<SUBMISSION>
<ACCESSION-NUMBER>0001025894-02-000068
<TYPE>8-K
<PUBLIC-DOCUMENT-COUNT>2
<PERIOD>20020204
<ITEMS>1
<ITEMS>3
<ITEMS>7
<FILING-DATE>20020204
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>TREESOURCE INDUSTRIES INC
<CIK>0000797543
<ASSIGNED-SIC>2421
<IRS-NUMBER>930832150
<STATE-OF-INCORPORATION>OR
<FISCAL-YEAR-END>0430
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>8-K
<ACT>34
<FILE-NUMBER>000-16158
<FILM-NUMBER>02526352
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>10260 SW GREENBURG RD STE 900
<STREET2>P O BOX 5805
<CITY>PORTLAND
<STATE>OR
<ZIP>97223-5805
<PHONE>5032463440
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>10260 SW GREENBURG RD SUITE 900
<STREET2>P.O. BOX 5805
<CITY>PORTLAND
<STATE>OR
<ZIP>97228-5805
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>WTD INDUSTRIES INC
<DATE-CHANGED>19920703
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>t_8k20204.txt
<DESCRIPTION>CURRENT REPORT, 2-4-2002
<TEXT>
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                            -------------------------



                                   Form 8-K/A

                                 CURRENT REPORT



                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934



                                January 11, 2002
                  --------------------------------------------
                                 Date of Report
                        (Date of earliest event reported)



                           TREESOURCE INDUSTRIES, INC.
--------------------------------------------------------------------------------
               (Exact Name of Registrant as Specified in Charter)

           Oregon                    0-16158                 93-0832150
----------------------------  ---------------------  ---------------------------
(State or Other Jurisdiction  (Commission File No.)        (IRS Employer
     of Incorporation)                                   Identification No.)

               595 S.E. Grand Ave., Suite 300, Portland, OR 97214
--------------------------------------------------------------------------------
          (Address of principal executive offices, including Zip Code)

                                 (503) 246-3440
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

<PAGE>
Item 1.  Change of Control of Registrant

         In connection with the reorganization of TreeSource Industries, Inc.
and certain of its wholly-owned subsidiaries (the "Company" or "TreeSource")
described under Item 3 below, the Company experienced a change in its equity
ownership on the effective date of the reorganization that may constitute a
change of control. See Item 3 for a discussion of the relevant cancellations and
issuances of equity interests of the Company in the reorganization.

Item 3.  Bankruptcy or Receivership

         As previously reported, on September 27, 1999, the Company filed
voluntary petitions for relief under chapter 11 of the U.S. Bankruptcy Code (the
"Code") in the U.S. Bankruptcy Court for the Western District of Washington (the
"Court"). Since that date, the Company has continued to operate as a
debtor-in-possession under the Code. On January 11, 2002, the Court entered an
order confirming the Company's Second Amended Joint Plan of Reorganization (the
"Plan"). The following summary of the material terms of the Plan is qualified in
its entirety by reference to the full text of the Plan, a copy of which is filed
as an exhibit to this Current Report on Form 8-K and incorporated by reference.

                               SUMMARY OF THE PLAN

Distributions With Respect to Lender's Claims

         The holder of the Company's pre-petition senior secured debt
securities, TreeSource Acquisition Company LLC (the "Lender"), in full
settlement, release and discharge of and in exchange for its claims, will
receive the following consideration: (a) $2 million in cash; (b) a new loan
agreement with the Company pursuant to which the Company will pay Lender a total
of $14 million, secured by liens on substantially all of the Company's assets;
and (c) 9,000,000 shares of the common stock of the reorganized Company,
representing all of the issued and outstanding shares of the reorganized Company
as of January 31, 2002, the effective date of the Plan (the "Effective Date").

Distributions With Respect to General Unsecured Claims

         Each holder of an unsecured claim, in full settlement, release and
discharge of its claim, will receive (a) its pro rata share of $1,100,000 in
cash, which amount represents approximately 30% of the Company's estimate of its
general unsecured trade claims, plus (b) its pro rata share of any recovery from
a lawsuit that was filed to recover certain pre-petition preferential transfers.

Form 8-K                                                                 PAGE 1
<PAGE>
TreeSource Industries, Inc. Equity Interests

         The holders of equity securities of the pre-petition Company, including
any warrants, rights, options or other convertible securities, will not receive
or retain any property under the Plan, or receive or retain any distributions or
interest under the Plan, on account of those interests or claims. On the
Effective Date, all of the outstanding equity securities of the pre-petition
Company will be deemed cancelled and become null and void.

All Other Claims

         Each holder of certain secured claims under the Plan may, at the
reorganized Company's option, either receive a cash payment from the reorganized
Company of the value of its collateral or continue to hold its lien and security
interest on such collateral. Priority tax claims will be paid in full after the
Effective Date. Other priority claims and statutory lien claims under the Plan
were paid as a matter of course by the Company as debtor-in-possession and none
remained unpaid as of the Effective Date, except for certain administrative
claims, which will be paid in full when the exact amounts are ultimately
approved by the Court. Except as otherwise described above, holders of other
claims under the Plan received no distribution under the Plan on account of
their claims.

New Term Loans

         On the Effective Date the reorganized Company entered into a new loan
agreement (the "Loan Agreement") with the Lender. Under the Loan Agreement, the
Company agreed to repay $6 million pursuant to a short-term loan and $8 million
pursuant to a long-term loan. Both loans will accrue simple interest at 11% per
annum. The maturity date of the short-term loan will be July 31, 2004. The
maturity date of the long-term loan will be October 31, 2008. These loans are
secured by liens and security interests in all of the property, both real and
personal, of the reorganized Company, which liens and security interests are
subordinate only to the liens and security interests of the Company's working
capital lender and such other liens as were prior and perfected on the date the
Company filed its petition for reorganization.

Working Capital Loan

         On October 4, 1999, following court approval, the Company entered into
a revolving credit facility with the debtor-in-possession lender to provide a
line of credit to be used to fund post-petition operations. This credit facility
has been extended and amended pursuant to subsequent court orders. Pursuant to
its terms, the revolving

Form 8-K                                                                 PAGE 2
<PAGE>
credit facility was due and payable on the Effective Date. On such date the
reorganized Company entered into a new $10 million working capital loan on
similar terms.

Survival of Certain Corporate Obligations

         Pursuant to the Plan, the Company has entered into indemnification
agreements with its pre-petition Chief Executive Officer and directors, and the
Company's obligations under these indemnification agreements survive unaffected
by the reorganization and other actions contemplated by the Plan.

Dissolution of Creditors' Committee

         Pursuant to the Plan, on its effective date, the Creditors' Committee
was reappointed as the Post-Confirmation Committee, which will remain in effect
until certain outstanding litigation and all objections to claims have been
finally resolved, at which time the Post-Confirmation Committee will dissolve
and the members of and professionals engaged by the Creditors' Committee will be
released from and discharged of all authority due to responsibilities,
obligations and liability, if any, arising from and in connection with the
Company's reorganization.

Officers and Directors of the Reorganized Company

         As of the Effective Date the Company's Board of Directors consists of
the following five new directors: James Schueler, R. Gregory Service, Harold
Mildenberger, David Cotner and Craig Rostead. Pursuant to the Plan, effective
the day after of the Effective Date, the Company's prior President and Chief
Executive Officer, Jess R. Drake, ceased to hold such offices. New officers will
be appointed by the new Board of Directors of the reorganized Company.

                                 CAPITALIZATION

         Effective January 31, 2002, all previously outstanding equity
securities of the Company have been cancelled for no value and 9,000,000 shares
of the reorganized Company's common stock have been issued to the Lender, which
shares represent 100% of the reorganized Company's outstanding equity
securities. No additional shares are served for future issuance in respect of
claims and interests filed and allowed under the Plan. An additional 1,000,000
shares of the reorganized Company's common stock have been reserved for issuance
pursuant to an equity incentive compensation plan.


Form 8-K                                                                 PAGE 3
<PAGE>
                             ASSETS AND LIABILITIES

         The following table sets forth information about the Company's assets
and liabilities as of December 31, 2001, in the form in which it was furnished
to the Count in the Company's most recent report furnished to the Court.





































Form 8-K                                                                 PAGE 4
<PAGE>
                  TREESOURCE INDUSTRIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                            (Unaudited, in thousands)

                                                             DECEMBER 31, 2001
ASSETS
CURRENT ASSETS
  Cash                                                             $1,187
  Restricted cash                                                   1,778
  Short term investments                                                -
  Accounts receivable, net                                          5,441
  Inventories                                                       8,318
  Prepaid expenses                                                  3,758
  Income tax refund receivable                                          -
  Deferred tax asset                                                    -
  Assets held for sale                                              5,085
  Timber, timberland, and timber-related assets                     2,405
                                                                   ------
     TOTAL CURRENT ASSETS                                          27,972

NOTES AND OTHER RECEIVABLES                                            84
TIMBER AND TIMBERLANDS                                                  -
PROPERTY PLANT AND EQUIPMENT
  Land                                                                510
  Buildings and improvements                                        4,579
  Machinery and equipment                                          26,842
                                                                   ------
                                                                   31,932
  Less reserve for impairment                                           -
  Less accumulated depreciation                                    27,160
                                                                   ------
                                                                    4,772
  Construction in progress                                            588
                                                                   ------
                                                                    5,360
DEFERRED TAX ASSET                                                      -
OTHER ASSETS                                                        1,794
                                                                   ------
                                                                  $35,210
                                                                   ======

Form 8-K                                                                 PAGE 5
<PAGE>
                  TREESOURCE INDUSTRIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                            (Unaudited, in thousands)

                                                             DECEMBER 31, 2001

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
  Accounts payable                                                 $3,210
  Accrued expenses                                                  4,787
  Income taxes payable                                                  -
  Timber contracts payable                                              -
  Current debt                                                      2,705
                                                                   ------
     Total current liabilities                                     10,701

DEFERRED INCOME TAXES PAYABLE                                           -
LIABILITIES SUBJECT TO COMPROMISE
  Accounts payable                                                  2,936
  Accrued expenses                                                  3,198
  Timber contracts payable                                              -
  Long-term debt                                                   42,979
                                                                   ------
     Total liabilities subject to compromise                       49,113

LONG-TERM DEBT, less current maturities                                76
COMMITMENTS AND CONTINGENCIES                                          40
STOCKHOLDERS' EQUITY (DEFICIT)
  Series A preferred stock                                         20,688
  Series B preferred stock                                            333
  Common stock, no par value                                       28,761
  Additional paid-in capital                                           15
Retained deficit - beg. yr.                                       (74,667)
  Dividends paid                                                        -
  Current year earnings                                               149
                                                                   ------
                                                                  (24,721)
                                                                   ------
                                                                  $35,210
                                                                   ======

Form 8-K                                                                 PAGE 6
<PAGE>
Item 7.  Financial Statements and Exhibits

         (c)      Exhibits

                  99.1               Second Amended Joint Plan of Reorganization





































Form 8-K                                                                 PAGE 7
<PAGE>



                                    SIGNATURE

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                        TREESOURCE INDUSTRIES, INC.



Dated:  February 4, 2002                   By: /s/GALEN L. BLAND
                                               -----------------------------
                                                         Galen L. Bland
                                                         Secretary

























Form 8-K                                                                 PAGE 8
<PAGE>

                                  EXHIBIT INDEX

     Exhibit Number                Description
     --------------                -----------

         99.1           Second Amended Joint Plan of Reorganization



































Form 8-K                                                                 PAGE 9

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>t_8k20201x.txt
<DESCRIPTION>AMENDED PLAN OF REORGANIZATION
<TEXT>
                                                                    Exhibit 99.1
                                   The Honorable Samuel J. Steiner

                                   Chapter 11








                         UNITED STATES BANKRUPTCY COURT
                         WESTERN DISTRICT OF WASHINGTON
                                   AT SEATTLE

In re
                                             Administratively Consolidated under
TREESOURCE INDUSTRIES, INC., et al.,         Case No 99-10937

                           Debtors.          No. 99-10932; 9910937 through
                                             No. 99-10961

Taxpayer ID No. 93-0832150                   SECOND AMENDED JOINT PLAN OF
                                             REORGANIZATION




















SECOND AMENDED JOINT PLAN OF
REORGANIZATION - 1                                        PERKINS COIE LLP
                                                   1201 Third Avenue, Suite 4800
                                                  Seattle, Washington 98101-3099
                                                          (206) 583-8888
<PAGE>
                                    CONTENTS


ARTICLE ONE:
         DEFINITIONS.........................................................1


ARTICLE TWO:  TREATMENT OF ADMINISTRATIVE CLAIMS
         AND PRIORITY TAX CLAIMS.............................................12

ARTICLE THREE:  CLASSIFICATION OF CLAIMS AND
         INTERESTS...........................................................13

ARTICLE FOUR:  IDENTIFICATION OF CLASSES OF CLAIMS AND
         INTERESTS IMPAIRED AND NOT IMPAIRED BY THIS PLAN....................14

ARTICLE FIVE:  PROVISIONS FOR TREATMENT OF  CLAIMS AND
         INTERESTS...........................................................15

ARTICLE SIX:  ACCEPTANCE OR REJECTION OF PLAN................................20

ARTICLE SEVEN:  NEW TERM LOANS...............................................20

ARTICLE EIGHT:  WORKING CAPITAL LOAN.........................................22

ARTICLE NINE:  MEANS FOR IMPLEMENTATION AND EXECUTION OF
         THIS PLAN...........................................................22

ARTICLE TEN:  CONDITIONS PRECEDENT...........................................25

ARTICLE ELEVEN:  EXECUTORY CONTRACTS AND UNEXPIRED LEASES....................26

ARTICLE TWELVE:  PROCEDURES FOR RESOLVING DISPUTED CLAIMS....................28

ARTICLE THIRTEEN:  CORPORATE GOVERNANCE......................................30

ARTICLE FOURTEEN:  MODIFICATION OF THIS PLAN.................................32

ARTICLE FIFTEEN:  EFFECT OF CONFIRMATION.....................................32

ARTICLE SIXTEEN:  MISCELLANEOUS PROVISIONS...................................34














SECOND AMENDED JOINT PLAN OF
REORGANIZATION - i                                        PERKINS COIE LLP
                                                   1201 Third Avenue, Suite 4800
                                                  Seattle, Washington 98101-3099
                                                          (206) 583-8888
<PAGE>
<TABLE>
<CAPTION>



                                INDEX TO EXHIBITS
                                                                                 Exhibit
                                                                                 -------


<S>                                                                                  <C>
Exhibit A:  Executory Contracts and Unexpired Leases to Be Assumed................   A

Exhibit B: Fifth Restated Articles of Incorporation of TSI........................   B

Exhibit C: Fourth Restated Bylaws of TreeSource Industries, Inc...................   C

Exhibit D:  New TSI Stock Option Plan.............................................   D

Exhibit E:  Form Articles of Incorporation for Washington Reorganized Subsidiaries   E

Exhibit F:  Form Bylaws for Washington Reorganized Subsidiaries...................   F

Exhibit G:  Form Articles of Incorporation for Oregon Reorganized Subsidiaries....   G

Exhibit H:  Form Bylaws for Oregon Reorganized Subsidiaries.......................   H

Exhibit I:  Form Indemnification Agreement........................................   I

</TABLE>


























SECOND AMENDED JOINT PLAN OF
REORGANIZATION - ii                                       PERKINS COIE LLP
                                                   1201 Third Avenue, Suite 4800
                                                  Seattle, Washington 98101-3099
                                                          (206) 583-8888

<PAGE>
                   SECOND AMENDED JOINT PLAN OF REORGANIZATION
         TreeSource Industries, Inc. ("TSI") and its debtor subsidiaries, the
debtors and debtors in possession in these jointly administered Chapter 11
cases, propose the following Second Amended Joint Plan of Reorganization under
section 1121(a) of the United States Bankruptcy Code, 11 U.S.C. Section 1121(a).
         ALL CREDITORS ARE ENCOURAGED TO CONSULT THE DISCLOSURE STATEMENT BEFORE
VOTING TO ACCEPT OR REJECT THIS PLAN. THE DISCLOSURE STATEMENT CONTAINS A
DISCUSSION OF THE DEBTORS' PREPETITION ACTIVITIES AND A SUMMARY AND ANALYSIS OF
THIS PLAN.

                            ARTICLE ONE: DEFINITIONS
         Whenever it appears appropriate from the context, each term stated in
either the singular or the plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter shall include the
masculine, feminine and the neuter. The words "herein," "hereto," "hereof,"
"hereunder" and others of similar import refer to this Plan as a whole and not
to any particular article, section, subsection, or clause contained in this
Plan. Any term used in this Plan that is not herein defined but is used in the
Bankruptcy Code shall have the meaning assigned to the term in the Bankruptcy
Code. Unless the context requires otherwise, the following words and phrases
shall have the meaning set forth below when used in initially capitalized form
in this Plan:

         "Administrative Claim" means a Claim for payment of an administrative
expense of a kind specified in section 503(b) of the Bankruptcy Code and
referred to in section 507(a)(1) of the Bankruptcy Code, including, without
limitation, the actual, necessary costs and expenses of preserving the Debtors'
estates and operating the Debtors' businesses, including



SECOND AMENDED JOINT PLAN OF
REORGANIZATION - 1                                        PERKINS COIE LLP
                                                   1201 Third Avenue, Suite 4800
                                                  Seattle, Washington 98101-3099
                                                          (206) 583-8888
<PAGE>
wages, salaries, or commissions for services rendered after the commencement of
the Chapter 11 Case, compensation for legal and other services and reimbursement
of expenses awarded under section 330(a) or 331 of the Bankruptcy Code and all
charges assessed against the Debtors' estates under section 1930 of title 28 of
the United States Code.

         "Allowed" means with respect to Claims, (i) any Claim against the
Debtors, proof of which is timely filed, or by order of the Bankruptcy Court is
not or will not be required to be filed, or (ii) any Claim that has been or is
hereafter listed in the Schedules filed by the Debtors as liquidated in amount
and not disputed or contingent and in each case as to which either (a) no
objection to the allowance thereof has been interposed within the applicable
period of time fixed by this Plan, the Bankruptcy Code, the Bankruptcy Rules or
the Bankruptcy Court or (b) such an objection is so interposed and the Claim
will have been allowed by a Final Order (but only to the extent so allowed), or
(iii) any Claim allowed pursuant to this Plan. Unless otherwise expressly
specified in this Plan or required under applicable law or provisions of the
Bankruptcy Code, an Allowed Claim shall not include interest on the principal
amount of such Claim from and after the Filing Date. Notwithstanding the
foregoing, Claims shall be Allowed to the extent that this Plan provides that
they are deemed Allowed.

         "Articles of Incorporation" means the Fifth Restated Articles of
Incorporation of TSI, a copy of which is attached hereto as Exhibit B.

         "Bankruptcy Claims" means any and all claims, rights and causes of
action of a trustee and debtor in possession existing in favor of the Debtors
under the Bankruptcy Code, other than those previously released or compromised
pursuant to a Bankruptcy Court Order or those released or compromised as part of
or under this Plan that may be brought against an




SECOND AMENDED JOINT PLAN OF
REORGANIZATION - 2                                        PERKINS COIE LLP
                                                   1201 Third Avenue, Suite 4800
                                                  Seattle, Washington 98101-3099
                                                          (206) 583-8888

<PAGE>
Entity, including, but not limited to, all claims, rights and causes of action
arising under sections 541 through 553 of the Bankruptcy Code.

         "Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as amended
from time to time, Title 11, United States Code, as applicable to the Chapter 11
Case.

         "Bankruptcy Court" means the United States Bankruptcy Court for the
Western District of Washington at Seattle.

         "Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure
promulgated under section 2075 of title 28 of the United States Code, as amended
from time to time, and any and all applicable local rules of the Bankruptcy
Court, as the same may from time to time be in effect and applicable to the
Chapter 11 Case and other related proceedings.

         "Business Day" means any day except a Saturday, Sunday or other day on
which the Bankruptcy Court's Office of the Clerk, now located at 315 Park Place
Building, 1200 Sixth Avenue, Seattle, Washington, is not open to accept routine
filings.

         "Bylaws" means the Fourth Restated Bylaws of TreeSource Industries,
Inc., a copy of which is attached hereto as Exhibit C.

         "Cash" means legal tender issued by the government of the United States
of America irrespective of the method of payment.

         "Canceled Securities" means a security, note or other instrument, other
than an Other Secured Claim evidencing a Claim or Interest outstanding
immediately prior to the Effective Date, which security, note or other
instrument, other than an Other Secured Claim, represents a Claim or Interest
that is impaired by this Plan, including, without limitation, the Old Term
Notes, the Debentures, the Series A Stock, the Series B Stock and the TSI Common
Stock.




SECOND AMENDED JOINT PLAN OF
REORGANIZATION - 3                                        PERKINS COIE LLP
                                                   1201 Third Avenue, Suite 4800
                                                  Seattle, Washington 98101-3099
                                                          (206) 583-8888
<PAGE>
         "Chapter 11 Case" means the pending bankruptcy cases concerning the
Debtors in the Bankruptcy Court under Case Nos. 99-10932 and 99-10937 through
99-10961, which were commenced on the Petition Date.

         "Claim" means (i) a right to payment from any of the Debtors' estates,
whether or not such right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured; or (ii) a right to an equitable remedy for breach of
performance from the estates if such breach gives rise to a right of payment
from any of the Debtors, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured, or unsecured.

         "Class" means a class of Claims or Interests, as described in Article
Three of this Plan in accordance with section 1123(a)(1) of the Bankruptcy Code.

         "Common Stock" means stock of any class of a corporation which has no
preference in respect of dividends or amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of such
corporation [Record Date].

         "Confirmation" means the entry by the Bankruptcy Court on the docket of
the Chapter 11 Case of the Confirmation Order signed by the Bankruptcy Court.


         "Confirmation Date" means the date on which the Confirmation Order is
entered by the Bankruptcy Court on the docket of the Chapter 11 Case.

         "Confirmation Order" means the order of the Bankruptcy Court confirming
this Plan under section 1129 of the Bankruptcy Code.

         "Creditors' Committee" means the Official Committee of Unsecured
Creditors in these cases appointed pursuant to section 1102 of the Bankruptcy
Code.





SECOND AMENDED JOINT PLAN OF
REORGANIZATION - 4                                        PERKINS COIE LLP
                                                   1201 Third Avenue, Suite 4800
                                                  Seattle, Washington 98101-3099
                                                          (206) 583-8888

<PAGE>
         "Curtailed Mills" means the mills, including all related personal
property and real property, owned by Morton Forest Products Co. and North Powder
Lumber Co.

         "Debenture" means the outstanding securities as of the Petition Date
issued by TSI (formerly known as WTD Industries, Inc.) pursuant to the
Indenture.

         "Debenture Claims" means the Allowed Claims of the Debenture Holders.

         "Debenture Holders" means those persons holding Debentures as of the
Record Date that are Allowed Debenture Claims.

         "Debtors" means TSI and the TSI Subsidiaries.

         "DIP Lender" means General Electric Capital Corporation.

         "Disclosure Statement" means the disclosure statement dated November
21, 2001, as amended, supplemented, or modified from time to time, describing
this Plan.

         "Disputed Claim" means (i) a Claim against the Debtors that was not
timely Filed; (ii) a claim against the Debtors, to the extent that a proof of
claim has been timely Filed or deemed timely Filed under applicable law, as to
which an objection has been timely Filed by the Debtors or any other party in
interest and which objection has not been withdrawn and has not been denied by a
Final Order; (iii) any Claim that was listed in the Schedules as disputed,
contingent or unliquidated; (iv) the Claim of any creditor arising from the
rejection of any executory contract or unexpired lease pursuant to this Plan;
(v) the Claim of any creditor appealing the Confirmation Order; and (vi) any
Claim Filed by an Interest Holder solely on account of such Interest. To the
extent an objection relates to the allowance of only a part of a Claim, such
Claim shall be a Disputed Claim only to the extent of the objection. Before an
objection has been or may be timely Filed, for the purposes of this Plan, a
Claim shall be considered a Disputed Claim to the extent that the amount of the
Claim specified in the proof of claim exceeds the amount of the Claim scheduled
by the Debtors.



SECOND AMENDED JOINT PLAN OF
REORGANIZATION - 5                                        PERKINS COIE LLP
                                                   1201 Third Avenue, Suite 4800
                                                  Seattle, Washington 98101-3099
                                                          (206) 583-8888
<PAGE>
         "Distribution Reserve" means, as of the Effective Date and any
subsequent distribution date, the estimated amount of Cash necessary to (i) make
distributions to holders of Disputed Claims that become Allowed Claims (other
than Penalty Claims), and (ii) pay the professional fees incurred by the
Post-Confirmation Committee, which funds are required to be reserved and that
will be held in a segregated interest-bearing account. The amount to be reserved
on account of Claims arising from the rejection of any executory contract or
unexpired leases shall be estimated by the Debtors before the Effective Date.

         "Effective Date" means the earlier of a date selected by the Debtors or
the date upon which the Confirmation Order becomes a Final Order; provided, that
if, as of either date, all conditions to effectiveness set forth in Section
10.01 of this Plan have not been satisfied, then the Effective Date shall be the
first Business Day on which all such conditions to effectiveness have been
satisfied or waived.

         "Entity" means any individual, corporation, limited liability company
or similar entity, limited or general partnership, joint venture, association,
joint stock company, estate, entity, trust, trustee, United States trustee,
unincorporated organization, government, governmental unit (as defined in the
Bankruptcy Code), agency or political subdivision thereof.

         "Filed" means filed with the Bankruptcy Court in this Chapter 11 Case.

         "Final Order" means any order, ruling, or judgment of the Bankruptcy
Court, or other court of competent jurisdiction, that is not reversed or stayed
as to effect and is no longer subject to review, modification or amendment by
appeal, or writ of certiorari.

         "Indenture" means that certain Indenture dated as of November 30, 1992
between TSI (formerly known as WTD Industries, Inc.) and State Street Bank &
Trust Company, as trustee.


SECOND AMENDED JOINT PLAN OF
REORGANIZATION - 6                                        PERKINS COIE LLP
                                                   1201 Third Avenue, Suite 4800
                                                  Seattle, Washington 98101-3099
                                                          (206) 583-8888
<PAGE>
         "Interest" means any equity interest in any of the Debtors, no matter
how designated including, without limitation, options and warrants.

         "Lender" means TreeSource Acquisition Company LLC, as successor in
interest to Principal Life Insurance Company, The Northwestern Mutual Life
Insurance Company, Foothill Group, Inc., Contrarian Capital Advisors, L.L.C.,
and Fixed Plus Partners, beneficial owner of note registered in the name of Bear
Stearns Securities Corp.

         "Lender's Claims" means the Claims of the Lender arising under the Old
Credit Agreement and evidenced by the Old Term Notes.

         "Net Proceeds" means, with respect to any sale of assets, the proceeds
of such assets after payment of reasonable selling costs, property taxes, and
other prior liens, and creation of reserves for the seller's reasonably
estimated future expenses (including, without limitation, environmental clean-up
costs).

         "New Loan Agreement" means the loan agreement relating to the New
Short-Term Loan and the New Long-Term Loan, to be entered into between the
Reorganized Debtors and the Lender, a copy of which will be filed with the
Bankruptcy Court no later than one week prior to the Voting Deadline.

         "New Long-Term Loan" means the term loan in the amount of $8,000,000
made pursuant to the New Loan Agreement as more particularly described in
Article Seven.

         "New Long-Term Note" means the note to be issued to the Lender pursuant
to the New Loan Agreement a copy of which will be filed with the Bankruptcy
Court no later than one week prior to the Voting Deadline.

         "New Short-Term Loan" means the term loan in the amount of $6,000,000
(subject to reduction as of the Effective Date) made pursuant to the New Loan
Agreement as more particularly described in Article Seven.



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         "New Short-Term Note" means the note to be issued to the Lender
pursuant to the New Loan Agreement, maturing on the 30-month anniversary of the
Effective Date, a copy of which will be filed with the Bankruptcy Court no later
than one week prior to the Voting Deadline.

         "New Term Loans" means the New Short-Term Loan and the New Long-Term
Loan.

         "New Term Notes" means the New Short-Term Note and the New Long-Term
Note.

         "New TSI Common Stock" means 9,000,000 shares of Common Stock to be
authorized pursuant to the Articles of Incorporation and issued pursuant to this
Plan.

         "Old Credit Agreement" means that certain Credit and Security Agreement
dated as of November 30, 1992, as amended from time to time, between the Lender
or their predecessors in interest and TSI (formerly known as WTD Industries,
Inc.) and its affiliates.

         "Old Term Notes" means the term notes held by the Lender pursuant to
the Old Credit Agreement.

         "Operating Mills" means the mills, including all related personal
property and real property, owned by Glide Lumber Products Co., Spanaway Lumber
Co., Trask River Lumber Co., and Tumwater Lumber Co.

         "Option Plan" means TSI's Stock Incentive Plan, a copy of which is
attached hereto as Exhibit D and is deemed incorporated into and part of this
Plan as if set forth in full herein.

         "Other Secured Claims" means any Allowed Claim against any of the
Debtors (including any Allowed Claim relating to a purchase money security
interest but excluding the Lender's Claims) that is secured by a perfected,
valid, and enforceable lien, security interest or other charge against, or
interest in collateral, on any of the Debtors' property to the extent of the
value of the interest of the holder of such Allowed Claim in the Debtors'
interest in such property.

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         "Penalty Claims" means any Claim for fines, penalties, forfeitures, or
for multiple, exemplary, or punitive damages, the basis for which arose before
the Petition Date, to the extent such fines, penalties, forfeitures, or damages
are not compensation for actual pecuniary loss suffered by the holder of such
Claim.

         "Petition Date" means September 27, 1999, the date upon which the
Debtors filed their voluntary Chapter 11 petitions in the Bankruptcy Court.

         "Plan" means this Second Amended Joint Plan of Reorganization together
with all exhibits and attachments hereto, either in its present form or as it
may be altered, amended or modified from time to time.


         "Post-Confirmation Committee" means the entity into which the
Creditors' Committee will be re-constituted as of the Effective Date of this
Plan until dissolved pursuant to Section 16.11 of this Plan.

         "Priority Claim" means any Claim, other than a Priority Tax Claim or
Administrative Claim, that is entitled to priority in section 507(a) of the
Bankruptcy Code.

         "Priority Tax Claim" means any Claim that is entitled to priority in
payment under section 507(a)(8) of the Bankruptcy Code.

         "Pro Rata" means at any particular time, with respect to each Class of
Claims, the same proportion that the Allowed amount of a Claim in such Class of
Claims bears to the aggregate of: (i) the Allowed amount of all such Claims,
plus (ii) the aggregate asserted amount of all Disputed Claims of such Class of
Claims, as reduced from time to time as and to the extent that the Allowed
amount of such Claim is determined.

         "Record Date" means November 20, 2001 unless otherwise specified for a
specific Class by the order of the Bankruptcy Court approving the Disclosure
Statement.

         "Reorganized Debtors" means the Debtors from and after the Effective
Date.

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         "Reorganized Subsidiaries" means the TSI Subsidiaries from and after
the Effective Date.

         "Reorganized TSI" means TreeSource Industries, Inc. from and after the
Effective Date.

         "Schedules" means the schedules of assets and liabilities filed by the
Debtors with the Bankruptcy Court in accordance with section 521(1) of the
Bankruptcy Code, including any supplements or amendments made thereto pursuant
to Bankruptcy Rule 1009.

         "Seneca Preference Lawsuit" means the Debtors' Adversary Proceeding No.
A01-1501 against Seneca Financial Group, Inc.

         "Series A Claims" means Claims arising out of the Series A Stock as of
the Record Date, including all claims, if any, arising from or in connection
with the purchase or sale thereof, and any right to payment under the Indenture
and the subordination provisions therein.

         "Series A Stock" means shares of Series A Preferred Stock of TSI.

         "Series B Stock" means shares of Series B Preferred Stock of TSI,
including all claims, if any, arising from or in connection with the purchase or
sale thereof.

         "Statutory Lien Claim" means any Allowed Claim against any of the
Debtors secured by a perfected, valid, and enforceable statutory lien on any of
the Debtors' property to the extent of the value of the interest of the holder
of such Statutory Lien Claim in the Debtors' interest in such property except
for Other Secured Claims and Lender's Claims.

         "Subsidiary" means a corporation or partnership more than 50% of the
outstanding voting stock or equity of which is owned, directly or indirectly, by
TSI or by one or more of the TSI Subsidiaries, or by TSI and one or more of the
TSI Subsidiaries.


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         "Surplus Assets " means the mills, including all related personal
property and real property, if any, owned by Burke Lumber Co., Central Point
Lumber Co., Pacific Softwoods Co., Pacific Hardwoods - South Bend Co., Philomath
Forest Products Co., Midway Engineered Wood Products, Inc., and Sedro-Woolley
Lumber Co., and any TSI Subsidiary Equity Interests in such TSI Subsidiaries.

         "Trustee Fees" means the charges assessed against the Debtors' estates
under 28 U.S.C. ss. 1930.

         "TSI" means TreeSource Industries, Inc.

         "TSI Common Stock" means the existing shares of Common Stock of TSI,
issued and outstanding as of the Petition Date, including all Claims, if any,
arising from or in connection with the purchase or sale thereof.

         "TSI Equity Interests" means Series B Stock, TSI Common Stock, any
rights or interests under TSI's Amended and Restated Rights Agreement dated as
of March 4, 1998 (the "Rights Agreement"), and Series C Junior Participating
Preferred Stock of TSI authorized in connection with the Rights Agreement,
together with any and all rights to acquire, or options, warrants, or any other
securities exercisable for, or convertible into, either Series B Stock or TSI
Common Stock.

         "TSI Subsidiaries" means Burke Lumber Co., Central Point Lumber Co.,
Glide Lumber Products Co., Greenweld North America Co., Midway Engineered Wood
Products, Inc., North Powder Lumber Co., Pacific Softwoods, Co., Philomath
Forest Products, Co., Trask River Lumber Co., TreeSource, Inc., Western Timber
Co., Morton Forest Products Co., Pacific Hardwoods - South Bend Co.,
Sedro-Woolley Lumber Co., Spanaway Lumber Co., Tumwater Lumber Co. (f/k/a
Cascade West Forest Products, Inc.), and Valley Wood Products Co.



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         "TSI Subsidiary Equity Interests" means any and all Interests in the
TSI Subsidiaries.

         "Unsecured Claims" means all Claims, including the Claim of any Entity
claiming a security interest in any of the Debtors' property, real or personal,
that is not otherwise classified in this Plan; provided, however, that Unsecured
Claims do not include Priority Claims, Administrative Claims, Priority Tax
Claims, Debenture Claims, Lender's Claims, Other Secured Claims, Statutory Lien
Claims, Penalty Claims and Series A Claims.

         "Unsecured Distribution" means (i) $1,100,000 and (ii) the proceeds of
the Seneca Preference Lawsuit, if any, to be distributed pursuant to Section
5.05 of this Plan.

         "Voting Deadline" means the date set by order of the Bankruptcy Court
upon which ballots or master ballots voting to accept or reject this Plan must
be received by the Debtors' bankruptcy counsel by 5:00 p.m. Seattle time in
order to be counted.

         "Working Capital Lender" means the DIP Lender or other financial
institution.

         "Working Capital Loan" means the working capital line of credit
approved hereunder and obtained by the Reorganized Debtors. The principal terms
of the Working Capital Loan will be similar to those contained in the revolving
credit facility with the DIP Lender (a copy of which is on file with the
Bankruptcy Court) or other commercially reasonable terms and will include
another intercreditor agreement with the Lenders acceptable to both parties. The
Working Capital Loan shall be a $____million facility with an additional $___
million of seasonal borrowing capacity. The Working Capital Loan documents will
be filed with the Bankruptcy Court no later than one week prior to the Voting
Deadline.

                 ARTICLE TWO: TREATMENT OF ADMINISTRATIVE CLAIMS
                             AND PRIORITY TAX CLAIMS

                  2.01 Administrative Claims. Each Administrative Claim
(including Trustees Fees) accrued on or before, but unpaid as of, the Effective
Date shall be paid in full in Cash on


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the latest of (i) the Effective Date; (ii) the date on which the Bankruptcy
Court enters an order allowing such Administrative Claim; provided, however,
that Administrative Claims representing indebtedness or other obligations
incurred in the ordinary course of business or assumed by the Debtors shall be
paid in the ordinary course of business and in accordance with any terms and
conditions of any agreement relating thereto; or (iii) the date on which the
Debtors or the Reorganized Debtors, as the case may be, and the holder of such
Administrative Claim otherwise agree. All amounts owed by the Debtors pursuant
to the revolving credit facility with the DIP Lender will be paid in full in
cash on the Effective Date from proceeds of the Working Capital Loan.

                  2.02 Priority Tax Claims. Each holder of an Allowed Priority
Tax Claim shall be paid the full amount of its Allowed Priority Tax Claim in
Cash by the Reorganized Debtors on the latest of (a) the Effective Date, (b) the
date such Priority Tax Claim becomes an Allowed Claim, (c) the date such
Priority Tax Claim first comes due in the ordinary course, and (d) the date on
which the Debtors or the Reorganized Debtors and the holder of such Allowed
Priority Tax Claim otherwise agree.

              ARTICLE THREE: CLASSIFICATION OF CLAIMS AND INTERESTS

         Pursuant to section 1122 of the Bankruptcy Code, set forth below is a
designation of Classes of Claims and Interests. Administrative Claims and
Priority Tax Claims of the kinds specified in sections 507(a)(1) and 507(a)(8)
of the Bankruptcy Code (the treatment of which is set forth in Article Two,
above) have not been classified and are excluded from the following Classes, in
accordance with section 1123(a)(1) of the Bankruptcy Code.

         3.01  Claims.
               ------
               Class 1.  Class 1 consists of all Allowed Priority Claims.
               -------
               Class 2.  Class 2 consists of the Allowed Lender's Claims.
               -------

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               Class 3.  Class 3 consists of all Allowed Statutory Lien Claims.
               -------
               Class 4.  Class 4 consists of all Allowed Other Secured Claims.
               -------
               Class 5.  Class 5 consists of all Allowed Unsecured Claims.
               -------
               Class 6.  Class 6 consists of the Allowed Debenture Claims.
               -------
               Class 7.  Class 7 consists of all Allowed Penalty Claims.
               -------
               Class 8.  Class 8 consists of all Allowed Series A Claims.
               -------
         3.02  Interests.
               ---------
               Class 9.  Class 9 consists of the TSI Equity Interests.
               -------
               Class 10. Class 10 consists of the TSI Subsidiary Equity
               --------
                         Interests.


              ARTICLE FOUR: IDENTIFICATION OF CLASSES OF CLAIMS AND
                INTERESTS IMPAIRED AND NOT IMPAIRED BY THIS PLAN

         4.01 Classes of Claims and Interests Not Impaired by This Plan.
Priority Claims (Class 1), Statutory Lien Claims (Class 3), and TSI Subsidiary
Equity Interests (Class 10) are not impaired by this Plan. Under section 1126(f)
of the Bankruptcy Code, holders of such Claims and Interests are conclusively
presumed to accept this Plan, and the votes of such holders will not be
solicited. To the extent that any of the foregoing holders claim or assert a
right to vote on this Plan, they shall be deemed to have voted to reject their
treatment.

         4.02 Classes of Claims and Interests Impaired by This Plan and Entitled
to Vote. The Lender's Claims (Class 2), Other Secured Claims (Class 4), and
Unsecured Claims (Class 5) are impaired by this Plan.

         4.03 Classes of Claims and Interests Impaired by This Plan and Deemed
to Reject This Plan. The Debenture Claims (Class 6), Penalty Claims (Class 7),
Series A Claims (Class 8), and TSI Equity Interests (Class 9) are impaired and
do not receive or retain any property under this Plan. Under section 1126(g) of
the Bankruptcy Code, the holders of such

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Claims and Interests are conclusively presumed to reject this Plan and the votes
of such holders will not be solicited.

         4.04 Confirmation Notwithstanding Rejection by a Class. In the event
that an impaired Class of Claims or Interests fails to accept this Plan in
accordance with section 1129(a) of the Bankruptcy Code, the Debtors may request
that the Bankruptcy Court confirm this Plan in accordance with section 1129(b)
of the Bankruptcy Code.

                    ARTICLE FIVE: PROVISIONS FOR TREATMENT OF
                              CLAIMS AND INTERESTS

         The treatment of and consideration to be received by holders of Allowed
Claims pursuant to this Plan shall be in full settlement of their respective
Allowed Claims unless otherwise specified herein.

         5.01 Priority Claims (Class 1). On the latest of (i) the Effective
Date, (ii) the date such Priority Claim becomes an Allowed Claim, or (iii) the
date on which the Debtors or the Reorganized Debtors, as the case may be, and
the holder of such Priority Claim otherwise agree, each holder of an Allowed
Priority Claim shall be entitled to receive Cash in an amount sufficient to
render such Priority Claim unimpaired under section 1124 of the Bankruptcy Code,
in full settlement, release and discharge of such Allowed Priority Claim. Class
1 is unimpaired.

         5.02 Lender's Claims (Class 2). The Lender's Claims, as stated in the
proof of claim filed on behalf of the Lender's predecessors in interest in this
case, shall be an Allowed Claim. On the Effective Date, the holder of Lender's
Claims shall receive (i) $2,000,000 in Cash, (ii) the New Short-Term Loan and
New Short-Term Note as described in Article Seven, (iii) the New Long-Term Loan
and New Long-Term Note as described in Article Seven, (iv) Net Proceeds of sales
of the Operating Mills, Curtailed Mills, or Surplus Assets that close


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between August 1, 2001 and the Confirmation Date, and (v) 9,000,000 shares of
New TSI Common Stock, representing all of the issued and outstanding shares of
the New TSI Common Stock as of the Effective Date. This treatment is in full
settlement, release and discharge of the Allowed Lender's Claims, including any
and all postpetition Claims, including, without limitation, those arising under
section 507(b) of the Bankruptcy Code; provided, however, that the distribution
of value to the Lender set forth in this Section 5.02 in respect of the Allowed
Lender's Claims shall not be deemed to discharge or release the Allowed Lender's
Claims except to the extent set forth herein; and, provided further, that the
Lender's liens and security interests in all real and personal property
collateral pledged under the Old Credit Agreement and that secure the Allowed
Lender's Claims thereunder shall survive, shall secure the New Term Notes and
all other obligations of Reorganized TSI and the Reorganized Subsidiaries to the
Lender under the New Loan Agreement, and shall retain the same priority as such
liens and security interests held as of the Petition Date, subject only to the
liens and security interests granted to the Working Capital Lender hereunder.
Class 2 is impaired.

         5.03 Statutory Lien Claims (Class 3). On the latest of (i) the
Effective Date, (ii) the date such Statutory Lien Claim becomes an Allowed
Statutory Lien Claim, or (iii) the date on which the Debtors or the Reorganized
Debtors, as the case may be, and the holder of an Allowed Statutory Lien Claim
otherwise agree, each holder of an Allowed Statutory Lien Claim shall receive
Cash in an amount sufficient to satisfy such Claim or the value of such
creditor's collateral. This treatment is in full settlement, release and
discharge of the Allowed Statutory Lien Claims, including any Claims arising
under sections 503 and 507(b) of the Bankruptcy Code. Class 3 is unimpaired.



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         5.04         Other Secured Claims (Class 4).

                  (a) On the latest of (i) the Effective Date, (ii) the date
such Other Secured Claim becomes an Allowed Other Secured Claim, or (iii) the
date on which the Debtors or the Reorganized Debtors, as the case may be, and
the holder of such Allowed Other Secured Claim otherwise agree, each holder of
an Allowed Other Secured Claim shall, at the sole option of the Debtors or
Reorganized Debtors, as the case may be:

                  (1) receive Cash in an amount sufficient to satisfy the lesser
of (i) such Allowed Other Secured Claim or (ii) the value of such creditor's
collateral as determined by agreement or Final Order of the Bankruptcy Court or
other court of competent jurisdiction, or

                  (2) retain its lien and security interest on the Debtors'
property and receive payment of its Other Secured Claim, together with interest
at the non-default contract rate (without adjustment or additional payments
required for any event of taxability or similar event) provided in the
claimant's agreement with the applicable Debtor. To the extent that the
agreement provides for periodic amortization of principal, the Other Secured
Claim shall be satisfied in periodic installments of principal and interest,
each in like amount to that provided by the agreement over such period as is
required to amortize the principal amount of such Other Secured Claim. In
addition: (i) any such Other Secured Claim shall be prepaid, in whole or part,
prior to scheduled maturity from any Net Proceeds received from the sale of the
collateral securing such obligation to a third party unaffiliated with the
Debtors; (ii) any such Other Secured Claim may be prepaid in full, at the
Debtors' or the Reorganized Debtors' option, as the case may be, by returning to
the holder of an Other Secured Claim the collateral securing that creditor's
Other Secured Claim; (iii) to the extent that the obligation does not provide
for the periodic amortization of outstanding principal, but provides instead for
payments of interest only, such obligation shall continue to provide for
payments of interest

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only until the later of (A) the originally scheduled maturity date of the Other
Secured Claim, or (B) the end of the period, commencing on the Effective Date,
equal in duration to the period from the Petition Date to the originally
scheduled maturity date, at which time the outstanding principal balance shall
be paid in full, unless otherwise ordered by the Bankruptcy Court.

                  (b) Except as otherwise provided in this Section 5.04, or as
otherwise ordered by the Bankruptcy Court, the obligations evidencing the Other
Secured Claims shall reflect terms identical to those contained in such
obligations prior to the Petition Date. The Debtor that was the primary obligor
on such obligation shall remain the primary obligor, and any guarantee of such
obligation by any other Debtor shall continue under the same terms as governed
such guaranty before the Petition Date.

                  (c) Collateral. Each of the Other Secured Claims shall
continue to be secured by the lien on the real or personal property of one or
more of the Debtors that existed at the Petition Date. Collateral securing Other
Secured Claims shall be subject to junior liens securing the Working Capital
Loan, the New Short-Term Loan, and the New Long-Term Loan.

                  (d) Computation of Allowed Other Secured Claims. For purposes
of this Section 5.04 and subject to any claims pursuant to section 506(c) of the
Bankruptcy Code, Allowed Other Secured Claims shall be limited to the principal
amount of the indebtedness owed to such holder of an Other Secured Claim
pursuant to its Secured Claim on the Petition Date plus any accrued and unpaid
interest on such Other Secured Claim at the non-default contract rate as of the
Petition Date; provided, however, that the amount of such Other Secured Claim
shall not exceed the fair market value of the collateral securing such Other
Secured Claim as of the Petition Date. This treatment is in full settlement,
release and

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discharge of the Allowed Other Secured Claims, including any and all
postpetition Claims, including, without limitation, those arising under section
507(b) of the Bankruptcy Code. Class 4 is impaired.

         5.05 Unsecured Claims (Class 5). On the latest of (i) the Effective
Date, (ii) the date such Unsecured Claim becomes an Allowed Unsecured Claim, or
(iii) the date on which the Debtors or the Reorganized Debtors, as the case may
be, and the holder of such Unsecured Claim otherwise agree, each holder of an
Allowed Unsecured Claim will be entitled to receive its Pro Rata share of the
Unsecured Distribution, subject to the amounts held in the Distribution Reserve
for distribution as provided in Article Twelve of this Plan, in full settlement,
release and discharge of such Allowed Unsecured Claim. Class 5 is impaired.

         5.06 Debenture Claims (Class 6). On the Effective Date, holders of
Allowed Debenture Claims shall receive no distribution on account of their
Debenture Claims. This treatment is in full and complete settlement, release and
satisfaction and discharge of the Claims of Debenture Holders. Class 6 is
impaired.

         5.07 Penalty Claims (Class 7). On the Effective Date, holders of
Allowed Penalty Claims shall receive no distribution on account of their Allowed
Penalty Claims. This treatment is in full and complete settlement, release and
satisfaction and discharge of their Allowed Penalty Claims. Class 7 is impaired.

         5.08 Series A Claims (Class 8). On the Effective Date, holders of
Allowed Series A Claims shall receive no distribution on account of their
Allowed Series A Claims. This treatment is in full and complete settlement,
release and satisfaction and discharge of their Allowed Series A Claims. Class 8
is impaired.

         5.09 TSI Equity Interests (Class 9). On the Effective Date, any and all
TSI Equity Interests and any and all certificates representing TSI Equity
Interests shall be canceled

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and become null and void, and the holders of TSI Equity Interests shall not be
entitled to receive or retain any distributions or Interest under this Plan.
Class 9 is impaired.

         5.10 TSI Subsidiary Equity Interests (Class 10). On the Effective Date,
the TSI Subsidiary Equity Interests shall, in each instance, be converted into
an aggregate of 1,000 shares of Common Stock issued by such TSI Subsidiary and
all such shares shall be retained by Reorganized TSI. Class 10 is unimpaired.

                  ARTICLE SIX: ACCEPTANCE OR REJECTION OF PLAN

         6.01 Each Impaired Class Entitled to Vote Separately. The holders of
Claims in each impaired Class of Claims receiving distributions hereunder shall
be entitled to vote separately as a Class to accept or reject this Plan. The
holders of Priority Claims (Class 1), Statutory Lien Claims (Class 3) and TSI
Subsidiary Equity Interests (Class 10) are not impaired and are deemed to have
accepted this Plan. Holders of Debenture Claims (Class 6), Penalty Claims (Class
7), Class A Claims (Class 8), and TSI Equity Interests (Class 9) are impaired
and are deemed to have rejected this Plan; their votes will not be solicited.

         6.02 Acceptance by a Class of Creditors. Consistent with section
1126(c) of the Bankruptcy Code, and except as provided in section 1126(e) of the
Bankruptcy Code, a Class of Claims shall have accepted this Plan if this Plan is
accepted by at least two-thirds in dollar amount and more than one-half in
number of the holders of the Allowed Claims of such Class that have timely and
properly voted to accept or reject this Plan.

                          ARTICLE SEVEN: NEW TERM LOANS

         7.01 New Short-Term Loan. The terms of the New Short-Term Loan are set
forth in the New Loan Agreement. The New Short-Term Note will accrue simple
interest at 11% per annum, payable at the earlier of maturity or the prepayment
in full of the principal balance. The maturity date of the New Short-Term Loan
shall be the 30-month anniversary of

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the Effective Date. The principal balance of the New Short-Term Loan shall be
$6, 000,000, reduced by the amount that the cash payment to the Lender at the
Effective Date pursuant to Section 5.02 of this Plan exceeds $2,000,000. The
Debtors will be obligated to make mandatory principal reductions out of the Net
Proceeds of sales of the Operating Mills, Curtailed Mills, or Surplus Assets. In
case of a discrepancy between the treatment described in this Article Seven and
the New Loan Agreement, the New Loan Agreement shall control.

         7.02         New Long-Term Loan.

         The terms of the New Long-Term Loan are set forth in the New Loan
Agreement. The principal balance of the New Long-Term Loan shall be $8,000,000
and it will accrue simple interest at 11% per annum. The repayment terms of the
New Long-Term Loan will be as set forth in the New Long-Term Note. In case of a
discrepancy between the treatment described in this Article Seven and the New
Loan Agreement, the New Loan Agreement shall control.

         7.03 Collateral for the New Term Loans. The New Term Loans shall be
secured by liens and security interests in all of the property, both real and
personal, of the Reorganized Debtors, which liens and security interests shall
be subordinate only to the liens and security interests of the Working Capital
Lender, and such other liens as were prior and perfected on the Petition Date.
Anything to the contrary herein notwithstanding, the Lender's liens and security
interests in all real and personal property collateral pledged under the Old
Credit Agreement and that secure the Allowed Lender's Claims thereunder shall
survive, shall, in addition to the new liens and security interests granted
hereunder, secure the New Term Notes and all other obligations of Reorganized
TSI and the Reorganized Subsidiaries to the Lender under the New Loan Agreement,
and shall retain the same priority as such liens and security interests held as
of the Petition Date, subject only to the liens and security interests set forth
in the preceding sentence.

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                       ARTICLE EIGHT: WORKING CAPITAL LOAN

         8.01 On October 4, 1999, following Bankruptcy Court approval, the
Debtors entered into a revolving credit facility with the DIP Lender to provide
a line of credit to be used to fund postpetition operations. Pursuant to its
terms, as amended, the revolving credit facility will become due and payable on
the Effective Date. On the Effective Date the Debtors will enter into the
Working Capital Loan. The Working Capital Loan shall be secured by first
priority liens on the Reorganized Debtors' property.

                   ARTICLE NINE: MEANS FOR IMPLEMENTATION AND
                             EXECUTION OF THIS PLAN

         9.01 Vesting of Property. Except for (i) the distributions to be made
on the Effective Date and (ii) as otherwise provided in this Plan, on the
Effective Date, title to all property of the Debtors' estates, including without
limitation all causes of action of the Debtors existing on the Effective Date
other than the Seneca Preference Lawsuit, shall, without further order or action
of the Bankruptcy Court, be deemed transferred to the Reorganized Debtors in
accordance with section 1141 of the Bankruptcy Code, free and clear of all
Claims. After the Confirmation Date but prior to the Effective Date, the Lender
may, in its sole discretion, provide a notice to the Debtors, DIP Lender and the
Creditors' Committee containing a description of any of the Surplus Assets that
will not vest in the Reorganized Debtors, but rather will remain in the
bankruptcy estates for subsequent disposition consistent with the terms of this
Plan. Any such Surplus Assets will be and will remain until sold subject to the
Lender's security interests under the New Term Loans.

         9.02 Establishment of Distribution Reserve. On or before the Effective
Date, the Debtors or the Reorganized Debtors, as the case may be, shall
establish the Distribution Reserve, which shall be funded with a portion of the
Unsecured Distribution. The

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Reorganized Debtors shall maintain the Distribution Reserve until such time as
all Unsecured Claims have been Allowed in whole or in part or disallowed in
whole or in part, the Seneca Preference Lawsuit has been fully litigated, and
all professional fees of the Post-Confirmation Committee have been paid. At such
time, the Reorganized Debtors shall distribute any remaining funds on a Pro Rata
basis to holders of Allowed Unsecured Claims. All interest that is earned on the
Distribution Reserve will become part of the Distribution Reserve and will be
paid to Allowed Unsecured Claims according to the terms of this Section 9.02. To
the extent the Distribution Reserve is inadequate to pay all Allowed Unsecured
Claims on a Pro Rata basis, a holder of such Allowed Unsecured Claim shall have
no claim against any of the Debtors or their officers, directors, agents,
employees, representatives or any other Entity retained or employed by the
Debtors due to the insufficiency of the Distribution Reserve.

         9.03 Surrender and Cancellation of Series A Stock, TSI Equity
Interests, Old Term Notes or Other Instruments; Discharge of Indenture
Obligations. (i) As of the Effective Date, any security, note or instrument
evidencing a Claim or Interest that is impaired by this Plan shall become a
Canceled Security. On the Effective Date, each of the respective transfer books
maintained for the Canceled Securities shall be closed. Except for the right to
receive the distributions, if any, called for by this Plan, the holder of a
Canceled Security shall have no rights arising from or relating to such Canceled
Security after the Effective Date, including, without limitation, any rights of
subordination or subrogation that may be construed to be contained in such
Canceled Security. Each holder of a Canceled Security evidencing an Allowed
Claim shall surrender such Canceled Security to Reorganized TSI (or its
designee) and Reorganized TSI (or its designee) shall distribute to the holder
thereof the appropriate consideration therefor in accordance with this Plan. No
distribution under this Plan shall be made to or on behalf of any holder of an
Allowed Claim or Interest evidenced by a Canceled

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Security unless and until such Canceled Security is received by Reorganized TSI
(or its designee) or Reorganized TSI (or its designee) waives in writing such
requirement as to any Entity; provided, however, that such waiver shall be
deemed made in respect of the Old Term Notes. In the event of any lost or
destroyed Canceled Security, the holder of such Canceled Security must deliver
an affidavit of loss or destruction to Reorganized TSI (or its designee), as
well as an agreement to indemnify Reorganized TSI, in form and substance
reasonably acceptable to Reorganized TSI, before such holder may receive any
distribution under this Plan for this lost or destroyed Canceled Security. Any
holder of an Allowed Claim that fails to surrender a Canceled Security related
thereto or deliver an affidavit and an indemnity agreement before the later to
occur of (a) two years from the Effective Date and (b) six months following the
date such holder's Claim becomes an Allowed Claim, shall be deemed to have no
further Claim and shall not participate in any distribution under this Plan.

         (ii) The Indenture and the respective obligations of the indenture
trustee thereunder shall be canceled and discharged on the Effective Date.

         9.04 Timing of Distributions. Notwithstanding any other provision of
this Plan, no payments, distributions, or other actions to be made or taken by
the Debtors pursuant to this Plan shall be made or taken until the Effective
Date.
         9.05 Method of Payment. Payments to be made by the Reorganized Debtors
pursuant to this Plan shall be made by check drawn on a domestic bank or by wire
transfer from a domestic bank, at the sole discretion of the Reorganized
Debtors. The foregoing notwithstanding, all payments to the Lender on the
Effective Date shall be by wire transfer.

         9.06 No Fractional Securities. Reorganized TSI (or its designee) will
not distribute any fractional interest in shares of New TSI Common Stock.


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         9.07 Unclaimed Property. If any Entity entitled to receive a Cash
payment under this Plan cannot be located on the later of the Effective Date or
when a Claim is Allowed, then such Cash will be set aside and held in the
Distribution Reserve account. If such Entity is located within one year of the
Effective Date, such Cash, together with any interest earned thereon, shall be
paid or distributed to such Entity. If such Entity is not located within one
year after the Effective Date, such Entity shall be deemed to have waived all
rights to distribution under this Plan and neither the Debtors nor the
Reorganized Debtors shall have any further obligation to such Entity under this
Plan. In that event, any such Cash and accrued interest held in reserve for such
Entity shall be distributed to holders of Allowed Unsecured Claims to the extent
they have not previously been paid in full; provided, however, that nothing
contained in this Plan shall require the Reorganized Debtors to attempt to
locate such Entity. If holders of Allowed Unsecured Claims have been paid in
full, the Reorganized Debtors shall retain such sums.

         9.08 Prepayment. Subject to the terms of the New Loan Agreements and
the Working Capital Loan, but notwithstanding any contrary provision in any
other agreement or instrument evidencing or relating to any obligation, the
Reorganized Debtors shall have the right to prepay, without penalty, all or any
portion of the Allowed Claims at any time after the Effective Date.

         9.09 Transactions on Business Days. If the Effective Date shall occur
on a day that is not a Business Day, the transactions contemplated by this Plan
to occur on such day shall instead occur on the next succeeding Business Day.

                        ARTICLE TEN: CONDITIONS PRECEDENT

         10.01 Conditions Precedent to the Effective Date. Except as waived by
the Debtors and any other party benefiting from such conditions, the following
conditions must

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occur and be satisfied on or before the Effective Date in order for this Plan to
be consummated:

                  (i) Entry of Confirmation Order. The Confirmation Order shall
         have been signed by the Bankruptcy Court and entered on the docket for
         the Chapter 11 Case by the Clerk of the Bankruptcy Court in form and
         substance reasonably satisfactory to the Debtors, the Lender and the
         Working Capital Lender.

                  (ii) No Stay. There shall not be any stay in effect with
         respect to the Confirmation Order.

                  (iii) Execution of New Term Loans. The Debtors and the Lender
         shall have executed and delivered the New Loan Agreement and such other
         instruments and documents as the Lender shall reasonably request to
         effectuate the transactions contemplated by this Plan.

                  (iv) Working Capital Loan. The Debtors and the Working Capital
         Lender shall have executed and delivered the documents relating to the
         Working Capital Loan.

                  (v) Option Plan. The Board of Directors of TSI shall have
         adopted the Option Plan upon terms acceptable to the Lender.

            ARTICLE ELEVEN: EXECUTORY CONTRACTS AND UNEXPIRED LEASES

         11.01 Assumption and Rejection of Executory Contracts. Any executory
contracts or unexpired leases that have not been (i) assumed by the Debtors with
the Bankruptcy Court's approval on or before the Effective Date or (ii)
identified on Exhibit A to this Plan shall be deemed to have been rejected by
the Debtors on the Effective Date. The executory contracts identified on Exhibit
A shall be deemed assumed by the affected Debtor(s) on the Effective Date.
Additionally, confirmation of this Plan will be deemed to approve the assumption
and continuation of the following categories of executory contracts entered into

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post-petition by the Debtors: (i) employment agreements that have been approved
by this Court prior to or by the Effective Date; (ii) the Indemnification
Agreements described in Section 16.10 hereto, and (iii) any postpetition
amendments to the Debtors' real property leases.

         11.02 Filing of Proofs of Claim for Rejection Damages. Unless otherwise
provided by an order of the Bankruptcy Court entered prior to the Confirmation
Date, a proof of claim against the Debtors arising from the rejection of an
executory contract or unexpired lease pursuant to a Final Order must be filed
with the Bankruptcy Court within the later of (i) the date designated by the
Bankruptcy Court as the last date for filing proofs of claim in the Chapter 11
Case; (ii) the time period established by the Bankruptcy Court in a Final Order
approving such rejection; or (iii) 30 days from the Effective Date. Any Entity
that fails to file proof of its Claim arising from such a rejection within the
period set forth above shall be forever barred from asserting a Claim against
the Debtors or the Reorganized Debtors or the property or interests in property
of the Debtors or Reorganized Debtors.

         11.03 Continuation of Employee Severance Arrangements. All employment
severance arrangements approved by the Bankruptcy Court in the Order Approving
Severance Arrangements with Key Personnel and Surcharge of Collateral dated June
1, 2001 shall remain in effect until December 31, 2002. Debtors have provided to
Lender on November 14, 2001 a list of the names of persons entitled to extended
severance pursuant to such arrangements and the amount of base severance that
they would be entitled to receive (not including any portion of the applicable
severance obligation calculated based on the employee's bonus under currently
existing bonus programs). Debtors will not, without the prior consent of Lender,
take any action prior to the Effective Date that would change the persons
entitled to receive extended severance or change the amount of severance that
such

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persons would be entitled to receive (other than changes caused by bonuses
under currently existing non-discretionary bonus programs).

            ARTICLE TWELVE: PROCEDURES FOR RESOLVING DISPUTED CLAIMS

         12.01 Objections to Claims and Interests. The Debtors shall have the
authority to file objections, with the prior approval of the Committee, to
Unsecured Claims, and without the prior approval of the Committee and to all
Claims that are not Unsecured Claims, before the Effective Date. If there are
unresolved objections to Unsecured Claims as of the Effective Date, the
Post-Confirmation Committee will have the sole discretion to pursue them. The
Post-Confirmation Committee may object to an Unsecured Claim by filing an
objection with the Bankruptcy Court and serving such objection upon the holder
of such Claim not later than 90 days after the Effective Date or such other date
that may be set by the Bankruptcy Court upon request of the Reorganized Debtors,
the Post-Confirmation Committee, or other party in interest. For purposes of
this paragraph, an objection shall be served by placing it in the U.S. mail,
first class postage paid, and addressed to the Claim holder at the address on
such holder's proof of claim herein, within the period allowed for filing
objections to Claims. Notwithstanding the foregoing, if any claimant is allowed
by the Bankruptcy Court to file a late proof of claim, the Post-Confirmation
Committee shall be allowed to object to such Unsecured Claim within 90 days of
the filing of such Unsecured Claim, if such period would extend past the
original 90-day period for objecting to Claims. For purposes of distributions on
the Effective Date, any late-Filed Claims that are deemed timely Filed by order
of the Bankruptcy Court shall be deemed to be Disputed Claims until the
expiration of the time by which the Post-Confirmation Committee must object to
such Disputed Claims. After the Effective Date, the Reorganized Debtors shall
have sole discretion to object to all Claims that are not Unsecured Claims.

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         12.02 Procedure. The Debtors, the Reorganized Debtors, and/or the
Post-Confirmation Committee, as applicable, at their sole option, may litigate
the merits of each Disputed Claim until determined by a Final Order; provided,
however, that (i) before the Effective Date, the Debtors, subject to the
approval of the Committee and the Bankruptcy Court, and (ii) after the Effective
Date, the Post-Confirmation Committee or the Reorganized Debtors, as applicable
under Section 12.01, subject to the approval of the Bankruptcy Court, may
compromise and settle any objection to any Disputed Claim.

         12.03 Payments and Distributions With Respect to Disputed Claims. No
payments or distributions shall be made with respect to a Disputed Claim until
such Disputed Claim becomes an Allowed Claim.

         12.04 Timing of Payments and Distributions With Respect to Disputed
Claims. Subject to the further provisions of this Plan, payments and
distributions with respect to each Disputed Claim that becomes an Allowed Claim
that would have otherwise been made had such Claim been an Allowed Claim on the
Effective Date shall be made quarterly from the Distribution Reserve after the
Effective Date until the time that all Disputed Claims have either been Allowed
in whole or in part or disallowed in whole or in part. Holders of Disputed
Claims that become Allowed Claims shall be bound, obligated and governed in all
respects by the provisions of this Plan.

         12.05 Retention and Enforcement of Causes of Action. Pursuant to
section 1123(b)(3) of the Bankruptcy Code, the Post-Confirmation Committee shall
retain and shall have the right to enforce any Bankruptcy Claim, to the extent
not otherwise released under this Plan, against any Entity. Upon the Effective
Date of the Plan, without further order of this Court, the Post-Confirmation
Committee shall be substituted for TSI as the plaintiff in the Seneca Preference
Lawsuit.

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         12.06 General Standards Governing Bankruptcy Claims. The
Post-Confirmation Committee shall exercise reasonable business judgment in
deciding how and whether to pursue Bankruptcy Claims. The Post-Confirmation
Committee shall evaluate, inter alia, the merits of their legal rights in a
particular case, the costs of litigation, the effect of litigation on the
business operations of the Reorganized Debtors and relationships in the
industry, the time required to achieve a judicial resolution and the possibility
of settlement, the inherent risk of litigation, and the likelihood of recovering
a potential judgment from the assets of a given defendant.

         12.07        Release of Claims.
         On the Effective Date, the Releasing Parties (defined below) shall
mutually release and forever discharge each other from any and all claims or
causes of action, whether known or unknown, in connection with or relating to
the Debtors; provided, however, that nothing contained herein shall operate to
release the Reorganized Debtors from any timely filed Claim in this Chapter 11
Case. The Releasing Parties are: (1) the Reorganized Debtors; (2) TreeSource
Acquisition Company, LLC and its members or interest holders; (3) Moss Adams
LLP; (4) any creditor receiving a distribution under this Plan; and (5) the
following individuals: Jess R. Drake, Scott Christie, William H. Wright, Richard
W. Detweiler, Joe Karas and Robert W. Lockwood. The foregoing releases do not
apply to or affect in any way the Committee's right to pursue the Seneca
Preference Lawsuit on behalf of the Class 5 Creditors.

                     ARTICLE THIRTEEN: CORPORATE GOVERNANCE

         13.01 Directors of Reorganized TSI. The initial Board of Directors of
Reorganized TSI will contain five directors: James Schueler, R. Gregory Service,
Harold Mildenberger, Robert Russell, and Craig Rostead. Holders of New TSI
Common Stock shall



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have the right to elect Reorganized TSI's Board of Directors
consistent with the Articles of Incorporation, the Bylaws, and Oregon corporate
law.

         13.02 Directors of Reorganized Subsidiaries. The initial Boards of
Directors of the Reorganized Subsidiaries will contain the same directors as the
initial Board of Directors of Reorganized TSI. The articles of incorporation and
bylaws of each of the Reorganized Subsidiaries shall be amended on or before the
Effective Date to the extent necessary to effectuate the provisions of this Plan
and section 1123(a)(6) of the Bankruptcy Code. Forms of the articles of
incorporation and bylaws of the Reorganized Subsidiaries that are Washington
corporations and Oregon corporations are attached hereto as Exhibits E through
H.

         13.03        Change in Management.
         The day after the Effective Date, per agreement with TSI's
pre-Confirmation Date board of directors, Jess R. Drake will be removed from
office as president and CEO of the Reorganized Debtors. After the Effective
Date, (a) the Board of Directors of Reorganized TSI shall be entitled to remove
any other officers of TSI and to appoint new officers for Reorganized TSI and
(b) the Board of Directors of each of the Reorganized Subsidiaries shall be
entitled to remove all officers of such Reorganized Subsidiary and appoint new
officers for such Reorganized Subsidiary.

         13.04        Additional Restructuring.
         Effective April 28, 2000, the following subsidiaries of TSI were merged
into Valley Wood Products Co., which may be liquidated: Alturas Lumber Co., Cle
Elum Lake Veneer Co., Cottage Grove Lumber Co., Eugene Wood Products Co.,
Silverton Forest Products, Co., Union Forest Products Co., Union Rail
Enterprises, Inc., and WTD Industries Co. (f/k/a

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Goshen Veneer Co.). Certain non-Debtor, non-operating subsidiaries of TSI were
also merged into the Reorganized Valley Wood Products Co.

         As soon as practicable following the Effective Date, at the option of
Reorganized TSI, the following Reorganized TSI Subsidiaries may be merged into
Reorganized TSI: TreeSource International, Inc., TreeSource, Inc., and Western
Timber Co.

         Any executory contracts assumed pursuant to this Plan will be deemed to
be assigned by any merging TSI Subsidiary to Reorganized TSI or Reorganized
Valley Wood Products Co., respectively.

                   ARTICLE FOURTEEN: MODIFICATION OF THIS PLAN

         14.01 Modification. Except as otherwise specifically provided in this
Plan, the Debtors may alter, amend, or modify this Plan under section 1127 of
the Bankruptcy Code at any time before the Confirmation Date. After the
Confirmation Date, the Reorganized Debtors may institute proceedings in the
Bankruptcy Court to remedy any defect or omission or reconcile any
inconsistencies in this Plan or the Confirmation Order, and such matters as may
be necessary to carry out the purposes and effects of this Plan, so long as it
does not adversely affect the treatment of holders of Claims under this Plan.

                     ARTICLE FIFTEEN: EFFECT OF CONFIRMATION

         15.01 Discharge of the Debtors. (i) Except as otherwise provided herein
or in the Confirmation Order, the rights afforded in this Plan shall be in
exchange for and in complete satisfaction, discharge and release of all Claims
and in termination of all Interests of any nature whatsoever, including any
interest accrued thereon from and after the Petition Date, against the Debtors,
as Debtors and Debtor in Possession, or any of their respective assets or
properties. Except as provided in this Plan or the Confirmation Order,
confirmation of this Plan will, as of the Effective Date: (a) discharge the
Debtors from all Claims or other debts



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that arose before the Effective Date, and all debts of the kind specified in
sections 502(g), 502(h) or 502(i) of the Bankruptcy Code, whether or not (i) a
proof of Claim based on such debt is filed or deemed filed pursuant to section
501 of the Bankruptcy Code, (ii) a Claim based on such debt is allowed pursuant
to section 502 of the Bankruptcy Code, or (iii) the holder of a Claim based on
such debt has accepted this Plan; and (b) terminate all Interests and other
rights of equity security holders in the Debtors.

         (ii) As of the Effective Date, except as provided in this Plan or the
Confirmation Order, all Entities will be precluded from asserting against the
Reorganized Debtors, their successors or property, any other or further Claims,
debts, rights, causes of action, liabilities or equity interests based upon any
act, omission, transaction or other activity of any kind or nature that occurred
before the Effective Date. In accordance with the foregoing, except as provided
in this Plan or the Confirmation Order, the Confirmation Order will be a
judicial determination, as of the Effective Date, of discharge of all such
Claims and other debts and liabilities against the Debtors and termination of
all such Interests and other rights of equity security holders in the Debtor,
pursuant to sections 524 and 1141 of the Bankruptcy Code, and such discharge
will void any judgment obtained against the Reorganized Debtors at any time
after the Effective Date, to the extent that such judgment relates to a
discharged Claim.

         15.02 Injunction.
         (i) Except as provided in this Plan or Confirmation Order, as of the
Effective Date, all Entities that have held, currently hold or may hold a Claim
or other debt or liability that is discharged or an Interest or other right of
an equity security holder that is terminated pursuant to the terms of this Plan
are permanently enjoined from taking any of the following actions on account of
any such discharged Claims, debts or liabilities or terminated



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Interests or rights: (a) commencing or continuing in any manner any action or
other proceeding against the Reorganized Debtors or their property; (b)
enforcing, attaching, collecting or recovering in any manner any judgment,
award, decree or order against the Reorganized Debtors or their property; (c)
creating, perfecting or enforcing any lien or encumbrance against the
Reorganized Debtors or their property; (d) asserting a setoff, right of
subrogation or recoupment of any kind against any debt, liability or obligation
due to the Reorganized Debtors or their property; and (e) commencing or
continuing any action, in any manner, in any place that does not comply with or
is inconsistent with the provisions of this Plan.

                  (ii) By accepting distributions pursuant to this Plan, each
holder of an Allowed Claim receiving distributions pursuant to this Plan will be
deemed to have specifically consented to the injunctions set forth in this Plan.

         15.03. Implementation of Option Plan. The Option Plan shall have been
adopted by the Board of Directors of TSI prior to the Effective Date and shall
be submitted for approval of the shareholders of the Reorganized TSI within 12
months after such adoption by the Board of Directors.

                    ARTICLE SIXTEEN: MISCELLANEOUS PROVISIONS

         16.01 Bankruptcy Court to Retain Jurisdiction. The Bankruptcy Court
shall retain jurisdiction over all matters arising out of or related to the
Chapter 11 Case and this Plan pursuant to sections 105(a) and 1142 of the
Bankruptcy Code until the Effective Date. From and after the Effective Date, and
until the closing of the Chapter 11 Case by the Bankruptcy Court pursuant to
section 350(a) of the Bankruptcy Code and Bankruptcy Rule 3022, the Bankruptcy
Court shall retain and have exclusive jurisdiction over the Reorganized Debtors,
their property, and the Chapter 11 Case for the purposes of determining



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all matters presented by or arising under this Plan, including, without
limitation, exclusive jurisdiction to:

                  (i) enforce and administer the provisions of this Plan
         including taking any action to enforce this Plan and to issue such
         orders as may be necessary for the implementation, execution and
         consummation of this Plan and the determination of any and all disputes
         arising under or in connection with this Plan including without
         limitation any obligations described in Article Fifteen of this Plan;

                  (ii) determine the allowance or classification of Claims and
         to determine any objections or disputes thereto;

                  (iii) determine any and all applications or motions regarding
         assumption or rejection of executory contracts and to determine the
         allowance of any and all Claims arising therefrom;

                  (iv) determine any and all applications, motions, adversary
         proceedings (including Bankruptcy Claims), and contested matters
         pending before the Bankruptcy Court as of the Effective Date and
         arising in or related to the Chapter 11 Case or this Plan;

                  (v) determine and enforce any and all applications for
         allowances of compensation for professional services rendered and
         expenses incurred in the Chapter 11 Case;

                  (vi) determine any (a) other request for payment of
         Administrative Claims, (b) other requests for payment of any salary,
         bonus, or other compensation for work performed prior to the Effective
         Date or (c) claims for severance payment, breach of employment contract
         or wrongful termination arising in connection with any termination of
         employment that occurs within 30 days after the Effective Date;



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                  (vii) correct any defect, cure any omission or reconcile any
         inconsistency in this Plan or the Confirmation Order as may be
         necessary to carry out the provisions, purposes and intent of this
         Plan;

                  (viii) approve and confirm any modification of this Plan;

                  (ix) enter and implement such orders as may be appropriate if
         the Confirmation Order is for any reason stayed, revoked, modified, or
         vacated;

                  (x) consider the compromise and settlement of any Claim
         against the Debtors or the Debtors' estates;

                  (xi) approve the sale of any property remaining in the
         bankruptcy estate;

                  (xii) determine such other matters as may be provided for in
         the Confirmation Order or as may from time to time be authorized under
         the provisions of the Bankruptcy Code or any other applicable law;

                  (xiii) enforce all orders, judgments and rulings entered in
         connection with the Chapter 11 Case;

                  (xiv) enforce, interpret and administer the provisions of (a)
         this Plan, including, but not limited to, the provisions relating to
         the distributions to be made hereunder and to the transfer of any
         property hereunder and (b) the agreements, documents, and instruments
         attached as exhibits to this Plan or the Disclosure Statement and those
         agreements, documents, and instruments created under or in connection
         with this Plan;

                  (xv) determine matters concerning federal, state or local
         taxes in accordance with sections 346, 505 and 1146 of the Bankruptcy
         Code; and

                  (xvi) issue and enter such orders, consistent with sections
         1142 and 105(a) of the Bankruptcy Code, as may be necessary to
         effectuate the consummation and full and complete implementation of
         this Plan.



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         16.02 Closing of Cases. From and after the Effective Date, all disputes
regarding claims against any of the TSI Subsidiaries shall be treated as
disputes solely with TSI, and may be adjudicated in TSI's Chapter 11 case,
regardless of whether the Bankruptcy Court closes the Chapter 11 cases of the
TSI Subsidiaries pursuant to section 350(a) of the Bankruptcy Code and
Bankruptcy Rule 3022.

         16.03 Binding Effect. The provisions of this Plan shall be binding upon
and inure to the benefit of the Debtors, their estates, any holder of a Claim or
Interest, and their respective predecessors, successors, assigns, agents,
officers and directors.

         16.04 Payment of Statutory Fees. All Trustee Fees shall be paid by the
Debtors or the Reorganized Debtors, as the case may be.

         16.05 Notices. All notices, requests, demands or other communications
to the Reorganized Debtors and/or the Lender in connection with or required to
be given under this Plan, if any, shall be in writing and shall be sent by (i)
certified first class mail, return receipt requested, postage prepaid (deemed
given when received as noted on return receipt), (ii) overnight courier, freight
prepaid, receipt requested (deemed given when received as noted on receipt),
(iii) facsimile (deemed given when received as noted on confirmation report) or
(d) hand delivery, receipt requested (deemed given when received as noted on
receipt):

         If to the Reorganized Debtors, to:

                                    TreeSource Industries, Inc.
                                    529 SE Grand Avenue
                                    Portland, OR 97214
                                    Attn: President
                                    Facsimile:  (503) 245-7773






SECOND AMENDED JOINT PLAN OF
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                                                   1201 Third Avenue, Suite 4800
                                                  Seattle, Washington 98101-3099
                                                          (206) 583-8888
<PAGE>
         If to the Lender to:

                                    Foster Pepper & Shefelman LLP
                                    1111 Third Avenue
                                    Suite 3400
                                    Seattle, WA 98101-3299
                                    Attn:  Christopher M. Alston, Esq.
                                    Facsimile:  (206) 447-9700

         Any of the above may, from time to time, change its address for future
notices and other communications hereunder by filing a notice of the change of
address with the Bankruptcy Court.

         16.06 Headings. The headings of the articles, sections and subsections
of this Plan are inserted for convenience only and shall not affect the
interpretation hereof.

         16.07 Construction. The rules of construction used in section 102 of
the Bankruptcy Code shall apply to the construction of this Plan.

         16.08 Governing Law. Except to the extent that the Bankruptcy Code or
other federal law is applicable, and except as specifically provided in any
agreement or instrument governing any debt, obligation or interest, the rights,
duties and obligations arising under this Plan shall be governed by, and
construed and enforced in accordance with, the laws of the State of Oregon.

         16.09 Successors and Assigns. The rights and obligations of any Entity
named or referred to in this Plan will be binding upon, and will inure to the
benefit of, the successors and assigns of such Entity.

         16.10 Survival of Certain Corporate Obligations. Prior to the Effective
Date, the Debtors will have entered into Indemnification Agreements, in the form
attached hereto as Exhibit I, with Scott Christie, Richard W. Detweiler, Jess R.
Drake, and William H. Wright, and the Debtors' obligations under the
Indemnification Agreements will not be discharged or

SECOND AMENDED JOINT PLAN OF
REORGANIZATION - 38                                       PERKINS COIE LLP
                                                   1201 Third Avenue, Suite 4800
                                                  Seattle, Washington 98101-3099
                                                          (206) 583-8888


<PAGE>
impaired by confirmation or consummation of this Plan, but will survive
unaffected by the reorganization and other actions contemplated by this Plan and
will be performed and honored by the Reorganized Debtors. Reorganized Debtors
may further, in their sole judgment, indemnify any other Entity in connection
with claims, demands, suits, causes of action or proceedings based upon any act
or omission of such Entity at any time before the Confirmation Date in an amount
not to exceed the extent to which such Entity could have been indemnified before
the Confirmation Date and may advance expenses in connection therewith, but only
to such extent or upon such terms as the Reorganized Debtors' Board of Directors
shall find it to be, in their sole judgment, appropriate to do so. Except as
specifically set forth in this Section 16.10 or the Indemnification Agreements,
upon confirmation of this Plan, any other purported obligations of any of the
Debtors to indemnify their respective officers, directors, agents, employees,
representatives or any other Entity shall be deemed rejected, discharged as
provided in Sections 15.01 and 15.02, and otherwise unenforceable against any of
them.

         16.11. Dissolution of Creditors' Committee. On the Effective Date, the
Creditors' Committee will re-appointed as the Post-Confirmation Committee, which
will remain in effect until the Seneca Preference Lawsuit and all objections to
Unsecured Claims have been finally resolved, at which time, the
Post-Confirmation Committee shall dissolve and the members of, and professionals
engaged by, the Creditors' Committee shall thereupon be released from and
discharged of all authority, duties, responsibilities, obligations and
liabilities, if any, arising from and in connection with the Chapter 11 Case;
provided, however, that the members and the advisors to the Creditors' Committee
shall continue to be obligated and bound by the terms of any confidentiality
agreement executed by them with the Debtors. The professional



SECOND AMENDED JOINT PLAN OF
REORGANIZATION - 39                                       PERKINS COIE LLP
                                                   1201 Third Avenue, Suite 4800
                                                  Seattle, Washington 98101-3099
                                                          (206) 583-8888


<PAGE>
fees incurred by the Post-Confirmation Committee shall be deducted from the
Distribution Reserve.

         16.12 Exhibits. All exhibits and schedules to this Plan are
incorporated into and are part of this Plan as if set forth in full herein.


















































SECOND AMENDED JOINT PLAN OF
REORGANIZATION - 40                                       PERKINS COIE LLP
                                                   1201 Third Avenue, Suite 4800
                                                  Seattle, Washington 98101-3099
                                                          (206) 583-8888
<PAGE>


         DATED:  This 21st day of November, 2001.

                             Respectfully submitted,


                             TREESOURCE INDUSTRIES, INC., BURKE LUMBER CO.,
                             CENTRAL POINT LUMBER CO., GLIDE LUMBER PRODUCTS
                             CO., GREENWELD NORTH AMERICA CO., MIDWAY FOREST
                             PRODUCTS CO., MORTON FOREST PRODUCTS CO., NORTH
                             POWDER LUMBER CO., PACIFIC HARDWOODS-SOUTH BEND
                             CO., PACIFIC SOFTWOODS CO., PHILOMATH FOREST
                             PRODUCTS CO., SEDRO-WOOLLEY LUMBER CO., SPANAWAY
                             LUMBER CO., TRASK RIVER LUMBER CO., TREESOURCE,
                             INC., TUMWATER LUMBER CO., VALLEY WOOD PRODUCTS
                             CO., WESTERN TIMBER CO.


                             By/s/JESS R. DRAKE
                               -------------------------------------------------
                               Jess R. Drake, President


Of Counsel:

  Steven M. Hedberg
  John S. Kaplan
  PERKINS COIE LLP
  1201 Third Avenue, 40th Floor
  Seattle, Washington 98101-3099
  (206) 583-8888













SECOND AMENDED JOINT PLAN OF
REORGANIZATION - 41                                       PERKINS COIE LLP
                                                   1201 Third Avenue, Suite 4800
                                                  Seattle, Washington 98101-3099
                                                          (206) 583-8888





</TEXT>
</DOCUMENT>
</SUBMISSION>
