<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED AUGUST 31, 1997
or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the transition period from ___________ to ___________
Commission File No. 1-13146
---------------------------
THE GREENBRIER COMPANIES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 93-0816972
(State of Incorporation) (IRS Employer Identification No.)
ONE CENTERPOINTE DRIVE, SUITE 200
LAKE OSWEGO, OREGON 97035
(Address of principal executive offices)
(503) 684-7000
(Registrant's telephone number, including area code)
---------------------------
Securities registered pursuant to Section 12(b) of the Act:
(Title of Each Class) (Name of Each Exchange
COMMON STOCK, on Which Registered)
PAR VALUE $0.001 PER SHARE NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act:
NONE
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
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
Yes X No
----- -----
Aggregate market value of the Registrant's Common Stock held by non-affiliates
on October 31, 1997 (based on the closing price of such shares on such date) was
approximately $92,111,000.
The number of shares outstanding of the Registrant's Common Stock on October 31,
1997 was 14,165,028 shares of Common Stock, par value $0.001 per share.
DOCUMENTS INCORPORATED BY REFERENCE
Parts of Registrant's 1997 Annual Report to Stockholders and of
Registrant's Proxy Statement dated November 24, 1997 prepared in connection
with the Annual Meeting of Stockholders to be held on January 13, 1998 are
incorporated by reference into Parts II and III of this Report.
<PAGE>
THE GREENBRIER COMPANIES, INC.
FORM 10-K
TABLE OF CONTENTS
PART I PAGE
----
Item 1. BUSINESS 1
Item 2. PROPERTIES 7
Item 3. LEGAL PROCEEDINGS 8
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 8
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS 8
Item 6. SELECTED FINANCIAL DATA 8
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 8
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE 8
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT 9
Item 11. EXECUTIVE COMPENSATION 9
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT 9
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 9
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K 10
SIGNATURES 19
(i)
<PAGE>
PART I.
ITEM 1. BUSINESS
INTRODUCTION
The Greenbrier Companies, Inc. ("Greenbrier" or the "Company") is a leading
supplier of transportation equipment and services to the railroad and related
industries. The Company's manufacturing segment produces double-stack intermodal
railcars, conventional railcars and marine vessels, and provides repair and
refurbishment for both intermodal and conventional railcars. In addition to
manufacturing, Greenbrier is engaged in complementary leasing and services
activities. The lease fleet consists of 27,594 owned or managed railcars as of
August 31, 1997. Greenbrier believes this fleet is among the largest
non-railroad owned fleets in the United States.
Greenbrier divested its fleet of domestic containers, intermodal and highway
trailers and chassis previously held for lease during the fourth quarter of 1997
and subsequent to year end. The Company is currently engaged in discussions with
potential purchasers of its third party transportation logistics business. The
decision to divest the third party logistics and trailer and container leasing
operations was reached after an extensive review of various options by
management. The expansion of the logistics segment during 1996 and 1997 was
based on expected complementary advantages of bringing assets and services
together which did not develop. Industry fundamentals for both businesses are
strong, however; rates of return on capital invested have been less than
desired. The Company has decided to focus on its core railcar operations where
it believes it can more productively deploy management and capital resources.
Greenbrier is a Delaware corporation formed in 1981. The Company's principal
executive offices are located at One Centerpointe Drive, Lake Oswego, Oregon
97035, and its telephone number is (503) 684-7000.
PRODUCTS AND SERVICES
Greenbrier operates in two primary business segments: the manufacture of
railcars and marine vessels and the refurbishment and repair of railcars; and
the leasing and management of surface transportation equipment and related
services. A summary of selected consolidated financial information for these two
business segments as well as domestic and foreign operations is set forth in
Note 16 of the Notes to Consolidated Financial Statements.
INTERMODAL PRODUCTS
Intermodal transportation is the movement of cargo in standardized containers or
trailers. Intermodal containers and trailers are generally freely
interchangeable among railcar, truck or ship, making it possible to move cargo
in a single container or trailer from a point of origin to its final destination
without the repeated loading and unloading of freight required by traditional
shipping methods. A major innovation in intermodal transportation has been the
articulated double-stack railcar which transports stacked containers on a single
platform. An articulated railcar is a unit comprised of up to five platforms,
each of which is linked by a common set of wheels and axles.
DOUBLE-STACK RAILCARS. The double-stack railcar provides significant operating
and capital savings over other types of intermodal railcars. These savings are
the result of (i) increased train density (two containers are carried within the
same longitudinal space conventionally used to carry one trailer or container);
(ii) a railcar weight reduction per container of approximately 50 percent;
(iii) easier terminal handling characteristics; (iv) reduced equipment costs of
approximately 30 percent over the cost of providing the same carrying capacity
with conventional equipment; (v) better ride quality leading to reduced damage
claims; and (vi) increased fuel efficiency resulting from weight reduction and
improved aerodynamics. The Company is the leading manufacturer of double stack
railcars with an estimated cumulative U.S. market share of nearly 60%. In 1997,
375 double-stack railcars were manufactured and sold by the Company, which the
Company believes represents 54% of total market share during such period.
1
<PAGE>
Greenbrier's comprehensive line of articulated and non-articulated double-stack
railcars offers varying load capacities and configurations. Current double-stack
products include:
MAXI-STACK -Registered Trademark- - The Maxi-Stack is a series of
double-stack railcars that features the ride-quality and operating
efficiency of articulated stack cars and the versatility for alternating
platforms to carry a variety of cargo. The Maxi-Stack III is a
five-platform railcar that features the ability to carry containers up to
53 feet in length, the longest shipping containers presently in use. The
Maxi-Stack AP is a three-platform all-purpose railcar that is more
versatile than other intermodal cars that carry both trailers and
containers because it allows the loading of either one large over-the-road
trailer or two 28-foot trailers. It is also able to carry double-stack
containers on the same platform.
HUSKY-STACK -Registered Trademark- - The Husky-Stack is a non-articulated
(stand-alone) or draw bar connected series of double-stack railcars with
the capability of carrying containers up to 42 percent heavier than a
single Maxi-Stack platform. The All-Purpose Husky-Stack is a
non-articulated version of the Maxi-Stack AP. Husky-Stack 2+2 is a 56-foot
railcar that allows the double-stack loading of up to four 28-foot
containers. Husky-Stack also provides a means to extend double-stack
economics to small load segments and terminals.
AUTOSTACK. Autostack is a proprietary system developed and licensed by the
Company to transport vehicles intermodally in standard domestic or international
shipping containers and, unlike conventional multi-level railcars, can be used
in standard rail, ship and highway intermodal corridors. In 1997, Greenbrier
recorded a $7 million write-down of the carrying value of the Autostack
operating equipment to approximate the anticipated net realizable value of the
assets based on projected future performance under existing contracts.
Greenbrier believes Autostack will remain a niche player in the vehicle
transportation industry. The Autostack system transported approximately 98,000
vehicles in 1997.
CONVENTIONAL RAILCARS
Greenbrier, through its subsidiaries Gunderson, Inc. and TrentonWorks Limited,
is the leading manufacturer of boxcars in North America. A wide variety of
100-ton capacity boxcars, primarily used in the forest products industry, are
offered as well as custom built high capacity railcars for special applications
such as automotive parts or canstock movement. In addition to boxcars, the
Company manufactures high cubic capacity covered hopper railcars for grain
transportation, center partition flat cars for lumber and other building
materials, gondolas for scrap steel services and various other conventional
railcar types. In 1997, approximately 4,100 conventional railcars were
manufactured and leased or sold.
Other conventional railcar designs such as flat cars and woodchip cars have been
manufactured by the Company. The need for expansion and upgrading of the railcar
manufacturing and refurbishing facilities is continually evaluated in order to
take advantage of increased market opportunities for new railcar designs.
RAIL SERVICES
Greenbrier is actively engaged in the repair and refurbishment of railcars for
third parties as well as its own lease fleet. In certain situations, repair and
refurbishment of the Company's lease fleet is performed in unaffiliated
facilities. Refurbishing and repair facilities are located in Portland and
Springfield, Oregon and Cleburne, Texas. The Springfield facility has a
long-term contract with a third-party primarily for the repair of railcars.
Greenbrier believes it is one of only a few railcar lessors with its own
refurbishing capabilities. In addition, Greenbrier operates wheel shops in
Portland, Pine Bluff, Arkansas and Tacoma, Washington.
MARINE VESSEL FABRICATION
The Portland, Oregon manufacturing facility is located on a deep water port on
the Willamette River. Until 1984, the Company's predecessor designed and built
ocean-going barges and other types of marine vessels for maritime shipping
companies. In 1995, Greenbrier re-entered the marine vessel market and expanded
and upgraded the marine facilities, which includes the largest side-launch ways
on the West Coast. The upgraded marine facilities also enhance steel plate
burning and fabrication capacity providing flexibility for railcar production.
Since 1995 vessels manufactured included conventional deck barges for aggregates
and other heavy industrial products and ocean-going dump barges.
2
<PAGE>
LEASING AND SERVICES
Greenbrier currently manages a lease fleet of 27,594 railcars of which 16,045
are owned and the remainder are managed for institutional investors and other
leasing companies. As of August 31, 1997 approximately 96.4% of the owned units
available for revenue service were on lease with an average remaining lease term
of 4 years. Management services include asset marketing and re-marketing,
maintenance management, accounting and/or administration. Greenbrier
participates in both the finance and the operating lease segments of the market.
The aggregate rental payments over the operating lease terms do not fully
amortize the acquisition costs of the leased equipment, as a result, the Company
is subject to the customary risk that it may not be able to sell or re-lease
equipment after the operating lease term expires. However, the Company believes
it can effectively manage the risks typically associated with operating leases
due to its intermodal expertise and its refurbishing and remarketing
capabilities. Most of the railcar leases are "full service" leases, whereby
Greenbrier is responsible for maintenance, taxes and administration. The rail
fleet is maintained, in part, through Greenbrier's own facilities and
engineering and technical staff. Assets from the owned lease fleet are
periodically sold to take advantage of market conditions, manage risk and
maintain liquidity. Railcar equipment held for sale consists mainly of hulks
that will either be refurbished or sold. Trailers and containers held for sale
include domestic containers, intermodal and highway trailers and chassis that
were sold subsequent to year end.
The following table summarizes the lease fleet:
<TABLE>
<CAPTION>
FLEET PROFILE
AS OF AUGUST 31, 1997(1)
------------------------------------------------------
Average
% of Owned Age of
Owned Managed Total Units on Owned
Units Units Units Lease Units (Yrs.)
------- ------- ------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Railcars Available for
Revenue Service 14,252 11,549 25,801 96.4% 18.9
Railcar Equipment Held
for Sale 1,793 - 1,793
------- ------- -------
16,045 11,549 27,594
------- ------- -------
------- ------- -------
Trailers and Containers Held
for Sale 12,090 1,244 13,334
------- ------- -------
------- ------- -------
Lessee Profile
Class I Railroads 11,289 8,971 20,260
Non-Class I Railroads 1,348 1,108 2,456
Shipping Companies 971 1,427 2,398
Leasing Companies 137 3 140
Off-Lease 507 40 547
------- ------- -------
Total Revenue Units 14,252 11,549 25,801
------- ------- -------
------- ------- -------
</TABLE>
- -------------
(1) Each platform of an articulated car is treated as a separate car.
A substantial portion of the equipment in the lease fleet has been acquired
through an agreement entered into in August 1990 with Southern Pacific
Transportation Company, which has since merged with Union Pacific Railroad
Company ("Union Pacific"), to purchase, refurbish and remarket over 10,000
railcars. The railcars are refurbished to predetermined specifications by
Greenbrier or by unaffiliated contract shops after satisfactory remarketing
arrangements are in place. All of the railcars subject to this agreement have
been refurbished and are on lease as of August 31, 1997.
3
<PAGE>
RAW MATERIALS AND COMPONENTS
Manufactured products require a supply of raw materials including steel plate
and numerous specialty components such as brakes, wheels and axles.
Approximately 50 percent of the cost of each freight car represents specialty
components purchased from third-parties. Customers often specify particular
components and suppliers of such components. Although the number of alternative
suppliers of certain specialty components has declined in recent years, there
are at least two suppliers for most such components. Inventory levels are
continually monitored to ensure adequate support of production. Advance
purchases are periodically made to avoid possible shortages of material due to
capacity limitations of component suppliers and possible price increases.
Binding long-term contracts with suppliers are not typically entered into as the
Company relies on established relationships with major suppliers to ensure the
availability of raw materials and specialty items. Fluctuations in the price of
components and raw materials have not had a material effect on earnings and are
not anticipated to have a material effect in the foreseeable future.
In 1997, approximately 45 percent of the Company's domestic requirements for
steel plate were purchased from Oregon Steel Mills, Inc. Approximately 76
percent of the Canadian requirements for steel plate were purchased from Algoma
Steel Inc. No other suppliers accounted for in excess of ten percent of total
purchases in 1997, and the top ten suppliers (including Oregon Steel Mills, Inc.
and Algoma Steel Inc.) accounted for approximately 28 percent of total
purchases. The Company maintains good relationships with its suppliers and has
not experienced any significant interruptions in recent years in the supply of
raw materials or specialty components. A member of the TrentonWorks Limited
board of directors serves as Chairman of the board of directors of Algoma Steel
Inc.
MARKETING AND PRODUCT DEVELOPMENT
A fully integrated marketing and sales effort is utilized whereby Greenbrier
seeks to leverage relationships developed in each of its manufacturing and
leasing and services operations to provide customers with a diverse range of
equipment and financing alternatives designed to satisfy a customer's unique
needs. These custom programs may involve a combination of railcar products and
financing, leasing, refurbishing and remarketing services, depending on whether
the customer is buying new equipment or refurbishing existing equipment.
Through customer relationships, insights are derived into the potential need for
new products and services. Marketing and engineering personnel collaborate to
evaluate opportunities and identify and develop new products. Research and
development costs incurred for new product development during 1997, 1996 and
1995 were $1,097,000, $597,000 and $1,086,000, respectively.
During 1997, Greenbrier completed the prototype and began commercial testing
of Auto-Max -Trademark-, a two-unit articulated railcar that can be configured
for either tri-level or bi-level vehicle transportation service. Auto-Max is
expected to be commercially introduced in late fiscal 1998.
CUSTOMERS AND BACKLOG
The manufacturing customer base includes every transportation company that
utilizes double-stack or conventional railcars as well as financial institutions
that provide equipment to the transportation industry. A portion of the customer
base includes TTX Company, Burlington Northern Santa Fe ("Burlington Santa Fe"),
Canadian National, First Union Rail, NorRail, Inc., General Electric Railcar
Services, and Norfolk Southern Railway Company. In 1997, sales to the largest
customer, TTX Company, accounted for 20 percent of total revenues.
4
<PAGE>
The following table lists the Company's backlog in units and dollars for new
railcars at the dates shown:
August 31,
--------------------------------------
1997 1996 1995
---- ---- ----
New railcar backlog(1) 2,600 2,200 4,600
Estimated value (in thousands) $133,000 $123,000 $280,000
- -------------
(1) Each platform of an articulated car is treated as a separate car.
The backlog as of August 31, 1997 extends into the third quarter of 1998. The
backlog is based on customer sale or lease orders that the Company believes are
firm. Customer orders, however, are subject to cancellation and other customary
industry terms and conditions. Historically, little variation has been
experienced between the number of railcars ordered and the number of railcars
actually sold. The backlog is not necessarily indicative of future results of
operations. Payment for railcars manufactured is typically received when the
cars are completed and accepted by a third-party customer.
Autostack services are currently provided under agreements with RailVan
Multimodal, Burlington Santa Fe, Sea-Land Service Inc. and Toyota Motor Sales
USA Inc. The agreements expire at various dates through 2000.
Leasing customers include Class I Railroads, regional and short line railroads,
other leasing companies, shippers and carriers such as Union Pacific, Burlington
Santa Fe, Railtex, Oregon Steel Mills, and First Union Rail.
COMPETITION
Greenbrier is affected by a variety of competitors in each of its principal
business activities. There are currently seven major railcar manufacturers
competing in the United States and Canada. Two of these producers build railcars
principally for their own fleets and five producers - Trinity Industries, Inc.,
Thrall Car Manufacturing Co., Johnstown America Corp., National Steel Car, Ltd.
and the Company - compete principally in the general railcar market. Some of
these producers have substantially greater resources than the Company.
Greenbrier competes on the basis of type of product, reputation for quality,
price, reliability of delivery and customer service and support.
In railcar leasing, principal competitors include The CIT Group, DJ Joseph,
First Union Rail, GATX Corporation, General Electric Railcar Services, NorRail,
Inc. and Helm Financial Corp.
PATENTS AND TRADEMARKS
Greenbrier pursues a proactive program for protection of intellectual property
resulting from its research and development efforts. Greenbrier has obtained
patent and trademark protection for significant intellectual property as it
relates to its business. The Company holds several United States and foreign
patents and has several patent applications pending.
Greenbrier holds the exclusive North American license to use the Autostack
technology until the later of 2007 or the expiration of the last Autostack
patent, subject to the payment of minimum royalties. The basic Autostack system
is covered by a family of related United States patents and patent applications.
Corresponding foreign patent coverage has been obtained, or is pending, in
Australia, Canada, Europe, Mexico, Japan and South Korea.
ENVIRONMENTAL MATTERS
The Company is subject to federal, state, provincial and local environmental
laws and regulations concerning, among other matters, air emissions, waste water
discharge, solid and hazardous waste disposal and employee health and safety.
Greenbrier maintains an active program of environmental compliance and believes
that its current operations are in material compliance with all applicable
federal, state, provincial and local environmental laws and regulations.
5
<PAGE>
REGULATION
The Federal Railroad Administration (the "FRA") in the United States and
Transport Canada in Canada administer and enforce laws and regulations relating
to railroad safety. These regulations govern equipment and safety appliance
standards for freight cars and other rail equipment used in interstate commerce.
The Association of American Railroads (the "AAR") also promulgates a wide
variety of rules and regulations governing safety and design of equipment,
relationships among railroads with respect to railcars in interchange and other
matters. The AAR also certifies railcar builders and component manufacturers
that provide equipment for use on North American railroads. The effect of these
regulations is that the Company must maintain its certifications with the AAR as
a car builder and component manufacturer, and products sold and leased by the
Company must meet AAR, Transport Canada and FRA standards.
EXECUTIVE OFFICERS OF THE COMPANY
The following are the executive officers of the Company.
ALAN JAMES, 67, has been Chairman of the Board of Directors of Greenbrier since
May 1994. Mr. James was President from 1974 to 1994.
WILLIAM A. FURMAN, 53, has been President, Chief Executive Officer and a
director of Greenbrier since May 1994. Mr. Furman is also Chief Executive
Officer of Gunderson, Inc. and Managing Director of TrentonWorks Limited. Mr.
Furman was Vice President from 1974 to 1994. Mr. Furman serves as a director of
Schnitzer Steel Industries, Inc., a public company engaged in steel recycling
and manufacturing.
ROBIN D. BISSON, 43, has been Senior Vice President Marketing and Sales since
January 1996 and President of Greenbrier Railcar, Inc., a subsidiary that
engages in railcar leasing, since 1991. Mr. Bisson was Vice President of
Greenbrier Railcar, Inc. from 1987 to 1991 and has been Vice President of
Greenbrier Leasing Corporation, a subsidiary that engages in railcar leasing,
since 1987.
LARRY G. BRADY, 58, has been Vice President and Chief Financial Officer of the
Company since May 1994. Mr. Brady has been Senior Vice President of Greenbrier
Leasing Corporation since he joined Greenbrier in 1991. From 1974 to 1990, he
was a partner with Touche Ross & Co. (which subsequently became Deloitte &
Touche LLP).
A. DANIEL O'NEAL, 61, has been Chairman of Greenbrier Logistics, Inc., a
subsidiary that engages in third party transportation logistics, since March
1996; Chairman of Autostack Corporation, a subsidiary that engages in vehicle
transportation, since 1992; a director of Gunderson, Inc. since 1985; and serves
as a director of the Company. From 1973 until 1980, Mr. O'Neal served as a
commissioner of the Interstate Commerce Commission, and from 1977 until 1980
served as Chairman.
MARK J. RITTENBAUM, 40, is Vice President and Treasurer of the Company, a
position he has held since May 1994. Mr. Rittenbaum has also been Vice President
and Treasurer of Greenbrier Capital Corporation, a subsidiary that engages in
the leasing of trailers and containers, since 1990.
TIMOTHY A. STUCKEY, 47, has been President of Autostack Corporation since 1992,
prior to which he served as Executive Vice President of Autostack since 1990 and
Assistant Vice President of Greenbrier Leasing Corporation since 1987.
NORRISS M. WEBB, 58, is Executive Vice President and General Counsel of the
Company, a position he has held since May 1994. He is also Vice President,
Secretary and a director of both Greenbrier Capital Corporation and Gunderson,
Inc. Mr. Webb was Vice President of the Company from 1981 to 1994.
L. CLARK WOOD, 55, has been President of Gunderson, Inc. since 1990 and Chief
Executive Officer of TrentonWorks Limited since June 1995. Mr. Wood was Vice
President and Director of Railcar Sales at Trinity Industries, Inc., a railroad
freight car manufacturer from 1985 to 1990.
Executive officers are elected by the Board of Directors. There are no family
relationships between any of the executive officers of the Company. Alan James,
Chairman of the Board of Directors, and Mr. Furman have entered into a
6
<PAGE>
Stockholders' Agreement pursuant to which they have agreed, among other things,
to vote as directors to elect Mr. Furman as President and Chief Executive
Officer of the Company, Mr. James as Chairman, and certain persons as executive
officers and each to vote for the other and for the remaining existing directors
in electing directors of the Company.
EMPLOYEES
As of August 31, 1997, Greenbrier had 2,533 full-time employees, consisting of
2,266 employees engaged in railcar and marine manufacturing, and railcar
services, 151 employees engaged in logistics services and 116 leasing and
services employees. A total of 757 employees at the manufacturing facility in
Trenton, Nova Scotia, Canada are covered by collective bargaining agreements
which expire in 2000. A stock incentive plan and a stock purchase plan are
available for all employees. A discretionary bonus program is maintained for
salaried and most hourly employees not covered by collective bargaining
agreements. Greenbrier believes that its relations with its employees are
generally good.
FORWARD-LOOKING STATEMENTS
From time to time, the Company or its representatives have made or may make
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, including, without limitation, statements as to
expectations, beliefs and strategies regarding the future. Such forward-looking
statements may be included in, but not limited to, press releases, oral
statements made with the approval of an authorized executive officer or in
various filings made by the Company with the Securities and Exchange Commission.
The following are among the factors that could cause actual results or outcomes
to differ materially from the forward-looking statements: business conditions
and growth in the surface transportation industry and general economies, both
domestic and international; lower than expected customer orders; the ability to
consummate expected sales; delays in receipt of orders or cancellation of
orders; transportation labor disputes which might disrupt the flow of cargo;
competitive factors, including increased competition, new product offerings by
competitors and price pressures; actual future costs and availability of
materials and a trained workforce; labor disputes; changes in product mix and
the mix between manufacturing and leasing and services revenue; a delay or
failure of products or services to compete successfully; shifts in market
demand; changes in interest rates; financial condition of principal customers;
and production difficulties and product delivery delays in the future as a
result of, among other matters, changing process technologies and increasing
production. Any forward-looking statements should be considered in light of
these factors.
ITEM 2. PROPERTIES
The Company's railcar manufacturing, refurbishment and repair facilities are
located in Portland and Springfield, Oregon; Cleburne, Texas; Pine Bluff,
Arkansas; Trenton, Nova Scotia, Canada; and Tacoma, Washington.
The 75-acre Gunderson railcar and marine manufacturing plant located in
Portland, Oregon is owned by the Company. This facility includes approximately
774,000 square feet of covered manufacturing space, and a 750-foot side-launch
ways for launching ocean-going vessels. The manufacturing facility in Trenton,
Nova Scotia is also owned by the Company and covers approximately 100 acres with
414,000 square feet of manufacturing space as well as a forge shop. The Company
leases, with an option to purchase, a railcar repair facility in Cleburne, Texas
occupying approximately 70 acres. The lease expires in November 2002. The
Springfield, Oregon railcar repair facility occupies approximately 5.4 acres
under a lease expiring in 1998, which may be extended until 2004. A small wheel
shop operating in approximately 20,000 square feet of manufacturing space is
leased in Pine Bluff, Arkansas through 1998. The Tacoma, Washington wheel shop
occupies approximately 4.6 acres under lease through 2003, which may be
extended, at various intervals, through 2071. Greenbrier's principal executive
offices, including activities related to railcar marketing and leasing and
Autostack, are located in Lake Oswego, Oregon in 23,000 square feet of space
leased through 2001. Subsidiaries of the Company occupy leased offices in
various locations throughout the U.S.
Greenbrier believes that its facilities are in good condition and that the
facilities, together with anticipated capital improvements and additions, are
adequate to meet its operating needs for the foreseeable future.
7
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
From time to time, the Company has been involved in litigation relating to
claims arising out of its operations in the regular course of business. As of
the date of this Annual Report on Form 10-K, the Company is not a party to any
legal proceedings, the adverse outcome of which would, in management's opinion,
have a material adverse effect on the Company's results of operations or
financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Reference is made to the information set forth in the section entitled "Common
Stock" on page 40 of the 1997 Annual Report to Stockholders, which section is
incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Reference is made to the information set forth in the section entitled "Selected
Financial Information" on page 18 of the Company's 1997 Annual Report to
Stockholders, which section is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Reference is made to the information set forth in the section entitled
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" on pages 19 to 23 of the 1997 Annual Report to Stockholders, which
section is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements and report of independent
auditors set forth in the 1997 Annual Report to Stockholders are incorporated
herein by reference: Consolidated Balance Sheets as of August 31, 1997 and 1996,
and the Consolidated Statements of Operations, Consolidated Statements of
Stockholders' Equity and Consolidated Statements of Cash Flows for each of the
years ended August 31, 1997, 1996 and 1995, on pages 25 to 28, the Notes to
Consolidated Financial Statements on pages 29 to 37, the report of independent
auditors thereon on page 24 and the section entitled Quarterly Results of
Operations-Unaudited on page 38.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
8
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
There is hereby incorporated by reference the information under the caption
"Election of Directors" in the Company's definitive Proxy Statement to be filed
pursuant to Regulation 14A, which Proxy Statement is anticipated to be filed
with the Securities and Exchange Commission within 120 days after the end of
Registrant's year ended August 31, 1997, and the information under the caption
"Executive Officers of the Company" in Part I, Item 1, "Business," of this
Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
There is hereby incorporated by reference the information under the caption
"Executive Compensation" in Registrant's definitive Proxy Statement to be filed
pursuant to Regulation 14A, which Proxy Statement is anticipated to be filed
with the Securities and Exchange Commission within 120 days after the end of
Registrant's year ended August 31, 1997.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There is hereby incorporated by reference the information under the captions
"Voting" and "Stockholdings of Certain Beneficial Owners and Management" in
Registrant's definitive Proxy Statement to be filed pursuant to Regulation 14A,
which Proxy Statement is anticipated to be filed with the Securities and
Exchange Commission within 120 days after the end of Registrant's year ended
August 31, 1997.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is hereby incorporated by reference the information under the caption
"Certain Relationships and Related Party Transactions" in Registrant's
definitive Proxy Statement to be filed pursuant to Regulation 14A, which Proxy
Statement is anticipated to be filed with the Securities and Exchange Commission
within 120 days after the end of Registrant's year ended August 31, 1997.
9
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
The Consolidated Financial Statements, together with the report thereon of
Deloitte & Touche LLP, dated November 12, 1997, appearing on pages 24 to 37 of
the 1997 Annual Report to Stockholders are incorporated by reference into this
Annual Report on Form 10-K. With the exception of the aforementioned information
and that which is specifically incorporated in Parts I and II, the 1997 Annual
Report to Stockholders is not to be deemed filed as part of this Annual Report
on Form 10-K.
Annual Report
Page No.
--------
(a) (1) Financial Statements of the Company - Index 17
Independent Auditors' Report 24
Consolidated Balance Sheets as of August 31, 1997 and 1996 25
Consolidated Statements of Operations for each of the years
ended August 31, 1997, 1996 and 1995 26
Consolidated Statements of Stockholders' Equity for each
of the years ended August 31, 1997, 1996 and 1995 27
Consolidated Statements of Cash Flows for each of the years
ended August 31, 1997, 1996 and 1995 28
Notes to Consolidated Financial Statements 29
This Filing
Page No.
--------
(2) The following financial statement schedules should be read
in conjunction with the Consolidated Financial Statements
in the 1997 Annual Report to Stockholders. All other
schedules have been omitted because they are inapplicable,
not required or because the information is given in the
Consolidated Financial Statements or related Notes to
Consolidated Financial Statements.
Independent Auditors' Report 15
Schedule I - Condensed Financial Information of Registrant 16
Schedule II - Valuation and Qualifying Accounts 18
(3) List of Exhibits
3.1. Registrant's Restated Certificate of Incorporation is
incorporated herein by reference to Exhibit 3.1 to the
Registrant's Registration Statement No. 33-78852, dated
July 11, 1994.
3.2. Registrant's Amended and Restated By-laws, as amended on
November 9, 1994 is incorporated herein by reference to
Exhibit 3.2 to Registrant's Annual Report on Form 10-K for
the year ended August 31, 1994.
9.1. Form of Stockholders' Agreement dated July 1, 1994, between
Alan James and William A. Furman is incorporated herein by
reference to Exhibit 9.1 to Registrant's Registration
Statement No. 33-78852, dated July 11, 1994.
9.2. Amendment No. 1 dated as of December 23, 1994 to
Stockholders' Agreement dated July 1, 1994 between Alan James
and William A. Furman is incorporated herein by reference to
Exhibit 9.2 to Registrant's Quarterly Report on Form 10-Q for
the quarter ended February 28, 1995.
10
<PAGE>
10.1. Form of Registrant's 1994 Stock Incentive Plan, dated
July 1, 1994 is incorporated herein by reference to Exhibit
10.1 to the Registrant's Registration Statement No. 33-78852,
dated July 11, 1994.
10.2.* Employment Agreement dated as of July 1, 1994, between Alan
James and Registrant is incorporated herein by reference to
Exhibit 10.2 filed with the Registrant's Quarterly Report on
Form 10-Q for the quarter ended May 31, 1994.
10.3.* Employment Agreement dated as of July 1, 1994, between
William A. Furman and Registrant is incorporated herein by
reference to Exhibit 10.3 filed with the Registrant's
Quarterly Report on Form 10-Q for the quarter ended May 31,
1994.
10.4. Lease of Land and Improvements dated as of July 23, 1992
between the Atchison, Topeka and Santa Fe Railway Company and
Gunderson Southwest, Inc. is incorporated herein by reference
to Exhibit 10.4 to Registrant's Registration Statement
No. 33-78852, dated July 11, 1994.
10.5. Remarketing Agreement dated as of November 19, 1987 among
Southern Pacific Transportation Company, St. Louis
Southwestern Railway Company, Greenbrier Leasing Corporation
and Greenbrier Railcar, Inc. is incorporated herein by
reference to Exhibit 10.5 to Registrant's Registration
Statement No. 33-78852, dated July 11, 1994.
10.6. Amendment to Remarketing Agreement among Southern Pacific
Transportation Company, St. Louis Southwestern Railway
Company, Greenbrier Leasing Corporation and Greenbrier
Railcar, Inc. dated as of November 15, 1988 is incorporated
herein by reference to Exhibit 10.6 to Registrant's
Registration Statement No. 33-78852, dated July 11, 1994.
10.7. Amendment No. 2 to Remarketing Agreement among Southern
Pacific Transportation Company, St. Louis Southwestern
Railway Company, Greenbrier Leasing Corporation and
Greenbrier Railcar, Inc. is incorporated herein by reference
to Exhibit 10.7 to Registrant's Registration Statement
No. 33-78852, dated July 11, 1994.
10.8. Amendment No. 3 to Remarketing Agreement dated November 19,
1987 among Southern Pacific Transportation Company, St. Louis
Southwestern Railway Company, Greenbrier Leasing Corporation
and Greenbrier Railcar, Inc. dated as of March 5, 1991 is
incorporated herein by reference to Exhibit 10.8 to
Registrant's Registration Statement No. 33-78852, dated
July 11, 1994.
10.9. Railcar Management Agreement between Greenbrier Leasing
Corporation and James-Furman & Company, dated as of
December 31, 1989 is incorporated herein by reference to
Exhibit 10.9 to Registrant's Registration Statement
No. 33-78852, dated July 11, 1994.
10.10. Railcar Maintenance Agreement between Greenbrier Leasing
Corporation and James-Furman & Company, dated as of
December 31, 1989 is incorporated herein by reference to
Exhibit 10.10 to Registrant's Registration Statement No.
33-78852, dated July 11, 1994.
11
<PAGE>
10.11. Form of Amendment No. 1 to Railcar Management Agreement
between Greenbrier Leasing Corporation and James-Furman &
Company dated as of July 1, 1994 is incorporated herein by
reference to Exhibit 10.11 to Registrant's Registration
Statement No. 33-78852, dated July 11, 1994.
10.12. Form of Amendment No. 1 to Railcar Maintenance Agreement
between Greenbrier Leasing Corporation and James-Furman &
Company dated as of July 1, 1994 is incorporated herein by
reference to Exhibit 10.12 to Registrant's Registration
Statement No. 33-78852, dated July 11, 1994.
10.13. Form of Option with Right of First Refusal and Agreement of
Purchase and Sale among William A. Furman, Alan James and
Registrant is incorporated herein by reference to Exhibit
10.13 to Registrant's Registration Statement No. 33-78852,
dated July 11, 1994.
10.14. Second Amended and Restated Credit Agreement by and among
Greenbrier Leasing Corporation, Greenbrier Capital
Corporation, Greenbrier Railcar, Inc., Autostack Corporation,
The Bank of California, N.A. and West One Bank, Idaho, N.A.,
dated as of April 30, 1994 is incorporated herein by
reference to Exhibit 10.14 to Registrant's Registration
Statement No. 33-78852, dated July 11, 1994.
10.15. $10,000,000 Term Loan and $20,000,000 Revolving Loan
Agreement by and among Gunderson, Inc. and United States
National Bank of Oregon and Bank of America Oregon, dated as
of January 31, 1994 is incorporated herein by reference to
Exhibit 10.15 to Registrant's Registration Statement No.
33-78852, dated July 11, 1994.
10.16. Autostack Partners Limited Partnership Agreement among
Autostack Corporation, MBK Rail Capital, Inc., Mitsui Nevitt
Capital Corporation effective August 30, 1993 is incorporated
herein by reference to Exhibit 10.17 to Registrant's
Registration Statement No. 33-78852, dated July 11, 1994.
10.17. Form of Agreement concerning Indemnification and Related
Matters (Directors) between Registrant and its directors is
incorporated herein by reference to Exhibit 10.18 to
Registrant's Registration Statement No. 33-78852, dated
July 11, 1994.
10.18. Exclusive License Agreement dated as of December 24, 1987
between G&G Intellectual Properties, Inc., and Greenbrier
Intermodal, Inc. is incorporated herein by reference to
Exhibit 10.19 to Registrant's Registration Statement
No. 33-78852, dated July 11, 1994.
10.19. Manufacturing Agreement dated as of December 24, 1987 between
Greenbrier Intermodal, Inc. and CTNR. J.V., Inc. is
incorporated herein by reference to Exhibit 10.20 to
Registrant's Registration Statement No. 33-78852, dated
July 11, 1994.
10.20. Note Agreement dated as of May 31, 1994 among Greenbrier
Leasing Corporation, Greenbrier Railcar, Inc. and The
Prudential Insurance Company of America is incorporated
herein by reference to Exhibit 10.22 to Registrant's
Registration Statement No. 33-78852, dated July 11, 1994.
10.21.* James-Furman Supplemental 1994 Stock Option Plan is
incorporated herein by reference to Exhibit 10.23 to the
Registrant's Annual Report on Form 10-K for the year ended
August 31, 1994.
12
<PAGE>
10.22. First amendment dated September 26, 1994 to the Lease of Land
and Improvements dated as of July 23, 1992 between The
Atchison, Topeka and Santa Fe Railway Company and Gunderson
Southwest, Inc. is incorporated herein by reference to
Exhibit 10.24 to Registrant's Quarterly Report on form 10-Q
for the quarter ended November 30, 1994.
10.23. Asset Purchase Agreement dated as of February 2, 1995 among
TrentonWorks Inc., 2361025 Nova Scotia Limited (which later
changed its name to TrentonWorks Limited), 2196203 Nova
Scotia Inc., and The Greenbrier Companies, Inc. is
incorporated herein by reference to Exhibit 10.25 to
Registrant's Quarterly Report on Form 10-Q for the quarter
ended February 28, 1995.
10.24. Stock Purchase and Shareholders' Agreement dated as of March
8, 1995 among The Greenbrier Companies, Inc., Greenbrier
Leasing Corporation, Plunkett Investments Ltd., 2441001 Nova
Scotia Limited, and 2361025 Nova Scotia Limited is
incorporated herein by reference to Exhibit 10.26 to
Registrant's Quarterly Report on Form 10-Q for the quarter
ended May 31, 1995.
10.25. Loan Agreement dated as of March 9, 1995 between 2361025 Nova
Scotia Limited and Canadian Imperial Bank of Commerce is
incorporated herein by reference to Exhibit 10.27 to
Registrant's Quarterly Report on Form 10-Q for the quarter
ended May 31, 1995.
10.26. Agreement dated as of March 9, 1995 between Her Majesty the
Queen in Right of the Province of Nova Scotia and 2361025
Nova Scotia Limited is incorporated herein by reference to
Exhibit 10.28 to Registrant's Quarterly Report on Form 10-Q
for the quarter ended May 31, 1995.
10.27. Covenant Agreement dated as of March 9, 1995 among Her
Majesty the Queen in Right of the Province of Nova Scotia as
Represented by the Minister Responsible for the Nova Scotia
Economic Renewal Agency and 2361025 Nova Scotia Limited and
2441001 Nova Scotia Limited is incorporated herein by
reference to Exhibit 10.29 to Registrant's Quarterly Report
on Form 10-Q for the quarter ended May 31, 1995.
10.28. Amending Agreement dated as of March 9, 1995 among
TrentonWorks Inc. 2361025 Nova Scotia Limited, 2196203 Nova
Scotia Inc., and The Greenbrier Companies, Inc. is
incorporated herein by reference to Exhibit 10.30 to
Registrant's Quarterly Report on Form 10-Q for the quarter
ended May 31, 1995.
10.29. First Amended and Restated $10,000,000 Term Loan and
$30,000,000 Revolving Loan Agreement dated as of May 31, 1995
among Gunderson, Inc., United States National Bank of Oregon
and Bank of America Oregon is incorporated herein by
reference to Exhibit 10.31 to Registrant's Quarterly Report
on Form 10-Q for the quarter ended May 31, 1995.
10.30.* Form of Registrant's Split-Dollar Agreement is incorporated
herein by reference to Exhibit 10.32 to Registrant's Annual
Report on Form 10-K for the year ended August 31, 1995.
13
<PAGE>
10.31 Stock Purchase Agreement between and among Greenbrier
Logistics, Inc. and A. Daniel O'Neal dated as of June 28,
1996 is incorporated herein by reference to Exhibit 10.32 to
Registrant's Quarterly Report on Form 10-Q for the quarter
ended May 31, 1996.
10.32* Employment Agreement dated June 1, 1996 between Greenbrier
Logistics, Inc. and A. Daniel O'Neal Jr. is incorporated
herein by reference to Exhibit 10.33 to Registrant's
Quarterly Report on Form 10-Q for the quarter ended May 31,
1996.
10.33* Greenbrier Leasing Corporations Manager Owned Target Benefit
Plan dated as of January 1, 1996 is incorporated herein by
reference to Exhibit 10.35 to Registrant's Quarterly Report
on Form 10-Q for the quarter ended May 31, 1997.
10.34 Credit Agreement dated as of September 1, 1997 among
Greenbrier Leasing Corporation, Greenbrier Capital
Corporation, Greenbrier Partners Inc., Greenbrier Railcar,
Inc., Autostack Corporation, Greenbrier Transportation
Limited Partnership, Autostack General Partner, Inc. and
Greenbrier Rental Services, Inc. with Bank of America
National Trust and Savings Association and Union Bank of
California, N.A.
13. 1997 Annual Report
21.1 List of the subsidiaries of the Registrant
23. Consent of Deloitte & Touche LLP, independent auditor
27. Financial Data Schedule
- -----------------
* Management contract or compensatory plan or arrangement
(b) Reports on Form 8-K
None
14
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
The Greenbrier Companies, Inc.
We have audited the financial statements of The Greenbrier Companies, Inc. and
Subsidiaries as of August 31, 1997 and 1996, and for each of the three years in
the period ended August 31, 1997, and have issued our report thereon dated
November 12, 1997; such financial statements and report are included in your
1997 Annual Report to Stockholders and are incorporated herein by reference. Our
audits also included the financial statement schedules of The Greenbrier
Companies, Inc. and Subsidiaries, listed in Item 14. These financial statement
schedules are the responsibility of the Company's management. Our responsibility
is to express an opinion based on our audits. In our opinion, such financial
statement schedules, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
Deloitte & Touche LLP
Portland, Oregon
November 12, 1997
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
THE GREENBRIER COMPANIES, INC.
CONDENSED FINANCIAL INFORMATION
OF REGISTRANT
(In thousands)
BALANCE SHEETS
August 31,
--------------------------------
1997 1996
---------- ----------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 21 $ 123
Accounts and notes receivable from affiliates 8,803 26,717
Investment in subsidiaries 95,417 87,024
Prepaid expenses and other 1,535 1,327
---------- ----------
$ 105,776 $ 115,191
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 1,115 $ 3,455
Deferred income taxes 589 -
Stockholders' equity 104,072 111,736
---------- ----------
$ 105,776 $ 115,191
---------- ----------
---------- ----------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
Year ended August 31,
--------------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Interest and other income $ 1,044 $ 2,624 $ 3,402
Expenses
Selling and administrative 4,571 5,325 4,073
Interest 26 37 18
-------- -------- --------
4,597 5,362 4,091
-------- -------- --------
Loss before income tax benefit and equity
in earnings of subsidiaries (3,553) (2,738) (689)
Income tax benefit 1,496 1,153 327
-------- -------- --------
Loss before equity in earnings (loss) of subsidiaries (2,057) (1,585) (362)
Equity in earnings (loss) of subsidiaries (2,114) 19,860 17,027
-------- -------- --------
Net earnings (loss) $ (4,171) $ 18,275 $ 16,665
-------- -------- --------
-------- -------- --------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I (CONTINUED)
THE GREENBRIER COMPANIES, INC.
CONDENSED FINANCIAL INFORMATION
OF REGISTRANT
(In thousands)
STATEMENTS OF CASH FLOWS
Year ended August 31,
----------------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ (4,171) $ 18,275 $ 16,665
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Deferred income taxes 589 (679) (2,260)
Equity in earnings of subsidiary (8,611) (19,860) (17,027)
Other 56 185 238
Decrease (increase) in assets:
Accounts and notes receivable 17,914 10,591 (28,211)
Prepaid expenses and other (208) 309 (648)
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities (2,340) 1,533 (4,050)
--------- --------- ---------
Net cash provided by (used in) operating activities 3,229 10,354 (35,293)
Cash flows from investing activities:
Investment in subsidiary - (7,472) (2,119)
Dividends (3,399) (3,399) (3,399)
Proceeds from subsidiary redemption of preferred stock 68 111 104
--------- --------- ---------
Net cash provided by (used in) investing activities (3,331) (10,760) (5,414)
Decrease in cash (102) (406) (40,707)
Cash and cash equivalents:
Beginning of year 123 529 4,236
--------- --------- ---------
End of year $ 21 $ 123 $ 529
--------- --------- ---------
Supplemental disclosures of cash flow information:
Cash paid during the year for interest $ 26 $ 37 $ 18
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II
THE GREENBRIER COMPANIES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Additions
-------------------------------
Balance at Charged to Charged to Balance
Beginning Costs and Other at End
of Period Expenses Accounts(1) Deductions of Period
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Year ended August 31, 1997:
Maintenance Reserves $ 26,278 $ 10,990 $ 7,959 $ (14,723) $ 30,504
Warranty Reserves 3,400 2,571 - (1,254) 4,717
Inventory Reserves 1,541 808 - (401) 1,948
Allowance for Uncollectible Accounts 595 580 322 (549) 948
----------- ----------- ----------- ----------- -----------
Total $ 31,814 $ 14,949 $ 8,281 $ (16,927) $ 38,117
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Year ended August 31, 1996:
Maintenance Reserves $ 22,134 $ 10,526 $ 7,705 $ (14,087) $ 26,278
Warranty Reserves 2,242 1,755 - (597) 3,400
Inventory Reserves 1,428 458 - (345) 1,541
Allowance for Uncollectible Accounts 337 162 106 (10) 595
----------- ----------- ----------- ----------- -----------
Total $ 26,141 $ 12,901 $ 7,811 $ (15,039) $ 31,814
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Year ended August 31, 1995:
Maintenance Reserves $ 13,716 $ 5,400 $ 12,207 $ (9,189) $ 22,134
Warranty Reserves 2,193 410 - (361) 2,242
Inventory Reserves 1,180 339 83 (174) 1,428
Allowance for Uncollectible Accounts 348 60 37 (108) 337
Other 85 - - (85) -
----------- ----------- ----------- ----------- -----------
Total $ 17,522 $ 6,209 $ 12,327 $ (9,917) $ 26,141
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
(1) Additions charged to other accounts are primarily executory costs included
in the investment in direct finance leases and amounts received under
maintenance agreements.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
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.
Dated: November 26, 1997 By: /s/ William A. Furman
---------------------------
William A. Furman
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Signature Date
- --------- ----
/s/ Alan James November 26, 1997
- -------------------------
Alan James, Chairman of the Board
/s/ William A. Furman November 26, 1997
- -------------------------
William A. Furman, President and
Chief Executive Officer, Director
/s/ Victor G. Atiyeh November 26, 1997
- -------------------------
Victor G. Atiyeh, Director
/s/ Peter K. Nevitt November 26, 1997
- -------------------------
Peter K. Nevitt, Director
/s/ A. Daniel O'Neal November 26, 1997
- -------------------------
A. Daniel O'Neal, Director
/s/ C. Bruce Ward November 26, 1997
- -------------------------
C. Bruce Ward, Director
/s/ Benjamin R. Whiteley November 26, 1997
- -------------------------
Benjamin R. Whiteley, Director
/s/ Larry G. Brady November 26, 1997
- -------------------------
Larry G. Brady, Vice President and
Chief Financial Officer (Principal Financial
and Accounting Officer)
<PAGE>
CREDIT AGREEMENT
Dated as of September 1, 1997
among
GREENBRIER LEASING CORPORATION
GREENBRIER CAPITAL CORPORATION
GREENBRIER PARTNERS INC.
GREENBRIER RAILCAR, INC.
AUTOSTACK CORPORATION
GREENBRIER TRANSPORTATION LIMITED PARTNERSHIP
GREENBRIER TRANSPORTATION, INC.
AUTOSTACK PARTNERS LIMITED PARTNERSHIP
AUTOSTACK GENERAL PARTNER, INC.
and
GREENBRIER RENTAL SERVICES, INC.
as Borrowers
GREENBRIER LEASING CORPORATION
as Greenbrier Funds Administrator
THE FINANCIAL INSTITUTIONS PARTIES HERETO
as Banks
with
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
as Administrative Agent
and
UNION BANK OF CALIFORNIA, N.A.
as Collateral Agent and Funding Agent
Arranged By
BA SECURITIES, INC.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE ONE - DEFINITIONS......................................................1
ARTICLE TWO - CREDIT FACILITIES...............................................26
2.1 Amounts and Terms of Facilities....................................26
2.2 Loan Accounts......................................................28
2.3 Procedure for Borrowing............................................29
2.4 Conversion and Continuation Elections..............................31
2.6 Optional Prepayments...............................................34
2.7 Mandatory Prepayments of Loans.....................................34
2.8 Repayment..........................................................35
2.9 Interest...........................................................35
2.10 Fees...............................................................36
2.11 Computation of Fees and Interest...................................36
2.12 Payments by Borrowers..............................................37
2.13 Payments by Banks to Funding Agent.................................38
2.14 Sharing of Payments, Etc...........................................38
ARTICLE THREE - LETTERS OF CREDIT.............................................39
3.1 The Letter of Credit Subfacility...................................39
3.2 Issuance, Amendment and Renewal of Letters of Credit...............40
3.3 Risk Participations, Drawings and Reimbursements...................43
3.4 Repayment of Participations........................................44
3.5 Role of Issuing Bank...............................................45
3.6 Obligations Absolute...............................................46
3.7 Cash Collateral Pledge.............................................47
3.8 Letter of Credit Fees..............................................47
3.9 Uniform Customs and Practice.......................................47
ARTICLE FOUR - TAXES, YIELD PROTECTION AND ILLEGALITY.........................48
4.1 Taxes..............................................................48
4.2 Illegality.........................................................49
4.3 Increased Costs and Reduction of Return............................50
4.4 Funding Losses.....................................................50
4.5 Inability to Determine Rates.......................................51
4.6 Certificates of Banks..............................................51
4.7 Substitution of Banks..............................................52
4.8 Survival...........................................................52
ARTICLE FIVE - REPRESENTATIONS AND WARRANTIES.................................52
5.1 Due Organization...................................................52
5.2 Authorization, Validity and Enforceability.........................52
5.3 Compliance With Applicable Laws....................................52
5.4 Licenses, Trademarks...............................................53
5.5 No Conflict........................................................53
5.6 No Litigation, Claims or Proceedings...............................53
5.7 Correctness of Financial Statements................................53
5.8 No Event of Default................................................53
5.9 Reaffirmation of Representations...................................53
<PAGE>
5.10 Title To Assets....................................................54
5.11 Tax Status.........................................................54
5.12 ERISA..............................................................54
5.13 Environmental Quality..............................................54
5.14 Other Laws/Regulations.............................................54
5.15 Labor, Salaries and Wages..........................................54
5.16 Affiliates.........................................................54
5.17 Capital Stock of Borrowers.........................................54
ARTICLE SIX - CONDITIONS PRECEDENT............................................54
6.1 Conditions of Initial Credit Extensions............................54
6.2 Conditions to All Credit Extensions................................55
ARTICLE SEVEN - AFFIRMATIVE COVENANTS.........................................56
7.1 Use of Proceeds....................................................56
7.2 Financial Covenants................................................56
7.3 Notice to Banks....................................................57
7.4 Financial Statements/Reporting Requirements........................58
7.5 Existence..........................................................59
7.6 Insurance..........................................................59
7.7 Accounting Records.................................................59
7.8 Compliance With Laws...............................................59
7.9 Taxes and Other Liabilities........................................60
ARTICLE EIGHT - NEGATIVE COVENANTS............................................60
8.1 Indebtedness.......................................................60
8.2 Liens. ............................................................61
8.3 Corporate Changes; Prepayments of Certain Indebtedness.............61
8.4 Sale of Assets.....................................................61
8.5 Acquisitions.......................................................62
8.6 Loans/Investments..................................................62
8.7 Other Business.....................................................63
8.8 No Changes in Depreciation Policies................................63
8.9 Restricted Payments and Affiliate Transactions.....................63
8.10 Adverse Selection or Transfer of Assets............................64
ARTICLE NINE - EVENTS OF DEFAULT..............................................65
9.1 Events of Default..................................................65
9.2 Remedies...........................................................66
9.3 Rights Not Exclusive...............................................67
9.4 Right of Set Off...................................................67
ARTICLE TEN - AGENTS..........................................................67
10.1 Appointment and Authorization; "Agents"............................67
10.2 Delegation of Duties...............................................68
10.3 Liability of Agent.................................................68
10.4 Reliance by Agent..................................................69
10.5 Notice of Default..................................................69
10.6 Credit Decision....................................................70
10.7 Indemnification of Agents..........................................70
10.8 Agents in Individual Capacity......................................71
10.9 Successor Agents...................................................71
10.10 Withholding Tax....................................................72
<PAGE>
ARTICLE ELEVEN - GENERAL PROVISIONS...........................................73
11.1 Amendments and Waivers............................................73
11.2 Notices...........................................................74
11.3 No Waiver; Cumulative Remedies....................................75
11.4 Costs and Expenses................................................75
11.5 Indemnification...................................................76
11.6 Payments Set Aside................................................76
11.7 Successors and Assigns............................................76
11.8 Assignments, Participations, Etc..................................77
11.9 Notification of Addresses, Lending Offices, Etc...................79
11.10 Counterparts......................................................79
11.11 Severability......................................................79
11.12 Governing Law and Jurisdiction....................................79
11.13 Waiver of Jury Trial..............................................79
11.14 Entire Agreement..................................................80
11.15 Joint and Several Liability; Exceptions for APLP
and GTLP..........................................................80
11.16 Appointment and Authorization of the Greenbrier
Funds Administrator...............................................81
<PAGE>
EXHIBITS
Exhibit A - Form of Borrowing Base Certificate
Exhibit B - Form of Compliance Certificate
Exhibit C - Form of Assignment and Acceptance
SCHEDULES
Schedule 1.1(A) - Applicable Margin
Schedule 1.1(B) - Marine Vessel Inventory
Schedule 1.1(C) - Permitted Liens
Schedule 2.1 - Revolving Commitments
Schedule 5.6 - Litigation
Schedule 5.16 - Borrower Affiliates
Schedule 5.17 - Borrower Capital Stock
Schedule 6.1 - List of Documents
Schedule 8.1 - Permitted Indebtedness
Schedule 11.2 - Bank Lending Offices; Addresses for
Notices
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT ("Agreement") is made as of September 1, 1997 by
and among Administrative Agent, Funding Agent, Banks, the Greenbrier Funds
Administrator and Borrowers.
RECITALS
Banks have agreed to make available to Borrowers a secured revolving
credit and term loan facility upon the terms and conditions set forth in this
Agreement.
ARTICLE ONE - DEFINITIONS
The definitions appearing in this Agreement, or any supplement or
addendum to this Agreement, shall be applicable to both the singular and plural
forms of the defined terms:
A. "AC" means Autostack Corporation, an Oregon corporation.
1.2 "Adjusted Consolidated Tangible Net Worth" means, at any time,
(a)Consolidated Tangible Net Worth, minus (b) the aggregate then outstanding
principal amount of Subordinated Golden West Indebtedness.
1.3 "Adjusted Reference Rate" means, for any day, an interest rate per
annum equal to the sum of (a) the Reference Rate and (b) the Applicable Margin,
in each case for such day.
1.4 "Adjusted Senior Funded Debt" means, at any time, in each case as
set forth on a balance sheet of the Consolidated Entity prepared in accordance
with GAAP: (a) the aggregate then outstanding principal amount of all
Indebtedness, plus (b) the aggregate then outstanding principal amount of
Attributable Debt with respect to Sale/Leaseback Transactions, minus (c) the
aggregate then outstanding principal amount of all Approved Subordinated
Indebtedness, Senior Golden West Indebtedness and Non-recourse Indebtedness.
1.5 "Administrative Agent" means BofA, acting in its capacity as
administrative agent for Banks hereunder, and any successor agent arising under
Article Ten.
1.6 "Affiliate" means, with respect to any Person, any other
Person which directly or indirectly controls, is controlled by, or is under
common control with, such Person. "Control", "controlled by" and "under common
<PAGE>
control with" means direct or indirect possession of the power to direct or
cause the direction of management or policies (whether through ownership of
voting securities, by contract or otherwise); provided that control shall be
conclusively presumed when any Person or affiliated group directly or indirectly
owns five (5) percent or more of the securities having ordinary voting power for
the election of directors of a corporation.
1.7 "Agent-Related Persons" means BofA, UBOC and any successor
Administrative Agent, Collateral Agent or Funding Agent, as the case may be,
arising under Article Ten, and any successor letter of credit Issuing Bank
hereunder, together with their respective Affiliates (including, in the case of
BofA, the Arranger), and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.
1.8 "Agents" means, collectively, Administrative Agent, Collateral Agent
and Funding Agent; and "Agent" means any of such Persons.
1.9 "AGP" means Autostack General Partner, Inc., a Delaware corporation.
1.10 "Agreement" means this Credit Agreement, as it may be amended,
restated, supplemented or otherwise modified and in effect from time to time.
1.11 "APLP" means Autostack Partners Limited Partnership, a
Delaware limited partnership.
1.12 "APLP Effective Date" has the meaning specified in subsection
11.15(b).
1.13 "APLP Borrowing Base" means at any time an amount equal to that
portion of the Borrowing Base at such time (as most recently determined pursuant
to subsection 7.4(b)) attributable to the Net Book Value of Inventory or the
Investment in Direct Finance Leases, in each case of APLP.
1.14 "APLP Obligations" means the Effective Amount of
Committed Advances, plus the Effective Amount of Swingline Advances, plus the
Effective Amount of L/C Obligations, in each case made to or incurred by or for
the account of APLP.
<PAGE>
1.15 "Applicable Margin" means the respective percentages set forth on
Schedule 1.1 corresponding to the Type of such Loan and the applicable "level"
of the Leverage Pricing Ratio then in effect; provided that, notwithstanding the
foregoing, if the Committed Advances are converted into Term Loans on the
Revolving Termination Date pursuant to Section 2.1(b), the respective
percentages set forth on Schedule 1.1 shall increase by (i) one-quarter of one
percent (0.25%) per annum with respect to each day during the period commencing
on the Revolving Termination Date and ending on the third anniversary thereof
and (ii) by one-half of one percent (0.50%) per annum with respect to each day
thereafter.
1.16 "Approved Minority Interests" means the Class A limited partnership
interest of MBK or Mitsui Nevitt in APLP and all other minority equity interests
in one or more of GLC's consolidated subsidiaries issued after the Closing Date
on terms and conditions previously approved in writing by the Required Banks.
1.17 "Approved Subordinated Indebtedness" means the following
liabilities of the Consolidated Entity determined in accordance with GAAP: (a)
Subordinated Golden West Indebtedness and (b) other liabilities that mature in
more than one (1) year and that have been subordinated to the Obligations on
terms and conditions previously approved in writing by the Required Banks.
1.18 "Arranger" means BA Securities, Inc., a Delaware corporation.
1.19 "Assignee" has the meaning specified in subsection
11.8(a).
1.20 "Assignment and Acceptance" has the meaning specified in Section
11.8(a).
1.21 "Attorney Costs" means and includes all fees and disbursements of
any law firm or other external counsel, the allocated cost of internal legal
services and all disbursements of internal counsel.
1.22 "Attributable Debt" means, at any time with respect to any
Sale/Leaseback Transaction for which the obligations of the applicable Borrower
do not constitute Capitalized Lease Obligations of such Borrower, the aggregate
amount of non-cancelable rental payments due from such Borrower under the lease
entered into in connection with such Sale/Leaseback Transaction during the
remaining non-cancelable term of such lease, net of rental payments which have
been defeased or secured by deposits, discounted from the respective due dates
thereof to such time using a discount rate equal to the discount rate that would
then be used to calculate the amount of such Borrower's Capitalized Lease
Obligations with respect to a comparable Capitalized Lease.
1.23 "Autostack Inventory" means Inventory consisting of loaders, racks
and rack handlers used in the "Autostack" system.
<PAGE>
1.24 "Banking Day" means a day on which each Agent's San Francisco main
office and Funding Agent's Portland Office (or such other offices as are
designated from time to time by successor Agents) are in each case open for
business to the public.
1.25 "Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978
(11 U.S.C.ss.101, et seq.).
1.26 "Banks" means BofA and UBOC, including in their respective
capacities as Issuing Banks, together with their respective successors and
assigns; and "Bank" means any of such Persons.
1.27 "BofA" means Bank of America National Trust and Savings
Association, a national banking association, acting in its individual capacity.
1.28 "BofA Fee Letter" means that certain fee letter dated
April 1, 1997, among GLC, BofA and the Arranger.
1.29 [INTENTIONALLY DELETED].
1.30 "Borrowers" means, collectively, GLC, GCC, GPI, GRI,
GRS, AC, APLP, AGP, GTLP and GTI, together with each other subsidiary of any
Borrower from time to time hereafter designated by the Greenbrier Funds
Administrator; provided that (a) each such subsidiary must be a member of the
Consolidated Entity and must have executed and delivered such agreements,
documents and instruments as Administrative Agent shall reasonably require to
cause such subsidiary to be joined as a party to this Agreement and each of the
other Loan Documents, with full joint and several liability hereunder and
thereunder for all Obligations, and (b) after giving effect to any such joinder,
no Default or Event of Default shall have occurred and be continuing; and
"Borrower" means any of such Persons.
1.31 "Borrowing" means a borrowing hereunder consisting of
Committed Advances or Term Loans of the same Type made to Borrowers on the same
day by Banks under Article Two, and, other than in the case of Reference Rate
Advances, having the same Period.
1.32 "Borrowing Base" means at any time an amount equal to the sum,
without duplication, at such time (as most recently determined pursuant to
subsection 7.4(b)) of:
(i) ninety percent (90%) of the Net Book Value of Eligible
Inventory consisting of Railcar Inventory; and
<PAGE>
(ii) ninety percent (90%) of Borrowers' Investment in Direct Finance
Leases covering Eligible Inventory consisting of Railcar Inventory; and
(iii) sixty-five percent (65%) of the Net Book Value of Eligible
Inventory consisting of Hulks and Rebuild Inventory, provided that the
portion of the Borrowing Base attributable at any time to Hulks and Rebuild
Inventory shall not exceed ten percent (10%) of the total Borrowing Base at
such time; and
(iv) eighty percent (80%) of the Net Book Value of Eligible
Inventory consisting of Intermodal Inventory; and
(v) eighty percent (80%) of Borrowers' Investment in Direct Finance
Leases covering Eligible Inventory consisting of Intermodal Inventory; and
(vi) the sum of fifty percent (50%) of the Net Book Value of
Eligible Inventory consisting of Autostack Inventory and fifty percent
(50%) of Borrowers' Investment in Direct Finance Leases covering Eligible
Inventory consisting of Autostack Inventory; and
(vii) the sum of forty percent (40%) of the Net Book Value of
Eligible Inventory consisting of Marine Vessel Inventory and forty percent
(40%) of Borrowers' Investment in Direct Finance Leases covering Eligible
Inventory consisting of Marine Vessel Inventory; and
(viii) the lesser of (A) TEN MILLION AND NO/100 DOLLARS
(10,000,000.00) and (B) eighty percent of (x) the Net Book Value of all
Eligible Mexican Inventory and (y) Borrowers' Investment in Direct Finance
Leases covering Eligible Mexican Inventory; and
(ix) prior to the Revolving Termination Date, with respect to
Inventory (other than Eligible Mexican Inventory) which is excluded from
the definition of "Eligible Inventory" solely by reason of its failure to
satisfy the requirements of clause (a) or (b)thereof, the lesser of (A) TEN
MILLION AND NO/100 DOLLARS(10,000,000.00) and (B) the sum of:
(1) seventy-five percent (75%) of (x) the Net Book Value of all such
Inventory consisting of Railcar Inventory and Intermodal Inventory and
(y) Borrowers' Investment in Direct Finance Leases covering such Railcar
Inventory and Intermodal Inventory;
<PAGE>
(2) sixty-five percent (65%) of the Net Book Value of all such
Inventory consisting of Hulks and Rebuild Inventory;
(3) fifty percent (50%) of (x) the Net Book Value of all such
Inventory consisting of Autostack Inventory and (y) Borrowers'
Investment in Direct Finance Leases covering such Autostack Inventory;
and
(4) forty percent (40%) of (x) the Net Book Value of all of such
Inventory consisting of Marine Vessel Inventory and (y) Borrowers'
Investment in Direct Finance Leases covering such Marine Vessel
Inventory;
provided, that the aggregate Net Book Value of Inventory and Borrower's
Investment in Direct Finance Leases, in each case included in the
Borrowing Base pursuant to this paragraph (ix) notwithstanding the
failure of such Inventory, or the failure of the Inventory covered by
such Direct Finance Leases, to satisfy the requirements of clause (b) of
the definition of "Eligible Inventory," shall not exceed $2,500,000 at
any time.
Notwithstanding the foregoing (x) the aggregate amount of the Borrowing Base
attributable at any time to Autostack Inventory, or to Borrowers' Investment in
Direct Finance Leases covering Autostack Inventory, whether such Inventory, or
such Investment in Direct Finance Leases is included in the Borrowing Base by
reason of paragraph (vi) or paragraph (viii) above, shall not in any event
exceed FIVE MILLION AND NO/100 DOLLARS (5,000,000.00) and (y) the aggregate
amount of the Borrowing Base attributable at any time to Marine Vessel
Inventory, or to Borrowers' Investment in Direct Finance Leases covering Marine
Vessel Inventory, whether such Inventory is included in the Borrowing Base by
reason of paragraph (vii) or paragraph (viii) above shall not in any event
exceed FIVE MILLION AND NO/100 DOLLARS (5,000,000.00).
1.33 "Borrowing Base Certificate" means a certificate substantially in
the form of Exhibit A, executed by the Greenbrier Funds Administrator and
accompanied by such supporting schedules and other information as shall be
reasonably requested by the Agents.
1.34 "Borrowing Date" means any date on which a Borrowing occurs under
Section 2.3.
1.35 "Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other law,
rule or regulation,whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a bank.
<PAGE>
1.36 "Cash Flow" means, for any period, the following for the
Consolidated Entity, in each case calculated in accordance with GAAP for such
period: (a) net earnings (excluding extraordinary after-tax gains and losses and
net earnings and losses attributable to Unrestricted Subsidiaries, other than
dividends and other distributions from earnings received in cash) plus (b) the
sum of the following, to the extent deducted in determining such net earnings:
(i) depreciation and amortization expense, (ii) charges for foreign, federal,
state and local taxes, (iii) rental expense, (iv) interest expense, including
the interest component of Capitalized Leases, and (v) after the Revolving
Termination Date, amortization expense with respect to Investment in Direct
Finance Leases.
1.37 "Capitalized Lease" means, as to any Person at any time, any lease
which in accordance with GAAP is required to be capitalized on the balance sheet
of such Person at such time; and "Capitalized Lease Obligations" of such Person
at any time means the aggregate amount which, in accordance with GAAP, is
required to be reported as a liability on the balance sheet of such Person at
such time as lessee under Capitalized Leases.
1.38 "Cash Collateralize" means to pledge and deposit with or deliver to
Funding Agent, for the benefit of Agents, Issuing Banks and Banks, as additional
collateral for the L/C Obligations, cash or deposit account balances pursuant to
documentation in form and substance satisfactory to Administrative Agent and
Issuing Banks (which documents are hereby consented to by Banks). Derivatives of
such term shall have corresponding meanings.
1.39 "Change of Control" means the occurrence or existence of any one or
more of the following events or conditions:
(a) any Person, or any two or more Persons acting in concert, in each
case other than Alan James, William A. Furman, any member of their
respective Family Groups or any Related Business Entity, acquires record or
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
and Exchange Commission under the Securities Exchange Act of 1934) of
twenty percent (20%) or more of the outstanding shares of voting stock of
Parent and, after giving effect to such acquisition, the aggregate shares
of such voting stock owned by Alan James, William A. Furman, their
respective Family Groups and/or Related Business Entities exceeds such
percentage ownership by less than ten percent(10%);
<PAGE>
(b) the replacement of a majority of the Board of Directors of Parent
over a one-year period, from the directors who constituted the Board of
Directors of Parent at the beginning of such period, which replacement
shall not have been approved by the Board of Directors ofParent (or
replacement directors approved by the Board of Directors of Parent), as
constituted at the beginning of such period; or
(c) the failure by Parent or any Affiliate of Parent to own
beneficially and of record at least eighty percent (80%) of the issued and
outstanding capital stock of GLC.
For purposes hereof, "Family Group" of any Person means such Person's spouse,
descendants and ancestors (in each case whether natural or adopted), a spouse of
any such descendant or ancestor and a trustee of any trust established primarily
for the benefit of any one or more of the foregoing; and "Related Business
Entity" means any Person in which Alan James, William A. Furman and/or any
member of their respective Family Groups hold fifty percent (50%) or more of the
voting stock or other equity interests having ordinary voting power to elect the
directors (or Persons performing a similar function) of such Person.
1.40 "Closing Date" means the date of this Agreement or, if later, the
date of the initial Committed Advance hereunder.
1.41 "Collateral" has the meaning specified in the Security
Agreement.
1.42 "Collateral Agent" means UBOC, acting in its capacity as Collateral
Agent hereunder, and any successor agent arising under Article Ten.
1.43 "Collateral Documents" means, collectively, (i) the
Security Agreement and all other security agreements, mortgages, deeds of trust,
lease assignments, guarantees and other similar agreements between any Borrower
and the Collateral Agent for the benefit of the Swingline Bank, the Banks and
the Agents now or hereafter delivered pursuant to or in connection with the
transactions contemplated hereby, and all financing statements (or comparable
documents) now or hereafter filed in accordance with the UCC or comparable law
against any Borrower, as debtor, in favor of the Collateral Agent, as secured
party, and (ii) all amendments, supplements, modifications, renewals,
replacements, consolidations, substitutions and extensions of any of the
foregoing.
1.44 "Commercial Account" means demand deposit account Nos.
003-084480, 003-100690, 003-111754 or 003-101516 at UBOC's Portland Branch.
<PAGE>
1.45 "Commitments" means, (i) with respect to the Swingline
Bank, the Swingline Commitment and (ii) with respect to any Bank, such Bank's
Revolving Commitment and Term Commitment.
1.46 "Committed Advance" means an extension of credit by a
Bank to a Borrower under Section 2.1(a) of this Agreement and may be a Reference
Rate Advance, a Eurodollar Rate Advance or a Money Market Rate Advance.
1.47 "Compliance Certificate" means a certificate substantially in the
form of Exhibit B.
1.48 "Consolidated Entity" means GLC and those of its subsidiaries from
time to time required to be consolidated with it for financial reporting
purposes in accordance with GAAP; provided that, notwithstanding the foregoing,
the Consolidated Entity in any event shall include each of the Borrowers; and,
provided, further that, for purposes of determining compliance with the
respective terms and provisions hereof at any time during any fiscal year of
GLC, the Consolidated Entity shall exclude:
(a) any Unrestricted Subsidiary, if (i) the aggregate Net Book Value
of the Inventory of such Unrestricted Subsidiary exceeds ten percent (10%)
of the aggregate Net Book Value of the Inventory of all Borrowers
(including, for purposes of this clause (i), Borrowers' inventory
comprising Golden West Collateral) and all Unrestricted Subsidiaries, in
each case as determined as of the end of the immediately preceding fiscal
year, or (ii) the aggregate earnings before interest and taxes of such
Unrestricted Subsidiary for either of the two immediately preceding fiscal
years exceeds ten percent (10%) of the aggregate earnings before interest
and taxes of all Borrowers and all Unrestricted Subsidiaries for such
fiscal year; and
(b) one or more Unrestricted Subsidiaries, if and to the extent
necessary to cause (i) the aggregate Net Book Value of the Inventory of all
Unrestricted Subsidiaries to be no greater than twenty-five percent (25%)
of the aggregate Net Book Value of the Inventory of all Borrowers
(including, for purposes of this clause (i), Borrowers' inventory
comprising Golden West Collateral) and all Unrestricted Subsidiaries, in
each case as determined as of the end of the immediately preceding fiscal
year, and (ii) the aggregate earnings before interest and taxes of all
Unrestricted Subsidiaries for either of the two immediately preceding
fiscal years to be no greater than twenty-five percent (25%) of the
aggregate earnings before interest and taxes of all Borrowers and all
Unrestricted Subsidiaries for such fiscal year.
<PAGE>
1.49 "Consolidated Tangible Net Worth" means, for any period, the Net
Book Value of the following items for the Consolidated Entity, in each case
calculated in accordance with GAAP for such period:
(a) all assets, less (i) intangibles, (ii) increases in the Consolidated
Entity's investment in Unrestricted Subsidiaries attributable to the
undistributed earnings of the Unrestricted Subsidiaries, and (iii) loans
and other advances to, notes and receivables from and equity investments in
Affiliates (including Unrestricted Subsidiaries and Parent), other than:
(w) such loans and other advances to, notes and receivables from
and equity investments in any Borrower;
(x) the Consolidated Entity's investment in Gunderson and Redon,
to the extent in existence on the Closing Date and including increases
therein after the Closing Date attributable solely to the undistributed
earnings of such Persons;
(y) such loans, other advances, notes and receivables arising as
a result of the sale of goods or the rendering of services by a Borrower
in the ordinary course of such Borrower's business, on terms no less
favorable to such Borrower than would be obtained in a comparable arm's-
length transaction with a Person not an Affiliate of such Borrower,
provided that the applicable obligor is an operating company which has
demonstrated in a manner reasonably satisfactory to Administrative Agent
its ability to repay such obligations in the ordinary course of its
business; and
(z) such loans and other advances to, notes and receivables from
and equity investments in any Affiliate of any Borrower (other than
Parent) in addition to those loans, advances, notes, receivables and
equity investments described in clauses (w), (x) and (y) above, in an
amount not exceeding $10,000,000 in the aggregate for all Borrowers;
minus
(b) all liabilities, except Approved Subordinated Indebtedness and
Approved Minority Interests.
1.50 "Consolidated Total Liabilities" means, for any period, the
following items for the Consolidated Entity, in each case calculated in
accordance with GAAP for such period: (a) all liabilities, including
Attributable Debt with respect to Sale/Leaseback Transactions, minus (b)
Approved Subordinated Indebtedness and Approved Minority Interests.
<PAGE>
1.51 "Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
1.52 "Direct Finance Leases" means, with respect to any Person at any
time, any lease which in accordance with GAAP is required to be capitalized on a
balance sheet of such Person at such time.
1.53 "Effective Amount" means (i) with respect to any Swingline Advances
on any date, the aggregate outstanding principal amount thereof after giving
effect to the making of any Swingline Advances and repayments of Swingline
Advances occurring on such date; (ii) with respect to any Committed Advances on
any date, the aggregate outstanding principal amount thereof after giving effect
to any Borrowings and prepayments or repayments of Committed Advances occurring
on such date; and (iii) with respect to any outstanding L/C Obligations on any
date, the amount of such L/C Obligations on such date after giving effect to any
Issuances of Letters of Credit occurring on such date and any other changes in
the aggregate amount of the L/C Obligations as of such date, including as a
result of any reimbursements of outstanding unpaid drawings under any Letters of
Credit or any reductions in the maximum amount available for drawing under
Letters of Credit taking effect on such date.
1.54 "Eligible Assignee" means (a) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined capital
and surplus of at least $100,000,000; (b) a commercial bank organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus of at least $100,000,000,
provided that such bank is acting through a branch or agency located in the
country in which it is organized or another country which is also a member of
the OECD; and (c) a Person that is primarily engaged in the business of
commercial banking and that is (i) a subsidiary of a Bank, (ii) a subsidiary of
a Person of which a Bank is a subsidiary, or (iii) a Person of which a Bank is a
subsidiary.
1.55 "Eligible Inventory" means Inventory:
(a) which is owned by one or more of the Borrowers and subject to a
valid and perfected Lien in favor of the Collateral Agent and not subject
to any other Lien, except, in the case of Inventory covered by a Lease, the
lessee's interest thereunder;
<PAGE>
(b) which, except for temporary and incidental use of Inventory by the
respective lessees thereof, is located only in (i) the United States, (ii)
Canada and (iii) other jurisdictions acceptable to Administrative Agent in
its sole and absolute discretion;
(c) which is in a ready state of repair acceptable to users according
to industry standards, or
(i) in the case of Railcar Inventory, actively under a
refurbishment program; and
(ii) in the case of Hulks and Rebuild Inventory, awaiting
commencement of repair or refurbishment (which repair or refurbishment
will qualify such railcars as Railcar Inventory) for no more than
ninety (90) days from the date of purchase thereof or, if later, the
Closing Date.
(d) which, in Administrative Agent's opinion, is not obsolete or unfit
for further use or processing, or, except in the case of Hulks and Rebuild
Inventory, unsalable or damaged;
(e) which, if such Inventory is covered by a Lease, as soon as
reasonably practicable following the execution of such Lease, is subjected
to a perfected security interest in favor of the applicable Borrower or the
subject of a public notice duly given by such Borrower of its ownership
thereof:
(i) with respect to Inventory that is subject to 49 U.S.C.
11303, by recording with the STB an appropriate document;
(ii) with respect to other Inventory, by filing a UCC-1 Financing
Statement naming the lessee as Debtor or other appropriate method of
perfection of a security interest in or notation of such Borrower's
interest in such Inventory under the UCC or other applicable state
law;
provided, that Autostack Inventory covered by a Lease shall not be deemed
ineligible solely by reason of the failure of such Inventory to satisfy the
foregoing requirements of this paragraph (e); and
(f) if such Inventory is Autostack Inventory, which:
<PAGE>
(i) is not work in process;
(ii) is owned by AC and/or APLP free and clear of all Liens,
except Liens in favor of Collateral Agent, and except for rights of
lessees or other third parties under Leases or operating agreements,
respectively, entered into in the ordinary course of business of AC or
APLP; and
(iii) under the UCC does not constitute fixtures or any other
type of interest with respect to which a "fixture filing" or other
recording or filing in the local real property records is required in
order to perfect a security interest therein, unless Borrowers have
previously granted in favor of Collateral Agent pursuant to the
Collateral Documents a perfected security interest of first priority
in such Inventory; and
(g) the value of which, in the Administrative Agent's reasonable
credit judgment, has not significantly decreased from the Net Book Value
thereof set forth on the most recent Borrowing Base Certificate delivered
pursuant to subsection 7.4(b).
1.56 "Eligible Mexican Inventory" means Inventory which is excluded from
the definition of "Eligible Inventory" solely by reason of its failure to
satisfy the requirements of clause (b) thereof, provided that such Inventory is
covered by a Lease with respect to which:
(a) the lessee thereunder is a Person (i) organized in the United States
or any state thereof and (ii) having long-term unsecured debt rated at
least "BBB-" or the equivalent by S&P or at least "Baa3" or the equivalent
by Moody's (or is a wholly-owned subsidiary of a Person having long-term
unsecured debt rated at least "BBB-" or the equivalent by S&P or at least
"Baa3" or the equivalent by Moody's);
(b) the original term of such Lease is at least three (3) years; and
(c) the Inventory covered thereby must be returned to the Borrower in
the United States upon termination thereof.
1.57 "ERISA" means the Employee Retirement Income Security
Act of 1974, or any successor thereof, in effect from time to time.
<PAGE>
1.58 "Eurocurrency Reserve Requirement" means, with respect to any
Eurodollar Rate Advance for a Period, a percentage equal to the daily average
during such Period of the percentages in effect on each day of such Period, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor), for determining the aggregate maximum reserve requirements
(including all basic, supplemental, marginal and other reserves) applicable to
"Eurocurrency liabilities" pursuant to Regulation D or any other then applicable
regulation of such Board of Governors which prescribes reserve requirements
applicable to "Eurocurrency liabilities," as now or in the future defined in
Regulation D. Without limiting the effect of the foregoing, the Eurocurrency
Reserve Requirement shall reflect any other reserves required to be maintained
by UBOC against (a) any category of liabilities that includes deposits by
reference to which the Eurodollar Rate (Adjusted) is to be determined, or (b)
any category of extensions of credit or other assets that includes Eurodollar
Rate Advances. For purposes of this Agreement, any Eurodollar Rate Advance
hereunder shall be deemed to be "Eurocurrency liabilities," as defined in
Regulation D, and, as such, shall be deemed to be subject to such reserve
requirements without the benefit of, or credit for, proration, exceptions or
set-offs which may be available to any Bank from time to time under Regulation
D.
1.59 "Eurodollar Rate" shall mean, with respect to each Period for a
Eurodollar Rate Advance, the rate per annum at which dollar deposits in
immediately available funds are offered to UBOC two (2) Business Days prior to
the beginning of such Period by major banks in the interbank eurodollar market
at or about 10:00 a.m. (Pacific time), for delivery on the first day of such
Period, for the number of days comprised therein and in an amount equal to the
amount of the Eurodollar Rate Advance to be outstanding during such Period.
1.60 "Eurodollar Rate (Adjusted)" shall mean, with respect to each
Period for a Eurodollar Rate Advance, a rate per annum (rounded upward, if
necessary, to the nearest 1/100th of 1%) determined pursuant to the following
formula:
Eurodollar Rate = Eurodollar Rate
-------------------------------------
(Adjusted) 100%-Eurocurrency Reserve Requirement
1.61 "Eurodollar Rate Advance" means a Committed Advance, that bears
interest based on the Eurodollar Rate (Adjusted).
1.62 "Event of Default" means any event or condition described in
Article Eight.
1.63 "Facility Amount" means $60,000,000, as such amount may
be reduced from time to time pursuant to Section 2.5(b).
<PAGE>
1.64 "Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor, "H.15(519)") on the preceding Banking Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Banking Day, the rate for such day will be the
arithmetic mean as determined by Funding Agent of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York
City time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by Funding Agent.
1.65 "Fee Letters" means, collectively, the UBOC Fee Letter and the BofA
Fee Letter; and "Fee Letter" means any of the foregoing.
1.66 "Fixed Charges" means, for any period, the sum of the following for
the Consolidated Entity, in each case calculated in accordance with GAAP for
such period: (a) interest expense, including the interest component of
Capitalized Leases, plus (b) rental expense, plus, after the Revolving
Termination Date, (c) current maturities of Indebtedness.
1.67 "Fixed Rate Advance" means a Money Market Rate Advance or a
Eurodollar Rate Advance.
1.68 "Funding Agent" means UBOC, acting in its capacity as funding agent
for Banks hereunder, and any successor agent arising under Article Ten.
1.69 "Further Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar charges
(including, without limitation, net income taxes and franchise taxes), and all
liabilities with respect thereto, imposed by any jurisdiction on account of
Taxes or Other Taxes payable or paid pursuant to Section 4.1.
1.70 "GAAP" means generally accepted accounting principles and practices
consistent with those principles and practices promulgated or adopted by the
Financial Accounting Standards Board and the Board of American Institute of
Certified Public Accountants, and their respective predecessors and successors.
Each accounting term used but not otherwise expressly defined herein shall have
the meaning given it by GAAP.
1.71 "GCC" means Greenbrier Capital Corporation, a California
corporation.
<PAGE>
1.72 "GLC" means Greenbrier Leasing Corporation, a Delaware corporation.
1.73 "GPI" means Greenbrier Partners Inc., a California corporation.
1.74 "GTI" means Greenbrier Transportation, Inc., a Delaware
corporation.
1.75 "Golden West Collateral" means railcars purchased under the SP
Remarketing Agreement and all Leases thereof.
1.76 "Governmental Authority" means any nation or government, any state
or other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
1.77 "Greenbrier Funds Administrator" means GLC acting in its capacity
as borrowing agent for itself and the other Borrowers hereunder and under each
of the other Loan Documents.
1.78 "GRI" means Greenbrier Railcar, Inc. a Delaware corporation.
1.79 "GRS" means Greenbrier Rental Services, Inc., a California
corporation.
1.80 "GTLP" means Greenbrier Transportation Limited Partnership, a
Delaware limited partnership.
1.81 "GTLP Borrowing Base" means at any time an amount equal to that
portion of the Borrowing Base at such time (as most recently determined pursuant
to subsection 7.4(b)) attributable to the Net Book Value of Inventory or the
Investment in Direct Finance Leases, in each case of GTLP.
1.82 "GTLP Credit Facilities" means the respective credit facilities
extended to GTLP pursuant to (i) that certain Loan Agreement dated as of
December 18, 1992, among GTLP, as borrower, GCC, as guarantor, and
Internationale Nederlanden Lease Structured Finance B.V., as agent, (ii) that
certain Loan Agreement dated as of December 18, 1992, among GTLP, as borrower,
GCC, as guarantor and First Union Bank of North Carolina, as the initial lender
and as agent and (iii) all other agreements, documents and instruments
evidencing any refinancing of the credit facilities referred to in the foregoing
clauses (i) and (ii).
<PAGE>
1.83 "GTLP Effective Date" has the meaning specified in subsection
11.15(c).
1.84 "GTLP Obligations" means the Effective Amount of
Committed Advances, plus the Effective Amount of Swingline Advances, plus the
Effective Amount of L/C Obligations, in each case made to or incurred by or for
the account of GTLP.
1.85 "Guaranty Obligation" means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or without
recourse, with respect to any Indebtedness, lease, letter of credit or other
obligation (the "primary obligations") of another Person (the "primary
obligor"), including any obligation of that Person (i) to purchase, repurchase
or otherwise acquire such primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any such primary
obligation, or to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
item, level of income or financial condition of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (iv) otherwise to assure or hold
harmless the holder of any such primary obligation against loss in respect
thereof. The amount of any Guaranty Obligation shall be deemed equal to the
stated or determinable amount (or portion) of the primary obligation in respect
of which such Guaranty Obligation is made or, if not stated or if
indeterminable, the maximum reasonably anticipated liability in respect thereof.
1.86 "Gunderson" means Gunderson, Inc., an Oregon corporation.
1.87 "Hulks and Rebuild Inventory" means Inventory consisting of
railcars which do not qualify as Railcar Inventory but which are awaiting
commencement of repair or refurbishment.
1.88 "Indebtedness" of any Person means, without
duplication, (a) all indebtedness for borrowed money; (b) all obligations
issued, undertaken or assumed as the deferred purchase price of property or
services (other than trade payables entered into in the ordinary course of
business on ordinary terms); (c) all non-contingent reimbursement or payment
obligations with respect to Surety Instruments; (d) all obligations evidenced by
notes, bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets or
businesses; (e) all indebtedness created or arising under any conditional sale
<PAGE>
or other title retention agreement, or incurred as financing, in either case
with respect to property acquired by the Person; (f) all Capitalized Lease
Obligations; (g) all indebtedness referred to in clauses (a) through (f) above
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including accounts and contracts rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness;
and (h) all Guaranty Obligations in respect of indebtedness or obligations of
others of the kinds referred to in clauses (a) through (g) above. For all
purposes of this Agreement, the Indebtedness of any Person shall include all
recourse Indebtedness of any partnership or joint venture in which such Person
is a general partner or a joint venturer.
1.89 "Indemnified Liabilities" has the meaning specified in
Section 11.5.
1.90 "Indemnified Person" has the meaning specified in
Section 11.5.
1.91 "Insolvency Proceeding" means, with respect to any
Person, (a) any case, action or proceeding with respect to such Person before
any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; undertaken under U.S. Federal, state or foreign law, including
the Bankruptcy Code.
1.92 "Interest Payment Date" means, (a) as to any Fixed Rate
Advance, the last day of each Period applicable to such Fixed Rate Advance,
provided that if any Period for a Eurodollar Rate Advance exceeds three (3)
months, the date that falls three (3) months after the beginning of such Period
and three (3) months after each Interest Payment Date thereafter is also an
Interest Payment Date, and (b) as to any Reference Rate Advance or Swingline
Advance, the last Banking Day of each calendar month.
1.93 "Intermodal Inventory" means Inventory of one of the
Borrowers consisting of domestic containers, intermodal and over-the-road
trailers and chassis.
1.94 "Internal Revenue Code" means the Internal Revenue Code
of 1986, and regulations promulgated thereunder.
<PAGE>
1.95 "Inventory" means all inventory, raw materials, work in process or
materials used, leased or consumed, or held for sale or lease or to be furnished
under contracts of service, in each case in any Borrower's business, including,
but not limited to, all barges, marine vessels, railcars, domestic containers,
intermodal and over-the-road trailers, chassis, loaders, racks and rack handlers
used in the Autostack system, warehouse receipts, bills of lading and other
documents evidencing goods now owned or hereafter acquired by any Borrower, and
all goods covered thereby including returned goods, accessions, additions,
improvements, and all products thereof, whether in any Borrower's possession or
in the possession of warehousemen, bailees or any other Person, and all proceeds
thereof, including, without limitation, all rights to payment with respect to
any insurance, including returned premiums, or any cause of action relating to
any of the foregoing; provided, that, notwithstanding the foregoing, "Inventory"
shall not mean or include any of the foregoing property of any Borrower
comprising Golden West Collateral.
1.96 "Investment in Direct Finance Leases" means, with respect to any
Person at any time, the aggregate amount which, in accordance
with GAAP, is required to be reported as an asset on the balance sheet of such
Person at such time as lessor under Direct Finance Leases.
1.97 "IRS" means the Internal Revenue Service, and any
Governmental Authority succeeding to any of its principal functions under the
Internal Revenue Code.
1.98 "Issuance Date" has the meaning specified in Section
3.1(a).
1.99 "Issue" means, with respect to any Letter of Credit, to issue or to
extend the expiry of, or to renew or increase the amount of, such Letter of
Credit. The terms "Issued," "Issuing" and "Issuance" have corresponding
meanings.
1.100 "Issuing Bank" means BofA or UBOC, as the case may be, acting in
their respective capacities as issuers of one or more Letters of Credit
hereunder, together with any replacement letter of credit issuer arising under
Section 10.1(b) or Section 10.9.
1.101 "L/C Advance" means each Bank's participation in any
L/C Borrowing in accordance with its Pro Rata Share.
1.102 "L/C Amendment Application" means, with respect to any
Issuing Bank, an application form for amendment of outstanding standby letters
of credit as shall at any time be in use at such Issuing Bank, as such Issuing
Bank shall request.
<PAGE>
1.103 "L/C Application" means an application form for issuances of
standby letters of credit as shall at any time be in use at Issuing Bank, as
Issuing Bank shall request.
1.104 "L/C Borrowing" means an extension of credit resulting from a
drawing under any Letter of Credit which shall not have been reimbursed on the
date when made nor converted into a Borrowing of Committed Advances under
subsection 3.3(c).
1.105 "L/C Commitment" means with respect to any Issuing
Bank the commitment of such Issuing Bank to Issue, and the commitment of Banks
severally to participate in, Letters of Credit from time to time Issued or
outstanding under Article Three, in an aggregate amount not to exceed on any
date the amount of $5,000,000, as the same shall be reduced as a result of a
reduction in such L/C Commitment pursuant to Section 2.5; provided that the L/C
Commitment of each Issuing Bank is a part of the combined Commitments, rather
than a separate, independent commitment.
1.106 "L/C Obligations" means at any time the sum of (a) the aggregate
undrawn amount of all Letters of Credit then outstanding, plus (b) the amount of
all unreimbursed drawings under all Letters of Credit, including all outstanding
L/C Borrowings.
1.107 "L/C-Related Documents" means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document relating to
any Letter of Credit, including any standard form documents for letter of credit
issuances of the respective Issuing Banks.
1.108 "Lease" means any contract or agreement providing for possession
or purchase of Inventory under which one of the Borrowers is the lessor.
1.109 "Lending Office" means, as to any Bank, the office or offices of
such Bank specified as its "Lending Office" or "Domestic Lending Office" or
"Eurodollar Lending Office", as the case may be, on Schedule 11.2, or such other
office or offices as such Bank may from time to time notify the Greenbrier Funds
Administrator and Funding Agent.
1.110 "Letters of Credit" means any standby letters of credit Issued by
Issuing Bank pursuant to Article Three.
1.111 "Lien" means any voluntary or involuntary security interest,
mortgage, pledge, claim, charge, encumbrance, title retention agreement, or
lessor's interest, covering all or any part of the property of any Borrower or
any other Person.
<PAGE>
1.112 "Loan" means an extension of credit by a Bank to
Borrowers under Section 2, including each Swingline Advance, Committed Advance
or Term Loan.
1.113 "Loan Documents" means, individually and collectively, this
Agreement, the Note(s), the Collateral Documents and all other contracts,
instruments, documents, certificates and addenda executed in connection with the
extensions of credit which are the subject of this Agreement.
1.114 "Leverage Pricing Ratio" means, at any time, the ratio of Adjusted
Senior Funded Debt to Adjusted Consolidated Tangible Net Worth, in each case at
such time.
1.115 "Marine Vessel Inventory" means the Inventory consisting of barges
and other marine vessels described on Schedule 1.1(B).
1.116 "Material Adverse Effect" means (a) a material adverse change in,
or a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) of GLC individually, or of GLC and the other
Borrowers taken as a whole; (b) a material impairment of the ability of any
Borrower to perform under any Loan Document and to avoid any Event of Default;
or (c) a material adverse effect upon the legality, validity, binding effect or
enforceability against any Borrower of any Loan Document.
1.117 "MBK" means MBK Rail Capital, Inc., a Delaware corporation.
1.118 "Mitsui Nevitt" means Mitsui Nevitt Capital Corporation, a
Delaware corporation.
1.119 "Money Market Rate" means, for any Period with respect to Money
Market Rate Advances comprising part of the same Borrowing, that rate of
interest per annum equal to the sum of (a) the rate per annum Funding Agent
quotes as the rate at which funds in the amount of such Borrowing for a Period
are available for purchase from other banks in the ordinary course of Funding
Agent's business on the Borrowing Date of such Borrowing, and (b) one and one-
half percent (1.5%), provided that, notwithstanding the foregoing, if the
Committed Advances are converted into Term Loans on the Revolving Termination
Date pursuant to Section 2.1(b), such percentage amount shall increase by (i)
one-quarter of one percent (0.25%) per annum with respect to each day during the
period commencing on the Revolving Termination Date and ending on the third
anniversary thereof and (ii) by one-half of one percent (0.50%) per annum with
respect to each day thereafter.
<PAGE>
1.120 "Money Market Rate Advance" means a Committed Advance that bears
interest based on the Money Market Rate.
1.121 "Moody's" means Moody's Investors Services, Inc., or any successor
thereto.
1.122 "Net Book Value" means that term as used in accordance with GAAP.
1.123 "Non-recourse Indebtedness" means Indebtedness with respect to
which in any action or proceeding brought on any instrument evidencing such
Indebtedness, no deficiency or other money judgment may be enforced against any
of the Borrowers (or any general or limited partner of any of the Borrowers
personally, any successor or assign of any of the Borrowers, or any officer,
shareholder or partner of a partner), and any judgment obtained in any such
action or proceeding may be enforced only against property securing such
Indebtedness.
1.124 "Note(s)" means the promissory note(s) in form and substance
satisfactory to Administrative Agent executed by Borrowers to evidence the
respective Obligations, and all extensions, renewals and modifications of, and
substitutions for, such note(s).
1.125 "Notice of Borrowing" has the meaning specified in
Section 2.3(a).
1.126 "Notice of Conversion/Continuation" has the meaning specified in
Section 2.4(a).
1.127 "Obligations" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document owing by any Borrower to
the Swingline Bank, any Bank, any Agent, or any Indemnified Person, whether
direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising.
"Obligations" shall also mean and include at any time all obligations and
liabilities of any Borrower at such time in respect of any Swap Contract entered
into between any Borrower and any Bank.
1.128 "Other Taxes" means any present or future stamp, court or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery, performance, enforcement or registration of, or otherwise with respect
to, this Agreement or any other Loan Documents.
1.129 "Parent" means The Greenbrier Companies, Inc., a
Delaware corporation.
<PAGE>
1.130 "Participant" has the meaning specified in subsection
11.8(d).
1.131 "PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto established under ERISA.
1.132 "Period" means (a) with respect to any Money Market
Rate Advance, a period of one, seven or fourteen days and (b) with respect to
any Eurodollar Rate Advance, a period of one, two, three, six, nine or twelve
months, provided that:
(i) in the case of any Period with respect to Eurodollar Rate
Advances:
(A) if any Period would otherwise end on a day that is not a
Banking Day, that Period shall be extended to the following Banking Day
unless the result of such extension would be to carry such Period into
another calendar month, in which event such Period shall end on the
preceding Banking Day; and
(B) any Period that begins on the last Banking Day of a calendar
month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Period) shall end on the last
Banking Day of the calendar month at the end of such Period;
(ii) no Period applicable to any Committed Advance shall extend
beyond the Revolving Termination Date; and
(iii) no Period applicable to any of the Term Loans or any portion
thereof shall extend beyond (A) the Termination Date or (B) any date upon
which is due any scheduled principal payment in respect of Term Loans
unless the aggregate principal amount of the Term Loans represented by
Reference Rate Advances, or by Fixed Rate Advances having Periods that will
expire on or before such date, equals or exceeds the amount of such
principal payment.
1.133 "Permitted Liens" means:
(a) Liens granted to the Collateral Agent under the Collateral
Documents;
(b) Liens of warehousemen, mechanics, materialmen, workers,
repairmen, common carriers, or landlords, liens for taxes, assessments or
other governmental charges, and other similar Liens arising by
<PAGE>
operation of law, in each case for amounts that are not yet due and payable
or that are being diligently contested in good faith by a Borrower and with
respect to which adequate reserves are maintained by such Borrower for
their payment in accordance with GAAP;
(c) Attachment or judgment Liens which do not constitute an Event of
Default under subsection 9.1(i);
(d) Deposits or pledges to secure obligations under workmen's
compensation, social security or similar laws, under unemployment
insurance, or to secure public or statutory obligations;
(e) Deposits or pledges to secure bids, tenders, contracts (other than
contracts for the payment of money), leases, statutory obligations, surety
and appeal bonds and other obligations of like nature arising in the
ordinary course of business;
(f) Easements, rights-of-way, restrictions and other similar
encumbrances on title to, or restrictions on the use of, real property,
which, in the aggregate, do not materially detract from the value of the
item of property subject thereto or materially interfere with the ordinary
conduct of the business of any Borrower;
(g) Liens granted pursuant to the SP Remarketing Agreement or under the
Other Rights (as such term is defined in the SP Remarketing Agreement);
(h) Liens securing Senior Golden West Indebtedness to the extent such
Liens attach only to Golden West Collateral;
(i) Liens in existence as of the Closing Date and described on Schedule
1.1(C);
(j) Liens securing Indebtedness permitted under subsections 8.1(c), (d),
(e), (f) and (i);
(k) Any interest or title of a lessor in connection with a
Sale/Leaseback Transaction permitted under Section 8.4; and
(l) Liens arising in connection with Capitalized Leases permitted
hereunder.
1.134 "Person" means any individual or entity.
1.135 "Phase X Railcars" means the approximately 875 railcars comprising
Phase X under the SP Remarketing Agreement.
<PAGE>
1.136 "Plan" means any employee benefit plan of any Borrower subject to
ERISA.
1.137 "Prior UBOC Obligations" means all Indebtedness and other
obligations of Borrowers arising under and in connection with that certain
Second Amended and Restated Credit Agreement dated as of April 30, 1994, as
amended through the Closing Date, among certain Borrowers, UBOC, as successor in
interest to The Bank of California, N.A., as agent, and the other financial
institutions identified therein.
1.138 "Pro Rata Share" means, as to any Bank, (i) at any time prior to
the Revolving Termination Date, the percentage equivalent (expressed as a
decimal rounded to the third decimal place) at such time of such Bank's
Revolving Commitment divided by the combined Revolving Commitments of all Banks
and (ii) from and after the Revolving Termination Date through and including the
Termination Date, the Effective Amount of such Bank's Term Loan divided by the
Effective Amount of all Term Loans, in each case at such time.
1.139 "Railcar Inventory" means Inventory consisting of railcars which
are either (a) in a ready state of repair acceptable to users according to
industry standards, or (b) actively under a repair or refurbishment program.
1.140 "Redon" means Redon General Partnership, a Georgia general
partnership.
1.141 "Reference Rate" means, for any day, the higher of:
(a) one-half of one percent (0.50%) per annum above the latest Federal Funds
Rate; and (b) the rate Funding Agent announces to be in effect as its Reference
Rate on such day. The Reference Rate is a rate set by Funding Agent based on
various factors, including general economic and market conditions, and is used
as a reference point for pricing certain loans. Each Bank may price its loans
at, above or below the Reference Rate.
1.142 "Reference Rate Advance" means a Committed Advance, or an L/C
Advance, that bears interest based on the Reference Rate.
1.143 "Required Banks" means at any time at least two (2)
Banks then holding at least sixty percent (60%) of the then aggregate unpaid
principal amount of the Committed Advances or Term Loans, as the case may be,
or, if no such Obligations are outstanding, at least two (2) Banks then having
at least sixty percent (60%) of the aggregate amount of the Revolving
Commitments or Term Commitments, as the case may be.
<PAGE>
1.144 "Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to or binding
upon the Person or any of its property or to which the Person or any of its
property is subject.
1.145 "Restricted Payment" means, with respect to any Borrower: (a) any
dividend or other distribution, direct or indirect, on account of any shares of
any class of stock of such Borrower now or hereafter outstanding, except a
dividend payable solely with shares of the class of stock on which such dividend
is declared; (b) any payment on account of the redemption, conversion, exchange,
retirement or other acquisition for value, direct or indirect, of any shares of
any class of stock of such Borrower now or hereafter outstanding, or the
issuance of a notice of an intention to do any of the foregoing; (c) any payment
made to retire, or to obtain the surrender of, any outstanding warrants, options
or other rights to acquire shares of any class of stock of such Borrower now or
hereafter outstanding; (d) any advance, loan or other payment of any kind made
by such Borrower to, or any investment of any kind by such Borrower in, any
Affiliate (other than any other Borrower) and (e) except for any prepayment made
by any Borrower in respect of Subordinated Golden West Indebtedness incurred in
connection with the purchase of the approximately 875 railcars comprising the
Phase X Railcars, any payment (other than regularly scheduled payments of
principal and interest) on account of subordinated Indebtedness of such or any
other Borrower now or hereafter outstanding, including, without limitation,
Approved Subordinated Indebtedness; provided that, notwithstanding the
foregoing, "Restricted Payment" shall not mean or include any payments or other
distributions made by any Borrower to Parent to permit Parent to pay Federal,
state and local income taxes then due and owing and reasonably attributable to
the operations of such Borrower.
1.146 "Revolving Commitment" has the meaning specified in
Section 2.1(a).
1.147 "Revolving Termination Date" has the meaning specified in Section
2.5(a).
1.148 "S&P" means Standard & Poor's Rating Services, a division of The
McGraw-Hill Companies, Inc., or any successor thereto.
1.149 "Sale/Leaseback Transaction" means any transaction entered into by
any Person included in the Consolidated Entity whereby (a) such Person sells or
otherwise transfers any real or personal property to any other Person and
concurrently or thereafter leases (or repurchases under an extended
<PAGE>
purchase contract or conditional sale or other title retention agreement) the
same or substantially similar property or (b) such Person leases, as lessee, any
Inventory pursuant to a lease which does not constitute a Capitalized Lease.
1.150 "Security Agreement" means that certain General Security
Agreement of even date herewith executed by each of the Borrowers in favor of
Collateral Agent for the benefit of the Swingline Bank, the Banks and the
Agents, as amended, restated, supplemented or otherwise modified and in effect
from time to time.
1.151 "Senior Golden West Indebtedness" means senior Indebtedness
secured by Golden West Collateral.
1.152 "SP" means Southern Pacific Transportation Company.
1.153 "SP Railcars" means those certain railcars acquired by
GRI or GLC under the SP Remarketing Agreement.
1.154 "SP Remarketing Agreement" means the Remarketing
Agreement dated as of November 19, 1987 by and among Southern Pacific
Transportation Company, St. Louis Southwestern Railway Company, GLC and GRI, as
amended by letter agreement dated November 15, 1988, as further amended by
Amendment No. 2 to Remarketing Agreement dated on or about August 15, 1990, and
as further amended by Amendment No. 3 to Remarketing Agreement, dated March 5,
1991.
1.155 "STB" means the Surface Transportation Board and any
Governmental Authority succeeding to any of its principal functions.
1.156 "Subordinated Golden West Indebtedness" means the
Indebtedness evidenced by the subordinated notes issued to Southern Pacific
Transportation Company pursuant to the SP Remarketing Agreement.
1.157 "Surety Instruments" means all letters of credit
(including standby and commercial), banker's acceptances, bank guaranties,
shipside bonds, surety bonds and similar instruments.
1.158 "Swap Contract" means any agreement, whether or not in writing,
relating to any transaction that is an interest rate swap, basis swap, forward
rate transaction, commodity swap, commodity option, equity or equity index swap
or option, bond, note or bill option, interest rate option, forward foreign
exchange transaction, cap, collar or floor transaction, currency swap, cross-
currency rate swap, swaption, currency option or any other, similar transaction
(including any option to enter into any of the foregoing) or any combination of
the foregoing, including any master agreement relating to or governing any or
all of the foregoing.
<PAGE>
1.159 "Swingline Advance" means an extension of credit by the Swingline
Bank to a Borrower under Section 2.1(c) of this Agreement.
1.160 "Swingline Bank" means at any time, UBOC, in its capacity as
lender of Swingline Advances hereunder or any other Bank that has agreed to
provide Swingline Advances hereunder; provided that the Greenbrier Funds
Administrator shall have delivered to Funding Agent a written notice that
Borrowers have elected to replace UBOC as Swingline Bank (it being understood
that there shall be only one Swingline Bank hereunder at such time).
1.161 "Swingline Commitment" has the meaning specified in
Section 2.1(c).
1.162 "Swingline Rate" means, for any day, an interest rate per annum
equal to the Reference Rate.
1.163 "Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar charges,
and all liabilities with respect thereto, excluding, in the case of the
Swingline Bank, each Bank and each Agent, respectively, taxes (including income
taxes or franchise or other similar taxes) imposed on or measured by such
Persons's net income by (a) the United States or other jurisdiction (or any
political subdivision thereof) under the laws of which such Person is organized
or maintains a lending office and (b) the State of Oregon.
1.164 "Term Commitment" has the meaning specified in Section
2.1(b).
1.165 "Term Loan" has the meaning specified in Section
2.1(b).
1.166 "Termination Date" means the sixth anniversary of the Revolving
Termination Date, as such date is extended from time to time pursuant to Section
2.5(a).
1.167 "Type" of Loan means a Reference Rate Advance, a Eurodollar Rate
Advance or a Money Market Rate Advance.
1.168 "Unrestricted Subsidiary" means a subsidiary of any Borrower which
is a member of the Consolidated Entity but which is not itself a Borrower.
<PAGE>
1.169 "UBOC" means Union Bank of California, N.A., a national banking
association, in its individual capacity.
1.170 "UBOC Fee Letter" means that certain fee letter dated September
12, 1997, between GLC and UBOC.
1.171 "UCC" means the Uniform Commercial Code as enacted in the
applicable jurisdiction, in effect on the Closing Date and as amended from time
to time.
1.172 "Voting Stock" means, with respect to any corporation, any shares
of stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency).
ARTICLE TWO - CREDIT FACILITIES
2.1 Amounts and Terms of Facilities.
(a) The Revolving Commitments. Each of the Banks severally agrees, on
the terms and conditions set forth herein, to make advances to Borrowers from
time to time on any Banking Day during the period from the Closing Date to but
excluding the Revolving Termination Date, in an aggregate amount not to exceed
at any time outstanding the amount indicated with respect to such Bank on
Schedule 2.1 (such amount, as the same may be reduced pursuant to Section 2.5 or
as a result of one or more assignments under Section 11.8, such Bank's
"Revolving Commitment").
(b) The Term Commitments. Each of the Banks severally agrees, on the
terms and conditions set forth herein, upon prior written notice given to
Administrative Agent by the Greenbrier Funds Administrator not more than ninety
(90) days, or less than sixty (60) days, prior to the Revolving Termination
Date, to convert, on the Revolving Termination Date, all of such Bank's
Committed Advances outstanding on such date into a term loan in an equal
original principal amount (with respect to each Bank, such Bank's "Term Loan").
Administrative Agent shall promptly notify Funding Agent and each Bank of its
receipt of any notice from the Greenbrier Funds Administrator pursuant to this
Section 2.1(b). Term Loans which are subsequently repaid or prepaid by Borrowers
may not be reborrowed.
(c) The Swingline Commitment. The Swingline Bank agrees, on the terms
and conditions set forth herein, to make advances to Borrowers from time to time
on any Banking Day during the period from the Closing Date to but excluding the
Revolving Termination Date, in an aggregate amount not to exceed
<PAGE>
at any time outstanding $5,000,000 (such amount, the Swingline Bank's "Swingline
Commitment"); provided that (i) Borrowers may not request Swingline Advances
upon the occurrence and during the continuance of an Event of Default and (ii)
the Swingline Bank shall not make Swingline Advances following its receipt of
notice of the existence of an Event of Default; provided, further, that the
Swingline Bank shall not be deemed to have notice of the existence of an Event
of Default unless and until it has actual knowledge thereof or has received
notice with respect thereto pursuant to Section 10.5.
(d) Further Limitations. Notwithstanding anything to the contrary
contained in this Agreement:
(i) after giving effect to any Borrowing of Committed Advances
prior to the APLP Effective Date:
(A) the APLP Obligations shall not exceed the APLP Borrowing
Base;
(B) the Effective Amount of Committed Advances, plus the
Effective Amount of Swingline Advances, plus the Effective Amount of
L/C Obligations minus the APLP Obligations shall not exceed the
Borrowing Base minus the APLP Borrowing Base; and
(C) the Effective Amount of Committed Advances, plus the
Effective Amount of Swingline Advances, plus the Effective Amount of
L/C Obligations minus the APLP Obligations and, prior to the GTLP
Effective Date, the GTLP Obligations, shall not exceed the Borrowing
Base minus the APLP Borrowing Base and, prior to the GTLP Effective
Date, the GTLP Borrowing Base;
(ii) after giving effect to any Borrowing of Committed Advances
prior to the GTLP Effective Date:
(A) the GTLP Obligations shall not exceed the GTLP Borrowing
Base;
(B) the Effective Amount of Committed Advances, plus the
Effective Amount of Swingline Advances, plus the Effective Amount of
L/C Obligations minus the GTLP Obligations shall not exceed the
Borrowing Base minus the GTLP Borrowing Base; and
(C) the Effective Amount of Committed Advances,
<PAGE>
plus the Effective Amount of Swingline Advances, plus the Effective
Amount of L/C Obligations minus the GTLP Obligations and, prior to the
APLP Effective Date, the APLP Obligations, shall not exceed the
Borrowing Base minus the GTLP Borrowing Base and, prior to the APLP
Effective Date, the APLP Borrowing Base;
(iii) after giving effect to any Borrowing of Committed Advances
following both the APLP Effective Date and the GTLP Effective Date, the
Effective Amount of Committed Advances, plus the Effective Amount of
Swingline Advances, plus the Effective Amount of L/C Obligations shall not
exceed the Borrowing Base;
(iv) the Effective Amount of Committed Advances plus the Effective
Amount of Swingline Advances plus the Effective Amount of L/C Obligations
shall not at any time exceed the Facility Amount; and
(v) the Effective Amount of Committed Advances of any Bank plus
the participation of such Bank in the Effective Amount of L/C Obligations
plus an amount equal to such Bank's Pro Rata Share of the Effective Amount
of Swingline Advances, shall not at any time exceed such Bank's Revolving
Commitment.
Within the limits of the foregoing, and subject to the other terms and
conditions hereof, Borrowers may borrow and reborrow under Sections 2.1(a), (b)
and (c).
2.2 Loan Accounts.
(a) The Swingline Bank's Swingline Advances, each Bank's
Committed Advances and Term Loan and the Letters of Credit Issued by each
Issuing Bank shall be evidenced in each case by one or more accounts or records
maintained by such Bank or Issuing Bank, as the case may be, in the ordinary
course of business. The accounts or records maintained by the respective Agents,
each Issuing Bank, the Swingline Bank and each Bank shall be rebuttably
presumptive evidence of the respective amounts of the Committed Advances and
Term Loans made by Banks to Borrowers, of the Swingline Advances made by the
Swingline Bank to Borrowers and of the Letters of Credit Issued for the account
of Borrowers, and the interest and payments thereon. Any failure to so record or
any error in doing so shall not, however, limit or otherwise affect the
obligations of Borrowers hereunder to pay any amount owing with respect to the
Committed Advances, Swingline Advances, the Term Loans or any Letter of Credit.
(b) Upon the request of any Bank made through Administrative
<PAGE>
Agent, the Committed Advances or Term Loan made by such Bank may be evidenced by
one or more Notes, instead of, or in addition to, loan accounts and, upon the
request of the Swingline Bank made through Administrative Agent, the Swingline
Advances made by the Swingline Bank may be evidenced by one or more Notes,
instead of, or in addition to, loan accounts.
Each such Bank shall endorse on the schedules annexed to its Note(s) the date,
amount and maturity of each Committed Advance, Swingline Advance or Term Loan,
as the case may be, made by it and the amount of each payment of principal made
by Borrowers with respect thereto. Each such Bank is irrevocably authorized by
Borrowers to endorse its Note(s) and such Bank's record shall be conclusive
absent manifest error; provided that the failure of any Bank to make, or an
error in making, a notation thereon with respect to any Committed Advance or its
Term Loan, or the failure of the Swingline Bank to make, or an error in making,
a notation thereon with respect to any Swingline Advance, shall not limit or
otherwise affect the obligations of Borrowers hereunder or under any such Note
to any such Bank.
2.3 Procedure for Borrowing.
(a) Each Borrowing of Committed Advances shall be made upon the
Greenbrier Funds Administrator's irrevocable notice (each, a "Notice of
Borrowing") given to Funding Agent (which notice must be received by Funding
Agent (i) prior to 9:00 a.m. (Pacific time) two (2) Banking Days prior to the
requested Borrowing Date, in the case of Eurodollar Rate Advances; and (ii)
prior to 11:00 a.m. (Pacific time) on the requested Borrowing Date, in the case
of Reference Rate Advances and Money Market Rate Advances, specifying:
(A) the amount of the Borrowing, which shall be in an aggregate
minimum amount of (i) in the case of a Borrowing of Reference Rate
Advances, $50,000 or any multiple of $1,000 in excess thereof, (ii) in
the case of a Borrowing of Eurodollar Rate Advances, $1,000,000 or any
multiple of $250,000 in excess thereof and (iii) in the case of a
Borrowing of Money Market Rate Advances, $1,000,000 or any multiple of
$500,000 in excess thereof;
(B) the requested Borrowing Date, which shall be a Banking Day;
(C) the Type of Loans comprising the Borrowing; and
(D) the duration of the Period applicable to such Loans included
in such notice. If the Notice of Borrowing fails to specify the
duration of the Period for any Borrowing comprised of (i) Eurodollar
Rate Advances, such Period shall
<PAGE>
be one month or (ii) Money Market Rate Advances, such Period shall be
one day.
(b) (i) Each borrowing of a Swingline Advance shall be made upon the
Greenbrier Funds Administrator's irrevocable notice given to Funding Agent
(which notice must be received by Funding Agent prior to 4:00 p.m. (Pacific
time) on the requested Borrowing Date), specifying:
(A) the amount of the Swingline Advance, which shall be in an
aggregate minimum amount of $1,000 or any multiple of $1,000 in excess
thereof; and
(B) the requested Borrowing Date, which shall be a Banking Day.
(ii) The proceeds of each Swingline Advance will be made available
to Borrowers by the Swingline Bank by 4:00 p.m. (Pacific time) on the
requested Borrowing Date for such Swingline Advance by a deposit to the
Commercial Account, unless the Greenbrier Funds Administrator shall
otherwise direct the Swingline Bank.
(iii) The Swingline Bank may by written notice given to Funding
Agent not later than 10:00 a.m. (Pacific time) on any Banking Day require
Banks to acquire participations on such Banking Day in all or a portion of
the then Effective Amount of Swingline Advances made in accordance with
Section 2.1(c). Each such notice shall specify the aggregate amount of
Swingline Advances in which Banks will participate. Promptly upon receipt
of such notice, Funding Agent will give notice thereof to each Bank,
specifying in such notice such Bank's percentage of such Swingline Advance
or Advances (which shall be equal to such Bank's Pro Rate Share). Each Bank
hereby absolutely and unconditionally agrees, upon receipt of notice as
provided above, to pay to Funding Agent, for the account of the Swingline
Bank, such Bank's percentage of such Swingline Advance or Advances. Each
Bank acknowledges and agrees that its obligation to acquire participations
in Swingline Advances pursuant to this Section is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of an Event of Default or a
Default or reduction or termination of the Facility and all Commitments,
and that each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever. Each Bank shall comply with its
obligation under this Section by wire transfer of immediately available
funds, in the same manner as provided in Sections 2.3(d) and 2.13 with
respect to Committed Advances made by such Bank (and Sections 2.3(d) and
2.13 shall apply, mutatis mutandis, to the payment obligations of Banks),
and Funding Agent shall promptly pay to the
<PAGE>
Swingline Bank the amounts so received by it from Banks. Funding Agent
shall notify the Greenbrier Funds Administrator of any participations in
any Swingline Advance acquired pursuant to this Section, and thereafter
payments in respect of such Swingline Advance shall be made to Funding
Agent and not the Swingline Bank. Any amounts received by the Swingline
Bank from any Borrower (or any other party on behalf of any Borrower) in
respect of a Swingline Advance after receipt by the Swingline Bank of the
proceeds of a sale of participations therein shall be promptly remitted to
Funding Agent; any such amounts received by Funding Agent shall be promptly
remitted by Funding Agent to those Banks that shall have made their
payments pursuant to this Section and to the Swingline Bank, as their
interests may appear. The purchase of participations in a Swingline Advance
pursuant to this Section shall not relieve Borrowers of any default in the
payment thereof.
(c) Funding Agent will promptly notify each Bank of its receipt of any
Notice of Borrowing and of the amount of such Bank's Pro Rata Share of the
requested Borrowing.
(d) Each Bank will make the amount of its Pro Rata Share of each
Borrowing available to Funding Agent for the account of Borrowers at Funding
Agent's Payment Office by 2:00 p.m. (Pacific time) on the Borrowing Date
requested by the Greenbrier Funds Administrator in funds immediately available
to Funding Agent. Such proceeds will then be made available to the Greenbrier
Funds Administrator by Funding Agent by a deposit to the Commercial Account,
unless the Greenbrier Funds Administrator shall otherwise direct Funding Agent
in writing.
(e) After giving effect to any Borrowing, unless Funding
Agent shall otherwise consent, there may not be more than eight (8) different
Periods with respect to Eurodollar Rate Advances and Money Market Rate Advances
in effect.
(f) The Greenbrier Funds Administrator and each Borrower hereby
authorizes the Swingline Bank and Funding Agent to make Swingline Advances and
Committed Advances, respectively, hereunder and to transfer funds based on
telephonic notices each such Person in good faith believes to have been made by
an authorized Person on behalf of the Greenbrier Funds Administrator. The
Greenbrier Funds Administrator agrees to deliver promptly to the Swingline Bank
or Funding Agent, as the case may be, a written confirmation, if such
confirmation is requested by such Person, of each telephonic notice. If the
written confirmation differs in any material respect from the action taken by
the Swingline Bank or Funding Agent, the records of the Swingline Bank or
Funding Agent, as the case may be, shall govern absent manifest error.
2.4 Conversion and Continuation Elections. (a) Borrowers
<PAGE>
may, upon irrevocable notice (each, a "Notice of Continuation/Conversion") from
the Greenbrier Funds Administrator to Funding Agent in accordance with
subsection 2.4(b):
(i) elect, as of any Banking Day, in the case of Reference Rate
Advances, or as of the last day of the applicable Period, in the case of
Fixed Rate Advances, to convert any such Loans (or any part thereof in an
amount not less than (A) in the case of a Borrowing of Reference Rate
Advances, $50,000, or any multiple of $1,000 in excess thereof, (B) in the
case of a Borrowing of Eurodollar Rate Advances, $1,000,000, or any
multiple of $250,000 in excess thereof and (C) in the case of a Borrowing
of Money Market Rate Advances, $1,000,000, or any multiple of $500,000 in
excess thereof) into Loans of any other Type; or
(ii) elect as of the last day of the applicable Period, to continue
any Committed Advances or Term Loans having Periods expiring on such day or
any part thereof in an amount not less than (A) in the case of a
continuation of a Borrowing of Eurodollar Rate Advances, $1,000,000, or any
multiple of $250,000 in excess thereof and (B) in the case of a
continuation of a Borrowing of Money Market Rate Advances, $1,000,000, or
any multiple of $500,000 in excess thereof;
provided that if at any time the aggregate amount of Fixed Rate Advances in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $1,000,000, such Fixed Rate Advances shall
automatically convert into Reference Rate Advances, and on and after such date
the right of Borrowers to continue such Loans as, and convert such Loans into,
Fixed Rate Advances shall terminate.
(b) The Greenbrier Funds Administrator shall deliver a Notice of
Conversion/Continuation to be received by Funding Agent not later than (i) 9:00
a.m. (Pacific time) at least two (2) Banking Days in advance of the Conversion/
Continuation Date, if the Loans are to be converted into or continued as
Eurodollar Rate Advances; and (ii) 11:00 a.m. (Pacific time) on the
Conversion/Continuation Date, if the Loans are to be converted into Reference
Rate Advances or Money Market Rate Advances, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Loans to be converted or continued;
(C) the Type of Loans resulting from the proposed conversion or
continuation; and
<PAGE>
(D) other than in the case of conversions into Reference Rate
Advances, the duration of the requested Period.
(c) If upon the expiration of any Period applicable to Fixed
Rate Advances, Borrowers failed to select timely a new Period to be applicable
to such Fixed Rate Advances, or if any Default or Event of Default then exists,
Borrowers shall be deemed to have elected to convert such Fixed Rate Advances
into Reference Rate Advances effective as of the expiration date of such Period.
(d) Funding Agent will promptly notify each Bank of its receipt of a
Notice of Conversion/Continuation, or, if no timely notice is provided by the
Greenbrier Funds Administrator, Funding Agent will promptly notify each Bank of
the details of any automatic conversion. All conversions and continuations shall
be made ratably according to the respective outstanding principal amounts of the
Committed Advances or the Term Loan, as the case may be, with respect to which
the notice was given.
(e) Unless the Required Banks otherwise consent, during the existence
of a Default or Event of Default, Borrowers may not elect to have all or part of
a Borrowing converted into or continued as a Eurodollar Rate Advance.
(f) After giving effect to any conversion or continuation of
Loans, unless Funding Agent shall otherwise consent, there may not be more than
eight (8) different Periods with respect to Eurodollar Rate Advances and Money
Market Rate Advances in effect.
2.5 Expiration and Termination of Revolving Commitments.
(a) Expiration of Revolving Commitments; Extension of
Revolving Termination Date. Unless terminated in full or reduced earlier
pursuant to the provisions of Section 2.5(b), the Revolving Commitments shall
expire on May 31, 1999 (such date, as extended pursuant to this Section 2.5(a),
the "Revolving Termination Date"); provided that Banks may, in their sole
discretion at the request of Borrowers, extend the Revolving Commitments on a
year to year basis for one twelve-month period at a time. Borrowers may request
an extension of the Revolving Commitments by notice given by the Greenbrier
Funds Administrator to Administrative Agent (which shall promptly notify Banks
thereof) not earlier than sixteen months and not later than thirteen months
prior to the Revolving Termination Date in effect as such time. Upon receipt of
such request, each Bank shall have forty-five (45) days within which to elect,
by notice to the Greenbrier Funds Administrator and Administrative Agent,
whether or not it wishes to extend its Revolving Commitment as requested. Each
Bank shall remain absolutely free to decline to extend its Revolving Commitment
<PAGE>
in its sole discretion, without regard to the financial condition or
creditworthiness of the respective Borrowers, or any other matters. Any Bank
that fails to give any such notice to the Greenbrier Funds Administrator and
Administrative Agent within such forty-five (45) day period shall be
conclusively presumed to have declined to extend its Revolving Commitment for
the ensuing twelve-month period as requested. If all Banks agree to so extend
their respective Revolving Commitments, the Revolving Commitments (and the
Revolving Termination Date) shall be extended for an additional twelve-month
period commencing on the date that the Revolving Commitments were next scheduled
to expire. If any Bank declines to extend its Revolving Commitment, whether by
giving notice to the Greenbrier Funds Administrator and Administrative Agent or
by failing to give any such notice, the Revolving Commitments of all Banks shall
expire on May 31st of the year following the year of Borrowers' request for an
extension, without requiring further action by any party. If Borrowers do not
request an extension by April 30th of the year immediately preceding the year in
which the Revolving Commitments are next scheduled to expire, the Revolving
Commitments shall expire as scheduled on May 31st of the year in which the
Revolving Commitments are next scheduled to expire.
(b) Voluntary Termination or Reduction of Revolving Commitments.
Borrowers may, upon not less than five (5) Banking Days' prior notice given by
the Greenbrier Funds Administrator to Administrative Agent (which shall promptly
notify Funding Agent and Banks of its receipt thereof), terminate the Revolving
Commitments, or permanently reduce the Revolving Commitments by an aggregate
minimum amount of $5,000,000 or any multiple of $1,000,000 in excess thereof;
provided, that, after giving effect thereto and to any prepayments of Committed
Advances made on the effective date thereof, none of the conditions described in
Section 2.1(d) shall exist. Once reduced in accordance with this Section, the
Revolving Commitments may not be increased. Any reduction of the Revolving
Commitments shall be applied to each Bank according to its Pro Rata Share. If
and to the extent specified by the Greenbrier Funds Administrator in the notice
to Administrative Agent, some or all of the reduction in the combined Revolving
Commitments shall be applied to reduce the L/C Commitment. All accrued
commitment and letter of credit fees to, but not including, the effective date
of any reduction or termination of the Revolving Commitments, shall be paid on
the effective date of such reduction or termination.
2.6 Optional Prepayments. Subject to Section 4.4, Borrowers may, at any
time or from time to time, upon not less than five (5) Banking Days' irrevocable
notice given by the Greenbrier Funds Administrator to Funding Agent ratably
prepay the Committed Advances or Term Loans, as the case may be, in whole or in
part, in minimum amounts of $500,000 or any multiple of $100,000 in excess
thereof. Such notice of prepayment shall specify the date and amount of
<PAGE>
such prepayment and the Type(s) of Loans to be prepaid. Funding Agent will
promptly notify each Bank of its receipt of any such notice, and of such Bank's
Pro Rata Share of such prepayment. If such notice is given by the Greenbrier
Funds Administrator, Borrowers shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified therein,
together with accrued interest to each such date on the amount prepaid and any
amounts required pursuant to Section 4.4. Optional prepayments of Term Loans
shall be applied to installments of principal thereon in inverse order of
maturity.
2.7 Mandatory Prepayments of Loans.
(a) Subject to Section 4.4, if on any date any of the conditions
described in Section 2.1(d) shall exist, Borrowers shall immediately, and
without notice or demand, prepay the outstanding principal amount of the
Obligations by an amount sufficient to eliminate such condition.
(b) If on any date the Effective Amount of L/C Obligations exceeds the
L/C Commitment, Borrowers shall Cash Collateralize on such date the outstanding
Letters of Credit in an amount equal to the excess of the maximum amount then
available to be drawn under the Letters of Credit over the L/C Commitment.
2.8 Repayment
(a) The Committed Advances. Unless the Committed Advances are
converted on such date into Term Loans pursuant to Section 2.1(b), Borrowers
shall repay to Banks on the Revolving Termination Date the aggregate outstanding
principal amount of Committed Advances and all other Obligations outstanding on
such date.
(b) The Term Loans. Borrowers shall repay the Term Loans, if any, in
twenty-four (24) substantially equal installments on the last Banking Day of
August, November, February and May of each fiscal year of Borrowers, commencing
with the first such date to occur after the Revolving Termination Date, with a
final installment on the Termination Date in an amount necessary to repay in
full the then aggregate outstanding principal amount of the Term Loans and all
other Obligations outstanding on such date.
(c) The Swingline Advances. Borrowers shall repay each
Swingline Advance on the Banking Day immediately following the Banking Day on
which such Swingline Advance was made.
2.9 Interest.
(a) Each Committed Advance and Term Loan shall bear interest on the
outstanding principal amount thereof from the applicable Borrowing Date
<PAGE>
at a rate per annum equal to the Adjusted Reference Rate, the Eurodollar Rate
(Adjusted) or the Money Market Rate, as the case may be (and subject to the
right of Borrowers to convert to other Types of Loans pursuant to Section 2.4).
Each Swingline Advance shall bear interest on the outstanding principal amount
thereof from the applicable Borrowing Date at a rate per annum equal to the
Swingline Rate.
(b) Interest on each Swingline Advance, Committed Advance and Term
Loan shall be paid in arrears on each Interest Payment Date. Interest shall also
be paid on the date of any prepayment of the Committed Advances or the Term
Loans under Section 2.6 or 2.7 for the portion of the Committed Advances or the
Term Loans, as the case may be, so prepaid and upon payment (including
prepayment) in full thereof. In addition, during the existence of any Event of
Default, interest shall be paid on demand of Administrative Agent at the request
or with the consent of the Required Banks.
(c) Notwithstanding subsection (a) of this Section, while any Event of
Default exists or after acceleration of any Obligations, Borrowers shall pay
interest (after as well as before entry of judgment thereon to the extent
permitted by law) on the principal amount of all outstanding Committed Advances,
Swingline Advances or Term Loans, as the case may be, at a rate per annum which
is determined by adding two percent (2%) per annum to (i) in the case of
Swingline Advances, the Swingline Rate then in effect and (ii) in the case of
Committed Advances or Term Loans, the Applicable Margin then in effect for such
Loans; provided that, on and after the expiration of any Period applicable to
any Fixed Rate Advance, the principal amount of such Loan shall, during the
continuation of such Event of Default or after acceleration, bear interest at a
rate per annum then applicable to Reference Rate Advances.
(d) Anything herein to the contrary notwithstanding, the obligations
of Borrowers to any Bank hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by such Bank would be contrary to the provisions of
any law applicable to such Bank limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Bank, and in such event
Borrowers shall pay such Bank interest at the highest rate permitted by
applicable law.
2.10 Fees. In addition to certain fees described in Section
3.8, Borrowers shall pay to Funding Agent for the account of each Bank a
commitment fee on the average daily unused portion of such Bank's Revolving
Commitment, computed on a quarterly basis in arrears on the last Banking Day of
each fiscal quarter based upon the daily utilization for that quarter as
<PAGE>
calculated by Funding Agent, equal to three-tenths of one percent (0.30%) per
annum. For purposes of calculating utilization under this subsection, the
Revolving Commitments (a) shall not be deemed used to the extent of the
Effective Amount of any Swingline Advances then outstanding, but (b) shall be
deemed used to the extent of the Effective Amount of L/C Obligations then
outstanding. Such commitment fee shall accrue from the date of the initial
Committed Advance hereunder to the Revolving Termination Date and shall be due
and payable quarterly in arrears on the last Banking Day of August, November,
February and May of each fiscal year of Borrowers, commencing with the first
such date to occur after the Closing Date, through the Revolving Termination
Date, with the final payment to be made on the Revolving Termination Date;
provided that, in connection with the termination of the Revolving Commitments
under Section 2.5, the accrued commitment fee calculated for the period ending
on the date of such termination shall be paid on such date. The commitment fees
provided in this subsection shall accrue at all times after the Closing Date,
including at any time during which one or more conditions in Article Six are not
met.
2.11 Computation of Fees and Interest.
(a) All computations of interest for Reference Rate Advances and
Swingline Advances shall be made on the basis of a year of 365 or 366 days, as
the case may be, and actual days elapsed. All other computations of fees and
interest shall be made on the basis of a 360-day year and actual days elapsed.
Interest and fees shall accrue during each period during which interest or such
fees are computed from the first day thereof to the last day thereof.
(b) Each determination of an interest rate by Funding Agent shall be
conclusive and binding on Borrowers and Banks in the absence of manifest error.
2.12 Payments by Borrowers
(a) All payments to be made by Borrowers shall be made without set-
off, recoupment or counterclaim. Except for amounts payable under the BofA Fee
Letter, which shall be made to Administrative Agent for the account of the
Person specified therein, and except as otherwise expressly provided herein, all
payments by Borrowers shall be made to Funding Agent for the account of the
Swingline Bank, the Agents or Banks, as the case may be, at Funding Agent's
Lending Office, and shall be made in dollars and in immediately available funds,
no later than 10:00 a.m. (Pacific time) on the date specified herein. The
Greenbrier Funds Administrator and each Borrower hereby authorize and direct the
Funding Agent to automatically charge to an account maintained by a Borrower
with the Funding Agent (and identified to the Funding Agent by the Greenbrier
Funds Administrator from time to time), on the date on which payable pursuant to
the terms hereof, the amount of all regularly scheduled payments of
<PAGE>
interest and commitment fees payable hereunder. Funding Agent will promptly
distribute to each Bank its Pro Rata Share (or other applicable share as
expressly provided herein), or shall promptly distribute to the Swingline Bank,
such payment in like funds as received. Any payment received by Funding Agent
later than 10:00 a.m. (Pacific time) shall be deemed to have been received on
the following Banking Day and any applicable interest or fee shall continue to
accrue.
(b) Subject to the provisions set forth in the definition of
"Period" herein, whenever any payment is due on a day other than a Banking Day,
such payment shall be made on the following Banking Day, and such extension of
time shall in such case be included in the computation of interest or fees, as
the case may be.
(c) Unless Funding Agent receives notice from the Greenbrier
Funds Administrator prior to the date on which any payment is due to Banks that
Borrowers will not make such payment in full as and when required, Funding Agent
may assume that Borrowers have made such payment in full to Funding Agent on
such date in immediately available funds and Funding Agent may (but shall not be
so required), in reliance upon such assumption, distribute to each Bank on such
due date an amount equal to the amount then due such Bank. If and to the extent
Borrowers have not made such payment in full to Funding Agent, each Bank shall
repay to Funding Agent on demand such amount distributed to such Bank, together
with interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Bank until the date repaid.
2.13 Payments by Banks to Funding Agent.
(a) Unless Funding Agent receives notice from a Bank on or prior to
the Closing Date or, with respect to any Borrowing after the Closing Date, at
least one Banking Day prior to the date of such Borrowing, that such Bank will
not make available as and when required hereunder to Funding Agent for the
account of Borrowers the amount of that Bank's Pro Rata Share of the Borrowing,
Funding Agent may assume that each Bank has made such amount available to
Funding Agent in immediately available funds on the Borrowing Date and Funding
Agent may (but shall not be so required), in reliance upon such assumption, make
available to Borrowers on such date a corresponding amount. If and to the extent
any Bank shall not have made its full amount available to Funding Agent in
immediately available funds and Funding Agent in such circumstances has made
available to Borrowers such amount, such Bank shall on the Banking Day following
such Borrowing Date make such amount available to Funding Agent, together with
interest at the Federal Funds Rate for each day during such period. A notice of
Funding Agent submitted to any Bank with respect to amounts owing under this
subsection (a) shall be conclusive, absent manifest error. If such amount is so
made available, such payment to Funding Agent shall
<PAGE>
constitute such Bank's Committed Advance on the date of Borrowing for all
purposes of this Agreement. If such amount is not made available to Funding
Agent on the Banking Day following the Borrowing Date, Funding Agent will notify
the Greenbrier Funds Administrator of such failure to fund and, upon demand by
Funding Agent, Borrowers shall pay such amount to Funding Agent for Funding
Agent's account, together with interest thereon for each day elapsed since the
date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Committed Advances or Term Loans, as the case may
be, comprising such Borrowing.
(b) The failure of any Bank to make any Committed Advance or
Term Loan on any Borrowing Date shall not relieve any other Bank of any
obligation hereunder to make such Loan on such Borrowing Date, but no Bank shall
be responsible for the failure of any other Bank to make any Loan to be made by
such other Bank on any Borrowing Date.
2.14 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Committed Advances or
Term Loan made by it any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) in excess of its ratable share
(or other share contemplated hereunder), such Bank shall immediately (a) notify
Funding Agent of such fact, and (b) purchase from the other Banks such
participations in the Committed Advances or Term Loans, as the case may be, made
by them as shall be necessary to cause such purchasing Bank to share the excess
payment pro rata with each of them; provided that if all or any portion of such
excess payment is thereafter recovered from the purchasing Bank, such purchase
shall to that extent be rescinded and each other Bank shall repay to the
purchasing Bank the purchase price paid therefor, together with an amount equal
to such paying Bank's ratable share (according to the proportion of (i) the
amount of such paying Bank's required repayment to (ii) the total amount so
recovered from the purchasing Bank) of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount so recovered. Each
Borrower agrees that any Bank so purchasing a participation from another Bank
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off, but subject to Section 11.8) with respect to
such participation as fully as if such Bank were the direct creditor of such
Borrower in the amount of such participation. Funding Agent will keep records
(which shall be conclusive and binding in the absence of manifest error) of
participations purchased under this Section and will in each case notify Banks
following any such purchases or repayments.
<PAGE>
ARTICLE THREE - LETTERS OF CREDIT
3.1 The Letter of Credit Subfacility. (a) On the terms and conditions
set forth herein (i) each Issuing Bank agrees, (A) from time to time on any
Banking Day during the period from the Closing Date to the Revolving Termination
Date to issue Letters of Credit for the account of Borrowers, and to amend or
renew Letters of Credit previously issued by it, in accordance with subsections
3.2(c) and 3.2(d); and (B) to honor drafts under the Letters of Credit; and (ii)
Banks severally agree to participate in Letters of Credit Issued for the account
of Borrowers; provided that no Issuing Bank shall be obligated to Issue, and no
Bank shall be obligated to participate in, any Letter of Credit if as of the
date of Issuance of such Letter of Credit (the "Issuance Date"):
(1) the Effective Amount of all L/C Obligations plus the Effective
Amount of all Committed Advances exceeds the combined Revolving
Commitments;
(2) the participation of any Bank in the Effective Amount of all L/C
Obligations plus the Effective Amount of the Committed Advances of such
Bank exceeds such Bank's Revolving Commitment;
(3) the Effective Amount of L/C Obligations exceeds the L/C
Commitment; or
(4) any of the conditions described in Section 2.1(d) shall exist.
Within the foregoing limits, and subject to the other terms and conditions
hereof, Borrowers' ability to obtain Letters of Credit shall be fully revolving,
and, accordingly, Borrowers may, during the foregoing period, obtain Letters of
Credit to replace Letters of Credit which have expired or which have been drawn
upon and reimbursed.
(b) No Issuing Bank is under any obligation to Issue any Letter of
Credit if:
(i) any order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain such Issuing
Bank from Issuing such Letter of Credit, or any Requirement of Law
applicable to such Issuing Bank or any request or directive (whether or not
having the force of law) from any Governmental Authority with jurisdiction
over such Issuing Bank shall prohibit, or request that such Issuing Bank
refrain from, the Issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon such Issuing Bank with respect to
such Letter of Credit any restriction,
<PAGE>
reserve or capital requirement (for which such Issuing Bank is not
otherwise compensated hereunder) not in effect on the Closing Date, or
shall impose upon such Issuing Bank any unreimbursed loss, cost or expense
which was not applicable on the Closing Date and which such Issuing Bank in
good faith deems material to it;
(ii) such Issuing Bank has received written notice from any Bank, any
Agent or the Greenbrier Funds Administrator on or prior to the Banking Day
prior to the requested date of Issuance of such Letter of Credit, that one
or more of the applicable conditions contained in Article Six is not then
satisfied;
(iii) the expiry date of any requested Letter of Credit is (A) more
than 360 days after the date of Issuance, unless the Required Banks have
approved such expiry date in writing, or (B) after the Revolving
Termination Date, unless all Banks have approved such expiry date in
writing;
(iv) the expiry date of any requested Letter of Credit is prior to
the maturity date of any financial obligation to be supported by the
requested Letter of Credit;
(v) any requested Letter of Credit does not provide for drafts, or
is not otherwise in form and substance acceptable to such Issuing Bank, or
the Issuance of a Letter of Credit shall violate any applicable policies of
such Issuing Bank; or
(vi) such Letter of Credit is in a face amount less than $50,000 or
to be denominated in a currency other than Dollars.
3.2 Issuance, Amendment and Renewal of Letters of Credit. Credit
(a) Each Letter of Credit shall be issued upon the
irrevocable written request of the Greenbrier Funds Administrator received by an
Issuing Bank (with a copy sent by the Greenbrier Funds Administrator to Funding
Agent) at least four days (or such shorter time as an Issuing Bank may agree in
a particular instance in its sole discretion) prior to the proposed date of
issuance. Each such request for issuance of a Letter of Credit shall be by
facsimile, confirmed immediately in an original writing, in the form of an L/C
Application, and shall specify in form and detail satisfactory to the applicable
Issuing Bank: (i) the proposed date of issuance of the Letter of Credit (which
shall be a Banking Day); (ii) the face amount of the Letter of Credit; (iii) the
expiry date of the Letter of Credit; (iv) the name and address of the
beneficiary thereof; (v) the documents to be presented by the beneficiary of the
<PAGE>
Letter of Credit in case of any drawing thereunder; (vi) the full text of any
certificate to be presented by the beneficiary in case of any drawing
thereunder; and (vii) such other matters as the applicable Issuing Bank may
require.
(b) At least two Banking Days prior to the Issuance of any
Letter of Credit by an Issuing Bank, such Issuing Bank will confirm with Funding
Agent (by telephone or in writing) that Funding Agent has received a copy of the
L/C Application or L/C Amendment Application from Borrowers and, if not, such
Issuing Bank will provide Funding Agent with a copy thereof. Unless an Issuing
Bank has received notice on or before the Banking Day immediately preceding the
date such Issuing Bank is to issue a requested Letter of Credit from Funding
Agent (A) directing such Issuing Bank not to issue such Letter of Credit because
such issuance is not then permitted under subsection 3.1(a) as a result of the
limitations set forth in clauses (1) through (4) thereof or subsection
3.1(b)(ii); or (B) that one or more conditions specified in Article Six are not
then satisfied; then, subject to the terms and conditions hereof, such Issuing
Bank shall, on the requested date, issue a Letter of Credit for the account of
Borrowers in accordance with such Issuing Bank's usual and customary business
practices.
(c) From time to time while a Letter of Credit is outstanding and
prior to the Revolving Termination Date, each Issuing Bank will, upon the
written request of Borrowers received by such Issuing Bank (with a copy sent by
Borrowers to Funding Agent) at least five days (or such shorter time as such
Issuing Bank may agree in a particular instance in its sole discretion) prior to
the proposed date of amendment, amend any Letter of Credit issued by it. Each
such request for amendment of a Letter of Credit shall be made by facsimile,
confirmed immediately in an original writing, made in the form of an L/C
Amendment Application and shall specify in form and detail satisfactory to the
applicable Issuing Bank: (i) the Letter of Credit to be amended; (ii) the
proposed date of amendment of such Letter of Credit (which shall be a Banking
Day); (iii) the nature of the proposed amendment; and (iv) such other matters as
the applicable Issuing Bank may require. No Issuing Bank shall be under any
obligation to amend any Letter of Credit if: (A) such Issuing Bank would have no
obligation at such time to issue such Letter of Credit in its amended form under
the terms of this Agreement; or (B) the beneficiary of any such Letter of Credit
does not accept the proposed amendment to the Letter of Credit. Funding Agent
will promptly notify Banks of the receipt by it of any L/C Application or L/C
Amendment Application.
(d) Each Issuing Bank and Banks agree that, while a Letter of Credit
is outstanding and prior to the Revolving Termination Date, at the
<PAGE>
option of Borrowers and upon the written request of the Greenbrier Funds
Administrator received by such Issuing Bank (with a copy sent by the Greenbrier
Funds Administrator to Funding Agent) at least five days (or such shorter time
as such Issuing Bank may agree in a particular instance in its sole discretion)
prior to the proposed date of notification of renewal, such Issuing Bank shall
be entitled to authorize the automatic renewal of any Letter of Credit issued by
it. Each such request for renewal of a Letter of Credit shall be made by
facsimile, confirmed immediately in an original writing, in the form of an L/C
Amendment Application, and shall specify in form and detail satisfactory to the
applicable Issuing Bank: (i) the Letter of Credit to be renewed; (ii) the
proposed date of notification of renewal of such Letter of Credit (which shall
be a Banking Day); (iii) the revised expiry date of such Letter of Credit; and
(iv) such other matters as the applicable Issuing Bank may require. No Issuing
Bank shall be under any obligation to so renew any Letter of Credit if: (A) such
Issuing Bank would have no obligation at such time to issue or amend such Letter
of Credit in its renewed form under the terms of this Agreement; or (B) the
beneficiary of any such Letter of Credit does not accept the proposed renewal of
the Letter of Credit. If any outstanding Letter of Credit shall provide that it
shall be automatically renewed unless the beneficiary thereof receives notice
from the applicable Issuing Bank that such Letter of Credit shall not be
renewed, and if at the time of renewal the applicable Issuing Bank would be
entitled to authorize the automatic renewal of such Letter of Credit in
accordance with this subsection 3.2(d) upon the request of Borrowers but the
applicable Issuing Bank shall not have received any L/C Amendment Application
from Borrowers with respect to such renewal or other written direction by
Borrowers with respect thereto, such Issuing Bank shall nonetheless be permitted
to allow such Letter of Credit to renew, and Borrowers and Banks hereby
authorize such renewal, and, accordingly, such Issuing Bank shall be deemed to
have received an L/C Amendment Application from Borrowers requesting such
renewal.
(e) Each Issuing Bank may, at its election (or as required by Funding
Agent at the direction of the Required Banks), deliver any notices of
termination or other communications to any Letter of Credit beneficiary or
transferee, and take any other action as necessary or appropriate, at any time
and from time to time, in order to cause the expiry date of such Letter of
Credit to be a date not later than the Revolving Termination Date.
(f) This Agreement shall control in the event of any conflict with any
L/C-Related Document (other than any Letter of Credit).
(g) Each Issuing Bank will also deliver to Administrative
<PAGE>
Agent, concurrently or promptly following its delivery of a Letter of Credit, or
amendment to or renewal of a Letter of Credit, to an advising bank or a
beneficiary, a true and complete copy of each such Letter of Credit or amendment
to or renewal of a Letter of Credit.
3.3 Risk Participations, Drawings and Reimbursements.
(a) Immediately upon the Issuance of each Letter of Credit, each Bank
shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the applicable Issuing Bank a participation in such Letter of
Credit and each drawing thereunder in an amount equal to the product of (i) the
Pro Rata Share of such Bank, times (ii) the maximum amount available to be drawn
under such Letter of Credit and the amount of such drawing, respectively. For
purposes of subsection 2.1(a), each Issuance of a Letter of Credit shall be
deemed to utilize the Revolving Commitment of each Bank by an amount equal to
the amount of such participation.
(b) In the event of any request for a drawing under a Letter of Credit
by the beneficiary or transferee thereof, the applicable Issuing Bank will
promptly notify Borrowers. Borrowers shall reimburse such Issuing Bank (i) if
such Issuing Bank is BofA, prior to 9:00 a.m. (Pacific time) and (ii) if such
Issuing Bank is UBOC, prior to 9:00 a.m. (Pacific time), on each date that any
amount is paid by such Issuing Bank under any Letter of Credit (each such date,
an "Honor Date"), in an amount equal to the amount so paid by such Issuing Bank.
In the event Borrowers fail to reimburse an Issuing Bank for the full amount of
any drawing under any Letter of Credit by the time specified above on the Honor
Date, the applicable Issuing Bank will promptly notify Funding Agent and Funding
Agent will promptly notify each Bank thereof, and Borrowers shall be deemed to
have requested that Committed Advances be made by Banks to be disbursed on the
Honor Date under such Letter of Credit, subject to the amount of the unutilized
portion of the Revolving Commitments and subject to the conditions set forth in
Article Six. Any notice given by an Issuing Bank or Funding Agent pursuant to
this subsection 3.3(b) may be oral if immediately confirmed in writing
(including by facsimile); provided that the lack of such an immediate
confirmation shall not affect the conclusiveness or binding effect of such
notice.
(c) Each Bank shall upon any notice pursuant to subsection
3.3(b) make available to Funding Agent for the account of the applicable Issuing
Bank an amount in United States dollars and in immediately available funds equal
to its Pro Rata Share of the amount of the drawing, whereupon the participating
Banks shall (subject to subsection 3.3(d)) each be deemed to have made a
Committed Advance consisting of a Reference Rate Advances to Borrowers in that
<PAGE>
amount. If any Bank so notified fails to make available to Funding Agent for the
account of the applicable Issuing Bank the amount of such Bank's Pro Rata Share
of the amount of the drawing by no later than 12:00 noon (Pacific time) on the
Honor Date, then interest shall accrue on such Bank's obligation to make such
payment, from the Honor Date to the date such Bank makes such payment, at a rate
per annum equal to the Federal Funds Rate in effect from time to time during
such period. Funding Agent will promptly give notice of the occurrence of the
Honor Date, but failure of Funding Agent to give any such notice on the Honor
Date or in sufficient time to enable any Bank to effect such payment on such
date shall not relieve such Bank from its obligations under this Section 3.3.
(d) With respect to any unreimbursed drawing that is not converted
into Committed Advances consisting of Reference Rate Advances to Borrowers in
whole or in part, because of the failure of Borrowers to satisfy the conditions
set forth in Article Six or for any other reason, Borrowers shall be deemed to
have incurred from the applicable Issuing Bank an L/C Borrowing in the amount of
such drawing, which L/C Borrowing shall be due and payable on demand (together
with interest) and shall bear interest at a rate per annum equal to the
Reference Rate plus two percent (2%) per annum, and each Bank's payment to such
Issuing Bank pursuant to this subsection 3.3(d) shall be deemed payment in
respect of its participation in such L/C Borrowing and shall constitute an L/C
Advance from such Bank in satisfaction of its participation obligation under
this Section 3.3.
(e) Each Bank's obligation in accordance with this Agreement to make
the Committed Advances or L/C Advances, as contemplated by this Section 3.3, as
a result of a drawing under a Letter of Credit, shall be absolute and
unconditional and without recourse to any Issuing Bank and shall not be affected
by any circumstance, including (i) any set-off, counterclaim, recoupment,
defense or other right which such Bank may have against the applicable Issuing
Bank, Borrowers or any other Person for any reason whatsoever; (ii) the
occurrence or continuance of a Default, an Event of Default; or (iii) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing; provided that each Bank's obligation to make Committed Advances
under this Section 3.3 is subject to the conditions set forth in Article Six.
3.4 Repayment of Paricipations. (a) Upon (and only upon) receipt by
Funding Agent for the account of an Issuing Bank of immediately available funds
from any Borrower (i) in reimbursement of any payment made by such Issuing Bank
under the Letter of Credit with respect to which any Bank has paid Funding Agent
for the account of such Issuing Bank for such Bank's participation in the Letter
of Credit pursuant to Section 3.3 or (ii) in payment of interest thereon,
<PAGE>
Funding Agent will pay to each Bank, in the same funds as those received by
Funding Agent for the account of the applicable Issuing Bank, the amount of such
Bank's Pro Rata Share of such funds, and such Issuing Bank shall receive the
amount of the Pro Rata Share of such funds of any Bank that did not so pay
Funding Agent for the account of such Issuing Bank.
(b) If Funding Agent or any Issuing Bank is required at any time to
return to any Borrower or to a trustee, receiver, liquidator, custodian, or any
official in any Insolvency Proceeding, any portion of the payments made by any
Borrower to Funding Agent for the account of such Issuing Bank pursuant to
subsection 3.4(a) in reimbursement of a payment made under the Letter of Credit
or interest or fee thereon, each Bank shall, on demand of Funding Agent,
forthwith return to Funding Agent or such Issuing Bank the amount of its Pro
Rata Share of any amounts so returned by Funding Agent or such Issuing Bank plus
interest thereon from the date such demand is made to the date such amounts are
returned by such Bank to Funding Agent or such Issuing Bank, at a rate per annum
equal to the Federal Funds Rate in effect from time to time.
3.5 Role of Issuing Bank
(a) Each Bank and each Borrower agree that, in paying any drawing
under a Letter of Credit, no Issuing Bank shall have any responsibility to
obtain any document (other than any sight draft and certificates expressly
required by the Letter of Credit) or to ascertain or inquire as to the validity
or accuracy of any such document or the authority of the Person executing or
delivering any such document.
(b) No Agent-Related Person nor any of the respective correspondents,
participants or assignees of any Issuing Bank shall be liable to any Bank for:
(i) any action taken or omitted in connection herewith at the request or with
the approval of Banks (including the Required Banks, as applicable); (ii) any
action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any L/C-Related Document.
(c) Borrowers hereby assume all risks of the acts or omissions of any
beneficiary or transferee with respect to its use of any Letter of Credit;
provided that this assumption is not intended to, and shall not, preclude any
Borrower pursuing such rights and remedies as it may have against the
beneficiary or transferee at law or under any other agreement. No Agent-Related
Person, nor any of the respective correspondents, participants or assignees of
any Issuing Bank, shall be liable or responsible for any of the
<PAGE>
matters described in clauses (i) through (vii) of Section 3.6; provided that
anything in such clauses to the contrary notwithstanding, Borrowers may have a
claim against the applicable Issuing Bank, and the applicable Issuing Bank may
be liable to Borrowers, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered by Borrowers which
Borrowers prove were caused by such Issuing Bank's willful misconduct or gross
negligence or such Issuing Bank's willful failure to pay under any Letter of
Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a Letter of
Credit. In furtherance and not in limitation of the foregoing: (i) each Issuing
Bank may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary; and (ii) no Issuing Bank shall be responsible for
the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.
3.6 Obligations Absolute. The obligations of Borrowers under this
Agreement and any L/C-Related Document to reimburse each Issuing Bank for a
drawing under a Letter of Credit issued by such Issuing Bank, and to repay any
L/C Borrowing and any drawing under a Letter of Credit converted into Committed
Advances, shall be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement and each such other L/C-Related
Document under all circumstances, including the following:
(i) any lack of validity or enforceability of this Agreement or any
L/C-Related Document;
(ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the obligations of any Borrower in respect of
any Letter of Credit or any other amendment or waiver of or any consent to
departure from all or any of the L/C-Related Documents;
(iii) the existence of any claim, set-off, defense or other right that
any Borrower may have at any time against any beneficiary or any transferee
of any Letter of Credit (or any Person for whom any such beneficiary or any
such transferee may be acting), any Issuing Bank or any other Person,
whether in connection with this Agreement, the transactions contemplated
hereby or by the L/C-Related Documents or any unrelated transaction;
(iv) any draft, demand, certificate or other document presented under
any Letter of Credit proving to be forged, fraudulent,
<PAGE>
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a
drawing under any Letter of Credit;
(v) any payment by any Issuing Bank under any Letter of Credit
against presentation of a draft or certificate that does not strictly
comply with the terms of any Letter of Credit; or any payment made by any
Issuing Bank under any Letter of Credit to any Person purporting to be a
trustee in bankruptcy, debtor-in-possession, assignee for the benefit of
creditors, liquidator, receiver or other representative of or successor to
any beneficiary or any transferee of any Letter of Credit, including any
arising in connection with any Insolvency Proceeding; or
(vi) any exchange, release or non-perfection of any collateral, or
any release or amendment or waiver of or consent to departure from any
other guarantee, for all or any of the obligations of any Borrower in
respect of any Letter of Credit.
3.7 Cash Collateral Pledge. Upon (i) the request of Administrative
Agent, (A) if any Issuing Bank has honored any full or partial drawing request
on any Letter of Credit and such drawing has resulted in an L/C Borrowing
hereunder, or (B) if, as of the Revolving Termination Date, any Letters of
Credit may for any reason remain outstanding and partially or wholly undrawn, or
(ii) the occurrence of the circumstances described in subsection 2.7 requiring
Borrowers to Cash Collateralize Letters of Credit, then, Borrowers shall
immediately Cash Collateralize the L/C Obligations in an amount equal to such
L/C Obligations.
3.8 Letter of Credit Fees. (a) Borrowers shall pay to Funding
Agent for the account of Banks a letter of credit fee with respect to the
Letters of Credit at a per annum rate equal to the Applicable Margin with
respect to Eurodollar Rate Advances in effect from time to time, times the
average daily maximum amount available to be drawn under the outstanding Letters
of Credit, computed on a quarterly basis in arrears on the last Banking Day of
each fiscal quarter of GLC based upon Letters of Credit outstanding for that
quarter as calculated by the respective Issuing Banks. Such letter of credit
fees shall be due and payable quarterly in arrears on the last Banking Day of
each fiscal quarter of GLC during which Letters of Credit are outstanding,
commencing on the first such quarterly date to occur after the Closing Date,
through the Revolving Termination Date (or such later date upon which the
outstanding Letters of Credit shall expire), with the final payment to be made
on the Revolving Termination Date (or such later expiration date).
<PAGE>
(b) Borrowers shall pay to each Issuing Bank a letter of credit
fronting fee for each Letter of Credit Issued by such Issuing Bank equal to
one-eighth of one percent (0.125%) of the face amount (or increased face
amount, as the case may be) of such Letter of Credit. Such Letter of Credit
fronting fee shall be due and payable on each date of Issuance of a Letter of
Credit by such Issuing Bank.
(c) Borrowers shall pay to each Issuing Bank from time to time on
demand the normal issuance, presentation, amendment and other processing
fees, and other standard costs and charges, of such Issuing Bank relating to
letters of credit as from time to time in effect.
3.9 Uniform Customs and Practice. The Uniform Customs and Practice for
Documentary Credits as published by the International Chamber of Commerce most
recently at the time of issuance of any Letter of Credit shall (unless otherwise
expressly provided in the Letters of Credit) apply to the Letters of Credit.
ARTICLE FOUR - TAXES, YIELD PROTECTION AND ILLEGALITY
4.1 Taxes.
(a) Any and all payments by or on behalf of Borrowers to the
Swingline Bank, Banks or Agents under this Agreement and any other Loan Document
shall be made free and clear of, and without deduction or withholding for, any
Taxes. In addition, Borrowers shall pay all Other Taxes.
(b) If any Borrower shall be required by law to deduct or withhold any
Taxes, Other Taxes or Further Taxes from or in respect of any sum payable
hereunder to any Bank or Agent, then:
(i) the sum payable shall be increased as necessary so that, after
making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section),
such Bank or Agent, as the case may be, receives and retains an amount
equal to the sum it would have received and retained had no such deductions
or withholdings been made;
(ii) such Borrower shall make such deductions and withholdings;
(iii) such Borrower shall pay the full amount deducted or withheld to
the relevant taxing authority or other authority in accordance with
applicable law; and
(iv) such Borrower shall also pay to each Bank or Agent for
<PAGE>
the account of such Bank at the time interest is paid, Further Taxes in the
amount that the respective Bank specifies as necessary to preserve the
after-tax yield such Bank would have received if such Taxes, Other Taxes or
Further Taxes had not been imposed.
(c) Borrowers agree to indemnify and hold harmless the Swingline Bank,
Banks and Agents for the full amount of (i) Taxes, (ii) Other Taxes, and (iii)
Further Taxes in the amount that such Persons specify as necessary to preserve
the after-tax yields such Persons would have received if such Taxes, Other Taxes
or Further Taxes had not been imposed, and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or with respect
thereto, whether or not such Taxes, Other Taxes or Further Taxes were correctly
or legally asserted. Payment under this indemnification shall be made within
thirty (30) days after the date the Swingline Bank or any Bank or Agent makes
written demand therefor.
(d) Within thirty (30) days after the date of any payment by
Borrowers of Taxes, Other Taxes or Further Taxes, Borrowers shall furnish to the
Swingline Bank, Bank or Agent, as the case may be, the original or a certified
copy of a receipt evidencing payment thereof, or other evidence of payment
satisfactory to such Person.
(e) If Borrowers are required to pay any amount to the
Swingline Bank, any Bank or Agent pursuant to subsection (b) or (c) of this
Section, then such Person shall use reasonable efforts (consistent with legal
and regulatory restrictions) to change the jurisdiction of its Lending Office so
as to eliminate any such additional payment by Borrowers which may thereafter
accrue, if such change in the sole judgment of such Person is not otherwise
disadvantageous to such Person.
4.2 Illegality.
(a) If any Bank determines that the enactment of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for such Bank or its applicable Lending Office to make
Eurodollar Rate Advances or Money Market Rate Advances, then, on notice thereof
by such Bank to the Greenbrier Funds Administrator through Funding Agent, any
obligation of that Bank to make Eurodollar Rate Advances or Money Market Rate
Advances, as the case may be, shall be suspended until such Bank notifies
Funding Agent and the Greenbrier Funds Administrator that the circumstances
giving rise to such determination no longer exist.
(b) If a Bank determines pursuant to paragraph (a) of this
<PAGE>
Section 4.2 that it is unlawful to maintain any Eurodollar Rate Advance or Money
Market Rate Advance, as the case may be, the Borrowers shall upon receipt by the
Greenbrier Funds Administrator of notice of such fact and demand from such Bank
(with a copy to Funding Agent), prepay in full such Eurodollar Rate Advance or
Money Market Rate Advance, together with interest accrued thereon and amounts
required under Section 4.4, either on the last day of the Period applicable
thereto, if such Bank may lawfully continue to maintain such Eurodollar Rate
Advance or Money Market Rate Advance to such day, or immediately, if such Bank
may not lawfully continue to maintain such Eurodollar Rate Advance or Money
Market Rate Advance. If Borrowers are required to so prepay any Eurodollar Rate
Advance or Money Market Rate Advance, then concurrently with such prepayment,
Borrowers shall borrow from the affected Bank, in the amount of such repayment,
a Reference Rate Advance or a Fixed Rate Advance of another type, as selected by
the Greenbrier Funds Administrator.
(c) If the obligation of any Bank to make or maintain
Eurodollar Rate Advances or Money Market Rate Advances has been so terminated or
suspended, Borrowers may elect, by notice given by the Greenbrier Funds
Administrator to such Bank through Funding Agent that all Loans which would
otherwise be made by such Bank as Eurodollar Rate Advances or Money Market Rate
Advances, as the case may be, shall be made instead, at the option of the
Greenbrier Funds Administrator, as any other Type of Committed Rate Advance then
permitted hereunder.
(d) Before giving any notice to Funding Agent under this
Section, the affected Bank shall designate a different Lending Office with
respect to its Fixed Rate Advances if such designation will avoid the need for
giving such notice or making such demand and will not, in the judgment of such
Bank, be illegal or otherwise disadvantageous to such Bank.
4.3 Increased Costs and Reduction of Return.
(a) If any Bank determines that, due to either (i) the enactment of or
any change in or in the interpretation of any law or regulation or (ii) the
compliance by such Bank with any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of law), there
shall be any increase in the cost to such Bank of agreeing to make or making,
funding or maintaining any Fixed Rate Advances or participating in Letters of
Credit, or, in the case of any Issuing Bank, any increase in the cost to such
Issuing Bank of agreeing to issue, issuing or maintaining any Letter of Credit
or of agreeing to make or making, funding or maintaining any unpaid drawing
under any Letter of Credit, then Borrowers shall be liable for, and shall from
time to time, upon demand (with a copy of such demand to be sent to Funding
Agent), pay to Funding Agent for the account of such Bank, additional amounts as
are sufficient to compensate such Bank for such increased costs.
<PAGE>
(b) If any Bank shall have determined that (i) the enactment of any
Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation,
(iii) any change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by such Bank (or
its Lending Office) or any corporation controlling such Bank with any Capital
Adequacy Regulation, affects or would affect the amount of capital required or
expected to be maintained by such Bank or any corporation controlling such Bank
and determines that the amount of such capital is increased as a consequence of
its Commitments, Loans, credits or obligations under this Agreement, then, upon
demand of such Bank to the Greenbrier Funds Administrator through Funding Agent,
Borrowers shall pay to such Bank, from time to time as specified by such Bank,
additional amounts sufficient to compensate such Bank for such increase.
4.4 Funding Losses. Borrowers shall reimburse each Bank and hold each
Bank harmless from any loss or expense which such Bank may sustain or incur as a
consequence of:
(a) the failure of Borrowers to make on a timely basis any payment of
principal of any Fixed Rate Advance;
(b) the failure of Borrowers to borrow, continue or convert a Type of
Loan after Borrowers have given (or are deemed to have given) a Notice of
Borrowing or a Notice of Conversion/ Continuation;
(c) the failure of Borrowers to make any prepayment in accordance with
any notice delivered under Section 2.6;
(d) the prepayment (including pursuant to Section 2.7) or other
payment (including after acceleration thereof) of a Fixed Rate Advance on a day
that is not the last day of the relevant Period; or
(e) the automatic conversion under Section 2.4 of any Fixed Rate
Advance to a Reference Rate Advance on a day that is not the last day of the
relevant Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Fixed Rate Advances or from fees payable
to terminate the deposits from which such funds were obtained. For purposes of
calculating amounts payable by Borrowers to Banks under this Section and under
subsection 4.3(a), each Fixed Rate Advance made by a Bank (and each related
reserve, special deposit or similar requirement) shall be conclusively deemed to
<PAGE>
have been funded at the eurodollar rate used in determining the Eurodollar Rate,
or the per annum rate used in determining the Money Market Rate, in each case
for such Fixed Rate Advance by a matching deposit or other borrowing in the
interbank eurodollar or other applicable market, as the case may be, for a
comparable amount and for a comparable period, whether or not such Fixed Rate
Advance is in fact so funded.
4.5 Inability to Determine Rates. If Funding Agent determines that for
any reason adequate and reasonable means do not exist for determining the
Eurodollar Rate or Money Market Rate, as the case may be, for any requested
Period with respect to a proposed Fixed Rate Advance, or that the Eurodollar
Rate or Money Market Rate applicable pursuant to subsection 2.9(a) for any
requested Period with respect to a proposed Fixed Rate Advance does not
adequately and fairly reflect the cost to Banks of funding such Loan, Funding
Agent will promptly so notify the Greenbrier Funds Administrator and each Bank.
Thereafter, the obligation of such Banks to make or maintain hereunder
Eurodollar Rate Advances or Money Market Rate Advances, as the case may be,
shall be suspended until Funding Agent revokes such notice in writing. Upon
receipt by the Greenbrier Funds Administrator of such notice, the Greenbrier
Funds Administrator may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it. If the Greenbrier Funds
Administrator does not revoke such Notice, Banks shall make, convert or continue
the Loans, as proposed by the Greenbrier Funds Administrator, in the amount
specified in the applicable notice submitted by it, but such Loans shall be
made, converted or continued as Reference Rate Advances instead of Eurodollar
Rate Advances or Money Market Rate Advances, as the case may be.
4.6 Certificates of Banks. Any Bank claiming reimbursement or
compensation under this Article Four shall deliver to the Greenbrier Funds
Administrator (with a copy to Funding Agent) a certificate setting forth in
reasonable detail the amount payable to such Bank hereunder and such certificate
shall be conclusive and binding on Borrowers in the absence of manifest error.
4.7 Substitution of Banks. Upon receipt by the Greenbrier Funds
Administrator from any Bank of a claim for compensation under Section 4.3, or
the reasonable determination by the Greenbrier Funds Administrator that payments
hereunder to any Bank are subject to Taxes under Section 4.1 (any such Bank
referred to herein as an "Affected Bank") Borrowers may: (i) request the
Administrative Agent and the Affected Bank to use their best efforts to obtain a
replacement bank or financial institution satisfactory to the Greenbrier Funds
Administrator to acquire and assume all or a ratable part of all of such
Affected Bank's Committed Advances and Commitments (a "Replacement Bank"); (ii)
<PAGE>
request one or more of the other Banks to acquire and assume all or part of such
Affected Bank's Committed Advances and Commitments; or (iii) designate a
Replacement Bank. Any such designation of a Replacement Bank under clause (i) or
(iii) shall be subject to the prior written consent of the Administrative Agent
(which consent shall not be unreasonably withheld).
4.8 Survival. The agreements and obligations of Borrowers in this
Article Four shall survive the payment of all other Obligations.
ARTICLE FIVE - REPRESENTATIONS AND WARRANTIESVE
Borrowers represent and warrant to each Bank and Agent that as of (i)
the Closing Date, (ii) the date of each Committed Advance and (iii) if the
Committed Advances are converted into Term Loans pursuant to Section 2.1(b), the
date of such conversion:
5.1 Due Organization. Each Borrower is duly organized and validly
existing in good standing under the laws of the jurisdiction of its
organization, and is duly qualified to conduct business and is in good standing
in each jurisdiction where failure to be so qualified and in good standing could
reasonably be expected to have a Material Adverse Effect.
5.2 Authorization, Validity and Enforceability. The execution, delivery
and performance of all Loan Documents executed by any Borrower is within such
Borrower's powers, have been duly authorized, and are not in conflict with such
Borrower's articles or certificate of incorporation, as the case may be, or by-
laws, or the terms of any charter or other organizational document of such
Borrower; and all such Loan Documents constitute valid and binding obligations
of such Borrower, enforceable in accordance with their respective terms.
5.3 Compliance With Applicable Laws. Each Borrower has complied with (a)
all licensing, permit and fictitious name requirements necessary to lawfully
conduct the business in which it is engaged and (b) except for any such failures
to comply which singly or in the aggregate could not reasonably be expected to
have a Material Adverse Effect, with all Requirements of Law applicable to such
Borrower, including, without limitation, those relating to any sales, leases or
the furnishing of services, and those requiring consumer or other disclosures,
in each case by such Borrower.
5.4 Licenses, Trademarks. Each Borrower has all patents,
licenses, trademarks, trademark rights, trade names, trade name rights,
copyrights, permits and franchises required in order for such Borrower to
<PAGE>
conduct its business and operate its properties as now or proposed to be
conducted without conflict with the rights of others.
5.5 Conflict. The execution, delivery, and performance by each
Borrower of all Loan Documents are not in conflict with any Requirement of Law,
or any indenture, agreement, or undertaking to which any Borrower is a party or
by which any Borrower, or any property of any Borrower, may be bound or
affected.
5.6 No Litigation, Claims or Proceedings. Except as set forth on
Schedule 5.6, there is no litigation, tax claim, proceeding or dispute pending,
or, to the knowledge of any Borrower, threatened against or affecting any
Borrower or its respective property which is required to be reported to Banks
under Section 7.3(a).
5.7 Correctness of Financial Statements. Each Borrower's financial
statements which have been delivered to Agents fairly and accurately reflect
such Borrower's financial condition as of August 31, 1996; and, since that date,
there has been no material adverse change in such Borrower's financial condition
or business.
5.8 No Event of Default. No Default or Event of Default has occurred and
is continuing.
5.9 Reaffirmation of Representations. Each request for a
Committed Advance and Issuance of a Letter of Credit, and any request to convert
the Committed Advances into Term Loans pursuant to Section 2.1(b), shall be in
each case deemed a representation by each Borrower that all representations and
warranties contained herein and in any other Loan Document are then accurate in
all material respects as though made on the date of such request; and that all
information contained in each Borrowing Base Certificate is accurate and that,
in the case of a request for a Committed Advance, a Swingline Advance or
Issuance of a Letter of Credit, as the case may be, after giving effect thereto,
none of the conditions described in subsection 2.1(d) shall exist, based on the
Borrowing Base, APLP Borrowing Base and GTLP Borrowing Base, as the case may be,
most recently determined pursuant to subsection 7.4(b).
5.10 Title to Assets. Each Borrower has good and clear title to its
assets, which are not subject to any Liens other than those permitted by the
terms of SECTION 8.2.
5.11 Tax Status. Each Borrower has filed all tax returns and reports
required to be filed and has paid all applicable federal, state and local
franchise and income taxes which are due and payable.
<PAGE>
5.12 ERISA. No Borrower has incurred any material accumulated funding
deficiency within the meaning of ERISA, and has not incurred any material
liability to the PBGC in connection with any Plan or other class of benefit
which PBGC has elected to insure.
5.13 Environmental Quality. Each Borrower has complied with all
Requirements of Law relating to environmental quality, and no Borrower is aware
that it is under investigation by any Governmental Authority designed to enforce
such Requirements of Law.
5.14 Other Laws/Regulations. Borrowers are not subject to the
Investment Company Act of 1940, the Public Utility Holding Company Act of 1935,
or any successor thereof, as any are in effect from time to time, or any other
Requirement of Law restricting the execution or performance of this Agreement or
any of the other Loan Documents by Borrowers.
5.15 Labor, Salaries and Wages. All salaries and wages due by
Borrowers have been paid, and no wage claims have been filed against any
Borrower by any employee or former employee, except for any such failures to
pay, or any such claims, which in each case singly or in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
5.16 Affiliates. The Affiliates of each Borrower are set forth in
Schedule 5.16 hereto.
5.17 Capital Stock of Borrowers. The capital stock of each corporate
Borrower consists of the classes of stock set forth on Schedule 5.17 hereto,
which stock is held by the stockholders set forth on Schedule 5.17.
ARTICLE SIX - CONDITIONS PRECEDENT
6.1 Conditions of Initial Credit Extensions. The obligation of each Bank
to make its initial extension of credit hereunder (or, if it shall occur
earlier, the obligation of any Issuing Bank to issue any Letter of Credit and of
each Bank to purchase a participation therein) is in each case subject to
satisfaction or waiver of the following conditions precedent:
(a) Closing Documents. Administrative Agent shall have received each
of the agreements, opinions, reports, approvals, consents, certificates and
other documents set forth on the List of Documents attached hereto as Schedule
6.1, including, without limitation, all Collateral Documents,
<PAGE>
including all fees payable on the Closing Date under the respective Fee Letters;
(b) Payment of Fees. Evidence of payment by Borrowers of all accrued
and unpaid fees, costs and expenses to the extent then due and payable on the
Closing Date; and
(c) Concurrent Payment of Prior UBOC Obligations. Evidence of
concurrent payment by Borrowers of all outstanding Prior UBOC Obligations and
cancellation of all agreements, documents and instruments evidencing the Prior
UBOC Obligations or executed and/or delivered in connection therewith.
6.2 Conditions to All Credit Extensions. The obligation of each
Bank to make any Loan to be made by it (including its initial Committed Advance
and Term Loan) or to continue or convert any Loan (whether under Section 2.1(b)
or 2.4), and the obligation of the Issuing Bank to Issue any Letter of Credit
(including the initial Letter of Credit) is subject to the satisfaction of the
following conditions precedent on the relevant Borrowing Date, date of
conversion or continuation or Issuance Date:
(a) Notice, Application. Funding Agent shall have received
(with, in the case of the initial Committed Advances only, a copy for each Bank)
a Notice of Borrowing, a Notice of Conversion/Continuation or other applicable
notice required hereunder, as applicable, or in the case of any Issuance of any
Letter of Credit, the Issuing Bank and Funding Agent shall have received an L/C
Application or L/C Amendment Application, as required under Section 3.2;
(b) Continuation of Representations and Warranties. The
representations and warranties in Article Five shall be true and correct on and
as of such Borrowing Date or Conversion/Continuation Date or Issuance Date with
the same effect as if made on and as of such Borrowing Date or
Conversion/Continuation Date or Issuance Date (except to the extent such
representations and warranties expressly refer to an earlier date, in which case
they shall be true and correct as of such earlier date); and
(c) No Existing Default. No Default or Event of Default shall exist or
shall result from such Borrowing or continuation or conversion or Issuance.
(d) No Material Adverse Change. Since August 31, 1996, no events have
occurred that singly or in the aggregate have had or could reasonably be
expected to have a Material Adverse Effect.
Each Notice of Borrowing, Notice of Conversion/Continuation and L/C Application
<PAGE>
or L/C Amendment Application submitted by Borrowers hereunder shall constitute a
representation and warranty by Borrowers hereunder, as of the date of each such
notice and as of each Borrowing Date, Conversion/Continuation Date, or Issuance
Date, as applicable, that the conditions in this Section 6.2 are satisfied.
ARTICLE SEVEN - AFFIRMATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any
Committed Advance, Term Loan or other Obligation shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding, unless the
Required Banks waive compliance in writing, Borrowers shall:
7.1 Use of Proceeds. Use the proceeds of the initial Committed
Advances to pay the Prior UBOC Obligations and the proceeds of all subsequent
Committed Advances, Terms Loans and Letters of Credit for working capital and
general corporate purposes not in contravention of any Requirement of Law or of
the respective terms and provisions of any Loan Document.
7.2 Financial Covenants.
(a) Minimum Consolidated Tangible Net Worth. Maintain a
Consolidated Tangible Net Worth, as determined as of the last day of each fiscal
quarter of GLC, of at least $95,000,000 (the "CTNW Base Amount"); provided that
the required minimum CTNW Base Amount for each fiscal quarter ending after the
Closing Date shall be automatically and permanently increased in the amount of
(i) fifty percent (50%) of net earnings of the Consolidated Entity, as
determined in accordance with GAAP (but shall not be decreased in the amount of
any such losses) for the immediately preceding fiscal quarter and (ii) without
duplication, fifty percent (50%) of all contributions to the capital of GLC made
after September 1, 1996; and, provided, further, that, notwithstanding the
foregoing, in the event of the repurchase of all or any part of the Approved
Minority Interest consisting of the Class A limited partnership interest of MBK
or Mitsui Nevitt in APLP by GLC or one or more of the other Borrowers prior to
the Revolving Termination Date, or in the event of the sale of the Phase X
Railcars, the minimum Consolidated Tangible Net Worth required to be maintained
by the Consolidated Entity pursuant to this Section 7.2(a) shall be reduced by
the net effect of such transactions on Consolidated Tangible Net Worth.
(b) Maximum Consolidated Total Liabilities to Consolidated
Tangible Net Worth. Maintain a ratio of Consolidated Total Liabilities to
Consolidated Tangible Net Worth, as determined as of the last day of each fiscal
quarter of GLC of no greater than 4.25 to 1.0.
<PAGE>
(c) Maximum Ratio of Adjusted Senior Funded Debt to Adjusted
Consolidated Tangible Net Worth. Maintain a ratio of Adjusted Senior Funded Debt
to Adjusted Consolidated Tangible Net Worth, as determined as of the last day of
each fiscal quarter of GLC of no greater than 3.0 to 1.0.
(d) Minimum Ratio of Cash Flow to Fixed Charges. Maintain a ratio of
Cash Flow to Fixed Charges, as determined as of the last day of each fiscal
quarter of GLC for the twelve month period ending on such date, of no less than
(i) as of the last day of each such fiscal quarter ending during the period
commencing on the Closing Date and ending on the Revolving Termination Date, 1.5
to 1.0, and (ii) as of the last day of each such fiscal quarter ending after the
Revolving Termination Date, 1.25 to 1.00.
(e) Profitability. Maintain net earnings of the Consolidated
Entity (excluding extraordinary after-tax gains or losses) plus (to the extent
excluded pursuant to the definition of the term "Consolidated Entity") dividends
and other distributions from earnings received by Borrowers in cash from
Unrestricted Subsidiaries, in each case as determined in accordance with GAAP as
of the last day of each fiscal quarter of GLC, for the twelve (12) month period
ending on such date, of at least $2,000,000.
7.3 Notice to Banks. Promptly give written notice to
Administrative Agent of:
(a) Any litigation or administrative or regulatory proceeding
affecting any Borrower where the amount claimed against such Borrower is
$1,000,000 or more, to the extent the amount claimed is not covered by insurance
to Administrative Agent's satisfaction; or where the granting of the relief
requested could reasonably be expected to have a Material Adverse Effect;
(b) Any substantial dispute which may exist between any Borrower and
any Governmental Authority;
(c) Any Event of Default;
(d) Any change in the location of any of any Borrower's places of
business or of the establishment of any new, or the discontinuance of any
existing, place of business;
(e) If requested by Administrative Agent, Borrowers shall furnish
Administrative Agent (or cause the Plan administrator to furnish Administrative
Agent) within 10 days of each such request assuming such report has been filed
with the PBGC at the time of or prior to such request, with the annual report
for each Plan filed with the PBGC;
<PAGE>
(f) As soon as possible and in any event within 30 days
after any Borrower knows or has reason to know that any event, which would
constitute a reportable event under ERISA with respect to any Plan has occurred,
or that the PBGC or any Borrower has instituted or will institute proceedings
under ERISA to terminate any Plan, Borrowers will deliver to Administrative
Agent a certificate of the treasurer, controller or chief financial officer of
the Borrowers setting forth details as to such reportable event and the action
which Borrowers propose to take with respect thereto, together with a copy of
any notice of such reportable event which may be required to be filed with the
PBGC, or any notice delivered by the PBGC evidencing its intent to institute
such proceedings or any notice to the PBGC that any Plan is to be terminated, as
the case may be. For all purposes of this covenant, Borrowers shall be deemed to
have knowledge of all facts attributable to the Plan Administrator under ERISA;
and
(g) Any other matters which singly or in the aggregate have had or
could reasonably be expected to have a Material Adverse Effect.
7.4 Financial Statements/Reporting Requirements. (a) Deliver to
Banks, in form and detail satisfactory to Banks, the following financial
information, which Borrowers warrant shall be accurate and complete in all
material respects:
(i) As soon as available but no later than sixty (60) days after the
end of each fiscal quarter of GLC, the consolidated and consolidating
balance sheets of GLC and its consolidated subsidiaries as of the end of
such period, and consolidated and consolidating statements of income and
retained earnings, and a consolidated statement of cash flow, in each case
for such period and for that portion of the financial reporting year ending
with such period, prepared and attested by the treasurer, controller or the
chief financial officer of GLC as being complete and correct in all
material respects and fairly presenting the financial condition and the
results of operations of, GLC and its consolidated subsidiaries for the
period covered;
(ii) As soon as available but no later than one hundred twenty (120)
days after the end of each fiscal year of GLC, a consolidated and
consolidating balance sheet of the GLC and its consolidated subsidiaries as
of the end of such fiscal year and the related consolidated and
consolidating statements of income and retained earnings, and a
consolidated statement of cash flow, in each case for such fiscal year,
setting forth in each case in comparative form the
<PAGE>
figures for the previous year, prepared and certified by an independent
certified public accountant selected by the Greenbrier Funds Administrator
and satisfactory to Administrative Agent (the "Accountant"). The
Accountant's certification shall not be qualified or limited due to a
restricted or limited examination by the Accountant of any material portion
of such Borrower's records or otherwise. The certification shall include,
or be accompanied by, a statement from the Accountant that during the
examination there was observed no Event of Default, or a statement of the
Event of Default if any is found. The certification shall include or be
accompanied by the Accountant's management letter if prepared by the
Accountant. None of the Borrowers shall change its financial reporting year
end from its current year end without Banks' prior written consent;
(iii) Concurrently with the delivery of the financial statements
referred to in Sections 7.4(a)(i) and (ii), a Compliance Certificate,
executed by the treasurer, controller or chief financial officer of GLC;
(iv) Promptly after sending, making available or filing, copies of
all reports, proxy statements and financial statements that any Borrower
sends or makes available to its stockholders and all registration
statements and reports that any Borrower files with the Securities and
Exchange Commission, or any other governmental official, agency or
authority; and
(v) Such other statements, lists of property and accounts, budgets,
forecasts, reports or other financial information as Administrative Agent
may from time to time reasonably request.
(b) Deliver to Agents no later than fifteen (15) days after the end of
each month, and, if requested more often by Funding Agent, at the time so
requested, a Borrowing Base Certificate as of the last day of such month, or as
of the date requested by Funding Agent; provided that, Borrowers may in their
sole discretion deliver a Borrowing Base Certificate to Agents more frequently
than otherwise required (or requested by Funding Agent) pursuant to this
subsection 7.4(b).
7.5 Existence. Maintain and preserve each Borrower's existence, present
form of business, and all rights, privileges and franchises necessary or
desirable in the normal course of its business; and keep all of each Borrower's
property in good working order and condition, ordinary wear and tear excepted;
7.6 Insurance. Maintain and keep in force insurance with companies
acceptable to Administrative Agent and in such amounts and types as is usual in
the business carried on by each Borrower, or as Administrative Agent may
reasonably request. Such insurance policies must be in form and substance
<PAGE>
satisfactory to Administrative Agent.
7.7 Accounting Records. Maintain adequate books, accounts and records,
and prepare all financial statements in accordance with GAAP (except as may be
otherwise provided in this Agreement), and in compliance with the regulations of
any governmental or regulatory body having jurisdiction over any Borrower or any
Borrower's business, and permit employees or agents of each Bank at such
reasonable times as such Bank may request to inspect each Borrower's properties,
including, without limitation, regular collateral audits, and to examine, audit
and make copies and memoranda of each Borrower's books, accounts and records.
7.8 Compliance With Laws. Comply with all laws, rules, regulations,
orders and directives of any governmental or regulatory authority having
jurisdiction over any Borrower or any Borrower's business, and comply with all
agreements to which any Borrower is a party, except for any such failures to
comply which singly or in the aggregate could not reasonably be expected to have
a Material Adverse Effect.
7.9 Taxes and Other Liabilities. Pay all of any Borrower's obligations
when due; pay all taxes and other governmental assessments before delinquency or
before any penalty attaches thereto, except as may be contested in good faith by
the appropriate procedures and for which such Borrower shall maintain
appropriate reserves; and timely file all required tax returns.
ARTICLE EIGHT - NEGATIVE COVENANTS
During the term of this Agreement and until the performance of all
obligations to Banks, Borrowers, will not without the prior written consent of
Required Banks:
8.1 Indebtedness. Incur any Indebtedness, except:
(a) the Obligations;
(b) Senior Golden West Indebtedness;
(c) Indebtedness outstanding as of the Closing Date and described on
Schedule 8.1, and any refinancing of such Indebtedness;
(d) Indebtedness secured by purchase money Liens, so long as (i) each
such Lien shall attach only to the property acquired, as the case may be and
(ii) the Indebtedness secured by each such Lien shall not exceed one
<PAGE>
hundred percent (100%) of the original purchase price of such property;
(e) Indebtedness incurred in connection with the financing of:
(i) assets not eligible or exceeding dollar limitations for inclusion
in the Borrowing Base and, subject to Section 8.10, assets eligible for
inclusion in the Borrowing Base; and
(ii) a specified group of assets, provided that such Indebtedness is
secured only by such assets and, at the time of incurrence thereof, could
reasonably be expected to be paid in full from the cash flows generated by
such assets;
(f) Non-recourse Indebtedness;
(g) Capitalized Lease Obligations;
(h) Indebtedness incurred in connection with Sale/Leaseback
Transactions permitted pursuant to subsection 8.4(b);
(i) Indebtedness constituting Guaranty Obligations;
(j) Approved Subordinated Indebtedness; and
(k) unsecured Indebtedness other than Approved Subordinated
Indebtedness;
provided, that no Indebtedness otherwise permitted under clauses (b) through and
including (k) shall be incurred if, immediately before or after giving effect to
such incurrence, an Event of Default or Default shall have occurred and be
continuing.
8.2 Liens. Except for Permitted Liens, create, incur, assume or permit
to exist any Lien, or grant any other Person or entity a negative pledge, on any
property of any Borrower.
8.3 Corporate Changes; Prepayments of Certain Indebtedness (a)
Liquidate or dissolve or enter into any consolidation, merger or other
combination, except that any Borrower may liquidate, consolidate or merge with
and into GLC or any other Borrower; (b) except in connection with the formation
of any subsidiary of a Borrower after the Closing Date, issue, redeem, purchase,
retire or otherwise acquire any shares of any class of any Borrower's capital
stock, or grant or issue any warrant, right or option pertaining thereto or
<PAGE>
other security convertible into any of the foregoing; (c) reorganize, reclassify
or recapitalize any Borrower's capital stock; (d) if before or after giving
effect to any such prepayment a Default or an Event of Default shall have
occurred and be continuing, prepay any Indebtedness secured by a Permitted Lien
or (e) enter into or modify any agreement as a result of which the terms of
payment of any Indebtedness secured by a Permitted Lien or subordinated
Indebtedness, including, without limitation, Approved Subordinated Indebtedness,
are waived or modified.
8.4 Sale of Assets. Sell, transfer, lease or otherwise dispose of any
Borrower's assets, except for:
(a) the sale, transfer, lease or other disposition of assets of a
Borrower in the ordinary course of such Borrower's business;
(b) the sale of all or substantially all of the assets, and/or all of
the capital stock, of GCC and GRS;
(c) the sale of all or substantially all of the Phase X Railcars;
(d) Sale/Leaseback Transactions covering:
(i) Inventory owned by one or more Borrowers for no longer than one
year; and
(ii) subject to Section 8.10, Inventory owned by one or more
Borrowers for longer than one year;
(e) the sale, transfer, lease or other disposition of one or more of
Borrowers' lines of business or all or substantially all of any type or
category of Borrowers' Inventory; provided that the aggregate Net Book
Value of Borrowers' Inventory involved in any such sale, transfer, lease or
other disposition during any fiscal year of GLC ending after the Closing
Date shall not exceed an amount equal to twenty percent (20%) of the
aggregate Net Book Value of all Borrowers' Inventory plus the aggregate
amount of Borrowers' Investment in Direct Finance Leases covering Inventory
plus the Net Book Value of all railcars constituting Golden West Collateral
plus the aggregate amount of Borrowers' Investment in Direct Finance Leases
covering Golden West Collateral, in each case as determined as of the end
of the immediately preceding fiscal year of GLC;
(f) the sale, transfer, lease or other disposition of Inventory owned by
one or more Borrowers for no longer than one year to an Unrestricted
Subsidiary; and
<PAGE>
(g) subject to Section 8.10, the sale, transfer, lease or other
disposition of Inventory owned by one or more Borrowers for longer than one
year to an Unrestricted Subsidiary.
Notwithstanding anything to the contrary contained in this Section 8.4, all
sales, transfers, leases or other dispositions of Borrowers' assets shall be (i)
for fair consideration and (ii) except for sales, transfers, leases or other
dispositions described in clauses (f) and (g) above, such consideration shall be
paid in cash.
8.5 Acquisitions. Acquire or purchase all or substantially all the
assets or business of any other individual or entity, except for such
acquisitions or purchases of assets or businesses conducted by or reasonably
related to those conducted by Borrowers on the Closing Date; or acquire or
purchase securities, except those permitted under Section 8.6.
8.6 Loans/Investments. Make or suffer to exist any loans, advances, or
investments, except:
(a) the respective investments of GLC in Gunderson and Redon, to the
extent in existence on the Closing Date;
(b) loans, advances and investments in subsidiaries of any Borrower;
(c) investments in connection with acquisitions and purchases
permitted under Section 8.5;
(d) loans, advances and investments constituting Restricted Payments
permitted under Section 8.9;
(e) Bank accounts in the ordinary course of any Borrower's business;
(f) Accounts receivable in the ordinary course of any Borrower's
business;
(g) Investments in domestic certificates of deposit and bankers'
acceptances issued by, and any other domestic deposit investments with,
financial institutions organized under the laws of the United States or a
state thereof, having $100,000,000 in capital and a rating of at least
"investment grade" by either S&P or Moody's;
(h) Investments in short term marketable obligations of the
<PAGE>
United States of America and in open market commercial paper rated at least
"A-1" or the equivalent by S&P or at least "P-1" or the equivalent by
Moody's;
(i) Securities of the United States Government;
(j) Temporary advances to cover incidental expenses incurred in the
ordinary course of business;
(k) Investments in Direct Finance Leases incurred in the ordinary
course of any Borrower's business;
(l) investments constituting capital expenditures made in the ordinary
course of any Borrower's business; and
(m) so long as before and after giving effect thereto, no Default or
Event of Default shall have occurred and be continuing, the repurchase of
the Approved Minority Interest consisting of the Class A limited
partnership interest of MBK and Mitsui Nevitt in APLP by GLC or one or more
of the other Borrowers.
8.7 Other Business. Conduct, or permit any subsidiary of any
Borrower to conduct, any business other than the businesses Borrowers conduct as
of the Closing Date and businesses reasonably related thereto.
8.8 No Changes in Depreciation Policies. Make any changes in any
Borrower's depreciation policies from those in effect on the Closing Date.
8.9 Restricted Payments and Affiliate Transactions. Make any
Restricted Payment or directly or indirectly enter into any transaction with or
for the benefit of an Affiliate, except that any Borrower may:
(a) make investments permitted pursuant to subsection 8.6(b);
(b) make Restricted Payments to any other Borrower;
(c) sell goods and render services to, or buy goods or procure the
services of, an Affiliate, in each case, in the ordinary course of such
Borrower's business on terms no more favorable to the Affiliate than would
have been obtainable in "arm's length" dealings; and
(d) make Restricted Payments (other than in connection with
transactions permitted under clauses (a), (b)and (c) above), provided
<PAGE>
that:
(i) the aggregate amount of all Restricted Payments made under this
Section 8.9(d) since September 1, 1996, do not exceed at any time an amount
equal at such time to (A) $3,500,000, plus (B) fifty percent (50%) of
cumulative net earnings (excluding extraordinary after-tax gains and
losses) of the Consolidated Entity since September 1, 1996, plus (to the
extent excluded pursuant to the definition of the term "Consolidated
Entity") (C) fifty percent (50%) of the dividends and other distributions
from earnings received by Borrowers in cash from Unrestricted Subsidiaries
since September 1, 1996, plus (D) fifteen percent
(15%) of Consolidated Tangible Net Worth; and
(ii) such Restricted Payments made since September 1, 1996 to Parent,
do not exceed at any time an aggregate amount equal at such time to (A)
$3,500,000, plus (B) fifty percent (50%) of cumulative net earnings
(excluding extraordinary after-tax gains and losses) of the Consolidated
Entity since September 1, 1996, plus (to the extent excluded pursuant to
the definition of the term "Consolidated Entity") (C) fifty percent (50%)
of the dividends and other distributions from earnings received by Borrower
in cash from Unrestricted Subsidiaries since September 1, 1996, plus eight
percent (8%) of Consolidated Tangible Net Worth.
8.10 Adverse Selection or Transfer of Assets. Select Inventory (a) to
secure Indebtedness permitted by subsection 8.1(e)(i), (b) to be the subject of
a Sale-Leaseback Transaction pursuant to 8.4(d)(ii) or (c) to sell or otherwise
transfer to Unrestricted Subsidiaries pursuant to subsection 8.4(g), in any of
such cases that has a materially greater fair market value relative to the Net
Book Value thereof, or that could reasonably be expected to produce materially
greater earnings over the remaining useful life thereof, than other Inventory
not so selected or transferred.
ARTICLE NINE - EVENTS OF DEFAULT
9.1 Events of Default. Any of the following shall constitute an "Event
of Default":
(a) Borrowers shall fail to pay, within five (5) days after the same
becomes due, any amount payable hereunder or under any other Loan Document.
(b) Any Borrower shall fail to perform or observe any
<PAGE>
covenant contained in Sections 7.1, 7.2, 7.3(c), 7.6, 7.7 or 7.8, or
contained in Sections 8.1 through and including 8.5.
(c) Any Borrower shall fail to perform or observe any covenant
contained in Section 7.3 (other than any covenant contained in clause (c)
thereof) or Section 7.4, and such failure shall continue unremedied for a
period of ten (10) days after the date upon which written notice thereof is
given to the Greenbrier Funds Administrator by Administrative Agent.
(d) Any Borrower shall fail to perform or observe any covenant
hereunder or under any other Loan Document (except for covenants under
sections or subsections referred to in subsections 9.1(a), (b) and (c),
respectively) and, if in the reasonable determination of the Administrative
Agent such failure is capable of cure during such thirty (30) day period,
such failure shall continue unremedied for a period of thirty (30) days
after the date upon which written notice thereof is given to the Greenbrier
Funds Administrator by Administrative Agent.
(e) Any representation or warranty made, or financial statements,
certification or other document provided, by any Borrower shall prove to
have been false or misleading in any material respect.
(f) Any Borrower shall fail to pay its debts generally as they become
due, as such term is defined in the Bankruptcy Code, or shall commence an
Insolvency Proceeding; an involuntary Insolvency Proceeding shall be
commenced or filed against any Borrower or a custodian, receiver, trustee,
assignee for the benefit of creditors, or other similar official, shall be
appointed to take possession, custody or control of the properties of any
Borrower; or the dissolution or termination of the business of any
Borrower.
(g) A default or event of default shall occur (and continue beyond any
applicable grace period) under any note, agreement or instrument evidencing
any other Indebtedness or any Guaranty Obligation, in each case of any
Borrower, which default or event of default permits the acceleration of the
maturity thereof, in the case of any such Indebtedness, or permits demand
to be made for payment thereunder or with respect thereto, in the case of
any such Guaranty Obligation; provided, that the aggregate outstanding
principal amount of all such Indebtedness and Guaranty Obligations for
which such a default or event of default has occurred exceeds $5,000,000.
<PAGE>
(h) Any governmental or regulatory authority shall take any action,
which, in the judgment of the Required Banks, could reasonably be expected
to have a Material Adverse Effect.
(i) Any sale, transfer or other disposition of all or a substantial or
material part of the assets of Borrowers, taken as a whole, including,
without limitation, to any trust or similar entity, shall occur, except in
the ordinary course of such entity's business as presently conducted.
(j) Except to the extent that such Collateral is included in the
Borrowing Base pursuant to clause (viii) of the definition thereof, the
Collateral Agent shall not have a perfected Lien in any Collateral included
in the Borrowing Base as most recently determined pursuant to subsection
7.4(b); or any Liens granted on any of the Collateral shall be determined
(other than pursuant to the respective terms and provisions of the
Collateral Documents) to be void, voidable, invalid, are subordinated or
otherwise not given the priority contemplated by the Collateral Documents.
(k) Any judgment(s) shall be entered against any Borrower or any
involuntary lien(s) of any kind or character shall attach to any assets or
property of any Borrower, any of which, in the judgment of any Bank, singly
or in the aggregate could reasonably be expected to have a Material Adverse
Effect, except as may be contested in good faith by the appropriate
procedures and for which such Borrower shall maintain appropriate reserves.
(l) A Change of Control shall occur or exist.
(m) Any Plan shall be involuntarily terminated pursuant to ERISA, a
trustee shall be appointed by the appropriate United States District Court
to administer any Plan, the PBGC shall institute proceedings to terminate
any Plan, or any Plan shall fail to satisfy the minimum funding standard
for such Plan for a plan year as established by the Internal Revenue Code,
as amended from time to time.
9.2 Remedies. If any Event of Default occurs, Administrative
Agent shall, at the request of, or may, with the consent of, the Required Banks,
(a) declare the commitment of each Bank to make Committed Advances and
any obligation of any Issuing Bank to Issue Letters of Credit to be
terminated, whereupon such commitments and obligation shall be terminated;
<PAGE>
(b) (i) declare the unpaid principal amount of all outstanding
Advances, all interest accrued and unpaid thereon, and all other amounts
owing or payable hereunder or under any other Loan Document to be
immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by each
Borrower; and (ii) demand that Borrowers immediately deposit with the
Funding Agent an amount equal to the maximum aggregate amount that is or at
any time thereafter may become available for drawing under any outstanding
Letters of Credit (whether or not any beneficiary shall have presented, or
shall be entitled at such time to present, the drafts or other documents
required to draw under such Letters of Credit), such deposit to be held by
the Funding Agent and used to reimburse the Issuing Bank(s) for the amount
of each drawing made under Letters of Credit, as and when each such drawing
is made; and
(c) exercise on behalf of itself, Funding Agent, the Swingline Bank
and Banks all rights and remedies available to it and such Persons under
the Loan Documents or applicable law;
provided, that upon the occurrence of any event specified in subsection 9.1(f),
the obligation of each Bank to make Loans shall automatically terminate and the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable without further
act of or notice from the Swingline Bank or any Agent or Bank.
9.3 Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not exclusive of
any other rights, powers, privileges or remedies provided by law or in equity,
or under any other instrument, document or agreement now existing or hereafter
arising.
9.4 Right of Set Off. In addition to any rights now or hereafter granted
by contract or applicable law, upon the occurrence of any Event of Default,
Banks are hereby authorized by the Greenbrier Funds Administrator and each of
the Borrowers at any time to set off and apply any and all deposits, whether
matured or unmatured, and any other Indebtedness at any time held or owing by
Banks to or for the credit or the account of any such Person against all
obligations and liabilities of Borrowers to Banks, regardless of whether (a)
Banks shall have made any demand hereunder; (b) Banks shall have declared the
principal of and interest on the Note(s) and other amounts due from Borrowers to
be due and payable; or (c) any of the obligations and liabilities shall be
contingent or unmatured.
<PAGE>
ARTICLE TEN - AGENTS
10.1 Appointment and Authorization; "Agents".
(a) The Swingline Bank and each Bank hereby irrevocably
(subject to Section 10.9) appoints, designates and authorizes each Agent to take
such action on its behalf under the provisions of this Agreement and each other
Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, no Agent shall have any duties or
responsibilities, except those expressly set forth herein, nor shall any Agent
have or be deemed to have any fiduciary relationship with the Swingline Bank or
any Bank, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against any Agent. Without limiting the generality
of the foregoing sentence, the use of the term "agent" in this Agreement with
reference to any Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties.
(b) Each Issuing Bank shall act on behalf of Banks with respect to any
Letters of Credit Issued by it and the documents associated therewith until such
time and except for so long as Administrative Agent may agree at the request of
the Required Banks to act for such Issuing Bank with respect thereto; provided
that each Issuing Bank shall have all of the benefits and immunities (i)
provided to Agents in this Article Ten with respect to any acts taken or
omissions suffered by such Issuing Bank in connection with Letters of Credit
Issued by it or proposed to be Issued by it and the application and agreements
for letters of credit pertaining to such Letters of Credit as fully as if the
term "Agent", as used in this Article Ten, included such Issuing Bank with
respect to such acts or omissions, and (ii) as additionally provided in this
Agreement with respect to such Issuing Bank.
10.2 Delegation of Duties. Each Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
10.3 Liability of Agent. None of the Agent-Related Persons
<PAGE>
shall(i) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to the Swingline Bank or any
Bank for any recital, statement, representation or warranty made by the
Greenbrier Funds Administrator or any Borrower, or any subsidiaries or
Affiliates thereof, or any officer thereof, contained in this Agreement or in
any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by any Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of any Borrower or any other party
to any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to the Swingline Bank or any
Bank to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the respective
Borrowers or any of their respective subsidiaries or Affiliates.
10.4 Reliance by Agents. Agent
(a) Each Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, telegram, facsimile, telex or telephone message, statement or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to Borrowers), independent
accountants and other experts selected by Agents. Each Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Required Banks as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the Swingline Bank and Banks against
any and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action. Each Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the Required
Banks and such request and any action taken or failure to act pursuant thereto
shall be binding upon all Banks.
(b) For purposes of determining compliance with the
conditions specified in Section 6.1, the Swingline Bank and each Bank that has
executed this Agreement shall be deemed to have consented to, approved or
accepted or to be satisfied with, each document or other matter either sent by
any Agent to such Person for consent, approval, acceptance or satisfaction, or
<PAGE>
required thereunder to be consented to or approved by or acceptable or
satisfactory to such Person.
10.5 Notice of Default. No Agent shall be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default, except, in the case
of Funding Agent, with respect to defaults in the payment of principal, interest
and fees required to be paid to Funding Agent for the account of the Swingline
Bank or any Bank, unless any Agent shall have received written notice from the
Swingline Bank, any Bank or any Borrower referring to this Agreement, describing
such Default or Event of Default and stating that such notice is a "notice of
default". Any Agent receiving any such notice will notify the other Agent, the
Swingline Bank and each Bank of its receipt thereof. Each Agent shall take such
action with respect to such Default or Event of Default as may be requested by
the Required Banks in accordance with Article Nine; provided that unless and
until such Agent has received any such request, each Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable or in the best
interest of Banks.
10.6 Credit Decision. The Swingline Bank and each Bank each acknowledges
that none of the Agent-Related Persons has made any representation or warranty
to it, and that no act by any Agent hereinafter taken, including any review of
the affairs of any Borrower and its subsidiaries, shall be deemed to constitute
any representation or warranty by any Agent-Related Person to any such Person.
The Swingline Bank and each Bank each represents to each Agent that it has,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the assets, business, prospects, operations,
property, financial and other condition and creditworthiness of each Borrower,
and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to Borrowers hereunder. The Swingline Bank and each Bank each
also represents that it will, independently and without reliance upon any Agent-
Related Person and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit and collateral
analysis, appraisals and decisions in taking or not taking action under this
Agreement and the other Loan Documents, and to make such investigations as it
deems necessary to inform itself as to the respective assets, businesses,
prospects, operations, property, financial and other condition and
creditworthiness of Borrowers. Except for notices, reports and other documents
expressly herein required to be furnished to the Swingline Bank and/or Banks by
such Agent, no Agent shall have any duty or responsibility to provide any such
Person with any credit, collateral or other information concerning the
respective assets, businesses, prospects, operations, property, financial and
<PAGE>
other condition or creditworthiness of Borrowers which may come into the
possession of any of the Agent-Related Persons.
10.7 Indemnification of Agents. Whether or not the transactions
contemplated hereby are consummated, the Swingline Bank and Banks shall
indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by
or on behalf of Borrowers and without limiting the obligation of Borrowers to do
so), pro rata, from and against any and all Indemnified Liabilities; provided
that no such Person shall be liable for the payment to the Agent-Related Persons
of any portion of such Indemnified Liabilities resulting solely from such
Person's gross negligence or willful misconduct. Without limitation of the
foregoing, the Swingline Bank and each Bank shall reimburse each Agent upon
demand for its ratable share of any costs or out-of-pocket expenses (including
Attorney Costs) incurred by such Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any other
Loan Document, or any document contemplated by or referred to herein, to the
extent that such Agent is not reimbursed for such expenses by or on behalf of
Borrowers. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of any Agent.
10.8 Agents in Individual Capacity. Each of BofA and UBOC and their
respective Affiliates may make loans to, issue letters of credit for the account
of, accept deposits from, acquire equity interests in and generally engage in
any kind of banking, trust, financial advisory, underwriting or other business
with each Borrower and each Borrower's subsidiaries and Affiliates as though
such were not the Swingline Bank, an Agent or Issuing Bank hereunder and without
notice to or consent of Banks. The Swingline Lender and Banks acknowledge that,
pursuant to such activities, BofA, UBOC or their respective Affiliates may
receive information regarding any Borrower or its Affiliates (including
information that may be subject to confidentiality obligations in favor of such
Borrower or such Affiliate) and acknowledge that no Agent shall be under any
obligation to provide such information to them. With respect to its Swingline
Advances, Committed Advances and Term Loan, BofA and UBOC shall each have the
same rights and powers under this Agreement as any other Bank and may exercise
the same as though it were not the Swingline Bank, an Agent or Issuing Bank.
10.9 Successor Agents. Each Agent may, and at the request of the
Required Banks shall, resign as such Agent upon 30 days' notice to Banks. If any
Agent resigns under this Agreement, the Required Banks shall appoint from among
Banks a successor agent for Banks which successor agent shall be approved
<PAGE>
by the Greenbrier Funds Administrator. If no successor agent is appointed prior
to the effective date of the resignation of any Agent, such Agent may appoint,
after consulting with Banks and the Greenbrier Funds Administrator, a successor
agent from among Banks. Upon the acceptance of its appointment as a successor
agent hereunder, such successor agent shall succeed to all the rights, powers
and duties of the retiring Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's appointment, powers and duties as an Agent shall
be terminated. After any retiring Agent's resignation hereunder as an Agent, the
provisions of this Article Ten and Sections 11.4 and 11.5 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was an
Agent under this Agreement. If no successor agent has accepted appointment as an
Agent by the date which is 30 days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and the remaining Agent shall perform all of the duties of
retiring Agent hereunder until such time, if any, as the Required Banks appoint
a successor agent as provided for above. Notwithstanding the foregoing, however,
neither BofA nor UBOC may be removed as an Agent at the request of the Required
Banks unless such Person shall also simultaneously be replaced as an "Issuing
Bank" hereunder pursuant to documentation in form and substance reasonably
satisfactory to such Person.
10.10 Withholding Tax.
(a) If any Bank is a "foreign corporation, partnership or trust" within
the meaning of the Code and such Bank claims exemption from, or a reduction of,
U.S. withholding tax under Sections 1441 or 1442 of the Code, such Bank agrees
with and in favor of Funding Agent, to deliver to Funding Agent:
(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, two properly completed
and executed copies of IRS Form 1001 before the payment of any interest in
the first calendar year and before the payment of any interest in each
third succeeding calendar year during which interest may be paid under this
Agreement;
(ii) if such Bank claims that interest paid under this Agreement is
exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Bank, two properly
completed and executed copies of IRS Form 4224 before the payment of any
interest is due in the first taxable year of such Bank and in each
succeeding taxable year of such Bank during which interest may be paid
under this Agreement; and
(iii) such other form or forms as may be required under the Code or
other laws of the United States as a condition to exemption from,
<PAGE>
or reduction of, United States withholding tax.
Such Bank agrees to promptly notify Funding Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Bank claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such
Bank sells, assigns, grants a participation in, or otherwise transfers all
or part of the respective Obligations of Borrowers to such Bank, such Bank
agrees to notify Funding Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of the respective Borrowers to
such Bank. To the extent of such percentage amount, Funding Agent will
treat such Bank's IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States withholding tax
by filing IRS Form 4224 with Funding Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the respective
Obligations of Borrowers to such Bank, such Bank agrees to undertake sole
responsibility for complying with the withholding tax requirements imposed
by Sections 1441 and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, Funding Agent may withhold from any interest payment to
such Bank an amount equivalent to the applicable withholding tax after
taking into account such reduction. However, if the forms or other
documentation required by subsection (a) of this Section are not delivered
to Funding Agent, then Funding Agent may withhold from any interest payment
to such Bank not providing such forms or other documentation an amount
equivalent to the applicable withholding tax imposed by Sections 1441 and
1442 of the Code, without reduction.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Funding Agent did not
properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered or was not properly
executed, or because such Bank failed to notify Funding Agent of a change
in circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason) such Bank shall
indemnify Funding Agent fully for all amounts paid, directly or indirectly,
by Funding Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to
Funding Agent under this Section, together with all costs and expenses
(including Attorney Costs). The obligation of Banks under this subsection
shall survive the payment of all Obligations and the resignation or
replacement of Funding Agent.
<PAGE>
ARTICLE ELEVEN - GENERAL PROVISIONS
11.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Greenbrier Funds Administrator or any Borrower therefrom, shall
be effective unless the same shall be in writing and signed by the Required
Banks (or by Administrative Agent at the written request of the Required Banks)
and Borrowers and acknowledged by the Greenbrier Funds Administrator and each
Agent, and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided that no
such waiver, amendment or consent shall, unless in writing and signed by all
Banks and all Borrowers and acknowledged by the Greenbrier Funds Administrator
and each Agent, do any of the following:
(a) increase or extend the Commitments of any Bank;
(b) postpone or delay any date fixed by this Agreement or any other Loan
Document for any payment of principal, interest, fees or other amounts due to
Banks (or any of them) hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of interest specified herein on
any Committed Advance or Term Loan, or (subject to clause (iii) below) any fees
or other amounts payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Committed Advances which is required for Banks or any of
them to take any action hereunder;
(e) except as otherwise expressly permitted pursuant to the terms hereof
or of any of the other Loan Documents, authorize the release of any
Lien in favor of the Collateral Agent; or
(f) amend this Section, or Section 2.14, or any provision herein
providing for consent or other action by all Banks;
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by each Issuing Bank in addition to the Required Banks or all
Banks, as the case may be, affect the rights or duties of Issuing Banks under
this Agreement or any L/C-Related Document relating to any Letter of Credit
Issued or to be Issued by it, (ii) no amendment, waiver or consent shall, unless
in writing and signed by each Agent in addition to the Required Banks or all
Banks, as the case may be, affect the rights or duties of Agents under this
<PAGE>
Agreement or any other Loan Document, (iii) no amendment, waiver or consent
shall, unless in writing and signed by the Swingline Bank in addition to the
Required Banks or all Banks, as the case may be, affect the rights or duties of
the Swingline Bank under this Agreement or any other Loan Document relating to
any Swingline Advance made or to be made by it, and (iv) each Fee Letter may be
amended, or rights or privileges thereunder waived, in a writing executed by the
parties thereto.
11.2 Notices. (a) Except as otherwise provided herein, all notices,
requests, consents, approvals, waivers and other communications hereunder shall
be in writing (including, unless the context expressly otherwise provides, by
facsimile transmission) and mailed, faxed or delivered, to the respective
addresses or facsimile numbers, as the case may be, specified for notices on
Schedule 11.2; or to such other address or facsimile number as shall be
designated by any of such parties from time to time in a written notice to the
other parties.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Banking Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article Two, Three or Ten to the Swingline Bank or any Agent
shall not be effective until actually received by such Person, and notices
pursuant to Article Three to any Issuing Bank shall not be effective until
actually received by any Issuing Bank at the address specified for such Issuing
Bank on Schedule 11.2.
(c) Any agreement of the Swingline Bank, Agents and Banks herein to
receive certain notices by telephone or facsimile is solely for the convenience
and at the request of the Greenbrier Funds Administrator and Borrowers. The
Swingline Bank, Agents and Banks shall be entitled to rely on the authority of
any Person purporting to be a Person authorized by the Greenbrier Funds
Administrator or Borrowers, as the case may be, to give such notice and none of
such Persons shall have any liability to the Greenbrier Funds Administrator,
Borrowers or any other Person on account of any action taken or not taken by the
Swingline Bank, Agents or Banks in reliance upon such telephonic or facsimile
notice. The respective obligations of Borrowers to repay the Obligations shall
not be affected in any way or to any extent by any failure by the Swingline
Bank, Agents and Banks to receive written confirmation of any telephonic or
facsimile notice or the receipt by any of such Persons of a confirmation which
is at variance with the terms understood by such Persons to be contained in the
telephonic or facsimile notice.
<PAGE>
11.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of the Swingline Bank, any Agent or any Bank, any
right, remedy, power or privilege hereunder, shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.
11.4 Costs and Expenses. Borrowers shall:
(a) whether or not the transactions contemplated hereby are consummated,
pay or reimburse BofA (including in its respective capacities as Administrative
Agent and an Issuing Bank) within five Banking Days after demand for all
reasonable costs and expenses incurred by them in connection with the
development, preparation, delivery, administration and execution of, and any
amendment, supplement, waiver or modification to (in each case, whether or not
consummated), this Agreement, any Loan Document and any other documents prepared
in connection herewith or therewith, and the consummation of the transactions
contemplated hereby and thereby, including reasonable Attorney Costs incurred by
them with respect thereto;
(b) pay or reimburse the Collateral Agent within five (5)
Banking Days after demand for all reasonable costs and expenses (including
Attorney Costs) payable pursuant to Section 8.8 of the Security Agreement,
including, without limitation, all such amounts incurred by the Collateral Agent
in connection with any release or contemplated release of Collateral pursuant to
Section 7.10 of the Security Agreement; and
(c) pay or reimburse Agents, the Arranger, the Swingline Bank and each
Bank within five Banking Days after demand (subject to subsection 6.1(b)) for
all reasonable costs and expenses (including Attorney Costs) incurred by them in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or any other Loan Document during the
existence of an Event of Default or after acceleration of the Swingline
Advances, Committed Advances or Term Loans, as the case may be, (including in
connection with any "workout" or restructuring regarding the Obligations and
including in any Insolvency Proceeding or appellate proceeding).
11.5 Indemnification. Whether or not the transactions contemplated
hereby are consummated, Borrowers shall jointly and severally indemnify, defend
and hold the Agent-Related Persons, the Swingline Bank and each Bank and each of
their respective officers, directors, employees, counsel, agents and attorneys-
in-fact (each, an "Indemnified Person") harmless from and against any and all
liabilities, obligations, losses, damages,
<PAGE>
penalties,actions, judgments, suits, costs, charges, expenses and disbursements
(including Attorney Costs) of any kind or nature whatsoever which may at any
time be imposed on, incurred by or asserted against any such Person in any way
relating to or arising out of this Agreement or any document contemplated by or
referred to herein, or the transactions contemplated hereby, or any action taken
or omitted by any such Person under or in connection with any of the foregoing,
whether or not any Indemnified Person is a party thereto (all the foregoing,
collectively, the "Indemnified Liabilities"); provided that Borrowers shall have
no obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities resulting solely from the gross negligence or willful misconduct of
such Indemnified Person. The agreements in this Section shall survive payment of
all other Obligations.
11.6 Payments Set Aside. To the extent that any Borrower makes a payment
to the Swingline Bank, any Agent or any Bank, or any of such Persons exercise
their right of set-off, and such payment or the proceeds of such set-off or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by such Agent or such Bank in its discretion) to be repaid to a
trustee, receiver or any other party, in connection with any Insolvency
Proceeding or otherwise, then (a) to the extent of such recovery the obligation
or part thereof originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been made or such
set-off had not occurred, and (b) and each such Person severally agrees to pay
to Funding Agent upon demand its pro rata share of any amount so recovered from
or repaid by Agents.
11.7 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that neither the Greenbrier Funds Administrator
nor any Borrower may assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of each Agent and each Bank.
<PAGE>
11.8 Assignments, Participations, Etc.
(a) Any Bank may, with the written consent of Administrative
Agent and, at all times other than during the existence of an Event of Default,
upon thirty (30) days' prior notice to, and prior consent of, the Greenbrier
Funds Administrator, at any time assign and delegate to one or more Eligible
Assignees (provided that no written consent of the Greenbrier Funds
Administrator and Administrative Agent shall be required in connection with any
assignment and delegation by a Bank to an Eligible Assignee that is a domestic
Affiliate of such Bank) (each an "Assignee") all, or any ratable part of all, of
the Commitments, the L/C Obligations and the other rights and obligations of
such Bank hereunder, in a minimum amount of $10,000,000; provided that the
Greenbrier Funds Administrator, Borrowers, Issuing Banks, Agents and the
Swingline Bank may continue to deal solely and directly with such Bank in
connection with the interest so assigned to an Assignee until (i) written notice
of such assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the
Greenbrier Funds Administrator and Agents by such Bank and the Assignee; (ii)
such Bank and its Assignee shall have delivered to the Greenbrier Funds
Administrator and Administrative Agent an Assignment and Acceptance in form and
substance reasonably satisfactory to Administrative Agent ("Assignment and
Acceptance") together with any Note or Notes subject to such assignment and
(iii) the assignor Bank or Assignee has paid to Administrative Agent a
processing fee in the amount of $3,500.
(b) From and after the date that Administrative Agent notifies the
assignor Bank that it has received (and both it and the Greenbrier Funds
Administrator has provided its consent with respect to) an executed Assignment
and Acceptance and payment of the above-referenced processing fee, (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Bank under the Loan
Documents, and (ii) the assignor Bank shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Loan Documents.
(c) Within five Banking Days after its receipt of notice by
Administrative Agent that the Greenbrier Funds Administrator has received an
executed Assignment and Acceptance and payment of the processing fee, (and
provided that the Greenbrier Funds Administrator consents to such assignment in
accordance with Subsection 11.8(a)), Borrowers shall execute and deliver to
Administrative Agent, new Notes evidencing such Assignee's assigned Obligations
<PAGE>
and Commitment and, if the assignor Bank has retained a portion of its
Obligations and its Commitment, replacement Notes in the principal amount of the
Commitment retained by the assignor Bank (such Notes to be in exchange for, but
not in payment of, the Notes held by such Bank). Immediately upon each
Assignee's making its processing fee payment under the Assignment and
Acceptance, this Agreement shall be deemed to be amended to the extent, but only
to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The Commitment
allocated to each Assignee shall reduce such Commitments of the assigning Bank
pro tanto.
(d) Any Bank may at any time sell to one or more commercial banks or
other Persons not Affiliates of any Borrower (a "Participant") participating
interests in any Obligations, the Commitment of that Bank and the other
interests of that Bank (the "originating Bank") hereunder and under the other
Loan Documents; provided that (i) the originating Bank's obligations under this
Agreement shall remain unchanged, (ii) the originating Bank shall remain solely
responsible for the performance of such obligations, (iii) the Greenbrier Funds
Administrator, Borrowers, Issuing Banks, Agents and the Swingline Bank shall
continue to deal solely and directly with the originating Bank in connection
with the originating Bank's rights and obligations under this Agreement and the
other Loan Documents, and (iv) no Bank shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment, consent or waiver would require
unanimous consent of all Banks as described in the first proviso to Section
11.1. In the case of any such participation, the Participant shall not have any
rights under this Agreement, or any of the other Loan Documents, and all amounts
payable by Borrowers hereunder shall be determined as if such Bank had not sold
such participation; except that, if amounts outstanding under this Agreement are
due and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Bank under this Agreement.
(e) Notwithstanding any other provision in this Agreement, the
Swingline Bank and any Bank may at any time create a security interest in, or
pledge, all or any portion of its rights under and interest in this Agreement
and any Note held by it in favor of any Federal Reserve Bank in accordance with
Regulation A of the Board of Governors of the Federal Reserve System (or any
Governmental Authority succeeding to any of its principal functions) or U.S.
Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may
<PAGE>
enforce such pledge or security interest in any manner permitted under
applicable law.
11.9 Notification of Addresses, Lending Offices, Etc. The
Swingline Bank and each Bank shall notify Funding Agent in writing of any
changes in the address to which notices to such Person should be directed, of
addresses of each of its Lending Offices, of payment instructions in respect of
all payments to be made to it hereunder and of such other administrative
information as Funding Agent shall reasonably request.
11.10 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of such counterparts taken together shall be deemed to
constitute but one and the same instrument. Any counterpart which may be
delivered by facsimile transmission shall be deemed the equivalent of an
originally signed counterpart and shall be fully admissible in any enforcement
proceeding regarding this Agreement.
11.11 Severability. The illegality or unenforceability of any provision
of this Agreement shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Agreement.
11.12 Governing Law and Jurisdiction
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS, WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF ILLINOIS OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE GREENBRIER FUNDS ADMINISTRATOR,
EACH BORROWER, THE SWINGLINE BANK, EACH AGENT AND EACH BANK CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. THE GREENBRIER FUNDS ADMINISTRATOR, EACH BORROWER, THE SWINGLINE BANK,
EACH AGENT AND EACH BANK IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. THE GREENBRIER FUNDS ADMINISTRATOR, EACH BORROWER, THE SWINGLINE
BANK, EACH AGENT AND EACH BANK WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT
OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY ILLINOIS
LAW.
11.13 Waiver of Jury Trial. THE GREENBRIER FUNDS ADMINISTRATOR,
BORROWERS, THE SWINGLINE BANK, BANKS AND AGENTS EACH WAIVE THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
<PAGE>
OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE GREENBRIER FUNDS ADMINISTRATOR,
BORROWERS, THE SWINGLINE BANK, BANKS AND AGENTS EACH AGREE THAT ANY SUCH CLAIM
OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
11.14 Entire Agreement. This Agreement, together with the other
Loan Documents, embodies the entire agreement and understanding among the
Greenbrier Funds Administrator, Borrowers, the Swingline Bank, Agents and Banks,
and supersedes all prior or contemporaneous agreements and understandings of
such Persons, verbal or written, relating to the subject matter hereof and
thereof.
11.15 Joint and Several Liability; Exceptions for APLP and
GTLP.
(a) Notwithstanding anything to the contrary contained herein or in any
of the other Loan Documents, all Borrowers (except, subject to the provisos to
subsections 11.15(b) and (c), APLP and GTLP, respectively) shall be jointly and
severally liable hereunder and under each of the other Loan Documents with
respect to all Obligations, regardless of which Borrower actually receives the
proceeds of the Committed Advances, Swingline Advances or Term Loans, as the
case may be, or the benefit of any other extensions of credit hereunder or the
manner in which Borrowers, the Swingline Bank any Agent or any Bank account
therefor in their respective books and records. Notwithstanding the foregoing,
(i) each Borrower's obligations and liabilities with respect to proceeds of
extensions of credit hereunder which it receives, or Letters of Credit issued
for its account, and related fees, costs and expenses, and (ii) its obligations
and liabilities, arising as a result of the joint and several liability of
Borrowers hereunder, with respect to proceeds of extensions of credit received
by, or Letters of Credit issued for the account of, any of the other Borrowers
hereunder, together with the related fees, costs and expenses, shall be separate
and distinct obligations, both of which are primary obligations of such
Borrower. Neither the joint and several liability of, nor the Liens granted to
the Collateral Agent under the Collateral Documents by, any Borrower shall be
impaired or released by any action or inaction on the part of the Swingline
Bank, any Agent or any Bank, or any other event or condition with respect to any
other Borrower, including any such action or inaction or other event or
condition, which might otherwise constitute a defense available to, or a
discharge of, such Borrower, or any guarantor or surety of or for any or all of
the Obligations.
<PAGE>
(b) Notwithstanding anything to the contrary contained herein or in any
of the other Loan Documents, APLP shall be severally liable hereunder and under
each of the other Loan Documents with respect to proceeds of extensions of
credit hereunder which are received by it or for its account, and for Letters of
Credit Issued for its account, and for related fees, costs and expenses;
provided that from and after the date (the "APLP Effective Date") on which APLP
shall be a wholly-owned subsidiary of AC and/or any other Borrower or a wholly-
owned subsidiary of any other Borrower, APLP shall be jointly and severally
liable hereunder and under all of the other Loan Documents with respect to all
Obligations to the extent provided in Section 11.15(a) above for all other
Borrowers.
(c) Notwithstanding anything to the contrary contained herein or in any
of the other Loan Documents, GTLP shall be severally liable hereunder and under
each of the other Loan Documents with respect to proceeds of extensions of
credit hereunder which are received by it or for its account, and for Letters of
Credit Issued for its account, and for related fees, costs and expenses;
provided that from and after the date (the "GTLP Effective Date") on which (i)
GTLP shall be wholly-owned by GCC and/or any other Borrower, or a wholly-owned
subsidiary of any other Borrower, and (ii) all obligations and liabilities of
GTLP under the respective GTLP Credit Facilities shall have been paid and
satisfied in full and each of the GTLP Credit Facilities shall have terminated
pursuant to the respective terms and provisions thereof, GTLP shall be jointly
and severally liable hereunder and under all of the other Loan Documents with
respect to all Obligations to the extent provided in Section 11.15(a) above for
all other Borrowers.
11.16 Appointment and Authorization of the Greenbrier Funds
Administrator.
(a) Each Borrower hereby designates and appoints the Greenbrier
Funds Administrator as its agent to act as specified in this Agreement and each
of the other Loans Documents and the Greenbrier Funds Administrator hereby
acknowledges such designation and accepts such appointment. Each Borrower hereby
irrevocably authorizes and directs the Greenbrier Funds Administrator to take
such action on its behalf under the respective provisions of this Agreement and
the other Loan Documents, and any other instruments, documents and agreements
referred to herein or therein, and to exercise such powers and to perform such
duties hereunder and thereunder as are specifically delegated to or required of
the Greenbrier Funds Administrator by the respective terms and provisions
thereof, and such other powers as are reasonably incidental thereto, including,
without limitation, to take the following actions for and on such Borrower's
behalf:
<PAGE>
(i) to submit on behalf of each Borrower (i) Notices of Borrowing
and Notices of Conversion/Continuation to the Funding Agent in accordance
with the provisions of subsections 2.3(a) and 2.4(a), respectively, hereof
and (ii) notices for Swingline Advances to the Swingline Bank in accordance
with the provisions of Section 2.3(b) hereof, each such notice to be
submitted by the Greenbrier Funds Administrator to the Funding Agent as
soon as practicable after its receipt of a request to do so from a
Borrower; and
(ii) to receive on behalf of each Borrower the proceeds of the Loans
in accordance with the provisions of subsections 2.2 and 2.4, respectively,
hereof, such proceeds to be disbursed to the applicable Borrower by the
Greenbrier Funds Administrator as soon as practicable after its receipt
thereof; and
(iii) to submit on behalf of each Borrower requests for the issuance
of Letters of Credit to an Issuing Bank in accordance with the provisions
of Section 3 of the Credit Agreement, each such request for the issuance of
a Letter of Credit to be submitted by the Greenbrier Funds Administrator to
the applicable Issuing Bank as soon as practicable after its receipt of a
request to do so from a Borrower.
The Greenbrier Funds Administrator is further authorized to take all such
actions on behalf of each Borrower necessary to exercise the specific powers
granted in clauses (i) through (iii) above and to perform such other duties
hereunder and under the other Loan Documents, and deliver such documents as
delegated to or required of the Greenbrier Funds Administrator by the terms
hereof or thereof.
(b) The Greenbrier Funds Administrator may perform any of its duties
hereunder or under any of the other Loan Documents by or through its agents or
employees.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
individually and as Administrative
Agent
By: /s/ Craig S. Munro
----------------------------------
Name: Craig S. Munro
--------------------------------
Title: Managing Director
-------------------------------
UNION BANK OF CALIFORNIA, N.A.,
individually and as Collateral Agent
and Funding Agent
By: /s/ Stephen Clive
----------------------------------
Name: Stephen Clive
--------------------------------
Title: Vice President
-------------------------------
<PAGE>
GREENBRIER LEASING CORPORATION, a
Delaware corporation, individually
and in its capacity as Greenbrier
Funds Administrator
By: /s/ Norriss M. Webb
----------------------------------
Name: Norriss M. Webb
Title: Executive Vice President
GREENBRIER CAPITAL CORPORATION, a
California corporation
By: /s/ Norriss M. Webb
----------------------------------
Name: Norriss M. Webb
Title: Vice President
GREENBRIER PARTNERS INC., a
California corporation
By: /s/ Norriss M. Webb
----------------------------------
Name: Norriss M. Webb
Title: Vice President
GREENBRIER RAILCAR, INC., a
Delaware corporation
By: /s/ Norriss M. Webb
----------------------------------
Name: Norriss M. Webb
Title: Vice President
AUTOSTACK CORPORATION, an
Oregon corporation
By: /s/ Norriss M. Webb
----------------------------------
Name: Norriss M. Webb
Title: Vice President
<PAGE>
GREENBRIER TRANSPORTATION LIMITED
PARTNERSHIP, a Delaware limited
partnership
By: /s/ Norriss M. Webb
----------------------------------
Name: Norriss M. Webb
Title: Vice President
GREENBRIER TRANSPORTATION, INC., a
Delaware corporation
By: GREENBRIER TRANSPORTATION, INC.,
its General Partner
By: /s/ Norriss M. Webb
----------------------------------
Name: Norriss M. Webb
Title: Vice President
AUTOSTACK PARTNERS LIMITED
PARTNERSHIP, a Delaware limited
partnership by Autostack General
Partner, Inc., General Partner
By: AUTOSTACK GENERAL PARTNERS, INC.,
its General Partner
By: /s/ Mark J. Rittenbaum
----------------------------------
Name: Mark J. Rittenbaum
Title: President
AUTOSTACK GENERAL PARTNER, INC., a
Delaware corporation
By: /s/ Mark J. Rittenbaum
----------------------------------
Name: Mark J. Rittenbaum
Title: President
GREENBRIER RENTAL SERVICES, INC., a
California corporation
By: /s/ Mark J. Rittenbaum
----------------------------------
Name: Mark J. Rittenbaum
Title: Vice President
<PAGE>
FINANCIAL
TABLE OF CONTENTS
Selected Financial Information 18
Management's Discussion and Analysis of Results
of Operations and Financial Condition 19
Reports of Management and Independent Auditors 24
Consolidated Balance Sheets 25
Consolidated Statements of Operations 26
Consolidated Statements of Stockholders' Equity 27
Consolidated Statements of Cash Flows 28
Notes to Consolidated Financial Statements 29
Quarterly Results of Operations 38
<PAGE>
SELECTED FINANCIAL INFORMATION
YEARS ENDED AUGUST 31
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1997 1996 1995 1994 1993
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Revenues:
Manufacturing $ 325,501 $ 421,456 $ 295,216 $ 234,439 $ 194,501
Leasing and services 105,419 98,484 92,510 87,250 69,810
-----------------------------------------------------------------------
$ 430,920 $ 519,940 $ 387,726 $ 321,689 $ 264,311
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Earnings from continuing operations before
income tax expense:
Manufacturing $ 3,454 $ 23,929 $ 18,502 $ 17,093 $ 13,548
Leasing and services 12,492(1) 15,012 16,705 7,115(2) 4,453
Corporate (6,122) (6,996) (5,426) (4,766) (3,722)
-----------------------------------------------------------------------
$ 9,824 $ 31,945 $ 29,781 $ 19,442 $ 14,279
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Earnings from continuing operations $ 6,021 $ 18,613 $ 16,665 $ 11,277(2) $ 8,219
Discontinued operations:
Loss on operations(3) $ (2,512) $ (338) $ -- $ -- $ --
Estimated loss on disposal(4) $ (7,680) $ -- $ -- $ -- $ --
Net earnings (loss) $ (4,171) $ 18,275 $ 16,665 $ 10,777(5) $ 8,219
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Earnings per share from continuing operations $ 0.43 $ 1.31 $ 1.18 $ 1.02 $ 0.78
Net earnings (loss) per share $ (0.29) $ 1.29 $ 1.18 $ 0.98(6) $ 0.78
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Weighted average shares outstanding 14,160 14,160 14,160 11,049 10,576
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Cash dividends paid per share $ 0.24 $ 0.24 $ 0.24 $ -- $ --
-----------------------------------------------------------------------
-----------------------------------------------------------------------
BALANCE SHEET DATA
Assets:
Manufacturing $ 180,262 $ 182,426 $ 154,768 $ 80,139 $ 58,184
Leasing and services 400,256 433,062 377,621 391,770 323,149
Notes payable and Revolving notes:
Manufacturing $ 50,942 $ 27,381 $ 41,791 $ 14,886 $ 14,981
Leasing and services 208,553 216,711 176,276 202,567 163,074
Subordinated debt $ 38,089 $ 44,554 $ 37,762 $ 34,142 $ 34,698
Minority interest 18,183 38,154 38,040 28,823 28,368
Stockholders' equity 104,072 111,736 96,818 82,786 27,205
-----------------------------------------------------------------------
Capital base $ 160,344 $ 194,444 $ 172,620 $ 145,751 $ 90,271
-----------------------------------------------------------------------
-----------------------------------------------------------------------
</TABLE>
(1) Includes $8,348 of special charges related to the divestiture of the
trailer and container lease fleet and an adjustment to the carrying value
of vehicle transportation equipment.
(2) Before $500 extraordinary charge for debt prepayment penalties.
(3) Net of income taxes of $1,784 in 1997 and $244 in 1996.
(4) Net of income taxes of $5,120.
(5) Includes $500 extraordinary charge for debt prepayment penalties.
(6) Includes $(0.04) related to extraordinary charge for debt prepayment
penalties.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
OVERVIEW
Greenbrier currently operates in two primary business segments: manufacturing
and leasing and services. The two business segments are operationally
integrated. The manufacturing segment produces double-stack intermodal railcars,
conventional railcars, marine vessels and forged steel products and performs
railcar refurbishment and maintenance activities, a portion of which is for the
leasing operation. The leasing and services segment leases or manages a fleet of
approximately 28,000 railcars for railroads, institutional investors and other
leasing companies as well as undertaking most of the sales and marketing
activities for the manufacturing operations. New product development is also
conducted on an integrated basis.
Railcars are generally manufactured under firm orders from third parties, and
revenue is recognized when the cars are completed and accepted by the customer.
From time to time Greenbrier commits to manufacture railcars prior to receipt of
firm orders to maintain continuity of manufacturing operations and may also
build cars for its own lease fleet. Revenues do not include sales of new
railcars to, or refurbishment services performed for, the leasing operation
since intercompany transactions are eliminated in preparing the consolidated
financial statements. The margin generated from such sales or refurbishment
activity is realized by the leasing segment over the term of the related lease
or upon sale of the equipment.
Mergers among Class I railroads have had a variety of effects on the industry
over the past several years. These include decreased capital expenditures while
resources were focused elsewhere, spin-offs of unproductive lines, outsourcing
of traditional functions such as maintenance and refurbishment, and partial
transfer of the equipment supply function to others. In addition, the intermodal
market experienced a pause in growth in 1995 and 1996, after the double digit
gains of 1994. This was in part due to overcapacity in the trucking industry
which has since been significantly absorbed. In 1997, the intermodal market
resumed growth, with loading volume up approximately 8% through October.
Consistent with the increased loading volume, there has been a recent increase
in new intermodal railcar orders. The spin-off of rail lines to short-line
railroads as a result of the mergers has opened new markets for growth and
increased Greenbrier's customer base. Greenbrier is taking advantage of the
outsourcing trend by providing maintenance and refurbishment services at various
facilities throughout North America.
DISCONTINUED OPERATIONS AND DIVESTITURES
During 1997 a plan was adopted to discontinue the third party transportation
logistics segment as well as to sell the trailer and container leasing
operation. The decision to divest the third party logistics and trailer and
container leasing operations was reached after extensive review of various
options by management. The expansion of the logistics business during 1996 and
1997 was based on expected complementary advantages of bringing assets and
services together, which did not develop. While industry fundamentals for both
businesses are strong, the rates of return on capital invested have not been at
desired levels. The decision has been made to focus on core railcar operations,
where it is believed that management and capital resources can be more
productively deployed.
Due to the intended divestiture of the logistics segment, it has been accounted
for as a discontinued operation. Accordingly, the results of logistics
operations have been excluded from continuing operations in the consolidated
statements of operations for all applicable periods. An estimated loss on
disposal of approximately $13 million ($7.7 million net of income taxes), which
includes an adjustment of assets to market value, estimated closedown expenses
and anticipated operating losses through final disposal has been reflected in
the consolidated statements of operations. Discussions with potential purchasers
of the logistics segment are currently underway.
A portion of the trailer and container fleet was sold during the fourth quarter
of 1997. Subsequent to year end, the sale of substantially all of the remaining
trailer and container fleet was completed. The aggregate proceeds received from
the sales amounted to approximately $86 million. Certain proceeds amounting to
$9.3 million, are in the form of a note receivable to be paid over 4 years
commencing September 1997. An estimated pre-tax loss of approximately $2 million
has been recorded in 1997 as a leasing and services special charge to complete
the divestiture of this operation. Trailer and container leasing results of
operations for all years have been included in leasing and services continuing
operations.
<PAGE>
AUTOSTACK VEHICLE TRANSPORTATION SYSTEM
In 1997 the carrying value of vehicle transportation equipment was adjusted to
the anticipated net realizable value of the assets based on projected future
performance under existing contracts. This resulted in a pre-tax charge of $7
million, which is included in leasing and services special charges in the
consolidated statements of operations, of which $1 million was allocated to the
minority investors. Autostack was commercially introduced in 1992 as a patented
system to transport automobiles via rail, ocean and highway in standard domestic
or international intermodal shipping containers. Market acceptance for this
product has not developed as anticipated; however, it is believed that Autostack
will remain a niche player in the vehicle transportation industry.
RESULTS OF OPERATIONS
The following table sets forth information regarding costs and expenses from
continuing operations, expressed as a percentage of the associated manufacturing
or leasing and services revenue.
Years Ended August 31 1997 1996 1995
---------------------
Manufacturing:
Sales 100.0% 100.0% 100.0%
Cost of sales 92.6 89.9 88.7
Selling and administrative expense 5.0 3.6 4.5
Interest expense 0.9 0.8 0.9
Minority interest 0.5 0.0 (0.4)
Earnings before income tax expense 1.0 5.7 6.3
Leasing and services:
Revenues 100.0% 100.0% 100.0%
Operating expense 43.9 43.7 41.2
Selling and administrative expense 13.5 15.5 13.0
Interest expense 23.1 22.8 24.2
Special charges 7.9 -- --
Minority interest (0.3) 2.8 3.5
Earnings before income tax expense 11.9 15.2 18.1
Corporate expenses as a percentage of total revenue 1.4% 1.3% 1.4%
Income tax expense as a percentage of pre-tax earnings 38.7% 41.7% 44.0%
Net earnings (loss) as a percentage of total revenue (1.0)% 3.5% 4.3%
<PAGE>
REVENUES
Manufacturing revenues include railcar and marine production, forging, and
repair and wheel activities. Manufacturing revenues decreased $96 million, or
23%, from 1996 to 1997 and increased $126 million, or 43%, from 1995 to 1996.
New railcar deliveries were 4,500 in 1997, 6,400 in 1996 and 5,100 in 1995.
Decreased revenue in 1997 resulted from fewer railcar deliveries in an overall
softer market environment partially offset by higher per unit sales value. In
1996 Canadian manufacturing operations contributed the majority of the increase
with an 85% increase in railcar deliveries and a product mix characterized by
higher unit sales value. Revenue from U.S. operations decreased in 1996 due to a
product mix characterized by higher unit sales value on fewer railcars
delivered. As of August 31, 1997, the firm order backlog of new railcars for
sale or lease amounted to approximately 2,600 units with an estimated sales
value of $133 million. In the two months subsequent to year end, additional
orders for 4,000 new railcars valued at approximately $200 million were
received.
Leasing and services revenue includes revenue from the trailer and container
fleet which was sold subsequent to year end but excludes revenue from logistics
services which was classified as a discontinued operation in 1997 and 1996.
Revenue increased $7 million, or 7%, from 1996 to 1997 and $6 million, or 6%,
from 1995 to 1996. The steady increase in revenue is a result of additional
railcars placed in lease service, as well as gains realized on the sale of
railcar leasing equipment in the normal course of business. Assets from
Greenbrier's lease fleet are periodically sold in order to take advantage of
market conditions, manage risk and maintain liquidity.
Pre-tax earnings realized on the disposition of leased equipment amounted to
$6.9 million during 1997, compared to $4.7 million during 1996 and $4.5 million
in 1995.
COSTS AND EXPENSES
The factors influencing cost of sales and gross margin in a given period include
order size (which affects economies of plant utilization), product mix, changes
in manufacturing costs, product pricing and currency exchange rates. The gross
margin percentage in 1997 declined from that achieved in 1996 and 1995. The
margins generated in 1997 reflect a highly competitive market, less favorable
product mix and shorter production runs, partially offset by improvements in
manufacturing efficiencies at the Canadian operation. The gross margin
percentage in 1996 declined slightly from that achieved in 1995. Margins
generated from both domestic and Canadian operations improved in 1996; however,
increased production levels at the Canadian facility, which operated at lower
relative margins, resulted in the overall decline.
Leasing and services operating expense as a percentage of revenue remained
constant at 44% in 1997 and 1996. Operating expense as a percentage of revenue
increased in 1996 compared to 1995. This was primarily a result of lower
automobile transportation volume generating lower revenue associated with
relatively fixed costs, and the start-up of highway rental operations. The
increases were partially offset by a restructuring of certain lease costs.
Total selling and administrative expense decreased slightly in 1997 compared to
1996 due to lower incentive compensation offset somewhat by increased research
and development costs. The increase in 1996 as compared to 1995 is a result of
increased incentive compensation commensurate with record earnings, costs
associated with highway rental operations, as well as an entire year of the
Canadian operation which was acquired in March 1995.
Overall interest expense increased in 1997 compared to 1996 due to greater usage
of revolving credit lines for interim financing of railcar production. The
increase in interest expense in 1996 compared to 1995 related primarily to
working capital needs to finance increased production and inventory levels.
<PAGE>
Minority interest related to manufacturing activity reflects the improved
contribution from the Canadian operation. The reduction in leasing and services
minority interest in the current year is primarily due to the December 1996
acquisition of a minority investor's interest in a consolidated leasing and
services subsidiary and minority investors' share of the writedown of the
carrying value of certain automobile transportation equipment. The decrease in
1996 compared to 1995 relates to reduced earnings from automobile
transportation.
The 1997 income tax provision represents an effective tax rate of 42% on U.S.
operations, which is consistent with 1996 and 1995. The Canadian operation,
which is not included in the U.S. consolidated tax return, generated an
operating loss carryforward in 1995, which offset earnings in 1996 and 1997.
This resulted in consolidated income taxes as a percentage of pre-tax earnings
being less than 42% in 1997 and 1996. In 1995, no tax benefit was recognized for
the losses incurred by Canadian operations.
LIQUIDITY AND CAPITAL RESOURCES
Greenbrier's growth has been financed through cash generated from operations,
borrowings from banks and other financial institutions, subordinated debt and
minority investments.
Cash provided by operations totaled $19 million in 1997, compared to $35 million
in 1996 and $16 million in 1995. The decrease in cash from operations in 1997 is
primarily due to the net loss for the year and fewer railcar deliveries. The
increase in cash from operations in 1996 is primarily due to reduced inventories
as a result of increased railcar deliveries, offset by purchases of materials
required for the construction of marine barges and increased accounts receivable
related to the timing of certain equipment sales in 1996.
Revolving credit facilities currently aggregate $118 million, which includes a
new $60 million revolving credit line implemented subsequent to year end. This
new credit line replaces a $43 million facility previously available. The new
facility will provide working capital and interim financing of equipment for the
leasing and services operation. The facility is available through May 1999.
Advances under the new facility bear interest at rates which vary depending on
the type of borrowing and certain defined ratios. Borrowings outstanding at
August 31, 1997 totaled $21 million. A $30 million operating line of credit to
be used for working capital, bearing interest primarily at prime and a $10
million five-year term loan facility to be used for certain manufacturing
capital expenditures are available through February 2000 and December 1998 for
U.S. manufacturing operations. Borrowings outstanding under the operating line
were $15 million as of August 31, 1997 and there were no borrowings outstanding
under the term facility. An $18 million (at the August 31, 1997 exchange rate)
operating line of credit, bearing interest at Canadian prime plus 1.125%, is
available through March 1998 for working capital and certain capital
expenditures for Canadian operations. An additional $14 million temporary
borrowing facility, bearing interest at Canadian prime plus 1.125% is available
through October 1997 for financing certain inventory. Borrowings outstanding
under the Canadian facilities were $22 million as of August 31, 1997.
Subsequent to year end Greenbrier completed the sale of substantially all of
the assets of the trailer and container leasing operations for approximately
$86 million, of which $31 million was used to reduce term debt. The balance
was used to reduce borrowings under revolving credit lines and for working
capital.
Capital expenditures totaled $80 million, $129 million and $91 million in
1997, 1996 and 1995. Of these capital expenditures, approximately $70
million, $122 million and $83 million in 1997, 1996 and 1995 were
attributable to leasing and services operations. Significant leasing and
services capital expenditure programs included additions to the lease railcar
fleet for a refurbishment program and other equipment purchases. Capital
expenditures for additions to the lease fleet in 1998 are expected to be
approximately $21 million. Greenbrier regularly sells assets from its lease
fleet some of which may have been purchased within the current year and
included in capital expenditures.
Approximately $10 million, $7 million and $8 million of the total capital
expenditures for 1997, 1996 and 1995 were attributable to manufacturing
operations. Capital expenditure programs included new and upgraded manufacturing
plant and equipment to improve efficiencies, increase capacity and expand and
upgrade marine facilities. Capital expenditures for manufacturing additions are
expected to be approximately $8 million in 1998 and will include plant
improvements and equipment acquisitions to further increase production and
improve capacity and efficiency.
<PAGE>
Operations in Canada give rise to market risks from changes in foreign currency
exchange rates. Forward exchange contracts are utilized to hedge the risk of
foreign currency fluctuations of a subsidiary. As of August 31, 1997, forward
exchange contracts outstanding for the purchase of Canadian dollars were $57
million maturing at various dates through December 1997. Realized and unrealized
gains and losses from such off-balance sheet contracts are deferred and
recognized in income concurrent with the hedged transaction.
Dividends of $.06 per share have been paid quarterly beginning in 1995. A
quarterly dividend of $.06 per share was declared in November 1997, to be paid
in December. Future dividends are dependent upon earnings, capital requirements
and financial condition.
Certain loan covenants restrict the transfer of funds from subsidiaries to the
parent company in the form of cash dividends, loans, or advances. The restricted
net assets of subsidiaries amounted to $34 million as of August 31, 1997.
Consolidated retained earnings at August 31, 1997 were not restricted as to the
payment of dividends. 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 for the coming year. 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.
PROSPECTIVE ACCOUNTING CHANGES
Statement of Financial Accounting Standards ("SFAS") No. 128, Earnings Per
Share, requires companies to present two measures of earnings per share, basic
and diluted. If SFAS No. 128 had been adopted for all periods presented, basic
and diluted earnings per share would not have materially differed from reported
earnings per share. SFAS No. 128 will be adopted in the second quarter of fiscal
year 1998. Early adoption is not permitted.
SFAS No. 130, Reporting Comprehensive Income, establishes requirements for
disclosure of comprehensive income. The new standard becomes effective in fiscal
year 1999.
SFAS No. 131, Disclosure about Segments of an Enterprise and Related
Information, establishes standards for disclosure about operating segments in
annual financial statements and requires disclosure of selected information
about operating segments in interim financial reports. The new standard becomes
effective in fiscal year 1999. There will not be any substantial changes to
disclosures at the time SFAS No. 131 is adopted.
The company did not elect early adoption of SFAS No. 130 or SFAS No. 131.
FORWARD-LOOKING INFORMATION
This document includes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, including, without limitation,
statements as to expectations, beliefs and strategies regarding the future. The
following are among the factors that could cause actual results or outcomes to
differ materially from the forward-looking statements: business conditions and
growth in the surface transportation industry and general economies, both
domestic and international; lower than expected customer orders; the ability to
consummate expected sales; delays in receipt of orders or cancellation of
orders; transportation labor disputes which might disrupt the flow of cargo;
competitive factors, including increased competition, new product offerings by
competitors and price pressures; actual future costs and availability of
materials and a trained workforce; labor disputes; changes in product mix and
the mix between manufacturing and leasing and services revenue; a delay or
failure of products or services to compete successfully; shifts in market
demand; changes in interest rates; financial condition of principal customers;
and production difficulties and product delivery delays in the future as a
result of, among other matters, changing process technologies and increasing
production. Any forward-looking statements should be considered in light of
these factors.
<PAGE>
REPORTS OF MANAGEMENT AND INDEPENDENT AUDITORS
REPORT OF MANAGEMENT
Board of Directors and Stockholders
The Greenbrier Companies, Inc.
The consolidated financial statements and other financial information of The
Greenbrier Companies, Inc. and Subsidiaries in this report were prepared by
management, which is responsible for their content. They reflect amounts based
upon management's best estimates and informed judgments. In management's
opinion, the financial statements present fairly the financial position, results
of operations and cash flows of the company in conformity with generally
accepted accounting principles.
The company maintains a system of internal accounting controls and procedures,
which is designed, consistent with reasonable cost, to provide reasonable
assurance that transactions are executed as authorized, that they are properly
recorded to produce reliable financial records, and that accountability for
assets is maintained. The accounting controls and procedures are supported by
careful selection and training of personnel and a continuing management
commitment to the integrity of the system.
The financial statements have been audited, to the extent required by generally
accepted auditing standards, by Deloitte & Touche LLP, independent auditors. In
connection therewith, management has considered the recommendations made by the
independent auditors in connection with their audit and has responded in an
appropriate, cost-effective manner.
The Board of Directors has appointed an Audit Committee composed entirely of
directors who are not employees of the company. The Audit Committee meets with
representatives of management and the independent auditors, both separately and
jointly. The Committee reports to the Board on its activities and findings.
/s/ William A. Furman /s/ Larry G. Brady
William A. Furman Larry G. Brady
President Vice President
Chief Executive Officer Chief Financial Officer
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
The Greenbrier Companies, Inc.
We have audited the accompanying consolidated balance sheets of The Greenbrier
Companies, Inc. and Subsidiaries as of August 31, 1997 and 1996, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended August 31, 1997. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of The Greenbrier Companies, Inc. and
Subsidiaries as of August 31, 1997 and 1996, and the results of their operations
and their cash flows for each of the three years in the period ended August 31,
1997, in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Portland, Oregon
November 12, 1997
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AUGUST 31
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1997 1996
---------------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 14,384 $ 6,083
Restricted cash and investments 7,360 6,400
Accounts and notes receivable 61,024 83,362
Inventories 87,233 75,989
Equipment held for refurbishment or sale 64,358 14,459
Investment in direct finance leases 182,421 190,307
Equipment on operating leases 102,120 174,394
Property, plant and equipment 44,925 39,252
Prepaid expenses and other 16,693 25,242
---------------------------
$ 580,518 $ 615,488
---------------------------
---------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Revolving notes $ 57,709 $ 27,814
Accounts payable and accrued liabilities 105,523 118,133
Deferred revenue 2,215 4,377
Deferred participation 39,032 32,316
Deferred income taxes 13,909 22,126
Notes payable 201,786 216,278
Subordinated debt 38,089 44,554
Minority interest 18,183 38,154
Commitments and contingencies (Notes 3, 18 & 19)
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 49,135 49,079
Retained earnings 54,689 62,259
Foreign currency translation adjustment 234 384
---------------------------
104,072 111,736
---------------------------
$ 580,518 $ 615,488
---------------------------
---------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1997 1996 1995
------------------------------------------
<S> <C> <C> <C>
REVENUES
Manufacturing $ 325,501 $ 421,456 $ 295,216
Leasing and services 105,419 98,484 92,510
------------------------------------------
Total revenues 430,920 519,940 387,726
COSTS AND EXPENSES
Cost of manufacturing sales 301,408 378,829 261,981
Leasing and services 46,317 43,019 38,148
Selling and administrative expense:
Manufacturing 16,305 15,276 13,407
Leasing and services 14,213 15,253 11,989
Corporate 6,122 6,996 5,426
------------------------------------------
36,640 37,525 30,822
Interest expense:
Manufacturing 2,823 3,235 2,707
Leasing and services 24,325 22,435 22,381
------------------------------------------
27,148 25,670 25,088
Leasing and services -- special charges 8,348 -- --
Minority interest:
Manufacturing 1,511 187 (1,381)
Leasing and services (276) 2,765 3,287
------------------------------------------
1,235 2,952 1,906
------------------------------------------
Total costs and expenses 421,096 487,995 357,945
EARNINGS FROM CONTINUING OPERATIONS
BEFORE INCOME TAX EXPENSE
Manufacturing 3,454 23,929 18,502
Leasing and services 12,492 15,012 16,705
Corporate (6,122) (6,996) (5,426)
------------------------------------------
9,824 31,945 29,781
Income tax expense (3,803) (13,332) (13,116)
------------------------------------------
EARNINGS FROM CONTINUING OPERATIONS 6,021 18,613 16,665
Discontinued operations:
Loss on operations (net of tax benefit of
$1,784 and $244 in 1997 and 1996) (2,512) (338) --
Estimated loss on disposal (net of tax
benefit of $5,120) (7,680) -- --
------------------------------------------
NET EARNINGS (LOSS) $ (4,171) $ 18,275 $ 16,665
------------------------------------------
------------------------------------------
Net earnings per share from continuing operations $ 0.43 $ 1.31 $ 1.18
Net earnings (loss) per share $ (0.29) $ 1.29 $ 1.18
------------------------------------------
------------------------------------------
Weighted average shares outstanding 14,160 14,160 14,160
------------------------------------------
------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Foreign
Common Stock Additional Currency Total
-------------------------- Paid-in Retained Translation Stockholders'
Shares Amount Capital Earnings Adjustment Equity
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, August 31, 1994 14,160 $ 14 $ 48,655 $ 34,117 $ -- $ 82,786
Compensation relating
to non-qualified stock
option plan -- -- 239 -- -- 239
Cash dividends
($.24 per share) -- -- -- (3,399) -- (3,399)
Foreign currency
translation adjustment -- -- -- -- 527 527
Net earnings -- -- -- 16,665 -- 16,665
----------------------------------------------------------------------------------------
Balance, August 31, 1995 14,160 14 48,894 47,383 527 96,818
Compensation relating
to non-qualified stock
option plan -- -- 185 -- -- 185
Cash dividends
($.24 per share) -- -- -- (3,399) -- (3,399)
Foreign currency
translation adjustment -- -- -- -- (143) (143)
Net earnings -- -- -- 18,275 -- 18,275
----------------------------------------------------------------------------------------
Balance, August 31, 1996 14,160 14 49,079 62,259 384 111,736
Compensation relating
to non-qualified stock
option plan -- -- 56 -- -- 56
Cash dividends
($.24 per share) -- -- -- (3,399) -- (3,399)
Foreign currency
translation adjustment -- -- -- -- (150) (150)
Net loss -- -- -- (4,171) -- (4,171)
----------------------------------------------------------------------------------------
Balance, August 31, 1997 14,160 $ 14 $ 49,135 $ 54,689 $ 234 $ 104,072
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31
(IN THOUSANDS) 1997 1996 1995
------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) $ (4,171) $ 18,275 $ 16,665
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Deferred income taxes (8,217) 6,396 3,331
Deferred participation 6,716 4,487 9,396
Depreciation and amortization 27,869 24,895 23,898
Discontinued operations 9,300 -- --
Special charges 8,348 -- --
Gain on sales of equipment (9,815) (5,324) (5,100)
Other (1,035) 215 771
Decrease (increase) in assets:
Accounts and notes receivable 16,504 (38,377) (5,421)
Inventories (11,244) 10,291 (40,799)
Prepaid expenses and other (6,074) (2,817) (5,811)
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities (7,457) 17,182 18,633
Deferred revenue (2,162) (352) (56)
------------------------------------------
Net cash provided by operating activities 18,562 34,871 15,507
------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiaries, net of cash acquired -- (1,960) (23,916)
Principal payments received under direct finance leases 11,226 8,402 6,836
Investment in direct finance leases (11,856) (26,430) (31,720)
Proceeds from sales of equipment 58,081 58,328 31,259
Purchase of property and equipment (64,381) (94,880) (53,481)
Use of (investment in) restricted cash and investments (960) (2,736) 3,224
------------------------------------------
Net cash used in investing activities (7,890) (59,276) (67,798)
------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 47,479 48,912 31,530
Repayments of borrowings (30,118) (25,375) (24,907)
Dividends (3,399) (3,399) (3,399)
Proceeds from (payments to) minority investors (16,333) -- 9,221
------------------------------------------
Net cash provided by (used in) financing activities (2,371) 20,138 12,445
------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 8,301 (4,267) (39,846)
Cash and cash equivalents
Beginning of period 6,083 10,350 50,196
------------------------------------------
End of period $ 14,384 $ 6,083 $ 10,350
------------------------------------------
------------------------------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 27,451 $ 26,166 $ 23,359
Income taxes 2,914 11,038 9,762
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Equipment obtained through borrowings $ 4,024 $ 7,581 $ 5,337
Repayment of borrowings through return of
railcars held for refurbishment or sale 11,594 2,433 7,726
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Years Ended August 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NOTE 1 -- NATURE OF OPERATIONS
The Greenbrier Companies, Inc. and Subsidiaries ("Greenbrier" or the "company")
currently operates in two primary business segments: manufacturing and leasing
and services. The two business segments are operationally integrated. The
manufacturing segment produces double-stack intermodal railcars, conventional
railcars, marine vessels and forged steel products and performs railcar
refurbishment and maintenance activities, a portion of which is for the leasing
operation. The leasing and services segment leases or manages a fleet of
approximately 28,000 railcars for railroads, institutional investors and other
leasing companies as well as undertaking most of the sales and marketing
activities for the manufacturing operations. New product development is also
conducted on an integrated basis.
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION -- The financial statements include the accounts of
the company and its majority-owned subsidiaries. Fifty percent interests in
partnerships in which the company is the general partner and exercises
substantive control are also consolidated. All significant intercompany
transactions and balances have been eliminated upon consolidation.
The financial statements and transactions of the company's Canadian subsidiary
are maintained in its functional currency and translated into U.S. dollars for
purposes of consolidation. Translation adjustments are accumulated as a separate
component of stockholders' equity.
CASH AND INVESTMENTS -- Cash is temporarily invested in U.S. treasury bills,
bankers acceptances, commercial paper and money market funds. Restricted cash
and investments may only be used for equipment acquisitions and partnership
distributions in accordance with loan or partnership agreements.
INVENTORIES -- Inventories are valued at the lower of cost (first-in, first-out)
or market. Work-in-process includes material, labor and overhead.
EQUIPMENT HELD FOR REFURBISHMENT OR SALE -- Railcars held for refurbishment or
sale are hulks that will either be refurbished or sold and which are carried at
the cost of the hulks and any refurbishment costs incurred. As discussed in Note
6, the operating assets of the trailer and container leasing operations are
included in Equipment held for refurbishment or sale as of August 31, 1997.
EQUIPMENT ON OPERATING LEASES -- Equipment on operating leases is stated at
cost. Depreciation to residual values is provided on the straight-line method
over the estimated useful lives of five to sixteen years for trailers and
containers, five to twenty years for railcar equipment and five to ten years for
vehicle transportation equipment. Management evaluates the remaining life and
recoverability of equipment in light of current conditions. If business
conditions change, such estimates could also change.
PROPERTY, PLANT AND EQUIPMENT -- Property, plant and equipment is stated at
cost. Depreciation is provided on the straight-line method over estimated useful
lives of three to twenty years.
PREPAID EXPENSES AND OTHER ASSETS -- Loan fees are capitalized and amortized as
interest expense over the life of the related borrowings. Goodwill is amortized
over twelve years.
MAINTENANCE AND WARRANTY RESERVES -- Maintenance reserves are estimated and
provided over the term of the underlying lease agreement. Warranty reserves are
estimated and charged to operations in the period provided.
INCOME TAXES -- The liability method is used to account for income taxes.
Deferred income taxes are provided for the effects of temporary differences
arising from differences in the recognition of revenues and expenses for
financial statement and income tax reporting purposes.
MINORITY INTEREST -- Minority interest represents unaffiliated investors'
capital investment and interest in the undistributed earnings and losses of
consolidated entities.
REVENUE RECOGNITION -- Revenue from railcar manufacturing or refurbishment is
recognized at the time railcars are completed and accepted by unrelated
customers.
Direct finance lease revenue is recognized over the lease term in a manner which
produces a constant rate of return on the net investment in the lease. Certain
interim rentals are based on estimated costs.
<PAGE>
Operating lease revenue is recognized as earned under the lease terms. Payments
received in advance are deferred until earned.
FORWARD EXCHANGE CONTRACTS -- Operations in Canada give rise to market risks
from changes in foreign currency exchange rates. Forward exchange contracts are
entered into to hedge the risk of foreign currency fluctuations. Realized and
unrealized gains and losses are deferred and recognized in earnings concurrent
with the hedged transaction. Even though forward exchange contracts are entered
to mitigate the impact of currency fluctuations, certain exposure remains, which
may impact operating results.
NET EARNINGS PER SHARE -- Net earnings per share is computed on the basis of the
weighted average number of common shares outstanding.
STOCK-BASED COMPENSATION -- Compensation expense for stock-based employee
compensation continues to be measured using the method prescribed by APB Opinion
No. 25, Accounting for Stock Issued to Employees. If material, pro forma
disclosures of net income and earnings per share will be made as if the method
prescribed by Statement of Financial Accounting Standards ("SFAS") No. 123,
Accounting for Stock-Based Compensation, had been applied in measuring
compensation expense.
STATEMENTS OF CASH FLOWS -- All highly-liquid investments with a maturity of
three months or less are considered cash equivalents.
ACCOUNTING ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
RECLASSIFICATIONS -- Certain reclassifications have been made to prior years'
consolidated financial statements to conform with the 1997 presentation.
PROSPECTIVE ACCOUNTING CHANGES -- SFAS No. 128, Earnings Per Share, requires
companies to present two measures of earnings per share, basic and diluted. If
SFAS No. 128 had been adopted for all periods presented, basic and diluted
earnings per share would not have materially differed from reported earnings per
share. SFAS No. 128 will be adopted in the second quarter of fiscal year 1998.
Early adoption is not permitted.
SFAS No. 130, Reporting Comprehensive Income, establishes requirements for
disclosure of comprehensive income. The new standard becomes effective in fiscal
year 1999.
SFAS No. 131, Disclosure about Segments of an Enterprise and Related
Information, establishes standards for disclosure about operating segments in
annual financial statements and requires disclosure of selected information
about operating segments in interim financial reports. The new standard becomes
effective in fiscal year 1999. There will not be any substantial changes to
disclosures at the time SFAS No. 131 is adopted.
The company did not elect early adoption of SFAS No. 130 or SFAS No. 131.
NOTE 3 -- DISCONTINUED OPERATIONS AND DIVESTITURES
During 1997 a plan was adopted to discontinue the third party transportation
logistics segment as well as to sell the trailer and container leasing
operations in order to focus on core business operations of manufacturing and
related leasing and services.
DISCONTINUED OPERATIONS -- Due to the intended divestiture of the logistics
segment, it has been accounted for as a discontinued operation and, accordingly,
the results of operations have been excluded from continuing operations in the
Consolidated Statements of Operations for all applicable periods. An estimated
pre-tax loss on disposal of $12,800, which includes an adjustment of assets to
market value, estimated closedown expenses and anticipated operating losses of
$800 through final disposal, has been reflected as an anticipated loss on
discontinued operations. Discussions with potential purchasers of the logistics
segment are currently underway. Information relating to the operating results
for the discontinued operations for the years ended August 31, 1997 and 1996 are
as follows:
1997 1996
------------------------------
Revenue $ 53,249 $ 10,070
Costs and expenses 57,545 10,652
------------------------------
Loss before income taxes (4,296) (582)
Less income tax benefit 1,784 244
------------------------------
Net loss $ (2,512) $ (338)
------------------------------
------------------------------
DIVESTITURES -- A portion of the trailer and container lease fleet was sold
during the fourth quarter of 1997. Subsequent to year end, the sale of
substantially all of the remaining trailer and container fleet was completed.
The
<PAGE>
aggregate proceeds from all of the sales was approximately $86,000. Certain
proceeds amounting to $9,300, are in the form of a note receivable to be paid
over 4 years commencing September 1997. An estimated pre-tax loss of
approximately $1,600 has been included in the Consolidated Statements of
Operations in Leasing and services -- special charges. Trailer and container
leasing operations contributed revenue of approximately $31,400, $26,800 and
$25,300 for the years ended August 31, 1997, 1996 and 1995.
NOTE 4 -- INVENTORIES
1997 1996
------------------------------
Manufacturing supplies
and raw materials $ 5,999 $ 5,856
Work-in-process 42,582 60,474
Assets held for sale 38,652 9,659
------------------------------
$ 87,233 $ 75,989
------------------------------
------------------------------
NOTE 5 -- INVESTMENT IN DIRECT FINANCE LEASES
1997 1996
------------------------------
Future minimum receipts
on lease contracts $ 303,910 $ 354,538
Less amounts for
maintenance, insurance
and taxes (64,264) (74,561)
------------------------------
Net minimum lease receipts 239,646 279,977
Estimated residual values 55,405 56,695
Unearned finance charges (112,630) (146,365)
------------------------------
$ 182,421 $ 190,307
------------------------------
------------------------------
Minimum future receipts on the direct finance lease contracts are as follows:
YEAR ENDING AUGUST 31,
1998 $ 51,401
1999 50,389
2000 48,726
2001 47,586
2002 39,091
Thereafter 66,717
----------
$ 303,910
----------
----------
NOTE 6 -- EQUIPMENT ON OPERATING LEASES
1997 1996
------------------------------
Railcar equipment
and other $ 140,701 $ 113,621
Trailers and containers -- 123,863
------------------------------
140,701 237,484
Accumulated depreciation (38,581) (63,090)
------------------------------
$ 102,120 $ 174,394
------------------------------
------------------------------
In addition to the above equipment, certain railcar equipment is leased by the
company and subleased to customers under noncancelable operating leases.
Trailers and containers with a carrying value of approximately $56,500 were
reclassified as equipment held for refurbishment or sale as of August 31, 1997.
Aggregate minimum future amounts receivable under all noncancelable operating
leases and subleases are as follows:
YEAR ENDING AUGUST 31,
1998 $ 12,404
1999 10,400
2000 7,995
2001 6,562
2002 5,944
Thereafter 20,579
----------
$ 63,884
----------
----------
In addition, certain equipment is also operated under daily, monthly or mileage
arrangements. Associated revenues amounted to $33,611, $28,460 and $22,870 for
the years ended August 31, 1997, 1996 and 1995.
In the fourth quarter of 1997 the carrying value of vehicle transportation
equipment was adjusted to the anticipated net realizable value of the assets
based on projected future performance under existing contracts. This resulted in
a pre-tax charge of $6,775, which is included in Leasing and services -- special
charges in the Consolidated Statements of Operations, of which $1,200 was
allocated to the minority investors.
<PAGE>
NOTE 7 -- PROPERTY, PLANT AND EQUIPMENT
1997 1996
------------------------------
Land and improvements $ 8,068 $ 8,064
Machinery and equipment 33,082 28,715
Buildings and improvements 11,964 10,695
Other 14,793 9,818
------------------------------
67,907 57,292
Accumulated depreciation (22,982) (18,040)
------------------------------
$ 44,925 $ 39,252
------------------------------
------------------------------
NOTE 8 -- REVOLVING NOTES
A $30,000 operating line of credit, bearing interest primarily at prime, is
available through February 2000 to provide working capital for the domestic
manufacturing operations based on defined receivables and inventory. Borrowings
outstanding as of August 31, 1997 and 1996 were $14,775 and $1,650.
An $18,043 (at the August 31, 1997 exchange rate) operating line of credit,
bearing interest primarily at Canadian prime plus 1.125%, is available through
March 1998 for working capital and certain capital expenditures for the Canadian
manufacturing operation based on defined receivables and inventory. An
additional $13,712 temporary borrowing facility, bearing interest at Canadian
prime plus 1.125% is available through October 1997 for financing certain
inventory. Total borrowings outstanding as of August 31, 1997 and 1996 for
Canadian manufacturing operations were $21,934 and $11,664.
Effective September 1, 1997 a $60,000 line of credit, was obtained to provide
working capital and interim financing of equipment for the leasing and services
operations through May 1999. Borrowings under this line bear interest at rates
which vary depending upon the type of borrowing and certain defined ratios. This
facility replaced a $43,000 agreement which had outstanding borrowings as of
August 31, 1997 and 1996 of $21,000 and $14,500.
The applicable prime rate for domestic and Canadian borrowings was 8.5% and
4.75% as of August 31, 1997.
NOTE 9 -- ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
1997 1996
------------------------------
MANUFACTURING
Accounts payable and
accrued liabilities $ 29,694 $ 37,165
Accrued payroll and
related liabilities 7,872 9,545
Warranty reserves 4,536 3,214
------------------------------
42,102 49,924
LEASING AND SERVICES
Maintenance and
warranty reserves 30,685 26,464
Estimated loss on disposal 12,800 --
Accrued payroll and
related liabilities 3,644 5,298
Accounts payable and
accrued liabilities 2,284 25,891
Other 14,008 10,556
------------------------------
63,421 68,209
------------------------------
$ 105,523 $ 118,133
------------------------------
------------------------------
NOTE 10 -- NOTES PAYABLE
1997 1996
------------------------------
MANUFACTURING
Term loans, interest
at 11%, due in
monthly installments
through June 2008 $ 11,741 $ 12,051
Other notes payable 2,492 2,016
------------------------------
14,233 14,067
LEASING AND SERVICES
Equipment notes payable 187,553 200,705
Other notes payable -- 1,506
------------------------------
187,553 202,211
------------------------------
$ 201,786 $ 216,278
------------------------------
------------------------------
An additional $10,000, five-year, term loan facility is available through
December 1998 to fund certain domestic manufacturing capital expenditures. As of
August 31, 1997 and 1996, there were no borrowings outstanding under this
facility.
<PAGE>
Equipment notes payable, bearing interest at rates varying from Libor plus 1.6%
to fixed rates of 7.1% to 10.8%, are due in varying installments through June
2005. The Libor interest rate was 5.8% as of August 31, 1997. The weighted
average remaining contractual life and weighted average interest rate of
equipment notes payable as of August 31, 1997 and 1996, of which $185,501 and
$151,744 bear fixed rates of interest, was approximately 58 and 71 months and
8.6% and 8.5%.
Substantially all assets of the company are pledged as collateral for the notes
payable and revolving notes. Principal payments on the notes payable are as
follows:
LEASING
MANUFACTURING AND SERVICES
------------------------------
Year ending August 31,
1998 $ 1,335 $ 54,072
1999 1,174 24,922
2000 1,251 26,907
2001 1,116 28,070
2002 1,082 27,542
Thereafter 8,275 26,040
------------------------------
$ 14,233 $ 187,553
------------------------------
------------------------------
The revolving and operating lines of credit, along with certain equipment notes
payable, contain covenants with respect to various subsidiaries, the most
restrictive of which limit the payment of dividends by subsidiaries and require
certain levels of tangible net worth, ratio of debt to equity and debt service
coverage.
NOTE 11 -- SUBORDINATED DEBT
1997 1996
------------------------------
Subordinated notes $ 38,089 $ 41,668
Subordinated notes -- hulks -- 2,886
------------------------------
$ 38,089 $ 44,554
------------------------------
------------------------------
Subordinated notes were issued for railcars purchased as part of an agreement
described in Note 19. The notes bear interest at 9% and 11%, with substantially
all of the principal due ten years from the date of the note, and are
subordinated to all other liabilities of a subsidiary. Approximately $96 becomes
due in 1998, $268 in 2001, and $10,272 in 2002 with the remaining balance due
after 2002.
NOTE 12 -- STOCKHOLDERS' EQUITY
Certain loan covenants restrict the transfer of funds from the subsidiaries to
the parent company in the form of cash dividends, loans, or advances. The
restricted net assets of subsidiaries amounted to $33,992 as of August 31, 1997.
Consolidated retained earnings at August 31, 1997 were not restricted as to the
payment of dividends.
A stock incentive plan was adopted July 1, 1994 which provides for granting
compensatory and non-compensatory options to employees and others. Outstanding
options generally vest at 50% two years from grant with the balance five years
from grant.
The following table summarizes the stock option transactions:
Weighted
Average
Shares Option
Under Price
Option Per Share
------------------------------
Balance at August 31, 1994 714 $ 14
Options granted 4 14
Options canceled (36) 14
------------------------------
Balance at August 31, 1995 682 14
Options granted 162 11
Options canceled (56) 14
------------------------------
Balance at August 31, 1996 788 13
Options canceled (30) 14
------------------------------
Balance at August 31, 1997 758 $ 13
------------------------------
------------------------------
Options outstanding at August 31, 1997 have exercise prices ranging from $11 to
$17 per share and have a remaining contractual life of 5.4 years. As of August
31, 1997, options to purchase 321 shares were exercisable and 622 shares were
available for grant. Options to purchase 592 and 698 shares were available for
grant at August 31, 1996 and 1995.
As discussed in Note 2, the disclosure-only provisions of SFAS No. 123 have been
adopted. Accordingly, no compensation cost has been recognized for stock options
granted with an exercise price equal to the fair value of the underlying stock
on the date of grant. Had compensation costs been determined based on the
estimated fair value of the options at the date of grant, the net income (loss)
and net income (loss) per share for the years ended August 31, 1997 and August
31, 1996 would not have differed materially from the amounts reported.
<PAGE>
The Chairman and the Chief Executive Officer, who are the founding and majority
stockholders, have entered into an agreement whereby they have agreed to vote
their shares together to elect each other as directors of the company and with
respect to all other matters put to a vote of the stockholders.
NOTE 13 -- RELATED PARTY TRANSACTIONS
Fees for managing certain trailers and containers of $562 were paid to an
affiliated partnership for each of the years ended August 31, 1997, 1996 and
1995. Maintenance, management and other fees received from a related entity
under a management agreement were $1,440, $930 and $884 for the years ended
August 31, 1997, 1996 and 1995.
In July 1996, the remaining 50% of a subsidiary was acquired from an executive
officer and director. The purchase price included $500 cash, a $250 note payable
bearing interest at 7% due on or before July 2000 and a contingent amount based
on the future value of certain operations.
A member of the board of directors of the Canadian operation also serves as a
director of the company from which the majority of the Canadian steel
requirements are acquired.
NOTE 14 -- EMPLOYEE BENEFIT PLANS
Defined contribution plans are available to substantially all U.S. employees.
Contributions are based on a percentage of employee contributions and amounted
to $737, $651 and $584 for the years ended August 31, 1997, 1996 and 1995.
A defined benefit pension plan is provided for Canadian employees covered by
collective bargaining agreements. The plan provides pension benefits based on
years of credited service. Contributions to the plan are actuarially determined
and are intended to fund the net periodic pension cost. The plan's assets,
obligations and pension cost are not material to the consolidated financial
statements.
Nonqualified deferred benefit plans exist for certain employees. Expenses
resulting from contributions to the plans, which are based on the earnings, were
$377, $626 and $278 for the years ended August 31, 1997, 1996 and 1995.
NOTE 15 -- INCOME TAXES
Components of income tax expense are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 4,547 $ 5,386 $ 7,906
State 284 1,302 1,879
Foreign 152 -- --
------------------------------------------
4,983 6,688 9,785
Deferred:
Federal (1,848) 5,441 2,723
State 442 1,203 608
Foreign 226 -- --
------------------------------------------
(1,180) 6,644 3,331
------------------------------------------
$ 3,803 $ 13,332 $ 13,116
------------------------------------------
------------------------------------------
</TABLE>
Income tax expense is computed at rates different than the statutory rates. The
reconciliation between effective and statutory rates is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------------------------------------
<S> <C> <C> <C>
Statutory rates 35.0% 35.0% 35.0%
State income taxes,
net of federal benefit 4.8 5.1 5.3
Impact of foreign taxes (1.8) (0.2) 1.7
Other 0.7 1.8 2.0
------------------------------------------
Effective income tax rate
on continuing operations 38.7% 41.7% 44.0%
------------------------------------------
------------------------------------------
</TABLE>
<PAGE>
The tax effects of temporary differences that give rise to significant portions
of deferred tax assets and deferred tax liabilities are as follows:
1997 1996
------------------------------
Deferred tax assets:
Alternative minimum
tax credit carryforward $ (18,409) $ (14,650)
Deferred participation (16,374) (13,918)
Maintenance and
warranty reserves (12,391) (11,524)
Accrued payroll and
related liabilities (4,479) (5,067)
Deferred revenue (898) (1,381)
Inventories and other (2,533) (1,665)
Net operating loss
carryforward (2,341) (548)
------------------------------
(57,425) (48,753)
Valuation allowance 141 639
------------------------------
(57,284) (48,114)
Deferred tax liabilities:
Accelerated depreciation 74,072 66,147
Other 4,406 4,341
------------------------------
Net deferred tax liability
attributable to continuing
operations 21,194 22,374
Net deferred tax asset
attributable to
discontinued
operation (7,285) (248)
------------------------------
Net deferred tax liability $ 13,909 $ 22,126
------------------------------
------------------------------
A valuation allowance has been provided for Canadian deferred tax assets which
was reduced in 1997 as a result of utilizing Canadian net operating loss carry
forwards.
NOTE 16 -- SEGMENT INFORMATION
The two business segments in which the company operates are manufacturing and
leasing and services of transportation equipment. A summary of selected
consolidated information for the industry segments is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------------------------------------
<S> <C> <C> <C>
Revenues:
Manufacturing $ 400,127 $ 485,765 $ 329,327
Elimination of
intersegment sales (74,626) (64,309) (34,111)
------------------------------------------
325,501 421,456 295,216
------------------------------------------
Leasing and
services 113,229 119,242 108,593
Elimination of
intersegment sales (7,810) (20,758) (16,083)
------------------------------------------
105,419 98,484 92,510
------------------------------------------
Total $ 430,920 $ 519,940 $ 387,726
------------------------------------------
------------------------------------------
Identifiable assets:
Manufacturing $ 180,262 $ 182,426 $ 154,768
Leasing and
services 400,256 433,062 377,621
------------------------------------------
Total $ 580,518 $ 615,488 $ 532,389
------------------------------------------
------------------------------------------
Capital expenditures:
Manufacturing $ 10,173 $ 6,690 $ 7,946
Leasing and
services 70,088 122,201 82,592
------------------------------------------
Total $ 80,261 $ 128,891 $ 90,538
------------------------------------------
------------------------------------------
Depreciation and
amortization:
Manufacturing $ 4,671 $ 3,997 $ 3,123
Leasing and
services 23,198 20,898 20,775
------------------------------------------
Total $ 27,869 $ 24,895 $ 23,898
------------------------------------------
------------------------------------------
</TABLE>
Revenues do not include sales of new railcars to, or refurbishment services
performed for, the leasing and services segment since intercompany transactions
are eliminated from manufacturing revenues. Marketing fees paid to the leasing
and services segment by the manufacturing segment are eliminated from leasing
and services revenue.
<PAGE>
Sales and marketing expenses of $6,264, $5,103 and $4,651 for the years ended
August 31, 1997, 1996 and 1995 have been allocated from the leasing and services
segment to the manufacturing segment. Such expenses represent costs which, in
the opinion of management, are reasonably allocable to the manufacturing
segment.
A portion of Greenbrier's manufacturing operations are located in Canada since
an acquisition in March 1995. The following table summarizes selected geographic
information:
<TABLE>
<CAPTION>
1997 1996 1995
------------------------------------------
<S> <C> <C> <C>
Revenues:
United States $ 321,538 $ 345,058 $ 354,888
Canada 109,382 174,882 32,838
------------------------------------------
Total $ 430,920 $ 519,940 $ 387,726
------------------------------------------
------------------------------------------
Earnings from continuing
operations before income
tax expense:
United States $ 6,574 $ 27,447 $ 31,218
Canada 3,250 4,498 (1,437)
------------------------------------------
Total $ 9,824 $ 31,945 $ 29,781
------------------------------------------
------------------------------------------
Identifiable assets:
United States $ 531,500 $ 570,743 $ 483,203
Canada 49,018 44,745 49,186
------------------------------------------
Total $ 580,518 $ 615,488 $ 532,389
------------------------------------------
------------------------------------------
</TABLE>
Intercompany sales between geographic areas, primarily from Canada to the U.S.,
were $38,765, $28,049, and $467 during 1997, 1996 and 1995.
NOTE 17 -- CUSTOMER CONCENTRATION
Revenue from the largest customers were 20% and 11% of total revenues for the
year ended August 31, 1997. Accounts receivable from these customers were 18% of
receivables as of August 31, 1997. Another significant customer accounted for
29% of 1996 revenues. Significant customers accounted for 42% and 11% of 1995
revenues.
NOTE 18 -- LEASE COMMITMENTS
Lease expense for railcar equipment leased under non-cancelable leases was
$3,767, $3,204 and $1,250 for the years ended August 31, 1997, 1996 and 1995.
Aggregate minimum future amounts payable under non-cancelable railcar equipment
leases are as follows:
YEAR ENDING AUGUST 31,
1998 $ 4,045
1999 3,734
2000 2,143
2001 18
----------
$ 9,940
----------
----------
Operating leases for domestic manufacturing and refurbishment facilities expire
at various dates through September 2003. Office space and certain manufacturing
and office equipment are rented under operating leases which expire at various
dates through June 2001. Rental expense for manufacturing facilities, office
space and equipment was $2,652, $2,023 and $1,285 for the years ended August 31,
1997, 1996 and 1995.
Aggregate minimum future amounts payable under non-cancelable operating leases
are as follows:
YEAR ENDING AUGUST 31,
1998 $ 1,678
1999 1,400
2000 1,299
2001 1,091
2002 484
Thereafter 193
----------
$ 6,145
----------
----------
<PAGE>
NOTE 19 -- COMMITMENTS AND CONTINGENCIES
An agreement entered into in 1990 under which the company agreed to purchase and
refurbish over ten thousand used railcars includes an option, which, under
certain conditions, provides for the seller to repurchase the railcars for the
original acquisition cost to the company at the date the underlying subordinated
notes are due. Should such option be exercised, amounts due under the
subordinated notes would be retired from the repurchase proceeds.
The agreement also provides that, under certain conditions, the seller will
receive a percentage of operating earnings, as defined. Amounts accrued are
referred to as participation and are included as deferred participation in the
Consolidated Balance Sheets. Payment of deferred participation is estimated to
be $1,193 in 2000, $2,785 in 2001, and $4,513 in 2002 with the remaining balance
due after 2002. Participation expense was $9,346, $8,670 and $9,918 for the
years ended August 31, 1997, 1996 and 1995.
As of August 31, 1997, forward exchange contracts entered into to hedge the risk
of foreign currency fluctuations of U.S. dollar accounts receivable related to
firm commitments for the sale of railcars to be manufactured in Canada were $57
million maturing at various dates through December 1997. No credit loss from
counterparty non-performance is anticipated.
Environmental studies have been conducted by the company of its owned and leased
properties which indicate additional investigation and some remediation may be
necessary. The outcome cannot be predicted with certainty; however, management
believes that any ultimate liability resulting from environmental issues will
not materially affect the financial position or results of operations of the
company. Management believes that its operations adhere to sound environmental
practices, applicable laws, and regulations.
The company is involved as a defendant in litigation in the ordinary course of
business, the outcome of which cannot be predicted with certainty. Management
believes that any ultimate liability will not materially affect the financial
position or results of operations of the company.
Agreements were entered into with several equipment manufacturers for the
purchase of railcars, and as of August 31, 1997 approximately $7,000 of
equipment remained to be purchased under these agreements.
Effective July 1, 1994, the company entered into employment agreements, which
expire August 31, 2004, with the Chairman and the Chief Executive Officer, which
provide each with a minimum annual salary and a bonus calculated based on
operating results, as defined. The minimum annual aggregate defined payment
under the agreements is $600 and the maximum is $2,000.
NOTE 20 -- FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair values of the company's financial instruments and the methods
and assumptions used to estimate such fair values, are as follows:
1997
------------------------------
Carrying Estimated
amount fair value
------------------------------
Notes payable and
subordinated debt $ 239,875 $ 235,257
Deferred participation 39,032 24,170
1996
------------------------------
Carrying Estimated
amount fair value
------------------------------
Notes payable and
subordinated debt $ 260,832 $ 257,078
Deferred participation 32,316 17,618
The carrying amount of cash and cash equivalents, restricted cash and
investments, accounts and notes receivable, revolving notes and accounts payable
and accrued liabilities is a reasonable estimate of fair value of these
financial instruments. Estimated rates currently available to the company for
debt with similar terms and remaining maturities are used to estimate the fair
value of notes payable and subordinated debt. The fair value of deferred
participation is estimated by discounting the estimated future cash payments
using the company's estimated incremental borrowing rate.
<PAGE>
QUARTERLY RESULTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Unaudited operating results by quarter for 1997 and 1996 are as follows(1):
<TABLE>
<CAPTION>
First Second Third Fourth
-------------------------------------------------------
<S> <C> <C> <C> <C>
1997
Manufacturing revenues $ 101,879 $ 74,558 $ 55,481 $ 93,583
Leasing and services revenues 25,472 27,777 27,101 25,069
-------------------------------------------------------
Total revenues $ 127,351 $ 102,335 $ 82,582 $ 118,652
-------------------------------------------------------
-------------------------------------------------------
Earnings before income tax expense:
Manufacturing $ 2,890 $ 1,383 $ (1,265) $ 446
Leasing and services 4,567 6,039 4,530 (2,644)
Corporate (1,627) (1,908) (1,169) (1,418)
-------------------------------------------------------
$ 5,830 $ 5,514 $ 2,096 $ (3,616)
-------------------------------------------------------
-------------------------------------------------------
Net earnings (loss) $ 2,920 $ 2,177 $ 780 $ (10,048)(2)
-------------------------------------------------------
-------------------------------------------------------
Net earnings per share $ 0.21 $ 0.15 $ 0.06 $ (0.71)
-------------------------------------------------------
-------------------------------------------------------
1996
Manufacturing revenues $ 95,109 $ 117,394 $ 95,842 $ 113,111
Leasing and services revenues 21,656 24,697 25,298 26,833
-------------------------------------------------------
Total revenues $ 116,765 $ 142,091 $ 121,140 $ 139,944
-------------------------------------------------------
-------------------------------------------------------
Earnings before income tax expense:
Manufacturing $ 5,511 $ 7,733 $ 5,496 $ 5,189
Leasing and services 2,299 3,740 4,121 4,852
Corporate (1,554) (1,914) (1,487) (2,041)
-------------------------------------------------------
$ 6,256 $ 9,559 $ 8,130 $ 8,000
-------------------------------------------------------
-------------------------------------------------------
Net earnings $ 3,363 $ 5,579 $ 4,901 $ 4,432
-------------------------------------------------------
-------------------------------------------------------
Net earnings per share $ 0.24 $ 0.39 $ 0.35 $ 0.31
-------------------------------------------------------
-------------------------------------------------------
</TABLE>
(1) Certain amounts differ from the amounts reported previously as a
result of discontinued operations.
(2) Net loss for the fourth quarter of 1997 resulted from the write-down
of investments in third-party transportation logistics and vehicle
transportation equipment, coupled with exit costs related to trailer
and container leasing activities.
<PAGE>
INVESTOR INFORMATION
CORPORATE OFFICES:
The Greenbrier Companies, Inc.
One Centerpointe Drive, Suite 200
Lake Oswego, Oregon 97035
(503) 684-7000
ANNUAL STOCKHOLDERS' MEETING:
January 13, 1998, 2:00 p.m.
Hilton Hotel
921 SW Sixth Avenue
Portland, Oregon
FINANCIAL INFORMATION:
Requests for copies of this annual report and other financial information should
be made to Investor Relations, The Greenbrier Companies, Inc.,
One Centerpointe Drive, Suite 200,
Lake Oswego, Oregon 97035
LEGAL COUNSEL:
Tonkon, Torp LLP
Portland, Oregon
INDEPENDENT AUDITORS:
Deloitte & Touche LLP
Portland, Oregon
TRANSFER AGENT:
First Chicago Trust Company of New York
525 Washington Boulevard
7th Floor
Jersey City, New Jersey 07303
Greenbrier's Transfer Agent maintains stockholder records, issues stock
certificates and will distribute dividends. Requests concerning these matters
should be directed to First Chicago Trust Company of New York.
STOCKHOLDER INQUIRIES:
Please contact Mark Rittenbaum, Investor Relations (503) 684-7000
COMMON STOCK:
Greenbrier's common stock has been traded on the New York Stock Exchange under
the symbol GBX since July 14, 1994. There were approximately 200 holders of
record of common stock as of October 31, 1997. The following table shows the
reported high and low sales price of Greenbrier common stock on the New York
Stock Exchange.
High Low
------------------------------
FISCAL 1997
First quarter $ 11.88 $ 7.75
Second quarter $ 11.63 $ 9.38
Third quarter $ 12.13 $ 8.25
Fourth quarter $ 13.38 $ 10.50
FISCAL 1996
First quarter $ 13.00 $ 10.50
Second quarter $ 13.00 $ 10.38
Third quarter $ 17.88 $ 11.25
Fourth quarter $ 16.00 $ 11.38
FISCAL 1995
First quarter $ 19.38 $ 16.25
Second quarter $ 17.75 $ 14.25
Third quarter $ 16.50 $ 13.38
Fourth quarter $ 15.75 $ 12.00
FISCAL 1994
Fourth quarter $ 18.50 $ 14.00
Cash dividends of $.06 per share have been paid quarterly on the common stock
since December 1994. There is no assurance as to future dividends as they are
dependent upon future earnings, capital requirements and financial condition.
<PAGE>
Exhibit 21.1
THE GREENBRIER COMPANIES, INC.
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
Names Under
State of Which Does
Name Incorporation Business
---- ------------- --------
<S> <C> <C>
Autostack Corporation OR N/A
Autostack General Partner, Inc. DE N/A
Autostack Partners Limited Partnership DE N/A
Greenbrier Capital Corporation (formerly known as Greenbrier
Intermodal, Inc.) CA N/A
Greenbrier Equipment Services, Inc. CA N/A
Greenbrier Rental Services, Inc. CA N/A
Greenbrier Leasing Corporation DE Greenbrier
Intermodal
Greenbrier Partners, Inc. CA N/A
Redon General Partnership GA N/A
Greenbrier Partners Limited Partnership CA N/A
Greenbrier Rail Car Services, Inc. DE N/A
Greenbrier Railcar, Inc. DE N/A
Greenbrier Transportation, Inc. DE N/A
Greenbrier Transportation Limited Partnership DE N/A
Gunderson, Inc. (formerly known as BW Industries, Inc.) OR N/A
Gunderson Leasing, Inc. OR N/A
Gunderson Marine, Inc. OR N/A
Gunderson Springfield, Inc. (formerly known as Gunderson Rail Car
Services, Inc.) OR N/A
Gunderson Wheel Services, Inc. OR N/A
Tolan O'Neal Transportation & Logistics, Inc. WA N/A
2441001 Nova Scotia Limited Nova Scotia,
Canada N/A
Trenton Works Limited Nova Scotia,
Canada N/A
Superior Transportation Systems, Inc. OR N/A
Interamerican Logistics Inc. Ontario,
Canada N/A
</TABLE>
<PAGE>
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements Nos.
333-08035, 33-3392, and 33-80869 of The Greenbrier Companies, Inc. on Forms S-8
of our reports dated November 12, 1997, appearing in and incorporated by
reference in this Annual Report on Form 10-K of The Greenbrier Companies, Inc.
for the year ended August 31, 1997.
DELOITTE & TOUCHE LLP
Portland, Oregon
November 24, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED AUGUST 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> SEP-01-1996
<PERIOD-END> AUG-31-1997
<CASH> 21,744<F1>
<SECURITIES> 0
<RECEIVABLES> 61,024
<ALLOWANCES> 0
<INVENTORY> 87,233
<CURRENT-ASSETS> 0
<PP&E> 44,925
<DEPRECIATION> 0
<TOTAL-ASSETS> 580,518
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 14
<OTHER-SE> 104,058
<TOTAL-LIABILITY-AND-EQUITY> 580,518
<SALES> 0
<TOTAL-REVENUES> 430,920
<CGS> 347,725
<TOTAL-COSTS> 421,096
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,148
<INCOME-PRETAX> 9,824
<INCOME-TAX> 3,803
<INCOME-CONTINUING> 6,021
<DISCONTINUED> 10,192
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,171)
<EPS-PRIMARY> (.29)
<EPS-DILUTED> (.29)
<FN>
<F1>OF THIS AMOUNT, $7,360 IS RESTRICTED.
</FN>
</TABLE>
