<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------------------------
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended May 31, 1996
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the transition period from ______ to ______
Commission File No. 1-13146
--------------------------------------------------
THE GREENBRIER COMPANIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 93-0816972
(State of Incorporation)(I.R.S. Employer Identification No.)
One Centerpointe Drive, Suite 200, Lake Oswego, OR 97035
(Address of principal executive offices) (Zip Code)
(503)684-7000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
The number of shares of the registrant's common stock, $0.001
par value per share, outstanding on June 30, 1996 was 14,160,000
shares.
<PAGE> 1
THE GREENBRIER COMPANIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts, unaudited)
<TABLE>
<CAPTION>
May 31, August 31,
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
MANUFACTURING
Current assets:
Cash and cash equivalents $ 1,584 $ 1,653
Accounts receivable 23,248 28,003
Inventories 65,065 86,280
Prepaid expenses 1,948 1,497
----------- -----------
91,845 117,433
Property, plant and equipment 35,170 33,135
Other 3,478 4,200
----------- -----------
130,493 154,768
LEASING AND SERVICES
Cash and cash equivalents 4,220 8,697
Restricted cash and investments 13,013 3,664
Accounts and notes receivable 26,609 11,610
Railcars held for refurbishment or sale 40,221 13,559
Investment in direct finance leases 184,412 168,402
Equipment on operating leases 165,133 158,661
Prepaid expenses and other 15,352 13,028
----------- -----------
448,960 377,621
----------- -----------
$ 579,453 $ 532,389
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
MANUFACTURING
Current liabilities:
Revolving notes $ 22,220 $ 27,313
Accounts payable and accrued liabilities 45,722 45,647
Current portion of notes payable 936 966
----------- -----------
68,878 73,926
Notes payable 13,366 13,512
----------- -----------
82,244 87,438
LEASING AND SERVICES
Revolving notes 8,601 -
Accounts payable and accrued liabilities 58,480 47,767
Deferred revenue 6,267 4,729
Deferred participation 30,413 27,829
Deferred income taxes 18,396 15,730
Notes payable 185,342 176,276
----------- -----------
307,499 272,331
Subordinated debt 43,489 37,762
Minority interest 38,090 38,040
COMMITMENTS AND CONTINGENCIES (NOTE 3)
STOCKHOLDERS' EQUITY
Preferred stock - $0.001 par value, 25,000
shares authorized, none issued - -
Common stock - $0.001 par value, 50,000
shares authorized, 14,160 outstanding 14 14
Additional paid-in capital 49,051 48,894
Retained earnings 58,677 47,383
Foreign currency translation adjustments 389 527
----------- -----------
108,131 96,818
----------- -----------
$ 579,453 $ 532,389
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 2
THE GREENBRIER COMPANIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share amounts, unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
May 31, May 31,
------------------- -------------------
1996 1995 1996 1995
------------------- -------------------
<S> <C> <C> <C> <C>
REVENUES
Manufacturing $ 95,842 $ 94,756 $308,345 $215,307
Leasing and services 25,298 22,568 71,651 67,781
--------- --------- --------- ---------
Total revenues 121,140 117,324 379,996 283,088
COSTS AND EXPENSES
Cost of manufacturing sales 85,529 82,060 276,461 191,074
Leasing and services 10,734 9,488 31,656 28,740
Selling and administrative
expense:
Manufacturing 3,828 3,073 10,852 8,381
Leasing and services 4,129 2,945 11,147 8,688
Corporate 1,487 1,711 4,955 4,489
--------- --------- --------- ---------
9,444 7,729 26,954 21,558
Interest expense:
Manufacturing 565 800 2,397 1,632
Leasing and services 5,553 5,661 16,506 17,022
--------- --------- --------- ---------
6,118 6,461 18,903 18,654
Minority interest:
Manufacturing 424 (476) (105) (476)
Leasing and services 761 895 2,182 2,512
--------- --------- --------- ---------
1,185 419 2,077 2,036
--------- --------- --------- ---------
Total costs and expenses 113,010 106,157 356,051 262,062
EARNINGS BEFORE INCOME TAX EXPENSE
Manufacturing 5,496 9,299 18,740 14,696
Leasing and services 4,121 3,579 10,160 10,819
Corporate (1,487) (1,711) (4,955) (4,489)
--------- --------- --------- ---------
8,130 11,167 23,945 21,026
Income tax expense (3,229) (4,880) (10,102) (9,021)
--------- --------- --------- ---------
NET EARNINGS $ 4,901 $ 6,287 $ 13,843 $ 12,005
========= ========= ========= =========
Net earnings per share $ 0.35 $ 0.44 $ 0.98 $ 0.85
========= ========= ========= =========
Weighted average shares
outstanding 14,160 14,160 14,160 14,160
========= ========= ========= =========
Dividends declared
per share $ 0.06 $ 0.06 $ 0.18 $ 0.18
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 3
THE GREENBRIER COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
May 31,
--------------------
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 13,843 $ 12,005
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Deferred income taxes 2,666 2,255
Deferred participation 2,584 7,203
Depreciation and amortization 17,886 16,180
Gain on sales of equipment (3,853) (3,029)
Other (1,133) 1,033
Decrease (increase) in assets:
Accounts and notes receivable (10,244) (21,158)
Inventories 21,215 (30,141)
Prepaid expenses and other (2,991) (656)
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities 10,788 22,627
Deferred revenue 1,538 (907)
--------- ---------
Net cash provided by operating activities 52,299 5,412
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiary, net of cash acquired - (23,916)
Principal payments received under direct
finance leases 5,604 5,413
Investment in direct finance leases (21,030) (29,016)
Proceeds from sales of equipment 59,625 14,609
Purchase of property and equipment (102,125) (38,409)
Use of(investment in) restricted cash
and investments (9,349) 4,353
--------- ---------
Net cash used in investing activities (67,275) (66,966)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 28,337 30,966
Repayments of borrowings (15,358) (17,728)
Proceeds from minority investors - 9,221
Dividends (2,549) (2,548)
--------- ---------
Net cash provided by financing activities 10,430 19,911
--------- ---------
DECREASE IN CASH AND CASH EQUIVALENTS (4,546) (41,643)
Cash and cash equivalents
Beginning of period 10,350 50,196
--------- ---------
End of period $ 5,804 $ 8,553
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 16,471 $ 16,366
Income taxes 9,880 4,602
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Equipment obtained through borrowings $ 6,680 $ 3,939
Repayment of borrowings through return of
railcars held for refurbishment 1,534 5,315
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 4
THE GREENBRIER COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, unaudited)
Note 1 - INTERIM FINANCIAL STATEMENTS
The consolidated financial statements of The Greenbrier Companies,
Inc. and Subsidiaries (the "Company") as of May 31, 1996 and for
the three and nine months ended May 31, 1996 and 1995, have been
prepared without audit and reflect all adjustments (consisting of
normal recurring accruals) which in the opinion of management are
necessary for a fair presentation of the financial position and
operating results for the periods indicated. The results of
operations for the nine months ended May 31, 1996 are not
necessarily indicative of the results to be expected for the
entire year ending August 31, 1996.
Certain notes and other information have been condensed or omitted
from the interim financial statements presented in this Quarterly
Report on Form 10-Q. Therefore, these financial statements should
be read in conjunction with the consolidated financial statements
contained in the Company's 1995 Annual Report to Stockholders
incorporated by reference into the Company's 1995 Annual Report on
Form 10-K.
Note 2 - INVENTORIES
May 31, August 31,
1996 1995
----------- -----------
Manufacturing supplies and raw materials $ 8,551 $ 7,832
Work-in-process 56,514 78,448
----------- -----------
$ 65,065 $ 86,280
=========== ===========
Note 3 - COMMITMENTS AND CONTINGENCIES
Purchase commitments of approximately $3,714 for leasing and
services operating equipment were outstanding as of May 31, 1996.
Note 4 - SUBSEQUENT EVENT
Subsequent to May 31, 1996, the Company consummated the
acquisition of Superior Transportation Systems, Inc. and the
remaining interest in its existing fifty percent owned subsidiary,
Tolan O'Neal Transportation & Logistics, Inc. as part of a planned
expansion of the Company's third-party transportation logistics
services. The acquisitions will be accounted for using the
purchase method.
<PAGE> 5
THE GREENBRIER COMPANIES, INC.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The Greenbrier Companies, Inc. and Subsidiaries ("Greenbrier")
currently operates in two primary business segments: the
manufacture of railcars and marine vessels and the refurbishment
of railcars; and the leasing and management of surface
transportation equipment and related services. The two business
segments are operationally integrated. The manufacturing
operations produce double-stack intermodal railcars, conventional
railcars and marine vessels and perform refurbishment and
maintenance activity, a portion of which is for railcar leasing
operations. The leasing and services operation undertakes most of
the sales and marketing activities for the manufacturing
operations. New product development is also conducted on an
integrated basis.
Subsequent to May 31, 1996, Greenbrier acquired Superior
Transportation Systems, Inc. and the remaining interest in its
existing fifty percent owned subsidiary, Tolan O'Neal
Transportation & Logistics, Inc. These transactions, along with
the planned acquisition of Interamerican Logistics Inc. discussed
in the February 29, 1996 Form 10-Q, are the first steps in a
planned expansion of Greenbrier's third-party transportation
logistics services. The Interamerican transaction is anticipated
to be complete early in fiscal 1997. Synergies with the existing
manufacturing and leasing businesses include building stronger
relationships with customers in the railroad and shipping
community and providing access to Greenbrier's asset base in
railcars, trailers and containers. The acquisitions were funded
from working capital and are not expected to have a significant
impact on 1996 earnings.
The following table sets forth information regarding costs and
expenses expressed as a percentage of the associated manufacturing
or leasing and services revenue.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
May 31, May 31,
------------------- -------------------
1996 1995 1996 1995
------------------- -------------------
<S> <C> <C> <C> <C>
Manufacturing:
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 89.2 86.6 89.7 88.7
Selling and administrative
expense 4.0 3.2 3.5 3.9
Interest expense 0.6 0.8 0.8 0.8
Minority interest 0.5 (0.5) (0.1) (0.2)
Earnings before income tax
expense 5.7 9.9 6.1 6.8
Leasing and services:
Revenues 100.0% 100.0% 100.0% 100.0%
Operating expense 42.4 42.0 44.2 42.4
Selling and administrative
expense 16.3 13.0 15.6 12.8
Interest expense 22.0 25.1 23.0 25.1
Minority interest 3.0 4.0 3.0 3.7
Earnings before income tax
expense 16.3 15.9 14.2 16.0
Corporate expense as a
percentage of total revenues 1.2 1.5 1.3 1.6
Income tax expense as a percentage
of pre-tax earnings 39.7 43.7 42.2 42.9
Net earnings as a percentage of
total revenues 4.0 5.4 3.6 4.2
</TABLE>
Three Months Ended May 31, 1996 Compared to Three Months Ended May
31, 1995
Revenues. Manufacturing revenue for the three-month period ended
May 31, 1996 increased slightly over the corresponding period in
the prior year. Revenue from Canadian operations was
substantially greater than the prior comparable period due to
increased volume and a product mix with higher unit sales value.
During the 1995 period the Canadian facility experienced
production difficulties. The increase in revenue from Canadian
operations in 1996 was largely offset by decreased revenue from
U.S. operations resulting from fewer railcar deliveries, partially
offset by a product mix including railcars with a higher unit
sales value. Total deliveries decreased by 237 to 1,362 in the
current quarter, compared to 1,599 in the prior comparable period.
The manufacturing backlog of railcars for sale and lease was
approximately 2,700 railcar platforms with an estimated value of
$165 million as of May 31, 1996.
<PAGE> 6
THE GREENBRIER COMPANIES, INC.
Leasing and services revenue increased $3 million, or 12%, for
the quarter ended May 31, 1996 compared to the quarter ended May
31, 1995. This increase is primarily due to revenue from
additional railcars placed in lease service partially offset by a
decrease in revenue from automobile transportation services as a
result of the lower volume of automobiles transported.
Pre-tax earnings realized on the disposition of leased equipment
during the quarter were 50% more than the $1 million realized in
the corresponding prior period.
Cost of Manufacturing Sales. Cost of sales as a percentage of
manufacturing revenue increased in the quarter ended May 31, 1996
to 89% from 87% in the quarter ended May 31, 1995. The lower
margins achieved in the current quarter result from line
changeovers and a less favorable product mix at U.S. operations
partially offset by continuing improvement in manufacturing
efficiencies at the Canadian operation. The prior period margin
benefited from efficiencies of longer production runs on a product
mix that included a greater proportion of higher margin products.
Leasing and Services Expense. Leasing and services expense as a
percentage of revenue remained consistent at 42% for the three-
month period ended May 31, 1996 compared to the corresponding
prior period. Reduced contribution from automobile transportation
services due to lower volumes, start-up utilization of the highway
trailer rental operation and softening of the intermodal trailer
and container market were offset by a restructuring of certain
lease participation costs.
Selling and Administrative Expense. As a percentage of revenue,
total selling and administrative expense for the three months
ended May 31, 1996 increased compared to the corresponding prior
period. Lower manufacturing volume and increased leasing and
services costs associated with the start up of the highway trailer
rental operation were the primary contributors to the increase in
expense as a percentage of revenue.
Interest Expense. Interest expense decreased slightly as the
effect of lower interest rates on working capital borrowings and
normal paydowns of term debt exceeded current year borrowings.
Minority Interest. Manufacturing minority interest increased as
a result of improved earnings of the Canadian operation. Leasing
minority interest decreased due to reduced earnings from
automobile transportation services.
Income Tax Expense. The income tax provision for the quarter
ended May 31, 1996 represents an effective tax rate of 42% on U.S.
operations which is consistent with the corresponding prior
period. Consolidated income taxes as a percentage of pre-tax
earnings are less than 42% as the Canadian operation had generated
operating loss carryforwards which offset current period earnings.
Nine Months Ended May 31, 1996 Compared to Nine Months Ended May
31, 1995
Revenues. Manufacturing revenues for the nine-month period ended
May 31, 1996 increased $93 million, or 43%, over the corresponding
prior period. Canadian operations, acquired in March 1995,
contributed the majority of the increase. Revenue from U.S.
operations decreased slightly due to a product mix characterized
by higher unit sales value on fewer railcars delivered than the
product mix in the prior comparable period. The number of
railcars sold increased by 856 to 4,689 for the nine months ended
May 31, 1996 from 3,833 in the prior year comparable period.
Leasing and services revenue increased $4 million, or 6%, for the
nine-month period ended May 31, 1996 compared to the nine-month
period ended May 31, 1995. This increase is primarily due to
revenue from additional railcars placed in lease service partially
offset by a decrease in revenue from automobile transportation
services as a result of the lower volume of automobiles
transported.
Pre-tax income realized on disposition of leased equipment during
the nine-month period ended May 31, 1996 amounted to $3.4 million
compared to $2.8 million in the corresponding prior period.
<PAGE> 7
THE GREENBRIER COMPANIES, INC.
Cost of Manufacturing Sales. Cost of sales as a percentage of
manufacturing revenue for the nine-month period ended May 31, 1996
increased slightly compared to the corresponding prior period.
Improved margins achieved by U.S. operations due to a favorable
product mix and the efficiencies of long production runs early in
the year were offset by lower margins achieved at the Canadian
operation.
Leasing and Services Expense. Leasing and services expense as a
percentage of revenue increased to 44% for the nine-month period
ended May 31, 1996 as compared to 42% for the corresponding prior
period. Reduced contribution from automobile transportation
services due to lower volume, as well as start-up utilization of
the highway trailer rental operation and the softening of the
intermodal trailer and container market were the primary reasons
for the increased percentage.
Selling and Administrative Expense. As a percentage of revenue,
total selling and administrative expense declined due to increased
manufacturing volume reduced by higher leasing and services costs
associated with the start up of the highway trailer rental
operation.
Interest Expense. The increase in manufacturing interest expense
for the nine-month period ended May 31, 1996 compared to the
corresponding prior period relates mainly to working capital
borrowings associated with the Canadian operation and to increased
production and inventory levels. The slight decrease in leasing
and services interest expense results from normal paydowns of term
debt offset somewhat by current year borrowings.
Minority Interest. Minority interest for the nine-month period
ended May 31, 1996 is consistent with the corresponding prior
period. The minority investors' share of operating losses at the
Canadian facility was reduced due to improved operations during
the current year. Decreased operating earnings relating to
automobile transportation services has reduced the leasing and
services minority interest.
Income Tax Expense. The income tax provision for the nine-month
period ended May 31, 1996 represents an effective tax rate of 42%
on U.S. operations which is consistent with the prior period. As
the Canadian operation is not included in the U.S. consolidated
tax return, no tax benefit has been recognized on the losses
incurred by Canadian operations.
Liquidity and Capital Resources
Cash provided by operations totaled $52 million for the nine-
month period ended May 31, 1996 compared to $5 million for the
corresponding prior period. The fluctuation in cash from
operations is due to the decrease in inventory resulting primarily
from increased railcar deliveries offset somewhat by purchases of
materials required for the construction of two marine barges.
Inventory levels at August 31, 1995 were higher than anticipated
due to the temporary suspension of production at the Canadian
operation.
Existing credit facilities for operations aggregate approximately
$101 million at May 31, 1996. A $43 million revolving credit line
is available through March 1997 which provides working capital and
interim financing of equipment for leasing and services
operations. Borrowings under the revolving credit line were $9
million at May 31, 1996. A $30 million operating line for working
capital and a $10 million five-year term facility for certain
manufacturing capital expenditures are available through February
1999 and December 1997 for U.S. manufacturing operations.
Borrowings outstanding under the operating line were $11 million
at May 31, 1996 and there were no borrowings outstanding under the
term facility. An $18 million (at the May 31, 1996 exchange rate)
operating line is available through March 1997 for working capital
and certain capital expenditures for Canadian operations.
Borrowings outstanding under this line at May 31, 1996 were $11
million. The weighted average interest rate on amounts
outstanding with respect to these credit facilities was 9% for the
nine-months ended May 31, 1996.
<PAGE> 8
THE GREENBRIER COMPANIES, INC.
Capital expenditures totaled $130 million for the nine-months
ended May 31, 1996 compared to $71 million for the nine-months
ended May 31, 1995. Of these capital expenditures, approximately
$125 million and $65 million were attributable to leasing and
services operations. Leasing and services capital expenditure
programs included additions to the leased railcar fleet under
refurbishment programs and various additions to the lease fleet
related to other equipment purchases. Certain of these additions
are not anticipated to be held long-term but rather sold to other
parties and accordingly are included in Railcars held for
refurbishment or sale. Leasing and services capital expenditures
for the remainder of 1996 are expected to be approximately $23
million.
Approximately $5 million and $6 million of the total capital
expenditures for the nine-months ended May 31, 1996 and May 31,
1995 were attributable to manufacturing operations. Capital
expenditure programs included new and upgraded manufacturing plant
and equipment to improve efficiencies and increase capacity.
Manufacturing capital expenditures for the remainder of 1996 are
expected to be approximately $2 million and will include plant
improvements and equipment acquisitions to further increase
production capacity and efficiency.
Operations in Canada give rise to market risks from changes in
foreign currency exchange rates. Forward exchange contracts have
been entered into to hedge these risks. At May 31, 1996 the net
amount of foreign exchange contracts outstanding for the purchase
of Canadian dollars was $15 million maturing at various dates
through November 1996. Realized and unrealized gains and losses
from such off-balance sheet contracts are deferred and recognized
in earnings concurrent with the hedged transaction.
Dividends of $.06 per share have been paid quarterly beginning in
1995. Additionally, the next quarterly dividend of $.06 per share
was declared in July 1996 to be paid in August 1996.
Management expects existing funds and cash generated from
operations, together with borrowings under existing credit
facilities, will be sufficient to fund dividends, working capital
needs, planned capital expenditures and expected debt repayments.
Management anticipates long-term financing will be required and
will continue to be available for the purchase of equipment to
expand Greenbrier's lease fleet.
<PAGE> 9
THE GREENBRIER COMPANIES, INC.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.32 Stock Purchase Agreement between and among Greenbrier
Logistics, Inc. and A. Daniel O'Neal dated as of June 28, 1996.
10.33 Employment Agreement dated June 1, 1996 between
Greenbrier Logistics, Inc. and A. Daniel O'Neal, Jr.
27. Financial Data Schedule
(b) Form 8-K
No reports on Form 8-K were filed during the quarter for which
this report is filed.
<PAGE> 10
THE GREENBRIER COMPANIES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
THE GREENBRIER COMPANIES, INC.
Date: July 12, 1996 By: /s/ Larry G. Brady
------------------ --------------------------
Larry G. Brady
Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
STOCK PURCHASE AGREEMENT
between and among
GREENBRIER LOGISTICS, INC.
PURCHASER
and
A. DANIEL O'NEAL
(Stockholder of Tolan O'Neal Transportation & Logistics, Inc.)
SELLER
Dated: June 28, 1996
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE 1
PURCHASE AND SALE OF SELLER'S SHARES . . . . . . . . . . . . . 2
1.01 Agreement to Purchase and Sell; Effect . . . . . . . 2
1.02 Purchase Price . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2
CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.01 Closing Date. . . . . . . . . . . . . . . . . . . . 4
2.02 Deliveries. . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . 4
3.01 Organization . . . . . . . . . . . . . . . . . . . . 5
3.02 Affiliates . . . . . . . . . . . . . . . . . . . . . 5
3.03 Capacity, Authorization and Effect of Agreement. . . 5
3.04 Absence of Breach. . . . . . . . . . . . . . . . . . 6
3.05 Title to Seller's Shares . . . . . . . . . . . . . . 6
3.06 Financial Statements . . . . . . . . . . . . . . . . 7
3.07 Absence of Changes . . . . . . . . . . . . . . . . . 10
3.08 Employee and Related Contracts and Transactions
with Affiliates. . . . . . . . . . . . . . . . . . . 12
3.09 Legal Proceedings. . . . . . . . . . . . . . . . . . 13
3.10 Property . . . . . . . . . . . . . . . . . . . . . . 14
3.11 Leases . . . . . . . . . . . . . . . . . . . . . . . 15
3.12 Franchises, Licenses, and Obligations. . . . . . . . 15
3.13 Insurance. . . . . . . . . . . . . . . . . . . . . . 16
3.14 Accounts and Notes Receivable. . . . . . . . . . . . 16
3.15 Compliance with Certain Instruments. . . . . . . . . 17
3.16 Minute Books and Stock Records . . . . . . . . . . . 17
3.17 Persons Authorized to Act. . . . . . . . . . . . . . 18
3.18 Accuracy of Representations. . . . . . . . . . . . . 18
3.19 Governmental and Third Party Consents. . . . . . . . 18
3.20 ERISA. . . . . . . . . . . . . . . . . . . . . . . . 19
3.21 Survival of Warranties, Representations, and
Covenants. . . . . . . . . . . . . . . . . . . . . . 19
3.22 Brokers. . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER. . . . . . . . . . 19
4.01 Organization . . . . . . . . . . . . . . . . . . . . 19
4.02 Capacity, Authorization and Effect of Agreement. . . 20
4.03 Absence of Breach. . . . . . . . . . . . . . . . . . 20
4.04 Brokers. . . . . . . . . . . . . . . . . . . . . . . 21
4.05 Accuracy of Representations. . . . . . . . . . . . 21
4.06 Investment Intent. . . . . . . . . . . . . . . . . . 21
4.07 Survival of Representations and Warranties . . . . . 21
ARTICLE 5
COVENANTS OF SELLER. . . . . . . . . . . . . . . . . . . . . . 21
5.01 Execution of Documents . . . . . . . . . . . . . . . 21
5.02 Investigation of Business and Examination of
Documents. . . . . . . . . . . . . . . . . . . . . . 22
5.03 Conduct of Business. . . . . . . . . . . . . . . . . 23
5.04 Lost Certificates. . . . . . . . . . . . . . . . . . 26
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER . . . . . . . 27
6.01 Representations and Warranties Accurate . . . . 27
6.02 Performance by Seller . . . . . . . . . . . . . 27
6.03 Consents and Authorizations. . . . . . . . . . 27
6.04 Absence of Certain Events. . . . . . . . . . . 28
6.05 Examinations. . . . . . . . . . . . . . . . . . 30
6.06 Closing Arrangements. . . . . . . . . . . . . . 30
6.07 Employment Agreement. . . . . . . . . . . . . . 30
6.08 401(k) Plan Termination . . . . . . . . . . . . 30
6.09 Investment Agreement Termination. . . . . . . . 31
ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. . . . . . . . . 31
7.01 Representations and Warranties Accurate . . . . 31
7.02 Performance by Purchaser. . . . . . . . . . . . 31
7.03 Authorizations, Legal Prohibition . . . . . . . 31
ARTICLE 8
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . 32
8.01 Indemnification by Seller. . . . . . . . . . . . . . 32
8.02 Indemnification by Purchaser . . . . . . . . . . . . 32
8.03 Notice of Claim. . . . . . . . . . . . . . . . . . . 33
8.04 Procedure for Indemnification. . . . . . . . . . . . 33
8.05 Additional Rules and Procedures. . . . . . . . . . . 35
8.06 Payment of Claims. . . . . . . . . . . . . . . . . . 38
ARTICLE 9
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 38
9.01 Cooperation. . . . . . . . . . . . . . . . . . . . . 38
9.02 Termination. . . . . . . . . . . . . . . . . . . . . 38
9.03 Specific Performance . . . . . . . . . . . . . . . . 39
9.04 Expenses . . . . . . . . . . . . . . . . . . . . . . 39
9.05 Applicable Law, Attorney Fees. . . . . . . . . . . . 39
9.06 Counterparts . . . . . . . . . . . . . . . . . . . . 39
9.07 Notices. . . . . . . . . . . . . . . . . . . . . . . 40
9.08 Assignment . . . . . . . . . . . . . . . . . . . . . 41
9.09 Severability . . . . . . . . . . . . . . . . . . . . 41
9.10 No Third Party Beneficiaries . . . . . . . . . . . . 42
9.11 Entire Agreement. . . . . . . . . . . . . . . . . . 42
9.12 Waiver, Amendment. . . . . . . . . . . . . . . . . . 42
<PAGE>
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT dated as of June 28, 1996
(the "Agreement"), is between GREENBRIER LOGISTICS, INC., an Oregon
corporation ("Purchaser"), and A. DANIEL O'NEAL ("Seller"), owner
of one-half of the issued and outstanding shares of capital stock
of TOLAN O'NEAL TRANSPORTATION & LOGISTICS, INC., a corporation
organized and existing under the laws of the state of Washington,
whose principal place of business is Suite 500, 200 West Thomas,
Seattle, Washington 98119 (the "Company").
W I T N E S S E T H:
WHEREAS, Purchaser has offered to acquire all of the
issued and outstanding shares (the "Shares") of capital stock of
the Company (the "Capital Stock"); and
WHEREAS, Seller owns one-half of all of the issued and
outstanding shares of Capital Stock of the Company (the "Seller's
Shares"); and
WHEREAS, Purchaser desires to purchase, and Seller
desires to sell, the Seller's Shares upon the terms and subject to
the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and of
the mutual agreements, provisions and covenants herein contained,
the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SELLER'S SHARES
1.01 Agreement to Purchase and Sell; Effect. On the
terms and subject to the conditions of this Agreement, Seller shall
sell to Purchaser and Purchaser shall purchase from Seller on the
Closing Date the Seller's Shares in exchange for the Purchase
Price, as set forth in Section 1.02. The sale and purchase of the
Seller's Shares on the terms and subject to the conditions of this
Agreement shall constitute the transfer by Seller to Purchaser
of:(a) all of Seller's right, title and interest in and to the
Seller's Shares (and any and all other Shares or other securities
issued or issuable in respect thereof on or after the date of this
Agreement) and all options, warrants or other rights to acquire
Seller's Shares; (b) all of Seller's rights as a shareholder of the
Company, whether arising by virtue of ownership of the Seller's
Shares, by contract or otherwise; and (c) all of Seller's rights,
if any, in respect of dividends, adjustment refunds or other
distributions of any kind or nature whatsoever arising by reason of
Seller's ownership of the Seller's Shares, any note or other
evidence of indebtedness of the Company held by Seller, and any
other loans or advances made by Seller to the Company.
1.02 Purchase Price. The Purchase Price shall be made up
of three components:the "Base Price," the "Deferred Price," and the
"Contingent Price."
a. The "Base Price" shall be $500,000.
b. The Deferred Price shall be $250,000 plus
interest at a rate of 7% per annum from the Closing Date (as
defined at 2.01, below) until the date such Deferred Price is
paid. The Deferred Price and any interest thereon shall be
paid in full on or before the fourth anniversary of the
Closing Date.
c. Subject to the terms and conditions set forth
in this Agreement, Purchaser shall also pay to Seller, a
Contingent Price, calculated as 5% of the then market value of
Purchaser as of the fifth anniversary of the Closing Date.
Such calculation shall be made and as of the fifth anniversary
of the Closing Date by an independent appraiser selected by
Purchaser and agreed to by Seller. Payment of the Contingent
Price shall be made within 90 days of the fifth anniversary of
the Closing Date.
d. Notwithstanding any other provision of this
Agreement to the contrary, the Contingent Price shall, as
between Seller and Purchaser, be deemed to include simple
interest which shall be imputed at the rate of six percent per
year, compounded annually from the Closing Date until the date
of payment. Each of Purchaser and Seller shall report such
payment consistently with this subsection 1.02.d. for purposes
of all federal or state income tax returns with respect to
periods in which such payment shall have been received.
ARTICLE 2
CLOSING
2.01 Closing Date. The closing ("Closing") of the
transactions contemplated by this Agreement shall take place at the
offices of Tonkon, Torp, Galen, Marmaduke & Booth, 1600 Pioneer
Tower, 888 Southwest Fifth Avenue, Portland, Oregon, beginning at
the hour of 9:00 A.M., Portland time, on June 28, 1996 or at such
other time and place as the parties shall agree in writing (the
"Closing Date").
2.02 Deliveries. At the Closing, Seller shall deliver
against payment of the Base Price certificates representing the
Seller's Shares, duly endorsed in blank, and in proper form for
transfer on the stock transfer books of Company, together with
evidence affixed thereto of payment of all applicable documentary
or transfer taxes. Purchaser shall deliver Sellers Shares to
Garvey Schubert & Barer to hold pursuant to the stock pledge
agreement between the parties of even date herewith (the "Stock
Pledge Agreement"). At the Closing, Purchaser shall deliver to
Seller, against delivery of the Seller's Shares, the Base Price by
cashier's or bank check drawn to Seller's order.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
As used herein, the term: "to Seller's knowledge" shall
mean such knowledge and belief of Seller as may be acquired by him
after reasonable inquiry of the directors, officers, key employees,
accountants, and attorneys of the Company. Seller represents and
warrants to Purchaser as follows:
3.01 Organization. The Company is a corporation duly
organized and validly existing under the laws of Washington, with
all requisite corporate power to own or lease its properties as
currently owned or leased and carry on its business as currently
conducted. The Company is duly qualified to do business in all
jurisdictions where the failure to be so qualified would have a
material adverse effect on the business or properties of the
Company, and the Company has all licenses and permits required by
any governmental authority for the conduct of its business as now
conducted.
3.02 Affiliates. The Company owns no capital stock nor
has any other ownership interest in any other corporation, limited
liability company, general or limited partnership, or other entity.
3.03 Capacity, Authorization and Effect of Agreement.
Seller will at, and immediately prior to, the Closing Date own one-
half of the Company's issued and outstanding Capital Stock and each
of the Seller's Shares shall be free and clear of all liens,
claims, options, charges, or encumbrances of whatever nature.
Seller has all requisite power and authority to enter into and
perform his obligations under this Agreement and to consummate the
transactions contemplated herein. The execution, delivery and
performance of this Agreement by Seller and all of the transactions
contemplated hereby have been duly authorized by all necessary
action on the part of Seller. This Agreement constitutes the valid
and binding obligation of Seller and is enforceable against him in
accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization and similar laws affecting creditors
generally and by the availability of equitable remedies.
3.04 Absence of Breach. The execution and delivery of
this Agreement do not, and the performance of this Agreement will
not:(a) to Seller's knowledge, violate any existing applicable law,
rule, regulation, judgment, order or decree of any governmental
instrumentality or court having jurisdiction over the Company or
Seller, (b) require the Company, or Seller to obtain any
authorization, consent, approval or waiver from, or to make any
filing with, any public body or authority or accelerate any action
required of the Company under any of the above.
3.05 Title to Seller's Shares. To Seller's knowledge, no
one other than The Greenbrier Companies, Inc. or its affiliates,
and Seller owns or holds any rights to acquire any additional
shares of the Company's capital stock or other securities (by
exercise of warrants, options, or otherwise) or any interest
therein or any voting rights with respect to any additional shares
of the Company's capital stock or other securities. Seller shall
have no rights in respect of dividends, adjustment refunds or other
distributions of any kind or nature whatsoever after the Closing
Date arising by reason of ownership of the Seller's Shares in
respect of any period prior to the Closing Date. The Seller's
Shares have been duly and validly issued, are fully paid and
nonassessable and are owned by Seller free and clear of any lien,
restriction, charge, encumbrance or other security interest. Upon
delivery to Purchaser at the Closing against payment of the Base
Price therefor, Purchaser will receive good and unencumbered title
to the Seller's Shares, free and clear of all liens, restrictions,
charges, encumbrances or other security interests of any kind or
nature whatsoever except as may be created by Purchaser, and
subject to the Stock Pledge Agreement, and will be the owner of all
of the Seller's Shares. There are not now, and at the time of the
Closing there will not be, any outstanding warrants, options,
agreements, contracts, calls, commitments or demands of any
character relating to the Seller's Shares which restrict the
transfer of Seller's Shares or which otherwise relate to the
Seller's Shares other than this Agreement. Seller hereby
authorizes the transfer of the Seller's Shares to Purchaser.
3.06 Financial Statements. Seller has delivered to
Purchaser true, correct and complete copies of the following
financial statements (the "Financial Statements"):
a. Reviewed balance sheets and statements of earnings,
retained earnings, and changes in financial position for the
Company as of August 31, 1995, 1994 and 1993 and for the three
years then ended, together with the notes thereto;
b. Unreviewed balance sheets, statements of income,
retained earnings and changes in financial conditions, as of
February 29, 1996 and February 28, 1995, and for the six
months then ended, together with any notes thereto (the
"Unreviewed Financial Statements").
In all material respects, the Financial Statements: have
been prepared and maintained in accordance with, and accurately
reflect, the books and records of the Company; accurately and fully
reflect all income, costs, and expenses necessary for, or relating
to, the conduct of the business of the Company; have been prepared
in accordance with generally accepted accounting principles
consistently applied; reflect all charges and accruals necessary to
fairly present the Company's financial condition and results of
operations as of the dates, and for the periods indicated; except
that the Unreviewed Financial Statements have been prepared in
accordance with generally accepted accounting principals for
interim financial information and accordingly do not include all of
the information and notes required by generally accepted accounting
principles which are included in the reviewed annual financial
statements, but the accounting policies used in the preparation of
the unreviewed financial statements have been consistently applied
in the preparation of the interim statements and, in the opinion of
management, all adjustments (consisting of normally recurring
accruals) considered necessary for a fair presentation, have been
included, subject to usual year-end adjustments which are not
material either separately or in the aggregate. The Financial
Statements described in Section 3.06.a. above have been reviewed in
accordance with generally accepted auditing standards by the public
accounting firm of Benson McLaughlin.
The balance sheets included in the Financial Statements
(the "Balance Sheets") present fairly the financial position of the
Company at the dates indicated and, together with any applicable
notes, reflect all liabilities, contingent or otherwise, of the
Company as of such dates and contain reserves for, and reflect all
actual and anticipated liabilities of the Company as of such dates;
and in all material respects, the statements of earnings, retained
earnings, and changes in financial position present fairly,
completely, and accurately the results of operations and changes in
financial position of the Company for the periods indicated. The
Company maintains accounts, books and records of all its business
and activities, and such accounts and books and records are
maintained in accordance with adequate systems of internal
controls, and are up-to-date in all material respects and are in
the possession of the Company.
To Seller's knowledge, the Company has no outstanding
material liabilities, contingent or otherwise nor is a party to or
bound by any agreement of guarantee, support, indemnification,
assumption, or endorsement of, or any other similar commitment with
respect to the material obligations, liabilities (contingent or
otherwise) or indebtedness of any person other than: those set out,
referred to or otherwise provided for in the Financial Statements;
and liabilities in respect of trade or business obligations
incurred after the date of the Financial Statements in the ordinary
course of the business of the Company, consistent with past
practice, none of which has been materially adverse to the nature,
results of operations, assets or financial condition of, or manner
of conducting, the business.
3.07 Absence of Changes. Since August 31, 1995, except
as set forth in Schedule 3.07, there has not been:
a. any sale, transfer, assignment, or other
disposition of any of the assets of the Company, except in the
ordinary course of business and not exceeding $10,000, or any
cancellation or forgiveness of any debt owed to, or claim
of,the Company;
b. any capital expenditure which, singly or in the
aggregate with all other capital expenditures, exceeds $10,000
made or incurred by the Company or any material lease
obligation incurred by the Company;
c. any loan made or agreed to be made by or to the
Company or any material obligation or liability(except trade
payables incurred in the ordinary course of business in
amounts consistent with prior periods) incurred by the
Company;
d. any termination or amendment of, or default
under, any material contract, lease, agreement, insurance
policy, or license to which the Company is or was a party;
e. any incurrence of indebtedness for borrowed
money or otherwise by the Company to any nontrade creditor;
f. any damage, destruction, or loss, whether or
not covered by insurance, likely to materially and adversely
affect the properties or business of the Company;
g. any labor or employment dispute or
disagreement, strike, slow down or lockout, affecting or
likely to materially adversely affect, the business or
prospects of the Company;
h. any material dispute with any supplier or
customer regarding the quality or quantity of any goods,
materials, or services provided to or by the Company regarding
the terms of any arrangement with any such supplier or
customer, or any notice from any such supplier or customer
that it will or may cease doing business with the Company;
i. any other changes in the condition (financial
or otherwise), assets, liabilities, business prospects or
operations of the Company, that have been, or are likely to
be, either individually or in the aggregate, materially
adverse to the Company;
j. any increase in the compensation or other
benefits payable or to become payable to any of the employees
of the Company, other than general salary increases in the
ordinary course of the business, consistent with past
practice, or any increase in the compensation or other
benefits payable or to become payable to any officer or
director or any increase in the benefits provided under any
employee benefit plans;
k. any declaration or payment of any dividend or
any distribution; or
l. any authorization or agreement or other
commitment to do any of the foregoing.
3.08 Employee and Related Contracts and Transactions with
Affiliates. Except only as to this Agreement and the laws,
regulations, contracts, agreements, plans, and commitments
("Arrangements") that are listed and described in Schedule 3.08,
the Company is not a party to or subject to any of the following,
whether written or oral:
a. any Arrangement for personal services with any
person or firm that is not by its terms terminable at will,
without penalty;
b. any Arrangement providing for bonuses,
pensions, deferred compensation, retirement payments, profit
sharing, incentive pay, severance pay, hospitalization,
medical expense, death benefits, disability benefits, or other
employee benefits;
c. any Arrangement providing for insurance for any
officer, consultant, director, employee, or members of their
families;
d. any Arrangement with any labor union; or
e. any Arrangement with any officer, director,
employee, or stockholder, of the Company or the spouse or
children of any such officer, director, employee, or
stockholder, or any corporation or other entity which is
controlled or majority-owned by any of such persons,
individually or collectively, including payments or loans to
or from the Company to such persons.
3.09 Legal Proceedings. Except as set forth in
Schedule 3.09:
a. there is no action, suit, arbitration
proceeding or formal investigation of any kind pending or to
Seller's knowledge threatened, and no claims or grievances
have, to Seller's knowledge, been made that, if valid, would
involve (either individually or in the aggregate) uninsured
expenditures (including reasonably estimated attorney fees and
expenses) by the Company, in excess of $10,000, or otherwise
would materially and adversely affect the Company's financial
condition, results of operations or business prospects.
b. the Company has not committed any act, or
failed or omitted to take any action, which act or omission
could give rise to any material legal action, investigation,
inquiry, or other proceeding before any court or
administrative agency including but not limited to acts or
omissions related to any labor, health and safety, or
environmental regulation; and
c. to Seller's knowledge the Company is in
compliance with the provisions of all applicable orders,
decrees, statutes, regulations, ordinances, and other laws
that materially affect the conduct of its business and the
ownership of its properties. Seller has furnished or made
available to Purchaser copies of all pleadings, complaints,
citations, or allegations, and copies of all opinions of legal
counsel evaluating or discussing the likelihood and/or the
amount of any such potential liability.
3.10 Property. The Company owned all of the property,
including all intangible property, reflected on the Balance Sheets
provided pursuant to Section 3.06 of this Agreement as of the date
of such Balance Sheets. The Company owns all property reasonably
required to operate the business of the Company as presently
conducted. Property reflected on the Balance Sheets includes all
property in which the Company has any interest on such dates,
except as changed in the ordinary course of business, none of such
changes being, either individually or in the aggregate, materially
adverse to the Company. The Company has good, clear and marketable
title to and possession of all such property free and clear of all
restrictions, interests, or encumbrances of any kind, except as set
forth on Schedule 3.10. Except as disclosed on Schedule 3.10, to
Seller's knowledge all buildings, fixtures, furniture, vehicles,
machinery, and equipment owned or used by the Company are in good
condition and repair, ordinary wear and tear accepted. No
hazardous substance has been disposed of or released at any
property owned or used by the Company nor disposed of or released
from any such property, nor otherwise disposed of or released
pursuant to the operations of the Company including but not limited
to the transport of or arranging for the transport of hazardous
substances, except in the regular course of the Company's business
and in compliance with all applicable laws, ordinances, codes, and
regulations. There is no friable asbestos on any such property.
To Seller's knowledge the Company has not received any notice of
violation of any applicable zoning, environmental, or safety
regulation or ordinance, or any other law, order, ordinance,
regulation, or requirement relating to its operations or its
properties and (a) there is no such violation; and (b) to Seller'
knowledge all buildings and structures owned or used by the Company
conforms with all applicable laws, ordinances, codes, and
regulations.
3.11 Leases. Seller has provided Purchaser copies of all
of the real and personal property leased by or to the Company. All
leases are valid, subsisting and enforceable in accordance with
their terms, and no party is in default under any such lease. No
hazardous substance has been disposed of or released at or from any
of the real or personal property leased by or to the Company except
in the regular course of the Company's business and in compliance
with all applicable laws, ordinances, codes, and regulations.
3.12 Franchises, Licenses, and Obligations. To Seller's
knowledge, the Company owns, or has legally enforceable rights in,
all patents, applications for patents, inventions, processes,
copyrights, trade names, trademarks, service marks, licenses,
franchises, registrations and applications therefor, software, and
technical information used in connection with, or necessary to, the
conduct of business as presently conducted, each of which is listed
and described on Schedule 3.12. None of the business activities
engaged in by the Company infringe upon the intellectual property
rights of any person.
3.13 Insurance. Seller has provided Purchaser copies of
all insurance policies maintained by the Company. All such
insurance policies are in full force and effect, and the Company is
not in default of any obligations under any such policies. Seller
has no reason to believe that any of the policies will not be
renewed by the insurer upon expiration, or will be renewed only on
the basis that there will be a material increase in the premiums.
3.14 Accounts and Notes Receivable. The accounts,
contracts, and notes receivable of the Company shown or reflected
on the Financial Statements provided pursuant to Section 3.06 are
the result of bona fide transactions and, to Seller's knowledge,
are good and collectible in the amounts there shown, and all such
receivables acquired subsequent to the date of such statements are
the result of bona fide transactions and, to Seller's knowledge,
are good and collectible in the aggregate amounts shown on the
books of the Company in all cases after application of reserves for
returns and bad debts in accordance with generally accepted
accounting principles consistently applied.
3.15 Compliance with Certain Instruments. The Company is
in compliance with all material obligations under all contracts and
agreements to which it is bound or by which any of its properties
may be affected. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated by
this Agreement will result in the imposition of any lien or
encumbrance on any property of the Company or accelerate the
maturity of any indebtedness of the Company or be an event that, by
itself or by the lapse of time, giving of notice, or otherwise,
would constitute a material breach of, default under, or cause the
acceleration of the expiration of, any contract or agreement to
which any of the Company is a party.
3.16 Minute Books and Stock Records. The minute books of
all proceedings of the boards of directors and shareholders of the
Company, have been made available to Purchaser, reflect all
necessary signatures, set forth the Company's respective articles
of incorporation and bylaws, as amended, and reflect that the
Company has taken all action required by statute. The stock
transfer books and stock ledgers of the Company are in good order,
complete, accurate, up-to-date, and reflect all necessary
signatures, and set forth all stock and securities issued,
transferred, and surrendered. No transfer has been made without
surrender of the proper certificate to the Company, duly endorsed,
and the Company has cancelled and retained such certificates in its
stock transfer records.
3.17 Persons Authorized to Act. Schedule 3.17 sets forth
with respect to the Company:
a. All bank or other financial institution
accounts of the Company and the names of each person
authorized to draw on each such account;
b. All safe deposit boxes of the Company and the
names of each person entitled to have access to each safe
deposit box;
c. The name of each person authorized to borrow
money (or furnish security for the same) or to transfer any
securities owned by the Company; and
d. Each power of attorney granted by the Company
to any person(s) for any purpose.
3.18 Accuracy of Representations. Seller has not made
any misstatements of material fact, or omitted to state any
material fact, necessary to make complete, accurate, and not
misleading any representation, warranty, schedule, exhibit, or
agreement set forth or described in this Agreement or delivered in
connection with the transactions contemplated by this Agreement.
3.19 Governmental and Third Party Consents. Except as
set forth in Schedule 3.19, no consent, approval, or authorization
of, or designation, declaration, or filing with, any governmental
authority or other person on the part of the Company or Seller is
required in connection with the execution, delivery, or performance
of this Agreement.
3.20 ERISA. Except as set forth in Schedule 3.08,
Company has never sponsored or maintained any "pension plans,"
within the meaning of the Employee Retirement Income Security Act
of 1974, as originally executed and as subsequently amended.
3.21 Survival of Warranties, Representations, and
Covenants. The representations and warranties of Seller contained
in this Agreement or contained in any document or certificate given
in order to carry out the transactions contemplated hereby shall
survive the execution and delivery of this Agreement and the
Closing, and, with the exception of the warranties set out in
Sections 3.01 through 3.03, Section 3.05, and the first four
sentences of Section 3.10, shall terminate and expire except as to
matters for which Purchaser has provided notice to Seller of the
inaccuracy or breach of such representations or warranties with
respect to any theretofore unasserted claim on August 31, 2001.
3.22 Brokers. Seller has not taken any action that has
obligated or could obligate Purchaser or the Company to pay any fee
or commission to any broker, finder, investment banker or other
intermediary in connection with the transactions contemplated by
this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
4.01 Organization. Purchaser is a corporation duly
organized and validly existing under the laws of the State of
Oregon, with all requisite power to own or lease its properties and
carry on its business as presently owned or conducted and to take
any action contemplated by Purchaser pursuant to this Agreement.
4.02 Capacity, Authorization and Effect of Agreement.
Purchaser has all requisite corporate power and authority to enter
into and perform this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of
this Agreement and all of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part
of Purchaser. This Agreement constitutes the valid and binding
obligation of Purchaser and is enforceable against it in accordance
with its terms, except as limited by bankruptcy, insolvency,
reorganization and similar laws affecting creditors generally and
by the availability of equitable remedies.
4.03 Absence of Breach. The execution and delivery of
this Agreement does not, and the performance of this Agreement will
not:(a) violate the organization documents of Purchaser; (b)
violate any existing applicable law, rule, regulation, judgment,
order or decree of any governmental instrumentality or court having
jurisdiction over Purchaser; or (c) require Purchaser to obtain any
authorization, consent, approval or waiver from, or to make any
filing with any governmental body, authority, or other person.
4.04 Brokers. Purchaser has not taken any action that
has obligated or could obligate Seller or the Company to pay any
fee or commission to any broker, finder, investment banker or other
intermediary in connection with the transactions contemplated by
this Agreement.
4.05 Accuracy of Representations. Purchaser has not made
any misstatement of material fact, or omitted to state any material
fact, necessary to make complete, accurate and not misleading any
representation, warranty, schedule, exhibit or agreement set forth
or described in this Agreement or delivered in connection with the
transactions contemplated by this Agreement.
4.06 Investment Intent. Purchaser intends to acquire the
Seller's Shares for investment and without a view to resale or
further distribution. Purchaser has no present intent to resell
the Seller's Shares.
4.07 Survival of Representations and Warranties. The
representations and warranties of Purchaser contained in this
Agreement shall survive the Closing and expire on August 31, 2001.
ARTICLE 5
COVENANTS OF SELLER
Seller covenants to Purchaser that he will do or cause to
be done the following:
5.01 Execution of Documents. Seller will at any time or
from time to time after the date of this Agreement (including after
Closing) execute whatever minutes of meetings or other instruments
and take whatever action Purchaser may deem necessary or desirable
(and which Seller may lawfully do) to carry out the intent and
purposes of the transactions contemplated by this Agreement.
Seller shall also use his best efforts to obtain the cooperation of
all other present and previous directors and officers of the
Company to execute such documents and take such actions in
accordance with the foregoing.
5.02 Investigation of Business and Examination of
Documents. During the period between the execution of this
Agreement and the Closing Date, Seller will provide access to and
will permit Purchaser to make such investigation of the operations,
properties, assets and records of the Company and of the financial
and legal condition thereof, as Purchaser deems necessary or
advisable to familiarize itself with such operations, properties,
assets, records and other matters. Without limiting the generality
of the foregoing, Seller will permit Purchaser to have access to
the premises used by the Company upon reasonable advance request
and during regular business hours, and will produce for inspection
and provide copies to Purchaser of:
a. all agreements and other documents referred to
in Article 3 hereof or in any of the Schedules attached hereto
and all other contracts, leases, licenses, title documents,
title opinions, insurance policies, pension plans, information
relating to employees, customer lists, information relating to
customers and suppliers, documents relating to all
liabilities, documents relating to legal or administrative
proceedings, and all other documents of or in the possession
of the Company;
b. all books, records, accounts, tax returns and
financial statements of the Company; and
c. all other information which in the reasonable
opinion of Purchaser is required in order to make an
examination of the Company.
5.03 Conduct of Business. Except as contemplated by this
Agreement or with the prior written consent of Purchaser, through
the Closing Date Seller will:
a. operate the Company, only in the usual and
ordinary course thereof, consistent with past practice, and
maintain accounting records in accordance with generally
accepted accounting principles consistently applied;
b. take all reasonable and appropriate actions
within his control to ensure that the representations and
warranties in Article 3 hereof remain true and correct at the
Closing Date, with the same force and effect as if such
representations and warranties were made at and as of the
Closing Date;
c. forthwith advise Purchaser of any facts that
come to Seller's attention which would cause any of the
representations and warranties herein contained to be untrue
in any material respect;
d. use his best efforts to: (i) preserve the
tangible and intangible assets and goodwill of the Company and
relationships with customers, suppliers and others having
dealings with the Company; (ii) keep available the services of
all employees; and (iii) maintain in full force and effect all
agreements to which the Company is a party;
e. take all other reasonable and appropriate
action reasonably requested by Purchaser in order that the
condition of the Company will not be impaired;
f. forthwith advise Purchaser in writing of any
material adverse change in the condition of the Company or its
assets;
g. use best efforts to maintain all of the
tangible properties and assets of the Company in the same
condition as they now exist, ordinary wear and tear excepted;
h. use best efforts to maintain the books, records
and accounts of the Company in the ordinary course and record
all transactions on a basis consistent with past practice;
i. not create, incur, assume, or permit to exist
any encumbrance upon any of the properties or assets of the
Company except as incurred in the ordinary course of business
and consistent with past practices;
j. not dispose of any of the properties or assets
of the Company except in the ordinary course of the business;
k. not terminate or waive any right of substantial
value of the Company;
l. not make any capital expenditure or
expenditures relating to the Company in excess of $25,000 in
the aggregate;
m. keep in full force all of the current insurance
policies of the Company;
n. take all reasonable and appropriate actions
within Seller's control to ensure that the Company performs
all obligations falling due under all agreements relating to
the Company or assets to which the Company is a party or by
which the Company is bound;
o. not enter into any agreement other than
agreements made in the ordinary course of business consistent
with past practice;
p. not increase, in any manner, the compensation
or employee benefits of any of the employees of the Company or
pay or agree to pay to any of them any pension, severance or
termination amount or other employee benefit not required by
any of the employee benefit plans and programs and collective
bargaining agreements referred to in the Schedules attached
hereto; and
q. from time to time, forthwith amend the
Schedules to this Agreement to reflect any change or
inaccuracy therein; provided that no such amendment to any
Schedule shall be effective to modify any representation or
warranty of Seller unless Purchaser shall have failed to
object thereto within 10 days following written notice to
Purchaser of the amendment or modification; provided, further,
however, that if Purchaser timely registers its written
objections to such modification of a Schedule, then Seller
shall use his best efforts to address such objections, prior
to Closing; if Seller fails to address such objections to
Purchaser's satisfaction, Purchaser's sole remedy shall be to
elect to terminate this Agreement without liability to the
other parties; if, however, such objections are timely
registered but Purchaser elects not to terminate this
Agreement and to proceed to the Closing, then the Closing
shall operate as a waiver of Purchaser's objections and shall
relieve Seller from any liability arising out of the
modification in question.
5.04 Lost Certificates. If any of Seller's
certificates for Seller's Shares to be delivered at the Closing
pursuant to Section 2.02 have been lost, stolen or destroyed,
Seller shall request the issuance of new certificates from the
Company and take such further actions as may reasonably be required
to obtain such replacement certificate or certificates prior to the
Closing Date.
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligation of Purchaser under this Agreement to
consummate the purchase of the Seller's Shares at the Closing shall
be subject to the satisfaction, at or prior to the Closing, of all
of the following conditions, any one or more of which may be waived
in whole or in part by Purchaser in writing:
6.01 Representations and Warranties Accurate. All
representations and warranties of Seller contained in Article 3
shall be true and correct in all respects at and as of the Closing
Date as if such representations and warranties were made at and as
of the Closing Date, and all covenants contained in Article 5 shall
have been complied with prior to and as of the Closing Date.
6.02 Performance by Seller. Seller shall have
performed and complied in all material respects with all
agreements, covenants and conditions required by this Agreement to
be performed and complied with by them prior to or on the Closing
Date, including, without limitation, any and all third party
contracts.
6.03 Consents and Authorizations. Seller shall have
obtained all governmental authorizations, approvals, consents and
waivers required on the part of Seller or the Company and all third
party consents, necessary to effect the Closing and the
transactions contemplated by this Agreement.
6.04 Absence of Certain Events. There shall not have
occurred any of the following events:
a. there is threatened, instituted or pending any
action, proceeding or application by or before any court or
governmental agency or other regulatory or administrative
agency or commission, domestic or foreign, by any government
or governmental authority or other regulatory agency or
commission, domestic or foreign, or by any other person,
domestic or foreign:(i) challenging the acquisition by
Purchaser of any of the Seller's Shares pursuant to this
Agreement or otherwise seeking to restrain or prohibit the
consummation of the transactions contemplated hereby;
(ii) seeking to obtain any material damages directly or
indirectly relating to the transactions contemplated hereby;
(iii) seeking to prohibit or limit the ownership or operation
by Purchaser of all or any portion of the businesses or assets
of the Company or of the Seller's Shares or to compel
Purchaser or the Company to dispose of, divest or hold
separate the Seller's Shares or all or any portion of
Purchaser's or the Company's businesses or assets as a result
of the transactions contemplated hereby; (iv) making, or
seeking to make, the purchase of, or payment for, some or all
of the Seller's Shares illegal, or resulting in a delay in the
ability of Purchaser to pay for some or all of the Seller's
Shares, or making consummation of the transactions
contemplated hereby unduly burdensome to Purchaser;
(v) imposing, or seeking to impose, material limitations on
the ability of Purchaser effectively to acquire or hold or to
exercise full rights of ownership of any Seller's Shares
acquired by it, including, but not limited to, the right to
vote any Seller's Shares purchased by it on all matters
properly presented to the stockholders of the Company; or
(vi) which, in any event, in the reasonable judgment of
Purchaser, materially adversely affects, or may adversely
affect, Purchaser or the Company or the value of the Seller's
Shares to Purchaser; or
b. there shall be any action taken, proposed or
threatened, or any statute, rule, regulation, judgment, order
or injunction (preliminary or permanent) proposed, sought,
enacted, promulgated, entered, enforced or deemed applicable
to the Agreement or other subsequent business combination, by
any government, governmental authority or other regulatory or
administrative agency or commission or court, domestic or
foreign, that, in the reasonable judgment of Purchaser,will,
directly or indirectly, result in any of the consequences
referred to in clauses (i) through (vi) of paragraph a. above;
or
c. there shall be any change (or any condition,
event or development involving a prospective change) or
threatened change in the structure, business, properties,
assets, liabilities, capitalization, stockholders' equity,
condition (financial or otherwise), operations, licenses or
franchises, results of operations or prospects of the Company
which, in the reasonable judgment of Purchaser, has or will
have a materially adverse effect on the Company or Purchaser
shall have become aware of any fact (including, but not
limited to, any change or development) which, in the
reasonable judgment of Purchaser, has or will have a material
adverse effect on the Company or the value of the Seller's
Shares to Purchaser.
6.05 Examinations. Purchaser shall be satisfied
with the results of the examinations and investigations made
pursuant to Section 5.02 hereof.
6.06 Closing Arrangements. Seller shall have
delivered to Purchaser a certificate, dated the Closing Date and
signed by Seller in form and substance acceptable to Purchaser,
confirming that all conditions to Closing have been satisfied. The
form and content of any and all arrangements and instruments for
the Closing shall be reasonably acceptable to Purchaser.
6.07 Employment Agreement. Purchaser or its
designated affiliate shall have entered into an employment
agreement with Seller, satisfactory in form and substance to
Purchaser, that supersedes all prior employment agreements between
Seller and Purchaser or its affiliates both written and oral.
6.08 401(k) Plan Termination. The Board of
Directors or Shareholders of the Company shall have resolved to
terminate the Company's 401(k) Profit Sharing Plan identified in
Schedule 3.08.
6.09 Investment Agreement Termination. That
certain Investment Agreement dated June 1, 1992, by and among the
Company, Greenbrier Leasing Corporation, and Seller shall have been
terminated.
ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement to
consummate, or cause the consummation of, the sale of the Seller's
Shares at the Closing shall be subject to the fulfillment, at or
prior to the Closing, of all of the following conditions, any one
or more of which may be waived in whole or in part by Seller:
7.01 Representations and Warranties Accurate. All
representations and warranties of Purchaser contained in Article 4
shall be true and correct in all material respects at and as of the
Closing Date as if such representations and warranties were made on
and as of the Closing Date.
7.02 Performance by Purchaser. Purchaser shall have
performed and complied in all material respects with all
agreements, covenants and conditions required by this Agreement to
be performed and complied with by it prior to or on the Closing
Date.
7.03 Authorizations, Legal Prohibition. Purchaser
shall have obtained all governmental authorizations, approvals,
consents and waivers on its part, the lack of which prior to
Closing, under any applicable law, rule or regulation, would render
legally impermissible the purchase hereunder of the Seller's Shares
by Purchaser. On the Closing Date, there shall exist no injunction
or other order issued by a court of competent jurisdiction which
would make unlawful the consummation of the transactions
contemplated by this Agreement.
ARTICLE 8
INDEMNIFICATION
8.01 Indemnification by Seller. Seller shall indemnify
and save Purchaser harmless for, from, and against any loss,
damages or deficiencies suffered by Purchaser or by the Company as
a result of any breach of representation, warranty or covenant on
the part of Seller contained in this Agreement or in any
certificate or document delivered pursuant to or contemplated by
this Agreement, and all claims, demands, costs and expenses,
including legal fees, in respect of the foregoing.
8.02 Indemnification by Purchaser. Purchaser shall
indemnify and save Seller harmless from and against any loss,
damages, or deficiencies suffered by Seller as a result of any
breach of any representation, warranty or covenant on the part of
Purchaser contained in this Agreement or in any certificate or
document delivered pursuant to or contemplated by this Agreement,
and all claims, demands, costs and expenses, including legal fees
in respect of the foregoing.
8.03 Notice of Claim. The indemnified party shall
promptly give notice to the indemnifying party of any claim for
indemnification pursuant to Section 8.01 or 8.02 (a "Claim", which
term shall include more than one Claim). Such notice shall specify
whether the Claim arises as a result of a claim by a person against
Purchaser or Seller (a "Third Party Claim") or whether the Claim
does not so arise (a "Purchaser's Claim" or a "Seller's Claim"),
and shall also specify with reasonable particularity (to the extent
that the information is available);
a. the factual basis for the Claim; and
b. the amount of the claim, or, if an amount is not
then determinable, an approximate and reasonable estimate of
the likely amount of the Claim.
8.04 Procedure for Indemnification.
a. Purchaser's or Seller's Claims. With respect to
Purchaser's or Seller's Claims, following receipt of notice of
a Claim, the indemnifying party shall have 30 days to make
such investigation of the Claim as it or they consider
necessary or desirable. For the purpose of such
investigation, the indemnified party shall make available to
the indemnifying party the information relied upon by the
indemnified party to substantiate the Claim. If Purchaser and
Seller agree at or prior to the expiration of such 30 day
period (or any mutually agreed upon extension thereof) to the
validity and amount of such Claim, the indemnifying party
shall immediately pay to the indemnified party the full agreed
upon amount of the Claim.
If Purchaser and Seller do not agree within 30 days (or
any mutually agreed upon extension thereof), Purchaser and Seller
agree that the dispute shall be submitted to arbitration by a
single arbitrator pursuant to the Commercial Arbitration Rules of
the American Arbitration Association. Such dispute shall not be
made the subject matter of an action in a court of law or equity by
either Purchaser or Seller unless the dispute has first been
submitted to arbitration and finally determined by such
arbitration. Any action commenced thereafter shall only be for
judgment in accordance with the decision of the arbitrators and the
costs incidental to the action. In any such arbitration the
decision of the arbitrator shall be conclusively deemed to
determine the rights and liabilities as between the parties to the
arbitration in respect of the matter in dispute.
b. Third Party Claims. With respect to any Third Party
Claim, the indemnifying party shall have the right, at its
expense, to participate in or assume control of the
negotiation, settlement or defense of such Third Party Claim
and, in such event, shall reimburse the indemnified party for
all out-of-pocket expenses as a result of such participation
or assumption. If the indemnifying party elects to assume
such control, the indemnified party shall cooperate with the
indemnifying party, shall have the right to participate in the
negotiation, settlement or defense of such Third Party Claim
at its own expense and shall have the right to disagree on
reasonable grounds with the selection and retention of
counsel, in which case counsel satisfactory to both parties
shall be retained by the indemnifying party. If the
indemnifying party, having elected to assume such control,
thereafter fails to defend any such Third Party Claim within
a reasonable time, the indemnified party shall be entitled to
assume such control and the indemnifying party shall be bound
by the results obtained with respect to such Third Party
Claim.
8.05 Additional Rules and Procedures. The
obligation to indemnify in respect of Claims shall also be subject
to the following:
a. in the event of any claims under this Article
8, no amount shall be owing until the amount of damage, loss,
or expense incurred by the indemnified party exceeds $50,000
in the aggregate, but once the aggregate sum of $50,000 is
exceeded, the entire amount of all aggregate damages, losses,
or expenses shall be owed. Notwithstanding anything to the
contrary herein, neither Seller's nor Purchaser's maximum
liability under this Article 8 shall exceed the Purchase
Price.
b. with respect to any indemnifiable claim
hereunder, the amount recoverable by the parties seeking
indemnity shall take into account the present value of any
insurance or third party indemnification recoveries or
reimbursements realized by or inuring to the benefit of such
party, and any tax benefits, arising from the same incident or
set of facts or circumstance giving rise to the claim for
indemnity.
c. Purchaser shall have no right to seek indemnity
hereunder, or otherwise to pursue any right, claim or remedy
against Seller with respect to any breach of warranty or
misrepresentation the specific factual basis of which was
actually known by Larry G. Brady, William A. Furman, or Marney
Malik prior to the Closing, unless, prior to the Closing,
Purchaser notifies Seller of such breach of warranty or
misrepresentation and gives Seller 30 days to cure the same.
d. in the event that any Third Party Claim is of a
nature such that the indemnified party is required by
applicable law to make a payment to any person (a "Third
Party") with respect to such Third Party Claim before the
completion of settlement negotiations or related legal
proceedings, the indemnified party may make such payment and
the indemnifying party shall, forthwith after demand reimburse
the indemnified party for any such payment. If the amount of
any liability of the indemnified party under the Third Party
Claim in respect of which such a payment was made, as finally
determined, is less than the amount which was paid by the
indemnifying party to the indemnified party, the indemnified
party shall, forthwith after receipt of the difference from
the Third Party, pay the amount of such difference to the
indemnifying party.
e. except in the circumstance contemplated by
paragraph 8.04 b. above, and whether or not the indemnifying
party assumes control of the negotiation, settlement or
defense of any Third Party Claim, the indemnified party shall
not negotiate, settle, compromise or pay any Third Party Claim
except with the prior written consent of the indemnifying
party (which consent shall not be unreasonably withheld);
f. the indemnified party shall not permit any
right of appeal in respect of any Third Party Claim to
terminate without giving the indemnifying party notice thereof
and an opportunity to contest such Third Party Claim;
g. The parties shall cooperate fully with each
other with respect to Third Party Claims, shall keep each
other fully advised with respect thereto (including supplying
copies of all relevant documentation promptly as it becomes
available);
h. notwithstanding paragraph 8.04.b., the
indemnifying party shall not settle any Third Party Claim or
conduct any related legal or administrative proceeding in a
manner which would, in the opinion of the indemnified party,
acting reasonably, have a material adverse impact on the
indemnified party.
8.06 Payment of Claims. Subject to the provisions of
this Article, the indemnified party shall be entitled to payment
from the indemnifying party immediately upon final determination of
any claim for which indemnification is due, whether by settlement,
judgment, arbitrator's decision, or other final resolution of the
claim. Any payment not made by the indemnifying party to the
indemnified party within 30 days after such final determination
shall bear interest at a rate equal to the lesser of 15 percent per
annum or the maximum rate permitted by law.
ARTICLE 9
MISCELLANEOUS
9.01 Cooperation. Each party hereto agrees that it is
its intent to consummate this Agreement in accordance with its
terms, and they respectively agree to exert their best efforts to
that end, including without limitation, the removal or satisfaction
of any objections to the validity or legality of this Agreement.
Seller agrees to cooperate fully with Purchaser in connection with
the purchase of the Seller's Shares and any transaction related
thereto and seek in a timely manner to make any filings and to
obtain any consents, permits, authorizations, approvals or waivers
required to be obtained.
9.02 Termination. This Agreement may be terminated
pursuant to: (a) the mutual consent of Purchaser and Seller; or (b)
by written notice from one party to the other if the Closing does
not occur on or before August 30, 1996, or (c) at Purchaser's
election pursuant to Section 5.03.q., hereof. There shall be no
further liability hereunder on the part of any party or any of its
partners, directors, officers or trustees if this Agreement shall
be so terminated, except by reason of the breach of this Agreement
by either party hereto.
9.03 Specific Performance. Seller acknowledges that the
unique nature of the Seller's Shares to be purchased by Purchaser
pursuant to this Agreement renders money damages an inadequate
remedy for the breach by Seller of its obligations under this
Agreement, and Seller agrees that in the event of such breach,
Purchaser shall, upon proper action instituted by it, be entitled
to a decree for specific performance of this Agreement according to
its terms.
9.04 Expenses. Each party will pay all of its own fees
and expenses incurred in connection with this Agreement.
9.05 Applicable Law, Attorney Fees. This Agreement shall
be governed by and construed in accordance with the laws of Oregon.
If any action is instituted by any party to this Agreement to
interpret or enforce this Agreement, the prevailing party shall be
entitled to recover as part of the award its reasonable attorney
fees and costs incurred in any such action including at
arbitration, trial, bankruptcy proceeding, and appeal.
9.06 Counterparts. This Agreement may be executed in two
or more counterparts, each of which counterparts shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
9.07 Notices. Any notices or other communications
hereunder shall be in writing and shall be deemed to have been duly
given (and shall be deemed to have been duly received if so given)
if personally delivered or sent by telegram, cable, telex or
facsimile or by registered or certified mail, postage prepaid,
addressed to the respective parties as follows:
If to Purchaser:
Larry G. Brady
Vice President and Chief Financial Officer
The Greenbrier Companies, Inc.
Suite 200
One Centerpointe Drive
Lake Oswego, Oregon 97035
Telephone:(503) 684-7000
Telefax:(503) 684-7553
With a copy to:
Norriss M. Webb
Executive Vice President and
General Counsel
The Greenbrier Companies, Inc.
Suite 200
One Centerpointe Drive
Lake Oswego, Oregon 97035
Telephone:(503) 684-7000
Telefax:(503) 684-7553
If to Seller:
A. Daniel O'Neal, Jr.
Tolan O'Neal Transportation & Logistics, Inc.
Suite 500
200 West Thomas
Seattle, Washington 98119
Telephone:(206) 282-0099
Telefax:(206) 282-3824
or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notices of
change of address shall only be effective upon receipt.
Inadvertent failure to provide a copy of a notice shall not be
deemed a breach of this Agreement.
9.08 Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, executors,
administrators, personal representatives, successors and permitted
assigns; provided, however, that Seller may not assign this
Agreement or any of its rights or obligations hereunder without the
prior written consent of Purchaser, which may be granted or
withheld in Purchaser's sole discretion; and provided further,
however, that Purchaser shall have the unrestricted right to assign
this entire Agreement at any time or any part of its rights or
obligations hereunder from time to time to any affiliate of
Purchaser, without relieving Purchaser of its obligations
hereunder.
9.09 Severability. If any provision or portion of this
Agreement shall become invalid or unenforceable for any
reason:(a) the invalidity or unenforceability of any provision of
portion thereof shall not affect the validity or enforceability of
the other provisions or portions hereof; and (b) the parties hereto
shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties to the end that the
transactions contemplated hereby are fulfilled to the extent
possible.
9.10 No Third Party Beneficiaries. This Agreement is not
intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
9.11 Entire Agreement. Except only as set forth in the
written employment agreement referred to in Section 6.09 hereof:
this Agreement constitutes the entire agreement between the parties
pertaining to the subject matter hereof; there are no warranties,
conditions or representations (including any that may be implied by
statute) and there are no agreements in connection with such
subject matter except as specifically set forth or referred to in
this Agreement; and no reliance is placed on any warranty,
representation, opinion, advice or assertion of fact made by any
party hereto or its directors, officers, employees or agents, to
any other party hereto or its directors, officers, employees or
agents, except to the extent that the same has been reduced to
writing and included as a term of this Agreement. Accordingly,
there shall be no liability, either in tort or in contract,
assessed in relation to any such warranty, representation, opinion
advice or assertion of fact, except to the extent aforesaid.
9.12 Waiver, Amendment. Except as expressly provided in
this Agreement, no amendment or waiver of this Agreement shall be
binding unless executed in writing by the party to be bound
thereby. No waiver of any provision of this Agreement shall
constitute a waiver of any other provision nor shall any waiver of
any provision of this Agreement constitute a continuing waiver
unless otherwise expressly provided.
IN WITNESS WHEREOF, Purchaser and Seller have caused this
Agreement to be duly executed on the day and year first above
written.
PURCHASER: SELLER:
GREENBRIER LOGISTICS, INC.
By: /s/ Larry G. Brady /s/ A. Daniel O'Neal
----------------------- --------------------
Its: Vice President A. Daniel O'Neal
-----------------------<PAGE>
CONSENT OF SPOUSE
I, the undersigned, certify and agree that:
1. I am the spouse of A. Daniel O'Neal who signed the
foregoing Agreement as Seller.
2. I have read the foregoing Agreement and I am aware
that by its provisions my spouse agrees to sell all his shares of
the Company, including my community property interest in them. I
hereby consent to the sale, approve of the provisions of this
Agreement, and agree that those shares and my interest in them are
subject to the provisions of this Agreement and that I will take no
action at any time to hinder operation of the Agreement on those
shares or in my interest in them.
DATE: July 2, 1996 /s/ Diane O'Neal
------------------------- -------------------------
Diane O'Neal
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), dated for
reference purposes the 1st day of June, 1996, is by and between
GREENBRIER LOGISTICS, INC., an Oregon corporation ("Company"),
and A. DANIEL O'NEAL, JR. ("Executive") (collectively, "the
Parties").
RECITALS
A. By agreement to be dated June 28, 1996, (the "Stock
Purchase Agreement"), Executive will sell and Company will
purchase all of Executive's shares of Tolan-O'Neal Transportation
& Logistics, Inc. held by Executive.
B. Company is engaged in the business of commercial
transportation scheduling and logistics. Company desires to
employ Executive on a full-time basis as its Chairman to perform
the duties set forth in this Agreement; and Executive desires to
accept the employment.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual
promises, agreements and conditions set forth below, it is agreed
as follows:
1. Employment. Company agrees to employ Executive
and Executive agrees to accept employment by Company upon the
terms and conditions hereinafter set forth.
2. Term. Subject to the provisions for termination
in Section 8, the term of this Agreement shall be for five
(5) years beginning on June 1, 1996.
3. Duties. Executive will perform duties as Chairman
of Company, and such other duties as may be assigned to him from
time to time by the Board of Directors of Company, provided that
such duties are consistent with those duties customarily
associated with such position.
4. Extent of Services; Restrictions. Executive shall
devote his entire working time, attention and energies to the
performance of his duties hereunder and shall not, during the
term of this Agreement, be engaged in any other business
activity, whether or not such business activity is pursued for
gain, profit or other pecuniary advantage. Notwithstanding the
foregoing, Executive may invest his assets in such form or manner
as will not require services on his part. Executive shall at all
times faithfully and to the best of his ability perform all of
the duties that may be required of him pursuant to this
Agreement. The duties shall be rendered at such places and times
as the needs of Company shall require subject to reasonable
travel burdens on Executive, consistent with past service to the
Greenbrier Companies.
5. Compensation and Benefits.
a. Base Compensation. Executive shall receive
base compensation of $200,000 per year, payable in accordance
with Company's standard payroll procedures for its non-union
employees.
b. Bonus Compensation. Executive shall be
entitled to receive such bonus remuneration, if any, as the Board
of Directors of Company shall authorize. Executive acknowledges
that such bonuses are discretionary.
c. Executive Benefits. Executive shall be
entitled to such other fringe benefits as are normally accorded
full-time employees of Company under its personnel policies
adopted from time to time, which are not inconsistent with the
terms of this Agreement; provided, however, Executive shall be
entitled to maintain existing benefits or equivalents. Company
shall have the right to modify or terminate any such fringe
benefits and personnel policies at any time, except those
benefits specifically provided in this Agreement.
d. Stock Options. The Greenbrier Companies,
Inc. shall grant a stock option to Executive on or before
November 30, 1996 to purchase 50,000 shares of The Greenbrier
Companies, Inc. common stock under the terms of The Greenbrier
Companies' 1994 Stock Option program with fair market valuation
of $12.12 per share.
e. Expenses. Executive shall be entitled to
reimbursement from Company for reasonable expenses, including
club and trade association dues, necessarily incurred by
Executive in the performance of Executive's duties under this
Agreement, upon presentation of vouchers indicating in detail the
amount and business purpose of each such expense and upon
compliance with Company's reimbursement policies established from
time to time.
f. Car Allowance. The Company shall provide a
car for Executive, for use in performing his duties hereunder,
that is in keeping with his position and responsibilities, and
the Company shall pay for full maintenance and operating costs
for such car.
6. Vacation. Executive shall be entitled to four
weeks of vacation with pay annually, to be taken at such time as
may be acceptable to the Executive and Company giving
consideration to the operating needs of Company. At the
termination of Executive's employment, either at the end of the
term of this Agreement or pursuant to Section 8, Executive shall
be entitled to payment in lieu of vacation which was not taken in
the year of termination.
7. Confidentiality; Noncompetition.
a. Confidentiality. Executive acknowledges that
during the course of his employment by Company, he has been and
will be exposed to, have disclosed to him and may develop
information that is proprietary to Company ("Confidential
Information"). Confidential Information includes, but is not
limited to, financial data, trade secrets, information concerning
the operation, design and marketing of products, repairs and
processes, business plans and procedures, customer lists, files
and profiles needs analyses, calculations, data, manuals,
specifications, performance standards, instructions and any other
material or information related to Company, its business or
operations, and the ideas and information relating thereto.
Confidential Information does not include any information which
is available to the public, in the public domain, or readily
ascertainable or available from another legitimate source.
Executive will at no time use or permit any other person or
entity to examine, use or derive benefit from Confidential
Information except in the course of performing his duties under
this Agreement. Executive shall maintain all Confidential
Information in the strictest confidence, and shall take all
reasonable precautions to preserve its confidentiality during the
term of this Agreement and thereafter. All documents and
materials evidencing Confidential Information, and copies
thereof, shall at all times remain the property of Company. Upon
demand, Executive will deliver to Company all documents and other
materials which contain or pertain to Confidential Information.
b. Noncompetition. Provided that Company is not
in breach of this Agreement, Executive agrees that during the
term of this Agreement and for a period of two years following
termination of his employment for any reason, Executive will not,
without the consent of the Company, within the geographic area of
North America:
(1) Directly or indirectly own (as a
proprietor, general or limited partner, shareholder, trust
beneficiary or otherwise), manage, operate, participate in (as an
employee, agent, manager, director, officer, consultant or
otherwise), perform services or consult for or otherwise carry on
in any capacity whatsoever for, a business engaged in providing
services which directly compete with the Company's business or
products;
(2) Directly or indirectly induce or attempt
to persuade any former, current or future employee, agent,
manager, consultant, director of, or other participant in the
Company's business to terminate such employment or other
relationship; or
(3) Directly or indirectly contact or
solicit any customers of Company or any of its affiliates for the
purpose of selling to the customers any products or services
which are the same as or substantially similar to, or competitive
with the products or services sold by Company or any of its
affiliates during Executive's employment with Company; or
(4) Directly or indirectly use Confidential
Information in connection with any activity prohibited above.
(5) Notwithstanding anything herein to the
contrary, Executive may own an interest not in excess of 5% of a
corporation whose shares are listed on a recognized stock
exchange or traded in the over-the-counter market in any country
in North America, which carries on a business which directly
competes with the services or products provided by Company.
c. Breach. Upon a breach by Executive of any of
the terms or conditions of the confidentiality or noncompetition
covenants, Company shall have the right to:
(1) Recover from Executive its actual
damages incurred by reason of such breach, including its attorney
fees and costs of suit, if Company prevails, or provided that
such is awarded to Company by way of an actual judgment;
(2) Obtain injunctive relief to prevent the
breach or continued breach of the covenants without proof of
actual damages; and
(3) Pursue any other remedy available at law
or in equity.
The provisions of this Section 7 shall remain in full
force and effect following termination of this Agreement for any
reason.
8. Termination.
a. For Cause. Company may terminate Executive's
employment at any time for cause with immediate effect upon
delivering written notice thereof to Executive. For purposes of
this Agreement, "for cause" shall mean: (i) gross negligence or
willful misconduct in the performance of Executive's duties;
(ii) embezzlement, theft, larceny, material fraud or other acts
of dishonesty; (iii) failure to cure any violation of any of the
provisions of this Agreement within thirty (30) days of written
notice from the Company; (iv) conviction of or entrance of a plea
of guilty or nolo contendere to a felony or other crime which has
or may have a material adverse effect on Executive's ability to
carry out his duties under this Agreement or upon the reputation
of Company; (v) conduct involving moral turpitude; or
(vi) refusal or repeated failure after warning by the Company to
carry out the reasonable directives of the Board of Directors,
provided that such directives are consistent with Executive's
duties herein. Upon termination for cause, Company's sole and
exclusive obligation will be to pay Executive his base
compensation earned through the date of termination, and any
accrued but unused vacation during the year of termination and
outstanding reimbursements, and Executive shall not be entitled
to any compensation after the date of such termination.
b. Without Cause. Company may terminate
Executive's employment at any time without cause upon written
notice. Upon termination without cause, Company's sole and
exclusive obligation will be to pay to Executive his base
compensation for the lesser of one year from the date of
termination or the remaining term of this Agreement, and
Executive shall not be entitled to any other compensation after
the date of such termination, except any accrued, but unused or
unpaid, vacation in the year of termination or compensation, and
any unreimbursed expenses incurred in conformance with this
Agreement prior to termination. Company's obligation under this
paragraph shall be reduced by any compensation Executive earns
subsequent to his termination and during the period that Company
is required to pay Executive his base compensation.
c. Upon Death. In the event of Executive's
death during the term of this Agreement, Company's sole and
exclusive obligation will be to pay to Executive's widow, if
living, or to his estate, if his widow is not then living,
Executive's base compensation through the last day of the month
in which his death occurs and any accrued, but unused, vacation
in the year of Executive's death.
d. Upon Disability. This Agreement shall
terminate, at Company's option, upon Executive's total
disability. Executive's total disability means his inability to
perform his duties under this Agreement by reason of illness,
mental or physical disability or accident for a period of six
consecutive months or for a period of twelve months (whether or
not consecutive in any consecutive 24-month period). Upon
termination by reason of Executive's disability, Company's sole
and exclusive obligation will be to pay Executive his base
compensation through the date of termination and any accrued, but
unused or unpaid, vacation or compensation. If Executive claims
disability, Company shall have the authority to consult with
Executive's attending physicians. Any and all information
obtained through such consultation shall be treated as
confidential.
e. Executive may terminate his employment under
this Agreement upon written notice to Company. Upon such
termination, Executive shall be entitled to all base compensation
and unused vacation in the year of termination, accrued to the
date of termination, and to reimbursement of any reasonable
business expenses incurred on behalf of the company prior to
termination.
9. Notices. Any notice required or permitted to be
given under this Agreement shall be sufficient if in writing and
personally delivered or sent by registered or certified mail
addressed as follows:
If to Company: William A. Furman
Greenbrier Logistics, Inc.
Suite 200
One Centerpointe Drive
Lake Oswego, OR 97035
Telephone: (503) 684-7000
Facsimile: (503) 684-7553
With a copy to: Norriss M. Webb
Executive Vice President and General
Counsel
The Greenbrier Companies, Inc.
Suite 200
One Centerpointe Drive
Lake Oswego, OR 97035
Telephone: (503) 684-7000
Facsimile: (503) 684-7553
And a copy to: Larry G. Brady
Vice President and Chief Financial
Officer
The Greenbrier Companies, Inc.
Suite 200
One Centerpointe Drive
Lake Oswego, OR 97035
Telephone: (503) 684-7000
Facsimile: (503) 684-7553
If to Executive: A. Daniel O'Neal, Jr.
Greenbrier Logistics, Inc.
Suite 500
200 West Thomas
Seattle, WA 98119
Telephone: (206) 282-0099
Facsimile: (206) 282-3824
Inadvertent failure to provide a courtesy copy shall not be
deemed a breach of this Agreement. Either party may, by notice
in writing to the other party, change the address to which
notices to that party are to be given.
10. Waiver. The waiver by either party of the breach
of any provision of this Agreement by the other party shall not
operate or be construed as a waiver of any subsequent breach by
such party.
11. Modification. No amendment, modification or
discharge of this Agreement shall be valid unless it is in
writing and duly executed by the party to be charged therewith.
12. Construction, Attorney Fees. This Agreement shall
be construed in accordance with and governed by the laws of the
state of Oregon. If any action is instituted by any party to
this Agreement to interpret or enforce this Agreement, the
prevailing party shall be entitled to recover as part of the
award its reasonable attorney fees and costs incurred in any such
action including at arbitration, trial, bankruptcy proceeding,
and appeal.
13. Severability. The invalidity or unenforceability
of any provision hereof shall in no way affect the validity or
enforceability of any other provision.
14. Benefit. This Agreement shall inure to and be
binding upon the Parties, their heirs, personal representatives,
successors and assigns, provided Executive may not assign this
Agreement.
15. Entire Agreement. The entire agreement between
the Parties is contained herein. This Agreement supersedes any
and all prior agreements and understandings between the Parties.
There are no promises or representations made on behalf of
Company to induce Executive to enter into this Agreement which
are not set forth herein. Executive expressly acknowledges and
agrees that this Agreement extinguishes all rights and interest
in Additional Compensation pursuant to Section 4.5 of the Prior
Contract.
16. Arbitration. Except for any dispute arising under
Section 7 above, any and all disputes arising from or pertaining
to this Agreement, or the interpretation or enforcement thereof,
shall be resolved by binding arbitration. The arbitration shall
be conducted by an independent and neutral arbiter mutually
agreed upon by the Parties.
17. Captions. The paragraph captions are for
convenience of the Parties and shall not affect the meaning or
interpretation of this Agreement.
18. Counterparts. This Agreement may be executed in
two or more counterparts, each of which counterparts shall be
deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the Parties have executed this
Agreement as of the day and year first written above.
/s/ A. Daniel O'Neal
---------------------------------
A. DANIEL O'NEAL, JR.
GREENBRIER LOGISTICS, INC.
By /s/ Larry G. Brady
--------------------------------
Its Vice President
-------------------------------
THE GREENBRIER COMPANIES, INC.
By /s/ Larry G. Brady
--------------------------------
Its Vice President
--------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the company's
consolidated financial statements and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> MAY-31-1996
<CASH> 18,817<F1>
<SECURITIES> 0
<RECEIVABLES> 49,857
<ALLOWANCES> 0
<INVENTORY> 65,065
<CURRENT-ASSETS> 91,845
<PP&E> 35,170
<DEPRECIATION> 0
<TOTAL-ASSETS> 579,453
<CURRENT-LIABILITIES> 68,878
<BONDS> 0
0
0
<COMMON> 14
<OTHER-SE> 108,117
<TOTAL-LIABILITY-AND-EQUITY> 579,453
<SALES> 0
<TOTAL-REVENUES> 379,996
<CGS> 308,117
<TOTAL-COSTS> 356,051
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,903
<INCOME-PRETAX> 23,945
<INCOME-TAX> 10,102
<INCOME-CONTINUING> 13,843
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,843
<EPS-PRIMARY> .98
<EPS-DILUTED> .98
<FN>
<F1>Of this amount, $13,013 is restricted.
</FN>
</TABLE>
