-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QVK1Ghyq4XfCetqKr5PrpWT47NbpDn63hDHVQ9PD7AeyHMPsh/DRFR+9tbKTcKtz PHXHavVnBwjWi0orjeL/XA== 0000950136-02-000852.txt : 20020415 0000950136-02-000852.hdr.sgml : 20020415 ACCESSION NUMBER: 0000950136-02-000852 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020327 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLTRISTA CORP CENTRAL INDEX KEY: 0000895655 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 351828377 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13665 FILM NUMBER: 02589331 BUSINESS ADDRESS: STREET 1: 5875 CASTLE CREEK PARKWAY, NORTH DRIVE STREET 2: SUITE 440 CITY: INDIANAPOLIS STATE: IN ZIP: 46250-4330 BUSINESS PHONE: 3175775000 MAIL ADDRESS: STREET 1: 5875 CASTLE CREEK PARKWAY, NORTH DRIVE STREET 2: SUITE 440 CITY: INDIANAPOLIS STATE: IN ZIP: 46250-4330 10-K 1 file001.txt FORM 10-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2001 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ALLTRISTA CORPORATION DELAWARE 0-21052 35-1828377 State of Incorporation Commission File Number IRS Identification Number 555 THEODORE FREMD AVENUE, SUITE B302 RYE, NEW YORK 10580 REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (914) 967-9400 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED - ------------------------------ ------------------------------------------ Common Stock, $.01 par value New York Stock Exchange Securities Registered Pursuant to Section 12(g) of the Act: None 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. [X] YES [ ] NO Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] As of March 25, 2002, the aggregate market value of voting common stock held by non-affiliates of the registrant was $162.5 million based upon the closing market price on such date as reported on the New York Stock Exchange. All (i) executive officers and directors of the registrant and (ii) all persons filing a Schedule 13D with the Securities and Exchange Commission in respect to registrant's common stock who hold 10% or more of the registrant's outstanding common stock, have been deemed, solely for the purpose of the foregoing calculation, to be "affiliates" of the registrant. There were 6,936,244 shares outstanding of the registrant's common stock, par value $.01 per share, as of March 3, 2002. DOCUMENTS INCORPORATED BY REFERENCE Certain information required for Part III of this report is incorporated herein by reference to the proxy statement for the 2002 annual meeting of the Company's stockholders. ================================================================================ ALLTRISTA CORPORATION INDEX TO FORM 10-K
PAGE ----- PART I Item 1. Business ................................................................... 1 Item 2. Properties ................................................................. 6 Item 3. Legal Proceedings .......................................................... 7 Item 4. Submission of Matters to a Vote of Security Holders ........................ 7 Executive Officers of the Company .......................................... 8 PART II Item 5. Market for Registrant's Common Stock and Related Stockholder Matters ....... 9 Item 6. Selected Financial Data .................................................... 9 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations .............................................................. 10 Item 7a. Quantitative and Qualitative Disclosures About Market Risk ................. 17 Item 8. Financial Statements and Supplementary Data ................................ 17 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ....................................................... 41 PART III Item 10. Directors and Executive Officers of the Registrant ......................... 41 Item 11. Executive Compensation ..................................................... 41 Item 12. Security Ownership of Certain Beneficial Owners and Management ............. 41 Item 13. Certain Relationships and Related Transactions ............................. 41 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K ........... 41 Signatures ......................................................................... 46 Financial Statement Schedule ....................................................... 47 Index to Exhibits .................................................................. 48
PART I ITEM 1. BUSINESS Alltrista Corporation (the "Company") was incorporated in the State of Indiana in 1991 and reincorporated in the State of Delaware in December 2001. We operate two distinct business segments, Consumer Products and Materials Based Group. Consumer Products is the leading provider of home canning products in North America primarily under the Ball (Registered Trademark) , Kerr (Registered Trademark) and Bernardin (Registered Trademark) brands. The Materials Based Group consists of manufacturing operations in injection molded plastics and industrial plastics and is the country's largest producer of zinc strip and fabricated products, including coin blanks for U.S. and foreign mints. In addition to the information included below in this Item 1, see Item 7 (Management's Discussion and Analysis of Financial Condition and Results of Operations) and Item 8, Note 1 (Significant Accounting Policies) and Note 4 (Business Segment Information) for financial and other information concerning the Company's operations. During 2001, we repositioned our growth strategy to focus on consumer products. Our Consumer Products segment markets and distributes a broad line of home food preservation and preparation products that includes recognized brand name home canning jars, jar closures and related food products (including fruit pectin, Fruit-Fresh (Registered Trademark) brand fruit protector, pickle mixes and tomato mixes). Our materials based group is comprised of three businesses: zinc strip products, injection molded plastics, and industrial plastics. Our zinc strip business is the sole source supplier of copper plated zinc penny blanks to both the United States Mint and the Royal Canadian Mint and is currently exploring opportunities with several other countries. In addition, we manufacture a line of industrial zinc items used in the plumbing, automotive, electrical component and European architectural markets, and the Lifejacket (Registered Trademark) anti-corrosion system. Unimark, our plastic injection molding business, manufactures precision custom components for major companies in the healthcare and consumer products industries including CIBA Vision Corporation, Johnson & Johnson, Meridian Diagnostics, Inc., The Scotts Company and Winchester Ammunition. Through our industrial plastic operations, we also manufacture and sell thermoformed plastic door liners and evaporator trays for refrigerators, primarily for Whirlpool Corporation, with whom we have enjoyed a business relationship for over 25 years. On December 18, 2001, at a special meeting of stockholders, our stockholders approved a proposal to reincorporate the Company in the State of Delaware. In order to reincorporate as a Delaware corporation, the Company organized a Delaware corporation as one of its subsidiaries. Effective December 19, 2001, the Company merged with the new Delaware subsidiary, and the Delaware corporation was the corporation that survived the merger. The surviving corporation (i.e., the Company) was renamed "Alltrista Corporation", the same name of the Company prior to the merger. In addition, the Company succeeded to the rights, properties and assets and assumed the liabilities held by the Company prior to the merger, and the financial statements of the Company are substantially identical to its financial statements prior to the merger, the only difference being those appropriate to reflect the Company's new corporate identity and common stock's par value of $0.01 per share. The business and management of the Company after the merger remain the same as those of the Company before the merger. However, since the merger, we are subject to the corporate laws of the State of Delaware and are no longer subject to the corporate laws of the State of Indiana. On September 24, 2001, we appointed Martin E. Franklin as Chairman and Chief Executive Officer and Ian G.H. Ashken as Vice Chairman, Chief Financial Officer and Secretary. On October 15, 2001, the Company announced the closing of its Indianapolis, Indiana corporate office. Corporate functions are now performed at the Company's new headquarters in Rye, New York and the Company's Consumer Products location in Muncie, Indiana. CONSUMER PRODUCTS Alltrista manufactures, markets and distributes a line of home food preservation products to serve value, mid-tier and premium oriented customers, which products include home canning jars, jar closures, home canning tools and other accessories. These products are marketed under the well-known Ball (Registered Trademark) , 1 Kerr (Registered Trademark) , Golden Harvest (Registered Trademark) and Bernardin (Registered Trademark) brand names. We also market and distribute related food products, including fruit pectin, Fruit-Fresh (Registered Trademark) brand fruit protector, pickle mixes, tomato mixes and all-in-one canning kits, including a jam pectin kit and jelly and salsa kits. In addition, we market a line of housewares under the Golden Harvest (Registered Trademark) brand, including tumblers, beverage tappers and other glassware. Customers Our customers are a diverse group of 1,800 wholesalers and retailers in the United States and Canada. Our principal customers include grocery stores, mass merchants, and hardware stores. We have been Wal-Mart's category manager for the home canning segment since 1998. In this role, we are responsible for the home canning section within the store, including inventory management, the introduction of new items, and the creation of various reports to track inventory, sales, and margins. Sales and Marketing Our consumer products sales are made in the United States and Canada through food brokers and manufacturer representative organizations as well as through our internal sales force and house accounts. We employ regional sales managers located in key geographic areas who oversee the sales and retail activities of food brokerage firms and independent manufacturer representatives. Distribution and Fulfillment We utilize independent warehouses located in various regions of the United States and Canada to distribute our products. The largest of these warehouses is located in Muncie, Indiana and is operated by an outsourced provider, which utilizes highly automated packaging equipment allowing us to maintain our efficient and effective logistics and freight management processes. We also work with an outsourced provider for the delivery of our products in order to ensure that as many shipments as possible are processed as full truckloads, saving significant freight costs. Manufacturing We manufacture the metal closures for our home canning jars at our Muncie, Indiana facility. Lithographed tin plated steel sheet is cut and formed to produce the lids and bands. Liquid plastisol, which we formulate, is applied to lids, forming an airtight seal, which is necessary for safe and effective home canning. Finished products are packaged for integration with glass jars or sold in multi-packs as replacement lids. Intellectual Property Management believes that none of our active trademarks or patents is essential to the successful operation of our business as a whole. However, one or more trademarks or patents may be material in relation to individual products or product lines such as our property rights to use the Kerr (Registered Trademark) , Ball (Registered Trademark) , Fruit-Fresh (Registered Trademark) and Bernardin (Registered Trademark) brand names. In addition, we have developed a proprietary two-piece closure system incorporating a plastisol sealant that differentiates our jar lids from our competitors' lids. See below, "Patents and Trademarks." Raw Materials Most of our glass canning jars are supplied under an agreement with Anchor Glass Container Corporation. Such glass materials are also available from a variety of other sources at competitive prices. The tin plate raw material used in the manufacture of our home canning jar lids and closures is supplied by multiple vendors and is currently available from a variety of sources at competitive prices. Historically, the raw materials and components that are necessary for the manufacture of our products have been available in the quantities that we require. MATERIALS BASED GROUP Our materials based group is currently comprised of three businesses: zinc products, injection molded plastics, and industrial plastics. 2 Effective November 26, 2001, we sold our underperforming thermoformed plastics operations consisting of the assets of our Triangle, TriEnda and Synergy World divisions (the "TPD Assets") to Wilbert, Inc. for $21.0 million in cash, a $1.9 million noninterest-bearing one-year note, and the assumption of certain identified liabilities. We recorded a pre-tax loss of $121.1 million in 2001 related to the sale. Effective November 1, 2001, we sold our majority interest in Microlin, LLC, a developer of proprietary battery and fluid delivery technology, for $1,000 in cash plus contingent consideration based upon future performance through December 31, 2012 and the cancellation of future funding requirements. We recorded a pre-tax loss of $1.4 million in 2001 related to the sale. Effective May 24, 1999, we sold our plastic packaging product line, which produced coextruded, high-barrier plastic sheet and containers for the food processing industry. Effective September 28, 1998, we sold the x-ray inspection equipment production line of LumenX, ending our involvement in the capital goods market. Effective September 30, 1997, we sold the machine vision inspection equipment product line of LumenX. ZINC We believe our zinc strip business is the largest zinc splitting operation in the United States. We are the sole source supplier of copper plated zinc penny blanks to both the United States Mint and the Royal Canadian Mint and are currently exploring opportunities with several other countries. In addition, we manufacture a line of industrial zinc items used in the plumbing, automotive, electrical component and European architectural markets, and the Lifejacket (Registered Trademark) anti-corrosion system. Our anticorrosion zinc Lifejacket (Registered Trademark) is gaining recognition as a cost-effective solution to arrest the corrosion of the reinforcement steel within poured concrete structures. We are affected by fluctuations in penny blank requirements of the United States Department of the Treasury and the Federal Reserve System. Although the future use of the penny as legal tender has been debated in recent years, management believes that the zinc penny will remain an important part of the currency system for the foreseeable future. Sales and Marketing Our sales and marketing staff consists of individuals with considerable technical background in the field of metallurgy. These individuals focus on leveraging our core capabilities in zinc metallurgy and electrochemistry to exploit new market opportunities. The sales and marketing staff works closely with our engineering and technical services group to deliver products to the customer. We maintain a website which contains technical information regarding the advantageous physical properties of zinc versus other metals. Manufacturing In our Greeneville, Tennessee facility, we manufacture alloys of zinc strip and fabricated zinc products in a number of configurations for our customers. We have five lines used to slit the coils into widths specific by customers. Many customers require less than the full master coil diameters, so the large coils are broken down into the requested diameters at the time they are slit. We also produce coin blanks stamped from slit coils using one of five high-speed presses. The stamped blanks are then rimmed and put into one of three electroplating lines where the copper coating is applied. Raw Materials We purchase special high-grade zinc ingot and a variety of metals, including copper, lead, titanium, magnesium, manganese and other alloys, to produce the zinc alloys we use in our various applications. These alloys have been developed by our technical staff to meet the specific physical and chemical characteristics of the finished product applications. We purchase zinc ingot based on market prices quoted on the London Metals Exchange (month-end average price) from a variety of suppliers. Certain 3 customers, including the United States Mint, provide their own purchased zinc that is utilized to manufacture product at a toll conversion price. We purchase copper for both alloying and plating purposes based on market prices quoted on the New York Commodities and Metals Exchange. As with zinc ingot, the United States Mint supplies the required copper for one-cent coin blanks. We also purchase a variety of chemicals for production and waste treatment, primarily for use in copper plating. Prices for chemicals are negotiated with suppliers based on market supply and demand conditions and volume purchase levels. UNIMARK-INJECTION MOLDED PLASTICS We manufacture precision custom injection molded components for major companies in the healthcare and consumer products industries. We also own Yorker (Registered Trademark) Closures, a proprietary product line of plastic closures. Products for the healthcare industry include items such as intravenous harness components and surgical devices. Products for manufacturers of consumer goods primarily include packaging and sport shooting ammunition components. Customers The three major customers of our injection molded plastics business represented approximately 58% of the Company's 2001 injection molded plastics sales. We supply shotgun shell components to Winchester Ammunition, healthcare products (contact lens cases) to CIBA Vision Corporation, Ethicon, Inc., Johnson & Johnson, CB Fleet Company, Inc., and Meridian Diagnostics, Inc. and consumer products for The Scotts Company, among others. Sales and Marketing We concentrate our marketing efforts in those markets that require high levels of precision, quality, and engineering expertise. There is potential for continued growth in all product lines, especially in the healthcare market, where our quality, service and "clean room" molding operations are critical competitive factors. Manufacturing We manufacture at three facilities located in Greenville, South Carolina; Reedsville, Pennsylvania; and Springfield, Missouri. The injection-molding process involves converting plastic resin pellets to a fluid state through elevated temperature and pressure, at which point the resin is injected into a mold where it is then formed into a finished part. Molded parts are usually small, intricate components that are produced using multi-cavity tooling. Post-molding operations employ robotics and automation for assembly and packaging. Raw Materials We purchase resin from regular commercial sources of supply and, in most cases, multiple sources. The supply and demand for plastic resins are subject to cyclical and other market factors. Competition The market for injection molded plastics is highly competitive. We concentrate our marketing efforts in those markets that require high levels of precision, quality, engineering expertise and cleanliness. We have differentiated ourselves from our competitors by developing long-lasting relationships with a number of specialty tooling manufacturers and by possessing strong design capabilities. We believe that the quality and cleanliness of our facilities provides another competitive advantage for us. As a result, we believe that we will continue to capture new injection molding programs as they come to market, as well as benefit from continued outsourcing trends among original equipment manufacturers. INDUSTRIAL PLASTICS Our industrial plastics business manufactures thermoformed white goods for a variety of customers in our Fort Smith, Arkansas facility. We also manufacture and sell extruded plastic sheet and roll stock 4 products in smooth, textured and laminated finishes for a variety of customers. We produce plastic tables for original equipment manufacturers in our Fort Smith plant and have a proprietary line of tables selling under the Vision (Trade Mark) brand that are primarily sold to the hospitality and institutional markets. Customers We manufacture refrigerator inner door liners and evaporator trays for Whirlpool, the largest customer of our industrial plastics business, which whom we have enjoyed a business relationship for over 25 years. In addition, we supply the after-market inner door liner service parts for Whirlpool. We also manufacture products for other white goods manufacturers, including Diversified Refrigeration, Inc., a supplier to General Electric and McCall Refrigeration. Sales and Marketing Our sales and marketing focuses on establishing and building relationships with major customers in our market. Our experienced sales and marketing teams, which include members of senior management, emphasize to the customer our total capabilities. Marketing, product design and manufacturing personnel interface with multiple contacts within the customer organization from the initiation of a new program through production. Manufacturing Our products are produced through a thermoforming process. Thermoforming is an operation in which plastic sheet is converted into a formed product through single- or twin-sheet vacuum or pressure formed in conjunction with the application of heat. After the product is formed, the process of removing the excess material, or trimming, is generally performed by automated equipment programmed to execute the appropriate steps to produce the finished part to the customer's specifications. We have the capability to provide value-added services such as assembling components into finished parts, performing various finishing operations, or attaching hardware or other items to a thermoformed part. Raw Materials We purchase resin directly for use in the manufacture of extruded sheet and also purchase plastic sheet from third-party suppliers in those instances where we are unable to provide for our needs internally. These raw materials are obtained from regular commercial sources of supply and, in most cases, multiple sources. The supply and demand for plastic resins are subject to cyclical and other market factors. Under our agreement with Whirlpool, we purchase resin used in the production of Whirlpool products under a supply contract that Whirlpool negotiates with resin suppliers. This agreement provides us protection from price fluctuations in materials for Whirlpool products, while we can usually pass through any changes in material pricing to its other customers. PATENTS AND TRADEMARKS The Company believes that none of its active patents or trademarks is essential to the successful operation of its business as a whole. However, one or more patents or trademarks may be material in relation to individual products or product lines such as property rights to use the Kerr (Registered Trademark) brand, Ball (Registered Trademark) brand, and Fruit-Fresh (Registered Trademark) brand names, and the Bernardin (Registered Trademark) trade name in connection with certain goods to be sold, including home food preservation supplies, kitchen housewares and packaged foods for human consumption. Pursuant to the terms of the 1993 distribution agreement with Ball Corporation, we were granted a license to use the Ball (Registered Trademark) brand name for our consumer products. In the event of a change of control of the Company which has not received the approval of a majority of the board of directors or causes us to be controlled or majority owned by a competitor of Ball, Ball has the option to terminate our license to use the Ball (Registered Trademark) brand name. Pursuant to the terms of an agreement with Kerr Group, Inc., we have a perpetual exclusive, worldwide license to use the Kerr (Registered Trademark) brand name in our consumer products division. However, in the event of a change of control of the Company which has not received the approval of a majority of the board of directors of the Company, Kerr has the option to terminate our license to use the Kerr (Registered Trademark) brand name. 5 GOVERNMENT CONTRACTS The Company enters into contracts with the United States Government which contain termination provisions customary for government contracts. See "Zinc Products" under the Materials Based Group Segment discussion above. The United States Government retains the right to terminate such contracts at its convenience. However, if the contract is terminated, the Company is entitled to be reimbursed for allowable costs and profits to the date of termination relating to authorized work performed to such date. The United States Government contracts are also subject to reduction or modification in the event of changes in government requirements or budgetary constraints. Since entering into a contract with the Company in 1981, the United States Government has not terminated the penny blank supply arrangement. BACKLOG The Company typically sells under supply contracts for minimum (generally exceeded) or indeterminate quantities and, accordingly, is unable to furnish backlog information. RESEARCH AND DEVELOPMENT Research and development costs are expensed as incurred in connection with the Company's internal programs for the development of products and processes and have not been material in recent years. ENVIRONMENTAL MATTERS Our operations are subject to federal, state and local environmental and health and safety laws and regulations, including those that impose workplace standards and regulate the discharge of pollutants into the environment and establish standards for the handling, generation, emission, release, discharge, treatment, storage and disposal of materials and substances including solid and hazardous wastes. We believe that we are in material compliance with such laws and regulations. Further, the cost of maintaining compliance has not, and we believe, in the future, will not, have a material adverse effect on our business, results of operations or financial condition. Due to the nature of our operations and the frequently changing nature of environmental compliance standards and technology, we cannot predict with any certainty that future material capital or operating expenditures will not be required in order to comply with applicable environmental laws and regulations. In addition to operational standards, environmental laws also impose obligations on various entities to clean up contaminated properties or to pay for the cost of such remediation, often upon parties that did not actually cause the contamination. We have attempted to limit our exposure to such liabilities through contractual indemnities and other mechanisms. We do not believe that any of our existing remediation obligations, including at third-party sites where we have been named a potentially responsible party, will have a material adverse effect upon our business, results of operations or financial condition. EMPLOYEES As of December 31, 2001, the Company employed approximately 800 people. Approximately 215 union workers are covered by two collective bargaining agreements at the Company's zinc products and consumer products manufacturing facilities. These agreements expire at the consumer products facility (Muncie, Indiana) on October 15, 2006, and at the zinc products facility (Greeneville, Tennessee) on October 4, 2003. The Company has not experienced a work stoppage during the past five years. Management believes that its relationships with the Company's employees and collective bargaining unions are satisfactory. ITEM 2. PROPERTIES The Company's properties are well maintained, considered adequate and being utilized for their intended purposes. Information regarding the approximate size of principal manufacturing, warehousing and office facilities is provided below. 6
APPROXIMATE LOCATION TYPE OF USE BUSINESS SEGMENT SQUARE FEET OWNED/LEASED - -------- ----------- ---------------- ------------ ------------ Fort Smith, Arkansas Manufacturing/Warehousing Materials Based Group 140,000 Owned Greeneville, Tennessee Manufacturing/Warehousing Materials Based Group 320,000 Owned Greenville, South Carolina Manufacturing/Warehousing Materials Based Group 48,000 Owned Muncie, Indiana Manufacturing/Warehousing Consumer Products 173,000 Owned Reedsville, Pennsylvania Manufacturing/Warehousing Materials Based Group 73,000 Owned Rye, New York Corporate offices -- 3,000 Leased Springfield, Missouri Manufacturing/Warehousing Materials Based Group 43,000 Owned Toronto, Canada Warehousing Consumer Products 48,000 Leased
In 2001, the Company consolidated its home canning metal closure production from its Toronto, Canada facility into its Muncie, Indiana facility. The Toronto facility is still being used for warehousing and its lease expires in July 2004. In 1999, the Company's industrial plastics business ceased operations in El Dorado, Arkansas. The Company is currently subleasing a portion of the El Dorado, Arkansas facility where the lease expires in May 2004. On October 15, 2001 the Company announced the closing of its Indianapolis corporate office. Corporate functions are now being performed out of the Company's new headquarters in Rye, New York and the Company's Consumer Products location in Muncie, Indiana. The Company is currently seeking a sublessor for the site of its previous 9,000 square feet headquarters located in Indianapolis, Indiana, for which the annual lease payment is approximately $160,000. ITEM 3. LEGAL PROCEEDINGS We are involved in various legal disputes and environmental matters in the ordinary course of business. In addition, the Environmental Protection Agency has designated the Company as a potentially responsible party, along with numerous other companies, for the clean up of several hazardous waste sites. Based on currently available information, the Company does not believe that the disposition of any of the legal disputes or environmental matters the Company is currently involved in will have a material, adverse effect upon the financial condition, results of operations, cash flows or competitive position of the Company. It is possible, that as additional information becomes available, the impact on the Company of an adverse determination could have a different effect. ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS Listed below are the matters voted upon by proxy and the respective voting results associated with a special meeting of stockholders held on December 18, 2001: 7
WITHHELD/ABSTAINED/ VOTED FOR VOTED AGAINST BROKER NON-VOTES ----------- --------------- -------------------- Proposal to approve the reincorporation of the Corporation in the State of Delaware ................. 4,046,426 1,258,262 1,545 Proposal to increase the number of shares of Common Stock authorized for issuance ................. 4,109,852 1,955,308 2,181 Proposal to include a provision eliminating directors liability other than as required under Delaware law in the certificate of incorporation of the new Delaware corporation. ......................................... 3,344,362 1,382,455 579,416 Proposal to amend the Corporation's 1998 Long-Term Equity Incentive Plan to increase the number of shares of Common Stock that may be issued thereunder by 350,000 shares and to eliminate the annual automatic share increase currently provided for in the Plan. ......... 3,832,987 1,305,601 167,645 Proposal to approve the Corporation's 2001 Stock Option Plan. ................................... 3,863,823 1,432,212 10,198
EXECUTIVE OFFICERS OF THE COMPANY The executive officers of the Company are as follows: Martin E. Franklin is our Chairman and Chief Executive Officer. Mr. Franklin was appointed to our board of directors on June 25, 2001 and became Chairman and Chief Executive Officer effective September 24, 2001. Mr. Franklin is also a managing member of Marlin Management, L.L.C., the general partner of Marlin Partners II, L.P. He also has been the Chairman and Chief Executive Officer of the general partner of Marlin Capital, L.P., a private investment partnership, and its affiliates since October 1996. Mr. Franklin was the Chairman of the Board of Directors of Bolle Inc. from February 1997 until February 2000. Mr. Franklin previously held positions as Chairman and Chief Executive Officer of Lumen Technologies, Inc. (formerly BEC Group, Inc.) from May 1996 to December 1998, and Benson Eyecare Corporation from October 1992 to May 1996. Since January 1, 2002, Mr. Franklin has served as the Chairman of the Board of Directors of Find/SVP, Inc., a Nasdaq OTC Bulletin Board company. Ian G.H. Ashken is our Vice Chairman, Chief Financial Officer and Secretary. Mr. Ashken was appointed to our board of directors on June 25, 2001 and became Vice Chairman, Chief Financial Officer and Secretary effective September 24, 2001. Mr. Ashken is also a managing member of Marlin Management, L.L.C., the general partner of Marlin Partners II, L.P. He also has been the Vice Chairman and Executive Vice President of the general partner of Marlin Capital, L.P., a private investment partnership, and its affiliates since October 1996. Mr. Ashken was the Vice Chairman of the Board of Directors of Bolle, Inc. from December 1998 until February 2000; from February 1997 until his appointment as Vice Chairman, Mr. Ashken was the Chief Financial Officer and a director of Bolle. Mr. Ashken previously held positions as Chief Financial Officer and a director of Lumen Technologies, Inc. (formerly BEC Group, Inc.) from May 1996 to December 1998 and Benson Eyecare Corporation from October 1992 to May 1996. J. David Tolbert is our Vice President, Human Resources and Administration. From April 1997 to October 1998, Mr. Tolbert served as our Vice President, Human Resources and Corporate Risk. From October 1993 to April 1997, Mr. Tolbert served as our Director of Human Resources. Since joining Ball Corporation in 1987, Mr. Tolbert served in various human resource and operating positions throughout the company. 8 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS Alltrista Corporation common stock is traded on the New York Stock Exchange under the symbol "ALC." There were 3,648 common stockholders of record on March 3, 2002. The Company currently does not and does not intend to pay cash dividends on its common stock in the foreseeable future, and is restricted from doing so under the terms of its credit facility. Cash generated from operations will be invested to support competitiveness and growth. For other information required by Item 5, see Item 8, Note 17 (Quarterly Stock Prices). ITEM 6. SELECTED FINANCIAL DATA
YEAR ENDED DECEMBER 31, ---------------------------------------------------------------- 2001 (A) 2000 (B) 1999 (C) 1998 (D) 1997 ------------- ------------ ------------ ------------ ----------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) STATEMENT OF OPERATIONS DATA Net sales ............................................ $ 304,978 $357,356 $ 358,031 $258,489 $249,604 Costs and expenses Cost of sales ........................................ 233,676 275,571 257,308 188,174 183,371 Selling, general and administrative expenses ......... 52,212 56,019 55,322 37,452 34,868 Goodwill amortization ................................ 5,153 6,404 4,605 1,399 1,265 Special charges (credits) and reorganization expenses ........................................... 4,978 380 2,314 1,260 -- Loss (gain) on divestiture of assets and product lines .............................................. 122,887 -- (19,678) -- -- ---------- -------- --------- -------- -------- Income (loss) before interest, taxes and minority interest ............................................. (113,928) 18,982 58,160 30,204 30,100 Interest expense, net ................................. 11,791 11,917 8,395 1,822 2,256 Income tax provision (benefit) ........................ (40,443) 2,402 19,458 10,785 10,603 Minority interest in gain (loss) of consolidated subsidiary ........................................... 153 (259) -- -- -- ---------- -------- --------- -------- -------- Income (loss) from continuing operations .............. (85,429) 4,922 30,307 17,597 17,241 ========== ======== ========= ======== ======== Loss from discontinued operations ..................... -- -- (87) (1,870) (2,404) Extraordinary loss from early extinguishment of debt (net of income taxes) ........................... -- -- (1,028) -- -- ---------- -------- --------- -------- -------- Net income (loss) ..................................... $ (85,429) $ 4,922 $ 29,192 $ 15,727 $ 14,837 ========== ======== ========= ======== ======== Basic earnings (loss) per share: Income (loss) from continuing operations ............. (13.43) .78 4.50 2.48 2.33 Loss from discontinued operations .................... -- -- ( .01) ( .26) ( .33) Extraordinary loss from early extinguishment of debt (net of income taxes) ......................... -- -- ( .15) -- -- ---------- -------- --------- -------- -------- $ (13.43) $ .78 $ 4.34 $ 2.22 $ 2.00 ========== ======== ========= ======== ======== Diluted earnings (loss) per share: Income (loss) from continuing operations ............. (13.43) .77 4.44 2.45 2.28 Loss from discontinued operations .................... -- -- ( .01) ( .26) ( .32) Extraordinary loss from early extinguishment of debt (net of income taxes) ......................... -- -- ( .15) -- -- ---------- -------- --------- -------- -------- $ (13.43) $ .77 $ 4.28 $ 2.19 $ 1.96 ========== ======== ========= ======== ========
9
YEAR ENDED DECEMBER 31, ------------------------------------------------------ 2001 (A) 2000 (B) 1999 (C) 1998 (D) 1997 ---------- ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) BALANCE SHEET DATA (AT END OF YEAR) Cash and cash equivalents .......... $ 6,376 $ 3,303 $ 17,394 $ 21,454 $ 26,641 Working capital .................... 8,035 22,975 54,611 46,923 53,759 Total assets ....................... 161,303 308,739 338,751 165,831 166,577 Total debt ......................... 84,875 137,060 140,761 25,715 30,000 Total stockholders' equity ......... 35,129 118,221 123,025 94,893 97,309
- ---------- (a) 2001 special charges (credits) and reorganization expenses include: a $2.3 million pretax charge associated with corporate restructuring; $2.6 million of pretax separation costs related to the management reorganization; $1.4 million of pretax costs to evaluate strategic options, $1.4 million of pretax costs to exit facilities; a $2.4 million pretax charge for stock option compensation; $4.1 million of pretax income associated with the discharge of deferred compensation obligations; and a $1.0 million pretax gain related to an insurance recovery. (b) 2000 special charges (credits) and reorganization expenses included $1.6 million of pretax income associated with the reduction in long-term performance-based compensation, $1.4 million of pretax litigation charges, net of recoveries and $.6 million of costs to evaluate strategic options. (c) 1999 special charges (credits) and reorganization expenses were a $2.3 million charge to exit a plastic thermoforming facility. (d) 1998 special charges (credits) and reorganization expenses were a $1.3 million pretax charge to exit a plastic injection molding facility. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS MANAGEMENT AND CORPORATE OFFICE REORGANIZATION On September 24, 2001, our board of directors appointed Martin E. Franklin as our Chairman and Chief Executive Officer and Ian G.H. Ashken as our Vice Chairman, Chief Financial Officer and Secretary. On October 15, 2001, we announced the closing of our Indianapolis, Indiana corporate office. Corporate functions have been transitioned to our new headquarters in Rye, New York, and our consumer products division in Muncie, Indiana. Following the sale of the TPD Assets and the third quarter 2001 appointment of new executive management, we reorganized our business segments to reflect the new business and management strategy. We are now organized into two distinct segments: consumer products and materials based group. Prior periods have been reclassified to conform to the current segment definitions. DIVESTITURES IN 2001 Effective November 26, 2001, we sold the TPD Assets to Wilbert, Inc. for $21.0 million in cash, a $1.9 million noninterest-bearing one-year note, and the assumption of certain identified liabilities. We recorded a pre-tax loss of $121.1 million in 2001 related to the sale. The cash proceeds from the sale were used to pay down our term debt. As a result of the sale, in January 2002 we recovered approximately $15.7 million of federal income taxes paid in 1999 and 2000, received a further federal income tax refund of $22.2 million in March 2002 and are anticipating an additional $.6 million federal income tax refund from the enactment, in March 2002, of the Job Creation and Workers' Assistance Act of 2002 by utilizing the carryback of a tax net operating loss generated in 2001 (See Notes 2 and 19 to our Consolidated Financial Statements). This refund was used to pay down our debt. The combined net sales of the TPD Assets included in our historical results were $63.8 million in 2001 (through the date of sale), $100.3 million in 2000 and $70.7 million in 1999. Operating earnings (losses) associated with these assets were $(12.0) million in 2001, $(8.4) million in 2000 and $2.8 million in 1999. Effective November 1, 2001, we sold our majority interest in Microlin, LLC, a developer of proprietary battery and fluid delivery technology, for $1,000 in cash plus contingent consideration based 10 upon future performance through December 31, 2012 and the cancellation of future funding requirements. We recorded a pre-tax loss of $1.4 million in 2001 related to the sale. Excluding the TPD Assets, Microlin, LLC and other divested businesses, Alltrista's net sales for 2001, 2000 and 1999 would have been $241.7 million, $258.1 million and $275.0 million, respectively, and Alltrista's EBITDA for 2001, 2000 and 1999 would have been $36.3 million, $36.6 million and $44.7 million, respectively. RECENT DEVELOPMENTS We expect that the net sales and operating income of our materials based group segment for the three months ended March 31, 2002 will be lower than the comparable period in 2001. Our zinc business has experienced reduced sales to the United States Mint, which announced in the fourth quarter of 2001 that it was implementing an inventory reduction program for all coinage. We anticipate that this inventory reduction program will result in lower sales and earnings for zinc compared to prior years until the fourth quarter of 2002. RESULTS OF OPERATIONS -- COMPARISON OF 2001 AND 2000 We reported consolidated net sales of $305.0 million in 2001, a decrease of 14.7% from sales of $357.4 million in 2000. Our loss before interest and taxes for the year ended December 31, 2001 was $113.9 million, including special charges and reorganization expenses of $5.0 million and a total loss on divestiture of assets and product lines of $122.9 million. For the year ended December 31, 2001, excluding all of these one-time items, earnings before interest and taxes was $13.9 million. These results compare to earnings before interest, taxes and minority interest for the year ended December 31, 2000 of $19.0 million. Sales of consumer products were relatively flat in 2001 compared to 2000. Domestic increases were offset by Canadian decreases due to unfavorable weather conditions and customers carrying higher levels of inventory over from 2000. Sales within the materials based group for 2001 decreased by $52.6 million due primarily to (i) lower demand for industrial thermoformed parts (part of the divested TPD Assets) in the heavy truck and material handling markets, (ii) the fact that full year sales in 2001 did not include December sales for the divested TPD Assets, and (iii) the decline in sales of zinc products resulting from lower coinage sales to the United States Mint, due to the Mint's stated objective of reducing inventory. Gross margin percentages increased to 23.4% in 2001 from 22.9% in 2000. Gross margin increased for consumer products due primarily to cost efficiencies which continued during 2001 as the benefits of the segment's SAP system implementation continued to be realized. This increase was offset by a decrease in gross margin for the materials based group in 2000 due primarily to lower sales of plastic thermoformed parts (part of the divested TPD Assets) resulting from decreased demand in the heavy truck, material handling and manufactured housing markets. Smaller orders reduced the length of production runs, and, thus, diminished operating efficiencies. Lower sales of injection molded precision consumer products also contributed to the decline in margins. Selling, general and administrative expenses decreased 6.8% to $52.2 million in 2001 from $56.0 million in 2000. Consumer products expenses decreased primarily due to lower expenses associated with sales and marketing, warehousing and shipping. Expenses within the materials based group decreased primarily as a result of the cost savings realized due to a third quarter 2000 realignment and consolidation of our divested thermoformed operations. Selling, general and administrative expenses as a percentage of sales increased from 15.7% in 2000 to 17.1% in 2001 due primarily to lower overall sales. Goodwill amortization decreased from $6.4 million in 2000 to $5.2 million in 2001 due primarily to our November 2001 sale of the TPD Assets. We incurred net special charges (credits) and reorganization expenses of $5.0 million and $0.4 million for 2001 and 2000, respectively. These amounts were comprised of the following (in millions): 11
2000 2001 --------- --------- Costs to evaluate strategic options ............................ $ 0.6 $ 1.4 Discharge of deferred compensation obligations ................. -- (4.1) Separation costs for former officers ........................... -- 2.6 Stock option compensation ...................................... -- 2.4 Corporate restructuring costs .................................. -- 2.3 Costs to exit facilities ....................................... -- 0.8 Reduction of long-term performance-based compensation .......... (1.6) -- Litigation charges ............................................. 1.4 -- Items related to divested thermoforming operations ............. -- (0.4) ------ ------ $ 0.4 $ 5.0 ====== ======
During 2001, certain participants in our deferred compensation plans agreed to forego balances in those plans in exchange for loans from us in the same amounts. The loans, which were completed during 2001, bear interest at the applicable federal rate and require the individuals to secure a life insurance policy having the death benefit equivalent to the amount of the loan payable to us. All accrued interest and principal on the loans mature and are payable upon the death of the participant and their spouse. We recognized $4.1 million of pretax income during 2001 related to the discharge of the deferred compensation obligations. Separation costs for former officers were associated with the 2001 management reorganization described above. During September 2001, options were granted to participants under our 2001 Stock Option Plan. Because the options granted under this new plan were still subject to stockholder approval at the time of grant, the options resulted in a one-time charge of $2.4 million, which was recorded in the fourth quarter of 2001, following stockholder approval of the 2001 Stock Option Plan on December 18, 2001. During the fourth quarter of 2001, we incurred corporate restructuring costs in the amount of $2.3 million. These include costs related to the transitioning of the corporate office function from Indianapolis, Indiana to Rye, New York and Muncie, Indiana, costs to reincorporate in Delaware and to hold a special meeting of shareholders, and related costs including professional fees. In late 2001, we consolidated our home canning metal closure production from our Bernardin, Ltd. Toronto, Ontario facility into our Muncie, Indiana manufacturing operation. The total cost to exit the Toronto facility was $0.8 million and includes a $0.3 million loss on the sale and disposal of equipment, and $0.5 million of employee severance costs. We will continue to distribute our products in Canada through Bernardin, Ltd. During 2001, items recognized related to the divested TPD Assets included a pre-tax gain of $1.0 million in connection with an insurance recovery associated with a property casualty. Also in 2001 we vacated our former Triangle Plastics facility in Independence, Iowa and integrated personnel and capabilities into its other operating and distribution facilities in the area. The total cost to exit this Iowa facility was $0.6 million and includes $0.4 million in future lease obligations and an additional $0.2 million of costs related to the leased facility. During 2000, we recorded a pretax gain of $1.6 million related to a reduction in long-term performance-based compensation. Also during 2000, we reached settlements in legal disputes incurring $1.4 million in net settlement and legal expenses. In 2001, we recognized a $121.1 million pretax loss on the sale of the TPD Assets and a $1.4 million pre-tax loss on the sale of its interest in Microlin, LLC. Net interest expense in 2001 was $11.8 million compared to $11.9 million for 2000. The effects of lower average borrowings outstanding and lower interest rates during 2001 were offset by the write-off of $1.5 million of previously deferred debt issuance and amendment costs in connection with the November 2001 amendment of our term loan and revolving credit facility. Our effective interest rate for 12 the year ended December 31, 2001 was 7.7%. As a result of decreasing interest rates during the year ended December 31, 2001, our interest rate swaps, which were at a fixed interest rate of 5.7%, resulted in additional interest expense to us during the year ended December 31, 2001. Our effective tax rate was 32.2% for 2001 compared to 34.0% for 2000. The effective rate for 2001 is lower than the statutory federal rate primarily because it includes a valuation allowance for tax benefits associated with the loss on the sale of the TPD Assets that may not be realizable. The effective rate for 2000 reflects the recognition of a tax benefit from exiting the Central European home canning test market. RESULTS OF OPERATIONS -- COMPARISON OF 2000 AND 1999 We reported consolidated net sales of $357.4 million in 2000, a slight decrease from sales of $358.0 million in 1999. Earnings before interest, taxes and minority interest were $19.0 million for the year ended December 31, 2000 compared to $58.2 million for the year ended December 31, 1999. Consumer products reported lower sales and operating earnings, and the materials based group reported increased sales and lower operating earnings. Sales of consumer products decreased $12.7 million to $120.4 million in 2000 from $133.1 in 1999 as home canning sales volumes returned to more normal levels compared to the 1999 season, which was influenced by the Year 2000 phenomenon. Within the materials based group, Triangle Plastics and its wholly owned subsidiary, TriEnda, which were acquired on April 25, 1999 and sold effective November 26, 2001, contributed $92.1 million to 2000 sales compared to $72.2 million for the eight-month period in 1999. In 2000, competitive pricing pressures and dramatically lower demand, chiefly in the heavy truck, manufactured housing and material handling markets, negatively impacted sales of thermoformed plastic parts. Prior year sales also included $13.0 million from a plastic packaging product line, which was disposed of on May 24, 1999. Gross margin percentages decreased from 28.1% in 1999 to 22.9% in 2000. Gross margin decreased for consumer products due to a decline in sales of home canning products from the abnormally high 1999 levels (due to Year 2000 concerns of consumers) accompanied by slightly higher sales of a lower margin consumer product line contributed to the decrease in the consumer products segment. Gross margin decreased for the materials based group due primarily to raw material price increases, reduced sales volumes and operating inefficiencies from several new customer programs for industrial thermoformed parts, as well as lower coinage and battery can volumes for zinc products. Selling, general and administrative expenses increased 1.3% to $56.0 million in 2000 from $55.3 million in 1999. Expenses within the consumer products segment increased primarily due to higher depreciation expense on a new information system. For the materials based group segment, the acquisition of Triangle Plastics and disposal of the plastic packaging product line contributed to the increase as Triangle Plastics maintained the personnel necessary to offer customers extensive design, engineering and development services, while the operations of the divested plastic packaging product line did not require this level of staffing. The write-down of fixed assets and severance costs of $1.2 million associated with the realignment and consolidation of our thermoforming operations also contributed to the increase. Additionally, research and development costs related to zinc-based products also increased. These increases were offset somewhat by a decrease in incentive compensation expense. Selling, general and administrative expenses as a percentage of sales increased from 15.5% in 1999 to 15.7% in 2000. Goodwill amortization increased to $6.4 million in 2000 from $4.6 million in 1999. This was the result of a full year of amortization being recorded in 2000 related to the 1999 acquisition of Triangle Plastics. Special charges (credits) and reorganization expenses were $0.4 million for 2000, and consisted of $1.4 million of litigation charges (net of recoveries) and $0.6 million of costs to evaluate strategic options, offset by a $1.6 million gain related to a reduction in long-term performance-based compensation. Special charges (credits) and reorganization expenses for 1999 consisted of $2.3 million of costs to exit a plastic thermoforming facility. In 1999, we recognized a $19.7 million pretax gain on the sale of a plastic packaging product line. 13 Net interest expense in 2000 was $11.9 million compared to $8.4 million for 1999. The increase was due primarily to increased average borrowings driven by the Triangle Plastics acquisition. Our effective tax rate decreased from 39.1% in 1999 to 34.0% in 2000 due primarily to the recognition of a tax benefit from exiting the Central European home canning test market. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES In conjunction with the sale of the TPD Assets, in November 2001, the Company entered into an agreement with its lenders to amend certain provisions of its term loan and revolving credit facilities. The amendment reduced the revolving credit facility from $50 million to $40 million, shortened the facility termination date by one year, accelerated the required principal payments to conform with the shortened term of the facility, modified certain financial covenants, and required that the $21 million of cash proceeds from the sale of the TPD Assets and $15 million from the recovery of income taxes associated with the net operating loss carryback be used to prepay term debt. As a result of these significant changes to the facility, the Company wrote off the unamortized costs of $1.5 million relating to the issuance and previous amendments of the Company's credit facility. In accordance with the terms of the amendment, the Company applied the $21.0 million of proceeds from the sale of the TPD assets to the outstanding term loan balance. In January 2002, the Company utilized $15.0 million of proceeds from the income tax refund related to the thermoformed sale to further pay down the term loan. The term loan, as amended and reflecting the payments mentioned above, requires quarterly payments of principal of $3.1 million through the first quarter of 2003, with quarterly payments of $11.2 million for the remainder of the term (through March 31, 2004). Interest on borrowings under the term loan and the revolving credit facility are based upon fixed increments over the adjusted London Interbank Offered Rate or the agent bank's alternate borrowing rate as defined in the agreement. The agreement also requires the payment of commitment fees on the unused balance. As of December 31, 2001 and 2000, the outstanding balances of the term loan were $75.5 million and $120.0 million, respectively. As of December 31, 2001 and 2000, borrowings outstanding under the revolving credit facility were $9.4 million and $16.0 million, respectively. In May 1999, the Company entered into a three-year interest rate swap with an initial notional value of $90 million. The swap effectively fixed the interest rate on approximately 60% of the Company's term debt at a maximum rate of 7.98% for the three-year period. The effective interest rate on the swaps was 5.7% during the year ended December 31, 2001. The swap matures and terminates in March 2002. Due to the prepayment of term debt in accordance with the amendment described above, as of December 31, 2001, the swap effectively fixed the interest rate on all of the Company's term debt. During 2000, the Company repurchased 452,600 shares of the Company's stock for $10.5 million. No shares were repurchased during 2001. Dividends are not presently paid on the Company's common stock nor does the Company anticipate paying dividends in the foreseeable future and is restricted from doing so under the terms of its credit facility. Net current assets decreased to $8.0 million at December 31, 2001 from $23.0 million at December 31, 2000 due primarily to the sale of the TPD assets. Cash flow generated from operations totaled approximately $39.9 million for the year ended December 31, 2001 and reflects an $11.2 million decrease in inventories resulting from an increased focus on inventory management and a $4.4 million decrease in accounts receivable due to better collection policies and procedures. Capital expenditures were $9.7 million in 2001 compared to $13.6 million in 2000 and were largely related to maintaining facilities and improving manufacturing efficiencies. Investments in 2001 included, among other items, new injection molding machines and presses, a co-extrusion line for the production of plastic sheet used in thermoforming operations and the repair and replacement of portions of a building and equipment damaged in a weather-related roof collapse. During 2001, certain participants in the Company's deferred compensation plans agreed to forego balances totaling $4.1 million in those plans in exchange for loans from the Company in the same 14 amounts. The loans, which were completed during 2001, bear interest at the applicable federal rate and require the individuals to secure a life insurance policy having the death benefit equivalent to the amount of the loan payable to the Company. All accrued interest and principal on the loans mature and are payable upon the death of the participant and their spouse. In June 2001, the Company surrendered the variable rate life insurance contracts used to fund all deferred compensation obligations. The proceeds from this surrender were $6.7 million. The Company believes that existing funds, cash generated from operations and its debt facility are adequate to satisfy its working capital and capital expenditure requirements for the foreseeable future. CONTINGENCIES The Company is involved in various legal disputes and environmental matters in the ordinary course of business. In addition, the Environmental Protection Agency has designated the Company as a potentially responsible party, along with numerous other companies, for the clean up of several hazardous waste sites. Based on currently available information, the Company does not believe that the disposition of any of the legal disputes or environmental matters the Company is currently involved in will have a material adverse effect upon the financial condition, results of operations, cash flows or competitive position of the Company. It is possible, that as additional information becomes available, the impact on the Company of an adverse determination could have a different effect. STOCK PLANS Effective September 24, 2001, the Company established the 2001 Stock Option Plan for the purpose of granting options for the purchase of common shares to the Company's executive officers and independent directors. Options vest to, and are exercisable by, participants on the earlier of 1) the date the Company's closing stock price equals or exceeds $17 per share or 2) the seventh anniversary of the grant date. During September, 570,000 options were granted to participants under this new plan. The Company's stock price exceeded $17 in January 2002, thereby vesting all option grants under this plan. Because the options granted under this new plan were still subject to stockholder approval at the time of grant, the options resulted in a one-time charge of $2.4 million, which was recorded in the fourth quarter of 2001. The charge represents the difference between the exercise price of the options of $10.95 (the fair value at the date of grant) and the fair value of the Company's stock at the time of stockholder approval on December 18, 2001 of $15.20. This charge is included in Special Charges (Credits) and Reorganization Expenses on the Consolidated Statement of Operations. NEW ACCOUNTING PRONOUNCEMENTS The Company adopted Statement of Financial Accounting Standard 133 (SFAS 133), Accounting for Derivative Instruments and Hedging Activities, on January 1, 2001. The statement requires the Company to recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives will either be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. Hedge ineffectiveness, the amount by which the change in the value of a hedge does not exactly offset the change in the value of the hedged item, will be immediately recognized in earnings. The adoption of SFAS 133 on January 1, 2001 did not have a material impact on the Company's results of operations or financial position. In July 2001, the Financial Accounting Standards Board (FASB) issued Statements of Financial Accounting Standards No. 141, Business Combinations, and No. 142, Goodwill and Other Intangible Assets, effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill (and intangible assets deemed to have indefinite lives) will no longer be amortized but will be subject to annual impairment tests in accordance with the Statements. Other intangible assets will continue to be amortized over their useful lives. The Company will apply the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of 2002. During 2002, the Company will perform the first of the required impairment tests of goodwill and indefinite lived intangible assets, but does not anticipate a material impact on its results of operations or financial position. 15 In June 2001, the FASB issued Statement of Financial Accounting Standard No. 143 (SFAS 143), Accounting for Asset Retirement Obligations, effective for fiscal years beginning after June 15, 2002. This standard requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. SFAS 143 is effective for the Company beginning with the first quarter of 2003, and its adoption is not expected to have a material impact on the Company's results of operations or financial position. In August 2001, the FASB issued Statement of Financial Accounting Standard No. 144 (SFAS 144), Accounting for the Impairment or Disposal of Long-Lived Assets, effective for fiscal years beginning after December 15, 2001. This standard supercedes SFAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and provides a single accounting model for long-lived assets to be disposed of. The new standard also supersedes the provisions of APB Opinion 30 with regard to reporting the effects of a disposal of a segment of a business and requires expected future operating losses from discontinued operations to be displayed in discontinued operations in the period(s) in which the losses are incurred. SFAS 144 is effective for the Company beginning with the first quarter of 2002, and its adoption is not expected to have a material impact on the Company's results of operations or financial position. FORWARD-LOOKING STATEMENTS From time to time, we may make or publish forward-looking statements relating to such matters as anticipated financial performance, business prospects, technological developments, new products, and similar matters. Such statements are necessarily estimates reflecting management's best judgment based on current information. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. Such statements are usually identified by the use of words or phases such as "believes," "anticipates," "expects," "estimates," "planned," "outlook," and "goal." Because forward-looking statements involve risks and uncertainties, our actual results could differ materially. In order to comply with the terms of the safe harbor, we note that a variety of factors could cause our actual results and experience to differ materially from the anticipated results or other expectations expressed in forward-looking statements. While it is impossible to identify all such factors, the risks and uncertainties that may affect the operations, performance and results of our business include the following: o Reductions, cancellations or delays in customer purchases would adversely affect our profitability; o We may be adversely affected by the trend towards retail trade consolidation; o Some of our products may suffer because of unfavorable weather conditions and market trends; o Competition in our industries may hinder our ability to execute our business strategy, achieve profitability, or maintain relationships with existing customers; o If we fail to develop new or expand existing customer relationships, our ability to grow our business will be impaired; o Our operations are subject to a numbers of federal, state and local environmental regulations; o We depend on key personnel; o We enter into contracts with the United States government and other governments; o Our operating results can be adversely affected by changes in the cost or availability of raw materials o Continuation of the US penny as a currency denomination; o The nature and extent of any current or future state and federal environmental regulations on our operations and the amount of any costs which may be incurred for the clean up of several hazardous waste sights; 16 o Our business could be adversely affected because of risks which are particular to international operations; o Certain of our employees are represented by labor unions; and o Any other factors which may be identified from time to time in our periodic SEC filings and other public announcements. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the forward-looking statement, we do not intend to update forward-looking statements. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK In general, business enterprises can be exposed to market risks including fluctuations in commodity prices, foreign currency values, and interest rates that can affect the cost of operating, investing, and financing. The Company's exposures to these risks are low. Most of the Company's zinc business is conducted on a tolling basis whereby customers supply zinc to the Company for processing, or supply contracts provide for fluctuations in the price of zinc to be passed on to the customer. The Company conducts a portion of its business through its Canadian subsidiary, Bernardin, Ltd., and as a result, is subject to the exposure that arises from foreign exchange rate movements between the Canadian and U.S. dollars. Such exposure arises pimarily from the translation of the results of operations of Bernardin. Sales of Bernardin were less than 5% of total consolidated sales during 2001. The Company from time to time invests in short-term financial instruments with original maturities usually less than thirty days. The Company is exposed to short-term interest rate variations with respect to the LIBOR on its term and revolving debt obligations. To manage a portion of this risk, in May 1999, the Company entered into a three-year interest rate swap which effectively fixed the interest rate on approximately 60% of the Company's term debt at a maximum rate of 7.98% for the three-year period. Due to the prepayment of term debt in accordance with the November 2001 amendment of the Company's credit facility, as of December 31, 2001, the swap effectively fixed the interest rate on 100% of the Company's term debt. Changes in LIBOR interest rates would affect the earnings of the Company either positively or negatively depending on the changes in short-term interest rates. Assuming that LIBOR rates increased 100 basis points over period end rates on the outstanding term and revolver debt, the Company's interest expense, after considering the effects of its interest rate swap, would have increased by approximately $535,000 and $620,000 for the years ended December 31, 2001 and 2000, respectively. The amount was determined by considering the impact of the hypothetical interest rates on the Company's borrowing cost, short-term investment rates, interest rate swap and estimated cash flow. Actual changes in rates may differ from the assumptions used in computing this exposure. The Company does not invest or trade in any derivative financial or commodity instruments, nor does it invest in any foreign financial instruments. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 17 REPORT OF INDEPENDENT AUDITORS Board of Directors and Shareholders Alltrista Corporation and Subsidiaries We have audited the accompanying consolidated balance sheets of Alltrista Corporation and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2001. Our audits also included the financial statement schedule listed in the Index at Item 14(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Alltrista Corporation and subsidiaries at December 31, 2001 and 2000, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /s/ ERNST & YOUNG LLP Indianapolis, Indiana January 23, 2002, Except for Note 19, as to which the date is March 22, 2002 18 ALLTRISTA CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEAR ENDED DECEMBER 31, ----------------------------------------- 2001 2000 1999 ------------- ----------- ----------- Net sales ........................................................... $ 304,978 $ 357,356 $ 358,031 Costs and expenses Cost of sales ...................................................... 233,676 275,571 257,308 Selling, general and administrative expenses ....................... 52,212 56,019 55,322 Goodwill amortization .............................................. 5,153 6,404 4,605 Special charges (credits) and reorganization expenses .............. 4,978 380 2,314 Loss (gain) on divestitures of assets and product lines ............ 122,887 -- (19,678) ---------- --------- --------- Income (loss) before interest, taxes and minority interest .......... (113,928) 18,982 58,160 Interest expense, net ............................................... (11,791) (11,917) (8,395) ---------- --------- --------- Income (loss) from continuing operations before taxes and minority interest .................................................. (125,719) 7,065 49,765 Income tax (provision) benefit ...................................... 40,443 (2,402) (19,458) Minority interest in loss (gain) of consolidated subsidiary ......... (153) 259 -- ---------- --------- --------- Income (loss) from continuing operations ............................ (85,429) 4,922 30,307 Discontinued operations: Loss on disposal of discontinued operations, net of income tax benefit of $54.................................................... -- -- (87) Extraordinary loss from early extinguishment of debt, net of income tax benefit of $635.......................................... -- -- (1,028) ---------- --------- --------- Net income (loss) ................................................... $ (85,429) $ 4,922 $ 29,192 ========== ========= ========= Basic earnings (loss) per share: Income (loss) from continuing operations ........................... $ (13.43) $ .78 $ 4.50 Net income (loss) .................................................. $ (13.43) $ .78 $ 4.34 Diluted earnings (loss) per share: Income (loss) from continuing operations ........................... $ (13.43) $ .77 $ 4.44 Net income (loss) .................................................. $ (13.43) $ .77 $ 4.28 Weighted average shares outstanding: Basic .............................................................. 6,363 6,338 6,734 Diluted ............................................................ 6,363 6,383 6,819
The accompanying notes are an integral part of the consolidated financial statements. 19 ALLTRISTA CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
DECEMBER 31, --------------------------- 2001 2000 ------------ ------------ ASSETS Current assets Cash and cash equivalents ............................................. $ 6,376 $ 3,303 Accounts receivable, net of reserve for doubtful accounts of $778 and $1,517........................................................... 13,986 32,250 Income taxes receivable ............................................... 16,252 -- Inventories, net ...................................................... 26,994 52,548 Deferred taxes on income .............................................. 4,832 4,621 Other current assets .................................................. 3,134 1,658 --------- --------- Total current assets ................................................ 71,574 94,380 --------- --------- Property, plant and equipment, at cost Land .................................................................. 782 1,998 Buildings ............................................................. 24,356 35,059 Machinery and equipment ............................................... 106,106 149,405 --------- --------- 131,244 186,462 Accumulated depreciation .............................................. (87,701) (97,410) --------- --------- 43,543 89,052 --------- --------- Goodwill, net of accumulated amortization of $6,628 and $16,192......... 15,487 114,138 Deferred taxes on income ............................................... 25,417 -- Other assets ........................................................... 5,282 11,169 --------- --------- Total assets ........................................................... $ 161,303 $ 308,739 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Short-term debt and current portion of long-term debt ................. $ 28,500 $ 41,995 Accounts payable ...................................................... 14,197 17,842 Accrued salaries, wages and employee benefits ......................... 9,252 8,344 Other current liabilities ............................................. 11,590 3,224 --------- --------- Total current liabilities ........................................... 63,539 71,405 --------- --------- Noncurrent liabilities Long-term debt ........................................................ 56,375 95,065 Deferred taxes on income .............................................. -- 13,068 Other noncurrent liabilities .......................................... 6,260 9,957 --------- --------- Total noncurrent liabilities ........................................ 62,635 118,090 --------- --------- Minority interest in subsidiary ........................................ -- 1,023 --------- --------- Commitments and contingencies (Notes 11 & 12) .......................... Stockholders' equity: Common stock ($.01 par value), 50,000 shares authorized, 7,963 and 7,963 shares issued and 6,398 and 6,341 shares outstanding in 2001 and 2000, respectively ......................................... 64 40,017 Additional paid-in capital ............................................ 41,789 -- Retained earnings ..................................................... 32,724 118,153 Accumulated other comprehensive loss .................................. (1,862) (978) Less: treasury stock (1,565 and 1,622 shares, at cost) ................ (37,586) (38,971) --------- --------- Total stockholders' equity .......................................... 35,129 118,221 --------- --------- Total liabilities and stockholders' equity ............................. $ 161,303 $ 308,739 ========= =========
The accompanying notes are an integral part of the consolidated financial statements. 20 ALLTRISTA CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
YEAR ENDED DECEMBER 31, ------------------------------------------ 2001 2000 1999 ------------- ----------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) ................................................... $ (85,429) $ 4,922 $ 29,192 Reconciliation of net income (loss) to net cash provided by operating activities: Depreciation ...................................................... 13,427 14,533 12,030 Amortization ...................................................... 5,370 6,778 5,667 Loss (gain) on divestitures of assets and product lines ........... 122,887 -- (19,678) Loss on disposal of fixed assets .................................. 402 338 152 Special charges (credits) and reorganization expenses ............. 680 (1,600) 2,314 Write-off of debt issuance and amendment costs .................... 1,507 -- -- Deferred taxes on income .......................................... (27,804) 3,892 (4,215) Deferred employee benefits ........................................ 378 (40) 1,297 Minority interest ................................................. 153 (259) -- Other, net ........................................................ 310 450 (459) Changes in working capital components, net of effects from acquisitions and divestitures: Accounts receivable ............................................... 4,351 6,678 1,760 Inventories ....................................................... 11,219 5,952 (7,023) Accounts payable .................................................. 794 (12,613) (1,086) Accrued salaries, wages and employee benefits ..................... 2,212 (2,589) 510 Other current assets and liabilities .............................. (10,600) (7,298) 1,863 --------- --------- ---------- Net cash provided by operating activities ........................ 39,857 19,144 22,324 --------- --------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from revolving credit borrowings ........................... 41,050 57,332 37,260 Payments on revolving credit borrowings ............................. (47,650) (41,940) (36,652) Proceeds from issuance of long-term debt ............................ -- -- 150,995 Payments on long-term debt .......................................... (45,585) (19,094) (37,076) Debt issue cost ..................................................... -- -- (2,262) Debt modification cost .............................................. (867) -- -- Proceeds from issuance of common stock .............................. 815 1,219 1,672 Purchase of treasury stock .......................................... -- (10,485) (3,146) --------- --------- ---------- Net cash provided (used) by financing activities ................... (52,237) (12,968) 110,791 --------- --------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures ................................................ (9,707) (13,637) (16,628) Insurance proceeds from property casualty ........................... 1,535 -- -- Proceeds from sale of property, plant and equipment ................. 70 105 1,658 Acquisitions of businesses, net of cash acquired .................... -- (6,930) (151,278) Proceeds from divestitures of assets and product lines .............. 21,001 220 29,305 Proceeds from the surrender of insurance contracts .................. 6,706 -- -- Proceeds from insurance contracts loaned to former officers ......... (4,059) -- -- Investments in insurance contracts .................................. -- -- (274) Other, net .......................................................... (93) (25) 42 --------- --------- ---------- Net cash provided (used) by investing activities .................. 15,453 (20,267) (137,175) --------- --------- ---------- NET INCREASE (DECREASE) IN CASH ...................................... 3,073 (14,091) (4,060) Cash and cash equivalents, beginning of year ......................... 3,303 17,394 21,454 --------- --------- ---------- CASH AND CASH EQUIVALENTS, END OF YEAR ............................... $ 6,376 $ 3,303 $ 17,394 ========= ========= ==========
The accompanying notes are an integral part of the consolidated financial statements. 21 ALLTRISTA CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (IN THOUSANDS)
COMMON STOCK TREASURY STOCK ---------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT --------- ------------ ------------- ------------- Balance, December 31, 1998 .......... 7,967 $ 40,494 (1,203) $ (29,021) Net income .......................... -- -- -- -- Stock options exercised and stock plan purchases ..................... 139 2,497 -- -- Shares reissued from treasury ....... (141) (3,039) 141 3,039 Shares tendered for stock options and taxes .......................... -- -- (23) (611) Cumulative translation adjustment ......................... -- -- -- -- Purchase of common stock ............ -- -- (144) (3,146) ----- ---------- ------ ---------- Balance, December 31, 1999 .......... 7,965 39,952 (1,229) (29,739) Net income .......................... -- -- -- -- Stock options exercised and stock plan purchases ..................... 63 1,449 -- -- Shares reissued from treasury ....... (65) (1,384) 65 1,384 Shares tendered for stock options and taxes .......................... -- -- (6) (131) Cumulative translation adjustment ......................... -- -- -- -- Purchase of common stock ............ -- -- (452) (10,485) ----- ---------- -------- ---------- Balance, December 31, 2000 .......... 7,963 40,017 (1,622) (38,971) Net income (loss) ................... -- -- -- -- Stock options exercised and stock plan purchases ..................... 67 929 -- -- Shares reissued from treasury ....... (67) (1,515) 67 1,515 Shares tendered for stock options and taxes .......................... -- -- (10) (130) Stock option compensation ........... -- 2,422 -- -- Restatement of par value of common stock associated with reincorporation in Delaware ........ -- (41,789) -- -- Cumulative translation adjustment ......................... -- -- -- -- Translation adjustment recorded to net income due to liquidation of investment in foreign subsidiary ................. -- -- -- -- Interest rate swap unrealized loss ............................... -- -- -- -- Minimum pension liability ........... -- -- -- -- ----- ---------- -------- ---------- Balance, December 31, 2001 .......... 7,963 $ 64 (1,565) $ (37,586) ===== ========== ======== ========== ACCUMULATED OTHER COMPREHENSIVE LOSS ------------------------------------ ADDITIONAL CUMULATIVE INTEREST MINIMUM PAID-IN RETAINED TRANSLATION RATE PENSION CAPITAL EARNINGS ADJUSTMENT SWAP LIABILITY ------------ ------------ ------------- ---------- ---------- Balance, December 31, 1998 .......... $ -- $ 84,039 $ (619) $ -- $ -- Net income .......................... -- 29,192 -- -- -- Stock options exercised and stock plan purchases ..................... -- -- -- -- -- Shares reissued from treasury ....... -- -- -- -- -- Shares tendered for stock options and taxes .......................... -- -- -- -- -- Cumulative translation adjustment ......................... -- -- 200 -- -- Purchase of common stock ............ -- -- -- -- -- ------- ---------- ------ ------- ------- Balance, December 31, 1999 .......... -- 113,231 (419) -- -- Net income .......................... -- 4,922 -- -- -- Stock options exercised and stock plan purchases ..................... -- -- -- -- -- Shares reissued from treasury ....... -- -- -- -- -- Shares tendered for stock options and taxes .......................... -- -- -- -- -- Cumulative translation adjustment ......................... -- -- (559) -- -- Purchase of common stock ............ -- -- -- -- -- ------- ---------- ------ ------- ------- Balance, December 31, 2000 .......... -- 118,153 (978) -- -- Net income (loss) ................... -- (85,429) -- -- -- Stock options exercised and stock plan purchases ..................... -- -- -- -- -- Shares reissued from treasury ....... -- -- -- -- -- Shares tendered for stock options and taxes .......................... -- -- -- -- -- Stock option compensation ........... -- -- -- -- -- Restatement of par value of common stock associated with reincorporation in Delaware ........ 41,789 -- -- -- -- Cumulative translation adjustment ......................... -- -- (424) -- -- Translation adjustment recorded to net income due to liquidation of investment in foreign subsidiary ................. -- -- 461 -- -- Interest rate swap unrealized loss ............................... -- -- -- (524) -- Minimum pension liability ........... -- -- -- -- (397) ------- ---------- ------ ------- ------- Balance, December 31, 2001 .......... $41,789 $ 32,724 $ (941) $ (524) $ (397) ======= ========== ====== ======= =======
The accompanying notes are an integral part of the consolidated financial statements. 22 ALLTRISTA CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (THOUSANDS OF DOLLARS)
YEAR ENDED DECEMBER 31, -------------------------------------- 2001 2000 1999 ------------- --------- ---------- Net income (loss) .......................................... $ (85,429) $4,922 $29,192 Foreign currency translation: Translation adjustment during period ...................... (424) (559) 200 Translation adjustment recorded to net income due to liquidation of investment in foreign subsidiary ......... 461 -- -- Interest rate swap unrealized gain (loss): Transition adjustment ..................................... 45 -- -- Change during period ...................................... (569) -- -- Minimum pension liability .................................. (397) -- -- --------- ------ ------- Comprehensive income (loss) ................................ $ (86,313) $4,363 $29,392 ========= ====== =======
The accompanying notes are an integral part of the consolidated financial statements. 23 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation These consolidated financial statements have been prepared in accordance with generally accepted accounting principles. The consolidated financial statements include the accounts of Alltrista Corporation and its subsidiaries (the "Company"). All significant intercompany transactions and balances have been eliminated upon consolidation. Certain reclassifications have been made in the Company's financial statements of prior years to conform to the current year presentation. These reclassifications have no impact on previously reported net income. The businesses comprising the Company have interests in consumer and materials based products. See Business Segment Information (Note 4). Use of Estimates Preparation of the consolidated financial statements requires estimates and assumptions that affect amounts reported and disclosed in the financial statements and related notes. Actual results could differ from those estimates. Revenue Recognition Revenue from the sale of products is primarily recognized at the time product is shipped to customers. The Company allows customers to return defective or damaged products as well as certain other products for credit, replacement, or exchange. Revenue is recognized as the net amount to be received after deducting estimated amounts for product returns, discounts, and allowances. The Company provides credit, in the normal course of business, to its customers. The Company also maintains an allowance for doubtful customer accounts and charges actual losses when incurred to this allowance. Freight Costs Freight costs on goods shipped to customers are included in Cost of Sales. Cash and Cash Equivalents Cash equivalents include financial investments with a maturity of three months or less when purchased. Inventories Inventories are stated at the lower of cost, determined on the first-in, first-out method, or market. Property, Plant and Equipment Property, plant and equipment are recorded at cost. Maintenance and repair costs are charged to expense as incurred, and expenditures that extend the useful lives of the assets are capitalized. The Company reviews property, plant and equipment for impairment whenever events or circumstances indicate that carrying amounts may not be recoverable through future undiscounted cash flows, excluding interest cost. Depreciation Depreciation is provided on the straight-line method in amounts sufficient to amortize the cost of the assets over their estimated useful lives (buildings - -- 30 to 50 years; machinery and equipment -- 5 to 15 years). Goodwill Goodwill represents the excess of the purchase prices of acquired businesses over the estimated fair values of the net assets acquired. Goodwill is amortized on a straight-line basis over periods not to exceed 24 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 20 years. The Company evaluates these assets for impairment whenever events or circumstances indicate that carrying amounts may not be recoverable through future undiscounted cash flows, excluding interest costs. If facts and circumstances suggest that a subsidiary's net assets are impaired, the Company assesses the fair value of the underlying business and reduces goodwill to an amount that results in the book value of the operation approximating fair value. Taxes on Income Deferred taxes are provided for differences between the financial statement and tax bases of assets and liabilities using enacted tax rates. The Company established a valuation allowance against a portion of the net tax benefit associated with all carryforwards and temporary differences at December 31, 2001, as it is more likely than not that these will not be fully utilized in the available carryforward period. Fair Value and Credit Risk of Financial Instruments The carrying values of cash and cash equivalents, accounts receivable, notes payable, accounts payable and accrued liabilities approximate their fair market value due to the short-term maturities of these instruments. The fair market value of long-term debt was estimated using rates currently available to the Company for debt with similar terms and maturities. The Company enters into interest rate swaps to manage interest rate exposures. The Company designates the interest rate swaps as hedges of underlying debt. Interest expense is adjusted to include the payment made or received under the swap agreements. The fair market value of the swap agreements was estimated based on the current market value of similar instruments. Financial instruments that potentially subject the Company to credit risk consist primarily of trade receivables and interest-bearing investments. Trade receivable credit risk is limited due to the diversity of the Company's customers and the Company's ongoing credit review procedures. Collateral for trade receivables is generally not required. The Company places its interest-bearing cash equivalents with major financial institutions and limits the amount of credit exposure to any one financial institution. Stock Options The Company accounts for the issuance of stock options under the provisions of Accounting Principles Board No. 25, "Accounting for Stock Issued to Employees." Generally for the Company's stock option plans, no compensation cost is recognized in the consolidated statement of income because the exercise price of the Company's stock options equals the market price of the underlying stock on the date of grant. Under the Company's 2001 Stock Option Plan, however, the Company did recognize a one-time charge of compensation cost because of stockholder approval of the plan subsequent to the grant date (see Note 10). 2. ACQUISITIONS AND DIVESTITURES Effective November 26, 2001, the Company sold the assets of its Triangle, TriEnda and Synergy World plastic thermoforming operations to Wilbert, Inc. for $21 million in cash, a $1.85 million noninterest-bearing one-year note as well as the assumption of certain identified liabilities. The Company recorded a pre-tax loss of $121.1 million in 2001 related to the sale. The amount of goodwill included in the loss on the sale was $82.0 million. The proceeds from the sale were used to pay down the Company's term debt. As a result of the sale, the Company also recovered in January 2002 approximately $15.7 million of federal income taxes paid in 1999 and 2000 by utilizing the carryback of a tax net operating loss generated in 2001. $15 million of the proceeds related to this recovery of income taxes was also used to pay down the Company's term debt. The tax net operating loss not utilized during the allowable carryback period will be available to offset taxable income in future periods. (See Note 19.) 25 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The combined net sales of the thermoformed business sold included in the Company's historical results were $63.8 million in 2001 (through the date of sale), $100.3 million in 2000 and $70.7 million in 1999. Operating earnings (losses) associated with this business were $(12.0) million in 2001, $(8.4) million in 2000 and $2.8 million in 1999. Effective November 1, 2001, the Company sold its majority interest in Microlin, LLC for $1,000 in cash plus contingent consideration based upon future performance through December 31, 2012 and the cancellation of future funding requirements. The Company recorded a pre-tax loss of $1.4 million in 2001 related to the sale. On June 1, 2000, the Company acquired the net assets of Synergy World, a St. Louis, Missouri-based designer and marketer of portable restrooms sold to equipment rental companies, waste services companies and diversified sanitation firms, for $6.9 million in cash plus acquisition costs. The transaction was accounted for as a purchase with the purchase price allocated to the assets purchased and liabilities assumed based on their estimated fair values as of the date of acquisition. These assets were sold effective November 26, 2001. On December 21, 1999, the Company acquired a 51 percent equity interest in Microlin, LLC ("Microlin"), a developer of proprietary battery technology. The initial cash outlay for this investment was $1.5 million, with an agreement to fund working capital needs over the next several years. This investment was sold effective November 1, 2001. Effective May 24, 1999, the Company sold its plastic packaging product line, which produced coextruded high-barrier plastic sheet and containers for the food processing industry, for $28.7 million in cash. This transaction resulted in a gain of $19.7 million. Proceeds from the sale were used for debt repayment. The Company's sales from this product line were $13.0 million in 1999. Effective April 25, 1999, the Company acquired the net assets of Triangle Plastics, Inc. and its TriEnda subsidiary ("Triangle Plastics"), a manufacturer of heavy gauge industrial thermoformed parts for original equipment manufacturers in the heavy trucking, agricultural, portable toilet, recreational and construction markets, and producer of plastic thermoformed products for material handling applications, for $148.0 million in cash plus acquisition costs. The transaction was accounted for as a purchase with the purchase price allocated to the assets purchased and liabilities assumed based on their estimated fair values as of the date of acquisition. These assets were sold effective November 26, 2001. 3. PRO FORMA FINANCIAL INFORMATION The following unaudited pro forma financial information presents a summary of consolidated results of the Company as if the sale of the assets of the Triangle, TriEnda and Synergy World plastic thermoforming operations (as described in Note 2 above) had occurred at the beginning of each period presented. The pro forma financial information also reflects the sale of the Company's interest in Microlin, LLC that became effective November 1, 2001. The pro forma information assumes the proceeds from the sale of thermoformed assets and recovery of income taxes were received at the beginning of each period, and assumes a 35.0% effective income tax rate for all periods.
2001 2000 (thousands of dollars, except per share data) ------------- ------------- Net sales ...................................................... $ 241,679 $ 257,995 Earnings before interest, taxes and minority interest .......... 20,530 26,676 Net income ..................................................... 7,260 11,251 Diluted earnings per share ..................................... $ 1.14 $ 1.76
The Company's pro forma net income adjusted to reflect the elimination of all special charges and reorganization expenses, all losses on divestitures of assets, and the write-off of debt issuance and amendment costs would have been $12.0 million, or $1.88 per share, for 2001 and $11.4 million, or $1.78 per share, for 2000. 26 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 4. BUSINESS SEGMENT INFORMATION Following the sale of the Triangle, TriEnda and Synergy World plastic thermoforming assets and the third quarter 2001 appointment of new executive management, the Company reorganized its business segments to reflect the new business and management strategy. Prior periods have been reclassified to conform to the current segment definitions. The Company is now organized into two distinct segments: Consumer Products and Materials Based Group. The Company's operating segments are managed by the Company's Chief Executive Officer and, with respect to the Consumer Products segment, the division president for consumer products as well. They are responsible for the segments' performance and are also part of the Company's operating decision-making group. The Consumer Products segment markets a line of home food preservation products under Ball (Registered Trademark) , Kerr (Registered Trademark) and Bernardin (Registered Trademark) brands. Products include home canning jars which are sourced from major commercial glass container manufacturers, home canning metal closures, and related food products, which are distributed through a wide variety of retail outlets. The Materials Based Group provides cast zinc strip and fabricated zinc products primarily for zinc coinage and industrial applications, produces injection molded plastic products used in medical, pharmaceutical and consumer products, and manufactures industrial thermoformed plastic parts for appliances. This segment also included through November 26, 2001, the plastic thermoforming operations of Triangle, TriEnda and Synergy (see Note 2) which produced industrial thermoformed plastic parts for manufactured housing, recreational vehicles, heavy trucking, agriculture equipment, portable restrooms, recreational and construction products. Net sales, operating earnings, assets employed in operations, capital expenditures, and depreciation and amortization by segment are summarized as follows:
2001 2000 1999 (thousands of dollars) -------------- ------------ -------------- NET SALES: Consumer products ...................................................... $ 120,644 $ 120,381 $133,074 Materials based group(1)(3)(4) ......................................... 185,437 238,047 225,584 Intercompany ........................................................... (1,103) (1,072) (627) ---------- --------- -------- Total net sales ...................................................... $ 304,978 $ 357,356 $358,031 ========== ========= ======== OPERATING EARNINGS (LOSS): Consumer products ...................................................... $ 13,291 $ 10,362 $ 17,091 Materials based group .................................................. 1,801 9,928 21,467 Intercompany ........................................................... 13 39 (69) Unallocated corporate expenses ......................................... (6,146) (1,347) (7) Gain (loss) on divestitures of assets and product lines(1)(4) .......... (122,887) -- 19,678 ---------- --------- --------- Earnings (loss) before interest, taxes and minority interest ......... (113,928) 18,982 58,160 Interest expense, net ................................................... (11,791) (11,917) (8,395) ---------- --------- --------- Income (loss) before taxes and minority interest ........................ $ (125,719) $ 7,065 $ 49,765 ========== ========= ========= ASSETS EMPLOYED IN OPERATIONS: Consumer products ...................................................... $ 51,301 $ 60,713 $ 71,625 Materials based group(1) ............................................... 55,152 231,956 232,619 ---------- --------- --------- Total assets employed in operations .................................. 106,453 292,669 304,244 Corporate(2) ........................................................... 54,850 16,070 34,507 ---------- --------- --------- Total assets ......................................................... $ 161,303 $ 308,739 $338,751 ========== ========= =========
27 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2001 2000 1999 (thousands of dollars) ---------- --------- --------- CAPITAL EXPENDITURES: Consumer products ............................. $ 633 $ 1,314 $ 5,477 Materials based group ......................... 9,067 12,036 10,893 Corporate ..................................... 7 287 258 ------- ------- ------- Total capital expenditures .................. $ 9,707 $13,637 $16,628 ======= ======= ======= DEPRECIATION AND AMORTIZATION: Consumer products ............................. $ 3,202 $ 3,264 $ 2,505 Materials based group ......................... 15,395 17,813 14,372 Corporate ..................................... 200 234 820 ------- ------- ------- Total depreciation and amortization ......... $18,797 $21,311 $17,697 ======= ======= =======
- ---------- (1) Effective November 26, 2001, the Company sold the assets of its Triangle, TriEnda and Synergy World plastic thermoforming operations. (2) Corporate assets primarily include cash and cash equivalents, amounts relating to benefit plans, deferred tax assets and corporate facilities and equipment. (3) Includes the net sales of Triangle Plastics effective April 25, 1999. (4) Effective May 24, 1999, the Company sold its plastic packaging product line. The Company's major customers are located within the United States and Canada. Net sales of the Company's products in Canada, including home food preservation products, coinage and thermoformed plastic parts were $26.8 million, $35.3 million and $35.7 million in 2001, 2000 and 1999, respectively. Long-lived assets located outside the United States and net sales outside of the United States and Canada are not material. 5. INVENTORIES Inventories were comprised of the following at December 31:
2001 2000 (thousands of dollars) --------- ---------- Raw materials and supplies .......... $ 5,563 $14,311 Work in process ..................... 4,746 10,253 Finished goods ...................... 16,685 27,984 ------- ------- Total inventories ................ $26,994 $52,548 ======= =======
6. DEBT AND INTEREST In November 2001, the Company entered into an agreement with its lenders to amend certain provisions of its term loan and revolving credit facilities. The amendment reduced the revolving credit facility from $50 million to $40 million, shortened the facility termination date by one year, accelerated the required principal payments to conform with the shortened term of the facility, modified certain financial covenants, and required that the proceeds from the sale of the thermoforming assets and $15 million from the recovery of income taxes associated with the net operating loss carryback be used to prepay term debt. In December 2001, the Company applied the $21.0 million of proceeds from the sale of the thermoformed assets to the outstanding term loan balance. In January 2002, the Company applied $15.0 million of proceeds from the income tax refund related to the thermoformed sale to further pay down the term loan. 28 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The term loan, as amended and reflecting the payments mentioned above, requires quarterly payments of principal of $3.1 million through the first quarter of 2003, with quarterly payments of $11.2 million for the remainder of the term (through March 31, 2004). Interest on the term loan is based upon fixed increments over the adjusted London Interbank Offered Rate or the agent bank's alternate borrowing rate as defined in the agreement. The Company's weighted average interest rate on the term loan outstanding borrowings at December 31, 2001 was 4.3%, exclusive of the effects of the interest rate swap (see below). As of December 31, 2001 and 2000, the outstanding balances of the term loan were $75.5 million and $120.0 million, respectively. Because the interest rates applicable to the term loan are based on floating rates identified by reference to market rates, the fair market value of the long-term debt as of December 31, 2001 and 2000 approximates its carrying value. Interest on borrowings under the revolving credit facility are based upon fixed increments over the adjusted London Interbank Offered Rate or the agent bank's alternate borrowing rate as defined in the agreement. The agreement also requires the payment of commitment fees on the unused balance. As of December 31, 2001, $9.4 million of borrowings were outstanding under this agreement with a weighted average interest rate of 4.7%. As of December 31, 2000, $16 million of borrowings were outstanding with a weighted average interest rate of 8.1%. In February 2001, the Company entered into an agreement with its lenders to amend certain provisions of its term loan and revolving credit facilities. The amendment reduced the revolving credit facility to $50 million, provided for the Company's accounts receivable and inventory to be pledged as collateral, and modified certain financial covenants. The Company financed the 1999 acquisition of Triangle Plastics with a $250 million credit facility consisting of a six-year $150 million term loan and a $100 million revolving credit facility with all borrowings scheduled to mature on March 31, 2005. The agreement contains certain guarantees and financial covenants including minimum net worth requirements, minimum fixed charge coverage ratios and maximum financial leverage ratios. As part of the financing in 1999, the Company paid off $25.7 million of existing debt. The Company incurred a $1.7 million pretax ($1.0 million after-tax) prepayment charge in connection with the payoff. The charge is reported as an extraordinary loss on the Consolidated Statement of Operations. In May 1999, the Company entered into a three-year interest rate swap with an initial notional value of $90 million. The swap effectively fixed the interest rate on approximately 60% of the Company's term debt at a maximum rate of 7.98% for the three-year period. Adjusted for the application of proceeds from the sale of thermoformed assets and from the related income tax refund, the swap now covers 100% of the Company's term debt. The fair market value of the swap as of December 31, 2001 and 2000 was approximately $(524,000) and $45,000, respectively. As of December 31, 2001, maturities on long-term debt over the next five years, were $19.1 million in 2002, $43.5 million in 2003, $12.9 million in 2004, and none for 2005 and 2006. Maturities on long-term debt over the next five years, as adjusted to reflect the application of the $15 million of proceeds from the income tax refund as mentioned above, are $27.4 million in 2002, $36.8 million in 2003, $11.2 million in 2004, and none for 2005 and 2006. Interest paid on the Company's borrowings during the years ended December 31, 2001, 2000 and 1999 was $9.5 million, $11.4 million and $8.3 million, respectively. 29 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 7. SPECIAL CHARGES (CREDITS) AND REORGANIZATION EXPENSES The Company incurred net special charges (credits) and reorganization expenses of $5.0 million, $0.4 million and $2.3 million for 2001, 2000 and 1999, respectively. These amounts are comprised of the following (in millions):
2001 2000 1999 --------- --------- --------- Costs to evaluate strategic options ............................ $ 1.4 $ 0.6 $ -- Discharge of deferred compensation obligations ................. (4.1) -- -- Separation costs for former officers ........................... 2.6 -- -- Stock option compensation ...................................... 2.4 -- -- Corporate restructuring costs .................................. 2.3 -- -- Costs to exit facilities ....................................... 0.8 -- 2.3 Reduction of long-term performance-based compensation .......... -- (1.6) -- Litigation charges ............................................. -- 1.4 -- Items related to divested thermoforming operations ............. (0.4) -- -- ------ ------ ----- $ 5.0 $ 0.4 $ 2.3 ====== ====== =====
During 2001, certain participants in the Company's deferred compensation plans agreed to forego balances in those plans in exchange for loans from the Company in the same amounts. The loans, which were completed during 2001, bear interest at the applicable federal rate and require the individuals to secure a life insurance policy having the death benefit equivalent to the amount of the loan payable to the Company. All accrued interest and principal on the loans are payable upon the death of the participant and their spouse. The Company recognized $4.1 million of pre-tax income during 2001 related to the discharge of the deferred compensation obligations. On September 25, 2001, the Company announced the departure from the Company of Thomas B. Clark, Chairman, President and Chief Executive Officer, and Kevin D. Bower, Senior Vice President and Chief Financial Officer. The Board announced the appointment of Martin E. Franklin as Chairman and Chief Executive Officer and Ian G.H. Ashken as Vice Chairman, Chief Financial Officer and Secretary. Separation costs associated with this management reorganization were approximately $2.6 million. During September 2001, options were granted to participants under the Company's 2001 Stock Option Plan. Because the options granted under this new plan were still subject to stockholder approval at the time of grant, the options resulted in a one-time charge of $2.4 million which was recorded in the fourth quarter of 2001 (see Note 10) following stockholder approval of the 2001 Stock Option Plan on December 18, 2001. During the fourth quarter of 2001, the Company incurred corporate restructuring costs in the amount of $2.3 million. These include costs related to the transitioning of the corporate office function from Indianapolis, Indiana to Rye, New York and Muncie, Indiana, costs to reincorporate in Delaware and to hold a special meeting of stockholders, and other costs including professional fees. Of this amount, $1.8 million remained unpaid as of December 31, 2001. In August 2001, the Company announced that it would be consolidating its home canning metal closure production from its Bernardin Ltd. Toronto, Ontario facility into its Muncie, Indiana manufacturing operation. The total cost to exit the Toronto facility was $0.8 million and includes a $0.3 million loss on the sale and disposal of equipment, and $0.5 million of employee severance costs. Of the $0.5 million accrued liability established for severance costs, approximately $0.4 million had been expended through December 31, 2001. The Company will continue to distribute its products in Canada through Bernardin, Ltd. During 2001, items recognized related to the divested thermoforming operations included a pre-tax gain of $1.0 million in connection with an insurance recovery associated with a property casualty. Also in 30 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) August 2001, the Company announced that it had vacated its former Triangle Plastics facility in Independence, Iowa and integrated personnel and capabilities into its other operating and distribution facilities in the area. The total cost to exit this Iowa facility was $0.6 million and includes $0.4 million in future lease obligations and an additional $0.2 million of costs related to the leased facility. During 2000, the Company recorded a pre-tax gain of $1.6 million related to a reduction in long-term performance-based compensation. Also during 2000, the Company reached settlements in legal disputes incurring $1.4 million in net settlement and legal expenses. During 1999, the Company incurred $2.3 million in costs associated with the exit of a plastic thermoforming facility. 8. TAXES ON INCOME The components of the provision for income taxes attributable to continuing operations were as follows for the years ended December 31:
2001 2000 1999 (thousands of dollars) -------------- ----------- ---------- Current income tax expense (benefit): U.S. federal ................................... $ (13,978) $ (166) $ 19,233 Foreign ....................................... 1,163 462 960 State and local ............................... (500) (59) 2,880 ---------- ------- -------- Total ....................................... (13,315) 237 23,073 ---------- ------- -------- Deferred income tax expense (benefit): U.S. federal .................................. (33,707) 1,135 (3,635) State, local and other ........................ (4,962) 187 (580) ---------- ------- -------- Total ....................................... (38,669) 1,322 (4,215) ---------- ------- -------- Income tax benefit applied to goodwill ......... 11,541 843 600 ---------- ------- -------- Total income tax provision (benefit) ........... $ (40,443) $ 2,402 $ 19,458 ========== ======= ========
Foreign pre-tax income was $0.9 million, $2.5 million and $1.0 million in 2001, 2000 and 1999, respectively. Deferred tax liabilities (assets) are comprised of the following at December 31:
2001 2000 (thousands of dollars) -------------- ---------- Property, equipment and intangibles .......... $ 9,430 $ 17,559 Other ........................................ 2,314 346 ---------- -------- Gross deferred tax liabilities .............. 11,744 17,905 ---------- -------- Net operating loss ........................... (39,909) -- Accounts receivable allowances ............... (388) (580) Inventory valuation .......................... (1,730) (1,312) Compensation and benefits .................... (4,010) (5,352) Other ........................................ (1,351) (2,214) ---------- -------- Gross deferred tax assets ................... (47,388) (9,458) ---------- -------- Valuation allowance .......................... 5,395 -- ---------- -------- Net deferred tax liability (asset) ........... $ (30,249) $ 8,447 ========== ========
31 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Approximately $103 million of net operating loss carryforwards remain at December 31, 2001. Their use is limited to future taxable income of the Company. The carryforwards expire in 2021. The Company established a valuation allowance against a portion of the net tax benefit associated with all carryforwards and temporary differences at December 31, 2001, as it is more likely than not that these will not be fully utilized in the available carryforward period. (See Note 19.) The difference between the federal statutory income tax rate and the Company's effective income tax rate as a percentage of income from continuing operations is reconciled as follows:
2001 2000 1999 ---------- ---------- ---------- Federal statutory tax rate ................. 35.0% 35.0% 35.0% Increase (decrease) in rates resulting from: State and local taxes, net ................ 3.3 1.0 3.0 Foreign ................................... ( .9) (2.2) 1.2 Valuation allowance ....................... (4.3) -- -- Other ..................................... (0.9) .2 ( .1) ---- ---- ---- Effective income tax rate .................. 32.2% 34.0% 39.1% ==== ==== ====
In 1999, the income tax expense or benefit from discontinued operations differed from an expense or benefit calculated using the federal statutory tax rate primarily due to state income taxes and the amortization of intangible assets. Total income tax payments made by the Company during the years ended December 31, 2001, 2000 and 1999 were $1.0 million, $1.7 million and $23.2 million, respectively. 9. RETIREMENT AND OTHER EMPLOYEE BENEFIT PLANS The Company has multiple defined contribution retirement plans that qualify under section 401(k) of the Internal Revenue Code. The Company's contributions to these retirement plans were $1.5 million, $1.5 million and $1.9 million, respectively, in the years ended December 31, 2001, 2000 and 1999. The Company also maintains a defined benefit pension plan for certain of its hourly employees. The components of net periodic pension expense for the years ended December 31, 2001, 2000 and 1999 are as follows:
2001 2000 1999 (thousands of dollars) ----------- ----------- ----------- Service cost of benefits earned during the period .......... $ 273 $ 280 $ 291 Interest cost on projected benefit obligation .............. 907 853 807 Investment loss (gain) on plan assets ...................... 1,793 (1,648) (1,670) Net amortization and deferral .............................. (2,942) 630 802 -------- -------- -------- Net periodic pension expense ............................... $ 31 $ 115 $ 230 ======== ======== ========
32 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The following table is a reconciliation of the benefit obligation and the fair value of plan assets as of December 31, 2001 and 2000:
2001 2000 (thousands of dollars) ------------ ------------- Change in benefit obligation: Benefit obligation at beginning of year ................ $ 12,304 $11,541 Service cost ........................................... 273 280 Interest cost .......................................... 907 853 Amendments ............................................. 232 -- Actuarial gain ......................................... (113) (58) Benefits paid .......................................... (386) (312) -------- -------- Benefit obligation at end of year ...................... 13,217 12,304 -------- -------- Change in plan assets: Fair value of plan assets at beginning of year ......... 13,320 12,087 Actual return on plan assets ........................... (1,793) 1,648 Benefits paid .......................................... (445) (415) -------- -------- Fair value of plan assets at end of year ............... 11,082 13,320 -------- -------- Funded status .......................................... (2,135) 1,016 Unrecognized net transitional asset .................... -- (1) Unrecognized prior service cost ........................ 882 745 Unrecognized net loss (gain) ........................... 884 (2,098) Additional minimum liability ........................... (1,279) -- -------- --------- Accrued benefit cost ................................... $ (1,648) $ (338) ======== =========
The actuarial assumptions used to compute the funded status of the plan for 2001 and 2000 include a discount rate of 7.50% and an expected long-term rate of return on assets of 9.0%. In accordance with the provisions of SFAS 87, "Employer's Accounting for Pensions," the Company recorded an additional minimum liability of $1.3 million at December 31, 2001, representing the excess of the unfunded accumulated benefit obligation over the accrued pension cost. The additional minimum liability has been offset by an intangible asset to the extent of previously unrecognized prior service cost, with the remainder of $0.4 million recorded as a component of accumulated other comprehensive loss. The Company also provides certain postretirement medical and life insurance benefits for a portion of its non-union employees. The components of net periodic postretirement benefit expense for the years ended December 31, 2001, 2000 and 1999 are as follows:
2001 2000 1999 (thousands of dollars) -------- -------- ------- Service cost of benefits earned ........... $ 62 $ 60 $ 67 Interest cost on liability ................ 112 105 105 Net amortization and deferral ............. (15) (14) 2 ----- ----- ---- Net postretirement benefit cost .......... $ 159 $ 151 $174 ===== ===== ====
33 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The status of the Company's unfunded postretirement benefit obligation at December 31, 2001 and 2000 follows:
2001 2000 (thousands of dollars) --------- ------------ Change in benefit obligation: Benefit obligation at beginning of year ......... $1,553 $1,446 Service cost .................................... 62 60 Interest cost ................................... 112 105 Actuarial loss (gain) ........................... 109 (9) Benefits paid ................................... (61) (49) ------ ------- Benefit obligation at end of year ............... 1,775 1,553 Unrecognized prior service cost ................. (46) (49) Unrecognized net gain ........................... 339 443 ------ ------- Accrued benefit cost ............................ $2,068 $1,947 ====== =======
The assumed discount rate used to measure the benefit obligation was 7.00% and 7.50% as of December 31, 2001 and 2000, respectively. Increases in health care costs would not materially impact the benefit obligation or the annual service and interest costs recognized as benefits under the medical plan consist of a defined dollar monthly subsidy toward the retiree's purchase of medical insurance for the majority of employees covered. Through December 31, 2001, the Company had a deferred compensation plan that permitted eligible employees to defer a specified portion of their compensation. The deferred compensation earned rates of return as specified in the plan. As of December 31, 2001 and 2000, the Company had accrued $2.2 million and $6.4 million, respectively, for its obligations under this plan. Interest expense on this obligation was $0.2 million, $0.3 million and $0.7 million in 2001, 2000 and 1999, respectively. Effective January 1, 2002 the deferred compensation plan has been terminated. Participants may elect to keep their existing balances in the plan, and if so those balances will earn a rate of return equal to the federal funds overnight repurchase rate. To effectively fund the deferred compensation obligation, the Company had purchased variable rate life insurance contracts. These insurance contracts were surrendered in June 2001 and therefore the obligation at December 31, 2001 is unfunded. The cash surrender value of the contracts included in Other Assets at December 31, 2000 was $6.6 million. During 2001, certain participants in the Company's deferred compensation plans agreed to forego balances in those plans in exchange for loans from the Company in the same amounts. The loans, which were completed during 2001, bear interest at the applicable federal rate and require the individuals to secure a life insurance policy having the death benefit equivalent to the amount of the loan payable to the Company. All accrued interest and principal on the loans are payable upon the death of the participant and their spouse. The Company recognized $4.1 million of pre-tax income during 2001 related to the discharge of the deferred compensation obligations. These amounts are included in Special Charges (Credits) and Reorganization Expenses on the Consolidated Statement of Operations. 10. STOCK PLANS The Company maintains the 1998 Long-Term Equity Incentive Plan that allows for grants of stock options, restricted stock, stock equivalent units, stock appreciation rights and other stock-related forms of incentive compensation. As of December 31, 2001, there were 383,490 shares available for grant under this long-term equity incentive plan. 34 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Effective September 24, 2001, the Company established the 2001 Stock Option Plan for the purpose of granting options for the purchase of common shares to the Company's executive officers and independent directors. Options vest to, and are exercisable by, participants on the earlier of 1) the date the Company's closing stock price equals or exceeds $17 per share or 2) the seventh anniversary of the grant date. During September, 570,000 options were granted to participants under this new plan. Because the options granted under this new plan were still subject to stockholder approval at the time of grant, the options resulted in a one-time charge of $2.4 million which was recorded in the fourth quarter of 2001. The charge represents the difference between the exercise price of the options of $10.95 (the fair value at the date of grant) and the fair value of the Company's stock at the time of stockholder approval on December 18, 2001 which was $15.20. This charge is included in Special Charges (Credits) and Reorganization Expenses on the Consolidated Statement of Operations. As of December 31, 2001, there were 80,000 shares available for grant under the 2001 Stock Option Plan. The Company also maintains the 1993 Stock Option Plan and the 1993 and 1996 Stock Option Plans for Nonemployee Directors whereby stock options are granted to key employees and non-employee directors. As of December 31, 2001, there were 222,042 shares available for grant under these stock option plans. New stock option issuances are generally made under the 1998 and 2001 plans. A summary of stock option activity for the years ended December 31, 2001 and 2000 is as follows:
2001 2000 ---------------------------------------------- ---------------------------------------------- WEIGHTED WEIGHTED AVG. AVG. SHARES OPTION PRICE PRICE RANGE SHARES OPTION PRICE PRICE RANGE ------------ -------------- ------------------ ------------ -------------- ------------------ Outstanding at beginning of year .............................. 306,170 $ 18.27 $ 10.89-$27.94 276,110 $ 18.81 $ 10.89-$27.94 New options granted ................ 666,000 11.06 10.95-15.09 80,750 16.54 12.50-23.75 Exercised .......................... (15,355) 10.89 10.89-10.89 (20,890) 12.38 10.89-19.63 Canceled ........................... (33,843) 19.62 13.00-27.94 (29,800) 23.53 19.63-27.94 ------- -------- ---------------- ------- -------- ---------------- Outstanding at end of year ......... 922,972 13.14 10.95-27.94 306,170 18.27 10.89-27.94 Exercisable at end of year ......... 242,543 $ 18.37 $ 12.50-$27.94 213,650 $ 18.70 $ 10.89-$27.94
Significant option groups outstanding at December 31, 2001 and related weighted average price and life information follows:
OPTIONS WEIGHTED AVERAGE OPTIONS WEIGHTED AVERAGE WEIGHTED AVERAGE EXERCISE PRICE OUTSTANDING EXERISE PRICE EXERCISABLE EXERCISE PRICE REMAINING LIFE (YEARS) - ---------------------- ------------- ------------------ ------------- ------------------ ----------------------- $22.25-$27.94......... 52,576 $ 23.95 43,893 $ 23.70 4.36 18.75-21.50 .......... 108,894 20.89 106,148 20.92 3.65 10.95-15.09 .......... 761,502 11.29 92,502 12.91 8.69
Had compensation cost for the Company's stock option plans been determined based on the fair value at the grant dates for awards under those plans, the Company's net income and earnings per share would have been reduced to the pro forma amounts indicated. 35 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2001 2000 1999 (thousands of dollars, except per share amounts) ------------- ----------- ------------ Net income (loss) As reported ..................................... $ (85,429) $ 4,922 $ 29,192 Pro forma ....................................... (85,724) 4,624 28,899 Basic earnings (loss) per share As reported ..................................... $ (13.43) $ 0.78 $ 4.34 Pro forma ....................................... (13.47) 0.73 4.29 Diluted earnings (loss) per share As reported ..................................... $ (13.43) $ 0.77 $ 4.28 Pro forma ....................................... (13.47) 0.72 4.24
The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in 2001, 2000 and 1999, respectively: no dividend yield for all years, expected volatility of 37, 36 and 25 percent, risk-free interest rates of 4.8, 5.1 and 5.4 percent and expected lives of 7.5 years for all periods. The average fair value of each option granted in 2001, 2000 and 1999 was $5.77, $8.26 and $8.62, respectively. The Company also grants restricted stock to key employees. The company granted 500, 3,250 and 6,950 shares in 2001, 2000 and 1999, respectively. The Company also maintains an employee stock purchase plan whereby the Company matches 20% of each participating employee's monthly payroll deduction, up to $500. The Company thereby contributed $59,000, $144,000 and $166,000 to the plan in 2001, 2000 and 1999, respectively. 11. LEASE COMMITMENTS The Company has commitments under operating leases, certain of which extend through 2008. These commitments total $2.7 million in 2002, $2.6 million in 2003, $2.3 million in 2004, $1.6 million in 2005, $0.6 million in 2006 and $0.4 million in total for all later years. Total lease expense was $4.8 million in 2001, $4.1 million in 2000 and $3.5 million in 1999. 12. CONTINGENCIES The Company is involved in various legal disputes in the ordinary course of business. In addition, the Environmental Protection Agency has designated the Company as a potentially responsible party, along with numerous other companies, for the clean up of several hazardous waste sites. Based on currently available information, the Company does not believe that the disposition of any of the legal or environmental disputes the Company is currently involved in will have a material adverse effect upon the financial condition, results of operations, cash flows or competitive position of the Company. It is possible, that as additional information becomes available, the impact on the Company of an adverse determination could have a different effect. 13. NEW ACCOUNTING PRONOUNCEMENTS The Company adopted Statement of Financial Accounting Standard 133 (SFAS 133), Accounting for Derivative Instruments and Hedging Activities, on January 1, 2001. The statement requires the Company to recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives will either be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. Hedge ineffectiveness, the amount by which the change in the value of a hedge does not exactly offset the change in the value of the hedged item, will be immediately recognized in earnings. The adoption of SFAS 133 on January 1, 2001 did not have a material impact on the Company's results of operations or financial position. 36 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) In July 2001, the Financial Accounting Standards Board (FASB) issued Statements of Financial Accounting Standards No. 141, Business Combinations, and No. 142, Goodwill and Other Intangible Assets, effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill (and intangible assets deemed to have indefinite lives) will no longer be amortized but will be subject to annual impairment tests in accordance with the Statements. Other intangible assets will continue to be amortized over their useful lives. The Company will apply the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of 2002. During 2002, the Company will perform the first of the required impairment tests of goodwill and indefinite lived intangible assets, but does not anticipate a material impact on its results of operations or financial position. In June 2001, the FASB issued Statement of Financial Accounting Standard No. 143 (SFAS 143), Accounting for Asset Retirement Obligations, effective for fiscal years beginning after June 15, 2002. This standard requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. SFAS 143 is effective for the Company beginning with the first quarter of 2003, and its adoption is not expected to have a material impact on the Company's results of operations or financial position. In August 2001, the FASB issued Statement of Financial Accounting Standard No. 144 (SFAS 144), Accounting for the Impairment or Disposal of Long-Lived Assets, effective for fiscal years beginning after December 15, 2001. This standard supercedes SFAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and provides a single accounting model for long-lived assets to be disposed of. The new standard also supersedes the provisions of APB Opinion 30 with regard to reporting the effects of a disposal of a segment of a business and requires expected future operating losses from discontinued operations to be displayed in discontinued operations in the period(s) in which the losses are incurred. SFAS 144 is effective for the Company beginning with the first quarter of 2002, and its adoption is not expected to have a material impact on the Company's results of operations or financial position. 14. DERIVATIVE FINANCIAL INSTRUMENTS The Company's derivative activities are initiated within the guidelines of documented corporate risk-management policies and do not create additional risk because gains and losses on derivative contracts offset losses and gains on the assets, liabilities and transactions being hedged. As derivative contracts are initiated, the Company designates the instruments individually as either a fair value hedge or a cash flow hedge. Management reviews the correlation and effectiveness of its derivatives on a periodic basis. The Company uses interest rate swaps to manage a portion of its exposure to short-term interest rate variations with respect to the London Interbank Offered Rate on its term debt obligations. The Company has designated the interest rate swaps as cash flow hedges. Gains and losses related to the effective portion of the interest rate swaps are reported as a component of other comprehensive income and reclassified into earnings in the same period the hedged transaction affects earnings. Because the terms of the swaps exactly match the terms of the underlying debt, the swaps are perfectly effective. The interest rate swap agreements expire in March 2002. 15. RELATED PARTY TRANSACTIONS On May 7, 2001, the Company entered into a letter of intent (the "Letter") with Marlin Partners II, LP (Marlin), Catterton Partners, L.P. and Alpha Private Equity Group (collectively, the "Other Investors") for the acquisition by Marlin and the Other Investors of all of the issued and outstanding common stock of the Company. At the time, Marlin was a related party due to its ownership of approximately 10 percent of the issued and outstanding common stock of the Company. Mr. Martin Franklin and Mr. Ian Ashken, the Company's current Chairman and CEO, and Vice Chairman and CFO, 37 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) respectively, were the managing partners of Marlin. According to the terms of the Letter, Marlin was reimbursed approximately $480,000 of expenses related to the contemplated transaction. On June 24, 2001, Messrs. Franklin and Ashken became Directors of the Company and on September 24, 2001, Messrs. Franklin and Ashken became executive officers of the Company. 16. EARNINGS PER SHARE Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share are calculated based on the weighted average number of outstanding common shares plus the dilutive effect of stock options as if they were exercised. Due to the net loss for 2001, the effect of the potential exercise of stock options was not considered in the diluted earnings per share calculation for that year since it would be antidilutive. A computation of earnings per share is as follows for the years ended December 31:
2001 2000 1999 (thousands, except per share amounts) -------------- ----------- ---------- Income (loss) from continuing operations ......................... $ (85,429) $ 4,922 $ 30,307 Discontinued operations .......................................... -- -- (87) Extraordinary loss from early extinguishment of debt ............. -- -- (1,028) ---------- ------- -------- Net income (loss) ................................................ $ (85,429) $ 4,922 $ 29,192 ========== ======= ======== Weighted average shares outstanding .............................. 6,363 6,338 6,734 Additional shares assuming conversion of stock options ........... -- 45 85 ---------- ------- -------- Weighted average shares outstanding assuming conversion .......... 6,363 6,383 6,819 ========== ======= ======== Basic earnings (loss) per share: Income (loss) from continuing operations ......................... $ (13.43) $ .78 $ 4.50 Discontinued operations .......................................... -- -- ( .01) Extraordinary loss from early extinguishment of debt ............. -- -- ( .15) ---------- ------- -------- Net income (loss) ................................................ $ (13.43) $ .78 $ 4.34 ========== ======= ======== Diluted earnings (loss) per share -- assuming conversion: Income (loss) from continuing operations ......................... $ (13.43) $ .77 $ 4.44 Discontinued operations .......................................... -- -- ( .01) Extraordinary loss from early extinguishment of debt ............. -- -- ( .15) ---------- ------- -------- Net income (loss) ................................................ $ (13.43) $ .77 $ 4.28 ========== ======= ========
17. QUARTERLY STOCK PRICES (UNAUDITED) Quarterly sales prices for the Company's common stock, as reported on the composite tape, were as follows:
FIRST SECOND THIRD FOURTH QUARTER QUARTER QUARTER QUARTER ----------- ----------- ----------- ----------- 2001 - ---- High ......... $ 15.13 $ 16.15 $ 13.03 $ 16.05 Low .......... $ 12.30 $ 11.64 $ 10.70 $ 11.30 ------- ------- ------- ------- 2000 - ---- High ......... $ 25.00 $ 25.50 $ 23.50 $ 20.94 Low .......... $ 21.00 $ 20.00 $ 20.75 $ 10.00 ------- ------- ------- -------
38 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 18. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) Summarized quarterly results of operations for 2001, 2000 and 1999 were as follows:
FIRST SECOND QUARTER QUARTER (thousands of dollars, except per share amounts) --------------- --------------- 2001 - ---- Net sales ........................................ $ 69,027 $ 90,598 -------- ---------- Gross profit ..................................... 14,935 24,677 -------- ---------- Net income (loss) from continuing operations ...................................... (238)(1) 5,111(2) -------- ------------ Net income (loss) ................................ (238) 5,111 -------- ------------ Basic earnings (loss) per share: Income (loss) from continuing operations .................................... $ (.04) $ .80 -------- ------------ Net income (loss) ............................... $ (.04) $ .80 -------- ------------ Diluted earnings (loss) per share: Income (loss) from continuing operations .................................... $ (.04) $ .80 -------- ------------ Net income (loss) ............................... $ (.04) $ .80 -------- ------------ 2000 - ---- Net sales ........................................ $ 84,455 $ 114,998 -------- ------------ Gross profit ..................................... 18,808 30,824 -------- ------------ Net income (loss) from continuing operations ...................................... 444 6,210(5) -------- ------------ Net income (loss) ................................ 444 6,210 -------- ------------ Basic earnings (loss) per share: Income (loss) from continuing operations .................................... $ .07 $ .99 -------- ------------ Net income (loss) ............................... $ .07 $ .99 -------- ------------ Diluted earnings (loss) per share: Income (loss) from continuing operations .................................... $ .07 $ .98 -------- ------------ Net income (loss) ............................... $ .07 $ .98 -------- ------------ 1999 - ---- Net sales ........................................ $ 53,411 $ 113,653 -------- ------------ Gross profit ..................................... 12,318 33,678 -------- ------------ Net income from continuing operations............. 1,963 20,364(8) -------- ------------ Net income (loss) ................................ 2,099 19,336 -------- ------------ Basic earnings (loss) per share: Income from continuing operations ............... $ .29 $ 3.03 -------- ------------ Net income (loss) ............................... $ .31 $ 2.88 -------- ------------ Diluted earnings (loss) per share: Income from continuing operations ............... $ .29 $ 2.99 -------- ------------ Net income (loss) ............................... $ .31 $ 2.84 -------- ------------ THIRD FOURTH QUARTER QUARTER TOTAL (thousands of dollars, except per share amounts) ------------------ ----------------- ------------- 2001 - ---- Net sales ........................................ $ 90,477 $ 54,876 $ 304,978 ----------- ---------- --------- Gross profit ..................................... 22,178 9,512 71,302 ----------- ---------- --------- Net income (loss) from continuing operations ...................................... (83,032)(3) (7,270)(4) (85,429) ----------- ---------- --------- Net income (loss) ................................ (83,032) (7,270) (85,429) ----------- ---------- --------- Basic earnings (loss) per share: Income (loss) from continuing operations .................................... $ (13.04) $ (1.14) $ (13.43) ----------- ---------- ---------- Net income (loss) ............................... $ (13.04) $ (1.14) $ (13.43) ----------- ---------- ---------- Diluted earnings (loss) per share: Income (loss) from continuing operations .................................... $ (13.04) $ (1.14) $ (13.43) ----------- ---------- ---------- Net income (loss) ............................... $ (13.04) $ (1.14) $ (13.43) ----------- ---------- ---------- 2000 - ---- Net sales ........................................ $ 97,096 $ 60,807 $ 357,356 ----------- ---------- ---------- Gross profit ..................................... 23,123 9,030 81,785 ----------- ---------- ---------- Net income (loss) from continuing operations ...................................... 1,641(6) (3,373)(7) 4,922 ------------- ---------- ---------- Net income (loss) ................................ 1,641 (3,373) 4,922 ------------- ---------- ---------- Basic earnings (loss) per share: Income (loss) from continuing operations .................................... $ .26 $ (.53) $ .78 ------------- ---------- ---------- Net income (loss) ............................... $ .26 $ (.53) $ .78 ------------- ---------- ---------- Diluted earnings (loss) per share: Income (loss) from continuing operations .................................... $ .26 $ (.53) $ .77 ------------- ---------- ---------- Net income (loss) ............................... $ .26 $ (.53) $ .77 ------------- ---------- ---------- 1999 - ---- Net sales ........................................ $ 112,768 $ 78,199 $ 358,031 ------------- ---------- ---------- Gross profit ..................................... 33,817 20,910 100,723 ------------- ---------- ---------- Net income from continuing operations............. 7,813 167(9) 30,307 ------------- ------------ ---------- Net income (loss) ................................ 7,813 (56) 29,192 ------------- ------------ ---------- Basic earnings (loss) per share: Income from continuing operations ............... $ 1.16 $ .02 $ 4.50 ------------- ------------ ---------- Net income (loss) ............................... $ 1.16 $ (.01) $ 4.34 ------------- ------------ ---------- Diluted earnings (loss) per share: Income from continuing operations ............... $ 1.14 $ .02 $ 4.44 ------------- ------------ ---------- Net income (loss) ............................... $ 1.14 $ (.01) $ 4.28 ------------- ------------ ----------
39 ALLTRISTA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED) - ---------- (1) Includes $1.3 million of income (net of tax) related to the discharge of deferred compensation obligations. (2) Includes $1.5 million of income (net of tax) related to the discharge of deferred compensation obligations, a $0.7 million gain (net of tax) related to an insurance recovery associated with a property casualty and $0.9 million of costs (net of tax) associated with the Company's evaluation of its strategic options. (3) Includes an $81.2 million loss (net of tax) related to the sale of thermoforming assets, $1.8 million of separation costs (net of tax) related to the management reorganization and $0.9 million of costs (net of tax) associated with the exit of facilities. (4) Includes $1.5 million of costs (net of tax) associated with corporate restructuring, a $1.6 million charge (net of tax) for stock option compensation, $1.0 million of costs (net of tax) associated with the write-off of debt issuance and amendment costs, an additional $0.9 million loss (net of tax) related to the sale of thermoforming assets and a $0.9 million loss (net of tax) related to the sale of the Company's interest in Microlin, LLC. (5) Includes $1.1 million of income (net of tax) associated with the reduction in long-term performance-based compensation. (6) Includes $1.5 million of costs (net of tax) related to litigation. (7) Includes $0.6 million of income (net of tax) related to litigation. (8) Includes a $12.2 million gain (net of tax) on the sale of the Company's plastic packaging product line. (9) Includes $1.4 million of costs (net of tax) associated with the exit of a plastics thermoforming facility. Note: Earnings per share calculations for each quarter are based on the weighted average number of shares outstanding for each period, and the sum of the quarterly amounts may not necessarily equal the annual earnings per share amounts. NOTE 19. SUBSEQUENT EVENT On March 9, 2002, The Job Creation and Workers Assistance Act of 2002 was enacted which provides, in part, for the carryback of 2001 net operating losses for five years instead of the previous two year period. As a result, the company filed for an additional refund of $22.8 million, of which $22.2 million was received on March 22, 2002. At December 31, 2001, the federal net operating losses were recorded as a deferred tax asset with a valuation allowance of $11.7 million. This valuation allowance will be reversed in the first quarter of 2002 resulting in a deferred tax benefit. On January 24, 2002, Martin E. Franklin, Chairman and Chief Executive Officer, and Ian G.H. Ashken, Vice Chairman, Chief Financial Officer and Secretary, received loans from the Company in the amounts of $3.3 million and $1.6 million, respectively. The purpose of these loans, which are due on January 23, 2007, is to exercise non-qualified stock options granted under the Company's 2001 Stock Option Plan. 40 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE No disclosure required under Item 9. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information regarding executive officers is included in Part I of this Form 10-K as permitted by General Instruction G (3). Information regarding directors required by Item 10 appearing under the caption "Director Nominees and Continuing Directors" of the Company's proxy statement for the 2002 Annual Meeting of Stockholders is incorporated herein by reference. The proxy statement is expected to be filed with the Commission on or about April 15, 2002. ITEM 11. EXECUTIVE COMPENSATION The information required by Item 11 appearing under the caption "Executive Compensation" of the Company's proxy statement for the 2002 Annual Meeting of Stockholders is incorporated herein by reference. The proxy statement is expected to be filed with the Commission on or about April 15, 2002. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by Item 12 appearing under the captions "Voting Securities and Principal Stockholders" and "Security Ownership by Management and Directors" of the Company's proxy statement for the 2002 Annual Meeting of Stockholders is incorporated herein by reference. The proxy statement is expected to be filed with the Commission on or about April 15, 2002. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by Item 13 appearing under the caption "Certain Relationships and Related Transactions" of the Company's proxy statement for the 2002 Annual Meeting of Stockholders is incorporated herein by reference. The proxy statement is expected to be filed with the Commission on or about April 15, 2002. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (A) THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT: (1) FINANCIAL STATEMENTS
LOCATION IN 10-K --------- Consolidated statements of operations -- Years ended December 31, 2001, 2000 and 1999 Item 8 Consolidated balance sheets -- December 31, 2001 and 2000 ............................ Item 8 Consolidated statements of cash flows -- Years ended December 31, 2001 2000 and 1999 . Item 8 Consolidated statements of changes in stockholders' equity -- Years ended December 31, 2001, 2000 and 1999 ................................................................. Item 8 Consolidated statements of comprehensive income -- Years ended December 31, 2001, 2000 and 1999 ............................................................................ Item 8 Notes to consolidated financial statements ........................................... Item 8 Report of independent auditors ....................................................... Item 8
41 (2) FINANCIAL STATEMENT SCHEDULE: See Schedule II of this Form 10-K. (3) EXHIBITS: Copies of exhibits incorporated by reference can be obtained from the SEC and are located in SEC File No. 0-21052.
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - -------------- ----------------------------------------------------------------------------------------------------------- 2.1 Asset Purchase Agreement by and between Alltrista Plastics Corporation, TriEnda Corporation, Quoin Corporation, Alltrista Corporation and Wilbert, Inc., dated October 15, 2001 (filed as Exhibit 10.7 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed November 14, 2001). 2.2 Amendment to Asset Purchase Agreement by and between Alltrista Plastics Corporation, TriEnda Corporation, Quoin Corporation, Alltrista Corporation and Wilbert, Inc., dated November 29, 2001 (filed as Exhibit 10-2 to the Company's Report on Form 8-K, Filing No. 0-21052, and incorporated herein by reference, filed December 14, 2001). 2.3 Agreement and Plan of Merger between Alltrista Corporation and Alltrista Reincorporation MergerSub, Inc. (filed as Exhibit A to the Company's Definitive Proxy Statement, Filing No. 0-21052, and incorporated herein by reference, filed November 26, 2001). *3.1 Restated Certificate of Incorporation. 3.2 Bylaws of Alltrista Corporation (filed as Exhibit C to the Company's Definitive Proxy Statement, Filing No. 0-21052, and incorporated herein by reference, filed November 26, 2001). 4.1 Form of Rights Agreement (filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed May 12, 1999). 4.2 Amendment to Rights Agreement, dated as of July 19, 2001, between the Company and EquiServe Trust Company, N.A. as successor in interest to The First Chicago Trust Company of New York as Rights Agent (filed as Exhibit 4.1 to the Company's Form 8-K, Filing No. 0-21052, and incorporated herein by reference, filed August 21, 2001). 4.3 Amendment to Rights Agreement, dated as of December 14, 2001, between the Company and EquiServe Trust Company, N.A. as successor in interest to the First Chicago Trust Company of New York as Rights Agent (filed as Exhibit 1 to the Company's Form 8-A/A, Filing No. 0-21052, and incorporated herein by reference, filed January 9, 2002). #10.1 Form of Alltrista Corporation 1993 Stock Option Plan for Nonemployee Directors (filed as Exhibit 10.2 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993). #10.2 Form of Alltrista Corporation 1993 Stock Option Plan (filed as Exhibit 10.3 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993). #10.3 Form of Alltrista Corporation 1996 Stock Option Plan for Nonemployee Directors (filed as Exhibit 10.4 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 1997). #10.4 Form of Alltrista Corporation 1993 Restricted Stock Plan (filed as Exhibit 10.4 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993. 10.5 Form of Change of Control Agreement (filed as Exhibit 10.6 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and is incorporated herein by reference, filed March 29, 1999). 10.6 Form of Amendment to Change of Control Agreement, effective June 21, 2001 (filed as Exhibit 10.16 to the Company's Report on Form 10-Q, Filing No. 0-21052, and is incorporated herein by reference, filed August 10, 2001).
42
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - --------------- --------------------------------------------------------------------------------------------------------- *10.7 List of Alltrista Corporation officers party to Exhibit 10.5 and Exhibit 10.6. 10.8 Form of Distribution Agreement between Ball Corporation and Alltrista Corporation (filed as Exhibit 10.7 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993). 10.9 Form of Tax Sharing and Indemnification Agreement between Ball Corporation and Alltrista Corporation (filed as Exhibit 10.10 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993). 10.10 Form of Indemnification Agreement (filed as Exhibit 10.13 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993). 10.11 List of Directors and Executive Officers party to Exhibit 10.10 (filed as Exhibit 10.10 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 31, 1996). #10.12 Alltrista Corporation 1998 Long Term Equity Incentive Plan as amended and restated as of November 8, 2001 (filed as Annex A to the Company's Preliminary Proxy Statement, Filing No. 0-21052, and incorporated herein by reference, filed November 13, 2001). #10.13 Alltrista Corporation 2001 Stock Option Plan effective September 24, 2001 (filed as Annex B to the Company's Preliminary Proxy Statement, Filing No. 0-21052, and incorporated herein by reference, filed November 13, 2001). #10.14 Form of Alltrista Corporation 1999 Economic Value Added and Growth Incentive Compensation Plan for Key Members of Management (filed as Exhibit 10.1 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 30, 2000). #10.15 Amendment to the Alltrista Corporation Economic Value Added and Growth Incentive Compensation Plan for Key Members of Management (filed as Exhibit 10.2 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 2001). #10.16 Alltrista Corporation 1993 Deferred Compensation Plan for Selected Key Employees as Amended on February 1, 2001 (filed as Exhibit 10.14 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 2001). #10.17 Amendment to the Alltrista Corporation 1993 Deferred Compensation Plan for Selected Key Employees, effective June 21, 2001 (filed as Exhibit 10.3 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). #10.18 Alltrista Corporation 1993 Deferred Compensation Plan for Selected Key Employees as Amended on February 1, 2001 (filed as Exhibit 10.13 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 2001). #10.19 Amendment to the Alltrista Corporation 1993 Deferred Compensation Plan, effective June 21, 2001 (filed as Exhibit 10.2 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). #10.20 Alltrista Corporation 1997 Deferred Compensation Plan for Directors as Amended on February 1, 2001 (filed as Exhibit 10.15 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 2001). #10.21 Amendment to the Alltrista Corporation 1997 Deferred Compensation Plan for Directors, effective June 21, 2001 (filed as Exhibit 10.4 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). #10.22 Alltrista Corporation Excess Savings and Retirement Plan as Amended on February 1, 2001(filed as Exhibit 10.16 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 2001). #10.23 Amendment to the Alltrista Corporation Excess Savings and Retirement Plan, effective June 21, 2001 (filed as Exhibit 10.5 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001).
43
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ----------------- -------------------------------------------------------------------------------------------------------- +10.24 Agreement to Forego Compensation between Kevin D. Bower and Alltrista Corporation, effective March 31, 2001 (filed as Exhibit 10.2 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed May 15, 2001). +10.25 Agreement to Forego Compensation between Jerry T. McDowell and Alltrista Corporation, effective May 25, 2001 (filed as Exhibit 10.6 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.26 Agreement to Forego Compensation between Thomas B. Clark and Alltrista Corporation, effective March 31, 2001 (filed as Exhibit 10.1 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed May 15, 2001). +10.27 Agreement to Forego Compensation between Thomas B. Clark and Alltrista Corporation, effective May 31, 2001 (filed as Exhibit 10.7 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.28 Loan Agreement between Thomas B. Clark and Alltrista Corporation, effective May 31, 2001 (filed as Exhibit 10.8 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.29 Promissory Note between Alltrista Corporation, and Thomas B. and Karen A. Clark, effective May 31, 2001 (filed as Exhibit 10.9 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.30 Loan Agreement between Kevin D. Bower and Alltrista Corporation, effective May 31, 2001 (filed as Exhibit 10.10 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.31 Promissory Note between Alltrista Corporation, and Kevin D. and Maureen C. Bower, effective May 31, 2001 (filed as Exhibit 10.11 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.32 Loan Agreement between Jerry T. McDowell and Alltrista Corporation, effective May 31, 2001 (filed as Exhibit 10.12 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.33 Promissory Note between Alltrista Corporation, and Jerry T. and Gayleen M. McDowell, effective May 31, 2001 (filed as Exhibit 10.13 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). *+10.34 Employment Agreement between the Company and Martin E. Franklin, effective January 1, 2002. *+10.35 Employment Agreement between the Company and Ian G.H. Ashken, effective January 1, 2002. *+10.36 Employment Agreement between the Company and J. David Tolbert, effective January 1, 2002. *+10.37 Promissory Note, dated January 24, 2002, by Martin E. Franklin in favor of Alltrista Corporation. *+10.38 Promissory Note, dated January 24, 2002, by Ian G.H. Ashken in favor of Alltrista Corporation. *10.39 Alltrista Corporation 2002 Executive Loan Program. *21.1 Subsidiaries of Alltrista Corporation. *23.1 Consent of Independent Auditors.
- ---------- * Filed herewith + This Exhibit represents a management contract. # This Exhibit represents a compensatory plan. (B) REPORTS ON FORM 8-K In a Form 8-K (Commission File Number 0-21052) filed October 17, 2001, the Company filed two press releases dated October 15, 2001. The Company's first release announced that it had signed a 44 definitive agreement with Wilbert, Inc. to sell its Triangle, TriEnda and Synergy World plastic thermoforming businesses. The Company's second release announced the Company's decision to close its Indianapolis headquarters, the Company's intent to renegotiate its current financing arrangements, the Company's withdrawal of its previously announced earnings guidance for 2001 and the Company's termination of its agreement with Bear Stearns & Co., Inc. to pursue a review of the Company's strategic options. In a Form 8-K (Commission File Number 0-21052) filed December 14, 2001, the Company filed a press release issued December 3, 2001 announcing that it had completed the sale of substantially all of the assets of its Triangle, TriEnda and Synergy World plastic thermoforming operations to Wilbert, Inc. The report also included pro forma financial information related to the sale. In a Form 8-K (Commission File Number 0-21052) filed January 9, 2002, the Company disclosed that on December 18, 2001, at a special meeting of stockholders, the following proposals were approved: (i) to reincorporate the Registrant in the State of Delaware; (ii) to increase the number of the Registrant's shares of common stock authorized for issuance; (iii) to include a provision in the certificate of incorporation of the Registrant following the reincorporation eliminating liability for directors other than as required by Delaware law; (iv) to amend and restate the Registrant's 1998 Long-Term Equity Incentive Plan to increase the number of shares of common stock that may be issued thereunder by 350,000 shares and to eliminate the annual automatic share increase currently provided for in said plan; and (v) to adopt the Registrant's 2001 Stock Option Plan. 45 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. ALLTRISTA CORPORATION By: /s/ Martin E. Franklin --------------------------------- Martin E. Franklin Chairman and Chief Executive Officer March 21, 2002 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated below. (1) Principal Executive Officer: /s/ Martin E. Franklin Chairman and Chief Executive Officer --------------------------------- March 21, 2002 Martin E. Franklin (2) Principal Financial Accounting Officer: /s/ Ian G. H. Ashken Vice Chairman, Chief Financial Officer and --------------------------------- Company Secretary Ian G.H. Ashken March 21, 2002 (3) Board of Directors: /s/ Martin E. Franklin Chairman, President and Chief Executive Officer --------------------------------- March 21, 2002 Martin E. Franklin /s/ Ian G. H. Ashken Vice Chairman, Chief Financial Officer and --------------------------------- Company Secretary Ian G.H. Ashken March 21, 2002 /s/ Douglas W. Huemme Director --------------------------------- March 21, 2002 Douglas W. Huemme /s/ Richard L. Molen Director --------------------------------- March 21, 2002 Richard L. Molen /s/ Lynda Watkins Popwell Director --------------------------------- March 21, 2002 Lynda Watkins Popwell /s/ Patrick W. Rooney Director --------------------------------- March 21, 2002 Patrick W. Rooney /s/ David L. Swift Director --------------------------------- March 21, 2002 David L. Swift /s/ Robert L. Wood Director --------------------------------- March 21, 2002 Robert L. Wood
46 SCHEDULE II ALLTRISTA CORPORATION VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (THOUSANDS OF DOLLARS)
BALANCE AT CHARGES TO BALANCE AT BEGINNING COSTS AND DEDUCTIONS END OF OF PERIOD EXPENSE FROM RESERVES OTHER (1) (2) PERIOD ------------ ------------ --------------- --------------- ------------- Reserves against laccounts receivable: 2001 .............................. $ (1,517) $ (1,589) $ 1,933 $ 395 $ (778) 2000 .............................. $ (1,735) $ (746) $ 964 $ -- $ (1,517) 1999 .............................. $ (1,081) $ (578) $ 48 $ (124) $ (1,735)
- ---------- (1) Effective November 26, 2001, the Company sold the assets of its Triangle, TriEnda and Synergy World thermoforming operations. (2) Effective April 25, 1999, the Company acquired the net assets of Triangle Plastics, Inc. and its TriEnda subsidiary. 47 ALLTRISTA CORPORATION ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2001 Copies of exhibits incorporated by reference can be obtained from the SEC and are located in SEC File No. 0-21052.
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - --------------- ----------------------------------------------------------------------------------------------------------- 2.1 Asset Purchase Agreement by and between Alltrista Plastics Corporation, TriEnda Corporation, Quoin Corporation, Alltrista Corporation and Wilbert, Inc., dated October 15, 2001 (filed as Exhibit 10.7 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed November 14, 2001). 2.2 Amendment to Asset Purchase Agreement by and between Alltrista Plastics Corporation, TriEnda Corporation, Quoin Corporation, Alltrista Corporation and Wilbert, Inc., dated November 29, 2001 (filed as Exhibit 10-2 to the Company's Report on Form 8-K, Filing No. 0-21052, and incorporated herein by reference, filed December 14, 2001). 2.3 Agreement and Plan of Merger between Alltrista Corporation and Alltrista Reincorporation MergerSub, Inc. (filed as Exhibit A to the Company's Definitive Proxy Statement, Filing No. 0-21052, and incorporated herein by reference, filed November 26, 2001). *3.1 Restated Certificate of Incorporation. 3.2 Bylaws of Alltrista Corporation (filed as Exhibit C to the Company's Definitive Proxy Statement, Filing No. 0-21052, and incorporated herein by reference, filed November 26, 2001). 4.1 Form of Rights Agreement (filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed May 12, 1999). 4.2 Amendment to Rights Agreement, dated as of July 19, 2001, between the Company and EquiServe Trust Company, N.A. as successor in interest to The First Chicago Trust Company of New York as Rights Agent (filed as Exhibit 4.1 to the Company's Form 8-K, Filing No. 0-21052, and incorporated herein by reference, filed August 21, 2001). 4.3 Amendment to Rights Agreement, dated as of December 14, 2001, between the Company and EquiServe Trust Company, N.A. as successor in interest to the First Chicago Trust Company of New York as Rights Agent (filed as Exhibit 1 to the Company's Form 8-A/A, Filing No. 0-21052, and incorporated herein by reference, filed January 9, 2002). #10.1 Form of Alltrista Corporation 1993 Stock Option Plan for Nonemployee Directors (filed as Exhibit 10.2 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993). #10.2 Form of Alltrista Corporation 1993 Stock Option Plan (filed as Exhibit 10.3 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993). #10.3 Form of Alltrista Corporation 1996 Stock Option Plan for Nonemployee Directors (filed as Exhibit 10.4 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 1997). #10.4 Form of Alltrista Corporation 1993 Restricted Stock Plan (filed as Exhibit 10.4 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993. 10.5 Form of Change of Control Agreement (filed as Exhibit 10.6 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and is incorporated herein by reference, filed March 29, 1999). 10.6 Form of Amendment to Change of Control Agreement, effective June 21, 2001 (filed as Exhibit 10.16 to the Company's Report on Form 10-Q, Filing No. 0-21052, and is incorporated herein by reference, filed August 10, 2001). *10.7 List of Alltrista Corporation officers party to Exhibit 10.5 and Exhibit 10.6.
48
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ----------- --------------------------------------------------------------------------------------------------------- 10.8 Form of Distribution Agreement between Ball Corporation and Alltrista Corporation (filed as Exhibit 10.7 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993). 10.9 Form of Tax Sharing and Indemnification Agreement between Ball Corporation and Alltrista Corporation (filed as Exhibit 10.10 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993). 10.10 Form of Indemnification Agreement (filed as Exhibit 10.13 to the Company's Registration Statement on Form 10, Filing No. 0-21052, and incorporated herein by reference, filed March 17, 1993). 10.11 List of Directors and Executive Officers party to Exhibit 10.10 (filed as Exhibit 10.10 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 31, 1996). #10.12 Alltrista Corporation 1998 Long Term Equity Incentive Plan as amended and restated as of November 8, 2001 (filed as Annex A to the Company's Preliminary Proxy Statement, Filing No. 0-21052, and incorporated herein by reference, filed November 13, 2001). #10.13 Alltrista Corporation 2001 Stock Option Plan effective September 24, 2001 (filed as Annex B to the Company's Preliminary Proxy Statement, Filing No. 0-21052, and incorporated herein by reference, filed November 13, 2001). #10.14 Form of Alltrista Corporation 1999 Economic Value Added and Growth Incentive Compensation Plan for Key Members of Management (filed as Exhibit 10.1 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 30, 2000). #10.15 Amendment to the Alltrista Corporation Economic Value Added and Growth Incentive Compensation Plan for Key Members of Management (filed as Exhibit 10.2 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 2001). #10.16 Alltrista Corporation 1993 Deferred Compensation Plan for Selected Key Employees as Amended on February 1, 2001 (filed as Exhibit 10.14 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 2001). #10.17 Amendment to the Alltrista Corporation 1993 Deferred Compensation Plan for Selected Key Employees, effective June 21, 2001 (filed as Exhibit 10.3 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). #10.18 Alltrista Corporation 1993 Deferred Compensation Plan for Selected Key Employees as Amended on February 1, 2001 (filed as Exhibit 10.13 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 2001). #10.19 Amendment to the Alltrista Corporation 1993 Deferred Compensation Plan, effective June 21, 2001 (filed as Exhibit 10.2 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). #10.20 Alltrista Corporation 1997 Deferred Compensation Plan for Directors as Amended on February 1, 2001 (filed as Exhibit 10.15 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 2001). #10.21 Amendment to the Alltrista Corporation 1997 Deferred Compensation Plan for Directors, effective June 21, 2001 (filed as Exhibit 10.4 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). #10.22 Alltrista Corporation Excess Savings and Retirement Plan as Amended on February 1, 2001(filed as Exhibit 10.16 to the Company's Annual Report on Form 10-K, Filing No. 0-21052, and incorporated herein by reference, filed March 27, 2001). #10.23 Amendment to the Alltrista Corporation Excess Savings and Retirement Plan, effective June 21, 2001 (filed as Exhibit 10.5 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001).
49
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ----------------- -------------------------------------------------------------------------------------------------------- +10.24 Agreement to Forego Compensation between Kevin D. Bower and Alltrista Corporation, effective March 31, 2001 (filed as Exhibit 10.2 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed May 15, 2001). +10.25 Agreement to Forego Compensation between Jerry T. McDowell and Alltrista Corporation, effective May 25, 2001 (filed as Exhibit 10.6 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.26 Agreement to Forego Compensation between Thomas B. Clark and Alltrista Corporation, effective March 31, 2001 (filed as Exhibit 10.1 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed May 15, 2001). +10.27 Agreement to Forego Compensation between Thomas B. Clark and Alltrista Corporation, effective May 31, 2001 (filed as Exhibit 10.7 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.28 Loan Agreement between Thomas B. Clark and Alltrista Corporation, effective May 31, 2001 (filed as Exhibit 10.8 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.29 Promissory Note between Alltrista Corporation, and Thomas B. and Karen A. Clark, effective May 31, 2001 (filed as Exhibit 10.9 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.30 Loan Agreement between Kevin D. Bower and Alltrista Corporation, effective May 31, 2001 (filed as Exhibit 10.10 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.31 Promissory Note between Alltrista Corporation, and Kevin D. and Maureen C. Bower, effective May 31, 2001 (filed as Exhibit 10.11 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.32 Loan Agreement between Jerry T. McDowell and Alltrista Corporation, effective May 31, 2001 (filed as Exhibit 10.12 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). +10.33 Promissory Note between Alltrista Corporation, and Jerry T. and Gayleen M. McDowell, effective May 31, 2001 (filed as Exhibit 10.13 to the Company's Report on Form 10-Q, Filing No. 0-21052, and incorporated herein by reference, filed August 10, 2001). *+10.34 Employment Agreement between the Company and Martin E. Franklin, effective January 1, 2002. *+10.35 Employment Agreement between the Company and Ian G.H. Ashken, effective January 1, 2002. *+10.36 Employment Agreement between the Company and J. David Tolbert, effective January 1, 2002. *+10.37 Promissory Note, dated January 24, 2002, by Martin E. Franklin in favor of Alltrista Corporation. *+10.38 Promissory Note, dated January 24, 2002, by Ian G.H. Ashken in favor of Alltrista Corporation. *10.39 Alltrista Corporation 2002 Executive Loan Program. *21.1 Subsidiaries of Alltrista Corporation. *23.1 Consent of Independent Auditors.
- ---------- * Filed herewith + This Exhibit represents a management contract. # This Exhibit represents a compensatory plan. Copies of exhibits incorporated by reference can be obtained from the SEC and are located in SEC File No. 0-21052. 50 EX-3.1 3 file002.txt RESTATED CERTIFICATE OF INCORPORATION RESTATED CERTIFICATE OF INCORPORATION OF ALLTRISTA REINCORPORATION MERGERSUB, INC. ALLTRISTA REINCORPORATION MERGERSUB, INC., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows: 1. The name of the corporation is Alltrista Reincorporation MergerSub, Inc. Alltrista Reincorporation MergerSub, Inc. was originally incorporated under the same name and the original Certificate of Incorporation of the corporation was filed with the Secretary of State of the State of Delaware on December 11, 2001. 2. Pursuant to Section 242 and 245 of the General Corporation Law of the State Delaware (the GCL"), this Restated Certificate of Incorporation restates, integrates and amends the provisions of the Certificate of Incorporation of this corporation. 3. The text of the Certificate of Incorporation of the corporation is hereby restated and amended to read in its entirety as follows: ARTICLE I. NAME OF CORPORATION The name of the corporation is Alltrista Corporation (hereinafter, the "Corporation"). ARTICLE II. REGISTERED OFFICE REGISTERED AGENT The address of the registered office of the Corporation in the State of Delaware is 2711 Centerville Road, Suite 400, in the City of Wilmington, County of New Castle, Delaware 19808. The name of its registered agent at that address is Corporation Service Company. ARTICLE III. PURPOSE; TERM OF EXISTENCE The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of the State of Delaware as set forth in Title 8 of the GCL. The period during which the Corporation shall continue is perpetual. ARTICLE IV. CAPITAL STOCK SECTION A. NUMBER OF SHARES OF CAPITAL STOCK AND DESIGNATION OF CLASSES. (1) The amount of total authorized capital stock of this Corporation shall be 55,000,000 shares, divided as follows: (i) 50,000,000 shares of Common Stock, par value $.01, (the "Common Stock"), and (ii) 5,000,000 shares of Preferred Stock, par value $.01, of which 250,000 shall be designated as "Series A Junior Participating Preferred Stock". (2) The Preferred Stock may be issued from time to time as herein provided in one or more series. The Board of Directors shall have the authority to determine and state the designations and the relative rights (including, if any, conversion rights, participation rights, voting rights, dividend rights, and stated, redemption and liquidation values), ranking preferences, limitations and restrictions of each such series by the adoption of resolutions prior to the issuance of each such series authorizing the issuance of such series. All shares of Preferred Stock of the same series shall be identical with each other in all respects. (3) Two hundred fifty thousand (250,000) shares of Preferred Stock shall be designated as "Series A Junior Participating Preferred Stock" and shall have the preferences, limitations, and relative voting and other rights as follows: (A) Dividends and Distributions. (1) Subject to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series A Junior Participating Preferred Stock with respect to dividends, the holders of shares of Series A Junior Participating Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the last day of March, June, September and December in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Junior Participating Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $5.00 or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all noncash dividends or other distributions other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock, since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Junior Participating Preferred Stock. In the event the Corporation shall at any time after the date rights are issued pursuant to the Rights Agreement, dated as of March 23, 1993, as amended and restated as of May 7, 1999 and as further amended as of July 19, 2001, between the Corporation and EquiServe Trust Company, N.A. a national banking association, as successor in interest to The First Chicago Trust Company of New York (the "Rights Declaration Date") (a) declare any dividend on Common Stock payable in shares of Common Stock, (b) subdivide the outstanding Common Stock, or (c) combine the outstanding Common Stock into a smaller number of shares, then in each -2- such case the amount to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (2) The Corporation shall declare a dividend or distribution on the Series A Junior Participating Preferred Stock as provided in paragraph (1) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $5.00 per share on the Series A Junior Participating Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. (3) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Junior Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Junior Participating Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Junior Participating Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which event such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Junior Participating Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Junior Participating Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof. (B) Voting Rights. The holders of shares of Series A Junior Participating Preferred Stock shall have the following voting rights: (1) Subject to the provision for adjustment hereinafter set forth, each share of Series A Junior Participating Preferred Stock shall entitle the -3- holder thereof to 100 votes on all matters submitted to a vote of the shareholders of the Corporation. In the event the Corporation shall at any time after the Rights Declaration Date (a) declare any dividend on Common Stock payable in shares of Common Stock, (b) subdivide the outstanding Common Stock, or (c) combine the outstanding Common Stock into a smaller number of shares, then in each such case the number of votes per share to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (2) Except as otherwise provided herein or by law, the holders of shares of Series A Junior Participating Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of shareholders of the Corporation. (3) (a) If at any time dividends on any Series A Junior Participating Preferred Stock shall be in arrears in an amount equal to six (6) quarterly dividends thereon, the occurrence of such contingency shall mark the beginning of a period (herein called a "default period") which shall extend until such time when all accrued and unpaid dividends for all previous quarterly dividend periods and for the current quarterly period on all shares of Series A Junior Participating Preferred Stock then outstanding shall have been declared and paid or set apart for payment. During each default period, all holders of Preferred Stock (including holders of the Series A Junior Participating Preferred Stock) with dividends in arrears in an amount equal to six (6) quarterly dividends thereon, voting as a class, irrespective of series, shall have the right to elect two (2) directors. (b) During any default period, such voting right of the holders of Series A Junior Participating Preferred Stock may be exercised initially at a special meeting called pursuant to subparagraph (3)(c) of this Section (B) or at any annual meeting of shareholders, and thereafter at annual meetings of shareholders, provided that neither such voting right nor the right of the holders of any other series of Preferred Stock, if any, to increase, in certain cases, the authorized number of directors shall be exercised unless the holders of ten percent (10%) in number of shares of Preferred Stock outstanding shall be present in person or by proxy. The absence of a quorum of the holders of Common Stock shall not affect the exercise by the holders of Preferred Stock of such voting right. At any meeting at which the holders of Preferred Stock shall exercise such voting right initially during an existing default -4- period, they shall have the right, voting as a class, to elect directors to fill such vacancies, if any, in the Board of Directors as may then exist up to two (2) directors or, if such right is exercised at an annual meeting, to elect two (2) directors. If the number which may be so elected at any special meeting does not amount to the required number, the holders of the Preferred Stock shall have the right to make such increase in the number of directors as shall be necessary to permit the election by them of the required number. After the holders of the Preferred Stock shall have exercised their right to elect directors in any default period and during the continuance of such period, the number of directors shall not be increased or decreased except by vote of the holders of Preferred Stock as herein provided or pursuant to the rights of any equity securities ranking senior to or pari passu with the Series A Junior Participating Preferred Stock. (c) Unless the holders of Preferred Stock shall, during an existing default period, have previously exercised their right to elect directors, the Board of Directors may order, or any shareholder or shareholders owning in the aggregate not less than ten percent (10%) of the total number of shares of Preferred Stock outstanding, irrespective of series, may request, the calling of a special meeting of the holders of Preferred Stock, which meeting shall thereupon be called by the President, a Vice President or the Corporate Secretary of the Corporation. Notice of such meeting and of any annual meeting at which holders of Preferred Stock are entitled to vote pursuant to this subparagraph (3)(c) shall be given to each holder of record of Preferred Stock by mailing a copy of such notice to him at his last address as the same appears on the books of the Corporation. Such meeting shall be called for a time not earlier than 20 days and not later than 60 days after such order or request or in default of the calling of such meeting within 60 days after such order or request, such meeting may be called on similar notice by any shareholder or shareholders owning in the aggregate not less than ten percent (10%) of the total number of shares of Preferred Stock outstanding. Notwithstanding the provisions of this subparagraph (3)(c), no such special meeting shall be called during the period within 60 days immediately preceding the date fixed for the next annual meeting of shareholders. (d) In any default period, the holders of Common Stock, and other classes of stock of the Corporation if applicable, shall continue to be entitled to elect the whole number of directors until the holders of Preferred Stock shall have exercised their right to elect two (2) directors voting as a class, after the exercise of which right (x) the directors so elected by the holders of Preferred Stock -5- shall continue in office until their successors shall have been elected by such holders or until the expiration of the default period, and (y) any vacancy in the Board of Directors may, except as provided in subparagraph (3)(b) of this Section (B), be filled by vote of a majority of the remaining directors theretofore elected by the holders of the class of stock which elected the director whose office shall have become vacant. References in this paragraph (3) to directors elected by the holders of a particular class of stock shall include directors elected by such directors to fill vacancies as provided in clause (y) of the foregoing sentence. (e) Immediately upon the expiration of a default period, (x) the right of the holders of Preferred Stock as a class to elect directors shall cease, (y) the term of any directors elected by the holders of Preferred Stock as a class shall terminate, and (z) the number of directors shall be such number as may be provided for in these Amended Articles or the Bylaws irrespective of any increase made pursuant to the provisions of subparagraph (3)(b) of this Section (B) (such number being subject, however, to change thereafter in any manner provided by law or in these Amended Articles or the Bylaws). Any vacancies in the Board of Directors effected by the provisions of clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining directors. (4) Except as set forth herein, holders of Series A Junior Participating Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. (C) Certain Restrictions. (1) Whenever quarterly dividends or other dividends or distributions payable on the Series A Junior Participating Preferred Stock as provided in Section (A) are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Junior Participating Preferred Stock outstanding shall have been paid in full, the Corporation shall not: (a) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Participating Preferred Stock; (b) declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to -6- dividends or upon liquidation, dissolution or winding up) with the Series A Junior Participating Preferred Stock, except dividends paid ratably on the Series A Junior Participating Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (c) redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Junior Participating Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Junior Participating Preferred Stock; (d) purchase or otherwise acquire for consideration any shares of Series A Junior Participating Preferred Stock, or any shares of stock ranking on a parity with the Series A Junior Participating Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series of classes. (2) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (1) of this Section (C), purchase or otherwise acquire such shares at such time and in such manner. (D) Reacquired Shares. Any shares of Series A Junior Participating Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein. (E) Liquidation, Dissolution or Winding Up. (1) Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made to the -7- holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Participating Preferred Stock unless, prior thereto, the holders of shares of Series A Junior Participating Preferred Stock shall have received $100 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the "Series A Liquidation Preference"). Following the payment of the full amount of the Series A Liquidation Preference, no additional distributions shall be made to the holders of shares of Series A Junior Participating Preferred Stock unless, prior thereto, the holders of shares of Common Stock shall have received an amount per share (the "Common Adjustment") equal to the quotient obtained by dividing (a) the Series A Liquidation Preference by (b) 100 (as appropriately adjusted as set forth in subparagraph (3) below to reflect such events as stock splits, stock dividends and recapitalizations with respect to the Common Stock) (such number in clause (c), the "Adjustment Number"). Following the payment of the full amount of the Series A Liquidation Preference and Common Adjustment in respect of all outstanding shares of Series A Junior Participating Preferred Stock and Common Stock, respectively, holders of Series A Junior Participating Preferred Stock and holders of shares of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to 1 with respect to such Preferred Stock and Common Stock, on a per share basis, respectively. (2) In the event, however, that there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference and the liquidation preferences of all other series of Preferred Stock, if any, which rank on a parity with the Series A Junior Participating Preferred Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences. In the event, however, that there are not sufficient assets available to permit payment in full of the Common Adjustment, then such remaining assets shall be distributed ratably to the holders of Common Stock. (3) In the event the Corporation shall at any time after the Rights Declaration Date (a) declare any dividend on Common Stock payable in shares of Common Stock, (b) subdivide the outstanding Common Stock, or (c) combine the outstanding Common Stock into a smaller number of shares, then in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted by multiplying such Adjustment Number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. -8- (F) Consolidation Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Junior Participating Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time after the Rights Declaration Date (a) declare any dividend on Common Stock payable in shares of Common Stock, (b) subdivide the outstanding Common Stock, or (c) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Junior Participating Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (G) Redemption. The shares of Series A Junior Participating Preferred Stock shall be redeemable at a price equal to the product of (a) the current market price of the Common Stock and (b) the Adjustment Number. (H) Ranking. The Series A Junior Participating Stock shall rank junior to all other series of the Corporation's Preferred Stock as to the payment of dividends and the distribution of assets, unless the terms of any such series shall provide otherwise. (I) Amendment. These Amended Articles shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Junior Participating Preferred Stock so as to affect them adversely without the affirmative vote of the holders of a majority or more of the outstanding shares of Series A Junior Participating Preferred Stock, voting separately as a class. (J) Fractional Shares. Series A Junior Participating Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series A Junior Participating Preferred Stock. SECTION B. ISSUE AND CONSIDERATION FOR CAPITAL STOCK (1) The Board of Directors shall have the authority to authorize and direct the issuance by the Corporation of shares of Common Stock and Preferred Stock at such times, in such amounts, to such persons, for such consideration, and upon such terms and conditions as it may determine, subject to the restrictions, limitations, conditions and requirements imposed by the provisions of this Restated Certificate of Incorporation, by the provisions of the resolutions -9- authorizing the issuance of any series of shares of Preferred Stock adopted by the Board of Directors, or by the provisions of the GCL. (2) When payment of the consideration for which any share or shares of stock so authorized to be issued shall have been received by the Corporation, such share or shares of stock so authorized to be issued shall have been received by the Corporation, such share or shares shall be declared and be taken to be fully paid and not liable to any further call or assessment, and the holder or holders thereof shall not be liable for any further payments thereon. SECTION C. NO PREEMPTIVE RIGHTS The shareholders have no preemptive rights to subscribe to or purchase any additional issues of shares of capital stock of the Corporation purchased or acquired by the Corporation and not canceled but held as treasury stock. SECTION D. AMENDMENT Notwithstanding anything contained in this Restated Certificate of Incorporation to the contrary, the affirmative vote of at least three-fourths of the combined voting power of the outstanding shares entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter amend or adopt any provision inconsistent with the first sentence of Section A, paragraph 2, of this Article IV. ARTICLE V. VOTING SECTION A. COMMON STOCK Each owner of record (as of the record date fixed by the By Laws or the Board of Directors for any such determination of shareholders) of shares of Common Stock shall have one (1) vote per share of Common Stock standing in his, her or its name on the books of the Corporation with respect to each matter to be voted on, including the election of directors and on matters referred to shareholders. SECTION B. PREFERRED STOCK Subject to the requirements of the GCL or applicable regulations of any exchange on which the Corporation's capital stock may be listed, holders of Preferred Stock shall have such voting rights as may be determined and designated by the Board of Directors in accordance with Article IV hereof. SECTION C. NO CUMULATIVE VOTING No holders of shares of Common Stock shall have any right to cumulative voting. ARTICLE VI. DIRECTORS SECTION A. NUMBER AND TERM -10- The maximum number of directors shall be nine and the minimum number shall be two. The exact number may from time to time be specified by the Bylaws of the Corporation at not less than two nor more than nine. If the number of directors is not specified by the Bylaws, the number shall be six. Subject to the rights, if any, of the holders of shares of any class or series of Preferred Stock then outstanding to elect directors under specified circumstances as may be required by the GCL or applicable regulations of any exchange on which the Corporation's capital stock may be listed, the directors shall be classified, with respect to the time for which they severally hold office, into three (3) classes, as nearly equal in number as possible, as shall be specified by the Bylaws, one (1) class to be originally elected for a term expiring at the Annual Meeting of Shareholders to be held in 2002, another class to be originally elected for a term expiring at the Annual Meeting of Shareholders to be held in 2003, and another class to be originally elected for a term expiring at the Annual Meeting of Shareholders to be held in 2004, with each director to hold office until his successor is elected and qualified. At each Annual Meeting of Shareholders of the Corporation, the successor of each director whose term expires at that Annual Meeting shall be elected to hold office for a term expiring at the Annual Meeting of Shareholders held in the third year following the year of his election, or until his successor is elected and qualified. SECTION B. QUALIFICATIONS Directors need not be shareholders of the Corporation. A majority of the directors at any time shall be citizens of the United States. SECTION C. VACANCIES Subject to the rights, if any, of the holders of shares of any class or series of Preferred Stock then outstanding to elect directors under specified circumstances as may be required by the GCL or applicable regulations of any exchange on which the Corporation's capital stock may be listed, newly created directorships resulting from any increase in the number of directors and any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other cause shall be filled by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full director's successor shall have been elected and qualified. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. SECTION D. REMOVAL Subject to the rights, if any, of the holders of any class or series of Preferred Stock then outstanding to elect directors under specified circumstances as may be required by the GCL or applicable regulations of any exchange on which the Corporation's capital stock may be listed, any director may be removed from office, but only for cause and only by the affirmative vote of the holders of at least three-fourths of the combined voting power of the outstanding shares of stock entitled to vote generally in the election of directors, voting together as a single class. -11- SECTION E. AMENDMENT Notwithstanding anything contained in this Restated Certificate to the contrary, the affirmative vote of the holders of at least three-fourths of the combined voting power of the outstanding shares of stock entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend or adopt any provision inconsistent with or to repeal this Article VI. SECTION F. BYLAWS. In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, alter, amend, change, add to or repeal the Bylaws of the Corporation. SECTION G. EXCULPATION OF LIABILITY. No director shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the GCL, or (iv) for any transaction from which the director derived an improper personal benefit. Any repeal or modification of this Article VI by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modification. ARTICLE VII. PROVISIONS FOR REGULATIONS OF BUSINESS AND CONDUCT OF AFFAIRS OF THE CORPORATION SECTION A. MEETINGS Meetings of the stockholders and the directors of this Corporation may be held either within or without the State of Delaware, and at such place as the Bylaws shall provide or, in default of such provisions, at such place as the Board of Directors shall designate. SECTION B. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Indemnification of directors, officers and employees shall be as follows: (1) The Corporation shall indemnify each person who is or was a director, officer or employee of the Corporation, or of any other corporation, partnership, joint venture, trust or other enterprise which he is serving or served in any capacity at the request of the Corporation, against any and all liability and reasonable expense that may be incurred by him in connection with or resulting from any claim, actions, suit or proceeding (whether actual or threatened, brought by or in the right of the corporation of such other corporation, partnership, joint venture, trust or other enterprise, or otherwise, civil, criminal, administrative, investigative, or in connection with an appeal relating thereto), in which he may become involved, as a party or otherwise, by reason of his being or having been a director, officer or employee of the -12- Corporation or of such other corporation, partnership, joint venture, trust or other enterprise or by reason of any past or future action taken or not taken in his capacity as such director, officer or employee, whether or not he continues to be such at the time such liability or expense is incurred, provided that a determination is made by the Corporation in accordance with Delaware law that such person acted in good faith and in a manner he reasonably believed to be in the best interests of the Corporation or at least not opposed to the best interests of such other corporation, partnership, joint venture, trust or other enterprise, as the case may be, and, in addition, in any criminal action or proceedings, had reasonable cause to believe his conduct was lawful or no reasonable cause to believe that his conduct was unlawful. The termination of a proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the person did not meet the standard of conduct described in the previous sentence. Notwithstanding the foregoing, there shall be no indemnification (a) as to amounts paid or payable to the Corporation or such other corporation, partnership, joint venture, trust or other enterprise, as the case may be, for or based upon the director, officer or employee having gained in fact any personal profit or advantage to which he was not legally entitled; (b) as to amounts paid or payable to the Corporation for an accounting of profits in fact made from the purchase or sale of securities of the corporation within the meaning of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any state statutory law; or (c) with respect to matters as to which indemnification would be in contravention of the laws of the State of Delaware or of the United States of America whether as a matter of public policy or pursuant to statutory provisions. (2) Any such director, officer or employee who has been wholly successful, on the merits or otherwise, with respect to any claim, action, suit or proceeding of the character described herein shall be entitled to indemnification as of right, except to the extent he has otherwise been indemnified. Except as provided in the preceding sentence, any indemnification hereunder shall be granted by the Corporation, but only if (a) the Board of Directors, acting by a quorum consisting of directors who are not partners to or who have been wholly successful with respect to such claim, action, suit or proceeding, shall find that the director, officer or employee has met the applicable standards of conduct set forth in paragraph 1 of this Section B of Article VII; or (b) outside legal counsel engaged by the Corporation (who may be regular counsel of the Corporation) shall deliver to the corporation its written opinion that such director, officer or employee has met such applicable standards of conduct; or (c) a court of competent jurisdiction has determined that such director, officer or employee has met such standards, in an action brought either by the Corporation, or by the director, officer or employee seeking indemnification, applying de novo such applicable standards of conduct. The termination of any claim, action, suit or proceeding, civil or criminal, by judgment, settlement (whether with or without court approval) or conviction or upon a plea of guilty or of nolo contendere, or its equivalent, shall not create a presumption that a director, officer or employee did not meet the applicable standards of conduct set forth in paragraph 1 of this Section B of Article VII. (3) As used in this Section B of Article VII, the term "liability" shall mean amounts paid in settlement or in satisfaction of judgments of fines or penalties, and the term "expense" shall include, but not be limited to, attorneys' fees and disbursements, incurred in connection with the claim, action, suit or proceeding. The Corporation may advance expenses to, or where appropriate may at its option and expense undertake the defense of, any such director, officer or employee upon receipt of an undertaking by or on behalf of such person to -13- repay such expenses if it should ultimately be determined that the person is not entitled to indemnification under this Section B of Article VII. (4) The provisions of this Section B of Article VII shall be applicable to claims, actions, suits or proceedings made or commenced after the adoption hereof, whether arising from acts or omissions to act occurring before or after the adoption hereof. If several claims, issues or matters of action are involved, any such director, officer or employee may be entitled to indemnification as to some matters even though he is not so entitled as to others. The rights of indemnification provided hereunder shall be in addition to any rights to which any director, officer or employee concerned may otherwise be entitled by contract or as a matter of law, and shall inure to the benefit of the heirs, executors and administrators of any such director, officer or employee. Any repeal or modification of the provisions of this Section B of Article VII by the stockholders of the Corporation shall not adversely affect any rights to indemnification and advancement of expenses existing pursuant to this Section B of Article VII with respect to any acts or omissions occurring prior to such repeal or modification. ARTICLE VIII. FAIR PRICE, FORM OF CONSIDERATION AND PROCEDURAL SAFEGUARDS FOR CERTAIN RELATED PARTY BUSINESS COMBINATIONS SECTION A. HIGHER VOTE REQUIRED FOR CERTAIN RELATED PARTY BUSINESS COMBINATIONS (1) In addition to any affirmative vote required by law or under these Amended Articles, and except as otherwise expressly provided in Section B of this Article VIII, any Related Party Business Combination (as hereinafter defined) shall require the affirmative vote of the holders of at least three-fourths of the Voting Stock (as hereinafter defined), voting together as a single class. For purposes of this Article VIII, each share of Voting Stock shall have the number of votes granted to it pursuant to this Restated Certificate of Incorporation. (2) Such affirmative votes shall be required notwithstanding the fact that no vote may be required, or that a lesser percentage or separate class vote may be specified, by law or in any agreement with any national securities exchange or otherwise. SECTION B. WHEN HIGHER VOTE NOT REQUIRED The provisions of Section A of this Article VIII shall not be applicable to any particular Related Party Business Combination, and such Related Party Business Combination shall require only such affirmative vote as is required by law or any other provision of this Restated Certificate of Incorporation or the Bylaws of the Corporation, or any agreement with any national securities exchange, if all of the conditions specified in either of the following subparagraphs 1 or 2 are met: (1) Approval of Disinterested Directors. The Related Party Business Combination shall have been expressly approved by a majority (whether such approval is made prior to or subsequent to the acquisition of beneficial ownership of the Voting Stock that caused the Related Party, as hereinafter defined, to become a Related Party) of the Disinterested Directors (as hereinafter defined); or -14- (2) Fair Price, Form of Consideration and Procedural Requirements. All of the following conditions shall have been met: (A) The aggregate amount of the cash and the Fair Market Value (as hereinafter defined) as of the date of the consummation of the Related Party Business Combination (the "Consummation Date") of consideration other than cash to be received per share by holders of shares of any class or series of Capital Stock (as hereinafter defined) in such Related Party Business Combination shall be at least equal to the highest of the following (it being intended that the requirements of this subparagraph (2). (A) shall be required to be met with respect to every class or series of outstanding Capital Stock, whether or not the Related Party has previously acquired beneficial ownership of any shares of a particular class or series of Capital Stock): (1) (if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by or on behalf of the Related Party for any shares of such class or series of Capital Stock acquired by or on behalf of the Related Party (a) within the two-year period immediately prior to the first public announcement of the proposal of the Related Party Business Combination (the "Announcement Date") or (b) in the transaction in which it became a Related Party, whichever is higher; (2) the Fair Market Value per share of such class or series of Capital Stock on the Announcement Date or on the date on which the Related Party became a Related Party (the "Determination Date"), whichever is higher; (3) (if applicable) the price per share equal to the Fair Market Value per share of such class or series of Capital Stock determined pursuant to the immediately preceding clause (2), multiplied by the ratio calculated by dividing (a) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by or on behalf of the Related Party for any share of such class or series of Capital Stock in connection with the acquisition by the Related Party of beneficial ownership of shares of such class or series of Capital Stock within the two-year period immediately prior to the Announcement Date by (b) the Fair Market Value per share of such class or series of Capital Stock on the first day in such two-year period on which Related Party acquired beneficial ownership of any share of such class or series of Capital Stock; (4) in the case of Common Stock, the Corporation's net income per share of Common Stock for the four full consecutive fiscal quarters immediately preceding the Announcement Date, multiplied by the higher of the then price/earnings multiple (if any) of such Related Party or the highest price/earnings multiple of the Corporation within the two-year period immediately preceding the Announcement Date (such -15- price/earnings multiples being determined as customarily computed and reported in the financial community); or (5) in the case of any class or series of Capital Stock other than Common Stock, the highest preferential amount per share to which the holders of shares of such class or series of Capital Stock are entitled in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation. All per share prices shall be adjusted for any intervening stock splits, stock dividends and reverse stock splits. (B) The consideration to be received by holders of a particular class or series of Capital Stock shall be in cash or in the same form as the Related Party has previously paid for shares of such particular stock. If the Related Party has paid for shares of any class or series of Capital Stock with varying forms of consideration, the form of consideration for such particular stock shall be either cash or the form used to acquire the largest number of shares of such particular stock previously acquired by it. (C) After such Related Party has become a Related Party and prior to the Consummation Date: (1) there shall have been (a) no reduction in the annual rate of dividends paid on the Common Stock (except as necessary to reflect any subdivision of Common Stock), except as approved by a majority of the Disinterested Directors, and (b) an increase in such annual rate of dividends as necessary to reflect any reclassification (including any reverse stock split), recapitalization, reorganization or any similar transaction which has the effect of reducing the number of outstanding shares of the Common Stock, unless the failure so to increase such annual rate is approved by a majority of the Disinterested Directors; (2) there shall have been no failure to declare and pay at the regular date therefor any full quarterly dividends (whether or not cumulative) payable in accordance with the terms of any other outstanding class or series of Capital Stock, except as approved by a majority of the Disinterested Directors; and (3) such Related Party shall have not become the beneficial owner of any additional shares of Capital Stock, except as part of the transaction which results in such Related Party becoming a Related Party. (D) After such Related Party has become a Related Party, such Related Party shall not have received the benefit, directly or indirectly (except proportionately as a stockholder), of any loans, advances, guaranties, pledges or other financial assistance or any tax credits or other tax advantages provided by the Corporation, whether in anticipation of or in connection with such Related Party Business Combination, or otherwise. -16- (E) A proxy or information statement describing the proposed Related Party Business Combination and complying with the requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (or any subsequent provisions replacing such Act, rules or regulations) shall be mailed to public stockholders of the Corporation at least 30 calendar days prior to the consummation of such Related Party Business Combination (whether or not such proxy or information statement is required to be mailed pursuant to such Act or subsequent provisions). The proxy or information statement shall contain on the first page thereof, in a prominent place, any statement as to the advisability (or inadvisability) of the Related Party Business Combination that the Disinterested Directors, or any of them, may choose to make and, if deemed advisable by a majority of the Disinterested Directors, the opinion of an investment banking firm selected by a majority of the Disinterested Directors as to the fairness (or not) of the terms of the Related Party Business Combination from a financial point of view to the holders of the shares of any class or series of Capital Stock other than the Related Party and its Affiliates or Associates (as hereinafter defined), such investment banking firm to be paid a reasonable fee for its services by this Corporation. (F) Such Related Party shall not have made any major change in the Corporation's business or equity capital structure without the approval of a majority of the Disinterested Directors. SECTION C. DEFINITIONS FOR ARTICLE VIII For the purposes of this Article VIII: (1) The term "Related Party Business Combination" shall mean any transaction referred to in one or more of the following: (A) any merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with (1) any Related Party or (2) any other corporation (whether or not itself a Related Party) which is, or after such merger or consolidation would be, an Affiliate or Associate (as hereinafter defined) of any Related Party; or (B) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with any Related Party or any Affiliate or Associate of any Related Party of any assets of the Corporation or any subsidiary having an aggregate Fair Market Value of Ten Million Dollars ($10,000,000) or more; or (C) the issuance or transfer by the Corporation or any Subsidiary (in one transaction or a series of transactions) of any securities having an aggregate Fair Market Value of Ten Million Dollars ($10,000,000) or more of the Corporation or any subsidiary to any Related Party or any Affiliate or Associate of any Related Party in exchange for cash, securities or other property (or combination thereof); or (D) the adoption of any plan or proposal for the liquidation or dissolution of the Corporation proposed by or on behalf of any Related Party or any Affiliate or Associate of any Related Party; or -17- (E) any reclassification of securities (including any reverse stock split), or recapitalization of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries or any other transaction (whether or not with or into or otherwise involving a Related Party or any Affiliate or Associate of any Related Party) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the Corporation or any Subsidiary which is directly or indirectly owned by any Related Party or any Affiliate or Associate of any Related Party; or (F) any agreement, contract or other arrangement providing for any one or more of the actions specified in the foregoing clauses (A) through (E). (2) The term "Related Party" shall mean any person (other than the Corporation or any Subsidiary, and other than any profit-sharing, employee stock ownership or other employee benefit plan of the Corporation or any Subsidiary or any trustee of or fiduciary with respect to any such plan when acting in such capacity) who or which: (A) is the beneficial owner (as hereinafter defined) of more than 10 percent of the voting power of the outstanding Voting Stock; or (B) is an Affiliate or Associate of the Corporation and at any time within the two-year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of 10 percent or more of the voting power of the then outstanding Voting Stock; or (C) is an assignee of or has otherwise succeeded to any shares of Voting Stock which were at any time within the two-year period immediately prior to the date in question beneficially owned by any Related Party, if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933, as amended. For purposes of determining whether a person is a Related Party, the number of shares of Voting Stock deemed to be outstanding shall include shares deemed owned through application of Section C(4), hereof, but shall not include any other shares of Voting Stock which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise. (3) The term "person" shall mean any individual, firm, partnership, trust, corporation or other entity and shall include any group comprised of any person and any other person with whom such person or any Affiliate or Associate of such person has any agreement, arrangement or understanding, directly or indirectly, for the purpose of acquiring, holding, voting or disposing of Voting Stock. (4) A person shall be a "beneficial owner" of any Voting Stock: (A) which such person or any of its Affiliates or Associates beneficially owns, directly or indirectly; or -18- (B) which such person or any of its Affiliates or Associates has (1) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement, understanding or relationship or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; or (2) the right to vote pursuant to any agreement, arrangement, understanding or relationship; or (3) the right to invest, including the power to dispose or to direct the disposition of, pursuant to any agreement, arrangement, understanding or relationship; or (C) which is beneficially owned, directly or indirectly, by any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement, understanding or relationship for the purpose of acquiring, holding, voting or disposing of any shares of Voting Stock. (5) The term "Affiliate," used to indicate a relationship with a specified person, shall mean a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified. (6) The term "Associate," used to indicate a relationship with a specified person, shall mean: (A) any corporation or organization (other than the Corporation or a Subsidiary) of which such person is an officer or partner or is, directly or indirectly, the beneficial owner of 10 percent or more of any class of equity securities; or (B) any trust or other estate in which such person has a substantial beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity; or (C) any relative or spouse of such person, or any relative of such spouse, who has the same home as such person; or (D) any person who is a director or officer of such specified person or any of its parents or subsidiaries (other than the Corporation or a Subsidiary). (7) The term "Subsidiary" shall mean any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definition of Related Party set forth in Section C(2), hereof, the term "Subsidiary" shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the Corporation. (8) The term "Disinterested Director" shall mean: (A) any member of the Board of Directors of the Corporation who is unaffiliated with the Related Party and was a member of the Board of Directors prior to the time that the Related Party became a Related Party; or -19- (B) any successor of a Disinterested Director who is unaffiliated with the Related Party and is recommended to succeed a Disinterested Director by a majority of Disinterested Directors then on the Board of Directors. (9) The term "Fair Market Value" shall mean: (A) in the case of stock, the highest closing sale price during the 30-calendar-day period immediately preceding the date in question of a share of such stock on the Composite Tape for New York Stock Exchange-Listed Stocks, or, if such stock is not quoted on the Composite Tape, on the New York Stock Exchange, Inc., or, if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934, as amended, on which such stock is listed or, if such stock is not listed on any such exchange, the highest closing bid quotation with respect to a share of such stock during the 30-calendar-day period preceding the date in question on the National Association of Securities Dealers, Inc., Automated Quotations System or any system then in use, or if no such quotation is available, the Fair Market Value on the date in question of a share of such stock as determined by a majority of the Disinterested Directors in good faith; and (B) in the case of property other than cash or stock, the Fair Market Value of such property on the date in question as determined by a majority of the Disinterested Directors in good faith. (10) The term "Capital Stock" shall mean all Capital Stock of the Corporation authorized to be issued from time to time under Article V of these Amended Articles, and the term "Voting Stock" shall mean the then outstanding shares of Capital Stock of the Corporation entitled to vote generally in the election of directors. (11) In the event of any Related Party Business Combination in which the Corporation survives, the phrase "other consideration to be received" as used in Sections B(2) (A) and B(2) (B) of this Article VIII shall include the shares of Common Stock and/or the shares of any other class or series of Capital Stock retained by the holders of such shares. SECTION D. DETERMINATION BY THE DISINTERESTED DIRECTORS A majority of the Disinterested Directors or, if there should be no Disinterested Directors, a majority of the directors, shall have the power and duty to determine for the purposes of this Article VIII, on the basis of information known to them after reasonable inquiry: (1) Whether a person is a Related Party; (2) The number of shares of Voting Stock beneficially owned by any person; (3) Whether a person is an Affiliate or Associate of another; (4) Whether the assets which are the subject of any Related Party Business Combination have, or the consideration to be received for the issuance or transfer of securities by -20- the Corporation or any Subsidiary in any Related Party Business Combination has, an aggregate Fair Market Value of Ten Million Dollars ($10,000,000) or more; and (5) Such other matters with respect to which a determination is required under this Article VIII. A majority of the Disinterested Directors or, if there should be no Disinterested Directors, a majority of the directors shall have the further power to interpret all of the terms and provisions of this Article VIII. SECTION E. EFFECT ON FIDUCIARY OBLIGATIONS (1) Nothing contained in this Article VIII shall be construed to relieve any Related Party from any fiduciary obligation imposed by law. (2) The fact that any Related Party Business Combination complies with the provisions of Section B. of this Article VIII shall not be construed to impose any fiduciary duty, obligation or responsibility on the Board of Directors, or any member thereof, to approve such Related Party Business Combination or recommend its adoption or approval to the stockholders of the Corporation, nor shall such compliance limit, prohibit or otherwise restrict in any manner the Board of Directors, or any member thereof, with respect to evaluations of or actions and responses taken with respect to such Related Party Business Combination. SECTION F. AMENDMENT Notwithstanding any other provision of law, this Restated Certificate of Incorporation or the Bylaws of the Corporation, and notwithstanding the fact that a lesser vote may be specified by law, this Restated Certificate of Incorporation or the Bylaws of the Corporation, and in addition to any affirmative vote of holders of any class or series of Capital Stock of the Corporation then outstanding which is required by law or by or pursuant to this Restated Certificate of Incorporation, the affirmative vote of the holders of at least three-fourths of the combined voting power of the shares of the outstanding Voting Stock, voting together as a single class, shall be required to amend or repeal, or adopt any provisions inconsistent with, this Article VIII; provided, however, that this Section F. shall not apply to, and such three-fourths vote shall not be required for, any amendment, repeal or adoption unanimously recommended by the Board of Directors if all such directors are persons who would be eligible to serve as Disinterested Directors within the meaning of this Article VIII. -21- IN WITNESS WHEREOF, Alltrista Corporation has caused this Restated Certificate of Incorporation to be duly executed by its duly authorized officer this 18th day of December 2001. /s/ Ian G.H. Ashken ----------------------- Ian G.H. Ashken Secretary -22- EX-10.7 4 file003.txt LIST OF ALLTRISTA CORPORATION OFFICERS Exhibit 10.7 LIST OF ALLTRISTA CORPORATION OFFICERS PARTY TO THE CHANGE OF CONTROL AGREEMENT AND AMENDMENT THERETO (As filed in Exhibits 10.5 and 10.6) Elected Corporate Officers - -------------------------- J. David Tolbert Vice President, Human Resources and Administration Appointed Officers - ------------------ Albert H. Giles President - Zinc Products Company John A. Metz President - Consumer Products Company EX-10.34 5 file004.txt EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of January 1, 2002, is entered into between Alltrista Corporation, a Delaware corporation (the "Company") and Martin E. Franklin, (the "Employee"). WITNESSETH: WHEREAS, the Company desires to continue to employ the Employee and to be assured of his services on the terms and conditions hereinafter set forth; and WHEREAS, the Employee is willing to continue such employment on such terms and conditions. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, the Company and the Employee hereby agree as follows: 1. Employment. The Company hereby employs the Employee as Chairman and Chief Executive Officer of the Company, and the Employee accepts such employment, upon the terms and subject to the conditions set forth in this Agreement. Notwithstanding the foregoing, it is understood and agreed that the Employee from time to time may (a) be appointed to additional offices or to different offices than those set forth above, (b) perform such duties other than those set forth above, and/or (c) relinquish one or more of such offices or other duties, as each may be mutually agreed by and between the company and the Employee; and, that no such action shall be deemed or construed to otherwise amend or modify any of the remaining terms or conditions of this Agreement. 2. Term. The term of this Agreement shall be two (2) years, commencing on the date hereof and ending on the second anniversary of such date (the "Initial Term"), subject to earlier termination pursuant to the provisions of Section 10. The employment of the Employee shall automatically continue hereunder following the Initial Term for successive one (1) year periods (the "Renewal Terms") unless the Company or the Employee gives written notice to the other at least (90) ninety days prior to the end of the Initial Term or any Renewal Term. 3. Duties. During the term of this Agreement, the Employee shall, subject to the provisions of Section 1 above, serve as Chairman and Chief Executive Officer of the Company and shall perform all duties commensurate with his position that may be assigned to him by the Board of Directors of the Company consistent with such position. The Employee shall devote such time and energy to the business and affairs of the Company as he deems reasonably necessary to perform the duties of this position and shall use his best efforts, skills and abilities to promote the interests of the Company. It is acknowledged and agreed that the Employee may not be required to devote his full time and energy to the affairs of the Company, except as he from time to time, in the exercise of his business judgment, may deem necessary or appropriate. Without limiting the generality of the foregoing, the Company hereby acknowledges that the Employee has certain responsibilities to the Marlin group of companies and the Company agrees that nothing contained in this Agreement shall interfere with such responsibilities, provided that the Employee otherwise has performed his duties on behalf of the Company hereunder. 4. Compensation and Benefits.During the term of this Agreement, the Company shall pay to the Employee, and the Employee shall accept from the Company, as compensation for the performance of services under this Agreement and the Employee's observance and performance of all of the provisions hereof, a salary of $400,000 per year (the "Base Compensation"). The Base Compensation shall be reviewed annually and shall be increased by a minimum of the Consumer Price Index. In addition, the Employee shall be eligible for a bonus package based on performance. The decision as to whether to pay the Employee a bonus, as well as the amounts and terms of any such bonus package, shall be determined by the Compensation Committee of the Board of Directors as part of its annual budget review process. The bonus program shall give Employee the opportunity to earn up to 50% of Base Compensation each year for achieving the Company's earnings per share budget and up to 100% of Base Compensation for achieving 110% of the Company's earnings per share budget. The Employee's salary shall be payable in accordance with the normal payroll practices of the Company and shall be subject to withholding for applicable taxes and other amounts. During the term of this Agreement, the Employee shall be entitled to participate in or benefit from, in accordance with the eligibility and other provisions thereof, such medical, insurance, and other fringe benefit plans or policies as the Company may make available to, or have in effect for, its personnel with commensurate duties from time to time. This will include maintaining a split-dollar life insurance policy (the "Life Insurance Policy") on the Employee in the amount of $5 million, the annual premium not to exceed $35,000. The Company retains the rights to terminate or alter any such plans or policies, other than the Life Insurance Policy, from time to time. The Employee shall also be entitled to vacations, sick leave and other similar benefits in accordance with policies of the Company from time to time in effect for personnel with commensurate duties. In addition to the benefits noted above the employee shall receive a grant of 50,000 restricted shares of the Company's common stock (the "Restricted Stock") on the effective date of this agreement. The restrictions shall lapse upon the earlier of (i) the date that the stock price of the common stock of the Company equals or exceeds twenty-five dollars ($25.00) or (ii) the date there is a change of control (as defined in Section 2.01 of the 1998 Restricted Stock Plan) of the Company. The number of shares granted and the target share price of $25.00 shall be adjusted for changes in the common stock as outlined in Section 5.05 of the Restricted Stock Plan or as otherwise mutually agreed in writing between the parties. The terms of the Restricted Stock shall be set forth in a Restricted Stock Award Agreement. Future restricted share grants shall be considered by the compensation committee of the Board of Directors on an annual basis. 5. Reimbursement of Business Expenses. During the term of this Agreement, upon submission of proper invoices, receipts or other supporting documentation satisfactory to the Company and in specific accordance with such guidelines as may be established from time to time by the Company's Board of Directors, the Employee shall be reimbursed by the Company for all reasonable business expenses actually and necessarily incurred by the Employee on behalf of the Employer in connection with the performance of services under this Agreement. 6. Representation of Employee. Except as set forth in Paragraph 3 hereof, the Employee represents and warrants that that he is not party to, or bound by, any agreement or commitment, or subject to any restriction, including but not limited to agreements related to previous employment containing confidentiality or non compete covenants, which in the future may have a possibility of adversely affecting the business of the Company or the performance by the Employee of his material duties under this Agreement. 7. Confidentiality. (For purposes of this Section 7, all references to the Company shall be deemed to include the Company's subsidiary corporations.) (a) Confidential Information. The Employee acknowledges that he will have knowledge of, and access to, proprietary and confidential information of the Company, including, without limitation, inventions, trade secrets, technical information, know-how, plans, specifications, methods of operations, financial and marketing information and the identity of customers and suppliers (collectively, the "Confidential Information"), and that such information, even though it may be contributed, developed or acquired by the Employee, constitutes valuable, special and unique assets of the Company developed at great expense which are the exclusive property of the Company. Accordingly, the Employee shall not, either during or subsequent to the term of this Agreement, use, reveal, report, publish, transfer or otherwise disclose to any person, corporation or other entity, any of the Confidential Information without the prior written consent of the Company, except to responsible officers and employees of the Company and other responsible persons who are in a contractual or fiduciary relationship with the Company and who have a need for such information for purposes in the best interests of the Company, and except for such information which is or becomes of general public knowledge from authorized sources other than the Employee. The Employee acknowledges that the Company would not enter into this Agreement without the assurance that all such confidential and proprietary information will be used for the exclusive benefit of the Company. (b) Return of Confidential Information. Upon the termination of Employee's employment with the Company, the Employee shall promptly deliver to the Company all drawings, manuals, letters, notes, notebooks, reports and copies thereof and all other materials relating to the Company's business. 8. Noncompetition. (For purposes of this Section 8, all references to the Company shall be deemed to include the Company's subsidiary corporations). During the term set forth below, the Employee will not utilize his special knowledge of the business of the Company and his relationships with customers and suppliers of the Company to compete with the Company. During the term of this Agreement and for a period of twelve (12) months after the expiration or termination of this Agreement (or twenty four (24) months in the event of the termination of this Agreement by the Company without Cause as defined below), the Employee shall not engage, directly or indirectly or have an interest, directly or indirectly, anywhere in the United States of America or any other geographic area where the Company does business or in which its products are marketed, alone or in association with others, as principal, officer, agent, employee, capital, lending of money or property, rendering of services or otherwise, in any business directly competitive with or similar to that engaged in by the Company (it being understood hereby, that the ownership by the Employee of 2% or less of the stock of any company listed on a national securities exchange shall not be deemed a violation of this Section 8). During the same period, the Employee shall not, and shall not permit any of his employees, agents or others under his control to, directly or indirectly, on behalf of himself or any other person, (i) call upon, or solicit the business of any person who is, or who had been at any time during the preceding two years, a customer of the Company or any successor to the business of the Company, or otherwise divert or attempt to divert any business from the Company or any such successor, or (ii) solicit or induce any person who is an employee of, or otherwise engaged by, the Company or any successor to the business of the Company to terminate his or her employment or other relationship with the Company or such successor. The Employee shall not at any time, directly or indirectly, use or purport to authorize any person to use any name, mark, logo, trade dress or other identifying words or images which are the same as or similar to those used at any time by the Company. 9. Remedies. The restrictions set forth in Section 7 and 8 are considered by the parties to be fair and reasonable. The Employee acknowledges that the Company would be irreparably harmed and that monetary damages would not provide an adequate remedy in the event of a breach of the provisions of Section 7 or 8. Accordingly, the Employee agrees that, in addition to any other remedies available to the Company, the Company shall be entitled to seek injunctive and other equitable relief to secure the enforcement of these provisions. If any provision of Sections 7, 8 or 9 relating to the time period, scope of activities or geographic area of restriction is declared by a court of competent jurisdiction to exceed the maximum permissible time period, scope of activities or geographic area, as the case may be, then any such provision of Section 7, 8 or 9 that is adjudicated to be invalid or unenforceable shall be deemed amended (with respect only to the jurisdiction in which such adjudication is made) in such manner as to render it enforceable and to effectuate as nearly as possible the original intentions and agreement of the parties. 10. Termination. This Agreement may be terminated upon the occurrence of any of the events set forth in, and subject to the terms of, this Section 10. (a) Death. This Agreement will terminate immediately and automatically upon the death of the Employee. (b) Disability. This Agreement may be terminated at the Company's option, immediately upon written notice to the Employee, if the Employee shall suffer a permanent disability. For the purpose of this Agreement, the term "permanent disability" shall mean the Employee's inability to perform his duties under this Agreement for a period of 120 consecutive days or for an aggregate of 180 days, whether or not consecutive, in any twelve month period, due to illness, accident or any other physical or mental incapacity, as reasonably determined by the Board of Directors of the Company. (c) Cause. This Agreement may be terminated at the Company's option, immediately upon written notice to the Employee, upon: (i) breach by the Employee of any material provision of this Agreement not cured within ten (10 days) after written notice of such breach is given by the Company to the Employee; (ii) gross negligence or willful misconduct of the Employee in connection with the performance of his duties under this Agreement, or Employee's willful refusal to perform any of his duties or responsibilities required pursuant to this Agreement; or (iii) fraud, criminal conduct or embezzlement by the Employee. (d) Without Cause. This Agreement may be terminated pursuant to the terms of Section 2 or on thirty (30) days written notice (the thirtieth day following such notice being herein sometimes called the "Termination Date") by the Company without cause, subject to the following provision. If the Employee's employment is terminated by the Company without Cause, or upon Disability, the Employee shall receive an amount (the "Severance Amount") equal to the sum of the following: (i) two year's Base Compensation; plus (ii) two year's target bonus which Employee would have been entitled to receive for the year in which Employee's employment was terminated; plus (iii) continuation of health insurance and other benefits for two years at the expense of Company; plus full vesting of any outstanding stock options on Company stock, the lapsing of any restrictions over any restricted shares of Company stock owned by the Employee and the prepayment of any outstanding amounts under the Employee's split-dollar life insurance policy. The cash portion of the Severance Amount shall be paid to the Employee as promptly as practicable after the date of Termination and in no event later than two (2) business days after termination. Payment of the Severance Amount shall be in lieu of all other financial obligations of the Company to the Employee under this Agreement and all other benefits hereunder shall cease as of the date of termination. The Employee shall have no obligation to seek other employment or otherwise mitigate damages hereunder. 11. Miscellaneous. (a) Survival. The provisions of Sections 7, 8 and 9 shall survive the termination of this Agreement. (b) Entire Agreement.This Agreement, sets forth the entire understanding of the parties and merges and supersedes any prior or contemporaneous agreements between the parties pertaining to the subject matter hereof. (c) Modification. This Agreement may not be modified or terminated orally; and no modification, termination or attempted waiver of any of the provisions hereof shall be binding unless in writing and signed by the party against whom the same is sought to be enforced; provided, however, that the Employee's compensation may be increased at any time by the Company without in any way affecting any of the other terms and conditions of this Agreement, which in all other respects shall remain in full force and effect. (d) Waiver. Failure of a party to enforce one or more of the provisions of this Agreement or to require at any time performance of any of the obligations hereof shall not be construed to be a waiver of such provisions by such party nor to in any way affect the validity of this Agreement or such party's right thereafter to enforce any provision of this Agreement, nor to preclude such party from taking any other action at any time which it would legally be entitled to take. (e) Successors and Assigns. Neither party shall have the right to assign this Agreement, or any rights or obligations hereunder, without the consent of the other party. (f) Communications. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been given at the time personally delivered or when mailed in any United States post office enclosed in a registered or certified postage prepaid envelope and addressed to the recipient's address set forth below, or to such other address as any party may specify by notice to the other party; provided, however, that any notice of change of address shall be effective only upon receipt. To the Company: Alltrista Corporation Suite B-302 555 Theodore Fremd Avenue Rye, New York 10580 Attention: Chief Financial Officer To the Employee: Mr. Martin E. Franklin 62 Rye Ridge Rd, Harrison, NY 10528 (g) Severability. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall not affect the validity and enforceability of the other provisions of this Agreement and the provision held to be invalid or unenforceable shall be enforced as nearly as possible according to its original terms and intent to eliminate such invalidity or unenforceability. (h) Jurisdiction; Venue. This Agreement shall be subject to the exclusive jurisdiction of the courts of New York County, New York. Any breach of any provision of this Agreement shall be deemed to be a breach occurring in the State of New York and the parties irrevocably and expressly agree to submit to the jurisdiction of the courts of the State of New York or the Federal Courts having concurrent geographic jurisdiction, for the purpose of resolving any disputes among them relating to this Agreement or the transactions contemplated by this Agreement. (i) Governing Law. This Agreement is made and executed and shall be governed by the laws of the State of New York, without regard to the conflicts of law principles thereof. IN WITNESS WHEREOF, each of the parties hereto have duly executed this Agreement as of the date set forth above. ALLTRISTA CORPORATION By: /s/ Ian G.H. Ashken ------------------------------- Ian G.H. Ashken Its: Vice Chairman and Chief Financial Officer ------------------------------- /s/ Martin E. Franklin ------------------------------------ Martin E. Franklin EX-10.35 6 file005.txt EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of January 1, 2002, is entered into between Alltrista Corporation, a Delaware corporation (the "Company") and Ian G.H. Ashken, (the "Employee"). WITNESSETH: WHEREAS, the Company desires to continue to employ the Employee and to be assured of his services on the terms and conditions hereinafter set forth; and WHEREAS, the Employee is willing to continue such employment on such terms and conditions. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, the Company and the Employee hereby agree as follows: 1. Employment. The Company hereby employs the Employee as Vice Chairman, Chief Financial Officer and Company Secretary of the Company, and the Employee accepts such employment, upon the terms and subject to the conditions set forth in this Agreement. Notwithstanding the foregoing, it is understood and agreed that the Employee from time to time may (a) be appointed to additional offices or to different offices than those set forth above, (b) perform such duties other than those set forth above, and/or (c) relinquish one or more of such offices or other duties, as each may be mutually agreed by and between the company and the Employee; and, that no such action shall be deemed or construed to otherwise amend or modify any of the remaining terms or conditions of this Agreement. 2. Term. The term of this Agreement shall be two (2) years, commencing on the date hereof and ending on the second anniversary of such date (the "Initial Term"), subject to earlier termination pursuant to the provisions of Section 10. The employment of the Employee shall automatically continue hereunder following the Initial Term for successive one (1) year periods (the "Renewal Terms") unless the Company or the Employee gives written notice to the other at least (90) ninety days prior to the end of the Initial Term or any Renewal Term. 3. Duties. During the term of this Agreement, the Employee shall, subject to the provisions of Section 1 above, serve as Vice Chairman, Chief Financial Officer and Company Secretary of the Company and shall perform all duties commensurate with his position that may be assigned to him by the Board of Directors of the Company consistent with such position. The Employee shall devote such time and energy to the business and affairs of the Company as he deems reasonably necessary to perform the duties of this position and shall use his best efforts, skills and abilities to promote the interests of the Company. It is acknowledged and agreed that the Employee may not be required to devote his full time and energy to the affairs of the Company, except as he from time to time, in the exercise of his business judgment, may deem necessary or appropriate. Without limiting the generality of the foregoing, the Company hereby acknowledges that the Employee has certain responsibilities to the Marlin group of companies and the Company agrees that nothing contained in this Agreement shall interfere with such responsibilities, provided that the Employee otherwise has performed his duties on behalf of the Company hereunder. 4. Compensation and Benefits.During the term of this Agreement, the Company shall pay to the Employee, and the Employee shall accept from the Company, as compensation for the performance of services under this Agreement and the Employee's observance and performance of all of the provisions hereof, a salary of $250,000 per year (the "Base Compensation"). The Base Compensation shall be reviewed annually and shall be increased by a minimum of the Consumer Price Index. In addition, the Employee shall be eligible for a bonus package based on performance. The decision as to whether to pay the Employee a bonus, as well as the amounts and terms of any such bonus package, shall be determined by the Compensation Committee of the Board of Directors as part of its annual budget review process. The bonus program shall give Employee the opportunity to earn up to 50% of Base Compensation each year for achieving the Company's earnings per share budget and up to 100% of Base Compensation for achieving 110% of the Company's earnings per share budget. The Employee's salary shall be payable in accordance with the normal payroll practices of the Company and shall be subject to withholding for applicable taxes and other amounts. During the term of this Agreement, the Employee shall be entitled to participate in or benefit from, in accordance with the eligibility and other provisions thereof, such medical, insurance, and other fringe benefit plans or policies as the Company may make available to, or have in effect for, its personnel with commensurate duties from time to time. This will include maintaining a split-dollar life insurance policy (the "Life Insurance Policy") on the Employee in the amount of $3 million, the annual premium not to exceed $30,000. The Company retains the rights to terminate or alter any such plans or policies, other than the Life Insurance Policy, from time to time. The Employee shall also be entitled to vacations, sick leave and other similar benefits in accordance with policies of the Company from time to time in effect for personnel with commensurate duties. In addition to the benefits noted above the employee shall receive a grant of 20,000 restricted shares of the Company's common stock (the "Restricted Stock") on the effective date of this agreement. The restrictions shall lapse upon the earlier of (i) the date that the stock price of the common stock of the Company equals or exceeds twenty-five dollars ($25.00) or (ii) the date there is a change of control (as defined in Section 2.01 of the 1998 Restricted Stock Plan) of the Company. The number of shares granted and the target share price of $25.00 shall be adjusted for changes in the common stock as outlined in Section 5.05 of the Restricted Stock Plan or as otherwise mutually agreed in writing between the parties. The terms of the Restricted Stock shall be set forth in a Restricted Stock Award Agreement. Future restricted share grants shall be considered by the compensation committee of the Board of Directors on an annual basis. 5. Reimbursement of Business Expenses. During the term of this Agreement, upon submission of proper invoices, receipts or other supporting documentation satisfactory to the Company and in specific accordance with such guidelines as may be established from time to time by the Company's Board of Directors, the Employee shall be reimbursed by the Company for all reasonable business expenses actually and necessarily incurred by the Employee on behalf of the Employer in connection with the performance of services under this Agreement. 6. Representation of Employee. Except as set forth in Paragraph 3 hereof, the Employee represents and warrants that that he is not party to, or bound by, any agreement or commitment, or subject to any restriction, including but not limited to agreements related to previous employment containing confidentiality or non compete covenants, which in the future may have a possibility of adversely affecting the business of the Company or the performance by the Employee of his material duties under this Agreement. 7. Confidentiality. (For purposes of this Section 7, all references to the Company shall be deemed to include the Company's subsidiary corporations.) (a) Confidential Information. The Employee acknowledges that he will have knowledge of, and access to, proprietary and confidential information of the Company, including, without limitation, inventions, trade secrets, technical information, know-how, plans, specifications, methods of operations, financial and marketing information and the identity of customers and suppliers (collectively, the "Confidential Information"), and that such information, even though it may be contributed, developed or acquired by the Employee, constitutes valuable, special and unique assets of the Company developed at great expense which are the exclusive property of the Company. Accordingly, the Employee shall not, either during or subsequent to the term of this Agreement, use, reveal, report, publish, transfer or otherwise disclose to any person, corporation or other entity, any of the Confidential Information without the prior written consent of the Company, except to responsible officers and employees of the Company and other responsible persons who are in a contractual or fiduciary relationship with the Company and who have a need for such information for purposes in the best interests of the Company, and except for such information which is or becomes of general public knowledge from authorized sources other than the Employee. The Employee acknowledges that the Company would not enter into this Agreement without the assurance that all such confidential and proprietary information will be used for the exclusive benefit of the Company. (b) Return of Confidential Information. Upon the termination of Employee's employment with the Company, the Employee shall promptly deliver to the Company all drawings, manuals, letters, notes, notebooks, reports and copies thereof and all other materials relating to the Company's business. 8. Noncompetition. (For purposes of this Section 8, all references to the Company shall be deemed to include the Company's subsidiary corporations). During the term set forth below, the Employee will not utilize his special knowledge of the business of the Company and his relationships with customers and suppliers of the Company to compete with the Company. During the term of this Agreement and for a period of twelve (12) months after the expiration or termination of this Agreement (or twenty four (24) months in the event of the termination of this Agreement by the Company without Cause as defined below), the Employee shall not engage, directly or indirectly or have an interest, directly or indirectly, anywhere in the United States of America or any other geographic area where the Company does business or in which its products are marketed, alone or in association with others, as principal, officer, agent, employee, capital, lending of money or property, rendering of services or otherwise, in any business directly competitive with or similar to that engaged in by the Company (it being understood hereby, that the ownership by the Employee of 2% or less of the stock of any company listed on a national securities exchange shall not be deemed a violation of this Section 8). During the same period, the Employee shall not, and shall not permit any of his employees, agents or others under his control to, directly or indirectly, on behalf of himself or any other person, (i) call upon, or solicit the business of any person who is, or who had been at any time during the preceding two years, a customer of the Company or any successor to the business of the Company, or otherwise divert or attempt to divert any business from the Company or any such successor, or (ii) solicit or induce any person who is an employee of, or otherwise engaged by, the Company or any successor to the business of the Company to terminate his or her employment or other relationship with the Company or such successor. The Employee shall not at any time, directly or indirectly, use or purport to authorize any person to use any name, mark, logo, trade dress or other identifying words or images which are the same as or similar to those used at any time by the Company. 9. Remedies. The restrictions set forth in Section 7 and 8 are considered by the parties to be fair and reasonable. The Employee acknowledges that the Company would be irreparably harmed and that monetary damages would not provide an adequate remedy in the event of a breach of the provisions of Section 7 or 8. Accordingly, the Employee agrees that, in addition to any other remedies available to the Company, the Company shall be entitled to seek injunctive and other equitable relief to secure the enforcement of these provisions. If any provision of Sections 7, 8 or 9 relating to the time period, scope of activities or geographic area of restriction is declared by a court of competent jurisdiction to exceed the maximum permissible time period, scope of activities or geographic area, as the case may be, then any such provision of Section 7, 8 or 9 that is adjudicated to be invalid or unenforceable shall be deemed amended (with respect only to the jurisdiction in which such adjudication is made) in such manner as to render it enforceable and to effectuate as nearly as possible the original intentions and agreement of the parties. 10. Termination. This Agreement may be terminated upon the occurrence of any of the events set forth in, and subject to the terms of, this Section 10. (a) Death. This Agreement will terminate immediately and automatically upon the death of the Employee. (b) Disability. This Agreement may be terminated at the Company's option, immediately upon written notice to the Employee, if the Employee shall suffer a permanent disability. For the purpose of this Agreement, the term "permanent disability" shall mean the Employee's inability to perform his duties under this Agreement for a period of 120 consecutive days or for an aggregate of 180 days, whether or not consecutive, in any twelve month period, due to illness, accident or any other physical or mental incapacity, as reasonably determined by the Board of Directors of the Company. (c) Cause. This Agreement may be terminated at the Company's option, immediately upon written notice to the Employee, upon: (i) breach by the Employee of any material provision of this Agreement not cured within ten (10 days) after written notice of such breach is given by the Company to the Employee; (ii) gross negligence or willful misconduct of the Employee in connection with the performance of his duties under this Agreement, or Employee's willful refusal to perform any of his duties or responsibilities required pursuant to this Agreement; or (iii) fraud, criminal conduct or embezzlement by the Employee. (d) Without Cause. This Agreement may be terminated pursuant to the terms of Section 2 or on thirty (30) days written notice (the thirtieth day following such notice being herein sometimes called the "Termination Date") by the Company without cause, subject to the following provision. If the Employee's employment is terminated by the Company without Cause, or upon Disability, the Employee shall receive an amount (the "Severance Amount") equal to the sum of the following: (i) two year's Base Compensation; plus (ii) two year's target bonus which Employee would have been entitled to receive for the year in which Employee's employment was terminated; plus (iii) continuation of health insurance and other benefits for two years at the expense of Company; plus full vesting of any outstanding stock options on Company stock, the lapsing of any restrictions over any restricted shares of Company stock owned by the Employee and the prepayment of any outstanding amounts under the Employee's split-dollar life insurance policy. The cash portion of the Severance Amount shall be paid to the Employee as promptly as practicable after the date of Termination and in no event later than two (2) business days after termination. Payment of the Severance Amount shall be in lieu of all other financial obligations of the Company to the Employee under this Agreement and all other benefits hereunder shall cease as of the date of termination. The Employee shall have no obligation to seek other employment or otherwise mitigate damages hereunder. 11. Miscellaneous. (a) Survival. The provisions of Sections 7, 8 and 9 shall survive the termination of this Agreement. (b) Entire Agreement.This Agreement, sets forth the entire understanding of the parties and merges and supersedes any prior or contemporaneous agreements between the parties pertaining to the subject matter hereof. (c) Modification. This Agreement may not be modified or terminated orally; and no modification, termination or attempted waiver of any of the provisions hereof shall be binding unless in writing and signed by the party against whom the same is sought to be enforced; provided, however, that the Employee's compensation may be increased at any time by the Company without in any way affecting any of the other terms and conditions of this Agreement, which in all other respects shall remain in full force and effect. (d) Waiver. Failure of a party to enforce one or more of the provisions of this Agreement or to require at any time performance of any of the obligations hereof shall not be construed to be a waiver of such provisions by such party nor to in any way affect the validity of this Agreement or such party's right thereafter to enforce any provision of this Agreement, nor to preclude such party from taking any other action at any time which it would legally be entitled to take. (e) Successors and Assigns. Neither party shall have the right to assign this Agreement, or any rights or obligations hereunder, without the consent of the other party. (f) Communications. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been given at the time personally delivered or when mailed in any United States post office enclosed in a registered or certified postage prepaid envelope and addressed to the recipient's address set forth below, or to such other address as any party may specify by notice to the other party; provided, however, that any notice of change of address shall be effective only upon receipt. To the Company: Alltrista Corporation Suite B-302 555 Theodore Fremd Avenue Rye, New York 10580 Attention: Chief Executive Officer To the Employee: Mr. Ian G.H. Ashken 22 Bluewater Hill Westport CT 06880 (g) Severability. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall not affect the validity and enforceability of the other provisions of this Agreement and the provision held to be invalid or unenforceable shall be enforced as nearly as possible according to its original terms and intent to eliminate such invalidity or unenforceability. (h) Jurisdiction; Venue. This Agreement shall be subject to the exclusive jurisdiction of the courts of New York County, New York. Any breach of any provision of this Agreement shall be deemed to be a breach occurring in the State of New York and the parties irrevocably and expressly agree to submit to the jurisdiction of the courts of the State of New York or the Federal Courts having concurrent geographic jurisdiction, for the purpose of resolving any disputes among them relating to this Agreement or the transactions contemplated by this Agreement. (i) Governing Law. This Agreement is made and executed and shall be governed by the laws of the State of New York, without regard to the conflicts of law principles thereof. IN WITNESS WHEREOF, each of the parties hereto have duly executed this Agreement as of the date set forth above. ALLTRISTA CORPORATION By: /s/ Martin E. Franklin ------------------------------- Martin E. Franklin Its: Chairman and Chief Executive Officer ------------------------------- /s/ Ian G.H. Ashken ------------------------------------ Ian G.H. Ashken EX-10.36 7 file006.txt EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of January 1, 2002, is entered into between Alltrista Corporation, a Delaware corporation (the "Company") and J. David Tolbert, (the "Employee"). WITNESSETH: WHEREAS, the Company desires to continue to employ the Employee and to be assured of his services on the terms and conditions hereinafter set forth; and WHEREAS, the Employee is willing to continue such employment on such terms and conditions. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, the Company and the Employee hereby agree as follows: 1. Employment. The Company hereby employs the Employee as Vice President, Human Resources and Administration of the Company, and the Employee accepts such employment, upon the terms and subject to the conditions set forth in this Agreement. Notwithstanding the foregoing, it is understood and agreed that the Employee from time to time may (a) be appointed to additional offices or to different offices than those set forth above provided they are within a fifty mile radius of the current Muncie, IN location, (b) perform such duties other than those set forth above, and/or (c) relinquish one or more of such offices or other duties, as may be mutually agreed by and between the company and the Employee; and, that no such action shall be deemed or construed to otherwise amend or modify any of the remaining terms or conditions of this Agreement. 2. Term. The term of this Agreement shall be two (2) years, commencing on the date hereof and ending on the second anniversary of such date (the "Initial Term"), subject to earlier termination pursuant to the provisions of Section 10. The employment of the Employee shall automatically continue hereunder following the Initial Term for the successive one (1) year periods (the "Renewal Terms") unless the Company or the Employee gives written notice to the other at least (90) ninety days prior to the end of the Initial Term. Subsequent to the Initial Term, the employment of the Employee hereunder may be terminated at the end of any Renewal Term by delivery by either the Employee or the Company of a written notice to the other part at least (90) ninety days prior to the end of any Renewal Term. 3. Duties. During the term of this Agreement, the Employee shall, subject to the provisions of Section 1 above, serve as Vice President, Human Resources and Administration of the Company and shall perform all duties commensurate with his position that may be assigned to him by the Chief Executive Officer of the Company and/or by the Board of Directors of the Company consistent with such position. The Employee shall devote substantially all of his time and energies to the business and affairs of the Company and shall use his best efforts, skills and abilities to promote the interests of the Company as necessary to diligently and competently perform the duties of his position. 4. Compensation and Benefits.During the term of this Agreement, the Company shall pay to the Employee, and the Employee shall accept from the Company, as compensation for the performance of services under this Agreement and the Employee's observance and performance of all of the provisions hereof, a salary of $150,000 per year (the "Base Compensation"). The Base Compensation shall be reviewed annually and shall be increased by a minimum of the Consumer Price Index. In addition, the Employee shall be eligible for a bonus package based on performance. The Employee's salary shall be payable in accordance with the normal payroll practices of the Company and shall be subject to withholding for applicable taxes and other amounts. During the term of this Agreement, the Employee shall be entitled to participate in or benefit from, in accordance with the eligibility and other provisions thereof, such medical, insurance, and other fringe benefit plans or policies as the Company may make available to, or have in effect for, its personnel with commensurate duties from time to time. The Company retains the rights to terminate or alter any such plans or policies from time to time. The Employee shall also be entitled to vacations, sick leave and other similar benefits in accordance with policies of the Company from time to time in effect for personnel with commensurate duties. 5. Reimbursement of Business Expenses. During the term of this Agreement, upon submission of proper invoices, receipts or other supporting documentation satisfactory to the Company and in specific accordance with such guidelines as may be established from time to time by the Company, the Employee shall be reimbursed by the Company for all reasonable business expenses actually and necessarily incurred by the Employee on behalf of the Employer in connection with the performance of services under this Agreement. 6. Representation of Employee. Except as set forth in Paragraph 3 hereof, the Employee represents and warrants that that he is not party to, or bound by, any agreement or commitment, or subject to any restriction, including but not limited to agreements related to previous employment containing confidentiality or non compete covenants, which in the future may have a possibility of adversely affecting the business of the Company or the performance by the Employee of his material duties under this Agreement. 7. Confidentiality. (For purposes of this Section 7, all references to the Company shall be deemed to include the Company's subsidiary corporations.) (a) Confidential Information. The Employee acknowledges that he will have knowledge of, and access to, proprietary and confidential information of the Company, including, without limitation, inventions, trade secrets, technical information, know-how, plans, specifications, methods of operations, financial and marketing information and the identity of customers and suppliers (collectively, the "Confidential Information"), and that such information, even though it may be contributed, developed or acquired by the Employee, constitutes valuable, special and unique assets of the Company developed at great expense which are the exclusive property of the Company. Accordingly, the Employee shall not, either during or subsequent to the term of this Agreement, use, reveal, report, publish, transfer or otherwise disclose to any person, corporation or other entity, any of the Confidential Information without the prior written consent of the Company, except to responsible officers and employees of the Company and other responsible persons who are in a contractual or fiduciary relationship with the Company and who have a need for such information for purposes in the best interests of the Company, and except for such information which is or becomes of general public knowledge from authorized sources other than the Employee. The Employee acknowledges that the Company would not enter into this Agreement without the assurance that all such confidential and proprietary information will be used for the exclusive benefit of the Company. (b) Return of Confidential Information. Upon the termination of Employee's employment with the Company, the Employee shall promptly deliver to the Company all drawings, manuals, letters, notes, notebooks, reports and copies thereof and all other materials relating to the Company's business. 8. Noncompetition. (For purposes of this Section 8, all references to the Company shall be deemed to include the Company's subsidiary corporations). During the term set forth below, the Employee will not utilize his special knowledge of the business of the Company and his relationships with customers and suppliers of the Company to compete with the Company. During the term of this Agreement and for a period of twelve (12) months after the expiration or termination of this Agreement, the Employee shall not engage, directly or indirectly or have an interest, directly or indirectly, anywhere in the United States of America or any other geographic area where the Company does business or in which its products are marketed, alone or in association with others, as principal, officer, agent, employee, capital, lending of money or property, rendering of services or otherwise, in any business directly competitive with or similar to that engaged in by the Company (it being understood hereby, that the ownership by the Employee of 2% or less of the stock of any company listed on a national securities exchange shall not be deemed a violation of this Section 8). During the same period, the Employee shall not, and shall not permit any of his employees, agents or others under his control to, directly or indirectly, on behalf of himself or any other person, (i) call upon, accept business from, or solicit the business of any person who is, or who had been at any time during the preceding two years, a customer of the Company or any successor to the business of the Company, or otherwise divert or attempt to divert any business from the Company or any such successor, or (ii) directly or indirectly recruit or otherwise solicit or induce any person who is an employee of, or otherwise engaged by, the Company or any successor to the business of the Company to terminate his or her employment or other relationship with the Company or such successor. 9. Remedies. The restrictions set forth in Section 7 and 8 are considered by the parties to be fair and reasonable. The Employee acknowledges that the Company would be irreparably harmed and that monetary damages would not provide an adequate remedy in the event of a breech of the provisions of Section 7 or 8. Accordingly, the Employee agrees that, in addition to any other remedies available to the Company, the Company shall be entitled to seek injunctive and other equitable relief to secure the enforcement of these provisions. If any provisions of Sections 7, 8 or 9 relating to the time period, scope of activities or geographic area of restrictions is declared by a court of competent jurisdiction to exceed the maximum permissible time period, scope of activities or geographic area, as the case may be, shall be provisions of Section 7, 8 or 9 other than those described in the preceding sentence are adjudicated to be invalid or unenforceable, the invalid or unenforceable provisions shall be deemed amended (with respect only to the jurisdiction in which such adjudication is made) in such manner as to render them enforceable and to effectuate as nearly as possible the original intentions and agreement of the parties. 10. Termination. This Agreement may be terminated prior to the expiration of the term set forth in Section 2 upon the occurrence of any of the events set forth in, and subject to the terms of, this Section 10. (a) Death. This Agreement will terminate immediately and automatically upon the death of the Employee. (b) Disability. This Agreement may be terminated at the Company's option, immediately upon written notice to the Employee, if the Employee shall suffer a permanent disability. For the purpose of this Agreement, the term "permanent disability" shall mean the Employee's inability to perform his duties under this Agreement for a period of 120 consecutive days or for an aggregate of 180 days, whether or not consecutive, in any twelve month period, due to illness, accident or any other physical or mental incapacity, as reasonably determined by the Board of Directors of the Company. In the event of termination for disability, the Employee will also be entitled to receive medical benefits generally available to other disabled employees of the Company. (c) Cause. This Agreement may be terminated at the Company's option, immediately upon written notice to the Employee, upon: (i) breach by the Employee of any material provision of this Agreement not cured within ten (10 days) after written notice of such breach is given by the Company to the Employee; (ii) gross negligence or willful misconduct of the Employee in connection with the performance of his duties under this Agreement, or Employee's willful refusal to perform any of his duties or responsibilities required pursuant to this Agreement; or (iii) fraud, criminal conduct or embezzlement by the Employee. (d) Without Cause. This Agreement may be terminated pursuant to the terms of Section 2 or on thirty (30) days written notice (the thirtieth day following such notice being herein sometimes called the "Termination Date") by the Company without cause, subject to the following provision. If the Employee's employment is terminated by the Company without Cause, or upon Disability, the Employee shall receive an amount (the "Severance Amount") equal to the sum of the following: (i) one year's Base Compensation; plus (ii) one year's target bonus which Employee would have been entitled to receive for achieving budget for the year in which Employee's employment was terminated; plus (iii) continuation of health insurance and other benefits for one year at the expense of Company; plus full vesting of any outstanding stock options and the lapsing of any restrictions over any restricted shares owned by the Employee. The cash portion of the Severance Amount shall be paid to the Employee as promptly as practicable after the date of Termination and in no event later than ten (10) days after termination. Payment of the Severance Amount shall be in lieu of all other financial obligations of the Company to the Employee and all other benefits in this Agreement shall cease as of the date of termination. The Employee shall have no obligation to seek other employment or otherwise mitigate damages hereunder. For the avoidance of doubt, it is understood that the Company will pay all amounts owed to Employee prior to the date of termination, including incentive compensation earned up through the date of termination in the same manner as all other plan participants. Notwithstanding anything in the incentive compensation plan, Employee need not be employed at the date the incentive payments are made to be eligible for this payment 11. Miscellaneous. (a) Survival. The provisions of Sections 7, 8 and 9 shall survive the termination of this Agreement. (b) Entire Agreement.This Agreement, sets forth the entire understanding of the parties and merges and supersedes any prior or contemporaneous agreements between the parties pertaining to the subject matter hereof. (c) Modification. This Agreement may not be modified or terminated orally; and no modification, termination or attempted waiver of any of the provisions hereof shall be binding unless in writing and signed by the party against whom the same is sought to be enforced; provided, however, that the Employee's compensation may be increased at any time by the Company without in any way affecting any of the other terms and conditions of this Agreement, which in all other respects shall remain in full force and effect. (d) Waiver. Failure of a party to enforce one or more of the provisions of this Agreement or to require at any time performance of any of the obligations hereof shall not be construed to be a waiver of such provisions by such party nor to in any way affect the validity of this Agreement or such party's right thereafter to enforce any provision of this Agreement, not to preclude such party from taking any other action at any time which it would legally be entitled to take. (e) Successors and Assigns. Neither party shall have the right to assign this Agreement, or any rights or obligations hereunder, without the consent of the other party. (f) Communications. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been given at the time personally delivered or when mailed in any United States post office enclosed in a registered or certified postage prepaid envelope and addressed to the recipient's address set forth below, or to such other address as any party may specify by notice to the other party; provided, however, that any notice of change of address shall be effective only upon receipt. To the Company: Alltrista Corporation Suite B-302 555 Theodore Fremd Avenue Rye, New York 10580 Attention: Chief Executive Officer To the Employee: Mr. David Tolbert 513 S. Pinehurst Lane Yorktown, IN 47396 (g) Severability. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall not affect the validity and enforceability of the other provisions of this Agreement and the provision held to be invalid or unenforceable shall be enforced as nearly as possible according to its original terms and intent to eliminate such invalidity or unenforceability. (h) Jurisdiction; Venue. This Agreement shall be subject to the exclusive jurisdiction of the courts of New York County, New York. Any breach of any provision of this Agreement shall be deemed to be a breach occurring in the State of New York and the parties irrevocably and expressly agree to submit to the jurisdiction of the courts of the State of New York or the Federal Courts having concurrent geographic jurisdiction, for the purpose of resolving any disputes among them relating to this Agreement or the transactions contemplated by this Agreement. (i) Governing Law. This Agreement is made and executed and shall be governed by the laws of the State of New York, without regard to the conflicts of law principles thereof. IN WITNESS WHEREOF, each of the parties hereto have duly executed this Agreement as of the date set forth above. ALLTRISTA CORPORATION By: /s/ Ian G.H. Ashken ------------------------------- Ian G.H. Ashken Its: Vice Chairman and Chief Financial Officer ------------------------------- /s/ J. David Tolbert ------------------------------------ J. David Tolbert EX-10.37 8 file007.txt PROMISSORY NOTE BY MARTIN E. FRANKLIN PROMISSORY NOTE $3,282,000 January 24, 2002 FOR VALUE RECEIVED, the undersigned, Martin E. Franklin ("Payor"), having an address at 555 Theodore Fremd Avenue, Suite B-302, Rye, New York 10580 hereby promises to pay to the order of Alltrista Corporation ("Payee"), having an address at 555 Theodore Fremd Avenue, Suite B-302, Rye, New York 10580, at Payee's principal place of business at 555 Theodore Fremd Avenue, Suite B-302, Rye, New York 10580, the sum of Three Million Two Hundred Eighty Two Thousand Dollars ($3,282,000), together with all accrued and unpaid interest thereon from the date hereof at the rate of 4.125% per annum (being the lowest cost of Payee's borrowing on the date noted above) on the Payment Date (as defined below); provided, however, that upon the occurrence and continuance of an Event of Default (as hereinafter defined), interest shall accrue at the prime rate in effect at such time. The principal of, and interest on, this note (the "Note") are payable in United States dollars, except as otherwise expressly provided in paragraph 13 below. This Note is subject to the following additional terms. 1. 2002 Executive Loan Program. This Note evidences a loan made by Payee to Payor under the Alltrista Corporation 2002 Executive Stock Program (the "Program") in connection with the exercise of non-qualified stock options to purchase 300,000 shares of Common Stock (the "Shares") granted under the Alltrista Corporation 2001 Stock Option Plan. Unless otherwise defined herein, capitalized terms used herein shall have the meaning ascribed to them in the Program. The Note is made pursuant to the terms and provisions of the Program. Payor hereby acknowledges receipt of a copy of the Program. Payor has read and understands the terms and provisions thereof, and accepts and understands that the Loan was made subject to all the terms and conditions of the Program and this Note. Payor agrees to be bound by, all of the terms and conditions of the Program. 2. Payment. (a) All payments hereunder shall be payable at the offices of Payee, or at such other place as Payee may from time to time designate by written notice to Payor. The Payor will pay the outstanding principal of, and all accrued and unpaid interest due, upon this Note on the Payment Date, except as otherwise provided in paragraph 2(c) below. All payments hereunder shall be applied first to all accrued and unpaid interest hereunder and then to the principal amount outstanding hereunder. (b) For purposes of this Note, the term "Payment Date" shall mean the date which is the earlier of (i) January 23, 2007, or (ii) 90 days after the date that Payor ceases to be employed by Alltrista Corporation or its present or future subsidiaries for any reason other than age, Disability (as defined in the Employment Agreement (the "Employment Agreement"), dated January 1, 2002, between Payor and Payee), death or termination by Alltrista Corporation without Cause (as defined in the Employment Agreement) (c) Notwithstanding anything to the contrary contained herein, in the event that, prior to the Payment Date, Payor sells, assigns, pledges, hypothecates, or otherwise transfers (collectively, a "Transfer") any Shares, Payor is required to repay that amount of the outstanding balance under this Note, within four business days following such Transfer, which is derived by multiplying (x) the number of Shares Transferred, by (y) $10.94. The number of shares granted and the price of $10.95 shall be adjusted for changes or adjustments in the common stock as outlined in Section 5.09 of the Company's 2001 Stock Option Plan. The Payor is required to provide Payee with notice describing a Transfer within two Business Days after the Transfer. 3. Events of Default. The following shall constitute an "Event of Default" under this Note: (a) Payor shall have failed to make any payment due hereunder within ten (10) days after the due date therefor, and shall fail to make such payment for an additional ten (10) business days after written notice of such non-payment; (b) A custodian, receiver, liquidator or trustee of the Payor, or of any of his property, is appointed or takes possession of the Payor's property; or an order for relief is entered under the Federal Bankruptcy Code or any other applicable laws or statute of the United States of America or any state or similar law of any other country, against the Payor; or any of the property of the Payor is sequestered by court order; or a petition or other proceeding is filed against the Payor under any bankruptcy, arrangement, insolvency, readjustment of indebtedness, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect; (c) The Payor files a petition in voluntary bankruptcy or seeking relief under any provision of any bankruptcy, reorganization, arrangement, insolvency, readjustment of indebtedness, dissolution or liquidation law of any jurisdiction, whether nor or hereafter in effect, or consents to the filing of any petition against it under any such law; (d) The Payor makes an assignment for the benefit of its creditors or consents to the appointment of or taking possession by a custodian, receiver, liquidator or trustee of the Payor of all or any material part of his property; and (e) any other material default shall occur hereunder which remains uncured or unwaived for a period of thirty (30) days after written notice of such default. Upon the occurrence of an Event of Default hereunder, the Payee may by written notice to Payor declare the entire unpaid principal amount of this Note together with accrued interest and charges thereon due and payable, and such amount may be collected forthwith. 4. Applicable Law and Jurisdiction. This Note shall be governed by and interpreted under the laws of the State of New York applicable to contracts made and to be performed 2 therein, without giving effect to the principles of conflicts of law. Payor hereby irrevocably consents that any legal action or proceeding against Payor arising out of or in any way connected with this Note may be instituted exclusively in any state court or United States federal court located in the State of New York and County of Westchester and Payor hereby submits to the jurisdiction and venue of such courts. Payor further irrevocably consents to the service of process arising out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by postage prepaid certified or registered first-class mail, return receipt requested, to Payor. In the event of litigation between Payee and Payor over any matter connected with this Note, the right to a trial by jury is hereby waived by Payor and Payee. 5. Remedies. If any Event of Default shall occur, then immediately upon the occurrence of an Event of Default, all amounts of principal and accrued interest payable hereunder, together with collection costs (including all reasonable attorneys' fees and disbursements), shall become immediately due and payable, all without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by Payor. The principal sum of, and any accrued interest on, this Note shall be irrevocably and unconditionally payable by Payor, without offset, discount, defense, claim or counterclaim of any nature. 6. Further Assurances. Payor hereby agrees to execute and deliver such other documents and instruments as may be reasonably requested by Payee in order to give effect to the intent and purposes of this Note. 7. Prepayment. This Note may be prepaid, in whole or in part, at any time, without charge, premium or penalty. 8. No Failure to Exercise. No failure on the part of Payee to exercise, and no delay in exercising any right hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise by Payee of any right preclude any other or further exercise thereof or the exercise of any other right. 9. Amendments. No amendment, modification or waiver of any provision of this Note, nor any consent to any departure by Payor therefrom, shall be effective unless the same shall be in writing and signed by Payee and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. 10. Binding. This Note shall be binding upon the Payor and its successors and assigns, and the terms hereof shall inure to the benefit of Payee and its heirs, legal representatives, successors and permitted assigns, including subsequent holders hereof. The provisions of this Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Note in any jurisdiction. 11. Notice. Any notice, request, demand or other communication permitted or required to be given under this Note shall be in writing, shall be sent by one of the following means to the addressee at the address provided above (or at such other address as shall be 3 designated hereunder by notice to the other party) and shall be deemed conclusively to have been given: (i) on the first day following the day timely deposited with Federal Express (or other equivalent national overnight courier) or United States Express Mail, with the cost of delivery prepaid or for the account of the sender; (ii) on the fifth day following the day duly sent by certified or registered United States mail, postage prepaid and return receipt requested; or (iii) on the day actually received by the addressee when personally delivered. 12. No Assignment. This Note may not be sold, gifted, assigned, or otherwise transferred without the prior written consent of the Payor and the Payee, which consent may be withheld for any or no reason. 13. Absolute Obligation and Repayment in Common Stock. No provision of this Note shall alter or impair the obligation of the Payor, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place and rate herein prescribed. However, the principal and interest under this Note may be repaid by the Payor, at Payor's sole and absolute discretion, either (i) in United States of America dollars, (ii) with shares of Common Stock valued at the Fair Market Value on the date that such shares of Common Stock are delivered to the Payor in repayment of the Note, or (iii) any combination of (i) and (ii) above, at Payor's sole and absolute discretion. The term "Fair Market Value" shall have the same meaning ascribed to such term in the Alltrista Corporation 2001 Stock Option Plan. 14. Usury Savings Clause. Anything in this Note to the contrary notwithstanding, the obligation of the Payor to make payments of interest shall be subject to the limitation that payments of interest shall not be required to be made to the extent that the Payee's receipt thereof would not be permissible under the law or laws applicable to it limiting rates of interest which may be charged or collected by it. Any such amount of interest which is not paid as a result of the limitation referred to in the preceding sentence shall be carried forward and paid by the Payor to the Payee on the earliest date or dates on which any interest is payable under this Note and on which the receipt thereof is permissible under the laws applicable to the Payee limiting rates of interest which may be charged or collected by such Lender. /s/ Martin E. Franklin ----------------------------- Name: Martin E. Franklin 4 EX-10.38 9 file008.txt PROMISSORY NOTE BY IAN G. H. ASKEN PROMISSORY NOTE $1,641,000 January 24, 2002 FOR VALUE RECEIVED, the undersigned, Ian Ashken ("Payor"), having an address at 555 Theodore Fremd Avenue, Suite B-302, Rye, New York 10580 hereby promises to pay to the order of Alltrista Corporation ("Payee"), having an address at 555 Theodore Fremd Avenue, Suite B-302, Rye, New York 10580, at Payee's principal place of business at 555 Theodore Fremd Avenue, Suite B-302, Rye, New York 10580, the sum of One Million Six Hundred Forty-One Thousand Dollars ($1,641,000), together with all accrued and unpaid interest thereon from the date hereof at the rate of 4.125% per annum (being the lowest cost of Payee's borrowing on the date noted above) on the Payment Date (as defined below); provided, however, that upon the occurrence and continuance of an Event of Default (as hereinafter defined), interest shall accrue at the prime rate in effect at such time. The principal of, and interest on, this note (the "Note") are payable in United States dollars, except as otherwise expressly provided in paragraph 13 below. This Note is subject to the following additional terms. 1. 2002 Executive Loan Program. This Note evidences a loan made by Payee to Payor under the Alltrista Corporation 2002 Executive Stock Program (the "Program") in connection with the exercise of non-qualified stock options to purchase 150,000 shares of Common Stock (the "Shares") granted under the Alltrista Corporation 2001 Stock Option Plan. Unless otherwise defined herein, capitalized terms used herein shall have the meaning ascribed to them in the Program. The Note is made pursuant to the terms and provisions of the Program. Payor hereby acknowledges receipt of a copy of the Program. Payor has read and understands the terms and provisions thereof, and accepts and understands that the Loan was made subject to all the terms and conditions of the Program and this Note. Payor agrees to be bound by, all of the terms and conditions of the Program. 2. Payment. (a) All payments hereunder shall be payable at the offices of Payee, or at such other place as Payee may from time to time designate by written notice to Payor. The Payor will pay the outstanding principal of, and all accrued and unpaid interest due, upon this Note on the Payment Date, except as otherwise provided in paragraph 2(c) below. All payments hereunder shall be applied first to all accrued and unpaid interest hereunder and then to the principal amount outstanding hereunder. (b) For purposes of this Note, the term "Payment Date" shall mean the date which is the earlier of (i) January 23, 2007, or (ii) 90 days after the date that Payor ceases to be employed by Alltrista Corporation or its present or future subsidiaries for any reason other than age, Disability (as defined in the Employment Agreement (the "Employment Agreement"), dated January 1, 2002, between Payor and Payee), death or termination by Alltrista Corporation without Cause (as defined in the Employment Agreement) (c) Notwithstanding anything to the contrary contained herein, in the event that, prior to the Payment Date, Payor sells, assigns, pledges, hypothecates, or otherwise transfers (collectively, a "Transfer") any Shares, Payor is required to repay that amount of the outstanding balance under this Note, within four business days following such Transfer, which is derived by multiplying (x) the number of Shares Transferred, by (y) $10.94. The number of shares granted and the price of $10.95 shall be adjusted for changes or adjustments in the common stock as outlined in Section 5.09 of the Company's 2001 Stock Option Plan. The Payor is required to provide Payee with notice describing a Transfer within two Business Days after the Transfer. 3. Events of Default. The following shall constitute an "Event of Default" under this Note: (a) Payor shall have failed to make any payment due hereunder within ten (10) days after the due date therefor, and shall fail to make such payment for an additional ten (10) business days after written notice of such non-payment; (b) A custodian, receiver, liquidator or trustee of the Payor, or of any of his property, is appointed or takes possession of the Payor's property; or an order for relief is entered under the Federal Bankruptcy Code or any other applicable laws or statute of the United States of America or any state or similar law of any other country, against the Payor; or any of the property of the Payor is sequestered by court order; or a petition or other proceeding is filed against the Payor under any bankruptcy, arrangement, insolvency, readjustment of indebtedness, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect; (c) The Payor files a petition in voluntary bankruptcy or seeking relief under any provision of any bankruptcy, reorganization, arrangement, insolvency, readjustment of indebtedness, dissolution or liquidation law of any jurisdiction, whether nor or hereafter in effect, or consents to the filing of any petition against it under any such law; (d) The Payor makes an assignment for the benefit of its creditors or consents to the appointment of or taking possession by a custodian, receiver, liquidator or trustee of the Payor of all or any material part of his property; and (e) any other material default shall occur hereunder which remains uncured or unwaived for a period of thirty (30) days after written notice of such default. Upon the occurrence of an Event of Default hereunder, the Payee may by written notice to Payor declare the entire unpaid principal amount of this Note together with accrued interest and charges thereon due and payable, and such amount may be collected forthwith. 4. Applicable Law and Jurisdiction. This Note shall be governed by and interpreted under the laws of the State of New York applicable to contracts made and to be performed therein, without giving effect to the principles of conflicts of law. Payor hereby irrevocably consents that any legal action or proceeding against Payor arising out of or in any way connected 2 with this Note may be instituted exclusively in any state court or United States federal court located in the State of New York and County of Westchester and Payor hereby submits to the jurisdiction and venue of such courts. Payor further irrevocably consents to the service of process arising out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by postage prepaid certified or registered first-class mail, return receipt requested, to Payor. In the event of litigation between Payee and Payor over any matter connected with this Note, the right to a trial by jury is hereby waived by Payor and Payee. 5. Remedies. If any Event of Default shall occur, then immediately upon the occurrence of an Event of Default, all amounts of principal and accrued interest payable hereunder, together with collection costs (including all reasonable attorneys' fees and disbursements), shall become immediately due and payable, all without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by Payor. The principal sum of, and any accrued interest on, this Note shall be irrevocably and unconditionally payable by Payor, without offset, discount, defense, claim or counterclaim of any nature. 6. Further Assurances. Payor hereby agrees to execute and deliver such other documents and instruments as may be reasonably requested by Payee in order to give effect to the intent and purposes of this Note. 7. Prepayment. This Note may be prepaid, in whole or in part, at any time, without charge, premium or penalty. 8. No Failure to Exercise. No failure on the part of Payee to exercise, and no delay in exercising any right hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise by Payee of any right preclude any other or further exercise thereof or the exercise of any other right. 9. Amendments. No amendment, modification or waiver of any provision of this Note, nor any consent to any departure by Payor therefrom, shall be effective unless the same shall be in writing and signed by Payee and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. 10. Binding. This Note shall be binding upon the Payor and its successors and assigns, and the terms hereof shall inure to the benefit of Payee and its heirs, legal representatives, successors and permitted assigns, including subsequent holders hereof. The provisions of this Note are severable, and if any provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall not in any manner affect such provision in any other jurisdiction or any other provision of this Note in any jurisdiction. 11. Notice. Any notice, request, demand or other communication permitted or required to be given under this Note shall be in writing, shall be sent by one of the following means to the addressee at the address provided above (or at such other address as shall be designated hereunder by notice to the other party) and shall be deemed conclusively to have been given: (i) on the first day following the day timely deposited with Federal Express (or other 3 equivalent national overnight courier) or United States Express Mail, with the cost of delivery prepaid or for the account of the sender; (ii) on the fifth day following the day duly sent by certified or registered United States mail, postage prepaid and return receipt requested; or (iii) on the day actually received by the addressee when personally delivered. 12. No Assignment. This Note may not be sold, gifted, assigned, or otherwise transferred without the prior written consent of the Payor and the Payee, which consent may be withheld for any or no reason. 13. Absolute Obligation and Repayment in Common Stock. No provision of this Note shall alter or impair the obligation of the Payor, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place and rate herein prescribed. However, the principal and interest under this Note may be repaid by the Payor, at Payor's sole and absolute discretion, either (i) in United States of America dollars, (ii) with shares of Common Stock valued at the Fair Market Value on the date that such shares of Common Stock are delivered to the Payor in repayment of the Note, or (iii) any combination of (i) and (ii) above, at Payor's sole and absolute discretion. The term "Fair Market Value" shall have the same meaning ascribed to such term in the Alltrista Corporation 2001 Stock Option Plan. 14. Usury Savings Clause. Anything in this Note to the contrary notwithstanding, the obligation of the Payor to make payments of interest shall be subject to the limitation that payments of interest shall not be required to be made to the extent that the Payee's receipt thereof would not be permissible under the law or laws applicable to it limiting rates of interest which may be charged or collected by it. Any such amount of interest which is not paid as a result of the limitation referred to in the preceding sentence shall be carried forward and paid by the Payor to the Payee on the earliest date or dates on which any interest is payable under this Note and on which the receipt thereof is permissible under the laws applicable to the Payee limiting rates of interest which may be charged or collected by such Lender. /s/ Ian Ashken ---------------------------- Name: Ian Ashken 4 EX-10.39 10 file009.txt ALLTRISTA CORPORATION 2002 EXECUTIVE LOAN PROGRAM ALLTRISTA CORPORATION 2002 EXECUTIVE LOAN PROGRAM 1. Purpose. The purpose of the Alltrista Corporation 2002 Executive Loan Program (the "Program") is to benefit Alltrista Corporation and its present or future subsidiaries (together, or separately, the "Company," as the context may require) by enhancing the Company's ability to attract and retain those officers and other key employees of the Company who are in a position to make substantial contributions to the ongoing success of the Company. The Program is intended to complement the incentives now offered by the Company to its executives which allow them to acquire shares of common stock (the "Common Stock") of Alltrista Corporation. To accomplish this purpose, the Program provides loans to finance exercises of incentive stock options and non-qualified stock options granted under various stock options plans maintained by the Company, all as the Compensation Committee of the Board of Directors of Alltrista Corporation (the "Committee") determines. 2. Participation. Participation in the Program shall be limited to (a) the Chief Executive Officer, Chief Financial Officer, all Vice Presidents and all other employees who are "executive officers" of the company under Section 16 of the Securities Exchange Act of 1934 and (b) those other officers and key employees of the Company who are determined by the Committee as being eligible to so participate (collectively, the "Participants"). 3. Administration. The Committee shall administer the Program and have exclusive power to determine (a) which officers and key employees shall become Participants in accordance with the limitations contained in Paragraph 2 above, (b) the time or times at which such offer shall be made, and (c) the amount to be loaned to any Participant. The interpretation and instruction by the Committee of any provision of the Program or of any agreement or other matter related to the Program shall be final unless otherwise determined by the Committee or the Board of Directors. 4. Amount Available for Loans. The aggregate amount of loans under the Program which may be outstanding at any one time shall not exceed $7,500,000. All loans under the Program must be made on or before December 31, 2005. 5. Terms of Notes. Each loan (a "Loan") made under the Program shall be evidenced by a promissory note executed and delivered by the Participant to Alltrista Corporation, in form and substance satisfactory to the Committee (the "Note"), and such other agreements as may be required by the Committee. Notwithstanding the general authority of the Committee under the Program, each Note shall be subject to the following terms and conditions: (a) The Participant shall be personally liable on the Note and each Loan shall be full recourse against the Participant. (b) The maximum term to maturity of the Note shall be five years, unless earlier terminated as provided in paragraph 7 below; provided, however, that the Note shall become immediately due and payable within 90 days after the date a Participant ceases to be employed by the Company for any reason other than age, disability ,death or without cause, as defined in any employment entered into with the Company by a Participant. (c) Each Note shall provide for the payment of annual interest at the most favorable rate applicable to funds borrowed by the Company at the time the Note is issued, provided that this rate is sufficient to avoid the loan being characterized as either (A) carrying "unstated interest" within the meaning of Section 483 of the Internal Revenue Code of 1986, as amended (the "Code"), or (B) a "below-market loan" within the meaning of Section 7872 of the Code in all other cases and (iii) any other minimum rate required to avoid the imputation of income as original issue discount. Interest shall be payable at the maturity of each Loan. (d) The Committee, in its discretion, may require that amounts payable with respect to the Note be secured by the shares issued at the time the Loan is made. (e) The principal amount of the Loans shall not exceed the aggregate of the exercise price due on any options being exercised, less the par value of the Common Stock of the shares being exercised. 6. Securities and Other Laws. Purchases and sales of Common Stock pursuant to the Program shall comply in all respects to federal and state securities laws and the Company's policies on insider trading. The Program and all loans entered into by the Company pursuant to the Program are subject to all laws, rules and regulations of any governmental authority which may be applicable thereto, including any applicable rules and regulations of the Federal Reserve Board. 7. Repayment of Note. (a) The principal and interest under the Loans, may be paid by the Participant either in cash or in or whole or in part in shares of Common Stock valued at the Fair Market Value on the repayment date. The term "Fair Market Value" shall have the same meaning ascribed to such term in the Alltrista Corporation 2001 Stock Option Plan. (b) The Note shall be repaid on a pro rata basis with the proceeds received by the Participant upon the sale of shares of Common Stock issued by the Company to a Participant in connection with the Loan, if not repaid prior to this date. (c) Participants may prepay Loans to the Company without charge, prepayment interest or penalty. Upon full satisfaction of all outstanding Loans to a Participant, the Company shall direct the Company's transfer agent to remove any restrictive legends and stop transfer orders that may be placed against certificates representing shares of Common Stock held by a Participant. 8. Restrictions on Shares. The Company may endorse such legend or legends upon the certificates for shares of Common Stock issued to the Participant in connection with the Program and may issue such "stop transfer" instructions to its transfer agent in respect of such shares of Common Stock as, in its discretion, it determines to be necessary or appropriate to: (i) prevent a violation of, or to perfect an exemption from, the registration requirements of the Securities Act; or (ii) implement the provisions of the Program, including Paragraph 7 above, and the Note or any other agreement between the Company and the Participant with respect to such shares of Common Stock. The Common Stock may not be margined or used as collateral for another loan, while the Loan is outstanding. 9. No Employment Rights Created. Nothing in this Program or any Note or other Loan document or the making of any Loan hereunder shall be deemed to create a contract of employment or to alter the nature of a Participant's employment with the Company; or (b) entitle a Participant to any severance or other payments upon termination of employment from the Company. 10. Non-Uniform Determinations. Neither the Committee's nor the Board's determinations under the Program need be uniform and may be made by the Committee (or the Board) selectively among Participants whether or not such persons are similarly situated. Without limiting the generality of the foregoing, the Committee shall be entitled, among other things, to make non-uniform and selective determinations and to enter into non-uniform and selective Loan documents. 11. General Provisions. (a) Amendment to Program/Termination. The Committee or the Board of Directors reserves the right to suspend, withdraw, amend, modify, waive or terminate the Program in whole or in part, at any time for any reason. The Program shall continue in full force and effect until such time as the Board determines to terminate the Program. No suspension or termination of the Program shall release any Participant from Participant's obligations under any outstanding Loan or accelerate the terms of any outstanding Loans. (b) Further Assurances. By accepting a Loan, a Participant shall be deemed to consent to provide any further assurances, documents, information, certificates, financial records or other items reasonably requested by the Company in connection with any Loan or any collateral held under a Loan. (c) Severability. If all or any part of the Program is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not serve to invalidate any portion of the Program not declared to be unlawful or invalid. Any Section or part of a Section so declared to be unlawful or invalid shall, if possible, be construed in a manner in which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid. (d) Expenses. The Company shall bear all expenses of administering the Program. (e) Determinations. The determination of the Committee (or the Board) on all matters relating to the Program or any Loan agreement shall be conclusive and final. No member of the Committee (or the Board) shall be liable for any action or determination made in good faith with respect to the Program or any Loan agreement. (f) Governing Law. The Program and all Notes and other Loan documents entered into in connection with this Program shall be governed by and construed in accordance with the internal laws of the state of New York without regard to the principles of conflicts of law thereof. 12. Effective Date. The effective date of the Program is January 2, 2002. EX-21.1 11 file010.txt SUBSIDIARIES OF ALLTRISTA CORPORATION Exhibit 21.1 ALLTRISTA CORPORATION SUBSIDIARIES OF ALLTRISTA CORPORATION
Company Shareholder State of Incorporation/Organization ------- ----------- ----------------------------------- Bernardin Ltd. Alltrista Limited Canada Alltrista Limited Alltrista Corporation Canada Alltrista Newco Corporation Alltrista Corporation Indiana Quoin Corporation Alltrista Corporation Delaware Hearthmark, Inc.* Quoin Corporation Indiana Alltrista Plastics Corporation** Quoin Corporation Indiana Alltrista Zinc Products, L.P.*** Quoin Corporation (LP 99%) Indiana Alltrista Newco Corporation (GP1%)
* (DBA) Alltrista Consumer Products Company ** (DBA) Alltrista Unimark Plastics Company Alltrista Industrial Plastics Company *** (DBA) Alltrista Zinc Products Company EX-23.1 12 file011.txt CONSENT OF ERNST & YOUNG LLP Exhibit 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in Registration Statement Number 33-60622 on Form S-8 dated March 31, 1993, Registration Statement Number 33-60730 on Form S-8 dated March 31, 1993, Registration Statement Number 333-27459 on Form S-8 dated May 20, 1997, Registration Statement Number 333-27461 on Form S-8 dated May 20, 1997, and in Registration Statement Number 333-67033 on Form S-8 dated November 10, 1998 of our report dated January 23, 2002, [except for Note 19, as to which the date is March 22, 2002], with respect to the consolidated financial statements and schedule of Alltrista Corporation included in the 2001 Annual Report (Form 10-K) for the year ended December 31, 2001. /s/ ERNST & YOUNG LLP Indianapolis, Indiana March 27, 2002 -----END PRIVACY-ENHANCED MESSAGE-----