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
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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
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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
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Name: Martin E. Franklin
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