Atlantis Plastics: 10-Q for Quarter ended 3/31/98 - -------------------------------------------------------------------------------- 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 March 31, 1998 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 (I.R.S. Employer incorporation or organization) Identification No.) 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 MARCH 31, 1998 ------------ ----------------------------- A, $.10 par value 4,622,937 B, $.10 par value 2,945,605 ATLANTIS PLASTICS, INC. TABLE OF CONTENTS PAGE NO. -------- PART I. FINANCIAL INFORMATION Consolidated Statements of Income (Unaudited) for the three months ended March 31, 1998 and 1997...................... 1 Consolidated Balance Sheets (Unaudited) as of March 31, 1998 and December 31, 1997............................ 2 Consolidated Statements of Cash Flows (Unaudited) for the three months ended March 31, 1998 and 1997...................... 3 Notes to Consolidated Financial Statements (Unaudited).......... 4 Management's Discussion and Analysis of Financial Condition and Results of Operations................ 7 PART II. OTHER INFORMATION Item 1 - Legal Proceedings..................................... 11 Item 6 - Exhibits and Reports on Form 8-K...................... 11 SIGNATURES............................................................... 12 ATLANTIS PLASTICS, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED - IN THOUSANDS, EXCEPT PER SHARE DATA) --------------------------------- THREE MONTHS ENDED MARCH 31, ---------------------------------- 1998 1997 ---------------------------------- Net sales..................................................... $64,427 $64,323 Cost of sales................................................. 53,138 55,136 --------------- --------------- GROSS PROFIT............................... 11,289 9,187 Selling, general and administrative expenses.................. 5,973 6,430 Impairment of long-lived assets and restructuring charges..... - 960 --------------- --------------- OPERATING INCOME........................... 5,316 1,797 Net interest expense.......................................... (2,748) (2,837) --------------- --------------- INCOME (LOSS) BEFORE INCOME TAXES.......... 2,568 (1,040) Income tax (provision) benefit................................ (881) 327 --------------- --------------- NET INCOME (LOSS).......................... $1,687 ($713) =============== =============== NET INCOME (LOSS) PER COMMON SHARE Basic $0.23 ($0.10) Diluted $0.22 ($0.10) Weighted-average number of shares used in computing income (loss) per share (in thousands): Basic 7,347 7,203 Diluted 7,617 7,203 SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED). 1 ATLANTIS PLASTICS, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED - IN THOUSANDS) --------------- --------------- MARCH 31, DECEMBER 31, 1998 1997 --------------- --------------- ASSETS Cash and equivalents......................................................... $11,153 $8,346 Accounts receivable, net..................................................... 26,116 25,444 Inventories.................................................................. 18,545 18,517 Other current assets......................................................... 6,290 7,448 --------------- --------------- Current assets........................................................... 62,104 59,755 Property and equipment, net.................................................. 59,887 60,065 Goodwill, net of accumulated amortization.................................... 48,568 48,961 Other assets................................................................. 1,994 2,108 --------------- --------------- Total assets............................................................. $172,553 $170,889 =============== =============== LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable and accrued expenses........................................ $24,055 $24,146 Current portion of long-term debt............................................ 3,256 3,254 --------------- --------------- Current liabilities...................................................... 27,311 27,400 Long-term debt, less current portion......................................... 101,199 101,862 Deferred income taxes........................................................ 8,366 8,287 Other liabilities............................................................ 710 791 --------------- --------------- Total liabilities........................................................ 137,586 138,340 --------------- --------------- Commitments and contingencies - - Shareholders' equity: Class A Common Stock, $.10 par value, 20,000,000 shares authorized, 4,622,937 and 4,358,516 shares issued and outstanding in 1998 and 1997... 462 436 Class B Common Stock, $.10 par value, 7,000,000 shares authorized, 2,945,605 and 2,742,280 shares issued and outstanding in 1998 and 1997... 295 274 Additional paid-in capital................................................. 8,791 7,117 Notes receivable from sale of Common Stock................................. (990) - Retained earnings.......................................................... 26,409 24,722 --------------- --------------- Total shareholders' equity............................................... 34,967 32,549 --------------- --------------- $172,553 $170,889 =============== =============== SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED). 2 ATLANTIS PLASTICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED - IN THOUSANDS) --------------------------------- THREE MONTHS ENDED MARCH 31, ---------------------------------- 1998 1997 ---------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss)............................................. $1,687 ($713) --------------- --------------- Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation.............................................. 1,959 1,792 Amortization of goodwill.................................. 393 399 Loan fee and other amortization........................... 106 141 Changes in assets and liabilities: Increase in accounts receivable....................... (672) (1,240) Increase in inventories............................... (28) (1,000) Decrease in other current assets...................... 1,158 314 Decrease in accounts payable and accrued expenses..... (91) (5,167) Increase in deferred income taxes..................... 79 129 Decrease in other liabilities......................... (81) (72) Other, net............................................ 8 277 --------------- --------------- Total adjustments..................................... 2,831 (4,427) --------------- --------------- Net cash provided by (used in) operating activities.. 4,518 (5,140) --------------- --------------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures........................................ (1,781) (1,408) --------------- --------------- Net cash used in investing activities................ (1,781) (1,408) --------------- --------------- CASH FLOWS FROM FINANCING ACTIVITIES: Payments on long-term debt.................................. (661) (665) Purchases of Common Stock................................... - (2,994) Proceeds from exercise of stock options..................... 731 64 --------------- --------------- Net cash provided by (used in) financing activities.. 70 (3,595) --------------- --------------- Net increase (decrease) in cash and equivalents............... 2,807 (10,143) Cash and equivalents at beginning of period................... 8,346 15,905 --------------- --------------- Cash and equivalents at end of period......................... $11,153 $5,762 =============== =============== SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED). 3 ATLANTIS PLASTICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. The accompanying unaudited consolidated financial statements of Atlantis Plastics, Inc. and Subsidiaries ("Atlantis" or the "Company"), do not include all disclosures provided in the annual consolidated financial statements. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and the footnotes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1997 as filed with the Securities and Exchange Commission. The December 31, 1997 balance sheet, included herein, was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. Atlantis Plastic Films accounts for approximately three-quarters 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 one-quarter 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, 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. 2. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments, which are of a normal recurring nature and necessary for a fair presentation of the financial statements. The results of operations for the three months ended March 31, 1998 are not necessarily indicative of the results to be expected for the full year. 3. In the first quarter of 1998, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income", which establishes standards for the reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. This implementation required no additional disclosure by the Company. 4. During the first quarter of 1997, the Company recorded impairment of long-lived assets and other restructuring charges of $960,000, or $586,000 after taxes, related to: (i) the closing of the Company's Nashville, Tennessee injection molding facility, including approximately $250,000 in non-cash charges for 4 the write-down of fixed assets and leasehold improvements associated with that facility, and (ii) restructuring expenses associated with management changes in the Company's stretch film unit. Anticipated costs (primarily severance and moving costs) associated with the closing of the Nashville facility were reduced by $145,000 in the second half of 1997. 5. In November 1996, the Board of Directors authorized the repurchase of up to 1,000,000 shares of Atlantis Class A Common Stock, or 14% of the 7.1 million Class A and Class B Common Stock then outstanding. Through June 1997, the Company had repurchased 320,344 shares (including 210,244 shares issued in connection with the conversion of Preferred Stock, described below), and options for 55,125 shares, for total consideration of approximately $3.3 million. The Company was restricted from repurchases during the second half of 1997 since it fell below the fixed charge ratio specified in the 11% Senior Note Indenture. As of December 31, 1997, the Company exceeds this fixed charge ratio and, accordingly, has the ability to repurchase shares of its Common Stock under its share repurchase program effective February 11, 1998. In January 1997, the Company issued a mandatory conversion notice to the holder of the 20,000 outstanding shares of the Company's Series A Preferred Stock ("Preferred Stock"). The Preferred Stock was convertible into 210,244 shares of Class A Common Stock. After issuing the mandatory conversion notice, the Company reached an agreement with the Preferred Stock holder to repurchase all of the common shares resulting from the conversion notice for $2 million (the original price paid for the Preferred Stock by the holder and included in the $3.3 million consideration cited earlier in this Note), and completed the repurchase in late March, 1997. Prior to this conversion, each share of Preferred Stock had a liquidation preference of $100, and the holder of the Preferred Stock was entitled to an annual cumulative dividend, payable in equal semiannual installments of $72,500 on April 15 and October 15 of each year. 6. In June 1997, SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information" was issued. SFAS 131 establishes standards for the way that public businesses report information about operating segments in annual financial statements, and requires that those enterprises report selected information about operating segments in interim financial reports issued to shareholders. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. The Company has not yet determined the impact of SFAS 131 on its future disclosures. SFAS 131 must be implemented for fiscal years ending after December 15, 1998. In February 1998, SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits" was issued. This Statement does not apply to the Company. 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. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from these statements. These risks include, but are not limited to, raw material costs and the ability to pass price increases to customers in a timely fashion, industry overcapacity, product acceptance, technological changes which could alter the demand for product or adversely impact the competitive cost of production, etc. All forward-looking statements should be considered in light of these risks and uncertainties. 5 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. Selected income statement data for the quarterly periods ended March 31, 1997 through March 31, 1998 are as follows: ($ in millions) 1998 1997 ---- -------------------------------------------- Q1 Q4 Q3 Q2 Q1 -- -- -- -- -- NET SALES Plastic Films $44.9 $45.6 $47.6 $48.1 $45.7 Molded Plastics 19.5 16.8 16.3 17.4 18.6 ----- --------------------------------------------- TOTAL $64.4 $62.3 $63.9 $65.5 $64.3 ===== ============================================= PERCENTAGE OF NET SALES GROSS PROFIT Plastic Films 19% 18% 17% 13% 13% Molded Plastics 15% 17% 13% 17% 18% ----- -------------------------------------------- TOTAL 18% 17% 16% 14% 14% ===== ============================================ OPERATING INCOME Plastic Films 9% 7% 8% 3% 3%(a) Molded Plastics 6% 5%(a) 2%(a) 6% 8%(a) ----- -------------------------------------------- TOTAL 8% 7%(a) 6%(a) 4% 4%(a) ===== ============================================ NET INTEREST EXPENSE $2.7 $2.8 $2.9 $2.9 $2.8 ===== ============================================ (a) Amounts exclude the effects of the 1997 impairment of long-lived assets and restructuring charges totaling $815,000 and more fully described in Note 4 of Notes to the Consolidated Financial Statements. RESULTS OF OPERATIONS The Company's 1998 first quarter sales of $64.4 million were comparable to last year's sales for the same period, with increased Atlantis Molded Plastics sales offset by lower Atlantis Plastic Film sales. Atlantis Molded Plastics net sales for the first three months of 1998 totaled $19.5 million, or 5% higher than last year's first quarter sales of $18.6 million. First quarter 1998 Atlantis Plastic Film sales of $44.9 million were 2% lower than last year's first quarter sales of $45.7 million, due to lower average selling prices caused by intense competition and unchanged volume (measured in pounds). 6 The Company's first quarter gross profit margins increased from 14% in 1997 to 18% in 1998, primarily due to improved gross profit margins in Atlantis Plastic Films which increased from 13% in 1997 to 19% in 1998. This increase is largely due to continued cost reduction measures, including improved gross spreads in Stretch Film. First quarter gross profit margins in the Molded Plastics segment declined from 18% in 1997 to 15% in 1998 primarily due to a change in the mix of production in the injection molded units. Selling, general, and administrative ("SG&A") expenses were $6.0 million for the first quarter of 1998 compared to $6.4 million for this period last year. This decrease is partially attributable to the reduction in management fees payable to Trivest, Inc. and the termination of the employment agreements between the Company and the Chairman of the Board of Directors and the Chairman of the Executive Committee of the Board of Directors. The 1997 expenses exclude restructuring charges taken in 1997 as described further below. The Company has reduced SG&A expenses by approximately 20% since the beginning of 1995 through a series of cost reduction and restructuring programs. Management does not anticipate further substantial reductions in SG&A in the immediate future. In the first quarter of 1997, the Company incurred a $960,000 restructuring charge related to estimated costs associated with the above mentioned closing of its Nashville injection molding facility and management changes implemented in May, 1997 in the Company's stretch film unit. Anticipated costs (primarily severance and moving costs) associated with the closing of the Nashville facility were reduced by $145,000 in the second half of 1997. First quarter net interest expense equaled $2.7 million, reflecting a 3% reduction from 1997 levels as a result of reduced debt levels in 1998 compared to 1997. Effective tax rates differed from applicable statutory rates in both 1998 and 1997, primarily due to nondeductible goodwill amortization. LIQUIDITY AND CAPITAL RESOURCES The Company's working capital at March 31, 1998 totaled approximately $34.8 million (including cash and equivalents of $11.2 million), compared to $32.4 million (including cash and equivalents of $8.3 million) at December 31, 1997. On March 31, 1998 there were no borrowings on the Company's revolving credit facility. Unused availability, net of outstanding letters of credit of approximately $1.0 million, equaled $14.0 million. 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 presently does not have any material commitments for future capital 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 three months of 1998, net cash provided by operating activities was approximately $4.5 million, compared to cash used in operations of $5.1 million for the same period last year. Accounts receivable increased $672,000 during the first quarter of 1998 due to higher sales during the month of March 1998 compared to December 1997. Inventory levels remained relatively unchanged in the first quarter of 1998 compared to an increase of $1.0 million in 1997, which was caused by month-end March 1997 inventory purchases by Atlantis 7 Plastic Films in advance of announced price increases by the Company's resin suppliers. Other current assets decreased by $1.2 million during the first quarter primarily due to payments received on resin rebates receivable outstanding at the end of 1997. Accounts payable and accrued expenses decreased $91,000 in the first quarter of 1998 compared to a decline of $5.2 million in 1997. The large decrease in 1997 was primarily due to incentive compensation and income tax payments made during the first quarter of 1997 related to 1996 operating results. CASH FLOWS FROM INVESTING ACTIVITIES Net cash used in investing activities during the first three months of 1998 consisted of capital expenditures totaling $1.8 million, compared to capital expenditures of $1.4 million for the same period last year. CASH FLOWS FROM FINANCING ACTIVITIES Net cash provided by financing activities for the first three months of 1998 was $70,000, compared to cash used by investing activities of $3.6 million during this period last year. Proceeds from the exercise of stock options equaled $731,000 during the first three months of 1998, compared to $64,000 during the same period in 1997. Additionally, cash was used during 1997 to repurchase approximately $3.0 million of Common Stock. 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. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from these statements. These risks include, but are not limited to, raw material costs and the ability to pass price increases to customers in a timely fashion, industry overcapacity, product acceptance, technological changes which could alter the demand for product or adversely impact the competitive cost of production, etc. All forward-looking statements should be considered in light of these risks and uncertainties. 8 ACCOUNTING PRONOUNCEMENTS In June 1997, SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information" was issued. SFAS 131 establishes standards for the way that public businesses report information about operating segments in annual financial statements, and requires that those enterprises report selected information about operating segments in interim financial reports issued to shareholders. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. The Company has not yet determined the impact of SFAS 131 on its future disclosures. SFAS 131 must be implemented for fiscal years ending after December 15, 1998. In February 1998, SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits" was issued. This Statement does not apply to the Company. 9 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 Management Agreement dated as of January 1, 1998 between Registrant and Trivest, Inc. 10.2 Agreement dated January 1, 1998 by and among Registrant, Trivest II, Inc., Earl W. Powell, and Phillip T. George, M.D. 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. 10 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: April 30, 1998 /S/ ANTHONY F. BOVA ------------------- ANTHONY F. BOVA President and Chief Executive Officer Date: April 30, 1998 /S/ PAUL RUDOVSKY ----------------- PAUL RUDOVSKY Executive Vice President, Finance and Administration 11 EXHIBIT INDEX EXHIBIT DESCRIPTION - ------- ----------- 10.1 Management Agreement dated as of January 1, 1998 between Registrant and Trivest, Inc. 10.2 Agreement dated January 1, 1998 by and among Registrant, Trivest II, Inc., Earl W. Powell, and Phillip T. George, M.D. 27.1 Financial Data Schedule EXHIBIT 10.1 MANAGEMENT AGREEMENT This Agreement is made and entered into as of January 1, 1998, by and between ATLANTIS PLASTICS, INC., a Florida corporation (the "COMPANY"), and TRIVEST, INC., a Delaware corporation or its successors (the "MANAGER"). PRELIMINARY STATEMENTS: A. The Manager and the Company are parties to that certain Fourth Amended and Restated Management Agreement, dated as of October 19, 1992 (the "PRIOR AGREEMENT"). B. The Prior Agreement terminated on December 31, 1997 and the Company desires to continue to engage the services of the Manager on the terms and subject to the conditions contained in this Agreement. In consideration of the premises and the respective mutual agreements, covenants, representations and warranties contained in this Agreement, the parties agree as follows: AGREEMENT: 1. CONTINUATION OF MANAGER. The Company continues the engagement of the Manager and the Manager accepts such continuation on the terms and conditions provided in this Agreement as the sole and exclusive manager and consultant of the Company's business, including without limitation, the business of the Company's subsidiaries, as well as any other corporations or entities now existing or hereafter formed or acquired by the Company or any of its subsidiaries to engage in any business. The Manager's duties hereunder shall include, but shall not be limited to, identifying executive personnel for the Company (including a President, a Chief Financial Officer and such additional officers approved by the Board of Directors of the Company (the "Board")), whose compensation shall be the responsibility of the Company. 2. BOARD OF DIRECTORS SUPERVISION. The activities of the Manager to be performed under this Agreement shall be subject to the supervision of the Board to the extent required by applicable law or regulation and subject to reasonable policies not inconsistent with the terms of this Agreement adopted by the Board and in effect from time to time. Where not required by applicable law or regulation, the Manager shall not require the prior approval of the Board to perform its duties under this Agreement. 3. AUTHORITY OF MANAGER. Subject to any limitations imposed by applicable law or regulation, the Manager shall render management, consulting and financial services to the Company and its subsidiaries which services shall include advice and assistance concerning any and all aspects of the operations, planning and financing of the Company and its subsidiaries as needed from time to time. In addition, the Manager shall render advice and expertise in connection with an acquisition 1 program for the Company and shall from time to time bring to the attention of the Company and its subsidiaries, such investment and business opportunities as the Manager, in its sole discretion, deems appropriate. 4. REIMBURSEMENT OF EXPENSES; INDEPENDENT CONTRACTOR. All obligations or expenses incurred by the Manager in the performance of its duties under this Agreement shall be for the account of, on behalf of, and at the expense of the Company and/or its subsidiaries, as the case may be. The Manager shall not be obligated to make any advance to or for the account of the Company (or any subsidiary) or to pay any sums, except out of funds held in accounts maintained by the Company (or a subsidiary) nor shall the Manager be obligated to incur any liability or obligation for the account of the Company or any subsidiary without assurance that the necessary funds for the discharge of such liability or obligation will be provided. The Manager shall be an independent contractor, and nothing contained in this Agreement shall be deemed or construed (i) to create a partnership or joint venture between the Company and/or any subsidiary of the Company and the Manager, or (ii) to cause the Manager to be responsible in any way for the debts, liabilities or obligations of the Company or any of its subsidiaries, or any other party, or (iii) to constitute the Manager or any of its employees as employees, officers, or agents of the Company or any of its subsidiaries. 5. OTHER ACTIVITIES OF MANAGER; INVESTMENT OPPORTUNITIES. 5.1 GENERAL. The Company and its subsidiaries acknowledge and agree that the Manager shall not devote the Manager's (or any employee, officer, director, affiliate or associate of the Manager) full time and business efforts to the duties of the Manager specified in this Agreement, but only so much of such time and efforts as the Manager reasonably deems necessary. The Company and its subsidiaries further acknowledge and agree that the Manager and its affiliates are engaged in the business of investing in, acquiring and/or managing businesses for the Manager's own account, for the account of the Manager's affiliates and associates and for the account of other unaffiliated parties, and plans to continue to be engaged in such business (and any other business or investment activities) during the term of this Agreement. No aspect or element of such activities shall be deemed to be engaged in for the benefit of the Company or any of its subsidiaries nor to constitute a conflict of interest. The Manager shall be required to bring only such investments and/or business opportunities to the attention of the Company and its subsidiaries as the Manager, in its sole discretion, deems appropriate. 5.2 DESIGNATED LINE OF BUSINESS; NEW BUSINESS SEGMENTS; PROHIBITED LINES OF BUSINESS. (a) Subject to the provisions of the last sentence of this Section 5.2(a), the Manager, its officers, directors, and affiliates (other than the Company and its subsidiaries) shall not invest in, acquire, manage, or otherwise provide services (including acquisition or investment banking services) with respect to, any firm, corporation, partnership or other entity principally engaged in business activities in the plastics industry (the "DESIGNATED LINE OF BUSINESS"). The 2 restriction contained in the preceding sentence shall apply to and be binding upon the Manager regardless of whether the Board elects to pursue or not to pursue any investment opportunity related to the Designated Line of Business which is brought to the attention of the Company, by the Manager or otherwise; PROVIDED, HOWEVER, that one or more affiliates of the Manager shall be entitled to invest in, acquire, manage and/or otherwise provide services (including acquisition or investment banking services) with respect to, any firm, corporation, partnership or other entity engaged in the Designated Line of Business (a "PLASTICS ENTITY"), if (i) prior to undertaking such investment, management or provision of services, information (including business and financial information in reasonable detail) regarding the Plastics Entity, together with the material terms of the proposed contract or transaction, are disclosed to the Board, and (ii) the Board (and at least a majority of the disinterested members thereof) authorizes such contract or transaction and expressly waives the prohibition otherwise imposed by this Section 5.2(a). (b) The Company acknowledges that it has no present intention to acquire substantially all of the assets of or a controlling interest in any firm, corporation, partnership or other entity which is not engaged in the Designated Line of Business (a "NEW BUSINESS SEGMENT"). In the event the Board shall determine to make such an acquisition and shall so notify the Manager in writing, then any such New Business Segment shall be deemed to be a Designated Line of Business for purposes of this Agreement; provided, however, that in the event the Manager shall, at the time of such notification, (i) own a controlling interest in, manage, or otherwise provide services (including Acquisition or investment banking services) with respect to, or (ii) have a binding commitment to invest in, acquire, manage, or otherwise provide services (including acquisition or investment banking services) with respect to, any New Business Segment, for its own account or on behalf of any person other than the Company, and shall so notify the Board in writing, then such New Business Segment shall not be deemed to be a Designated Line of Business. (c) Notwithstanding any provision of this Section 5.2 which may be to the contrary, the Manager, its officers, directors and affiliates shall be entitled to make investments in (i) securities of the Company, or (ii) no more than 5% of any class of securities of any corporation, partnership or other entity engaged in a Designated Line of Business, which securities are listed and registered on a national securities exchange or which are quoted on the NASDAQ Interdealer Quotation System. (d) The Manager shall use its reasonable best efforts to identify and bring to the attention of the Company acquisition candidates engaged in the Designated Line of Business. 6. COMPENSATION OF MANAGER. 6.1 MANAGEMENT FEE. During the term of this Agreement, the Manager will receive annually with respect to the management of the business operations of the Company, a cash consulting and management fee in the amount of $750,000 ("BASE COMPENSATION"). The Base Compensation will be paid to the Manager by the Company in advance in equal quarterly installments. The Base Compensation will be adjusted annually during the term hereof to reflect any 3 increase from the previous year in the consumer price index, with the first such adjustment to occur as of January 1, 1999. For purposes of this Agreement, the consumer price index to be used will be the "Consumer Price Index for Miami Urban Consumers", published by the United States Department of Labor, Bureau of Labor Statistics. If the U.S. Department of Labor ceases to prepare a consumer price index, and there is no successor, then an equivalent index will be used, prepared by an agency of the U.S. Government, or by a responsible financial periodical of recognized authority, to be selected by mutual agreement of the Company and the Manager. If the parties are unable to agree upon a successor, the parties will refer the choice of a successor to arbitration in Miami, Florida in accordance with the rules of the American Arbitration Association, which determination will be final. The parties will share equally the cost of arbitration. 6.2 ADDITIONAL BUSINESS OPERATIONS. If the Company or its subsidiaries acquire or enter into any additional business operations after the date of this Agreement (each an "Additional Business"), the Board and the Manager will, prior to the acquisition or prior to entering into the business operations, in good faith, determine whether and to what extent the Base Compensation should be increased as a result thereof. Any increase will be evidenced by a written supplement to this Agreement signed by the Company and the Manager. 6.3 INCENTIVE COMPENSATION. (a) As additional compensation, beginning with the Company's fiscal year ending December 31, 1998 and continuing for each fiscal year during which this Agreement is in effect, the Manager will be entitled to an annual incentive compensation payment in an amount equal to 1% of the Company's EBITDAM for such year, provided that EBITDAM for such year is greater than $20,000,000 (the "INCENTIVE COMPENSATION"). Any Incentive Compensation payable with respect to any such fiscal year shall be paid by the Company to the Manager within 75 days after the end of such fiscal year; PROVIDED, HOWEVER, that the Compensation Committee of the Board may approve the payment of an estimated amount of Incentive Compensation (the "ESTIMATED INCENTIVE COMPENSATION") with respect to any such fiscal year in such installments as such Committee shall deem appropriate. In the event that the Estimated Incentive Compensation (if any) paid to the Manager with respect to any such fiscal year is greater than the actual amount of Incentive Compensation that is finally determined to have been payable with respect to such fiscal year, than the Manager shall promptly repay the amount of such excess to the Company. In the event that the Estimated Incentive Compensation (if any) paid to the Manager with respect to any such fiscal year is less than the actual amount of Incentive Compensation that is finally determined to have been payable with respect to such fiscal year, than the Company shall promptly pay the amount of such deficiency to the Manager. (b) Notwithstanding any provision hereof which may be to the contrary, in the event any Incentive Compensation with respect to any fiscal year of the Company is paid prior to the issuance of the Company's regularly prepared financial statements for such fiscal year, any amount paid shall be subject to increase or decrease based upon the results of such financial statements. 4 (c) For purposes of this Section 6.3, "EBITDAM" means the Company's earnings before net interest expense, income taxes, depreciation, amortization and any compensation incurred by the Company to the Manager hereunder. (d) In the event that the Manager's engagement hereunder is terminated pursuant to Section 8.1 or Section 8.3 below, then notwithstanding the fact that the Manager is not engaged by the Company through the end of the fiscal year in which such termination occurs, the Manager shall be entitled to receive the Incentive Compensation that would have otherwise been payable to it had it been engaged hereunder through the end of such fiscal year, pro rated based upon the number of days elapsed in such year through the effective date of such termination. In the event that the Manager's engagement hereunder is terminated pursuant to Section 8.4 below, then the amount (if any) of Incentive Compensation to be paid to the Manager in respect of the number of days elapsed in the fiscal year in which such termination occurs through the effective date of such termination will be determined through good faith negotiations between the Board and the Manager. If the Board and the Manager are unable to agree upon the amount of Additional Incentive Compensation, the Additional Incentive Compensation amount will be determined by arbitration in Miami, Florida in accordance with the rules of the American Arbitration Association, which determination will be final. The parties will share equally the cost of arbitration. 6.4 ADDITIONAL INCENTIVE COMPENSATION. As additional compensation, the Manager will be entitled to a one-time fee with respect to the acquisition or disposition of any business operation by the Company or its subsidiaries introduced or negotiated by the Manager or its affiliates or with respect to any other transaction not in the ordinary course of business, including any public or private debt or equity financing or unusual efforts extended or results obtained by the Manager on behalf or for the benefit of the Company or its subsidiaries ("ADDITIONAL INCENTIVE COMPENSATION"). The Additional Incentive Compensation will be paid at the closing of any such transaction. The amount of any Additional Incentive Compensation will be determined through good faith negotiations between the Board and the Manager. If the Board and the Manager are unable to agree upon the amount of Additional Incentive Compensation, the Additional Incentive Compensation amount will be determined by arbitration in Miami, Florida in accordance with the rules of the American Arbitration Association, which determination will be final. The parties will share equally the cost of arbitration. 6.5 COMPANY'S RIGHT TO ENGAGE OTHER FINANCIAL ADVISORS. Notwithstanding any provision of this Agreement which may be to the contrary, the Manager acknowledges and agrees that the Company may from time to time engage the services of financial advisors in addition to the Manager in connection with certain acquisitions, dispositions and financing transactions if, in the judgment of the Board, such engagement is in the best interest of the Company and its shareholders. 7. TERM. This Agreement shall commence as of the date hereof and shall remain in effect until December 31, 2002, unless terminated earlier in accordance with the provisions of this Agreement. 5 8. TERMINATION. 8.1 BY SHAREHOLDER ACTION. The Board may terminate the Manager's engagement under this Agreement at any time upon a majority vote of all of the then outstanding voting shares of capital stock of the Company at the time of such vote (including capital stock held by the Manager, its officers, directors and affiliates, each of whom shall be entitled to vote). 8.2 UPON BREACH. Either the Company or the Manager may terminate the Manager's engagement under this Agreement in the event of the breach of any of the material terms or provisions of this Agreement by the other party, which breach is not cured within 10 business days after notice of the same is given to the party alleged to be in breach by the other party. In the event this Agreement is terminated by the Manager because of the breach of any of the material terms or provisions hereof by the Company, the Manager shall be entitled to recover damages from the Company and shall not be required to mitigate or reduce damages by seeking or undertaking other management arrangements or business opportunities. 8.3 CHANGE IN SENIOR MANAGEMENT OF MANAGER. The Board may terminate the Manager's engagement under this Agreement, upon 90 days prior notice, in the event that Earl W. Powell (or a successor to Earl W. Powell acceptable to the Board) shall cease to serve as an executive officer of the Manager or shall otherwise cease to be actively engaged in the Manager's business. 8.4 CHANGE OF CONTROL. The Board may terminate the Manager's engagement under this Agreement, by written notice to the Manager, in the event that (i) the Board shall approve the sale of all, or substantially all, of the Company's consolidated assets in any single transaction or series of related transactions, (ii) there shall occur a sale or issuance, or series of related sales or issuances, of the Company's voting securities in any single transaction or series of related transactions which results in any person or group of affiliated persons (other than the holders of the Company's voting securities as of the date of this Agreement and affiliates of such holders) owning (on a fully-diluted basis) voting securities of the Company representing (at the time of such sale or issuance or such series of sales and/or issuances) a majority of the ordinary voting power to elect directors of the Company or (iii) the Board shall approve any merger or consolidation of the Company with or into another corporation (regardless of which entity is the surviving corporation) if, after giving effect to such merger or consolidation, the holders of the Company's voting securities (on a fully-diluted basis) immediately prior to the merger or consolidation own voting securities of the surviving or resulting corporation representing less than a majority of the ordinary voting power to elect directors of the surviving or resulting corporation (on a fully-diluted basis). Any termination of the Manager's engagement pursuant to clause (i) or clause (iii) of this Section 8.4 shall be effective upon the date the transaction described therein is consummated. Any termination of the Manager's engagement pursuant to clause (ii) of this Section 8.4 shall be effective upon the date specified in the written notice of termination delivered to the Manager. 6 9. STANDARD OF CARE. The Manager (including any person or entity acting for or on behalf of the Manager) shall not be liable for any mistakes of fact, errors of judgment, for losses sustained by the Company or any subsidiary or for any acts or omissions of any kind, unless caused by intentional misconduct of the Manager engaged by the Manager in bad faith. 10. INDEMNIFICATION OF MANAGER. The Company and its present and future subsidiaries agree to indemnify and hold harmless the Manager and its present and future officers, directors, affiliates, employees and agents ("INDEMNIFIED PARTIES") to the fullest extent permitted by corporate law as if any of the Indemnified Parties were an officer or director to the Company and/or its subsidiaries. The Company and its subsidiaries agree to reimburse the Indemnified Parties on a monthly basis for any cost of defending any action or investigation (including attorney's fees and expenses) subject to an undertaking from such Indemnified Party to repay the Company or its subsidiaries if such party is determined not to be entitled to such indemnity. 11. NO ASSIGNMENT. Neither party shall assign, transfer or convey any of its rights, duties or interest under this Agreement, nor shall it delegate any of the obligations or duties required to be kept or performed by it hereunder without the prior written consent of the other party. 12. NOTICES. All notices, requests, demands, claims and other communications hereunder will be in writing. Any notice, request, demand, claim or other communication hereunder shall be deemed duly given if (and then two business days after) it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below: If to the Company: Atlantis Plastics, Inc. 1870 The Exchange Suite 200 Atlanta, Georgia 30339 Attention: President If to the Manager: Trivest, Inc. 2665 South Bayshore Drive Suite 800 Miami, Florida 33133 Attention: Chief Executive Officer Either party hereto may send any notice, request, demand, claim or other communication hereunder to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail or electronic mail), but no such notice, request, demand, claim or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Either party hereto may change the address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other party notice in the manner herein set forth. 7 13. SEVERABILITY. If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or enforceable, shall not be affected thereby, and each term and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law. 14. NO WAIVER. The failure of the Company or the Manager to seek redress for any violation of, or to insist upon the strict performance of, any term or condition of this Agreement shall not prevent a subsequent act by the Company or the Manager, which would have originally constituted a violation of this Agreement by the Company or the Manager, from having all the force and effect of any original violation. The failure by the Company or the Manager to insist upon the strict performance of any one of the terms or conditions of the Agreement or to exercise any right, remedy or elections herein contained or permitted by law shall not constitute or be construed as a waiver or relinquishment for the future of such term, condition, right, remedy or election, but the same shall continue and remain in full force and effect. Except as the Company's rights of termination are limited herein, all rights and remedies that the Company or the Manager may have at law, in equity or otherwise upon breach of any term or condition of this Agreement, shall be distinct, separate and cumulative rights and remedies and no one of them, whether exercised by the Company or the Manager or not, shall be deemed to be in exclusion of any other right or remedy of the Company or the Manager. 15. ENTIRE AGREEMENT; CERTAIN TERMS. This Agreement contains the entire agreement between the parties hereto with respect to the matters herein contained and supersedes all prior agreements between the parties hereto with respect to such matters. Any agreement hereafter made shall be ineffective to effect any change or modification to this Agreement, in whole or in part, unless such agreement is in writing and signed by the party against whom enforcement of the change or modification is sought. 16. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida without reference to the laws of any other state. 8 IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly exercised by their authorized representatives as of the date first above written. ATLANTIS PLASTICS, INC. By: ____________________________ Anthony F. Bova President and Chief Executive Officer TRIVEST, INC. By: ____________________________ Earl W. Powell President and Chief Executive Officer 9 EXHIBIT 10.2 AGREEMENT This Agreement is made and entered into as of January 1, 1998, by and among ATLANTIS PLASTICS, INC., a Florida corporation (the "COMPANY"), TRIVEST II, INC., a Florida Corporation ("TRIVEST II"), EARL W. POWELL ("POWELL") and PHILLIP T. GEORGE, M.D. ("GEORGE"). PRELIMINARY STATEMENTS: A. Trivest II's affiliate, Trivest, Inc., a Delaware corporation ("TRIVEST"), and the Company were parties to that certain Fourth Amended and Restated Management Agreement, dated as of October 19, 1992 (the "PRIOR MANAGEMENT AGREEMENT"). B. The Prior Agreement terminated on December 31, 1997 and, in connection with the transactions contemplated hereby, the Company and Trivest have agreed to enter into that certain Management Agreement, of even date herewith (the "NEW MANAGEMENT AGREEMENT"), pursuant to which the Company shall continue to engage the services of Trivest on the terms and subject to the conditions contained therein. C. The Company and Powell were parties to a Second Amended and Restated Employment Agreement, dated as of January 1, 1990, as amended, pursuant to which Powell served as the Chairman of the Board of the Company (the "POWELL EMPLOYMENT AGREEMENT"). D. The Company and George were parties to an Employment Agreement, dated as of January 1, 1990, as amended, pursuant to which George served as the Chairman of the Executive Committee of the Board of Directors of the Company (the "GEORGE EMPLOYMENT AGREEMENT"). E. The Powell Employment Agreement and the George Agreement terminated on December 31, 1997. F. The Company is a party to that certain Office Lease (commencement date as of September 1, 1993), between the Company and SPP Real Estate (Grand Bay), Inc. (the "LANDLORD") (as successor to Colony GBP Partners, L.P. and Grand Bay Plaza Joint Venture), as amended (the "MIAMI LEASE"), pursuant to which the Company is the lessee of office space presently occupied by Trivest II and its affiliates (the "TRIVEST MIAMI OFFICE"). G. The Company is a party to that certain Sublease Agreement, dated as of August 17, 1995, between the Company and Concept One International, Inc. (the "SUBLEASE"), pursuant to which the Company has subleased a portion of the Trivest Miami Office to Concept One International, Inc. H. The Company has certain liabilities on its books related to the Miami Lease, which liabilities aggregate, as of December 31, 1997, the sum of $170,239 (the "BALANCE SHEET LEASE LIABILITIES"). -1- In consideration of the premises and the respective mutual agreements, covenants, representations and warranties contained in this Agreement, the parties agree as follows: AGREEMENT: 1. ASSIGNMENT AND ASSUMPTION OF MIAMI LEASE. Effective as of January 1, 1998 (but subject in all respects to the consent of the Landlord), the Company hereby assigns to Trivest II and Trivest II hereby assumes and agrees to perform all of the terms, conditions, covenants and provisions contained in the Miami Lease to be performed by the Company. Such assignment shall include, without limitation, all of the Company's right, title and interest in and to all claims, deposits, prepayments, refunds and other prepaid items relating to the Miami Lease. Trivest II shall use reasonable commercial efforts to cause the Landlord to enter into a consent to such assignment. If, in connection with any such consent, the Landlord shall not consent to the unconditional discharge and release of the Company from all of its obligations under the Miami Lease, Trivest II hereby agrees to indemnify the Company from and against any liability, loss, cost, actual or punitive damage, deficiency, demand, claim, suit, action or cause of action, fine, penalty, cost or expense of any kind whatsoever (including reasonable attorney's fees and costs) (collectively, "Losses" and individually, a "Loss") the Company shall suffer as a result of any breach of the terms or provisions of the Miami Lease by Trivest II arising after the effective date of such consent to assignment (the "ASSIGNMENT EFFECTIVE DATE"). 2. ASSIGNMENT AND ASSUMPTION OF SUBLEASE. Effective as of January 1, 1998 (but subject in all respects to the consent of the Landlord to the assignment of the Sublease as contemplated by Section 1 above), the Company hereby assigns to Trivest II and Trivest II hereby assumes and agrees to perform all of the terms, conditions, covenants and provisions contained in the Sublease to be performed by the Company. Such assignment shall include, without limitation, all of the Company's right, title and interest in and to all claims, deposits, prepayments, refunds and other prepaid items relating to the Sublease. If, in connection with any consent of the Landlord referred to in the penultimate sentence of Section 1 above, the Landlord shall not consent to the unconditional discharge and release of the Company from all of its obligations under the Miami Lease, Trivest II hereby agrees to indemnify the Company from and against any Losses the Company shall suffer as a result of any breach of the terms or provisions of the Sublease by Trivest II arising after the Assignment Effective Date. 3. TRANSFER OF FIXED ASSETS LOCATED AT TRIVEST MIAMI OFFICE; ASSUMPTION OF BALANCE SHEET LEASE LIABILITIES. In consideration of the undertakings of Trivest II set forth in Sections 1 and 2 above, the assumption by Trivest of the Balance Sheet Lease Liabilities and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company hereby sells, conveys, assigns, transfers, sets over and delivers to Trivest II, effective as of January 1, 1998, all of its right, title and interest in and to all supplies, equipment, furniture, fixtures, leasehold improvements, office equipment, signs, artwork and all other tangible personal property located at the Trivest Miami Office. Trivest hereby assumes the Balance Sheet Lease Liabilities. -2- 4. CONTINUATION OF CERTAIN BENEFITS. The Company shall continue to provide to Powell and to George the use of the leased automobiles provided by the Company to them as of December 31, 1997, together with the operating expenses thereof (e.g., insurance, license, repairs, fuel and oil), until the leases of such automobiles expire. 5. FURTHER ASSURANCES. In the event that at any time after the date hereof any further action is necessary to carry out the purposes of this Agreement, each of the parties will take such further action (including the execution and delivery of such further instruments and documents) as any other party may reasonably request, all at the sole cost and expense of the requesting party. 6. NO EXPANSION OF REMEDIES. Trivest II's assumption of any liabilities and obligations under Sections 1 or 2 above shall in no way expand the rights or remedies of third parties against Trivest II as compared to the rights and remedies which such parties would have had against the Company had the transactions contemplated by this Agreement not been consummated. 7. MISCELLANEOUS. (a) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any rights or remedies upon any person other than the parties and their respective successors and assigns. (b) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement among the parties and supersedes any prior understandings, agreements, or representations by or among the parties, written or oral, to the extent they related in any way to the subject matter hereof. (c) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties named herein and their respective successors and assigns. (d) COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. (e) HEADINGS. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. (f) NOTICES. All notices, requests, demands, claims and other communications hereunder will be in writing. Any notice, request, demand, claim or other communication hereunder shall be deemed duly given if (and then two business days after) it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below: -3- If to the Company: Atlantis Plastics, Inc. 1870 The Exchange Suite 200 Atlanta, Georgia 30339 Attention: President If to Trivest II, Powell or George: Trivest, Inc. 2665 South Bayshore Drive Suite 800 Miami, Florida 33133 Attention: Chief Executive Officer Any party hereto may send any notice, request, demand, claim or other communication hereunder to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail or electronic mail), but no such notice, request, demand, claim or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Any party hereto may change the address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other party notice in the manner herein set forth. (g) GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Florida without giving effect to any choice or conflict of law provision or rule (whether of the State of Florida or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Florida. (h) AMENDMENTS AND WAIVERS. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by each of the parties hereto. No waiver by any party of any default hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. (i) SEVERABILITY. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. -4- IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly exercised by their authorized representatives as of the date first above written. ATLANTIS PLASTICS, INC. By: ____________________________ Anthony F. Bova President and Chief Executive Officer TRIVEST II, INC. By: ____________________________ Earl W. Powell President and Chief Executive Officer __________________________________ EARL W. POWELL __________________________________ PHILLIP T. GEORGE, M.D. -5- End