UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly period ended: June 30, 1997
-------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------ ------------
Commission file number: 0-23804
-------
Simpson Manufacturing Co., Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 94-3196943
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4637 Chabot Drive, Suite 200, Pleasanton, CA 94588
--------------------------------------------------
(Address of principal executive offices)
(Registrant's telephone number, including area code): (510)460-9912
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
The number of shares of the Registrant's Common Stock outstanding as
of June 30, 1997: 11,472,965
----------
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
-----------------------------
(Unaudited)
1997 1996 1996
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 4,698,928 $ 12,875,191 $ 19,815,297
Short-term investments - - 3,896,428
Trade accounts receivable, net 39,701,166 30,521,398 20,930,490
Inventories 53,373,606 34,823,846 42,247,777
Deferred income taxes 3,923,455 2,493,455 2,919,455
Other current assets 1,258,106 950,650 956,565
------------ ------------ ------------
Total current assets 102,955,261 81,664,540 90,766,012
Net property, plant and equipment 36,055,534 25,656,317 28,687,635
Investments 557,331 1,355,336 1,382,578
Other noncurrent assets 2,971,392 1,774,287 1,684,548
------------ ------------ ------------
Total assets $142,539,518 $110,450,480 $122,520,773
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes Payable $ 26,091 $ - $ -
Trade accounts payable 11,033,264 8,408,694 10,063,828
Accrued liabilities 4,855,687 3,426,457 4,137,648
Income taxes payable 2,837,187 868,164 341,626
Accrued profit sharing trust contributions 3,876,283 3,302,741 2,446,001
Accrued cash profit sharing and commissions 3,866,504 3,012,877 2,292,057
Accrued workers' compensation 809,272 809,272 809,272
------------ ------------ ------------
Total current liabilities 27,304,288 19,828,205 20,090,432
Deferred income taxes and long-term liabilities 1,027,037 100,783 133,333
------------ ------------ ------------
Total liabilities 28,331,325 19,928,988 20,223,765
Commitments and contingencies (Notes 5 and 6)
Shareholders' equity
Common stock 31,551,350 30,993,676 31,233,648
Retained earnings 82,641,173 59,572,621 70,862,906
Cumulative translation adjustment 15,670 (44,805) 200,454
------------ ------------ ------------
Total shareholders' equity 114,208,193 90,521,492 102,297,008
------------ ------------ ------------
Total liabilities and shareholders' equity $142,539,518 $110,450,480 $122,520,773
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 65,554,874 $ 51,759,610 $117,482,096 $ 95,217,057
Cost of sales 39,228,286 31,508,992 71,836,850 59,864,983
------------ ------------ ------------ ------------
Gross profit 26,326,588 20,250,618 45,645,246 35,352,074
------------ ------------ ------------ ------------
Operating expenses:
Selling 6,366,762 5,462,644 11,575,025 9,972,678
General and administrative 8,077,667 6,225,481 14,304,043 11,353,926
------------ ------------ ------------ ------------
14,444,429 11,688,125 25,879,068 21,326,604
------------ ------------ ------------ ------------
Income from operations 11,882,159 8,562,493 19,766,178 14,025,470
Interest income (expense), net (18,166) 97,356 142,089 150,883
------------ ------------ ------------ ------------
Income before income taxes 11,863,993 8,659,849 19,908,267 14,176,353
Provision for income taxes 4,843,000 3,492,000 8,130,000 5,746,000
------------ ------------ ------------ ------------
Net income $ 7,020,993 $ 5,167,849 $ 11,778,267 $ 8,430,353
============ ============ ============ ============
Net income per common share $ 0.59 $ 0.44 $ 0.99 $ 0.72
============ ============ ============ ============
Weighted average shares outstanding 11,901,328 11,747,506 11,892,487 11,691,673
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months
Ended June 30,
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities
Net income $ 11,778,267 $ 8,430,353
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sale of capital equipment (13,194) (15,827)
Depreciation and amortization 3,817,462 2,875,084
Deferred income taxes and long-term liabilities (1,129,944) 181,000
Equity in income of affiliates (110,000) (33,000)
Changes in operating assets and liabilities, net of
effects of acquisitions:
Trade accounts receivable (17,521,910) (9,807,467)
Inventories (4,973,420) (371,546)
Other current assets (235,056) 283,963
Other noncurrent assets 296,903 (40,430)
Trade accounts payable (275,372) 1,033,680
Accrued liabilities (165,525) 75,029
Accrued profit sharing trust contributions 1,430,282 1,303,002
Accrued cash profit sharing and commissions 1,574,447 1,723,733
Income taxes payable 2,632,769 1,789,446
Accrued workers' compensation - (32,853)
------------ ------------
Total adjustments (14,672,558) (1,036,186)
------------ ------------
Net cash provided by (used in) operating activities (2,894,291) 7,394,167
------------ ------------
Cash flows from investing activities
Capital expenditures (6,803,126) (1,858,062)
Proceeds from sale of equipment 12,730 41,560
Proceeds from sale of short-term investments 3,995,333 -
Acquisitions, net of cash and equity interest
already owned (9,352,706) -
Equity investments - (11,637)
------------ ------------
Net cash used in investing activities (12,147,769) (1,828,139)
------------ ------------
Cash flows from financing activities
Repayment of debt (254,804) (20,037)
Issuance of Company's common stock 180,495 373,412
------------ ------------
Net cash provided by (used in) financing activities (74,309) 353,375
------------ ------------
Net increase (decrease) in cash and cash equivalents (15,116,369) 5,919,403
Cash and cash equivalents at beginning of period 19,815,297 6,955,788
------------ ------------
Cash and cash equivalents at end of period $ 4,698,928 $ 12,875,191
============ ============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
<PAGE>
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
Interim Period Reporting
The accompanying unaudited interim condensed consolidated financial
statements have been prepared pursuant to the rules and regulations for
reporting on Form 10-Q. Accordingly, certain information and footnotes
required by generally accepted accounting principles have been condensed or
omitted. These interim statements should be read in conjunction with the
consolidated financial statements and the notes thereto included in Simpson
Manufacturing Co., Inc.'s (the "Company's") 1996 Annual Report on Form 10-K
(the "1996 Annual Report").
The unaudited quarterly condensed consolidated financial statements have
been prepared on the same basis as the audited annual consolidated
financial statements, and in the opinion of management, contain all
adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the financial information set forth therein, in accordance
with generally accepted accounting principles. The year-end condensed
consolidated balance sheet data was derived from audited financial
statements, but does not include all disclosures required by generally
accepted accounting principles. The Company's quarterly results may be
subject to fluctuations. As a result, the Company believes the results of
operations for the interim periods are not necessarily indicative of the
results to be expected for any future period.
Net Income Per Common Share
Net income per common share is computed based upon the weighted average
number of common shares outstanding. Common equivalent shares, using the
treasury stock method, are included in the per-share calculations for all
periods since the effect of their inclusion is dilutive.
The number of shares used in computing primary and fully diluted net income
per common share did not differ materially for the three and six months
ended June 30, 1997 and 1996.
Newly Issued Accounting Standards
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share" and No. 129, "Disclosure of Information about Capital Structure."
SFAS No. 128 establishes standards for computing and presenting earnings
per share ("EPS"), replacing the presentation of primary EPS with a
presentation of basic EPS. SFAS No. 129 consolidates the existing
disclosure requirements regarding an entity's capital structure. SFAS No.
128 and 129 are effective for financial statements issued for periods
ending after December 15, 1997, and accordingly, management has not
determined the effect, if any, on the Company's financial statements for
the three and six months ended June 30, 1997.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income", and SFAS No. 131, "Disclosures About Segments of an Enterprise and
Related Information." SFAS No. 130 established standards for reporting and
display of comprehensive income and its components. SFAS No. 131 specifies
revised guidelines for determining an entity's operating segments and the
type and level of financial information to be disclosed. SFAS No. 130 and
131 are effective for financial statements issued for periods beginning
after December 15, 1997, and accordingly, management has not determined the
effect, if any, on the Company's financial statements for the three and six
months ended June 30, 1997.
2. Trade Accounts Receivable
Trade accounts receivable consist of the following:
<TABLE>
<CAPTION>
At June 30, At
----------------------------- December 31,
1997 1996 1996
------------ ------------ ------------
<S> <C> <C> <C>
Trade accounts receivable $ 41,721,912 $ 32,029,660 $ 22,242,827
Allowance for doubtful accounts (1,505,868) (1,053,448) (1,108,950)
Allowance for sales discounts (514,878) (454,814) (203,387)
------------ ------------ ------------
$ 39,701,166 $ 30,521,398 $ 20,930,490
============ ============ ============
</TABLE>
<PAGE> 3. Inventories The components of inventories consist
of the following:
<TABLE>
<CAPTION>
At June 30, At
----------------------------- December 31,
1997 1996 1996
------------ ------------ ------------
<S> <C> <C> <C>
Raw materials $ 17,426,108 $ 12,206,175 $ 15,107,660
In-process products 5,530,391 3,164,225 3,763,634
Finished products 30,417,107 19,453,446 23,376,483
------------ ------------ ------------
$ 53,373,606 $ 34,823,846 $ 42,247,777
============ ============ ============
</TABLE>
Approximately 91% of the Company's inventories are valued using the LIFO
(last-in, first-out) method. Because inventory determination under the LIFO
method is only made at the end of each year based on the inventory levels
and costs at that time, interim LIFO determinations must necessarily be
based on management's estimates of expected year-end inventory levels and
costs. Since future estimates of inventory levels and costs are subject to
change, interim financial results reflect the Company's most recent
estimate of the effect of inflation and are subject to final year-end LIFO
inventory amounts. At June 30, 1997 and 1996, and December 31, 1996, the
replacement value of LIFO inventories exceeded LIFO cost by approximately
$886,000, $3,077,000 and $1,186,000, respectively.
4. Net Property, Plant and Equipment
Net property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
At June 30, At
----------------------------- December 31,
1997 1996 1996
------------ ------------ ------------
<S> <C> <C> <C>
Land $ 2,440,682 $ 2,065,682 $ 2,065,682
Buildings and site improvements 12,652,353 10,382,076 10,379,901
Leasehold improvements 2,909,671 2,859,204 2,869,612
Machinery and equipment 53,188,221 42,271,683 46,311,624
------------ ------------ ------------
71,190,927 57,578,645 61,626,819
Less accumulated depreciation
and amortization (39,480,105) (32,866,366) (35,916,354)
------------ ------------ ------------
31,710,822 24,712,279 25,710,465
Capital projects in progress 4,344,712 944,038 2,977,170
------------ ------------ ------------
$ 36,055,534 $ 25,656,317 $ 28,687,635
============ ============ ============
</TABLE>
<PAGE>
5. Debt The outstanding debt at June 30, 1997 and 1996, and the available
credit at June 30, 1997, consisted of the following:
<TABLE>
<CAPTION>
Available Debt Outstanding
Credit at at June 30,
June 30, -----------------------------
1997 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Revolving line of credit, interest
at bank's reference rate (at June
30, 1997, the bank's reference
rate was 8.50%), expires June 1998 $ 13,537,128 $ - $ -
Revolving line of credit, interest
at bank's prime rate (at June 30,
1997, the bank's prime rate was
8.50%), expires June 1998 4,937,129 - -
Revolving term commitment, interest
at bank's prime rate (at June 30,
1997, the bank's prime rate was
8.50%), expires June 1998 4,000,000 - -
Revolving line of credit, interest
rate at the bank's base rate of
interest plus 2%, expires June 1998 416,075 - -
Standby letter of credit facilities 525,744 - -
Other notes payable - 26,091 -
------------ ------------ ------------
Total credit facilities $ 23,416,076 $ 26,091 $ -
============ ============
Standby letters of credit issued
and outstanding (525,744)
------------
Total credit available $ 22,890,332
============
</TABLE>
The Company has two outstanding standby letters of credit. These letters of
credit, in the aggregate amount of $525,744, are used to support the
Company's self-insured workers' compensation insurance requirements. Other
notes payable represent debt associated with foreign businesses acquired in
March 1997.
6. Commitments and Contingencies
Note 10 to the consolidated financial statements in the Company's 1996
Annual Report provides information concerning commitments and contingencies
relating to pending or possible claims, legal actions and proceedings
against the Company and its subsidiaries. Management believes that the
final resolution of these matters, individually or in the aggregate, is not
expected to have a material adverse effect on the financial position of the
Company.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following is a discussion and analysis of the consolidated financial
condition and results of operations for the Company for the three and six
months ended June 30, 1997 and 1996. The following should be read in
conjunction with the interim Condensed Consolidated Financial Statements
and related Notes appearing elsewhere herein.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1997, COMPARED
WITH THE THREE MONTHS ENDED JUNE 30, 1996
Net sales increased 26.7% from the second quarter of 1996 to the second
quarter of 1997. The increase reflected growth throughout the United
States, particularly in California. In addition, approximately 4% of the
sales for the quarter resulted from the acquisitions in March 1997 of
Patrick Bellion, S.A., of France ("Bellion"), and the Isometric Group, of
Canada ("Isometric"). Simpson Strong-Tie's second quarter sales increased
27.9% over the same quarter last year while Simpson Dura-Vent's sales
increased 21.7%. Contractor distributors and homecenters were the fastest
growing connector sales channels, while dealer distributor sales increased
but at a slower rate than overall sales during the quarter. The growth rate
of Simpson Strong-Tie's engineered wood, seismic and epoxy product sales
remained strong, while Simpson Dura-Vent sales of Direct-Vent products,
sold both to OEMs and through distributors, continued to experience strong
growth.
Income from operations increased 38.8% from $8,562,493 in the second
quarter of 1996 to $11,882,159 in the second quarter of 1997. This increase
was primarily due to higher gross margins that resulted from lower overhead
costs as a percentage of sales, despite an increase in depreciation and
facility charges which resulted principally from expansion during 1996. The
increase in gross margins was offset somewhat by the lower margins at the
recently acquired businesses. Selling expenses increased 16.6% from
$5,462,644 in the second quarter of 1996 to $6,366,762 in the second
quarter of 1997, but decreased somewhat as a percentage of sales. The
increase was primarily due to higher promotional expenses associated with
the retail business and an increase in the number of salespeople. General
and administrative expenses increased 29.8% from $6,225,481 in the second
quarter of 1996 to $8,077,667 in the second quarter of 1997. The increase
in selling, general and administrative expenses was primarily due to
increased cash profit sharing, as a result of higher operating profit, as
well as additional administrative costs associated with the two
acquisitions earlier in the year. The effective tax rate was 40.8% in the
second quarter of 1997, consistent with the first quarter of 1997.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997, COMPARED
WITH THE SIX MONTHS ENDED JUNE 30, 1996
Net sales increased 23.4% from the first half of 1996 to the first half of
1997. The increase reflected growth throughout the United States. The
largest percentage increase was in the Northeastern region of the country;
California showed the next largest percentage increase and the largest
dollar increase in sales. Simpson Strong-Tie's sales for the first half of
1997 increased 25.9% over the same period last year while Simpson Dura-
Vent's sales increased 14.5%. Homecenters and contractor distributors were
the fastest growing connector sales channels. The growth rate of Simpson
Strong-Tie's engineered wood, seismic and epoxy product sales remained
strong, while Simpson Dura-Vent sales of Direct-Vent products, sold both to
OEMs and through distributors, continued to experience above average
growth.
Income from operations increased 40.9% from $14,025,470 in the first six
months of 1996 to $19,766,178 in the first six months of 1997. This
increase was primarily due to higher gross margins that resulted from lower
overhead costs as a percentage of sales, despite an increase in
depreciation charges which resulted principally from equipment purchased
during 1996. Selling expenses increased 16.1% from $9,972,678 in the first
half of 1996 to $11,575,025 in the first half of 1997, but decreased
slightly as a percentage of sales. As was the case in the second quarter,
the increase was primarily due to higher promotional expenses and an
increase in the number of salespeople. General and administrative expenses
increased 26.0% from $11,353,926 in the first half of 1996 to $14,304,043
in the first half of 1997. The increase in selling, general and
administrative expenses was primarily due to increased cash profit sharing,
as a result of higher operating profit, as well as additional
administrative costs associated with the two acquisitions in March 1997.
<PAGE>
LIQUIDITY AND SOURCES OF CAPITAL
As of June 30, 1997, working capital was $75.7 million as compared to $61.8
million at June 30, 1996, and $70.7 million at December 31, 1996. The
principal components of the increase in working capital from December 31,
1996, were increases in the Company's trade accounts receivable and
inventory balances totaling nearly $29.9 million as a result of higher
sales levels and seasonal buying programs. In addition, the increase in
these balances were also affected by the purchases of Bellion and Isometric
in March of 1997. This increase was offset somewhat by decreases in cash
and cash equivalents and short-term investments which, in the aggregate,
decreased a total of $19.0 million, a large portion of which was used in
the two acquisitions and to purchase capital equipment. Further offsetting
the increase in trade accounts receivable and inventory were increases in
income taxes payable, accrued cash profit sharing and commissions and
accrued contributions to the Company's profit sharing trust of
approximately $2.5 million, $1.6 million and $1.4 million, respectively.
The balance of the change in working capital was due to the fluctuation of
various other asset and liability accounts, including trade accounts
payable and deferred taxes. Without giving effect to the two acquisitions,
which are included in investing activities, the working capital change
combined with higher net income and noncash expenses, such as depreciation
and amortization, totaling approximately $15.6 million, resulted in a net
use of cash of $2.9 million. As of June 30, 1997, the Company had unused
credit facilities available of approximately $22.9 million.
The Company used $12.1 million in its investing activities, primarily to
complete the two acquisitions and to purchase capital equipment. The
Company has made $6.8 million in capital equipment purchases in the first
half of 1997 to expand its capacity. The Company plans to continue this
expansion throughout the remainder of the year. Partially offsetting these
expenditures, the Company sold its short-term investments, which matured in
March, for approximately $4.0 million.
The Company believes that cash generated by operations and borrowings
available under its existing credit agreements will be sufficient for the
Company's working capital needs and planned capital expenditures through
the remainder of 1997. Depending on the Company's future growth, it may
become necessary to secure additional sources of financing.
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is involved in various legal proceedings and other matters
arising in the normal course of business. In the opinion of management,
none of such matters when ultimately resolved will have a material adverse
effect on the Company's financial position or results of operations.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Annual Meeting of Shareholders ("Annual Meeting") was held on May 15,
1997. The following seven nominees were reelected as director by the votes
indicated:
<TABLE>
<CAPTION>
Total Votes
Total Votes Withheld
For Each From Each
Name Director Director
- ------------------------ ------------ ------------
<S> <C> <C>
Earl F. Cheit 10,952,557 16,686
Thomas J Fitzmyers 10,952,957 16,286
Stephen B. Lamson 10,952,657 16,586
Alan R. McKay 10,953,257 15,986
Sunne Wright McPeak 10,949,957 19,286
Barclay Simpson 10,951,136 18,107
Barry Lawson Williams 10,950,457 18,786
</TABLE>
The following proposals were also adopted at the Annual Meeting by the vote
indicated:
<TABLE>
<CAPTION>
Broker
Proposal For Against Abstain Non-Vote
- ------------------------------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
To increase by 300,000 shares (from
1,200,000 to 1,500,000) the number
of shares of Common Stock reserved
for issuance under the Simpson
Manufacturing Co., Inc. 1994 Stock
Option Plan 10,343,141 591,917 34,185 -
To ratify the appointment of Coopers
& Lybrand L.L.P. as independent
auditors of the Company for 1997 10,935,035 1,157 33,051 -
</TABLE>
<PAGE>
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
<TABLE>
<CAPTION>
a. Exhibits.
EXHIBIT
NO DESCRIPTION
------- ------------------------------------------------------
<S> <C>
10.1 Application for Amendment to Letter of Credit, dated
May 19, 1997, between Simpson Manufacturing Co.,
Inc. and Wells Fargo HSBC Trade Bank, N.A.
10.2 Credit Agreement, dated June 20, 1997, between
Barclays Bank PLC and Simpson Strong-Tie
International, Inc.
10.3 Tri-Party Agreement, First Amendment to Lease and
Purchase and Sale Agreement, dated July 25, 1997,
between Vacaville Investors, Simpson Manufacturing
Co., Inc. and Simpson Dura-Vent Company, Inc.
11 Statements re computation of earnings per share
27 Financial Data Schedule, which is submitted
electronically to the Securities and Exchange
Commission for information only and not filed.
</TABLE>
b. Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for which
this report is filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Simpson Manufacturing Co., Inc.
-------------------------------
(Registrant)
DATE: August 13, 1997 By: /s/Stephen B. Lamson
--------------- -------------------------------
Stephen B. Lamson
Chief Financial Officer
<PAGE>
EXHIBIT 10.1
------------
WELLS FARGO HSBC TRADE BANK APPLICATION FOR AMENDMENT TO LETTER
OF CREDIT
TO: WELLS FARGO HSBC TRADE BANK, N.A. DATE FOR BANK USE ONLY
DOCUMENT TRACK NO.
/_/ Operations Group /_/ Operations Group
525 Market Street, 25th Floor 9000 Flair Drive, 3rd Floor
San Francisco, California 94105 El Monte, California 91731
LETTER OF Letter of Credit No. : 140941
CREDIT Applicant: Simpson Manufacturing Co. Inc.
INFORMATION Beneficiary: Self Insurance Plans State of California
PLEASE AMEND THE ABOVE-REFERENCED LETTER OF CREDIT BY
/_/ CABLE/TELEX /_/ COURIER /_/ MAIL /_/ OTHER:
AS FOLLOWS:
1. LETTER OF CREDIT AMOUNT IS REDUCED BY $153,412.50 TO
$262,872.50.
2. LETTER OF CREDIT AMOUNT IS INCREASED BY $
3. LATEST SHIPMENT DATE IS EXTENDED TO
4. LETTER OF CREDIT EXPIRATION DATE IS EXTENDED TO June 1, 1998
5. OTHER AMENDMENT(S):
ALL OTHER TERMS AND CONDITIONS OF THE LETTER OF CREDIT REMAIN UNCHANGED.
APPLICANT'S AGREEMENT AND SIGNATURE: IT IS UNDERSTOOD THAT THIS
AMENDMENT IS SUBJECT TO ACCEPTANCE BY THE BENEFICIARY AND ANY CONFIRMING
BANK.
Simpson Manufacturing Co., Inc.
- ----------------------------------------- ---------------------------
APPLICANT ADDRESS
- ---------------------- ----------------- ---------------------------
AUTHORIZED SIGNATURE TITLE ADDRESS
- ---------------------- ----------------- ---------------------------
AUTHORIZED SIGNATURE TITLE ADDRESS
(TO BE COMPLETED BY APPROVING TRADE BANK OFFICER)
Issuance of the Amendment has been approved, and Applicant's signature
verified, in accordance with Trade Bank's credit policies and procedure.
APPROVING APPROVING APPROVING
OFFICER'S OFFICER'S OFFICER'S
SIGNATURE NAME (PRINT) OFFICE (PRINT)
East Bay
/s/Steven Bojkovic Steven Bojkovic RCBC AU #2677
-------------------- -------------------- ------------------
------------ ------------ ------------ ------------
MAC AU PHONE DATE
EXHIBIT 10.2
------------
BARCLAYS BANK PLC
Birmingham Corporate Banking Centre
P.O. Box No. 5960, 15 Colmore Row, Birmingham B3 2EP
Private & Confidential
The Directors Direct Dial: (0121)480 5531
Simpson Strong-Tie International Inc. Fax. No: (0121)480 5506
Phoenix Road Ext. No:
Hawks Green SCB/KH/PAG
CANNOCK
Staffordshire WS11 2LR 20 June 1997
Dear Sirs
SIMPSON STRONG-TIE INTERNATIONAL INC.
- -------------------------------------
We are writing to confirm that we have agreed facilities for the above
company as described below. The facilities are repayable upon demand at
any time, but subject to this overriding condition, the limits have been
marked forward for review by 15th June 1998.
FACILITIES
- ----------
Overdraft GBP250,000 (two hundred and fifty
thousand pounds
Rental Guarantee to Royal GBP470,000 (four hundred and seventy
London thousand pounds
HM Customs & Excise
Guarantee GBP10,000 (2 x GBP5,000)
Company Barclaycard GBP15,000 (fifteen thousand pounds)
BACs GBP70,000(seventy thousand pounds)
Purpose To assist with the working capital
requirements of the company
Interest/Commission/Fees Interest will charged at a rate of 2%
above Barclays Bank's Base Rate current
from time to time.
No amounts may be drawn in excess of the
agreed facility but if exceptionally the
Bank pays amounts which are not agreed
in advance and which create an excess
position, then a borrowing margin of 15%
will apply to the unauthorised amounts
calculated daily.
<PAGE>
Interest will be charged quarterly in
arrears in March, June, September and
December, or at such other intervals as
the Bank my notify to you.
Base Rate is currently 6.5% and
variations in Base Rate are published in
the press.
Commission will be charged in line with
the Bank tariff current from time to
time, a copy of which is in your
possession. The tariff is usually
reviewed annually in May.
Commission in respect of the Rental
Guarantee will be charged at a reate of
0.45% per annum.
Additionally, the non-transactional
costs incurred reviewing, controlling
and monitoring the account will be
recovered by way of an account
management time charge.
The commission and management time
charge will be debited quarterly in
arrears in March, June, September and
December.
A renewal fee of GBP500 will be charged
on acceptance of this letter.
Security The facility will be secured/guaranteed
by:
1. Standby Letter of Credit in the sum
of GBP470,000 from the Union Bank re
the Rental Guarantee to Royal
London.
2. A Guarantee from Simpson
Manufacturing Inc in respect of the
remaining facilities
and any other security which is now
held or hereinafter may be held by the
Bank, all of which security is to be
available as cover for all liabilities
of the Borrower whether actual or
contingent to the Bank at any time.
<PAGE>
Condition Precedent The facility is conditional upon the
Standby Letter of Credit being renewed
at its expiry dates.
Information The Borrower will provide the Bank with:
Copies of its audited, trading and
consolidated profit and loss account and
balance sheet as soon as they are
available, and not later than 180 days
from the end of each accounting
reference period.
Acceptance This offer will be available for
acceptance until 19th July 1997 after
which date, the offer will lapse unless
extended in writing by the Bank.
Acceptance will be signified by signing
and returning the attached copy letter
Yours faithfully,
/s/S C Brettell
- ----------------------
S C BRETTELL
CORPORATE MANAGER
EXHIBIT 10.3
------------
TRI-PARTY AGREEMENT
(First Amendment to Lease and Purchase and Sale Agreement)
THIS TRI-PARTY AGREEMENT ("Agreement") is entered into as
of July 25, 1997, by and between VACAVILLE INVESTORS ("Landlord"),
SIMPSON MANUFACTURING CO., INC. ("Buyer") and SIMPSON DURA-VENT
COMPANY, INC. ("Tenant"), with reference to the following facts:
A. Pursuant to the terms of that certain Industrial Lease
dated May 1, 1994 (the "Lease"), Landlord leased to Tenant the
property located at 902 Aldridge Road, Vacaville, California (the
"Premises"), as more particularly described in the Lease.
B. The Term of the Lease is scheduled to expire, unless
sooner terminated, on November 30, 2003.
C. The Property contains approximately one acre of "surplus"
land, the exact location of which will be shown on a survey being
prepared by Buyer and reasonably consented to by Landlord (the
"Surplus Land"). Tenant is willing to terminate the Lease with
respect to the Surplus Land and Buyer desires to buy and Landlord
desires to sell the Surplus Land.
D. Landlord, Tenant and Buyer desire to enter into this
Agreement in order to (i) extend the Term of the Lease upon the
terms and conditions set forth herein, (ii) provide for certain
other amendments to the Lease as set forth in this Agreement, and
(iii) provide for Buyer to purchase the Surplus Land.
NOW, THEREFORE, in consideration of the foregoing, and
for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Landlord, Tenant and Buyer hereby
agree as follows (capitalized terms used herein but not herein
defined shall have the meaning ascribed to them in the Lease):
A. LEASE AMENDMENT
1. Extension of the Term. Landlord and Tenant hereby
agree to extend the term of the Lease for an additional four (4)
years so that the Expiration Date of the Lease shall be November
30, 2007, unless sooner terminated pursuant to the terms of the
Lease. From and after the date hereof, all references in the Lease
and this Agreement to the "Term" or "term" shall refer to the Term
as extended hereby, unless the context clearly indicates otherwise.
2. Rent. Sections 3.1 and 3.2 of the Lease are hereby
deleted and replaced with the following:
<PAGE>
Tenant shall pay to Landlord during the Term rent in the
amounts set forth below ("Rent"), which sums shall be payable by
Tenant on or before the first day of each month, in advance, at the
address specified for Landlord in the Lease, or such other place as
Landlord shall designate, without any prior demand therefor and
without any abatement, deduction or setoff whatsoever:
December 1, 1997 - November 30, 2001: $.29 per rentable square
foot per month (i.e.,
$36,470 per month)
December 1, 2001 - November 30, 2003: $.30 per rentable square
foot per month (i.e.,
$37,728)
December 1, 2003 - November 30, 2005: $.317 per rentable square
foot per month (i.e.,
$39,866)
December 1, 2005 - November 30, 2007: $.334 per rentable square
foot per month (i.e.,
$42,004)
3. Option to Renew.
a. Notwithstanding any terms of the Lease to the
contrary, Landlord hereby grants Tenant an option to extend the
term of the Lease for one additional period of either five years or
ten years, such term to be determined by Tenant and such term to
commence immediately after the expiration of the term of the Lease,
upon the same terms and conditions contained herein, except that
the Rent for the Premises shall be equal to ninety-five percent
(95%) of the Fair Market Rent for the Premises if Tenant elects a
five year term or ninety percent (90%) of the Fair Market Rent for
the Premises if Tenant elects a ten year term, both subject to
increases as set forth in subparagraph (f) below. Notwithstanding
the foregoing, in no event shall the Rent for the renewal term be
less than ninety-five percent (95%) of the then current Rent for
the Premises if Tenant elects a five year term or ninety percent
(90%) of the then current Rent for the Premises if Tenant elects a
ten year term. The Fair Market Rent shall be determined in the
manner set forth below. Tenant must exercise the option granted
herein on or before November 30, 2006 and in such notice exercising
its option must indicate to Landlord whether it elects a five or
ten year renewal term. If Tenant properly exercises the option
granted herein, references in the Lease to the "term" shall be
deemed to mean the option term unless the context clearly provides
otherwise.
b. If Tenant exercises its option to extend the
term of the Lease, the Rent during the option term shall be
determined in the following manner.
<PAGE>
(1) The Fair Market Rent for the renewal term
shall be specified by Landlord in a written notice ("Landlord's
Rent Determination Notice") given to Tenant not less than ninety
(90) days prior to commencement of such renewal term, subject to
Tenant's right of arbitration as set forth below. If Tenant
believes that the Fair Market Rent specified by Landlord in
Landlord's Rent Determination Notice exceeds the actual Fair Market
Rent for the Premises, Tenant shall so notify Landlord ("Tenant's
Objection Notice") within fifteen (15) business days following
receipt of Landlord's Rent Determination Notice. If Tenant fails
to so notify Landlord within said fifteen (15) business days,
Landlord's determination of the Fair Market Rent for the Premises
shall be deemed disapproved by Tenant. If Tenant notifies Landlord
that Tenant objects to Landlord's determination of Fair Market
Rent, and if the parties are unable to agree upon the Fair Market
Rent for the Premises within twenty (20) days after Landlord's
receipt of Tenant's Objection Notice, then Landlord and Tenant
shall each designate, within ten (10) days after the lapse of such
twenty (20) day negotiation period, a real estate broker licensed
in the State of California and then currently engaged in the
industrial leasing brokerage business in Solano County for at least
the immediately preceding five (5) years. If one party fails to
notify the other of its designated broker, the broker designated on
a timely basis shall be the sole broker to determine the issues.
In the event that two brokers are chosen, the brokers so chosen
shall meet within ten (10) business days after the second broker is
appointed, and if within ten (10) business days after such first
meeting the brokers shall be unable to agree upon the Fair Market
Rent, they shall appoint a third broker, who shall be a competent
and impartial person with qualifications similar to those required
of the first two brokers pursuant to this Paragraph. Each of said
three brokers shall, within fifteen (15) days after the appointment
of the third broker, determine the Fair Market Rent for the
Premises. The Fair Market Rent shall be the arithmetic average of
such three determinations; provided, however, that if any such
broker's determination deviates more than ten percent (10%) from
the median of such determinations, the Fair Market Rent shall be
equal to the average of the two closest determinations.
c. Landlord shall pay the costs and fees of
Landlord's broker in connection with any determination of Fair
Market Rent hereunder, and Tenant shall pay the costs and fees of
Tenant's broker in connection with such determination. The costs
and fees of any third broker shall be paid one-half by Landlord and
one-half by Tenant.
d. If the Fair Market Rent of the Premises has not
been determined as of the commencement of the renewal term, then,
until such Fair Market Rent is determined, Tenant shall continue to
pay as Rent for the Premises the per square foot rental rate in
effect at the time of Landlord's Rent Determination Notice. When
such Fair Market Rent has been determined, if Tenant has underpaid
the Rent applicable for such period, Tenant shall pay such
deficiency to Landlord at the time the next monthly payment of Rent
is due or if Tenant has overpaid such Rent, Landlord shall, at
Landlord's option, credit the amount of such overpayment against
Tenant's payment(s) of Rent next coming due hereunder or pay such
overpayment to Tenant within ten (10) days after Tenant's demand
for payment thereof.
<PAGE>
e. The term "Fair Market Rent" for the Premises
shall mean the "fair market" base rent as of the commencement of
the renewal term, based on the prevailing rental rates then being
obtained in arms'-length transactions for new leases and lease
renewals or extensions of comparable space in comparable buildings
in Solano County ("Comparable Buildings"). Fair Market rent of
Comparable Buildings will consider all characteristics of the
property including the building to land ratio, available power, the
number of skylights, the thickness of concrete floors, the roof
system spans, the quality of lighting, the adequacy of ventilation,
the total amount of office space, the overall quality of
construction, and any unique design characteristics of the
building. An adjustment to the Fair Market Rent of Comparable
Buildings is needed for the above items and other landlord
improvements. The adjustment will be made on the basis of a
reasonable rate of return to the Landlord for those tenant required
improvements that were financed by the Landlord.
f. The Rent payable during the renewal term shall
be adjusted every two years following November 1, 2007 (each two
(2) year date referred to as an "Adjustment Date"). Such rental
adjustments shall be based upon the percentage increase of the
Consumer Price Index For All Urban Consumers, San Francisco-
Oakland-San Jose, All Items (1982-1984=100) as published by the
U.S. Bureau of Labor Statistics (the "Index"), over the respective
two year period. The Index published most immediately preceding
the date that is two years prior to the Adjustment Date in question
(the "Beginning Index") and the Index published most immediately
preceding the Adjustment Date in question (the "Adjustment Index")
are to be used in determining the amount of the respective
adjustment. The Rent shall be determined by multiplying the then
current Rent by a fraction, the numerator of which is the
Adjustment Index and the denominator of which is the Beginning
Index. If the 1982-1984 base of the Index is changed, the new base
shall be converted to the 1982-1984 base in accordance with the
U.S. Department of Labor's conversion factor, and the base as so
converted shall be used. If the U.S. Department of Labor ceases to
publish the Index, then the successor index designated by the U.S.
Department of Labor or, if no successor index is so designated, the
most nearly comparable index shall be used.
4. Master Planning. Landlord acknowledges that
Tenant and Buyer are planning on connecting three facilities,
including the Premises, with driveways and utility connections.
Landlord agrees to cooperate with Tenant in such endeavor; and
further agrees not to unreasonably withhold its consent to any
particular plan for such connections.
5. Brokers. Tenant hereby represents and warrants to
Landlord that Tenant has incurred no obligation to pay any person
or entity any commission, finder's fee or other charge in
connection with this Agreement.
<PAGE>
6. Option to Purchase.
Landlord hereby grants Tenant an option to purchase the
Premises and the land as more particularly described in Exhibit B
attached hereto (the "Property") on November 30, 2012 (the "Closing
Date"); provided, that the Internal Revenue Service allows for tax
deferred exchanges as of the Closing Date of the type (or the
equivalent) allowed by the Internal Revenue Service as of July
1997. In the event Tenant desires to exercise its option to
purchase the Property, Tenant shall deliver to Landlord written
notice of its intention on or before November 30, 2011, together
with a deposit into an escrow of $500,000, which shall be
refundable only in the event of a default by Landlord. The
purchase price for the Property shall be $6,740,000, all cash.
In addition, in the event that Tenant exercises its
option to purchase as set forth herein, and Tenant had previously
exercised its option to renew the lease as set forth in Section 3
below for a ten year renewal term (and the rent was determined
based upon ninety percent of fair market value), Tenant shall
reimburse to Landlord on the Closing Date, the positive amount
derived, if any, by subtracting the Rent Tenant pays for the ten
year renewal term for the period from the beginning of the renewal
term up to the Closing Date from ninety-five percent of the fair
market rent for a five year renewal term for the period from the
beginning of the renewal term up to the Closing Date.
Landlord and Tenant agree to execute any and all
documents required to transfer the Property to Tenant under the
terms of this option. Landlord agrees that title shall be
transferred free and clear of all monetary liens, except for
current property taxes not yet due and payable, and that title will
be insured by an ALTA owners policy with only those other
exceptions that Tenant approves. All costs and expenses shall be
prorated as of the closing date and Landlord and Tenant shall be
responsible for closing costs in accordance with the custom of the
county in which the Property is located.
In the event that Landlord elects to consummate the
transaction contemplated herein by virtue of an exchange
transaction under Section 1031 of the Internal Revenue Code, Buyer
shall cooperate with Landlord in so effecting Landlord's
consummation of such transaction, subject to the following
conditions:
a. The period for the closing shall not be
extended by such exchange transaction;
b. Buyer shall not take title to any property as
part of any such exchange transaction;
<PAGE>
c. Buyer shall not be required to advance any
funds whatsoever or incur any obligation or liability whatsoever in
connection with any such exchange transaction other than the
purchase of the Property;
d. Landlord shall pay all costs and expenses
arising as a consequence of such exchange transaction, including,
without limitation, any attorneys' fees and costs incurred by Buyer
in connection therewith; and
e. Landlord shall indemnify Buyer and hold Buyer
harmless from and against any loss, cost, liability, damage or
expense (including reasonable attorneys' fees and costs) incurred
or suffered by Buyer arising out of or in any way connected with
such exchange transaction.
7. Status of Lease. Except as amended hereby, the
Lease remains unchanged, and as amended hereby, the Lease and all
the terms and conditions thereof remain in full force and effect.
B. PURCHASE AND SALE AGREEMENT
1. Property Included in Sale. Landlord hereby agrees
to sell and convey to Buyer, and Buyer hereby agrees to purchase
from Landlord, the following:
a. the Surplus Land;
b. all rights, privileges and easements
appurtenant to the Surplus Land, including, without limitation, all
minerals, oil, gas and other hydrocarbon substances on and under
the Surplus Land, as well as all development rights and credits,
air rights, solar rights, water, water rights, and water stock
relating to the Surplus Land and any easements, rights-of-way or
other appurtenances used in connection with the beneficial use and
enjoyment of the Surplus Land (all of which are collectively called
the "Appurtenances");
All of the items described in subsections (a) and (b)
above are hereinafter collectively called the "Property."
2. Purchase Price.
a. The purchase price of the Property is $1.61 per
square foot of land on the exact number of square feet determined
by the final survey approved as set forth in Section 1(a) above
(the "Purchase Price").
b. The Purchase Price shall be paid to Landlord in
cash at the closing of the transaction contemplated hereby
("Closing").
<PAGE>
3. Title to the Property. At the Closing, Landlord
shall convey to Buyer marketable and insurable fee simple title to
the Real Property, by duly executed and acknowledged grant deed in
a form acceptable to Buyer. Evidence of delivery of marketable and
insurable fee simple title shall be the issuance by Title Company
of an ALTA Owner's Policy of Title Insurance, in the full amount of
the Purchase Price insuring fee simple title to the Real Property,
in Buyer, subject only to those exceptions as Buyer shall approve
pursuant to section 4(a) below. Said policy shall provide full
coverage against mechanics' or materialmen's liens arising out of
the construction of any of the Improvements and shall contain such
special endorsements as Buyer may reasonably require.
4. Conditions to Closing. The following conditions are
conditions precedent to Buyer's obligation to purchase the
Property:
a. Title. Buyer's review and approval of title to
the Property. Buyer shall advise the Landlord within ten (10)
business days after actual receipt of a preliminary title report,
copies of all exceptions and a final survey of the Real Property,
what exceptions to title, if any, will be accepted by Buyer;
provided, however, that Landlord hereby agrees to remove all
monetary liens, encumbrances and judgments of any nature whatsoever
encumbering title to the Property, and Buyer shall not be required
to specifically disapprove any such title exceptions (such title
exceptions being deemed to be disapproved hereby).
b. Subdivision. The final subdivision of the Real
Property so as to allow Landlord to legally convey fee simple title
to Buyer.
5. Closing and Escrow.
a. Closing Date. The Closing hereunder shall be
held and delivery of all items to be made at the Closing under the
terms of this Agreement shall be made at the offices of
____________ ("Title Company") on the date fifteen (15) days after
the satisfaction of all of the conditions set forth in section 4
above (or, if said date falls on a holiday or weekend day, then the
second business day after such holiday or weekend day) (the
"Closing Date"). Such date may not be extended without the written
approval of both Landlord and Buyer, except as otherwise expressly
provided in this Agreement. If the Closing does not occur on or
before the Closing Date, the Title Company as escrow holder shall,
unless it is notified by both parties to the contrary within five
(5) days after the Closing Date, return to the depositor thereof
items which may have been deposited hereunder.
<PAGE>
b. Landlord's Documents. At or before the
Closing, Landlord shall deliver to Buyer through escrow the
following:
(1) a duly executed and acknowledged grant
deed conveying to the Buyer the Real Property and all rights,
privileges and easements appurtenant thereto as required by
section 3(a);
(2) an affidavit of Landlord that Landlord is
not a "foreign person" within the meaning of Section 1445 of
the Internal Revenue Code of 1986 (the "Code") duly executed
by Landlord in the form attached hereto as Exhibit B;
(3) a California form 590;
(4) closing statement in form and content
satisfactory to Buyer and Landlord; and
(5) any other documents, instruments or
agreements necessary for the closing of this transaction;
Buyer may waive compliance on Landlord's part under any
of the foregoing items by an instrument in writing.
c. Buyer's Documents and Funds. At or before the
Closing, Buyer shall deliver to Landlord through escrow the
following:
(1) the Purchase Price;
(2) any other documents, instruments or
agreements called for hereunder which have not previously been
delivered.
Landlord may waive compliance on Buyer's part under any
of the foregoing items by an instrument in writing.
d. Other Documents. Landlord and Buyer shall each
deposit such other instruments as are reasonably required by the
escrow holder or otherwise required to close the escrow and
consummate the purchase of the Property in accordance with the
terms hereof.
e. Prorations. Real property taxes, water, sewer
and utility charges, amounts payable under the Service Contracts,
annual permits and/or inspection fees (calculated on the basis of
the period covered), and other expenses normal to the operation and
maintenance of the Property shall be prorated on the basis of a
365-day year as of 12:01 a.m. on the date the grant deed is
recorded. Landlord and Buyer hereby agree that if any of the
aforesaid prorations cannot be calculated accurately on the Closing
Date, then the same shall be calculated within thirty (30) days
after the Closing Date and either party owing the other party a sum
of money based on such subsequent proration(s) shall promptly pay
said sum to the other party, together with interest thereon at the
rate of twelve percent (12%) per annum from the Closing Date to the
date of payment if payment is not made within ten (10) days after
delivery of a bill therefor.
<PAGE>
f. Expenses. Buyer shall pay the fee for the
policy of title insurance. Buyer shall pay the cost of any
transfer taxes applicable to the sale. Buyer shall pay the charges
of the escrow for the sale as well as the cost of recording the
grant deed to the Property; and Landlord shall pay all costs
relating to the reconveyance or discharge of any lien, encumbrance
or judgment against the Property.
g. Property Taxes. Notwithstanding any other
provision of this Agreement to the contrary, if Buyer shall become
liable after the Closing for payment of any property taxes assessed
against the Property for any period of time prior to the Closing
Date, Landlord shall immediately pay to Buyer on demand an amount
equal to such tax assessment in accordance with subsection 5(e).
6. Representations and Warranties of Landlord.
Landlord hereby represents and warrants to Buyer as follows:
a. Except for the Lease, which is being terminated
with respect to the Surplus Land, Landlord has not executed or
otherwise entered into any leases, tenancies, occupancy agreements
or other agreements with respect to rights affecting possession of
the Property or any portion thereof and there are no such
agreements entered into or executed by any third party.
b. Landlord has not entered into and there are no
service contracts or other agreements affecting the Property.
c. Landlord does not know of any condemnation,
environmental, zoning or other land-use regulation proceedings,
either instituted or planned to be instituted, which would
adversely affect the use and operation of the Property for its
intended purpose or the value of the Property, nor has Landlord
received notice of any special assessment proceedings affecting the
Property.
d. To the best of Landlord's knowledge, there has
been no production, disposal or storage on or under the Real
Property, nor use in the operation or occupancy of any of the
Improvements, of any hazardous waste or other toxic or hazardous
substances by Landlord, nor to the best of Landlord's knowledge, by
any previous owner or previous or current occupant of the Property
or any portion thereof or any property or improvements adjacent to
the Property, and Landlord has not been notified of any proceeding
or inquiry by any governmental authority with respect to the
production, storage, disposal or use of any hazardous waste or
other toxic or hazardous substance on or under the Real Property or
in any of the Improvements or on, under or about any property or
Improvements adjacent to the Property.
<PAGE>
e. Landlord is a California limited partnership
duly organized and validly existing and in good standing under the
laws of the State of California and has the authority to own and
convey the Property; this Agreement and all documents executed by
Landlord which are to be delivered to Buyer at the Closing are or
at the time of Closing will be duly authorized, executed, and
delivered by Landlord, are or at the time of Closing will be legal,
valid, and binding obligations of Landlord enforceable in
accordance with their terms, are and at the time of Closing will be
sufficient to convey title (if they purport to do so), and do not
and at the time of Closing will not violate any provisions of any
agreement or judicial order to which Landlord is a party or to
which Landlord or the Property is subject.
f. There is no litigation pending or, after due
and diligent inquiry, to the best of the Landlord's knowledge
threatened, against Landlord or any basis therefor that arises out
of the ownership of the Property or that might detrimentally affect
the proposed use or operation of the Property, or the value of the
Property or adversely affect the ability of Landlord to perform its
obligations under this Agreement.
7. Indemnification. Each party hereby agrees to
indemnify the other party and hold it harmless from and against any
and all claims, demands, liabilities, costs, expenses, penalties,
damages and losses, including, without limitation, reasonable
attorneys' fees, resulting from any misrepresentations or breach of
warranty or breach of covenant made by such party in this Agreement
or in any document, certificate, or exhibit given or delivered to
the other pursuant to or in connection with this Agreement. The
indemnification provisions of this section 8 shall survive beyond
the delivery of the grant deed and transfer of title, or, if title
is not transferred pursuant to this Agreement, beyond any
termination of this Agreement.
8. Possession. Possession of the Property shall be
delivered to Buyer on the Closing Date.
9. Miscellaneous.
a. Notices. Any notice, consent, approval, waiver
or other communication required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly
given when delivered personally or two (2) days after deposited in
the United States mail, certified mail, postage prepaid, return
receipt required, and addressed as follows:
If to Landlord: Vacaville Investors
P.O. Box 1954
4527 Mar Vista
Mendocino, California 95460
Attention: Ev Johnston
<PAGE>
If to Buyer: Simpson Manufacturing Co., Inc.
4637 Chabot Drive, Suite 200
P.O. Box 10789
Pleasanton, CA 94588-0789
Att'n: Steve Lamson
With a copy to: Shartsis, Friese & Ginsburg LLP
One Maritime Plaza, Eighteenth Floor
San Francisco, California 94111
Att'n: Adam K. Elsesser, Esq.
or such other address as either party may from time to time specify
by notice hereunder to the other.
b. Brokers and Finders. Neither party has had any
contact or dealings regarding the Property, or any communication in
connection with the subject matter of this transaction, through any
licensed real estate broker or other person who can claim a right
to a commission or finder's fee as a procuring cause of the sale
contemplated herein.
c. Successors and Assigns. The terms and
provisions of this Agreement shall bind and inure to the benefit of
the parties hereto and their respective successors, heirs,
administrators and assigns. Without being relieved of any
liability under this Agreement, Buyer reserves the right to take
title to the Property in a name or assignee other than Buyer.
d. Amendments. Except as otherwise provided
herein, this Agreement may be amended or modified by, and only by,
a written instrument executed by Landlord and Buyer.
e. Continuation and Survival of Representations
and Warranties. All representations and warranties by the
respective parties herein or made in writing pursuant to this
Agreement are intended to and shall remain true and correct as of
the time of Closing, shall be deemed to be material, and shall
survive the execution and delivery of this Agreement and the
delivery of the grant deed and transfer of title. All statements
contained in any certificate or other instrument delivered at any
time by or on behalf of Landlord in connection with the transaction
contemplated hereby shall constitute representations and warranties
hereunder.
f. Governing Law. This Agreement shall be
governed by and construed and interpreted in accordance with the
laws of the State of California.
g. Merger of Prior Agreements. This Agreement
contains the entire agreement of the parties and supersedes all
prior negotiations, correspondence, understandings and agreements
between the parties, relating to the subject matter hereof.
<PAGE>
h. Enforcement. If either party fails to perform
any of its obligations under this Agreement or if a dispute arises
concerning the meaning or interpretation of any provision of this
Agreement, the defaulting party or the party not prevailing in such
dispute, as the case may be, shall pay any and all costs and
expenses incurred by the other party in enforcing or establishing
its rights hereunder, including, without limitation, court costs
and reasonable attorneys' fees.
i. Time of the Essence. Time is of the essence of
this Agreement.
j. Specific Performance. Landlord acknowledges
that in the event of a breach or default or threatened breach or
default under this Agreement by Landlord prior to the Closing,
damages at law will be an inadequate remedy and, accordingly,
without in any manner limiting any other remedies available to
Buyer, Landlord's obligations under this Agreement may be enforced
by specific performance.
IN WITNESS WHEREOF, Landlord and Tenant have executed this
Agreement as of the date first set forth above.
VACAVILLE INVESTORS
By: /s/Ev Johnston
-------------------------------
Ev Johnston
Its: Managing Partner
-------------------------------
SIMPSON MANUFACTURING CO., INC.
By: /s/Steve Lamson
-------------------------------
Its: CFO
-------------------------------
SIMPSON DURA-VENT COMPANY, INC.
By: /s/Steve Lamson
-------------------------------
Its: CFO
-------------------------------
<TABLE>
<CAPTION>
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(UNAUDITED)
EXHIBIT 11
--------------
Primary Earnings per Share
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Weighted average number of
common shares outstanding 11,457,312 11,428,130 11,458,580 11,409,066
Shares issuable pursuant to
employee stock option plans,
less shares assumed repurchased
at the average fair value
during the period 439,146 315,867 429,102 279,563
Shares issuable pursuant to the
independent director stock
option plan, less shares assumed
repurchased at the average fair
value during the period 4,870 3,509 4,805 3,044
------------ ------------ ------------ ------------
Number of shares for computation
of primary net income per share 11,901,328 11,747,506 11,892,487 11,691,673
============ ============ ============ ============
Net income $ 7,020,993 $ 5,167,849 $ 11,778,267 $ 8,430,353
============ ============ ============ ============
Primary net income per share $ 0.59 $ 0.44 $ 0.99 $ 0.72
============ ============ ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(UNAUDITED)
EXHIBIT 11
--------------
Fully Diluted Earnings per Share
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Weighted average number of
common shares outstanding 11,457,312 11,428,130 11,458,580 11,409,066
Shares issuable pursuant to
employee stock option plans,
less shares assumed repurchased
at the end of period fair value 452,968 362,332 451,125 370,836
Shares issuable pursuant to the
independent director stock option
plan, less shares assumed
repurchased at the end of period
fair value 4,981 4,000 4,981 4,000
------------ ------------ ------------ ------------
Number of shares for computation
of fully diluted net income per
share 11,915,261 11,794,462 11,914,686 11,783,902
============ ============ ============ ============
Net income $ 7,020,993 $ 5,167,849 $ 11,778,267 $ 8,430,353
============ ============ ============ ============
Fully diluted net income per share $ 0.59 $ 0.44 $ 0.99 $ 0.72
============ ============ ============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Balance Sheet at June 30, 1997, (Unaudited)
and the Condensed Consolidated Statement of Operations for the six
months ended June 30, 1997, (Unaudited) and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 4,698,928
<SECURITIES> 0
<RECEIVABLES> 41,721,912
<ALLOWANCES> 2,020,746
<INVENTORY> 53,373,606
<CURRENT-ASSETS> 102,955,261
<PP&E> 75,535,639
<DEPRECIATION> 39,480,105
<TOTAL-ASSETS> 142,539,518
<CURRENT-LIABILITIES> 27,304,288
<BONDS> 0
0
0
<COMMON> 31,551,350
<OTHER-SE> 82,656,843
<TOTAL-LIABILITY-AND-EQUITY> 114,208,193
<SALES> 117,482,096
<TOTAL-REVENUES> 117,482,096
<CGS> 71,836,850
<TOTAL-COSTS> 71,836,850
<OTHER-EXPENSES> 25,879,068
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0<F1>
<INCOME-PRETAX> 19,908,267
<INCOME-TAX> 8,130,000
<INCOME-CONTINUING> 11,778,267
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,778,267
<EPS-PRIMARY> 0.99
<EPS-DILUTED> 0.99
<FN>
<F1>Interest income for the six months ended June 30, 1997,
was $142,089.
</FN>
</TABLE>
