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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended January 1, 1994
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ________ to ________
Commission File Number 0-7469
TJ INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 82-0250992
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(State of incorporation) (IRS employer identification number)
380 E. PARKCENTER BLVD., SUITE 300, BOISE, IDAHO 83706
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (208) 345-8500
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Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK ($1.00 PAR VALUE)
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(Title of Class)
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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
The aggregate market value of the voting stock held by non-affiliates of the
registrant, computed by reference to the price at which the stock was sold, or
the average bid and asked prices of such stock, as of the close of business on
March 4, 1994, was $433,958,000.
The number of outstanding shares of the registrant's common stock ($1.00 par
value), as of March 4, 1994 was 16,771,334.
Documents incorporated by reference: Listed hereunder the following documents
if incorporated by reference, and the Parts of this Form 10-K into which the
document is incorporated:
The registrant's definitive proxy statement to be dated on or after April, 4,
1994, for use in connection with the annual meeting of stockholders to be held
on May 25, 1994, portions of which are incorporated by reference into Part III
of this Form 10-K.
EXHIBIT INDEX ON PAGE 23
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PART I
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ITEM 1. BUSINESS
ITEM 1(a). GENERAL DEVELOPMENT OF BUSINESS
TJ International, Inc. includes the operations of its subsidiaries and its
51% interest in Trus Joist MacMillan a Limited Partnership (the Partnership).
Reference in this document to "the Company" includes TJ International, its
subsidiaries, and the Partnership unless otherwise specified.
The Company posted an all time sales record in a market which had only 5%
more U.S. and Canadian housing starts than 1992. On a year-to-year comparative
basis, sales increased 38% from $400,480,000 in 1992 to $551,204,000 in 1993.
The 1993 net income was $12,528,000 or $.76 per fully diluted share. These
results compare with a 1992 net income of $7,311,000 or $.45 per fully diluted
share which includes a credit of $900,000 or $.07 per fully diluted share
resulting from adoption of Financial Accounting Standards Board (FASB) Statement
No. 109, which governs accounting for income taxes.
For the fourth quarter, sales increased 44% to $144,725,000 from
$100,383,000. Net income for the fourth quarter of 1993 was $3,007,000, or $.16
per fully diluted share. This compares with 1992's fourth quarter net income of
$465,000 or $.01 per fully diluted share.
Significant Company items or events which occurred in 1993 included:
MARKET DEVELOPMENTS. The Company's engineered lumber sales, used in residential
construction, per North American housing start increased 49% in 1993 to $246 per
start as compared to $165 in 1992. The Company believes this increased market
acceptance is due to engineered lumber products offering advantages in both
performance and cost effectiveness over natural lumber. The Company also
believes its products are well positioned to benefit from the increasing
scarcity and associated higher prices of the older, large diameter logs
historically utilized to make the solid structural lumber products (2x10's,
2x12's, etc.) with which the Company's products compete.
The Company's window and door sales per North American housing start decreased
somewhat from $88 per start in 1992 to $86 per start in 1993. This market
performance was despite these products' dependence on the California and Eastern
Canadian markets, two regions still suffering from latent recession. In 1993,
housing starts were down 13% in California and 14% in the combined Eastern
Canadian provinces of Ontario, Quebec and Maritimes. The Company believes its
window and patio door products are well positioned to capitalize on the decline
in the all-aluminum window market as consumers and regulators demand the higher
insulating qualities of vinyl and wood products. The Company also believes it
is well positioned to benefit from any economic recovery in the cyclically
depressed markets of California and Eastern Canada.
TECHNOLOGY DEVELOPMENTS. In July 1993, the Company announced it had
successfully manufactured a high-strength TimberStrand-TM- laminated strand
lumber in limited quantities at its Deerwood, Minnesota manufacturing facility.
The Company believes this significant technological breakthrough, which enables
the Company to develop high strength structural products from alternative wood
resources such as Aspen or Yellow Popular, will be a significant competitive
advantage. Aspen and Yellow Poplar are abundant, less environmentally
pressured, and more competitively priced than traditional structural wood
species such as Douglas Fir and Southern Yellow Pine.
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WINDOW AND PATIO DOOR OPERATING STRATEGY REFOCUS. During the third quarter of
1993, the Company completed an in-depth analysis of its strategy for the window
and patio door products. The operating strategy adopted will refocus the
business on becoming the "no-problem" supplier to the move-up, new construction
market. The strategy will emphasize a high level of product quality and
delivery reliability together with a high degree of personal service in
regionally focused market areas. It will also take advantage of the Company's
multiple, geographically dispersed manufacturing facilities to offer products
designed for local market preferences and fast delivery times.
STOCK SPLIT; DIVIDEND INCREASE. At the Company's August 26, 1993 Board of
Directors meeting, the Company's Board of Directors approved a two-for-one stock
split to be effected in the form of a 100% stock dividend. The stock dividend
was paid on October 1, 1993 to stockholders of record on September 7, 1993.
The Company's Board of Directors also authorized an increase in the Company's
quarterly cash dividend from $0.0525 to $0.055 per post-split share, beginning
with the dividend paid on October 20, 1993 to holders of record on September 24,
1993.
ARRANGEMENT WITH WEYERHAEUSER. The Company announced in July 1993 an
arrangement with Weyerhaeuser's Building Materials Distribution Division to
further develop distribution of the Company's engineered lumber products. Under
the arrangement, 45 Weyerhaeuser customer service centers in the United States
and Canada will distribute the Company's engineered lumber products. In
addition, Weyerhaeuser is assuming an expanded role as a supplier of veneer and
oriented strand board to the Company's manufacturing facilities. The Company
believes the arrangement with Weyerhaeuser will enhance the visibility and sales
of the Company's products.
CAPITAL EXPANSION PROGRAM. At the Company's August 26, 1993 Board of Directors
meeting, the Board of Directors approved a two-year capital expansion program.
The program is intended to enhance the Company's leading position in engineered
lumber products through the capacity expansion of existing facilities and
construction of new production facilities. The capital expansion program is
predicated on the positive developments in the engineered lumber products
business, including higher commodity lumber prices and increased market
acceptance of engineered lumber products. The Company believes that the new
housing construction industry is undergoing a transition toward increased use of
engineered lumber for structural building material, as wide-dimension commodity
lumber increases in price and decreases in quality. The Company believes this
expansion plan is appropriate because its new LSL technology represents a
significant technological advancement which the Company believes will further
strengthen its market leading position. The Company believes undertaking this
capacity expansion program on an accelerated time schedule is prudent given the
demand for these new technologies and competition in these markets that the
Company expects will develop over time. However, there can be no assurance that
the market for engineered lumber products will increase or that markets for new
products will develop.
The capital expansion program includes the following:
Hazard, Kentucky, TimberStrand-TM- LSL Plant. The Company is proceeding with
construction of a TimberStrand-TM- LSL engineered lumber production facility for
approximately $100 million near Hazard, Kentucky. Construction of the facility
commenced in the fall of 1993 with initial production expected in 1995.
Buckhannon, West Virginia, Combination Plant. In November 1993, the Company
announced it will proceed with construction of a combination facility near
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Buckhannon, West Virginia which will manufacture both MICRO=LAM-R- LVL and
Parallam-R- PSL. It will cost approximately $85 million. Initial production of
LVL is expected in the spring of 1995 and PSL production is scheduled for fall
1995.
Existing Plants. The Company also authorized capital expenditures of
approximately $25 millon to expand capacity at its existing MICRO=LAM-R- LVL,
Parallam-R- PSL, and I-joist production facilities.
The Company is also examining potential sites for a third TimberStrand-TM- LSL
plant, or an additional combination LVL and PSL plant. Commitment to this third
plant is contingent upon continued market demand and acceptance of engineered
lumber.
ITEM 1(b). FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.
The primary business of the Company is the manufacture and marketing of
specialty building products for the light construction industry. Principal
products are wooden structural components, such as roof and floor joists and
beams, headers, columns and posts, and wood windows and patio doors. Over 90%
of the Company's sales are derived from this activity. The remainder of the
Company's sales consist primarily of direct sales of various MICRO=LAM-R- LVL
and TimberStrand-TM- LSL products to industrial users and the resale of certain
accessory products sold in conjunction with products manufactured by the
Company. The Company believes that these industrial and resale sales do not
constitute a separate industry segment and that separate financial information
would not be material to an understanding of the Company's business as a whole.
Financial information relating to foreign and domestic operations is presented
in Note 10 to the consolidated financial statements, page 42 of this Report.
ITEM 1(c). NARRATIVE DESCRIPTION OF BUSINESS.
The Company is the leading manufacturer and marketer of engineered lumber
products in the world and a significant North American manufacturer of windows
and patio doors. Engineered lumber products are high quality substitutes for
sawn structural lumber historically obtained from the logging of older, large
diameter trees. The Company utilizes advanced technology to manufacture
engineered lumber at fourteen facilities located in the United States and Canada
and estimates that its market share is in excess of 60% for engineered lumber
products sold in North America. The Company's residential engineered lumber
sales per North American housing start have increased from $75 per start in 1988
to $246 per start in 1993, an increase of 228%. The Company also manufactures
and markets windows and patio doors through its three wholly-owned subsidiaries,
Norco Windows, Inc. in the United States and R. Laflamme & Frere, Inc. and
Dashwood Industries Limited in Canada.
STRATEGY. The Company's strategy in engineered lumber is to be a leading
manufacturer and marketer of value-added specialty building products to the
residential and light commercial construction industry. The Company believes it
is well positioned to benefit from the increasing scarcity and associated higher
prices of the older, large diameter logs historically utilized to make the sawn
structural lumber products with which the Company's products compete. The
Company's strategy is to increase the product acceptance of its engineered
lumber products and to strengthen its market leadership in these products. To
increase product acceptance, the Company's selling efforts highlight product
advantages including consistent quality, superior strength, relatively light
weight, and ease of installation targeted at end users such as architects and
contractors. The Company seeks to strengthen its leading market position through
(i) the addition of production capacity including the construction of new
engineered lumber manufacturing
<PAGE>
facilities, the expansion of existing facilities, and the construction of other
facilities as market conditions warrant, (ii) the ongoing development of
proprietary technologies including processes utilizing relatively low-cost wood
fiber from abundantly available tree species, such as aspen and yellow poplar,
(iii) an aggressive sales, marketing and service effort, and (iv) the
establishment of an extensive North American distribution network including
strategic alliances with MacMillan Bloedel and Weyerhaeuser.
In its window operations, the Company's strategy is to market its products
directly to builders and dealers, supporting these efforts with high levels of
personal service and by building relationships with customers. The Company's
product line includes windows with price points and features that allow its
products to be cost competitive in the entire range of homes from entry level
housing to high-end custom housing. The Company has also recently added
all-vinyl window manufacturing capacity to capitalize on the decline in the
all-aluminum window market as consumers and regulators demand the higher
insulating qualities of vinyl and wood windows. In its window operations, the
Company believes it is well positioned to benefit from any economic recovery in
its cyclically depressed markets, including eastern Canada and California.
TIMBER SUPPLY. In general, the supply of public timber in the Pacific Northwest
and to a lesser extent in the southern United States has declined over the past
several years principally due to environmentally related pressures. In addition,
the Clinton Administration in July 1993 announced a forest management plan
calling for reduced harvests in the public forests west of the Cascade
mountains, which have traditionally been a source of high quality sawn
structural lumber. The plan, as proposed, represents an approximate 75%
reduction in harvest levels on federal lands which historically prevailed in
this region. Non-federal owned timber has traditionally provided approximately
two-thirds of the volume harvested annually in Oregon and Washington. Harvest
rates in excess of replacement growth rates and more restrictive environmental
regulation on these timberlands have also reduced the volume of high grade
timber available from this source.
The Company believes this plan, if implemented, would materially and
permanently reduce the supply of wood available in the region. As a result of
this plan and general environmentally-related timber supply pressures, the
Douglas fir veneer utilized as the raw material in the Company's Oregon
engineered lumber facilities could materially increase in cost due to limited
availability.
Unlike many of its principal competitors in engineered lumber, the Company
does not currently manufacture veneer on the West Coast or own any timberlands
or standing timber. The Company buys its raw materials on contract both from
small independent suppliers and larger integrated forest products companies. In
addition, a significant portion of its wood raw materials are purchased on the
spot market. The reduced supplies could result in more volatile wood markets.
The Company has experienced and believes it may continue to experience
volatility in its quarter-to-quarter results due to raw material price
volatility.
The Company, however, believes it will be able to satisfy its needs for raw
materials and it is not currently aware of any potential shortages for its
longer-term requirements. The Company believes that it has significant
competitive advantages over companies marketing traditional sawn lumber products
in an environment of reduced timber supply because its engineered lumber
technologies are able to utilize non-traditional sources of wood fiber, which
are both more abundant and less expensive.
ACQUISITIONS. The Company regularly reviews potential opportunities to acquire
additional facilities or companies. These acquisitions must complement the
Company's
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internal growth by adding to its product line of value-added specialty building
materials, adding to its customer base, or enhancing its technological
advantages. The Company intends to capitalize on its improved financial
flexibility by examining potential acquisitions that meet its strategic
objectives.
ENGINEERED LUMBER PRODUCTS
OVERVIEW. The Company believes that the new housing construction industry is
undergoing a transition in its use of structural building materials as sawn
structural lumber increases in price and decreases in quality. Engineered lumber
is enjoying accelerated market acceptance and is displacing sawn structural
lumber.
This transition is driven by the changing composition of the North American
timberlands, both in terms of regional log supply restrictions and the type and
size of logs currently available for use as raw material. The availability of
timber from federally owned forests in the Pacific Northwest has been greatly
restricted and the size of an average sawlog has decreased to the point where it
is often too small to produce significant quantities of high grade,
wide-dimension structural lumber.
TECHNOLOGY. The Company is the industry leader in developing and
commercializing proprietary technologies that enable the manufacturing of
engineered lumber products from wood that has been regarded as not sufficiently
large, strong, straight, or free of defects to be sawn into structural lumber.
The following table outlines the principal features of the Company's
technologies:
<TABLE>
<CAPTION>
TECHNOLOGY RAW MATERIAL MAXIMUM SIZE PRODUCTION FACILITIES
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<S> <C> <C> <C>
MICRO=LAM-R- LVL Rectangular high-grade 80 feet long Eugene, Oregon
veneer 4 feet wide by 3 1/2 inches Stayton, Oregon
thick Junction City, Oregon
Natchitoches, Louisiana
Valdosta, Georgia
Parallam-R- PSL Irregular veneer from first 80 feet long by Colbert, Georgia
and last peels of the log 20 inches wide by Vancouver, British Columbia
11 inches thick
TimberStrand-TM- LSL 12-inch long flakes 35 feet long by Deerwood, Minnesota
8 feet wide by 5 1/2 inches
thick
</TABLE>
The Company's three engineered lumber technologies are: laminated veneer
lumber, or LVL, the oldest and most commercialized of the technologies; parallel
strand lumber, or PSL, first introduced in the mid-1980's in Canada; and
laminated strand lumber, or LSL, a new technology introduced in the fall of
1991. Both PSL and LSL are proprietary to the Company, while equipment to
produce LVL is now available from several machinery manufacturers and is
utilized by an increasing number of forest products manufacturers. The Company
believes its LVL manufacturing process enjoys several advantages which make this
process cost-competitive compared to the commercially available alternatives.
Although the Company has been issued or has applied for a number of patents
on its current processes, the Company believes that its technological
competitiveness depends more upon continued innovation and technical expertise
than on legal protection of its patent rights. There can be no assurance that
the Company's efforts to protect its proprietary rights will be successful.
<PAGE>
LAMINATED VENEER LUMBER (LVL). LVL uses thin sheets of veneer peeled from a
log. Each sheet is carefully dried and individually graded using ultrasonic
measurements to determine its strength characteristics. Sheets are then placed
in specific sequence and location within the product to maximize its strength
and randomize wood defects, such as knots. This engineered configuration of
veneers is then laminated with adhesives under heat and pressure to form a piece
of wood in widths of 24 inches or 48 inches, thicknesses from 3/4 inches to 3
1/2 inches, and up to 80 feet in length.
PARALLEL STRAND LUMBER. This technology, which is proprietary to the Company,
starts with sheets of thin veneer peeled from a log. These sheets are then
clipped into strands which are four feet long and 5/8 inches wide. The ability
to use this very narrow strand allows a significantly higher percentage of the
log to be manufactured into a value-added product. The strand is then coated
with an adhesive. The next step in the process employs a pressing system in
which microwaves are used to cure the adhesive and form a large block, or
billet, of engineered lumber measuring up to 11 inches by 20 inches and 80 feet
long. The Company's PSL process is protected by 21 patents in 16 countries.
These patents expire in the years 1994 through 2008.
The Company believes that the combination of the PSL and LVL technologies
in a single manufacturing facility will allow it to be among the most
competitive purchasers of whole logs.
LAMINATED STRAND LUMBER (LSL). The Company's other proprietary engineered
lumber technology, LSL, begins with small-diameter, 8-foot-long logs such as
aspen and yellow poplar. These are species traditionally used in lower value
applications such as pulp logs and are therefore substantially less expensive
than traditional sources of sawn lumber. These logs are flaked into strands
about 12 inches long, which are then treated with an adhesive. The strands are
put into a steam-injection press that significantly densifies the wood and
creates boards 35 feet long, up to 5 1/2 inches thick, and 8 feet wide. The
Company's LSL process is protected by 20 patents in 25 countries. In addition,
one patent is pending approval. These patents expire in the years 1994 through
2010.
The Company's future success will depend in large part on its ability to
achieve market acceptance of its LSL technology and to obtain cost reductions in
the implementation of this technology sufficient to provide the Company with an
adequate return. The Company's Deerwood, Minnesota plant, where LSL is
manufactured, experienced a loss in all quarters of 1993. The Company's
strategic decision to operate the plant to achieve manufacturing efficiencies in
higher value TimberStrand-TM- LSL products that are still in start-up, to
develop a broad and deep product line and to test equipment designs for the
larger plant near Hazard, Kentucky, contributed to this loss. There can be no
assurance that the Company will be able to achieve such market acceptance or to
lower manufacturing costs to a level sufficient to earn an adequate return.
All the Company's technologies can use wood fiber from trees that were
previously not suitable for the manufacture of structural lumber, and this
allows the Company to access the current inventory of wood fiber. The current
inventory of wood fiber differs from that in the past, primarily in the species
and size of the trees available for harvest. Much of today's potential LSL
lumber supply consists of smaller second growth logs or is found in the interior
forests of Appalachia, the upper Midwest and the Canadian interior forests.
These forests include faster-growing, more abundant and competitively priced
species of trees such as aspen and yellow poplar. Previously, these trees had
not been regarded as sufficiently large, straight, or strong to be sawn into
structural lumber. New technologies now allow the use of these species. The
Company will continue to use
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substantial volumes of Douglas fir in the West and southern yellow pine wood
fiber in the South from the available supply of large mature trees and smaller
second growth logs, respectively. It will also pursue, as appropriate, use of
non-traditional saw timber species such as aspen and yellow poplar for its
future wood supply.
PRODUCTS. The Company produces the broadest line of structural engineered
lumber building products in the industry, possesses certain exclusive product
technologies, and believes it enjoys a reputation for superior quality and
service.
The table below lists the Company's products, the technology
utilized, product size, and end use of such products.
<TABLE>
<CAPTION>
RESIDENTIAL PRODUCTS ENGINEERED LUMBER TECHNOLOGY PRODUCT SIZE END USE
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<S> <C> <C> <C>
TJI I-joists MICRO=LAM-R- LVL on the top and 9 1/2" to 16" deep Residential construction
bottom with enhanced composite Width from 1 1/2" to floor joists and roof
panel webs in the middle 3 1/2"" trusses substituting for
Up to 80' long traditional 2x10 and 2x12
sawn lumber systems.
Rim joists TimberStrand-TM- LSL 1 1/4" thick Residential construction
9 1/2" to 16" deep frames in perimeter of
17' to 35' long floor. Substitutes for
laterally ripped plywood
and/or 2x10 and 2x12
sawn lumber.
Headers, beams, and columns MICRO=LAM-R- LVL 1 3/4" to 7 1/4" thick Residential construction.
Parallam-R- PSL 9 1/2" to 18" deep Ranges from main carrying
TimberStrand-TM- LSL Up to 80' long beam in home to support
structures above a window
or door (header).
Substitutes for
traditional 2x10 and 2x12
sawn lumber.
COMMERCIAL PRODUCTS
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Open-web truss MICRO=LAM-R- LVL or strength-rated 14" to 114" deep Roof support structure in
lumber on the top and bottom with Spans lengths up to light commercial
tubular steel webs in the middle 120 feet long buildings.
TJI-R- roof truss series MICRO=LAM-R- LVL 2.3" to 4.65" thick Roof structure for
4 1/2' to 37.1' deep smaller commercial
Up to 80' long buildings.
INDUSTRIAL PRODUCTS
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Window and door core material TimberStrand-TM- LSL Various Substitutes for finger
jointed Ponderosa pine
lumber in the manufacture
of wood windows and doors.
Concrete forming and shoring MICRO=LAM-R- LVL 1 1/2" to 5 1/4" thick Support members in the
support members Parallam-R- PSL 6 1/2" to 20" deep structure into which wet
Up to 80' long concrete is poured in
both residential and
commercial buildings.
Substitutes for 2x10,
2x12, 4x4 and larger sawn
lumber and for aluminum
form support systems.
Scaffold plank MICRO=LAM-R- LVL 1 1/2" to 2 1/2" thick Decking material in
9" to 11 3/4" wide scaffold frames.
Up to 80' long Substitutes for high
strength rated 2x6
and 2x8 sawn lumber.
</TABLE>
The Company continues to explore the development of new and improved
engineered lumber products which have superior performance and quality
characteristics relative to traditional sawn lumber. The Company currently has a
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focused effort to develop further TimberStrand-TM- LSL products including a
product which substitutes for premium length lumber (lengths over 22'), a fascia
board which substitutes for 2x8, rough sawn, clear spruce, and a solid floor
joist targeted at the multi-family construction market. The Company is also in
the process of developing a series of I-joists utilizing TimberStrand-TM- LSL as
the flange material.
The Company owns a number of registered and non-registered trademarks for
its promotional literature and engineered lumber products. The Company believes
that its engineered lumber trademarks, and in particular, the Silent Floor-R-
brand of residential structural products, have achieved significant name
recognition in the engineered lumber industry.
MARKETS. The Company's engineered lumber is sold primarily into three markets.
The largest market is the new-construction residential housing market, which
includes single-family detached homes, apartments, condominiums, townhouses, and
manufactured housing. Industrial uses are another market and include core
components for the millwork and furniture industry, scaffold plank, and concrete
forming and shoring products. The third market is the light-commercial
construction market, which includes structures such as warehouses, schools,
gymnasiums, shopping centers, and low-rise office buildings.
The Company estimates that at today's price levels a typical newly
constructed 2,000 square foot house could utilize $2,100 of engineered
structural lumber products. This estimate is based upon factors such as average
house size, geographic preferences for framing methods, differing foundation and
subfloor composition, and multi-story construction.
SALES, MARKETING, AND DISTRIBUTION. The Company's residential engineered lumber
products are sold directly to more than 260 stocking retail lumber dealers in
the United States and Canada. In addition, the Company's sales through its
network of 118 wholesale lumber distributors, which include the MacMillan
Bloedel Building Materials Distribution Centers and Weyerhaeuser Building
Materials Customer Service Centers, broadens the Company's market to include an
extensive range of smaller lumber dealers and outlets. The Company believes this
distribution network gives it the broadest and deepest reach into the market of
any engineered lumber producer.
The Company's products are supported by an advanced computer-assisted
software package. The Company's proprietary TJXpert software, which is receiving
increasing acceptance by builders, translates a builder's blueprints into a
complete framing plan for a structural system using engineered lumber products.
The Company employs the engineered lumber industry's largest sales force
consisting of 215 technical sales representatives who market the Company's
products directly to architects, project engineers, contractors, developers,
independent lumber dealers, national wholesale building material suppliers, and
industrial users. This enables the Company to better educate and assist
customers in the use of engineered lumber and simultaneously helps create
demand, further enabling the Company to differentiate its products from those of
its competition.
The Company also has sales offices and representatives in Japan and the
United Kingdom, and conducts business in much of Europe through several
distributors and agents. While not currently comprising a significant portion of
the Company's business, the Company believes these markets present future growth
opportunities for its products.
COMPETITION. Sawn lumber products produced in traditional sawmills remain the
primary competition for the Company's engineered lumber products.
<PAGE>
The Company's competition in the growing engineered lumber industry
includes five large competitors producing LVL in six plants across North
America, and eight that are manufacturing wood I-joists. Competition is expected
to continue to increase. In particular, competition may emerge or increase from
established wood products companies that now sell primarily traditional wood
products. A number of existing or potential competitors such as
Louisiana-Pacific Corporation, Boise Cascade Corporation, Willamette Industries,
Inc., and Georgia-Pacific Corporation, own a significant portion of their own
raw materials and generally have greater financial resources than the Company.
The Company believes that the principal competitive factors in the market
for engineered lumber are price, performance, market acceptance, distribution
capabilities, and customer support. The Company believes its broader product
line, based in part on its proprietary technologies PSL and LSL lumber, provide
an important advantage in this competition.
Other materials, including steel, plastic, brick, and cement are
alternative basic materials for construction. However, these materials may not
readily lend themselves to traditional residential framing methods or tools and
have certain inherent manufacturing and performance deficiencies.
WINDOW AND DOOR PRODUCTS
OVERVIEW. The Company entered the window industry in 1986 with the acquisition
of Norco Windows, Inc., located in Hawkins, Wisconsin. This was followed by the
acquisitions of Dashwood Industries Limited of Centralia, Ontario, in 1987, and
R. Laflamme & Frere Inc. of St. Apollinaire, Quebec, in 1992.
The Company's strategy is to offer highly reliable product quality and
personal service through locally tailored distribution channels. The Company
manufactures and markets full lines of all-vinyl windows and all-wood windows
and patio doors which include maintenance-free exterior options such as cladding
with aluminum or vinyl or encapsulating in vinyl.
The Company's window operations have achieved high penetration in regional
markets in portions of Canada and the U.S. The Company's Canadian window group
is the leading manufacturer in eastern Canada. It markets an extensive line of
windows and patio doors through its Dashwood and Laflamme brands for sale
primarily in the provinces of Ontario and Quebec. The Company's U.S. window
operations are best established in the upper Midwest and Ohio River Valley and
are marketed primarily under the SiteLine-R-, Teton-TM- and Sierra-TM- brands.
In recent years, the Company has sought to expand distribution and build new
manufacturing capacity in the western U.S.
RAW MATERIAL RESOURCES. The Company's windows and patio doors employ vinyl
(PVC) or wood as the primary raw materials for construction of the window
frames. A portion of the Company's wood windows and patio doors use Ponderosa
pine cutstock, which is obtained from independent suppliers. The Company is
actively pursuing substitutes in the form of composite or engineered lumber to
reduce its dependence on Ponderosa pine. The Company's window subsidiaries have
substituted engineered lumber for frame components in several window and patio
door products. The Company obtains vinyl and insulating glass from several
suppliers and is not aware of any potential shortages for its long-term
requirements.
TECHNOLOGY. The Company believes that both its wood and vinyl windows will
benefit from a fundamental and accelerating shift away from the use of
energy-inefficient aluminum windows to those with superior insulating
characteristics. This reflects an overall construction industry trend toward
products that can best substitute new
<PAGE>
energy- and material-efficient composites and components in place of poorly
performing or inefficient materials.
The Company's window operations are actively involved in the development
and use of new composite technologies in the manufacture of its windows. Among
others, these alternative composite technologies could include the use of vinyl,
fiberglass, and engineered lumber or combinations thereof. Toward this end, the
Company's window operations have recently intensified R&D efforts over
historical levels.
PRODUCTS. The Company's window and patio door product line is among the
industry's broadest. In Canada, the Company has broadened its product line
during a severe recession in eastern Canada to include windows for housing
ranging from government-financed starter homes to high-end custom homes. The
Company's product line in Canada includes all-vinyl windows and all-wood windows
and patio doors which include maintenance-free exterior options such as cladding
with aluminum or vinyl or encapsulating in vinyl. The Company manufactures wood
patio doors and steel-entry doors at three locations in eastern Canada and
markets them under the Dashwood and Laflamme brands.
The Company manufactures the SiteLine-R- wood window at Hawkins, Wisconsin,
and markets this product to builders for use in custom and single family homes.
The Company positions this product as a value-priced, high volume window with
wide local distribution. The Company manufactures the Teton wood window at a new
plant in Twin Falls, Idaho, primarily for use in high-end custom homes. The
product is positioned as a premium quality window with multiple features and
superior insulating performance. The Company manufactures the all-vinyl Sierra-
TM- window at a facility opened in the summer of 1993 in Indianapolis, Indiana,
and markets it to the entire spectrum of residential housing, from starter homes
to custom homes. The Company is positioning this product as a cost competitive,
better insulating alternative to aluminum windows which are declining in sales
because of poor performance characteristics.
SALES, MARKETING AND DISTRIBUTION. The Company's windows, patio doors and
steel-entry doors are shipped directly to end users, to Company distribution
centers and stores, or to independent distributors and dealers. Serving
customers through Company-owned distribution facilities in the United States
provides the Company with service advantages over those of its competitors
selling to independent distributors. A network of sales and service centers
under the Dashwood name in Ontario, Canada has strengthened the Company's
leading market share position in eastern Canada. The Company's window sales
force consists of 73 Company-employed salespersons. The Company distributes its
window and patio door products through nine facilities located in the United
States and Canada.
COMPETITION. Competition for the Company's windows comes from all other windows
produced in the United States and Canada. A number of large integrated forest
products, window, and other companies manufacture competing products. Three
companies are especially significant in the wood window segment of the industry:
Andersen Corporation, Rolscreen Company, and Marvin Windows, each of which is
larger and has greater brand awareness than the Company's window businesses.
Competition exists from many small, local concerns as well.
BACKLOG
The Company's order backlog at January 1, 1994 was approximately $44.4
million compared to approximately $25.5 million at January 2, 1993. Some
portion of the current order backlog will probably not be filled due to extended
deliveries or cancellations. In addition, lead times of orders can vary
significantly from quarter
<PAGE>
to quarter and year to year. Accordingly, the Company's backlog on a particular
date may not be representative of the level of future sales.
EMPLOYEES
As of January 1, 1994, the Company employed a total of approximately 3,600
employees, of which 2,300 were in the Company's engineered lumber operations and
1,300 were in the Company's window operations. Hourly employees at Norco's
Hawkins, Wisconsin, plant and manufacturing facilities in Eastern Canada are
represented under collective bargaining agreements. The Company's labor
agreements covering employees at these sites expire at various dates, the
earliest of which is July 1, 1994. The Company believes that it has good
relations with its employees and their unions.
ENVIRONMENTAL MATTERS
The Company is subject to various federal, state, provincial, and local
environmental laws and regulations, particularly relating to air and water
quality and the storage, handling, and disposal of various materials and
substances used in the Company's plants and processes. Permits are required for
certain of the Company's operations, and these permits are subject to
revocation, modification, and renewal by issuing authorities. Governmental
authorities have the power to enforce compliance with their regulations, and
violations may result in the payment of fines or the entry of injunctions, or
both.
The Company believes that it is in material compliance with existing
environmental laws and regulations, and that its expenditures in future years
for environmental compliance will not have a material adverse effect on its
operations.
ITEM 1(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC
------------------------------------------------
OPERATIONS AND EXPORT SALES.
---------------------------
The Company operates manufacturing facilities in two countries, the United
States and Canada; and the majority of all sales are made domestically in those
countries. Financial information relating to foreign and domestic operations is
presented in Note 10 to the consolidated financial statements, page 42 of this
Report.
ITEM 2. PROPERTIES
----------
The Partnership owns office and manufacturing facilities used for open web
joist fabrication, TJI-R- joist series manufacturing and/or TJI-R- joist cut-up
remanufacturing in Chino, California; Claresholm, Alberta; Delaware, Ohio; and
Hillsboro, Oregon. In addition, the Partnership leases plants in Oxford, North
Carolina and Quebec City, Quebec for the production of I joists. The
Partnership also owns in Boise, Idaho, a machine shop and research and
development facilities.
The Partnership owns plants in Eugene, Oregon; Junction City, Oregon;
Natchitoches, Louisiana; Stayton, Oregon; and Valdosta, Georgia, for the
production of MICRO=LAM-R- lumber and various MICRO=LAM-R- lumber industrial
products. The Eugene, Natchitoches and Valdosta plants also produce TJI-R-
joists principally for the Company's residential structural distribution system
program and the Stayton plant produces TJI-R- joists principally for the
Company's light commercial markets.
The Partnership also owns plants in Colbert, Georgia, and Vancouver,
British Columbia, for the production of Parallam-R- lumber, and a plant in
Deerwood, Minnesota, for the production of TimberStrand-TM- lumber.
<PAGE>
Norco owns manufacturing facilities for window and patio door fabrication
and raw material production in Hawkins, Wisconsin; Marenisco, Michigan;
Indianapolis, Indiana; and Twin Falls, Idaho. Additionally, Norco owns a window
distribution facility in Grand Rapids, Michigan; and it leases distribution
centers in Indianapolis, Indiana; Bow, New Hampshire; Sacramento, California;
Kansas City, Kansas; Reynoldsburg, Ohio; and Salt Lake City, Utah.
Dashwood owns a window and door manufacturing facility in Centralia,
Ontario, and leases a store in London, Ontario. Dashwood also leases a small
warehouse in Ottawa, Ontario for sales to the direct sell market. Laflamme owns
window manufacturing plants in Saint-Apollinaire and Thetford Mines, Quebec.
The Company owns Boise, Idaho, property of approximately 32 acres of
unimproved land. Both the Company's, Norco's, and the Partnership's
headquarters staff are located in leased locations in Boise, Idaho.
The properties at Eugene, Oregon; Stayton, Oregon; Natchitoches, Louisiana
and Twin Falls, Idaho; are subject to mortgages aggregating $25,600,000.
Because the costs of these latter properties are financed partially or wholly by
Industrial Development Revenue Bonds, record title to a significant portion of
the land, buildings, and equipment is being held by the bond issuing authorities
until the bonds are retired.
A former TJI joist cut-up remanufacturing plant located in Fort Lupton,
Colorado was closed in late 1990 and is presently for sale. The MICRO=LAM-R-
lumber portion of the Stayton, Oregon plant was mothballed during 1992 and was
reopened in April, 1993.
All properties in use or held for future use are considered suitable for
the Company's present and future needs and should have adequate capacity for
those needs.
ITEM 3. LEGAL PROCEEDINGS.
-----------------
No material legal proceedings or claims are pending or known to the Company
other than several claims and suits for damages arising in the ordinary conduct
of business, resulting primarily from construction accidents and often involving
contractors and others as joint defendants.
Based on current facts and knowledge, all material liabilities under any of
the pending claims and suits would be covered under the limits of coverage of
the Company's liability insurance policies, or are otherwise provided for on the
Company's books.
For several years, the Company has self-insured its risks up to certain
loss amounts and has obtained insurance to cover losses in excess of the
retained amounts. Such risk retention enables the Company to participate more
actively in the management of any claims or lawsuits and to control or better
contain the attendant costs and expenses. Over time, based principally on loss
experience, the amount of such risk retention has been increased. Additionally,
because the cost of available insurance has become exorbitant, beginning in
1986, the Company has determined it appropriate to accept greater levels of
self-insurance and lower limits for excess coverages. Nevertheless, based on
its claims history, the Company believes its insurance coverages are adequate
relative to its potential exposures.
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
ITEM A. EXECUTIVE OFFICERS OF THE REGISTRANT.
Following is a schedule of names and certain information regarding all of
the executive officers of the Company, as of January 1, 1994, each of whose term
of office is one year.
NAME AND AGE OFFICE
Harold E. Thomas, age 67 Chairman of the Board,
TJ International, Inc.
Walter C. Minnick, age 51 President and Chief
Executive Officer,
TJ International, Inc.
John L. Cook, age 52 Senior Vice President,
Canadian Window Operations,
TJ International, Inc.
Thomas H. Denig, age 47 Senior Vice President,
Structural Operations,
TJ International, Inc.
Valerie A. Heusinkveld, age 35 Vice President, Finance
Chief Financial Officer,
TJ International, Inc.
Richard B. Drury, age 44 Secretary and Treasurer,
TJ International, Inc.
Jody B. Olson, age 46 Vice President, Corporate
Development,
TJ International, Inc.
Kevin R. Case, age 39 Senior Vice President, Eastern
Operations, Trus Joist
MacMillan
Robert J. Dingman, age 52 Senior Vice President, Western
Operations, Trus Joist
MacMillan
Randy W. Goruk, age 41 Senior Vice President,
Industrial Operations, Trus
Joist MacMillan
Harold E. Thomas holds a Bachelor of Science Degree in Forestry from the
University of Idaho, and worked in sales for lumber mills prior to 1960, when
Mr. Thomas and Arthur L. Troutner founded the Company. Mr. Thomas was first
elected to the Board of Directors in 1960 and was President of the Company from
1960 to 1971. Mr. Thomas has been Chairman since 1960 and served as Chief
Executive Officer from 1971 to 1975 and from 1979 to 1986.
Walter C. Minnick was elected President and Chief Executive Officer on May
8, 1986. On December 6, 1991, Mr. Minnick was also elected Chairman of the
Board of
<PAGE>
the Partnership. Mr. Minnick has served as a director since 1979. Mr. Minnick
was also the acting chief financial officer from January 31, 1991 until December
1, 1992. Between January 1979 and May 1986, Mr. Minnick served as President and
Chief Operating Officer. Mr. Minnick was Manager of the Company's Boise, Idaho,
open web plant from December 1974 to September 1975, and National Manufacturing
Manager from September 1975 to June 1976, as well as serving as Secretary from
May 1974 to June 1976, at which time he was elected Vice President. Mr.
Minnick, who joined the Company in April 1974, is a graduate of Whitman College,
Harvard Law School, and Harvard Graduate School of Business.
John L. Cook was elected Senior Vice President, Canadian Window Operations
on January 7, 1992. Mr. Cook was appointed President, Design Master
Corporation, on September 15, 1988, and continues as President of Dashwood
Industries Limited, having served in this capacity since 1985. Previously, Mr.
Cook was President of Champion Road Machinery Limited and, prior to Champion,
held numerous senior management positions within various heavy equipment
divisions of Eaton Corporation, a Cleveland-based multinational corporation.
Mr. Cook is a graduate of the School of Business, Wilfrid Laurier University.
Thomas H. Denig was elected Senior Vice President, Structural Operations on
January 2, 1990. Mr. Denig was also elected President and Chief Executive
Officer of the Partnership on December 6, 1991, after having served as President
of Trus Joist Corporation since January 2, 1990. Mr. Denig joined the Company
in 1974 as a salesperson and has subsequently served as California South Sales
Manager, MICRO=LAM-R- Lumber Industrial Sales Manager, National Sales Manager,
Western Division Manager, Eastern Division Manager and had been elected Vice
President, Eastern Operations on December 17, 1985. Mr. Denig is a graduate of
Valparaiso University and served as a lieutenant in the U.S. Marine Corp. before
joining the Company.
Valerie A. Heusinkveld was elected Vice President of Finance and Chief
Financial Officer of TJ International, Inc., on December 1, 1992. Ms.
Heusinkveld is an honors graduate of the University of Idaho and a Certified
Public Accountant. Before being named CFO, Ms. Heusinkveld served as Vice
President of Finance and Treasurer for Trus Joist MacMillan. Ms. Heusinkveld
has also served as controller of Norco Windows Western Operations group and as a
corporate accountant and assistant to the Vice President of Finance. Ms.
Heusinkveld joined TJ International in 1989 after working for Arthur Andersen &
Co.
Richard B. Drury was elected Secretary on May 21, 1985 and was elected to
the additional position of Treasurer on January 4, 1991. Mr. Drury is a
graduate of Boise State University and a Certified Public Accountant. Prior to
joining the Company in 1979, Mr. Drury gained audit and tax experience with
Arthur Andersen & Co.
Jody B. Olson was elected Vice President, Corporate Development on December
17, 1987. On December 6, 1991, Mr. Olson was also elected Secretary of the
Board of the Partnership. Previous positions held by Mr. Olson were MICRO=LAM-
R- Lumber Division Controller; MICRO=LAM-R- Lumber Industrial Salesperson and
Sales Manager; General Manager of the Company's former trucking subsidiary;
Manager, Energy Systems; Assistant to the President, Mergers and Acquisitions;
and Manager, Corporate Development. Mr. Olson, who joined the Company in 1979,
is a graduate of the University of Idaho and the Lewis and Clark Law School.
Kevin R. Case was appointed Sr. Vice President, Eastern Operations for Trus
Joist MacMillan, on May 7, 1992. Mr. Case joined the Company in 1984 as a
Residential Products Salesman and has subsequently served as a Regional Sales
Manager, and General Manager of Northeast Operations. Mr. Case holds a B.A.
degree from Dartmouth College and an MBA from Stanford University.
<PAGE>
Robert J. Dingman was appointed Sr. Vice President, Western Operations for
Trus Joist MacMillan, on May 7, 1992. Mr. Dingman joined the Company in 1984 as
the Southwest Division Manager and has subsequently served as Division Manager,
MICRO=LAM-R- Lumber Operations and Vice President, Western Operations. Before
joining the Company, Mr. Dingman, a graduate of St. Lawrence College, had been
for a period of more than three years Vice President and General Manager of the
Architectural Building Products Division of Koppers Company, Inc.
Randy W. Goruk was appointed Sr. Vice President, Industrial Operations for
Trus Joist MacMillan, on May 7, 1992. Mr. Goruk joined the Company in 1974 as a
draftsperson and has subsequently served as a salesperson, British Columbia
Regional Sales Manager, Canadian Division Sales Manager and Canadian Division
Manager, Vice President, Canadian Operations, and Vice President, Eastern
Operations. Mr. Goruk is a graduate of the Northern Alberta Institute of
Technology and the University of British Columbia.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
-----------------------------------------
AND RELATED STOCKHOLDER MATTERS.
-------------------------------
The approximate number of record holders of the Company's $1.00 par value
common stock at March 15, 1994, is set forth below:
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
-------------- ------------------------
Common Stock, $1 par value 1,845
The remainder of this Item 5 is contained in the following sections of the
Report at the pages indicated below:
"Market and Dividend Information," on page 29 of this Report, to the extent
that said section discusses the principal market or markets on which the
Company's common stock is being traded; the range of high and low quoted
sales prices (closing) for each quarterly period during the past two years;
the source of such quotations; and the frequency and amount of any
dividends paid during the past two years with respect to such common stock.
"Note 3 to the consolidated financial statements," page 35 of this Report,
to the extent that said Note describes any restriction on the Company's
present or future ability to pay such dividends.
ITEMS 6, 7, AND 8.
- ------------------
The information called by Items 6, 7 and 8, inclusive of Part II of this form,
is contained in the following sections of this Report at the pages indicated
below:
CAPTIONS AND PAGES OF THIS REPORT
---------------------------------
ITEM 6 Selected Financial Data "Selected Financial Data" ......25
ITEM 7 Management's Discussion "Management's Discussion
and Analysis of Financial and Analysis" ..................26
Conditions and Results of
Operations
<PAGE>
ITEM 8 Financial Statements and "Consolidated Financial
Supplementary Data Statements".....................31
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE.
--------------------
Not applicable.
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
--------------------------------------------------
Identification of the Company's executive officers is included in Item A
(following Item 4) in Part I of this Form 10-K.
The Company has adopted procedures to assist its directors and executive
officers in complying with Section 16(a) of the Exchange Act, which includes
assisting the director or executive officer in preparing forms for filing.
Through an oversight, in 1993 Mr. Dingman was late filing one Form 4 in
connection with two transactions in the Company's Common Stock.
The balance of this Item 10 is included in the Company's definitive proxy
statement, under the caption "Election of Directors;" and is incorporated herein
by reference.
ITEM 11. EXECUTIVE COMPENSATION.
----------------------
Item 11 is included in the Company's definitive proxy statement, under the
caption "Compensation of Executive Officers," including the sub-caption
"Executive Compensation Tables," and is incorporated herein by reference. The
subcaption "Report of the Executive Compensation Committee on Executive
Compensation," and "Performance Graph," under the caption "Compensation of
Executive Officers" in the Company's definitive proxy statement are not
incorporated herein.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
---------------------------------------------------
MANAGEMENT.
----------
Item 12 is included in the Company's definitive proxy statement under the
caption "Security Ownership of Certain Beneficial Owners and Management;" and is
incorporated herein by reference.
For purposes of calculating the aggregate market value of the voting stock
held by non-affiliates as set forth on the cover page of this Form 10-K, the
Company has assumed that affiliates are those persons identified in the portion
of the definitive proxy statement identified above.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
----------------------------------------------
This item 13 is included in Note 9 to the consolidated financial
statements, page 41 of this Report.
<PAGE>
-R- - MICRO=LAM, Parallam, TJI, and The Silent Floor are registered
trademarks of the Company.
-TM- - Siteline, Sierra, Teton, Ecowood, TimberStrand, and TJL are trademarks
of the Company.
<PAGE>
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
----------------------------------------------------
ON FORM 8-K.
-----------
A-1 Financial Statements
A list of the financial statements included herein is set forth
in the Index to Financial Statements, Schedules and Exhibits
submitted as a separate section of this Report.
A-2 Financial Statement Schedules
A list of financial schedules included herein is contained in the
accompanying Index to Financial Statements, Schedules and
Exhibits submitted as a separate section of this Report.
A-3 Exhibits. The following documents are filed as Exhibits to this
Form 10-K:
(3) Limited Partnership Agreement between TJ International,
Inc. and MacMillan Bloedel of America, Inc. whereby the
Partnership was formed. This document was filed as an
exhibit to the Company's Form 8-K dated September 30, 1991
and is incorporated herein by reference.
Bylaws of Trus Joist Corporation (a Delaware corporation).
This document was filed as an exhibit to the Company's Form
10-K for the fiscal year ended December 28, 1991 and is
incorporated herein by reference.
Amendment to Limited Partnership Agreement effective the
beginning of the Company's fiscal year 1993. This document
was filed as an exhibit to the Company's Form 10-Q for the
quarter ended September 26, 1992 and is incorporated herein
by reference.
Certificate of Ownership and Merger of TJ Merger Corporation
with and into Trus Joist Corporation, whereby the Company
changed its name from Trus Joist Corporation to TJ
International, Inc. effective September 16, 1988. This
document was filed as an exhibit to the Company's Form 10-K
for the fiscal year ended January 2, 1993 and is
incorporated herein by reference.
Amended Certificate of Incorporation of Trus Joist
Corporation. This document was filed as an exhibit to the
Company's Form 10-Q for the quarter ended July 3, 1993 and
is incorporated herein by reference.
(4) Rights Agreement, dated as of August 24, 1989, between
TJ International and West One Bank. This document was filed
as an exhibit to the Company's Form 8-K dated October 6,
1989 and is incorporated herein by reference.
Nonstatutory Stock Option Plan, as amended. This document
was filed as an exhibit to the Company's Form 10-K for the
fiscal year ended December 30, 1989 and is incorporated
herein by reference.
<PAGE>
1982 Incentive Stock Option Plan, as amended. This document
was filed as an exhibit to the Company's Form 10-K for the
fiscal year ended December 30, 1989 and is incorporated
herein by reference.
1985 Incentive Stock Option Plan, as amended. This document
was filed as an exhibit to the Company's Form 10-K for the
fiscal year ended December 30, 1989 and is incorporated
herein by reference.
1988 Stock Option Plan, as amended. This document was filed
as an exhibit to the Company's Form 10-K for the fiscal year
ended December 30, 1989 and is incorporated herein by
reference.
1992 Stock Option Plan. This document was filed as an
exhibit to the Company's Form 10-K for the fiscal year ended
January 2, 1993 and is incorporated herein by reference.
1993 Stock Option Plan. This document was filed as an
exhibit to the Company's Form 10-Q for the quarter ended
July 3, 1993 and is incorporated herein by reference.
Amended and Restated Restricted Stock Plan for Non-Employee
Directors. This document was filed as an exhibit to the
Company's Form 10-Q for the quarter ended July 3, 1993 and
is incorporated herein by reference.
(10) Amendment to Reimbursement Agreement pertaining to the
Natchitoches, Louisiana, plant. This document was filed as
an exhibit to the Company's Form 10-K for the fiscal year
ended December 30, 1989 and is incorporated herein by
reference.
Loan Agreement, Trust Indenture and Deed of Trust pertaining
to Twin Falls, Idaho, plant. These documents were filed as
an exhibit to the Company's Form 10-K for the fiscal year
ended December 30, 1989 and are incorporated herein by
reference.
Certificate of Designation, Preferences and Rights of ESOP
Convertible Preferred Stock; Stock Purchase Agreement; and
ESOP Term Note. These documents were filed as an exhibit to
the Company's Form 10-Q for the quarter ended September 29,
1990 and are incorporated herein by reference.
Indenture, Lease and Guaranty pertaining to Eugene, Oregon,
plant. These documents were filed as Exhibits to the
Company's Form 10-K for the fiscal year ended December 28,
1991 and are incorporated herein by reference.
Mortgage, Security Interest and Indenture of Trust; Lease
Agreement; Guaranty Agreement; Reimbursement Agreement;
Remarketing and Interest Services Agreement; pertaining to
Stayton, Oregon, plant. These documents were filed as
Exhibits to the Company's Form 10-K for the fiscal year
<PAGE>
ended December 28, 1991 and are incorporated herein by
reference.
Trust Indenture; Refunding Agreement; Remarketing Agreement;
Reimbursement Agreement; Pledge and Security Agreement;
pertaining to the Natchitoches, Louisiana, plant. These
documents were filed as Exhibits to the Company's Form 10-K
for the fiscal year ended January 2, 1993 and are
incorporated by reference.
$75,000,000 Credit Agreement date as of October 12, 1993.
This document was filed as an exhibit to the Company's Form
10-Q for the quarter ended October 2, 1993 and is
incorporated herein by reference.
Amendment to Reimbursement Agreement; Pledge and Security
Agreement; pertaining to the Natchitoches, Louisiana plant.
Stock Purchase and Resale Agreement.
(11) Statement regarding computation of per share earnings.
The information required by Exhibit (11) is included under
the caption "Net Income (Loss) Per Share" in Note 1 to the
consolidated financial statements, page 36 of this Report.
(22) Subsidiaries of the registrant.
(24) Consent of independent public accountants to
incorporation by reference of their reports dated February
16, 1994, into the Company's Form S-8 Registration
statements under the Securities Act of 1933, filed September
3, 1982 (as amended) (Registration No. 2-79209), February
26, 1985 (Registration No. 2-96065), February 27, 1985 (as
amended) (Registration No. 2-96821), April 8, 1985
(Registration No. 2-96964), April 10, 1986 (Registration No.
33-4704), May 31, 1990 (as amended) (Registration No. 33-
21870), May 23, 1988 (as amended) (Registration No. 33-
22186), and November 13, 1992 (Registration No. 33-54582).
(25) Powers of Attorney.
All other Exhibits are omitted since they are not applicable or
not required.
(b) Reports on Form 8-K.
No current reports on Form 8-K have been filed during the fourth
quarter of 1992.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
TJ INTERNATIONAL, INC., Registrant
By /s/ Walter C. Minnick
-----------------------------------------------------------------
Walter C. Minnick - President, Chief Executive Officer,
Director and Attorney-in-Fact for Directors listed below.
By /s/ Valerie A. Heusinkveld
-----------------------------------------------------------------
Valerie A. Heusinkveld - Vice President, Finance and Chief Financial
Officer
Each of the above signatures is affixed as of March 25, 1994. Those
Directors of TJ International, Inc. listed below executed powers of attorney
appointing Walter C. Minnick their attorney-in-fact, empowering him to sign this
report on their behalf.
Harold S. Eastman
Robert B. Findlay
Robert V. Hansberger
Robert G. Linville, Jr.
J. L. Scott
Harold E. Thomas
Arthur L. Troutner
J. Robert Tullis
Steven C. Wheelwright
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS TO FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended January 1, 1994 Commission File Number 0-7469
TJ INTERNATIONAL, INC.
INDEX TO FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS
The following documents are filed as part of this Report: PAGES IN THIS REPORT
--------------------
(1) FINANCIAL STATEMENTS:
---------------------
Selected Financial Data.............................................25
Management's Discussion and Analysis................................26
Market and Dividend Information.....................................29
Quarterly Financial Data (Unaudited)................................30
Consolidated Balance Sheets at January 1, 1994, January
2, 1993 and December 28, 1991....................................31
Consolidated Statements of Income (Loss) for the three
years ended January 1, 1994......................................32
Consolidated Statements of Stockholders' Equity for the
three years ended January 1, 1994................................33
Consolidated Statements of Cash Flow for the three years
ended January 1, 1994............................................34
Notes to Consolidated Financial Statements..........................35
Report of Independent Public Accountants............................42
(2) FINANCIAL STATEMENTS SCHEDULES
------------------------------
Report of Independent Public Accountants............................43
V. Property, Plant and Equipment..................................44
VI. Accumulated Depreciation and Amortization of
Property, Plant and Equipment..................................45
IX. Short-term Borrowings..........................................46
<PAGE>
The following documents are filed as part of this Report: Pages in this Report
--------------------
(3) EXHIBITS
--------
(10) Amendment to Reimbursement Agreement; Pledge and
Security Agreements; pertaining to the
Natchitoches, Louisiana plant.......................Document 2
(10) Stock Purchase and Resale Agreement......................Document 3
(21) Subsidiaries of the Registrant...........................Document 4
(24) Consent of Independent Public Accountants................Document 5
(25) Powers of Attorney.......................................Document 6
All other schedules are omitted because they are not applicable or the required
information is shown in the Consolidated Financial Statements or Notes thereto.
<PAGE>
SELECTED FINANCIAL DATA
The following table summarizes selected financial data for the 10 fiscal years
ended January 1, 1994, and should be read in conjunction with the more detailed
Consolidated Financial Statements included herein.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
AMOUNTS IN THOUSANDS EXCEPT PER SHARE FIGURES AND PERCENTAGES
1993 1992 1991 1990 1989 1988 1987 1986 1985 1984
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $551,204 $400,480 $283,210 $327,472 $351,137 $315,001 $256,905 $179,860 $132,668 $120,782
Income (loss) from
operations 22,687 3,628 (4,261) 21,405 27,436 30,987 25,388 16,205 7,645 12,841
Net income
(loss) 12,528 7,311 (3,227) 11,947 15,273 17,834 13,253 8,393 4,719 7,681
Net income (loss) per
share
Primary .82 .45 (0.31) .82 1.06 1.25 0.95 0.58 0.30 0.51
Fully diluted .76 .45 (0.31) .82 1.06 1.25 0.95 0.58 0.30 0.51
Weighted average number
of shares outstanding
Primary 14,267 13,418 12,942 14,214 14,432 14,216 13,980 14,372 15,524 15,164
Fully diluted 15,603 14,700 14,616 14,214 14,432 14,216 13,980 14,372 15,524 15,164
Cash dividends declared
per common share $ .215 $ .210 $ .210 $ .210 $ .200 $ .180 $ .155 $ .120 $ .100 $ .090
Working capital 125,689 24,110 18,247 34,934 30,940 39,336 33,645 28,243 37,610 34,933
Total assets 454,327 345,046 334,887 167,282 173,102 146,435 125,737 104,264 102,919 101,142
Long-term debt,
excluding current
portion 30,877 33,072 26,392 28,949 30,306 23,512 24,719 25,900 28,259 27,971
Stockholders'equity 233,366 128,903 126,894 93,183 92,002 78,648 60,768 49,186 49,698 52,062
Net book value per share 13.94 9.85 9.80 7.08 6.55 5.66 4.43 3.61 3.39 3.49
Return on average
stockholders' equity 6.9% 5.7% (2.9)% 12.9% 17.9% 25.6% 24.1% 17.0% 9.3% 15.7%
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
In 1992, net income and net income per share include income of $900 and $.07,
respectively, for the cumulative effect of adopting Statement No. 109,
"Accounting for Income Taxes."
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
GENERAL
The company's operations are strongly influenced by the cyclicality and
seasonality of residential housing construction. This industry experiences
fluctuations resulting from a number of factors, including the general economy,
consumer confidence, credit availability, and interest rates. The seasonality
of this industry, which is particularly pronounced in the colder climates of
Canada and the northern United States, has an especially significant impact on
the company's window operations. These are predominantly located in northern
climates. As a result of this seasonal pattern, the company's sales have
historically tended to be lowest in the first and fourth quarters and highest in
the second and third quarters of each year.
The company's engineered lumber products are gaining increased market
acceptance as high-quality substitutes for large-dimension structural lumber.
The reduced availability and increased price of quality, large-dimension
structural lumber have in part spurred this conversion. As well, the consistent
quality, superior strength, lighter weight, and ease of installation of
engineered lumber products are causing an increasing number of builders and
other wood users to choose engineered lumber over traditional solid-sawn lumber.
The Company believes this trend should continue through the 1990's.
No other company possesses the range of engineered lumber products, nor the
second generation of TimberStrand-TM- laminated strand lumber (LSL) or
Parallam-R- parallel strand lumber (PSL) technologies. However, a number of
companies, including several large forest products companies, now produce
look-alike wood I-joist products and laminated veneer lumber (LVL) products.
These are manufactured using processes similar to the company's oldest
generation technologies. The Company believes its system of manufacturing
plants and multiple technologies position it as the low-cost producer of
engineered lumber. While competition helps expand the market for engineered
wood products, including those manufactured by the Company, it may also make
the existing markets more price competitive. It is likely these trends of
increased competition in engineered lumber products will continue for the
foreseeable future.
PARTNERSHIP
The Company and MacMillan Bloedel, through MBA, established the Partnership in
October of 1991. The Company has a 51 percent interest in the Partnership and
serves as general partner, with authority to manage and control the daily
operations of the Partnership. Partnership income and losses through 1993 were
allocated on a formula basis as agreed to by the partners and in accordance with
the Partnership Agreement. These formulas allocated most of the losses
associated with the start-up of the partnership's Deerwood LSL plant, Vancouver
PSL plant, and Colbert PSL plant to MacMillan Bloedel, and most of the remaining
income or loss to the Partnership to the Company. The percentage of start-up
losses allocated in MacMillan Bloedel has declined over time. The company's
allocation of the remaining percentage of income or loss, after such start-up
losses, also declines over time. As a result of these provisions, MacMillan
Bloedel was allocated $11.9 million and $6.5 million of losses in 1992 and 1991,
respectively, and $10.1 million of income in 1993. These allocations are
reflected as adjustments to costs and expenses in the consolidated statements of
income under "Minority interest in Partnership" and also affect the partner's
capital accounts in the Partnership.
During 1993, MacMillan Bloedel was allocated the maximum $7 million of
start-up losses related to the company's TimberStrand-TM- LSL plant in Deerwood,
Minnesota. The Company was allocated two-thirds of the remaining partnership
income. In accordance with the Partnership Agreement, the Company will be
allocated 51 percent of all income or losses of the Partnership in 1994 and
thereafter.
The Partnership Agreement also specifies a formula allocation for
accelerated tax depreciation through the end of 1993. Tax benefits to the
Company of $1.3 million in 1993, $4.3 million in 1992, and $0.5 million in 1991
have been included in income taxes (benefits) in the consolidated statements of
income pursuant to this allocation.
1983 COMPARED TO 1992
Sales for the year ended January 1, 1994, increased by $151 million or 38
percent from the corresponding period last year. The company's sales increase
continued to outpace new housing construction, which posted a 5 percent increase
in North American housing starts. In the combined eastern Canadian provinces of
Quebec, Ontario, and the Maritimes, housing starts decreased 14 percent.
Engineered lumber product sales for 1993 were $437 million, a 51 percent
increase over the same period in 1992. Growing acceptance of the company's
engineered lumber products as a substitute for commodity sawn lumber was the
primary
<PAGE>
factor behind the increased sales. The company's three major product groups
(industrial, light commercial, and residential) all participated in the sales
growth, with residential products contributing the strongest performance. Sales
of residential products per North American housing start increased 49 percent to
$246 for 1993 from $165 per start in 1992. Unit volume increases accounted for
the majority of this improvement.
Window and patio door sales were $114 million through January 1, 1994, as
compared to $111 million for the same period in 1992. Despite an increasingly
competitive market and a reduced market opportunity in eastern Canada, sales of
these products maintained market share in 1993, declining slightly to $86 per
North American housing start in 1993 as compared to $88 for the same period in
1992. Both sales and order file levels for the company's Teton wood window and
patio door products manufactured at its new Twin Falls, Idaho, plant were higher
for 1993 than in the comparable period in 1992. Sales from the company's
Canadian subsidiaries were slightly lower than the prior year.
Sales for the fourth quarter of 1993 increased by 45 percent over the
comparative quarter for 1992. Structural product sales posted a 63 percent gain
while window sales decreased 4 percent. These structural sales gains in the
fourth quarter reflect the improved market conditions and increased market share
for the company's products. The window sales decrease reflects the continued
downturn in the eastern Canadian market.
The company's net income was materially reduced from levels that would
otherwise have been achieved because of losses incurred in its window
subsidiaries. These losses were caused primarily by increases in the cost of
raw materials that the Company was unable to reflect in price increases. Also
contributing to these results were a lower than anticipated increase in sales of
the company's window products, which resulted in part from continued weakness in
the eastern Canadian and California markets, and start-up expenses incurred by
the Company in connection with the establishment of its new Teton wood window
manufacturing facility. The Company reviewed its window operations and is
implementing a plan aimed at reducing these continuing losses.
The company's gross margins for the year ended January 1, 1994, improved to
26 percent from 21 percent in 1992. Price increases for engineered lumber
products realized in the second, third, and fourth quarters of 1993 more than
offset higher raw material costs. The increased demand for the company's
engineered lumber products resulted in higher production volumes in its
manufacturing facilities, which allowed for more efficient manufacturing
schedules and better absorption of manufacturing overheads. Reduced margins for
the company's window and patio door products offset these gains somewhat.
Also contributing to improved margins was a reduction of start-up losses at
the company's new technology plants. Although the Parallam-R- PSL facilities
incurred start-up losses during the first part of 1992, they were profitable for
1993. Losses at the company's TimberStrand-TM- LSL facility in Deerwood,
Minnesota, have been reduced from the previous year. The Deerwood plant
experienced losses for all quarters in 1993. The strategic decision to focus
the plant on achieving manufacturing efficiencies in higher-value TimberStrand-
TM- LSL products contributed to the losses in the second half of 1993.
Selling and administrative expenses increased $18.9 million for 1993, from
the comparable period in 1992 because of higher operating levels. As a percent
of sales, they decreased from 23 percent in 1992 to 20 percent in 1993. The
reduction was primarily a result of the use of existing capacity in the sales
and distribution network and the administrative infrastructure to accommodate
significate volume increases.
Minority interest in Partnership represents in net effect of the start-up
losses allocated to MacMillan Bloedel offset by the allocation of MacMillan
Bloedel's share of partnership profits exclusive of the allocated start-up
losses. For 1993, MacMillan Bloedel was allocated $10.1 million in net profits
as compared to an allocation of $11.9 million of net losses in 1992. The
transition from allocating losses to profits is primarily the result of lower
start-up losses and improving operating results in 1993 as compared to 1992. In
addition, under the formula allocations specified in the Partnership Agreement,
MacMillan Bloedel was allocated 70 percent of TimberStrand-TM- LSL start-up
losses in 1993 compared to 80 percent of the total TimberStrand-TM- LSL and
Parallam-R- PSL losses for 1992. The remaining profits were allocated one-third
to MacMillan Bloedel in 1993 and 15 percent in 1992.
As contemplated in the Partnership Agreement, the Company was also
allocated tax depreciation deductions that will not reverse to the Company in
future years. The Company has recorded tax benefits related to this tax
depreciation of $1.3 million and $4.3 million in 1993 and 1992, respectively.
1992 COMPARED TO 1991
Sales for 1992 increased $117 million, or 41 percent, over 1991. This increase
significantly outpaced the overall improvement in new housing construction,
which posted a 17 percent increase in the United States and Canada combined.
The increases during 1992 for both
<PAGE>
structural and window product lines were predominantely from growth in unit
volume rather than price increases. Increasing acceptance of the company's
engineered lumber products in the residential construction market was the
largest contributor to this increase. Engineered lumber product sales for 1992
were $289 million, a 42 percent increase from 1991 structural product sales of
$203 million. Sales per North American housing start for these products in 1992
increased to $165, a 42 percent increase over the 1991 level of $116.
Window sales were $111 million in 1992 as compared to $80 million in 1991,
an increase of 39 percent. Window sales posted strong market share gains in
1992, increasing 21 percent from $73 per North American housing start in 1991 to
$88 per start in 1992. The increases resulted from a combination of the
introduction of the new premium-quality Teton window in the western United
States, the acquistion of R. Laflamme & Frere in Quebec, and increasing sales of
the SiteLine-TM- window through existing and growing distribution.
The company's gross margins were 21 percent in 1992 after having been 25
percent for 1991. Gross margins for 1992 were pressured by three factors.
First, the start-up losses related to the new Parallam-R- PSL and
TimberStrand-TM- LSL technologies reduced gross margins. The start-ups of these
two new technologies was disproportionately large compared to all other start-up
previously undertaken by the Company. During 1992, the Company succeeded in
turning the Parallam-R- PSL technology from a loss position to a positive gross
margin contributor. The TimberStrand-TM- LSL facility experienced start-up
losses throughout 1992. Start-up losses were also incurred for Teton wood
window capacity expansion.
Second, gross margins were reduced by under-absorbed production capacity at
the company's eastern Canadian window manufacturing facilities. The continuing
severe recession in this geographic area has significantly reduced housing
construction activity. The company's resulting low sales volumes led to losses
from operations in 1992 and 1991. A third factor pressuring margins was
rapidly rising wood costs. In the latter part of the year, this reduced
operating margins as price increases lagged raw material cost increases.
Selling and administrative expenses increased $18.5 million for 1992 from
the comparable period in 1991. This was attributable to higher operating levels
and a full year of partnership overhead in 1992 compared to only one quarter in
1991. However, these expenses decreased from 25 percent of sales in 1991 to 23
percent in 1992. The reduction was primarily a result of a program designed to
improve the effectiveness of the company's sales organization coupled with a
broadening of wholesale distribution which allowed the Company to spread its
relatively fixed selling costs over a larger base.
Minority interest in Partnership represents the net effect of the start-up
losses allocated to MacMillan Bloedel for the Parallam-R- PSL and
TimberStrand-TM- LSL plants. This was offset somewhat by the allocation of
MacMillan Bloedel's share of partnership profits exclusive of the allocated
start-up losses. In 1992 and 1991, 80 percent of the start-up losses were
allocated to MacMillan Bloedel. The remaining profits were allocated 15
percent to MacMillan Bloedel in 1992 and 10 percent to MacMillan Bloedel in the
fourth quarter of 1991.
Operating income in 1992 was $3.6 million compared to an operating loss of
$4.3 million in 1991. The 1991 loss resulted largely from restructuring and
other one-time charges totaling $8.1 million.
During 1992, the Company adopted Statement No. 109 of the Financial
Accounting Standards Board to account for its income taxes. The cumulative
effect of this change resulted in a positive adjustment of $0.9 million, or
$0.07 per fully diluted share. As comtemplated in the Partnership Agreement
with MacMillan Bloedel, the Company was allocated tax depreciation deductions
that will not reverse to the Company in future years. The Company recorded tax
benefits related to this tax depreciation of $4.3 million and $0.5 million in
1992 and 1991, respectively.
In 1992, the Company reversed $1.6 million of excess income tax reserves
provided in prior years. Income tax benefits also included $1.8 million of net
operating loss carryforwards resulting from 1992 losses at the Canadian
structural products subsidiaries. The Company believes that future taxable
income of these Canadian subsidiaries will be sufficient to realize those
benefits before the carryforward period expires in 1999.
LIQUIDITY AND CAPITAL RESOURCES
Working capital increased by $102 million to $126 million at January 1, 1994,
from $24 million at January 2, 1993. This increase was primarily the result of
the company's sale of 3,500,000 common shares in November 1995. (See Footnote 7
in the accompanying financial statements.)
Cash provided by operating activities was $40.8 million, $3.2 million, and
$10.5 million in fiscal years 1993, 1992, and 1991, respectively. Capital
expenditures were $35.4 million for the fiscal year ended January 1, 1994, $19.7
million for the fiscal year ended January 2, 1993, and $8.9 million for the
fiscal year ended December 28, 1991.
The Company entered into a $75 million Revolving Credit Facility (the
Credit Facility) on October 12, 1993, provided by a syndicate of
<PAGE>
banks. The Credit Facility includes various customary financial covenants.
These include a limitation on indebtedness equal to 50 percent of total
capitalization (including Minority interest in Partnership) and requirements
to maintain (i) a minimum net worth, and (ii) ratios of cash flow compared to
indebtedness and debt service. The Company initially used borrowings under
the Credit Facility to pay $13.6 million of the company's short-term notes
payable. Upon completion of the common stock offering, the Company paid all
amounts outstanding under the Credit Facility. Short-term debt at the end of
1993 is related to lines of credit used primarily for cash management
purposes.
The company's Board of Directors has approved a two-year capital
expansion program. Pursuant to the capital expansion program, the Company
intends to construct a plant near Hazard, Kentucky, that will manufacture
TimberStrand-TM- LSL products. Construction commenced in the fall of 1993
with an expected cost of $100 million. The capital expansion program also
provides for capital expenditures of approximately $25 million to expand
capacity at its existing MICRO=LAM-R- LVL and Parallam-R- PSL facilities.
In addition, the company's Board of Directors approved construction of a
plant that will manufacture both MICRO=LAM-R- LVL and Parallam-R- PSL near
Buckhannon, West Virginia, at an expected cost of $85 million. The Company
is evaluating potential sites for a third TimberStrand-TM- LSL plant, or
an additional combination LVL and PSL plant, but has not determined
whether or when to proceed with that plant.
MacMillan Bloedel's Board of Directors has authorized a $49 million
capital contribution to the Partnership to help fund the capacity expansion
program. The Company expects the contribution to be made as the Partnership
experiences negative cash flow resulting from expenditures for capital
expansion over the next six to nine months. However, there is no provision
in the Partnership Agreement, or in any other agreement requiring the partners
to contribute funds.
The Company believes that cash generated from operations, borrowings
under the Credit Facility, net proceeds from the stock offering, and the
$49 million contribution authorized by MacMillan Bloedel will be sufficient
to meet the company's working capital needs and capital expansion program
approved by the company's Board of Directors. The Company also believes that
additional or expanded lines of credit or appropriate long-term capital can be
obtained to fund capital expenditures or working capital requirements as they
arise, or to fund an acquisition.
A substantial majority of the company's assets is held, and revenues
generated, by the Partnership. Distributions of cash by the Partnership to the
Company require the unanimous consent of the members of the Partnership's
Management Board, which includes members of both the Company and MacMillan
Bloedel. Accordingly, there can be no assurance that distributions by the
Partnership will be approved for the payment of dividends to fund the
company's other operations, or for other purposes.
MARKET AND DIVIDEND INFORMATION
The company's stock is traded on the over-the-counter market and is listed
with the National Association of Security Dealers Automated Quotation (NASDAQ)
under the symbol TJCO.
The high and low quoted sales prices (closing) and dividends paid per
common share for each quarterly period during 1993 and 1992 were as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
1993 SALES PRICE
-------------------------- DIVIDENDS
HIGH LOW PAID
----------------------------------------
<S> <C> <C> <C>
First $15 7/8 $ 11 7/16 $.05 1/4
Second 21 1/4 14 7/8 .05 1/4
Third 25 16 5/8 .05 1/4
Fourth 32 3/4 25 1/4 .05 1/2
<CAPTION>
- -----------------------------------------------------------------------------
1992 SALES PRICE
-------------------------- DIVIDENDS
HIGH LOW PAID
----------------------------------------
<S> <C> <C> <C>
First $12 $ 9 1/8 $.05 1/4
Second 12 7/8 11 .05 1/4
Third 12 3/4 10 7/8 .05 1/4
Fourth 12 1/4 11 1/8 .05 1/4
- -----------------------------------------------------------------------------
</TABLE>
<PAGE>
RESULTS OF QUARTERLY OPERATIONS
Unaudited results of operations by quarter for 1993, 1992, and 1991 are as
follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
DOLLAR AMOUNTS IN THOUSANDS QUARTER
EXCEPT PER SHARE FIGURES -------------------------------------------------------
FIRST SECOND THIRD FOURTH
-------------------------------------------------------
<S> <C> <C> <C> <C>
1993
Sales $114,111 $139,639 $152,729 $144,725
Gross profit 22,062 36,770 42,391 41,128
Net income (loss) (573) 4,262 5,832 3,007
Net income (loss) per share
Primary (0.06) 0.30 0.41 0.17
Fully diluted (0.06) 0.27 0.38 0.16
-------------------------------------------------------
1992
Sales $ 75,561 $111,024 $113,512 $100,383
Gross profit 13,689 24,268 24,957 19,493
Net income (loss) 94 3,298 3,454 465
Net income (loss) per share
Primary (0.02) 0.22 0.23 0.01
Fully diluted (0.02) 0.21 0.22 0.01
-------------------------------------------------------
1991
Sales $ 45,330 $ 79,679 $ 84,838 $ 73,363
Gross profit 12,148 22,189 22,401 12,758
Net income (loss) (1,946) 2,744 3,208 (7,233)
Net income (loss) per share
Primary (0.17) 0.19 0.23 (0.57)
Fully diluted (0.17) 0.18 0.21 (0.57)
<FN>
- -------------------------------------------------------------------------------------------------
Per share calculations are based on the average common shares outstanding for
each period presented. Accordingly, the total of the per share figures for the
quarters may not equal the per share figures reported for the year.
In 1992, net income and net income per share have been restated to reflect
the required implementation of Statement No. 109 as of the beginning of the
year. As a result, first quarter net income and net income per share have been
increased from previously reported amounts of ($806,000) and ($.07),
respectively. There was no change in fully diluted net income per share for the
second and third quarters from previously reported amounts. During the year,
the Company reversed $1,575,000 of excess income tax reserves provided in prior
years. These reversals increased net income per share by $.02 in the second
quarter. $.03 in the third quarter, and $.07 in the fourth quarter. In
addition, in the fourth quarter the Company sold its closed Boise plant and
recorded the resulting net income per share of $.03.
In 1991, as a result of the restructuring and one-time charges described in
Note 1 of the Notes to the Consolidated Financial Statements, net income per
share was reduced in the fourth quarter by $.39. In addition, the income taxes
(benefits) were provided quarterly based upon estimates of the 1991 annualized
effective income tax rate. Had the annual effective income tax rate been
determined at the beginning of 1991, net income (loss) per share would have been
($.15), $.16, $.13, and ($.48) in the first, second, third and fourth quarters,
respectively.
</TABLE>
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
DOLLAR AMOUNTS IN THOUSANDS
ASSETS JANUARY 1, 1994 JANUARY 2, 1993 DECEMBER 28, 1991
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current assets
Cash and cash equivalents $ 66,319 $ 210 $ 460
Marketable securities 7,004 -- --
Receivables, less allowances of
$663, $785, and $1,079 45,709 28,731 21,292
Inventories 53,081 44,237 38,839
Receivable from MacMillan Bloedel, net -- 808 --
Other 10,715 6,955 8,754
-------------------------------------------------------
182,828 80,941 69,345
Property
Property and equipment 361,952 330,404 310,583
Accumulated depreciation (120,762) (99,468) (82,858)
-------------------------------------------------------
241,190 230,936 227,725
Goodwill 23,660 24,700 25,740
Unexpected bond funds -- 632 4,363
Other assets 6,649 7,837 7,714
-------------------------------------------------------
$454,327 $345,046 $334,887
LIABILITIES AND STOCKHOLDERS' EQUITY
- ---------------------------------------------------------------------------------------------------------
Current liabilities
Notes payable $ 4,007 $ 23,620 $ 7,631
Current portion of long-term debt 1,891 1,228 2,557
Accounts payable 20,566 12,376 12,069
Payable to MacMillan Bloedel, net 3,120 -- 8,116
Accrued liabilities 27,555 19,607 20,725
-------------------------------------------------------
57,139 56,831 51,098
Long-term debt, excluding current portion 30,877 33,072 26,392
Deferred income taxes 8,429 5,533 8,832
Other long-term liabilities 14,982 14,026 15,232
Minority interest in Partnership 109,534 106,681 106,439
Stockholders' equity
ESOP convertible preferred stock, issued
1,259,308, 632,059, and 634,216 shares 14,859 14,932 14,983
Guaranteed ESOP benefit (12,390) (13,462) (14,073)
Common stock, issued 16,738,069,
7,900,516, and 7,908,730 shares 16,738 7,901 7,909
Paid-in capital 135,727 44,181 44,722
Retained earnings 82,139 97,492 93,739
Cumulative translation adjustments (3,707) (2,016) 1,410
Common stock in treasury,
1,359,373 and 1,437,410 shares, at cost -- (20,125) (21,796)
--------------------- ---------------------------
233,366 128,903 126,894
-------------------------------------------------------
$454,327 $345,046 $334,887
- ----------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
FOR THE THREE YEARS ENDED JANUARY 1, 1994
DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE FIGURES
1993 1992 1991
-------------------------------------------------------
<S> <C> <C> <C>
Sales $551,204 $400,480 $283,210
---------- --------
Cost and expenses
Cost of sales 408,853 318,073 213,714
Selling expenses 59,040 51,042 41,265
Administrative expenses 50,475 39,592 30,826
Minority interest in Partnership 10,149 (11,855) (6,464)
Other -- -- 8,130
-------------------------------------------------------
528,517 396,852 287,471
-------------------------------------------------------
Income (loss) from operations 22,687 3,628 (4,261)
Investment income, net 449 159 151
Interest expense (3,136) (2,924) (1,792)
-------------------------------------------------------
Income (loss) before income taxes 20,000 863 (5,902)
Income taxes (benefits) 7,472 (5,548) (2,675)
-----------------------------------------------
Income (loss) before cumulative effect of
change in accounting principle 12,528 6,411 (3,227)
Cumulative effect of change in accounting principle -- 900 --
-------------------------------------------------------
Net income (loss) $ 12,528 $ 7,311 $ (3,227)
-------------------------------------------------------
-------------------------------------------------------
Net income (loss) per share
Income (loss) before cumulative effect of
change in accounting principle
Primary $ .82 $ .38 $ (.31)
Fully diluted .76 .38 (.31)
Cumulative effect of change in accounting principle
Primary $ -- $ .07 $ --
Fully diluted -- .07 --
-----------------------------------------------
Net income (loss)
Primary $ .82 $.45 $(.31)
Fully diluted .76 .45 (.31)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
FOR THE THREE YEARS ENDED JANUARY 1, 1994
DOLLAR AMOUNTS IN THOUSANDS
GUARANTEED CUMULATIVE COMMON
PREFERRED ESOP COMMON PAID-IN RETAINED TRANSLATION STOCK IN
STOCK BENEFIT STOCK CAPITAL EARNINGS ADJUSTMENTS TREASURY
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 29, 1990 $15,000 $(14,675) $ 7,919 $ 2,428 $100,500 $ 1,800 $(19,789)
Net loss -- -- -- -- (3,227) -- --
Partnership equity adjustment -- -- -- 43,014 -- -- --
Cash dividends declared:
Common stock -- -- -- -- (2,710) -- --
Preferred stock, net of tax -- -- -- -- (824) -- --
Stock options exercised, net of tax -- -- -- (682) -- -- 1,616
Treasury stock purchased -- -- -- -- -- -- (3,773)
Other (17) 602 (10) (38) -- (390) 150
----------------------------------------------------------------------------------------
Balance, December 28, 1991 14,983 (14,073) 7,909 44,722 93,739 1,410 (21,796)
Net income -- -- -- -- 7,311 -- --
Cash dividends declared:
Common stock -- -- -- -- (2,737) -- --
Preferred stock, net of tax -- -- -- -- (821) -- --
Stock options exercised, net of tax -- -- -- (591) -- -- 1,629
Other (51) 611 (8) 50 -- (3,426) 42
----------------------------------------------------------------------------------------
Balance, January 2, 1993 14,932 (13,462) 7,901 44,181 97,492 (2,016) (20,125)
Net income -- -- -- -- 12,528 -- --
Cash dividends declared:
Common stock -- -- -- -- (3,029) -- --
Preferred stock, net of tax -- -- -- -- (896) -- --
Stock offering -- -- 3,500 90,950 -- -- --
Treasury stock cancellation -- -- (1,273) -- (17,344) -- 18,617
Stock split -- -- 6,612 -- (6,612) -- --
Stock options exercised, net of tax -- -- -- 297 -- -- 1,481
Other (73) 1,072 (2) 299 -- (1,691) 27
----------------------------------------------------------------------------------------
Balance, January 1, 1994 $14,859 $(12,390) $16,738 $135,727 $ 82,139 $ (3,707) $ 0
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
FOR THE THREE YEARS ENDED JANUARY 1, 1994
DOLLAR AMOUNTS IN THOUSANDS
1993 1992 1991
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 12,528 $ 7,311 $ (3,227)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 24,059 21,897 15,163
Deferred income taxes (benefits) 1,744 1,501 (1,534)
Minority interest in Partnership 10,149 (11,855) (6,464)
Other, net 911 (663) 8,651
Change in working capital items:
Receivables (17,567) (6,765) 20
Inventories (8,844) (4,769) (5,745)
Other current assets (864) 1,834 7
Accounts payable and accrued liabilities 17,096 (4,649) 1,776
Other, net 1,626 (602) 1,807
----------------------------------------
Net cash provided by operating activities $ 40,838 $ 3,240 $ 10,454
- -----------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures $(35,418) $(19,676) $(8,862)
Purchase of marketable securities (7,004) -- --
Decrease in unexpended bond funds 632 3,731 1,067
Payment for acquisition -- -- (4,107)
Other, net 9 733 (978)
----------------------------------------
Net cash used in investing activities $(41,781) $(15,212) $(12,880)
- -----------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid on common stock $(2,796) $(2,730) $(2,722)
Cash dividends paid on ESOP preferred stock (1,341) (2,697) (384)
Purchase of treasury stock -- -- (3,773)
Minority partner capital contributions 2,327 16,673 --
Minority partner tax distributions (4,455) (445) --
Proceeds from stock offering, net 94,450 -- --
Payments on note to minority partner -- (12,229) --
Net (repayments) borrowings under lines-of-credit (19,613) 15,632 7,631
Principal payments of long-term debt (1,209) (2,844) (1,357)
Other, net (311) 362 391
----------------------------------------
Net cash provided by (used in) financing activities $67,052 $11,722 $(214)
- -----------------------------------------------------------------------------------------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS
Net increase (decrease) in cash and cash equivalents $66,109 $(250) $(2,640)
Cash and cash equivalents at beginning of year 210 460 3,100
----------------------------------------
Cash and cash equivalents at end of year $66,319 $210 $460
- -----------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest, net of amounts capitalized $3,135 $ 3,076 $1,655
Income taxes (refunds), net (1,878) (65) 273
- -----------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
subsidiaries, including the company's 51 percent interest in Trus Joist
MacMillan a Limited Partnership (the Partnership). All significant intercompany
balances and transactions have been eliminated.
FISCAL YEAR
The company's 52/53 week fiscal year ends on the Saturday closest to December 31
of each year. The additional week, which occurs approximately every fifth year,
does not materially affect the comparability of operations between years.
FOREIGN TRANSLATION
The accounts of the company's Canadian subsidiaries are measured using the
Canadian dollar as functional currency. These financial statements are
translated into U.S. dollars using exchange rates in effect at year-end for
assets and liabilities and the average exchange rate during the period for
results of operations. The resulting translation adjustments are made directly
to the cumulative translation adjustments component of Stockholders' Equity.
CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES
The Company considers cash on hand, cash in banks, and all highly liquid
investments with maturities of three months or less when purchased to be cash
equivalents. These securities are recorded at cost, which approximates fair
value, and totaled $66,319,000 at January 1, 1994, $176,000 at January 2, 1993,
and $156,000 at December 28, 1991.
Marketable securities include tax-exempt municipal bonds and preferred
stocks. These securities are recorded at cost, which approximates fair value
based on quoted market prices.
INVENTORIES
Inventories are valued at the lower of cost or market and include material,
labor, and production overhead costs. Inventories consisted of the following:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
EXPRESSED IN THOUSANDS
JANUARY 1, 1994 JANUARY 2, 1993 DECEMBER 28, 1991
-------------------------------------------------------
<S> <C> <C> <C>
Finished goods $23,830 $19,987 $18,808
Raw materials and work-in-progress 33,244 26,763 21,828
-------------------------------------------------------
57,074 46,750 40,636
Reduction to LIFO cost (3,993) (2,513) (1,797)
-------------------------------------------------------
$53,081 $44,237 $38,839
- ------------------------------------------------------------------------------------------------------
</TABLE>
The last-in, first-out (LIFO) method is used for determining the cost of lumber,
veneer, MICRO=LAM-R- lumber, TJI-R- joists, and open-web trusses. Approximately
38 percent of total inventories at the end of 1993 and 32 percent at the end of
1992 and 1991 were valued using the LIFO method. The first-in, first-out (FIFO)
method is used to determine the cost of all other inventories.
PROPERTY
Property and equipment are recorded at cost. Additions, betterments, and
replacements of major units of property are capitalized. Maintenance, repairs,
and minor replacements are expensed as incurred and approximated $15,900,000 in
1993, $13,928,000 in 1992, and $8,464,000 in 1991. The net book value of
property sold or retired is removed from the asset and related depreciation
accounts, and any resulting gain or loss is included in income.
The provision for depreciation on certain MICRO=LAM-R- LVL, Parallam-R-
PSL, and TimberStrand-TM- LSL manufacturing equipment is computed on the
units-of-production method. Virtually all other property and equipment is
depreciated on the straight-line method. Estimated useful lives of the principal
items of property and equipment range from three to thirty years.
CAPITALIZED INTEREST
The Company capitalizes interest on qualifying assets. Interest expense and
income capitalized into property and equipment approximated:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
EXPRESSED IN THOUSANDS
1993 1992 1991
--------------------------------------
<S> <C> <C> <C>
Interest expense $255 $611 $599
Interest income 5 232 360
- -----------------------------------------------------------------------------
</TABLE>
<PAGE>
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred. Research and
development costs charged to expense were approximately $2,758,000 in 1993,
$3,929,000 in 1992, and $1,906,000 in 1991.
CUMULATIVE EFFECT ON PRIOR YEARS OF CHANGE IN ACCOUNTING PRINCIPLE
During the fourth quarter of 1992, the Company adopted the accounting for income
taxes as required by Statement No. 109 of the Financial Accounting Standards
Board (Statement No. 109). As required, the cumulative effect of the change as
of the beginning of 1992 is presented separately in the consolidated statements
of income. Prior year financial statements have not been restated.
NET INCOME (LOSS) PER SHARE
Primary net income (loss) per common share is based on net income (loss)
adjusted for preferred stock dividends and related tax benefits divided by the
weighted average number of common shares outstanding after giving effect to
stock options as common stock equivalents, if dilutive. Fully diluted net income
(loss) per common share assumes conversion of the ESOP convertible preferred
stock (ESOP preferred stock) into common stock at the beginning of the year.
Primary and fully diluted net income (loss) were calculated as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
EXPRESSED IN THOUSANDS
1993 1992 1991
<S> <C> <C> <C>
Net income (loss) as reported before cumulative
effect of change in accounting principle $12,528 $ 6,411 $(3,227)
Preferred stock dividends, net of related tax benefits (890) (1,306) (824)
----------------------------------------
Primary net income (loss) before cumulative
effect of change in accounting principle 11,638 5,105 (4,051)
Cumulative effect of change in accounting principle -- 900 --
----------------------------------------
Primary net income (loss) $11,638 $ 6,005 $(4,051)
----------------------------------------
----------------------------------------
Primary shares outstanding 14,267 13,418 12,942
- ---------------------------------------------------------------------------------------------------------------
Net income (loss) as reported before cumulative
effect of change in accounting principle $12,528 $ 6,411 $(3,227)
Additional ESOP contribution payable upon assumed conversion
of ESOP preferred stock, net of related tax benefits (721) (672) (662)
----------------------------------------
Fully diluted net income (loss) before cumulative
effect of change in accounting principle 11,807 5,739 (3,889)
Cumulative effect of change in accounting principle -- 900 --
----------------------------------------
Fully diluted net income (loss) $11,807 $ 6,639 $(3,889)
----------------------------------------
----------------------------------------
Fully diluted shares outstanding 15,603 14,700 14,616
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
Fully diluted net income (loss) per share for 1992 and 1991 are the same as
primary net income (loss) per share since the effect of the assumed conversion
of the ESOP preferred stock is anti-dilutive.
MINORITY INTEREST IN TRUS JOIST MACMILLAN
The Company has a 51 percent interest in the Partnership. Income and losses
through January 1, 1994, are allocated on a formula basis as agreed to by the
partners and in accordance with the Partnership Agreement. As a result, the
minority owner of the 49 percent interest in the Partnership was allocated
$10,149,000 of income in 1993, $11,855,000 of losses in 1992, and $6,464,000 of
losses in 1991. These allocations are reflected as adjustments to costs and
expenses in the consolidated statements of income as Minority interest in
Partnership. The minority partner's interest in the Partnership's accumulated
equity is included in the consolidated balance sheet as Minority interest in
Partnership. In addition, the Partnership Agreement calls for a favorable
allocation to the Company of the benefits arising from accelerated tax
depreciation through the end of 1993. These benefits of $1,320,000 in 1993,
$4,317,000 in 1992, and $543,000 in 1991 have been included in income taxes
(benefits) in the consolidated statements of income.
OTHER COSTS AND EXPENSES
In the fourth quarter of 1991, the Company started "Project Profit," which was
designed to reduce overheads, stimulate sales, and maximize the company's
competitiveness in the future. "Other" in the consolidated statements of income
consists of the related restructuring and other one-time charges including the
consolidation of several operating divisions, closure of a plant and four
warehouse distribution facilities, mothballing of two facilities, severance and
relocation costs, as well as inventory and other asset write-offs and reserves.
The Company also provided one-time charges related principally to accounts
receivable and product warranties at one of its restructured divisions.
<PAGE>
2 THE PARTNERSHIP
On September 29, 1991, the Company and MacMillan Bloedel of America, Inc. (MBA),
a wholly owned subsidiary of MacMillan Bloedel Limited (MB), formed Trus Joist
MacMillan a Limited Partnership.
The Company contributed to the Partnership all of its North American
structural wood products manufacturing facilities and sales offices for a 51
percent interest in the Partnership. MBA and MB contributed to the Partnership
all of their North American engineered lumber manufacturing facilities for a 49
percent interest in the Partnership. The Company, MBA, and MB also contributed
to the Partnership patents and trademarks relating to their combined engineered
lumber products business. The contribution of the MBA and MB assets has been
accounted for under the purchase method of accounting. The assets and
liabilities have been recorded based on estimates of fair market value. The
assets and liabilities contributed by MBA and MB are as follows (expressed in
thousands):
<TABLE>
<S> <C>
Current assets $ 4,563
Property and equipment 130,290
Goodwill 26,000
Other assets 2,623
Current liabilities (5,663)
Note payable to MB (6,813)
Long-term liabilities (1,000)
--------
--------
$150,000
</TABLE>
Because the company's assets and liabilities contributed to the Partnership have
been reflected at historical cost, the $43,014,000 excess of the estimated fair
value of the MB assets contributed to the Partnership over MB's 49 percent
interest in the equity of the Partnership has been credited to paid-in capital.
The accounts of the Partnership have been included in the company's
consolidated financial statements since September 29, 1991. Goodwill recognized
in the transaction is being amortized using the straight-line method over 25
years. As of January 1, 1994, a total of $2,340,000 of this goodwill has been
amortized. The goodwill amount expensed was $1,040,000 in 1993, $1,040,000 in
1992, and $260,000 in 1991.
If the formation of the Partnership had occurred as of the beginning of
1991, net sales would have been $294,461,000, net loss would have been
$4,126,000, and net loss per fully diluted share would have been $.38. These
summarized, unaudited, pro forma results have been prepared for comparative
purposes only. They do not purport to be indicative of the results of operations
that would have resulted had the transaction been consummated at the beginning
of 1991 or that may occur in the future.
3 DEBT
The Company entered into a $75 million Revolving Credit Facility (the Credit
Facility) on October 12, 1993, provided by a syndicate of banks. The Credit
Facility provides several interest rate options, none of which exceed prime, and
matures on October 11, 1996. The Credit Facility includes both facility and
committment fees and also includes various customary financial covenants. These
include a limitation of indebtness equal to 50 percent of total capitalization
(including minority interest) and requirements to maintain (i) a minimum of net
worth, and (ii) ratios of cash flow compared to indebtness and debt service.
The company's other long-term debt agreements also include customary financial
conventants. Under the most restrictive of these agreements, retained earnings
available for cash dividends at January 1, 1994, was $61,869,000.
At year-end, the Company also has available unsecured, committed lines of
credit totaling $17,546,000 with foreign and domestic banks. The interest rate
on any loan, determined at the time of the borrowing, would not exceed the
lending bank's prevailing prime rate. Arrangements with the domestic banks
provide for a commitment fee of 1/4 percent. At January 1, 1994, approximately
$4,007,000 at 3.58 percent was borrowed under these agreements.
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
EXPRESSED IN THOUSANDS
JANUARY 1, 1994 JANUARY 2, 1993 DECEMBER 28, 1991
-------------------------------------------------------
<S> <C> <C> <C>
Industrial revenue bonds, 7.43% weighted average interest rate
at January 1, 1994, payable in varying amounts through 2009 $ 9,200 $ 9,950 $10,549
Industrial revenue bonds, interest rates at a percentage of
prime rate -- -- 2,000
Industrial revenue variable rate demand bonds, interest rates
established weekly, 2.61% weighted average during 1993
payable in varying amounts through 2009 16,400 16,400 16,400
Note payable with a foreign bank, 9.51% weighted average interest
rate at January 1, 1994, due in varying amounts through 1999 7,168 7,950 --
-------------------------------------------------------
32,768 34,300 28,949
Less current portion (1,891) (1,228) (2,557)
-------------------------------------------------------
$30,877 $33,072 $26,392
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
All of the industrial revenue bonds are secured by the property and equipment
acquired with the bond proceeds and any unexpended bond funds. At January 1,
1994, the net book value of such property and equipment was approximately
$33,600,000.
On March 30, 1992, the Company, through its wholly owned subsidiary
Dashwood Industries Limited, acquired all of the shares of R. Laflamme & Frere,
Inc. Related to the acquisition, $7,950,000 of additional long-term debt was
incurred.
The scheduled payments of long-term debt are $1,891,000 in 1994, $1,438,000
in 1995, $1,472,000 in 1996, $1,874,000 in 1997, $1,904,000 in 1998, and
$24,189,000 thereafter. The company's variable rate demand bonds are supported
by irrevocable letters of credit. These letters of credit, together with the
company's revolving line of credit, allow the Company to borrow for periods in
excess of one year, if drawn upon to repay bondholders.
4 ACCRUED LIABILITIES
Accrued liabilities consisted of the following:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
EXPRESSED IN THOUSANDS
January 1, 1994 January 2, 1993 December 28, 1991
-------------------------------------------------------
<S> <C> <C> <C>
Salaries, wages, and commissions $ 5,110 $ 4,533 $ 4,156
Retirement plans and other associate benefits 13,761 8,305 7,682
Estimated other retained risks 2,149 728 634
Restructuring and other one-time charges -- -- 3,502
Other 6,535 6,041 4,751
-------------------------------------------------------
$27,555 $19,607 $20,725
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5 INCOME TAXES
Income (loss) before income taxes and income taxes (benefits) include the
following:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
EXPRESSED IN THOUSANDS
1993 1992 1991
-------------------------------------------------------
<S> <C> <C> <C>
Income (loss) before income taxes
U.S. $25,587 $ 9,070 $(1,769)
Canada (5,587) (8,207) (4,133)
-------------------------------------------------------
$20,000 $ 863 $(5,902)
-------------------------------------------------------
-------------------------------------------------------
Income taxes (benefits)
Current income taxes
U.S. federal $ 5,638 $(5,926) $ 132
U.S. state (78) -- 27
Canada 168 (1,123) (1,300)
-------------------------------------------------------
5,728 (7,049) (1,141)
-------------------------------------------------------
Deferred income taxes
U.S. federal 1,453 3,701 (940)
U.S. state 1,565 (84) (294)
Canada (1,274) (2,116) (300)
-------------------------------------------------------
1,744 1,501 (1,534)
-------------------------------------------------------
$7,472 $(5,548) $(2,675)
-------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
The company's effective income tax rate varied from the U.S. federal statutory
income tax rate for the following reasons:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
EXPRESSED IN THOUSANDS EXCEPT PERCENTAGES
1993 1992 1991
<S> <C> <C> <C> <C>
U.S. federal statutory income tax rate $7,000 35.0% 34.0% (34.0)%
Partnership tax depreciation allocation (1,320) (6.6) (500.2) (9.2)
Reversal of excess tax reserves provided in prior
years (395) (2.0) (182.5) --
Foreign income (loss) at different rates 849 4.3 (9.3) (5.3)
State income taxes, net of federal effect 967 4.8 4.3 (3.0)
Other items 371 1.9 10.8 6.2
--------------------------------------------------------
Effective income tax rate $7,472 37.4% (642.9)% (45.3)%
-------------------------------------------------------
-------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The deferred tax liabilities and assets included in the consolidated balance
sheets as of January 1, 1994, and January 2, 1993, computed under Statement No.
109 are comprised of the following:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
EXPRESSED IN THOUSANDS
January 1, 1994 January 2, 1993
-------------------------------------------------------
<S> <C> <C>
Tax in excess of book depreciation $(15,632) $(11,022)
Other (1,154) (697)
-------------------------------------------------------
Total deferred tax liabilities (16,786) (11,719)
-------------------------------------------------------
Accrued liabilities not yet deductible for tax purposes 6,538 5,972
Net operating loss carryforwards 5,220 3,278
Alternative minimum tax credit carryforward 3,997 1,297
Other 1,928 796
-------------------------------------------------------
Total deferred tax assets 17,683 11,343
Less valuation allowances (2,045) (1,252)
-------------------------------------------------------
$(1,148) $(1,628)
-------------------------------------------------------
-------------------------------------------------------
Classified as
Other (current assets) $7,281 $3,905
Deferred income taxes (long-term liabilities) (8,429) (5,533)
-------------------------------------------------------
$(1,148) $(1,628)
-------------------------------------------------------
-------------------------------------------------------
</TABLE>
As of January 1, 1994, the Company had deferred tax assets of $5,220,000 arising
from tax benefits to be realized from net operating losses available to offset
future taxable income. For financial reporting purposes, the Company had
valuation reserves and deferred tax credits available to recognize $3,992,000 of
these benefits. The remaining $1,228,000 is applicable to losses of Canadian
subsidiaries which expire beginning in 1998. The Company believes future taxable
income in Canada will be adequate to realize these benefits as these Canadian
subsidiaries are expected to regain their historical profitability under current
forecasted conditions.
The Company also had tax credits of $3,997,000 at January 1, 1994,
available indefinitely to be used to the extent that future U.S. federal income
taxes exceed alternative minimum taxes.
The deferred portion of income taxes (benefits) included in the
consolidated statements of income and computed under the accounting method
required prior to Statement No. 109 for 1991 arises from the following timing
differences:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
EXPRESSED IN THOUSANDS 1991
-------------------------------------------------------
<S> <C>
Tax in excess of book depreciation $ 1,026
Restructuring and other one-time charges (2,265)
Other, net (295)
-------------------------------------------------------
$(1,534)
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
6 RETIREMENT PLANS AND INCENTIVE BONUS PROGRAMS
Most of the company's employees are covered under defined contribution
retirement plans and are also participants in the company's Employee Stock
Ownership Plan (ESOP). Benefits under these plans are limited to each
individual's fund balances.
In September 1990, the ESOP borrowed $15 million at a 9 percent interest
rate from the Company. This term loan matures on March 31, 2011, and has no
prepayment penalties. Proceeds from the loan were used by the ESOP to purchase
1,269,842 shares of newly issued ESOP preferred stock from the Company. The ESOP
preferred stock is described in Note 7.
In connection with the above transactions, the Company has guaranteed that
over the term of the loan, it will make sufficient contributions to the ESOP to
allow the ESOP to repay the loan to the Company. This guarantee has been
recorded as Guaranteed ESOP benefit in Stockholders' Equity. The company's
annual contributions to the ESOP are based on a formula. The contributions,
together with all dividends on the ESOP preferred shares, will be used by the
ESOP to make the necessary interest payments and any principal prepayments.
With each loan payment, a portion of the ESOP preferred stock is released and
allocated to the employees' accounts in the ESOP. The Guaranteed ESOP benefit is
amortized based on the shares allocated method of calculating expense. The
annual expense associated with the ESOP was approximately $995,000 in 1993,
$1,334,000 in 1992, and $602,000 in 1991.
The Company matches certain contributions of participating associates to
its retirement plans and in 1992 made additional contributions based on a
formula. Contributions to these plans were approximately $8,617,000 in 1993,
$6,436,000 in 1992, and $4,330,000 in 1991, of which approximately 57 percent,
64 percent, and 74 percent, respectively, resulted from company contributions
made under the compensation reduction agreement provision of the plans.
Substantially all of the company's officers and key employees participate
in incentive bonus programs that are based on formulas or are discretionary.
Amounts charged to income under the programs were approximately $2,824,000 in
1993, $1,748,000 in 1992, and $1,227,000 in 1991.
7 STOCKHOLDERS' EQUITY
At January 2, 1993, there were 40,000,000 shares of common stock ($1.00 par
value) and 2,000,000 shares of preferred stock ($1.00 par value) authorized.
In September 1990, the Company issued 1,269,842 shares of $1.00 par value
ESOP preferred stock at $11.8125 per share (liquidation preference) to the ESOP.
Each share of the ESOP preferred stock is convertible into the company's common
stock at the higher of the liquidation preference or the fair market value of
the underlying common stock. The Company has the option to satisfy any
conversion in cash, common stock, or any combination thereof. The ESOP
preferred stock has voting rights equal to one vote per share and is entitled
to preferential dividends of $1.065 per share each year. The ESOP preferred
stock is redeemable at the company's option in certain situations.
On August 26, 1993, the company's Board of Directors declared a two-for-one
stock split in the form of a 100 percent stock dividend. On October 1, 1993, one
share of common stock was issued for each share outstanding as of September 7,
1993. The stock split was recorded in accordance with the declaration whereby
retained earnings was charged and common stock was credited with $6,612,094,
representing the aggregate of the par value of the shares issued. All per share
information included in these financial statements and notes is based on the
increased number of shares of common stock after giving retroactive effect to
the stock split.
The company's Board of Directors on August 26, 1993, also authorized the
retirement of 1,272,675 shares of treasury stock. The retirement of treasury
stock was recorded in accordance with the authorization whereby retained
earnings and common stock were charged $17,343,947 and $1,272,675, respectively,
and treasury stock was credited with $18,616,622, representing the aggregate
cost of the treasury stock. In September 1990, the company's Board of Directors
authorized a program to repurchase up to $15,000,000 of its own stock at market
price. At January 1, 1994, $2,935,000 of additional stock could be acquired
under this program.
In November 1993, the Company completed a public offering of 3,500,000
shares of common stock at $28.50 per share. The net proceeds of the stock
offering after deducting applicable issuance costs and expenses were
$94,450,000. The proceeds were used to repay $18,848,000 of short-term debt
under line of credit arrangements. The balance of the proceeds will be used for
other general corporate purposes, including the company's announced capacity
expansion in its engineered lumber business, working capital, and acquisitions,
which the Company reviews from time to time in the regular course of business.
In 1989, the Company issued common stock purchase rights to each
stockholder. These rights generally become exercisable 10 days following the
public announcement of the acquisition by a person or group of 20 percent or
more of the company's common stock or a tender offer being made for 30 percent
or more of the common stock. With certain exceptions, if the Company is
thereafter involved in a merger or other business combination, or more than 50
percent of the company's assets or earning power are sold, the rights permit
each holder to purchase common stock of the acquiring company at 50 percent of
its market value. If the rights are triggered and the Company is the surviving
corporation in a merger, the rights permit holders, other than the person or
group that triggered exercisability of the rights, to purchase shares of the
company's common stock at a 50 percent discount from the then current market
value. The rights, which expire in September 1999, are non-voting and may be
redeemed by the Company at $.005 per right at any time until 10 days following
the date the rights are triggered. Under certain circumstances, the Board of
Directors may extend the redemption period beyond the 10 days, and may amend
certain provisions of the rights plan. In connection with these rights, the
Board of Directors has reserved for issuance the same number of shares as are
outstanding at any point of time.
<PAGE>
The Company has five stock option plans in effect for officers and key
associates. At January 1, 1994, 1,456,968 shares were reserved for issuance
under these plans. Under the terms of these plans, which have been approved by
the company's stockholders, incentive stock options may be issued at an exercise
price of not less than the fair market value of the stock on date of grant and
nonstatutory options may be issued at a $1.00 exercise price. The outstanding
options and exercise prices are adjusted to reflect any stock splits, stock
dividends, and the like. The incentive stock options become exercisable three
years after date of grant, and, depending upon Board of Director determination
at the time of grant, the nonstatutory options either become exercisable three
years after date of grant or in 20 percent annual installments commencing five
years after date of grant. All unexercised options expire 10 years after date
of grant.
At January 1, 1994, a total of 182,770 incentive stock options and 867,976
nonstatutory options were outstanding under the plans. The ability to grant
options under the existing plans expires at various dates to February 2003.
Stock option transactions are summarized as follows: (after giving retroactive
effect to the stock split):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
1993 1992 1991
----------------------------------------
<S> <C> <C> <C>
Number of option shares
Granted 136,250 212,600 353,000
Became exercisable 79,981 83,858 65,010
Exercised 110,046 127,528 155,876
Canceled 15,412 25,734 35,192
Outstanding at end of year 1,050,746 1,039,954 980,616
Exercisable at end of year 149,547 179,612 224,018
Option price range (per share)
Granted $ .50 $ .50 $ .50
Exercised .25-9.38 .25-9.38 .25-9.38
Outstanding at end of year .25-9.38 .25-9.38 .25-9.38
- -------------------------------------------------------------------------------
</TABLE>
For nonstatutory stock options, the excess of the fair market value over the
exercise price on date of grant is accrued ratably as compensation expense from
the date of grant to the exercisable date. No accounting entries are made for
incentive stock options until they are exercised.
8 LEASES
Basic or minimum rental expenses for operating and month-to-month leases
amounted to $5,540,000 in 1993, $5,511,000 in 1992, and $4,533,000 in 1991.
The Company has various operating leases with initial or remaining terms of
more than one year. These lease have minimum lease payment requirements of
$4,359,000 in 1994, $3,294,000 in 1995, $2,432,000 in 1996, $2,036,000 in 1997,
and $1,521,000 in 1998. In addition to minimum rentals, certain mobile
equipment lease agreements provide for usage charges and cost-of-
living increases. Lease agreements related to real property have fixed payment
terms based upon the lapse of time.
Certain lease agreements provide the Company with the option to purchase
the leased property at the end of the lease term at approximately fair market
value. Additionally, certain lease agreements contain renewal options of up to
three years with substantially the same terms.
9. RELATED PARTY TRANSACTIONS
The Partnership sells to MacMillan Bloedel Building Materials (MBBM), a division
of MB, on terms comparable to other Company distributors. Sales of MBBM were
$104,376,000, $52,379,000, and $5,401,000 in 1993, 1992, and 1991, respectively.
Accounts receivable from MBBM at January 1, 1994, were $8,098,000, at January 2,
1993 were $1,859,000, and at December 28,1991, were $706,000. Amounts due from
MBBM are included in receivables in the accompanying consolidated balance
sheets.
MB provides certain technological and research assistance and computer
services support to the Partnership. Amounts incurred under this arrangement
with MB were $1,223,000, $2,851,000, and $491,000 for 1993, 1992, and 1991,
respectively.
Quarterly, the Partnership makes cash distributions to the partners in lieu
of state and federal income taxes. Payments of $4,455,000 and $445,000 were
made to MBA in 1993 and 1992, respectively.
Certain employees who perform services for the Partnership at the former MB
facilities remain on the payroll of MB. The Partnership Agreement provides the
MB will be reimbursed for its actual payroll and related benefit costs relating
to these employees. Payroll reimbursements to MB for 1993, 1992, and 1991 were
$5,164,000, $4,539,000 and $2,638,000, respectively. MB also provides patent
administration, computer services support, and engineering designs at the
request of the Partnership. Amounts incurred under these arrangements were
$91,000, $414,000, and $255,000 for 1993, 1992, and 1991, respectively. Total
payables to MB and MBA for such services and tax distributions at January 1,
1994, January 2, 1993, and December 28, 1991, were $3,120,000, $1,519,000, and
$2,365,000, respectively.
<PAGE>
The Partnership Agreement provides that MB will make cash capital
contributions to the Partnership, up to $19,000,000, to maintain its ownership
percentage as its capital account was reduced for start-up losses allocated to
MB. The Partnership received $13,083,000 related to 1992 and $5,917,000 related
to 1991 pursuant to this provision of the agreement. Receivables from MB
relating to this provision were $2,327,000 and $5,917,000 at January 2, 1993,
and December 28, 1991, respectively.
In accordance with the terms of the Partnership Agreement, all capital
expenditures made by MBA subsequent to June 30, 1991, and through the completion
of the construction of the Deerwood, Minnesota, TimberStand-TM- lumber
manufacturing facility were payable by the Partnership. The liability of the
Partnership was in the form of a note payable to MBA, which totaled $11,668,000
at December 28, 1991. On March 30, 1992, the Partnership paid MBA $12,229,000
of principal and $253,000 of interest. At January 2, 1993, the net of the
amounts described above, except for the receivable from MBBM, is included in
receivable from MacMillan Bloedel net in the accompanying consolidated balance
sheets. At January 1, 1994, and December 28, 1991, the net amount is included
in payable to MacMillan Bloedel, net.
10 GEOGRAPHIC INFORMATION
The primary business of the Company is the manufacture and marketing of
specialty building products for buildings in the light-construction industry.
More than 90 percent of the company's sales are derived from this activity.
The Company operates primarily in two countries, the United States and
Canada; the majority of all sales are made domestically in those countries.
Geographic information about the company's operations for the three years ended
January 1, 1994, is as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
EXPRESSED IN THOUSANDS
UNITED STATES CANADA CONSOLIDATED
----------------------------------------
<S> <C> <C> <C>
1993
Sales to unaffilated customers $462,738 $ 88,466 $551,204
Income (loss) from operations 25,964 (3,277) 22,687
Identifiable assets 413,759 40,568 454,327
----------------------------------------
1992
Sales to unaffiliated customers $323,934 $ 76,546 $400,480
Income (loss) from operations 9,493 (5,865) 3,628
Identifiable assets 299,253 45,793 345,046
----------------------------------------
1991
Sales to unaffiliated customers $233,968 $ 49,242 $283,210
Loss from operations (376) (3,885) (4,261)
Identifiable assets 276,425 58,462 334,887
</TABLE>
Certain products are transferred between the United States and Canada for
further manufacture and marketing; these transfers between geographic areas
totaled approximately $23,344,000 in 1993, $11,872,000 in 1992, and $5,873,000
in 1991. The transfer price is approximately the same price charged to similar
customers.
- ------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the stockholders of TJ International, Inc.:
We have audited the accompanying consolidated balance sheets of TJ
International, Inc. (a Delaware corporation) and subsidiaries as of January 1,
1994, January 2, 1993, and December 28, 1991, and the related consolidated
statements of income, stockholder's equity, and cash flows for the years then
ended. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of TJ International, Inc. and
subsidiaries as of January 1, 1994, January 2, 1993, and December 28, 1991, and
the results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, effective
December 29, 1991, the Company changed its method of accounting for income taxes
in accordance with Statement No. 109 of the Financial Accounting Standards
Board.
/S//Arthur Andersen & Co.
Boise, Idaho
February 16, 1994
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To TJ International, Inc.:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in TJ International, Inc.'s annual
report to stockholders incorporated by reference in this Form 10-K, and have
issued our report thereon dated February 16, 1994. Our audit was made for the
purpose of forming an opinion on those statements taken as a whole. The
schedules listed in Part IV, Item 14(a) (2) are the responsibility of the
Company's management and are presented for purposes of complying with the
Securities and Exchange Commission's rules and are not part of the basic
consolidated financial statements. These schedules have been subjected to the
auditing procedures applied in the audit of the basic consolidated financial
statements and, in our opinion, fairly state in all material respects the
financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.
/s/ Arthur Andersen & Co.
- ---------------------------------
Boise, Idaho
February 16, 1994
<PAGE>
SCHEDULE V
TJ INTERNATIONAL, INC. AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 28, 1991, JANUARY 2, 1993 AND JANUARY 1, 1994
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING ADDITIONS RETIREMENTS END
CLASSIFICATION OF YEAR AT COST (A) AND SALES OF YEAR
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DECEMBER 28, 1991:
Land $3,761,002 $490,726 ($100) $4,251,628
Buildings and leasehold
improvements 42,727,824 27,837,553 (3,309) 70,562,068
Machinery and equipment 122,077,878 116,405,893 (2,714,320) 235,769,451
------------ ------------ ---------- ------------
$168,566,704 $144,734,172 ($2,717,729) $310,583,147
------------ ------------ ---------- ------------
------------ ------------ ---------- ------------
JANUARY 2, 1993:
Land $4,251,628 $962,707 ($102,743) $5,111,592
Buildings and leasehold
improvements 70,562,068 5,509,608 (1,825,159) 74,246,517
Machinery and equipment 235,769,451 20,963,693 (5,687,412) 251,045,732
------------ ----------- ----------- ------------
$310,583,147 $27,436,008 ($7,615,314) $330,403,841
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
JANUARY 1, 1994:
Land $5,111,592 $286,544 $0 $5,398,136
Buildings and leasehold
improvements 74,246,517 6,975,930 (40,865) 81,181,582
Machinery and equipment 251,045,732 26,471,224 (2,144,430) 275,372,526
------------ ----------- ----------- ------------
$330,403,841 $33,733,698 ($2,185,295) $361,952,244
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
<FN>
(A) SIGNIFICANT ADDITIONS FOR THE YEARS SHOWN:
1991 - Contribution of assets totalling $130,290,000 by Company's 49% partner
upon formation on the Partnership on September 29, 1991; additional work
on TimberStrand lumber facility in Deerwood, Minnesota.
1992 - Aquisition of Laflamme & Frere, Inc. located in St. Apollinaire, Quebec
Canada.
1993 - Completion of I joist line at Natchitoches, Louisiana; land development
cost and initial construction cost associated with the second
TimberStrand lumber facility in Hazard, Kentucky.
NOTE: The methods used by the Company in computing the annual provision for
depreciation and amortization of physical properties are discussed in
Note 1 to Consolidated Financial Statements on page 35 of this Report.
</TABLE>
<PAGE>
SCHEDULE VI
TJ INTERNATIONAL, INC. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 28, 1991, JANUARY 2, 1993 AND JANUARY 1, 1994
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED BALANCE AT
BEGINNING TO COSTS RETIREMENTS END
CLASSIFICATION OF YEAR AND EXPENSES AND SALES OF YEAR
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DECEMBER 28, 1991:
Buildings and leasehold
improvements $11,551,329 $1,843,006 ($689) $13,393,646
Machinery and equipment 56,884,860 13,081,232 (501,822) 69,464,270
----------- ----------- ---------- -----------
$68,436,189 $14,924,238 ($502,511) $82,857,916
----------- ----------- ---------- -----------
----------- ----------- ---------- -----------
JANUARY 2, 1993:
Buildings and leasehold
improvements $13,393,646 $3,219,890 ($625,487) $15,988,049
Machinery and equipment 69,464,270 17,584,297 (3,568,371) 83,480,196
----------- ----------- ------------ -----------
$82,857,916 $20,804,187 ($4,193,858) $99,468,245
----------- ----------- ------------ -----------
----------- ----------- ------------ -----------
JANUARY 1, 1994:
Buildings and leasehold
improvements $15,988,049 $4,242,404 ($14,596) $20,215,857
Machinery and equipment 83,480,196 18,357,404 (1,291,430) 100,546,170
----------- ----------- ------------ -------------
$99,468,245 $22,599,808 ($1,306,026) $120,762,027
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
</TABLE>
<PAGE>
SCHEDULE IX
TJ INTERNATIONAL, INC. AND SUBSIDIARIES
SCHEDULE IX - SHORT-TERM BORROWINGS
FOR THE YEARS ENDED DECEMBER 28, 1991, JANUARY 2, 1993 AND JANUARY 1, 1994
<TABLE>
<CAPTION>
WEIGHTED
OUTSTANDING DURING YEAR AVERAGE
----------------------- INTEREST
CATEGORY OF AGGREGATE BALANCE AT MAXIMUM AVERAGE RATE DURING
SHORT-TERM BORROWINGS END OF YEAR AMOUNT (A) AMOUNT (B) THE YEAR (B)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AMOUNTS PAYABLE TO BANKS (C):
Year ended December 28, 1991 $7,631,000 $10,878,000 $6,589,000 7.54%
Year ended January 2, 1993 $23,620,000 $40,584,000 $26,830,000 5.77%
Year ended January 1, 1994 $4,007,000 $44,351,000 $26,512,000 4.12%
<FN>
(A) At any month end during the year.
(B) Determined based on amounts outstanding for only those days for which there
were amounts payable to a bank and applicable interest thereon.
(C) Any borrowings were pursuant to the Company's various short-term
facilities. The terms of the short-term credit facilities available to the
Company at January 1, 1994 are discussed in Note 3 to the Consolidated
Financial Statements on page 37 of this Report.
</TABLE>
<PAGE>
EXHIBIT 10
REIMBURSEMENT AGREEMENT
among
TJ INTERNATIONAL, INC.,
and
TRUS JOIST MacMILLAN
A LIMITED PARTNERSHIP
as Borrowers
and
THE BANK OF TOKYO LTD.
as Bank
DATED as of
September 1, 1993
Parish of Natchitoches, State of Louisiana
Variable Rate Demand Refunding Bonds
(Trus Joist Corporation Project)
Series 1988
<PAGE>
INDEX
PAGE
----
Section 1. Terms and Amount of Letter of Credit . . . . . . . . . . 2
Section 2. Reimbursement and Other Payments . . . . . . . . . . . . 2
Section 3. Issuance of the Letter of Credit;
Conditions Precedent to Issuance of the
Letter of Credit . . . . . . . . . . . . . . . . . . . . 5
(a) Agreement of the Bank. . . . . . . . . . . . . . . . . . 5
(b) Conditions Precedent to Issuance of the Letter of
Credit . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4. Obligations Absolute . . . . . . . . . . . . . . . . . . 7
Section 5. Representations and Warranties . . . . . . . . . . . . . 8
Section 6. Covenants. . . . . . . . . . . . . . . . . . . . . . . . 12
(i) Covenants of the Borrowers . . . . . . . . . . . . . . . 12
(a) Information. . . . . . . . . . . . . . . . . . . . . . . 12
(b) Consolidations, Mergers, Sales of Assets . . . . . . . . 12
(c) Maintenance of Property; Insurance . . . . . . . . . . . 13
(d) Conduct of Business and Maintenance of Existence . . . . 13
(e) Compliance with Laws . . . . . . . . . . . . . . . . . . 13
(f) Inspection of Property, Books and Records. . . . . . . . 14
(g) Pari Passu Status. . . . . . . . . . . . . . . . . . . . 14
(h) Notices. . . . . . . . . . . . . . . . . . . . . . . . . 14
(i) Related Documents. . . . . . . . . . . . . . . . . . . . 14
(j) Registration of Bonds. . . . . . . . . . . . . . . . . . 15
(k) ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . 15
(l) Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 15
(m) Liens. . . . . . . . . . . . . . . . . . . . . . . . . . 15
(n) Net Worth. . . . . . . . . . . . . . . . . . . . . . . . 17
(o) Debt Ratios. . . . . . . . . . . . . . . . . . . . . . . 17
(p) Recordation of Mortgage. . . . . . . . . . . . . . . . . 18
(q) Title Report . . . . . . . . . . . . . . . . . . . . . . 18
(r) Ratings. . . . . . . . . . . . . . . . . . . . . . . . . 18
(s) Pledge . . . . . . . . . . . . . . . . . . . . . . . . . 18
(t) Hazardous Substances . . . . . . . . . . . . . . . . . . 18
(ii) Covenants of the Bank . . . . . . . . . . . . . . . . . 18
Section 7. Events of Default. . . . . . . . . . . . . . . . . . . . 19
Section 8. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . 21
<PAGE>
Section 9. Notices. . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 10. No Waiver; Remedies. . . . . . . . . . . . . . . . . . . 22
Section 11. Right of Set-off; Limitation on Bank
Collateral . . . . . . . . . . . . . . . . . . . . . . . 22
Section 12. Indemnification. . . . . . . . . . . . . . . . . . . . . 23
Section 13. Continuing Obligation. . . . . . . . . . . . . . . . . . 24
Section 14. Transfer of Letter of Credit; Increase,
Reduction or Reinstatement of Stated
Amount; Extension of the Letter of
Credit . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 15. Liability of the Bank. . . . . . . . . . . . . . . . . . 25
Section 16. Certain Defined Terms. . . . . . . . . . . . . . . . . . 26
Section 17. Costs, Expenses and Taxes. . . . . . . . . . . . . . . . 31
Section 18. Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . 32
Section 19. Severability . . . . . . . . . . . . . . . . . . . . . . 32
Section 20. Governing Law. . . . . . . . . . . . . . . . . . . . . . 32
Section 21. Headings . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 22. Consent of Jurisdiction and Venue, etc.. . . . . . . . . 32
Section 23. Participation by the Bank. . . . . . . . . . . . . . . . 33
Section 24. Satisfaction Requirement . . . . . . . . . . . . . . . . 33
Section 25. Accounting Terms and Definitions . . . . . . . . . . . . 33
Section 26. Counterparts . . . . . . . . . . . . . . . . . . . . . . 34
Section 27. References to Drafts . . . . . . . . . . . . . . . . . . 34
Exhibit X: Form of Irrevocable Direct-Pay Letter of Credit
Exhibit Y: Form of Pledge and Security Agreement
Appendix A: Form of Opinion of Counsel
<PAGE>
REIMBURSEMENT AGREEMENT
This REIMBURSEMENT AGREEMENT (the "Agreement"), is dated as of September 1,
1993, between TJ INTERNATIONAL INC., formerly known as TRUS JOIST CORPORATION
("TJI"), TRUS JOIST MacMILLAN A LIMITED PARTNERSHIP ("TJM") (collectively, TJI
and TJM are referred to hereinafter as the "Borrowers" and individually as the
"Borrower"), and THE BANK OF TOKYO LTD. (the "Bank").
WHEREAS, the Parish of Natchitoches, State of Louisiana (the "Issuer") has
issued $10,000,000 in aggregate principal amount of its Variable Rate Demand
Refunding Bonds (Trus Joist Corporation Project) Series 1988 (the "Bonds"),
pursuant to a Trust Indenture, dated as of September 1, 1988 (said indenture,
together with any indentures supplemental thereto, hereinafter referred to as
the "Indenture"), between the Issuer and Premier Bank, National Association,
formerly known as The First National Bank of Shreveport, as Trustee (said
trustee, together with any successor trustee, hereinafter referred to as the
"Trustee") and lent the proceeds of the sale of the Bonds to TJI pursuant to the
Refunding Agreement, dated as of September 1, 1988 between the Issuer and TJI
(such Refunding Agreement together with any amendments thereto, hereinafter
referred to as the "Refunding Agreement") to provide funds to refund the
Issuer's $10,000,000 Industrial Revenue Bonds (Trus Joist Corporation Project)
Series 1984 (the "Prior Bonds") which Prior Bonds were issued to finance the
cost of acquisition and construction of an industrial plant building and
equipping of such building for use as a wood laminating facility as more fully
described in the Refunding Agreement (the "Project"); and
WHEREAS, pursuant to an Assignment and Assumption
Agreement dated as of September 30, 1991 (said Assignment and Assumption
Agreement, together with any amendments or supplements thereto, the "Assignment
and Assumption Agreement") between TJI and TJM, TJI assigned and transferred its
rights and obligations under the Refunding Agreement and other documents related
to the issuance of the Bonds, and TJM assumed and became jointly and severally
liable with TJI on such obligations; and
WHEREAS, to support certain payments with respect to the Bonds, the
Borrowers have requested the Bank to issue an irrevocable direct-pay letter of
credit constituting an "Alternate Credit Facility" as defined in the Indenture,
substantially in the form of Exhibit X hereto (such letter of credit as it may
be extended, together with any amendments thereto and any substitute letter of
credit of the Bank hereinafter referred to as the "Letter of Credit") in the
stated amount of $10,407,671, which Alternate Credit Facility is in replacement
of an irrevocable direct-pay letter of credit no. SF0451IM issued by National
Westminster Bank, PLC dated September 14, 1988; and
NOW, THEREFORE, in consideration of the premises and in order to induce the
Bank to issue the Letter of Credit, the Borrowers and
<PAGE>
the Bank, subject to the terms and conditions of this Agreement, hereby agree as
follows (capitalized terms used herein and not otherwise defined have the
meaning set forth in Section 16 hereof):
Section 1. TERMS AND AMOUNT OF LETTER OF CREDIT.
The Bank hereby agrees, on the terms and subject to the conditions
hereinafter set forth, to issue its irrevocable direct-pay Letter of Credit for
the account of the Borrowers in favor of Premier Bank, National Association, as
Paying Agent (said paying agent, together with any successor paying agent,
hereinafter referred to as the "Paying Agent") in an initial amount not to
exceed $10,407,671 which amount equals the original aggregate principal amount
of the Bonds plus 124 days' interest calculated at 12% based on a 365/366-day
year. The Letter of Credit shall be dated the date on which the Bank, in its
sole discretion, shall determine that all of the conditions precedent set forth
in Section 3 of this Agreement shall have been satisfied and shall expire on the
Expiration Date. Notwithstanding anything herein to the contrary, this
Agreement shall not expire or be otherwise terminated until such time as all
payment obligations to the Bank due or to become due hereunder have been paid.
Section 2. REIMBURSEMENT AND OTHER PAYMENTS.
(a) The Borrowers agree to pay to the Bank (i) on the same day that any
Drawing is made by the Paying Agent under the Letter of Credit and in accordance
with the Indenture (a "Drawing Payment Date") all amounts advanced by the Bank
on behalf of the Borrowers in respect of each such Drawing, and such payment
obligation may be satisfied by the Borrowers causing the Trustee to reimburse
the Bank in accordance with Sections 509 and 510 of the Indenture; (ii) on each
Drawing Payment Date, a Draw Fee equal to $200; (iii) on demand the reasonable
charges and expenses which the Bank may pay or incur relative to the Letter of
Credit; (iv) upon the date of each transfer of the Letter of Credit in
accordance with its terms a transfer fee of $1,000; and (v) subject to the
crediting procedure set forth in paragraph (f) of this Section, and to the
extent permitted by law, interest on any and all amounts unpaid by the Borrowers
when due under this Agreement from the date such amounts become payable until
payment in full, shall be payable on demand at an interest rate per annum equal
to the higher of the Federal Funds Rate plus 1% or the Prime Rate payable on
demand from the relevant Drawing Payment Date until the date of repayment in
full; unless such amounts remain unpaid for more than 30 days in which case
amounts unpaid for by more than 30 days shall bear interest at a rate per annum
equal to the higher of the Prime Rate plus 1.5% or the Federal Funds Rate plus
2.5%. If the Bank actually receives in immediately available funds
reimbursement for any Drawing on the date such Drawing is paid, no interest
shall accrue on such Drawing for such day.
(b) The Borrowers agree they will pay to the Bank (i) a nonrefundable
letter of credit fee (the "Letter of Credit Fee") in
<PAGE>
an amount equal to 0.75% per annum (calculated on the basis of a 360-day year)
calculated as a percentage of the outstanding amounts available to be drawn
under the Letter of Credit during the period from and including the date on
which the Letter of Credit is issued (the "Date of Issuance") until the
Expiration Date, payable quarterly in advance, the first such payment to be
prorated, if necessary, and made on the Date of Issuance and thereafter such
payments to be made on each December 1, March 1, June 1 and September 1, and
(ii) a fee of $1,000 at the time of delivery by the Bank of a new Letter of
Credit but only if such new Letter of Credit is required because the Stated
Amount is to be increased due to the conversion of the Bonds to the Fixed Rate
and such increased amount exceeds the initial amount of the Letter of Credit,
which amount is $10,407,671.
(c) [Intentionally deleted]
(d) If the Bank determines that the effect of any change from the Date of
Issuance in any applicable law, governmental regulation, guideline or order or
in the interpretation thereof by any governmental authority charged with the
administration thereof, (such as, for example, a change in official reserve
requirements which the Bank is required to maintain in respect of loans or
deposits or other funds procured for funding such loans) is to increase the cost
to the Bank of making or maintaining the Letter of Credit, the Pledged Bonds or
to reduce the amount of any payment of principal or interest receivable by the
Bank, then the Borrowers will pay to the Bank, on demand, such additional
amounts as the Bank may determine to be required to compensate the Bank on an
after-tax basis for such additional cost or reduction of amounts receivable.
Any additional payments under this clause will be computed from the effective
date at which such additional costs or reduction in amounts receivable have to
be borne by the Bank. For purposes of this clause the determination of the Bank
shall be conclusive if made reasonably and in good faith.
(e) If the introduction of, change in, or change in the interpretation or
application of, any law, regulation, directive or request from any governmental
or regulatory authority (whether or not having the force of law) imposes, deems
applicable or modifies any capital adequacy or similar requirement (including,
without limitation, a requirement which affects the Bank's allocation of capital
resources to its obligations) and, as a result, the cost to the Bank of making
or maintaining amounts available under the Letter of Credit, the Pledged Bonds,
or this Agreement is increased as a result of the above, or the Bank's return
under the Letter of Credit or this Agreement or on all or any of its capital is
reduced or the Bank is, in its sole opinion, unable to obtain the rate of return
on all or any of its capital that it would have been able to achieve but for its
obligations hereunder and/or their performance, then the Borrowers shall pay to
the Bank on demand such additional amounts which will, in the sole opinion of
the Bank, compensate the Bank in this respect. The Bank will endeavor to
mitigate the effects of such event. A certificate of the Bank specifying the
<PAGE>
amount of such compensation shall, in the absence of manifest error, be
conclusive.
(f) Payments of interest due on any Bonds that have been tendered and
purchased with an A Drawing and, if applicable, a C Drawing pursuant to the
Indenture which payments have been received by the Bank shall first be credited
against payments of interest due under clause (v) of paragraph (a) above.
(g) Interest on obligations hereunder and the Letter of Credit Fee payable
hereunder shall be computed on the basis of the actual number of days elapsed in
a year of 360 days. The Borrowers agree to pay all fees due the Bank hereunder,
at the times and in the manner indicated herein, directly to the Bank at the
address listed on the signature page hereof until such time as the Borrowers are
notified in writing by the Bank of a different address. All payments by the
Borrowers to the Bank due hereunder shall be made from any source legally
available therefor in lawful currency of the United States in immediately
available funds at Federal Reserve Bank of San Francisco, ABA Code 125001829,
Attention: Manager, Letter of Credit Department re: TJ International, Inc. If
any amount payable hereunder shall fall due on a day that is not a Business Day,
then such due date shall be extended to the next succeeding Business Day, and
interest shall continue to accrue on such amount during such extension. Nothing
contained in this Agreement shall be deemed to establish or require the payment
of a rate of interest in excess of the maximum rate permitted by applicable law.
(h) The Stated Amount shall be increased, reduced and reinstated as
specified in the Letter of Credit.
(i) As further security for the payment of the obligations of the
Borrowers pursuant to clauses (i), (iii) and (v) of paragraph (a) above, the
Borrowers will pledge to the Bank, and grant to the Bank a security interest in,
all of their right, title and interest in and to Pledged Bonds which are the
subject of A Drawings under the Letter of Credit pursuant to a Pledge and
Security Agreement substantially in the form of Exhibit Y hereto (as the same
may be amended from time to time, the "Pledge Agreement"). Upon payment to the
Bank of the amount to be prepaid in accordance herewith, together with accrued
interest to the date of such prepayment on the amount to be prepaid, the
outstanding obligations of the Borrowers under clause (i) of paragraph (a) above
shall be reduced by the amount of such prepayment, interest shall cease to
accrue on the amount prepaid and, if an Event of Default shall not have occurred
and be continuing, the Bank shall release to the Paying Agent from the pledge
and security interest created by the Pledge Agreement a principal amount of
Pledged Bonds held under the Pledge Agreement equal to the amount of such
prepayment; PROVIDED that prior to such release of such Pledged Bonds the Bank
shall notify the Paying Agent in accordance with the Letter of Credit that the
amount of such A Drawing has been reinstated under the Letter of Credit.
<PAGE>
(j) TJI and TJM agree that all payments and other rights, duties and
obligations of the Borrowers, TJI or TJM hereunder shall be the joint and
several obligation of TJI and TJM.
Section 3. ISSUANCE OF THE LETTER OF CREDIT; CONDITIONS PRECEDENT TO
ISSUANCE OF THE LETTER OF CREDIT.
(a) AGREEMENT OF THE BANK. Subject to the terms and conditions of this
Agreement, on the Date of Issuance, and subject to satisfaction of the
conditions set forth in subparagraph (b) below, the Bank shall issue the Letter
of Credit in the Stated Amount effective on the Date of Issuance and expiring on
the Expiration Date.
(b) CONDITIONS PRECEDENT TO ISSUANCE OF THE LETTER OF CREDIT. The
obligation of the Bank to issue the Letter of Credit is subject to the following
conditions precedent:
(i) The Bank shall have received on or before the Date of Issuance
the following, each dated such date, and in form and substance as is
satisfactory to the Bank and its counsel:
(A) copies of the resolutions or other authorizing documents of the
Board of Directors or Management Board of TJI and TJM, respectively, or if
appropriate, the Executive Committee or General Partner thereof authorizing
the execution, delivery and performance of this Agreement and the Related
Documents to which they are a party, certified by the respective Secretary
or an Assistant Secretary of TJI and TJM (which certificate shall state
that such resolutions or other authorizing documents are in full force and
effect on the Date of Issuance) and copies of the Certificate of
Incorporation and Certificate of Limited Partnership;
(B) a certificate of the respective Secretary, or an Assistant
Secretary of TJI and TJM, certifying as to the authority, incumbency and
specimen signatures of the officers of TJI and TJM authorized to sign this
Agreement and the Related Documents executed in connection with this
Agreement to which they are a party and the other documents to be delivered
by them hereunder and who will be authorized to represent TJI and TJM in
connection with this Agreement, upon which the Bank may rely until it
receives a new certificate;
(C) an opinion of counsel to TJI and TJM, addressed to the Bank,
which opinion shall be satisfactory to the Bank and its counsel, dated the
Date of Issuance, substantially in the form attached hereto as Appendix A;
(D) a copy of the opinion of Foley & Judell, Bond Counsel, addressed
to the Bank or a reliance letter addressed to the Bank with respect to such
opinion, dated the Date of Issuance, to the effect that the transactions
contemplated by
<PAGE>
this Agreement do not adversely affect the exclusion of interest on the
Bonds from gross income for federal income tax purposes;
(E) an executed copy of each of the Related Documents (or a duplicate
thereof) to be executed in connection with the transactions contemplated by
this Agreement;
(F) a certificate of the Paying Agent as to the authority, incumbency
and signature specimens of officials of the Paying Agent authorized to make
Drawings, to execute and present certificates under the Letter of Credit
and otherwise to communicate with the Bank regarding the Letter of Credit,
upon which the Bank may rely until it receives a new such certificate;
(G) Certificates of Good Standing or similar certificates evidencing
that TJI and TJM are qualified to conduct business in Idaho, Louisiana and
Delaware;
(H) a certificate of the Trustee, dated the Date of Issuance, to the
effect that the Trustee has full power and authority to perform its
responsibilities under the Indenture and the Trustee accepts such
responsibilities; and
(I) such other documents, instruments, approvals (and, if requested
by the Bank, certified duplicates of executed copies thereof) or opinions
as the Bank may reasonably request.
(ii) The following statements shall be true and correct on the Date of
Issuance as they pertain to each Borrower and the Bank shall have received
certificates signed by an Authorized Borrower Representative of each Borrower,
dated the Date of Issuance, stating that:
(A) the representations and warranties contained in Section 5 of this
Agreement or made by the Borrower in any instrument delivered pursuant to
or in connection with this Agreement are correct on and as of the Date of
Issuance (and after giving effect to the issuance of the Letter of Credit)
as though made on and as of such date;
(B) no Default or Event of Default has occurred and is continuing, or
would result from the issuance of the Letter of Credit;
(C) no material adverse change has occurred in the Borrower's
operations or condition (financial or otherwise) since the date of TJI's
most recent audited financial statements, except as disclosed in writing to
the Bank, or would result from the issuance of the Letter of Credit; and
(D) all of the Related Documents to which TJI or TJM is
<PAGE>
a party shall have been duly authorized, executed and delivered by TJI or
TJM, respectively and, assuming due authorization by the other parties to
the Related Documents, the Related Documents shall be in full force and
effect.
(iii) The Bank shall have received payment of the Letter of Credit
Fee as provided in Section 2(b)(i) hereof.
Section 4. OBLIGATIONS ABSOLUTE. TJI and TJM are jointly and severally
liable hereunder, and except as hereinafter provided, the obligations of TJI and
TJM under this Agreement shall be absolute, unconditional and irrevocable and
shall be paid and performed strictly in accordance with the terms of this
Agreement under all circumstances whatsoever, including, without limitation, the
following circumstances:
(a) any lack of validity or enforceability of the Letter of Credit or any
of the Related Documents;
(b) any amendment or waiver of, or any consent to or departure from, this
Agreement or any Related Documents;
(c) the existence of any claim, set-off, defense or other rights which the
Borrowers may have at any time against the Trustee, the Paying Agent, any
beneficiary or any transferee of the Letter of Credit (or any Person for whom
the Trustee, the Paying Agent, any such beneficiary or any such transferee may
be acting), the Bank or any other Person, whether in connection with this
Agreement, the Related Documents or any unrelated transaction; provided that
nothing in this Section 4 shall prevent the assertion of any such claim by
separate suit or counterclaim;
(d) any statement in any certificate or any other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect whatsoever subject, however, to the limitations set forth in Section 15
hereof;
(e) payment by the Bank under the Letter of Credit against presentation of
a draft or certificate which does not comply with the terms of the Letter of
Credit except if such payment constitutes the gross negligence or willful
misconduct of the Bank;
(f) any other circumstance or happening whatsoever, whether or not similar
to any of the foregoing.
Section 5. REPRESENTATIONS AND WARRANTIES. (i) The Borrowers represent
and warrant as follows:
(a) TJI is a corporation duly incorporated, validly existing and in good
standing under the laws of the state of Delaware. TJM is a limited partnership
duly established, validly existing and in good standing under the laws of the
state of Delaware. TJI and TJM
<PAGE>
are duly qualified to do business and are in good standing in such state and in
each state in which the ownership of their property or the nature of their
business makes such qualification necessary and where the failure to so qualify
will have a materially adverse affect on the business and operations of TJI and
TJM, and have all corporate or partnership powers, as applicable, and all
material governmental licenses, authorizations, consents and approvals required
to carry on their business as now conducted.
(b) The execution, delivery and performance by TJI and TJM of this
Agreement, the Pledge Agreement and the Related Documents to which either of
them is a party are within TJI's or TJM's corporate or partnership powers, as
applicable, have been duly authorized by all necessary corporate or partnership
action, do not contravene or constitute a material default under any provision
of applicable law or regulation or of (i) TJI's or TJM's certificate of
incorporation, articles of partnership, or by-laws, as applicable, or (ii) any
agreement, judgment, injunction, order, decree or contractual restriction
binding on TJI or TJM or their property, and do not result in or require the
creation or imposition of any lien, security interest or other charge or
encumbrance upon or with respect to any of their properties, except as
contemplated by such Related Documents.
(c) No further approval, authorization, consent, order, notice to or
filing or registration with any governmental authority or any public board or
body (other than in connection or in compliance with the provisions of the
securities or "Blue Sky" laws of any jurisdiction which were not required on or
prior to the Date of Issuance and the final filing required by the Internal
Revenue Service) is legally required with respect to the entering into and
performance by TJI or TJM of this Agreement and the Related Documents to which
TJI or TJM are a party.
(d) This Agreement, the Pledge Agreement and the Related Documents to
which TJI or TJM are a party have been or will be duly executed and delivered
and are, or upon execution will be, the valid and legally binding obligations of
TJI or TJM, as the case may be, enforceable against TJI or TJM in accordance
with their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws or equitable
principles relating to or limiting creditors' rights generally or the
availability of equitable remedies.
(e) The annual financial statements of TJI, and the interim financial
statements of TJI, copies of which have been delivered to the Bank, fairly
present, in conformity with generally accepted accounting principles, the
financial position of TJI and its Subsidiaries, as of the date thereof and the
results of operations and changes in financial position for the periods
indicated. Since the date of the most recent financial statements or interim
financial statements, as the case may be, there has been no material adverse
change in the condition or operations of TJI and its Subsidiaries not disclosed
in such information and no event has
<PAGE>
occurred which materially adversely affects the financial condition of TJI and
its Subsidiaries.
(f) Except as disclosed to the Bank in writing, there are no actions,
suits or proceedings, and no proceedings before any governmental commission,
board, bureau or other administrative agency, pending, or, to the knowledge of
the Borrowers, threatened against or affecting the Borrowers which will (to the
extent not covered by insurance) in the opinion of the Borrowers have a material
adverse effect on the Project or the business, financial condition or results of
operations of the Borrowers or which in any manner questions the validity of
this Agreement, the Pledge Agreement or any of the Related Documents.
(g) The Borrowers have filed all United States federal income tax returns
and all other material tax returns which are required to be filed by the
Borrowers and have paid all taxes due pursuant to such returns or pursuant to
any assessment received by the Borrowers, except for those which the Borrowers
are contesting in good faith. The charges, accruals and reserves on the books
of the Borrowers in respect of taxes or other governmental charges are, in the
opinion of the Borrowers, adequate. Each Borrower will promptly notify the Bank
of any taxes or assessments in excess of $500,000 that such Borrower is
contesting.
(h) All the proceeds from the sale of the Bonds have been used by TJI to
refund the Prior Bonds.
(i) Neither TJI nor TJM is an "investment company" within the meaning of
the Investment Company Act of 1940.
(j) Neither TJI nor TJM is a "holding company" as such term is defined in
the Public Utility Holding Company Act of 1935.
(k) Each Borrower makes the representations and warranties made by it in
the Related Documents executed in connection with this Agreement to and for the
benefit of the Bank as if the same were set forth at length in this Agreement.
(l) Neither TJI nor any of its Subsidiaries is in default under any
agreement to which it is a party or by which it may be bound and no litigation,
arbitration or administrative proceedings are presently pending or, to the
knowledge of the Borrowers, threatened, which in any such case would have a
material adverse effect upon the financial condition of TJI and its Subsidiaries
taken as a whole.
(m) No Event of Default (as defined in Section 7 hereof) has occurred or
is outstanding and no event has occurred which with the giving of notice or the
lapse of time or both would constitute an Event of Default.
(n) Each Borrower has good and marketable title to all its properties and
assets subject to no liens, mortgages, pledges,
<PAGE>
security interests, encumbrances or charges of any kind except as would be
permitted under the provisions of this Agreement.
(o) Each Borrower possesses all the trademarks, trade names, service
marks, copyrights, patents, licenses or rights in any thereof, adequate for the
conduct of its business as now conducted and presently proposed to be conducted,
without conflict with the rights or claimed rights of others.
(p) Except as previously disclosed in writing to the Bank, TJI and each
other member, if any, of the "Group" (defined as constituting all entities under
common control with TJI which together with TJI are treated as a single employer
under the Employee Retirement Income Security Act of 1974, as amended from time
to time ("ERISA") and the Internal Revenue Code of 1986, as amended from time to
time (the "Code")) have fulfilled their obligations, if any, under the minimum
funding standards of ERISA and the Code, and have made all required
contributions, if any, with respect to each single or multiemployer plan (both
as defined in ERISA, and each a "Plan") maintained for employees of any of them.
Each member of the Group is in compliance in all material respects with the
presently applicable provisions of ERISA and the Code and has not incurred any
liability (including any contingent liability) to or on account of any Plan
under Title IV of ERISA; and no Plan is insolvent or in reorganization, no
proceedings to terminate any plan have been instituted, and no condition exists
which presents a material risk to any member of the Group of incurring a
liability to or on account of any Plan under ERISA.
(q) To the best of each Borrower's knowledge, there has not been any
material "release" (as defined in 42 U.S.C. Section 9601(22)) or threat of a
material "release" of any "hazardous substances" (as defined in 42 U.S.C.
Section 9601(14)) on or about any of the real property owned or leased by such
Borrower (with the exception of those facilities disclosed in writing), and all
of such real property and the existing and proposed uses thereof are in material
compliance with all applicable laws, statutes, ordinances, rules and regulations
of any governmental authority relating to environmental protection, toxic waste,
hazardous substance handling, treatment, storage or disposal.
(r) Neither TJI nor TJM is engaged principally or as one of their
important activities in the business of extending credit for the purpose of
purchasing or carrying "margin stock" (as defined in Regulations G, T, U or X of
the Board of Governors of the Federal Reserve System, as in effect from time to
time, together with all official rulings and interpretations issued thereunder).
The execution, delivery and performance of this Agreement and the use of the
proceeds of the Bonds or any extension of credit hereunder, do not and will not
constitute a violation of said Regulations.
(ii) The Bank represents and warrants as follows:
(a) The Bank is duly licensed by the Supervisor of Banking of
<PAGE>
the State of Washington and the Bank has full corporate power and corporate
authority to enter into this Agreement and to carry out and consummate all
transactions contemplated by this Agreement, and by proper corporate action has
duly authorized the execution and delivery of this Agreement.
(b) This Agreement has been duly authorized, executed and delivered by the
Bank and constitutes the legal, valid and binding obligation of the Bank
enforceable in accordance with its terms except as the enforcement thereof may
be limited by bankruptcy, insolvency, reorganization or other laws, judicial
decisions or principles of equity relating to or affecting the enforcement of
creditors' rights generally.
Section 6. COVENANTS.
(i) COVENANTS OF THE BORROWERS. So long as the Expiration Date has
not occurred or any amount is due or owing to the Bank hereunder, each Borrower
agrees that it will comply with the following covenants:
(a) INFORMATION. TJI will deliver to the Bank:
(i) as soon as available and in any event within 90 days after the
end of each fiscal year of TJI, TJI's audited financial statements;
(ii) as soon as available, but no later than 45 days after the end of
each quarter, a copy of TJI's quarterly interim financial statements;
(iii) simultaneously with the delivery of each set of documents
referred to in clauses (i) and (ii) above, a certificate of an Authorized
Borrower Representative stating that each Borrower is in compliance with each of
the covenants set forth in this Section 6 and stating whether there exists on
the date of such certificate any Default and, if any Default then exists,
setting forth the details thereof and the action which such Borrower is taking
or proposes to take with respect thereto;
(iv) promptly upon their mailing to the shareholders of TJI copies of
all financial statements, reports and proxy statements so mailed, if any;
(v) from time to time such additional information regarding the
financial position or business of TJI as the Bank may reasonably request.
(b) CONSOLIDATIONS, MERGERS, SALES OF ASSETS. TJI and TJM will not
consolidate with or merge into any other Person, or sell, lease or otherwise
transfer all or any substantial part of their assets to any such Person without
the prior written consent of the Bank; provided, however, that nothing herein is
intended to limit TJI or TJM's ability to sell, lease, transfer or otherwise
dispose
<PAGE>
of assets in the ordinary course of business; and provided that such merger,
sale, lease or other transfer shall comply with the terms of Section 6.3 of the
Refunding Agreement, as applicable. Notwithstanding the foregoing, each
Borrower may, with the prior written consent of the Bank, consolidate, merge,
sell or otherwise transfer all or substantially all of the Project if such
Borrower shall deliver to the Bank (i) evidence that the purchaser, transferee
or surviving entity has assumed in writing and in full, and is capable of
performing and complying with the duties and obligations of Borrower hereunder;
(ii) an opinion of counsel to the purchaser, the transferee or surviving entity
addressed to the Issuer and the Bank to the effect that the purchaser,
transferee or surviving entity has duly assumed the obligations of Borrower
under this Agreement and the Related Documents to which Borrower is a party and
that such obligations are legal, valid, binding and enforceable obligations of
the transferee, the purchaser or surviving entity; (iii) an opinion of bond
counsel that such sale, transfer or other disposition of assets will not
adversely affect the exclusion from federal gross income and the exemption from
all taxes under the laws of the State of Louisiana of the interest on the Bonds.
The Project was transferred from TJI to TJM in connection with the Assignment
and Assumption Agreement. It is hereby expressly agreed that any disposition of
the Project in violation of this subparagraph (b) shall be deemed an Event of
Default hereunder and shall be ineffective to relieve each Borrower of its
obligations under this Agreement. Nothing in this subparagraph (b) shall affect
any provision of the Related Documents to which each Borrower is a party which
requires the consent of the Issuer, the Bank or the Trustee as a precondition to
the disposition of the Project.
(c) MAINTENANCE OF PROPERTY; INSURANCE. Each Borrower will keep the
Project in good repair, working order and condition, reasonable wear and tear
excepted, and will maintain, with financially sound and reputable insurance
companies, insurance on all its property in at least such amounts and against
such risks as are customarily insured against by businesses of like size and
type in the area.
(d) CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Each Borrower will
preserve, renew and keep in full force and effect its corporate or partnership
existence, as the case may be, and the rights, privileges and franchises
necessary or desirable in the normal conduct of business.
(e) COMPLIANCE WITH LAWS. Each Borrower will comply, in all material
respects, with all applicable laws, ordinances, rules, regulations and
requirements of governmental authorities except where the necessity of
compliance therewith is contested in good faith by appropriate proceedings;
PROVIDED, HOWEVER, that the foregoing shall not require compliance with any such
laws, ordinances, rules, regulations and/or requirements so long as failure to
comply shall not have a material adverse effect on the condition of each
Borrower and its ability to perform its
<PAGE>
obligations under this Agreement, the Pledge Agreement and the Related
Documents.
(f) INSPECTION OF PROPERTY, BOOKS AND RECORDS. Each Borrower will keep
proper books of record and account in which full, true and correct entries in
conformity with generally accepted accounting principles consistently applied
shall be made of all dealings and transactions in relation to its business and
activities. Each Borrower will permit representatives of the Bank at reasonable
times and intervals upon prior written notice to visit and inspect any of their
respective properties to the extent permitted by applicable law and applicable
safety and security policies of the Borrower, to examine and make abstracts,
subject to proprietary and confidentiality policies and agreements of or binding
upon each Borrower, from any of their respective books and records and to
discuss their respective affairs, finances and accounts with their respective
officers and independent public accountants, all at such reasonable times and as
often as may reasonably be desired.
(g) PARI PASSU STATUS. Each Borrower agrees that it will not take any
action which would result in such Borrower's obligations to the Bank under this
Agreement not ranking at least PARI PASSU in right of payment with all unsecured
obligations of such Borrower to other creditors.
(h) NOTICES. Each Borrower will promptly give written notice to the Bank
of the occurrence of any Default or Event of Default within two Business Days of
discovery of such Default or Event of Default signed by an Authorized Borrower
Representative setting forth the details of, and the actions which such Borrower
proposes to take with respect to, such Default or Event of Default. Each
Borrower will also promptly give notice to the Bank of any pending or threatened
action, suit or proceeding, an adverse decision in which could materially and
adversely affect the operations or the conditions (financial or otherwise) of
such Borrower or the Project or the ability of such Borrower to repay any debt
incurred under this Agreement or the Refunding Agreement or which questions the
validity of this Agreement, the Pledge Agreement or any Related Documents.
(i) RELATED DOCUMENTS. Each Borrower will comply with the terms and
covenants of the Related Documents to which it is a party. Each Borrower agrees
that it will not amend, modify or terminate or agree to amend, modify or
terminate any of the Related Documents to which it is a party without the prior
written consent of the Bank.
(j) REGISTRATION OF BONDS. TJI and TJM agree to promptly notify the
Paying Agent of all Bonds which either of them acquire, or which they have
acquired for their respective accounts, in accordance with the Indenture for
registration in the name of TJI or TJM, as the case may be.
<PAGE>
(k) ERISA. Other than as previously disclosed in writing to the Bank,
(i) Each Borrower has not engaged in any transaction which could
subject it to either a material civil penalty assessed pursuant to
Section 502(1) of ERISA or a tax imposed by Section 4975 of the Code.
(ii) No Plan or trust created under any Plan has been terminated. No
material liability to the PBGC or to any trustee under Section 4042 or 4049 of
ERISA has been, or is expected to be, incurred with respect to any Plan. There
has been no reportable event (within the meaning of Section 4043(b) of ERISA)
with respect to any Plan and no event or condition exists which presents a
material risk of a "distress termination" or involuntary termination of any Plan
by the PBGC under Title IV of ERISA.
(iii) Full payment has been made of all amounts which each Borrower
is required to have paid as contributions to each Plan as of the date that such
contributions are due under applicable law and no accumulated funding deficiency
(as defined in Section 302 of ERISA and Section 402 of the Code), whether or not
waived, exists with respect to any Plan.
(l) TAXES. Each Borrower will pay all taxes, assessments and other
governmental charges before the same become delinquent, provided, however, that
nothing herein shall be interpreted to require such Borrower to pay any tax,
assessment or other governmental charge so long as its validity is contested in
good faith and adequate reserves or other appropriate provision, if any, as
shall be required by generally accepted accounting principles, shall have been
made therefor.
(m) LIENS. Each Borrower agrees that it will not create, incur or permit
to exist against any properties or assets, real or personal, of such Borrower or
of any Subsidiary now or hereafter acquired, any mortgage, pledge, security
interest, encumbrance, lien or charge of any kind upon or defect in title to or
restriction of use of same or hold or acquire any property or assets under
conditional sales, financing lease or other title retention agreement, (or
permit any Subsidiary to do so,) (herein called "liens") except:
(i) Mechanics, suppliers, tax and other like liens arising in the
ordinary course of business securing obligations which are not overdue or are
being contested in good faith by appropriate legal proceedings diligently
conducted; provided such Borrower or such Subsidiary set aside on its books
adequate reserves or other appropriate provision, if any, as shall be required
by generally accepted accounting principles;
(ii) Any lien on any asset securing indebtedness incurred or assumed
for the purpose of financing all or any part of the cost of acquiring such
asset, including any interest in title of a
<PAGE>
lessor under any operating lease or any financing lease; provided that such lien
attaches to such asset currently with or within 90 days after the acquisition
thereof;
(iii) Liens over $500,000 existing on the date of this Agreement as
to which each Borrower has given written notice to the Bank;
(iv) Any lien existing on any asset of any corporation at the time
such corporation becomes a Subsidiary and not created in contemplation of such
event;
(v) Any lien on any asset of any corporation existing at the time
such corporation is merged into or consolidated with a Borrower or a Subsidiary
and not created in contemplation of such event;
(vi) Any lien existing on any asset prior to the acquisition thereof
by a Borrower or a Subsidiary and not created in contemplation of such
acquisition;
(vii) Any lien arising pursuant to any order of attachment, distraint
or similar legal process arising in connection with court proceedings so long as
the execution or other enforcement thereof is effectively stayed and the claims
secured thereby are being contested in good faith by appropriate proceedings;
(viii) Liens (other than any lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds (which bonds shall not exceed 10% of the consolidated net worth of the
Borrowers), bids, leases, government contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the payment of
borrowed money);
(ix) Leases or subleases granted to others not interfering with the
ordinary conduct of the business of the Borrowers or any of their Subsidiaries;
(x) Easements, rights-of-way, restrictions and other similar charges
or encumbrances not interfering with the ordinary conduct of the business of the
Borrowers or any of their Subsidiaries;
(xi) Any lien arising out of the refinancing, extension, renewal or
refunding of any indebtedness secured by any lien permitted by any of the
foregoing clauses of this Section 6(m); PROVIDED that the amount of such
indebtedness is not increased and such indebtedness is not secured by any
additional assets;
(xii) The Indenture and this Agreement;
<PAGE>
(xiii) Permitted Encumbrances; and
(xiv) Liens not otherwise permitted by the foregoing clauses of this
Section 6(m) (including, without limitation, liens on stock of Subsidiaries,
whether consolidated or unconsolidated) securing indebtedness in any aggregate
principal amount at any time outstanding not to exceed 5% of TJI's Consolidated
Tangible Net Worth (as defined below).
(n) NET WORTH. TJI's Consolidated Tangible Net Worth will at no time be
less than $100,000,000 plus 50% of all net income earned by TJI after January 2,
1993. "Consolidated Tangible Net Worth" shall mean the amount by which
Shareholder's Equity exceeds the aggregate of all amounts appearing on the asset
side of the consolidated balance sheet for goodwill, patents, trademarks,
tradenames, copyrights, organization expenses, all write-ups (other than write-
ups from foreign currency translations and write-ups of assets of a going
concern business made within twelve months after the acquisition of such
business) subsequent to January 2, 1993 in the book value of any asset owned by
TJI or a consolidated Subsidiary and other similar items, if any.
"Shareholder's Equity" means at any time the sum of the following accounts set
forth in the consolidated balance sheet of TJI prepared in accordance with
generally accepted accounting principles consistently applied: (i) the par
value or stated value of all outstanding capital stock, (ii) capital surplus,
(iii) retained earnings and (iv) cumulative translation adjustments, (v) less
treasury stock.
(o) DEBT RATIOS. TJI's Consolidated Indebtedness (excluding capital lease
obligations) will not exceed 100% of Consolidated Tangible Net Worth (as defined
above). The ratio of current assets to current liabilities shall be at least
1.25 at the end of each quarter. "Consolidated Indebtedness" shall mean
indebtedness for borrowed money; indebtedness guaranteed directly or indirectly
in any manner or in respect of which TJI assures a creditor against loss;
indebtedness secured by any mortgage, pledge, lien, security interest or
conditional sale or other title retention agreement to which any property or
asset owned or held by TJI is subject, whether or not the indebtedness secured
thereby shall have been assumed (but excluding obligation under leases which
shall have been or should be, in accordance with generally accepted accounting
principles, recorded as capital leases).
(p) RECORDATION OF MORTGAGE. Each Borrower will, at its expense, cause a
mortgage to be properly recorded, upon title to the land constituting the
portion of the Project owned by TJM, as a mortgage upon its interest in the
Project and will, at its expense, do all things necessary by way of any
additional filings to continue and maintain the lien and priority of the
mortgage.
(q) TITLE REPORT. At the Date of Issuance, the Borrowers shall deliver to
the Bank either a preliminary title report or an opinion of title on the Project
by a reputable Louisiana attorney, in form and substance satisfactory to the
Bank.
<PAGE>
(r) RATINGS. The Borrowers will not seek, or cause to be sought, a rating
on the Bonds to be issued by either of the national rating agencies so long as
the Letter of Credit is outstanding without the prior written consent of the
Bank, which consent shall not be unreasonably withheld.
(s) PLEDGE. The Borrowers will at all times maintain the pledge with
respect to the Pledged Bonds, if any, pursuant to the Pledge Agreement, defend,
preserve and protect such pledges to the extent permitted by law against all
claims of all Persons and keep the Pledged Bonds free from all liens, except as
permitted by the Indenture and the Pledge Agreement, respectively.
(t) HAZARDOUS SUBSTANCES. Each Borrower agrees to indemnify and hold the
Bank harmless from and against any and all claims, demands, losses, liens,
liabilities, penalties, fines, lawsuits and other proceedings, including without
limitation, reasonable attorneys' fees, arising directly or indirectly or out of
or in any way in connection with the presence of hazardous substances (as
defined in 42 U.S.C. Section 9601(14)) on real property owned or leased by such
Borrower, whether or not as a result of the Borrower's ownership, lease,
operation or occupancy of the same, and whether or not such Borrower was aware
of such hazardous substances.
(ii) COVENANTS OF THE BANK. The Bank covenants to promptly give the
Borrowers and the Remarketing Agent written notice of any reduction in the
Bank's credit rating by either of the national rating agencies.
Section 7. EVENTS OF DEFAULT. Upon the occurrence of any of the
following events (herein referred to as an "Event of Default"):
(a) any representation, warranty or other written statement made by either
Borrower herein, the Pledge Agreement or in any certificate, financial or other
statement furnished by either Borrower pursuant to this Agreement shall prove to
have been untrue or incomplete in any material respect when made and such
warranty, representation or other written statement shall not have been
corrected within 30 days of written notice thereof; or
(b) either Borrower shall fail to pay (i) the amount specified in Section
2(a)(i) of this Agreement when due or (ii) any other amounts when due under this
Agreement where such failure to pay when due shall have remained unremedied for
10 days; or
(c) either Borrower shall fail to perform or observe any other material
term, covenant or agreement on its part to be performed or observed hereunder
(other than as specified in (b) above) or in the Pledge Agreement, and any such
failure shall remain unremedied for 30 days after written notice thereof shall
have been given to such Borrower by the Bank; or
(d) any material provision of this Agreement, the Pledge
<PAGE>
Agreement or any Related Document shall at any time for any reason cease to be
in full force and effect (other than by release by the Bank with respect to the
Pledge Agreement) or valid and binding on either Borrower, or shall be declared
to be null and void, or validity or enforceability thereof shall be contested by
either Borrower or either Borrower shall deny that it has any further liability
or obligation under this Agreement; or
(e) Either Borrower shall (i) apply for or consent to the appointment of a
receiver, trustee, liquidator or custodian or the like of itself or of its
property, (ii) admit in writing its inability to pay its debts generally as they
become due, (iii) make a general assignment for the benefit of creditors, (iv)
be adjudicated a bankrupt or insolvent, or (v) commence a voluntary case under
the federal bankruptcy laws of the United States of America or file a voluntary
petition or answer seeking reorganization, an arrangement with creditors or an
order for relief or seeking to take advantage of any insolvency law or file an
answer admitting the material allegations of a petition filed against it in any
bankruptcy, reorganization or insolvency proceeding; or corporate action shall
be taken by it for the purpose of effecting any of the foregoing; or
(f) if without the application, approval or consent of either Borrower an
involuntary case or other proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors seeking in respect of either Borrower an
order for relief or an adjudication in bankruptcy, reorganization, dissolution,
winding-up, liquidation, a composition or arrangement with creditors, a
readjustment of debts, the appointment of a trustee, receiver, liquidator or
custodian or the like of either Borrower or of all or any substantial part of
the assets of either Borrower, or other like relief in respect thereof under any
bankruptcy or insolvency law, and, if such proceeding is being contested by
either Borrower in good faith, the same shall (i) result in the entry of an
order for relief or any such adjudication or appointment or (ii) continue
undismissed, or pending and unstayed, for any period of sixty (60) consecutive
days; or
(g) the occurrence of an Event of Default under the Indenture or the
Refunding Agreement and a notice of such default shall have been received or
given by the Bank and the time for cure shall have elapsed; or
(h) a final judgment for the payment of money in excess of $1,000,000, net
of insurance proceeds, shall be rendered by a court of record against either
Borrower that such Borrower does not discharge or make provision for discharge
in accordance with the terms thereof within 90 days from the date of entry
thereof; or
(i) any warranty, representation or other written statement made by or on
behalf of either Borrower contained in any Related Document or in any
certificate, financial or other statement
<PAGE>
furnished in compliance with or in reference to any Related Document shall prove
to have been untrue or incomplete in any material respect when made and such
warranty, representation or other written statement shall not have been
corrected within 30 days of written notice to such Borrower thereof from either
the Bank, the Trustee or any other person with actual knowledge of such untrue
or incomplete statement; or
(j) default shall be made in the payment when due (subject to any
applicable grace period), whether by acceleration or otherwise, of any Debt of
either Borrower in an amount of $500,000 or more of any interest or premium
thereon, or default shall be made in the performance or observance of any
obligation or condition with respect to any such Debt if the effect of such
default is to accelerate the maturity of any such Debt or to permit the holder
or holders thereof, or any trustee or agent for such holders, to cause such Debt
to become due and payable prior to its expressed maturity, or any such Debt
shall be declared to be due and payable or required to be prepaid (other than by
a regularly scheduled required prepayment) prior to stated maturity, whether or
not any such default shall subsequently be cured; or
(k) any material provision of this Agreement shall at any time for any
reason cease to be valid and binding on either Borrower (other than a provision
which, in the opinion of the Bank, provides or could provide immaterial benefits
to the Bank hereunder), or shall be declared to be null and void, or the
validity or enforceability of any material provision of this Agreement shall be
contested by either Borrower or a proceeding shall be commenced by any
governmental agency or authority having jurisdiction over either Borrower
seeking to establish the invalidity of this Agreement or the unenforceability in
any material respect thereof; or
(l) with respect to any Plan as to which either Borrower may have
liability, there shall exist a deficiency in excess of $100,000 in the Plan
assets available to satisfy the benefits guaranteeable under ERISA with respect
to such Plan, (i) steps are undertaken to terminate such Plan, (ii) such Plan is
terminated or (iii) any Reportable Event (as described in Section 4043 of ERISA
and the regulations promulgated thereunder) which presents a material risk of
termination with respect to such Plan shall occur; or
(m) the occurrence, in the Bank's opinion, of an effective change of
control of either Borrower which the Bank considers material;
then the Bank may, in its sole discretion, declare all amounts payable by the
Borrowers under this Agreement to be immediately due and payable (and the same
shall upon such notice become immediately due and payable), in each case without
any presentment, demand, protest or other notice or formality of any kind. Upon
any such occurrence, the Bank may, in addition, (a) exercise all of its
<PAGE>
rights and remedies under any Related Document or applicable law, (b) give
written notice to the Trustee of such occurrence, with the effect contemplated
by Section 802(e) of the Indenture, (c) require the Trustee to declare the
unpaid outstanding principle amount of the Bonds to be due and payable as
provided in Section 803(b) of the Indenture, or (d) exercise all or any
combination of the remedies provided for in this paragraph.
Section 8. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Agreement nor consent to any departure by the Borrowers therefrom shall in
any event be effective unless the same shall be in writing and signed by the
Bank, and then such waiver, amendment or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 9. NOTICES. Except as expressly provided for herein, all
notices and other communications provided for hereunder shall be in writing
(including tested telex and telegraphic communication) and mailed, telegraphed,
telexed or delivered to each party at the address or telex number or telecopy
number specified for such party on the signature page of this Agreement, or as
to each party at such other address or telex number or telecopy number as shall
be designated by such party in a written notice to the other party. All such
notices and other communications shall, when mailed or telegraphed, be effective
when received, addressed as aforesaid and when telexed or telecopied, when the
appropriate answer back is received. Communications by the Paying Agent with
the Bank with respect to the Letter of Credit shall be made as provided in the
Letter of Credit. Any tested telex or telegraphic communication provided to the
Bank hereunder shall be promptly followed by a written confirmation thereof.
Section 10. NO WAIVER; REMEDIES. No failure on the part of the Bank to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other further exercise thereof or the exercise of any other right.
The remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
Section 11. RIGHT OF SET-OFF; LIMITATION ON BANK COLLATERAL.
(a) Upon the occurrence and during the continuance of any Event of
Default, the Bank is hereby authorized at any time and from time to time,
without notice to the Borrowers (any such notice being expressly waived by the
Borrower), to set-off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held and other indebtedness at any
time owing by the Bank to or for the credit or the account of the Borrowers
against any and all of the obligations of the Borrowers now or hereafter
existing under this Agreement, irrespective of whether or not the Bank shall
have made any demand under this Agreement and although such obligations may be
contingent and unmatured. The Bank agrees promptly to notify the Borrowers
after any such set-off
<PAGE>
and application, PROVIDED that the failure to give such notice shall not affect
the validity of such set-off and application. The rights of the Bank under this
Section are in addition to other rights and remedies which the Bank may have
including, without limitation, other rights of set-off.
(b) Each Borrower hereby agrees that it shall not at any time grant and
the Bank hereby agrees that it will not at any time accept from the Borrowers
for the payment of the reimbursement obligation of the Borrowers set forth in
Section 2 of this Agreement any collateral except Bonds which have been pledged
pursuant to the Pledge Agreement and the security interests granted in the
Indenture and Refunding Agreement and Collateral Mortgage unless the Borrowers
shall have obtained an opinion of nationally recognized bond counsel that the
delivery of such collateral will not adversely affect the exclusion from gross
income of the interest on the Bonds for federal income tax purposes.
Section 12. INDEMNIFICATION. To the fullest extent permitted by law, each
Borrower hereby indemnifies and holds harmless the Bank from and against any and
all claims, damages, losses, liabilities, reasonable costs or expenses
whatsoever which the Bank may incur (or which may be claimed against the Bank by
any Person) by reason of or in connection with (a) the execution and delivery or
transfer of, or payment or failure to pay under, the Letter of Credit; (b) the
grant of the security interest in the Refunding Agreement; (c) the use of the
proceeds of the Bonds or any Drawing; or (d) any action or proceeding relating
to a court order, injunction or other process or decree restraining or seeking
to restrain the Bank from paying any amount under the Letter of Credit; PROVIDED
that the Borrowers shall not be required to indemnify the Bank for any claims,
damages, losses, liabilities, costs or expenses to the extent, but only to the
extent, caused by (i) the willful misconduct or gross negligence of the Bank in
determining whether a draft or certificate presented under the Letter of Credit
complied with the terms of the Letter of Credit or (ii) the Bank's willful
failure to pay under the Letter of Credit after the presentation to it by the
Trustee (or a successor trustee under the Indenture to whom the Letter of Credit
has been transferred in accordance with its terms) of a draft and certificate
strictly complying with the terms and conditions of the Letter of Credit.
Nothing in this Section 12 is intended to limit any obligation of the Borrowers
contained in this Agreement. If any action shall be brought against the Bank in
respect of which indemnity may be sought against the Borrowers, the Bank shall
promptly notify the Borrowers in writing, and the Borrowers shall promptly
assume the defense thereof, including the employment of counsel (the selection
of which shall have been approved by the Bank and such approval shall not be
unreasonably withheld), the payment of all expenses and the right to negotiate
and consent to settlement. If the Borrowers elect not to defend such action,
the Bank shall have the right to employ counsel to defend such action and to
participate in the defense thereof, and the fees and expenses of such counsel
shall be at the expense of the Borrowers.
<PAGE>
In addition, the Bank shall have the right to employ separate counsel at its own
expense and participate in such action; provided, however, that if the Bank is
advised by counsel experienced in matters of banking or securities laws that it
has defenses or causes of action separate from that of the Borrowers, the Bank
may employ separate counsel at Borrowers' expense. Borrowers shall not be
liable for any settlement of any such action effected without their consent by
the Bank, but if settled with the consent of the Borrowers or if there be a
final judgment for the plaintiff in any such action against the Borrowers or the
Bank, with or without the consent of the Borrowers, the Borrowers agree to
indemnify and hold harmless the Bank to the extent provided herein.
Section 13. CONTINUING OBLIGATION. The obligations of each Borrower and
the Bank under this Agreement shall continue until the later of (a) the
Expiration Date or (b) the date upon which all amounts due and owing to the Bank
under this Agreement shall have been paid in full and shall (i) be binding upon
each Borrower and the Bank, their successors and assigns, and (ii) inure to the
benefit of and be enforceable by the Bank and the Borrowers and their successors
and assigns; PROVIDED that the Borrowers may not assign all or any part of this
Agreement without the prior written consent of the Bank.
Section 14. TRANSFER OF LETTER OF CREDIT; INCREASE, REDUCTION OR
REINSTATEMENT OF STATED AMOUNT; EXTENSION OF THE LETTER OF CREDIT. The Letter
of Credit may be transferred in accordance with the provisions set forth therein
and the Stated Amount of the Letter of Credit may be increased, reduced or
reinstated in accordance with the provisions set forth therein. In the event
the Bonds are converted to the Fixed Rate at the request of the Borrowers as
provided in the Indenture and the Bank elects, in its sole discretion, to
provide a new Letter of Credit with respect to such Bonds, the Letter of Credit
shall be provided in an amount such that the Interest Component of the Stated
Amount available to be drawn under the Letter of Credit shall be increased from
124 days' interest at 12% per annum calculated on the basis of a 365/366-day
year to 223 days' interest at the Fixed Rate per annum based on a year of 360
days comprised of twelve (12) thirty (30) day months and an amount sufficient to
pay the premium due on the Bonds at the first optional call date after the Fixed
Rate Conversion Date shall be added to the Stated Amount of the Letter of Credit
(the "Premium Component") and each Borrower hereby consents to such increase in
the Stated Amount of the Letter of Credit. If by increasing the Interest
Component and adding the Premium Component as provided in the preceding sentence
the Stated Amount of the Letter of Credit will exceed the Stated Amount as of
the Date of issuance then the new Letter of Credit shall reflect such increase
in the Interest Component and the Stated Amount and the addition of the Premium
Component. On or after the first anniversary of the Date of Issuance and on
each anniversary date thereafter, the Bank may, upon the written request of the
Borrowers given to the Bank not more than ninety (90) days nor less than
<PAGE>
sixty (60) days prior to such anniversary date, elect, at its option, and sole
discretion, to extend the Scheduled Expiration Date for one or more additional
years. Any such extension shall be subject to the mutual agreement of the
Borrowers and the Bank as to the Letter of Credit Fee to be applicable to the
period of extension.
If the principal of any Bonds shall be paid or deemed paid upon maturity,
redemption, acceleration or defeasance, then the Stated Amount shall be reduced
in accordance with the terms of the Letter of Credit by an amount equal to the
sum of (a) such principal and (b) (i) if the Bonds have not been converted to
the Fixed Rate, 124 days' interest on such principal calculated at the rate of
12% per annum based on a 365/366-day year, or (ii) if the Bonds have been
converted to the Fixed Rate, 223 days' interest on such principal calculated at
such Fixed Rate based on a 360-day year comprised of twelve (12) thirty (30) day
months. If the Bonds are converted to the Fixed Rate and the Bank has elected
to maintain the Letter of Credit as described in the preceding paragraph, the
Stated Amount shall be automatically reduced from time to time in accordance
with the terms thereof to reflect a reduction in the Premium Component payable
upon redemption of the Bonds prior to maturity.
Section 15. LIABILITY OF THE BANK. As between the Borrowers and the Bank,
the Borrowers assume all risks of the acts or omissions of the Paying Agent, the
Trustee and any transferee of the Letter of Credit with respect to its use of
the Letter of Credit. As between the Borrowers and the Bank, neither the Bank
nor any of its officers or directors shall be liable or responsible for: (a)
the use which may be made of the Letter of Credit or for any acts or omissions
of the Paying Agent and the Trustee and any transferee in connection therewith;
(b) the validity, sufficiency or genuineness of documents, or of any
endorsement(s) thereon, even if such documents should in fact prove to be in any
or all respects invalid, insufficient, fraudulent or forged; (c) payment by the
Bank against presentation of documents which do not comply with the terms of the
Letter of Credit; or (d) any other circumstance whatsoever in making or failing
to make payment under the Letter of Credit, except only that the Borrowers shall
have a claim against the Bank, and the Bank shall be liable to the Borrowers, to
the extent, but only to the extent, of any direct, as opposed to consequential,
damages suffered by the Borrowers which the Borrowers prove were caused by (i)
the Bank's willful misconduct or gross negligence in determining whether
documents presented under the Letter of Credit comply with the terms of the
Letter of Credit or (ii) the Bank's willful failure to pay under the Letter of
Credit after the presentation to it by the Paying Agent (or a successor trustee
under the Indenture to whom the Letter of Credit has been transferred in
accordance with its terms) of a draft and certificate strictly complying with
the terms and conditions of the Letter of Credit. In furtherance and not in
limitation of the foregoing, the Bank may accept documents that appear on their
face to be in order, without responsibility for further investigation,
<PAGE>
regardless of any notice or information to the contrary.
Section 16 CERTAIN DEFINED TERMS. As used in this Agreement and unless
otherwise expressly indicated, or unless the context clearly requires otherwise,
the following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
"A Drawing" means any draw in the form of Exhibit A to the Letter of Credit
made under the Letter of Credit to pay the principal amount of Bonds to be
purchased in accordance with the Indenture.
"Agreement" means this Reimbursement Agreement, as the same may be from
time to time amended or supplemented.
"Assignment and Assumption Agreement" means the Assignment and Assumption
Agreement dated as of September 30, 1991 between TJI and TJM, and any amendments
or supplements thereto, including the First Amendment to Assignment and
Assumption Agreement dated as of September 1, 1993.
"Authorized Borrower Representative" means any authorized representative of
either Borrower designated to act on behalf of such Borrower by a written
certificate furnished to the Bank, the Trustee, the Paying Agent and the Issuer.
"B Drawing" means any draw in the form of Exhibit B to the Letter of Credit
made under the Letter of Credit to pay the principal amount of the Bonds on or
prior to maturity, redemption or acceleration.
"Bank" means The Bank of Tokyo Ltd.
"Bonds" means the Parish of Natchitoches, State of Louisiana Industrial
Development Variable Rate Demand Refunding Bonds (Trus Joist Corporation
Project) Series 1988.
"Business Day" means any day other than a Saturday, a Sunday, a legal
holiday or a day on which banking institutions in the cities of New York, New
York, Seattle, Washington, San Francisco, California or Shreveport, Louisiana
are, or a day on which the New York Stock Exchange is, authorized or required by
law or executive order to close.
"C Drawing" means any draw in the form of Exhibit C to the Letter of Credit
made under the Letter of Credit to pay interest and premium, if any, due on the
Bonds on or prior to maturity, redemption or acceleration, on any interest
payment date or redemption date or on any date Bonds are to be purchased in
accordance with the Indenture.
"Code" means the Internal Revenue Code of 1986, as amended.
<PAGE>
"Collateral Pledge Agreement" means the Collateral Pledge Agreement, dated
as of September 1, 1988, and any amendments or supplements thereto, including
the First Supplemental Collateral Pledge Agreement dated as of September 1,
1993, among TJI, TJM, National Westminster Bank, PLC, the Trustee and the Bank,
pursuant to which the Note is pledged to and for the benefit of the Trustee and
the Bank as security for the Borrowers' obligations under the Refunding
Agreement and this Agreement.
"Date of Issuance" means September 1, 1993.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person as the lessee under capital leases, (iv) all debt
of others secured by a lien on any asset of such Person, whether or not such
debt is assumed by such Person, (v) all Guarantees made by such Person and (vi)
all Deferred Obligations of such Person.
"Default" means any event or condition specified in Section 7 hereof which,
with the giving of notice or the lapse of time or both would, unless cured or
waived, become an Event of Default.
"Deferred Obligations" of any Person means, at any date, all obligations of
such Person to pay the deferred purchase price of property or services, except
(i) trade accounts payable arising in the ordinary course of business and (ii)
payments withheld in good faith to assure performance by other parties or
payments withheld while being contested in good faith.
"Drawing" means an A Drawing, B Drawing or C Drawing, as the context may
require.
"Drawing Payment Date" means the date on which the Bank honors a Drawing
made by the Paying Agent pursuant to this Agreement and the Letter of Credit.
"Draw Fee" means the sum of $200 to be paid with respect to each Drawing
made under the Letter of Credit.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" has the meaning assigned to that term in Section 7 of
this Agreement.
"Expiration Date" has the meaning assigned to that term in paragraph 2 of
the Letter of Credit.
"Federal Funds Rate" means for each day a rate per annum equal to the
overnight federal funds rate quoted by the Bank at or about 11:00 A.M., New York
time on such day (or, if there is no quote on such day, on the next preceding
day on which there is such a quote)
<PAGE>
for amounts approximating the amount remaining unpaid by the Borrowers to the
Bank hereunder.
"Fixed Rate" means the interest rate in effect on the Bonds from and after
the Fixed Rate Conversion Date with respect to the Bonds, as said rate is
determined in accordance with the Indenture.
"Fixed Rate Conversion Date" means the date on which the Bonds begin
bearing interest at the Fixed Rate.
"Floating Rate" means the adjustable interest rate on the Bonds determined
in accordance with the Indenture.
"Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Debt of any other Person or
in any manner providing for the payment of any Debt of any other Person or
otherwise protecting the holder of such Debt against loss (whether by agreement
to purchase assets, goods, securities or services or otherwise), including any
obligation pursuant to a letter of credit, provided that the term Guarantee
shall not include endorsements of negotiable instruments for collection or
deposit in the ordinary course of business.
"Indenture" means the Trust Indenture dated as of September 1, 1988 between
the Issuer and the Trustee, together with any amendments or supplements thereto.
"Interest Component" means prior to the Fixed Rate Conversion Date an
amount equal to 124 days' interest at 12% on the Bonds calculated on the basis
of a 365/366-day year and after the Fixed Rate Conversion Date an amount equal
to 223 days' interest at the Fixed Rate on the Bonds calculated on the basis of
a 360-day year comprised of twelve (12) thirty (30) day months.
"Interest Payment Date" means (i) from the Date of Issuance to, but not
including the Fixed Rate Conversion Date, the first business Day of March, June,
September and December, or the next succeeding Business Day if such day is not a
Business Day and (ii) from and after the Fixed Rate Conversion Date, the first
business Day of July and January.
"Issuer" means the Parish of Natchitoches, State of Louisiana.
"Letter of Credit" means the irrevocable direct-pay Letter of Credit No.
151LCS010125 issued by the Bank on the Date of Issuance in favor of the Trustee
with a Scheduled Expiration Date of September 14, 1994.
"Mortgage" means the collateral mortgage made by TJI and assumed by TJM
pursuant to the Assignment and Assumption Agreement for the benefit of the Bank
and the Trustee in respect of the real property, and the improvements thereon,
constituting or included in the Project from time to time.
<PAGE>
"Note" has the meaning specified therefor in the Refunding Agreement.
"Paying Agent" means Premier Bank, National Association (formerly known as
The First National Bank of Shreveport), or any successor appointed pursuant to
Section 915 of the Indenture.
"Paying Agent Agreement" means the paying agent agreement between the
Paying Agent and the Issuer, dated as of September 1, 1988.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Encumbrances" means any lien that is subordinate to the security
pledged hereunder and under the Indenture; and any other lien permitted by the
Bank herein or as further defined in the Refunding Agreement.
"Person" means an individual, a corporation, a partnership, an association,
a trust or any other entity or organization, including a government or political
subdivision or agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan which is covered
by Title IV of ERISA and is either (i) maintained by the Borrowers or such
Subsidiary or (ii) maintained pursuant to a collective bargaining agreement or
similar arrangement under which more than one employer makes contributions and
to which the Borrowers or any Subsidiary is then making or accruing an
obligation to make contributions or has within the preceding five (5) plan years
made contributions.
"Pledge Agreement" means the Pledge and Security Agreement dated as of
September 1, 1993 by and between the Borrowers and the Bank.
"Pledged Bonds" means Bonds purchased pursuant to a drawing under the
Letter of Credit, which Bonds are pledged by the Borrowers to the Bank and in
which Bonds the Borrowers have granted to the Bank a security interest pursuant
to the Pledge Agreement provided for in this Reimbursement Agreement, but not
including Bonds released from such pledge and security interest under the terms
of this Reimbursement Agreement or the said Pledge Agreement.
"Prime Rate" means the rate of interest established by the Bank in New
York, New York from time to time as its prime rate, such rate of interest to
change on the effective date of each change in the prime rate.
"Project" means the project as defined in the first WHEREAS paragraph of
this Agreement.
"Refunding Agreement" means the refunding agreement between the Issuer and
TJI dated as of September 1, 1988 pursuant to which
<PAGE>
the Issuer has made the project loan to TJI, together with any amendments or
supplements thereto.
"Related Documents" means the Bonds, the Indenture, the Refunding
Agreement, the Bond Purchase Agreement dated as of September 1, 1988, between
the Issuer, TJI, and Piper, Jaffray & Hopwood Incorporated, the Pledge
Agreement, the Collateral Pledge Agreement, the Remarketing Agreement, the
Security Agreement, any amendments or supplements to the foregoing executed in
connection with the transactions contemplated by this Agreement, and any other
related agreements or documents designated by the Bank and the Borrowers as a
Related Document.
"Related Person" means the Borrowers and all corporations, general
partnerships, limited partnerships, trades and businesses (whether or not
incorporated) under common control with the Borrowers which, together with the
Borrowers, are treated as a single employer under Section 414(b) or 414(c) of
the Code.
"Remarketing Agent" means the Persons acting as such under the Remarketing
Agreement.
"Remarketing Agreement" means the Remarketing Agreement dated as of
September 1, 1988 between Piper Jaffray & Hopwood Incorporated and the Issuer
and any successor agreement.
"Scheduled Expiration Date" means September 14, 1994.
"Security Agreement" means the Security Agreement executed by the Borrowers
in favor of the Trustee and the Bank dated as of September 1, 1993.
"Special Bank Event" means the delivery by the Bank to the Borrowers and
the Trustee of an opinion of counsel having expertise in banking or securities
law matters to the effect that, on the basis of a change after the Date of
Issuance in the laws, rules or regulations applicable to the Bank or in the
interpretation of such laws, rules or regulations by a governmental authority of
the United States or Japan or of a ruling after the Date of Issuance by a court
of competent jurisdiction or other governmental authority, the maintenance of
the Letter of Credit by the Bank or the pledge to the Bank of the Pledged Bonds
(all as contemplated by this Agreement) is or will be a violation of the laws,
rules and regulations applicable to the Bank or requires or will require the
Bank to register as a securities dealer (or in any similar capacity) if not
otherwise so registered.
"Stated Amount" has the meaning assigned to that term in the Letter of
Credit.
"Subsidiary" shall mean, with respect to any Person, any other Person in
which such Person may own, directly or indirectly, more than 50% of the capital
stock entitled to vote on the election of directors, or which may effectively be
controlled by such Person.
<PAGE>
Section 17. COSTS, EXPENSES AND TAXES. Whether or not the transactions
contemplated by this Agreement are consummated or the Letter of Credit is
issued, upon execution of this Agreement by the Bank and the Borrowers, the
Borrowers agree to pay on demand all reasonable costs and expenses in connection
with the preparation, negotiation, execution, delivery and administration of
this Agreement, the Pledge Agreement, the Letter of Credit, the Related
Documents and any other documents which may be delivered in connection with this
Agreement and the Letter of Credit, any waiver or amendment or the giving of any
consent under, this Agreement, the Pledge Agreement, the Related Documents and
such other documents or any transfer of the Letter of Credit, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Bank with respect thereto and with respect to advising the Bank as to its rights
and responsibilities under this Agreement, all reasonable costs and expenses,
including the reasonable fees and out-of-pocket expenses of counsel for the
Bank, if any, in connection with the enforcement of this Agreement and such
other documents which may be delivered in connection with this Agreement. In
addition, the Borrowers shall pay any and all stamp and other taxes and fees
payable or determined to be payable in connection with the execution, delivery,
filing and recording of this Agreement, the Letter of Credit, the Pledge
Agreement, the Related Documents and such other documents and agree to save the
Bank harmless from and against any and all liabilities with respect to or
resulting from any delay by the Borrowers in paying or omission to pay such
taxes and fees. The Bank agrees promptly to notify the Borrowers of any such
taxes and fees which are incurred by the Bank.
Section 18. ATTORNEYS' FEES. In the event that any party hereto shall
incur legal fees and costs in connection with the actual or threatened breach of
any provision hereof, or to enforce any right or remedy hereunder, such party
shall be entitled to recover such fees and costs from the breaching party. In
the event that an action is brought in connection with this Agreement the
prevailing party shall be entitled to recover from the losing party in addition
to any money judgment or other relief, such attorneys' fees, disbursements and
costs as may be incurred by the prevailing party instituting or defending such
litigation and as are allowed by the court.
Section 19. SEVERABILITY. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or nonauthorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 20. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Washington, without
regard to the choice of law principles of Washington law.
<PAGE>
Section 21. HEADINGS. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
Section 22 CONSENT OF JURISDICTION AND VENUE, ETC.
(a) The Borrowers irrevocably (i) agree that any suit, action or other
legal proceeding arising out of or relating to this Agreement or such other
documents which may be delivered in connection with this Agreement may be
brought in a court of record in the State of Washington or in the Courts of the
United States of America located in such State, (ii) consent to the jurisdiction
of each such court in any such suit, action or proceeding and (iii) waive any
objection which they may have to the laying of venue of any suit, action or
proceeding in any of such courts and any claim that any such suit, action or
proceeding has been brought in an inconvenient forum. The Borrowers irrevocably
consent to the service of any and all process in any such suit, action or
proceeding by mailing of copies of such process to the Borrowers at their
respective addresses specified herein by certified mail, return receipt
requested. The Borrowers agree that a final and non-appealable judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
(b) Nothing in this Section shall affect the right of the Bank to serve
legal process in any other manner permitted by law or affect the right of the
Bank to bring any suit, action or proceeding against the Borrowers or their
property in the courts of any other jurisdictions.
Section 23. PARTICIPATION BY THE BANK. The Bank shall be entitled at any
time to grant participations in or assign, sell or otherwise transfer the whole
or any part of the Bank's rights or obligations (or both) under this Agreement,
the Related Documents or the Letter of Credit to any Person. No such
participation, assignment, sale or other transfer shall relieve the Bank from
its obligations hereunder or under the Letter of Credit and the Issuer and the
Borrowers need deal solely with the Bank with respect to waivers, modifications,
and consents to this Agreement, the Related Documents and the Letter of Credit.
Any such participant, assignee, purchaser or transferee is referred to in this
Agreement as a "Participant." The Borrowers agree that the provisions of
Section 6 and Sections 2(d) and (e) hereof shall run to the benefit of each
Participant and its participations or interests herein; provided, however, only
the Bank may enforce such provisions on behalf of any such Participant; and
provided further that no such Participant shall be entitled to receive any
greater payment pursuant to Sections 2(d) and (e) hereof than the Bank would
have been entitled to receive with respect to the rights and obligations
transferred except as a result of circumstances arising after the date of grant
of such participation; provided, however, that such increase shall be limited to
only such costs as would be incurred if participations in the Letter of Credit
had not been
<PAGE>
granted. The Bank shall use its best efforts to give the Borrowers at least
thirty (30) days prior written notice of any participation, assignment, sale or
other transfer under this Section 23. Upon a participation, assignment, sale or
transfer in accordance with the foregoing, the Borrowers shall execute such
documents and do such acts as the Bank may reasonably request to effect the
same.
Section 24. SATISFACTION REQUIREMENT. If any agreement, certificate or
other writing, or any action taken or to be taken, is by the terms of this
Agreement required to be satisfactory to the Bank, the determination of such
satisfaction shall be made by the Bank in its sole and exclusive judgment
exercised in good faith. Any time the Bank's consent is required hereunder,
such consent shall not be unreasonably withheld.
Section 25. ACCOUNTING TERMS AND DEFINITIONS. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted and construed, all
accounting determinations and procedures hereunder shall be made and performed,
and all financial statements required to be delivered hereunder shall be
prepared in accordance with generally accepted United States accounting
principles applicable as of the date of the Agreement, consistently applied.
Section 26. COUNTERPARTS. 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.
Section 27. REFERENCES TO DRAFTS. If any substitute Letter of Credit does
not require the presentation of drafts then any reference herein to drafts or
documents drawn or presented under the Letter of Credit shall be deemed
references to documents required to be presented for payment under such
substitute Letter of Credit.
[Remainder of page intentionally left blank]
<PAGE>
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LEND MONEY, EXTEND CREDIT OR TO
FORBEAR FROM ENFORCING PAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON
LAW.
IN WITNESS WHEREOF, each Borrower and the Bank have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
THE BANK OF TOKYO LTD.
By:/s/ M. Tomi
-----------------------------
General Manager
ADDRESS FOR NOTICES:
1201 Third Avenue, Suite 1100
Seattle, WA 98101
Attention: Manager, Letter of
Credit Department
Telex No. 328754 TOHBANK SEA
TJ INTERNATIONAL, INC.
a Delaware corporation
By:/s/ Thomas H. Denig
--------------------------------
Title: Senior Vice President,
---------------------------
Structural Operations
---------------------------
<PAGE>
TRUS JOIST MacMILLAN A LIMITED
PARTNERSHIP, a Delaware
Limited Partnership
By: TJ International, Inc., as
General Partner
By: /s/ Thomas H. Denig
--------------------------------
Title: Senior Vice President,
---------------------------
Structural Operations
---------------------------
Address for Notices:
-------------------
for TJ International and Trus Joist
MacMillan A Limited Partnership
9777 W. Chinden Blvd.
Boise, ID 83714
<PAGE>
EXHIBIT X
IRREVOCABLE DIRECT-PAY LETTER OF CREDIT
Date: September 1, 1993
CREDIT NO: 151LCS010125
EXPIRATION DATE: September 14, 1994
except as hereinafter provided.
Premier Bank, National Association
The Premier Bank Tower
400 Texas Street, 7th Floor
Shreveport, LA 71101
Dear Sirs:
1. At the request and for the account of our customers Trus Joist
MacMillan a Limited Partnership and TJ International, Inc., formerly known as
Trus Joist Corporation (collectively the "Borrower"), on whose behalf the Parish
of Natchitoches, State of Louisiana (the "Issuer") has issued its Variable Rate
Demand Refunding Bonds (Trus Joist Corporation Project) Series 1988 (the
"Bonds") pursuant to a trust indenture dated as of September 1, 1988 (including
all amendments and supplements thereto, the "Indenture") by and between the
Issuer and Premier Bank, National Association, formerly known as The First
National Bank of Shreveport, as trustee and paying agent (the "Trustee" and
"Paying Agent"), The Bank of Tokyo Ltd. (the "Bank"), does hereby establish in
your favor, as Paying Agent under the Indenture, this Irrevocable Direct-Pay
Letter of Credit in the aggregate amount of TEN MILLION FOUR HUNDRED SEVEN
THOUSAND SIX HUNDRED SEVENTY-ONE DOLLARS ($10,407,671) (hereinafter, as
increased, reduced or reinstated from time to time in accordance with the
provisions hereof, the "Stated Amount") of which an amount not exceeding TEN
MILLION DOLLARS ($10,000,000) (as reduced from time to time in accordance with
the terms hereof, the "Principal Component") may be drawn upon with respect to
payment of the unpaid principal amount or the portion of the Purchase Price, as
hereinafter defined, corresponding to the unpaid principal amount of the Bonds
and an initial amount not exceeding FOUR HUNDRED SEVEN THOUSAND SIX HUNDRED
SEVENTY-ONE DOLLARS ($407,671) (as increased, reduced or reinstated from time to
time in accordance with the terms hereof, the "Interest Component") may be drawn
upon with respect to payment of interest accrued and unpaid or the portion of
the Purchase Price
<PAGE>
corresponding to interest accrued and unpaid on the Bonds on or prior to their
stated maturity date, but in no event more than the actual interest accrued and
unpaid, at an interest rate on the Bonds of 12% per annum (calculated on the
basis of a 365/366-day year) for the 124 days' immediately preceding any Drawing
made with respect to the Bonds bearing interest at the floating rate (the
"Floating Rate") to and including the Fixed Rate Conversion Date (as defined in
the Indenture) with respect to such Bonds and for all Bonds on which the
interest rate has been converted from the Floating Rate to a fixed rate (the
"Fixed Rate") as provided in the Indenture a period of 223 days' immediately
preceding any Drawing, as defined in Paragraph 3 hereof, made with respect to
such Bonds calculated on the basis of a 360-day year consisting of twelve (12)
thirty (30) day months; provided, however, that the amount of the Principal
Component or Interest Component which may be drawn with respect to the Bonds
shall not exceed the initial aggregate principal amount of the Bonds or the
maximum amount available for an interest drawing with respect to the Bonds.
2. This Letter of Credit shall expire at 4:00 p.m. local time in Seattle,
Washington, on the date (the "Expiration Date") which is the earliest of:
(i) September 14, 1994, unless extended by us in our sole discretion (the
"Scheduled Expiration Date"), (ii) the date of payment of a Principal Component
Drawing which when added to all other Principal Component Drawings honored
hereunder and not subject to reinstatement in the aggregate equals the initial
amount of the Principal Component of the Stated Amount (a "Final Payment
Drawing"), (iii) the first Business Day which is fifteen (15) calendar days
after the date of receipt of our notice in the form of Exhibit J (a "Default
Notice") hereto by the Trustee that an Event of Default (as defined in the
Reimbursement Agreement) or a Special Bank Event (as defined in the
Reimbursement Agreement) has occurred under the Reimbursement Agreement and
declaring the unpaid outstanding principal amounts of Bonds to be due and
payable in accordance with Sections 803(b) and 803(d) of the Indenture unless
such notice is rescinded, revoked or annulled by us in writing prior to the
redemption date, (iv) the first Business Day that is fifteen (15) calendar days
after our receipt of a certificate signed by one purporting to be your duly
authorized officer in the form of Exhibits F or G ("Termination Certificates")
attached hereto, appropriately completed stating that this Letter of Credit
shall terminate with respect to the Bonds on the first Business Day which is
fifteen (15) calendar days after the date of receipt of said notice, or (v) the
date when you surrender this Letter of Credit to the Bank for cancellation. You
agree to surrender this Letter of Credit to the Bank, and not to make any
Drawing, after (a) the Expiration Date, or (b) the date on which there are no
Bonds outstanding under the Indenture.
3. Funds under this Letter of Credit will be made available to you
against receipt by us of a sight draft in the form
<PAGE>
attached hereto as Exhibit L, together with the following items, at the time
required below: (A) if the Drawing is being made with respect to payment of the
principal portion of the Purchase Price of the Bonds pursuant to Sections 210,
211, 214 and 215 of the Indenture (an "A Drawing"), receipt by us of your
written certificates in the form of Exhibit A and Exhibit D attached hereto
appropriately completed and signed by one purporting to be your duly authorized
officer; (B) if the Drawing is being made with respect to the principal of the
Bonds due on a principal payment date or upon maturity, acceleration or
redemption (a "B Drawing"), receipt by us of your written certificate in the
form of Exhibit B attached hereto appropriately completed and signed by one
purporting to be your duly authorized officer; (C) if the Drawing is being made
with respect to the payment of the interest portion of the Purchase Price of the
Bonds, if any, or to pay interest due on an interest payment date or upon
maturity, acceleration or redemption, or if Bonds have been converted to the
Fixed Rate and this Letter of Credit has been amended by delivery of a new
letter of credit to provide therefor then to pay the premiums, if any (the
"Premium Component"), on the Bonds upon redemption (a "C Drawing"), receipt by
us of your written certificate in the form of Exhibit C attached hereto
appropriately completed and signed by one purporting to be your duly authorized
officer. "Drawing" as used herein shall mean an "A Drawing," "B Drawing" or "C
Drawing" as the context may require.
4. If a Drawing is made by you hereunder at or prior to 8:00 A.M.,
Seattle time, on a Business Day (as defined herein), and provided that such
Drawing and the documents and other items presented in connection therewith are
in strict conformance with the terms and conditions hereof, payment shall be
made to you or your designee, of the amount specified, in immediately available
funds, not later than 12:00 Noon, Seattle time, on the same Business Day or not
later than 10:00 A.M., Seattle time, on such later Business Day, as you may
specify. If a Drawing is made by you hereunder after 8:00 A.M., Seattle time,
on a Business Day and provided that such Drawing and the documents and other
items presented in connection therewith are in strict conformance with the terms
and conditions hereof, payment shall be made to you or your designee, of the
amount specified, in immediately available funds, not later than 10:00 A.M.,
Seattle time, on the next succeeding Business Day or not later than 10:00 A.M.,
Seattle time, on such later Business Day as you may specify.
Payment under this Letter of Credit will be made by wire transfer of
Federal Funds into any account at the Paying Agent. The Bank agrees to honor
all Drawings under this Letter of Credit with its own funds and not with any
funds of the Borrower.
5. Demands for payment hereunder honored by us shall not, in the
aggregate, exceed the Stated Amount, as the Stated
<PAGE>
Amount may have been increased, reduced or reinstated by us as herein provided.
Subject to the preceding sentence, each "A Drawing" or "B Drawing" honored by
the Bank hereunder shall PRO TANTO reduce the Principal Component and each "C
Drawing" honored by the Bank hereunder shall PRO TANTO reduce the Interest
Component or if this Letter of Credit shall have been amended by delivery of a
new letter of credit due to conversion of any of the Bonds to the Fixed Rate,
the Premium Component, as applicable, and any such reduction shall result in a
corresponding reduction in the Stated Amount, it being understood that after the
effectiveness of any such reduction you shall no longer have any right to make a
Drawing hereunder in respect of the amount of such principal and/or interest on
the Bonds or the payment of the Purchase Price corresponding thereto causing or
corresponding to such reduction unless the amount of such Drawing is subject to
reinstatement and has been reinstated as provided in Paragraph 7 of this Letter
of Credit.
6. Upon receipt by us of a certificate in the form of Exhibit E (a
"Reduction Certificate") attached hereto appropriately completed and signed by
one purporting to be your duly authorized officer the Stated Amount, the
Principal Component, the Interest Component and if this Letter of Credit shall
have been amended by delivery of a new letter of credit due to conversion of any
of the Bonds to the Fixed Rate, the Premium Component will be reduced to the
amounts set forth therein. If the amount available hereunder shall be so
reduced or, if the amount available hereunder shall be reduced pursuant to
Paragraph 5 of this Letter of Credit, we may require you to surrender this
Letter of Credit to us on the tenth Business Day after prior written notice by
us to you and to accept on such date, in substitution for this Letter of Credit,
an irrevocable direct-pay letter of credit, dated such date, for an amount equal
to the amount to which the amount available to be drawn hereunder shall have
been so reduced, but otherwise in a form and having terms identical to this
Letter of Credit.
Upon notice by us to you in the form of Exhibit I (a "Notice of Increase")
attached hereto, we may require you to surrender this Letter of Credit to us on
the tenth Business Day after receipt by you of our notice and to accept on such
date, in substitution for this Letter of Credit, an irrevocable direct-pay
letter of credit, dated such date, for an amount equal to the increased Stated
Amount as set forth in such Notice of Increase and for a term of not less than
one (1) year, but otherwise in a form and having identical terms to this Letter
of Credit.
7. The amount of Drawings made hereunder with respect to the Borrower for
which such Drawings have been made will be reinstated by us under this Letter of
Credit to the amount of such Drawings under the following conditions:
<PAGE>
(1) With respect to our honoring an "A Drawing," the Stated Amount
shall be automatically reinstated in the amount of said Drawing as to the
Principal Component and, if applicable, the Interest Component (subject to
any reduction in said amounts as provided in the first paragraph of
Paragraph 6) unless you shall have received, on or prior to the close of
business on the tenth Business Day after any payment in respect of an "A
Drawing," a Default Notice from us.
(2) With respect to our honoring a "C Drawing," the amount of said
Drawing will automatically be reinstated in the amount of such Drawing
(subject to any reduction in said Interest Component as above provided in
the first paragraph of Paragraph 6) unless you shall have received, on or
prior to the close of business on the tenth Business Day after any payment
in respect of a "C Drawing," a Default Notice from us.
8. Only the Paying Agent may make a Drawing under this Letter of Credit.
Upon the payment to you, your account, your designee or the account of your
designee of the amount demanded pursuant to presentation of a sight draft and
accompanying certifications, we shall be fully discharged of our obligation
under this Letter of Credit with respect to payment of the amount demanded and
we shall not thereafter be obligated to make any further payments under this
Letter of Credit in respect of such demand for payment to you or any other
person who may have made to you or makes to you a demand for payment of
principal of, premium, if any, Purchase Price of, or interest on, any Bond. By
paying to you an amount demanded in accordance herewith, we make no
representation as to the correctness of the amount demanded or your calculations
and representations on the certificates required of you by this Letter of
Credit.
If your sight draft and accompanying Exhibits are not, in any instance, in
strict conformance with the terms and conditions of this Letter of Credit, we
shall give you prompt notice that the purported negotiation was not effected in
accordance with this Letter of Credit, stating the reasons therefor and that we
are holding any documents at your disposal or are returning them to you, as we
may elect. Upon being notified that the purported negotiation was not effected
in conformity with this Letter of Credit, you may attempt to correct any such
nonconforming sight draft and accompanying Exhibits if, and to the extent that,
you are entitled (without regard to the provisions of this sentence) and able to
do so.
9. Upon receipt of your Reduction Certificate by the Bank, the Stated
Amount of this Letter of Credit shall be permanently reduced as provided in such
Reduction Certificate.
<PAGE>
Upon receipt of your Termination Certificate in the form of Exhibit F by the
Bank this Letter of Credit shall be surrendered for cancellation in accordance
with its terms.
10. All demands for payment, Bonds and certificates to be presented to the
Bank hereunder, as well as all communications to the Bank in respect of this
Letter of Credit, shall be in writing and shall be timely delivered in writing
or by tested telex or identifiable telecopy confirmed in writing to the address
shown at the foot hereof or at such other address in the State as may be
designated by us in a written notice delivered to you and shall make specific
reference to The Bank of Tokyo Ltd. Irrevocable Direct-Pay Letter of Credit No.
151LCS010125, Attention: Manager, Letter of Credit Department re: TJ
International, Inc.
11. As used herein (a) "Purchase Price" shall mean the principal amount
of, together with accrued interest, if any, on, any Bonds to be purchased with
proceeds of an "A Drawing" and, if applicable, a "C Drawing;" (b) "Business Day"
shall mean any day other than a Saturday, a Sunday, a legal holiday or a day on
which banking institutions in Washington, California, New York and Louisiana
are, or on which the New York Stock Exchange is, authorized or obligated by law
or executive order to close; (c) "Payment Date" shall mean any day on which the
principal of premium, if any, and interest on the Bonds shall be due on or prior
to their stated maturity or as a result of acceleration or redemption; (d)
"Purchase Payment Date" shall mean any day on which the Purchase Price of the
Bonds shall be due and payable.
12. This Letter of Credit is subject to the Uniform Customs and Practices
for Documentary Credits (1983 Revision), International Chamber of Commerce,
Publication No. 400 or any successor publication which may be in effect from
time to time (the "UCP"), except that Article 45 of the UCP or any successor
Article which is substantially similar shall not be included in the reference to
the UCP. This Letter of Credit shall be deemed to be a contract made under the
laws of the State of Washington and shall, as to matters not governed by the
UCP, be governed by and construed in accordance with the laws of Washington.
13. Notwithstanding anything in the UCP to the contrary, and particularly
Article 54 thereof or any successor Article which is substantially similar, this
Letter of Credit may be successively transferred in its entirety (but not in
part). Transfer of the available Drawing(s) under this Letter of Credit to such
transferee shall be effected by the presentation to us at our address set forth
at the foot of this Letter of Credit accompanied by the transfer form attached
hereto as Exhibit H (a "Transfer Demand") appropriately completed and the
payment to the Bank of $1,000 as a transfer fee.
<PAGE>
14. This Letter of Credit is intended to remain in full force and effect
until it expires in accordance with its terms. Any failure by you or any
successor paying agent to draw upon this Letter of Credit with respect to any
payment of principal of or interest with respect to the Bonds in accordance with
the terms and conditions of the Indenture shall not cause this Letter of Credit
to be unavailable for any future drawing in accordance with the terms and
conditions of the Indenture.
15. This Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited by
reference to any document, instrument or agreement referred to herein
(including, without limitation, the Bonds), except only the sight draft and
Exhibits referred to herein; and any such reference shall not be deemed to
incorporate herein by reference any document, instrument or agreement except for
such sight draft and Exhibits.
Very truly yours,
THE BANK OF TOKYO LTD.
By:______________________________
Title: Vice President
Delivery Address:
The Bank of Tokyo Ltd.
1201 Third Avenue, Suite 1100
Seattle, WA 98101
Attention: Manager, Letter of
Credit Department
<PAGE>
EXHIBIT A
to Exhibit X
PAYING AGENT'S CERTIFICATE FOR "A DRAWING"
The undersigned, a duly authorized officer of _________, as Paying Agent
(the "Paying Agent"), hereby certifies to The Bank of Tokyo Ltd. (the "Bank"),
with reference to Irrevocable Direct-Pay Letter of Credit No. 151LCS010125 (the
"Letter of Credit") issued by the Bank in favor of the Paying Agent under the
Indenture, that:
1. The Paying Agent is the Paying Agent under the Indenture for the
owners of the Bonds.
2. Pursuant to Section _______ of the Indenture, the Paying Agent has
concurrently herewith presented its sight draft drawn on you in the amount of
$_________. The Paying Agent is making a Drawing under the Letter of Credit
with respect to paying of the Purchase Price on the Bonds to be purchased
pursuant to Section ______ of the Indenture.
3. The amount demanded hereby is $_________. Such amount represents the
principal portion in the amount of $______________ of the Purchase Price of the
Bonds tendered or deemed tendered to the Paying Agent pursuant to Section
________ of the Indenture, less the proceeds of the remarketing of such Bonds.
Said amount does not exceed the amount permitted to be drawn under the Letter of
Credit in accordance with the Letter of Credit and the Indenture.
4. The amount demanded hereby does not include any amount in respect of
the purchase of any Pledged Bonds (as defined in the Reimbursement Agreement) or
any Bonds registered in the name of the Borrower.
Any capitalized term used herein and not defined shall have its respective
meaning as set forth in the Letter of Credit.
IN WITNESS WHEREOF, the Paying Agent has executed and delivered this
Certificate as of the ____ day of ________, 19___.
___________________________________
as Paying Agent
By: _______________________________
Title: ____________________________
<PAGE>
EXHIBIT B
to Exhibit X
PAYING AGENT'S CERTIFICATE FOR "B DRAWING"
The undersigned, _____________________________, as Paying Agent (the
"Paying Agent"), hereby certifies to The Bank of Tokyo Ltd. (the "Bank"), with
reference to Irrevocable Direct-Pay Letter of Credit No. 151LCS010125 (the
"Letter of Credit") issued by the Bank in favor of the Paying Agent under the
Indenture, that:
1. The Paying Agent is the Paying Agent under the Indenture for the
owners of the Bonds, and the person executing this Certificate on behalf of the
Paying Agent is a duly authorized officer of the Paying Agent.
2. Pursuant to Section ____ of the Indenture, the Paying Agent has
concurrently presented its sight draft drawn on you in the amount of
$_____________. The Paying Agent is making a Drawing under the Principal
Component of the Letter of Credit with respect to paying of principal on the
Bonds which amount has, or will within two (2) Business Days, become due and
payable pursuant to the applicable Indenture, on or prior to their stated
maturity or as a result of acceleration or redemption of the Bonds.
3. The amount demanded hereby is $________________. Said amount does not
exceed the amount permitted to be drawn under the Letter of Credit in accordance
with the Letter of Credit and the Indenture.
4. The amount demanded hereby does not include any amount in respect of
the payment of principal on any Pledged Bonds (as defined in the Reimbursement
Agreement) or Bonds registered in the name of the Borrower.
5. Upon receipt by the undersigned of the amount demanded hereby, (a) the
undersigned will apply the same directly to the payment when due of the
principal amount owing on the Bonds pursuant to the Indenture, (b) no portion of
said amount shall be applied by the undersigned for any other purpose and (c) no
portion of said amount shall be commingled with other funds held by the
undersigned.
6. The Principal Component available under the Letter of Credit
(immediately prior to the Drawing requested hereby and taking into account any
other Drawing previously or concurrently requested by the Paying Agent which has
not been paid or rejected by the Bank prior to the time of presentation of this
Certificate and assuming no subsequently presented Drawing is honored prior to
the time of payment of this Drawing) is $____________. After payment of the
Drawing requested hereby (and any other Drawing previously or concurrently
requested by the Paying Agent which has
<PAGE>
not been paid or rejected by the Bank prior to the time of presentation of this
Certificate and assuming no subsequently presented Drawing is honored prior to
the time of payment of this Drawing), the Principal Component will be
$____________.
[7. The amount of the Drawing requested to pay the Principal Component of
the Bonds for an optional redemption pursuant to Section [____________]* of the
Indenture does not exceed the amount deposited with the Paying Agent for
reimbursement to the Bank for the Drawing to pay such optional redemption.]* OR
[The amount of the Drawing requested to pay the Principal Component of the Bonds
for mandatory redemption is being made pursuant to Section [_________]* of the
Indenture.]
Any capitalized term used herein and not defined shall have its respective
meaning as set forth in the Letter of Credit.
IN WITNESS WHEREOF, the Paying Agent has executed and delivered this
Certificate as of the ______ day of __________, 19___.
___________________________________
as Paying Agent
By:________________________________
Title: ____________________________
*Strike inapplicable language.
<PAGE>
EXHIBIT C
to Exhibit X
PAYING AGENT'S CERTIFICATE FOR "C DRAWING"
The undersigned, ______________________, as Paying Agent (the "Paying
Agent"), hereby certifies to The Bank of Tokyo Ltd. (the "Bank"), with reference
to Irrevocable Direct-Pay Letter of Credit No. 151LCS010125 (the "Letter of
Credit") issued by the Bank in favor of the Paying Agent under the Indenture,
that:
1. The Paying Agent is the Paying Agent under the Indenture for the
owners of the Bonds and the person executing this Certificate on behalf of the
Paying Agent is a duly authorized officer of the Paying Agent.
2. Pursuant to Section [___________]* of the Indenture, the Paying Agent
has concurrently presented its sight draft drawn on you in the amount of
$__________. The Paying Agent is making a Drawing under the Interest Component
[and/or Premium Component]* of the Letter of Credit with respect to payment of
interest [and/or premium]* due on the Bonds identified below on a [Payment Date
or a Purchase Payment Date]* [for payment of the accrued interest portion of the
Purchase Price of the Bonds identified below or the accrued interest to be paid
on the Bonds on or prior to their stated maturity or as a result of the
acceleration or redemption of the Bonds]* [and payment of the premium due on the
Bonds as a result of redemption]*, which amount has, or will within two (2)
Business Days, become due and payable pursuant to the Indenture.
3. The amount demanded hereby is $__________. Said amount does not
exceed the amount permitted to be drawn under the Letter of Credit in accordance
with the Letter of Credit and the Indenture.
4. The amount demanded hereby does not include any amount in respect of
the payment of interest or in respect of the payment of the accrued interest
portion of the purchase price of Pledged Bonds (as defined in the Reimbursement
Agreement) or Bonds registered in the name of the Borrower.
5. Upon receipt by the undersigned of the amount demanded hereby, (a) the
undersigned will either (i) apply the same directly to [the payment when due of
the accrued interest portion of the Purchase Price of the Bonds or to the
payment when due of the interest accrued and owing [and/or to the premium due]*
on the Bonds pursuant to the Indenture, (ii) pay such amounts directly to the
Paying Agent, (b) no portion of said amount shall be applied by the undersigned
for any other purpose and (c) no portion of said amount shall be commingled with
other funds held by the undersigned.
<PAGE>
6. The Interest Component [and/or Premium Component]* available under the
Letter of Credit (immediately prior to the Drawing requested hereby and taking
into account any other Drawing previously or concurrently requested by the
Paying Agent which has not been paid or rejected by the Bank prior to the time
of presentation of this Certificate and assuming no subsequently presented
Drawing is honored prior to the time of payment of this Certificate) is
$__________ [and/or $__________].*
7. After payment of the Drawing requested hereby (and any other Drawing
previously or concurrently requested by the Paying Agent which has not been paid
or rejected by the Bank prior to the time of presentation of this Certificate
and assuming (a) no subsequently presented Drawing is honored prior to the time
of payment of this Drawing, and (b) reinstatement of the Interest Component in
accordance with the terms of the Letter of Credit) the Interest Component will
be $__________ [and/or the Premium Component will be $____________].*
8. [The amount of the Drawing requested to pay the Interest Component
[and/or Premium Component]* of the Bonds for an optional redemption pursuant to
Section _____________ of the Indenture does not exceed the amount deposited with
the Paying Agent for reimbursement to the Bank for the Drawing to pay such
optional redemption.]*
Any capitalized term used herein and not defined shall have its respective
meaning as set forth in the Letter of Credit.
IN WITNESS WHEREOF, the Paying Agent has executed and delivered this
certificate as of the _____ day of_________, 19___.
___________________________________
as Paying Agent
By:________________________________
Title: ____________________________
* Strike inapplicable language
<PAGE>
EXHIBIT D
to Exhibit X
PAYING AGENT'S CERTIFICATE FOR RECEIPT OF PLEDGED BONDS
The undersigned, a duly authorized officer of _________________________
(the "Paying Agent"), hereby certifies to The Bank of Tokyo Ltd. (the "Bank"),
with reference to the Irrevocable Direct-Pay Letter of Credit No. 151LCS010125
(the "Letter of Credit") issued by the Bank in favor of ______________, as
Paying Agent, that the Paying Agent has received and is holding as agent for the
Bank under the terms of the Pledge and Security Agreement, dated as of September
1, 1993 between TJ International, Inc., Trus Joist MacMillan a Limited
Partnership, and the Bank, Bonds in the principal amount of $_________, which
amount represents the amount of the principal portion of the Bonds drawn upon
the Letter of Credit pursuant to the "A Drawing" presented to you concurrently
herewith.
Any capitalized term used herein and not defined shall have the respective
meaning as set forth in the Letter of Credit.
IN WITNESS WHEREOF, the Paying Agent has executed and delivered this
certificate as of the ____ day of_____________, 19___.
___________________________________
as Paying Agent
By:________________________________
Title:_____________________________
<PAGE>
EXHIBIT E
to Exhibit X
PAYING AGENT'S CERTIFICATE OF REDUCTION
OF AMOUNT OF LETTER OF CREDIT
The undersigned, _______________________, as Paying Agent (the "Paying
Agent"), hereby certifies to The Bank of Tokyo Ltd. (the "Bank"), with reference
to Irrevocable Direct-Pay Letter of Credit No. 151LCS010125 (the "Letter of
Credit") issued by the Bank in favor of the Paying Agent under the Indenture,
that:
1. The Paying Agent is the Paying Agent under the Indenture for the
owners of the Bonds and the person executing this Certificate on behalf of the
Paying Agent is a duly authorized officer of the Paying Agent.
2. The Paying Agent hereby notifies you that on or prior to the date
hereof $__________ principal amount of the Bonds have been [redeemed, defeased
or converted to the Fixed Rate (and in the case of conversion the Letter of
Credit shall not have been amended)]* pursuant to the Indenture.
3. Following the [redemption, the defeasance or the conversion to the
Fixed Rate (and in the case of conversion the Letter of Credit shall not have
been amended)]* of the Bonds, the aggregate principal amount of Bonds
outstanding is $_____________.
4. The maximum amount required for an interest Drawing on the Bonds
bearing interest at the Floating Rate [and Bonds bearing interest at the Fixed
Rate]* referred to in paragraph 3 above during the Interest Coverage Period, as
defined below, is $__________ [and $____________, respectively]*.
[5. The maximum amount required for payment of premium for Bonds bearing
interest at the Fixed Rate is $__________.]*
6. The amount available to be drawn by the Paying Agent under the Letter
of Credit in respect of accrued and unpaid interest on the Bonds or the portion
of the Purchase Price of the Bonds equal to accrued and unpaid interest is
reduced to $_________ (such amount being equal to the amount specified in
paragraph 4 above) upon receipt by the Bank of this Certificate.
7. The Stated Amount of the Letter of Credit is reduced to $_________
(such amount being equal to the sum of the amounts specified in paragraphs 3, 4
and [5]* above) upon receipt by the Bank of this Certificate, of which amount
$__________ (the amount specified in paragraph 3 above) constitutes the revised
Principal Component, $_________ (the amount specified in paragraph 4 above)
constitutes the revised Interest Component [and $__________ (the
<PAGE>
amount specified in paragraph 5 above) constitutes the revised Premium
Component.]*
8. For the purposes hereof, the term "Interest Coverage Period" means 124
days with respect to Bonds bearing interest at the Floating Rate [and 223 days
with respect to Bonds bearing interest at the Fixed Rate]*.
Any capitalized term used herein and not defined shall have its respective
meaning as set forth in the Letter of Credit.
IN WITNESS WHEREOF, the Paying Agent has executed and delivered this
Certificate as of the ____ day of __________, 19___.
___________________________________
as Paying Agent
By:________________________________
Title: ____________________________
* The amount of the Fixed Rate Bonds and the related Premium Coverage thereon
shall only be included for purposes of this Certificate if the Letter of Credit
has been amended to provide coverage of such Bonds, otherwise strike references
to Fixed Rate Bonds in paragraphs 3, 4 and 7 of this Certificate and to the
Premium Component in paragraphs 5 and 7 of this Certificate.
<PAGE>
EXHIBIT F
to Exhibit X
PAYING AGENT'S CERTIFICATE FOR TERMINATION OF
LETTER OF CREDIT (ACCEPTANCE OF
SUBSTITUTE LETTER OF CREDIT)
The undersigned, ___________________________, as Paying Agent (the "Paying
Agent"), hereby certifies to The Bank of Tokyo Ltd. (the "Bank"), with reference
to Irrevocable Direct-Pay Letter of Credit No. 151LCS010125 (the "Letter of
Credit") issued by the Bank in favor of the Paying Agent, that:
1. The Paying Agent is the Paying Agent under the Indenture for the
owners of the Bonds and the person executing this Certificate on behalf of the
Paying Agent is a duly authorized officer of the Paying Agent.
2. The conditions precedent to the acceptance of an "Alternate Credit
Facility" set forth in the Indenture have been satisfied.
3. As Paying Agent under the Indenture, the Paying Agent has received an
"Alternate Credit Facility."
4. Upon receipt by the Bank of this Certificate the Letter of Credit
shall terminate with respect to the Bonds on the first Business Day which is
fifteen (15) calendar days after the date of receipt of this notice, all as
provided in clause (iv) of paragraph 2 of the Letter of Credit.
Any capitalized term used herein and not defined shall have its respective
meaning as set forth in the Letter of Credit.
IN WITNESS WHEREOF, the Paying Agent has executed and delivered this
Certificate as of the ____ day of ____________, 19___.
___________________________________
as Paying Agent
By:________________________________
Title:_____________________________
<PAGE>
EXHIBIT G
to Exhibit X
PAYING AGENT'S CERTIFICATE FOR TERMINATION OF
LETTER OF CREDIT (NO BONDS OUTSTANDING OR
CONVERSION OF ALL BONDS TO FIXED RATE WITHOUT
AMENDMENT OF THE LETTER OF CREDIT OR
EXPIRATION OF THE LETTER OF CREDIT)
The undersigned, ___________________________, as Paying Agent (the "Paying
Agent"), hereby certifies to The Bank of Tokyo Ltd. (the "Bank"), with reference
to Irrevocable Direct-Pay Letter of Credit No. 151LCS010125 (the "Letter of
Credit") issued by the Bank in favor of the Paying Agent, that:
1. The Paying Agent is the Paying Agent under the Indenture for the
owners of the Bonds and the person executing this Certificate on behalf of the
Paying Agent is a duly authorized officer of the Paying Agent.
2. [No Bonds remain outstanding under the Indenture]* OR [All Bonds
remaining outstanding under the Indenture have been converted to the Fixed Rate
as of ______________, _____________ (the "Final Fixed Rate Date") and the Letter
of Credit has not been amended to cover such converted Bonds]* OR [The
Expiration Date of the Letter of Credit will occur on _______________, _____]
the date which is 123 days after the Final Fixed Rate Date or Expiration Date]*.
3. Upon receipt by the Bank of this Certificate the Letter of Credit
shall terminate as provided in the Letter of Credit.
Any capitalized term used herein and not defined shall have its
respective meaning as set forth in the Letter of Credit.
IN WITNESS WHEREOF, the Paying Agent has executed and delivered this
Certificate as of the _____ day of ___________, 19___.
___________________________________
as Paying Agent
By:________________________________
Title:_____________________________
* Strike inapplicable language.
<PAGE>
EXHIBIT H
to Exhibit X
TRANSFER DEMAND
The Bank of Tokyo Ltd.
1201 Third Avenue, Suite 1100
Seattle, WA 98101
Attn: Stanley A. Lance, Vice President
Re: The Bank of Tokyo Ltd. Irrevocable Direct-Pay Letter of Credit No.
151LCS010125
Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
(Name of Transferee)
(Address)
all rights of the undersigned beneficiary to draw under the above Letter of
Credit in its entirety. The transferee has succeeded the undersigned as Paying
Agent under the Indenture (as defined in the Letter of Credit).
By this transfer, all rights of the undersigned beneficiary in such Letter
of Credit are transferred to the transferee and the transferee shall have the
sole rights as beneficiary thereof, including sole rights relating to any
amendments, whether increases or extensions or other amendments and whether now
existing or hereafter made. All amendments are to be advised direct to the
transferee without necessity of any consent of or notice to the undersigned
beneficiary.
The Letter of Credit is returned herewith, and we ask you to endorse the
transfer on the reverse thereof and forward it directly to the transferee with
your customary notice of transfer.
Very truly yours,
Signature Authenticated
___________________________________
____________________________ Signature of Beneficiary
(Authorized Signature)
<PAGE>
We certify that we have succeeded (name of beneficiary) as Paying Agent
under the Indenture (as defined in the Letter of Credit).
Signature Authenticated
_______________________________ ______________________________
(Authorized Signature) Signature of Transferee
<PAGE>
EXHIBIT I
to Exhibit X
PAYING AGENT'S REQUEST FOR INCREASE OF
INTEREST COMPONENT OF LETTER OF CREDIT
[AND INCREASE OF STATED AMOUNT OF LETTER OF CREDIT]*
AND ADDITION OF PREMIUM COMPONENT
The undersigned, _________________________, as Paying Agent (the "Paying
Agent"), hereby certifies to The Bank of Tokyo Ltd. (the "Bank"), with reference
to Irrevocable Direct-Pay Letter of Credit No. 151LCS010125 (the "Letter of
Credit") issued by the Bank in favor of the Paying Agent, that:
1. The Paying Agent is the Paying Agent under the Indenture for the
owners of the Bonds and the person executing this Certificate on behalf of the
Paying Agent is a duly authorized officer of the Paying Agent.
2. The Paying Agent hereby notifies you that twenty-nine (29) days from
the date hereof $____________ principal amount of the Bonds will be converted to
the Fixed Rate pursuant to the Indenture.
3. Following the conversion of such Bonds the number of days' interest
available under the Letter of Credit to pay interest on such Fixed Rate Bonds
will increase from 124 days to 223 days and the aggregate principal amount of
all of the Fixed Rate Bonds Outstanding will be $______________ and the
aggregate principal amount of all Floating Rate Bonds Outstanding will be
$______________.
4. The maximum amount required for an interest Drawing on Bonds bearing
interest at the Fixed Rate is $_____________ (computed at the rate of interest
per annum of the Fixed Rate Bonds on the basis of a 360-day year consisting of
twelve 30-day months), and the maximum amount required for an interest Drawing
on Bonds bearing interest at the Floating Rate is $______________ (computed at
the rate of 12% per annum on the basis of a 365/366-day year), accruing on the
Fixed Rate Bonds and Floating Rate Bonds referred to in paragraph 3 above during
the Interest Coverage Period, as defined below.
5. The amount available to be drawn by the Trustee under the Letter of
Credit in respect of accrued and unpaid interest on the Bonds is increased to
$_________ (such amount being equal to the sum of the amounts specified in
paragraph 4 above) upon receipt by the Bank of this Certificate in accordance
with paragraph 7 hereof.
6. The maximum amount required for payment of premium for Bonds bearing
interest at the Fixed Rate is $_____________ (the
<PAGE>
"Premium Component"). Such amount of Premium Component shall be added to the
stated amount of the Letter of Credit as provided in paragraph 7 below, and such
amount shall be available to be drawn by the Trustee in respect of the Premium
Component on the Bonds.
[7. The Stated Amount of the Letter of Credit is increased to
$______________ (such amount being equal to the sum of the amounts specified in
paragraphs 3, 5 and 6 above) upon the earlier of the date set forth in your
certificate delivered to us in the form of Exhibit K or on the tenth day
following receipt by the Bank of this Certificate unless we are notified in
writing that such increase will not be made by such tenth day, of which amount
$_____________ (sum of the amounts specified in paragraph 3 above) constitutes
the Principal Component, $___________ (the sum of the amounts specified in
paragraph 5 above) constitutes the revised Interest Component and
$_______________ (the amount specified in paragraph 6 above) constitutes the
Premium Component.]*
8. For the purposes hereof, the term "Interest Coverage Period" means one
hundred twenty-four (124) days with respect to Bonds bearing interest at the
Floating Rate and two hundred twenty-three (223) days with respect to Bonds
bearing interest at the Fixed Rate.
Any capitalized term used herein and not defined shall have its respective
meaning as set forth in the Letter of Credit.
IN WITNESS WHEREOF, the Paying Agent has executed and delivered this
Certificate as of the ____ day of ___________, 19___.
___________________________________
as Paying Agent
By:________________________________
Title:_____________________________
*Strike inapplicable language
<PAGE>
EXHIBIT J
to Exhibit X
NOTICE OF EVENT OF DEFAULT OR SPECIAL BANK EVENT
UNDER REIMBURSEMENT AGREEMENT
The undersigned [Manager or Deputy Manager]*, a duly authorized officer of
The Bank of Tokyo Ltd. (the "Bank"), hereby certifies to ________________ (the
"Trustee"), with reference to Irrevocable Direct-Pay Letter of Credit No.
151LCS010125 (the "Letter of Credit") issued by the Bank in favor of the
Trustee, that:
1. The Trustee is the Trustee under the Indenture for the owners of the
Bonds.
2. [The Borrower is in default under Section ___ of the Reimbursement
Agreement.] OR [A "Special Bank Event" (as defined in the Reimbursement
Agreement) has occurred and is continuing.]
3. After receipt by you of this notice the Bonds shall be redeemed
pursuant to the terms of the Indenture and coverage under the Letter of Credit
shall terminate with respect to such Bonds on the first Business Day which is
fifteen (15) calendar days after the date of receipt of this notice, all as
provided in clause (iii) of paragraph 2 of the Letter of Credit.
Any capitalized term used herein and not defined shall have its respective
meaning as set forth in the Letter of Credit.
IN WITNESS WHEREOF, the Bank has executed and delivered this notice as of
the ____ day of ____________, 19___.
THE BANK OF TOKYO LTD.
By:________________________________
Title:_____________________________
* Strike inapplicable language.
<PAGE>
EXHIBIT K
to Exhibit X
NOTICE OF INTENT TO INCREASE INTEREST COMPONENT
AND STATED AMOUNT AND ADD PREMIUM COMPONENT
The undersigned [Manager or Deputy Manager]*, a duly authorized officer of
The Bank of Tokyo Ltd. (the "Bank") with reference to Irrevocable Direct-Pay
Letter of Credit No. 151LCS010125 issued in favor of the
________________________ (the "Paying Agent") (the "Letter of Credit") does
hereby certify that:
1. The Bank has received the Paying Agent's Request for Increase of
Interest Component of Letter of Credit [and Stated Amount of Letter of Credit]*
and Addition of Premium Component.
2. The Interest Component of the Letter of Credit is hereby increased to
$______________ as of [insert date].
3. $________ is hereby added to the Letter of Credit as the Premium
Component of the Letter of Credit as of [insert date].
[4. The Stated Amount of the Letter of Credit is hereby increased to
$_____________ as of [insert date].*]
Any capitalized term used herein and not defined shall have its respective
meaning as set forth in the Letter of Credit.
IN WITNESS WHEREOF, the Bank has executed and delivered this notice as of
the ____ day of ____________, 19___.
THE BANK OF TOKYO LTD.
By:________________________________
Title:_____________________________
* Strike inapplicable language.
<PAGE>
EXHIBIT L
to Exhibit X
FORM OF SIGHT DRAFT
The Bank of Tokyo Ltd.
1201 Third Avenue, Suite 1100
Seattle, WA 98101
Attn: Stanley A. Lance, Vice President
This sight draft is presented to you for the amount of $__________ for the
purposes set forth in the accompanying Certificate.
___________________________________
as Paying Agent for the
Parish of Natchitoches, State of Louisiana
Variable Rate Demand Refunding Bonds (Trus Joist
Corporation Project) Series 1988
By:________________________________
Title:_____________________________
<PAGE>
EXHIBIT Y
This PLEDGE AND SECURITY AGREEMENT (the "Pledge Agreement"), dated as of
September 1, 1993, made by TJ INTERNATIONAL, INC., formerly known as TRUS JOIST
CORPORATION ("TJI") and TRUS JOIST MacMILLAN A LIMITED PARTNERSHIP ("TJM") (TJI
and TJM are collectively referred to herein as the "Borrowers"), to THE BANK OF
TOKYO LTD., (the "Bank"), pursuant to the Reimbursement Agreement, dated as of
September 1, 1993, between the Borrowers and the Bank (hereinafter, as the same
may from time to time be amended or supplemented, called the "Reimbursement
Agreement" or the "Agreement"):
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Borrowers and the Bank have entered into the Reimbursement
Agreement pursuant to which the Bank has agreed to issue the Letter of Credit
(as defined in the Reimbursement Agreement) to Premier Bank, National
Association, formerly known as The First National Bank of Shreveport, as trustee
and paying agent (the "Trustee") for the account of the Borrowers in order to
support certain payments with respect to Parish of Natchitoches, State of
Louisiana (the "Issuer") $10,000,000 Variable Rate Demand Refunding Bonds (Trus
Joist Corporation Project) Series 1988 (the "Bonds"), which bonds have been
issued for the benefit of the Borrowers.
WHEREAS, it is a condition precedent under the Reimbursement Agreement to
the obligation of the Bank to issue the Letter of Credit that the Borrowers
shall have executed and delivered this Pledge Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Bank to enter into the Agreement and issue the Letter of Credit thereunder and
for other good and valuable consideration, receipt of which is hereby
acknowledged, the Borrowers hereby agree with the Bank as follows:
1. DEFINED TERMS. Unless otherwise defined herein, terms defined in the
Reimbursement Agreement shall have such defined meanings when used herein.
2. PLEDGE. The Borrowers hereby pledge, assign, hypothecate, transfer,
and deliver to the Bank all its right, title and interest to the Pledged Bonds
as the same may be from time to time purchased by the Trustee from the owners
thereof and hereby grant to the Bank a first lien on, and security interest in,
their right, title and interest in and to the Pledged Bonds, the interest
thereon and all proceeds thereof, (collectively, the "Collateral") as collateral
security for the prompt and complete payment when due
<PAGE>
of all amounts due in respect of the reimbursement obligation of the Borrowers
set forth in Section 2(a) of the Agreement and interest on such amounts as set
forth therein and the prompt performance of the other obligations of the
Borrowers under the Agreement (all the foregoing being hereinafter called the
"Obligations").
3. INTEREST ON THE BONDS. If, while this Pledge Agreement is in effect,
the Borrowers shall become entitled to receive or shall receive any interest
payment in respect of the Pledged Bonds, the Borrowers agree to accept the same
as the Bank's agent and to hold the same in trust on behalf of the Bank and to
deliver the same in trust on behalf of the Bank and to deliver the same
forthwith to the Bank. The Borrowers instruct and authorize the Trustee to hold
and receive on the Bank's behalf and to deliver forthwith to the Bank any
payment received by it in respect of the Pledged Bonds (including the proceeds
of any remarketing of the Pledged Bonds). All sums of money so paid in respect
of the Pledged Bonds which are received by the Borrowers and paid to the Bank
shall be credited against the obligation of the Borrowers to pay interest to the
Bank set forth in Section 2(a)(v) of the Agreement.
4. RELEASE OF PLEDGED BONDS. The Bank agrees to instruct the Trustee to
release from the lien of this Pledge Agreement any Pledged Bonds that are being
remarketed pursuant to the Indenture, in each case to the extent that the Bank
receives reimbursement in cash of the principal and, if applicable, interest
amounts of the A Drawing related to the purchase of such Pledged Bonds in a
manner which will permit the reinstatement of the Principal Component and
Interest Component in respect of such Pledged Bonds in accordance with the terms
of the Letter of Credit. If the Borrowers make or cause to be made to the Bank
a prepayment in respect of its reimbursement obligation under Section 2(a) of
the Agreement pursuant to subsection 2(a)(i) thereof, the Bank has agreed,
subject to Section 2 of the Agreement, to instruct the Trustee to release from
the lien of this Pledge Agreement the Pledged Bonds in the principal amount of
which is equal to the amount of the prepayment so made and to reinstate the
Letter of Credit by such amount.
5. RIGHTS OF THE BANK. The Bank shall not be liable for failure to
collect or realize upon the Obligations or any collateral security (including
the Collateral) or guarantee therefor, or any part thereof, or for any delay in
so doing nor shall it be under any obligation to take any action whatsoever with
regard thereto. If an Event of Default has occurred and is continuing, the Bank
may thereafter, without notice, exercise all rights, privileges or options
pertaining to any Pledged Bonds as if it were the absolute owner thereof, upon
such terms and conditions as it may determine, all without liability except to
account for property actually received by it, but the Bank shall have no duty to
exercise any of the aforesaid rights, privileges or options and
<PAGE>
shall not be responsible for any failure to do so or delay in so doing.
6. REMEDIES. Except as otherwise limited by the Indenture, in the event
that any portion of the Obligations has been declared due and payable, the Bank,
without demand of performance or other demand, advertisement or notice of any
kind (except the notice required under the Agreement or Related Documents or
notice specified below of time and place of public or private sale) to or upon
the Borrowers or any other person (all and each of which demands, advertisements
and/or notices are hereby expressly waived), in its sole discretion may
forthwith collect, receive, appropriate and realize upon the Pledged Bonds, or
any part thereof, (a) exercise any or all of its rights and remedies under the
Reimbursement Agreement, any Related Document or any other instrument or
agreement securing, evidencing or relating to the Obligations or under
applicable law, (b) forthwith collect, receive, appropriate and realize upon all
or any part of the Collateral, and/or may forthwith sell, assign, give option or
options to purchase, contract to sell or otherwise dispose of and deliver said
Pledged Bonds, or any part thereof, in one or more parcels at public or private
sale or sales, at any exchange, broker's board or at any of the Bank's offices
or elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk, with the right to the Bank upon any such sale or
sales, public or private, to purchase the whole or any part of said Collateral
so sold, free of any right or equity of redemption in the Borrowers, which right
or equity is hereby expressly waived or released; provided that it is understood
that prior to the Termination Date any such sale of any Pledged Bonds shall
constitute a release thereof for purposes of the Reimbursement Agreement and
that the Bank will give the notice to reinstate the Letter of Credit which is
contemplated thereby. The Bank shall pay over the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred therein or
incidental to the care, safekeeping or otherwise of any kind and all of the
Pledged Bonds or in any way relating to the rights of the Bank hereunder,
including reasonable attorneys' fees and legal expenses, and the payment, in
whole or in part, of the Obligations in such order as the Bank may elect, the
Borrowers remaining unpaid after such application, and only after so paying over
such net proceeds and after the payment by the Bank of any other amount required
by any provision of law, need the Bank account for the surplus, if any, to the
Borrowers. The Borrowers agree that the Bank need not give more than ten (10)
days' notice of the time and place of any public sale or of the time after which
a private sale or other intended disposition is to take place and that such
notice is reasonable notification of such matters. No notification need be
given to the Borrowers if they have signed after default a statement renouncing
or modifying any right to notification of sale or other intended disposition.
In addition to the rights and remedies granted to it in this Pledge Agreement
and
<PAGE>
in any other instrument or agreement securing, evidencing or relating to any of
the Obligations, the Bank shall have all the rights and remedies of a secured
party. The Borrowers further agree to waive and agree not to assert any rights
or privileges which they may acquire under Section 9-112 of the Uniform
Commercial Code and the Borrowers shall be liable for the deficiency if the
proceeds of any sale or other disposition of the Pledged Bonds are insufficient
to pay all amounts to which the Bank is entitled, and the reasonable fees of any
attorneys employed by the Bank to collect such deficiency.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWERS. The
Borrowers represent and warrant that: (a) on the date of delivery to the Bank
of any Pledged Bonds described herein, neither the Issuer, the Remarketing Agent
nor the Trustee will have any right, title or interest in and to the Pledged
Bonds; (b) they have, and on the date of delivery to the Bank of any Pledged
Bonds will have, full power, authority and legal right to pledge all of their
right, title and interest in and to the Pledged Bonds pursuant to this Pledge
Agreement; (c) this Pledge Agreement has been duly authorized, executed and
delivered by TJI and TJM and constitutes a legal, valid and binding obligation
of TJI and TJM enforceable in accordance with its terms; (d) to Borrowers'
knowledge no consent of any other party (including, without limitation,
stockholders or creditors of the Borrowers) and no consent, license, permit,
approval or authorization of, exemption by, notice or report to, or
registration, filing or declaration with, any governmental authority, domestic
or foreign, is required to be obtained by the Borrowers in connection with the
execution, delivery or performance of this Pledge Agreement; (e) to Borrowers'
knowledge the execution, delivery and performance of this Pledge Agreement will
not violate any provision of any applicable law or regulation or of any order,
judgment, writ, award or decree of any court, arbitrator or governmental
authority, domestic or foreign, or of the certificate of incorporation or bylaws
or the partnership agreement, as the case may be, of the Borrowers or of any
securities issued by the Borrowers, or of any mortgage, indenture, lease,
contract or other agreement, instrument or undertaking to which the Borrowers
are a party or which purports to be binding upon the Borrowers or upon any of
their respective assets and will not result in the creation or imposition of any
lien, charge or encumbrance on or security interest in any of the assets of the
Borrowers except as contemplated by this Pledge Agreement; and (f) the Borrowers
intend that the pledge, assignment and delivery of such Pledged Bonds pursuant
to this Pledge Agreement will create a valid first lien on and a first perfected
security interest in, all right, title or interest of the Borrowers in or to
such Pledged Bonds, and the proceeds thereof, subject to no prior pledge, lien,
mortgage, hypothecation, security interest, charge, option or encumbrance or to
any agreement purporting to grant to any third party a security interest in the
property or assets of the Borrowers which would include the Pledged Bonds. The
Borrowers covenant and agree that they will defend the Bank's right, title and
security interest in and to the Pledged Bonds and the proceeds
<PAGE>
thereof against the claims and demands of all persons whomsoever. The Borrowers
agree that the Trustee, as agent and custodian of the Pledged Bonds for the
Bank, may rely in good faith on the Bank's representation to the Trustee that
the Borrowers are in default under the Reimbursement Agreement, and the Trustee
may, without risk of liability to the Borrowers, honor any directions by Bank to
assist in the Bank's exercise of its remedies hereunder.
8. NO DISPOSITION, ETC. Without the prior written consent of the Bank
(which consent prior to the Termination Date may only be given if such Pledged
Bonds have previously been released from the lien of this Pledge Agreement
pursuant to Section 4 hereof), the Borrowers agree that they will not sell,
assign, transfer, exchange, or otherwise dispose of, or grant any option with
respect to, the Pledged Bonds or the Collateral, nor will it create, incur or
permit to exist any pledge, charge, option or any other encumbrance with respect
to any of the Pledged Bonds or the Collateral, or any interest therein, or any
proceeds thereof, except for the lien and security interest provided for by this
Pledge Agreement and the sale of the Pledged Bonds or the Collateral pursuant to
the Indenture.
9. SALE OF COLLATERAL. (a) The Borrowers recognize that the Bank may be
unable to effect a public sale of any or all of the Pledged Bonds by reason of
certain prohibitions contained in the Securities Act of 1933, as amended, and
applicable state securities laws, but may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers who will be obliged to
agree, among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. The
Borrowers acknowledge and agree that any such private sale may result in prices
and other terms less favorable to the seller than if such sale were a public
sale and, notwithstanding such circumstances, agree that any such private sale
shall be deemed to have been made in a commercially reasonable manner. The Bank
shall be under no obligation to delay a sale of any of the Pledged Bonds for the
period of time necessary to permit the Issuer to register such securities for
public sale under the Securities Act, or under applicable state securities laws,
even if the Issuer would agree to do so.
(b) The Borrowers further agree to do or cause to be done all such other
acts and things as may be necessary to make such sale or sales of any portion or
all of the Pledged Bonds valid and binding and in compliance with any and all
applicable laws, regulations, orders, writs, injunctions, decrees or awards of
any and all courts, arbitrators or governmental instrumentalities, domestic or
foreign, having jurisdiction over any such sale or sales, all at the Borrowers'
expense. The Borrowers further agree that a breach of any of the covenants
contained in this Paragraph 9 will cause irreparable injury to the Bank, that
the Bank has no adequate remedy at law in respect of such breach and, as a
consequence, agrees that each and every covenant contained in this paragraph
shall be specifically enforceable against the Borrowers
<PAGE>
and the Borrowers hereby waive and agree not to assert any defenses against an
action for specific performance of such covenants except for a defense that no
Event of Default has occurred under the Agreement. The Borrowers further
acknowledge the impossibility of ascertaining the amount of damage which would
be suffered by the Bank by reason of a breach of any of such covenants and,
consequently, agrees that, if the Bank shall sue for damages for breach, the
Borrowers shall pay, as liquidated damages and not as a penalty, an amount equal
to the par value plus accrued interest by the Bank in satisfaction of the
Borrowers' obligation to the Bank, on the date the Bank shall demand compliance
with this paragraph.
10. FURTHER ASSURANCES. The Borrowers agree that at any time and from
time to time upon the written request of the Bank, the Borrowers will execute
and deliver such further acts and things as the Bank may reasonably request in
order to effect the purposes of this Pledge Agreement.
11. SEVERABILITY. Any provision of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction
be ineffective, to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12. NO WAIVER; CUMULATIVE REMEDIES. The Bank shall not by any act, delay,
omission or otherwise be deemed to have waived any of its rights or remedies
hereunder and no waiver shall be valid unless in writing, signed by the Bank,
and then only to the extent therein set forth. A waiver by the Bank of any
right or remedy hereunder on any one occasion shall not be constructed as a bar
to any right or remedy which the Bank would otherwise have on any future
occasion. No failure to exercise nor any delay in exercising on the part of the
Bank, any right, power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided are cumulative and may be exercised singly or concurrently, and are not
exclusive of any other rights or remedies.
13. BINDING EFFECT. This Pledge Agreement and all Obligations of the
Borrowers hereunder shall be binding upon the successors and assigns of the
Borrowers, and shall together with the rights and remedies of the Bank
hereunder, inure to the benefit of the Bank and its respective successors and
assigns. This Pledge Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Washington, without
regard to the choice of law principles of Washington law.
<PAGE>
14. JOINT AND SEVERAL LIABILITY. TJI and TJM agree that all obligations
of Borrowers, TJI or TJM hereunder shall be the joint and several obligations of
TJI and TJM.
IN WITNESS WHEREOF, TJI and TJM have caused this Pledge Agreement to be
duly executed and delivered by their respective duly authorized officers on the
day and year first above written.
TJ INTERNATIONAL, INC.,
a Delaware Corporation
By: ______________________________
______________________________
______________________________
______________________________
TRUS JOIST MacMILLAN A LIMITED
PARTNERSHIP, a Delaware
Limited Partnership
By: TJ International, Inc., as
General Partner
By: ______________________________
______________________________
______________________________
______________________________
<PAGE>
APPENDIX A
September 1, 1993
Parish of Natchitoches
State of Louisiana
The Bank of Tokyo Ltd.
1201 Third Avenue, Suite 1100
Seattle, WA 98101
Premier Bank, National Association
The Premier Bank Tower
400 Texas Street, 7th Floor
Shreveport, LA 71101
Re: Parish of Natchitoches, State of Louisiana
Variable Rate Demand Refunding Bonds
(Trus Joist Corporation Project) Series 1988--
Letter of Credit Bank Replacement
Dear Sirs:
We have acted as counsel for TJ International, Inc. (formerly known as
Trus Joist Corporation) ("TJI"), and as counsel to Trus Joist MacMillan A
Limited Partnership, a Delaware limited partnership ("TJM") (collectively, TJI
and TJM are referred to herein as the "Borrowers" and individually as the
"Borrower") in connection with that certain Reimbursement Agreement (the
"Reimbursement Agreement"), dated as of September 1, 1993 among the Borrowers
and The Bank of Tokyo Ltd. (the "Bank"), relating to a Letter of Credit No.
151LCS010125 issued by the Bank in favor of Premier Bank, National Association
(formerly known as The First National Bank of Shreveport) as trustee (the
"Trustee"). Capitalized terms used in this opinion, unless otherwise indicated,
which are defined in the Reimbursement Agreement have the respective meanings
set forth in the Reimbursement Agreement. For purposes of rendering the
opinions contained in this letter, we have examined and reviewed the following:
<PAGE>
1. The Reimbursement Agreement;
2. The Pledge and Security Agreement dated as of September 1, 1993, by
the Borrowers in favor of the Bank (the "Pledge Agreement");
3. The First Supplemental Collateral Pledge Agreement dated as of
September 1, 1993 (the "Supplemental Collateral Pledge Agreement")
among the Borrowers, the Trustee, National Westminster Bank PLC, Los
Angeles Overseas Branch, formerly San Francisco Overseas Branch and
the Bank;
4. The First Amendment to Assignment and Assumption Agreement dated as of
September 1, 1993 (the "Amendment to Assignment Agreement") between
TJI and TJM;
5. The Security Agreement dated as of September 1, 1993, by the Borrowers
in favor of the Trustee and the Bank (the "Security Agreement");
6. The Limited Partnership Agreement of TJM and Resolutions adopted by
TJM authorizing the execution, delivery and performance of the
Borrowers' Documents (as defined below); and
7. Resolutions adopted by TJI authorizing the execution, delivery and
performance of the Borrowers' Documents.
The Reimbursement Agreement, Pledge Agreement, Supplemental Collateral
Pledge Agreement, Amendment to Assignment Agreement and Security Agreement are
collectively referred to herein as the "Borrowers' Documents."
As to any facts relevant to our opinion, we have examined such
certificates of public officials and of officials of the Borrowers and originals
(or copies certified or otherwise identified to our satisfaction) of such
documents and records of the Borrowers and the officials of the Borrowers and of
such other documents, records and papers, and have considered such questions of
law, as we have deemed relevant as a basis for this opinion. We have relied, to
the extent that we deem such reliance proper, upon such certificates of public
officials and of officials of the Borrowers with respect to matters of fact
which were not independently established. In such examination, we have assumed
the genuineness of all signatures not witnessed by us, and the conformity to
originals of all documentation submitted to us as counterparts, certified or
photostatic copies thereof.
Based on the foregoing and the qualifications, limitations, exceptions
and assumptions set forth below, we are of the opinion that:
<PAGE>
September 1, 1993
Page 3
1. TJI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, is in good standing and
qualified to do business in the States of Idaho and Louisiana and has all
requisite power and authority required to perform its obligations under the
Borrowers' Documents and to carry on its business as now conducted.
2. TJM is a limited partnership duly organized, validly existing and
in good standing under the laws of the State of Delaware, is in good standing
and qualified to do business as a limited partnership in the States of Idaho and
Louisiana, and has all requisite power and authority to perform its obligations
under the Borrowers' Documents, and to carry on its business as now conducted.
3. The execution and delivery by the Borrowers of, and the
incurrence and performance by the Borrowers of the obligations provided for in
the Borrowers' Documents have been duly authorized by all proper and necessary
action of each of the Borrowers. The Borrowers' Documents have each been duly
and properly executed and delivered by each of the Borrowers. The Borrowers'
Documents each constitute a legal, valid and binding obligation and agreement of
each of the Borrowers, enforceable against the Borrowers in accordance with
their terms, except as the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws affecting
creditors' rights generally and by general equitable principles (regardless of
whether the issue of enforceability is considered in a proceeding in equity or
at law).
4. Neither the execution and delivery of the Borrowers' Documents,
nor compliance with the provisions thereof, will (A) violate, result in the
breach of, or constitute a default under (i) any applicable constitutional,
legislative, judicial or administrative provisions, statutes or regulations or
other laws, (ii) the Certificate of Incorporation or bylaws of TJI, the
Certificate of Limited Partnership or Limited Partnership Agreement of TJM,
(iii) any Material Contract which is defined as documents filed by TJI with the
Securities and Exchange Commission in response to item 601(b)(10) of Regulation
S-K (17 C.F.R. Section 240.601(b)(10)), to which either of the Borrowers is a
party or by which either of the Borrowers or any properties of the Borrowers may
be affected, bound or subject, or (iv) to the best of our knowledge, any order,
writ, injunction or decree of any court, arbitrator or other governmental
authority to which either of the Borrowers is subject, or (B) to the best of our
knowledge, result in the creation or imposition of any lien, charge or
encumbrance upon any assets of the Borrowers.
<PAGE>
September 1, 1993
Page 4
Based and relying upon a review of our open files for TJM and TJI, and
a certificate of an authorized representative from each of the Borrowers, we
hereby confirm to you that there are no actions or proceedings against the
Borrowers, pending or overtly threatened in writing, before any court,
governmental agency or arbitrator which (i) seek to affect the validity of the
Borrowers' Documents; or (ii) seek to contest, question or affect the
organization of the Borrowers or the legal existence of the Borrowers or affect
the corporate powers of TJI or the partnership powers of TJM.
6. No approval of or consent from or filing with any governmental
authority or any other person, which approval, consent or filing has not
heretofore been obtained, given or made, is required in connection with the
execution and delivery by the Borrowers of the Borrowers' Documents.
The opinion set forth in paragraph 1 as it relates to the
qualification of the Borrowers to do business in Idaho and Louisiana is based
solely on certificates of good standing issued by the Secretary of State of
Idaho and the Secretary of State of Louisiana, copies of which are attached
hereto.
We are members of the bar of the State of Idaho and do not hold
ourselves out as experts in, and do not express any opinion with respect to, the
law of any jurisdiction other than the law of the State of Idaho, the Delaware
General Corporation Law and Delaware Revised Uniform Limited Partnership Act and
United States Federal Law.
This opinion may only be relied upon by the addressees hereof and only
in connection with the described transactions.
Very truly yours,
HAWLEY TROXELL ENNIS & HAWLEY
Michael M. Stoddard
<PAGE>
This PLEDGE AND SECURITY AGREEMENT (the "Pledge Agreement"), dated as of
September 1, 1993, made by TJ INTERNATIONAL, INC., formerly known as TRUS JOIST
CORPORATION ("TJI") and TRUS JOIST MacMILLAN A LIMITED PARTNERSHIP ("TJM") (TJI
and TJM are collectively referred to herein as the "Borrowers"), to THE BANK OF
TOKYO LTD., (the "Bank"), pursuant to the Reimbursement Agreement, dated as of
September 1, 1993, between the Borrowers and the Bank (hereinafter, as the same
may from time to time be amended or supplemented, called the "Reimbursement
Agreement" or the "Agreement"):
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Borrowers and the Bank have entered into the Reimbursement
Agreement pursuant to which the Bank has agreed to issue the Letter of Credit
(as defined in the Reimbursement Agreement) to Premier Bank, National
Association, formerly known as The First National Bank of Shreveport, as trustee
and paying agent (the "Trustee") for the account of the Borrowers in order to
support certain payments with respect to Parish of Natchitoches, State of
Louisiana (the "Issuer") $10,000,000 Variable Rate Demand Refunding Bonds (Trus
Joist Corporation Project) Series 1988 (the "Bonds"), which bonds have been
issued for the benefit of the Borrowers.
WHEREAS, it is a condition precedent under the Reimbursement Agreement to
the obligation of the Bank to issue the Letter of Credit that the Borrowers
shall have executed and delivered this Pledge Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Bank to enter into the Agreement and issue the Letter of Credit thereunder and
for other good and valuable consideration, receipt of which is hereby
acknowledged, the Borrowers hereby agree with the Bank as follows:
1. DEFINED TERMS. Unless otherwise defined herein, terms defined in the
Reimbursement Agreement shall have such defined meanings when used herein.
2. PLEDGE. The Borrowers hereby pledge, assign, hypothecate, transfer,
and deliver to the Bank all its right, title and interest to the Pledged Bonds
as the same may be from time to time purchased by the Trustee from the owners
thereof and hereby grant to the Bank a first lien on, and security interest in,
their right, title and interest in and to the Pledged Bonds, the interest
thereon and all proceeds thereof, (collectively, the "Collateral") as collateral
security for the prompt and complete payment when due
<PAGE>
of all amounts due in respect of the reimbursement obligation of the Borrowers
set forth in Section 2(a) of the Agreement and interest on such amounts as set
forth therein and the prompt performance of the other obligations of the
Borrowers under the Agreement (all the foregoing being hereinafter called the
"Obligations").
3. INTEREST ON THE BONDS. If, while this Pledge Agreement is in effect,
the Borrowers shall become entitled to receive or shall receive any interest
payment in respect of the Pledged Bonds, the Borrowers agree to accept the same
as the Bank's agent and to hold the same in trust on behalf of the Bank and to
deliver the same in trust on behalf of the Bank and to deliver the same
forthwith to the Bank. The Borrowers instruct and authorize the Trustee to hold
and receive on the Bank's behalf and to deliver forthwith to the Bank any
payment received by it in respect of the Pledged Bonds (including the proceeds
of any remarketing of the Pledged Bonds). All sums of money so paid in respect
of the Pledged Bonds which are received by the Borrowers and paid to the Bank
shall be credited against the obligation of the Borrowers to pay interest to the
Bank set forth in Section 2(a)(v) of the Agreement.
4. RELEASE OF PLEDGED BONDS. The Bank agrees to instruct the Trustee to
release from the lien of this Pledge Agreement any Pledged Bonds that are being
remarketed pursuant to the Indenture, in each case to the extent that the Bank
receives reimbursement in cash of the principal and, if applicable, interest
amounts of the A Drawing related to the purchase of such Pledged Bonds in a
manner which will permit the reinstatement of the Principal Component and
Interest Component in respect of such Pledged Bonds in accordance with the terms
of the Letter of Credit. If the Borrowers make or cause to be made to the Bank
a prepayment in respect of its reimbursement obligation under Section 2(a) of
the Agreement pursuant to subsection 2(a)(i) thereof, the Bank has agreed,
subject to Section 2 of the Agreement, to instruct the Trustee to release from
the lien of this Pledge Agreement the Pledged Bonds in the principal amount of
which is equal to the amount of the prepayment so made and to reinstate the
Letter of Credit by such amount.
5. RIGHTS OF THE BANK. The Bank shall not be liable for failure to
collect or realize upon the Obligations or any collateral security (including
the Collateral) or guarantee therefor, or any part thereof, or for any delay in
so doing nor shall it be under any obligation to take any action whatsoever with
regard thereto. If an Event of Default has occurred and is continuing, the Bank
may thereafter, without notice, exercise all rights, privileges or options
pertaining to any Pledged Bonds as if it were the absolute owner thereof, upon
such terms and conditions as it may determine, all without liability except to
account for property actually received by it, but the Bank shall have no duty to
exercise any of the aforesaid rights, privileges or options and
<PAGE>
shall not be responsible for any failure to do so or delay in so doing.
6. REMEDIES. Except as otherwise limited by the Indenture, in the event
that any portion of the Obligations has been declared due and payable, the Bank,
without demand of performance or other demand, advertisement or notice of any
kind (except the notice required under the Agreement or Related Documents or
notice specified below of time and place of public or private sale) to or upon
the Borrowers or any other person (all and each of which demands, advertisements
and/or notices are hereby expressly waived), in its sole discretion may
forthwith collect, receive, appropriate and realize upon the Pledged Bonds, or
any part thereof, (a) exercise any or all of its rights and remedies under the
Reimbursement Agreement, any Related Document or any other instrument or
agreement securing, evidencing or relating to the Obligations or under
applicable law, (b) forthwith collect, receive, appropriate and realize upon all
or any part of the Collateral, and/or may forthwith sell, assign, give option or
options to purchase, contract to sell or otherwise dispose of and deliver said
Pledged Bonds, or any part thereof, in one or more parcels at public or private
sale or sales, at any exchange, broker's board or at any of the Bank's offices
or elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk, with the right to the Bank upon any such sale or
sales, public or private, to purchase the whole or any part of said Collateral
so sold, free of any right or equity of redemption in the Borrowers, which right
or equity is hereby expressly waived or released; provided that it is understood
that prior to the Termination Date any such sale of any Pledged Bonds shall
constitute a release thereof for purposes of the Reimbursement Agreement and
that the Bank will give the notice to reinstate the Letter of Credit which is
contemplated thereby. The Bank shall pay over the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred therein or
incidental to the care, safekeeping or otherwise of any kind and all of the
Pledged Bonds or in any way relating to the rights of the Bank hereunder,
including reasonable attorneys' fees and legal expenses, and the payment, in
whole or in part, of the Obligations in such order as the Bank may elect, the
Borrowers remaining unpaid after such application, and only after so paying over
such net proceeds and after the payment by the Bank of any other amount required
by any provision of law, need the Bank account for the surplus, if any, to the
Borrowers. The Borrowers agree that the Bank need not give more than ten (10)
days' notice of the time and place of any public sale or of the time after which
a private sale or other intended disposition is to take place and that such
notice is reasonable notification of such matters. No notification need be
given to the Borrowers if they have signed after default a statement renouncing
or modifying any right to notification of sale or other intended disposition.
In addition to the rights and remedies granted to it in this Pledge Agreement
and
<PAGE>
in any other instrument or agreement securing, evidencing or relating to any of
the Obligations, the Bank shall have all the rights and remedies of a secured
party. The Borrowers further agree to waive and agree not to assert any rights
or privileges which they may acquire under Section 9-112 of the Uniform
Commercial Code and the Borrowers shall be liable for the deficiency if the
proceeds of any sale or other disposition of the Pledged Bonds are insufficient
to pay all amounts to which the Bank is entitled, and the reasonable fees of any
attorneys employed by the Bank to collect such deficiency.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWERS. The
Borrowers represent and warrant that: (a) on the date of delivery to the Bank
of any Pledged Bonds described herein, neither the Issuer, the Remarketing Agent
nor the Trustee will have any right, title or interest in and to the Pledged
Bonds; (b) they have, and on the date of delivery to the Bank of any Pledged
Bonds will have, full power, authority and legal right to pledge all of their
right, title and interest in and to the Pledged Bonds pursuant to this Pledge
Agreement; (c) this Pledge Agreement has been duly authorized, executed and
delivered by TJI and TJM and constitutes a legal, valid and binding obligation
of TJI and TJM enforceable in accordance with its terms; (d) to Borrowers'
knowledge no consent of any other party (including, without limitation,
stockholders or creditors of the Borrowers) and no consent, license, permit,
approval or authorization of, exemption by, notice or report to, or
registration, filing or declaration with, any governmental authority, domestic
or foreign, is required to be obtained by the Borrowers in connection with the
execution, delivery or performance of this Pledge Agreement; (e) to Borrowers'
knowledge the execution, delivery and performance of this Pledge Agreement will
not violate any provision of any applicable law or regulation or of any order,
judgment, writ, award or decree of any court, arbitrator or governmental
authority, domestic or foreign, or of the certificate of incorporation or bylaws
or the partnership agreement, as the case may be, of the Borrowers or of any
securities issued by the Borrowers, or of any mortgage, indenture, lease,
contract or other agreement, instrument or undertaking to which the Borrowers
are a party or which purports to be binding upon the Borrowers or upon any of
their respective assets and will not result in the creation or imposition of any
lien, charge or encumbrance on or security interest in any of the assets of the
Borrowers except as contemplated by this Pledge Agreement; and (f) the Borrowers
intend that the pledge, assignment and delivery of such Pledged Bonds pursuant
to this Pledge Agreement will create a valid first lien on and a first perfected
security interest in, all right, title or interest of the Borrowers in or to
such Pledged Bonds, and the proceeds thereof, subject to no prior pledge, lien,
mortgage, hypothecation, security interest, charge, option or encumbrance or to
any agreement purporting to grant to any third party a security interest in the
property or assets of the Borrowers which would include the Pledged Bonds. The
Borrowers covenant and agree that they will defend the Bank's right, title and
security interest in and to the Pledged Bonds and the proceeds
<PAGE>
thereof against the claims and demands of all persons whomsoever. The Borrowers
agree that the Trustee, as agent and custodian of the Pledged Bonds for the
Bank, may rely in good faith on the Bank's representation to the Trustee that
the Borrowers are in default under the Reimbursement Agreement, and the Trustee
may, without risk of liability to the Borrowers, honor any directions by Bank to
assist in the Bank's exercise of its remedies hereunder.
8. NO DISPOSITION, ETC. Without the prior written consent of the Bank
(which consent prior to the Termination Date may only be given if such Pledged
Bonds have previously been released from the lien of this Pledge Agreement
pursuant to Section 4 hereof), the Borrowers agree that they will not sell,
assign, transfer, exchange, or otherwise dispose of, or grant any option with
respect to, the Pledged Bonds or the Collateral, nor will it create, incur or
permit to exist any pledge, charge, option or any other encumbrance with respect
to any of the Pledged Bonds or the Collateral, or any interest therein, or any
proceeds thereof, except for the lien and security interest provided for by this
Pledge Agreement and the sale of the Pledged Bonds or the Collateral pursuant to
the Indenture.
9. SALE OF COLLATERAL. (a) The Borrowers recognize that the Bank may be
unable to effect a public sale of any or all of the Pledged Bonds by reason of
certain prohibitions contained in the Securities Act of 1933, as amended, and
applicable state securities laws, but may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers who will be obliged to
agree, among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. The
Borrowers acknowledge and agree that any such private sale may result in prices
and other terms less favorable to the seller than if such sale were a public
sale and, notwithstanding such circumstances, agree that any such private sale
shall be deemed to have been made in a commercially reasonable manner. The Bank
shall be under no obligation to delay a sale of any of the Pledged Bonds for the
period of time necessary to permit the Issuer to register such securities for
public sale under the Securities Act, or under applicable state securities laws,
even if the Issuer would agree to do so.
(b) The Borrowers further agree to do or cause to be done all such other
acts and things as may be necessary to make such sale or sales of any portion or
all of the Pledged Bonds valid and binding and in compliance with any and all
applicable laws, regulations, orders, writs, injunctions, decrees or awards of
any and all courts, arbitrators or governmental instrumentalities, domestic or
foreign, having jurisdiction over any such sale or sales, all at the Borrowers'
expense. The Borrowers further agree that a breach of any of the covenants
contained in this Paragraph 9 will cause irreparable injury to the Bank, that
the Bank has no adequate remedy at law in respect of such breach and, as a
consequence, agrees that each and every covenant contained in this paragraph
shall be specifically enforceable against the Borrowers
<PAGE>
and the Borrowers hereby waive and agree not to assert any defenses against an
action for specific performance of such covenants except for a defense that no
Event of Default has occurred under the Agreement. The Borrowers further
acknowledge the impossibility of ascertaining the amount of damage which would
be suffered by the Bank by reason of a breach of any of such covenants and,
consequently, agrees that, if the Bank shall sue for damages for breach, the
Borrowers shall pay, as liquidated damages and not as a penalty, an amount equal
to the par value plus accrued interest by the Bank in satisfaction of the
Borrowers' obligation to the Bank, on the date the Bank shall demand compliance
with this paragraph.
10. FURTHER ASSURANCES. The Borrowers agree that at any time and from
time to time upon the written request of the Bank, the Borrowers will execute
and deliver such further acts and things as the Bank may reasonably request in
order to effect the purposes of this Pledge Agreement.
11. SEVERABILITY. Any provision of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction
be ineffective, to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12. NO WAIVER; CUMULATIVE REMEDIES. The Bank shall not by any act, delay,
omission or otherwise be deemed to have waived any of its rights or remedies
hereunder and no waiver shall be valid unless in writing, signed by the Bank,
and then only to the extent therein set forth. A waiver by the Bank of any
right or remedy hereunder on any one occasion shall not be constructed as a bar
to any right or remedy which the Bank would otherwise have on any future
occasion. No failure to exercise nor any delay in exercising on the part of the
Bank, any right, power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided are cumulative and may be exercised singly or concurrently, and are not
exclusive of any other rights or remedies.
13. BINDING EFFECT. This Pledge Agreement and all Obligations of the
Borrowers hereunder shall be binding upon the successors and assigns of the
Borrowers, and shall together with the rights and remedies of the Bank
hereunder, inure to the benefit of the Bank and its respective successors and
assigns. This Pledge Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Washington, without
regard to the choice of law principles of Washington law.
<PAGE>
14. JOINT AND SEVERAL LIABILITY. TJI and TJM agree that all obligations
of Borrowers, TJI or TJM hereunder shall be the joint and several obligations of
TJI and TJM.
IN WITNESS WHEREOF, TJI and TJM have caused this Pledge Agreement to be
duly executed and delivered by their respective duly authorized officers on the
day and year first above written.
TJ INTERNATIONAL, INC.,
a Delaware Corporation
By: /S/ THOMAS H. DENIG
SENIOR VICE PRESIDENT,
STRUCTURAL OPERATIONS
TRUS JOIST MacMILLAN A LIMITED
PARTNERSHIP, a Delaware
Limited Partnership
By: TJ INTERNATIONAL, INC., AS
GENERAL PARTNER
By: /S/ THOMAS H. DENIG
SENIOR VICE PRESIDENT,
STRUCTURAL OPERATIONS
<PAGE>
EXHIBIT 10-1
STOCK PURCHASE AND RESALE AGREEMENT
This Agreement is made this 24th day of May, 1983 between TRUS JOIST
CORPORATION, a Nevada corporation (the Company) and HAROLD E. THOMAS, PHYLLIS S.
THOMAS, ARTHUR L. TROUTNER and KATHERINE TROUTNER, all of Boise, Idaho
(collectively the Shareholders and individually a Shareholder).
R E C I T A L S:
The Shareholders are the owners of a substantial number of shares (the
Stock) of the common stock of the Company.
Upon the death of each Shareholder, a substantial portio of the Stock owned
by such deceased Shareholder will have to be sold to provide cash for the
payment of death taxes.
The Company's shares are presently traded in the over-the-counter market as
reported by the national Association of Security Dealers Automated Quotations
(NASDAQ).
The trading market for the Company's shares is such that it is doubtful
whether a substantial portion of a Shareholder's Stock could be sold without
adverse impact on the market other than over a period of time at a possible
substantial discount from normal market price.
It is in the best interests of the Company and its shareholders that a
normal trading market for Stock of the Company continues to exist and that none
of the Stock becomes owned by persons whose interests may be inimical to those
of the Company in conducting its business, including the necessity, from time to
time, of arranging Company financing.
It is in the best interest of the Shareholders and the Company to enter
into this Agreement providing for the purchase and sale of the Stock upon the
following terms in the event of the death of a Shareholder.
1. COMPANY'S OBLIGATION TO PURCHASE. Upon the death of a Shareholder, the
Personal Representative of the estate of such Shareholder (the Personal
Representative) shall sell and the Company shall purchase or arrange for the
purchase of one-half (if not divisible by two, rounded up the next full share)
of the total number of shares of Stock owned, as hereafter defined, by such
Shareholder at the date of death.
<PAGE>
2. OPTION OF THE COMPANY TO PURCHASE ADDITIONAL STOCK. In addition to the
shares which the Company or its assignee shall be required to purchase and the
Personal Representative shall be required to sell as provided in paragraph 1,
the Company or its assignee shall have the option to purchase all or any part of
the remaining Stock owned, as hereafter defined, by such Shareholder at the date
of death.
3. EXCEPTION OT OBLIGATIONS AND RIGHTS TO PURCHASE AND SELL.
Notwithstanding paragraphs 1 and 2 above, neither the Company nor the
Shareholders shall have any obligation or right to purchase or sell any of the
Stock by reason of the death of a Shareholder if, on the date of death, the
deceased Shareholder was married to another Shareholder named as a party to the
Agreement, unless by the terms of such deceased Shareholder's will, he or she is
deemed to have died simultaneously with his or her spouse.
4. OWNERSHIP OF STOCK BY A DECEASED SHAREHOLDER. For the purpose of this
Agreement, Stock owned by a Shareholder at date of death shall include Stock
owned of record by such eceased Shareholder and any Stock which may be acquired
by the Personal Representative within 60 days under any stock purchase right
existing at such date, and all other Stock required to be included in the gross
taxable estate of such deceased Shareholder for the purposes of the federal
estate tax. The Company may rely upon the certification of the Personal
Representative as to the Stock, other than those held of record by the deceased
Shareholder, which will be included in the deceased Shareholder's gross taxable
estate for federal estate tax purposes. If any other person, organization or
fiduciary is the legal owner of shares of Stock deemed owned by a deceased
Shareholder for purposes of this Agreement and shall refuse to sell any of such
shares as provided in this Agreement, neither the Company nor any Shareholder
shall have any liability to any person or to each other arising from such
refusal.
5. TIME OF PURCHASE AND EXERCISE OF OPTION.
(a) The Company shall commit to the purchase the Stock of a deceased
Shareholder which it or its assignee is required to purchase under paragraph 1
and shall determine the extent to which the option referred to in paragraph 2
will be exercised within the 60 day period immediately following the date of
written notification from the Personal Representative of such Shareholder of the
death of such Shareholder. If the Company shall receive no such notification
but shall otherwise learn of the death of the Shareholder, such 60 day period
shall commence with the date of written notice from the Company to the Personal
Representative that the 60 day period has commenced to run.
(b) On or before the expiration of such 60 day period, the Company shall
by written notice advise the Personal
<PAGE>
Representative whether it is purchasing the shares referred to in paragraph 1
above directly or arranging for such purchase by a third party or parties, and
with respect to additional shares owned by the deceased Shareholder for purposes
of this Agreement whether it elects to purchase or arrange for the purchase of
all or part of such shares under its option provided in paragraph 2 above. The
Company shall have a period of an additional 120 days following the expiration
of such 60 day period to complete the purchase specified in the notice. The
notice may specify the date of purchase to be any specific date within the
period from the notice of exercise to the end of such 120 day period. The
purchase price for such Stock shall be paid on or before the expiration of such
120 day period to the Personal Representative, or to the person or persons
designated by such Personal Representative to receive payment.
6. PURCHASE PRICE.
(a) The purchase price for all of the Stock purchased by the Company
hereunder, whether pursuant to the obligation to purchase under paragraph 1 or
upon exercise of the option of the Company described in paragraph 2, shall be
the average of the closing bid prices of the common stock of the Company as
reported by NASDAQ for the 10 trading days immediately preceding and including
the 60th day of the 60 day period specified in paragraph 5. If the 60th day
shall not fall upon a business day in which trading in the common stock of the
Company occurs, the closing bid price shall be determined based on the average
of the bid prices for the 10 trading days immediately preceding the 60th day of
the 60 day period. If prices for the Company's shares are not quoted on NASDAQ,
the price shall be the average of the closing bid prices for such 10 trading
days as quoted by all of the securities dealers making a market in such stock,
unless such shares are listed on any recognized securities exchange in which
case the price shall be the average of the closing prices for such 10 trading
days.
(b) If there is no established market for the Company's shares on such
date, the Company and the Personal Representative shall mutually agree on a
price, or, if they cannot agree, will submit the issue of price to binding
arbitration, each selecting an arbitrator, the two arbitrators to select a third
arbitrator with the decision as to price being made by majority vote of the
three arbitrators so selected. In determining the value of the Stock, the
arbitrators shall value the Stock owned of record by the Shareholder at death at
its fair market value as a block, with appropriate discounts or premiums applied
based upon the size of such block and the distribution of Company ownership at
such time. The arbitrators shall consider as the primary factors in arriving at
such value the earnings of the Company during the preceding 12 months, the price
obtained i any arms length sales of the Company's Stock in the preceding 12
months, the then present book value per share of the Company's
<PAGE>
Stock, the Company's dividend policy and the liquidity of the Company. Such
value, once determined by the arbitrators, shall be applied on a per share basis
to all Stock purchased pursuant to this Agreement.
(c) If all or any part of the purchase is to be made by a third party or
parties, the purchase price for the Stock purchased by the third party or
parties hereunder shall be the fair value for the shares being purchased as
determined by the Company in its sole discretion provided such price shall be
not less than 90% of the average of such bid prices or closing prices for the 10
trading days immediately preceding closing and not more than the average of such
bid prices for such 10 trading days. In the event of any such third party
purchase, the Company may, but shall not be required, to retain an investment
banking firm to place the sale with a buyer or buyers acceptable to the Company.
Such firm will be paid a commission based on the gross proceeds at competitive
industry rates. In the event of any purchase by a third party or parties, the
proceeds to be paid to the Personal Representative shall be the net proceeds
after paying one-half (50%) of any commission, discounts or costs associated
with such sale.
7. PERFORMANCE OF THE COMPANY'S OBLIGATION TO PURCHASE. The sole
obligation of the Company to the Personal Representative shall be to provide
such Personal Representative, or the person or persons designated by such
Personal Representative funds equal to the amount of the purchase price for the
Stock purchased. The Company shall have absolute discretion to purchase the
Stock for its own account or to arrange for purchase of all or part of the Stock
by any other person, persons or organization, including the option to arrange
for a public sale of such shares and for that purpose shall have the right to
assign all or any portion of its rights and obligations to purchase. The
Company shall have no obligation or liability to the Shareholder or the Personal
Representative as to the net proceeds received from a sale to a third party or
parties provided that the sale price, as supplemented if necessary by the
Company to reach the minimum price, is within the rage specified in paragraph
6(c).
8. CLOSING. On the date which the purchase price for the Stock of a
deceased Shareholder is to be paid, a Closing will he held at the office of the
Company in Boise, Idaho. At the Closing the Company will provide a certified or
cashier's check in the amount of the purchase price payable to the seller of the
Stock. Such check shall be delivered to the Personal Representative, or the
person or persons designated by such Personal Representative, against delivery
to the Company, or any assignee, of certificates for the Stock to be purchased,
duly endorsed for transfer and accompanied by all documents required to effect a
transfer thereof.
<PAGE>
9. RIGHT OF REFUSAL. During the lifetime of the Shareholders, the Company
shall have the following right of refusal with respect to transfers of Stock
held by any Shareholder:
(a) Except as provided in subsection (h) below, before there can be a
valid sale, assignment, exchange, gift, attachment or other transfer, voluntary
or involuntary, or any agreement to effect the same (collectively referred to
for purposes of this paragraph as a "transfer") of any of the Stock held by a
Shareholder, the Shareholder shall first give notice in writing to the Secretary
of the Corporation of the intention to transfer the shares. The notice shall
specify the number of shares to be transferred, the name and address of the
proposed transferee, and the terms, including price, upon which the proposed
transfer is to be made. The Company may thereupon elect, at any time within 30
days of receipt of such notice, to purchase all of the shares specified in the
notice on the terms and for the price therein specified.
(b) If the Corporation elects to purchase such shares, it shall send
notice of exercise of its right to purchase within the prescribed time period to
the Shareholder at the address specified in the Notices section of this
Agreement. A closing for such purchase shall occur within 90 days from the
notice of exercise at the place and in the manner specified for Closing under
this Agreement, except that the Shareholder shall take the place of the Personal
Representative, with the exact date of closing to be specified in the notice of
exercise.
(c) If the Company does not exercise its purchase right as provided in (a)
above, the Shareholder may dispose of all of the shares referred to in the
notice at any time within the 60 day period following expiration of the original
30 day notice period, after which 60 day period the restriction on transfer
shall again apply with a new notice required prior to any transfer. Provided,
however, that no transfer shall be made at a lower price or on terms more
favorable to the proposed purchaser or transferee than those specified in the
notice.
(d) The transfers to which the above-described right of refusal applies
includes any attempted transfer by way of execution, attachment or similar
process and any other involuntary transfers.
(e) Any transfer, or purported transfer, of the shares of Stock other than
a transfer permitted under sub-paragraph (h) below shall be null and void unless
the terms, conditions and provisions of this paragraph are strictly complied
with.
(f) Appropriate instructions shall be lodged with the Company's transfer
agent with respect to the restrictions applicable under this Agreement, and the
certificates for all
<PAGE>
shares of Stock, including certificates now held by the Shareholders which shall
be delivered to the Company for such purpose, shall bear the following legend:
THE STOCK EVIDENCED BY THIS CERTIFICATE IS SUBJECT TO AND TRANSFERABLE
ONLY UPON COMPLIANCE WITH THE TERMS AND CONDITIONS OF A STOCK PURCHASE
AGREEMENT ENTERED INTO BETWEEN THE HOLDER AND THE CORPORATION, A COPY
OF WHICH IS ON FILE WITH THE SECRETARY OF THE CORPORATION.
(g) The Company's right of refusal hereunder is assignable by the Company
to any third party or parties selected by it.
(h) The right of refusal provided for in this paragraph 9 shall not be
applicable to the following transfers:
(i) Inter vivos transfers made without consideration to members of a
Shareholder's immediate family (spouse and children) or to the spouse and
children of such immediate family members, or transfers to a trust the
beneficiaries of which are such immediate family members or their spouse and
children, provided that if total shares transferred from the Shareholder to any
such transferee during the five year period preceding the proposed transfer
exceed in the aggregate 1% of the shares of the Company's common stock then
outstanding, then the restrictions of this paragraph 9 shall apply to the shares
then being transferred to the transferee;
(ii) Transfers to charitable organizations specified in Section 501(c) of
the Internal Revenue Code, provided that if the transfer exceeds 1% of the
Company's common stock then outstanding then the restrictions of this paragraph
9 shall apply to the transferee;
(iii) Transfers in which the total number of shares to be transferred to
the proposed transferee, together with all shares previously transferred to such
transferee or its affiliates during the preceding five year period, represent
less than 1% of the Company's common stock then outstanding; and
(iv) Transfers pursuant to Rule 144 of the Securities and Exchange
Commission.
10. AGREEMENT WITH RESPECT TO A DECEASED SHAREHOLDER. This Agreement is
between the Company and the Shareholders and each of them. The Company and the
Personal Representative shall
<PAGE>
have the right to enter into a separate agreement with respect to time and
manner of payment or otherwise relating to the performance of such parties,
other than an agreement providing for a higher purchase price, without affecting
the rights and obligations of the Company and the other Shareholders.
11. COMPLIANCE WITH RULES AND REGULATIONS. The implementation of this
Agreement shall be subject to compliance by the Company and the Shareholders
with such rules and regulations applicable to the Company and the trading of its
shares as may be in effect from time to time and applicable to the contemplated
transactions, as determined by counsel to the Company. The obligation of the
Company to purchase Stock for its own account hereunder is subject to the
availability of a legal source of funds for such repurchase.
12. NOTICES. Notices under this Agreement shall be sent by certified
mail, return receipt requested, to the parties at the following addresses:
If to the Company: Trus Joist Corporation
9777 West Chinden Blvd.
Boise, Idaho 83704
Attn: President
If to any Shareholder: To the last address of
record as reflected in
the Company's stockholder
records.
IN WITNESS WHEREOF, the Company and the Shareholders have executed this
Agreement the day and year first above written.
COMPANY SHARHOLDERS
TRUS JOIST CORPORATION
By /s/ Walter C. Minnick /s/ Harold E. Thomas
---------------------- ------------------------
Its President Harold E. Thomas
----------------------
/s/ Phyllis S. Thomas
------------------------
Phyllis S. Thomas
/s/ Arthur L. Troutner
------------------------
Arthur L. Troutner
/s/ Katherine Troutner
------------------------
Katherine Troutner
<PAGE>
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<PAGE>
EXHIBIT 21
TJ INTERNATIONAL, INC.
----------------------
SUBSIDIARIES OF THE REGISTRANT
------------------------------
The significant subsidiaries of the Company are as follows:
<TABLE>
<CAPTION>
State or Other Percentage
Jurisdiction of Voting
of Incorporation Securities
or Organization Owned
------------------- ------------
<S> <C> <C>
Trus Joist MacMillan, A Limited
Partnership Delaware 51% (1)
Trus-Joist (Western), Ltd. New Brunswick 100%
Norco Windows, Inc. Wisconsin 100%
Dashwood Industries Limited Ontario 100%
<FN>
(1) The Company has a 51% interest in this partnership.
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
EXHIBIT 24
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports dated February 16, 1994, included or incorporated by reference in this
Form 10-K for the year ended January 1, 1994, into TJ International, Inc.'s
previously filed Form S-8 Registration Statement for the Trus Joist Corporation
Nonstatutory Stock Option Plan with 1982 Incentive Amendment, as amended
(Registration No. 2-79209), Form S-8 Registration Statement for the Trus Joist
Corporation Employee Stock Ownership Plan (Registration No. 2-96065), Form S-8
Registration Statement for the Trus Joist Corporation Associates' Stock Purchase
Plan, as amended (Registration No. 2-96821), Form S-8 Registration Statement for
the Trus Joist Corporation Key Employees' 1982 Inventive Stock Option Plan with
Nonstatutory Feature (Registration No. 2-96964), Form S-8 Registration Statement
for the Trus Joist Corporation Employee Stock Ownership Plan (Registration No.
33-4704), Form S-8 Registration Statement for the Trus Joist Corporation Profit
Sharing Plan, as amended (Registration No. 33-21870), Form S-8 Registration
Statement for the Trus Joist Corporation Key Employees' 1985 Incentive Stock
Option Plan with Nonstatutory Feature, as amended (Registration No. 33-22186)
and Form S-8 Registration Statement for TJ International, Inc. Key Employees
1988 and 1992 Stock Option Plans (Registration No. 33-54582).
/s/ Arthur Andersen & Co.
- -------------------------
Boise, Idaho
April 4, 1994
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
SPECIAL POWER OF ATTORNEY EXHIBIT 25
KNOW ALL MEN BY THESE PRESENTS: That I, Harold S. Eastman,
have made, constituted and appointed, and by these presents do make, constitute
and appoint either the Chairman of the Board or the President of TJ
International, Inc., a Delaware corporation, my true and lawful attorney in my
name, place and stead, and for my use and benefit as follows:
- For the special purpose of signing the Company's Form 10-K for the
fiscal year ended January 1, 1994 to be filed with the Securities and
Exchange Commission on or before April 1, 1994, and
- For the special purpose of signing all such Forms S-8 as the Company
may be required to file pursuant to SEC regulations.
and to sign, seal, execute, deliver and acknowledge such instruments in writing
of whatever kind and nature as may be necessary or proper in the premises.
I HEREBY give and grant unto said attorney full power and authority to do
and perform all and every act and thing whatsoever requisite and necessary to be
done, as fully to all intents and purposes as I might or could do if personally
present, and hereby ratify and confirm all that said attorney shall lawfully do
or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 16th day of
February, 1994.
/s/ Harold S. Eastman
________________________________
STATE OF
County of
On this 16th day of February, 1994, before me, the undersigned, a Notary
Public in and for said State, personally appeared Harold S. Eastman, known to me
to be the person whose name is subscribed to the foregoing and acknowledged to
me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Patricia K. Stiburek
________________________________
Notary Public for the State of
Idaho
Residing at Boise, Idaho
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That I, Robert B. Findlay,
have made, constituted and appointed, and by these presents do make, constitute
and appoint either the Chairman of the Board or the President of TJ
International, Inc., a Delaware corporation, my true and lawful attorney in my
name, place and stead, and for my use and benefit as follows:
- For the special purpose of signing the Company's Form 10-K for the
fiscal year ended January 1, 1994 to be filed with the Securities and
Exchange Commission on or before April 1, 1994, and
- For the special purpose of signing all such Forms S-8 as the Company
may be required to file pursuant to SEC regulations.
and to sign, seal, execute, deliver and acknowledge such instruments in writing
of whatever kind and nature as may be necessary or proper in the premises.
I HEREBY give and grant unto said attorney full power and authority to do
and perform all and every act and thing whatsoever requisite and necessary to be
done, as fully to all intents and purposes as I might or could do if personally
present, and hereby ratify and confirm all that said attorney shall lawfully do
or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 16th day of
February, 1994.
/s/ Robert B. Findlay
________________________________
STATE OF
County of
On this 16th day of February, 1994, before me, the undersigned, a Notary
Public in and for said State, personally appeared Robert B. Findlay, known to me
to be the person whose name is subscribed to the foregoing and acknowledged to
me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Patricia K. Stiburek
________________________________
Notary Public for the State of
Idaho
Residing at Boise, Idaho
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That I, R. V. Hansberger,
have made, constituted and appointed, and by these presents do make, constitute
and appoint either the Chairman of the Board or the President of TJ
International, Inc., a Delaware corporation, my true and lawful attorney in my
name, place and stead, and for my use and benefit as follows:
- For the special purpose of signing the Company's Form 10-K for the
fiscal year ended January 1, 1994 to be filed with the Securities and
Exchange Commission on or before April 1, 1994, and
- For the special purpose of signing all such Forms S-8 as the Company
may be required to file pursuant to SEC regulations.
and to sign, seal, execute, deliver and acknowledge such instruments in writing
of whatever kind and nature as may be necessary or proper in the premises.
I HEREBY give and grant unto said attorney full power and authority to do
and perform all and every act and thing whatsoever requisite and necessary to be
done, as fully to all intents and purposes as I might or could do if personally
present, and hereby ratify and confirm all that said attorney shall lawfully do
or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 28th day of
February, 1994.
/s/ R. V. Hansberger
________________________________
STATE OF
County of
On this 28th day of February, 1994, before me, the undersigned, a Notary
Public in and for said State, personally appeared R. V. Hansberger, known to me
to be the person whose name is subscribed to the foregoing and acknowledged to
me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Patricia K. Stiburek
________________________________
Notary Public for the State of
Idaho
Residing at Boise, Idaho
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That I, Robert G. Linville, Jr., have
made, constituted and appointed, and by these presents do make, constitute and
appoint either the Chairman of the Board or the President of TJ International,
Inc., a Delaware corporation, my true and lawful attorney in my name, place and
stead, and for my use and benefit as follows:
- For the special purpose of signing the Company's Form 10-K for the
fiscal year ended January 1, 1994 to be filed with the Securities and
Exchange Commission on or before April 1, 1994, and
- For the special purpose of signing all such Forms S-8 as the Company
may be required to file pursuant to SEC regulations.
and to sign, seal, execute, deliver and acknowledge such instruments in writing
of whatever kind and nature as may be necessary or proper in the premises.
I HEREBY give and grant unto said attorney full power and authority to do
and perform all and every act and thing whatsoever requisite and necessary to be
done, as fully to all intents and purposes as I might or could do if personally
present, and hereby ratify and confirm all that said attorney shall lawfully do
or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 16th day of
February, 1994.
/s/ Robert G. Linville, Jr.
________________________________
STATE OF
County of
On this 16th day of February, 1994, before me, the undersigned, a Notary
Public in and for said State, personally appeared Robert G. Linville, Jr., known
to me to be the person whose name is subscribed to the foregoing and
acknowledged to me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Patricia K. Stiburek
________________________________
Notary Public for the State of
Idaho
Residing at Boise, Idaho
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That I, J. L. Scott, have made,
constituted and appointed, and by these presents do make, constitute and appoint
either the Chairman of the Board or the President of TJ International, Inc., a
Delaware corporation, my true and lawful attorney in my name, place and stead,
and for my use and benefit as follows:
- For the special purpose of signing the Company's Form 10-K for the
fiscal year ended January 1, 1994 to be filed with the Securities and
Exchange Commission on or before April 1, 1994, and
- For the special purpose of signing all such Forms S-8 as the Company
may be required to file pursuant to SEC regulations.
and to sign, seal, execute, deliver and acknowledge such instruments in writing
of whatever kind and nature as may be necessary or proper in the premises.
I HEREBY give and grant unto said attorney full power and authority to do
and perform all and every act and thing whatsoever requisite and necessary to be
done, as fully to all intents and purposes as I might or could do if personally
present, and hereby ratify and confirm all that said attorney shall lawfully do
or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 16th day of
February, 1994.
/s/ J. L. Scott
________________________________
STATE OF
County of
On this 16th day of February, 1994, before me, the undersigned, a Notary
Public in and for said State, personally appeared J. L. Scott, known to me to be
the person whose name is subscribed to the foregoing and acknowledged to me that
he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Patricia K. Stiburek
________________________________
Notary Public for the State of
Idaho
Residing at Boise, Idaho
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That I, Harold E. Thomas, have made,
constituted and appointed, and by these presents do make, constitute and appoint
either the Chairman of the Board or the President of TJ International, Inc., a
Delaware corporation, my true and lawful attorney in my name, place and stead,
and for my use and benefit as follows:
- For the special purpose of signing the Company's Form 10-K for the
fiscal year ended January 1, 1994 to be filed with the Securities and
Exchange Commission on or before April 1, 1994, and
- For the special purpose of signing all such Forms S-8 as the Company
may be required to file pursuant to SEC regulations.
and to sign, seal, execute, deliver and acknowledge such instruments in writing
of whatever kind and nature as may be necessary or proper in the premises.
I HEREBY give and grant unto said attorney full power and authority to do
and perform all and every act and thing whatsoever requisite and necessary to be
done, as fully to all intents and purposes as I might or could do if personally
present, and hereby ratify and confirm all that said attorney shall lawfully do
or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 16th day of
February, 1994.
/s/ Harold E. Thomas
________________________________
STATE OF
County of
On this 16th day of February, 1994, before me, the undersigned, a Notary
Public in and for said State, personally appeared Harold E. Thomas, known to me
to be the person whose name is subscribed to the foregoing and acknowledged to
me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Patricia K. Stiburek
________________________________
Notary Public for the State of
Idaho
Residing at Boise, Idaho
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That I, Arthur L. Troutner, have made,
constituted and appointed, and by these presents do make, constitute and appoint
either the Chairman of the Board or the President of TJ International, Inc., a
Delaware corporation, my true and lawful attorney in my name, place and stead,
and for my use and benefit as follows:
- For the special purpose of signing the Company's Form 10-K for the
fiscal year ended January 1, 1994 to be filed with the Securities and
Exchange Commission on or before April 1, 1994, and
- For the special purpose of signing all such Forms S-8 as the Company
may be required to file pursuant to SEC regulations.
and to sign, seal, execute, deliver and acknowledge such instruments in writing
of whatever kind and nature as may be necessary or proper in the premises.
I HEREBY give and grant unto said attorney full power and authority to do
and perform all and every act and thing whatsoever requisite and necessary to be
done, as fully to all intents and purposes as I might or could do if personally
present, and hereby ratify and confirm all that said attorney shall lawfully do
or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 16th day of
February, 1994.
/s/ Arthur L. Troutner
________________________________
STATE OF
County of
On this 16th day of February, 1994, before me, the undersigned, a Notary
Public in and for said State, personally appeared Arthur L. Troutner, known to
me to be the person whose name is subscribed to the foregoing and acknowledged
to me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Patricia K. Stiburek
________________________________
Notary Public for the State of
Idaho
Residing at Boise, Idaho
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That I, J. Robert Tullis, have made,
constituted and appointed, and by these presents do make, constitute and appoint
either the Chairman of the Board or the President of TJ International, Inc., a
Delaware corporation, my true and lawful attorney in my name, place and stead,
and for my use and benefit as follows:
- For the special purpose of signing the Company's Form 10-K for the
fiscal year ended January 1, 1994 to be filed with the Securities and
Exchange Commission on or before April 1, 1994, and
- For the special purpose of signing all such Forms S-8 as the Company
may be required to file pursuant to SEC regulations.
and to sign, seal, execute, deliver and acknowledge such instruments in writing
of whatever kind and nature as may be necessary or proper in the premises.
I HEREBY give and grant unto said attorney full power and authority to do
and perform all and every act and thing whatsoever requisite and necessary to be
done, as fully to all intents and purposes as I might or could do if personally
present, and hereby ratify and confirm all that said attorney shall lawfully do
or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 16th day of
February, 1994.
/s/ J. Robert Tullis
________________________________
STATE OF
County of
On this 16th day of February, 1994, before me, the undersigned, a Notary
Public in and for said State, personally appeared J. Robert Tullis, known to me
to be the person whose name is subscribed to the foregoing and acknowledged to
me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Patricia K. Stiburek
________________________________
Notary Public for the State of
Idaho
Residing at Boise, Idaho
<PAGE>
SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That I, Steven C. Wheelwright, have made,
constituted and appointed, and by these presents do make, constitute and appoint
either the Chairman of the Board or the President of TJ International, Inc., a
Delaware corporation, my true and lawful attorney in my name, place and stead,
and for my use and benefit as follows:
- For the special purpose of signing the Company's Form 10-K for the
fiscal year ended January 1, 1994 to be filed with the Securities and
Exchange Commission on or before April 1, 1994, and
- For the special purpose of signing all such Forms S-8 as the Company
may be required to file pursuant to SEC regulations.
and to sign, seal, execute, deliver and acknowledge such instruments in writing
of whatever kind and nature as may be necessary or proper in the premises.
I HEREBY give and grant unto said attorney full power and authority to do
and perform all and every act and thing whatsoever requisite and necessary to be
done, as fully to all intents and purposes as I might or could do if personally
present, and hereby ratify and confirm all that said attorney shall lawfully do
or cause to be done by virtue of these presents.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 16th day of
February, 1994.
/s/ Steven C. Wheelwright
________________________________
STATE OF
County of
On this 16th day of February, 1994, before me, the undersigned, a Notary
Public in and for said State, personally appeared Steven C. Wheelwright, known
to me to be the person whose name is subscribed to the foregoing and
acknowledged to me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Patricia K. Stiburek
________________________________
Notary Public for the State of
Idaho
Residing at Boise, Idaho
<PAGE>
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