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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (sec.)240.14a-11(c) or (sec.)240.14a-12
Tuscarora Incorporated
(Name of Registrant as Specified in its Charter)
Tuscarora Incorporated
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies: common stock,
no par value of Tuscarora Incorporated
2) Aggregate number of securities to which transaction applies: 9,306,985 shares
of Tuscarora Incorporated common stock
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction: $211,116,067
5) Total fee paid: $42,223
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: $42,223
2) Form, Schedule or Registration Statement No.: Previous Filing of Preliminary
Proxy Statement
3) Filing Party: Tuscarora Incorporated
4) Date filed: January 26, 2001
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Tuscarora Logo
TUSCARORA INCORPORATED
800 FIFTH AVENUE
NEW BRIGHTON, PENNSYLVANIA 15066
MERGER PROPOSAL -- YOUR VOTE IS VERY IMPORTANT
The Boards of Directors of Tuscarora Incorporated (referred to throughout
this proxy statement as Tuscarora or the Company) and SCA Packaging
International B.V. (referred to throughout this proxy statement as SCA
Packaging) have approved a merger. The proposed merger provides for the merger
of SCA Packaging USA, Inc. (referred to throughout this document as SCA
Acquisition) an indirect wholly-owned subsidiary of SCA Packaging's ultimate
parent company, into Tuscarora, after which Tuscarora will survive as an
indirect wholly-owned subsidiary of SCA Packaging's ultimate parent company.
Upon completion of the merger, you, as a Tuscarora shareholder, will
receive $21.50 cash consideration for each share of Tuscarora common stock that
you own. You will not own any stock or have any interest in Tuscarora after the
merger, and you will not receive any stock or any other interest in SCA
Packaging as a result of the merger.
We cannot complete the merger unless Tuscarora's shareholders approve both
the merger and a related amendment to Tuscarora's Restated Articles of
Incorporation. To that end, we have scheduled a special meeting for you to vote
on the proposed merger and the amendment. Because approval requires the
affirmative vote of a majority of the votes cast at the meeting, assuming a
quorum is present, failure to vote is effectively a vote against the merger, and
therefore it is very important that you vote.
This proxy statement provides you with detailed information about the
proposed merger and the amendment to the Restated Articles of Incorporation. We
encourage you to read this entire document carefully. In addition, you may
obtain information about the Company from documents that we have filed with the
Securities and Exchange Commission.
The date, time and place of the special meeting is March 9, 2001, beginning
at 9:30 a.m. local time at the Pittsburgh Airport Marriott, Parkway West,
Coraopolis, Pennsylvania.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the meeting,
please take the time to tell us how you want to vote by completing the enclosed
proxy card and mailing it to us as soon as possible. If you do attend the
meeting, you may revoke your proxy at the meeting and vote in person.
/s/ John P. O'Leary, Jr.
John P. O'Leary, Jr.
President and Chief Executive Officer
Tuscarora Incorporated
THIS PROXY STATEMENT IS FIRST BEING MAILED TO SHAREHOLDERS OF
TUSCARORA ON FEBRUARY 12, 2001.
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TUSCARORA INCORPORATED
800 FIFTH AVENUE
NEW BRIGHTON, PENNSYLVANIA 15066
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 9, 2001
To the shareholders of Tuscarora:
Tuscarora will hold a special meeting of its shareholders on March 9, 2001
at 9:30 a.m., local time, at the Pittsburgh Airport Marriott, Parkway West,
Coraopolis, Pennsylvania. At the special meeting, you, as a Tuscarora
shareholder, will be asked to:
1. Consider and vote on a proposal to amend the Restated Articles of
Incorporation of Tuscarora so that Subchapter E of Chapter 25 of the
Pennsylvania Business Corporation Law of 1988, as amended, does not
apply to Tuscarora (referred to in this proxy statement as the Articles
Amendment). The text of the Articles Amendment is included in this proxy
statement as Appendix V. APPROVAL OF THE ARTICLES AMENDMENT IS A
PRECONDITION TO CONSIDERING AND VOTING ON THE PROPOSED MERGER DESCRIBED
BELOW. IF THE ARTICLES AMENDMENT IS NOT APPROVED AT THE SPECIAL MEETING,
THEN THE SPECIAL MEETING WILL BE ADJOURNED WITHOUT CONSIDERING AND
VOTING ON THE PROPOSED MERGER. IF THE ARTICLES AMENDMENT IS APPROVED,
BUT THE PROPOSED MERGER IS NOT APPROVED AT THE SPECIAL MEETING, THEN THE
ARTICLES AMENDMENT WILL NOT BECOME EFFECTIVE.
2. If the Articles Amendment is approved, consider and vote on a proposal
to approve the merger of Tuscarora and SCA Acquisition, which is
provided for in an Agreement and Plan of Merger (referred to in this
proxy statement as the Merger Agreement), dated as of January 21, 2001,
among Tuscarora, SCA Packaging and SCA Acquisition, an indirect
wholly-owned subsidiary of SCA Packaging's ultimate parent company.
3. Transact such other business as may properly come before the special
meeting.
Only shareholders of record at the close of business on February 8, 2001
are entitled to vote at the special meeting or at any adjournment or
postponement thereof.
Approval of the Articles Amendment and the merger proposal requires, in
each case (assuming a quorum), the affirmative vote of a majority of the shares
of Tuscarora common stock voted on each proposal at the special meeting.
Your vote is important. Please sign and promptly return the proxy card in
the enclosed envelope, whether or not you expect to attend the special meeting.
By Order of the Board of Directors,
Harold F. Reed, Jr.
Secretary
New Brighton, Pennsylvania
February 12, 2001
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TABLE OF CONTENTS
SUMMARY..................................................... 1
THE SPECIAL MEETING......................................... 6
Time, Place and Purpose................................ 6
Voting Rights; Votes Required For Approval............. 6
Proxies................................................ 6
Completed Proxies.................................... 6
Proxies With No Instructions......................... 6
Proxies Marked Abstain............................... 6
Broker Non-Votes..................................... 7
Other Business....................................... 7
Adjournments......................................... 7
Revocation........................................... 7
Solicitation of Proxies.............................. 7
PROPOSAL NO. 1 -- APPROVAL OF THE ARTICLES AMENDMENT........ 8
PROPOSAL NO. 2 -- APPROVAL OF THE MERGER.................... 9
Background of and Reasons for the Merger............... 9
Opinion of Tuscarora's Financial Advisor............... 10
Recommendation of the Board of Directors of
Tuscarora............................................. 13
Terms of the Merger.................................... 14
Exchange of Certificates and Cash.................... 14
Representations and Warranties....................... 15
Conditions to the Merger............................. 16
Covenants............................................ 16
Termination of the Merger Agreement.................. 18
Amendments; Waivers.................................. 19
Agreement with Certain Shareholders.................... 19
Dissenters' Rights..................................... 20
Filing Notice of Intention to Demand Fair Value...... 21
Record and Beneficial Owners......................... 21
Notice to Demand Payment............................. 21
Payment of Fair Value of Shares...................... 21
Estimate by You of Fair Value of Shares.............. 22
Valuation Proceedings................................ 22
Costs and Expenses of Valuation Proceedings.......... 22
Other................................................ 22
Material Federal Income Tax Consequences............... 23
Regulatory Approvals................................... 23
U.S. Antitrust....................................... 23
Foreign Antitrust.................................... 23
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INTERESTS OF TUSCARORA EXECUTIVE OFFICERS AND DIRECTORS IN
THE MERGER................................................ 23
Employment Agreements.................................. 24
Treatment of Stock Options and Phantom Share Units..... 25
Indemnification of Officers and Directors.............. 25
Relationship with Financial Advisor.................... 25
THE COMPANIES............................................... 26
Tuscarora Incorporated................................. 26
SCA Packaging.......................................... 26
OWNERSHIP OF TUSCARORA COMMON STOCK......................... 26
FUTURE SHAREHOLDER PROPOSALS................................ 28
WHERE YOU CAN FIND MORE INFORMATION......................... 28
APPENDIX I -- AGREEMENT AND PLAN OF MERGER.................. I-1
APPENDIX II -- PENNSYLVANIA BUSINESS CORPORATION LAW
SUBCHAPTER D OF CHAPTER 15: DISSENTERS RIGHTS............. II-1
APPENDIX III -- OPINION OF PARKER/HUNTER INCORPORATED....... III-1
APPENDIX IV -- PENNSYLVANIA BUSINESS CORPORATION LAW
SUBCHAPTER E OF CHAPTER 25: CONTROL TRANSACTIONS.......... IV-1
APPENDIX V -- PROPOSED AMENDMENT TO RESTATED ARTICLES OF
INCORPORATION OF TUSCARORA................................ V-1
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SUMMARY
This summary highlights selected information from this document and may not
contain all of the information that is important to you. To understand the
Articles Amendment and the proposed merger fully and for a more complete
description of the legal terms of the Articles Amendment and the proposed
merger, you should carefully read this entire document, including each appendix,
and the documents to which we have referred you. See "Where You Can Find More
Information" on page 28.
- - THE COMPANIES (PAGE 26)
Tuscarora Incorporated
800 Fifth Avenue
New Brighton, Pennsylvania 15066
(724) 843-8200
Tuscarora custom designs and manufactures protective packaging and
material handling solutions for a wide range of manufactured products
utilizing a variety of materials. The Company also supplies customers with
molded foam plastic components for a growing number of industrial and consumer
product applications. Tuscarora is a Pennsylvania corporation with its
headquarters in New Brighton, Pennsylvania, and employs approximately 2,100
employees at its facilities in the United States, Mexico, the United Kingdom
and the Republic of Ireland.
SCA Packaging International B.V.
Coldenhovenseweg 130, 6961EH Eerbeek
Postbus 1, 6960AA Eerbeek
The Netherlands
+31-31-367-75-20
SCA Packaging is a business group of the Swedish company Svenska
Cellulosa Aktiebolaget (SCA), a $7 billion paper, packaging and hygiene
company. SCA Packaging offers customized transport packaging solutions to its
customers, featuring IT-based design technology, with local service close to
customer facilities. SCA Packaging is also one of Europe's leading producers
of containerboard.
- - THE SPECIAL MEETING (PAGE 6)
The special meeting will be held at the Pittsburgh Airport Marriott,
Parkway West, Coraopolis, Pennsylvania on March 9, 2001 at 9:30 a.m., local
time. At the special meeting, you, Tuscarora's shareholders, will vote on the
Articles Amendment and the merger proposal.
- - THE MERGER (PAGE 14)
In the proposed merger, SCA Acquisition will merge with and into
Tuscarora. Tuscarora will survive as an indirect wholly-owned subsidiary of
SCA Packaging's ultimate parent company. As a result of the merger, if you are
a Tuscarora shareholder, and you have not exercised your right to dissent, you
will receive $21.50 in cash for each share of Tuscarora common stock that you
own.
- - REASONS FOR THE MERGER (PAGE 13)
In reaching its determination to recommend approval of the merger, the
Company's Board considered the following material factors:
- the best interests of Tuscarora;
- the implications of the merger for all of Tuscarora's constituents,
including its shareholders, employees, suppliers, customers, creditors and
others with whom it deals, and the communities in which its operations are
located;
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- the consideration Tuscarora shareholders will receive if the merger is
completed and the likelihood that the merger will deliver greater value to
Tuscarora shareholders than what would be reasonable to expect if Tuscarora
remained independent;
- the presentation made to the Board on January 19, 2001 by representatives of
Parker/Hunter Incorporated, including Parker/Hunter's opinion that the
consideration in the merger is fair to Tuscarora shareholders from a
financial point of view as of that date;
- the Board's familiarity with Tuscarora's business, operations, financial
condition, earnings and prospects (both short-term and long-term);
- the Board's understanding of the business, operations, financial condition,
earnings and prospects (both short-term and long-term) of SCA Packaging;
- the Board's assessment of SCA Packaging's ability to pay the merger
consideration;
- the complementary nature of the businesses, services and products of
Tuscarora and SCA Packaging, and the opportunity for Tuscarora to become
part of a combined business that offers a wider variety of products to
customers and an enhanced ability to attract new customers;
- the likelihood of a smooth integration of Tuscarora's business with that of
SCA Packaging;
- the Board's review of other strategic alternatives to the merger potentially
available to Tuscarora; and
- the judgment and advice of Tuscarora's senior management.
As a result of the foregoing considerations, the Board determined that the
potential advantages of the proposed merger outweigh the benefits of remaining
an independent corporation. The Board believes that the combined company will
have a far greater opportunity than Tuscarora alone to compete in its industry.
- - RECOMMENDATION TO SHAREHOLDERS (PAGE 13)
The Board of Directors of Tuscarora believes that the merger is fair to
and in the best interests of the Company and unanimously recommends that you
vote "FOR" the proposal to approve the merger.
- - THE MERGER AGREEMENT (APPENDIX I)
We have attached the Merger Agreement to this document as Appendix I.
Please read the entire Merger Agreement. It is the legal document that governs
the proposed merger.
- - WHAT WE NEED TO DO BEFORE THE MERGER CAN BE COMPLETED (PAGE 16)
Completion of the merger depends on a number of conditions being met,
including the following:
- approval of the Articles Amendment and the merger proposal by you, the
shareholders of Tuscarora;
- expiration or termination of the applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act (which has occurred -- see
"Regulatory Approvals" on page 23) and under the antitrust laws of the
United Kingdom and the Republic of Ireland;
- absence of an injunction or order prohibiting the merger;
- Tuscarora and SCA Packaging having performed their respective
obligations and obtained all necessary consents and approvals;
- the respective representations and warranties of Tuscarora and
SCA Packaging in the Merger Agreement being true and correct in all
material respects;
- the employment agreements between Tuscarora and John O'Leary, David
O'Leary and Brian Mullins, respectively, remaining in effect; and
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- dissenters' rights not having been exercised by shareholders holding,
in the aggregate, 10% or more of the outstanding shares of Tuscarora's
common stock.
- - THE ARTICLES AMENDMENT (PAGE 8)
You will be requested to vote at the special meeting to approve an
amendment of Tuscarora's Restated Articles of Incorporation to opt out of
certain provisions relating to shareholders' rights in control transactions
that are provided for in Subchapter E of Chapter 25 of the Pennsylvania
Business Corporation Law, a copy of which is attached as Appendix IV. The
proposed merger would constitute a control transaction that would cause these
provisions of Pennsylvania law to be triggered. Because the provisions of
Subchapter E provide essentially the same protection to a shareholder in a
cash merger (such as the proposed merger) as statutory dissenters' rights to
which Tuscarora's shareholders are entitled under Pennsylvania law (as
discussed below on page 4 and on page 20), and because of the administrative
burden of being subject to two different procedural determinations of fair
value for shareholders who choose to not accept the merger consideration, the
Company's Board, in order to facilitate the proposed merger, decided to adopt
the Articles Amendment. The Articles Amendment requires shareholder approval
to become effective. The Board recommends that shareholders vote in favor of
approving the Articles Amendment. If the shareholders approve the Articles
Amendment but do not approve the proposed merger at the special meeting, the
Articles Amendment will not become effective.
- - VOTE REQUIRED TO APPROVE THE MERGER PROPOSAL (PAGE 6)
The proposed merger must be approved, assuming a quorum, by a majority of
the votes cast on the proposal, either in person or by proxy, at the Tuscarora
special meeting. A majority of the issued and outstanding shares must be
present in person or by proxy to constitute a quorum. Under an agreement which
certain directors, all executive officers and certain other related
shareholders entered into with SCA Acquisition (referred to in this proxy
statement as the Shareholders Agreement), holders of approximately 15% of
Tuscarora's shares outstanding have agreed to vote in favor of the merger.
- - VOTE REQUIRED TO APPROVE THE ARTICLES AMENDMENT (PAGE 6)
The Articles Amendment must be approved, assuming a quorum, by a majority
of the votes cast on the proposal, either in person or by proxy, at the
Tuscarora special meeting. A majority of the issued and outstanding shares
must be present in person or by proxy to constitute a quorum. Under the
Shareholders Agreement, holders of approximately 15% of Tuscarora's shares
outstanding have agreed to vote in favor of the Articles Amendment.
- - INTERESTS OF EXECUTIVE OFFICERS AND DIRECTORS IN THE MERGER (PAGE 23)
You should be aware that the executive officers of Tuscarora (John
O'Leary, David O'Leary and Brian Mullins), two of whom (John O'Leary and David
O'Leary) are directors and recommend that you vote in favor of the merger,
have employment agreements and stock options that provide them with interests
in the merger, including the right to receive compensation or other rights,
that are different from, or in addition to, the consideration you will receive
if the merger becomes effective. The Board of Directors knew about these
interests and considered them when it approved the merger.
As of January 9, 2001, directors and executive officers of Tuscarora and
their affiliates beneficially owned and were entitled to vote, including
(assuming their exercise) shares covered by their vested stock options,
1,415,597 shares of Tuscarora common stock, or approximately 15.21% of the
shares outstanding.
- - AGREEMENT WITH CERTAIN SHAREHOLDERS (PAGE 19)
Certain directors of Tuscarora, all of the executive officers (John
O'Leary and David O'Leary, who are also directors, and Brian Mullins) and
certain other related shareholders of Tuscarora, in all cases acting solely in
their capacities as shareholders, entered into the Shareholders Agreement with
SCA Acquisition. These shareholders collectively hold, including shares
covered by vested stock options, approximately 15% of the
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outstanding shares of Tuscarora's common stock. Under the terms of the
Shareholders Agreement, each signing shareholder, among other things, has
agreed to vote all of his or her Tuscarora shares in favor of the Articles
Amendment and the proposed merger and against any other merger or similar
transaction or any amendment of Tuscarora's Restated Articles of Incorporation
or By-laws that would impede or prevent the proposed merger with SCA
Acquisition. In addition, under the Shareholders Agreement, each signing
shareholder granted SCA Acquisition an irrevocable proxy to vote the shares
covered by the Shareholders Agreement and an option to acquire, under certain
circumstances, such shares for $21.50 per share if a third party proposes a
merger or other business combination with Tuscarora and the Merger Agreement
is terminated. The voting obligation contained in the Shareholders Agreement
expires upon consummation of the merger or termination of the Merger
Agreement. SCA Acquisition's right to exercise the options to acquire the
signing shareholders' shares under the Shareholders Agreement expires upon the
earlier of 18 months after a termination of the Merger Agreement or 60 days
after Tuscarora completes a merger or other business combination with a third
party.
- - DISSENTERS' RIGHTS (PAGE 20)
Pennsylvania law grants you, as a Tuscarora shareholder, dissenters'
appraisal rights. You may object to the proposed merger and have the fair
value of your shares of Tuscarora common stock determined in an appraisal
proceeding and paid to you in cash. To do so, you must follow the procedures
set forth under Pennsylvania law. These procedures require, among other
things, that a dissenter:
- file with Tuscarora a written notice of intention to dissent prior to the
vote on the merger proposal,
- make no change in the beneficial ownership of Tuscarora shares from the date
of filing of the notice until the effective time of the merger, and
- not vote "FOR" the approval of the merger proposal.
There are also post-vote procedures that you must follow if you want to
dissent. Dissenters' rights will be forfeited if these requirements are not
fully and precisely satisfied. See the relevant sections of Pennsylvania law
attached as Appendix II to this proxy statement.
- - TAX CONSEQUENCES (PAGE 23)
You generally will recognize capital gain or loss equal to the difference
between the amount of cash you receive as a result of the merger and your
adjusted tax basis in the shares of Tuscarora common stock owned by you.
- - REGULATORY APPROVALS (PAGE 23)
The merger is subject to review by the Federal Trade Commission and the
Antitrust Division of the U.S. Department of Justice. The Merger is also
subject to the jurisdiction of the antitrust authorities in the United Kingdom
and in the Republic of Ireland. All required filings have been made. The
waiting period in the U.S. was terminated early on February 7, 2001, thus
allowing the merger to be completed without further review by the U.S.
antitrust authorities. With respect to the United Kingdom and the Republic of
Ireland, the relevant waiting period is expected to expire, and/or
confirmation that further review will not be made is expected to be received,
before March 9, 2001, the date of the special meeting of shareholders.
- - TERMINATION OF THE MERGER AGREEMENT (PAGE 18)
The Merger Agreement may be terminated by Tuscarora or SCA Packaging,
under certain circumstances, either before or after shareholder approval.
These circumstances include:
- mutual written consent of SCA Packaging and Tuscarora;
- the merger has not occurred by July 31, 2001;
- a law or regulation makes the merger illegal or otherwise prohibited;
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- a court or government agency issues an order prohibiting the merger;
- the Tuscarora shareholders fail to approve the Articles Amendment or
the merger at the shareholders meeting;
- the Merger Agreement has been materially breached and the breach cannot
be timely cured;
- shares held by dissenting shareholders represent 10% or more of
Tuscarora's shares of common stock outstanding, or
- the Board of Directors of Tuscarora amends or withdraws its
recommendation to the shareholders to approve the Articles Amendment
or the merger in a manner adverse to SCA Packaging and/or approves or
recommends to Tuscarora's shareholders a superior acquisition proposal
or an acquisition proposal which its duties as directors require it to
approve or recommend.
If termination occurs as a result of Tuscarora's Board having amended,
modified, withdrawn, conditioned or qualified its recommendation to
shareholders, or having approved or recommended to Tuscarora's shareholders
another acquisition proposal, or the termination occurs for any other reason
(other than a breach by SCA Packaging) and prior to termination an acquisition
proposal has been made by any person, and, in each case, Tuscarora is acquired
within 18 months after termination or enters into an agreement within 18
months after termination to be acquired and such agreement is consummated,
Tuscarora must pay to SCA Packaging a termination fee of $15,000,000.
Separately, in certain circumstances, Tuscarora is obligated to reimburse
SCA Packaging for its reasonable, actual expenses and SCA Packaging is
obligated to reimburse Tuscarora for its reasonable, actual expenses, in each
case, up to $3,000,000 if the merger is not completed.
If termination occurs as a result of a breach of the Merger Agreement by
any of the parties thereto, the non-breaching party that exercises its right
to terminate will be entitled to receive $15,000,000 from the party in breach
plus any other damages to which it may be entitled. In no event, however, will
Tuscarora be obligated to pay both the termination fee described above and the
breach fee.
- - OPINION OF TUSCARORA'S FINANCIAL ADVISOR (PAGE 10)
On January 19, 2001, Parker/Hunter delivered its oral opinion to the
Board of Directors of Tuscarora, which opinion was subsequently confirmed in a
written opinion dated January 21, 2001, that as of such date and based upon
and limited by the assumptions made, matters considered and limitations stated
in the opinion, the $21.50 cash consideration per share to be paid to
Tuscarora shareholders in the merger was fair from a financial point of view
to the holders of Tuscarora common stock. The full text of the written opinion
of Parker/Hunter, which states the assumptions made, matters considered and
limitations on the review undertaken, is attached as Appendix III to this
proxy statement. WE URGE YOU TO READ THE OPINION CAREFULLY AND IN ITS
ENTIRETY.
PARKER/HUNTER'S OPINION IS DIRECTED TO THE BOARD OF DIRECTORS OF TUSCARORA,
ADDRESSES ONLY THE FAIRNESS OF THE CASH CONSIDERATION TO BE PAID IN THE MERGER
TO THE TUSCARORA SHAREHOLDERS FROM A FINANCIAL POINT OF VIEW AND DOES NOT
CONSTITUTE A RECOMMENDATION TO ANY SHAREHOLDER AS TO HOW SUCH SHAREHOLDER SHOULD
VOTE AT THE TUSCARORA SPECIAL MEETING.
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THE SPECIAL MEETING
TIME, PLACE AND PURPOSE
The special meeting will be held at the Pittsburgh Airport Marriott,
Parkway West, Coraopolis, Pennsylvania on March 9, 2001, at 9:30 a.m., local
time.
At the special meeting, the shareholders of Tuscarora will consider and
vote upon:
- the Articles Amendment, and if such amendment is approved,
- the merger proposal; and
- such other matters as may properly come before the special meeting.
VOTING RIGHTS; VOTES REQUIRED FOR APPROVAL
The record date for the special meeting is February 8, 2001. Only holders
of record of shares of Tuscarora common stock on February 8, 2001 are entitled
to notice of and to vote at the special meeting. On the record date, there were
approximately 9,311,435 shares of Tuscarora common stock outstanding and
entitled to vote at the special meeting held by approximately 558 shareholders
of record.
At the special meeting:
- each record holder is entitled to one vote per share;
- the presence, in person or by proxy, of the holders of a majority of the
outstanding shares is necessary to constitute a quorum;
- approval of the Articles Amendment requires the affirmative vote, in
person or by proxy, of a majority of the votes cast by all holders
entitled to vote at the meeting (assuming a quorum is present); and
- approval of the merger proposal requires the affirmative vote, in person
or by proxy, of a majority of the votes cast at the meeting by all
holders entitled to vote at the meeting (assuming a quorum is present).
Under the Shareholders Agreement entered into by SCA Acquisition with
certain directors, all executive officers and certain other related
shareholders, shareholders holding approximately 15% of Tuscarora's shares
outstanding have agreed to vote in favor of both the Articles Amendment and the
merger.
PROXIES
COMPLETED PROXIES
If you sign, complete and return a proxy and Tuscarora receives your proxy
prior to the meeting, your proxy will be voted as you instruct.
PROXIES WITH NO INSTRUCTIONS
If you sign and return a proxy but you do not provide instructions as to
your vote, your proxy will be voted "FOR" the Articles Amendment and "FOR" the
proposed merger.
PROXIES MARKED ABSTAIN
If you execute and return a proxy marked "ABSTAIN", your proxy will count
for purposes of determining whether there is a quorum but your proxy will not be
voted. Under Pennsylvania law, a proxy marked "ABSTAIN" is not considered a vote
cast. Approval of the Articles Amendment and proposed merger requires the
affirmative vote of a majority of the votes cast at the meeting (assuming a
quorum). Accordingly, proxies marked "ABSTAIN" will (except to the extent they
are counted for purposes of determining whether there is a quorum) have no
effect on the approval of the Articles Amendment or the proposed merger.
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BROKER NON-VOTES
Brokers that hold shares of Tuscarora common stock in street name for
customers who are the beneficial owners of those shares are prohibited from
giving a proxy to vote those shares in favor of the approval of the Articles of
Amendment or the proposed merger without specific instructions from the
customers. Accordingly, shares of Tuscarora common stock beneficially owned by
customers who fail to provide their brokers with instructions regarding how to
vote their shares of Tuscarora common stock will not be counted as a vote for or
against the Articles Amendment or the proposed merger. If a broker returns a
proxy card but has not received instructions from you as to how to vote, and,
thus, does not vote, the shares held for you will not be voted but will
nonetheless be counted as present for determining if a quorum is present at the
special meeting. Approval of the Articles Amendment and proposed merger requires
the affirmative vote of a majority of the votes cast at the meeting (assuming a
quorum). Accordingly, broker non-votes (except to the extent they are counted
for purposes of determining whether there is a quorum) have no effect on the
approval of the Articles Amendment and the proposed merger.
OTHER BUSINESS
We are not aware of any business for consideration at the special meeting
other than as described in this proxy statement. However, if matters are
properly brought before the special meeting or any adjournments or postponements
thereof, then the persons appointed as proxies will have the discretion to vote
or act thereon according to their best judgment.
ADJOURNMENTS
We may adjourn the special meeting in order to solicit additional proxies.
Proxies marked "AGAINST" approval of the Articles of Amendment or the merger
proposal will be voted against any proposal to adjourn the meeting for the
purpose of soliciting additional proxies.
REVOCATION
You may revoke your proxy at any time prior to its use. In order to revoke
your proxy, you must send to the Secretary of Tuscarora, at 800 Fifth Avenue,
New Brighton, Pennsylvania, 15066, a signed notice of revocation or you must
send a later dated proxy changing your vote. In addition, you may choose to
attend the special meeting and vote in person. Simply attending the meeting will
not in itself constitute the revocation of your proxy. You will need to make it
known at the special meeting that you would like to vote in person.
SOLICITATION OF PROXIES
The solicitation of the enclosed proxy is made on behalf of the Board of
Directors of Tuscarora. Tuscarora will pay the costs associated with soliciting
proxies from its shareholders. Solicitation of proxies will be made by mail, by
electronic telecommunications or in person. Tuscarora has retained Mellon
Investor Services, LLC to assist in the solicitation of proxies. Tuscarora will
pay Mellon Investor Services a fee of $7,500 plus out-of-pocket expenses for its
services. In order to ensure sufficient representation at our meeting, we may
request by telephone or telegram the return of your proxy card. Please assist us
by promptly returning your proxy card without delay.
Tuscarora and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the shareholders of Tuscarora.
The directors and executive officers of Tuscarora include the following: David
I. Cohen, Abe Farkas, Karen L. Farkas, Robert W. Kampmeinert, Jeffery L.
Leininger, Brian C. Mullins, David C. O'Leary, John P. O'Leary, Jr., Harold F.
Reed, Jr., and Thomas P. Woolaway. Collectively, as of January 9, 2001, the
directors and executive officers of Tuscarora beneficially owned approximately
15.21% of the outstanding shares of Tuscarora common stock. Shareholders of
Tuscarora may obtain additional information regarding the interests of such
participants elsewhere in this proxy statement (see, particularly, "Interests of
Tuscarora Executive Officers and Directors in the Merger" on page 23).
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PROPOSAL NO. 1 -- APPROVAL OF THE ARTICLES AMENDMENT
The text of the proposed Articles Amendment is attached hereto as Appendix
V. The following summary of legal considerations relevant to the Articles
Amendment is intended to assist you in making a voting decision; however, such
summary is qualified in its entirety by reference to the appendices attached to
this proxy statement.
The Articles Amendment would make Subchapter E of Chapter 25 of the
Pennsylvania Business Corporation Law, a copy of which is attached to this proxy
statement as Appendix IV, inapplicable to Tuscarora. Subchapter E provides that
any holder of voting shares of a registered Pennsylvania corporation (which
Tuscarora is for purposes of Subchapter E) who objects to a "control
transaction" will be entitled to make a written demand of the "controlling
person or group" for payment of the fair value of the voting shares of the
corporation held by the shareholder. A "control transaction" is defined as the
acquisition by a person or group of the status of a "controlling person or
group." For this purpose, a "controlling person or group" is defined as a person
or group which has voting power over voting shares of the registered corporation
that would entitle the holder thereof to cast at least 20% of the votes that all
shareholders would be entitled to cast in an election of directors of the
corporation, with certain exceptions. In the absence of the Articles Amendment,
the proposed merger would be a "control transaction" under Subchapter E.
Under Subchapter E, the "controlling person or group" is obligated to give
prompt notice following the occurrence of a control transaction to which
Subchapter E applies to all shareholders of record of the corporation. If a
control transaction occurs, a shareholder making written demand in accordance
with Subchapter E is entitled to receive cash for each of the shareholder's
shares in an amount equal to the fair value of each voting share of the
corporation as of the date on which the control transaction occurs, taking into
account all relevant factors, including an increment representing a proportion
of any value payable for the acquisition of control over the corporation. The
minimum per share value the shareholder can receive under Subchapter E is the
highest price per share paid by the controlling person or group for shares of
the corporation at any time during the 90-day period ending on and including the
date of the control transaction. If a shareholder believes the fair value of his
or her shares to be higher than this minimum value, Subchapter E provides the
shareholder with the option to proceed to court supervised appraisal
proceedings, with payment of the minimum value being made within the time period
set forth in Subchapter E.
If the shareholder and the controlling person or group are unable to agree
on the fair value of the shares or on a binding procedure to determine the fair
value of the shares within the time set forth in Subchapter E, the shareholder
is entitled to receive the minimum value, if any, as a partial payment within a
statutorily defined time period. Any additional amount potentially owed to the
shareholder will be determined by a court appointed appraiser with experience in
appraising the share value of companies "of like nature" to the acquired
company.
The rights provided by Subchapter E are basically the same as the
dissenters' rights to which you as a shareholder are already entitled under
Pennsylvania law (as discussed in "Dissenters' Rights" on page 20). Because
these rights permit shareholders who oppose the merger to dissent and seek an
appraisal of the fair value of their shares, the Board of Directors believes
that the application of Subchapter E would be duplicative and wishes to avoid
the administrative burden of being subject to two different procedural
determinations of fair value of Tuscarora shares held by dissenting
shareholders. Therefore, the Board has adopted the Articles Amendment and
recommends that shareholders vote in favor of the Articles Amendment.
TUSCARORA'S BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
THE ADOPTION OF THE ARTICLES AMENDMENT.
APPROVAL OF THE ARTICLES AMENDMENT IS A PRECONDITION TO CONSIDERING AND
VOTING ON THE MERGER PROPOSAL. IF THE ARTICLES AMENDMENT IS NOT APPROVED AT THE
SPECIAL MEETING, THEN THE SPECIAL MEETING WILL BE ADJOURNED WITHOUT CONSIDERING
AND VOTING ON THE MERGER PROPOSAL. IF THE TUSCARORA SHAREHOLDERS APPROVE THE
ARTICLES AMENDMENT BUT DO NOT APPROVE THE MERGER PROPOSAL, OR THE MERGER IS NOT
CONSUMMATED FOR SOME OTHER REASON, THE ARTICLES AMENDMENT WILL NOT BECOME
EFFECTIVE EVEN IF IT IS APPROVED BY THE SHAREHOLDERS.
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PROPOSAL NO. 2 -- APPROVAL OF THE MERGER
At the special meeting, the Tuscarora shareholders will be asked to approve
the Agreement and Plan of Merger dated as of January 21, 2001, among Tuscarora,
SCA Packaging and SCA Acquisition, and the transactions contemplated thereby.
This section summarizes the material aspects of the proposed merger. The summary
is qualified in its entirety by reference to the Merger Agreement (which is
attached to this proxy statement as Appendix I).
BACKGROUND OF AND REASONS FOR THE MERGER
The Board of Directors of Tuscarora in recent years considered the business
of, and the prospects for, the Company, and, because it perceived the market
value of the Company's common stock to be undervalued, studied various strategic
alternatives for increasing shareholder value. Among the strategic alternatives
considered were a potential sale or merger of the Company (to either a strategic
or a financial buyer) or a refinancing of the Company. Tuscarora engaged
Parker/Hunter Incorporated to act as its financial advisor in connection with
any possible strategic alternative and Parker/Hunter has advised the Company in
that regard.
Tuscarora has, from time to time, had conversations, and engaged in
negotiations, with other companies which have expressed interest in a possible
acquisition of, or merger with, the Company. Such other companies have included
strategic buyers and private equity investors. Negotiations with such companies,
other than SCA Packaging, did not result in an agreement to purchase the
Company, and have been terminated.
In November of 1999, while traveling in Asia on other business, John P.
O'Leary, Jr., President and Chief Executive Officer of Tuscarora, became aware
of the existence of Central Packaging Group ("CenPac"), a Singapore-based
packaging company with multiple manufacturing locations throughout Asia.
Subsequently, through Tuscarora's relationship with Sekisui Chemical in Japan, a
CenPac shareholder, Mr. O'Leary was introduced to Colin Williams, President of
SCA Packaging in Europe. SCA Packaging is also a significant shareholder in
CenPac.
Messrs. O'Leary and Williams held a number of meetings thereafter in late
winter and early spring of 2000, at which they discussed CenPac generally, and,
specifically, the possibility and the desirability of Tuscarora making an equity
investment in CenPac. These discussions led to the formal announcement of a
strategic alliance between CenPac and Tuscarora on August 24, 2000. The issue of
possible equity participation by Tuscarora in CenPac remained the subject of
further discussions after the announcement of the strategic alliance.
These discussions led also to Tuscarora and SCA Packaging considering the
desirability of pursuing together strategic alliances in Western Europe and/or a
joint venture in the United Kingdom or in the Republic of Ireland. These
discussions took place in Europe over the course of the summer and fall of 2000
and involved not only Messrs. O'Leary and Williams, but also Gunnar Haglund,
Vice President Finance of SCA Packaging. In September of 2000, SCA Packaging
broached with Tuscarora the subject of SCA Packaging possibly acquiring
Tuscarora. Discussions of a preliminary nature along that line ensued but only
for a short period of time, and were terminated late in September, 2000.
Mr. Williams came to visit Tuscarora headquarters in New Brighton,
Pennsylvania for the first time in late November of 2000. There he toured
Tuscarora's local facilities. Subsequent meetings were held in November and
December of 2000 at which Mr. O'Leary and Mr. Williams resumed their discussions
regarding the possible acquisition of Tuscarora by SCA Packaging. In late
December, SCA Packaging undertook due diligence with respect to Tuscarora in
order to support its interest in acquiring Tuscarora.
On January 10 and 11, 2001, Mr. Williams and Mr. Haglund, along with
Sverker Martin-Lof, President of Svenska Cellulosa Aktiebolaget (referred to
herein as SCA), the ultimate parent company of SCA Packaging, visited Tuscarora.
This visit included tours of Tuscarora's facilities in Pennsylvania, Connecticut
and Massachusetts. During that visit, the discussions concerning an acquisition
of Tuscarora by SCA Packaging continued, culminating in an understanding with
respect to the principal terms of an acquisition, including the purchase price.
Such understanding, however, was subject to the completion by SCA Packaging of
its due diligence and the approval of the understanding by SCA's Board of
Directors and the negotiation of an acceptable merger agreement and certain
related agreements -- an agreement with certain shareholders of Tuscarora and
employ-
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ment agreements with certain employees of Tuscarora. On January 19, 2001, SCA
Packaging extended to Tuscarora an offer to acquire Tuscarora by way of a merger
and on January 19, 2001, Tuscarora's Board accepted SCA Packaging's offer in
principle subject to the satisfactory conclusion of the negotiation of a merger
agreement. On January 21, 2001, the parties concluded the negotiation of, and
signed, the Merger Agreement (for a description of its terms see page 14).
Contemporaneously, the Shareholders Agreement with certain shareholders (see
page 19) and the employment agreements with John O'Leary, Jr., David O'Leary and
Brian Mullins (see page 24) were entered into.
OPINION OF TUSCARORA'S FINANCIAL ADVISOR
On January 19, 2001, at a meeting of the Tuscarora Board held to evaluate
the proposed merger, representatives of Parker/Hunter rendered to the Tuscarora
Board an oral opinion, subsequently confirmed by the delivery of a written
opinion dated January 21, 2001, to the effect that, as of the date and based
upon and subject to the assumptions made, matters considered and limitations
stated in the opinion, the cash consideration per share was fair, from a
financial point of view, to the holders of Tuscarora common stock. Parker/
Hunter did not determine or recommend the amount of consideration to be paid for
Tuscarora shares.
THE FULL TEXT OF THE WRITTEN OPINION OF PARKER/HUNTER DATED JANUARY 21,
2001, WHICH STATES, AMONG OTHER THINGS, THE ASSUMPTIONS MADE, MATTERS CONSIDERED
AND LIMITATIONS ON THE REVIEW UNDERTAKEN IN CONNECTION WITH THE OPINION, IS
ATTACHED AS APPENDIX III TO THIS PROXY STATEMENT AND IS INCORPORATED HEREIN BY
REFERENCE. THIS SECTION IS ONLY A SUMMARY OF THE WRITTEN OPINION, AND AS A
SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH
OPINION. THE ENGAGEMENT OF PARKER/HUNTER AND ITS OPINION ARE FOR THE BENEFIT OF
THE TUSCARORA BOARD OF DIRECTORS, AND ITS OPINION WAS RENDERED TO THE TUSCARORA
BOARD IN CONNECTION WITH ITS CONSIDERATION OF THE MERGER. PARKER/HUNTER'S
OPINION IS DIRECTED ONLY TO THE FAIRNESS OF THE CASH CONSIDERATION TO BE PAID IN
THE MERGER FROM A FINANCIAL POINT OF VIEW TO THE TUSCARORA SHAREHOLDERS AND DOES
NOT ADDRESS ANY OTHER ASPECTS OF THE MERGER. THE OPINION IS NOT INTENDED TO, AND
DOES NOT CONSTITUTE, A RECOMMENDATION TO ANY TUSCARORA SHAREHOLDER AS TO WHETHER
SUCH SHAREHOLDER SHOULD VOTE FOR THE MERGER. TUSCARORA SHAREHOLDERS ARE URGED TO
READ THE OPINION OF PARKER/HUNTER IN ITS ENTIRETY.
In connection with its written opinion, Parker/Hunter reviewed, among other
things, the following: (i) the financial terms and conditions of the Merger
Agreement; (ii) certain publicly available financial statements and other
business and financial information of Tuscarora; (iii) certain internal
information, primarily financial in nature, including financial projections for
Tuscarora prepared by the management of Tuscarora; (iv) certain publicly
available information concerning the trading of, and the trading markets for,
the common stock of Tuscarora; (v) the nature and financial terms of certain
recent business combinations believed to be relevant; and (vi) certain publicly
available information regarding companies believed to be comparable to Tuscarora
as well as trading market information for certain of such other companies'
securities. Parker/Hunter also discussed with certain senior officers of
Tuscarora the foregoing matters as well as the operations, financial condition,
history and prospects of Tuscarora and other matters Parker/Hunter believed to
be relevant. Parker/Hunter took into account its assessment of general economic,
market and financial conditions and its experience in securities valuation
generally. Parker/Hunter also considered such other information, financial
studies, analyses, investigations and financial, economic, market and trading
criteria it deemed relevant.
In rendering its opinion, Parker/Hunter relied, without independent
verification, on the accuracy and completeness of all financial and other
information that was publicly available or furnished or otherwise communicated
to Parker/Hunter by Tuscarora. Parker/Hunter relied upon the assurances of
Tuscarora's management that they were not aware of any facts that would make
such information inaccurate or misleading. Parker/ Hunter did not make, or
assume any responsibility for obtaining or making, any independent evaluation or
appraisal of the properties, assets or liabilities, contingent or otherwise, of
Tuscarora, nor was Parker/Hunter furnished with any such evaluation or
appraisal. With respect to Tuscarora's financial projections, Parker/Hunter
assumed that they were reasonably prepared on bases reflecting the best
currently available estimates and good faith judgments of Tuscarora's
management. Parker/Hunter expressed no opinion with respect to such projections
or the assumptions on which they were based. Parker/Hunter's opinion is
necessarily based upon the business, market, monetary, economic, and other
conditions as they existed on, and could be evaluated as of, January 21,
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2001, and does not predict or take into account any changes which may occur, or
information which may become available, after such date.
In rendering its opinion, Parker/Hunter assumed that the merger will be
consummated on terms described in the Merger Agreement, without waiver of any
material terms and conditions by Tuscarora, and that obtaining necessary
regulatory approvals for the merger would not have adverse effects on Tuscarora.
Parker/Hunter has not been requested to and did not solicit third party
indications of interest in acquiring all or any part of Tuscarora.
Set forth below is a summary of the report presented by Parker/Hunter to
the Tuscarora Board on January 19, 2001 in connection with its oral opinion. The
summary set forth below does not purport to be a complete description of the
analysis performed by Parker/Hunter, but describes, in summary form, the
principal elements of the analyses performed by Parker/Hunter in arriving at its
opinion.
Comparable Publicly Traded Companies Analysis. Parker/Hunter reviewed and
analyzed certain financial and market performance data for selected publicly
traded companies in the plastic packaging or specialty plastic products
industries that were generally comparable to Tuscarora for purposes of this
analysis. Such comparable companies consisted of: Applied Extrusion
Technologies; Atlantis Plastics, Inc.; Bemis Company, Inc.; Ivex Packaging
Corporation; and Liqui-Box Corporation.
For each comparable company, Parker/Hunter calculated the multiple of
enterprise value (market value, plus short- and long-term debt, less cash and
cash equivalents) to latest twelve months ("LTM") revenues, earnings before
interest, taxes, depreciation and amortization ("EBITDA") and earnings before
interest and taxes ("EBIT"), and the multiple of market value to LTM net income
and book value. The analysis indicated that the enterprise values of the
comparable companies as a multiple of their LTM revenues ranged from 0.43x to
1.06x (median 0.88x), as a multiple of LTM EBITDA ranged from 4.2x to 6.4x
(median 5.4x), as a multiple of LTM EBIT ranged from 6.2x to 9.1x (median 8.1x),
and also indicated that the market value as a multiple of LTM net income and
book value ranged from 6.2x to 12.1x (median 11.1x) and 0.3x to 2.9x (median
1.9x), respectively.
Based on the multiples derived in the comparable publicly traded companies
analysis and Tuscarora's LTM financial results for the period ended November 30,
2000, the implied per share values for Tuscarora ranged from: $4.00 to $22.38
(median $17.10) based on LTM revenues; $11.14 to $21.18 (median $16.74) based on
LTM EBITDA; $8.72 to $16.86 (median $14.08) based on LTM EBIT; $8.89 to $17.15
(median $15.74) based on LTM net income; and $3.02 to $29.49 (median $19.16)
based on book value. Parker/Hunter also calculated the implied values per share
based on Tuscarora's projected results for the twelve month period ending
February 28, 2001 (the "February Projected Results"). Using February Projected
Results this analysis indicated that the implied values per share based on
revenues ranged from $4.24 to $22.98 (median $17.60), based on EBITDA ranged
from $11.02 to $21.00 (median $16.59), based on EBIT ranged from $8.04 to $15.85
(median $13.18), and based on net income and book value ranged from $8.23 to
$15.89 (median $14.59) and $3.02 to $29.46 (median $19.15), respectively.
Comparable Selected Transactions Analysis. Parker/Hunter reviewed the
financial terms and analyzed certain other publicly available information
relating to selected completed acquisitions of companies that were believed to
be comparable to Tuscarora for purposes of this analysis (the "Selected
Transactions"). As part of its analysis, Parker/Hunter selected five mergers and
acquisitions of plastic packaging or specialty plastic products companies since
January 1, 1996 in which the enterprise values of the acquired companies were
less than $500 million. Such Selected Transactions consisted of (acquiror/target
company): Tyco International Ltd./Carlisle Plastics, Inc.; ACX Technologies,
Inc./Britton Group plc; Huntsman Packaging Corporation/Blessings Corporation;
The Geon Company/O'Sullivan Corporation; and Sealed Air Corporation/Dolphin
Packaging plc.
Parker/Hunter analyzed the consideration paid in these transactions in
terms of enterprise value as a multiple of LTM revenues, EBITDA and EBIT, and in
terms of market value as a multiple of LTM net income and book value. This
analysis indicated that for the Selected Transactions: (i) enterprise value as a
multiple of LTM revenues ranged from 0.65x to 1.60x (median 1.12x); (ii)
enterprise value as a multiple of LTM EBITDA ranged from 6.4x to 8.0x (median
7.2x); (iii) enterprise value as a multiple of LTM EBIT ranged from 9.8x to
12.0x (median 10.5x); (iv) market value as a multiple of LTM net income ranged
from 12.6x to 18.7x (median 15.4x); and (v) market value as a multiple of book
value ranged from 1.6x to 2.8x (median 2.6x).
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Based on the multiples derived in the comparable transactions analysis and
Tuscarora's LTM financial results, the implied per share values for Tuscarora
ranged from $10.38 to $38.14 (median $24.15) based on LTM revenues; $21.47 to
$28.79 (median $25.14) based on LTM EBITDA; $19.00 to $25.01 (median $20.83)
based on LTM EBIT; $17.92 to $26.60 (median $21.92) based on LTM net income; and
$16.14 to $28.00 (median $26.05) based on book value. Parker/Hunter also
calculated the implied values per share based on Tuscarora's Projected February
Results. Using Projected February Results this analysis indicated that the
implied values per share based on revenues ranged from $10.75 to $39.06 (median
$24.79), based on EBITDA ranged from $21.28 to $28.56 (median $24.94), based on
EBIT ranged from $17.90 to $23.67 (median $19.66), based on net income ranged
from $16.61 to $24.65 (median $20.32); and based on book value ranged from
$16.13 to $27.97 (median $26.02).
Premiums Paid Analysis. Parker/Hunter examined the percentage premiums paid
in transactions involving 446 publicly traded companies with equity values
between $100 million and $500 million acquired between January 1, 1996 and
January 19, 2001. The analysis indicated a range of premiums paid one day, one
week and four weeks prior to announcement of -31.0% to 139.8% (median 24.3%),
- -28.2% to 172.6% (median 32.0%), and -29.7% to 172.0% (median 43.9%),
respectively. Parker/Hunter also noted that the consideration of $21.50 per
share in cash in the merger represented a 53.6% premium over the closing price
of Tuscarora common stock on January 19, 2001, a 56.4% premium over the closing
price one week prior to January 19, 2001, a 72.0% premium over the closing price
four weeks prior to January 19, 2001, a 58.5%% premium over the closing price
three months prior to January 19, 2001, a 42.1% premium over the closing price
six months prior to January 19, 2001 and an 84.0% premium over the closing price
one year prior to January 19, 2001.
Discounted Cash Flow Analysis. Parker/Hunter performed a discounted cash
flow ("DCF") analysis for Tuscarora on a stand alone basis using assumptions
provided by management for fiscal years 2001 through 2004 under the following
scenarios: (i) the first case incorporated management's estimate of future
performance ("Case I"); and (ii) the second case modified certain revenue growth
and operating margin assumptions ("Case II"). Case I assumes an average
operating margin of 10.4% over the four-year period, whereas Case II assumes an
average operating margin of 8.5%. In determining the terminal value at the end
of the projected period, Parker/ Hunter utilized multiples ranging from 6.0x to
7.5x EBITDA. Parker/Hunter then discounted both the unlevered free cash flows
and the terminal values, using discount rates ranging from 12.0% to 16.0%, in
order to determine a net present value of the unlevered equity value of
Tuscarora. Parker/Hunter then added cash and subtracted outstanding debt as of
November 30, 2000, from the discounted present values. Based on Case I, the DCF
analysis generated implied per share values ranging from $18.00 to $28.04, with
a midpoint of $22.73. Case II generated implied per share values ranging from
$13.52 to $21.68, with a midpoint of $17.37.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Each of the
analyses conducted by Parker/Hunter was carried out in order to provide a
different perspective on the transaction and add to the total mix of information
available. Parker/Hunter did not form a conclusion as to whether any individual
analysis, considered in isolation, supported or failed to support an opinion as
to fairness from a financial point of view. Rather, in reaching its conclusion,
Parker/Hunter considered the results of the analyses in light of each other and
ultimately reached an opinion based on the results of the analyses taken as a
whole. Further, Parker/Hunter's conclusion involved significant elements of
judgment and qualitative analysis as well as the financial and quantitative
analyses. Parker/Hunter did not place particular reliance or weight on any
individual factor, but instead concluded that its analyses, taken as a whole,
supported its determination. Accordingly, notwithstanding the separate factors
summarized above, Parker/Hunter believes that its analyses must be considered as
a whole and that selecting portions of the analyses or the summary set forth
above without considering the analyses as a whole could create an incomplete or
misleading view of the process underlying the opinion of Parker/Hunter. No
company or transaction used in the above analyses as a comparison is identical
to Tuscarora or the transaction contemplated by the Merger Agreement.
Consequently, an analysis of the results of the foregoing is not mathematical;
rather, it involves complex considerations and judgments concerning differences
in financial and operating characteristics between the comparable companies and
Tuscarora, as well as other factors that could affect the acquisitions or public
trading values of the companies to which Tuscarora is being compared. The
analyses were prepared solely for the purpose of Parker/Hunter providing its
opinion to the Tuscarora Board in connection with the Tuscarora Board's
consideration of the merger and do not purport to be appraisals or necessarily
reflect the prices at which businesses or securities
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actually may be sold, which may be significantly more or less favorable than as
set forth in these analyses. Similarly, any estimate of values or forecast of
future results contained in the analyses is not necessarily indicative of actual
values or actual future results, which may be significantly more or less
favorable than suggested by such analyses.
In performing its analyses, Parker/Hunter made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters. Because such analyses are inherently subject to uncertainty,
being based upon numerous factors or events beyond the control of the parties,
Parker/Hunter assumes no responsibility if future results or actual values are
materially different from the forecasts or estimates contained in the analyses.
The Tuscarora Board engaged Parker/Hunter based upon Parker/Hunter's
qualifications, expertise, reputation and experience in mergers and
acquisitions, and knowledge of Tuscarora's business. In the past, Parker/Hunter
has provided investment banking services to Tuscarora for which Parker/Hunter
has received customary fees. For its services as Tuscarora's financial advisor,
Parker/Hunter was paid a non-refundable retainer of $100,000 in connection with
its engagement as the Company's financial advisor. Parker/Hunter received
$500,000 for delivery of its opinion. If Tuscarora requests additional opinions
with respect to a revised offer, Parker/Hunter will be paid $250,000 per
opinion. Such retainer and opinion fees were not contingent upon the
consummation of the merger. A transaction fee of 1% of the aggregate
consideration paid in the proposed merger is due to Parker/Hunter when the
merger is consummated. The retainer and opinion fees will be credited against
the transaction fee. Tuscarora also agreed to reimburse Parker/Hunter for its
out-of-pocket expenses, including, but not limited to, fees of counsel, and to
indemnify Parker/Hunter and certain related parties against certain liabilities,
including liabilities ensuing under federal securities laws. Robert W.
Kampmeinert, a member of Tuscarora's Board of Directors, is the Chairman,
President and Chief Executive Officer of Parker/Hunter, but did not participate
in Parker/Hunter's determination of fairness.
Parker/Hunter is experienced in providing advice in connection with mergers
and acquisitions and related transactions, and is regularly engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions, underwritings, sales and distributions of listed and unlisted
securities, private placements and valuations for corporate and other purposes.
In the ordinary course of business, Parker/Hunter and its affiliates may
actively trade or hold the securities of Tuscarora or Svenska Cellulosa
Aktiebolaget for their own account or for the account of customers and,
accordingly, may at any time hold a long or short position in such securities.
RECOMMENDATION OF THE BOARD OF DIRECTORS OF TUSCARORA
THE BOARD OF DIRECTORS OF TUSCARORA BELIEVES THAT THE TERMS OF THE PROPOSED
MERGER ARE FAIR AND IN THE BEST INTERESTS OF TUSCARORA AND UNANIMOUSLY
RECOMMENDS THAT THE SHAREHOLDERS OF TUSCARORA VOTE "FOR" APPROVAL OF THE MERGER
PROPOSAL.
In reaching its determination to recommend approval of the merger, the
Board considered the following material factors:
- the best interests of Tuscarora;
- the implications of the merger for all of Tuscarora's constituents
including its shareholders, employees, suppliers, customers, creditors
and others with whom it deals, and the communities in which its
operations are located;
- the consideration Tuscarora shareholders will receive if the merger is
completed and the likelihood that the merger will deliver greater value
to Tuscarora shareholders than what would be reasonable to expect if
Tuscarora remained independent;
- the presentation made to the Board on January 19, 2001 by representatives
of Parker/Hunter, including Parker/Hunter's opinion that the
consideration in the merger is fair to Tuscarora shareholders from a
financial point of view as of that date;
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- the Board's familiarity with Tuscarora's business, operations, financial
condition, earnings and prospects (both short-term and long-term);
- the Board's understanding of the business, operations, financial
condition, earnings and prospects (both short-term and long-term) of SCA
Packaging;
- the Board's assessment of SCA Packaging's ability to pay the merger
consideration;
- the complementary nature of Tuscarora's and SCA Packaging's businesses,
services and products, and the opportunity for Tuscarora to become part
of a combined business that offers a wider variety of products to
customers and an enhanced ability to attract new customers;
- the likelihood of a smooth integration of Tuscarora's business with that
of SCA Packaging; o the Board's review of other strategic alternatives to
the merger potentially available to Tuscarora; and
- the judgment and advice of Tuscarora's senior management.
As a result of the foregoing considerations, the Board determined that the
potential advantages of the proposed merger outweigh the benefits of remaining
an independent corporation. The Board believes that the combined company will
have a far greater opportunity than Tuscarora alone to compete in its industry.
In view of the variety of factors considered in connection with its
evaluation of the merger, the Board, as a whole, did not find it practicable to
and did not quantify or otherwise assign relative weights to the specific
factors considered in reaching its determination. The Board, as a whole, did not
attempt to analyze each individual factor separately to determine how it
impacted the fairness of the merger. Consequently, individual members of the
Board may have given different weights to different factors and may have viewed
different factors as affecting the determination of fairness differently.
TERMS OF THE MERGER
THIS DISCUSSION OF THE TERMS OF THE PROPOSED MERGER HAS BEEN SUMMARIZED
FROM AND IS QUALIFIED BY REFERENCE TO THE MERGER AGREEMENT ATTACHED TO THIS
PROXY STATEMENT AS APPENDIX I. YOU SHOULD READ THE MERGER AGREEMENT FOR A
COMPLETE DESCRIPTION OF THE PROPOSED MERGER.
The Merger Agreement provides that SCA Acquisition, which is an indirect
wholly-owned subsidiary of SCA Packaging's ultimate parent company, will merge
with and into Tuscarora. Tuscarora will survive and become an indirect
wholly-owned subsidiary of SCA Packaging's ultimate parent company and retain
the name Tuscarora Incorporated, while SCA Acquisition will cease to exist. As a
shareholder of Tuscarora you will receive $21.50 in cash for each share of
Tuscarora common stock that you own. Promptly after satisfaction or waiver of
the conditions to the merger, Tuscarora and SCA Acquisition will file articles
of merger with the Commonwealth of Pennsylvania, at which time the merger will
become effective. When the merger becomes effective, your shares of Tuscarora
common stock will automatically be cancelled and, unless you have exercised your
right to dissent (see "Dissenter's Rights" on page 20) your only right will be
to receive $21.50 in cash for each share of Tuscarora common stock that you own.
You will no longer have the right to vote the shares or receive dividends on the
shares, or any other rights as a shareholder other than to receive the merger
consideration of $21.50 per share. The Merger Agreement also provides that when
the merger is effective, each outstanding stock option will be cancelled,
whether or not vested or exercisable. Each option holder will receive a cash
payment for each cancelled option equal to the excess of $21.50 over the option
price. In addition, directors holding phantom share units will be paid $21.50
for each phantom share unit held (see "Treatment of Stock Options and Phantom
Share Units" on page 25).
EXCHANGE OF CERTIFICATES AND CASH
As promptly as possible after the effective date of the merger, each holder
of record will receive a transmittal letter which will instruct you as to how to
exchange your share certificates for the cash payable to you pursuant to the
merger. Upon surrender of your share certificates and an executed letter of
transmittal, you, the holder, will receive the $21.50 per share cash
consideration as provided for in the Merger Agreement. After the effective date
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until the surrender of your certificates, each certificate will represent only
the right to receive the merger consideration of $21.50 per share. No interest
will be paid on the merger consideration.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains representations and warranties of Tuscarora
and SCA Packaging regarding various legal, financial and business matters.
Tuscarora's representations and warranties relate to:
- corporate existence and power;
- corporate authorization;
- governmental authorization;
- absence of conflicts, violations and defaults under its articles of
incorporation or bylaws, any other agreements or instruments, or any
judgments, orders or laws as a result of the transactions contemplated by
the Merger Agreement;
- Tuscarora's capitalization;
- Tuscarora's subsidiaries;
- Tuscarora's Securities and Exchange Commission filings;
- Tuscarora's financial statements and undisclosed liabilities;
- information contained in this proxy statement;
- absence of certain changes since August 31, 2000;
- absence of material litigation;
- taxes;
- employee benefits;
- compliance with laws;
- title to properties;
- intellectual property;
- environmental matters;
- financial advisor's and finder's fees;
- shareholder vote required for, and Board of Directors approval of, the
proposed merger;
- certain actions required under Pennsylvania law;
- the suspension of Tuscarora's shareholder rights plan;
- labor matters;
- year 2000 computer matters; and
- the absence of certain contracts.
SCA Packaging's representations and warranties relate to:
- corporate existence and power;
- corporate authorization;
- governmental authorization;
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- absence of conflicts, violations and defaults under its articles of
incorporation or bylaws, any other agreements or instruments, or any
judgments, orders or laws as a result of the transactions contemplated by
the Merger Agreement;
- absence of material litigation; and
- financial advisor's and finder's fees.
The representations and warranties of Tuscarora and SCA Packaging will not
survive the merger.
CONDITIONS TO THE MERGER
The respective obligations of Tuscarora and SCA Packaging to complete the
proposed merger are subject to the following conditions (except as noted below):
- Tuscarora shareholder approval of the Articles Amendment and the merger
proposal;
- expiration or termination of the applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act (which has occurred -- see
"Regulatory Approvals" on page 23) and under the antitrust laws of the
United Kingdom and the Republic of Ireland;
- absence of any injunction, order, decree, law or regulation which
restrains, enjoins or otherwise prohibits the consummation of the merger
or the other transactions contemplated by the Merger Agreement;
- continued effectiveness of the employment agreements between Tuscarora,
and respectively, John P. O'Leary, Jr., the President and Chief Executive
Officer of Tuscarora, David C. O'Leary, the Senior Vice President and
Chief Operating Officer, and Brian C. Mullins, the Senior Vice President,
Chief Financial Officer and Treasurer of Tuscarora;
- performance by Tuscarora and SCA Packaging of their respective
obligations under the Merger Agreement in all material respects, and the
accuracy of their representations and warranties in all material respects
(unless otherwise qualified by materiality);
- all consents, approvals, actions, orders, authorizations, registrations,
declarations, announcements and filings needed to consummate the merger
have been obtained by the parties;
- no exercise of dissenters' rights by shareholders holding, in the
aggregate, 10% or more of the outstanding shares of Tuscarora's common
stock (this is a condition to SCA Packaging's obligations only); and
- the absence immediately following the merger of any right to acquire any
equity securities of Tuscarora under any Tuscarora stock option plan
(this is a condition to SCA Packaging's obligations only).
COVENANTS
Each of Tuscarora and SCA Packaging have undertaken covenants in the Merger
Agreement. The following summarizes the more significant covenants applicable to
Tuscarora:
- Interim operations of Tuscarora -- Tuscarora has undertaken a covenant
that places restrictions on it and its subsidiaries until the merger is
effective or the Merger Agreement is terminated. In general, Tuscarora
has agreed that it and its subsidiaries will conduct their business in
the ordinary course consistent with past practice and will use
commercially reasonable efforts to preserve intact their organizations
and business relationships. Tuscarora also agreed to specific
restrictions with respect to:
- amending its articles of incorporation or by-laws;
- engaging in certain transactions with respect to its capital stock;
- the payment of dividends;
- issuing capital stock other than in connection with its stock option
plans;
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- making capital expenditures other than in the ordinary course of
business consistent with past practice, but not in excess of $3,000,000
during each 60 day period from the date the Merger Agreement was
signed, on a cumulative basis;
- making an acquisition in excess of $1,000,000, excluding certain
acquisitions in process;
- selling or leasing assets not in the ordinary course of business or,
other than inventory, assets with an aggregate book value in excess
of $500,000 during each 30 day period from the date of the Merger
Agreement was signed, on a cumulative basis;
- incurring indebtedness for borrowed money except in the ordinary course
of business under existing credit agreements;
- entering into any agreement that limits its ability to compete in any
line of business or in any location;
- amending, modifying or terminating, except in the ordinary course
of business, a material contract;
- except in the ordinary course of business, permitting any material
change to any pricing, marketing, purchasing or inventory practice;
- increasing the compensation of any director, officer or employee
(except for normal increases to non-officer employees consistent
with past practice) or increasing employee benefits or adopting
additional employee benefit plans;
- changing accounting or financial reporting practices; and
- settling material litigation or making any material tax election
or compromising any material tax liability.
- Special meeting -- Tuscarora has agreed to call a special meeting to
obtain shareholder approval for the Articles Amendment and the merger.
Tuscarora's Board, except in the event of a superior acquisition proposal
or unless otherwise required by its duties as directors, has agreed to
recommend, and will take all lawful action to solicit, approval by the
shareholders of the Articles Amendment and the merger at the special
meeting.
- No solicitation -- Tuscarora has agreed not to solicit or initiate
another acquisition proposal and not to participate in any discussions or
negotiations regarding another acquisition proposal or enter into any
agreement or make a recommendation with respect to another acquisition
proposal, other than in the event (a) of a proposal that Tuscarora's
Board of Directors determines would result in a transaction more
favorable to Tuscarora's shareholders from a financial point of view than
the merger with SCA Packaging or (b) Tuscarora's Board of Directors
determines that its duties as directors require it to take any such
action. Tuscarora is permitted to respond to an unsolicited written
proposal from a person reasonably believed to have the financial and
other capability to consummate an acquisition proposal. Tuscarora has
agreed to notify SCA Packaging of certain events related to another
acquisition proposal and to afford SCA Packaging an opportunity to react
to such other acquisition proposal by making an alternative proposal if
it so chooses. Tuscarora or SCA Packaging may terminate the Merger
Agreement if Tuscarora's Board determines that such other acquisition
proposal is a superior acquisition proposal as defined in the Merger
Agreement or is one that its duties as directors require it to approve or
recommend and determines to enter into a binding agreement concerning
such acquisition proposal.
- Indemnification and Insurance of Tuscarora Directors and Officers -- SCA
Packaging has agreed to:
- continue the indemnification rights of Tuscarora's directors, officers,
employees and agents for a period of six years from the effective date
of the merger with respect to claims which may be made against
Tuscarora's officers, directors, employees or agents for acts or
omissions occurring before the merger;
- indemnify Tuscarora's directors and officers for their acts or
omissions in those capacities occurring before the effective time of
the merger; and
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- provide Tuscarora's current directors and officers liability insurance
protection of the same kind and scope as provided currently, for a
period of six years after the effective time of the merger.
- Performance by SCA Acquisition -- SCA Packaging has agreed to take all
action necessary to cause SCA Acquisition to perform its obligations
under the Merger Agreement and to consummate the merger on the terms and
conditions set forth in the Merger Agreement.
- Further Covenants -- Tuscarora and SCA Packaging further agree to:
- use reasonable best efforts to take all actions necessary to consummate
the merger as promptly as practicable;
- cooperate to determine whether any other actions, filings, consents,
approvals or waivers are required to consummate the merger and seek any
required items promptly;
- consult before issuing any press release or making any public statement
with respect to the merger or any of the other transactions
contemplated by the Merger Agreement; and
- give notice to the other of communications from a governmental entity
regarding the merger and of any actions, suits, claims, investigations
or proceedings that would have been required to be disclosed if pending
on the date of the Merger Agreement.
- Access to Information -- Tuscarora has agreed to give SCA Packaging
access to certain types of information, reasonably requested, to enable
SCA Packaging to continue to perform its investigation of Tuscarora, and
SCA Packaging has agreed to conduct such investigation so as to not
interfere with Tuscarora's business.
TERMINATION OF THE MERGER AGREEMENT
The Merger Agreement may be terminated at any time prior to the effective
time of the merger, either before or after approval by Tuscarora shareholders,
under the following circumstances:
- by mutual written consent of SCA Packaging and Tuscarora;
- by either SCA Packaging or Tuscarora, if:
- the merger has not been consummated by July 31, 2001, provided that a
party whose breach of the Merger Agreement resulted in the failure of
the merger to occur by July 31, 2001, may not terminate the Merger
Agreement;
- any law or regulation makes illegal or otherwise prohibits the
consummation of the merger;
- any judgment, injunction, order or decree of a government entity
permanently enjoins consummation of the merger and the reasonable best
efforts of Tuscarora and SCA Packaging have failed to remove such
judgment, injunction, order or decree;
- Tuscarora's shareholders do not approve the Articles Amendment or the
merger;
- if the other party has breached any covenant, agreement, representation
or warranty and such breach is material and incapable of being cured,
or is not cured, before July 31, 2001; or
- if Tuscarora's Board determines to approve or recommend another
acquisition proposal (after concluding that it represents a superior
acquisition proposal or it is one that its duties as directors require
it to approve or recommend); provided that Tuscarora may terminate only
if it has afforded SCA Packaging an opportunity to react to such other
acquisition proposal by way of making an alternative proposal if it so
chooses.
- by SCA Packaging, if:
- Tuscarora's Board amends, modifies, withdraws, conditions or qualifies
its recommendation of the Articles Amendment and the proposed merger in
a manner adverse to SCA Packaging and/or approves or recommends to
Tuscarora's shareholders another acquisition proposal; or
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- shares held by dissenting shareholders represent in the aggregate 10% or
more of the shares of Tuscarora's common stock outstanding.
Tuscarora must reimburse reasonable, actual expenses up to $3,000,000
incurred by SCA Packaging if termination occurs because:
- Tuscarora's Board has amended, modified, withdrawn, conditioned or
qualified its recommendation to the shareholders to approve the Articles
Amendment or the proposed merger in a manner adverse to SCA Packaging;
- Tuscarora's Board has approved or recommended to Tuscarora's shareholder
another acquisition proposal;
- Tuscarora's shareholders do not approve the Articles Amendment or the
merger; or
- shares held by dissenting shareholders represent 10% or more of
Tuscarora's shares of common stock outstanding.
Under certain circumstances, in the event of a breach of or failure to
perform any representation, warranty, covenant or agreement, the party breaching
or failing to perform must reimburse reasonable, actual expenses up to
$3,000,000 incurred by the other party.
If termination occurs as a result of Tuscarora's Board having amended,
modified, withdrawn, conditioned or qualified its recommendation to
shareholders, or having approved or recommended to Tuscarora's shareholders
another acquisition proposal or the termination occurs for any other reason
(other than a breach by SCA Packaging), and prior to termination an acquisition
proposal has been made by any person, and, in each case, Tuscarora is acquired
within 18 months after termination or enters into an agreement within 18 months
after termination to be acquired and such agreement is consummated, Tuscarora
must pay to SCA Packaging a termination fee of $15,000,000.
If termination occurs as a result of a breach by Tuscarora, SCA Packaging
or SCA Acquisition, the breaching party must pay $15,000,000 to the
non-breaching party who exercises its right to terminate. This payment is not
the exclusive remedy for a breach. Tuscarora shall not pay more than $15,000,000
in the aggregate with respect to the termination fee described above and the
breach fee.
AMENDMENTS; WAIVERS
Any provision of the Merger Agreement may be amended or waived by Tuscarora
and SCA Packaging prior to the effective time of the merger. Waivers or
amendments executed after approval of the Tuscarora shareholders will require
further shareholder approval if required by law.
AGREEMENT WITH CERTAIN SHAREHOLDERS
In connection with the Merger Agreement, certain directors of Tuscarora,
all of the executive officers (John O'Leary and David O'Leary, who are also
directors, and Brian Mullins), and certain other related shareholders of
Tuscarora, in all cases acting solely in their capacities as shareholders,
entered into the Shareholders Agreement with SCA Acquisition. These shareholders
collectively hold, including the shares covered by vested stock options,
approximately 15% of the outstanding shares of Tuscarora's common stock.
Under the terms of the Shareholders Agreement, at the special meeting or in
any circumstances where a vote, consent or other approval regarding the Articles
Amendment or the proposed merger with SCA Acquisition is sought from the
shareholders of Tuscarora, each signing shareholder is required to vote all of
his or her shares of Tuscarora common stock:
- in favor of the Articles Amendment and the proposed merger; and
- against any other merger or similar transaction, or any amendment of
Tuscarora's Restated Articles of Incorporation or By-laws or other
transaction that would impede or prevent the merger of Tuscarora and SCA
Acquisition.
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The Shareholders Agreement contains certain representations, warranties and
covenants by the signing shareholders regarding various legal and business
matters. Each signing shareholder's representations, warranties and covenants
relate to:
- ownership of and title to the signing shareholder's shares;
- authority of the signing shareholder to perform under the Shareholders
Agreement and absence of required consents with respect to such
performance; and
- prohibitions on the sale, pledge or other transfer of 90% of the signing
shareholder's shares until SCA Acquisition's right to exercise the option
expires.
In addition, under the Shareholders Agreement, each signing shareholder:
- has granted an irrevocable proxy to SCA Acquisition for the purpose of
voting each signing shareholder's share in connection with the Articles
Amendment and the proposed merger;
- has granted to SCA Acquisition an irrevocable option to purchase, under
certain circumstances, each signing shareholder's shares at $21.50 per
share if an acquisition proposal is made by a third party and the Merger
Agreement has been terminated;
- has agreed to exercise his or her vested stock options under any of the
Company's stock option plans, with the resulting shares being subject to
the irrevocable option described above;
- has agreed to surrender the certificates representing the shares covered
by the Shareholders Agreement to SCA Acquisition upon consummation of the
merger with SCA Acquisition;
- has waived his or her rights of appraisal and dissent in connection with
the proposed merger; and
- has agreed to the cancellation of all options or other rights to purchase
shares upon the effectiveness of the proposed merger, in exchange for the
right to receive the excess of $21.50 per share over the option or
purchase price.
The signing shareholders' obligation to vote their shares as provided for
in the Shareholders Agreement, and the related grant of a proxy to SCA
Acquisition, terminates upon the termination of the Merger Agreement.
SCA Acquisition's right to exercise the options granted under the
Shareholders Agreement expires upon the earlier of 18 months after a termination
of the Merger Agreement or 60 days after Tuscarora completes a merger or other
business combination with a third party.
The voting obligation contained in the Shareholders Agreement expires upon
consummation of the merger or termination of the Merger Agreement.
The Shareholders Agreement provides for an equitable adjustment in the
number and kind of the shares covered in the event of a change in Tuscarora's
capital stock by reason of a stock dividend, stock split or other change which
would affect SCA Acquisition rights.
DISSENTERS' RIGHTS
Under Pennsylvania law, if you do not wish to accept the cash payment
provided for in the Merger Agreement, you have the right to dissent from the
merger and to receive payment in cash for the fair value of your Tuscarora
common stock. Tuscarora shareholders electing to exercise dissenters' rights
must comply with the provisions of Section 1571 to 1580 (Subchapter D of Chapter
15) of the Pennsylvania Business Corporation Law ("PBCL") in order to perfect
their rights. Tuscarora will require strict compliance with the statutory
procedures. A copy of Subchapter D is attached as Appendix II.
The following is intended as a brief summary of the material provisions of
the Pennsylvania statutory procedures required to be followed by a shareholder
in order to dissent from the merger and perfect dissenters' rights. This
summary, however, is not a complete statement of all applicable requirements and
is qualified in its entirety by reference to Subchapter D of the PBCL, the full
text of which appears in Appendix II of this proxy statement.
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IF YOU WISH TO CONSIDER EXERCISING YOUR DISSENTERS' RIGHTS, YOU SHOULD
CAREFULLY REVIEW THE TEXT OF SUBCHAPTER D CONTAINED IN APPENDIX II SINCE FAILURE
TO TIMELY AND PROPERLY COMPLY WITH THE REQUIREMENTS OF SUBCHAPTER D WILL RESULT
IN THE LOSS OF YOUR DISSENTERS' RIGHTS UNDER PENNSYLVANIA LAW.
FILING NOTICE OF INTENTION TO DEMAND FAIR VALUE
If you wish to dissent from the merger, you must deliver to Tuscarora,
before the vote of Tuscarora shareholders is taken on the merger, a written
notice of intention to demand that you be paid the fair value of your shares if
the merger is completed. This written notice may be sent to the Secretary of
Tuscarora at 800 Fifth Avenue, New Brighton, Pennsylvania, 15066. Neither the
return of a proxy with instructions to vote your shares against the merger, nor
a vote against the merger, is sufficient to satisfy the requirement of
delivering a written notice to Tuscarora. In addition, you must not change
beneficial ownership of your shares at any time during the period from the date
of filing the notice with Tuscarora through the effective date of the merger,
and you must not vote in favor of the merger the shares for which payment of
fair value is sought. The submission of a signed blank proxy, if not revoked,
will serve to waive dissenters' rights, but a failure to vote against the merger
will not waive your rights to dissent. Proper revocation of a signed blank proxy
or a signed proxy instructing a vote for approval of the merger will also
preserve dissenters' rights under the PBCL. FAILURE TO COMPLY WITH ANY OF THE
FOREGOING WILL RESULT IN THE FORFEITURE OF ANY RIGHT TO PAYMENT OF FAIR VALUE
FOR YOUR SHARES UNDER THE PBCL, AND YOUR SHARES WILL BE CONVERTED INTO THE
MERGER CONSIDERATION IN THE MANNER DESCRIBED IN THIS DOCUMENT.
RECORD AND BENEFICIAL OWNERS
The PBCL distinguishes between record holders and beneficial owners.
Generally if you choose to assert your dissenters' rights, you must dissent as
to all of the shares you own. A record holder of shares may assert dissenters'
rights for fewer than all of the shares of Tuscarora common stock registered in
the record holder's name only if the record holder dissents with respect to all
the shares of Tuscarora common stock beneficially owned by any one person and
discloses the name and address of the person or persons on whose behalf the
record holder is dissenting. If you are a beneficial owner of shares who is not
the record holder, you may assert your dissenters' rights with respect to shares
held on your behalf if you submit to Tuscarora no later than the time of
assertion of dissenters' rights the written consent of the record holder. If you
are a beneficial owner, you may not dissent with respect to less than all of the
shares of Tuscarora common stock beneficially owned by you, whether or not such
shares are registered in your name.
NOTICE TO DEMAND PAYMENT
If the merger is approved at the special meeting, Tuscarora will mail a
notice to all dissenters who filed notice of intention to dissent and who did
not vote in favor of the merger. The notice will state where and when a demand
for payment must be sent and where certificates for shares must be deposited in
order to obtain payment. The notice will be accompanied by a copy of Subchapter
D and a form for demanding payment. This form will include a request for
certification of the date that beneficial ownership of the dissenting shares was
acquired by the shareholder or the person on whose behalf the shareholder
dissents. The time set for the receipt of demands and the deposit of
certificates will no be less than 30 days from the mailing of the notice.
Failure by you as a dissenting shareholder to timely demand payment or timely
deposit certificates as required by the notice will cause you to lose all right
to receive payment of the fair value of your shares. If the merger has not been
completed within 60 days after the date set for demanding payment and depositing
certificates, Tuscarora will return any certificates that have been deposited.
Tuscarora, however, may at any later time send a new notice regarding demand for
payment and deposit of certificates.
PAYMENT OF FAIR VALUE OF SHARES
Promptly after the merger, or upon timely receipt of demand for payment if
the merger has already been completed, Tuscarora will either:
- remit to dissenters who have made demand and deposited their certificates
the amount Tuscarora estimates to be the fair value of their shares, or
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- give written notice that no remittance will be made.
The remittance or notice will be accompanied by:
- the closing balance sheet and statement of income of Tuscarora for a
fiscal year ending not more than 16 months prior to the date of the
remittance or notice together with the latest available interim financial
statements'
- a statement of Tuscarora's estimate of the fair value of the shares;
- a notice of the right of the dissenting shareholder to demand payment or
supplemental payment, as the case may be; and
- a copy of Subchapter D.
If Tuscarora does not remit the amount of its estimate of the fair value of
the shares, it will return all certificates that have been deposited and may
make a notation on them that a demand for payment has been made.
ESTIMATE BY YOU OF FAIR VALUE OF SHARES
If you, as a dissenting shareholder, believe that the amount estimated by
Tuscarora and not remitted to you or the amount paid by Tuscarora to you for
your shares is less than their fair value, you may send to Tuscarora your own
estimate of the fair value. This will be deemed a demand for payment of the
amount or the deficiency. If you do not file your own estimate of fair value
within 30 days after the mailing of Tuscarora's notice or remittance, you will
only be entitled to the amount stated in the notice or remitted to you by
Tuscarora.
VALUATION PROCEEDINGS
Within 60 days after the latest of (i) the effective date of the merger,
(ii) timely receipt of any demands for payment, or (iii) timely receipt of any
shareholder estimates of fair value, if any demands for payment remain
unsettled, Tuscarora may file in court an application for relief requesting that
the fair value of the shares be determined by the court. If your demands have
not been settled, you will be made a party to the proceeding and will be
entitled to recover the amount by which the fair value of your shares is found
to exceed the amount, if any, previously remitted, plus interest. If Tuscarora
fails to file an application within the 60-day period and you have not settled
your claim, you may file an application in Tuscarora's name within 30 days after
the expiration of the 60-day period. If no dissenter files an application within
this 30-day period and you have not settled your claim, you will be paid no more
than Tuscarora's estimate of the fair value of your shares and may bring an
action to recover any amount not previously remitted.
COSTS AND EXPENSES OF VALUATION PROCEEDINGS
The costs and expenses of any valuation proceedings, including the
reasonable compensation and expenses of any appraiser appointed by the court,
will be determined by the court and assessed against Tuscarora. The court may,
however, apportion and assess any part of such costs and expenses against all or
some of the dissenters whose action in demanding supplemental payment is found
by the court to be in bad faith. The court may also assess the fees and expenses
of counsel and experts for any or all of the dissenters against Tuscarora if
Tuscarora fails to comply substantially with Subchapter D or acts in bad faith.
If the court finds that the services of counsel for any dissenter were of
substantial benefit to the other dissenters and should not be assessed against
Tuscarora, it may award to reasonable fees to be paid out of the amounts awarded
to the dissenters who were benefitted.
OTHER
You should be aware that certain courts have disagreed as to whether
dissenters' rights are the exclusive remedy available to a shareholder who is
opposed to a corporate transaction, such as the merger. You should note that
Section 1572 of the PBCL defines "fair value" as: The fair value of shares
immediately before the effectuation of the corporate action to which the
dissenter objects, taking into account all relevant factors, but excluding any
appreciation or depreciation in anticipation of the corporate action. In view of
the complexities of
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these provisions of the PBCL, if you are considering dissenting from the merger,
you should consult your own counsel.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The exchange of your common stock for cash pursuant to the terms of the
Merger Agreement will be a taxable transaction for federal income tax purposes
under the Internal Revenue Code, and may also be a taxable transaction under
state, local and other tax laws. Similarly, any Tuscarora shareholders who
exercise their dissenters' appraisal rights and receive cash in exchange for
their shares of Tuscarora common stock will recognize income for federal tax
purposes and may recognize income under state, local and other tax laws. A
shareholder of Tuscarora will recognize gain or loss equal to the difference
between the amount of cash received by the shareholder pursuant to the merger
and the shareholder's adjusted tax basis in the Tuscarora common stock exchanged
by such shareholder. Gain or loss must be determined separately for each block
of Tuscarora common stock surrendered pursuant to the merger. For purposes of
federal tax law, a block consists of shares of Tuscarora common stock acquired
by the shareholder at the same time and price.
Gain or loss recognized by the shareholder exchanging his or her Tuscarora
common stock for cash pursuant to the merger or pursuant to the exercise of
dissenters' rights will be capital gain or loss if such common stock is a
capital asset in the hands of the shareholder. If the Tuscarora common stock has
been held for more than one year, the gain or loss will be long-term. Capital
gains recognized by an individual shareholder generally will be subject to tax
at the top marginal rate applicable to the shareholder (up to a maximum of 39.6%
for short-term capital gains and 20% for long-term capital gains), and capital
gains recognized by a corporate shareholder generally will be subject to tax at
a maximum rate of 35%.
Neither SCA Packaging nor Tuscarora has requested or will request a ruling
from the Internal Revenue Service as to any of the tax effects to Tuscarora's
shareholders of the transactions discussed in this proxy statement, and no
opinion of counsel has been or will be rendered to Tuscarora's shareholders with
respect to any of the tax effects of the merger to shareholders.
The federal income tax discussion set forth above is based upon current law
and is intended for general information only. You are urged to consult your tax
advisor concerning the specific tax consequences of the merger to you, including
the applicability and effect of state, local or other tax laws and of any
proposed changes in those tax laws and the Internal Revenue Code.
REGULATORY APPROVALS
U.S. ANTITRUST
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the related rules, the proposed merger may not be completed until
notifications have been given, required information has been furnished to the
Federal Trade Commission and the U.S. Department of Justice and the specified
waiting period has expired or been terminated. Each of SCA Packaging and
Tuscarora made filings with the Federal Trade Commission and the U.S. Department
of Justice and the applicable waiting period was terminated early on February 7,
2001, thus allowing the merger to be completed without further review by the
U.S. antitrust authorities.
FOREIGN ANTITRUST
Filings have been made with the antitrust authorities in the United Kingdom
and in the Republic of Ireland. In each case, the relevant waiting period is
expected to expire, and/or confirmation that further review will not be made is
expected to be received, before March 9, 2001, the date of the special meeting
of shareholders.
INTERESTS OF TUSCARORA EXECUTIVE OFFICERS AND DIRECTORS IN THE MERGER
In considering the recommendation of the Board of Directors with respect to
the merger, you should be aware that certain executive officers and members of
the Board of Directors of Tuscarora have interests in the
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merger that are different from, or in addition to yours. The Board was aware of
these interests and considered them when approving the merger and recommending
it to you. These interests are described below.
EMPLOYMENT AGREEMENTS
In connection with the signing of the Merger Agreement, Tuscarora entered
into employment agreements with John P. O'Leary, Jr., the President and Chief
Executive Officer of Tuscarora, David C. O'Leary, the Senior Vice President and
Chief Operating Officer and Brian C. Mullins, the Senior Vice President, Chief
Financial Officer and Treasurer of Tuscarora (each of whom is referred to in
this section as "Employee").
The terms of John O'Leary's and David O'Leary's employment agreements begin
on the effective date of the merger and expire 36 months from that date (the
"Term") unless terminated earlier. The term of Brian Mullins' employment
agreement will run for 24 months from the effective date of the merger (also the
"Term") unless terminated earlier.
Under each agreement, the Employee will be a full time employee of
Tuscarora and will be compensated as such, including salary, bonuses and stock
options, in the ordinary course. In addition, each Employee will be entitled to
receive a stay bonus if he remains in the employ of the Company through the end
of the Term and all of it or part of it in certain other circumstances as
described below. The stay bonus will be an amount equal to 30 times the sum of:
- the then current monthly salary under the employment agreement, and
- the sum of the bonuses paid to the Employee for the two fiscal years
immediately preceding the date of the Employee's termination divided by
24, but in any event not less than $1,191,000 in the case of John
O'Leary, $821,130 in the case of David O'Leary and $700,380 in the case
of Brian Mullins.
Each employment agreement may be terminated by Tuscarora in the event of
"disability" or for "good cause" as defined in the employment agreement or
without cause. Employee may terminate the employment agreement for "good reason"
as defined in the employment agreement or without good reason. If an employment
agreement is terminated by Tuscarora due to "disability" the full amount of the
stay bonus will be payable. If an employment agreement is terminated by
Tuscarora without cause, or if an Employee terminates an employment agreement
for "good reason," the Employee will be entitled to receive the stay bonus and,
in the case of John P. O'Leary and David C. O'Leary but not in the case of Brian
C. Mullins, 50% of his salary for the remainder of the Term. If Employee is
terminated by Tuscarora for "good cause," he will not be entitled to receive the
stay bonus or any part of his salary for the remainder of the Term. If John
O'Leary or David O'Leary terminates his employment without good reason, he will
be entitled to receive the stay bonus as follows:
- none of it if he terminates at any time prior to twelve months from the
commencement of the employment agreement;
- 1/3 of it if he terminates on or after twelve months from the
commencement of the employment agreement but before twenty-four months;
and
- 2/3 of it if he terminates on or after twenty-four months from the
commencement of the employment agreement but before thirty-six months.
If Brian Mullins terminates his employment without good reason, he will be
entitled to receive the stay bonus as follows:
- none of it if he terminates at any time prior to six months from the
commencement of the employment agreement;
- 50% of it if he terminates on or after six months from the commencement
of the employment agreement but before twelve months; and
- 100% of it if he terminates on or after twelve months from the
commencement of the employment agreement.
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Under each employment agreement "good cause" means the violation by
Employee of a material provision of the employment agreement, dishonesty, fraud,
gross neglect or gross misconduct on the part of the Employee that materially
and adversely affects the operations or reputation of Tuscarora or Employee's
conviction of a felony charge or chronic alcohol abuse or illegal drug abuse,
and "good reason" means, principally, Employee having been (1) assigned duties
materially inconsistent with Employee's position with Tuscarora or (2) required
to relocate to an office more than 50 miles from New Brighton, Pennsylvania or
to travel to a materially greater extent than he currently travels.
If the amount payable to an Employee under the employment agreement taken
together with any amounts or benefits otherwise paid to him by the Company or
any affiliated company are an "excess parachute payment" as defined in Section
280G of the Internal Revenue Code and would subject him to the excise tax
imposed under Section 4999 of the Internal Revenue Code, certain adjustments may
be made to the amounts payable under the employment agreement.
Each Employee will be obligated to refrain from competing with the Company
during the period of his employment with the Company and for a period of 30
months thereafter.
TREATMENT OF STOCK OPTIONS AND PHANTOM SHARE UNITS
The Merger Agreement provides that when the merger is effective, each
outstanding stock option granted under various Tuscarora stock option plans will
be cancelled, whether or not vested or exercisable. Each option holder will be
entitled to receive a cash payment for each cancelled option equal to the excess
of $21.50 over the applicable option price. The information below reflects the
amount of cash payments that would be received based on options outstanding as
of January 9, 2001 by executive officers and directors of Tuscarora.
VALUE OF OPTIONS
CANCELLED
NAME TITLE IN THE MERGER
---- ----- ----------------
John P. O'Leary, Jr. President and Chief Executive Officer $1,349,650
David C. O'Leary Senior Vice President and Chief Operating
Officer $ 805,025
Brian C. Mullins Senior Vice President, Chief Financial
Officer and Treasurer $ 669,025
Directors as a Group (other than John
O'Leary and David O'Leary) $ 214,900
Total (all executive officers and
directors) $3,038,600
See "Ownership of Tuscarora Common Stock" on page 26 for the amount of
common stock beneficially owned by the executive officers and directors of
Tuscarora.
Certain directors who participate in the Deferred Compensation Plan for
Non-employee Directors hold phantom share units as a result of their election to
defer certain director fees. They will be paid $21.50 per phantom share unit
when the merger is effective.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Merger Agreement requires Tuscarora and SCA Packaging to provide
indemnification and liability insurance arrangements for officers and directors
of Tuscarora. See "The Merger -- Terms of the Merger -- Covenants" on page 16
for further discussion.
RELATIONSHIP WITH FINANCIAL ADVISOR
Robert W. Kampmeinert, a member of Tuscarora's Board of Directors, is the
Chairman, President and Chief Executive Officer of Parker/Hunter, the Company's
financial advisor. Parker/Hunter will receive compensation for its services as
financial advisor as discussed on page 13.
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THE COMPANIES
TUSCARORA INCORPORATED
Tuscarora was incorporated in 1962.
Tuscarora custom designs and manufactures protective packaging and material
handling solutions for a wide range of manufactured products utilizing a variety
of materials. Tuscarora also supplies customers with molded foam plastic
components for a growing number of industrial and consumer product applications.
Complex packaging requirements are engineered from material options that
include molded and die-cut foam plastics, corrugated paperboard, wood and
thermoformed plastics, used singularly or in combination. Component applications
requiring energy management, insulation, or flotation properties are primarily
manufactured from expanded foam plastics for use in the automotive and
recreational vehicles, and appliance industries.
Tuscarora serves more than 3600 customers located in North America and
Europe from 36 manufacturing facilities and nine design and testing centers
regionally located throughout the United States, Mexico, the United Kingdom and
the Republic of Ireland. Tuscarora's major customers are in the following
industries: high technology and telecommunications, automotive and recreational
vehicles, consumer electronics, large and small appliances, building products
and office furniture, and pharmaceuticals and specialty chemicals.
Tuscarora's executive offices are located at 800 Fifth Avenue, New
Brighton, Pennsylvania 15066 (telephone number (724) 843-8200).
SCA PACKAGING
Svenska Cellulosa Aktiebolaget (SCA) was incorporated in 1929 as a holding
company for some ten forest industry companies producing sawn goods and paper
pulp in northern Sweden. Today, SCA is an integrated paper company that produces
absorbent hygiene products, corrugated packaging and graphic papers, with Europe
as its primary market. Based on customer needs, value-added products are
produced for private consumers, institutions, industry and the retail trade. Net
sales in 1999 totaled SEK 65 billion. At the beginning of 2000, the number of
employees was slightly more than 34,100 in over 40 countries.
SCA Packaging is one of three business groups of SCA; the other two are
Hygiene Products and Forest Products. SCA Packaging is one of the leading
European corrugated packaging companies with 203 locations in 29 countries and
190 production plants (85 integrated box plants and 94 sheet plants) and mills
(11 Kraftliner and recycled paper mills) in 29 countries, mostly in Europe. SCA
Packaging produces approximately 35 million boxes and trays of corrugated board
every day (more than 3 billion sqm/year). The company also produces 2.52 million
tons annually of containerboard (paper) in its 11 European paper mills.
Kraftliner is produced from fresh wood fibers in its 2 Swedish mills and
Testliner from recycled fibers in the Benelux, Denmark, Germany, Italy,
Switzerland, Turkey and the United Kingdom. Containerboard is transformed into
corrugated board by SCA Packaging box plants and sheet feeders or sold on the
market. SCA Packaging employed some 18,000 people in 2000. Main customers are in
processed and fresh foods, beverages, consumer durables and industrial products.
Net sales reach SEK M 19,858 in 1999, up 32% on the previous year (SEK 15,035 M
in 98), mostly due to acquisitions.
SCA Packaging's executive officers are located at Excelsiorlaan 81, B-1930
Zaventem, Belgium. The telephone number is +32-2-718-3711.
OWNERSHIP OF TUSCARORA COMMON STOCK
The following table contains information about the beneficial ownership of
the Tuscarora common stock as of January 9, 2001 by:
- each person known to us to own beneficially more than 5% of the
outstanding shares of Tuscarora's common stock;
- the Chief Executive Officer and two other executive officers of
Tuscarora;
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- each director of Tuscarora; and
- all directors and executive officers of Tuscarora as a group.
To our knowledge, all persons listed below have sole voting and investment
power over their shares of common stock, unless otherwise indicated.
BENEFICIAL OWNERSHIP OF COMMON
STOCK
------------------------------
NAME OF BENEFICIAL OWNER NUMBER OF SHARES % OF CLASS
- ------------------------ ---------------- ----------
David I. Cohen (1) (3)...................................... 10,558 .11%
Abe Farkas (1) (3) (4) (5).................................. 439,100 4.72%
Karen L. Farkas (1) (3)..................................... 23,000 .25%
Robert W. Kampmeinert (1) (4) (6) (7)....................... 23,000 .25%
Jeffery L. Leininger (1).................................... 3,500 .04%
Brian C. Mullins (1) (2) (4)................................ 74,894 .80%
David C. O'Leary (1) (2) (3) (4) (6)........................ 189,577 2.03%
John P. O'Leary, Jr. (1) (2) (3) (4) (6) (8)................ 327,382 3.49%
Harold F. Reed, Jr. (1) (3) (4)............................. 76,450 .82%
Thomas P. Woolaway (1) (3) (4).............................. 248,136 2.67%
All directors and executive officers of the Company as a
group (10 persons) (1).................................... 1,415,597 15.21%
T. Rowe Price Associates, Inc.
100 East Pratt Street Baltimore, Maryland 21202 (9)......... 833,700 8.96%
- ---------------
(1) Includes shares covered by vested stock options as follows: David I. Cohen,
3,500 shares; Abe Farkas, 3,500 shares; Karen L. Farkas, 3,500 shares;
Robert W. Kampmeinert, 3,500 shares; Jeffery L. Leininger, 3,500 shares;
Brian C. Mullins, 41,250 shares; David C. O'Leary, 35,250 shares; John P.
O'Leary, Jr., 70,500 shares; Harold F. Reed, Jr., 3,500 shares and Thomas P.
Woolaway, 3,500 shares. In computing the percentage ownership for each
person and all directors and executive officers as a group, the shares
covered by the stock options held by each person and the group are deemed
outstanding. The table does not include stock options granted to the
Company's executive officers which may become exercisable prior to October
26, 2005, depending on the stock price of the Company's common stock, and,
accordingly, may or may not become exercisable within 60 days.
(2) Includes shares credited to their accounts under the Company's Common Stock
Purchase Plan for Salaried Employees as follows: Brian C. Mullins, 1,933
shares; David C. O'Leary, 2,144 shares and John P. O'Leary, Jr., 1,762
shares.
(3) Includes shares held jointly with their spouses, as to which voting power
and investment power are shared, as follows: David I. Cohen, 7,058 shares;
Abe Farkas, 112,900 shares; Karen L. Farkas, 750 shares; David C. O'Leary,
30,684 shares; John P. O'Leary, Jr., 16,368 shares; Harold F. Reed, Jr.,
13,500 shares and Thomas P. Woolaway, 50,051 shares.
(4) Includes shares held by their wives as follows: Abe Farkas, 93,000 shares;
Robert W. Kampmeinert, 1,500 shares; Brian C. Mullins, 7,230 shares; David
C. O'Leary, 2,796 shares; John P. O'Leary, Jr., 592 shares; Harold F. Reed,
Jr., 1,500 shares and Thomas P. Woolaway, 77,139 shares. Beneficial
ownership of these shares is disclaimed.
(5) Includes 198,200 shares held by the wife of Abe Farkas as trustee under
trusts for children and grandchildren. Beneficial ownership of these shares
is disclaimed.
(6) Includes shares held in custodian accounts for children as follows: Robert
W. Kampmeinert, 3,000 shares; David C. O'Leary, 15,475 shares and John P.
O'Leary, Jr., 15,622 shares. Beneficial ownership of these shares is
disclaimed.
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(7) Includes 15,000 shares held by Parker/Hunter Incorporated. Beneficial
ownership of these shares is disclaimed.
(8) Includes 120,285 shares held by the trust for the individual account defined
contribution pension plans of the Company and its subsidiaries. John P.
O'Leary, Jr. is a named fiduciary with respect to the trust and has sole
power to direct the trustee as to the acquisition, disposition and voting of
the Company's common stock held by the trust.
(9) T. Rowe Price Associates, Inc. ("Price Associates") is an investment advisor
registered under the Investment Advisors Act of 1940. It advised the Company
that the shares are owned by various individual and institutional investors
which Price Associates serves as investment advisor with power to direct
investments and/or to vote the shares. Included in the total shown are
730,000 shares (7.84% of the shares outstanding) owned by T. Rowe Price
Small Cap Value Fund, Inc., a closed end mutual fund registered under the
Investment Company Act of 1940. Price Associates advised the Company that
although it is deemed to be a beneficial owner of the shares for purposes of
the SEC reporting requirements, it expressly disclaims that it is, in fact,
the beneficial owner of the shares.
The information in the table does not include 305,761 shares of the
Company's common stock held by trusts created under the Will of John P. O'Leary,
Sr., co-founder and former Chief Executive Officer of the Company. The children
of John P. O'Leary, Sr.: John P. O'Leary, Jr., David C. O'Leary and Kerry
O'Leary Zombeck, and their mother, Beverly J. O'Leary, are co-trustees of these
trusts and share voting power and investment power.
Directors Abe Farkas and Karen L. Farkas are father and daughter.
FUTURE SHAREHOLDER PROPOSALS
Tuscarora intends to hold an annual meeting of shareholders in 2001 only if
the merger is not completed. If an annual meeting is held in 2001, a shareholder
proposal to be timely for inclusion in the proxy statement for such meeting must
be received by the Secretary of Tuscarora at the address set forth on the first
page of this document, by July 19, 2001. Separately, if Tuscarora doesn't
receive, on or before October 2, 2001, notice of a matter or proposal intended
to be presented at such annual meeting, then the persons appointed by the Board
of Directors to act as proxy holders for such annual meeting will be allowed to
use their discretionary voting authority with respect to such matter or proposal
at such meeting.
WHERE YOU CAN FIND MORE INFORMATION
Tuscarora files annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any reports, statements or other information we file at the SEC's public
reference room located at 450 Fifth Avenue, N.W., Washington, D.C. 20549. Please
call the SEC at 1-800-SEC-0330 for further information on the public reference
room. Our SEC filings that have been electronically filed are also available to
the public from commercial document retrieval services and at the Web site
maintained by the SEC at "http://www.sec.gov."
If you are a shareholder, we may have sent you some of the documents
referenced above, but you can obtain any of them through us or the SEC. You may
obtain documents referenced above without charge by writing or calling us at the
following addresses:
TUSCARORA INCORPORATED
Investor Relations
800 Fifth Avenue
New Brighton, PA 15066
Tel: (724) 843-8200
If you would like to request documents from us, please do so by February
28, 2001 to receive them before the special meeting.
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROXY STATEMENT
TO VOTE ON THE ARTICLES AMENDMENT AND THE MERGER PROPOSAL. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS
CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT IS DATED FEBRUARY 12,
2001. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THE PROXY
STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN SUCH DATE.
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APPENDIX I
AGREEMENT AND PLAN OF MERGER
DATED AS OF
JANUARY 21, 2001
AMONG
TUSCARORA INCORPORATED,
SCA PACKAGING INTERNATIONAL B.V.
AND
SCA PACKAGING USA, INC.
I-1
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TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS................................................ 1
ARTICLE II THE MERGER................................................ 5
2.01 The Merger.................................................. 5
2.02 Organizational Documents.................................... 5
2.03 Directors and Officers...................................... 5
ARTICLE III CONVERSION OF SECURITIES AND RELATED MATTERS............. 5
3.01 Conversion of Capital Stock................................. 5
3.02 Exchange of Certificates and Cash........................... 6
3.03 Dissenting Shares........................................... 7
3.04 Tuscarora Stock Options, Phantom Shares and Tuscarora Common
Stock Purchase Plan....................................... 7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF TUSCARORA............... 8
4.01 Corporate Existence and Power............................... 8
4.02 Corporate Authorization..................................... 8
4.03 Governmental Authorization.................................. 8
4.04 Non-Contravention........................................... 8
4.05 Capitalization.............................................. 9
4.06 Subsidiaries................................................ 9
4.07 Tuscarora SEC Documents..................................... 10
4.08 Financial Statements; No Material Undisclosed Liabilities... 10
4.09 Proxy Statement............................................. 11
4.10 Absence of Certain Changes.................................. 11
4.11 Litigation.................................................. 11
4.12 Taxes....................................................... 11
4.13 Employee Benefits........................................... 12
4.14 Compliance with Laws; Licenses, Permits and Registrations... 13
4.15 Title to Properties......................................... 13
4.16 Intellectual Property....................................... 13
4.17 Environmental Matters....................................... 14
4.18 Finders' Fees; Opinions of Financial Advisor................ 15
4.19 Required Vote; Board Approval............................... 15
4.20 State Takeover Statutes; Rights Agreement................... 15
4.21 Labor Matters............................................... 16
4.22 Year 2000................................................... 16
4.23 Certain Contracts........................................... 16
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SCA PACKAGING............ 16
5.01 Corporate Existence and Power............................... 16
5.02 Corporate Authorization..................................... 16
5.03 Governmental Authorization.................................. 16
5.04 Non-Contravention........................................... 17
5.05 Litigation.................................................. 17
5.06 Proxy Statement............................................. 17
5.07 Finders' Fees............................................... 17
ARTICLE VI COVENANTS OF TUSCARORA.................................... 17
6.01 Tuscarora Interim Operations................................ 17
6.02 Shareholder Meeting......................................... 19
6.03 Acquisition Proposals; Board Recommendation................. 19
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TABLE OF CONTENTS
(CON'T)
PAGE
----
ARTICLE VII COVENANTS OF SCA PACKAGING............................... 21
7.01 Director and Officer Liability.............................. 21
7.02 Conduct of SCA Acquisition.................................. 22
ARTICLE VIII COVENANTS OF SCA PACKAGING AND TUSCARORA................ 22
8.01 Reasonable Best Efforts..................................... 22
8.02 Certain Filings; Cooperation in Receipt of Consents......... 22
8.03 Public Announcements........................................ 23
8.04 Access to Information; Notification of Certain Matters...... 23
8.05 Further Assurances.......................................... 24
8.06 Confidentiality............................................. 24
8.07 Legal Opinion............................................... 24
8.08 Employment Continuation Agreements.......................... 24
ARTICLE IX CONDITIONS TO THE MERGER.................................. 24
9.01 Conditions to the Obligations of Each Party................. 24
9.02 Conditions to the Obligations of Tuscarora.................. 24
9.03 Conditions to the Obligations of SCA Packaging and SCA
Acquisition............................................... 25
ARTICLE X TERMINATION................................................ 25
10.01 Termination................................................. 25
10.02 Effect of Termination....................................... 26
10.03 Fees and Expenses........................................... 26
ARTICLE XI MISCELLANEOUS............................................. 27
11.01 Notices..................................................... 27
11.02 Survival of Representations, Warranties and Covenants after
the Effective Time........................................ 28
11.03 Amendments; No Waivers...................................... 28
11.04 Successors and Assigns...................................... 28
11.05 Governing Law............................................... 28
11.06 Counterparts; Effectiveness; Third Party Beneficiaries...... 28
11.07 Waiver of Jury Trial........................................ 28
11.08 Enforcement................................................. 28
11.09 Entire Agreement............................................ 29
EXHIBITS
Exhibit A -- Opinion of Reed Smith
-ii-
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of January 21, 2001 (the
"Agreement"), among TUSCARORA INCORPORATED, a Pennsylvania corporation
("Tuscarora"), SCA PACKAGING INTERNATIONAL B.V., a company organized under the
laws of the kingdom of the Netherlands ("SCA Packaging"), and SCA PACKAGING USA,
INC., a Pennsylvania corporation and an indirect wholly-owned subsidiary of SCA
Packaging's ultimate parent company ("SCA Acquisition").
RECITALS
WHEREAS, the Boards of Directors of Tuscarora and SCA Packaging each have
determined that a business combination between Tuscarora and SCA Acquisition is
advisable and in the best interests of their respective companies and
shareholders, and presents an opportunity for their respective companies to
achieve long-term strategic and financial benefits, and accordingly have agreed
to effect the merger provided for herein upon the terms and subject to the
conditions set forth herein;
WHEREAS, by resolutions duly adopted, the respective Boards of Directors of
Tuscarora, SCA Packaging and SCA Acquisition have approved and adopted this
Agreement and the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
(a) As used herein, the following terms have the following meanings:
"Acquisition Proposal" means any offer or proposal for, or indication of
interest in, a merger, consolidation, share exchange, business combination,
reorganization, recapitalization, liquidation, dissolution or other similar
transaction involving, or any direct or indirect purchase of 15% or more of the
assets or any purchase or sale of, or tender offer or exchange offer for, 15% or
more of any class of equity securities of, Tuscarora or any Tuscarora Subsidiary
other than the transactions contemplated by this Agreement.
"Affiliate" means, with respect to any Person, any other Person, directly
or indirectly, controlling, controlled by, or under common control with, such
Person. For purposes of this definition, the term "control" (including the
correlative terms "controlling", "controlled by" and "under common control
with") means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.
"Applicable Law" shall mean all applicable federal, state, local,
municipal, foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute or
treaty and in the case of Tuscarora or any Tuscarora Subsidiary any judgment or
decree applicable to Tuscarora or any Tuscarora Subsidiary or any of their
assets or properties.
"Articles Amendment" means the Amendment to the Articles of Incorporation
of Tuscarora, pursuant to which Tuscarora's Restated Articles of Incorporation
will be amended to provide that Subchapter E of Chapter 25 of the PBCL (Sections
2541 to 2548) will not be applicable to Tuscarora.
"Business Day" means any day other than a Saturday, Sunday or one on which
banks are authorized by law to close in New York, New York.
"Code" means the Internal Revenue Code of 1986, as amended.
"Employment Agreements" means the employment agreements between Tuscarora
and John P. O'Leary, Jr., between Tuscarora and David C. O'Leary and between
Tuscarora and Brian C. Mullins, and entered into contemporaneously herewith and
dated January 21, 2001.
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"Employment Continuation Agreements" means the employment agreements to be
offered by Tuscarora to certain officers of Tuscarora in substantially the form
included as Exhibit 6.01A to the Tuscarora Disclosure Schedule.
"Environmental Law" means any Applicable Law of any Governmental Entity
relating to human health, safety or protection of the environment or to
emissions, discharges, releases or threatened releases of pollutants,
contaminants or Hazardous Materials in the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata), or otherwise relating to the treatment, storage, disposal, transport or
handling of any pollutant, contaminant or Hazardous Material.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Governmental Entity" means any federal, state or local governmental
authority, any transgovernmental authority or any court, administrative or
regulatory agency or commission or other governmental authority or agency,
domestic or foreign.
"Hazardous Material" means (A) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation and transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls (PCBs);
(B) any chemicals, materials, substances or wastes which are now or hereafter
become defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants" or words
of similar import, under any Environmental Law; and (C) any other chemical,
material, substance or waste, exposure to which is now or hereafter prohibited,
limited or regulated by any Governmental Entity.
"Knowledge" means, with respect to the matter in question, that any of the
executive officers of Tuscarora, SCA Packaging or SCA Acquisition, as the case
may be, has actual knowledge of such matter after due inquiry. For purposes
hereof, the executive officers of Tuscarora shall be John P. O'Leary, Jr., David
C. O'Leary and Brian C. Mullins and the executive officers of SCA Packaging and
SCA Acquisition shall be Colin Williams, Gunnar Haglund and Mikael Schmidt.
"Lien" means, with respect to any asset, mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset; provided,
however, that the term "Lien" shall not include (i) liens for water and sewer
charges and current taxes not yet due and payable or being contested in good
faith and (ii) mechanics', carriers', workers', repairers', materialmen's,
warehousemen's and other similar liens arising or incurred in the ordinary
course of business with respect to amounts not yet due and payable or being
contested in good faith.
"Material Adverse Effect" means a material adverse effect on the assets,
properties, financial condition, business or results of operations of a Person
and its Subsidiaries, taken as a whole, arising out of any event or development,
but shall exclude any material adverse effect arising out of any event or
development relating to (i) U.S. or global economic or industry conditions, (ii)
changes in U.S. or global financial markets or conditions, (iii) any generally
applicable change in law, rule or regulation or GAAP or interpretation of any
thereof, and/or (iv) the announcement of this Agreement or the transactions
contemplated hereby. "Tuscarora Material Adverse Effect" means a Material
Adverse Effect in respect of Tuscarora and "SCA Packaging Material Adverse
Effect" means a Material Adverse Effect in respect of SCA Packaging.
"PBCL" means the Pennsylvania Business Corporation Law of 1988, as amended.
"Person" means an individual, a corporation, a limited liability company, a
partnership, an association, a trust or any other entity or organization,
including any Governmental Entity.
"Proxy Statement" means the proxy statement relating to the Tuscarora
Shareholder Meeting, together with any amendments or supplements thereto and
including any information incorporated by reference therein.
"Rights" means all rights issued under the Rights Agreement.
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"Rights Agreement" means the Rights Agreement dated August 17, 1998,
between Tuscarora and ChaseMellon Shareholder Services, LLC, as amended
effective contemporaneously with the execution and delivery of this Agreement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Significant Subsidiary" means any Subsidiary that constitutes a
"significant subsidiary" of such Person within the meaning of Rule 1-02 of
Regulation S-X of the Exchange Act.
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other Persons performing
similar functions are directly or indirectly owned by such Person.
"Superior Proposal" means a bona fide, written Acquisition Proposal for at
least a majority of the outstanding Tuscarora Common Shares that is on terms
that a majority of Tuscarora's Board of Directors determines in good faith
(after consultation with an investment bank of nationally recognized reputation
and Tuscarora's outside counsel): (i) would result in a transaction that is more
favorable to Tuscarora's shareholders (in their capacities as shareholders) from
a financial point of view (taking into account, among other things, all legal,
financial, regulatory and other aspects of the proposal and the identity of the
offeror) than the transactions contemplated hereby (after giving effect to any
revised proposal made by or on behalf of SCA Packaging prior to the end of the
five-Business-Day-period referred to in Section 6.03(d)); and (ii) is reasonably
capable of being completed.
"Tax" or "Taxes" means all federal, state, county, local or foreign taxes
(including, but not limited to, withholding taxes), assessments, fees, imports,
levies and other governmental charges, and any related interest and penalties of
Tuscarora or any of the Tuscarora Subsidiaries.
"Tax Return" means any report, return or other information required to be
supplied to any taxing authority with respect to Taxes, or maintained by
Tuscarora or any of the Tuscarora Subsidiaries.
"Third Party Acquisition Event" means (i) the consummation of an
Acquisition Proposal involving the purchase of a majority of either the equity
securities of Tuscarora or of the consolidated assets of Tuscarora and the
Tuscarora Subsidiaries, taken as a whole, or any such transaction that, if it
had been proposed prior to the termination of this Agreement would have
constituted an Acquisition Proposal or (ii) the entering into by Tuscarora or
any of the Tuscarora Subsidiaries of a definitive agreement with respect to any
such transaction.
"Tuscarora Balance Sheet" means Tuscarora's consolidated balance sheet
included in the Tuscarora 10-K relating to its fiscal year ended on August 31,
2000.
"Tuscarora Common Share" means one share of common stock, without par value
of Tuscarora, and "Tuscarora Common Shares" means more than one share of common
stock, without par value, of Tuscarora.
"Tuscarora SEC Documents" means (i) the annual reports on Form 10-K of
Tuscarora (the "Tuscarora 10-Ks") for the fiscal years ended August 31, 1998,
August 31, 1999 and August 31, 2000, (ii) the quarterly reports on Form 10-Q of
Tuscarora (the "Tuscarora 10-Qs") for the fiscal quarters ended in November,
February and May of fiscal years 1998, 1999 and 2000, and for the fiscal quarter
ended in November of fiscal year 2001, (iii) Tuscarora's proxy or information
statements relating to meetings of, or actions taken without a meeting by, the
Tuscarora shareholders held since August 31, 1998 and (iv) all other reports,
filings, registration statements and other documents filed by Tuscarora with the
SEC since August 31, 1998.
"Tuscarora Subsidiary" means any Subsidiary of Tuscarora.
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(b) Each of the following terms is defined in the Section set forth
opposite such term:
TERMS SECTION
- ----- -----------
Agreement Preamble
Articles of Merger 2.01(b)
Business Restrictions 4.23
Cash Payment 3.04
CERCLA 4.17(d)
Certificates 3.02(a)
Closing 2.01(d)
COBRA 4.13(f)
Computer Equipment 4.22(a)
Department of State 2.01(b)
Deutsche Banc 5.07
Dissenting Shares 3.03(a)
Dissenting Shareholder 3.03(a)
Effective Time 2.01(b)
End Date 10.01(b)(i)
Environmental Laws 4.17(b)
ERISA 4.13(a)
ERISA Affiliate 4.13(a)
Exchange Agent 3.02(a)
Exchange Fund 3.02(a)
GAAP 4.08(a)
HSR Act 4.03
Indemnified Parties 7.01(b)
Indemnifying Party 7.01(b)
Merger 2.01(a)
Merger Consideration 3.01(b)
Multiemployer Plan 4.13(b)
Options 3.04
Order 4.11
Parker/Hunter 4.18
Phantom Shares 3.04
Reimbursable Expenses 10.03(b)
Release 4.17(b)
Retirement Plan 4.13(b)
Rights Definitions
Rights Agreement Definitions
SCA Acquisition Preamble
SCA Acquisition Common Share 3.01(a)
SCA Packaging Preamble
SCA Packaging Breach Fee 10.03(d)
Surviving Corporation 2.01(a)
Termination Fee 10.03(c)
Third Party Acquisition Event 10.03(c)
Tuscarora Preamble
Tuscarora Breach Fee 10.03(d)
Tuscarora Disclosure Schedule Article IV
Tuscarora Employee Plans 4.13(a)
Tuscarora Intellectual Property 4.16
Tuscarora Material Adverse Effect Definitions
Tuscarora Option 3.04
Tuscarora Permits 4.14(b)
Tuscarora Preferred Stock 4.05
Tuscarora Recommendation 6.02
Tuscarora Returns 4.12
Tuscarora Securities 4.05(b)
Tuscarora Shareholder Approval 4.19(a)
Tuscarora Shareholder Meeting 6.02
Tuscarora Stock Option Plans 3.04
Tuscarora 10-Ks Definitions
Tuscarora 10-Qs Definitions
Y2K 4.22(a)
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ARTICLE II
THE MERGER
2.01 THE MERGER.
(a) At the Effective Time, SCA Acquisition shall be merged (the "Merger")
with and into Tuscarora in accordance with the terms and conditions of this
Agreement and of the PBCL, at which time the separate existence of SCA
Acquisition shall cease and Tuscarora shall continue its existence. In its
capacity as the corporation surviving the Merger, this Agreement sometimes
refers to Tuscarora as the "Surviving Corporation".
(b) As soon as practicable after satisfaction or, to the extent permitted
hereby, waiver of all conditions to the Merger set forth herein, Tuscarora and
SCA Acquisition shall file articles of merger (the "Articles of Merger") with
the Department of State of the Commonwealth of Pennsylvania (the "Department of
State") and make all other filings or recordings required by the PBCL in
connection with the Merger. The "Effective Time" shall be the date and time that
the Articles of Merger are filed with the Department of State (unless otherwise
agreed upon by the parties and specified in the Articles of Merger, in which
case, subject to Section 1928 of the PBCL, the Effective Time shall be the date
and time so specified).
(c) From and after the Effective Time, the Merger shall have the effects
set forth in Section 1929 of the PBCL.
(d) The closing of the Merger (the "Closing") shall be held at the offices
of Clifford Chance Rogers & Wells LLP, 200 Park Avenue, New York, New York 10166
(or such other place as agreed by the parties), on a date and time to be
specified by the parties, which shall be no later than 10:00 a.m., New York
time, on the first Business Day after satisfaction or, to the extent permitted
hereby, waiver of the conditions set forth in Article IX, unless the parties
hereto agree to another date.
2.02 ORGANIZATIONAL DOCUMENTS. The Articles of Merger shall provide that at
the Effective Time (i) SCA Acquisition's articles of incorporation in effect
immediately prior to the Effective Time shall be the Surviving Corporation's
articles of incorporation, provided that the Surviving Corporation shall change
its name to Tuscarora Incorporated and (ii) SCA Acquisition's bylaws in effect
immediately prior to the Effective Time shall be the Surviving Corporation's
bylaws, in each case until amended in accordance with applicable law.
2.03 DIRECTORS AND OFFICERS. From and after the Effective Time (until duly
removed or until successors are duly elected or appointed and qualified), (i)
SCA Acquisition's directors at the Effective Time shall be the Surviving
Corporation's directors and (ii) subject to the Employment Agreements, and to
the extent accepted, the Employment Continuation Agreements, Tuscarora's
officers immediately prior to the Effective Time shall be the Surviving
Corporation's officers.
ARTICLE III
CONVERSION OF SECURITIES AND RELATED MATTERS
3.01 CONVERSION OF CAPITAL STOCK. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder thereof:
(a) Each share of common stock, without par value per share, of SCA
Acquisition (each, a "SCA Acquisition Common Share") outstanding immediately
prior to the Effective Time shall be converted into and become one fully paid
and nonassessable share of common stock, without par value per share, of the
Surviving Corporation.
(b) Subject to Section 3.03, each Tuscarora Common Share and associated
Right outstanding immediately prior to the Effective Time shall be converted
into the right to receive $21.50 per share in cash (the "Merger Consideration")
payable without interest to the holder of such share upon surrender of the
certificates that formerly evidenced such Tuscarora Common Share in the manner
provided in Section 3.02. Each such Tuscarora Common Share at the Effective Time
shall no longer be outstanding and shall automatically be cancelled and retired
and shall cease to exist, and each holder of a certificate representing any such
Tuscarora Common Share
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shall cease to have any rights with respect thereto, except the right to receive
the Merger Consideration per share, upon surrender of such certificate in
accordance with Section 3.02, without interest.
(c) Each Tuscarora Common Share held by Tuscarora as treasury stock or
owned by SCA Packaging or any SCA Packaging Subsidiary immediately prior to the
Effective Time shall be canceled and retired and shall cease to exist, and no
payment shall be delivered in exchange thereof.
3.02 EXCHANGE OF CERTIFICATES AND CASH.
(a) Exchange Agent. Prior to the Effective Time, SCA Packaging shall
appoint a bank or trust company reasonably acceptable to Tuscarora as an agent
(the "Exchange Agent") for the benefit of holders of Tuscarora Common Shares for
the purpose of exchanging, pursuant to this Article III, certificates
("Certificates") that immediately prior to the Effective Time represented
outstanding Tuscarora Common Shares which were converted into the right to
receive the Merger Consideration. SCA Packaging will make available to the
Surviving Corporation for deposit with the Exchange Agent, as needed, the Merger
Consideration to be paid in respect of Tuscarora Common Shares pursuant to this
Article III (the "Exchange Fund"), and except as contemplated by Section 3.02(e)
or Section 3.02(f) hereof, the Exchange Fund shall not be used for any other
purpose.
(b) Exchange Procedures. As promptly as practicable after the Effective
Time, SCA Packaging shall cause the Surviving Corporation to send, or will cause
the Exchange Agent to send, to each holder of record of a Certificate or
Certificates a letter of transmittal and instructions (which shall be in
customary form and specify that delivery shall be effected, and risk of loss and
title shall pass, only upon delivery of the Certificates to the Exchange Agent),
for use in the exchange contemplated by this Section 3.02. Upon surrender of a
Certificate to the Exchange Agent, together with a duly executed letter of
transmittal, the holder of such Certificate shall be entitled to receive in
exchange therefor the Merger Consideration as provided in this Article III in
respect of the Tuscarora Common Shares represented by such Certificate (after
giving effect to any required withholding tax). Until surrendered as
contemplated by this Section 3.02, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive the Merger
Consideration as provided in this Article III. If any portion of the Merger
Consideration is to be paid to a Person other than the Person in whose name the
Certificate is registered, it shall be a condition to such payment that the
Certificate so surrendered shall be properly endorsed or otherwise be in proper
form for transfer and that the Person requesting such payment shall pay to the
Exchange Agent any transfer or other taxes required as a result of such payment
to a Person other than the registered holder of such Certificate or establish to
the satisfaction of the Exchange Agent that such tax has been paid or is not
payable. If any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming such Certificate to
be lost, stolen or destroyed and, if required by SCA Packaging or the Surviving
Corporation, the posting by such Person of a bond, in such reasonable amount as
SCA Packaging or the Surviving Corporation may direct, as indemnity against any
claim that may be made against it with respect to such Certificate, the Exchange
Agent will deliver in exchange for such lost, stolen or destroyed Certificate,
the proper amount of the Merger Consideration as contemplated by this Article
III.
(c) No Further Ownership Rights in Tuscarora Common Shares. All cash paid
out upon surrender of Certificates in accordance with the terms hereof shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
Tuscarora Common Shares represented thereby, and, as of the Effective Time, the
stock transfer books of Tuscarora shall be closed and there shall be no further
registration of transfers on Tuscarora's stock transfer books of Tuscarora
Common Shares outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Section 3.02.
(d) Return of Merger Consideration. Upon demand by SCA Packaging, the
Exchange Agent shall deliver to SCA Packaging or the Surviving Corporation, as
designated by SCA Packaging, any portion of the Merger Consideration made
available to the Exchange Agent pursuant to this Section 3.02 that remains
undistributed to holders of Tuscarora Common Shares one hundred and eighty (180)
days after the Effective Time. Holders of Certificates who have not complied
with this Section 3.02 prior to such demand shall thereafter look only to the
Surviving Corporation for payment of any claim to the Merger Consideration.
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(e) No Liability. None of SCA Packaging, SCA Acquisition, the Surviving
Corporation or the Exchange Agent shall be liable to any Person in respect of
any Tuscarora Common Shares (or dividends or distributions with respect thereto)
for any amounts paid to a public official pursuant to any applicable abandoned
property, escheat or similar law. Any amounts remaining unclaimed by any holder
of Tuscarora Common Shares immediately prior to such time when such amounts
would otherwise escheat to or become the property of any Governmental Entity,
shall, to the extent permitted by applicable laws, become the property of the
Surviving Corporation, free and clear of all claims or interest of any Person
previously entitled thereto.
(f) Withholding Rights. Each of the Surviving Corporation and SCA Packaging
shall be entitled to deduct and withhold from the Merger Consideration,
otherwise payable hereunder to any Person, such amounts as it is required to
deduct and withhold with respect to the making of such payment under any
provision of federal, state, local or foreign income tax law. To the extent that
the Surviving Corporation or SCA Packaging so withholds those amounts, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of Tuscarora Common Shares in respect of which such
deduction and withholding was made by the Surviving Corporation or SCA
Packaging, as the case may be.
3.03 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary, any
issued and outstanding Tuscarora Common Shares ("Dissenting Shares") held by a
Dissenting Shareholder (as defined below) shall not be converted into the Merger
Consideration but shall become the right to receive such consideration as may be
determined to be due to such Dissenting Shareholder pursuant to the PBCL;
provided, however, that each Tuscarora Common Share outstanding immediately
prior to the Effective Time and held by a Dissenting Shareholder who, after the
Effective Time, loses or fails to perfect or withdraws his or her right of
appraisal, pursuant to the PBCL, shall be deemed to be converted as of the
Effective Time into the right to receive the Merger Consideration, without any
interest or dividends, if any, thereon. As used in this Agreement, the term
"Dissenting Shareholder" means any record holder or beneficial owner of
Tuscarora Common Shares who complies with all provisions of the PBCL (including
the provisions of Sections 1571 through 1580 of the PBCL) concerning the right
of holders of Tuscarora Common Shares to dissent from the Merger and demand fair
value for their shares in accordance with the PBCL.
(b) Tuscarora shall give SCA Packaging (i) prompt notice of any demands for
appraisal pursuant to the applicable provisions of the PBCL received by
Tuscarora, withdrawals of such demands, and any other instruments served
pursuant to the PBCL and received by Tuscarora and (ii) the opportunity to
participate in all negotiations and proceedings with respect to demands for
appraisal under the PBCL. Tuscarora shall not, except with the prior written
consent of SCA Packaging, make any payment with respect to any such demands for
appraisal or offer to settle or settle any such demands.
3.04 TUSCARORA STOCK OPTIONS, PHANTOM SHARES AND TUSCARORA COMMON STOCK
PURCHASE PLAN. Simultaneously with the execution of this Agreement, the Board of
Directors of Tuscarora (or, if appropriate, any committee thereof) has adopted
appropriate resolutions, and Tuscarora hereby agrees to take all other actions
necessary after the date hereof, if any, to provide (i) that each outstanding
stock option (each "Tuscarora Option") heretofore granted under any of
Tuscarora's stock plans, including, but not limited to, the Tuscarora
Incorporated 1989 Stock Incentive Plan, as amended, and the Tuscarora
Incorporated 1997 Stock Incentive Plan (collectively, the "Tuscarora Stock
Option Plans"), whether or not then vested or exercisable, shall, at the
Effective Time, be canceled, and each holder thereof shall be entitled to
receive a payment in cash equal to the product of (y) the number of Tuscarora
Common Shares subject to such Tuscarora Option and (z) the excess, if any, of
the Merger Consideration for Tuscarora Common Shares over the exercise price per
share subject to such Tuscarora Option, (ii) that each phantom share unit
("Phantom Share") held for a director or former director under Tuscarora's
Deferred Compensation Plan for Non-Employee Directors shall, at the Effective
Time, be canceled and that each director or former director be entitled to
receive a payment in cash equal to the product of (y) the number of Phantom
Shares held by such owner and (z) the Merger Consideration, and (iii) that each
fractional share of Tuscarora Common Share held in Tuscarora's Common Stock
Purchase Plan shall, at the Effective Time, be cancelled and that each owner of
such fractional share interests shall be entitled to receive a payment in cash
equal to the product of (y) the fractional shares held and (z) the Merger
Consideration (subject in
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each case ((i), (ii) or (iii)) to any applicable withholding taxes, the "Cash
Payment"). As provided herein, the Tuscarora Stock Option Plans and any feature
of any benefit plan or other plan, program or arrangement providing for the
issuance or grant of any interest or credit in respect of the capital stock of
Tuscarora or any Subsidiary shall terminate as of the Effective Time. Tuscarora
will take all steps necessary to ensure that none of Tuscarora or any of its
Subsidiaries is or will be bound by any Tuscarora Options, Phantom Shares, other
options, warrants, rights or agreements (collectively, an "Option") which would
entitle any person to acquire any capital stock of the Surviving Corporation or
any of its subsidiaries or to receive any payment in respect thereof (except for
Cash Payments to be made as provided in this Section) and to cause such Options
to be canceled or cause the holders of such Options to agree to such
cancellation thereof as provided herein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TUSCARORA
Except as disclosed in the Tuscarora SEC Documents filed with the SEC by
Tuscarora prior to the execution and delivery of this Agreement or in the
Tuscarora Disclosure Schedule delivered to SCA Packaging and SCA Acquisition
prior to the execution and delivery of this Agreement (the "Tuscarora Disclosure
Schedule") (it being understood any such disclosure shall apply to all
applicable representations and warranties, regardless of whether a specific
Section of this Agreement is specified but only to the extent it is reasonably
clear from the content of such disclosure that it relates to such
representations and warranties), Tuscarora represents and warrants to SCA
Packaging that:
4.01 CORPORATE EXISTENCE AND POWER. Tuscarora is a corporation duly
incorporated, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania, and has all corporate power and authority required
to own, operate and lease its properties and to carry on its business as now
conducted. Tuscarora is duly licensed, qualified or admitted to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified,
individually or in the aggregate, would not be reasonably likely to have a
Tuscarora Material Adverse Effect. Tuscarora has heretofore made available to
SCA Packaging true and complete copies of Tuscarora's articles of incorporation
and bylaws as currently in effect.
4.02 CORPORATE AUTHORIZATION. The execution, delivery and performance by
Tuscarora of this Agreement and the consummation by Tuscarora of the
transactions contemplated hereby are within Tuscarora's corporate powers and,
except for the Tuscarora Shareholder Approval, have been duly authorized by all
necessary corporate action on the part of Tuscarora and each Tuscarora
Subsidiary. This Agreement has been duly and validly executed and delivered by
Tuscarora, and assuming that this Agreement constitutes the valid and binding
obligation of SCA Packaging and SCA Acquisition, this Agreement constitutes a
valid and binding agreement of Tuscarora, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium and similar
laws, now or hereafter in effect, relating to or affecting creditors' rights and
remedies and to general principles of equity.
4.03 GOVERNMENTAL AUTHORIZATION. The execution, delivery and performance by
Tuscarora of this Agreement and the consummation by Tuscarora of the
transactions contemplated hereby require no action by or in respect of, or
filing with, any Governmental Entity other than (a) the filing of Articles of
Merger in accordance with the PBCL; (b) compliance with any applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the
"HSR Act"); (c) compliance with any applicable requirements of the Securities
Act and the Exchange Act; (d) such as may be required under any applicable
property transfer laws and the regulations promulgated thereunder listed in the
Tuscarora Disclosure Schedule; and (e) such other consents, approvals, actions,
orders, authorizations, registrations, declarations and filings which, if not
obtained or made, would not, individually or in the aggregate, prevent or
materially impair the ability of Tuscarora to consummate the transactions
contemplated by this Agreement or would not have a Tuscarora Material Adverse
Effect.
4.04 NON-CONTRAVENTION. The execution, delivery and performance by
Tuscarora of this Agreement and the consummation by Tuscarora of the
transactions contemplated hereby do not and will not (a) contravene or
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conflict with Tuscarora's articles of incorporation or bylaws, or (b) assuming
compliance with the matters referred to in Section 4.03 and in the Tuscarora
Disclosure Schedule, (i) contravene or conflict with or constitute a violation
of any provision of any Applicable Law binding upon or applicable to Tuscarora
or any Tuscarora Subsidiary, (ii) constitute a default (or an event which with
notice or lapse of time or both would become a default) under or give rise to a
right of termination, cancellation or acceleration of any right or obligation of
Tuscarora or any Tuscarora Subsidiary, or to a loss of any benefit or status to
which Tuscarora or any Tuscarora Subsidiary is entitled under any provision of
any agreement, contract or other instrument binding upon Tuscarora or any
Tuscarora Subsidiary or any license, franchise, permit or other similar
authorization held by Tuscarora or any Tuscarora Subsidiary, or (iii) result in
the creation or imposition of any Lien on any asset of Tuscarora or any
Tuscarora Subsidiary other than, in the case of each of (b)(i), (ii) and (iii),
any such items that would not, individually or in the aggregate (x) have a
Tuscarora Material Adverse Effect or (y) prevent or materially impair the
ability of Tuscarora to consummate the transactions contemplated by this
Agreement.
4.05 CAPITALIZATION.
(a) The authorized capital stock of Tuscarora consists solely of 50,000,000
Tuscarora Common Shares and 2,000,000 shares of Preferred Stock ("Tuscarora
Preferred Stock"), without par value (of which 200,000 have been designated
Series A Junior Participating Preferred Stock and reserved for issuance upon
exercise of the Rights). As of December 31, 2000, not including shares held by
Tuscarora or any Tuscarora Subsidiary, there were outstanding (i) 9,306,985
Tuscarora Common Shares, (ii) no shares of Tuscarora Preferred Stock, (iii)
stock options to purchase an aggregate of 1,359,375 Tuscarora Common Shares,
(iv) 19,166.682 Phantom Shares and (v) 319,373 of Tuscarora Common Shares held
in Tuscarora's treasury. All issued and outstanding shares of capital stock of
Tuscarora are, and all shares reserved for issuance will be, upon issuance in
accordance with the terms specified in the instruments or agreements pursuant to
which they are issuable, duly authorized, validly issued, fully paid and
nonassessable.
(b) As of the date hereof, except as set forth in Section 4.05(a), and for
changes since December 31, 2000 resulting from the exercise of stock options
described in Section 4.05(a) or in connection with the issuance of Tuscarora
Common Shares by Tuscarora pursuant to elections made prior to the date hereof
by employees of Tuscarora or any Tuscarora Subsidiaries, to purchase shares of
Tuscarora Common Shares pursuant to Tuscarora's Common Stock Purchase Plan or
any Phantom Shares acquired pursuant to Tuscarora's Deferred Compensation Plan
for Non-Employee Directors, each in accordance with the provisions of such plans
as in effect on the date hereof, there are no outstanding (i) shares of capital
stock or other voting securities of Tuscarora, (ii) securities of Tuscarora
convertible into or exchangeable for shares of capital stock or voting
securities of Tuscarora, or (iii) options, warrants or other rights (including
"phantom" stock rights) to acquire from Tuscarora, or any obligations of
Tuscarora to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of
Tuscarora (the items in clauses (i), (ii) and (iii) being referred to
collectively as the "Tuscarora Securities"). There are no outstanding
obligations of Tuscarora or any Tuscarora Subsidiary to repurchase, redeem or
otherwise acquire any Tuscarora Securities. There are no voting trusts or other
agreements or understandings to which Tuscarora or any Tuscarora Subsidiary is a
party with respect to the voting of capital stock of Tuscarora.
4.06 SUBSIDIARIES.
(a) Each Tuscarora Subsidiary is a corporation duly incorporated or an
entity duly organized, and is validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization, has all powers and
authority and all material governmental licenses, authorizations, consents and
approvals required to own, operate and lease its properties and to carry on its
business as now conducted and is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary, in each case with such exceptions as, individually or
in the aggregate, would not have a Tuscarora Material Adverse Effect. The
Tuscarora Disclosure Schedule sets forth a list of all Subsidiaries of Tuscarora
and their respective jurisdictions of incorporation or organization and
identifies Tuscarora's (direct or indirect) percentage equity ownership interest
therein and identifies which Subsidiaries are Significant Subsidiaries.
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(b) All of the outstanding shares of capital stock of, or other ownership
interests in, each Tuscarora Subsidiary has been validly issued and is fully
paid and nonassessable. All of the outstanding capital stock of, or other
ownership interests, which is owned, directly or indirectly, by Tuscarora in,
each of the Tuscarora Subsidiaries is owned free and clear of any Lien and free
of any other limitation or restriction (including any limitation or restriction
on the right to vote, sell or otherwise dispose of such capital stock or other
ownership interests). There are no outstanding (i) securities of Tuscarora or
any of the Tuscarora Subsidiaries convertible into or exchangeable or
exercisable for shares of capital stock or other voting securities or ownership
interests in any of the Tuscarora Subsidiaries, or (ii) options, warrants or
other rights to acquire from Tuscarora or any of the Tuscarora Subsidiaries, and
there is no other obligation of Tuscarora or any of the Tuscarora Subsidiaries
to issue, any capital stock, voting securities or other ownership interests in,
or any securities convertible into or exchangeable or exercisable for any
capital stock, voting securities or ownership interests in, any of the Tuscarora
Subsidiaries, or (iii) obligations of Tuscarora or any of the Tuscarora
Subsidiaries to repurchase, redeem or otherwise acquire any outstanding
securities of any of the Tuscarora Subsidiaries or any capital stock of, or
other ownership interests in, any of the Tuscarora Subsidiaries.
4.07 TUSCARORA SEC DOCUMENTS.
(a) Tuscarora has made available to SCA Packaging the Tuscarora SEC
Documents. Tuscarora has filed all reports, filings, registration statements and
other documents required to be filed by it with the SEC since August 31, 1998.
No Tuscarora Subsidiary is required to file any form, report, registration
statement or prospectus or other document with the SEC.
(b) As of its filing date, each Tuscarora SEC Document complied or as to
form in all material respects with the applicable requirements of the Securities
Act and/or the Exchange Act, as the case may be.
(c) No Tuscarora SEC Document filed pursuant to the Exchange Act contained,
or will contain, as of its filing date, any untrue statement of a material fact
or omitted to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. No Tuscarora SEC Document, as amended or supplemented, if
applicable, filed pursuant to the Securities Act contained, or will contain, as
of the date such document or amendment became effective, any untrue statement of
a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
4.08 FINANCIAL STATEMENTS; NO MATERIAL UNDISCLOSED LIABILITIES.
(a) The audited consolidated financial statements and unaudited
consolidated interim financial statements of Tuscarora included in the Tuscarora
10-Ks and the Tuscarora 10-Qs fairly present in all material respects, in
conformity with generally accepted accounting principles applied on a consistent
basis ("GAAP") (except as may be indicated in the notes thereto), the
consolidated financial position of Tuscarora and its consolidated Subsidiaries
as of the dates thereof and their consolidated results of operations and
statements of cash flows for the periods then ended (subject to normal year-end
adjustments in the case of any unaudited interim financial statements).
(b) There are no liabilities of Tuscarora or any Tuscarora Subsidiary of
any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, in each case, that are required by GAAP to be set
forth on a consolidated balance sheet of Tuscarora, other than:
(i) liabilities or obligations disclosed or provided for in the
Tuscarora Balance Sheet or disclosed in the notes thereto;
(ii) liabilities or obligations under this Agreement or incurred in
connection with the transactions contemplated hereby; or
(iii) liabilities or obligations incurred in the ordinary course of
business since the date of the Tuscarora Balance Sheet that have not and
would not, individually or in the aggregate, have a Tuscarora Material
Adverse Effect.
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4.09 PROXY STATEMENT.
(a) The information contained or incorporated by reference in the Proxy
Statement (except for information provided by SCA Packaging or SCA Acquisition)
will, at the time of the mailing thereof, and at the time of the Tuscarora
Shareholder Meeting, not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading. Except as limited in Section 4.09(b), the Proxy
Statement will comply as to form in all material respects with the provisions of
the Exchange Act.
(b) Notwithstanding the foregoing, Tuscarora makes no representation or
warranty with respect to any statements made or incorporated by reference in the
Proxy Statement based on information supplied by SCA Packaging or SCA
Acquisition.
4.10 ABSENCE OF CERTAIN CHANGES. Since August 31, 2000, except as otherwise
expressly contemplated by this Agreement, Tuscarora and the Tuscarora
Subsidiaries have conducted their business in the ordinary course consistent
with past practice and there has not been (a) any damage, destruction or other
casualty loss (whether or not covered by insurance) affecting the business or
assets of Tuscarora or any Tuscarora Subsidiary that, individually or in the
aggregate, has had or would be reasonably likely to have a Tuscarora Material
Adverse Effect, (b) any action, event, occurrence, development or state of
circumstances or facts that, individually or in the aggregate, has had or would
be reasonably expected to have a Tuscarora Material Adverse Effect, (c) any
declaration, setting aside or payment of any dividend or other distribution with
respect to the capital stock of Tuscarora, other than regular semi-annual
dividends not in excess of $.15 share, or (d) any change by Tuscarora in
accounting principles, practices or methods.
4.11 LITIGATION. There is no action, suit, investigation, arbitration or
proceeding pending against, or to the Knowledge of Tuscarora threatened against,
Tuscarora or any Tuscarora Subsidiary or any of their respective assets or
properties before any arbitrator or Governmental Entity that, individually or in
the aggregate, has had, or if determined adversely to Tuscarora or any Tuscarora
Subsidiary would be reasonably likely to have, a Tuscarora Material Adverse
Effect and to the Knowledge of Tuscarora there are no facts or circumstances
that would be reasonably likely to give rise to any action, suit, arbitration,
or proceeding. Neither Tuscarora nor any Tuscarora Subsidiary is subject to any
judgment, decree, order, writ, permit or licenses (collectively, an "Order") of
any Governmental Entity, which individually or in the aggregate, is having or
would be reasonably likely to have, a Tuscarora Material Adverse Effect.
4.12 TAXES. (i) All Tax Returns, statements, reports and forms required to
be filed with any taxing authority by, or with respect to, Tuscarora and the
Tuscarora Subsidiaries (collectively, the "Tuscarora Returns") have been filed
on a timely basis and in correct form in accordance with all applicable laws;
(ii) Tuscarora and the Tuscarora Subsidiaries have timely paid all taxes shown
as due and payable on the Tuscarora Returns; (iii) the Tax Returns are true and
correct in all material respects and accurately reflect the Taxes required to
have been paid, except to the extent of those items which may be disputed by
applicable taxing authorities but for which there is substantial authority to
support the position taken by Tuscarora or any of its Subsidiaries; (iv)
Tuscarora and the Tuscarora Subsidiaries have made provision for all Taxes
payable by them for which no Tuscarora Return has yet been filed; (v) the
charges, accruals and reserves for taxes with respect to Tuscarora and its
Subsidiaries reflected on the Tuscarora Balance Sheet are adequate under GAAP to
cover the tax liabilities accruing through the date thereof; (vi) there is no
action, suit, proceeding, audit or claim now pending or, to the Knowledge of
Tuscarora, proposed against or with respect to Tuscarora or any of the Tuscarora
Subsidiaries in respect to any tax where there is a reasonable possibility of a
materially adverse determination; (vii) no extension of time given to Tuscarora
or any of its Subsidiaries for the completion of the audit of any of the Tax
Returns is in effect; (viii) neither Tuscarora nor any of its Subsidiaries is
party to any agreement providing for the allocation or sharing of Taxes; (ix)
neither Tuscarora nor any of the Tuscarora Subsidiaries has been a member of an
affiliated, consolidated, combined or unitary group other than one of which
Tuscarora was the common parent; and (x) neither Tuscarora nor any of its
Subsidiaries has filed a consent pursuant to section 341(f) of the Code or
agreed to have section 341(f)(2) of the Code apply to any disposition of a
Subsection (f) asset (as the term is defined in section 341(f)(4) of the Code)
owned by Tuscarora or any of its Subsidiaries.
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4.13 EMPLOYEE BENEFITS.
(a) Section 4.13(a) of the Tuscarora Disclosure Schedule contains a correct
and complete list identifying each material "employee benefit plan", as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974
("ERISA"), each employment, severance or similar contract, plan, arrangement or
policy and each other plan or arrangement (written or oral) providing for
compensation, bonuses, profit-sharing, stock option or other stock related
rights or other forms of incentive or deferred compensation, vacation benefits,
insurance coverage (including any self-insured arrangements), health or medical
benefits, disability benefits, workers' compensation, supplemental unemployment
benefits, severance benefits and post-employment or retirement benefits
(including compensation, pension, health, medical or life insurance benefits)
which is maintained, administered or contributed to, or to be offered, by
Tuscarora or any ERISA Affiliate (as defined below) including, without
limitation, all such plans which cover, or will cover if accepted, any employee
or former employee of Tuscarora or any Tuscarora Subsidiary or any ERISA
Affiliate. Copies of such plans (and, if applicable, related trust agreements)
and all amendments thereto and written interpretations thereof have been
furnished to SCA Packaging together with the most recent annual report (Form
5500 including, if applicable, Schedule B thereto) prepared in connection with
any such plan. Such plans are referred to collectively herein as the "Tuscarora
Employee Plans". For purposes of this Section 4.13, "ERISA Affiliate" of any
Person means any other Person which, together with such Person, would be treated
as a single employer under Section 414 of the Code.
(b) Section 4.13(b) of the Tuscarora Disclosure Schedule separately
identifies each Tuscarora Employee Plan that constitutes a "multiemployer plan",
as defined in Section 3(37) of ERISA (a "Multiemployer Plan"), or any other plan
subject to Title IV of ERISA (a "Retirement Plan"). No "accumulated funding
deficiency", as defined in Section 412 of the Code, has been incurred with
respect to any Tuscarora Employee Plan which is a Retirement Plan, whether or
not waived. All contributions, premiums and other payments required by law or
any Tuscarora Employee Plan or applicable collective bargaining agreement to
have been made under any Plan (without regard to any waivers granted under
Section 412 of the Code) to any fund, trust or account established thereunder or
in connection therewith have been made by the due date thereof, and any and all
contributions, premiums and other payments with respect to compensation or
service under or on account of each Tuscarora Employee Plan have been paid or
have been fully reserved and provided for on the Tuscarora Balance Sheet. No
condition exists and no event has occurred that would be reasonably likely to
(i) constitute grounds for termination of any Tuscarora Employee Plan which is a
Retirement Plan or, (ii) with respect to any Tuscarora Employee Plan which is a
Multiemployer Plan, presents a material risk of a complete or partial withdrawal
under Title IV of ERISA. Neither Tuscarora nor any of its ERISA Affiliates has
incurred any liability under Title IV of ERISA arising in connection with the
termination of, or complete or partial withdrawal from, any plan covered or
previously covered by Title IV of ERISA that would have a Tuscarora Material
Adverse Effect. Nothing has been done or omitted to be done and no transaction
or holding of any asset under or in connection with any Tuscarora Employee Plan
has occurred that will make Tuscarora or any Tuscarora Subsidiary, or any
officer or director of Tuscarora or any Tuscarora Subsidiary, subject to any
liability under Title I or Title IV of ERISA or liable for any tax pursuant to
Section 4975 of the Code (assuming the taxable period of any such transaction
expired as of the date hereof) that would have a Tuscarora Material Adverse
Effect.
(c) Each Tuscarora Employee Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified during the
period from its adoption to date, and each trust forming a part thereof is
exempt from tax pursuant to Section 501(a) of the Code. Tuscarora has furnished
to SCA Packaging copies of the most recent Internal Revenue Service
determination letters with respect to each such Tuscarora Employee Plan. Each
Tuscarora Employee Plan has been maintained in substantial compliance with its
terms and with the requirements prescribed by any and all statutes, orders,
rules and regulations, including but not limited to, ERISA and the Code, which
are applicable to such Tuscarora Employee Plan, except where failure to be in
such substantial compliance would not have a Tuscarora Material Adverse Effect.
There are no pending, or to the Knowledge of Tuscarora threatened or anticipated
claims, investigations or suits involving any of the Tuscarora Employee Plans.
None of Tuscarora or any Tuscarora Subsidiary is in material default in
performing any of its contractual obligations under any of the Tuscarora
Employee Plans.
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(d) There is no contract, agreement, plan or arrangement covering any
employee or former employee of Tuscarora that, individually or collectively,
would give rise to the payment of any amount that would not be deductible
pursuant to the terms of Sections 162(m) or 280G of the Code.
(e) Except as disclosed in writing to SCA Packaging prior to the date
hereof, there has been no amendment to, written interpretation or announcement
(whether or not written) relating to, or change in employee participation or
coverage under, any Tuscarora Employee Plan which would increase materially the
expense of maintaining such Tuscarora Employee Plan above the level of the
expense incurred in respect thereof for the fiscal year ended August 31, 2000.
(f) None of Tuscarora nor any Tuscarora Subsidiaries maintains or is
obligated to provide benefits under any life, medical or health plan which
provides benefits to retirees or other terminated employees other than benefit
continuation rights under the Consolidated Omnibus Reconciliation Act of 1985,
as amended ("COBRA").
4.14 COMPLIANCE WITH LAWS; LICENSES, PERMITS AND REGISTRATIONS.
(a) Neither Tuscarora nor any Tuscarora Subsidiary is in violation of, or
has violated, any applicable provisions of any Applicable Laws, except for any
such violations which, individually or in the aggregate, would not have a
Tuscarora Material Adverse Effect.
(b) Each of Tuscarora and the Tuscarora Subsidiaries has all permits,
licenses, approvals, authorizations of and registrations (the "Tuscarora
Permits") with and under all federal, state, local and foreign laws, and from
all Governmental Entities required by Tuscarora and the Tuscarora Subsidiaries
to carry on their respective businesses as currently conducted, except where the
failure to have any such Tuscarora Permits, individually or in the aggregate,
would not have a Tuscarora Material Adverse Effect. No suspension or
cancellation of any of the Tuscarora Permits is pending or, to the Knowledge of
Tuscarora, threatened, and Tuscarora and the Tuscarora Subsidiaries are in
compliance with the terms of the Tuscarora Permits, except where the failure to
so comply, individually or in the aggregate, would not reasonably be expected to
have a Tuscarora Material Adverse Effect.
4.15 TITLE TO PROPERTIES.
(a) Tuscarora and each Tuscarora Subsidiary have good and marketable title
to, or valid leasehold interests in, all their properties and assets except for
such as are no longer used or useful in the conduct of their businesses or as
have been disposed of in the ordinary course of business and except for defects
in title, easements, restrictive covenants and similar Liens, encumbrances or
impediments that, either individually or in the aggregate, do not materially
interfere with the ability of Tuscarora and each Tuscarora Subsidiary to conduct
their business, taken as a whole, as currently conducted and except as would not
have a Tuscarora Material Adverse Effect. All such assets and properties, other
than assets and properties in which Tuscarora or any Tuscarora Subsidiary has
leasehold interests, are free and clear of all Liens, except for Liens that,
either individually or in the aggregate, do not and will not materially
interfere with the ability of Tuscarora and the Tuscarora Subsidiaries to
conduct their business as currently conducted.
(b) Except as would not, individually or in the aggregate, have a Tuscarora
Material Adverse Effect, (i) Tuscarora and each Tuscarora Subsidiary are in
compliance with the terms of all leases to which they are a party and under
which they are in occupancy, and all such leases are in full force and effect
and (ii) Tuscarora and each Tuscarora Subsidiary enjoy quiet and undisturbed
possession under all such leases.
4.16 INTELLECTUAL PROPERTY. Except as would not have a Tuscarora Material
Adverse Effect, individually or in the aggregate, Tuscarora and the Tuscarora
Subsidiaries own or have a valid license (in each case, free and clear of any
Liens other than rights of licensors) to use each trademark, service mark, trade
name, maskwork, invention, patent, trade secret, copyright, know-how, computer
software programs or applications (including any registrations or applications
for registration of any of the foregoing) or any other similar type of
proprietary intellectual property right (collectively, the "Tuscarora
Intellectual Property") necessary to carry on the business of Tuscarora and the
Tuscarora Subsidiaries, taken as a whole, as currently conducted. To the
Knowledge of Tuscarora, its use of the Tuscarora Intellectual Property does not
infringe on or otherwise violate the rights of any Person. Neither Tuscarora nor
any Tuscarora Subsidiary has received any written notice of infringement of or
challenge to, and, to the Knowledge of Tuscarora, there are no claims pending
with respect to the rights of others
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to the use of, any Tuscarora Intellectual Property that, in any such case,
individually or in the aggregate, would have a Tuscarora Material Adverse
Effect.
4.17 ENVIRONMENTAL MATTERS. Except as would not have, individually or in
the aggregate, a Tuscarora Material Adverse Effect:
(a) Each of Tuscarora and the Tuscarora Subsidiaries has obtained all
licenses, permits, authorizations, approvals and consents from Governmental
Entities which are required in respect of its business, operations, assets or
properties under any applicable Environmental Law (as defined below). Each of
Tuscarora and the Tuscarora Subsidiaries is in compliance with (and has no
liability under) the terms and conditions of all such licenses, permits,
authorizations, approvals and consents and any applicable Environmental Law.
(b) No Order has been issued, no complaint has been filed, no penalty has
been assessed and no investigation or review is pending or, to the Knowledge of
Tuscarora, threatened by any Governmental Entity with respect to any alleged
failure by Tuscarora or any of the Tuscarora Subsidiaries to have any license,
permit, authorization, approval or consent from Governmental Entities required
under any applicable Environmental Law in connection with the conduct of the
business or operations of Tuscarora or any of the Tuscarora Subsidiaries or with
respect to any treatment, storage, recycling, transportation, disposal or
"release" as defined in 42 U.S.C. Section 9601 (22) ("Release"), by Tuscarora or
any of the Tuscarora Subsidiaries of any Hazardous Material, and neither
Tuscarora nor any of the Tuscarora Subsidiaries is aware of any facts or
circumstances which could be reasonably expected to form the basis for any such
Order, complaint, penalty or investigation.
(c) Neither Tuscarora nor any of the Tuscarora Subsidiaries nor, to the
Knowledge of Tuscarora, any prior owner or lessee of any property now or
previously owned or leased by Tuscarora or any of the Tuscarora Subsidiaries has
handled or Released any Hazardous Material on any property now or previously
owned or leased by Tuscarora or any such Subsidiary; and, without limiting the
foregoing, (i) no polychlorinated biphenyl is or has been present, (ii) no
asbestos is or has been present, (iii) there are no underground storage tanks,
active or abandoned and (iv) no Hazardous Material has been Released in a
quantity reportable under, or in violation of, any Environmental Law, at, on or
under any property now or previously owned or leased by Tuscarora or any such
Subsidiary, during any period that Tuscarora or any of the Tuscarora
Subsidiaries owned or leased such property or, to the Knowledge of Tuscarora and
the Tuscarora Subsidiaries, prior thereto.
(d) Neither Tuscarora nor any of the Tuscarora Subsidiaries has transported
or arranged for the transportation of any Hazardous Material to any location
which is the subject of any action, suit, arbitration or proceeding that could
be reasonably expected to lead to claims against Tuscarora or any of the
Tuscarora Subsidiaries for clean-up costs, remedial work, damages to natural
resources or personal injury claims, including, but not limited to, claims under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, and the rules and regulations promulgated thereunder
("CERCLA").
(e) No oral or written notification of a Release of a Hazardous Material
has been filed by or on behalf of Tuscarora or any of the Tuscarora
Subsidiaries, and no property now or previously owned or leased by Tuscarora or
any of the Tuscarora Subsidiaries is listed or proposed for listing on the
National Priorities List promulgated pursuant to CERCLA or on any similar state
list of sites requiring investigation or clean-up.
(f) There are no Liens arising under or pursuant to any Environmental Law
on any real property owned or leased by Tuscarora or any of the Tuscarora
Subsidiaries, and no action of any Governmental Entity has been taken or, to the
Knowledge of Tuscarora, is in process which could subject any of such properties
to such Liens, and neither Tuscarora nor any of the Tuscarora Subsidiaries would
be required to place any notice or restriction relating to the presence of
Hazardous Material at any such property owned by it in any deed to such
property.
(g) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by, or which are in the possession
of, Tuscarora or any of the Tuscarora Subsidiaries in relation to any property
or facility now or previously owned or leased by Tuscarora or any of the
Tuscarora Subsidiaries which have not been delivered to SCA Packaging prior to
the execution of this Agreement.
(h) Neither Tuscarora nor any Tuscarora Subsidiary has sold at any time any
products that contain asbestos.
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4.18 FINDERS' FEES; OPINIONS OF FINANCIAL ADVISOR.
(a) Except for Parker/Hunter Incorporated ("Parker/Hunter") there is no
investment banker, broker, finder or other intermediary which has been retained
by, or is authorized to act on behalf of, Tuscarora or any Tuscarora Subsidiary
who might be entitled to any fee or commission from SCA Packaging or SCA
Acquisition or any of their Affiliates upon consummation of the transactions
contemplated by this Agreement. All amounts payable to Parker/Hunter are
disclosed in the engagement letter with Parker/Hunter dated September 7, 2000, a
copy of which has been provided to SCA Packaging. Such engagement letter has not
been modified or amended. The estimated fees and expenses incurred and to be
incurred by Tuscarora for counsel, accountants, investment bankers, financial
printers, experts and consultants in connection with this Agreement and the
transactions pursuant to this Agreement have been disclosed to SCA Packaging by
Tuscarora prior to the execution of this Agreement.
(b) Tuscarora has received the opinion of Parker/Hunter, dated as of the
date hereof, to the effect that, as of such date, the Merger Consideration is
fair to the holders of Tuscarora Common Shares (other than SCA Packaging and any
SCA Acquisition) from a financial point of view.
4.19 REQUIRED VOTE; BOARD APPROVAL.
(a) The only vote of the holders of any class or series of capital stock of
Tuscarora required by law, rule or regulation to approve the Articles Amendment,
this Agreement, the Merger and/or any of the other transactions contemplated
hereby is the affirmative vote (the "Tuscarora Shareholder Approval") of a
majority of the votes cast by all holders of Tuscarora Common Shares entitled to
vote thereon at a meeting at which a quorum is present.
(b) Tuscarora's Board of Directors has unanimously (i) approved the
Articles Amendment, this Agreement, the Merger, and the transactions
contemplated hereby; (ii) directed that the Articles Amendment, this Agreement
and the Merger be submitted to a vote of the shareholders entitled to vote
thereon at a regular or special meeting of the shareholders; and (iii) resolved
to recommend to such shareholders that they vote in favor of adopting and
approving the Articles Amendment, this Agreement and the Merger in accordance
with the terms hereof.
4.20 STATE TAKEOVER STATUTES; RIGHTS AGREEMENT.
(a) Tuscarora has taken all actions required to be taken by it in order to
exempt SCA Packaging and SCA Acquisition and their Affiliates, this Agreement,
the Merger and the other transactions contemplated hereby from any provisions of
the PBCL which would preclude the consummation of the Merger and prevent SCA
Packaging from receiving full voting control over the Tuscarora Common Shares,
including but not limited to Sections 2535 through 2588, inclusive of Title 15
of the Pennsylvania Code, except for Subchapter E of Chapter 25, Control
Transactions, PBCL Sections 2541 to 2548, Subchapter I of Chapter 25, PBCL
Sections 2581 to 2583 and Subchapter J of Chapter 25, PBCL Sections 2585 to 2588
which apply to the transactions contemplated by this Agreement. No other
"business combination" (as defined under Subchapter F of Chapter 25 of the
PBCL), "control-share acquisition" (as defined under Subchapter G of Chapter 25
of the PBCL), or other anti-takeover laws or regulations enacted under state or
federal laws in the United States or any charter or by-law provisions apply to
this Agreement, the Merger or any of the transactions contemplated hereby.
(b) Tuscarora has taken all action necessary to (i) render the Rights
inapplicable to the Merger and the other transactions contemplated by this
Agreement without payment of any consideration to the holders of the Rights and
(ii) ensure that (A) neither SCA Packaging, SCA Acquisition nor any of their
Affiliates will become an Acquiring Person (as defined in the Rights Agreement)
as a result of the transactions contemplated hereby and (B) neither a
"Distribution Date" nor a "Share Acquisition Date" (each as defined in the
Rights Agreement) shall occur by reason of the approval or execution of this
Agreement, the announcement or consummation of the Merger or the announcement or
consummation of any of the other transactions contemplated by this Agreement;
including, without limitation, amending the Rights Agreement to exclude the
Merger from the scope of the Rights Agreement. As of the date hereof, each Right
is represented by the certificate representing the associated Tuscarora Common
Share and is not exercisable or transferable apart from the associated Tuscarora
Common Share.
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4.21 LABOR MATTERS. Neither Tuscarora nor any Tuscarora Subsidiary is a
party to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor organization, nor is Tuscarora or any
Tuscarora Subsidiary the subject of any proceeding asserting that it has
committed an unfair labor practice or seeking to compel it to bargain with any
labor organization as to wages and conditions of employment, nor is there any
strike, other labor dispute or organizational effort involving it pending or, to
the Knowledge of Tuscarora, threatened.
4.22 YEAR 2000.
(a) Other than exceptions that would not, individually or in the aggregate,
be reasonably likely to have a Tuscarora Material Adverse Effect, all of
Tuscarora's (A) computer software, computer firmware, computer hardware (whether
general or special purpose) or other similar or related items of automated,
computerized or software systems and (B) equipment containing embedded
microchips (including systems and equipment supplied by others) used or relied
on by Tuscarora ("Computer Equipment") is currently operating properly and as
intended, and none has been subject to any problems or has been rendered
inoperable or non-functional in any respect by the change-of-year date from 1999
to 2000 ("Y2K").
(b) Neither Tuscarora nor any Tuscarora Subsidiary now is or has been
involved in any dispute with any third party alleging that the operation of any
Computer Equipment has been interrupted or impaired in any way by the failure of
the Computer Equipment to process information correctly because of Y2K.
4.23 CERTAIN CONTRACTS. As of the date hereof, neither Tuscarora nor any
Tuscarora Subsidiary is a party to or bound by (i) any "material contracts" (as
such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) or (ii)
any material agreement that restricts the ability of Tuscarora or any Tuscarora
Subsidiaries or by its terms, any Affiliate of Tuscarora, to engage in any
business whether by business type or geographic location. All such material
contracts are valid and in full force and effect except to the extent they have
previously expired in accordance with their terms or if the failure to be in
full force and effect, individually or in the aggregate, would not have a
Tuscarora Material Adverse Effect. Neither Tuscarora nor any Tuscarora
Subsidiary has violated any provision of, or committed or failed to perform any
act which with or without notice, lapse of time or both would constitute a
default under the provisions of, any such material contracts, except in each
case for those violations and defaults which, individually or in the aggregate,
would not have in a Tuscarora Material Adverse Effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SCA PACKAGING
SCA Packaging represents and warrants to Tuscarora that:
5.01 CORPORATE EXISTENCE AND POWER. Each of SCA Packaging and SCA
Acquisition is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
corporate power and authority required to carry on its business as now
conducted.
5.02 CORPORATE AUTHORIZATION. The execution, delivery and performance by
SCA Packaging and SCA Acquisition of this Agreement and the consummation by SCA
Packaging and SCA Acquisition of the transactions contemplated hereby are within
the corporate powers of SCA Packaging and SCA Acquisition and have been duly
authorized by all necessary corporate action. This Agreement has been duly and
validly executed and delivered by SCA Packaging and SCA Acquisition, and,
assuming that this Agreement constitutes the valid and binding obligation of
Tuscarora, this Agreement constitutes a valid and binding agreement of each of
SCA Packaging and SCA Acquisition, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and similar laws,
now or hereafter in effect, relating to or affecting creditors' rights and
remedies and to general principles of equity.
5.03 GOVERNMENTAL AUTHORIZATION. The execution, delivery and performance by
SCA Packaging and SCA Acquisition of this Agreement and the consummation by SCA
Packaging and SCA Acquisition of the transactions contemplated hereby require no
action by or in respect of, or filing with, any Governmental Entity other than
(a) those set forth in clauses (a) through (e) of Section 4.03, (b) for the
filing of any pre-merger notification reports by SCA Packaging under the
Applicable Laws of the United Kingdom and the Republic of
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Ireland, and (c) such other consents, approvals, actions, orders,
authorizations, registrations, declarations and filings which, if not obtained
or made, would not, individually or in the aggregate, be reasonably likely to
prevent or materially impair the ability of SCA Packaging and SCA Acquisition to
consummate the transactions contemplated by this Agreement.
5.04 NON-CONTRAVENTION. The execution, delivery and performance by SCA
Packaging and SCA Acquisition of this Agreement and the consummation by SCA
Packaging and SCA Acquisition of the transactions contemplated hereby do not and
will not (a) contravene or conflict with the articles of incorporation or bylaws
of SCA Packaging or the articles of incorporation or bylaws of SCA Acquisition,
(b) assuming compliance with the matters referred to in Section 5.03, contravene
or conflict with any Applicable Law, binding upon or applicable to SCA Packaging
or any SCA Packaging Subsidiary, (c) constitute a default under or give rise to
a right of termination, cancellation or acceleration of any right or obligation
of SCA Packaging or any SCA Packaging Subsidiary or to a loss of any benefit or
status to which SCA Packaging or any SCA Packaging Subsidiary is entitled under
any provision of any agreement, contract or other instrument binding upon SCA
Packaging or any SCA Packaging Subsidiary other than, in the case of each of (b)
and (c), any such items that would not, individually or in the aggregate, (x)
have an SCA Packaging Material Adverse Effect or (y) prevent or materially
impair the ability of SCA Packaging or SCA Acquisition to consummate the
transactions contemplated by this Agreement.
5.05 LITIGATION. There is no action, suit, investigation or proceeding
pending against, or to the Knowledge of SCA Packaging threatened against, SCA
Packaging or any of its Subsidiaries or any of their respective assets or
properties before any arbitrator or any Governmental Entity, which, as of the
date hereof, questions the validity of this Agreement or any action to be taken
by SCA Packaging in connection with the consummation of the transactions
contemplated hereby or could otherwise materially prevent or delay the
consummation of the transactions contemplated by this Agreement.
5.06 PROXY STATEMENT.
(a) The information contained or incorporated by reference in the Proxy
Statement (with respect to information relating solely to SCA Packaging or SCA
Acquisition) will, at the time of the mailing thereof, and at the time of the
Tuscarora Shareholder Meeting, not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.
(b) Notwithstanding the foregoing, SCA Packaging makes no representation or
warranty with respect to any statements made or incorporated by reference in the
Proxy Statement based on information supplied by Tuscarora.
5.07 FINDERS' FEES. Except for Deutsche Banc Alex. Brown ("Deutsche Banc"),
whose fees will be paid by SCA Packaging, there is no investment banker, broker,
finder or other intermediary who might be entitled to any fee or commission from
SCA Packaging or any of its Affiliates upon consummation of the transactions
contemplated by this Agreement. All amounts payable to Deutsche Banc are
disclosed in the engagement letter with Deutsche Banc dated January 10, 2001, a
copy of which has been provided to Tuscarora. Such engagement letter has not
been modified or amended.
ARTICLE VI
COVENANTS OF TUSCARORA
Tuscarora agrees that:
6.01 TUSCARORA INTERIM OPERATIONS. Except as set forth in Section 6.01 of
the Tuscarora Disclosure Schedule or as otherwise expressly contemplated hereby,
without the prior consent of SCA Packaging (which consent shall not be
unreasonably withheld or delayed), from the date hereof until the Effective
Time, Tuscarora shall, and shall cause each of the Tuscarora Subsidiaries to,
conduct their business in all material respects in the ordinary course
consistent with past practice and shall use commercially reasonable efforts to
(i) preserve intact its present business organization, (ii) maintain in effect
all material foreign, federal, state and local licenses,
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approvals and authorizations, including, without limitation, all material
licenses and permits that are required for Tuscarora or any Tuscarora Subsidiary
to carry on its business and (iii) preserve existing relationships with its
material customers, lenders, suppliers and others having material business
relationships with it. Without limiting the generality of the foregoing, except
as set forth in Section 6.01 of the Tuscarora Disclosure Schedule or as
otherwise expressly contemplated by this Agreement, from the date hereof until
the Effective Time, without the prior consent of SCA Packaging (which consent,
other than as to subparagraphs (a), (b), (c), (e) and (f) and (l) with respect
to subparagraphs (a), (b), (c), (e) and (f), shall not be unreasonably withheld
or delayed), Tuscarora shall not, nor shall it permit any Tuscarora Subsidiary
to:
(a) amend its articles of incorporation or by-laws or comparable governing
documents;
(b) split, combine or reclassify any shares of capital stock of Tuscarora
or any less-than-wholly-owned Tuscarora Subsidiary or declare, set aside or pay
any dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, or redeem, repurchase or
otherwise acquire or offer to redeem, repurchase, or otherwise acquire any of
its securities or any securities of any Tuscarora Subsidiary, except (i) for
regular semi-annual cash dividends (having customary record and payment dates,
not in excess of $.15 per Tuscarora Common Share, or (ii) for regular dividends
required to be paid in accordance with the provisions of the Subscription and
Shareholder Agreement, dated as of October 10, 2000, between Hytherm (Republic
of Ireland) Limited and Tuscarora;
(c) (i) issue, deliver or sell, or authorize the issuance, delivery or sale
of, any shares of its capital stock of any class or any securities convertible
into or exercisable for, or any rights, warrants or options to acquire, any such
capital stock or any such convertible securities, other than the issuance of
Tuscarora Common Shares upon exercise of Tuscarora Options outstanding on the
date of this Agreement and disclosed pursuant to this Agreement or in connection
with the issuance of Tuscarora Common Shares by Tuscarora pursuant to elections
made prior to the date hereof by employees of Tuscarora or any Tuscarora
Subsidiaries to purchase Tuscarora Common Shares pursuant to Tuscarora's Common
Stock Purchase Plan or any Phantom Shares issued pursuant to Tuscarora's
Deferred Compensation Plan for Non-Employee Directors, each in accordance with
the provisions of such plans as in effect on the date hereof; or (ii) amend any
outstanding security of Tuscarora or any Tuscarora Subsidiary;
(d) other than in connection with transactions permitted by Section
6.01(e), incur any capital expenditures or any obligations or liabilities in
respect thereof, except for those incurred in the ordinary course of business
and consistent with past practice of Tuscarora and the Tuscarora Subsidiaries in
an aggregate amount not exceeding $3,000,000 during each sixty (60) day period
from and after the date hereof (provided that to the extent that such full
$3,000,000 for any sixty (60) day period shall not be incurred, then the
shortfall amount may be carried forward on a rolling basis, to any subsequent
sixty (60) day periods);
(e) acquire any assets of, or any equity interest in, any Person or any
business or division of any Person, in either case in excess of $1,000,000 or
merge or consolidate with any Person;
(f) sell, lease, encumber or otherwise dispose of any assets or properties,
other than (i) sales of inventory in the ordinary course of business consistent
with past practice (ii) sales of equipment and property no longer used in the
operation of Tuscarora's business, (iii) sales of assets related to discontinued
operations of Tuscarora; provided, that the aggregate book value of all items
sold pursuant to clauses (ii) and (iii) shall not exceed $500,000 during each
thirty (30) day period from and after the date hereof (provided that to the
extent such full $500,000 for any thirty (30) day period shall not be incurred,
then the shortfall amount may be carried forward on a rolling basis, to any
subsequent thirty (30) day periods);
(g) incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of Tuscarora or any Tuscarora Subsidiary or
guarantee any debt securities of others, or voluntarily purchase, cancel, prepay
or otherwise provide for a complete or partial discharge in advance of a
scheduled repayment date with respect to, or waive any right under, any
indebtedness for borrowed money, other than (i) borrowings under Tuscarora's
existing revolving credit facility for (x) working capital needs in the ordinary
course of business consistent with past practices or for capital expenditures
permitted by Section 6.01(d) hereof or Section 6.01(e) hereof, or (y) to fund
the acquisitions
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set forth in Section 6.01 of the Tuscarora Disclosure Schedule and (ii)
repayments of such revolving credit facility in the ordinary course of business
consistent with prior practice;
(h) (i) enter into any agreement or arrangement that limits or otherwise
restricts Tuscarora, any Tuscarora Subsidiary or any of their respective
Affiliates or any successor thereto, or that would, after the Effective Time,
limit or restrict Tuscarora, any Tuscarora Subsidiary, the Surviving
Corporation, SCA Packaging, any SCA Packaging Subsidiary or any of their
respective Affiliates, from engaging or competing in any line of business or in
any location, (ii) except in the ordinary course of business, amend, modify or
terminate any material contract, agreement or arrangement of Tuscarora or any
Tuscarora Subsidiary or otherwise waive, release or assign any material rights,
claims or benefits of Tuscarora or any Tuscarora Subsidiary thereunder, or (iii)
except in the ordinary course of business, permit any material change to any
pricing, marketing, purchasing or inventory practice;
(i) (i) except as required by law or an existing agreement, increase the
amount of compensation of any director, officer or employee, except for normal
increases to non-officer employees consistent with past practice or make any
increase in or commitment to increase any employee benefits, (ii) except as
required by law, an agreement existing on the date hereof or Tuscarora severance
policy as of the date hereof, grant any severance or termination pay to any
director, officer or employee of Tuscarora or any Tuscarora Subsidiary, (iii)
adopt any additional employee benefit plan or, except in the ordinary course of
business, make any contribution to any existing such plan or enter into any
employment agreement or (iv) except as may be required by law, amend in any
material respect any Tuscarora Employee Plan;
(j) change Tuscarora's (x) methods of accounting or financial reporting in
effect at August 31, 2000, except as required by changes in GAAP or by
Regulation S-X of the Exchange Act, as concurred to by its independent public
accountants, (y) methods of calculating any bad debt, contingency or other
reserve for accounting, financial reporting or tax purposes or (z) fiscal year;
(k) (i) settle, or propose to settle, any litigation, investigation,
arbitration, proceeding or other claim that is material to the business of
Tuscarora and the Tuscarora Subsidiaries, taken as a whole, or (ii) make any tax
election or enter into any settlement or compromise of any tax liability that in
either case is material to the business of Tuscarora and the Tuscarora
Subsidiaries, taken as a whole; or
(l) agree, resolve or commit to do any of the foregoing;
provided that the limitations set forth in clauses 6.01(a) through 6.01(l) shall
not apply to any action, transaction or event occurring exclusively between
Tuscarora and any wholly-owned Tuscarora Subsidiary or between any wholly-owned
Tuscarora Subsidiaries.
6.02 SHAREHOLDER MEETING. Tuscarora shall cause a special meeting of its
shareholders (the "Tuscarora Shareholder Meeting") to be duly called and held as
soon as reasonably practicable for the purpose of obtaining the Tuscarora
Shareholder Approval. The proposal for the adoption of the Articles Amendment at
the Tuscarora Shareholder Meeting will state that it is expressly conditioned on
adoption of this Agreement and the proposal for the adoption of this Agreement
shall state that it is expressly conditioned on adoption of the Articles
Amendment. Except in the event of a Superior Proposal or unless otherwise
required by its duties as directors under Applicable Law (as determined in good
faith based upon the advice of its outside legal counsel), (i) Tuscarora's Board
of Directors shall recommend approval and adoption by its shareholders of this
Agreement and the Articles Amendment (the "Tuscarora Recommendation"), (ii)
neither Tuscarora's Board of Directors nor any committee thereof shall amend,
modify, withdraw, condition or qualify the Tuscarora Recommendation in a manner
adverse to SCA Packaging or take any action or make any statement inconsistent
with the Tuscarora Recommendation and (iii) Tuscarora shall take all lawful
action to solicit the Tuscarora Shareholder Approval.
6.03 ACQUISITION PROPOSALS; BOARD RECOMMENDATION.
(a) Tuscarora agrees that it shall not, nor shall it permit any Tuscarora
Subsidiary to, nor shall it authorize or permit any officer, director, employee,
investment banker, attorney, accountant, agent or other advisor or
representative of Tuscarora or any Tuscarora Subsidiary, directly or indirectly,
to (i) solicit or initiate, the making or submission of any Acquisition
Proposal, (ii) participate in any discussions or negotiations regarding, or
furnish
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to any Person any information with respect to any solicitation or initiation of
an Acquisition Proposal, or take any other action knowingly to solicit or
initiate any inquiries or the making of any proposal that constitutes, or may be
reasonably expected to lead to, any Acquisition Proposal, (iii) grant any waiver
or release under any standstill or similar agreement with respect to any class
of Tuscarora's equity securities or amend the Rights Agreement or take any
action with respect to, or make any determination under, the Rights Agreement,
including a redemption of the Rights in order to facilitate any Acquisition
Proposal, (iv) approve or recommend, or propose publicly to approve or
recommend, any Acquisition Proposal, or (v) approve or recommend, or propose to
approve or recommend, or execute or enter into, any agreement with respect to
any Acquisition Proposal, other than in the manner contemplated by Section
6.03(d); provided, however, that Tuscarora may take any action(s) described in
the foregoing clauses (i), (ii), (iii), (iv), or (v) in respect of any Person,
in response to an unsolicited bona fide written Acquisition Proposal from a
Person reasonably believed to have the financial and other capability to
consummate an Acquisition Proposal if Tuscarora's Board of Directors determines
in good faith either (y) that an Acquisition Proposal could reasonably result in
a Superior Proposal or (z) based upon the advice of its outside legal counsel
that it is otherwise required to take such action(s) in order to comply with its
duties as directors under Applicable Law; provided, further, that, prior to
Tuscarora taking any such action(s) in respect of such Person, such Person shall
have entered into a confidentiality agreement with Tuscarora on customary terms
provided that if such confidentiality agreement contains provisions that are
less restrictive than the comparable provision, or omits restrictive provisions,
contained in the Confidentiality Agreement, then the Confidentiality Agreement
will be deemed to be amended to contain only such less restrictive provisions or
to omit such restrictive provisions, as the case may be, and Tuscarora shall
provide the notice contemplated by Section 6.03(c). Without limiting the
foregoing, it is understood that any violation of the restrictions set forth in
the preceding sentence by any officer, director, employee, investment banker,
attorney, accountant, agent or other advisor or representative of Tuscarora or
any Tuscarora Subsidiary, whether or not such individual is purporting to act on
behalf of Tuscarora or any Tuscarora Subsidiary or otherwise, shall be deemed to
be a breach of this Section 6.03 by Tuscarora. Subject to Tuscarora's right to
consider certain unsolicited written Acquisition Proposals made after the date
hereof pursuant to this Section 6.03(a) (including with any person with whom
Tuscarora has previously had negotiations), Tuscarora shall cease and cause to
be terminated immediately all existing negotiations with any Persons conducted
heretofore with respect to, or that could be reasonably expected to lead to, any
Acquisition Proposal.
(b) Unless Tuscarora's Board of Directors has previously withdrawn, or is
concurrently therewith withdrawing, the Tuscarora Recommendation in accordance
with Section 6.02, neither Tuscarora's Board of Directors nor any committee
thereof shall recommend any Acquisition Proposal to Tuscarora shareholders.
Notwithstanding the foregoing, nothing contained in this Section 6.03(b) or
elsewhere in this Agreement shall prevent Tuscarora's Board of Directors from
complying with Rule 14e-2 under the 1934 Act with respect to any Acquisition
Proposal or making any disclosure required by Applicable Law.
(c) Tuscarora shall notify SCA Packaging promptly (but in no event later
than one business day) after receipt by Tuscarora or any Tuscarora Subsidiary
(or any of their respective directors, officers, agents or advisors), of any
Acquisition Proposal or any negotiations, discussions or contacts concerning, or
any request for nonpublic information or for access to the properties, books or
records of Tuscarora or any Tuscarora Subsidiary or any request for a waiver or
release under any standstill or similar agreement, by any Person that has made
an Acquisition Proposal. Such notice to SCA Packaging shall be made orally and
in writing and shall indicate the identity of the offeror and the terms and
conditions of such proposal, inquiry, contact or request. Tuscarora shall keep
SCA Packaging informed, on a reasonably current basis, of the status and details
(including amendments or proposed amendments) of any such Acquisition Proposal
or request and the status of any negotiations or discussions.
(d) Pursuant to the terms of Section 10.01(c)(ii) and Section 10.01(d)(ii)
respectively, either SCA Packaging or Tuscarora may terminate this Agreement at
any time prior to the Tuscarora Shareholder Approval if Tuscarora's Board of
Directors shall have determined, (i) to approve or recommend an Acquisition
Proposal after concluding that such Acquisition Proposal (y) constitutes a
Superior Proposal or (z) is one that its duties as directors under Applicable
Law require it to approve or recommend (as determined in good faith based upon
the advice of its outside legal counsel) and (ii) to enter into a binding
agreement concerning such Acquisition
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Proposal; provided that Tuscarora may not exercise its right to terminate under
this Section 6.03(d) and Section 10.01(c)(ii) (and may not enter into a binding
written agreement with respect to such an Acquisition Proposal) unless (1)
Tuscarora shall have provided to SCA Packaging at least five Business Days'
prior written notice that its Board of Directors has authorized and intends to
terminate this Agreement pursuant to this Section 6.03(d) and Section
10.01(c)(ii), specifying the material terms and conditions of such Acquisition
Proposal and providing the most current version of the agreement relating
thereto, if any, and (2) SCA Packaging does not make, within five Business Days
of receiving such notice, an offer such that a majority of Tuscarora's Board of
Directors determines that (A) the foregoing Acquisition Proposal no longer
constitutes a Superior Proposal or (B) its duties as directors no longer require
it to take such action(s); provided, further, that SCA Packaging may exercise
its right to terminate under this Section 6.03(d) and Section 10.01(d)(ii) at
any time after receiving the notice contemplated by this Section 6.03(d). In
connection with the foregoing, Tuscarora agrees that it will (x) not enter into
a binding agreement with respect to such an Acquisition Proposal until at least
the sixth Business Day after it has provided the notice to SCA Packaging
required hereby, (y) negotiate in good faith with SCA Packaging, and consider in
good faith any offer made by SCA Packaging, during that period and (z) notify
SCA Packaging promptly if its intention to enter into such an agreement shall
change at any time after such notification.
ARTICLE VII
COVENANTS OF SCA PACKAGING
SCA Packaging agrees that:
7.01 DIRECTOR AND OFFICER LIABILITY.
(a) SCA Packaging and the Surviving Corporation agree that the
indemnification obligations set forth in Tuscarora's Restated Articles of
Incorporation, as amended, and Tuscarora's By-Laws, in each case as of the date
of this Agreement, shall survive the Merger and shall extend to the sixth
anniversary of the Effective Time with respect to claims which may be made
against the individuals who on or prior to the Effective Time were directors,
officers, employees and agents of Tuscarora or the Tuscarora Subsidiaries and
shall not be amended, repealed or otherwise modified during such period in any
manner that would adversely affect the rights thereunder of such individuals.
(b) To the fullest extent permitted under applicable law and regardless of
whether the Merger becomes effective, Tuscarora shall indemnify and hold
harmless, and, after the Effective Time, SCA Packaging shall cause the Surviving
Corporation to (each, an "Indemnifying Party"), until the sixth anniversary of
the Effective Time, indemnify and hold harmless, to the fullest extent permitted
under Applicable Law, each present and former director or officer of Tuscarora
and each Tuscarora Subsidiary and each such person who served at the request of
Tuscarora or any Tuscarora Subsidiary as a director, officer, trustee, partner
or fiduciary of another Person, pension or other employee benefit plan or
enterprise (collectively, the "Indemnified Parties") against all costs and
expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages, liabilities and settlement amounts paid in connection with any
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), whether civil, administrative or investigative,
arising out of or pertaining to any action or omission in their capacity as an
officer, director, trustee, partner or fiduciary in each case occurring before
the Effective Time (including the transactions contemplated by this Agreement).
Without limiting the foregoing, in the event of any such claim, action, suit,
proceeding or investigation, (i) Tuscarora or SCA Packaging and the Surviving
Corporation, as the case may be, shall pay the reasonable fees and expenses of
one counsel selected by each Indemnified Party, which one counsel shall be
reasonably satisfactory to Tuscarora or to SCA Packaging and the Surviving
Corporation, as the case may be, promptly after statements therefor are received
(unless the Surviving Corporation shall elect to defend such action) and (ii)
Tuscarora or SCA Packaging and the Surviving Corporation, as applicable, shall
cooperate in the defense of any such matter; provided, however, that neither
Tuscarora nor SCA Packaging or the Surviving Corporation shall be liable for any
settlement effected without its prior written consent (which consent shall not
be unreasonably withheld). Any Indemnified Party wishing to claim
indemnification under this Section, upon learning of any such claim, action,
suit, proceeding or investigation, shall notify the Indemnifying Parties, but
the failure so to notify an Indemnifying Party shall not relieve it from any
liability which it may have under this paragraph except to the
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extent such failure irreparably prejudices such party. The Indemnified Parties
as a group may retain only one law firm to represent them with respect to each
such matter unless there is, under applicable standards of professional conduct,
a conflict on any significant issue between the positions of any two or more
Indemnified Parties.
(c) For six years from the Effective Time, the Surviving Corporation shall
provide to Tuscarora's current directors and officers liability insurance
protection of the same kind and scope as that provided by Tuscarora's directors'
and officers' liability insurance policies as of the date hereof; provided,
however, that in no event shall the Surviving Corporation be required to expend
in any one year an amount in excess of 200% of the annual premiums currently
paid by Tuscarora for such insurance; and, provided, further, that if the annual
premiums of such insurance coverage exceed such amount, the Surviving
Corporation shall be obligated to obtain a policy with the greatest coverage
available for a cost not exceeding such amount.
(d) If Tuscarora or the Surviving Corporation or any of their respective
successors or assigns (i) consolidates with or merges into any other person or
shall not be the continuing or surviving corporation or entity in such
consolidation or merger or (ii) transfers all or substantially all its
properties and assets to any Person, then, and in each case, proper provision
shall be made so that the successors and assigns of Tuscarora or the Surviving
Corporation, as the case may be, honor the obligations set forth in this Section
7.01.
(e) The obligations of Tuscarora, the Surviving Corporation, and SCA
Packaging under this Section 7.01 shall not be terminated or modified in such a
manner as to adversely affect any director, officer, employee, agent or other
person to whom this Section 7.01 applies without the consent of such affected
director, officer, employees, agents or other persons (it being expressly agreed
that each such director, officer, employee, agent or other person to whom this
Section 7.01 applies shall be third-party beneficiaries of this Section 7.01).
7.02 CONDUCT OF SCA ACQUISITION. SCA Packaging will take all action
necessary to cause SCA Acquisition to perform its obligations under this
Agreement and to consummate the Merger on the terms and conditions set forth in
this Agreement.
ARTICLE VIII
COVENANTS OF SCA PACKAGING AND TUSCARORA
The parties hereto agree that:
8.01 REASONABLE BEST EFFORTS. Subject to the terms and conditions hereof,
each party will use reasonable best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under this Agreement and Applicable Laws and regulations to consummate
the Merger and the other transactions contemplated by this Agreement as promptly
as practicable; provided, however, that, for these purposes, reasonable best
efforts of Tuscarora, the Surviving Corporation, SCA Packaging and/or SCA
Acquisition shall not include (i) offering to pay any material consideration to
receive required consents; or (ii) offering to divest to others and/or hold
separate, and divesting or otherwise holding separate (including by establishing
a trust or otherwise) any of their assets or businesses, or taking any other
action (or otherwise agreeing to do any of the foregoing) if doing so would,
individually or in the aggregate, reasonably be expected to result in a
Tuscarora Material Adverse Effect or SCA Packaging Material Adverse Effect, as
the case may be.
8.02 CERTAIN FILINGS; COOPERATION IN RECEIPT OF CONSENTS.
(a) Promptly after the date hereof, Tuscarora shall prepare and file with
the SEC, the Proxy Statement and use its reasonable best efforts to have the
Proxy Statement cleared by the SEC as promptly as practicable after such filing.
Tuscarora agrees to use its reasonable best efforts, after consultation with SCA
Packaging, to respond promptly to all such comments of and requests by the SEC.
The Proxy Statement shall include the recommendation of the Board of Directors
of Tuscarora described in Section 4.19. Tuscarora shall mail the Proxy Statement
to its shareholders as promptly as practicable after the Proxy Statement is
cleared by the SEC and, if necessary, after the Proxy Statement shall have been
so mailed, promptly circulate amended, supplemental or supplemented proxy
material, and, if required in connection therewith, resolicit proxies.
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(b) No filing of or amendment or supplement to the Proxy Statement will be
made by Tuscarora without the approval of SCA Packaging, which will not be
unreasonably withheld or delayed. Tuscarora will advise SCA Packaging, promptly
after receipt thereof, of any request by the SEC for amendment of the Proxy
Statement or comments thereon and responses thereto or requests by the SEC for
additional information. If at any time prior to the Effective Time, Tuscarora or
SCA Packaging discovers any event or any information relating to either party,
or any of their respective Affiliates, officers or directors, that should be set
forth in an amendment or supplement to the Proxy Statement, so that such
document would not include any misstatement of a material fact or omit to state
any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party that
discovers such information shall promptly notify the other parties hereto and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law or regulation,
disseminated to the shareholders of Tuscarora. Tuscarora represents that
Parker/Hunter has consented to the references to its opinion in the Proxy
Statement.
(c) Tuscarora and SCA Packaging shall cooperate with one another in (i)
determining whether any other action by or in respect of, or filing with, any
Governmental Entity is required, or any actions, consents, approvals or waivers
are required to be obtained from parties to any material contracts, in
connection with the consummation of the transactions contemplated hereby, (ii)
seeking any such other actions, consents, approvals or waivers or making any
such filings, furnishing information required in connection therewith and
seeking promptly to obtain any such actions, consents, approvals or waivers
(including, without limitation, consents to those agreements listed on Section
4.04 of the Tuscarora Disclosure Schedule as requiring consent) and (iii)
setting a mutually acceptable date for the Tuscarora Shareholder Meeting.
8.03 PUBLIC ANNOUNCEMENTS. The parties shall consult with each other before
issuing any press release or making any public statement with respect to this
Agreement, the Merger and/or the other transactions contemplated hereby and,
except as may be required by Applicable Law or any listing agreement with any
national securities exchange or by NASDAQ or any other stock exchange applicable
to SCA Packaging, will not issue any such press release or make any such public
statement prior to such consultation.
8.04 ACCESS TO INFORMATION; NOTIFICATION OF CERTAIN MATTERS.
(a) From the date hereof until the Effective Time and subject to Applicable
Law, Tuscarora shall (i) give to SCA Packaging, its counsel, financial advisors,
auditors and other authorized representatives reasonable access to the offices,
properties, books and records of Tuscarora, (ii) furnish or make available to
SCA Packaging, its counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as SCA
Packaging may reasonably request and (iii) instruct its employees, counsel,
financial advisors, auditors and other authorized representatives to cooperate
with the reasonable requests of SCA Packaging in its investigation. Any
investigation pursuant to this Section 8.04(a) shall be conducted in such manner
as not to interfere unreasonably with the conduct of the business of Tuscarora.
Unless otherwise required by Applicable Law, SCA Packaging will hold, and will
cause its respective officers, employees, counsel, financial advisors, auditors
and other authorized representatives to hold, any nonpublic information obtained
in any such investigation in confidence in accordance with the Confidentiality
Agreement referred to in Section 8.06. No information or knowledge obtained in
any investigation pursuant to this Section 8.04(a) shall affect or be deemed to
modify any representation or warranty made by Tuscarora hereunder.
(b) Each party hereto shall give prompt notice to each other party hereto
of:
(i) any communication received by such party from, or given by such
party to, any Governmental Entity in connection with any of the
transactions contemplated hereby; and
(ii) any actions, suits, claims, investigations or proceedings
commenced or, to its Knowledge, threatened against, relating to or
involving or otherwise affecting such party or any of its Subsidiaries
that, if pending on the date of this Agreement, would have been required to
have been disclosed pursuant to Article IV or V, as the case may be, or
that relate to the consummation of the transactions contemplated by this
Agreement; provided, however, that the delivery of any notice pursuant to
this Section 8.04(b) shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
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8.05 FURTHER ASSURANCES. At and after the Effective Time, the officers and
directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of Tuscarora or SCA Acquisition, any deeds,
bills of sale, assignments or assurances and to take and do, in the name and on
behalf of Tuscarora or SCA Acquisition, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets of Tuscarora acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger.
8.06 CONFIDENTIALITY. The Confidentiality Agreement entered into between
SCA Packaging and Tuscarora dated September 6, 2000, shall remain in full force
and effect according to its terms.
8.07 LEGAL OPINION. At Closing, Tuscarora shall deliver to SCA Packaging
the opinion of Reed Smith LLP, counsel to Tuscarora, substantially in the form
of Exhibit A.
8.08 EMPLOYMENT CONTINUATION AGREEMENTS. It is understood that the
acceptance by any or all of the officers to be offered the Employment
Continuation Agreements contemplated by Schedule 6.01(a) of the Tuscarora
Disclosure Schedule shall not be a condition to the obligations of Tuscarora,
SCA Packaging and SCA Acquisition to consummate the Merger and the failure of
any or all of such officers to accept such Employment Continuation Agreements
will not be deemed a Tuscarora Material Adverse Effect.
ARTICLE IX
CONDITIONS TO THE MERGER
9.01 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The obligations of
Tuscarora, SCA Packaging and SCA Acquisition to consummate the Merger are
subject to the satisfaction or waiver of the following conditions:
(a) the Tuscarora Shareholder Approval shall have been obtained;
(b) (i) any applicable waiting period (and any extension thereof) under the
HSR Act applicable to the Merger shall have expired or been terminated and (ii)
if required by Applicable Law, the parties shall have received approval of the
Merger from the relevant antitrust Governmental Entities in the United Kingdom
and the Republic of Ireland; and
(c) no Governmental Entity of competent authority or jurisdiction shall
have enacted, issued, promulgated, enforced or entered any Applicable Law or
Order (whether temporary, preliminary or permanent), or taken any other action,
which restrains, enjoins or otherwise prohibits the consummation of the Merger
or the other transactions contemplated by this Agreement.
9.02 CONDITIONS TO THE OBLIGATIONS OF TUSCARORA. The obligations of
Tuscarora to consummate the Merger are subject to the satisfaction or waiver of
the following further conditions:
(a) (i) SCA Packaging and SCA Acquisition each shall have performed in all
material respects all of its obligations hereunder required to be performed by
it at or prior to the Effective Time, (ii) (A) the representations and
warranties of SCA Packaging contained in this Agreement that are qualified by
reference to a Material Adverse Effect shall be true and correct when made and
at and as of the Effective Time, as if made at and as of such time and (B) all
other representations and warranties of SCA Packaging shall be true and correct
when made and at and as of the Effective Time as if made at and as of such time,
except for such inaccuracies as do not and are not reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect, and (iii)
Tuscarora shall have received a certificate signed by the Chief Executive
Officer or Chief Financial Officer of SCA Packaging to the foregoing effect;
(b) The parties shall have obtained or made all consents, approvals,
actions, orders, authorizations, registrations, declarations, announcements and
filings contemplated by Sections 4.03 and 5.03 which if not obtained or made (i)
would render consummation of the Merger illegal or (ii) would have a Material
Adverse Effect with respect to SCA Packaging or Tuscarora; and
(c) The Employment Agreements shall have not been repudiated by SCA
Packaging or SCA Acquisition.
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9.03 CONDITIONS TO THE OBLIGATIONS OF SCA PACKAGING AND SCA
ACQUISITION. The obligations of SCA Packaging and SCA Acquisition to consummate
the Merger are subject to the satisfaction of the following further conditions:
(a) (i) Tuscarora shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the
Effective Time, (ii) (A) the representations and warranties of Tuscarora
contained in this Agreement that are qualified by reference to a Tuscarora
Material Adverse Effect shall be true and correct when made and at and as of the
Effective Time, as if made at and as of such time and (B) all other
representations and warranties of Tuscarora shall be true and correct when made
and at and as of the Effective Time, as if made as of such time, except for such
inaccuracies as do not and are not reasonably likely, individually or in the
aggregate, to have a Tuscarora Material Adverse Effect, and (iii) SCA Packaging
shall have received a certificate signed by the Chief Executive Officer,
President or Chief Financial Officer of Tuscarora to the foregoing effect;
(b) The parties shall have obtained or made all consents, approvals,
actions, orders, authorizations, registrations, declarations, announcements and
filings contemplated by Sections 4.03 and 5.03 which if not obtained or made (i)
would render consummation of the Merger illegal, or (ii) would have a Material
Adverse Effect with respect to SCA Packaging or Tuscarora;
(c) The Employment Agreements shall remain in full force and effect and
shall not have been terminated, repudiated by Tuscarora or by any individual
party thereto, or breached, except in the case of termination due to the death
or disability of the individual party thereto;
(d) The period for execution and perfection of statutory appraisal rights
available in connection with the Merger as described in Section 3.03 shall have
expired and such appraisal rights shall not have been exercised and perfected by
the holders of shares of capital stock of any class or series of Tuscarora
holding more than 10% of the outstanding Tuscarora Common Shares; and
(e) Immediately following the Effective Time, no person shall have any
right under any Tuscarora Stock Option Plan (or any Option granted thereunder)
or other plan, program or arrangement to acquire any equity securities of
Tuscarora.
ARTICLE X
TERMINATION
10.01 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, by action taken or authorized by the Board of Directors of
the terminating party or parties, and except as provided below, whether before
or after receipt of the Tuscarora Shareholder Approval:
(a) by mutual written agreement of SCA Packaging and Tuscarora.
(b) by either SCA Packaging or Tuscarora, if
(i) the Effective Time shall not have occurred on or before July 31,
2001 (the "End Date"); provided, however, that the right to terminate this
Agreement under this Section 10.01(b)(i) shall not be available to any
party whose breach of any provision of this Agreement has resulted in the
failure of the Effective Time to occur on or before the End Date;
(ii) there shall be any law or regulation that makes consummation of
the Merger illegal or otherwise prohibited or any judgment, injunction,
order or decree of any Governmental Entity having competent jurisdiction
enjoining Tuscarora, SCA Packaging or SCA Acquisition from consummating the
Merger is entered and such judgment, injunction, order or decree shall have
become final and nonappealable and, prior to such termination, the party
seeking to terminate shall have used reasonable best efforts to resist,
resolve or lift, as applicable, such law, regulation, judgment, injunction,
order or decree; or
(iii) at the Tuscarora Shareholder Meeting (including any adjournment
or postponement thereof), the Tuscarora Shareholder Approval shall not have
been obtained.
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(c) by Tuscarora, (i) if a breach of or failure to perform any
representation, warranty, covenant or agreement on the part of SCA Packaging or
SCA Acquisition set forth in this Agreement shall have occurred which would
cause the condition set forth in Section 9.02(a) not to be satisfied, and such
condition shall be incapable of being satisfied by the End Date (or, if capable,
is not satisfied by the End Date); or (ii) as contemplated by Section 6.03(d).
(d) by SCA Packaging, (i) if Tuscarora's Board of Directors shall have (A)
amended, modified, withdrawn, conditioned or qualified the Tuscarora
Recommendation in a manner adverse to SCA Packaging and/or (B) recommended to
Tuscarora's shareholders or approved any Acquisition Proposal; (ii) as
contemplated by Section 6.03(d); or (iii) if a breach of or failure to perform
any representation, warranty, covenant or agreement on the part of Tuscarora set
forth in this Agreement shall have occurred which would cause the condition set
forth in Section 9.03(a) not to be satisfied, and such condition is incapable of
being satisfied by the End Date (or, if capable, is not satisfied by the End
Date).
(e) by SCA Packaging, if shares held by Dissenting Shareholders represent
10% or more of the total shares of Tuscarora Common Shares issued and
outstanding immediately prior to the Effective Time.
10.02 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 10.01 (including any such termination by way of Section 6.03(d)), this
Agreement shall forthwith become null and void and there shall be no liability
or obligation on the part of SCA Packaging, Tuscarora, SCA Acquisition, or any
of their respective officers, directors, shareholders, agents or Affiliates,
except (i) as set forth in Section 10.03, (ii) that the provisions of Sections
8.06, 10.02, 10.03, 11.01, 11.02, 11.04, 11.05, 11.07, 11.08 and 11.09 of this
Agreement shall remain in full force and effect and survive any termination of
this Agreement, and (iii) notwithstanding any provision of this Agreement to the
contrary, none of Tuscarora, SCA Packaging or SCA Acquisition shall be relieved
or released from any liabilities or damages arising out of its breach of this
Agreement prior to such termination.
10.03 FEES AND EXPENSES.
(a) Except as set forth in this Section 10.03, all fees and expenses
incurred in connection herewith and the transactions contemplated hereby shall
be paid by the party incurring such expenses, whether or not the Merger is
consummated.
(b) If this Agreement is terminated pursuant to Sections 10.01(b)(iii),
10.01(c)(ii), Section 10.01(d) or Section 10.01(e), Tuscarora shall reimburse
SCA Packaging for its actual documented reasonable out-of-pocket expenses
incurred to third parties in connection with the transactions contemplated
hereby not to exceed $3 million ("Reimbursable Expenses"). If this Agreement is
terminated pursuant to Section 10.01(c)(i), SCA Packaging shall reimburse
Tuscarora for its Reimbursable Expenses.
(c) If (i) (x) this Agreement is terminated by Tuscarora pursuant to
Section 10.01(c)(ii), (y) this Agreement is terminated by SCA Packaging pursuant
to Section 10.01(d)(i) or 10.01(d)(ii), or (z) any person shall have made an
Acquisition Proposal and thereafter this Agreement is terminated for any reason
(other than the breach of this Agreement by SCA Packaging) and (ii) a Third
Party Acquisition Event occurs within eighteen months after such termination,
then Tuscarora shall pay (but only in the event that the transactions
contemplated by the Third Party Acquisition Event are consummated) to SCA
Packaging a termination fee equal to $15 million (the "Termination Fee") within
one Business Day of the consummation of the transactions contemplated by the
Third Party Acquisition Event. In the event that this Agreement is terminated
under the circumstances set forth above in this Section 10.03(c), then except as
set forth in Section 10.02 and Section 10.03(b), Tuscarora shall not have any
liability pursuant to this Agreement other than to pay the Termination Fee as
provided above in this Section 10.03(c).
(d) If this Agreement is terminated by Tuscarora pursuant to Section
10.01(c)(i), and the failure to satisfy the condition specified in such Section
results from a breach by SCA Packaging or SCA Acquisition (including, without
limitation, SCA Packaging's or SCA Acquisition's failure to consummate the
Merger notwithstanding the satisfaction or waiver of all of the conditions to
its obligation to consummate the Merger), then the SCA Packaging shall pay to
Tuscarora, within five Business Days of such termination, a fee (the "SCA
Packaging Breach Fee") equal to $15 million. If this Agreement is terminated by
SCA Packaging pursuant to Sec-
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tion 10.01(d)(iii) and the failure to satisfy the condition specified in such
Section results from a breach by Tuscarora (including, without limitation,
Tuscarora's failure to consummate the Merger notwithstanding the satisfaction or
waiver of all of the conditions to its obligation to consummate the Merger),
then Tuscarora shall pay to SCA Packaging, within five Business Days of such
termination, a fee (the "Tuscarora Breach Fee") equal to $15 million. In the
event that Tuscarora is required to pay the Tuscarora Breach Fee and SCA
Packaging is also entitled to receive the Termination Fee in accordance with the
terms of Section 10.03(c), then the Tuscarora Breach Fee shall be reduced to $0
(such that Tuscarora shall not pay more than $15 million in the aggregate with
respect to the Breach Fee and the Termination Fee). The parties agree that any
remedy or amount payable pursuant to this Section 10.03(d) shall not preclude
any other remedy or amount payable hereunder and shall not be an exclusive
remedy for any breach of any representation, warranty, covenant or agreement
contained in this Agreement.
(e) Any payment of the Termination Fee, the Tuscarora Breach Fee or SCA
Packaging Breach Fee pursuant to this Section 10.03 shall be made within one
Business Day after termination of this Agreement (or as otherwise expressly set
forth in this Agreement). Any payment of Reimbursable Expenses pursuant to this
Section 10.03 shall be made within five Business Days after written notice to
Tuscarora of SCA Packaging's Reimbursable Expenses or to SCA Packaging of
Tuscarora's Reimbursable Expenses, as the case may be. If Tuscarora fails to pay
to SCA Packaging the Termination Fee, the Tuscarora Breach Fee or Reimbursable
Expenses when due, or if SCA Packaging fails to pay Tuscarora the SCA Packaging
Breach Fee or the Reimbursable Expenses when due, the defaulting party shall pay
the costs and expenses (including reasonable legal fees and expenses) in
connection with any action, including the filing of any lawsuit or other legal
action, taken to collect payment, together with interest on the amount of any
unpaid Termination Fee, Reimbursable Expenses, Tuscarora Breach Fee or SCA
Packaging Breach Fee at the prime rate published in The Wall Street Journal from
the date such amounts were required to be paid to the date they are paid.
ARTICLE XI
MISCELLANEOUS
11.01 NOTICES. Except as otherwise expressly set forth in Section 6.03(c),
all notices, requests and other communications to any party hereunder shall be
in writing (including facsimile or similar writing) and shall be given,
if to SCA Packaging or SCA Acquisition, to:
SCA Packaging Business Group
Excelsiorlaan 81
B-1930 Zaventem
Belgium
Attention: Vice President -- Legal Department
Facsimile: + 32-2-725-7443
with a copy to:
Clifford Chance Rogers & Wells LLP
200 Park Avenue
New York, NY 10166
Attention: Steven A. Hobbs
Facsimile: (212) 878-8375
if to Tuscarora, to:
Tuscarora Incorporated
800 Fifth Avenue
New Brighton, PA 15066
Attention: Chairman and Chief Executive Officer
Facsimile: (724) 843-4845
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with a copy to:
Reed Smith LLP
435 Sixth Avenue
Pittsburgh, PA 15219
Attention: H. Kennedy Linge
Facsimile: (412) 288-3063
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. Each such notice, request
or other communication shall be effective (a) if given by facsimile, when such
facsimile is transmitted to the facsimile number specified in this Section and
the appropriate facsimile confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section.
11.02 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS AFTER THE
EFFECTIVE TIME. The representations and warranties contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time or the termination of this Agreement. The covenants contained in
Articles II and III and Sections 7.01, 8.05, 8.06, 10.02, 10.03, 11.01, 11.02,
11.04, 11.05, 11.06, 11.07, 11.08 and 11.09 shall survive the Effective Time.
11.03 AMENDMENTS; NO WAIVERS.
(a) Any provision of this Agreement may be amended or waived prior to the
Effective Time if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Tuscarora, SCA Packaging and SCA
Acquisition or in the case of a waiver, by the party against whom the waiver is
to be effective; provided that after the Tuscarora Shareholder Approval, no such
amendment or waiver shall, without the further approval of such shareholders, be
made that would require such approval under any Applicable Law.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
11.04 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, provided that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement without the
consent of the other parties hereto, except that SCA Packaging or SCA
Acquisition may transfer or assign to any wholly owned SCA Packaging Subsidiary
the right to enter into the transactions contemplated by this Agreement,
provided that no such assignment shall be permitted if it would delay or impede
the Merger or any of the other transactions contemplated by this Agreement, and
any such transfer or assignment will not relieve SCA Packaging or SCA
Acquisition of its obligations hereunder. Any purported assignment in violation
hereof shall be null and void.
11.05 GOVERNING LAW. This Agreement shall be construed in accordance with
and governed by the internal laws of the Commonwealth of Pennsylvania.
11.06 COUNTERPARTS; EFFECTIVENESS; THIRD PARTY BENEFICIARIES. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement shall become effective when each party
hereto shall have received counterparts hereof signed by all of the other
parties hereto. Except as set forth in 7.01, no provision of this Agreement is
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
11.07 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
11.08 ENFORCEMENT. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed
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that the parties shall be entitled to seek specific performance of the terms
hereof, this being in addition to any other remedy to which they are entitled at
law or in equity.
11.09 ENTIRE AGREEMENT. This Agreement (together with the exhibits and
schedules hereto, the Employment Agreements and the Confidentiality Agreement
referred to in Section 8.06) constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings, both oral and written, between the parties with
respect to the subject matter hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
TUSCARORA INCORPORATED
By: /s/ JOHN P. O'LEARY, JR.
------------------------------------
Name: John P. O'Leary, Jr.
Title: Chairman, President and
Chief Executive Officer
SCA PACKAGING INTERNATIONAL B.V.
By: /s/ MIKAEL SCHMIDT
------------------------------------
Name: Mikael Schmidt
Title: Director
By: /s/ GUNNAR HAGLUND
------------------------------------
Name: Gunnar Haglund
Title: Director
SCA PACKAGING USA, INC.
By: /s/ MIKAEL SCHMIDT
------------------------------------
Name: Mikael Schmidt
Title: EVP and Secretary
By: /s/ GUNNAR HAGLUND
------------------------------------
Name: Gunnar Haglund
Title: EVP and Treasurer
68
APPENDIX II
PENNSYLVANIA BUSINESS CORPORATION LAW
CHAPTER 15
SUBCHAPTER D: DISSENTERS RIGHTS
SECTION 1571. APPLICATION AND EFFECT OF SUBCHAPTER.
(a) General rule. -- Except as otherwise provided in subsection (b), any
shareholder of a business corporation shall have the right to dissent from,
and to obtain payment of the fair value of his shares in the event of, any
corporate action, or to otherwise obtain fair value for his shares, where
this part expressly provides that a shareholder shall have the rights and
remedies provided in this subchapter. See:
Section 1906(c) (relating to dissenters rights upon special treatment).
Section 1930 (relating to dissenters rights).
Section 1931(d) (relating to dissenters rights in share exchanges).
Section 1932(c) (relating to dissenters rights in asset transfers).
Section 1952(d) (relating to dissenters rights in division).
Section 1962(c) (relating to dissenters rights in conversion).
Section 2104(b) (relating to procedure).
Section 2324 (relating to corporation option where a restriction on
transfer of a security is held invalid).
Section 2325(b) (relating to minimum vote requirement).
Section 2704(c) (relating to dissenters rights upon election).
Section 2705(d) (relating to dissenters rights upon renewal of election).
Section 2907(a) (relating to proceedings to terminate breach of
qualifying conditions).
Section 7104(b)(3) (relating to procedure).
(b) Exceptions.
(1) Except as otherwise provided in paragraph (2), the holders of the
shares of any class or series of shares that, at the record date fixed
to determine the shareholders entitled to notice of and to vote at the
meeting at which a plan specified in any of section 1930, 1931(d),
1932(c) or 1952(d) is to be voted on, are either:
(i) listed on a national securities exchange; or
(ii) held of record by more than 2,000 shareholders;
shall not have the right to obtain payment of the fair value of any
such shares under this subchapter.
(2) Paragraph (1) shall not apply to and dissenters rights shall be
available without regard to the exception provided in that paragraph in
the case of:
(i) Shares converted by a plan if the shares are not converted
solely into shares of the acquiring, surviving, new or other
corporation or solely into such shares and money in lieu of
fractional shares.
(ii) Shares of any preferred or special class unless the articles,
the plan or the terms of the transaction entitle all
shareholders of the class to vote thereon and require for the
adoption of the plan or the effectuation of the transaction the
affirmative vote of a majority of the votes cast by all
shareholders of the class.
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(iii) Shares entitled to dissenters rights under section 1906(c)
(relating to dissenters rights upon special treatment).
(3) The shareholders of a corporation that acquires by purchase, lease,
exchange or other disposition all or substantially all of the shares,
property or assets of another corporation by the issuance of shares,
obligations or otherwise, with or without assuming the liabilities of
the other corporation and with or without the intervention of another
corporation or other person, shall not be entitled to the rights and
remedies of dissenting shareholders provided in this subchapter
regardless of the fact, if it be the case, that the acquisition was
accomplished by the issuance of voting shares of the corporation to be
outstanding immediately after the acquisition sufficient to elect a
majority or more of the directors of the corporation.
(c) Grant of optional dissenters rights. -- The bylaws or a resolution of the
Board of Directors may direct that all or a part of the shareholders shall
have dissenters rights in connection with any corporate action or other
transaction that would otherwise not entitle such shareholders to dissenters
rights.
(d) Notice of dissenters rights. -- Unless otherwise provided by statute, if a
proposed corporate action that would give rise to dissenters rights under
this subpart is submitted to a vote at a meeting of shareholders, there
shall be included in or enclosed with the notice of meeting:
(1) a statement of the proposed action and a statement that the
shareholders have a right to dissent and obtain payment of the fair
value of their shares by complying with the terms of this subchapter;
and
(2) a copy of this subchapter.
(e) Other statutes. -- The procedures of this subchapter shall also be
applicable to any transaction described in any statute other than this part
that makes reference to this subchapter for the purpose of granting
dissenters rights.
(f) Certain provisions of articles ineffective. -- This subchapter may not be
relaxed by any provision of the articles.
(g) Cross references. -- See sections 1105 (relating to restriction on equitable
relief), 1904 (relating to de facto transaction doctrine abolished) and 2512
(relating to dissenters rights procedure).
SECTION 1572. DEFINITIONS.
The following words and phrases when used in this subchapter shall have the
meanings given to them in this section unless the context clearly indicates
otherwise:
"Corporation." The issuer of the shares held or owned by the dissenter
before the corporate action or the successor by merger, consolidation,
division, conversion or otherwise of that issuer. A plan of division may
designate which of the resulting corporations is the successor corporation
for the purposes of this subchapter. The successor corporation in a
division shall have sole responsibility for payments to dissenters and
other liabilities under this subchapter except as otherwise provided in the
plan of division.
"Dissenter." A shareholder or beneficial owner who is entitled to and
does assert dissenters rights under this subchapter and who has performed
every act required up to the time involved for the assertion of those
rights.
"Fair value." The fair value of shares immediately before the
effectuation of the corporate action to which the dissenter objects, taking
into account all relevant factors, but excluding any appreciation or
depreciation in anticipation of the corporate action.
"Interest." Interest from the effective date of the corporate action
until the date of payment at such rate as is fair and equitable under all
the circumstances, taking into account all relevant factors including the
average rate currently paid by the corporation on its principal bank loans.
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SECTION 1573. RECORD AND BENEFICIAL HOLDERS AND OWNERS.
(a) Record holders of shares. -- A record holder of shares of a business
corporation may assert dissenters rights as to fewer than all of the shares
registered in his name only if he dissents with respect to all the shares of
the same class or series beneficially owned by any one person and discloses
the name and address of the person or persons on whose behalf he dissents.
In that event, his rights shall be determined as if the shares as to which
he has dissented and his other shares were registered in the names of
different shareholders.
(b) Beneficial owners of shares. -- A beneficial owner of shares of a business
corporation who is not the record holder may assert dissenters rights with
respect to shares held on his behalf and shall be treated as a dissenting
shareholder under the terms of this subchapter if he submits to the
corporation not later than the time of the assertion of dissenters rights a
written consent of the record holder. A beneficial owner may not dissent
with respect to some but less than all shares of the same class or series
owned by the owner, whether or not the shares so owned by him are registered
in his name.
SECTION 1574. NOTICE OF INTENTION TO DISSENT.
If the proposed corporate action is submitted to a vote at a meeting of
shareholders of a business corporation, any person who wishes to dissent and
obtain payment of the fair value of his shares must file with the corporation,
prior to the vote, a written notice of intention to demand that he be paid the
fair value for his shares if the proposed action is effectuated, must effect no
change in the beneficial ownership of his shares from the date of such filing
continuously through the effective date of the proposed action and must refrain
from voting his shares in approval of such action. A dissenter who fails in any
respect shall not acquire any right to payment of the fair value of his shares
under this subchapter. Neither a proxy nor a vote against the proposed corporate
action shall constitute the written notice required by this section.
SECTION 1575. NOTICE TO DEMAND PAYMENT.
(a) General rule. -- If the proposed corporate action is approved by the
required vote at a meeting of shareholders of a business corporation, the
corporation shall mail a further notice to all dissenters who gave due
notice of intention to demand payment of the fair value of their shares and
who refrained from voting in favor of the proposed action. If the proposed
corporate action is to be taken without a vote of shareholders, the
corporation shall send to all shareholders who are entitled to dissent and
demand payment of the fair value of their shares a notice of the adoption of
the plan or other corporate action. In either case, the notice shall:
(1) State where and when a demand for payment must be sent and certificates
for certificated shares must be deposited in order to obtain payment.
(2) Inform holders of uncertificated shares to what extent transfer of
shares will be restricted from the time that demand for payment is
received.
(3) Supply a form for demanding payment that includes a request for
certification of the date on which the shareholder, or the person on
whose behalf the shareholder dissents, acquired beneficial ownership of
the shares.
(4) Be accompanied by a copy of this subchapter.
(b) Time for receipt of demand for payment. -- The time set for receipt of the
demand and deposit of certificated shares shall be not less than 30 days
from the mailing of the notice.
SECTION 1576. FAILURE TO COMPLY WITH NOTICE TO DEMAND PAYMENT, ETC.
(a) Effect of failure of shareholder to act. -- A shareholder who fails to
timely demand payment, or fails (in the case of certificated shares) to
timely deposit certificates, as required by a notice pursuant to section
1575 (relating to notice to demand payment) shall not have any right under
this subchapter to receive payment of the fair value of his shares.
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(b) Restriction on uncertificated shares. -- If the shares are not represented
by certificates, the business corporation may restrict their transfer from
the time of receipt of demand for payment until effectuation of the proposed
corporate action or the release of restrictions under the terms of section
1577(a) (relating to failure to effectuate corporate action).
(c) Rights retained by shareholder. -- The dissenter shall retain all other
rights of a shareholder until those rights are modified by effectuation of
the proposed corporate action.
SECTION 1577. RELEASE OF RESTRICTIONS OR PAYMENT FOR SHARES.
(a) Failure to effectuate corporate action. -- Within 60 days after the date set
for demanding payment and depositing certificates, if the business
corporation has not effectuated the proposed corporate action, it shall
return any certificates that have been deposited and release uncertificated
shares from any transfer restrictions imposed by reason of the demand for
payment.
(b) Renewal of notice to demand payment. -- When uncertificated shares have been
released from transfer restrictions and deposited certificates have been
returned, the corporation may at any later time send a new notice conforming
to the requirements of section 1575 (relating to notice to demand payment),
with like effect.
(c) Payment of fair value of shares. -- Promptly after effectuation of the
proposed corporate action, or upon timely receipt of demand for payment if
the corporate action has already been effectuated, the corporation shall
either remit to dissenters who have made demand and (if their shares are
certificated) have deposited their certificates the amount that the
corporation estimates to be the fair value of the shares, or give written
notice that no remittance under this section will be made. The remittance or
notice shall be accompanied by:
(1) The closing balance sheet and statement of income of the issuer of the
shares held or owned by the dissenter for a fiscal year ending not more
than 16 months before the date of remittance or notice together with
the latest available interim financial statements.
(2) A statement of the corporation's estimate of the fair market value of
the shares.
(3) A notice of the right of the dissenter to demand payment or
supplemental payment, as the case may be, accompanied by a copy of this
subchapter.
(d) Failure to make payment. -- If the corporation does not remit the amount of
its estimate of the fair value of the shares as provided by subsection (c),
it shall return any certificates that have been deposited and release
uncertificated shares from any transfer restrictions imposed by reason of
the demand for payment. The corporation may make a notation on any such
certificate or on the records of the corporation relating to any such
uncertificated shares that such demand has been made. If shares with respect
to which notation has been so made shall be transferred, each new
certificate issued therefor or the records relating to any transferred
uncertificated shares shall bear a similar notation, together with the name
of the original dissenting holder or owner of such shares. A transferee of
such shares shall not acquire by such transfer any rights in the corporation
other than those that the original dissenter had after making demand for
payment of their fair value.
SECTION 1578. ESTIMATE BY DISSENTER OF FAIR VALUE OF SHARES.
(a) General rule. -- If the business corporation gives notice of its estimate of
the fair value of the shares, without remitting such amount, or remits
payment of its estimate of the fair value of a dissenters' shares as
permitted by section 1577(c) (relating to payment of fair value of shares)
and the dissenter believes that the amount stated or remitted is less than
the fair value of his shares, he may send to the corporation his own
estimate of the fair value of the shares, which shall be deemed a demand for
payment of the amount or the deficiency.
(b) Effect of failure to file estimate. -- Where the dissenter does not file his
own estimate under subsection (a) within 30 days after the mailing by the
corporation of its remittance or notice, the dissenter shall be entitled to
no more than the amount stated in the notice or remitted to him by the
corporation.
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SECTION 1579. VALUATION PROCEEDINGS GENERALLY.
(a) General rule. Within 60 days after the latest of:
(1) effectuation of the proposed corporate action;
(2) timely receipt of any demand for payment under section 1575 (relating
to notice to demand payment); or
(3) timely receipt of any estimates pursuant to section 1578 (relating to
estimate by dissenter of fair value of shares);
if any demands for payment remain unsettled, the business corporation may
file in court an application for relief requesting that the fair value of
the shares be determined by the court.
(b) Mandatory joinder of dissenters. -- All dissenters, wherever residing, whose
demands have not been settled shall be made parties to the proceeding as in
an action against their shares. A copy of the application shall be served on
each such dissenter. If a dissenter is a nonresident, the copy may be served
on him in the manner provided or prescribed by or pursuant to 42 Pa.C.S. Ch.
53 (relating to bases of jurisdiction and interstate and international
procedure).
(c) Jurisdiction of the court. -- The jurisdiction of the court shall be plenary
and exclusive. The court may appoint an appraiser to receive evidence and
recommend a decision on the issue of fair value. The appraiser shall have
such power and authority as may be specified in the order of appointment or
in any amendment thereof.
(d) Measure of recovery. -- Each dissenter who is made a party shall be entitled
to recover the amount by which the fair value of his shares is found to
exceed the amount, if any, previously remitted, plus interest.
(e) Effect of corporation's failure to file application. -- If the corporation
fails to file an application as provided in subsection (a), any dissenter
who made a demand and who has not already settled his claim against the
corporation may do so in the name of the corporation at any time within 30
days after the expiration of the 60-day period. If a dissenter does not file
an application within the 30-day period, each dissenter entitled to file an
application shall be paid the corporation's estimate of the fair value of
the shares and no more, and may bring an action to recover any amount not
previously remitted.
SECTION 1580. COSTS AND EXPENSES OF VALUATION PROCEEDINGS.
(a) General rule. -- The costs and expenses of any proceeding under section 1579
(relating to valuation proceedings generally), including the reasonable
compensation and expenses of the appraiser appointed by the court, shall be
determined by the court and assessed against the business corporation except
that any part of the costs and expenses may be apportioned and assessed as
the court deems appropriate against all or some of the dissenters who are
parties and whose action in demanding supplemental payment under section
1578 (relating to estimate by dissenter of fair value of shares) the court
finds to be dilatory, obdurate, arbitrary, vexatious or in bad faith.
(b) Assessment of counsel fees and expert fees where lack of good faith
appears. -- Fees and expenses of counsel and of experts for the respective
parties may be assessed as the court deems appropriate against the
corporation and in favor of any or all dissenters if the corporation failed
to comply substantially with the requirements of this subchapter and may be
assessed against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted in bad faith or in a dilatory, obdurate,
arbitrary or vexatious manner in respect to the rights provided by this
subchapter.
(c) Award of fees for benefits to other dissenters. -- If the court finds that
the services of counsel for any dissenter were of substantial benefit to
other dissenters similarly situated and should not be assessed against the
corporation, it may award to those counsel reasonable fees to be paid out of
the amounts awarded to the dissenters who were benefitted.
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APPENDIX III
[PARKER/HUNTER LETTERHEAD]
January 21, 2001
The Board of Directors
Tuscarora Incorporated
800 Fifth Avenue
New Brighton, PA 15066
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of common stock, no par value per share (the "Common
Stock"), of Tuscarora Incorporated ("Tuscarora" or the "Company") of the
consideration to be received by such holders in connection with the Agreement
and Plan of Merger dated January 21, 2001 (the "Agreement") among Tuscarora, SCA
Packaging International B.V. ("SCA") and SCA Acquisition Corp., an indirect
wholly owned subsidiary of the Acquiror (the "Merger Subsidiary"). The Agreement
provides that the Merger Subsidiary will be merged into the Company (the
"Merger") in a transaction in which each share of Common Stock will be converted
into the right to receive $21.50 per share in cash upon consummation of the
Merger.
Parker/Hunter Incorporated, as part of its investment banking business, is
regularly engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, the purchase
and sale of listed and unlisted securities, private placements and valuations
for corporate and other purposes. We are familiar with the Company having acted
as financial advisor in connection with, and having participated in certain
negotiations leading to, the Agreement. Further, we have provided investment
banking services to the Company in the past and have received customary fees for
such services. Parker/Hunter makes a market in the Company's Common Stock and
provides research coverage of Tuscarora. Robert W. Kampmeinert, Chairman,
President and Chief Executive Officer of Parker/Hunter Incorporated, is a
director of the Company. In our determination of the fairness of the
consideration to be received in the Merger by the holders of Common Stock, Mr.
Kampmeinert did not participate. In the ordinary course of our business, we may
actively trade the equity securities of the Company for our own account and for
the accounts of our customers and, accordingly, may at any time hold a long or
short position in such securities.
In connection with our opinion, we have reviewed, among other things, the
following: (i) the Agreement; (ii) certain publicly available financial
statements and other business and financial information of Tuscarora; (iii)
certain internal information, primarily financial in nature, including financial
projections for the Company prepared by the management of the Company; (iv)
certain publicly available information concerning the trading of, and the
trading markets for, the Common Stock; (v) the nature and financial terms of
certain recent business combinations that we believe to be relevant; and (vi)
certain publicly available information regarding companies that we believe to be
comparable to the Company as well as trading market information for certain of
such other companies' securities. We have also discussed with certain senior
officers of the Company the foregoing matters as well as the operations,
financial condition, history and prospects of the Company and other matters we
believe to be relevant. We have taken into account our assessment of general
economic, market and financial conditions and our experience in securities
valuation generally. We have also considered such other information, financial
studies, analyses, investigations and financial, economic, market and trading
criteria that we deemed relevant. We have not been requested to and did not
solicit third party indications of interest in acquiring all or any part of the
Company.
PITTSBURGH - PHILADELPHIA - CLEVELAND
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[Parker/Hunter Logo] Tuscarora Incorporated
January 21, 2001
Page 2
In rendering this opinion, we relied, without independent verification, on the
accuracy and completeness of all financial and other information that was
publicly available or furnished or otherwise communicated to us by the Company.
We have not made an independent evaluation or appraisal of the properties,
assets or liabilities, contingent or otherwise, of the Company, nor have we been
furnished with any such evaluations or appraisals. With respect to the Company's
financial projections, we have assumed that they have been reasonably prepared
on bases reflecting the best currently available estimates and good faith
judgments of the Company's management and we express no opinion with respect to
such projections or the assumptions on which they were based. Our opinion is
necessarily based upon the business, market, monetary, economic, and other
conditions as they exist on, and can be evaluated as of, the date of this letter
and does not predict or take into account any changes which may occur, or
information which may become available, after the date hereof. Further, our
opinion does not address the relative merits of the Merger and any other
potential transactions or business strategies considered by the Board of
Directors of the Company, and does not constitute a recommendation to any holder
of the Common Stock of the Company as to how such holder should vote with
respect to the Merger.
Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the consideration to be received by the holders of Common Stock pursuant
to the Merger is fair to such holders from a financial point of view.
Very truly yours,
PARKER/HUNTER INCORPORATED
By: /s/ CRAIG A. WOLFANGER
-----------------------------
Craig A. Wolfanger
Senior Managing Director
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APPENDIX IV
PENNSYLVANIA BUSINESS CORPORATION LAW
CHAPTER 25
SUBCHAPTER E: CONTROL TRANSACTIONS
SECTION 2541. APPLICATION AND EFFECT OF SUBCHAPTER.
(a) General rule. -- Except as otherwise provided in this section, this
subchapter shall apply to a registered corporation unless:
(1) the registered corporation is one described in section 2502(1)(ii) or
(2) (relating to registered corporation status);
(2) the bylaws, by amendment adopted either:
(i) by March 23, 1984; or
(ii) on or after March 23, 1988, and on or before June 21, 1988; and,
in either event, not subsequently rescinded by an article
amendment, explicitly provide that this subchapter shall not be
applicable to the corporation in the case of a corporation which
on June 21, 1988, did not have outstanding one or more classes
or series of preference shares entitled, upon the occurrence of
a default in the payment of dividends or another similar
contingency, to elect a majority of the members of the board of
directors (a bylaw adopted on or before June 21, 1988, by a
corporation excluded from the scope of this paragraph by the
restriction of this paragraph relating to certain outstanding
preference shares shall be ineffective unless ratified under
paragraph (3));
(3) the bylaws of which explicitly provide that this subchapter shall not
be applicable to the corporation by amendment ratified by the board of
directors on or after December 19, 1990, and on or before March 19,
1991, in the case of a corporation:
(i) which on June 21, 1988, had outstanding one or more classes or
series of preference shares entitled, upon the occurrence of a
default in the payment of dividends or another similar
contingency, to elect a majority of the members of the board of
directors; and
(ii) the bylaws of which on that date contained a provision descried
in paragraph (2); or
(4) the articles explicitly provide that this subchapter shall not be
applicable to the corporation by a provision included in the original
articles, by an article amendment adopted prior to the date of the
control transaction and prior to or on March 23, 1988, pursuant to the
procedures then applicable to the corporation, or by an articles
amendment adopted prior to the date of the control transaction and
subsequent to March 23, 1988, pursuant to both:
(i) the procedures then applicable to the corporation; and
(ii) unless such proposed amendment has been approved by the board of
directors of the corporation, in which event this subparagraph
shall not be applicable, the affirmative vote of the
shareholders entitled to cast at least 80% of the votes which
all shareholders are entitled to cast thereon.
A reference in the articles or bylaws to former section 910 (relating
to right of shareholders to receive payment for shares following a
control transaction) of the act of May 5, 1933 (P.L. 364, No. 106),
known as the Business Corporation Law of 1933, shall be deemed a
reference to this subchapter for the purposes of this section. See
section 101(c) (relating to references to prior statutes).
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(b) Inadvertent transactions. -- This subchapter shall not apply to any person
or group that inadvertently becomes a controlling person or group if that
controlling person or group, as soon as practicable, divests itself of a
sufficient amount of its voting shares so that it is no longer a controlling
person or group.
(c) Certain subsidiaries. -- This subchapter shall not apply to any corporation
that on December 23, 1983, was a subsidiary of any other corporation.
SECTION 2542. DEFINITIONS.
The following words and phrases when used in this subchapter shall have the
meanings given to them in this section unless the context clearly indicates
otherwise:
"Control transaction." The acquisition by a person or group of the status
of a controlling person or group.
"Controlling person or group." A controlling person or group as defined in
section 2543 (relating to controlling person or group).
"Fair value." A value not less than the highest price paid per share by the
controlling person or group at any time during the 90-day period ending on and
including the date of the control transaction plus an increment representing any
value, including, without limitation, any proportion of any value payable for
acquisition of control of the corporation, that may not be reflected in such
price.
"Partial payment amount." the amount per share specified in section
2545(c)(2) (relating to contents of notice).
"Subsidiary." Any corporation as to which any other corporation has or has
the right to acquire, directly or indirectly, through the exercise of all
warrants, options and rights and the conversion of all convertible securities,
whether issued or granted by the subsidiary or otherwise, voting power over
voting shares of the subsidiary that would entitle the holders thereof to cast
in excess of 50% of the votes that all shareholders would be entitled to cast in
the election of directors of such subsidiary, except that a subsidiary will not
be deemed to cease being a subsidiary as long as such corporation remains a
controlling person or group within the meaning of this subchapter.
"Voting shares." The term shall have the meaning specified in section 2552
(relating to definitions).
SECTION 2543. CONTROLLING PERSON OR GROUP.
(a) General rule. -- For the purpose of this subchapter, a "controlling person
or group" means a person who has, or a group of persons acting in concert
that has, voting power over voting shares of the registered corporation that
would entitle the holders thereof to cast at least 20% of the votes that all
shareholders would be entitled to cast in an election of directors of the
corporation.
(b) Exceptions generally. -- Notwithstanding subsection (a):
(1) A person or group which would otherwise be a controlling person or
group within the meaning of this section shall not be deemed a
controlling person or group unless, subsequent to the later of March
23, 1988, or the date this subchapter becomes applicable to a
corporation by bylaw or article amendment or otherwise, that person or
group increases the percentage of outstanding voting shares of the
corporation over which it has voting power to in excess of the
percentage of outstanding voting shares of the corporation over which
that person or group had voting power on such later date, and to at
least the amount specified in subsection (a), as the result of forming
or enlarging a group or acquiring, by purchase, voting power over
voting shares of the corporation.
(2) No person or group shall be deemed to be a controlling person or group
at any particular time it voting power over any of the following voting
shares is required to be counted at such time in order to meet the 20%
minimum:
(i) Shares which have been held continuously by a natural person
since January 1, 1983, and which are held by such natural person
at such time.
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(ii) Shares which are held at such time by any natural person or
trust, estate, foundation or other similar entity to the extent
the shares were acquired solely by gift, inheritance, bequest,
devise or other testamentary distribution or series of these
transactions, directly or indirectly, from a natural person who
had acquired the shares prior to January 1, 1983.
(iii) Shares which were acquired pursuant to a stock split, stock
dividend, reclassification or similar recapitalization with
respect to shares described under the paragraph that have been
held continuously since their issuance by the corporation by
the natural person or entity that acquired them from the
corporation or that were acquired, directly or indirectly, from
such natural person or entity, solely pursuant to a transaction
or series of transactions described in subparagraph (ii), and
that are held at such time by a natural person or entity
described in subparagraph (ii).
(iv) Control shares as defined in section 2562 (relating to
definitions) which have not yet been accorded voting rights
pursuant to section 2564(a) (relating to voting rights of
shares acquired in a control-share acquisition).
(v) Shares, the voting rights of which are attributable to a person
under subsection (d) if:
(A) the person acquired the option or conversion right directly
from or made the contract, arrangement or understanding or
has the relationship directly with the corporation; and
(B) the person does not at the particular time own or otherwise
effectively possess the voting rights of the shares.
(vi) Shares acquired directly from the corporation or an affiliate
or associate, as defined in section 2552 (relating to
definitions), of the corporation by a person engaged in
business as an underwriter of securities who acquires the
shares through his participation in good faith in a firm
commitment underwriting registered under the Securities Act of
1933.
(3) In determining whether a person or group is or would be a controlling
person or group at any particular time, there shall be disregarded
voting power arising from a contingent right of the holders of one or
more classes or series of preference shares to elect one or more
members of the board of directors upon or during the continuation of a
default in the payment of dividends on such shares or another similar
contingency.
(c) Certain record holders. -- A person shall not be a controlling person under
subsection (a) if the person holds voting power, in good faith and not for
the purpose of circumventing this subchapter, as an agent, bank, broker,
nominee or trustee for one or more beneficial owners who do not individually
or, if they are a group acting in concert, as a group have the voting power
specified in subsection (a), or who are not deemed a controlling person or
group under subsection (b).
(d) Existence of voting power. -- For the purposes of this subchapter, a person
has voting power over a voting share if the person has or shares, directly
or indirectly, through any option, control, arrangement, understanding,
conversion right or relationship, or by acting jointly or in concert or
otherwise, the power to vote, or to direct the voting of, the voting share.
SECTION 2544. RIGHT OF SHAREHOLDERS TO RECEIVE PAYMENT FOR SHARES.
Any holder of voting shares of a registered corporation that becomes the
subject of a control transaction who shall object to the transaction shall be
entitled to the rights and remedies provided in this subchapter.
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SECTION 2545. NOTICE TO SHAREHOLDERS.
(a) General rule. -- Prompt notice that a control transaction has occurred shall
be given by the controlling person or group to:
(1) Each shareholder of record of the registered corporation holding voting
shares.
(2) The court, accompanied by a petition to the court praying that the fair
value of the voting shares of the corporation be determined pursuant to
section 2547 (relating to valuation procedures) if the court should
receive, pursuant to section 2547, certificates from shareholders of
the corporation or an equivalent request for transfer of uncertificated
securities.
(b) Obligations of the corporation. -- If the controlling person or group so
requests, the corporation shall, at the option of the corporation and at the
expense of the person or group, either furnish a list of all such
shareholders to the person or group or mail the notice to all such
shareholders.
(c) Contents of notice. -- The notice shall state that:
(1) All shareholders are entitled to demand that they be paid the fair
value of their shares.
(2) The minimum value the shareholder can receive under this subchapter is
the highest price paid per share by the controlling person or group
within the 90-day period ending on and including the date of the
control transaction, and stating that value.
(3) If the shareholder believes the fair value of the shares is higher,
this subchapter provides an appraisal procedure for determining the
fair value of such shares, specifying the name of the court and its
address and the caption of the petition referenced in subsection
(a)(2), and stating that the information is provided for the possible
use by the shareholder in electing to proceed with a court-appointed
appraiser under section 2547.
There shall be included in, or enclosed with, the notice a copy of this
subchapter.
(d) Optional procedure. -- The controlling person or group may, at its option,
supply with the notice referenced in subsection (c) a form for the
shareholder to demand payment of the partial payment amount directly from
the controlling person or group without utilizing the court-appointed
appraiser procedure of section 2547, requiring the shareholder to sate the
number and class or series, if any, of the shares owned by him, and stating
where the payment demand must be sent and the procedures to be followed.
SECTION 2546. SHAREHOLDER DEMAND FOR FAIR VALUE.
(a) General rule. -- After the occurrence of the control transaction, any holder
of voting shares of the registered corporation may, prior to or within a
reasonable time after the notice required by section 2545 (relating to
notice to shareholders) is given, which time period may be specified in the
notice, make written demand on the controlling person or group for payment
of the amount provided in subsection (c) with respect to the voting shares
of the corporation held by the shareholder, and the controlling person or
group shall be required to pay that amount to the shareholder pursuant to
the procedures specified in section 2547 (relating to valuation procedures).
(b) Contents of demand. -- The demand of the shareholder shall state the number
and class or series, if any, of the shares owned by him with respect to
which the demand is made.
(c) Measure of value. -- A shareholder making written demand under this section
shall be entitled to receive cash for each of his shares in an amount equal
to the fair value of each voting share as of the date on which the control
transaction occurs, taking into account all relevant factors, including an
increment representing a proportion of any value payable for acquisition of
control of the corporation.
(d) Purchase independent of subchapter. -- The provisions of this subchapter
shall not preclude a controlling person or group subject to this subchapter
from offering, whether in the notice required by section 2545 or otherwise,
to purchase voting shares of the corporation at a price other than that
provided in subsection (c),
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and the provisions of this subchapter shall not preclude any shareholder
from agreeing to sell his voting shares at that or any other price to any
person.
SECTION 2547. VALUATION PROCEDURES.
(a) General rule. -- If, within 45 days (or such other time period, if any, as
required by applicable law) after the date of the notice required by section
2545 (relating to notice to shareholders), or, if such notice was not
provided prior to the date of the written demand by the shareholder under
section 2546 (relating to shareholder demand for fair value), then within 45
days (or such other time period, if any, required by applicable law) of the
date of such written demand, the controlling person or group and the
shareholder are unable to agree on the date of such written demand, the
controlling person or group and the shareholder are unable to agree on the
fair value of the shares or on a binding procedure to determine the fair
value of the shares, then each shareholder who is unable to agree on both
the fair value and on such a procedure with the controlling person or group
and who so desires to obtain the rights and remedies provided in this
subchapter shall, no later than 30 days after the expiration of the
applicable 45-day or other period, surrender to the court certificates
representing any of the shares that are certificated shares, duly endorsed
for transfer to the controlling person or group, or cause any uncertificated
shares to be transferred to the court as escrow agent under subsection (c)
with a notice stating that the certificates or uncertificated shares are
being surrendered or transferred, as the case may be, in connection with the
petition referenced in section 2545 or, if no petition has theretofore been
filed, the shareholder may file a petition within the 30-day period in the
court praying that the fair value (as defined in this subchapter) of the
shares be determined.
(b) Effect of failure to give notice and surrender certificates. -- Any
shareholder who does not so give notice and surrender any certificates or
cause uncertificated shares to be transferred within such time period shall
have no further right to receive, with respect to shares the certificates of
which were not so surrendered or the uncertificated shares which were not so
transferred under this section, payment under this subchapter from the
controlling person or group with respect to the control transaction giving
rise to the rights of the shareholder under this subchapter.
(c) Escrow and notice. -- The court shall hold the certificates surrendered and
the uncertificated shares transferred to it in escrow for, and shall
promptly, following the expiration of the time period during which the
certificates may be surrendered and the uncertificated shares transferred,
provide a notice to the controlling person or group of the number of shares
so surrendered or transferred.
(d) Partial payment for shares. -- The controlling person or group shall then
make a partial payment for the shares so surrendered or transferred to the
court, within ten business days of receipt of the notice from the court, at
a per-share price equal to the partial payment amount. The court shall then
make payment as soon as practicable, but in any event within ten business
days, to the shareholders who so surrender or transfer their shares to the
court of the appropriate per-share amount received from the controlling
person or group.
(e) Appointment of appraiser. -- Upon receipt of any share certificate
surrendered or uncertificated share transferred under this section, the
court shall, as soon as practicable but in any event within 30 days, appoint
an appraiser with experience in appraising share values of companies of like
nature to the registered corporation to determine the fair value of the
shares.
(f) Appraisal procedure. -- The appraiser so appointed by the court shall, as
soon as reasonably practicable, determine the fair value of the shares
subject to its appraisal and the appropriate market rate of interest on the
amount then owned by the controlling person or group to the holders of the
shares. The determination of any appraiser so appointed by the court shall
be final and binding on both the controlling person or group and all
shareholders who so surrendered their share certificates or transferred
their shares to the court, except that the determination of the appraiser
shall be subject to review to the extent and within the time provided or
prescribed by law in the case of other appointed judicial officers. See 42
Pa.C.S. Sections 5105(a)(3) (relating to right to appellate review) and
5571(b) (relating to appeals generally).
(g) Supplemental payment. -- Any amount owed, together with interest, as
determined pursuant to the appraisal procedures of this section shall be
payable by the controlling person or group after it is so determined and
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upon and concurrently with the delivery or transfer to the controlling
person or group by the court (which shall make delivery of the certificates
or certificates surrendered or the uncertificated shares transferred to it
to the controlling person or group as soon as practicable but in any event
within ten business days after the final determination of the amount owed)
of the certificate or certificates representing shares surrendered or the
uncertificated shares transferred to the court, and the court shall then
make payment, as soon as practicable but in any event within ten business
days after receipt of payment from the controlling person or group, to the
shareholders who so surrendered or transferred their shares to the court of
the appropriate per-share amount received from the controlling person or
group.
(h) Voting and dividend rights during appraisal proceedings. -- Shareholders who
surrender their shares to the court pursuant to this section shall retain
the right to vote their shares and receive dividends or other distributions
thereon until the court receives payment in full for each of the shares so
surrendered or transferred of the partial payment amount (and, thereafter,
the controlling person or group shall be entitled to vote such shares and
receive dividends or other distributions thereon). The fair value (as
determined by the appraiser) of any dividends or other distributions so
received by the shareholders shall be subtracted from any amount owing to
such shareholders under this section.
(i) Powers of the court. -- The court may appoint such agents, including the
transfer agent of the corporation, or any other institution, to hold the
share certificates so surrendered and the shares surrendered or transferred
under this section, to effect any necessary change in record ownership of
the shares after the payment by the controlling person or group to the court
of the amount specified in subsection (h), to receive and disburse dividends
or other distributions, to provide notices to shareholders and to take such
other actions as the court determines are appropriate to effect the purposes
of this subchapter.
(j) Costs and expenses. -- The costs and expenses of any appraiser or other
agents appointed by the court shall be assessed against the controlling
person or group. The costs and expenses of any other procedure to determine
fair value shall be paid as agreed to by the parties agreeing to the
procedure.
(k) Jurisdiction exclusive. -- The jurisdiction of the court under this
subchapter is plenary and exclusive and the controlling person or group, and
all shareholders who so surrendered or transferred their shares to the court
shall be made a party to the proceeding as in an action against their
shares.
(l) Duty of corporation. -- The corporation shall comply with requests for
information, which may be submitted pursuant to procedures maintaining the
confidentiality of the information, made by the court or the appraiser
selected by the court. If any of the shares of the corporation are not
represented by certificates, the transfer, escrow or retransfer of those
share contemplated by this section shall be registered by the corporation,
which shall give the written notice required by section 1528(f) (relating to
uncertificated shares) to the transferring shareholder, the court and the
controlling shareholder or group, as appropriate in the circumstances.
(m) Payment under optional procedure. -- Any amount agreed upon between the
parties or determined pursuant to the procedure agreed upon between the
parties shall be payable by the controlling person or group after it is
agreed upon or determined and upon and concurrently with the delivery of any
certificate or certificates representing such shares or the transfer of any
uncertificated shares to the controlling person or group by the shareholder.
(n) Title to shares. -- Upon full payment by the controlling person or group of
the amount owed to the shareholder or to the court, as appropriate, the
shareholder shall cease to have any interest in the shares.
SECTION 2548. COORDINATION WITH CONTROL TRANSACTION.
(a) General rule. -- A person or group that proposes to engage in a control
transaction may comply with the requirements of this subchapter in
connection with the control transaction, and the effectiveness of the rights
afforded in this subchapter to shareholders may be conditioned upon the
consummation of the control transaction.
(b) Notice. -- The person or group shall group shall give prompt written notice
of the satisfaction of any such condition to each shareholder who has made
demand as provided in this subchapter.
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APPENDIX V
PROPOSED AMENDMENT TO RESTATED ARTICLES OF INCORPORATION OF TUSCARORA
ARTICLES AMENDMENT
"14(th) Control Transactions. Subchapter E (Control Transaction), 15 Pa.
C.S.A. Sections 2541-2548, of Title 15 of Pennsylvania Consolidated statues,
Chapter 25 (Registered Corporations) shall not be applicable to the Company."
V-1
82
TUSCARORA INCORPORATED
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF SHAREHOLDERS
Pittsburgh Airport Marriott, Parkway West, Coraopolis,
Allegheny County, Pennsylvania
FRIDAY, MARCH 9, 2001-9:30 A.M., PITTSBURGH TIME
The undersigned shareholder(s) of Tuscarora Incorporated
(the "Company") hereby appoints John P. O'Leary, Jr., Harold F. Reed, Jr. and
Brian C. Mullins, and each of them acting individually, as proxies of the
undersigned to vote at the Special Meeting of Shareholders of the Company to be
held March 9, 2001, and at any adjournment thereof, all the shares of Common
Stock of the Company which the undersigned may be entitled to vote on the
matters set forth on the reverse side of this proxy and, in their discretion,
upon any other business which may properly come before the meeting.
The undersigned shareholder(s) hereby revokes all previous proxies for
the Special Meeting, acknowledges receipt of the Notice of Special Meeting and
Proxy Statement, both dated February 12, 2001 and hereby ratifies all that said
proxies may do by virtue hereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
SHAREHOLDER(S). IF NO DIRECTION IS GIVEN, THE SHARES WILL BE VOTED "FOR" ITEM 1
AND "FOR" ITEM 2.
(Continued, and to be signed, on the other side)
- FOLD AND DETACH HERE -
83
Please mark
your votes as [ X ]
indicated in
this example
The Board of Directors recommends a vote "FOR" Item 1 and "FOR" Item 2.
Item 1 and Item 2 are interdependent, and unless both are approved, neither
will be deemed to be approved.
Item (1) Approval of an amendment to the Restated Articles of Incorporation of
Tuscarora Incorporated so that Subchapter E of Chapter 25 of the Pennsylvania
Business Corporation Law of 1988, as amended, does not apply to Tuscarora
Incorporated.
FOR [_] AGAINST [_] ABSTAIN [_]
Item (2) Approval of an Agreement and Plan of Merger, dated as of January 21,
2001, among Tuscarora Incorporated, SCA Packaging International, B.V. and SCA
Packaging USA, Inc., providing for the payment of $21.50 per share to
shareholders of Tuscarora Incorporated in consideration for the shares of
Tuscarora Incorporated common stock held by such shareholders.
FOR [_] AGAINST [_] ABSTAIN [_]
Please date and sign below exactly as your name appears on the card. If you are
acting as attorney, executor, administrator, guardian or trustee, please so
indicate with your full title when signing. Corporate holders should sign in
full corporate name by a duly authorized officer. If shares are held jointly,
each shareholder named should sign.
DATED ______________________ , 2001
___________________________________
___________________________________
With respect to the Special Meeting
I/We will attend ____ I/We will not attend ______
- FOLD AND DETACH HERE -
PLEASE INDICATE IN THE SPACE PROVIDED ABOVE
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING.
YOU ARE URGED TO PROMPTLY RETURN THIS PROXY IN THE ENCLOSED ENVELOPE WHETHER OR
NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING IN PERSON IN ORDER THAT THE
PRESENCE OF A QUORUM MAY BE ASSURED AT THE MEETING.
84
February 12, 2001
TO: Participants in the Tuscarora Incorporated
Common Stock Purchase Plan for Salaried Employees
Dear Participant:
In accordance with Section 12 of the Tuscarora Incorporated Common Stock
Purchase Plan for Salaried Employees (the "Plan"), Mellon Bank, N.A., as record
holder of the shares of Common Stock of Tuscarora Incorporated ("Tuscarora") in
which you have a beneficial interest under the Plan, will vote your shares at
the Special Meeting of Shareholders of Tuscarora to be held on March 9, 2001,
and at any adjournment thereof, in accordance with your written direction.
Enclosed are the Notice of Special Meeting and Proxy Statement, both dated
February 12, 2001.
If you wish to instruct us in the voting of your shares, you should complete the
reverse side of this card and return it in the enclosed envelope. By doing so,
you are directing us to execute and file a proxy in the form solicited by the
Board of Directors of Tuscarora, authorizing the proxies therein appointed to
vote your shares at the Special Meeting on the matters set forth on the reverse
side and, in their discretion, upon any other business which may properly come
before the Special Meeting. The Board of Directors of Tuscarora recommends a
vote "FOR" Item 1 and "FOR" Item 2 and your shares will be so voted unless you
otherwise indicate.
Mellon Bank, N.A.
(Continued, and to be signed, on the other side)
- FOLD AND DETACH HERE -
85
Please mark
your votes as [ X ]
indicated in
this example
The Board of Directors recommends a vote "FOR" Item 1 and "FOR" Item 2.
Item 1 and Item 2 are interdependent, and unless both are approved, neither
will be deemed to be approved.
Item (1) Approval of an amendment to the Restated Articles of Incorporation of
Tuscarora Incorporated so that Subchapter E of Chapter 25 of the Pennsylvania
Business Corporation Law of 1988, as amended, does not apply to Tuscarora
Incorporated.
FOR [_] AGAINST [_] ABSTAIN [_]
Item (2) Approval of an Agreement and Plan of Merger, dated as of January 21,
2001, among Tuscarora Incorporated, SCA Packaging International, B.V. and SCA
Packaging USA, Inc., providing for the payment of $21.50 per share to
shareholders of Tuscarora Incorporated in consideration for the shares of
Tuscarora Incorporated common stock held by such shareholders.
FOR [_] AGAINST [_] ABSTAIN [_]
Please date and sign below exactly as your name appears on the card. If shares
are held jointly, each shareholder named should sign.
DATED ______________________ , 2001
___________________________________
___________________________________
- FOLD AND DETACH HERE -
YOUR VOTE IS IMPORTANT TO US. PLEASE COMPLETE, DATE AND SIGN THE
ABOVE CARD AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.