCEPTED AND AGREED:
- --------------------------------
Gary A. Crutchfield
SEVENTEETH AMENDMENT TO CREDIT AGREEMENT
This SEVENTEENTH AMENDMENT TO CREDIT AGREEMENT ("AMENDMENT") is made
and entered into this 12th day of November, 1999 by and between ATLANTIS
PLASTICS, INC. ("BORROWER"), HELLER FINANCIAL, INC., in its capacity as Agent
for the Lenders party to the Credit Agreement described below ("AGENT"), and the
Lenders which are signatories hereto.
WHEREAS, Agent, Lenders and Borrower are parties to a certain Credit
Agreement dated February 22, 1993 and all amendments thereto (as such agreement
has from time to time been amended, supplemented or otherwise modified, the
"AGREEMENT"); and
WHEREAS, the parties desire to amend the Agreement as hereinafter set
forth;
NOW THEREFORE, in consideration of the mutual conditions and agreements
set forth in the Agreement and this Amendment, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINITIONS. Capitalized terms used in this Amendment, unless
otherwise defined herein, shall have the meaning ascribed to such terms in the
Agreement.
2. AMENDMENTS. Subject to the conditions set forth below, the Agreement
is amended as follows:
(a) Subsection 1.1 is hereby amended by adding the following
definition to subsection 1.1 in its appropriate place:
"Seventeenth Amendment Effective Date" means November 12, 1999."
(b) Subsection 2.1 (A) is amended by deleting the first paragraph of
subsection 2.1 (A) in its entirety and inserting the following in lieu
thereof:
"REVOLVING LOAN. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of
Borrower herein set forth, each Lender agrees to lend to Borrower
from time to time during the period from the Seventeenth Amendment
Effective Date to and excluding the Expiry Date, its Pro Rata Share
of the Revolving Loan. The aggregate amount of all Revolving Loan
Commitments shall be $20,000,000, as reduced from time to time
pursuant to subsection 2.4. Amounts borrowed under this subsection
2.1(A) may be repaid and reborrowed at any time prior to the Expiry
Date. No Lender shall have any obligation to make advances under
this subsection 2.1(A) to the extent any requested advance would
cause the principal balance of the Revolving Loans then outstanding
to exceed the Maximum Revolving Loan Amount; provided that Lenders
may, in their sole discretion, elect from time to time to make Loans
in excess of the Maximum Revolving Loan Amount."
<PAGE>
(c) Subsection 2.5 is amended by deleting the first sentence of
subsection 2.5 in its entirety and inserting the following in lieu thereof:
"This Agreement shall be effective until May 12, 2000 (the
"Termination Date"), and the Commitments shall terminate on said
date."
(d) Subsection 6.1 is hereby amended by deleting the first sentence
in subsection 6.1 in its entirety and inserting the following in lieu
thereof:
"6.1 CAPITAL EXPENDITURE LIMITS. The aggregate amount of all Capital
Expenditures of Borrower and the Subsidiary Guarantors (excluding
expenditures funded by insurance proceeds) will not exceed the sum
of $16,000,000 from November 12, 1999 through May 12, 2000."
(e) Subsection 6.2 is hereby amended by deleting subsection 6.2 in
its entirety and inserting the following in lieu thereof:
"6.2 FIXED CHARGE COVERAGE. The Fixed Charge Coverage, on a trailing
twelve (12) Fiscal Month basis, shall not be less than 0.9 for the
Fiscal Quarter ending December 31, 1999 and each Fiscal Quarter
thereafter."
3. COVENANTS. Notwithstanding the limitations of subsection 7.11,
Borrowers may make payments of fees and compensation to Trivest, Inc. and its
officers and subsidiaries, for November 12, 1999 through May 12, 2000, so long
as such payments do not exceed 110% of the total amount paid from November 22,
1998 through May 22, 1999.
4. CONDITIONS. The effectiveness of this Amendment is subject to the
following conditions precedent:
(a) Borrower shall have executed and delivered this Amendment, and
such other documents and instruments as Agent may require shall have been
executed and/or delivered to Agent;
(b) Borrower shall deliver to Agent executed copy of the Third
Amended Revolving Note in the amount of $20,000,000;
(c) All proceedings taken in connection with the transactions
contemplated by this Amendment and all documents, instruments and other
legal matters incident thereto shall be satisfactory to Agent and its legal
counsel;
(d) No Default or Event of Default shall have occurred and be
continuing; and
(e) Borrower shall have paid Agent a closing fee in the amount of
$35,000.
5. REPRESENTATIONS AND WARRANTIES. To induce Agent and Lenders to enter
into this Amendment, Borrower represents and warrants to Agent and Lenders that
(a) the execution, delivery and performance of this Amendment has been duly
authorized
2
<PAGE>
by all requisite corporate action on the part of Borrower and that this
Amendment has been duly executed and delivered by Borrower and (b) each of the
representations and warranties set forth in Section 4 of the Agreement (other
than those which, by their terms, specifically are made as of certain date prior
to the date hereof) are true and correct in all material respects as of the date
hereof.
6. SEVERABILITY. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
7. REFERENCES. Any reference to the Agreement contained in any
document, instrument or agreement executed in connection with the Agreement
shall be deemed to be a reference to the Agreement as modified by this
Amendment.
8. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall constitute an original, but all of which taken
together shall be one and the same instrument.
9. RATIFICATION. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions of the
Agreement and shall not be deemed to be a consent to the modification or waiver
of any other term or condition of the Agreement. Except as expressly modified
and superseded by this Amendment, the terms and provisions of the Agreement are
ratified and confirmed and shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed under seal and delivered by their respective duly authorized
officers on the date first written above.
Heller Financial, Inc., ATLANTIS PLASTICS, INC.
as Agent and Lender Borrower
By:___________________________ By:_____________________________
Name Printed: ________________ Name Printed: __________________
Title: _______________________ Title: ___________________________
3
<PAGE>
ACKNOWLEDGMENT
Each of Atlantis Molded Plastics, Inc., Atlantis Plastic Injection
Molding, Inc. (f/k/a Cyanede Plastics, Inc.), Atlantis Plastic Films, Inc. and
Pierce Plastics, Inc. hereby acknowledges and consents to the terms of this
Agreement and hereby affirms, ratifies and confirms all of the terms and
provisions of the such entity's Guaranty in favor of Agent and Lenders.
ATLANTIS MOLDED PLASTICS, INC.
By:
Name Printed: _______________________________
Title:
ATLANTIS PLASTIC INJECTION
MOLDING, INC.
By:
Name Printed: _______________________________
Title:
ATLANTIS PLASTIC FILMS, INC.
By:
Name Printed: _______________________________
Title:
PIERCE PLASTICS, INC.
By:
Name Printed: _______________________________
Title:
4
THIRD AMENDED REVOLVING NOTE
$20,000,000 Chicago, Illinois
November 12, 1999
FOR VALUE RECEIVED, the undersigned, ATLANTIS PLASTICS, INC., a Florida
corporation ("Borrower"), hereby unconditionally promises to pay to the order of
HELLER FINANCIAL, INC., a Delaware corporation ("Lender"), at the office of
Agent (as defined below) at 500 West Monroe Street, Chicago, Illinois 60661, or
at such other place as the holder of this Third Amended Revolving Note (the
"Revolving Note") may from time to time designate in writing, in lawful money of
the United States of America and in immediately available funds, the principal
sum of TWENTY MILLION DOLLARS ($20,000,000), or, if less, the aggregate unpaid
principal amount of all advances made to Borrower by Lender pursuant to
subsection 2.1(A) of the Credit Agreement described below, at such times as are
specified there.
This Revolving Note is one of the Notes referred to in, was executed
and delivered pursuant to, and evidences indebtedness of Borrower incurred
under, that certain Credit Agreement dated as of February 22, 1993 by and among
Borrower, each of the Lenders party thereto from time to time, and Heller
Financial, Inc., in its capacity as Agent for the Lenders (as the same may be
amended, restated, supplemented or otherwise modified and in effect from time to
time, the "Credit Agreement"), to which reference is hereby made for a statement
of the terms and conditions under which the loan evidenced hereby was made and
is to be repaid and for a statement of Agent's and Lender's remedies upon the
occurrence of an Event of Default. Capitalized terms used herein but not
otherwise specifically defined shall have the meanings ascribed to such terms in
the Credit Agreement.
Borrower further promises to pay interest on the outstanding unpaid
principal amount hereof from the date hereof until payment in full at the rate
from time to time applicable to the Revolving Loan as determined in accordance
with the Credit Agreement; PROVIDED, HOWEVER, that upon the occurrence and
during the continuance of an Event of Default, Borrower shall pay interest on
the outstanding principal balance of this Revolving Note at the rate of interest
applicable following the occurrence of an Event of Default as determined in
accordance with the Credit Agreement.
Interest on this Revolving Note shall be payable, at the times and from
the dates specified in the Credit Agreement, on the date of any prepayment
hereof, at maturity, whether due by acceleration or otherwise, and as otherwise
provided in the Credit Agreement. From and after the date when the principal
balance hereof becomes due and payable, whether by acceleration or otherwise,
interest hereon shall be payable on demand. In no contingency or event
whatsoever shall interest charged hereunder, however such interest may be
characterized or computed, exceed the highest rate permissible under any law
which a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that Lender has
received interest
<PAGE>
hereunder in excess of the highest rate applicable hereto, such excess shall be
applied in accordance with the terms of the Credit Agreement.
The indebtedness evidenced by this Revolving Note is secured pursuant
to the terms of the Loan Documents.
Borrower hereby waives demand, presentment and protest and notice of
demand, presentment, protest and nonpayment.
Borrower further agrees, subject only to any limitation imposed by
applicable law, to pay all expenses, including attorneys' fees and legal
expenses, incurred by Borrower in endeavoring to collect any amounts payable
hereunder which are not paid when due, whether by acceleration or otherwise.
THIS REVOLVING NOTE HAS BEEN DELIVERED AT CHICAGO, ILLINOIS, AND SHALL
BE GOVERNED BY, AND INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS) AND DECISIONS OF THE STATE OF
ILLINOIS. Whenever possible each provision of this Revolving Note shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Revolving Note shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Revolving Note. Whenever in this Revolving
Note reference is made to Agent, Lender or Borrower, such reference shall be
deemed to include, as applicable, a reference to their respective permitted
successors and assigns and in the case of Lender, any financial institution to
which it has sold or assigned all or any part of its interest in the Revolving
Loan or in its commitment to make the Revolving Loan as permitted by the Credit
Agreement. The provisions of this Revolving Note shall be binding upon and shall
inure to the benefit of such permitted successors and assigns. Borrower's
successors and assigns shall include, without limitation, a receiver, trustee or
debtor in possession of or for Borrower.
This Revolving Note is issued in substitution for and replacement of,
but not in payment of, the Revolving Note of Borrower dated February 22, 1999,
payable to the order of Lender in the original principal amount of $15,000,000.
ATLANTIS PLASTICS, INC.,
a Florida corporation
By: __________________________________________
Name: ________________________________________
Title: _______________________________________
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 3,632
<SECURITIES> 0
<RECEIVABLES> 33,351
<ALLOWANCES> 1,114
<INVENTORY> 17,226
<CURRENT-ASSETS> 58,778
<PP&E> 132,566
<DEPRECIATION> 70,379
<TOTAL-ASSETS> 168,316
<CURRENT-LIABILITIES> 29,925
<BONDS> 0
0
0
<COMMON> 759
<OTHER-SE> 45,634
<TOTAL-LIABILITY-AND-EQUITY> 168,316
<SALES> 189,129
<TOTAL-REVENUES> 189,129
<CGS> 151,107
<TOTAL-COSTS> 151,107
<OTHER-EXPENSES> 18,926
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,800
<INCOME-PRETAX> 12,296
<INCOME-TAX> 5,029
<INCOME-CONTINUING> 7,267
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,267
<EPS-BASIC> 0.96
<EPS-DILUTED> 0.92
</TABLE>
