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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended August 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______________ to ______________
Commission file number 0-17051
TUSCARORA INCORPORATED
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1119372
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
800 Fifth Avenue
New Brighton, Pennsylvania 15066
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 412-843-8200
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, without par value
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 and (2) has been subject to
such filing requirements for at least the past 90 days.
Yes __X__ 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. / /
The registrant estimates that as of October 27, 1995, the
aggregate market value of the shares of its Common Stock held by non-affiliates
of the registrant was approximately $104,417,616.
As of October 27, 1995, 6,184,486 shares of Common Stock of
the registrant were issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
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Portions of the registrant's Annual Report to Shareholders for
its fiscal year ended August 31, 1995 are incorporated by reference into Parts
I and II of this Annual Report.
Portions of the Proxy Statement for the registrant's Annual
Meeting of Shareholders to be held on December 14, 1995 are incorporated by
reference into Part III of this annual report.
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PART I
ITEM 1. BUSINESS.
Tuscarora Incorporated (the "Company") was incorporated in
1962 as Tuscarora Plastics, Inc. The corporate name was changed in 1992 to
reflect changes in the Company's business.
The Company designs and manufactures products for interior
protective packaging and for material handling and other applications. Most of
the products are custom molded products made from expanded foam plastic
materials but other products are made by integrating multiple materials to meet
customer requirements. The Company also supplies customers with custom molded
foam plastic thermal insulation products and components and manufactures rigid
plastic products for material handling applications and component parts.
The Company has been manufacturing custom molded products
since its inception and is the largest manufacturer in the United States of
custom molded products made from expanded foam plastic materials. Integrated
materials products and rigid plastic products were not manufactured by the
Company prior to 1991.
CUSTOM MOLDED PRODUCTS
PACKAGING AND MATERIAL HANDLING PRODUCTS. The packaging
products are primarily foam plastic shapes which are used to protect a wide
range of finished consumer and industrial goods during shipment. The products
are designed to reduce or eliminate damage that may occur during shipment and
handling as a result of shock, vibration or wide temperature fluctuations. The
goods which are packaged include computers and computer peripherals, consumer
electronic items such as television sets, VCR'S and satellite dishes, kitchen
appliances such as refrigerators, microwave ovens and blenders, office
equipment such as copiers and fax machines, outboard motors, vaccine
containers, military equipment, valves, cosmetics, liquid chemicals, toys,
seedlings and perishable pharmaceuticals. Most of the shapes are unique in
that they are custom made for each particular application. The Company's
customers generally ship their goods utilizing the Company's interior
protective packaging products in exterior shipping containers.
The material handling products are also primarily unique foam
plastic shapes which serve many of the same purposes and functions as the
packaging products but are designed primarily for use in intra-plant or
inter-plant movement of components rather than for shipment of finished goods.
These products are widely used by automobile manufacturers and by their
suppliers to
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transport parts to assembly plants. They also frequently serve as parts
positioning carriers for automated assembly. The material handling products are
generally more durable than the packaging products and are usually reusable,
providing a cost-effective means of transporting materials that are sensitive or
difficult to handle.
The packaging and material handling products possess an
unusual combination of useful properties such as exceptional lightness, impact
resistance and shock absorbency, toughness and strength, thermal insulating
efficiency, temperature tolerance, buoyancy and chemical and biological
neutrality. The cost of the products to the customer is often less than
alternative types of materials because, pound for pound, less foam plastic
material is required to provide equal or better protection. The Company's
complex shapes can also be easily and quickly handled thus reducing the
customer's labor costs. Because foam plastic packaging shapes frequently
require less space and are lighter than most other packaging materials, the
customer is also often able to reduce its product shipping costs. Similarly,
properly designed foam plastic material handling devices often increase total
yield per transportation container, thus reducing intra-plant or inter-plant
freight cost.
THERMAL INSULATION PRODUCTS AND COMPONENTS. The thermal
insulation products are foam plastic shapes used primarily in the manufacture
of refrigeration equipment such as home and commercial refrigerators, freezers,
air conditioners and water coolers. Insulated shippers are manufactured for
sale to shippers of temperature sensitive materials like certain food and
pharmaceutical products. Thermal insulation products are also manufactured for
building construction applications where the insulating performance of a rigid
or unusually shaped part is required. For example, these products are used as
insulation in prefabricated metal buildings, as core materials for factory
manufactured steel exterior doors and as insulation set into poured concrete or
block walls.
Foam plastic shapes are used as interior, trim and
under-the-hood components in automobiles. In particular, the shapes are placed
behind and under the interior assemblies of automobiles to provide added
passenger protection. Flotation and seating assemblies are made for marine
applications.
The Company also has arrangements with three of its raw
material suppliers under which the Company manufactures custom molded foam
plastic energy absorbing automobile bumper cores for customers of the suppliers
which are North American assembly plants of leading domestic and foreign
automobile manufacturers. Under these arrangements, the Company receives a fee
for converting its suppliers' raw materials into the final product.
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INTEGRATED MATERIALS PRODUCTS
Like most of the Company's custom molded products, integrated
materials products are made for interior packaging and material handling
applications to protect goods during shipment and handling. These products are
made from corrugated paperboard, molded and/or fabricated foam plastic shapes,
rigid plastic shapes, wood and other materials used singularly or in
combination. The products are also generally custom designed to meet the
shipping and handling requirements for a broad range of customer products
similar to those protected by the Company's custom molded products.
These products are generally economical in relatively smaller
quantities than custom molded products. Although they generally require more
material and labor to produce, they rarely require the production of expensive
tooling. Therefore, the total cost of a project to the customers will
normally be less if required quantities are relatively small.
RIGID PLASTIC PRODUCTS
The rigid plastic products are custom made for material
handling applications and component parts. A typical example of a material
handling application is the manufacture of durable rigid material handling
trays to withstand multiple shipping cycles and to provide precise part
positioning for handling by automated manufacturing equipment. Products such
as housings for electronic instruments and garage door panels are also made
from rigid plastic.
CONTRIBUTION TO NET SALES
During the 1995, 1994 and 1993 fiscal years, packaging and
material handling products have contributed approximately 88%, 87% and 86%,
respectively, of the Company's net sales.
During the 1995, 1994 and 1993 fiscal years, sales of the
integrated materials products have accounted for 19.0%, 13.2% and 7.77%,
respectively, of the Company's net sales. The increases reflect the
Company's emphasis on growing the integrated materials business. The growth
has resulted primarily from business acquisitions and increased sales from the
acquired operations.
MANUFACTURING
The Company emphasizes design engineering and has sales
offices and related design centers at seven locations where experienced
personnel study and evaluate the requirements of the Company's customers.
These facilities have been used primarily for the design and building of
prototype foam shapes for use in the custom molding operations and for the
testing of these
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prototypes but in recent years have also been used extensively in developing the
Company's integrated materials and rigid plastic products.
CUSTOM MOLDED PRODUCTS. Custom molding meets the needs of the
Company's customers who require large quantities of custom designed foam
plastic shapes. Products can be formed to practically any desired shape.
Generally, after a shape has been developed and an order is
received, the Company designs and builds one or more aluminum production molds.
These molds, most of which are purchased and owned by the customer, are then
shipped to one of the Company's custom molding facilities, generally the
facility nearest the customer, for required production. The Company presently
makes all its molds at a single mold making facility.
Custom molded foam plastic products are produced by causing
raw material beads, which have been expanded to a preselected density and
stored prior to use, to be blown into an aluminum production mold in an
automatic molding machine. Time controlled heat (in the form of steam) is
applied to the beads in the mold, causing the beads to further expand, soften
and fuse together to form the shape of the product which is then removed from
the molding machine. The properties of the products depend on the raw material
used and the density selected. Custom molded products made from raw materials
other than EPS generally require stabilization in special curing rooms before
the products can be packed for storage or shipment (see "Raw Materials" below).
Significant capital expenditures for molding machines and
other process equipment are required to manufacture custom molded products (see
"Capital Expenditures" below). Process equipment includes air compressors,
steam boilers, cooling towers, conveyors, drying equipment and a wide variety
of other standard industrial machinery items. The major items of expense in
the manufacture of the custom molded products are the raw materials from which
the products are made, labor and the utilities needed to operate the process
equipment.
The Company makes use of Computer Aided Design ("CAD") and
Computer Aided Manufacturing ("CAM") equipment at its design centers and mold
making facility and has acquired design to manufacturing (D-T-M) systems for
some of these facilities.
OTHER PRODUCTS. The manufacture of the integrated materials
and rigid plastic products is less capital intensive, requiring lower capital
expenditures. In the integrated materials operations, the machinery and
equipment consists primarily of machining and fabricating equipment and
corner post and base pad machines. Fabrication of foam plastic involves the
cutting of shapes from billets of foam plastic using specialized cutting
tools and hot wire equipment.
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The rigid plastic products are made primarily by thermoforming
which is the process of taking a rigid sheet of hard thermoplastic such as
ABS or high density polyethylene, heating it and then vacuum and/or pressure
forming it around a mold. Blow molding and other techniques are also utilized.
The major items of expense in the manufacture of the
integrated materials and rigid plastic products are raw materials and labor.
MANUFACTURING FACILITIES. The Company has 20 custom molding
facilities, eight facilities for the manufacture of integrated materials
products and two facilities where rigid plastic products are manufactured. The
facilities are generally strategically situated near manufacturing facilities
of the Company's customers. Molded foam plastic shapes and rigid plastic
shapes made for integrated materials products are shipped from the facility
where these shapes are made to the appropriate integrated materials facility.
The Company's manufacturing facilities ensure timely delivery
of products to customers and enable the Company to provide products at a lower
shipping cost than more distant competitors. There is also significant
production flexibility among the Company's facilities since molds and/or
molding machines and other manufacturing equipment can be moved quickly from
one facility to another to facilitate production and assure supply to
customers.
All the Company's manufacturing facilities have warehousing
capacity for inventories of finished goods. This enables the Company to
respond to the delivery needs of customers.
Distribution of products is made from the Company's
manufacturing facilities and warehouses to customers by Company
operated tractor-trailers and by common carrier. Most of the Company operated
tractor-trailers are leased.
GEOGRAPHICAL EXPANSION
Prior to the 1990 fiscal year, all the Company's manufacturing
facilities were in the United States east of the Mississippi River. During the
1990 fiscal year, the Company acquired a custom molding facility in Las Cruces,
New Mexico and during the 1994 fiscal year, the Company acquired a custom
molding and integrated materials facility in Colorado Springs, Colorado. A
custom molding facility was also opened in the 1994 fiscal year in Juarez,
Mexico. Integrated materials products are also presently manufactured in
Juarez. During the 1995 fiscal year, the Company acquired a custom molding
business in the United Kingdom (see "Acquisitions" below).
The Las Cruces facility was acquired to enable the Company to
serve domestic customers that had opened "Maquiladora" operations just across
the U.S. Mexican border. Maquiladora programs enable domestic companies to ship
component parts in bond into Mexico, assemble them and then ship them back in
bond to the United States. The facility in Juarez will serve the Maquiladora
customers as well as customers manufacturing and selling their products in
Mexico. The Colorado Springs facility enables the Company to serve the growing
high tech and medical equipment industries in the Mountain States. The
acquisition in the United Kingdom provides the Company with a meaningful entry
into that market.
The Company formed a subsidiary, Tuscarora Limited, to acquire
the business in the United Kingdom and conducts its business in Mexico through
a subsidiary, Tuscarora International, Inc. The Company has no other
subsidiaries which play an important role in the Company's business.
The location of all the Company's manufacturing facilities, as
well as the sales offices and related design centers, is set forth under Item 2
of this annual report.
MARKETS AND CUSTOMERS
The Company serves major industry groups including the high
technology, consumer electronics, major appliances and automotive industries.
Significant advances in sales in each of these markets, particularly in the
high technology market, was achieved during the 1995 fiscal year. Products
are sold to over 2,500 customers in the United States, Canada, Mexico
and the United Kingdom. Sales are made primarily by the Company's own sales
force which, including supporting technical personnel at the Company's design
centers, consists of approximately 64 salaried employees. Sales in certain
geographic areas are handled by sales representatives paid on a commission
basis who are assisted and supported by
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Company personnel. Customers make extensive use of the design centers which
help the customers develop and test the products that best meet their specific
needs.
During the 1995 fiscal year, no customer accounted for more
than 9%, and the Company's 10 top customers accounted for 34.2%, of the
Company's net sales.
COMPETITION
The Company's packaging and material handling products compete
with similar products made by others as well as with a number of other types of
products including corrugated die cuts, wood or corrugated crates with block
and brace framing, fabricated sheet polyethylene and urethane foams and
foam-in-place urethane packaging systems. A number of the companies producing
competing products, particularly paper and corrugated packaging products, are
well established and have substantially greater financial resources than the
company.
Thermal insulation products for use in refrigeration equipment
and building construction represent a small portion of the overall market for
insulation products. Because of the specialized nature of this market, the
Company competes primarily with other manufacturers of similar foam plastic
products, rather than with manufacturers of alternate insulation products.
The majority of the volume of similar foam plastic products is
produced by independent manufacturers who generally market their products in a
particular geographical area from a single or limited number of plants.
Competition among the producers of similar products is based primarily on
customer service, product engineering and price.
The components manufactured by the Company for automobiles and
other markets can be provided by other vendors using alternative materials at
competitive prices. Although the Company's products work well in these
applications, they are not unique or proprietary.
RAW MATERIALS
The Company has manufactured custom molded products from
expanded polystyrene ("EPS") since the Company was incorporated. EPS, which is
received by the Company in an unexpanded state, is a petroleum-based, rigid,
closed cell, cellular plastic with properties which depend on its density. in
its raw form, the material has an appearance much like table salt, but each
bead contains hundreds of microscopic cells. Under conditions of
time-controlled heat, the beads can be expanded to many times their original
size with no increase in weight. In its raw form, the material has a density
of 38 to 40 pounds per cubic foot, but through the expansion process this
density can be reduced to less
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than one pound per cubic foot. The optimum cushioning characteristics for
packaging and material handling applications are obtained in the 1.0 to 1.75
pounds per cubic foot range, while optimum thermal insulation is achieved at
about 2.0 pounds per cubic foot. The Company expands the beads to various
densities and stores them until the final products are produced.
Although EPS is subject to attack by certain solvents and
strong oxidizing acids, it is for most purposes chemically and biologically
neutral. To the knowledge of the Company, EPS meets all applicable
requirements for food packaging which have evolved from the Food, Drug and
Cosmetics Act of 1938. EPS is combustible but modified raw materials are
available which are specifically formulated to self-extinguish when the source
of ignition is eliminated. These modified raw materials are normally specified
where the end product may be exposed to a potential ignition source.
Other resins developed by the Company's raw material suppliers
became commercially available in the mid-1980s. These resins are also
petroleum based and include expanded polypropylene ("EPP"), expanded
polyethylene ("EPE"), ARCEL(TM) and high heat-resistant styrene-based moldable
resins. EPP and EPE are polyolefin resins and ARCEL(TM) is a co-polymer of
polyethylene and polystyrene. ARCEL(TM) and the heat-resistant styrene-based
resins, like EPS, are received by the Company in an unexpanded state whereas
EPP and EPE raw material beads have already been expanded prior to receipt by
the Company and do not need further expansion.
EPS is used in manufacturing packaging and material handling
products as well as thermal insulation products and certain components. EPE
and low density EPP are used primarily in making packaging shapes for fragile
electronic items or where multiple impact protection is required and in making
flotation assemblies for marine applications. ARCEL(TM) is used primarily in
making the reusable material handling shapes where greater durability and
toughness are required. Higher density grades of EPP are used in making the
automobile bumper cores where greater energy absorption and higher temperature
tolerance are necessary. The heat-resistant styrene-based resins are used
primarily in making the shapes which are used as interior, trim and
under-the-hood components in automobiles. The raw materials are also used in
the manufacture of certain of the integrated materials products.
The raw materials other than EPS are significantly more
expensive than EPS, and products made from these raw materials sell at higher
prices and generally have a higher profit margin than products made from
EPS. During the 1995 fiscal year, approximately 20% of the Company's net
sales of custom molded products were attributable to products made from
these premium raw materials.
There are five principal suppliers in the United States of the
raw materials for the Company's custom molded products:
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ARCO Chemical Company, a subsidiary of Atlantic Richfield Company; BASF
Corporation, a U.S. subsidiary of BASF, AG (Germany); Huntsman Chemical
Corporation; Kaneka Corporation, a U.S. subsidiary of Kanegafuchi Chemical
Industry Co., Ltd. (Japan); and JSP International, Inc., a U.S. subsidiary
of Japan Styrene Paper Ltd. EPS and the heat-resistant styrene-based resins
are generally available to any prospective purchaser. EPP, EPE and ARCEL(TM)
are available to the Company and other similar manufacturers under
non-exclusive license agreements with one or more of these suppliers. The
Company has never experienced a shortage of raw materials and does not
foresee that any shortage will occur.
The Company reuses virtually all of its own scrap as well as
used products returned by customers (see "Environmental Considerations" below).
In addition, ARCO Chemical Company has developed and sells to the Company EPS
resins using recycled material. These resins are intended to meet proposals
being advocated in certain states that all packaging eventually contain a
percentage of recycled material.
Because the raw materials for the Company's custom molded
products are petroleum based, their availability could be affected by a crude
oil shortage. Nonetheless, based on its experiences in the past when there
were crude oil shortages, the Company does not believe that it would be
materially adversely affected by future crude oil shortages. The raw materials
are considered high value-added products by their manufacturers, and thus the
manufacturers have in the past and would likely continue to make the raw
materials available even during a period of restricted oil supply.
The price of foam plastic resins can also vary depending on
the worldwide supply and demand for certain petrochemical feedstocks such
as ethylene and benzene. For instance, a shortage of styrene monomer (a
compound of ethylene and benzene) caused the price of EPS to increase
substantially during the 1987 and 1988 fiscal years. The price of EPS
was stable during the 1994 and 1993 fiscal years however, average EPS prices
increased substantially in the 1995 fiscal year due to increased demand for
styrene monomer on the world market relative to production capacity. The
Company passed the increased prices along to its customers through higher
selling prices. The prices of the raw materials other than EPS have not
changed significantly since these materials became commercially available.
The raw materials for the integrated materials products
(including foam billets purchased in blocks for fabrication) and rigid plastic
products are readily available.
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CAPITAL EXPENDITURES
Capital expenditures for property, plant and equipment during
the 1995, 1994 and 1993 fiscal years amounted to $22,791,000, $14,049,000 and
$12,356,000, respectively.
Capital expenditures for machinery and equipment, including
machinery and equipment acquired in acquisitions, during the 1995, 1994 and
1993 fiscal years amounted to $18,869,000, $10,722,000 and $8,187,000,
respectively. During the 1995 fiscal year, $6,590,000 of these capital
expenditures were for automatic molding machines, including machines acquired
in the M.Y. Trondex Ltd. acquisition (see "Acquisitions" below) and
next-generation vacuum transfer molding machines for a new EPS custom molding
facility in Lewisburg, Tennessee. The remainder of these capital
expenditures during the 1995 fiscal year were as follows: (i) $7,688,000 for
other process equipment used in the manufacture of custom molded products,
(ii) $2,849,000 for machinery and equipment to manufacture the Company's
integrated materials and rigid plastic products, including machinery and
equipment acquired in the Astrofoam acquisition (see "Acquisitions" below)
and (iii) $1,742,000 for environmental control equipment (see "Environmental
Considerations" below).
Capital expenditures for land, buildings and improvements
during the 1995, 1994 and 1993 fiscal years amounted to $3,922,000, $3,327,000
and $4,169,000, respectively. The 1995 fiscal year expenditures included an
aggregate of $2,005,000 expended in connection with the new EPS custom molding
facility in Lewisburg, Tennessee, a new integrated materials facility in
Burlington, Wisconsin and a move to a new mold making location in Sun Prairie,
Wisconsin.
ACQUISITIONS
The Company made two acquisitions of similar businesses during
the 1995 fiscal year. In September 1994, the Company purchased substantially
all the assets and assumed substantially all the liabilities of the specialty
corrugated and foam packaging business of Astrofoam, Inc. in Holden,
Massachusetts. In February 1995, the Company purchased substantially all the
assets and assumed substantially all the liabilities of the custom molding
business of M.Y. Trondex Ltd. in Northampton, England and Glasgow, Scotland.
The Company made two acquisitions of similar businesses during
the 1994 fiscal year. In September 1993, the Company purchased the corrugated
packaging business and related machinery and equipment of Box Pack Incorporated
in Greeneville, Tennessee. In April 1994, the Company purchased substantially
all the assets and assumed substantially all the liabilities of the custom
molding and fabricating business of Styro-Molders Corporation in Colorado
Springs, Colorado.
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The Company made one acquisition of a similar business during
the 1993 fiscal year. In October 1992, the Company purchased the custom molded
foam polypropylene business and related machinery and equipment of Sentinel
Products Corporation in St. Johnsville, New York.
Acquisitions accounted for approximately 42% of the
increase in the Company's net sales during the 1995 fiscal year. For purposes
of this calculation, the net sales from the Styro-Molders business during the
first 7-1/2 months of the 1995 fiscal year were included.
For further information with respect to the above
acquisitions, see Note 9 of the Notes to Consolidated Financial Statements
included in the Company's Annual Report to Shareholders for the 1995 fiscal
year. Said Note 9 is incorporated in this item by reference.
The Company will continue to look for acquisitions of similar
and/or related businesses.
SEASONALITY
The Company's net sales and net income are subject to some
seasonal variation. The Company's business generally declines in December due
to a reduction in manufacturing activity by its customers, and this usually
adversely affects the Company's net sales and net income during the second
quarter of the fiscal year. Net income in the second fiscal quarter is also
adversely affected by higher operating costs during the winter months. See
Note 13 of the Notes to Consolidated Financial Statements included in the
Company's Annual Report to Shareholders for the 1995 fiscal year. Said Note 13
is incorporated in this item by reference.
EMPLOYEES
As of August 31, 1995, the Company had approximately 1,511
employees, of which approximately 1,435 are full time employees and
approximately 1,191 are paid on an hourly basis. Of the hourly employees,
approximately 311 at six manufacturing facilities are covered by five
collective bargaining agreements with five different unions. One agreement
expires on November 30, 1995 but a new agreement has been ratified covering the
three-year period ending November 30, 1998. The other four agreements expire
at various dates from December 1995 through October 1998. The Company
considers its labor relations to be good and has never suffered a work stoppage
as a result of a labor conflict.
ENVIRONMENTAL CONSIDERATIONS
The Company has obtained or applied for air quality permits
for all its custom molding facilities except its new facilities in England and
Scotland where air quality permits are not required. The permits restrict the
amount of pentane which may be released from the Company's raw materials and
have resulted in capital expenditures for batch pre-expanders which allow the
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Company to use low pentane content raw materials in the manufacturing process.
Air quality permits have not been required in connection with the manufacture
of the Company's integrated materials and rigid plastics products.
The Company has acquired recycling equipment for all its
custom molding and all but one of its integrated materials facilities. The
equipment includes (i) EPS regrinders which enable the Company to reuse
in-house scrap and products returned by customers and (ii) EPS densifiers which
enable the Company to compact products returned by customers for return to the
Company's EPS raw material suppliers for remanufacture into recycled content
raw material. Regrinding equipment for ARCEL(TM) has been installed at one of
the Company's custom molding facilities. In-house scrap resulting from the
manufacture of the Company's rigid plastic products is returned to the raw
material suppliers for these products for recycling.
During the 1995, 1994 and 1993 fiscal years, the Company's
capital expenditures for environmental matters, including batch
pre-expanders and recycling equipment, amounted to $1,742,000, $1,064,000 and
$1,443,000, respectively. Amounts charged to selling and administrative
expenses for environmental matters, primarily for services in connection with
maintaining the air quality permits, are not significant. Capital expenditures
for environmental matters during the 1996 fiscal year are not expected to
exceed $500,000.
In September 1994, the Company commenced a program under which
environmental compliance audits will be conducted at all the Company's
manufacturing facilities. At the end of the 1995 fiscal year, four audits had
been completed. The audits which were conducted by an environmental consulting
firm, did not result in plans for any significant additional expenditures for
environmental matters.
The Company's recycling efforts are part of a nationwide
effort by the EPS industry to recover foam plastic packaging for reuse or
recycling. The Company is a founding member of the Association of Foam
Packaging Recyclers (AFPR) whose members operate collection centers throughout
the United States that accept used foam packaging and recycle it in-house into
new foam packaging, densify it for shipment to EPS resin suppliers for
manufacture into recycled-content EPS or process it for sale to manufacturers
of other products.
The Company's foam plastic products may also be safely
landfilled or incinerated. The Company's integrated materials products may be
recycled, safely landfilled or incinerated and the rigid plastic products may
also be recycled.
There has been public concern that using chloro-fluoro-carbons
("CFCS") in the manufacture of plastic products may
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deplete the Earth's upper atmospheric ozone layer. The Company does not use,
nor has it ever used, CFCs in the manufacture of any of its products.
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ITEM 2. PROPERTIES.
The Company's headquarters are located at 800 Fifth Avenue,
New Brighton, Pennsylvania 15066.
The Company has custom molding facilities at the following
locations:
Colorado Springs, Colorado Marion, Ohio
Putnam, Connecticut New Brighton, Pennsylvania
Conyers, Georgia Greeneville, Tennessee
Streator, Illinois Lewisburg, Tennessee
Martinsville, Indiana (two facilities)
Chesaning, Michigan Sterling, Virginia
Tupelo, Mississippi Pardeevile, Wisconsin
Las Cruces, New Mexico Juarez, Mexico
Cortland, New York Northampton, England
Butner, North Carolina Glasgow, Scotland
During the 1995 fiscal year, the Company (i) opened a new EPS custom molding
facility in Lewisburg, Tennessee (at the same time transforming the original
Lewisburg facility opened in 1972 from a combined polyolefins/EPS molding
facility into a dedicated polyolefins plant) and (ii) acquired the facilities
in England and Scotland in connection with the acquisition of a similar
business in February 1995 (see "Acquisitions" under Item 1).
The Company has integrated materials facilities at the
following locations:
Colorado Springs, Colorado Beaver, Pennsylvania
Conyers, Georgia Greeneville, Tennessee
Holden, Massachusetts Burlington, Wisconsin
Saginaw, Michigan Juarez, Mexico
During the 1995 fiscal year, the Company (i) reopened its former custom molding
facility in Saginaw, Michigan as an integrated materials facility, (ii)
finished transferring its integrated materials facility in Antioch, Illinois to
the facility in Burlington, Wisconsin which was acquired in September 1994 and
(iii) acquired the facility in Holden, Massachusetts in connection with the
acquisition of a similar business in September 1994 (see "Acquisitions" under
Item 1).
The custom molding and integrated materials facilities in
Colorado Springs, Colorado and Juarez, Mexico are at the same location. The
custom molding and integrated materials facilities in Conyers, Georgia and
Greeneville, Tennessee are located at different sites.
Rigid plastic products are also manufactured at the facilities
in Beaver, Pennsylvania and Burlington, Wisconsin.
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The Company's mold making facility is in Sun Prairie,
Wisconsin. This facility is considered a manufacturing facility because most
of the custom molds are sold to and owned by the Company's customers. During
the 1995 fiscal year, the Company upgraded its mold making operations in Sun
Prairie by moving to a larger facility.
Most of the custom molding facilities are owned by the Company
while most of the integrated materials facilities are leased. The
manufacturing facilities which the Company leases are at the following
locations:
Colorado Springs, Colorado Lewisburg, Tennessee
Conyers, Georgia (EPS facility)
(integrated materials) Burlington, Wisconsin
Holden, Massachusetts Sun Prairie, Wisconsin
Beaver, Pennsylvania Juarez, Mexico
Greeneville, Tennessee Northampton, England
(integrated materials) Glasgow, Scotland
The leases expire at various dates from January 1996 through August 2007. In
all but a few cases, the leases may be extended at the Company's option. The
Company has options to purchase all the leased facilities except the facilities
in Beaver, Pennsylvania, Sun Prairie, Wisconsin, Juarez, Mexico and Glasgow,
Scotland. The Company generally makes substantial leasehold improvements to
and exercises its options to purchase leased facilities.
The Company's sales offices and related design centers are
located at the Company's headquarters in New Brighton, Pennsylvania, at the
manufacturing facilities in Colorado Springs, Colorado, Holden, Massachusetts,
Burlington, Wisconsin and Northampton, England and at separate facilities
in Conyers, Georgia and Holly, Michigan.
The Company has warehouse facilities at each manufacturing
location as well as in other locations. The Company continues to own
properties in Essex, Connecticut, Louisville, Kentucky, Baltimore, Maryland and
Durham, North Carolina where former manufacturing operations have been
discontinued. Three of these properties are currently leased to third parties.
Substantially all the Company's long-term debt is secured by
mortgages and security interests in certain of the Company's property, plant
and equipment.
The Company believes that the facilities referred to above are
generally well suited for their respective uses and that they are generally
adequately sized and designed to provide the operating efficiencies necessary
for the Company to be competitive. The Company continually upgrades and
expands its facilities as necessary to meet the demand for its products.
-14-
<PAGE> 16
ITEM 3. LEGAL PROCEEDINGS.
EMPLOYMENT CLAIMS. On June 13, 1995, a Complaint was filed
against the Company in EDWINA WILHOIT V. TUSCARORA, INC., a civil action in the
United States District Court for the Eastern District of Tennessee in
Greeneville, Tennessee. The plaintiff, an employee at one of the Company's
manufacturing facilities in Greeneville, Tennessee, alleges sexual harassment
and assault by the Company's plant manager in June 1994 in violation of Title
VII of the 1964 Federal Civil Rights Act, as amended, the Tennessee Human
Rights Act and Tennessee common law. The Complaint also alleges a past pattern
of sexual harassment by the plant manager. The plaintiff seeks $1,000,000 in
compensatory damages and $4,000,000 in punitive damages from the Company as
well as an award of attorneys' fees. The Company has a sexual harassment
policy which has been in force for many years. The Company believes it
promptly, reasonably and effectively responded to all incidents of alleged
sexual harassment and assault referred to in the Complaint. In particular, the
plant manager was immediately suspended and then discharged following
investigation of the incident in June 1994. The Company is vigorously
contesting the lawsuit and has filed an Answer to the Complaint denying any
liability. The Company expects to file a Motion for Summary Judgment after
discovery has been completed.
On October 3, 1995, a Complaint was filed against the Company
in L. MARIE ROBERTS V. TUSCARORA INCORPORATED, JOE ALCOTT AND LARRY MOONEYHAN,
a civil action in the State Court of Rockdale County, Georgia. The Plaintiff,
a former employee at one of the Company's manufacturing facilities in Conyers,
Georgia, alleges sexual harassment by defendants Alcott and Mooneyhan, the
plaintiff's supervisor and the Company's plant manager, respectively, and
sexual assault by defendant Alcott. It is alleged that the Company knew of the
individual defendants' actions and did nothing to remedy the situation. The
plaintiff alleges various causes of action under Georgia law and seeks an
unspecified amount of compensatory and punitive damages. After investigation,
in accordance with its policy, the Company took prompt and effective action to
end any harassment by Mr. Alcott by terminating his employment. The Company
determined after investigation that Mr. Mooneyhan was not at fault. On the
basis that the plaintiff alleged a cause of action under Title VII of the 1964
Federal Civil Rights Act, as amended, the Company removed the lawsuit to the
United States District Court for the Northern District of Georgia, Atlanta
Division. The Company is vigorously contesting the lawsuit and has filed an
Answer to the Complaint denying any liability in the District Court. The
plaintiff is contesting the removal of the lawsuit to the District Court and
seeking remand of the lawsuit to the State Court.
ENVIRONMENTAL CLAIMS. Since 1992, the Company has been
involved in cost recovery litigation with the United States Environmental
Protection Agency (the "USEPA") and other parties
-15-
<PAGE> 17
over clean up costs at the Smith's Farm Superfund Site in Bullitt
County, Kentucky. The litigation was commenced in February 1992 in the United
States District Court for the Western District of Kentucky under the caption
AKZO COATINGS, INC. ET AL. V. AC&S, INC. ET AL. In 1988, the Company may have
generated small amounts of scrap product and warehouse demolition waste debris
that were transported to the site from the Company's custom molding facility in
Louisville, Kentucky where operations have since been discontinued. The
Company denies that either the scrap product or the demolition debris contained
hazardous substances. In the fall of 1994, the USEPA advised the Company that
it had developed an allocation for the site under which the Company would be a
DE MINIMIS party. Eighteen DE MINIMIS parties, including the Company, have
entered into settlement discussions with the USEPA and are negotiating an
Administrative Order on Consent ("AOC"). The Company believes that a
settlement will be reached with the USEPA during the Company's fiscal year
ended August 31, 1996 and that the Company's liability for clean up costs at
the site under that settlement will be in range of $50,000 to $150,000. It is
expected that any AOC would contain a covenant not-to-sue and contribution
protection.
Since 1991, the Company has been involved in discussions with
the Connecticut Department of Environmental Protection ("CTDEP") which
could result in the Company performing certain remedial actions at the
Company's former custom molding facility in Essex, Connecticut. This facility,
which was leased by the Company in 1979 and then purchased in 1984, is
presently leased by the Company to a third party. The CTDEP alleges that
prior to 1968, wastes, including metals and cyanides, were deposited by a
prior owner in two unlined lagoons located on the property (which lagoons
were subsequently closed) and that such condition creates a potential source
of pollution to waters of the state. The USEPA has also inspected the
property under its CERCLIS program and has concluded that groundwater
contamination exists in the vicinity of the former lagoons and that organic
and inorganic contaminants are present in some sediment and surface water
samples. It is not clear what if any remedial action may be required by the
CTDEP or the USEPA. The Company believes, however, that any expenditures for
cleanup costs which it might undertake or be required to undertake would not
be significant and would be payable over several years. The Company has
notified the prior owner of this matter and of its potential liability to the
Company.
-16-
<PAGE> 18
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
----------------------------------------------------
No matters were submitted to a vote of security holders of the
Company during the fiscal quarter ended August 31, 1995.
EXECUTIVE OFFICERS OF THE COMPANY
---------------------------------
In accordance with Instruction 3 to Item 401(b) of Regulation
S-K, information with respect to the executive officers of the Company is set
forth below.
<TABLE>
<CAPTION>
Name Age Office with the Company
- -------------------- --- -------------------------------------
<S> <C> <C>
John P. O'Leary, Jr. 48 President and Chief Executive Officer
Brian C. Mullins 54 Vice President and Treasurer
James H. Brakebill 58 Vice President, Manufacturing
David C. O'Leary 46 Vice President, Sales and Marketing
</TABLE>
John P. O'Leary, Jr. became President and Chief Executive
Officer of the Company in January 1990; he was Vice President from November
1983 to January 1990. He has been a director of the Company since 1974 and
became Chairman of the Board of Directors in August 1994.
Brian C. Mullins has been Vice President and Treasurer of the
Company since November 1979. Mr. Mullins is the Company's chief financial and
accounting officer.
James H. Brakebill has been Vice President, Manufacturing of
the Company since April 1994; he was Vice President of Technology from October
1986 to April 1994. Mr. Brakebill is responsible for all manufacturing
operations of the Company.
David C. O'Leary has been Vice President, Sales and Marketing
of the Company since April 1994; he was Vice President-Southern Division from
January 1990 to April 1994 and Vice President-Eastern Division of the Eastern
Region from November 1983 to January 1990. Mr. O'Leary is responsible for all
sales and marketing activities of the Company.
John P. O'Leary, Jr. and David C. O'Leary are brothers.
The executive officers are elected annually by the Board of
Directors at an organization meeting which is held immediately after each
Annual Meeting of Shareholders.
-17-
<PAGE> 19
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
-------------------------------------------------
The Company's Common Stock is traded in the over-the-counter
market on the National Market System of the National Association of Securities
Dealers ("NASDAQ"). The Common Stock trades under the NASDAQ symbol TUSC. As
of August 31, 1995, there were 838 holders of record of the Company's Common
Stock.
Information with respect to the market prices of, and the cash
dividends paid with respect to, the Company's Common Stock during the fiscal
years ended August 31, 1995 and 1994 appears under Note 13-Quarterly Financial
Data (unaudited) of the Notes to Consolidated Financial Statements on page 18
of the Company's Annual Report to Shareholders for the fiscal year ended August
31, 1995 and is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
The selected financial data required by this Item 6 is
furnished by the "Eleven Year Consolidated Financial Summary" which appears on
the bottom half of the inside front cover of the Company's Annual Report to
Shareholders for the fiscal year ended August 31, 1995 and is incorporated
herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
-------------------------------------------------
The Management's Discussion and Analysis of Results of
Operations and Financial Condition required by this Item 7 appears on pages 19
through 21 of the Company's Annual Report to Shareholders for the fiscal year
ended August 31, 1995 and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
The following financial statements and related notes and
report appear on the pages indicated in the Company's Annual Report to
Shareholders for the fiscal year ended August 31, 1995 and are incorporated
herein by reference:
-18-
<PAGE> 20
<TABLE>
<CAPTION>
Page(s) in
Annual Report
Financial Statements and Related Report to Shareholders
- ------------------------------------------------- ---------------
<S> <C>
Consolidated Statements of Income for the
fiscal years ended August 31, 1995,
1994 and 1993 . . . . . . . . . . . . . . . . . . . . . 8
Consolidated Balance Sheets as of August 31,
1995 and 1994 . . . . . . . . . . . . . . . . . . . . . 9
Consolidated Statements of Cash Flows for the
fiscal years ended August 31, 1995, 1994
and 1993 . . . . . . . . . . . . . . . . . . . . . . . . 10
Consolidated Statements of Shareholders' Equity
for the fiscal years ended August 31, 1995,
1994 and 1993 . . . . . . . . . . . . . . . . . . . . . 11
Notes to Consolidated Financial Statements . . . . . . . . . . . 12-18
Report of Independent Accountants . . . . . . . . . . . . . . . . 19
</TABLE>
The supplementary financial information required by this Item
8 is included in Note 13 - Quarterly Financial Data (unaudited) of the Notes to
Consolidated Financial Statements and is also incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
------------------------------------------------
There were no such events and therefore this Item 9 is not
applicable.
PART III
ITEMS 10 THROUGH 13.
In accordance with the provisions of General Instruction G to
Form 10-K, the information required by Item 10 (Directors and Executive
Officers of the Registrant), Item 11 (Executive Compensation), Item 12
(Security Ownership of Certain Beneficial Owners and Management) and Item 13
(Certain Relationships and Related Transactions) is not set forth herein
(except for the information concerning "Executive Officers of the Company"
which appears at the end of Part I of this annual report) because the Company
has already filed its definitive Proxy Statement for its Annual Meeting of
Shareholders to be held on December 14, 1995, which includes such information,
with the Commission. Such information is incorporated herein by reference,
except for the information required to be included in the Proxy Statement by
paragraphs (i), (k) and (l) of Item 402 of Regulation S-K.
-19-
<PAGE> 21
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
------------------------------------------------------
The financial statements, financial statement schedules and
exhibits listed below are filed as part of this annual report:
(a)(1) Financial Statements:
The consolidated financial statements of the Company and its
subsidiaries, together with the report of S.R. Snodgrass, A.C., dated October
12, 1995, appearing on pages 8 through 19 of the Company's Annual Report to
Shareholders for the fiscal year ended August 31, 1995 are incorporated herein
by reference (see Item 8 above).
(a)(2) Financial Statement Schedules:
<TABLE>
<CAPTION>
Page in this
Schedules and Related Report Annual Report
- ------------------------------------------------- -------------
<S> <C>
Schedule II - Valuation Account for the
fiscal years ended August 31, 1995,
1994 and 1993 S-1
Report of Independent Accountants on Schedules S-2
</TABLE>
All other Financial Statement Schedules are omitted either
because they are not applicable or are not material, or the information
required therein is contained in the consolidated financial statements or notes
thereto set forth in the Company's Annual Report to Shareholders for its fiscal
year ended August 31, 1995.
(a)(3) Exhibits:
<TABLE>
<CAPTION>
Exhibit
No. Document
- ------- -------------------------------------------------------------
<S> <C>
3(i) Restated Articles of Incorporation, filed herewith.
3(ii) By-Laws, as Amended and Restated effective December 15, 1994,
filed as Exhibit 3(ii) to the Company's quarterly report on
Form 10-Q for the fiscal quarter ended February 28, 1995 and
incorporated herein by reference.
4.1 Articles 5th through 10th of the Company's Restated Articles
of Incorporation and Section 7.01 of the Company's By-Laws
(included in Exhibits 3(i) and 3(ii) above, respectively).
</TABLE>
-20-
<PAGE> 22
<TABLE>
<CAPTION>
Exhibit
No. Document
- ------- ---------------------------------------------------------------------
<S> <C>
4.2 Secured Term Loan, Revolving Credit and Line of Credit Agreement,
dated July 27, 1983, between the Company and Mellon Bank N.A.,
(the "Mellon Credit Agreement"), Filed as Exhibit 4.2 to the
Company's annual report on Form 10-K for the fiscal year
ended August 31, 1988 and incorporated herein by reference.
4.3 First Amendment, dated September 4, 1984, to the Mellon Credit
Agreement, filed as Exhibit 4.3 to the Company's annual report on
Form 10-K for the fiscal year ended August 31, 1988 and incorporated
herein by reference.
4.4 Second Amendment, dated October 2, 1985, to the Mellon Credit
Agreement, filed as Exhibit 4.4 to the Company's annual report on
Form 10-K for the fiscal year ended August 31, 1988 and incorporated
herein by reference.
4.5 Third Amendment, dated as of January 30, 1987, to the Mellon Credit
Agreement, filed as Exhibit 4.5 to the Company's annual report on
Form 10-K for the fiscal year ended August 31, 1988 and incorporated
herein by reference.
4.6 Fourth Amendment, dated as of August 31, 1987, to the Mellon Credit
Agreement, filed as Exhibit 4.6 to the Company's annual report on
Form 10-K for the fiscal year ended August 31, 1988 and incorporated
herein by reference.
4.7 Fifth Amendment, dated as of February 29, 1988, to the Mellon Credit
Agreement, filed as Exhibit 4.7 to the Company's annual report on
Form 10-K for the fiscal year ended August 31, 1988 and incorporated
herein by reference.
4.8 Sixth Amendment, dated as of July 12, 1989, to the Mellon Credit
Agreement, filed as Exhibit 4.8 to the Company's annual report on
Form 10-K for the fiscal year ended August 31, 1989 and incorporated
herein by reference.
4.9 Seventh Amendment, dated as of May 31, 1990, to the Mellon Credit
Agreement, filed as Exhibit 4.1 to the Company's quarterly report on
Form 10-Q for the fiscal quarter ended May 31, 1990 and incorporated
hereby by reference.
</TABLE>
-21-
<PAGE> 23
<TABLE>
<CAPTION>
Exhibit
No. Document
- ------- -----------------------------------------------------------------
<S> <C>
4.10 Term Note due June 1, 2000, filed as Exhibit 4.4 to the Company's
quarterly report on Form 10-Q for the fiscal quarter ended
May 31, 1990 and incorporated herein by reference.
4.11 Letter, dated August 28, 1990, amending the Seventh Amendment
to the Mellon Credit Agreement, filed as Exhibit 4.13 to the
Company's annual report on Form 10-K for the fiscal year
ended August 31, 1990 and incorporated herein by reference.
4.12 Eighth Amendment, dated as of August 1, 1991, to the Mellon Credit
Agreement, filed as Exhibit 4.13 to the Company's annual report on
Form 10-K for the fiscal year ended August 31, 1991 and incorporated
herein by reference.
4.13 Ninth Amendment, dated as of December 18, 1991, to the Mellon Credit
Agreement, filed as Exhibit 19 to the Company's quarterly report on
Form 10-Q for the fiscal quarter ended February 29, 1992 and
incorporated herein by reference.
4.14 Tenth Amendment, dated as of August 18, 1992, to the Mellon Credit
Agreement, with the form of Term Note due July 1, 2002 attached,
filed as Exhibit 4.15 to the Company's annual report on Form 10-K
for the fiscal year ended August 31, 1992 and incorporated herein
by reference.
4.15 Eleventh Amendment, dated as of February 26, 1993, to the Mellon
Credit Agreement, filed as Exhibit 4.16 to the Company's quarterly
report on Form 10-Q for the fiscal quarter ended February 28, 1993
and incorporated herein by reference.
4.16 Twelfth Amendment, dated as of June 30, 1994, to the Mellon Credit
Agreement, with the form of Term Note due July 1, 2004 attached,
filed as Exhibit 4.16 to the Company's annual report on Form 10-K
for the fiscal year ended August 31, 1994 and incorporated herein
by reference.
4.17 Thirteenth Amendment, dated as of May 31, 1995, to the Mellon Credit
Agreement, with the form of Revolving Credit Note, dated June 8, 1995,
and the form of Term Note due July 1, 2005 attached, filed herewith.
</TABLE>
-22-
<PAGE> 24
<TABLE>
<CAPTION>
Exhibit
No. Document
- ------- --------------------------------------------------------------
<S> <C>
10.1 1985 Incentive Stock Plan, as adopted by the Company's
Board of Directors on August 22, 1985 and approved by the
Company's shareholders on October 31, 1985, filed on
June 20, 1988 as part of Exhibit 10.1 To Amendment No. 1
to Registration Statement No. 33-17138 on Form S-1 and
incorporated herein by reference.*
10.2 1985 Incentive Stock Option Plan, as amended by the Company's
Board of Directors on October 29, 1987, filed on June 20, 1988
as part of Exhibit 10.2 to Amendment No. 1 to Registration
Statement No. 33-17138 on Form S-1 and incorporated herein by
reference.*
10.3 1989 Stock Incentive Plan, as amended by the Company's Board of
Directors on October 13, 1994, filed herewith.*
10.4 Common Stock Purchase Plan for Salaried Employees, as amended by
the Company's Board of Directors on October 11, 1991, filed as
Exhibit 10.4 to the Company's annual report on Form 10-K for the
fiscal year ended August 31, 1991 and incorporated herein by reference.*
10.5 Deferred Compensation Plan for Non-Employee Directors, as adopted
by the Company's Board of Directors on December 14, 1994, filed as
Exhibit 10.6 to the Company's quarterly report on Form 10-Q for the
fiscal quarter ended February 28, 1995 and corporated herein by reference.*
10.6 Retirement Policy and Plan for Non-Employee Directors, as amended by
the Company's Board of Directors on December 14, 1994, filed as
Exhibit 10.7 to the Company's quarterly report on Form 10-Q for the
fiscal quarter ended February 28, 1995 and incorporated herein by reference.*
10.7 Written description of supplemental retirement benefit for
Thomas P. Woolaway, filed herewith.*
</TABLE>
-23-
<PAGE> 25
<TABLE>
<CAPTION>
Exhibit
No. Document
- ------- ---------------------------------------------------------------
<S> <C>
10.8 Indemnification and Insurance Agreement, dated August 12, 1988,
between the Company and John P. O'Leary, Sr. (substantially
identical agreements have been entered into with all the Company's
directors), filed as Exhibit 10.3 to the Company's annual report on
Form 10-K for the fiscal year ended August 31, 1988 and incorporated
herein by reference.
11 Statement re Computation of Earnings Per Share, filed herewith.
13 Those portions of the Annual Report to Shareholders for the fiscal
year ended August 31, 1995 which are expressly incorporated in
this annual report by reference, filed herewith.
21 List of subsidiaries of the Company, filed herewith.
23 Consent of S.R. Snodgrass, A.C., filed herewith.
24 Powers of Attorney, filed herewith.
27 Financial Data Schedule, filed herewith.
<FN>
_____________
* Management contract or compensatory plan, contract or arrangement required
to be filed by Item 601(b)(10)(iii) of Regulation S-K.
</TABLE>
The Company agrees to furnish to the Commission upon request
copies of all instruments defining the rights of holders of long-term debt of
the Company and its subsidiaries which are not filed as a part of this annual
report.
Copies of the exhibits filed as a part of this annual report
are available at a cost of $.20 per page to any shareholder of record upon
written request to Brian C. Mullins, Vice President and Treasurer, Tuscarora
Incorporated, 800 Fifth Avenue, New Brighton, Pennsylvania 15066.
(b) Reports on Form 8-K:
No events which resulted in the filing of a current report on
Form 8-K occurred during the fiscal quarter ended August 31, 1995.
-24-
<PAGE> 26
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Tuscarora Incorporated
By /s/ JOHN P. O'LEARY,JR.
------------------------------------
John P. O'Leary, Jr., President
and Chief Executive Officer
Date: November 27, 1995
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Company in the capacities indicated on November 27, 1995:
/s/ John P. O'Leary, Jr. /s/ Brian C. Mullins
- ----------------------------- -----------------------------
John P. O'Leary, Jr. Brian C. Mullins
(Director and Chief (Principal Financial
Executive Officer) Officer and Principal
Accounting Officer)
James T. Anderson, Jr.
Thomas S. Blair
David I. Cohen
Abe Farkas
Karen L. Farkas
Robert W. Kampmeinert
David C. O'Leary
Harold F. Reed, Jr.
James I. Wallover
Thomas P. Woolaway
By /s/ BRIAN C. MULLINS
-----------------------------
Brian C. Mullins,
Attorney-in-Fact
-25-
<PAGE> 27
TUSCARORA INCORPORATED
SCHEDULE II - VALUATION ACCOUNT
YEARS ENDED AUGUST 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Balance at Charged to Balance at
Beginning Costs and End
Description of Period Expenses Deductions(1) of Period
- ----------- ---------- --------- ------------- ----------
<S> <C> <C> <C> <C>
Allowance for
doubtful accounts
Year Ended
August 31, 1995 $646,991 $287,782 $240,098 $694,675
Year Ended
August 31, 1994 643,386 180,000 176,395 646,991
Year Ended
August 31, 1993 655,893 205,000 217,507 643,386
<FN>
- ----------------------------
(1) Uncollected receivables written off, net of recoveries.
</TABLE>
S-1
<PAGE> 28
REPORT OF INDEPENDENT ACCOUNTANTS ON SCHEDULES
Tuscarora Incorporated
New Brighton, Pennsylvania
Our report on the consolidated financial statements of
Tuscarora Incorporated and subsidiaries has been incorporated by reference in
this Form 10-K from the Company's 1995 Annual Report to Shareholders and
appears on page 19 therein. In connection with our audits of such financial
statements, we have also audited the related financial statement schedule
listed on page 20 of this annual report on Form 10-K.
In our opinion, the financial statement schedule referred to
above, when considered in relation to the basic financial statements taken as a
whole, presents fairly the information required to be included therein.
/s/ S.R. SNODGRASS, A.C.
---------------------------------
Beaver Falls, Pennsylvania S.R. Snodgrass, A.C.,
October 12, 1995 Certified Public Accountants
S-2
<PAGE> 29
TUSCARORA INCORPORATED
FORM 10-K FOR FISCAL YEAR ENDED AUGUST 31, 1995
EXHIBIT INDEX
The following exhibits are required to be filed with this annual
report on Form 10-K. Exhibits are incorporated herein by reference to other
documents pursuant to Rule 12b-23 under the Securities Exchange Act of 1934
as amended, as indicated in the index. Exhibits not incorporated herein by
reference follow the index.
(a)(3) Exhibits:
<TABLE>
<CAPTION>
Exhibit
No. Document
- ------- -----------------------------------------------------------
<C> <S>
3(i) Restated Articles of Incorporation, filed herewith.
3(ii) By-Laws, as Amended and Restated effective December 15, 1994,
filed as Exhibit 3(ii) to the Company's quartely report on
Form 10-Q for the fiscal quarter ended February 28, 1995 and
incorporated herein by reference.
4.1 Articles 5th through 10th of the Company's Restated Articles
of Incorporation and Section 7.01 of the Company's By-Laws
(included in Exhibits 3(i) and 3(ii) above, respectively).
4.2 Secured Term Loan, Revolving Credit and Line of Credit
Agreement, dated July 27, 1983, between the Company and
Mellon Bank, N.A., (the "Mellon Credit Agreement"), filed
as Exhibit 4.2 to the Company's annual report on Form 10-K
for the fiscal year ended August 31, 1988 and incorporated
herein by reference.
4.3 First Amendment, dated September 4, 1984, to the Mellon
Credit Agreement, filed as Exhibit 4.3 to the Company's
annual report on Form 10-K for the fiscal year ended
August 31, 1988 and incorporated herein by reference.
</TABLE>
<PAGE> 30
<TABLE>
<CAPTION>
Exhibit No. Document
- ----------- -------------------------------------------------------
<C> <S>
4.4 Second Amendment, dated October 2, 1985 to the
Mellon Credit Agreement, filed as Exhibit 4.4 to
the Company's annual report on Form 10-K for the
fiscal year ended August 31, 1988 and incorporated
herein by reference.
4.5 Third Amendment, dated as of January 30, 1987, to
the Mellon Credit Agreement, filed as Exhibit 4.5
to the Company's annual report on Form 10-K for the
fiscal year ended August 31, 1988 and incorporated
herein by reference.
4.6 Fourth Amendment, dated as of August 31, 1987, to
the Mellon Credit Agreement, filed as Exhibit 4.6
to the Company's annual report on Form 10-K for the
fiscal year ended August 31, 1988 and incorporated
herein by reference.
4.7 Fifth Amendment, dated as of February 29, 1988, to
the Mellon Credit Agreement, filed as Exhibit 4.7
to the Company's annual report on Form 10-K for the
fiscal year ended August 31, 1988 and incorporated
herein by reference.
4.8 Sixth Amendment, dated as of July 12, 1989, to
the Mellon Credit Agreement, filed as Exhibit 4.8
to the Company's annual report on Form 10-K for the
fiscal year ended August 31, 1989 and incorporated
herein by reference.
4.9 Seventh Amendment, dated as of May 31, 1990, to
the Mellon Credit Agreement, filed as Exhibit 4.1
to the Company's quarterly report on Form 10-Q for the
fiscal quarter ended May 31, 1990 and incorporated
herein by reference.
4.10 Term note due June 1, 2000, filed as Exhibit 4.4 to
the Company's quarterly report on Form 10-Q for the
fiscal quarter ended May 31, 1990 and incorporated
herein by reference.
4.11 Letter, dated August 28, 1990, amending the Seventh
Amendment to the Mellon Credit Agreement, filed as
Exhibit 4.13 to the Company's annual report on
Form 10-K for the fiscal year ended August 31, 1990
and incorporated herein by reference.
</TABLE>
-2-
<PAGE> 31
<TABLE>
<CAPTION>
Exhibit No. Document
- ----------- -------------------------------------------------------
<C> <S>
4.12 Eighth Amendment, dated as of August 1, 1991, to
the Mellon Credit Agreement, filed as Exhibit 4.13
to the Company's annual report on Form 10-K for
the fiscal year ended August 31, 1991 and
incorporated herein by reference.
4.13 Ninth Amendment, dated as of December 18, 1991, to
the Mellon Credit Agreement, filed as Exhibit 19
to the Company's quarterly report on Form 10-Q for
the fiscal quarter ended February 29, 1992 and
incorporated herein by reference.
4.14 Tenth Amendment, dated as of August 18, 1992, to
the Mellon Credit Agreement, with the form of Term
Note due July 1, 2002 attached, filed as Exhibit 4.15
to the Company's annual report on Form 10-K for
the fiscal year ended August 31, 1992 and
incorporated herein by reference.
4.15 Eleventh Amendment, dated as of February 26, 1993, to
the Mellon Credit Agreement, filed as Exhibit 4.16
to the Company's quarterly report on Form 10-Q for
the fiscal quarter ended February 28, 1993 and
incorporated herein by reference.
4.16 Twelfth Amendment, dated as of June 30, 1994, to
the Mellon Credit Agreement, with the form of Term
Note due July 1, 2004 attached, filed as Exhibit 4.16
to the Company's annual report on Form 10-K for
the fiscal year ended August 31, 1994 and
incorporated herein by reference.
4.17 Thireteenth Amendment, dated as of May 31, 1995, to
the Mellon Credit Agreement, with the form of
Revolving Credit Note, dated June 8, 1995, and the
form of Term Note due July 1, 2005 attached, filed
herewith.
10.1 1985 Incentive Stock Plan, as adopted by the
Company's Board of Directors on August 22, 1985
and approved by the Company's shareholders on
October 31, 1985, filed on June 20, 1988 as part
of Exhibit 10.1 to Amendment No. 1 to Registration
Statement No. 33-17138 on Form S-1 and
incorporated herein by reference.*
</TABLE>
-3-
<PAGE> 32
<TABLE>
<CAPTION>
Exhibit
No. Document
- ------- -----------------------------------------------------------
<C> <S>
10.2 1985 Incentive Stock Option Plan, as amended by the Company's
Board of Directors on October 29, 1987, filed on June 20,
1988 as part of Exhibit 10.2 to Amendment No. 1 to
Registration Statement No. 33-17138 on Form S-1 and
incorporated herein by reference.*
10.3 1989 Stock Incentive Plan, as amended by the Company's Board of
Directors on October 13, 1994; filed herewith.*
10.4 Common Stock Purchase Plan for Salaried Employees, as amended
by the Company's Board of Directors on October 11, 1991, filed
as Exhibit 10.4 to the Company's annual report on Form 10-K
for the fiscal year ended August 31, 1991 and incorporated
herein by reference.*
10.5 Deferred Compensation Plan for Non-Employee Directors, as
adopted by the Company's Board of Directors on December 14,
1994, filed as Exhibit 10.6 to the Company's quarterly report
on Form 10-Q for the fiscal quarter ended February 28, 1995 and
incorporated herein by reference.*
10.6 Retirement Policy and Plan for Non-Employee Directors, as
amended by the Company's Board of Directors on December 14,
1994, filed as Exhibit 10.7 to the Company's quarterly report
on Form 10-Q for the fiscal quarter ended February 28, 1995 and
incorporated herein by reference.*
10.7 Written description of supplemental retirement benefit for
Thomas P. Woolaway, filed herewith.*
10.8 Indemnification and Insurance Agreement, dated August 12, 1988,
between the Company and John P. O'Leary, Sr. (substantially
identical agreements have been entered into with all the
Company's directors), filed as Exhibit 10.3 to the Company's
annual report on Form 10-K for the fiscal year ended August 31,
1988 and incorporated herein by reference.
11 Statement re Computation of Earnings Per Share, filed herewith.
</TABLE>
-4-
<PAGE> 33
<TABLE>
<CAPTION>
Exhibit
No. Document
- ------- -----------------------------------------------------------
<C> <S>
13 Those portions of the Annual Report to
Shareholders for the Fiscal year ended August 31, 1995
which are expressly incorporated in this
annual report by reference, filed herewith.
21 List of subsidiaries of the Company, filed
herewith.
23 Consent of S.R. Snodgrass, A.C., filed herewith.
24 Powers of Attorney, filed herewith.
27 Financial Data Schedule, filed herewith.
- -------------
<FN>
* Management contract or compensatory plan, contract or
arrangement required to be filed by Item 601(b) (10) (iii) of
Regulation S-K.
</TABLE>
5
<PAGE> 1
Exhibit 3(i)
TUSCARORA INCORPORATED
RESTATED ARTICLES OF INCORPORATION
1st. The name of the Company is Tuscarora Incorporated.
2nd. The location and post office address of its current registered
office in this Commonwealth is 800 Fifth Avenue, New Brighton, Beaver County,
Pennsylvania 15066.
3rd. The purposes of the Company are to engage in the business of
designing, manufacturing and developing all forms of plastics and other
synthetic materials and encouraging their widespread use, to make available to
its customers all related services, and, in addition, to engage in all other
lawful businesses for which a corporation may be incorporated under the
Pennsylvania Business Corporation Law, being the Act of May 5, 1933, as
amended.
4th. The term of its existence is perpetual.
5th. 5.1. The aggregate number of shares of all classes of capital
stock which the Company shall have the authority to issue is 21,000,000 shares,
divided into two classes, of which 1,000,000 shares shall be Preferred Stock,
par value $.01 per share (the "Preferred Stock"), and 20,000,000 shares shall
be Common Stock, without par value.
5.2. The Board of Directors is hereby expressly authorized, at any time
or from time to time, to divide any or all of the shares of the Preferred Stock
into one or more series, and in the resolution or resolutions establishing a
particular series, before issuance of any of the shares of the particular
series, to fix and determine the number of shares and the designation of such
series, so as to distinguish it from the shares of all other series and
classes, and to fix and determine the preferences, voting rights,
qualifications, privileges, limitations, options, conversion rights,
restrictions and other special or relative rights of the Preferred Stock or of
such series, to the fullest extent now or hereafter permitted by the laws of
the Commonwealth of Pennsylvania, including, but not limited to, variations
between different series in the following respects:
(a) the distinctive designation of such series and the number of shares
which shall constitute such series, which number may be increased or
decreased (but not below the number of shares of such series then
outstanding) from time to time by the Board of Directors;
(b) the annual dividend rate for such series, the dates in each year on
which dividends on such series shall be payable and the date or dates from
which such dividends shall commence to accrue;
(c) the price or prices at which, and the terms and conditions on
which, the shares of such series may be made redeemable;
(d) the purchase or sinking fund provisions, if any, for the purchase
or redemption of shares of such series;
(e) the preferential amount or amounts payable upon shares of such
series in the event of the liquidation, dissolution or winding up of the
Company;
(f) the voting rights, if any, of the holders of shares of such series;
(g) the terms and conditions, if any, upon which shares of such series
may be converted and the class or classes or series of shares of the
Company or other securities into which such shares may be converted;
(h) the relative seniority, parity or junior rank of such series as to
dividends or assets with respect to any other classes or series of stock
then or thereafter to be issued; and
(i) such other terms, qualifications, privileges, limitations, options,
restrictions and special or relative rights and preferences, if any, of
shares of such series as the Board of Directors may, at the time of such
resolution or resolutions, lawfully fix and determine under the laws of
the Commonwealth of Pennsylvania.
<PAGE> 2
Unless otherwise provided in a resolution or resolutions establishing
any particular series, the aggregate number of authorized shares of the
Preferred Stock may be increased by an amendment of the Restated Articles
approved solely by a majority vote of the outstanding shares of Common Stock
(or solely with a lesser vote of the Common Stock, or solely by action of the
Board of Directors, if permitted by law at the time).
All shares of any one series shall be alike in every particular, except
with respect to the accrual of dividends prior to the date of issuance.
5.3. Except for and subject to those rights expressly granted to the
holders of the Preferred Stock or any series thereof by resolution or
resolutions adopted by the Board of Directors pursuant to Section 5.2 of this
Article 5th and except as may be provided by the laws of the Commonwealth of
Pennsylvania, the holders of the Common Stock shall have exclusively all
other rights of shareholders.
5.4. No holder of Common Stock or of any other class of stock of the
Company shall be entitled as such, as a matter of right, to subscribe for or
purchase any part of any new or additional issue of stock of any class or of
securities convertible into any stock of any class, whether now or hereafter
authorized and whether issued for cash or other consideration or by way of
dividend, and the Company may issue shares, option rights or securities having
option or conversion rights without first offering them to shareholders of any
class.
6th. No Cumulative Voting.
The shareholders of the Company shall not have any right of cumulative
voting in the election of directors.
7th. Definitions; Interpretation.
7.1. Definitions. For the purposes of Articles 7th, 8th, 9th and 10th:
(a) "Person" means any individual, firm, corporation,
partnership, joint venture, trust or other entity. When two or more
persons act as a partnership, syndicate, association or other group for
the purpose of acquiring, holding or disposing of shares of stock, such
partnership, syndicate, association or group shall be deemed a person.
As used herein, the pronouns "which", "that" and "it" in relation to
persons that are individuals shall be construed to mean "who" or
"whom", "he" or "she" and "him" or "her", as appropriate.
(b) "Interested Shareholder" at any particular time means any
person (other than the Company or a Subsidiary, or an employee
benefit plan of the Company or a Subsidiary, or a trustee or fiduciary
of any such plan when acting in such capacity) who or which:
(1) is at such time, or is a member of a group acting
in concert which is at such time, the beneficial owner,
directly or indirectly, of more than 20% of the voting power
of the outstanding Voting Stock;
(2) is at such time a director or Affiliate of the
Company and at any time within the two-year period
immediately prior to such time was the beneficial owner,
directly or indirectly, of more than 20% of the voting power
of the then outstanding Voting Stock; or
(3) is at such time an assignee of or has otherwise
succeeded to the beneficial ownership of any shares of Voting
Stock which were at any time within the two-year period
immediately prior to such time beneficially owned by any
Interested Shareholder, 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;
With respect to any particular transaction, "Interested Shareholder"
means any Interested Shareholder involved in such transaction, any
Affiliate or Associate of any such Interested Shareholder and any
other member of a group acting in concert with any such Interested
Shareholder.
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<PAGE> 3
(c) A person is a "beneficial owner" of any shares of Voting
Stock:
(1) which such person or any of its Affiliates or
Associates beneficially owns, directly or indirectly;
(2) which such person or any of its Affiliates or
Associates has (A) the right to acquire (whether or not such
right is exercisable immediately) pursuant to any agreement,
arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options,
revocation of a trust or otherwise or (B) the right to vote,
or to direct the voting of, pursuant to any agreement,
arrangement or understanding; or
(3) which are beneficially owned, directly or
indirectly, by any other person with which such person or any
of its Affiliates or Associates has any agreement, arrangement
or understanding for the purpose of acquiring, holding,
voting or disposing of any shares of Voting Stock.
For the purposes of determining whether a person is an
Interested Shareholder pursuant to definition (b) of this Section 7.1,
the number of shares of Voting Stock deemed to be outstanding shall
include shares deemed owned by an Interested Shareholder through the
application of this definition (c) but shall not include any other
shares of Voting Stock which may be acquired pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion
rights, exchange rights, warrants or options, revocation of a trust or
otherwise.
(d) "Affiliate" has the meaning ascribed to that term in Rule
12b-2 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as in effect on August 28, 1987 (the term
"registrant" in said Rule 12b-2 meaning in this case the Company).
(e) "Associate" has the meaning ascribed to that term in Rule
12b-2 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as in effect on August 28, 1987 (the term
"registrant" in said Rule 12b-2 meaning in this case the Company).
(f) "Subsidiary" means any corporation of which a majority of
any class of equity security is owned, directly or indirectly, by the
Company, as well as any Affiliate of the Company which is controlled by
the Company; provided, however, that for the purposes of the definition
of Interested Shareholder set forth in definition (b) of this Section
7.1, "Subsidiary" means only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Company.
(g) "Disinterested Director" means a director of the Company
who is not an Interested Shareholder or an Affiliate, Associate or
representative of an Interested Shareholder and either (1) was a
director of the Company immediately prior to the time the Interested
Shareholder became an Interested Shareholder or (2) is a successor to a
Disinterested Director and is or was recommended or elected to succeed
a Disinterested Director by the affirmative vote of a majority of the
Disinterested Directors then in office. Whenever the holders of any
class or series of stock having a preference over the Common Stock as
to dividends or assets shall have the right, voting separately as a
class or series, to elect one or more directors of the Company, the
term "Disinterested Director" shall not include any director elected
by the holders of such class or series. As used with respect to any
particular transaction in Article 9th or with respect to a
determination or interpretation as to such transaction under definition
(h) of this Section 7.1 or Section 7.2, the term "Disinterested
Director" includes all directors who are Disinterested Directors with
respect to any Interested Shareholder involved in such transaction. In
all other cases, unless the context otherwise clearly requires,
the term "Disinterested Director" means only those directors who are
Disinterested Directors with respect to all persons who are then
Interested Shareholders.
(h) "Fair Market Value" means (1) in the case of stock, the
highest closing sale price during the 30-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, or, if such stock is not listed on such
3
<PAGE> 4
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 sale price or, if none, the highest
closing bid quotation with respect to a share of such stock during the
30-day period preceding the date in question on the National
Association of Securities Dealers, Inc. Automated Quotation System or
any similar system then in use, or if no such quotations are available,
the fair market value on the date in question of a share of such stock
as determined in good faith by the affirmative vote of a majority of
the Disinterested Directors then in office; and (2) in the case of
property other than stock or cash, the fair market value of such
property on the date in question as determined in good faith by the
affirmative vote of a majority of the Disinterested Directors then in
office or by a qualified appraiser retained by them for such purpose.
(i) "Voting Stock" means capital stock of the Company entitled
to vote generally in an annual election of directors of the Company.
(j) "Total Assets" means the consolidated total assets of the
Company and its subsidiaries as of the close of the most recent fiscal
quarter ended on or prior to the first public announcement of the
Business Combination in question, as shown on the consolidated balance
sheet published by the Company for such quarter.
7.2. Interpretation. The Disinterested Directors, by the affirmative
vote of a majority of the Disinterested Directors then in office, are
authorized to interpret all the terms and provisions of Articles 7th, 8th, 9th
and 10th and to determine, on the basis of information known to them after
reasonable inquiry, any fact necessary to determine compliance with any such
term or provision, including, without limitation, (a) whether a person is an
Interested Shareholder, (b) the number of shares of Voting Stock beneficially
owned by any person, (c) whether a person is an Affiliate or Associate or
another person, (d) whether any Articles provision required by clause (a) of
Section 9.1 of Article 9th complies with such Section and is valid and
enforceable and (e) whether the assets which are the subject of any Business
Combination have, or the consideration to be received for the issuance
or transfer of securities by the Company or any Subsidiary in any Business
Combination has, an aggregate Fair Market Value equal to 5% or more of Total
Assets. Any such interpretation or determination made in good faith shall be
binding and conclusive for all purposes of these Articles.
8th. Board of Directors.
The business and affairs of the Company shall be managed by or under
the direction of a Board of Directors comprised as follows:
(a) Number. The Board of Directors shall consist of such number
of persons as may from time to time be fixed by the Board pursuant to a
resolution adopted by the affirmative vote of a majority of the
Disinterested Directors then in office, plus such number of additional
directors as the holders of any class or series of stock having a
preference over the Common Stock as to dividends or assets, voting
separately as a class or series, shall have the right from time to time
to elect.
(b) Classes, Election and Terms. The directors elected by the
holders of Voting Stock shall be classified in respect of the time for
which they shall severally hold office by dividing them into three
classes, as nearly equal in number as possible. If such classes of
directors are not equal, the Board of Directors, by the affirmative
vote of a majority of the Disinterested Directors then in office, shall
determine which class shall contain an unequal number of directors. At
the annual meeting of shareholders of the Company in 1987, separate
elections shall be held for the directors of each class, the term of
office of the directors of the first class to expire at the first
annual meeting after their election, the term of office of the
directors of the second class to expire at the second annual meeting
after their election and the term of office of the directors of the
third class to expire at the third annual meeting after their election.
At each succeeding annual meeting of shareholders, the shareholders
shall elect directors of the class whose term then expires, to hold
office until the third succeeding annual meeting. Except as otherwise
expressly provided in these Articles,
4
<PAGE> 5
each director shall hold office for the term for which elected
and until his or her successor shall be elected and shall qualify.
(c) Removal of Directors. Any director, any class of directors
or the entire Board of Directors may be removed from office by
shareholder vote at any time, without assigning any cause, but only if
shareholders entitled to cast at least 75% of the votes which all
shareholders would be entitled to cast at an annual election of
directors or of such class of directors shall vote in favor of such
removal; provided, however, that the shareholders shall have such power
of removal without cause only if and so long as the general corporate
law of the Company's state of incorporation specifically mandates such
power. If such power of removal without cause is not mandated by
statute, the shareholders may remove a director or directors from
office at any time only for cause and only if, in addition to any
affirmative vote required by law, these Articles or otherwise, such
removal is approved by the holders of at least a majority of the voting
power of the then outstanding shares of Voting Stock of the Company
which are not beneficially owned by any Interested Shareholder, voting
together as a single class.
(d) Vacancies. Vacancies in the members of the Board of
Directors elected by the holders of Voting Stock, including vacancies
resulting from an increase in the number of directors, shall be filled
only by the affirmative vote of a majority of the Disinterested
Directors then in office, though less than a quorum, except as
otherwise required by law. All directors elected to fill vacancies
shall hold office for a term expiring at the annual meeting of
shareholders at which the term of the class to which they have been
elected expires. No decrease in the number of directors constituting
the Board of Directors shall shorten the term of any incumbent
director.
(e) Nominations of Director Candidates. Nominations for the
election of directors may be made only by the Board of Directors or a
committee appointed by the Board of Directors or by a holder of record
of stock entitled to vote in the election of the directors to be
elected; provided, however, that a nomination may be made by a
shareholder only if written notice of such nomination is received by
the Secretary of the Company not later than (1) with respect to an
election to be held at an annual meeting of shareholders, 90 days prior
to the anniversary date of the immediately preceding annual meeting,
and (2) with respect to an election to be held at a special meeting of
shareholders, the close of business on the 10th day following the date
on which notice of such meeting is first given to shareholders. Each
such notice shall set forth (1) the name and address of the shareholder
who intends to make the nomination and of the person or persons to be
nominated; (2) a representation that the shareholder is a holder of
record of stock of the Company entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; (3) a description of all
arrangements or understandings between the shareholder and each nominee
and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
shareholder; (4) such other information regarding each nominee proposed
by such shareholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and
Exchange Commission, had the nominee been nominated by the Board of
Directors; and (5) the consent of each nominee to serve as a director
of the Company if so elected. Only candidates who have been nominated
in accordance with this Article 8th shall be eligible for election by
the shareholders as directors of the Company.
(f) Exception for Preferred Stock. Whenever the holders of any
class or series of stock having a preference over the Common Stock as
to dividends or assets shall have the right, voting separately as a
class or series, to elect one or more directors of the Company or to
take any other action, none of the provisions of this Article 8th above
shall apply with respect to the director or directors elected or the
action taken by the holders of such class or series.
5
<PAGE> 6
9th. Votes Required For Certain Business Combinations.
9.1. Special Votes for Certain Business Combinations. In addition to
any affirmative vote required by law, these Articles or otherwise, and except
as otherwise expressly provided in Section 9.2 below:
(a) any merger, consolidation or share exchange of the Company
or any Subsidiary with (1) any Interested Shareholder or with (2) any
other person (whether or not itself an Interested Shareholder) which
is, or after such merger, consolidation or share exchange would be, an
Affiliate or Associate of an Interested Shareholder or which does not
include in its Articles the substance of the terms of this Article 9th,
in each case without regard to which person is the surviving person;
(b) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition or security arrangement, investment, loan, advance,
guarantee, agreement to purchase, agreement to pay, extention of
credit, joint venture participation or other arrangement (in one
transaction or a series of transactions) to, with or for the benefit of
any Interested Shareholder or any Affiliate or Associate of any
Interested Shareholder involving any assets, securities or commitments
of the Company or any Subsidiary having an aggregate Fair Market Value
and/or involving aggregate commitments equal to 5% or more of Total
Assets;
(c) the issuance or transfer by the Company or any Subsidiary
(in one transaction or a series of transactions) of any securities of
the Company or any Subsidiary to any Interested Shareholder or any
Affiliate or Associate of any Interested Shareholder in exchange for
cash, securities or other consideration (or a combination thereof)
having an aggregate Fair Market Value equal to 5% or more of Total
Assets;
(d) the adoption of any plan or proposal for the liquidation or
dissolution of the Company proposed by or on behalf of any Interested
Shareholder or any Affiliate or Associate of any Interested
Shareholder;
(e) any reclassification of securities (including any reverse
stock split), or recapitalization of the Company, or any merger or
consolidation of the Company with any Subsidiary or any other
transaction (whether or not with or into or otherwise involving an
Interested Shareholder) which has the effect, directly or indirectly,
of increasing the proportionate share of the outstanding shares of any
class of equity securities or securities convertible into equity
securities of the Company or any Subsidiary which is directly or
indirectly beneficially owned by any Interested Shareholder or any
Affiliate or Associate of any Interested Shareholder; or
(f) any other transaction or series of transactions similar in
purpose or effect to, or any agreement, contract or other arrangement
providing for, any one or more of the transactions specified in the
foregoing clauses (a) through (e);
shall require the affirmative votes of (i) the holders of at least 75% of the
voting power of all then outstanding shares of Voting Stock, voting together as
a single class, and (ii) the holders of at least a majority of the voting power
of the then outstanding shares of Voting Stock which are not beneficially owned
by such Interested Shareholder, voting together as a single class. Such
affirmative votes shall be required notwithstanding the fact that no vote may
be required, or that a lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.
The term "Business Combination" as used in this Article 9th shall mean
any transaction which is referred to in any one or more of clauses (a) through
(f) above.
9.2. Exception to Special Vote Requirements. The provisions of Section
9.1 shall not be applicable to any Business Combination, and such Business
Combination shall require only such affirmative vote (if any) as is required by
law, any other provision of these Articles, any agreement with any national
securities exchange or otherwise, if the Business Combination is approved by
the affirmative vote of a majority of the Disinterested Directors then in
office.
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<PAGE> 7
9.3. No Effect on Fiduciary Obligations of Interested Shareholders.
Nothing contained in this Article 9th shall be construed to relieve any
Interested Shareholder from any fiduciary obligation imposed by law or equity.
10th. Amendments.
10.1. Amendments to By-Laws. The Board of Directors may adopt, amend
and repeal the By-Laws with respect to those matters which are not, by statute,
reserved exclusively to the shareholders, provided that such power may be
exercised only by the affirmative vote of a majority of the Disinterested
Directors then in office. No By-Law may be adopted, amended or repealed by the
shareholders unless, in addition to any other affirmative vote required by law,
these Articles or otherwise, such action is approved by the affirmative votes
of (a) the holders of at least 75% of the voting power of all then outstanding
shares of Voting Stock, voting together as a single class, and (b) the holders
of at least a majority of the voting power of the then outstanding shares of
Voting Stock which are not beneficially owned by any Interested Shareholder,
voting together as a single class; provided, however, that the additional
affirmative votes required by this Section 10.1 shall not apply to any
shareholder adoption, amendment or repeal of any By-Law provision if such
action is recommended and submitted to the shareholders for their
consideration by the affirmative vote of a majority of the Disinterested
Directors then in office.
10.2. Amendments to Articles. In addition to any affirmative vote
required by law, these Articles or otherwise, any amendment, alteration, change
or repeal of any provision of these Articles, or the adoption of any provision
inconsistent therewith, shall require the affirmative votes of (a) the holders
of at least 75% of the voting power of all then outstanding shares of Voting
Stock, voting together as a single class, and (b) the holders of at least a
majority of the voting power of the then outstanding shares of Voting Stock
which are not beneficially owned by any Interested Shareholder, voting together
as a single class; provided, however, that the additional affirmative votes
required by this Section 10.2 shall not apply to any amendment, alteration,
change, repeal or provision if it is recommended and submitted to the
shareholders for their consideration by the affirmative vote of a majority of
the Disinterested Directors then in office.
11th. Director Liability.
11.1. To the fullest extent that the laws of the Commonwealth of
Pennsylvania, as in effect on January 27, 1987, or as thereafter amended,
permit elimination or limitation of the liability of directors, no director of
the Company shall be personally liable for monetary damages as such for any
action taken, or any failure to take any action, as a director.
11.2. This Article 11th shall not apply to any actions filed prior to
January 27, 1987, nor to any breach of performance of duty or any failure of
performance of duty by any director of the Company occurring prior to January
27, 1987. The provisions of this Article 11th shall be deemed to be a contract
with each director of the Company who serves as such at any time while this
Article 11th is in effect, and each such director shall be deemed to be so
serving in reliance on the provisions of this Article 11th. Any amendment or
repeal of this Article 11th or adoption of any By-Law of this Company or other
provision of the Articles of this Company which has the effect of increasing
director liability shall operate prospectively only and shall not have any
effect with respect to any action taken, or any failure to act, by a director
prior to such amendment, repeal, By-Law or other provision becoming effective.
12th. Indemnification of, and Advancement of Expenses to, Directors,
Officers and Others.
12.1. Right to Indemnification. Except as prohibited by law, every
director and officer of the Company shall be entitled as of right to be
indemnified by the Company against all expenses and liability (as those terms
are defined below in this Section 12.1) incurred by such person in connection
with any actual or threatened claim, action, suit or proceeding, whether civil,
criminal, administrative, investigative or other, or whether brought by or
against such person or by or in the right of the Company or otherwise, in which
such person may be involved in any manner, as a party or otherwise, by reason
of such person being or having been a director or officer of the Company or of
a subsidiary of
7
<PAGE> 8
the Company or by reason of the fact that such person is or was serving
at the request of the Company as a director, officer, employee, fiduciary or
other representative of another company, partnership, joint venture, trust,
employee benefit plan or other entity (such claim, action, suit or proceeding
hereinafter being referred to as an "Action"); provided, that no such right to
indemnification shall exist with respect to an Action brought by an indemnitee
(as defined below) against the Company (an "Indemnitee Action") except as
provided in the last sentence of this Section 12.1. Persons who are not
directors or officers of the Company may be similarly indemnified in respect of
service to the Company or a subsidiary of the Company or to another such entity
at the request of the Company to the extent the Board of Directors of the
Company at any time designates any of such persons as entitled to the benefits
of this Article 12th. As used in this Article 12th, "indemnitee" includes each
director and officer of the Company and each other person designated by the
Board of Directors of the Company as entitled to the benefits of this Article
12th; "expenses" means all expenses actually and reasonably incurred, including
fees and expenses of counsel selected by an indemnitee; and "liability" means
all liability incurred, including the amounts of any judgments, excise taxes,
fines or penalties and any amounts paid in settlement. An indemnitee shall be
entitled to be indemnified pursuant to this Section 12.1 against expenses
incurred in connection with an Indemnitee Action if (a) the Indemnitee Action
is instituted under Section 12.3 below and the indemnitee is successful in
whole or in part in such Indemnitee Action, (b) the indemnitee is successful in
whole or in part in another Indemnitee Action for which expenses are claimed or
(c) if the indemnification for expenses is included in a settlement of, or is
awarded by a court in, such other Indemnitee Action.
12.2 Right to Advancement of Expenses. Every indemnitee shall be
entitled as of right to have the expenses of the indemnitee in defending any
Action or in bringing and pursuing an Indemnitee Action under Section 12.3
below paid in advance by the Company prior to final disposition of the Action
or Indemnitee Action, provided that the Company receives a written undertaking
by or on behalf of the indemnitee to repay the amount advanced if it should
ultimately be determined that the indemnitee is not entitled to be indemnified
for the expenses.
12.3 Right of Indemnitee to Initiate Action. If a written claim for
indemnification under Section 12.1 above or for advancement of expenses under
Section 12.2 above is not paid in full by the Company within 30 days after the
claim has been received by the Company, the indemnitee may at any time
thereafter bring an Indemnitee Action to recover the unpaid amount of the
claim, and, if successful in whole or in part, the indemnitee shall also be
entitled to be paid the expense of bringing and pursuing such Indemnitee
Action. The only defense to an Indemnitee Action to recover on a claim for
indemnification under Section 12.1 above shall be that the conduct of the
indemnitee was such that under Pennsylvania law the Company is prohibited from
indemnifying the indemnitee for the amount claimed but the burden of proving
such defense shall be on the Company. Neither the failure of the Company
(including its Board of Directors, independent legal counsel and shareholders)
to have made a determination prior to the commencement of such Indemnitee
Action that indemnification of the indemnitee is proper in the circumstances,
nor an actual determination by the Company (including its Board of Directors,
independent legal counsel or shareholders) that the conduct of the indemnitee
was such that indemnification is prohibited by law, shall be a defense to such
Indemnitee Action or create a presumption that the conduct of the indemnitee
was such that indemnification is prohibited by law. The only defense to an
Indemnitee Action to recover a claim for advancement of expenses under Section
12.2 above shall be the failure by the indemnitee to provide the undertaking
required by Section 12.2 above.
12.4. Funding and Insurance. The Company may create a trust fund, grant
a security interest, cause a letter of credit to be issued or use other means
(whether or not similar to the foregoing) to ensure the payment of all sums
required to be paid by the Company to effect indemnification as provided in
this Article 12th.
12.5. Non-Exclusivity; Nature and Extent of Rights. The rights to
indemnification and advancement of expenses provided for in this Article 12th
shall (a) not be deemed exclusive of any other rights, whether now existing or
hereafter created, to which any indemnitee may be entitled under any agreement,
provision in the Articles or By-Laws of the Company, vote of shareholders or
directors or
8
<PAGE> 9
otherwise, (b) be deemed to create contractual rights in favor of each
indemnitee who serves at any time while this Article 12th is in effect (and
each such indemnitee shall be deemed to be so serving in reliance on the
provisions of this Article 12th and (c) continue as to each indemnitee who has
ceased to have the status pursuant to which the indemnitee was entitled or was
designated as entitled to indemnification under this Article 12th and inure to
the benefit of the heirs and legal representatives of each indemnitee. Any
amendment or repeal of this Article 12th or adoption of any By-Law of this
Company or other provision of the Articles of this Company which has the effect
of limiting in any way the rights to indemnification or advancement of expenses
provided for in this Article 12th shall operate prospectively only and shall
not affect any action taken, or failure to act, by an indemnitee prior to such
amendment, repeal, By-Law or other provision becoming effective.
12.6. Partial Indemnity. If an indemnitee is entitled under any
provision of this Article 12th to indemnification by the Company for some or a
portion of the expenses or liability incurred by the indemnitee in the
preparation, investigation, defense, appeal or settlement of any Action or
Indemnitee Action but not, however, for the total amount thereof, the Company
shall indemnify the indemnitee for the portion of such expenses or liability to
which the indemnitee is entitled.
12.7. Applicability of Section. This Article 12th shall apply to every
Action other than an Action filed prior to January 27, 1987, except that it
shall not apply to the extent that Pennsylvania law does not permit its
application to any breach of performance of duty or any failure of performance
of duty by an indemnitee occurring prior to January 27, 1987.
13th. Articles Defined. Henceforth, the Articles as defined in the
Pennsylvania Business Corporation Law shall not include any prior documents.
9
<PAGE> 1
Exhibit 4.17
THIRTEENTH AMENDMENT TO
SECURED TERM LOAN, REVOLVING CREDIT
AND LINE OF CREDIT AGREEMENT
-----------------------------------
THIS THIRTEENTH AMENDMENT (this "Amendment") made as of the 31st day of
May, 1995 by and between TUSCARORA INCORPORATED, a Pennsylvania corporation
(the "Company"), and MELLON BANK, N.A., a national banking association (the
"Bank");
WITNESSETH:
WHEREAS, the Company and the Bank entered into a Secured Term Loan,
Revolving Credit and Line of Credit Agreement dated July 27, 1983 (herein, as
the same has heretofore been supplemented and amended by the First Amendment
dated September 4, 1984, the Second Amendment dated October 2, 1985 (the
"Second Amendment"), the Third Amendment dated as of January 30, 1987 (the
"Third Amendment"), the Fourth Amendment dated as of August 31, 1987, the Fifth
Amendment dated as of February 29, 1988 (the "Fifth Amendment"), the Sixth
Amendment dated as of August 1, 1989, the Seventh Amendment dated as of May 31,
1990, the Eighth Amendment dated as of August 1, 1991, the Ninth Amendment
dated as of December 18, 1991 (the "Ninth Amendment"), the Tenth Amendment
dated as of August 18, 1992 (the "Tenth Amendment"), the Eleventh Amendment
dated as of February 26, 1993 (the "Eleventh Amendment"), and the Twelfth
Amendment dated as of June 30, 1994, the "Agreement") (except where separate
references are made to the Agreement as executed on July 27, 1983 or to one of
the Amendments enumerated herein) whereby the Bank has extended credit to the
Company;
WHEREAS, there is currently outstanding a Revolving Credit Loan
facility with a conversion date of January 31, 1997, when the facility is
scheduled to convert to a term loan;
WHEREAS, the parties wish to extend said conversion date to January 31,
1998 and to make a corresponding change in the maturity date of the term loan
to January 1, 2003;
WHEREAS, the Company has also requested an increase from $12,000,000 to
$14,000,000 in availability under the Revolving Credit Note; and
WHEREAS, the Bank has agreed, effective June 30, 1995, to extend an
additional term loan to the Company in the principal amount of $12,000,000;
PI1-520998.5
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, and intending to be legally bound hereby, the parties
hereby agree as follows:
1. DEFINITIONS. Capitalized words and terms which are defined in the
Agreement are herein used as therein defined, unless provision is made herein
to the contrary. Certain definitions provided in the Agreement are, however,
modified as follows:
"AGREEMENT" shall have the meaning ascribed to such term in
the first recital of this Thirteenth Amendment.
"COMMITMENT" shall mean the face principal amount of the
Revolving Credit Loan as the same may be amended from time to time.
"CONVERSION DATE" shall, effective June 30, 1995, mean
January 31, 1998.
"EBIT" shall mean with respect to any person for any
period net income before the payment or deduction of interest
expense and income taxes MINUS, to the extent included in the
calculation of net income, extraordinary gains, in each case of such
person for such period, computed and calculated on a consolidated basis
in accordance with GAAP.
"EXPIRATION DATE" shall mean the earlier of (i) January 31,
1998 or (ii) the date on which the Commitment is terminated pursuant to
subsection 2(e)(ii) of the Second Amendment.
"INTEREST COVERAGE RATIO" shall mean for any period the ratio
computed by dividing EBIT by Interest Expense.
"INTEREST EXPENSE" shall mean for any period the amount of
interest accrued on indebtedness during such period, including, without
limitation, all interest required under GAAP to be capitalized during
such period.
The phrases "HEREIN", "HEREOF", and "HEREUNDER" and the like
shall mean this Thirteenth Amendment as a whole and not any particular
section or other subdivision.
2. REVOLVING CREDIT LOAN/ADDITIONAL TERM LOAN.
(a) REVOLVING CREDIT FACILITY; CONVERSION. As set forth in the
Revolving Credit Note, subject to the terms and conditions of the
Agreement, availability under the Revolving Credit Note shall be,
effective June 8, 1995, and shall continue to be in the principal
amount of $14,000,000.
- 2 -
<PAGE> 3
Effective June 30, 1995, the Revolving Credit Loan shall be
converted to a term loan on January 31, 1998.
(b) REVOLVING CREDIT NOTE. In view of the amendments to the
terms "Conversion Date" and "Expiration Date" made in Section 1 of this
Amendment and the increase in the Commitment made in subsection (a) of
this Section 2, the Revolving Credit Note shall be amended and
restated, effective June 8, 1995, in the form attached as Exhibit A to
this Amendment (the Revolving Credit Note").
(c) ADDITIONAL TERM LOAN. In view of the change of the
Conversion Date, effective June 30, 1995, to January 31, 1998, the
repayment terms of the term loan to be extended on the Conversion Date
are hereby amended, effective June 30, 1995, to provide that the
principal amount of such term loan shall be repaid in 20 equal
quarterly installments of principal, due and payable on the first day
of each January, April, July and October of each year, commencing on
April 1, 1998 and ending on January 1, 2003, each in an amount equal to
one-twentieth of the original principal amount thereof, together with
interest on each such date at one or more of the rates provided for in
a Supplement to Conversion Note in the form attached as Exhibit B to
this Agreement, which supplement to Conversation Note would be attached
to and become a part of a promissory note evidencing the obligation to
repay the term loan to be extended on the Conversion Date.
(d) EFFECT OF AMENDMENTS. The terms and conditions of the
Revolving Credit Loan provided for in the Agreement, are hereby
confirmed, except to the extent modified by the foregoing provisions of
this Section 2.
3. TERM LOAN NO. 10.
(a) TERM LOAN. Subject to the terms and conditions of the
Agreement and in reliance upon the representations, warranties and
covenants contained therein, the Bank shall make Term Loan No. 10 to
the Company on the date when the conditions precedent thereto stated in
Section 8 hereof are satisfied, but in no event before June 30, 1995
(for purposes of Term Loan No. 10, the "Closing Date") in the principal
amount of Twelve Million Dollars ($12,000,000). The principal amount of
Term Loan No. 10, which shall be evidenced by a term note in the form
of Exhibit C hereto ("Term Note No. 10"), shall be payable in 40
quarterly installments of Three Hundred Thousand Dollars ($300,000)
each, together with interest at the rate provided for in Term Note No.
10, commencing on October 1, 1995 and continuing on the first day of
each January, April, July, and October thereafter until July 1, 2005.
- 3 -
<PAGE> 4
(b) INTEREST/INTEREST RATE OPTIONS. Interest shall accrue upon
the unpaid principal balance of Term Loan No. 10 commencing on the date
of the making of such Loan and shall be payable in accordance with the
terms of this Amendment. The Company agrees to pay interest upon such
unpaid principal balance of Term Loan No. 10 from time to time in
accordance with the provisions of the Supplement to Term Note No. 10
which is attached to Term Note No. 10 and incorporated by reference
therein.
4. MORTGAGES AND SECURITY INTERESTS/CROSS COLLATERAL.
Upon the execution and delivery of this Thirteenth Amendment, all
obligations of the Company to the Bank arising hereunder shall be secured by
the liens and security interests granted to the Bank pursuant to Section 2.17
of the Agreement, Section 5 of the First Amendment and subsection 8(d) of the
Third Amendment, as amended by Section 2 of the Ninth Amendment, except to the
extent that such liens and security interests have been released. All
indebtedness of the Company to the Bank whether now outstanding or arising
hereafter shall be secured by the security interests and liens granted in the
documents described in the immediately preceding sentence, as described in
greater detail in subsection 5(b) hereof.
5. REPRESENTATIONS AND WARRANTIES.
(a) CONFIRMATION OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties made by the Company in sections 3.01 - 3.11, inclusive, of the
Agreement are confirmed and ratified as if stated herein in their entirety,
except to the extent that such representations and warranties are modified
herein for purposes of this Thirteenth Amendment, as follows: references to the
Agreement in Article III of the Agreement shall be deemed to include this
Thirteenth Amendment.
(b) MORTGAGES AND SECURITY INTERESTS. The Company represents and
warrants that the liens and security interests granted to the Bank pursuant to
Section 2.17 of the Agreement, Section 5 of the First Amendment and subsection
8(d) of the Third Amendment, as amended by Section 2 of the Ninth Amendment,
shall, except to the extent that such liens and security interests shall have
been released, secure, inter alia, the obligations of the Company arising under
the Agreement. The obligations of the Company arising pursuant to this
Thirteenth Amendment shall constitute "Debt" as defined in:
(i) the mortgages described in subsection 2.17(i) of the
Agreement, except to the extent such mortgages have been released;
- 4 -
<PAGE> 5
(ii) the Deed to Secure Debt and the Deed of Trust; and
(iii) the First Security Agreement.
The definition of "Debt" in each of the documents described in this
subsection 5(b) is hereby amended to include all indebtedness of the Company
arising under the Agreement including without limitation the Debt arising
pursuant to this Thirteenth Amendment.
6. COMMITMENT FEES. Section 2.(e)(i) of the Second Amendment, as
previously amended by the Fifth Amendment, the Tenth Amendment and the Eleventh
Amendment, is, effective June 30, 1995, hereby amended and restated in its
entirety as follows:
The Company agrees to pay the Bank, as a consideration for its
Commitment hereunder, a Commitment Fee calculated at the rate of 1/8 of
1% per annum (based on a year of 365 or 366 days, as the case may be)
from the date hereof until and including the Expiration Date on the
average daily unborrowed principal amount of the Bank's Commitment
hereunder.
7. COVENANTS.
(a) Section 5.01(g) of the Agreement is amended to add the
following proviso at the end of that Section:
"; provided, however, that nothing in this Section 5.01(g) will
prohibit a transaction otherwise permitted by Section 5.02(h) of
this Agreement."
(b) Section 5.02(i) of the Agreement is deleted in its entirety
and replaced with the following new covenant:
"(i) CAPITAL EXPENDITURES. Make or commit to make, or permit any
Subsidiary to make or commit to make, any Capital Expenditures in any
fiscal year aggregating more than the sum of (i) $25,000,000 plus
(ii) the proceeds of capital assets disposed of pursuant to Section
5.02(g) of this Agreement if equivalent amounts have been applied to
the purchase of new capital assets."
(c) Section 5.02(b) of the Agreement is deleted in its entirety
and replaced with the following new covenant:
- 5 -
<PAGE> 6
"(b) Interest Coverage Ratio. Permit the Interest Coverage Ratio,
measured at the end of any fiscal quarter for the then most recent
four fiscal quarters, to be less than 3.0:1."
(d) Section 5.02(c) of the Agreement is amended to add new
subsections (9) - (11) as follows:
"(9) Indebtedness in respect of Tuscarora Limited's obligations to
Mellon Europe Limited and to the Bank;
(10) Indebtedness in respect of the Company's obligations to the Bank
and to Mellon Europe Limited pursuant to Guarantee and Suretyship
Agreements in favor of the Bank and Mellon Europe Limited, to be
executed by the Company, in form and substance satisfactory to the
Bank, as the same may be amended from time to time.
(11) Indebtedness in respect of the Company's earnout obligations to
Styro-Molders Corporation under the Agreement, dated March 21, 1994,
between the Company and Styro-Molders Corporation."
(e) Section 5.02(f) of the Agreement, as amended by the Ninth
Amendment, is hereby deleted and shall have no further force or effect.
(f) Section 5.02(g) of the Agreement is deleted in its entirety
and replaced with the following new covenant:
"(g) sell, assign, lease, transfer or otherwise dispose of, or
permit any Subsidiary to sell, assign, lease, transfer or
otherwise dispose of, voluntarily or involuntarily, any of its
capital assets (consisting of property, plant and equipment)
during any fiscal year except for dispositions of capital assets
in the ordinary course of business or dispositions of capital
assets no longer useful in its business; provided, that during
such fiscal year an amount equal to the proceeds of such
dispositions is applied to (i) the purchase of new capital assets
useful in the business of the Company or a Subsidiary or (ii) the
outstanding balance of any Term Loan or, if all Term Loans have
been repaid in full, to the outstanding principal balance of the
Revolving Credit Loan."
(g) Section 11(b) of the Third Amendment is hereby deleted and
shall have no further force or effect.
- 6 -
<PAGE> 7
8. CONDITIONS PRECEDENT. The conditions precedent to the effectiveness
of this Amendment are as follows:
(a) a duly executed Revolving Credit Note in the form of
Exhibit A hereto together with the Supplement thereto shall have been
delivered to the Bank;
(b) a duly executed Term Note No. 10 in the form of Exhibit B
hereto together with the Supplement thereto shall have been delivered
to the Bank;
(c) the representations and warranties of the Company contained
in the Agreement shall be true and no Event of Default shall have
occurred and no condition or event shall have occurred or existed which
would, after notice or lapse of time or both constitute such an Event
of Default;
(d) there shall have been delivered to the Bank copies of all
documents evidencing corporate action taken by the Company relative to
this Thirteenth Amendment and the transaction contemplated hereby in
form and scope satisfactory to the Bank and special counsel for the
Bank, certified by the Secretary or an Assistant Secretary of the
Company;
(e) there shall have been delivered to the Bank certificates,
signed by the Secretary or an Assistant Secretary of the Company,
certifying as to the name of the officer or officers of the Company
authorized to sign this Thirteenth Amendment and the other documents
delivered hereunder and as to the specimens of the true signatures of
such officer or officers, on which the Bank may rely conclusively; and
(f) all details and proceedings in connection with this
Thirteenth Amendment shall be satisfactory in form and substance to the
Bank and its special counsel and there shall have been delivered to the
Bank and its special counsel counterpart originals, certificates or
other copies of such documents and proceedings in connection therewith
and in such quantities as the Bank or its special counsel may
reasonably request.
9. EXECUTION AND VALIDITY. The references to documents in Section 3.02
of the Agreement shall be deemed to include this Thirteenth Amendment in
addition to the other documents described therein.
- 7 -
<PAGE> 8
10. MISCELLANEOUS.
(a) RATIFICATION. Except as provided otherwise or modified
herein, the terms and provisions of the Agreement are ratified and
confirmed.
(b) NO WAIVER. The execution of this Thirteenth Amendment and
the consummation of the transactions contemplated hereby shall not be
deemed to constitute (i) a waiver by the Bank of any Event of Default
or event which with the passage of time or notice would constitute an
Event of Default under the Agreement or (ii) a waiver by the Bank of
any existing breach or violation of any warranty or covenant by the
Company under the Agreement.
WITNESS the due execution hereof as of the day and year first above
written.
ATTEST: TUSCARORA INCORPORATED
By: /s/ BRIAN C. MULLINS By: /s/ JOHN P. O'LEARY, JR.
----------------------------- ----------------------------
Title: Vice President & Treasurer Title: President & CEO
-------------------------- -------------------------
[Corporate Seal]
MELLON BANK, N.A.
By: /s/ JOHN R. COOPER
-----------------------------
Vice President
- 8 -
<PAGE> 9
EXHIBIT A
TUSCARORA INCORPORATED
Revolving Credit Note
----------------------
$14,000,000 Pittsburgh, Pennsylvania
June 8, 1995
On January 31, 1998, for value received, the undersigned, TUSCARORA
INCORPORATED, a Pennsylvania corporation and the successor by change of name to
Tuscarora Plastics, Inc., (herein called the "Company"), hereby promises to pay
to the order of MELLON BANK, N.A. (the "Bank") the principal sum of Fourteen
Million Dollars ($14,000,000) or the aggregate unpaid amount of the Revolving
Credit Loan (as that term is defined in the Agreement referred to below) made
by the Bank to the Company pursuant to said Agreement, whichever is less,
together with interest on the unpaid balance of said principal sum from time to
time outstanding from the date hereof payable in accordance with the Supplement
to Revolving Credit Note which is attached hereto and incorporated by reference
herein.
If any payment of principal or interest on this Note shall become due
on a day which is not a business day, such payment shall be made on the next
succeeding business day and such extension of time shall in such case be
included in computing interest in connection with such payment.
Payments of both principal and interest are to be made at the office of
the Bank at Mellon Square, Pittsburgh, Pennsylvania, in lawful money of the
United States of America and in immediately available funds.
This Note is the "Revolving Credit Note" referred to in, is entitled to
the benefits of, and is subject to the provisions of, the Secured Term Loan,
Revolving Credit and Line of Credit Agreement, dated July 27, 1983, by and
between Tuscarora Plastics, Inc. and Mellon Bank, N.A., as amended (the
"Agreement"), which Agreement, among other things, contains provisions for
acceleration of the maturity hereof upon the happening of certain stated
events, and also for prepayments on account of principal hereof prior to
maturity upon terms and conditions therein specified.
This Revolving Credit Note evidences a continuing, pre-existing debt.
It is not intended as a novation of such debt, and neither delivery of this
promissory note to the Bank nor the Bank's surrender or cancellation of any
prior note evidencing such debt shall constitute a payment or discharge
of such debt.
<PAGE> 10
This promissory note in no way alters, amends, renews, extinguishes or
affects in any other way any collateral security for the debt or any document
relating to such collateral security.
POWER TO CONFESS JUDGMENT: THE COMPANY HEREBY AUTHORIZES AND EMPOWERS
THE PROTHONOTARY OR ANY ATTORNEY OF ANY COURT OF RECORD WITHIN THE COMMONWEALTH
OF PENNSYLVANIA OR ELSEWHERE TO APPEAR FOR THE COMPANY, AND, WITH OR WITHOUT
DECLARATION FILED, CONFESS JUDGMENT AGAINST THE COMPANY IN FAVOR OF THE HOLDER
HEREOF, AS OF ANY TERM, FOR THE UNPAID BALANCE HEREOF AND INCLUDING, WITHOUT
LIMITATION, ALL ACCRUED AND UNPAID INTEREST, CHARGES, EXPENSES OR OTHER
IMPOSITIONS PAYABLE HEREUNDER, OR UNDER THE AGREEMENT OR THE SECURITY DOCUMENTS
WHETHER BY ACCELERATION OR OTHERWISE WITH COSTS OF SUIT AND A REASONABLE
ATTORNEY'S COMMISSION AS CERTIFIED BY THE HOLDER HEREOF WITH RELEASE OF ALL
ERRORS, WAIVING ALL LAWS EXEMPTING REAL OR PERSONAL PROPERTY FROM EXECUTION, TO
THE EXTENT THAT SUCH LAWS MAY LAWFULLY BE WAIVED BY THE COMPANY. NO SINGLE
EXERCISE OF THE FOREGOING POWER TO CONFESS JUDGMENT SHALL BE DEEMED TO EXHAUST
THE POWER, WHETHER OR NOT ANY SUCH EXERCISE SHALL BE HELD BY ANY COURT TO BE
VALID, VOIDABLE, OR VOID, BUT THE POWER SHALL CONTINUE UNDIMINISHED AND IT MAY
BE EXERCISED FROM TIME TO TIME AS OFTEN AS HOLDER SHALL ELECT, UNTIL SUCH TIME
AS HOLDER SHALL HAVE RECEIVED PAYMENT IN FULL.
WITNESS the due execution hereof.
ATTEST: TUSCARORA INCORPORATED
By: ___________________________ By: ______________________________
Title: ________________________ Title: ___________________________
[CORPORATE SEAL]
- 2 -
<PAGE> 11
SUPPLEMENT TO REVOLVING CREDIT NOTE
-----------------------------------
This Supplement to Revolving Credit Note (this "Supplement") is annexed
to and is part of the Revolving Credit Note dated June 8, 1995 of Tuscarora
Incorporated ("Borrower") payable to Mellon Bank, N.A. ("Bank") in the stated
principal amount of Fourteen Million Dollars ($14,000,000). Such Revolving
Credit Note, as supplemented by this Supplement, shall be referred to as the
"Note".
1. INTEREST PAYMENTS. Interest on the unpaid principal amount of this
Note under the Prime Rate Portion shall be payable quarterly on the last day of
each January, April, July and October and on the date of payment in full.
Interest on the unpaid principal amount of the Note under the As-Offered Rate,
Euro-Rate and CD Rate Portions shall be payable on the last day of the Rate
Period of the corresponding interest rate option.
2. INTEREST RATE OPTIONS. The unpaid principal amount of this Note
shall bear interest for each day until due on one or more bases selected by
Borrower from among the interest rate Options set forth below. Borrower
understands and agrees: (a) that the Bank may in its sole discretion from time
to time determine that the right of Borrower to select, convert to or renew the
As-Offered Rate Option, the Euro-Rate Option or the CD Rate Option is not
available and (b) that subject to the provisions of this Note Borrower may
select any number of such Options to apply simultaneously to different parts of
the unpaid principal amount of this Note and may select any number of Rate
Segments to apply simultaneously to different parts of the As-Offered Rate
Portion, the Euro-Rate Portion or the CD Rate Portion. Provided, however, that
borrowings under the Euro-Rate Option or CD Rate Option shall be in minimum
amounts of $500,000 and borrowings under As-Offered Rate Option shall be in the
minimum amount of $1,000,000.
Available Interest Rate Options
-------------------------------
PRIME RATE OPTION: A rate per annum (computed on the basis of a year
of 365 or 366 days, as the case may be) for each day equal to the
Prime Rate for such day.
AS-OFFERED RATE OPTION: For each Rate Segment of the As-Offered Rate
Portion, a rate per annum (computed on the basis of a year of 360 days
and actual days elapsed) for each day equal to the As-Offered Rate for
such Rate Segment for such day.
EURO-RATE OPTION: For each Rate Segment of the Euro-Rate Portion,
a rate per annum (computed on the basis of a year of 360 days and
actual days elapsed) for each day equal to the Euro-Rate for such Rate
Segment for such day plus 1.00%.
CD RATE OPTION: For each Rate Segment of the CD Rate Portion, a rate
per annum (computed on the basis of a year of 360 days and actual days
elapsed) for each day equal to the CD Rate for such Rate Segment for
such day plus 1.00%.
3. RATE PERIODS. At any time when Borrower selects, converts to or
renews the As-Offered Rate Option, CD Rate Option or the Euro-Rate Option, the
Borrower shall fix a period acceptable to the Bank in the Bank's sole
discretion (the "Rate Period") during which such Option shall apply to the
corresponding Rate Segment. In no event, however, shall a Rate Period exceed
180 days. The Bank's right to payment of principal and interest under this Note
shall in no way be affected by the fact that one or more Rate Periods may be in
effect.
4. RATE SEGMENTS. Every selection of, conversion to or renewal of the
As-Offered Rate Option, CD Rate Option or the Euro-Rate Option shall be in a
principal amount selected by the Borrower and acceptable to the Bank in the
Bank's sole discretion.
5. INTEREST AFTER MATURITY. After the principal amount of any part of
the Prime Rate Portion shall have become due, such Prime Rate Portion shall
bear interest for each day until paid (before and after judgment) at a rate per
annum (based on a year of 365 or 366 days, as the case may be) which for each
day shall be the greater of (a) 2% above the Prime Rate Option on the day such
part of the Prime Rate Portion became due and (b) 2% above the Prime Rate
Option, such interest rate to change automatically from time to time effective
as of the effective date of each change in the Prime Rate. After the principal
amount of any part of the As-Offered Rate Portion, the Euro-Rate Portion or CD
Rate Portion shall have become due, such part shall bear interest for each day
until paid (before and after judgment) (c) until the end of the applicable
then-current Rate Period at a rate per annum 2% above the As-Offered Rate
Option, CD Rate Option or Euro-Rate Option otherwise applicable to such part
and (d) thereafter in accordance with the previous sentence.
<PAGE> 12
6. SELECTION, CONVERSION OR RENEWAL OF RATE OPTIONS. Subject to the
other provisions of this Note, the Borrower may select any interest rate Option
to apply to any borrowing evidenced by this Note. Subject to the other
provisions of this Supplement, the Borrower may convert any part of the unpaid
principal amount of the Note from any interest rate Option to any other
interest rate Option and may renew the As-Offered Rate Option, CD Rate Option
or the Euro-Rate Option as to any Rate Segment: (a) at any time with respect to
conversion from the Prime Rate Option to another Option and (b) at the
expiration of any Rate Period with respect to conversion from or renewals of
the As-Offered Rate Option, CD Rate Option or the Euro-Rate Option, as the case
may be, as to the Rate Segment corresponding to such expiring Rate Period.
Whenever the Borrower desires to select, convert or renew any interest rate
Option, the Borrower shall give the Bank notice (which shall be irrevocable) no
later than 10:00 a.m., Pittsburgh time, on a Business Day which is at least two
Business Days (or, in the case of selection of, conversion to or renewal of the
Euro-Rate Option, at least two London Business Days) in advance of the day
(which shall be a Business Day) on which such selection, conversion or renewal
is to occur. If such notice has been duly given, and if the Bank in its sole
discretion approves the proposed selection, conversion or renewal, after the
date specified in such notice interest shall be calculated upon the unpaid
principal amount of the Note taking into account such selection, conversion or
renewal.
7. PRIME RATE FALLBACK. If any Rate Period expires, any part of the
Rate Segment corresponding to such Rate Period which has not been converted or
renewed in accordance with Section 6 hereof automatically shall be converted to
the Prime Rate Option. If the Borrower fails to select, or if the Bank fails to
approve, an interest rate Option to apply to any new borrowing evidenced by the
Note, such new borrowing shall be deemed to be at the Prime Rate Option.
8. PREPAYMENTS. The Borrower shall have the right at its option from
time to time to prepay the Prime Rate Portion in whole or in part. The Borrower
shall have no right to prepay any part of the As-Offered Rate Portion, CD Rate
Portion or the Euro-Rate Portion at any time without the prior written consent
of Bank except that the Borrower may prepay any part of any Rate Segment at the
expiration of the Rate Period corresponding to such Rate Segment.
9. INDEMNITY. The Borrower shall indemnify the Bank against any loss or
expense (including loss of margin) which the Bank has sustained or incurred as
a consequence of:
(i) payment, prepayment or conversion of any part of any Rate
Segment of the As-Offered Rate Portion, the Euro-Rate Portion or the CD
Rate Portion on a day other than the last day of the corresponding Rate
Period (whether or not any such payment is pursuant to demand by the
Bank under this Note and whether or not any such payment, prepayment or
conversion is consented to by the Bank, unless the Bank shall have
expressly waived such indemnity in writing);
(ii) attempt by the Borrower to revoke in whole or part any
irrevocable notice given pursuant to Section 6 of this Note; or
(iii) breach of or default by any Debtor in the performance or
observance of any covenant or condition contained in this Note or any
separate security, guarantee or suretyship agreement between Bank and
any Debtor.
If the Bank sustains any such loss or expense it shall from time to time notify
the Borrower of the amount determined in good faith by the Bank (which
determination shall be conclusive) to be necessary to indemnify the Bank for
such loss or expense. Such amount shall be due and payable by the Borrower on
demand.
10. COMPENSATION FOR TAXES, RESERVES AND EXPENSES ON OUTSTANDING LOANS.
If any Law or guideline or interpretation or application thereof by any
Official Body charged with the interpretation or administration thereof or
compliance with any request or directive of any central bank or other Official
Body (whether or not having the force of law):
(i) subjects the Bank or any Notional Euro-Rate Funding Office
to any tax, or changes the basis of taxation with respect to the
Agreement, the Notes, the Loans or payments by the Company of
principal, interest or other amounts due from the Company hereunder or
under the Notes (except for taxes on the overall net income of the Bank
or such Notional Euro-Rate Funding Office imposed by the jurisdiction
in which the Bank's principal executive office or Notional Euro-Rate
Funding Office is located:
- 2 -
<PAGE> 13
(ii) imposes, modifies or deems applicable any reserve, special
deposit or similar requirement against assets held by, credit extended
by, deposits with or for the account of, or other acquisition of funds
by, the Bank of any Notional Euro-Rate Funding Office (other than
requirements expressly included herein in the determination of the CD
Rate or Euro-Rate, as the case may be, hereunder); or
(iii) imposes upon the Bank or any Notional Euro-Rate Funding
Office any other condition or expense with respect to the Agreement,
the Notes, or its making, maintenance or funding of any part of the
Loans, including, without limitation, any capital adequacy or similar
requirements;
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, or impose any expense upon the Bank or any Notional
Euro-Rate Funding Office with respect to the Agreement, the Notes or the
making, maintenance or funding of any part of the Loans by an amount which the
Bank deems to be material (the Bank being deemed for this purpose to have made,
maintained or funded each Rate Segment of the CD Rate Portion Source of Funds),
the Bank shall from time to time notify the Company of the amount determined in
good faith (using any averaging and atribution methods employed in good faith)
by the Bank (which determination shall be conclusive) to be necessary to
compensate the Bank or such Notional Euro-Rate Funding Office for such increase
in cost, reduction in income or additional expense. Such amount shall be due
and payable by the Company to the Bank ten (10) Business Days after such notice
is given.
11. RECORDS. The unpaid principal amount of this Note, the unpaid
interest accrued hereon, the interest rate or rates applicable to such unpaid
principal amount, and the duration of such applicability shall at all times be
ascertained from the records of Bank, which shall be conclusive absent manifest
error.
12. NOTICES. All notices under this Note shall be in writing or by
telephone promptly confirmed in writing, and all such writings shall be sent by
first-class express or certified mail or by hand delivery, in all cases with
charges prepaid. All notices shall be sent to the applicable party at the
address stated below or in accordance with the last unrevoked written direction
from such party to the other parties hereto. All notices by the Borrower shall
be effective when received by the Bank and all notices by the Bank shall be
effective when telephoned, deposited in the mail or received, whichever is
first. Written notices or confirmations by the Borrower shall not be deemed
records of the Bank within the meaning of Section 11 of this Note regardless of
whether received by the Bank. The Bank may conclusively rely without inquiry on
any notice or confirmation purporting to be from or authorized by the Borrower.
13. DEFINITIONS. As used in this supplement:
"As-Offered Rate" shall mean a rate per annum offered by Bank in its
sole discretion, such interest rate to remain fixed for the duration of such
Rate Period.
"Assessment Rate" for any day shall mean the rate per annum (rounded
upward to the nearest 1/100 of 1%) determined in good faith by Bank (which
determination shall be conclusive) as representing for such day the maximum
effective rate per annum payable by Bank to the Federal Deposit Insurance
Corporation (or any successor) for such day for insurance on dollar time
deposits of any maturity, exclusive of any credit allowed against such annual
assessment on account of assessment payments made or to be made by Bank. Each
CD Rate shall be adjusted automatically as of the effective date of any change
in the Assessment Rate.
"Business Day" shall mean any day on which Bank is open for business at
the location where the Note is payable.
"Corresponding Source of Funds" shall mean: (i) in the case of any
Funding Segment of a CD Rate Portion, the proceeds of hypothetical issuances by
the Bank of one or more of its certificates of deposit at the beginning of the
CD Rate Funding Period corresponding to such Funding Segment, having maturities
approximately equal to such CD Rate Funding period and in an aggregate amount
approximately equal to such Funding Segment; and (ii) in the case of any
Funding Segment of a Euro-Rate Portion, the proceeds of hypothetical receipts
by a Notional Euro-Rate Funding Office or by the Bank through a Notional
Euro-Rate Funding Office of one or more Dollar deposits in the interbank
eurodollar market at the beginning of the Euro-Rate Funding Period
corresponding to such Funding Segment, having maturities approximately equal to
such Euro-Rate Funding Period and in an aggregate amount approximately equal to
such Funding Segment.
- 3 -
<PAGE> 14
"CD Rate Reserve Percentage" for any day shall mean the percentage
(rounded upward to the nearest 1/100 of 1%), as determined in good faith by
Bank (which determination shall be conclusive) as representing for such day the
maximum effective reserve requirement (including without limitation
supplemental, marginal and emergency requirements) for Bank in respect of
nonpersonal time deposits of any maturity in dollars in the United States. Each
CD Rate shall be adjusted automatically as of the effective date of any change
in the CD Rate Reserve Percentage.
"CD Rate" for any day for any proposed or existing Rate Segment
corresponding to a Rate Period shall mean the rate per annum determined by Bank
by adding
(A) the rate per annum obtained by dividing (the resulting
quotient to be rounded upward to the nearest 1/100 of 1%) (1) the rate
of interest (which shall be the same for each day in such Rate Period)
estimated in good faith by Bank in accordance with its usual procedures
(which determination shall be conclusive) to be the average of the
secondary market bid rates at or about 11:00 a.m., Eastern time, on
the first day of such Rate Period by dealers of recognized standing for
negotiable certificates of deposit of major money center banks for
delivery on such day in amounts comparable to such Rate Segment (or, if
there are no such comparable amounts actively traded, the smallest
amounts actively traded) and having maturities comparable to such Rate
Period by (2) a number equal to 1.00 minus the CD Rate Reserve
Percentage for such day and
(B) the Assessment Rate for such day.
The "CD Rate" may also be expressed by the following formula:
[average of secondary market bid ]
[rates estimated by the Bank per ]
CD Rate = [subsection (A) (1) ] + Assessment
---------------------------------- Rate
[1.00 - CD Rate Reserve Percentage]
"Euro-Rate Reserve Percentage" for any day shall mean the percentage
(rounded upward to the nearest 1/100 of 1%), as determined in good faith by the
Bank (which determination shall be conclusive) as representing for such day the
maximum effective reserve requirement (including without limitation
supplemental, marginal and emergency requirements) for member banks of the
Federal Reserve System with respect to eurocurrency funding (currently referred
to as "Eurocurrency liabilities") of any maturity. Each Euro-Rate shall be
adjusted automatically as of the effective date of each change in the Euro-Rate
Reserve Percentage.
"Euro-Rate" for any day for any proposed or existing Rate Segment
corresponding to a Rate Period shall mean the rate per annum determined by the
Bank to be the rate per annum obtained by dividing (the resulting quotient to
be rounded upward to the nearest 1/100 of 1%) (A) the rate of interest (which
shall be the same for each day in such Rate Period) determined in good faith by
the Bank in accordance with its usual procedures (which determination shall be
conclusive) to be the average of the rates per annum for deposits in United
States dollars offered to major money center banks in the London interbank
market at approximately 11:00 a.m., London time, two London Business Days
prior to the first day of such Rate Period for delivery on the first day of
such Rate Period in amounts comparable to such Rate Segment (or, if there are
no such comparable amounts actively traded, the smallest amounts actively
traded) and having maturities comparable to such Rate Period by (B) a number
equal to 1.00 minus the Euro-Rate Reserve Percentage for such day.
The "Euro-Rate" may also be expressed by the following formula:
[average of rates offered to major ]
[money center banks in the London ]
[interbank market determined by the ]
Euro-Rate = [Bank per subsection (A) ]
-------------------------------------
[1.00 - Euro-Rate Reserve Percentage]
"Law" shall mean any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, order, injunction, writ, decree or award
of any Official Body.
"London Business Day" shall mean a day for dealings in deposits in
United States dollars by and among banks in the London interbank market.
- 4 -
<PAGE> 15
"Notional Euro-Rate Funding Office" shall mean any branch, subsidiary
or affiliate of the Bank which the Bank, in its sole discretion, deems from
time to time to have made, maintained or funded any part of the Euro-Rate
Portion of the Loans at any time.
"Official Body" shall mean the United States of America or any foreign
government or state, any state and any political subdivision thereof, and any
agency, department, court, commission, board, bureau or instrumentality of any
of them.
"Portion": "Prime Rate Portion" shall mean at any time the part,
including the whole, of the unpaid principal amount of the Note bearing
interest at such time under the Prime Rate Option or in accordance with the
first sentence of Section 5 hereof. "Euro-Rate Portion", "As-Offered Rate
Portion" or "CD Rate Portion" shall mean at any time the part, including the
whole, of the unpaid principal amount of the Note bearing interest at such time
under the applicable option or at a rate determined by reference to the
applicable option pursuant to Section 5 (c) hereof. (By definition, the sum of
the Prime Rate Portion, the As-Offered Rate Portion, the Euro-Rate Portion and
the CD Rate Portion at any time equals the unpaid principal amount of the Note
at such time.)
"Prime Rate" shall mean the interest rate per annum announced from time
to time by Bank as its Prime Rate, such interest rate to change automatically
from time to time as of the effective date of each announced change in such
Prime Rate. The Prime Rate may be greater or less than other interest rates
charged by Bank to other borrowers and is not solely based or dependent upon
the interest rate which Bank may charge any particular borrower or class of
borrowers.
"Rate Segment" of the As-Offered Rate Portion, the Euro-Rate Portion or
the CD Rate Portion at any time shall mean the entire principal amount of such
Portion to which at such time there is applicable a particular Rate Period
beginning on a particular day and ending on another particular day. (By
definition, the As-Offered Rate Portion, the Euro-Rate Portion or the CD Rate
Portion is at all times composed of an integral number of discrete Rate
Segments, each corresponding to a particular Rate Period, and the sum of the
principal amounts of all Rate Segments of the As-Offered Rate Portion, the
Euro-Rate Portion or the CD Rate Portion at any time equals the principal
amount of such Portions at such time.)
WITNESS the due execution hereof:
Attest: TUSCARORA INCORPORATED
By: _______________________________ By: _______________________________
Title: _____________________________
(Corporate Seal)
Address for Notices to Borrower:
Tuscarora Incorporated
800 Fifth Avenue
P.O. Box 448
New Brighton, PA 15066
Address for Notices to Bank:
Mellon Bank, N.A.
Two Mellon Bank Center
Room 152-0270
Pittsburgh, PA 15259-0001
ATTN: Middle Market Banking Dept.
- 5 -
<PAGE> 16
Exhibit B
Supplement to Conversion Note
-----------------------------
This Supplement to Conversion Note (this "Supplement") is annexed to
and is part of Conversion Note dated January 31, 1998 of Tuscarora Incorporated
("Borrower") payable to Mellon Bank, N.A. ("Bank") in the stated principal
amount of Fourteen Million Dollars ($14,000,000). Such Conversion Note, as
supplemented by this Supplement, shall be referred to herein as the "Note".
1. INTEREST PAYMENTS. Interest on the unpaid principal amount of this
Note under the Prime Rate Portion shall be payable quarterly on the first day
of each January, April, July, and October and on the date of payment in full.
Interest on the unpaid principal amount of the Note under the As-Offered Rate,
Euro-Rate and CD Rate Portions shall be payable on the last day of the Rate
Period of the corresponding interest rate option.
2. INTEREST RATE OPTIONS. The unpaid principal amount of this Note
shall bear interest for each day until due on one or more bases selected by
Borrower from among the Interest Rate Options set forth below. Borrower
understands and agrees: (a) that the Bank may in its sole discretion from time
to time determine that the right of Borrower to select, convert to or renew the
As-Offered Rate Option, the Euro-Rate Option or the CD Rate Option is not
available and (b) that subject to the provisions of this Note Borrower may
select any number of such Options to apply simultaneously to different parts of
the unpaid principal amount of this Note and may select any number of Rate
Segments to apply simultaneously to different parts of the As-Offered Rate
Portion, the Euro-Rate Portion or the CD Rate Portion. Provided, however, that
borrowings under the Euro-Rate Option or CD Rate Option shall be in minimum
amounts of $500,000 and borrowings under As-Offered Rate Option shall be in the
minimum amount of $1,000,000.
Available Interest Rate Options
-------------------------------
PRIME RATE OPTION: A rate per annum (computed on the basis of a
year of 365 or 366 days, as the case may be) for each day equal to the
Prime Rate plus 0.125% for such day.
AS-OFFERED RATE OPTION: For each Rate Segment of the As-Offered
Rate Portion, a rate per annum (computed on the basis of a year of 360
days and actual days elapsed) for each day equal to the As-Offered Rate
for such Rate Segment for such day.
EURO-RATE OPTION: For each Rate Segment of the Euro-Rate Portion, a
rate per annum (computed on the basis of a year of 360 days and actual
days elapsed) for each day equal to the Euro-Rate for such Rate
Segment for such day plus 1.375%.
CD RATE OPTION: For each Rate Segment of the CD Rate Portion, a rate
per annum (computed on the basis of a year of 360 days and actual days
elapsed) for each day equal to the CD Rate for such Rate Segment for
such day plus 1.375%.
3. RATE PERIODS. At any time when Borrower selects, converts to or
renews the As-Offered Rate Option, CD Rate Option or the Euro-Rate Option, the
Borrower shall fix a period acceptable to the Bank in the Bank's sole
discretion (the "Rate Period"), which Rate Period shall not exceed 180 days,
during which such Option shall apply to the corresponding Rate Segment. The
Bank's right to payment of principal and interest under this Note shall in no
way be affected by the fact that one or more Rate Periods may be in effect.
Interest Rate Options shall be selected in a manner which shall ensure that
Borrower shall be able to make scheduled payments of principal under the Note
without incurring liability under Section 9 hereof; provided, however, that in
the event that Borrower prepays any Rate Segment bearing interest under the
As-Offered Rate Portion, the Euro-Rate Portion or the CD Rate Portion in order
to make a scheduled payment of principal under the Note, Borrower shall
indemnify the Bank as provided in Section 9 hereof.
4. RATE SEGMENTS. Every selection of, conversion to or renewal of the
As-Offered Rate Option, CD Rate Option or the Euro-Rate Option shall be in a
principal amount selected by the Borrower and acceptable to the Bank in the
Bank's sole discretion.
<PAGE> 17
5. INTEREST AFTER MATURITY. After the principal amount of any part of
the Prime Rate Portion shall have become due, such Prime Rate Portion shall
bear interest for each day until paid (before and after judgment) at a rate per
annum (based on a year of 365 or 366 days, as the case may be) which for each
day shall be the greater of (a) 2% above the Prime Rate Option on the day such
part of the Prime Rate Portion became due and (b) 2% above the Prime Rate
Option, such interest rate to change automatically from time to time effective
as of the effective date of each change in the Prime Rate. After the principal
amount of any part of the As-Offered Rate Portion, the Euro-Rate Portion or CD
Rate Portion shall have become due, such part shall bear interest for each day
until paid (before and after judgment) (c) until the end of the applicable
then-current Rate Period at a rate per annum 2% above the As-Offered Rate
Option, CD Rate Option or Euro-Rate Option otherwise applicable to such part
and (d) thereafter in accordance with the previous sentence.
6. SELECTION, CONVERSION OR RENEWAL OF RATE OPTIONS. Subject to the
other provisions of this Note, the Borrower may select any interest rate Option
to apply to any borrowing evidenced by this Note. Subject to the other
provisions of this Supplement, the Borrower may convert any part of the unpaid
principal amount of the Note from any interest rate Option to any other
interest rate Option and may renew the As-Offered Rate Option, CD Rate Option
or the Euro-Rate Option as to any Rate Segment: (a) at any time with respect to
conversion from the Prime Rate Option to another Option and (b) at the
expiration of any Rate Period with respect to conversion from or renewals of
the As-Offered Rate Option, CD Rate Option or the Euro-Rate Option, as the
case may be, as to the Rate Segment corresponding to such expiring Rate Period.
Whenever the Borrower desires to select, convert or renew any interest rate
Option, the Borrower shall give the Bank notice (which shall be irrevocable) no
later than 10:00 a.m., Pittsburgh time, on a Business Day which is at least two
Business Days (or, in the case of selection of, conversion to or renewal of the
Euro-Rate Option, at least two London Business Days) in advance of the day
(which shall be a Business Day) on which such selection, conversion or renewal
is to occur. If such notice has been duly given, and if the Bank in its sole
discretion approves the proposed selection, conversion or renewal, after the
date specified in such notice interest shall be calculated upon the unpaid
principal amount of the Note taking into account such selection, conversion or
renewal.
7. PRIME RATE FALLBACK. If any Rate Period expires, any part of the
Rate Segment corresponding to such Rate Period which has not been converted or
renewed in accordance with Section 6 hereof automatically shall be converted to
the Prime Rate Option. If the Borrower fails to select, or if the Bank fails to
approve, an interest rate Option to apply to any new borrowing evidenced by the
Note, such new borrowing shall be deemed to be at the Prime Rate Option.
8. PREPAYMENTS. The Borrower shall have the right at its option from
time to time to prepay the Prime Rate Portion in whole or in part. The Borrower
shall have no right to prepay any part of the As-Offered Rate Portion, CD Rate
Portion or the Euro-Rate Portion at any time without the prior written consent
of Bank except that the Borrower may prepay any part of any Rate Segment at the
expiration of the Rate Period corresponding to such Rate Segment.
9. INDEMNITY. The Borrower shall indemnify the Bank against any loss or
expense (including loss of margin) which the Bank has sustained or incurred as
a consequence of:
(i) payment, prepayment or conversion of any part of any Rate
Segment of the As-Offered Rate Portion, the Euro-Rate Portion or the CD
Rate Portion on a day other than the last day of the corresponding Rate
Period (whether or not any such payment is pursuant to demand by the
Bank under this Note and whether or not any such payment, prepayment or
conversion is consented to by the Bank, unless the Bank shall have
expressly waived such indemnity in writing);
(ii) attempt by the Borrower to revoke in whole or part any
irrevocable notice given pursuant to Section 6 of this Note; or
(iii) breach of or default by any Debtor in the performance or
observance of any covenant or condition contained in this Note or any
separate security, guarantee or suretyship agreement between Bank and
any Debtor.
If the Bank sustains any such loss or expense it shall from time to time notify
the Borrower of the amount determined in good faith by the Bank (which
determination shall be conclusive) to be necessary to indemnify the Bank for
such loss or expense. Such amount shall be due and payable by the Borrower on
demand.
- 2 -
<PAGE> 18
10. COMPENSATION FOR TAXES, RESERVES AND EXPENSES ON OUTSTANDING LOANS.
If any Law or guideline or interpretation or application thereof by any Of-
ficial Body charged with the interpretation or administration thereof or
compliance with any request or directive of any central bank or other Official
Body (whether or not having the force of law):
(i) subjects the Bank or any Notional Euro-Rate Funding Office
to any tax, or changes the basis of taxation with respect to the
Agreement, the Notes, the Loans or payments by the Company of
principal, interest or other amounts due from the Company hereunder or
under the Notes (except for taxes on the overall net income of the Bank
or such Notional Euro-Rate Funding Office imposed by the jurisdiction
in which the Bank's principal executive office or Notional Euro-Rate
Funding Office is located:
(ii) imposes, modifies or deems applicable any reserve, special
deposit or similar requirement against assets held by, credit extended
by, deposits with or for the account of, or other acquisition of funds
by, the Bank of any Notional Euro-Rate Funding Office (other than
requirements expressly included herein in the determination of the CD
Rate or Euro-Rate, as the case may be, hereunder); or
(iii) imposes upon the Bank or any Notional Euro-Rate Funding
Office any other condition or expense with respect to the Agreement,
Notes, or its making, maintenance or funding of any part of the Loans,
including, without limitation, any capital adequacy or similar
requirements;
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, or impose any expense upon the Bank or any Notional
Euro-Rate Funding Office with respect to the Agreement, the Notes or the
making, maintenance or funding of any part of the Loans by an amount which the
Bank deems to be material (the Bank being deemed for this purpose to have made,
maintained or funded each Rate Segment of the CD Rate Portion, the As-Offered
Rate Portion and the Euro-Rate Portion from a Corresponding Source of Funds),
the Bank shall from time to time notify the Company of the amount determined in
good faith (using any averaging and atribution methods employed in good faith)
by the Bank (which determination shall be conclusive) to be necessary to
compensate the Bank or such Notional Euro-Rate Funding Office for such increase
in cost, reduction in income or additional expense. Such amount shall be due
and payable by the Company to the Bank ten (10) Business Days after such notice
is given.
11. RECORDS. The unpaid principal amount of this Note, the unpaid
interest accrued hereon, the interest rate or rates applicable to such unpaid
principal amount, and the duration of such applicability shall at all times be
ascertained from the records of Bank, which shall be conclusive absent manifest
error.
12. NOTICES. All notices under this Note shall be in writing or by
telephone promptly confirmed in writing, and all such writings shall be sent by
first-class express or certified mail or by hand delivery, in all cases with
charges prepaid. All notices shall be sent to the applicable party at the
address stated below or in accordance with the last unrevoked written direction
from such party to the other parties hereto. All notices by the Borrower shall
be effective when received by the Bank and all notices by the Bank shall be
effective when telephoned, deposited in the mail or received, whichever is
first. Written notices or confirmations by the Borrower shall not be deemed
records of the Bank within the meaning of Section 11 of this Note regardless of
whether received by the Bank. The Bank may conclusively rely without inquiry on
any notice or confirmation purporting to be from or authorized by the Borrower.
13. DEFINITIONS. As used in this supplement:
"As-Offered Rate" shall mean a rate per annum offered by Bank in its
sole discretion, such interest rate to remain fixed for the duration of such
Rate Period.
"Assessment Rate" for any day shall mean the rate per annum (rounded
upward to the nearest 1/100 of 1%) determined in good faith by Bank (which
determination shall be conclusive) as representing for such day the maximum
effective rate per annum payable by Bank to the Federal Deposit Insurance
Corporation (or any successor) for such day for insurance on dollar time
deposits of any maturity, exclusive of any credit allowed against such annual
assessment on account of assessment payments made or to be made by Bank. Each
CD Rate shall be adjusted automatically as of the effective date of any change
in the Assessment Rate.
"Business Day" shall mean any day on which Bank is open for business at
the location where the Note is payable.
- 3 -
<PAGE> 19
"Corresponding Source of Funds" shall mean: (i) in the case of any
Funding Segment of a CD Rate Portion, the proceeds of hypothetical issuances by
the Bank of one or more of its certificates of deposit at the beginning of the
CD Rate Funding Period corresponding to such Funding Segment, having maturities
approximately equal to such CD Rate Funding period and in an aggregate amount
approximately equal to such Funding Segment; and (ii) in the case of any
Funding Segment of a Euro-Rate Portion, the proceeds of hypothetical receipts
by a Notional Euro-Rate Funding Office or by the Bank through a Notional
Euro-Rate Funding Office of one or more Dollar deposits in the interbank
eurodollar market at the beginning of the Euro-Rate Funding Period
corresponding to such Funding Segment, having maturities approximately equal to
such Euro-Rate Funding Period and in an aggregate amount approximately equal to
such Funding Segment.
"CD Rate Reserve Percentage" for any day shall mean the percentage
(rounded upward to the nearest 1/100 of 1%), as determined in good faith by
Bank (which determination shall be conclusive) as representing for such day the
maximum effective reserve requirement (including without limitation
supplemental, marginal and emergency requirements) for Bank in respect of
nonpersonal time deposits of any maturity in dollars in the United States. Each
CD Rate shall be adjusted automatically as of the effective date of any change
in the CD Rate Reserve Percentage.
"CD Rate" for any day for any proposed or existing Rate Segment
corresponding to a Rate Period shall mean the rate per annum determined by Bank
by adding
(A) the rate per annum obtained by dividing (the resulting
quotient to be rounded upward to the nearest 1/100 of 1%) (1) the rate
of interest (which shall be the same for each day in such Rate Period)
estimated in good faith by Bank in accordance with its usual procedures
(which determination shall be conclusive) to be the average of the
secondary market bid rates at or about 11:00 a.m., Eastern time, on
the first day of such Rate Period by dealers of recognized standing for
negotiable certificates of deposit of major money center banks for
delivery on such day in amounts comparable to such Rate Segment (or, if
there are no such comparable amounts actively traded, the smallest
amounts actively traded) and having maturities comparable to such Rate
Period by (2) a number equal to 1.00 minus the CD Rate Reserve
Percentage for such day and
(B) the Assessment Rate for such day.
The "CD Rate" may also be expressed by the following formula:
[average of secondary market bid ]
[rates estimated by the Bank per ]
CD Rate = [subsection (A)(1) ] + Assessment
----------------------------------
[1.00 - CD Rate Reserve Percentage] Rate
"Euro-Rate Reserve Percentage" for any day shall mean the percentage
(rounded upward to the nearest 1/100 of 1%), as determined in good faith by the
Bank (which determination shall be conclusive) as representing for such day the
maximum effective reserve requirement (including without limitation
supplemental, marginal and emergency requirements) for member banks of the
Federal Reserve System with respect to eurocurrency funding (currently referred
to as "Eurocurrency liabilities") of any maturity. Each Euro-Rate shall be
adjusted automatically as of the effective date of each change in the Euro-Rate
Reserve Percentage.
"Euro-Rate" for any day for any proposed or existing Rate Segment
corresponding to a Rate Period shall mean the rate per annum determined by the
Bank to be the rate per annum obtained by dividing (the resulting quotient to
be rounded upward to the nearest 1/100 of 1%) (A) the rate of interest (which
shall be the same for each day in such Rate Period) determined in good faith by
the Bank in accordance with its usual procedures (which determination shall be
conclusive) to be the average of the rates per annum for deposits in United
States dollars offered to major money center banks in the London interbank
market at approximately 11:00 a.m., London time, two London Business Days
prior to the first day of such Rate Period for delivery on the first day of
such Rate Period in amounts comparable to such Rate Segment (or, if there are
no such comparable amounts actively traded, the smallest amounts actively
traded) and having maturities comparable to such Rate Period by (B) a number
equal to 1.00 minus the Euro-Rate Reserve Percentage for such day.
The "Euro-Rate" may also be expressed by the following formula:
[average of rates offered to major ]
[money center banks in the London ]
[interbank market determined by the]
Euro-Rate = [Bank per subsection (A) ]
----------------------------------
[1.00 - Euro-Rate Reserve Percentage]
- 4 -
<PAGE> 20
"Law" shall mean any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, order, injunction, writ, decree or award
of any Official Body.
"London Business Day" shall mean a day for dealings in deposits in
United States dollars by and among banks in the London interbank market.
"Notional Euro-Rate Funding Office" shall mean any branch, subsidiary
or affiliate of the Bank which the Bank, in its sole discretion, deems from
time to time to have made, maintained or funded any part of the Euro-Rate
Portion of the Loans at any time.
"Official Body" shall mean the United States of America or any foreign
government or state, any state and any political subdivision thereof, and any
agency, department, court, commission, board, bureau or instrumentality of any
of them.
"Portion": "Prime Rate Portion" shall mean at any time the part,
including the whole, of the unpaid principal amount of the Note bearing
interest at such time under the Prime Rate Option or in accordance with the
first sentence of Section 5 hereof. "Euro-Rate Portion", "As-Offered Rate
Portion" or "CD Rate Portion" shall mean at any time the part, including the
whole, of the unpaid principal amount of the Note bearing interest at such time
under the applicable option or at a rate determined by reference to the
applicable option pursuant to Section 5(c) hereof. (By definition, the sum of
the Prime Rate Portion, the As-Offered Rate Portion, the Euro-Rate Portion and
the CD Rate Portion at any time equals the unpaid principal amount of the Note
at such time.)
"Prime Rate" shall mean the interest rate per annum announced from time
to time by Bank as its Prime Rate, such interest rate to change automatically
from time to time as of the effective date of each announced change in such
Prime Rate. The Prime Rate may be greater or less than other interest rates
charged by Bank to other borrowers and is not solely based or dependent upon
the interest rate which Bank may charge any particular borrower or class of
borrowers.
"Rate Segment" of the As-Offered Rate Portion, the Euro-Rate Portion or
the CD Rate Portion at any time shall mean the entire principal amount of such
Portion to which at such time there is applicable a particular Rate Period
beginning on a particular day and ending on another particular day. (By
definition, the As-Offered Rate Portion, the Euro-Rate Portion or the CD Rate
Portion is at all times composed of an integral number of discrete Rate
Segments, each corresponding to a particular Rate Period, and the sum of the
principal amounts of all Rate Segments of the As-Offered Rate Portion, the
Euro-Rate Portion or the CD Rate Portion at any time equals the principal
amount of such Portions at such time.)
WITNESS the due execution hereof.
Attest: TUSCARORA INCORPORATED
By: _____________________________ By: _____________________________
Title: __________________________
(Corporate Seal)
Address for Notices to Borrower:
Tuscarora Incorporated
800 Fifth Avenue
P. O. Box 448
New Brighton, PA 15066
Address for Notices to Borrower:
Mellon Bank, N.A.
Two Mellon Bank Center
Room 152-0270
Pittsburgh, PA 15259-0001
Attn: Middle Market Banking Dept.
- 5 -
<PAGE> 21
EXHIBIT C
TUSCARORA INCORPORATED
Term Note No. 10
----------------
$12,000,000 Pittsburgh, Pennsylvania
June 30, 1995
FOR VALUE RECEIVED, the undersigned TUSCARORA INCORPORATED (the
"Company"), hereby promises to pay to the order of MELLON BANK, N.A. (the
"Bank"), the principal sum of Twelve Million Dollars ($12,000,000), in lawful
money of the United States, in 39 equal principal quarterly installments,
commencing on October 1, 1995 and continuing on the first day of each January,
April, July, and October thereafter through April 1, 2005, each such
installment to be in the amount of Three Hundred Thousand Dollars ($300,000),
plus a final installment payable July 1, 2005 in an amount equal to the then
unpaid balance hereof, if any; each principal payment to be made together with
interest from the date hereof on the unpaid balance of said principal sum
payable on the first day of each January, April, July, and October and on the
date of payment in full and after maturity, on demand, until payment in full,
at a rate per annum (based on a year of 365 or 366 days as the case may be)
which shall be the rate of interest then governing under the Secured Term Loan,
Revolving Credit and Line of Credit Agreement dated July 27, 1983 between the
Company and the Bank, as amended (as so amended, the "Agreement") and under the
Supplement to Term Note No. 10 which is attached hereto and incorporated by
reference herein.
Payments of both principal and interest are to be made at the principal
office of the Bank at Pittsburgh, Pennsylvania, in lawful money of the United
States of America in funds immediately available at such office. If any payment
of principal or interest on this Term Note shall become due on a Saturday,
Sunday, or bank holiday under the laws of the place where payment is received,
such payment shall be made on the next succeeding business day and such
extension of time shall in such case be included in computing interest in
connection with such payment.
The undersigned waives presentment, demand, notice, protest and all
other demands and notices in connection with delivery, acceptance, performance,
default or enforcement of this Term Note and the Agreement. In an action on
this Term Note, the Bank or its assignee need not produce or file the original
of this Term Note, but only need produce or file a photocopy of this Term Note
certified by the Bank or such assignee to be a true and correct copy.
<PAGE> 22
This Term Note is issued pursuant to the Agreement and the Bank or any
subsequent holder hereof is entitled to the benefits thereof and shall be bound
thereby. As provided in the Agreement, this Term Note is secured by mortgage
liens and security interests. The Agreement also contains provisions, among
others, for the acceleration of the maturity hereof upon the happening of
certain events and for prepayment at the option of the Company on account of
principal hereof prior to maturity upon the terms and conditions therein
specified.
POWER TO CONFESS JUDGMENT: THE COMPANY HEREBY AUTHORIZES AND EMPOWERS
THE PROTHONOTARY OR ANY ATTORNEY OF ANY COURT OF RECORD WITHIN THE COMMONWEALTH
OF PENNSYLVANIA OR ELSEWHERE TO APPEAR FOR THE COMPANY, AND, WITH OR WITHOUT
DECLARATION FILED, CONFESS JUDGMENT AGAINST THE COMPANY IN FAVOR OF THE HOLDER
HEREOF, AS OF ANY TERM, FOR THE UNPAID BALANCE HEREOF AND INCLUDING, WITHOUT
LIMITATION, ALL ACCRUED AND UNPAID INTEREST, CHARGES, EXPENSES OR OTHER
IMPOSITIONS PAYABLE HEREUNDER, OR UNDER THE AGREEMENT OR THE SECURITY DOCUMENTS
WHETHER BY ACCELERATION OR OTHERWISE WITH COSTS OF SUIT AND A REASONABLE
ATTORNEY'S COMMISSION AS CERTIFIED BY THE HOLDER HEREOF WITH RELEASE OF ALL
ERRORS, WAIVING ALL LAWS EXEMPTING REAL OR PERSONAL PROPERTY FROM EXECUTION, TO
THE EXTENT THAT SUCH LAWS MAY LAWFULLY BE WAIVED BY THE COMPANY. NO SINGLE
EXERCISE OF THE FOREGOING POWER TO CONFESS JUDGMENT SHALL BE DEEMED TO EXHAUST
THE POWER, WHETHER OR NOT ANY SUCH EXERCISE SHALL BE HELD BY ANY COURT TO BE
VALID, VOIDABLE, OR VOID, BUT THE POWER SHALL CONTINUE UNDIMINISHED AND IT MAY
BE EXERCISED FROM TIME TO TIME AS OFTEN AS HOLDER SHALL ELECT, UNTIL SUCH TIME
AS HOLDER SHALL HAVE RECEIVED PAYMENT IN FULL.
WITNESS the due execution hereof.
ATTEST: TUSCARORA INCORPORATED
By: ________________________________ By: _______________________________
Title: _____________________________ Title: ____________________________
[CORPORATE SEAL]
- 2 -
<PAGE> 23
Supplement to Term Note No. 10
------------------------------
This Supplement to Term Note No. 10 (this "Supplement") is annexed to
and is part of Term Note No. 10 dated June 30, 1995 of Tuscarora Incorporated
("Borrower") payable to Mellon Bank, N.A. ("Bank") in the stated principal
amount of Twelve Million Dollars ($12,000,000). Such Term Note, as supplemented
by this Supplement, shall be referred to herein as the "Note".
1. INTEREST PAYMENTS. Interest on the unpaid principal amount of this
Note under the Prime Rate Portion shall be payable quarterly on the first day
of each January, April, July and October and on the date of payment in full.
Interest on the unpaid principal amount of the Note under the As-Offered Rate,
Euro-Rate and CD Rate Portions shall be payable on the last day of the Rate
Period of the corresponding interest rate option.
2. INTEREST RATE OPTIONS. The unpaid principal amount of this Note
shall bear interest for each day until due on one or more bases selected by
Borrower from among the Interest Rate Options set forth below. Borrower
understands and agrees: (a) that the Bank may in its sole discretion from time
to time determine that the right of Borrower to select, convert to or renew the
As-Offered Rate Option, the Euro-Rate Option or the CD Rate Option is not
available and (b) that subject to the provisions of this Note Borrower may
select any number of such Options to apply simultaneously to different parts of
the unpaid principal amount of this Note and may select any number of Rate
Segments to apply simultaneously to different parts of the As-Offered Rate
Portion, the Euro-Rate Portion or the CD Rate Portion. Provided, however, that
borrowings under the Euro-Rate Option or CD Rate Option shall be in minimum
amounts of $500,000 and borrowings under As-Offered Rate Option shall be in the
minimum amount of $1,000,000.
Available Interest Rate Options
-------------------------------
PRIME RATE OPTION: A rate per annum (computed on the basis of a year
of 365 or 366 days, as the case may be) for each day equal to the
Prime Rate plus 0.25% for such day.
AS-OFFERED RATE OPTION: For each Rate Segment of the As-Offered
Rate Portion, a rate per annum (computed on the basis of a year of 360
days and actual days elapsed) for each day equal to the As-Offered Rate
for such Rate Segment for such day.
EURO-RATE OPTION: For each Rate Segment of the Euro-Rate Portion, a
rate per annum (computed on the basis of a year of 360 days and actual
days elapsed) for each day equal to the Euro-Rate for such Rate
Segment for such day plus 1.50%.
CD RATE OPTION: For each Rate Segment of the CD Rate Portion, a rate
per annum (computed on the basis of a year of 360 days and actual days
elapsed) for each day equal to the CD Rate for such Rate Segment for
such day plus 1.50%.
3. RATE PERIODS. At any time when Borrower selects, converts to or
renews the As-Offered Rate Option, CD Rate Option or the Euro-Rate Option, the
Borrower shall fix a period acceptable to the Bank in the Bank's sole
discretion (the "Rate Period"), which Rate Period shall not exceed 180 days,
during which such Option shall apply to the corresponding Rate Segment. The
Bank's right to payment of principal and interest under this Note shall in no
way be affected by the fact that one or more Rate Periods may be in effect.
Interest Rate Options shall be selected in a manner which shall ensure that
Borrower shall be able to make scheduled payments of principal under the Note
without incurring liability under Section 9 hereof; provided. however, that in
the event that Borrower prepays any Rate Segment bearing interest under the
As-Offered Rate Portion, the Euro-Rate Portion or the CD Rate Portion in order
to make a scheduled payment of principal under the Note, Borrower shall
indemnify the Bank as provided in Section 9 hereof.
4. RATE SEGMENTS. Every selection of, conversion to or renewal of the
As-Offered Rate Option, CD Rate Option or the Euro-Rate Option shall be in a
principal amount selected by the Borrower and acceptable to the Bank in the
Bank's sole discretion.
<PAGE> 24
5. INTEREST AFTER MATURITY. After the principal amount of any part of
the Prime Rate Portion shall have become due. such Prime Rate Portion shall
bear interest for each day until paid (before and after judgment) at a rate
per annum (based on a year of 365 or 366 days, as the case may be) which for
each day shall be the greater of (a) 2% above the Prime Rate Option on the day
such part of the Prime Rate Portion became due and (b) 2% above the Prime Rate
Option, such interest rate to change automatically from time to time effective
as of the effective date of each change in the Prime Rate. After the principal
amount of any part of the As-Offered Rate Portion, the Euro-Rate Portion or CD
Rate Portion shall have become due, such part shall bear interest for each day
until paid (before and after judgment) (c) until the end of the applicable
then-current Rate Period at a rate per annum 2% above the As-Offered Rate
Option, CD Rate Option or Euro-Rate Option otherwise applicable to such part
and (d) thereafter in accordance with the previous sentence.
6. SELECTION, CONVERSION OR RENEWAL OF RATE OPTIONS. Subject to the
other provisions of this Note, the Borrower may select any interest rate Option
to apply to any borrowing evidenced by this Note. Subject to the other
provisions of this Supplement, the Borrower may convert any part of the unpaid
principal amount of the Note from any interest rate Option to any other
interest rate Option and may renew the As-Offered Rate Option, CD Rate Option
or the Euro-Rate Option as to any Rate Segment: (a) at any time with respect to
conversion from the Prime Rate Option to another Option and (b) at the
expiration of any Rate Period with respect to conversion from or renewals of
the As- Offered Rate Option, CD Rate Option or the Euro-Rate Option, as the
case may be, as to the Rate Segment corresponding to such expiring Rate Period.
Whenever the Borrower desires to select, convert or renew any interest rate
Option, the Borrower shall give the Bank notice (which shall be irrevocable) no
later than 10:00 a.m., Pittsburgh time, on a Business Day which is at least two
Business Days (or, in the case of selection of, conversion to or renewal of the
Euro-Rate Option, at least two London Business Days) in advance of the day
(which shall be a Business Day) on which such selection, conversion or renewal
is to occur. If such notice has been duly given, and if the Bank in its sole
discretion approves the proposed selection, conversion or renewal, after the
date specified in such notice interest shall be calculated upon the unpaid
principal amount of the Note taking into account such selection, conversion or
renewal.
7. PRIME RATE FALLBACK. If any Rate Period expires, any part of the
Rate Segment corresponding to such Rate Period which has not been converted or
renewed in accordance with Section 6 hereof automatically shall be converted to
the Prime Rate Option. If the Borrower fails to select, or if the Bank fails to
approve, an interest rate Option to apply to any new borrowing evidenced by the
Note, such new borrowing shall be deemed to be at the Prime Rate Option.
8. PREPAYMENTS. The Borrower shall have the right at its option from
time to time to prepay the Prime Rate Portion in whole or in part. The Borrower
shall have no right to prepay any part of the As-Offered Rate Portion, CD Rate
Portion or the Euro-Rate Portion at any time without the prior written consent
of Bank except that the Borrower may prepay any part of any Rate Segment at the
expiration of the Rate Period corresponding to such Rate Segment.
9. INDEMNITY. The Borrower shall indemnify the Bank against any loss or
expense (including loss of margin) which the Bank has sustained or incurred as
a consequence of:
(i) payment, prepayment or conversion of any part of any Rate
Segment of the As-Offered Rate Portion, the Euro-Rate Portion or the CD
Rate Portion on a day other than the last day of the corresponding Rate
Period (whether or not any such payment is pursuant to demand by the
Bank under this Note and whether or not any such payment, prepayment or
conversion is consented to by the Bank, unless the Bank shall have
expressly waived such indemnity in writing);
(ii) attempt by the Borrower to revoke in whole or part any
irrevocable notice given pursuant to Section 6 of this Note; or
(iii) breach of or default by any Debtor in the performance or
observance of any covenant or condition contained in this Note or any
separate security, guarantee or suretyship agreement between Bank and
any Debtor.
If the Bank sustains any such loss or expense it shall from time to time notify
the Borrower of the amount determined in good faith by the Bank (which
determination shall be conclusive) to be necessary to indemnify the Bank for
such loss or expense. Such amount shall be due and payable by the Borrower on
demand.
- 2 -
<PAGE> 25
10. COMPENSATION FOR TAXES, RESERVES AND EXPENSES ON OUTSTANDING LOANS.
If any Law or guideline or interpretation or application thereof by any Of-
ficial Body charged with the interpretation or administration thereof or
compliance with any request or directive of any central bank or other Official
Body (whether or not having the force of law):
(i) subjects the Bank or any Notional Euro-Rate Funding Office
to any tax, or changes the basis of taxation with respect to the
Agreement, the Notes, the Loans or payments by the Company of
principal, interest or other amounts due from the Company hereunder or
under the Notes (except for taxes on the overall net income of the Bank
or such Notional Euro-Rate Funding Office imposed by the jurisdiction
in which the Bank's principal executive office or Notional Euro-Rate
Funding Office is located:
(ii) imposes, modifies or deems applicable any reserve, special deposit
or similar requirement against assets held by, credit extended by,
deposits with or for the account of, or other acquisition of funds by,
the Bank of any Notional Euro-Rate Funding Office (other than
requirements expressly included herein in the determination of the CD
Rate or Euro-Rate, as the case may be, hereunder); or
(iii) imposes upon the Bank or any Notional Euro-Rate Funding
Office any other condition or expense with respect to the Agreement,
Notes, or its making, maintenance or funding of any part of the Loans,
including, without limitation, any capital adequacy or similar
requirements;
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, or impose any expense upon the Bank or any Notional
Euro-Rate Funding Office with respect to the Agreement, the Notes or the
making, maintenance or funding of any part of the Loans by an amount which the
Bank deems to be material (the Bank being deemed for this purpose to have made,
maintained or funded each Rate Segment of the CD Rate Portion, the As-Offered
Rate Portion and the Euro-Rate Portion from a Corresponding Source of Funds),
the Bank shall from time to time notify the Company of the amount determined in
good faith (using any averaging and atribution methods employed in good faith)
by the Bank (which determination shall be conclusive) to be necessary to
compensate the Bank or such Notional Euro-Rate Funding Office for such increase
in cost, reduction in income or additional expense. Such amount shall be due
and payable by the Company to the Bank ten (10) Business Days after such notice
is given.
11. RECORDS. The unpaid principal amount of this Note, the unpaid
interest accrued hereon, the interest rate or rates applicable to such
unpaid principal amount, and the duration of such applicability shall at
all times be ascertained from the records of Bank, which shall be conclusive
absent manifest error.
12. NOTICES. All notices under this Note shall be in writing or by
telephone promptly confirmed in writing, and all such writings shall be sent by
first-class express or certified mail or by hand delivery, in all cases with
charges prepaid. All notices shall be sent to the applicable party at the
address stated below or in accordance with the last unrevoked written direction
from such party to the other parties hereto. All notices by the Borrower shall
be effective when received by the Bank and all notices by the Bank shall be
effective when telephoned, deposited in the mail or received, whichever is
first. Written notices or confirmations by the Borrower shall not be deemed
records of the Bank within the meaning of Section 11 of this Note regardless of
whether received by the Bank. The Bank may conclusively rely without inquiry on
any notice or confirmation purporting to be from or authorized by the Borrower.
13. DEFINIATIONS. As used in this supplement:
"As-Offered Rate" shall mean a rate per annum offered by Bank in its
sole discretion, such interest rate to remain fixed for the duration of such
Rate Period.
"Assessment Rate" for any day shall mean the rate per annum (rounded
upward to the nearest 1/100 of 1%) determined in good faith by Bank (which
determination shall be conclusive) as representing for such day the maximum
effective rate per annum payable by Bank to the Federal Deposit Insurance
Corporation (or any successor) for such day for insurance on dollar time
deposits of any maturity, exclusive of any credit allowed against such annual
assessment on account of assessment payments made or to be made by Bank. Each
CD Rate shall be adjusted automatically as of the effective date of any change
in the Assessment Rate.
"Business Day" shall mean any day on which Bank is open for business at
the location where the Note is payable.
- 3 -
<PAGE> 26
"Corresponding Source of Funds" shall mean: (i) in the case of any
Funding Segment of a CD Rate Portion, the proceeds of hypothetical issuances by
the Bank of one or more of its certificates of deposit at the beginning of the
CD Rate Funding Period corresponding to such Funding Segment, having maturities
approximately equal to such CD Rate Funding period and in an aggregate amount
approximately equal to such Funding Segment; and (ii) in the case of any
Funding Segment of a Euro-Rate Portion, the proceeds of hypothetical receipts
by a Notional Euro-Rate Funding Office or by the Bank through a Notional
Euro-Rate Funding Office of one or more Dollar deposits in the interbank
eurodollar market at the beginning of the Euro-Rate Funding Period
corresponding to such Funding Segment, having maturities approximately equal to
such Euro-Rate Funding Period and in an aggregate amount approximately equal to
such Funding Segment.
"CD Rate Reserve Percentage" for any day shall mean the percentage
(rounded upward to the nearest 1/100 of 1%), as determined in good faith by
Bank (which determination shall be conclusive) as representing for such day the
maximum effective reserve requirement (including without limitation
supplemental, marginal and emergency requirements) for Bank in respect of
nonpersonal time deposits of any maturity in dollars in the United States. Each
CD Rate shall be adjusted automatically as of the effective date of any change
in the CD Rate Reserve Percentage.
"CD Rate" for any day for any proposed or existing Rate Segment
corresponding to a Rate Period shall mean the rate per annum determined by Bank
by adding
(A) the rate per annum obtained by dividing (the resulting
quotient to be rounded upward to the nearest l/l00 of 1%) (1) the rate
of interest (which shall be the same for each day in such Rate Period)
estimated in good faith by Bank in accordance with its usual procedures
(which determination shall be conclusive) to be the average of the
secondary market bid rates at or about 11 :00 a.m., Eastern time, on
the first day of such Rate Period by dealers of recognized standing for
negotiable certificates of deposit of major money center banks for
delivery on such day in amounts comparable to such Rate Segment (or, if
there are no such comparable amounts actively traded, the smallest
amounts actively traded) and having maturities comparable to such Rate
Period by (2) a number equal to 1.00 minus the CD Rate Reserve
Percentage for such day and
(B) the Assessment Rate for such day.
The "CD Rate" may also be expressed by the following formula:
[average of secondary market bid ]
[rates estimated by the Bank per ]
CD Rate = [subsection (A)(1) ] + Assessment
-------------------------------- Rate
[1.00 - CD Rate Reserve Percentage]
"Euro-Rate Reserve Percentage" for any day shall mean the percentage
(rounded upward to the nearest 1/100 of 1%), as determined in good faith by the
Bank (which determination shall be conclusive) as representing for such day the
maximum effective reserve requirement (including without limitation
supplemental, marginal and emergency requirements) for member banks of the
Federal Reserve System with respect to eurocurrency funding (currently referred
to as "Eurocurrency liabilities") of any maturity. Each Euro-Rate shall be
adjusted automatically as of the effective date of each change in the Euro-Rate
Reserve Percentage.
"Euro-Rate" for any day for any proposed or existing Rate Segment
corresponding to a Rate Period shall mean the rate per annum determined by the
Bank to be the rate per annum obtained by dividing (the resulting quotient to
be rounded upward to the nearest 1/100 of 1%) (A) the rate of interest (which
shall be the same for each day in such Rate Period) determined in good faith by
the Bank in accordance with its usual procedures (which determination shall be
conclusive) to be the average of the rates per annum for deposits in United
States dollars offered to major money center banks in the London interbank
market at approximately 11 :00 a.m., London time, two London Business Days
prior to the first day of such Rate Period for delivery on the first day of
such Rate Period in amounts comparable to such Rate Segment (or, if there are
no such comparable amounts actively traded, the smallest amounts actively
traded) and having maturities comparable to such Rate Period by (B) a number
equal to 1.00 minus the Euro-Rate Reserve Percentage for such day.
The "Euro-Rate" may also be expressed by the following formula:
[average of rates offered to major ]
[money center banks in the London ]
[interbank market determined by the]
Euro-Rate =[Bank per subsection (A) ]
-----------------------------------
[1.00 - Euro-Rate Reserve Percentage]
- 4 -
<PAGE> 27
"Law" shall mean any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, order, injunction, writ, decree or award
of any Official Body.
"London Business Day" shall mean a day for dealings in deposits in
United States dollars by and among banks in the London interbank market.
"Notional Euro-Rate Funding Office" shall mean any branch, subsidiary
or affiliate of the Bank which the Bank, in its sole discretion, deems from
time to time to have made, maintained or funded any part of the Euro-Rate
Portion of the Loans at any time.
"Official Body" shall mean the United States of America or any foreign
government or state, any state and any political subdivision thereof, and any
agency, department, court, commission, board, bureau or instrumentality of any
of them.
"Portion": "Prime Rate Portion" shall mean at any time the part,
including the whole, of the unpaid principal amount of the Note bearing
interest at such time under the Prime Rate Option or in accordance with the
first sentence of Section 5 hereof. "Euro-Rate Portion", "As-Offered Rate
Portion" or "CD Rate Portion" shall mean at any time the part, including the
whole, of the unpaid principal amount of the Note bearing interest at such time
under the applicable option or at a rate determined by reference to the
applicable option pursuant to Section 5 (c) hereof. (By definition, the sum of
the Prime Rate Portion, the As-Offered Rate Portion, the Euro-Rate Portion and
the CD Rate Portion at any time equals the unpaid principal amount of the Note
at such time.)
"Prime Rate" shall mean the interest rate per annum announced from time
to time by Bank as its Prime Rate, such interest rate to change automatically
from time to time as of the effective date of each announced change in such
Prime Rate. The Prime Rate may be greater or less than other interest rates
charged by Bank to other borrowers and is not solely based or dependent upon
the interest rate which Bank may charge any particular borrower or class of
borrowers.
"Rate Segment" of the As-Offered Rate Portion, the Euro-Rate Portion or
the CD Rate Portion at any time shall mean the entire principal amount of such
Portion to which at such time there is applicable a particular Rate Period
beginning on a particular day and ending on another particular day. (By
definition, the As-Offered Rate Portion, the Euro- Rate Portion or the CD Rate
Portion is at all times composed of an integral number of discrete Rate
Segments, each corresponding to a particular Rate Period, and the sum of the
principal arnounts of all Rate Segments of the As-Offered Rate Portion, the
Euro-Rate Portion or the CD Rate Portion at any time equals the principal
amount of such Portions at such time.)
WITNESS the due execution hereof.
Attest: TUSCARORA INCORPORATED
By: ________________________________ By: _______________________________
Title: ____________________________
(Corporate Seal)
Address for Notices to Borrower:
Tuscarora Incorporated
800 Fifth Avenue
P.O. Box 448
New Brighton, PA 15066
Address for Notices to Bank:
Mellon Bank, N.A.
Two Mellon Bank Center
Room 152-0270
Pittsburgh, PA 15259-0001
ATTN: Middle Market Banking Dept.
- 5 -
<PAGE> 1
EXHIBIT 10.3
TUSCARORA INCORPORATED
1989 STOCK INCENTIVE PLAN
------------------
ADOPTED BY BOARD OF DIRECTORS
ON OCTOBER 16, 1989
APPROVED BY SHAREHOLDERS
ON DECEMBER 19, 1989
AMENDED BY BOARD OF DIRECTORS
ON OCTOBER 13, 1994
<PAGE> 2
TUSCARORA INCORPORATED
1989 STOCK INCENTIVE PLAN
The purposes of the 1989 Stock Incentive Plan (the "Plan") are to encourage
eligible employees of Tuscarora Incorporated (the "Company") and its
Subsidiaries to increase their efforts to make the Company and each Subsidiary
more successful, to provide an additional inducement for such employees to
remain with the Company or a Subsidiary, to reward such employees by providing
an opportunity to acquire shares of the Common Stock, without par value, of the
Company (the "Common Stock") on favorable terms and to provide a means through
which the Company may attract able persons to enter the employ of the Company or
one of its Subsidiaries. For the purposes of the Plan, the term "Subsidiary"
means any corporation in an unbroken chain of corporations beginning with the
Company if each of the corporations other than the last corporation in the
unbroken chain owns stock possessing at least fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in the chain.
SECTION 1
ADMINISTRATION
The Plan shall be administered by a Committee (the "Committee") appointed
by the Board of Directors of the Company (the "Board") and consisting of not
less than two members of the Board, none of whom is eligible or was within one
year prior to becoming a member of the Committee eligible for selection as a
person to whom equity securities may be allocated or granted pursuant to the
Plan or any other plan of the Company or any of its affiliates (as "affiliates"
is defined in regulations of the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended (the "1934 Act")) entitling the
participants therein to acquire equity securities.
The Committee shall interpret the Plan and prescribe such rules,
regulations and procedures in connection with the operations of the Plan as it
shall deem to be necessary and advisable for the administration of the Plan
consistent with the purposes of the Plan.
The Committee shall keep records of action taken at its meetings. A
majority of the Committee shall constitute a quorum at any meeting and the acts
of a majority of the members present at any meeting at which a quorum is
present, or acts approved in writing by a majority of the Committee, shall be
the acts of the Committee.
SECTION 2
ELIGIBILITY
Those employees of the Company or any Subsidiary who share responsibility
for the management, growth or protection of the business of the Company or any
Subsidiary shall be eligible to be granted stock options (with or without cash
payment rights) and to receive restricted share awards as described herein.
Subject to the provisions of the Plan, the Committee shall have full and
final authority, in its discretion, to grant stock options (with or without cash
payment rights) and to award restricted shares as described herein and to
determine the employees to whom any such grant or award shall be made and the
number of shares to be covered thereby. In determining the eligibility of any
employee, as well as in determining the number of shares covered by each grant
of a stock option or award of restricted shares and whether cash payment rights
shall be granted in conjunction with a stock option, the Committee shall
consider the position and the responsibilities of the employee being considered,
the nature and value to the Company or a Subsidiary of his or her services, his
or her present and/or potential contribution to the success of the Company or a
Subsidiary and such other factors as the Committee may deem relevant.
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SECTION 3
SHARES AVAILABLE UNDER THE PLAN
The aggregate number of shares of the Common Stock which may be issued and
as to which grants of stock options or awards of restricted shares may be made
under the Plan is 599,500 shares, subject to adjustment and substitution as set
forth in Section 8. If any stock option granted under the Plan is cancelled by
mutual consent or terminates or expires for any reason without having been
exercised, the number of shares subject thereto shall again be available for
purposes of the Plan. If any shares of the Common Stock are forfeited to the
Company pursuant to the restrictions applicable to restricted shares awarded
under the Plan, the number of shares so forfeited shall again be available for
purposes of the Plan. The shares which may be issued under the Plan may be
either authorized but unissued shares or shares previously issued and thereafter
acquired by the Company or partly each, as shall be determined from time to time
by the Board.
SECTION 4
GRANT OF STOCK OPTIONS AND CASH PAYMENT RIGHTS AND AWARDS OF RESTRICTED SHARES
The Committee shall have authority, in its discretion, (a) to grant
"incentive stock options" pursuant to Section 422A of the Internal Revenue Code
of 1986 (the "Code"), to grant "nonstatutory stock options" (i.e., stock options
which do not qualify under such Section 422A of the Code) or to grant both types
of stock options (but not in tandem) and (b) to award restricted shares. The
Committee also shall have the authority, in its discretion, to grant cash
payment rights in conjunction with nonstatutory stock options with the effect
provided in Section 5(D). Cash payment rights may not be granted in conjunction
with incentive stock options. Cash payment rights granted in conjunction with a
nonstatutory stock option may be granted either at the time the stock option is
granted or at any time thereafter during the term of the stock option.
Notwithstanding any other provision contained in the Plan or in any stock
option agreement or an amendment thereto, but subject to the possible exercise
of the Committee's discretion contemplated in the last sentence of this Section
4, the aggregate fair market value, determined as provided in Section 5(H) on
the date of grant of incentive stock options, of the shares with respect to
which such incentive stock options are exercisable for the first time by an
employee during any calendar year under all plans of the corporation employing
such employee, any parent or subsidiary corporation of such corporation and any
predecessor corporation of any such corporation shall not exceed $100,000. If
the date on which one or more incentive stock options could first be exercised
would be accelerated pursuant to any provision of the Plan or any stock option
agreement or an amendment thereto, and the acceleration of such exercise date
would result in a violation of the $100,000 restriction set forth in the
preceding sentence, then, notwithstanding any such provision, but subject to the
provisions of the next succeeding sentence, the exercise date of such incentive
stock options shall be accelerated only to the extent, if any, that does not
result in a violation of such restriction and, in such event, the exercise date
of the incentive stock options with the lowest option price shall be accelerated
first. The Committee may, in its discretion, authorize the acceleration of the
exercise date of one or more incentive stock options even if such acceleration
would violate the $100,000 restriction set forth in the first sentence of this
paragraph and even if one or more such incentive stock options are converted in
part to nonstatutory stock options.
SECTION 5
TERMS AND CONDITIONS OF STOCK OPTIONS AND CASH PAYMENT RIGHTS
Stock options and cash payment rights granted under the Plan shall be
subject to the following terms and conditions:
(A) The purchase price at which each stock option may be exercised
(the "option price") shall be such price as the Committee, in its
discretion, shall determine but shall not be less than one hundred percent
(100%) of the fair market value per share of the Common Stock covered by
the stock option on the date of grant, except that in the case of an
incentive stock option granted to an employee who,
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immediately prior to such grant, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of
the Company or any Subsidiary (a "Ten Percent Employee"), the option price
shall not be less than one hundred ten percent (110%) of such fair market
value on the date of grant. For purposes of this Section 5(A), the fair
market value of the Common Stock shall be determined as provided in Section
5(H). For purposes of this Section 5(A), an individual (i) shall be
considered as owning not only shares of stock owned individually but also
all shares of stock that are at the time owned, directly or indirectly, by
or for the spouse, ancestors, lineal descendants and brothers and sisters
(whether by the whole or half blood) of such individual and (ii) shall be
considered as owning proportionately any shares owned, directly or
indirectly, by or for any corporation, partnership, estate or trust in
which such individual is a shareholder, partner or beneficiary.
(B) The option price for each stock option shall be paid in full upon
exercise and shall be payable in cash in United States dollars (including
check, bank draft or money order); provided, however, that in lieu of such
cash the person exercising the stock option may (if authorized by the
Committee at the time of grant in the case of an incentive stock option, or
at any time in the case of a nonstatutory stock option) pay the option
price in whole or in part by delivering to the Company shares of the Common
Stock having a fair market value on the date of exercise of the stock
option, determined as provided in Section 5(H), equal to the option price
for the shares being purchased; except that (i) any portion of the option
price representing a fraction of a share shall in any event be paid in cash
and (ii) no shares of the Common Stock which have been held for less than
one year may be delivered in payment of the option price of a stock option.
The date of exercise of a stock option shall be determined under procedures
established by the Committee, and as of the date of exercise the person
exercising the stock option shall be considered for all purposes to be the
owner of the shares with respect to which the stock option has been
exercised. Payment of the option price with shares shall not increase the
number of shares of the Common Stock which may be issued under the Plan as
provided in Section 3.
(C) No stock option shall be exercisable by a grantee during
employment during the first six months of its term. No incentive stock
option shall be exercisable after the expiration of ten years (five years
in the case of a Ten Percent Employee) from the date of grant. No
nonstatutory stock option shall be exercisable after the expiration of ten
years and six months from the date of grant. A stock option to the extent
exercisable at any time may be exercised in whole or in part.
(D) Cash payment rights granted in conjunction with a nonstatutory
stock option shall entitle the person who is entitled to exercise the stock
option, upon exercise of the stock option or any portion thereof, to
receive cash from the Company (in addition to the shares to be received
upon exercise of the stock option) equal to such percentage as the
Committee, in its discretion, shall determine not greater than one hundred
percent (100%) of the excess of the fair market value of a share of the
Common Stock on the date of exercise of the stock option (or on the date
provided for in the following sentence) over the option price per share of
the stock option times the number of shares covered by the stock option, or
portion thereof, which is exercised. If any such person is subject to the
provisions of Section 16(b) of the 1934 Act at the time of exercise of the
stock option, the amount of such cash payment shall be determined as of the
date on which any restrictions imposed by Section 16(b) of the 1934 Act no
longer apply for purposes of Section 83 of the Code. Payment of the cash
provided for in this Section 5(D) shall be made by the Company as soon as
practicable after the time the amount payable is determined. For purposes
of this Section 5(D), the fair market value of the Common Stock shall be
determined as provided in Section 5(H).
(E) No stock option shall be transferable by the grantee otherwise
than by Will, or if the grantee dies intestate, by the laws of descent and
distribution of the state of domicile of the grantee at the time of death.
All stock options shall be exercisable during the lifetime of the grantee
only by the grantee.
(F) Unless the Committee, in its discretion, shall otherwise determine
but subject to the provisions of Section 4 in the case of incentive stock
options and subject to the restriction on exercise set forth in Section
5(I):
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(i) If the employment of a grantee who is not disabled within the
meaning of Section 422A(c)(7) of the Code (a "Disabled Grantee") is
voluntarily terminated with the consent of the Company or a Subsidiary
or a grantee retires under any retirement plan of the Company or a
Subsidiary, any then outstanding incentive stock option held by such
grantee shall be exercisable by the grantee (but only to the extent
exercisable by the grantee immediately prior to the termination of
employment, provided that the restriction on exercise set forth in
Section 5(I) shall not be considered solely in determining the extent to
which such stock option is exercisable on the date of termination of
employment) at any time prior to the expiration date of such incentive
stock option or within three months after the date of termination of
employment, whichever is the shorter period;
(ii) If the employment of a grantee who is not a Disabled Grantee
is voluntarily terminated with the consent of the Company or a
Subsidiary or a grantee retires under any retirement plan of the Company
or a Subsidiary, any then outstanding nonstatutory stock option held by
such grantee shall be exercisable by the grantee (but only to the extent
exercisable by the grantee immediately prior to the termination of
employment, provided that the restriction on exercise set forth in
Section 5(I) shall not be considered solely in determining the extent to
which such stock option is exercisable on the date of termination of
employment) at any time prior to the expiration date of such
nonstatutory stock option or within one year after the date of
termination of employment, whichever is the shorter period;
(iii) If the employment of a grantee who is a Disabled Grantee is
voluntarily terminated with the consent of the Company or a Subsidiary,
any then outstanding stock option held by such grantee shall be
exercisable by the grantee in full (whether or not so exercisable by the
grantee immediately prior to the termination of employment) by the
grantee at any time prior to the expiration date of such stock option or
within one year after the date of termination of employment, whichever
is the shorter period;
(iv) Following the death of a grantee during employment, any
outstanding stock option held by the grantee at the time of death shall
be exercisable in full (whether or not so exercisable by the grantee
immediately prior to the death of the grantee) by the person entitled to
do so under the Will of the grantee, or, if the grantee shall fail to
make testamentary disposition of the stock option or shall die
intestate, by the legal representative of the grantee at any time prior
to the expiration date of such stock option or within one year after the
date of death, whichever is the shorter period;
(v) Following the death of a grantee after termination of
employment during a period when a stock option is exercisable, any
outstanding stock option held by the grantee at the time of death shall
be exercisable by such person entitled to do so under the Will of the
grantee or by such legal representative (but only to the extent the
stock option was exercisable by the grantee immediately prior to the
death of the grantee, provided that the restriction on exercise set
forth in Section 5(I) shall not be considered solely in determining the
extent to which such stock option was exercisable by the grantee
immediately prior to the death of the grantee) at any time prior to the
expiration date of such stock option or within one year after the date
of death, whichever is the shorter period; and
(vi) If the employment of a grantee terminates for any reason other
than voluntary termination with the consent of the Company or a
Subsidiary, retirement under any retirement plan of the Company or a
Subsidiary or death, all outstanding stock options held by the grantee
at the time of such termination of employment shall automatically
terminate.
Whether termination of employment is a voluntary termination with the
consent of the Company or a Subsidiary and whether a grantee is a Disabled
Grantee shall be determined in each case, in its discretion, by the
Committee and any such determination by the Committee shall be final and
binding.
If a grantee of a stock option engages in the operation or management
of a business (whether as owner, partner, officer, director, employee or
otherwise and whether during or after termination of employment) which is
in competition with the Company or any of its Subsidiaries, the Committee
may immediately terminate all outstanding stock options held by the
grantee. Whether a grantee has engaged
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in the operation or management of a business which is in competition with
the Company or any of its Subsidiaries shall also be determined, in its
discretion, by the Committee, and any such determination by the Committee
shall be final and binding.
(G) All stock options and cash payment rights shall be confirmed by a
written agreement or an amendment thereto in a form prescribed by the
Committee, in its discretion. Each agreement or amendment thereto shall be
executed on behalf of the Company by the Chief Executive Officer (if other
than the President), the President or any Vice President and by the
grantee.
(H) Fair market value of the Common Stock shall be the mean between
the following prices, as applicable, for the date as of which fair market
value is to be determined as quoted in The Wall Street Journal (or in such
other reliable publication as the Committee, in its discretion, may
determine to rely upon): (a) if the Common Stock is listed on the New York
Stock Exchange, the highest and lowest sales prices per share of the Common
Stock as quoted in the NYSE-Composite Transactions listing for such date,
(b) if the Common Stock is not listed on such exchange, the highest and
lowest sales prices per share of Common Stock for such date on (or on any
composite index including) the principal United States securities exchange
registered under the 1934 Act on which the Common Stock is listed or (c) if
the Common Stock is not listed on any such exchange, the highest and lowest
sales prices per share of the Common Stock for such date on the National
Association of Securities Dealers Automated Quotations System or any
successor system then in use ("NASDAQ"). If there are no such sale price
quotations for the date as of which fair market value is to be determined
but there are such sale price quotations within a reasonable period both
before and after such date, then fair market value shall be determined by
taking a weighted average of the means between the highest and lowest sales
prices per share of the Common Stock as so quoted on the nearest date
before and the nearest date after the date as of which fair market value is
to be determined. The average should be weighted inversely by the
respective numbers of trading days between the selling dates and the date
as of which fair market value is to be determined. If there are no such
sale price quotations on or within a reasonable period both before and
after the date as of which fair market value is to be determined, then fair
market value of the Common Stock shall be the mean between the bona fide
bid and asked prices per share of Common Stock as so quoted for such date
on NASDAQ, or if none, the weighted average of the means between such bona
fide bid and asked prices on the nearest trading date before and the
nearest trading date after the date as of which fair market value is to be
determined, if both such dates are within a reasonable period. The average
is to be determined in the manner described above in this Section 5(H). If
the fair market value of the Common Stock cannot be determined on the basis
previously set forth in this Section 5(H) on the date as of which fair
market value is to be determined, the Committee shall in good faith
determine the fair market value of the Common Stock on such date. Fair
market value shall be determined without regard to any restriction other
than a restriction which, by its terms, will never lapse.
(I) Notwithstanding any other provision of this Section 5 or any other
provision of the Plan or any stock option agreement or an amendment
thereto, any grantee who has made a hardship withdrawal from the Tuscarora
Plastics, Inc. Savings Plan shall be prohibited, for a period of twelve
(12) months following such hardship withdrawal, from exercising any stock
option granted under the Plan in such a manner and to the extent that the
exercise of such stock option would result in an employee elective
contribution or an employee contribution to an employer plan within the
meaning of Treasury Regulation sec. 1.401(k)-1(d)(2)(iii)(B)(3) or any
successor regulation thereto.
Subject to the foregoing provisions of this Section and the other
provisions of the Plan, any stock option granted under the Plan may be exercised
at such times and in such amounts and be subject to such restrictions and other
terms and conditions, if any, as shall be determined, in its discretion, by the
Committee and set forth in the agreement referred to in Section 5(G) or an
amendment thereto.
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SECTION 6
TERMS AND CONDITIONS OF RESTRICTED SHARE AWARDS
Restricted share awards shall be evidenced by a written agreement in a form
prescribed by the Committee, in its discretion, which shall set forth the number
of shares of the Common Stock awarded, the restrictions imposed thereon
(including, without limitation, restrictions on the right of the grantee to
sell, assign, transfer or encumber such shares while such shares are subject to
other restrictions imposed under this Section 6), the duration of such
restrictions, events (which may, in the discretion of the Committee, include
performance-based events) the occurrence of which would cause a forfeiture of
the restricted shares and such other terms and conditions as the Committee in
its discretion deems appropriate. If Rule 16b-3 under the 1934 Act or any
successor rule so requires, each restricted share agreement shall provide that
the restricted shares subject to such agreement may not be sold, assigned,
transferred or encumbered until six months have elapsed from the date of the
restricted share award unless the restrictions applicable to the restricted
shares have lapsed or terminated as a result of death or disability. Restricted
share awards shall be effective only upon execution of the applicable restricted
share agreement on behalf of the Company by the Chief Executive Officer (if
other than the President), the President or any Vice President, and by the
awardee.
Following a restricted share award and prior to the lapse or termination of
the applicable restrictions, the share certificates representing the restricted
shares shall be held by the Company in escrow. Upon the lapse or termination of
the applicable restrictions (and not before such time), the share certificates
representing the restricted shares shall be delivered to the awardee. From the
date a restricted share award is effective, the grantee shall be a shareholder
with respect to all the shares represented by the share certificates for the
restricted shares and shall have all the rights of a shareholder with respect to
the restricted shares, including the right to vote the restricted shares and to
receive all dividends and other distributions paid with respect to the
restricted shares, subject only to the succeeding paragraph and the restrictions
imposed by the Committee.
If a dividend or other distribution shall be declared upon the Common Stock
payable in shares of the Common Stock, the shares of the Common Stock
distributed with respect to any restricted shares held in escrow shall also be
held by the Company in escrow and be subject to the same restrictions as are
applicable to the restricted shares. If the outstanding shares of the Common
Stock shall be changed into or exchangeable for a different number or kind of
shares of stock or other securities of the Company or another corporation,
whether through reorganization, reclassification, recapitalization, stock
splitup, combination of shares, merger or consolidation or otherwise, such stock
or other securities into which any restricted shares held in escrow are changed
or for which any restricted shares held in escrow may be exchanged shall also be
held by the Company in escrow and be subject to the same restrictions as are
applicable to the restricted shares. Owners of any restricted shares held in
escrow shall be treated in the same manner as owners of shares of the Common
Stock not held in escrow with respect to fractional shares resulting from any
dividend or other distribution with respect to restricted shares or from any
change in or exchange of restricted shares, and any cash or other property paid
in lieu of a fractional share shall be subject to restrictions similar to those
applicable to the restricted shares except as otherwise determined by the
Committee in its discretion.
If an awardee of restricted shares engages in the operation or management
of a business (whether as owner, partner, officer, director, employee or
otherwise and whether during or after termination of employment) which is in
competition with the Company or any of its Subsidiaries, the Committee may
immediately declare forfeited all restricted shares held by the awardee as to
which the restrictions have not yet lapsed. Whether an awardee has engaged in
the operation or management of a business which is in competition with the
Company or any of its Subsidiaries shall also be determined, in its discretion,
by the Committee, and any such determination by the Committee shall be final and
binding.
SECTION 7
ISSUANCE OF SHARES
The obligation of the Company to issue shares of the Common Stock under the
Plan shall be subject to (i) the effectiveness of a registration statement under
the Securities Act of 1933, as amended, with respect to
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such shares, if deemed necessary or appropriate by counsel for the Company, (ii)
the condition that the shares shall have been listed (or authorized for listing
upon official notice of issuance) upon each stock exchange, if any, on which the
shares of Common Stock may then be listed and (iii) all other applicable laws,
regulations, rules and orders which may then be in effect.
SECTION 8
ADJUSTMENT AND SUBSTITUTION OF SHARES
If a dividend or other distribution shall be declared upon the Common Stock
payable in shares of the Common Stock, the number of shares of the Common Stock
then subject to any outstanding stock options and the number of shares of the
Common Stock which may be issued under the Plan but are not then subject to
outstanding stock options shall be adjusted by adding thereto the number of
shares of the Common Stock which would have been distributable thereon if such
shares had been outstanding on the date fixed for determining the shareholders
entitled to receive such stock dividend or distribution.
If the outstanding shares of the Common Stock shall be changed into or
exchangeable for a different number or kind of shares of stock or other
securities of the Company or another corporation, whether through
reorganization, reclassification, recapitalization, stock split-up, combination
of shares, merger or consolidation or otherwise, then there shall be substituted
for each share of the Common Stock subject to any then outstanding stock option
and for each share of the Common Stock which may be issued under the Plan but
which is not then subject to any outstanding stock option, the number and kind
of shares of stock or other securities into which each outstanding share of the
Common Stock shall be so changed or for which each such share shall be
exchangeable.
In case of any adjustment or substitution as provided for in this Section
8, the aggregate option price for all shares subject to each then outstanding
stock option prior to such adjustment or substitution shall be the aggregate
option price for all shares of stock or other securities (including any
fraction) to which such shares shall have been adjusted or which shall have been
substituted for such shares. Any new option price per share shall be carried to
at least three decimal places with the last decimal place rounded upwards to the
nearest whole number.
No adjustment or substitution provided for in this Section 8 shall require
the Company to issue or sell a fraction of a share or other security.
Accordingly, all fractional shares or other securities which result from any
such adjustment or substitution shall be eliminated and not carried forward to
any subsequent adjustment or substitution.
If any such adjustment or substitution provided for in this Section 8
requires the approval of shareholders in order to enable the Company to grant
incentive stock options, then no such adjustment or substitution shall be made
without the required shareholder approval. Notwithstanding the foregoing, in the
case of incentive stock options, if the effect of any such adjustment or
substitution would be to cause the stock option to fail to continue to qualify
as an incentive stock option or to cause a modification, extension or renewal of
such stock option within the meaning of Section 425 of the Code, the Committee
may determine that such adjustment or substitution not be made but rather shall
use reasonable efforts to effect such other adjustment of each then outstanding
stock option as the Committee, in its discretion, shall deem equitable and which
will not result in any disqualification, modification, extension or renewal
(within the meaning of Section 425 of the Code) of such incentive stock option.
SECTION 9
EFFECT OF THE PLAN ON THE RIGHTS OF EMPLOYEES AND EMPLOYER
Neither the adoption of the Plan nor any action of the Board or the
Committee pursuant to the Plan shall be deemed to give any employee any right to
be granted a stock option (with or without cash payment rights) or to be awarded
restricted shares under the Plan. Nothing in the Plan, in any stock option or
cash payment rights granted under the Plan, in any restricted share award under
the Plan or in any agreement providing for
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any of the foregoing or amendment thereto shall confer any right to any employee
to continue in the employ of the Company or any Subsidiary or interfere in any
way with the rights of the Company or any Subsidiary to terminate the employment
of any employee at any time or adjust the compensation of any employee at any
time.
SECTION 10
AMENDMENT
The right to alter and amend the Plan at any time and from time to time and
the right to revoke or terminate the Plan are hereby specifically reserved to
the Board; provided always that no such revocation or termination shall
terminate any outstanding stock options or cash payment rights granted under the
Plan or cause a revocation or a forfeiture of any restricted share award under
the Plan; and provided further that no such alteration or amendment of the Plan
shall, without shareholder approval (a) increase the total number of shares
which may be issued under the Plan, (b) change the minimum option price, (c)
make any changes in the class of employees eligible to receive incentive stock
options or (d) extend any period set forth in the Plan during which stock
options (with or without cash payment rights) may be granted or restricted
shares may be awarded. No alteration, amendment, revocation or termination of
the Plan shall, without the written consent of the holder of a stock option,
cash payment rights or restricted shares theretofore granted or awarded under
the Plan, adversely affect the rights of such holder with respect thereto.
SECTION 11
EFFECTIVE DATE AND DURATION OF PLAN
The effective date and date of adoption of the Plan shall be October 16,
1989, the date of adoption of the Plan by the Board, provided that such adoption
of the Plan by the Board is approved by the affirmative vote of the holders of
at least a majority of the outstanding shares of voting stock of the Company
represented in person or by proxy at a meeting of such holders duly called,
convened and held on or prior to October 15, 1990. No stock option granted under
the Plan may be exercised and no restricted shares may be awarded until after
such approval. No stock option or cash payment rights may be granted and no
restricted shares may be awarded under the Plan subsequent to October 15, 1999.
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Exhibit 10.7
TUSCARORA INCORPORATED
DESCRIPTION OF SUPPLEMENTAL RETIREMENT
BENEFIT FOR THOMAS P. WOOLAWAY
--------------------------------------
Thomas P. Woolaway, former Chief Operating Officer and a director of the
Company, is receiving a supplemental retirement benefit pursuant to a
recommendation of the Compensation Committee of the Board of Directors which
was approved by the Board of Directors. The supplemental retirement benefit
provided was $4,000 per month for life subject to a 50% joint and survivor
election in favor of Mrs. Woolaway. Mr. Woolaway has made the election and as a
result will receive $3,712 per month in supplemental retirement benefits during
his lifetime.
<PAGE> 1
EXHIBIT 11
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PRIMARY
Weighted average number of shares of Common Stock outstanding 6,057 6,097 6,109 6,129 6,154
Net effect of dilutive stock options - based on the treasury
stock method using average market price 62 102 102 71 102
------ ------ ------ ------ ------
TOTAL 6,119 6,199 6,211 6,200 6,256
------ ------ ------ ------ ------
Net income $4,230 $4,981 $4,270 $5,703 $8,980
------ ------ ------ ------ ------
Per share amount $ 0.69 $ 0.80 $ 0.69 $ 0.92 $ 1.44
------ ------ ------ ------ ------
FULLY DILUTED
Weighted average number of shares of Common Stock outstanding 6,057 6,097 6,109 6,129 6,154
Net effect of dilutive stock options - based on the treasury
stock method using greater of average market price or
closing market price 64 114 102 71 137
------ ------ ------ ------ ------
TOTAL 6,121 6,211 6,211 6,200 6,291
------ ------ ------ ------ ------
Net income $4,230 $4,981 $4,270 $5,703 $8,980
------ ------ ------ ------ ------
Per share amount $ 0.69 $ 0.80 $ 0.69 $0.92 $ 1.43
------ ------ ------ ------ ------
</TABLE>
The per share and share numbers have been adjusted to reflect the 100% share
distribution paid on April 14, 1992. In thousands, except per share data.
<PAGE> 1
Exhibit 13
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Year Ended
August 31, 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $163,299,682 $120,085,187 $101,075,026
Cost of Sales 123,682,160 92,476,379 79,567,085
- --------------------------------------------------------------------------------
Gross profit 39,617,522 27,608,808 21,507,941
- --------------------------------------------------------------------------------
Selling and Administrative Expenses 21,831,518 17,103,015 14,684,578
Interest Expense 2,603,250 1,327,689 1,306,744
Other (Income) Expense--Net (Note 5) 148,636 161,111 (768,843)
- --------------------------------------------------------------------------------
24,583,404 18,591,815 15,222,479
- --------------------------------------------------------------------------------
Income before income taxes
and cumulative effect
of accounting change 15,034,118 9,016,993 6,285,462
Provision for Income Taxes (Note 7) 6,053,854 3,313,954 2,336,299
- --------------------------------------------------------------------------------
Income before cumulative effect
of accounting change 8,980,264 5,703,039 3,949,163
Cumulative Effect of Accounting
Change (Note 7) -- -- 321,218
- --------------------------------------------------------------------------------
Net income $ 8,980,264 $ 5,703,039 $ 4,270,381
================================================================================
Earnings Per Share
Before cumulative effect
of accounting change $1.46 $0.93 $0.65
Cumulative effect of
accounting change -- -- $0.05
- --------------------------------------------------------------------------------
Net income per share of
Common Stock (Note 1) $1.46 $0.93 $0.70
================================================================================
Weighted average number of shares
of Common Stock outstanding 6,153,745 6,129,062 6,109,202
================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
1
<PAGE> 2
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Assets (August 31) 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 2,659,767 $ 3,671,490
Trade accounts receivable, less allowance of
$694,675 in 1995; $646,991 in 1994 23,463,267 16,773,835
Inventories (Note 2) 18,018,610 14,270,863
Prepaid expenses and other current assets 1,452,542 919,084
- -------------------------------------------------------------------------------
Total current assets 45,594,186 35,635,272
- -------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT
Land 2,515,155 2,507,655
Buildings and improvements 40,284,731 36,499,948
Machinery and equipment 93,542,491 78,083,301
- -------------------------------------------------------------------------------
Total 136,342,377 117,090,904
- -------------------------------------------------------------------------------
Less accumulated depreciation (68,751,183) (61,734,573)
- -------------------------------------------------------------------------------
Net property, plant and equipment 67,591,194 55,356,331
- -------------------------------------------------------------------------------
OTHER ASSETS
Cash value of life insurance 390,148 318,076
Intangible and other long-term assets 4,145,731 2,915,815
- -------------------------------------------------------------------------------
Total other assets 4,535,879 3,233,891
- -------------------------------------------------------------------------------
Total assets $117,721,259 $ 94,225,494
- -------------------------------------------------------------------------------
Liabilities and Shareholders' Equity (August 31)
- -------------------------------------------------------------------------------
CURRENT LIABILITIES
Current maturities of long-term debt (Note 3) $ 4,819,255 $ 3,667,977
Accounts payable 15,515,024 13,350,738
Accrued income taxes 365,986 301,610
Accrued payroll and related taxes 490,190 747,693
Other current liabilities 2,013,544 1,019,436
- -------------------------------------------------------------------------------
Total current liabilities 23,203,999 19,087,454
- -------------------------------------------------------------------------------
LONG-TERM DEBT (Note 3) 36,510,150 25,284,404
DEFERRED INCOME TAXES (Note 7) 1,849,078 1,680,889
SUPPLEMENTAL PENSION BENEFITS (Notes 5 and 8) 976,730 992,798
OTHER LONG-TERM LIABILITIES 407,941 --
- -------------------------------------------------------------------------------
Total liabilities 62,947,898 47,045,545
- -------------------------------------------------------------------------------
COMMITMENTS (Note 11)
SHAREHOLDERS' EQUITY
Preferred Stock--par value $.01 per share;
authorized shares,1,000,000; none issued -- --
Common Stock--without par value, authorized shares,
20,000,000; issued shares, 6,200,158 in 1995,
6,193,714 in 1994 (Note 4) 6,200,158 6,193,714
Capital surplus (Note 4) 2,259,502 2,171,217
Retained earnings 46,799,379 39,234,310
Currency translation adjustment (100,460) --
- -------------------------------------------------------------------------------
Total 55,158,579 47,599,241
- -------------------------------------------------------------------------------
Less Common Stock in treasury--27,532 shares
in 1995; 46,625 shares in 1994; at cost (385,218) (419,292)
- -------------------------------------------------------------------------------
Total shareholders' equity 54,773,361 47,179,949
- -------------------------------------------------------------------------------
Total liabilities and shareholders' equity $117,721,259 $ 94,225,494
- -------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
2
<PAGE> 3
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Year Ended
August 31, 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 8,980,264 $ 5,703,039 $ 4,270,381
Cumulative effect of accounting change -- -- (321,218)
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation 10,247,768 9,148,076 8,549,927
Amortization 641,745 572,474 656,082
Provision for losses on receivables 287,782 180,000 205,000
Increase (decrease) in deferred income taxes 168,189 (670,475) (229,953)
Loss (gain) on sale or abandonment of
property, plant and equipment, net 64,425 7,217 (20,069)
Stock compensation expense 10,516 10,310 8,495
Company's share of White Knight's loss -- -- 32,059
Gain on sale of equity interest in White Knight -- -- (780,833)
Changes in operating assets and liabilities, net of
effects of business acquisitions:
Decrease (increase):
Trade accounts receivable (5,059,511) (2,500,622) (1,598,629)
Inventories (2,468,166) (3,531,860) (440,890)
Prepaid expenses and other current assets (393,767) 40,320 292,300
Cash value of life insurance (72,072) 542,504 (61,497)
Intangible and other long-term assets (201,854) 279,466 (267,747)
Increase (decrease):
Accounts payable 1,100,205 5,875,211 906,260
Accrued income taxes 64,376 301,610 (666,519)
Accrued payroll and related taxes (256,558) 124,317 32,408
Other current liabilities 593,290 (201,252) 337,850
Supplemental pension benefits 16,067 1,126,599 --
Other long-term liabilities 386,753 -- --
- ----------------------------------------------------------------------------------------------------------------
Cash provided by operating activities 14,109,452 17,006,934 10,903,407
- ----------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Capital spending
Purchase of property, plant and equipment (20,689,178) (12,433,432) (11,881,467)
Business acquisitions, net of cash acquired (See Note 9) (5,679,929) (3,712,807) (520,515)
Proceeds from sale of property, plant and equipment 184,764 52,844 348,269
Proceeds from sale of equity interest in White Knight -- -- 1,805,382
- ----------------------------------------------------------------------------------------------------------------
Cash (used for) investing activities (26,184,343) (16,093,395) (10,248,331)
- ----------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt 16,045,000 4,900,000 7,550,000
Payments on long-term debt (3,667,977) (3,092,636) (6,615,621)
Dividends paid (1,415,195) (1,225,751) (1,099,666)
Proceeds from sale of Common Stock 118,287 146,317 86,722
- ----------------------------------------------------------------------------------------------------------------
Cash provided by (used for)
financing activities 11,080,115 727,930 (78,565)
- ----------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (16,947) -- --
Net increase (decrease) in cash and
cash equivalents (1,011,723) 1,641,469 576,511
- ----------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 3,671,490 2,030,021 1,453,510
- ----------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,659,767 $ 3,671,490 $ 2,030,021
- ----------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA
Income taxes paid $ 5,821,289 $ 3,602,117 $ 3,316,391
Interest paid $ 2,396,164 $ 1,206,026 $ 1,332,549
================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
3
<PAGE> 4
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Common Stock Treasury Shares
--------------------- -------------------
Currency
Shares Capital Retained Translation
Issued Amount Surplus Earnings Shares Amount Adjustment Total
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
August 31, 1992 6,180,778 $6,180,778 $1,831,915 $31,586,307 74,716 ($318,897) -- $39,280,103
- ----------------------------------------------------------------------------------------------------------------------------------
Net income 4,270,381 4,270,381
Sale of shares under
employee stock
purchase plan 5,987 5,987 89,212 95,199
Sale of shares under
stock option plans 29,607 (6,950) 29,677 59,284
Shares acquired in
payment of
option price 4,888 (59,267) (59,267)
Dividends paid
($0.18 per share) (1,099,666) (1,099,666)
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at
August 31,1993 6,186,765 $6,186,765 $1,950,734 $34,757,022 72,654 ($348,487) -- $42,546,034
- ----------------------------------------------------------------------------------------------------------------------------------
Net income 5,703,039 5,703,039
Sale of shares under
employee stock
purchase plan 6,949 6,949 98,098 105,047
Sale of shares under
stock option plans 122,385 (48,140) 288,004 410,389
Shares acquired in
payment of
option price 22,111 (358,809) (358,809)
Dividends paid
($0.20 per share) (1,225,751) (1,225,751)
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at
August 31,1994 6,193,714 $6,193,714 $2,171,217 $39,234,310 46,625 ($419,292) -- $47,179,949
- ----------------------------------------------------------------------------------------------------------------------------------
Net income 8,980,264 8,980,264
Sale of shares under
employee stock
purchase plan 6,444 6,444 113,874 120,318
Sale of shares under
stock option plans (25,589) (33,700) 362,933 337,344
Shares acquired in
payment of
option price 14,607 (328,859) (328,859)
Dividends paid
($0.23 per share) (1,415,195) (1,415,195)
Currency translation adjustment ($100,460) (100,460)
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE AT
AUGUST 31, 1995 6,200,158 $6,200,158 $2,259,502 $46,799,379 27,532 ($385,218) ($100,460) $54,773,361
==================================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE> 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE I: SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the
accounts of Tuscarora Incorporated (the Company)
and its wholly-owned subsidiaries. The 49% investment
in White Knight Packaging Corporation, which was
sold during the 1993 fiscal year, was accounted
for by the equity method (see Notes 5 and 10). All
significant inter-company accounts and transactions
have been eliminated.
Foreign Currency Translation
The financial statements of the Company's foreign
subsidiaries are maintained in their functional
currencies and translated into U.S. dollars in accordance
with Statement of Financial Accounting Standards No. 52,
"Foreign Currency Translation". Assets and liabilities
are translated at current exchange rates in effect at
the balance sheet date, and shareholders' equity is
translated at historical exchange rates. Revenues and
expenses are translated at the average exchange rate
that prevailed during each period. Translation gains
or losses which result from the process of translating
foreign currency financial statements into U.S. dollars
are accumulated as a separate component of shareholders'
equity in accordance with SFAS No. 52.
In accordance with Statement of Financial
Accounting Standards No. 95, "Statement of Cash
Flows", cash flows from the Company's operations
in foreign countries are calculated based on their
functional currencies. As a result, amounts related
to operating assets and liabilities reported on the
Consolidated Statements of Cash Flows for fiscal
year 1995 will not necessarily agree with changes in
the corresponding balances on the Consolidated Balance
Sheets. The effect of exchange rate changes on cash
balances held in foreign currencies is reported on a
separate line below cash flows provided by financing
activities.
Concentrations of Credit Risk
Financial instruments, which potentially subject
the Company to concentrations of credit risk, consist
primarily of cash, cash equivalents and trade accounts
receivable. The Company maintains cash and cash
equivalents in several financial institutions which,
at times, may exceed federally insured limits. The
Company has not experienced any losses and does not
foresee a material risk associated with these accounts.
Concentrations of credit risk with respect to
trade accounts receivable are limited due to the large
number of customers and their dispersion across
many geographic areas. This risk is further reduced
by the Company's maintenance of credit insurance
on certain large accounts. The Company does not
currently foresee a material credit risk associated
with its receivables.
Inventories
Inventories other than finished goods are stated
at the lower of cost or market, cost being determined
on the FIF0 (first-in, first-out) method. Finished
goods are stated at the lower of average cost or mar-
ket and include the cost of material, labor and man-
ufacturing overhead.
5
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Property, Plant and Equipment
Land, buildings and equipment are stated on the
basis of cost. Major renewals and betterments are
charged to the property accounts while replacements,
maintenance and repairs which do not improve or
extend the life of the assets are charged to income.
When properties are disposed of, the related cost
and accumulated depreciation are removed from the
respective accounts, and any profit or loss on dispo-
sition is credited or charged to income.
Provisions for depreciation of plant and equipment
are computed primarily on the straight-line method
based on the following estimated useful lives:
<TABLE>
<S> <C>
Building and improvements ............. 10-30 years
Machinery and equipment ............... 3-10 years
</TABLE>
Intangible Assets
Intangible assets, which include amounts allocated
to covenants not to compete and goodwill acquired in
connection with acquisitions, are amortized using the
straight-line method over the periods estimated to be
benefitted. The periods do not exceed three years for
covenants not to compete and fifteen years for good-
will (see Note 9).
Income Taxes
The Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income
Taxes" (SFAS No. 109), effective September 1, 1992.
SFAS No. 109 requires recognition of deferred tax assets
and liabilities for the expected future tax consequences
of events that have been included in the financial
statements and income tax returns. Under this method,
deferred tax assets and liabilities are determined based
on the difference between the financial statement and
the tax basis of assets and liabilities using tax rates
currently in effect.
Net Income Per Share
Net income per share has been computed on the
weighted average number of shares of Common Stock
outstanding. The fully diluted net income per share of
Common Stock has not been separately presented as
the amounts would not be materially different from
the net income per share of Common Stock shown.
Cash Equivalents
For purposes of the balance sheets and statements of
cash flows, cash equivalents include time deposits and
certificates of deposit with original maturities of 30
days or less.
Reclassification
Certain amounts in the Consolidated Statements of
Cash Flows for the years ended August 31, 1994 and
1993 have been reclassified to be consistent with the
1995 presentation.
NOTE 2: INVENTORIES
Inventories at August 31,1995 and 1994 are summa-
rized as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------
August 31, 1995 1994
- --------------------------------------------------------
<S> <C> <C>
Finished goods $ 9,317,095 $ 6,851,928
Work in process 421,524 300,414
Raw materials 6,576,578 6,050,686
Supplies 1,703,413 1,067,835
- --------------------------------------------------------
Total $18,018,610 $14,270,863
========================================================
</TABLE>
6
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3: LONG-TERM DEBT
In June 1995, the revolving credit facility under the
credit agreement between the Company and its prin-
cipal bank was increased to $14,000,000 and extended
through January 31, 1998. The Company also con-
verted $12,000,000 of the amount borrowed under
the revolving credit facility to a ten-year term note
repayable in quarterly installments with final matu-
rity on July 1, 2005. The amount borrowed under the
revolving credit facility is convertible to an approxi-
mately five-year term note which is repayable in
quarterly installments commencing on April 1, 1998,
with final maturity on January 1, 2003. The commit-
ment fee is 1/8 of 1% per annum of the average daily
unborrowed funds.
Long-term debt outstanding at August 31, 1995
and 1994 is summarized as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Interest Rate at August 31,
August 31, 1995 1995 1994
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Notes under credit agreement with principal bank
Revolving credit note 6.99% $ 5,495,000 $ 1,450,000
Term notes payable by maturity:
Variable rate note payable in quarterly
installments, through June 1, 2000 7.57% 7,900,000 9,480,000
Variable rate note payable in quarterly
installments, through July 1, 2002 7.50% 2,800,000 3,200,000
Variable rate note payable in quarterly
installments, through July 1, 2004 7.50% 8,100,000 9,000,000
Variable rate note payable in quarterly
installments, through July 1, 2005 7.57% 12,000,000 --
Industrial development bonds and notes:
Variable rate bonds subject to annual mandatory
sinking fund redemption through December 1, 2000,
with final payment on December 1, 2001. 3.85% 3,725,000 4,150,000
Fixed rate note payable in monthly installments
through May 1, 1995 -- -- 62,005
Other long-term debt:
Variable rate mortgage note payable in quarterly
installments through March 30, 2006 9.25% 895,840 979,171
Non-interest bearing obligation payable in
periodic installments through April 30, 1997 -- 413,565 631,205
- ------------------------------------------------------------------------------------------------------------------
-- 41,329,405 28,952,381
Less amounts due within one year, included in current liabilities 4,819,255 3,667,977
- ------------------------------------------------------------------------------------------------------------------
Total long-term debt $36,510,150 $25,284,404
==================================================================================================================
</TABLE>
The obligations of the Company to repay the
borrowings under the bank credit agreement and the
industrial development bonds are secured by mortgages
and security interests in certain of the Company's
property, plant and equipment.
The bank credit agreement and the agreement
relating to the industrial development bonds contain
covenants which require the maintenance of financial
ratios with respect to cash flow, interest coverage
and other matters and impose restrictions on capital
expenditures, indebtedness and disposition of capital
assets. At August 31, 1995, approximately $4,400,000
of retained earnings was available for the payment of
cash dividends by the Company without causing a
violation of any of the financial covenants.
7
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Aggregate maturities of long-term debt during
each of the five fiscal years ending after August 31,
1995 are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------
Year Ending
August 31,
- --------------------------------------------------
<S> <C>
1996 $4,819,255
1997 4,770,974
1998 4,588,332
1999 4,588,332
2000 4,588,332
==================================================
</TABLE>
NOTE 4: COMMON STOCK
In all transactions involving the authorized but
unissued shares of the Company's Common Stock,
an amount equal to $1.00 times the number of shares
which is issued is credited to the Common Stock
account and the balance of the purchase price is
credited to the Capital Surplus account.
NOTE 5: OTHER (INCOME) EXPENSE
Other (Income) Expense for the year ended August 31,
1995 consists primarily of a non-recurring charge to
income as a result of the Company's decision not to
retain exclusive rights to manufacture and market a
line of collapsible aluminum shipping containers
which were obtained in fiscal 1992. The Company is
still able to manufacture and market these products
on a non-exclusive basis.
For the fiscal year ended August 31, 1994, the net
expense of $161,111 shown under Other (Income)
Expense resulted primarily from the difference between
the excess of the proceeds over the carrying value of
life insurance policies owned by the Company on the
life of John P. O'Leary, Sr., the Company's co-founder
and Chairman of the Board who died during the fiscal
year, and the amount recorded by the Company as
the liability for future payments to Mr. O'Leary, Sr.'s
widow for supplemental pension benefits under the
terms of the employment agreement between the
Company and Mr. O'Leary, Sr.
The amount included under this caption for the
fiscal year ended August 31, 1993 consists primarily
of a gain of $780,833 which resulted from the
Company's sale of its 49% equity interest in White
Knight Packaging Corporation.
NOTE 6: STOCK OPTIONS AND COMMON STOCK
PURCHASE PLAN
In December 1994, shareholders approved an amend-
ment to the Company's 1989 Stock Incentive Plan
increasing the number of shares of the Company's
Common Stock that may be issued under the plan by
300,000. At August 31, 1995, a total of 308,550 shares
remained available for the grant of stock options under
the plan. The outstanding stock options have been
granted under this plan and a prior stock option plan.
All stock options have been granted at 100% of
the fair market value of the Company's Common
Stock on the date of grant (110% in the case of Ten
Percent Employees). The stock options have ten year
option terms (five years in the case of Ten Percent
Employees). The option price may be paid in cash,
in already-owned shares of the Company's Common
Stock or in a combination of cash or shares. Data
concerning the stock options outstanding during the
three fiscal years ended August 31,1995 is as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
Range of
Shares Option Price
- --------------------------------------------------------------------
<S> <C> <C>
Shares under option
August 31, 1992 237,680 $ 3.17-13.20
Options granted 43,600 16.44
Options expired -- --
Options exercised 6,950 8.53
- --------------------------------------------------------------------
Shares under option
August 31, 1993 274,330 $ 3.17-16.44
Options granted 44,200 15.00
Options expired 9,300 10.00-15.00
Options exercised 48,140 3.17-16.44
- --------------------------------------------------------------------
Shares under option
August 31, 1994 261,090 $ 3.17-16.44
Options granted 92,500 16.75
Options expired 1,200 15.00-16.44
Options exercised 33,700 3.17-16.44
- --------------------------------------------------------------------
SHARES UNDER OPTION
AUGUST 31, 1995 318,690 $ 3.17-16.75
====================================================================
</TABLE>
The options outstanding at August 31, 1995
are exercisable and expire at various dates from
December 1995 to October 2004.
The Company has a Common Stock Purchase Plan
under which most full-time salaried employees in
the U.S. may participate. Employees may authorize
salary deductions up to 8% of annual salary but not
to exceed $300 per month, and the Company con-
tributes an amount equal to 10% of the contributions
of the participating employees. The contributions are
used to purchase shares of the Company's Common
Stock from the Company at current market value.
8
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7: INCOME TAXES
The Company adopted Statement of Financial
Accounting Standards No. 109 (SFAS No. 109),
"Accounting for Income Taxes" effective September 1,
1992. The adoption of SFAS No. 109 changed the
Company's method of accounting for income taxes
from the deferred method to an asset and liability
method (see Note 1). The cumulative effect of adopt-
ing the standard was a decrease in deferred income
taxes and a corresponding increase in net income of
$321,218, or $.05 per share, for the 1993 fiscal year.
The provision for income taxes consists of
the following:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
Year Ended
August 31, 1995 1994 1993
- -------------------------------------------------------------------
<S> <C> <C> <C>
Payable
Currently:
Federal $4,751,053 $3,252,570 $2,105,399
State 1,121,211 731,859 460,853
Foreign 13,401 -- --
- -------------------------------------------------------------------
5,885,665 3,984,429 2,566,252
- -------------------------------------------------------------------
Deferred:
Federal 130,290 (520,314) (178,150)
State 37,899 (150,161) (51,803)
- -------------------------------------------------------------------
168,189 (670,475) (229,953)
- -------------------------------------------------------------------
Total provision $6,053,854 $3,313,954 $2,336,299
===================================================================
</TABLE>
The following is a reconciliation of the statutory
U.S. Corporate Federal income tax rate to the effec-
tive income tax rate:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
Year Ended
August 31, 1995 1994 1993
- ----------------------------------------------------------------
<S> <C> <C> <C>
U.S. Federal
income tax rate 35.0% 34.0% 34.0%
Changes in tax rate
resulting from:
State income taxes,
net of Federal
tax benefit 5.0% 4.3% 4.3%
Other 0.3% -1.5% -1.1%
- ----------------------------------------------------------------
Effective income
tax rate 40.3% 36.8% 37.2%
================================================================
</TABLE>
Deferred tax assets and liabilities as of August 31,
1995, 1994 and 1993 were comprised of the following:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
August 31, 1995 1994 1993
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Deferred tax assets:
Allowance for
bad debts $ 270,045 $ 258,409 $ 256,969
Supplemental
pension
benefits 441,141 449,964 --
Other -- 23,964 3,994
Deferred tax liabilities:
Depreciation and
amortization 2,513,391 2,315,596 2,503,882
Other 46,873 97,630 108,445
- ---------------------------------------------------------------------
Net deferred
tax liability $1,849,078 $1,680,889 $2,351,364
=====================================================================
</TABLE>
NOTE 8: RETIREMENT AND POSTEMPLOYMENT BENEFITS
The Company maintains non-contributory individual
account defined contribution pension plans covering
most full-time employees in the U.S. and a contribu-
tory individual account defined contribution pension
plan covering most full-time salaried employees in
the U.K. Under these pension plans, the contribution
rate for each employee is generally 5 1/2% of total com-
pensation. Benefits generally do not become vested
until, but become fully vested upon, five full years of
employment in the U.S. and two full years of employ-
ment in the U.K. Normal retirement under all plans
is age 65. The contributions to the plans for the fiscal
years ended August 31, 1995, 1994 and 1993 were
$1,409,179, $1,163,002 and $1,088,476, respectively.
The unfunded past service liability at August 31,1995,
1994 and 1993 under the plans was approximately
$405,525, $382,626 and $456,074, respectively. The
past service liability is paid to the trustee of the applic-
able plans over a ten-year period.
The Company also maintains a Section 401(k) plan
covering most full-time salaried employees in the U.S.
Under this plan, participants may elect to defer and
have contributed to the plan on their behalf up to 7%
of their current compensation, subject to certain limi-
tations. Each month, the Company also contributes
to the account of each participant an amount equal
to 25% of the Salary Deferral Contributions made on
behalf of the participant which does not exceed 4% of
the participant's compensation for the month (3% prior
to January 1, 1994). All Salary Deferral Contributions
and Company Matching Contributions to the plan
9
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
and earnings thereon are fully vested at all times. The
Company Matching Contributions to the plan for the
fiscal years ended August 31,1995, 1994 and 1993 were
$78,733, $54,755 and $49,768, respectively.
During the 1994 fiscal year, two key executive offi-
cers retired and are receiving supplemental pension
benefits. The Company charged $479,657 against
1994 fiscal year earnings which represented the liability
for future payments.
The Company adopted Statement of Financial
Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than
Pensions" (SFAS No. 106), effective September 1,
1992. SFAS No. 106 requires that the cost of postre-
tirement benefits be accrued during the years that
employees render services. The Company does not
provide significant postretirement benefits; the cum-
ulative effect of adopting this standard in the 1993
fiscal year was not material.
The Company adopted Statement of Financial
Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits" (SFAS
No. 112), effective September 1, 1994. SFAS No. 112
requires recognition of benefits provided by an
employer to former or inactive employees after
employment but before retirement. The Company
does not provide significant postemployment benefits;
the cumulative effect of adopting this standard in
the 1995 fiscal year was not material.
NOTE 9: ACQUISITIONS
During the 1995 fiscal year, the Company acquired two
similar businesses. In September 1994, the Company
purchased substantially all the assets and assumed
substantially all the liabilities of the specialty corru-
gated and foam packaging business of Astrofoam,
Inc. in Holden, Massachusetts for approximately
$2,200,000; and in February 1995, the Company pur-
chased substantially all the assets and assumed sub-
stantially all the liabilities of the custom molding
business of M.Y. Trondex Limited in Northampton,
England and Glasgow, Scotland for approximately
$3,500,000, of which $2,900,000 was paid at the clos-
ing and the remainder is being paid over a three-year
period. In each case, the businesses acquired are being
operated at the same locations under leases from the
seller or a third party.
The Company also made acquisitions of two simi-
lar businesses during the 1994 fiscal year. In April
1994, the Company purchased substantially all the
assets and assumed substantially all the liabilities
of the custom molding and fabricating business of
Styro-Molders Corporation in Colorado Springs,
Colorado for $3,100,000 in cash, of which $2,400,000
was paid at the closing and the remainder is being
paid over a three-year period; and in September 1993,
the Company purchased the corrugated packaging
business and related machinery and equipment of
Box Pack Incorporated in Greeneville, Tennessee for
approximately $675,000 in cash. In each case, the
businesses acquired are being operated at the same
locations under leases from the seller.
The Company made one acquisition in the 1993
fiscal year. In October 1992, the Company purchased
the custom molded foam polypropylene business and
related machinery and equipment of Sentinel Products
Corporation in St. Johnsville, New York for approxi-
mately $500,000 in cash. In this case, the business
acquired was transferred to other Company facilities.
All the above acquisitions have been accounted for
as purchases. In certain of these acquisitions, (i) part
of the purchase price was allocated to a covenant not
to compete and/or goodwill (see Note 1) and (ii) the
Company agreed to pay additional consideration to
the seller based on the sales realized by, or the oper-
ating performance of, the business acquired over a
specified period after the acquisition. The additional
consideration is generally charged against selling
expense when paid.
NOTE 1O: SALE OF INVESTMENT
In April 1993, the Company sold its 49% equity
interest in White Knight Packaging Corporation for
$1,805,382. The investment, which was carried at cost
as adjusted for the amortization of goodwill and the
Company's proportionate share of White Knight's
earnings or losses, amounted to $1,024,549 at the time
of the sale. The investment in White Knight, a devel-
opment stage company that provides aseptic packag-
ing to marketers and distributors of dairy, juice and
other liquid food products, was acquired in February
1992 for $1,300,000.
10
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11: LEASE COMMITMENTS
Rental expense charged to operations for the fiscal
years ended August 31,1995,1994 and 1993 amounted
to $3,889,162, $2,825,219 and $2,606,500, respec-
tively. The approximate net minimum rental required
to be paid under all non-cancelable operating leases
during each of the five fiscal years ending after
August 31,1995 is as follows:
<TABLE>
<CAPTION>
- -------------------------------------------
Year Ending
August 31,
- -------------------------------------------
<S> <C>
1996 $2,938,957
1997 2,309,732
1998 1,936,561
1999 1,529,506
2000 1,216,714
Thereafter 3,690,894
===========================================
</TABLE>
Substantially all the rental payments represent
commitments under leases for manufacturing and
warehouse facilities and under leases for trucking
equipment. The Company has the option to purchase
certain of the manufacturing and warehouse facilities.
NOTE 12: CLAIMS AND CONTINGENCIES
During the 1995 fiscal year, two lawsuits were filed
against the Company involving claims of sexual dis-
crimination and harassment in which compensatory
and punitive damages are sought. The Company is
vigorously contesting these lawsuits and believes that,
consistent with a policy in place for many years, it has
promptly, reasonably and effectively responded to all
incidents alleged. Other employment-related claims
are pending before Federal and state agencies.
The Company is also involved in several legal and
administrative proceedings, including one with
respect to a Superfund site, which may result in the
Company becoming liable for a portion of certain
environmental cleanup costs. With respect to these
matters, the Company believes that its share of the
costs should not be significant.
In the opinion of Management, the disposition of
the employment and environmental claims should not
have a material adverse effect on the Company's
financial position.
NOTE 13: QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial information is
as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Fiscal Quarter Ended
November 30 February 28 May 31 August 31
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FISCAL 1995:
Net Sales $38,920,000 $37,890,000 $40,970,000 $45,520,000
Gross Profit 9,778,000 8,776,000 9,774,000 11,289,000
Net Income 2,501,000 1,840,000 2,345,000 2,294,000
Per Share of Common Stock:
Net Income $0.41 $0.30 $0.38 $0.37
Dividends Paid -- $0.11 -- $0.12
Stock Market Prices:
High 18 1/4 21 22 23 3/4
Low 14 16 1/4 18 1/2 18 3/4
- ----------------------------------------------------------------------------------------
FISCAL 1994:
Net Sales $29,288,000 $26,660,000 $30,343,000 $33,794,000
Gross Profit 7,107,000 5,807,000 6,917,000 7,777,000
Net Income 1,648,000 903,000 1,519,000 1,633,000
Per Share of Common Stock:
Net Income $0.27 $0.15 $0.25 $0.26
Dividends Paid -- $0.10 -- $0.10
Stock Market Prices:
High 16 1/4 20 18 3/4 15 1/2
Low 12 1/4 14 14 13
========================================================================================
</TABLE>
11
<PAGE> 12
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
OF TUSCARORA INCORPORATED
We have audited the accompanying consolidated
balance sheets of Tuscarora Incorporated and sub-
sidiaries as of August 31, 1995 and 1994, and the
related consolidated statements of income, sharehold-
ers' equity and cash flows for each of the three years
in the period ended August 31,1995. These financial
statements are the responsibility of the Company's
management. Our responsibility is to express an opin-
ion on these financial statements based on our audits.
We conducted our audits in accordance with
generally accepted auditing standards. Those stand-
ards require that we plan and perform the audit to
obtain reasonable assurance about whether the finan-
cial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the finan-
cial statements. An audit also includes assessing the
accounting principles used and significant estimates
made by management, as well as evaluating the over-
all 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 Tuscarora Incorpo-
rated and subsidiaries as of August 31, 1995 and 1994,
and the results of their operations and their cash flows
for each of the three years in the period ended August
31, 1995, in conformity with generally accepted
accounting principles.
As discussed in Note 7 to the Consolidated
Financial Statements, effective September 1, 1992,
the Company changed its method of accounting for
income taxes.
/s/ S.R. SNODGRASS A.C.
Beaver Falls, PA
October 12, 1995
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS--FISCAL 1995
COMPARED TO FISCAL 1994
Net sales for the year ended August 31, 1995 were
$163.3 million, representing an increase of $43.2 mil-
lion, or 36.0%, over fiscal 1994. Approximately 42%
of the increase in net sales was due to the acquisitions
of similar businesses in Colorado Springs, Colorado
and Holden, Massachusetts in April and September
1994, respectively, and in the United Kingdom in
February 1995. The balance of the increase reflected
the continued strong demand from the Company's
existing customers in virtually all geographic and
end-use markets, particularly high technology, con-
sumer electronics, major appliances and automotive
and also higher selling prices to customers as a result
of the Company passing on higher raw material costs.
Net sales in the fourth quarter of fiscal 1995 were
$45.5 million, an increase of $11.7 million or 34.7%
over the fourth quarter of fiscal 1994 net sales
of $33.8 million. Substantial sales increases were
obtained during fiscal 1995 and the fourth quarter
of fiscal 1995 in both the Company's custom molding
and integrated materials operations.
Gross profit for the year ended August 31,1995
was $39.6 million, or 24.3% of sales, compared to
$27.6 million, or 23.0% of sales, for fiscal 1994. The
gross profit margin was favorably impacted by the
higher sales level which resulted in improvements in
manufacturing efficiency in both the Company's cus-
tom molding and integrated materials operations and
by the consumption in the first quarter of raw materi-
als purchased by the Company during the 1994 fiscal
year in advance of price increases from the Company's
suppliers. The increase in the gross profit margin was
partially offset by below-average margins at the U.K.
operations following their acquisition.
Selling and administrative expenses for the year
ended August 31,1995 increased $4.7 million, or
27.6%, but decreased as a percentage of net sales to
13.4% compared with 14.2% in fiscal 1994. The dollar
increase was due primarily to employee costs added
in connection with the acquisitions and increased
commissions associated with the higher sales level.
12
<PAGE> 13
Interest expense for the year ended August 31,
1995 was $2.6 million compared to $1.3 million for
fiscal 1994. The increase of $1.3 million was due to a
higher level of outstanding debt coupled with higher
interest rates.
Income before income taxes for the year ended
August 31, 1995 increased to $15.0 million from
$9.0 million for fiscal 1994, an increase of 66.7%.
The provision for income taxes for the year ended
August 31, 1995 increased due to the increase in income
before income taxes. The Company's effective tax rate
increased to 40.3% from 36.8% primarily due to the
income tax effect in fiscal 1995 of an unused net oper-
ating loss of the U.K. operations and the exclusion
from taxable income in fiscal 1994 of the excess of
the proceeds over the carrying value of life insurance
policies owned by the Company.
Net income for the year ended August 31, 1995 was
$9.0 million, an increase of 57.5% from $5.7 million
for fiscal 1994. The increase was due primarily to the
increases in net sales and gross profit.
Net sales and net income for fiscal 1995 and the
net sales during the fourth quarter of fiscal 1995 were
Company records for a year and a fourth fiscal quar-
ter. The high level of sales and manufacturing activity
is continuing in fiscal 1996.
RESULTS OF OPERATIONS--FISCAL 1994
COMPARED TO FISCAL 1993
Net sales totaled $120.1 million in fiscal 1994 com-
pared with $101.1 million in fiscal 1993. The increase
of $19.0 million or 18.8% was attributable primarily
to consistent growth in the level of manufacturing
activity in the Company's major markets, including
high technology, automotive and consumer electron-
ics, and to the acquisitions of similar businesses in
September 1993 and April 1994. Net sales in the fourth
quarter of fiscal 1994 were $33.8 million, an increase
of $7.5 million or 28.4% over the fourth quarter of
fiscal 1993 net sales of $26.3 million. Increased sales
of products made from integrated materials and ther-
moformed products, the Company's newer products,
contributed to the net sales increases, particularly
during the fourth quarter.
Gross profit in fiscal 1994 was $27.6 million, a
28.4% increase from $21.5 million in fiscal 1993. The
gross profit margin increased to 23.0% in fiscal 1994
from 21.3% in fiscal 1993 primarily due to the increase
in net sales which provided a more efficient utilization
of manufacturing capacity. The increase resulted
despite higher raw material costs in the third and
fourth quarters of fiscal 1994 than in fiscal 1993 and
despite higher employee costs primarily associated
with the Company's newer products.
Selling and administrative expenses increased
$2.4 million or 16.5% in fiscal 1994 but decreased
as a percentage of net sales to 14.2% compared with
14.5% in fiscal 1993. The dollar increase was due
primarily to increased employee costs, including the
cost of certain supplemental pension benefits.
Interest expense in fiscal 1994 was $1.33 million
compared to $1.31 million in fiscal 1993. The increase
of $21,000 or 1.6% was due primarily to the increase
in the average outstanding borrowings.
Other (income) expense provided a net expense
in fiscal 1994 primarily due to the difference between
the excess of the proceeds over the carrying value
of life insurance policies owned by the Company on
John P. O'Leary, Sr., the Company's deceased co-
founder and Chairman, and the liability recorded by
the Company for future payments to Mr. O'Leary's
widow under the terms of his employment contract.
In fiscal 1993, other (income) expense provided a net
gain primarily due to the Company's sale of its 49%
equity interest in White Knight Packaging Corporation.
Income before income taxes in fiscal 1994 increased
to $9.0 million representing a 43.5% increase from
$6.3 million in fiscal 1993.
The provision for income taxes for fiscal 1994
increased due to the increase in income before income
taxes. The effective tax rate decreased to 36.8% from
37.2% primarily due to the exclusion from taxable
income of the excess of the proceeds over the carrying
value of the life insurance policies referred to above.
Before taking into account the adoption of FASB
Statement No. 109, effective in fiscal 1993, net income
for fiscal 1994 was $5.7 million, an increase of 44.4%
from net income of $3.9 million for fiscal 1993. This
increase was due primarily to the increases in net sales
and gross profit. Results reflecting the adoption of
FASB Statement No. 109, which only affected the
13
<PAGE> 14
reported results for the first quarter of fiscal 1993, were
net income of $5.7 million for fiscal 1994 versus net
income of $4.3 million for fiscal 1993, a 33.5% increase.
Net sales and net income for fiscal 1994 and net
sales during the fourth quarter of fiscal 1994 were
Company records for a year and a fourth fiscal quar-
ter. The high level of sales and manufacturing activity
continued into fiscal 1995.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities amounted
to $14.1 million, $17.0 million and $10.9 million in
fiscal 1995, fiscal 1994 and fiscal 1993, respectively.
Depreciation and amortization in fiscal 1995, fiscal 1994
and fiscal 1993 amounted to $10.9 million, $9.7 million
and $9.2 million, respectively. Because a substantial
portion of cash flow from operations results from
depreciation and amortization, the Company believes
that its liquidity would not be adversely affected
should a period of reduced earnings occur.
At August 31, 1995, the Company's accounts receiv-
able, inventories and accounts payable were signifi-
cantly higher than at the end of the previous fiscal
year primarily due to the acquisitions of the similar
businesses and to the increased sales and manufac-
turing activity during fiscal 1995. Inventories and
accounts payable were lower in relation to net sales
at August 31, 1995 than at August 31, 1994 when the
raw materials inventory and accounts payable were
unusually high due to accelerated purchases in
advance of announced price increases in the final
two quarters of fiscal 1994.
Long-term debt increased to $36.5 million at
August 31, 1995 from $25.3 million at August 31, 1994.
During fiscal 1995, the Company increased the revolv-
ing credit facility under its credit agreement with its
principal bank from $12.0 million to $14.0 million
and converted $12.0 million of the amount borrowed
under the revolving credit facility to a new ten-year
term loan under the credit agreement. The increased
borrowing during the fiscal year was used primarily
in connection with the acquisitions in September 1994
and February 1995 and for capital expenditures for
machinery and equipment, including equipment
utilizing next generation manufacturing technology
for a new EPS custom molding plant in Lewisburg,
Tennessee. At August 31, 1995, $8.5 million of the
revolving credit facility remained available. See
Note 3 of the Notes to Consolidated Financial
Statements for additional information with respect
to long-term debt.
During fiscal 1995, fiscal 1994 and fiscal 1993, the
Company made capital expenditures in the amounts
of $26.4 million, $16.1 million and $12.4 million,
respectively, including approximately $1.7 million,
$1.1 million and $1.4 million, respectively, for environ-
mental control equipment. The largest amount of the
capital expenditures during all three years has been
for machinery and equipment, including machinery
and equipment purchased in connection with the
acquisition of similar businesses (see Note 9 of the
Notes to Consolidated Financial Statements). The
Company will continue to look for the acquisition
of similar and related businesses.
Cash dividends amounted to $1.4 million ($.23
per share), $1.2 million ($.20 per share) and $1.1 mil-
lion ($.18 per share) in fiscal 1995, fiscal 1994 and
fiscal 1993, respectively.
Cash provided by operating activities as supple-
mented by the amount available under the bank
credit agreement should continue to be sufficient to
fund the Company's operating requirements, capital
expenditures and dividend payments.
INFLATION
The impact of inflation on both the Company's
financial position and results of operations has been
minimal and is not expected to adversely effect
fiscal 1996 results.
14
<PAGE> 15
ELEVEN YEAR CONSOLIDATED FINANCIAL SUMMARY
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Year Ended
August 31 1995 1994 1993 1992 1991 1990
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net sales $163,300 $120,085 $101,075 $95,809 $84,420 $84,458
Income before income taxes 15,034 9,017 6,285 8,289 6,856 7,912
Net income 8,980 5,703 4,270(a) 4,981 4,230 4,874
Depreciation and amortization 10,890 9,721 9,206 7,879 7,235 6,591
Weighted average number of shares outstanding 6,154 6,129 6,109 6,097 6,057 6,022
Net income per share 1.46 0.93 0.70(a) 0.82 0.70 0.81
Margin on sales 5.5% 4.7% 4.2% 5.2% 5.0% 5.7%
Return on beginning shareholders' equity 19.0% 13.4% 10.9% 14.2% 13.4% 17.8%
Working capital 22,390 16,548 15,893 13,463 13,728 11,385
Total assets 117,721 94,225 79,769 75,510 63,775 60,677
Long-term debt (excluding current portion) 36,510 25,284 23,930 22,121 14,870 16,264
Shareholders' equity 54,773 47,180 42,546 39,280 35,152 31,451
Shareholders' equity per share 8.90 7.70 6.96 6.44 5.80 5.22
Dividends per share 0.23 0.20 0.18 0.16 0.14 0.13
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Year Ended
August 31 1989 1988 1987 1986 1985
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $ 77,642 $ 65,583 $55,279 $46,641 $45,206
Income before income taxes 7,479 5,644 5,192 3,587 3,503
Net income 4,478 3,469 2,834 2,210 2,025
Depreciation and amortization 5,463 4,269 3,347 2,811 2,563
Weighted average number of shares outstanding 6,020 5,356 5,290 5,288 5,274
Net income per share 0.74 0.65 0.54 0.42 0.38
Margin on sales 5.8% 5.3% 5.1% 4.7% 4.5%
Return on beginning shareholders' equity 19.0% 22.0% 21.1% 19.1% 20.3%
Working capital 11,418 10,146 5,792 5,086 5,004
Total assets 53,138 46,777 40,132 32,879 30,188
Long-term debt (excluding current portion) 13,165 13,248 12,858 11,005 10,474
Shareholders' equity 27,360 23,574 15,762 13,404 11,572
Shareholders' equity per share 4.54 4.40 2.98 2.53 2.19
Dividends per share 0.12 0.10 0.09 0.08 0.07
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
In the above table, all dollar amounts, except per share data, are in thousands.
The weighted average number of shares of Common Stock outstanding and the dividends and other per share amounts have been adjusted
to reflect 200% share distributions paid on November 30, 1985 and October 1, 1987 and a 100% share distribution paid on April 14,
1992.
</TABLE>
15
<PAGE> 1
EXHIBIT
NO. 21
TUSCARORA INCORPORATED
Subsidiaries
------------
The following subsidiaries are 100% owned by Tuscarora Incorporated:
Jurisdiction of
Incorporation
Name of Subsidiary ---------------
- ------------------ Pennsylvania
Mat-Flo, Inc.
Seneca Machine & Manufacturing Pennsylvania
Co., Inc.
Tuscarora Plastics of New New York
York, Inc.
Tuscarora Plastics of Ohio, Ohio
Inc.
Tuscarora International, Inc. Delaware
Tuscarora Limited England
The following companies are 100% owned subsidiaries of Tuscarora
International, Inc.
Tuscarora, S.A. de C.V. Mexico
Tuscarora de Mexico, S.A. de C.V. Mexico
<PAGE> 1
EXHIBIT
NO. 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------------------
We consent to the incorporation by reference in the following documents
of our reports, dated October 12, 1995, on our audits of the consolidated
financial statements and related financial statements schedules of Tuscarora
Incorporated and its subsidiaries as of August 31, 1995 and 1994, and for the
years ended August 31, 1995, 1994 and 1993, which reports are incorporated by
reference or included in the Annual Report on Form 10-K of Tuscarora
Incorporated for its fiscal year ended August 31, 1995:
1. Registration Statement No. 33-35373 on Form S-8 for the 1985
Incentive Stock Option Plan and 1989 Stock Incentive Plan of Tuscarora
Incorporated, filed under the Securities Act of 1933, as amended, and the
Prospectus used in connection with such Registration Statement; and
2. Registration Statement No. 33-35587 on Form S-8 for the Tuscarora
Incorporated Common Stock Purchase Plan for Salaried Employees, filed under the
Securities Act of 1933, as amended, and the Prospectus used in connection with
such Registration Statement.
We also consent to the reference to our firm under the caption
"Experts" in the above-mentioned Prospectuses.
/s/ S.R. SNODGRASS A.C.
Beaver Falls, Pennsylvania S.R. Snodgrass A.C.
November 27, 1995 Certified Public Accountants
<PAGE> 1
EXHIBIT
NO. 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints John P. O'Leary, Jr. and Brian C. Mullins and each of them, the
undersigned's true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for the undersigned and in the undersigned's
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K for the fiscal year ended August 31, 1995 of Tuscarora Incorporated,
and any and all amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as the
undersigned might or could do in person and hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitutes, may lawfully do or cause to be done by virtue hereof.
October 13, 1995
/s/ James T. Anderson, Jr.
-------------------------------
James T. Anderson, Jr.
<PAGE> 2
EXHIBIT
NO. 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints John P. O'Leary, Jr. and Brian C. Mullins and each of them, the
undersigned's true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for the undersigned and in the undersigned's
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K for the fiscal year ended August 31, 1995 of Tuscarora Incorporated,
and any and all amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as the
undersigned might or could do in person and hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitutes, may lawfully do or cause to be done by virtue hereof.
October 13, 1995
/s/ Thomas S. Blair
-------------------------------
Thomas S. Blair
<PAGE> 3
EXHIBIT
NO. 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints John P. O'Leary, Jr. and Brian C. Mullins and each of them, the
undersigned's true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for the undersigned and in the undersigned's
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K for the fiscal year ended August 31, 1995 of Tuscarora Incorporated,
and any and all amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as the
undersigned might or could do in person and hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitutes, may lawfully do or cause to be done by virtue hereof.
October 13, 1995
/s/ David I. Cohen
-------------------------------
David I. Cohen
<PAGE> 4
EXHIBIT
NO. 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints John P. O'Leary, Jr. and Brian C. Mullins and each of them, the
undersigned's true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for the undersigned and in the undersigned's
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K for the fiscal year ended August 31, 1995 of Tuscarora Incorporated,
and any and all amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as the
undersigned might or could do in person and hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitutes, may lawfully do or cause to be done by virtue hereof.
October 13, 1995
/s/ Abe Farkas
-------------------------------
Abe Farkas
<PAGE> 5
EXHIBIT
NO. 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints John P. O'Leary, Jr. and Brian C. Mullins and each of them, the
undersigned's true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for the undersigned and in the undersigned's
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K for the fiscal year ended August 31, 1995 of Tuscarora Incorporated,
and any and all amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as the
undersigned might or could do in person and hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitutes, may lawfully do or cause to be done by virtue hereof.
October 13, 1995
/s/ Karen L. Farkas
-------------------------------
Karen L. Farkas
<PAGE> 6
EXHIBIT
NO. 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints John P. O'Leary, Jr. and Brian C. Mullins and each of them, the
undersigned's true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for the undersigned and in the undersigned's
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K for the fiscal year ended August 31, 1995 of Tuscarora Incorporated,
and any and all amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as the
undersigned might or could do in person and hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitutes, may lawfully do or cause to be done by virtue hereof.
October 13, 1995
/s/ Robert W. Kampmeinert
-------------------------------
Robert W. Kampmeinert
<PAGE> 7
EXHIBIT
NO. 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints John P. O'Leary, Jr. and Brian C. Mullins and each of them, the
undersigned's true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for the undersigned and in the undersigned's
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K for the fiscal year ended August 31, 1995 of Tuscarora Incorporated,
and any and all amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as the
undersigned might or could do in person and hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitutes, may lawfully do or cause to be done by virtue hereof.
October 13, 1995
/s/ David C. O'Leary
-------------------------------
David C. O'Leary
<PAGE> 8
EXHIBIT
NO. 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints John P. O'Leary, Jr. and Brian C. Mullins and each of them, the
undersigned's true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for the undersigned and in the undersigned's
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K for the fiscal year ended August 31, 1995 of Tuscarora Incorporated,
and any and all amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as the
undersigned might or could do in person and hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitutes, may lawfully do or cause to be done by virtue hereof.
October 13, 1995
/s/ Harold F. Reed, Jr.
-------------------------------
Harold F. Reed, Jr.
<PAGE> 9
EXHIBIT
NO. 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints John P. O'Leary, Jr. and Brian C. Mullins and each of them, the
undersigned's true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for the undersigned and in the undersigned's
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K for the fiscal year ended August 31, 1995 of Tuscarora Incorporated,
and any and all amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as the
undersigned might or could do in person and hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitutes, may lawfully do or cause to be done by virtue hereof.
October 13, 1995
/s/ James I. Wallover
-------------------------------
James I. Wallover
<PAGE> 10
EXHIBIT
NO. 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints John P. O'Leary, Jr. and Brian C. Mullins and each of them, the
undersigned's true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for the undersigned and in the undersigned's
name, place and stead, in any and all capacities, to sign the Annual Report on
Form 10-K for the fiscal year ended August 31, 1995 of Tuscarora Incorporated,
and any and all amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as the
undersigned might or could do in person and hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitutes, may lawfully do or cause to be done by virtue hereof.
October 13, 1995
/s/ Thomas P. Wollaway
-------------------------------
Thomas P. Wollaway
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<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-END> AUG-31-1995
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