-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TCrfb3z9RZGFCY8zEtzknhWbwYZUEkWNyXdiqWtzM7dTrHY9wSUvNT/woQ9l37PX y+cf1//u99ofRUn6JDGd1A== 0000950128-95-000212.txt : 19951201 0000950128-95-000212.hdr.sgml : 19951201 ACCESSION NUMBER: 0000950128-95-000212 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19950831 FILED AS OF DATE: 19951129 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TUSCARORA INC CENTRAL INDEX KEY: 0000821538 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS FOAM PRODUCTS [3086] IRS NUMBER: 251119372 STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-17051 FILM NUMBER: 95597389 BUSINESS ADDRESS: STREET 1: 800 FIFTH AVE CITY: NEW BRIGHTON STATE: PA ZIP: 15066 BUSINESS PHONE: 4128438200 MAIL ADDRESS: STREET 1: 800 FIFTH AVENUE CITY: NEW BRIGHTON STATE: PA ZIP: 15066 FORMER COMPANY: FORMER CONFORMED NAME: TUSCARORA PLASTICS INC DATE OF NAME CHANGE: 19920703 10-K 1 TUSCARORA 10-K 1 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: ------------------------------------ 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. 2 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 3 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. -2- 4 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 -3- 5 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. -4- 6 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 -5- 7 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 -6- 8 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: -7- 9 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. -8- 10 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. -9- 11 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 -10- 12 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 -11- 13 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. -12- 14 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. -13- 15 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- 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- 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- 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.
Name Age Office with the Company - -------------------- --- ------------------------------------- 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
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- 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- 20
Page(s) in Annual Report Financial Statements and Related Report to Shareholders - ------------------------------------------------- --------------- 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
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- 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:
Page in this Schedules and Related Report Annual Report - ------------------------------------------------- ------------- 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
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:
Exhibit No. Document - ------- ------------------------------------------------------------- 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).
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Exhibit No. Document - ------- --------------------------------------------------------------------- 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.
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Exhibit No. Document - ------- ----------------------------------------------------------------- 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.
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Exhibit No. Document - ------- -------------------------------------------------------------- 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.*
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Exhibit No. Document - ------- --------------------------------------------------------------- 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. _____________ * Management contract or compensatory plan, contract or arrangement required to be filed by Item 601(b)(10)(iii) of Regulation S-K.
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- 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- 27 TUSCARORA INCORPORATED SCHEDULE II - VALUATION ACCOUNT YEARS ENDED AUGUST 31, 1995, 1994 AND 1993
Balance at Charged to Balance at Beginning Costs and End Description of Period Expenses Deductions(1) of Period - ----------- ---------- --------- ------------- ---------- 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 - ---------------------------- (1) Uncollected receivables written off, net of recoveries.
S-1 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 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:
Exhibit No. Document - ------- ----------------------------------------------------------- 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.
30
Exhibit No. Document - ----------- ------------------------------------------------------- 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.
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Exhibit No. Document - ----------- ------------------------------------------------------- 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.*
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Exhibit No. Document - ------- ----------------------------------------------------------- 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.
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Exhibit No. Document - ------- ----------------------------------------------------------- 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. - ------------- * Management contract or compensatory plan, contract or arrangement required to be filed by Item 601(b) (10) (iii) of Regulation S-K.
5 EX-3.I 2 TUSCARORA 10-K 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. 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. 2 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 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 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 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. 6 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 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 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 EX-4.17 3 TUSCARORA 10-K 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 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 - 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 - 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 - 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 - 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 - 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 - 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 - 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. 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 - 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. 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 - 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 - 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 - 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 - 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. 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 - 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 - 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 - 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 - 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. 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 - 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. 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 - 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 - 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 - 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 - EX-10.3 4 TUSCARORA 10-K 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 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. 1 3 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, 2 4 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): 3 5 (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 4 6 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. 5 7 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 6 8 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 7 9 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. 8 EX-10.7 5 TUSCARORA 10-K 1 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. EX-11 6 TUSCARORA 10-K 1 EXHIBIT 11 STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
1991 1992 1993 1994 1995 ------ ------ ------ ------ ------ 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 ------ ------ ------ ------ ------
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. EX-13 7 TUSCARORA 10-K 1 Exhibit 13 CONSOLIDATED STATEMENTS OF INCOME
- -------------------------------------------------------------------------------- Year Ended August 31, 1995 1994 1993 - -------------------------------------------------------------------------------- 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 ================================================================================
The accompanying notes are an integral part of the consolidated financial statements. 1 2 CONSOLIDATED BALANCE SHEETS
- ------------------------------------------------------------------------------- Assets (August 31) 1995 1994 - ------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------
The accompanying notes are an integral part of the consolidated financial statements. 2 3 CONSOLIDATED STATEMENTS OF CASH FLOWS
- ---------------------------------------------------------------------------------------------------------------- Year Ended August 31, 1995 1994 1993 - ---------------------------------------------------------------------------------------------------------------- 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 ================================================================================================================
The accompanying notes are an integral part of the consolidated financial statements. 3 4 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
- ---------------------------------------------------------------------------------------------------------------------------------- Common Stock Treasury Shares --------------------- ------------------- Currency Shares Capital Retained Translation Issued Amount Surplus Earnings Shares Amount Adjustment Total - ---------------------------------------------------------------------------------------------------------------------------------- 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 ==================================================================================================================================
The accompanying notes are an integral part of the consolidated financial statements. 4 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 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: Building and improvements ............. 10-30 years Machinery and equipment ............... 3-10 years
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:
- -------------------------------------------------------- August 31, 1995 1994 - -------------------------------------------------------- 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 ========================================================
6 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:
- ------------------------------------------------------------------------------------------------------------------ Interest Rate at August 31, August 31, 1995 1995 1994 - ------------------------------------------------------------------------------------------------------------------ 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 ==================================================================================================================
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 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:
- -------------------------------------------------- Year Ending August 31, - -------------------------------------------------- 1996 $4,819,255 1997 4,770,974 1998 4,588,332 1999 4,588,332 2000 4,588,332 ==================================================
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:
- -------------------------------------------------------------------- Range of Shares Option Price - -------------------------------------------------------------------- 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 ====================================================================
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 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:
- ------------------------------------------------------------------- Year Ended August 31, 1995 1994 1993 - ------------------------------------------------------------------- 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 ===================================================================
The following is a reconciliation of the statutory U.S. Corporate Federal income tax rate to the effec- tive income tax rate:
- ---------------------------------------------------------------- Year Ended August 31, 1995 1994 1993 - ---------------------------------------------------------------- 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% ================================================================
Deferred tax assets and liabilities as of August 31, 1995, 1994 and 1993 were comprised of the following:
- --------------------------------------------------------------------- August 31, 1995 1994 1993 - --------------------------------------------------------------------- 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 =====================================================================
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 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 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:
- ------------------------------------------- Year Ending August 31, - ------------------------------------------- 1996 $2,938,957 1997 2,309,732 1998 1,936,561 1999 1,529,506 2000 1,216,714 Thereafter 3,690,894 ===========================================
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:
- ---------------------------------------------------------------------------------------- Fiscal Quarter Ended November 30 February 28 May 31 August 31 - ---------------------------------------------------------------------------------------- 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 ========================================================================================
11 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 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 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 15 ELEVEN YEAR CONSOLIDATED FINANCIAL SUMMARY
- ------------------------------------------------------------------------------------------------------------------------------ Year Ended August 31 1995 1994 1993 1992 1991 1990 - ------------------------------------------------------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------ Year Ended August 31 1989 1988 1987 1986 1985 - ------------------------------------------------------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------------------------------------------------------ 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.
15 EX-21 8 TUSCARORA 10-K 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 EX-23 9 TUSCARORA 10-K 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 EX-24 10 TUSCARORA 10-K 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. 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 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 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 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 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 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 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. 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 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 EX-27 11 TUSCARORA 10-K
5 1 12-MOS AUG-31-1995 AUG-31-1995 2,659,767 0 24,157,942 694,675 18,018,610 45,594,186 136,342,377 68,751,183 117,721,259 23,203,999 36,510,150 6,200,158 0 0 48,573,203 117,721,259 163,299,682 163,299,682 123,682,160 123,682,160 0 287,782 2,603,250 15,034,118 6,053,854 8,980,264 0 0 0 8,980,264 1.46 1.46
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