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EXHIBIT 10.4
ASSET PURCHASE AGREEMENT
Between
FIRST SIERRA FINANCIAL, INC.
("FIRST SIERRA"),
FIRST SIERRA ACQUISITION, INC.
("NEWCO")
and
GENERAL INTERLEASE CORPORATION
("GIC")
and
XXXX XXXXXX AND XXXXXX XXXXXXX
(THE "STOCKHOLDERS")
Dated: June 28, 1996
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of this 28th
day of June, 1996, by and among GENERAL INTERLEASE CORPORATION ("GIC"), a
Florida corporation, and its shareholders, XXXX X. XXXXXX and XXXXXX XXXXXXX
(the "Stockholders") and FIRST SIERRA FINANCIAL, INC. ("First Sierra"), a
Delaware corporation, and its wholly owned subsidiary, FIRST SIERRA
ACQUISITION, INC. ("NEWCO"), a Delaware corporation.
Premises
WHEREAS, GIC is engaged in the business of leasing revenue producing
equipment and rolling stock to businesses; and
WHEREAS, the Stockholders are the record and beneficial owners and
holders of all of the issued and outstanding shares of Common Stock ("GIC
Common Stock"), of GIC; and
WHEREAS, the parties desire that Newco acquire substantially all of
the assets of GIC in a reorganization that complies with the terms of Section
368(a)(1)(C) of the Internal Revenue Code of 1986, as amended, and upon the
terms and conditions and for the consideration herein set forth;
AGREEMENT
NOW, THEREFORE, on the stated premises and for and in consideration of
the mutual covenants and agreements hereinafter set forth and the mutual
benefits to the parties to be derived herefrom, it is hereby agreed as follows:
SECTION 1
PURCHASE AND SALE OF ACQUIRED ASSETS
1.1 Acquired Assets. On the Closing Date, in accordance
with this Agreement, GIC shall sell, transfer, assign and convey, and Newco
will purchase, all assets of every kind and character of GIC used by GIC in the
operation of its business (the "Acquired Assets"), such Acquired Assets to
include, without limitation:
(a) That certain real property lease of GIC's business location at
0000 Xxxxxxxxx 00xx Xxxxxx Xxxxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx,
which lease is attached hereto as Schedule 3.15 (the "Real
Property Lease");
(b) All of GIC's leases and lease/financing arrangements,
including without limitation, the Leases (as defined in
Section 3.9 hereof), the Lease Documents (as defined in
Section 3.9 hereof), all rights in and to the Equipment (as
defined in Section 3.9
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hereof), and all rights in and to the Scheduled Payments (as
defined in Section 3.9 hereof);
(c) All rights in and to the residual values of the Leases;
(d) All accounts receivable, notes receivable and other
receivables, as well as all other rights of GIC to payment
under the Leases or for the sale or lease of any property or
for services rendered, including without limitation those
which are not evidenced by instruments or chattel paper,
whether or not they have been earned by performance or have
been written off or reserved against as a bed debt or doubtful
account in any financial statements of the GIC; together with
all instruments and all documents of title representing any of
the foregoing, all rights in any merchandise or goods which
any of the same represent, and all rights, title, security and
guarantees in favor of the Seller with respect to any of the
foregoing, including without limitation, any right of stoppage
in transit (the "Receivables"). The Receivables include all
accounts, notes and other receivables of GIC as of May 31,
1996 (as listed on Schedule 3.13) as well as all additions
thereto made in the ordinary course of GIC's business between
May 31, 1996 and the Closing, but excludes all payments
thereon and reductions thereto made in the ordinary course of
GIC's business during the latter period which do not violate
the terms of this Agreement.
(e) All cash on deposit in GIC's bank accounts, including all
uncleared deposits in such accounts, the xxxxx cash of GIC,
all temporary cash investments and instruments representing
same and all other cash and cash equivalents of GIC;
(f) All automobiles, trucks, trailers and other vehicles described
in the attached Schedule 1.1(f) (the "Vehicles");
(g) All furniture, equipment, machinery, appliances, implements,
spare parts, supplies, and other tangible personal property of
every kind and description (other than the Vehicles and the
Equipment) located either in GIC's business offices or
elsewhere insofar as any of the foregoing relates to the
operations and business of GIC (the "Furniture and
Equipment"). The Furniture and Equipment includes all
Furniture and Equipment owned or leased by GIC as of May 31,
1996 (as listed on Schedule 3.16) as well as all additions
thereto made in the ordinary course of business between May
31, 1996 and the Closing, but excludes all conveyances or
other dispositions thereof made in the ordinary course of
GIC's business during the latter period which do not violate
the terms of this Agreement;
(h) All patents, licenses, trademarks, tradenames, servicemarks,
copyrights, technology, know-how, data, covenants by others
not to compete, rights and privileges used by GIC in the
conduct of its operations and business, including the
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right to recover for infringement thereof, including without
limitation everything listed and described on the attached
Schedule 3.14;
(i) To the extent transferable by GIC, all federal, state and
local permits, authorizations, certificates, approvals,
registrations, variances, exemptions, rights-of-way,
franchises, rights of other kind and character which are
required by law with respect to the operations and business of
GIC as it is now being conducted;
(j) All agreements, contracts, understandings, plans, obligations,
commitments and other documents which are material to and/or
utilized by GIC in its operations and business;
(k) All right, title and interest of GIC in and to all deposits,
prepaid expenses (including without limitation prepaid
insurance, maintenance and rent, and all security deposits
underlying leases), and other current assets;
(l) All insurance proceeds and insurance claims of GIC, relating
to all or any part of GIC's business or the Acquired Assets
and, to the extent transferable by GIC, the benefit of and the
right to enforce the covenants and warranties, if any, which
GIC is entitled to enforce with respect to its business or the
Acquired Assets;
(m) All books, records, papers and instruments of what ever nature
and wherever located which (i) relate to and/or are utilized
in the operations or business of GIC or the Acquired Assets,
or (ii) are required or necessary in order for Newco to
conduct the operations and business of GIC from and after the
Closing in the manner in which it is presently being
conducted, including, without limitation, blueprints, plans,
specifications, plats, maps, surveys, building and machinery
diagrams, drawings, accounting and financial records,
maintenance and production records, operations and management
reports, personnel and labor relations records, environmental
records and reports, copies of sales and property tax records
and returns, customer lists, sales records and other customer
data relating to the operations and business of GIC; provided,
however, that GIC shall retain all corporate minute books,
stock registers, corporate kit, and any other documents
related to GIC's internal corporate matters.
(n) The name "General Interlease Corporation"; and
(o) All other or additional privileges, rights, claims, interests,
properties, options and assets of GIC of every kind and
description and wherever located which are used or intended
for use in connection with, or which are necessary to the
continued conduct of, the operations and business of GIC as
presently being conducted; provided, however, that GIC shall
retain all rights relating to any causes of action
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existing or accruing prior to the Closing Date in which GIC is
the plaintiff or is otherwise entitled to remedies.
1.2 Purchase Price. In consideration of the sale, assignment, and
delivery of GIC's business and the Acquired Assets, Newco shall pay to GIC and
GIC shall receive, subject to the terms of this Agreement, Fifty-six thousand
seven hundred eighteen (56,718) shares of Series A Convertible Preferred Stock,
$.01 par value, of First Sierra (the "Series A Preferred Stock"), which shall
be paid as follows:
(i) Twenty-eight thousand three hundred fifty-nine
(28,359) shares of the Series A Preferred Stock
(representing $1,320,000 of the purchase price) shall
be delivered at Closing to GIC;
(ii) Twenty-eight thousand three hundred fifty-nine
(28,359) shares of Series A Preferred Stock
(representing $1,320,000 of the purchase price) (the
"Escrowed Stock") will be placed into escrow pursuant
to the terms of Section 6.7, and such Escrowed Stock
to be maintained as security for purposes of any
indemnification claims under Section 6.1.
1.3 Terms of Series A Preferred Stock. The terms and provisions
of the Series A Preferred Stock shall be as provided in the Certificate of
Designation, Preferences, Rights and Limitations of the Series A Preferred
Stock, a copy of which is attached hereto as Exhibit "A" (the "Series A
Designation"). Subject to the terms of the Series A Designation, and subject
to Section 6.7 of this Agreement with respect to the Escrowed Stock, the rights
and preferences of the Series A Preferred Stock are as follows:
(a) Conversion Rate. Each share of the Series A Preferred Stock
issuable to the Stockholder shall be convertible into one (1)
share of First Sierra Common Stock (the "Conversion Rate").
(b) Dividends. The holders of the Series A Preferred Stock shall
be entitled to receive, subject to the terms of the Series A
Designation, when and as declared by the First Sierra Board of
Directors, dividends at a per annum rate of $1.86 per share
(4% per annum of the $2,640,000 Series A Preferred Stock)
(the "Dividend Rate"), such dividends being non-cumulative.
The first dividend payment (and each dividend payment
thereafter) shall be declared and paid by First Sierra unless
Newco (or if the assets of Newco are ever sold to First
Sierra, the division of First Sierra consisting of such
assets, which shall be referred to herein as the "GIC
Division") does not obtain a margin of $3,750,000 from all
income generated by the GIC Division during the first 15
months after Closing, after being increased by the amount, if
any, by which the actual overhead for the GIC Division exceeds
$125,000 per month (the "Minimum Dividend Performance
Results"). As an example of the foregoing, if the actual
overhead during a 12 month period is
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$150,000 per month, the margin requirement would be $4,050,000
(=$3,750,000 + $300,000). In instances where First Sierra is
the ultimate funding source, fee income would be calculated by
taking the present value of the lease generated by the GIC
Division at a discount rate equal to the average 2 year
Treasury rate during the month the GIC Division's leases were
generated plus 250 basis points. Subject to the provisions of
Section 6.7, the first dividend payable to the Stockholder
would be paid on the sixteen (16) month anniversary of the
Closing Date. All future dividends would be calculated on a
twelve (12) month basis to determine if the Minimum Dividend
Performance Results have been achieved, and will be paid
within one month after each successive twelve (12) month
period thereafter until such time as the Preferred Stock is
fully converted. If the Minimum Dividend Performance Results
are met for the periods described above, then First Sierra
shall pay (and the Board of Directors will be required to
declare) the dividends described in this Section 1.3(b).
(c) Redemption. Unless the shares of Series A Preferred Stock
have been converted prior to such time, First Sierra shall be
obligated to redeem the Series A Preferred Stock on December
31, 2001, at an aggregate redemption price for all the shares
of $2,640,000.
(d) Letters of Credit. First Sierra agrees that its obligations
under the terms of the Series A Designation to distribute
assets on a preferential basis to the holders of the Series A
Preferred Shares in connection with the dissolution,
liquidation or winding up of the affairs of First Sierra, and
to redeem the Series A Preferred Shares on December 31, 2001,
shall, at all times while the Series A Preferred Shares are
outstanding, be secured by one or more irrevocable standby
letters of credit (together, with any and all renewals and
replacements, the "Letter of Credit") to be issued by Xxxxx
Fargo, a national banking association, for the account of the
Stockholders, as beneficiaries under the Letter of Credit (the
"Beneficiary"), in an amount equal to the aggregate redemption
price for the Series A Preferred Shares then outstanding. The
Letter of Credit is in the form attached hereto as Exhibit
"B". In the event First Sierra consummates an initial public
offering of its Common Stock, then the Letter of Credit shall
terminate if at any time the fair market value of the Common
Stock of First Sierra into which the Series A Preferred Stock
is convertible equals or exceeds one hundred twenty percent
(120%) of the value of the Series A Preferred Stock and the
Common Stock into which the Series A Preferred Stock is
convertible can be traded on the open market without
restriction or can be sold pursuant to Rule 144 promulgated
under the Securities Act of 1933. For purposes of this
subsection 1.3(d), the fair market value of the First Sierra
Common Stock shall be the closing price if the First Sierra
Common Stock is traded on a national stock exchange or is
traded over-the-counter and reported on the NASDAQ National
Market System. For purposes of this subsection 1.3(d), the
value of the Series A Preferred Stock shall be based upon the
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total amount of Series A Preferred Stock issued hereunder to
the Stockholder having a value of $2,640,000. The initial
Letter of Credit shall have an expiry date of no earlier than
one year from its date of issue and shall provide that, if
within 15 days prior to its expiry date, it is not renewed,
replaced or extended for an additional period of at least one
year (but in no event for any period extending past December
31, 2001) in the amount calculated above, the Stockholders
shall be entitled to draw as therein provided. Any replacement
Letter of Credit may be issued by Xxxxx Fargo or another
institution having combined capital, surplus and undivided
profits of at least $100 million. First Sierra will notify
the Stockholders of any replacement or renewal of the Letter
of Credit within 15 days of the expiry date. It is a
condition to any conversion of the Series A Preferred Shares
into Common Stock of the Purchaser pursuant to the Series A
Designation that the holders thereof have surrendered the
Letter of Credit without replacement, extension or renewal.
1.4 Allocation. The purchase price for the Acquired Assets shall
be allocated for all purposes in accordance with Schedule 1.4.
1.5 Taxes. Except as specifically provided in Section 1.6,
neither Newco nor First Sierra shall be responsible for a tax of any kind
related to any period prior to the Closing Date (and any period [or portion
thereof] which ends on the Closing Date) or arising by virtue of this
transaction.
1.6 Assumed Liabilities. Newco shall not assume or be bound by
any duties, responsibilities, obligations or liabilities, known or unknown,
contingent or otherwise, of GIC of any kind whatsoever unless expressly assumed
hereunder. Newco shall assume or agree to pay only the following debts,
liabilities and obligations of GIC, Seller, and none other: (i) Those accounts
payable and accrued expenses of GIC and the non-recourse debt of GIC, all as
reflected in the May 31, 1996 unaudited balance sheet of GIC, and all other
such accounts payable, accrued expenses, and non- recourse debt arising since
May 31, 1996 in the ordinary course of the business of GIC through the Closing
Date; and (ii) Deferred income tax liability associated with the GIC lease
assets purchased by Newco which involve accounting methods adopted by GIC for
such lease assets, in a total amount not to exceed $683,000 (the "Closing Date
Deferred Taxes"). The term "Closing Date Deferred Taxes" is inclusive of any
Federal and state income taxes reported in the tax returns of either Newco or
First Sierra which relate to any issue or tax return reporting position adopted
by GIC which is required to be continued by Newco or First Sierra, by virtue of
this transaction, in tax periods after the Closing Date and which relates to
any lease transaction which was consummated prior to the Closing. "Closing
Date Deferred Taxes" also includes any interest and/or penalties which may
result from an examination of the income tax returns of either Newco or First
Sierra to the extent that such examination involves any issue or tax return
reporting position adopted by GIC which is required to be continued by Newco or
First Sierra, by virtue of this transaction, in tax periods after the Closing
Date and which relates to any lease transaction which was consummated prior to
the Closing. The parties agree to work together to prepare the
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day immediately prior to Closing (and failing such, as soon as practicable
after Closing, but in any event before July 31, 1996), an accurate list of the
accounts payable, accrued expenses, and non-recourse debt of GIC as of the
Closing Date (the "Closing Date Liabilities").
1.7 Liabilities Not Assumed. Except as otherwise expressly
provided in Section 1.6, Newco does not assume, agree to pay, perform or
discharge or otherwise have any responsibility for any liability or obligation
of GIC, fixed or contingent, and whether arising or to be performed prior to,
on or after the Closing. Without in any way limiting the generality of the
foregoing, Newco does not assume, and GIC shall pay, perform, discharge, and
GIC and the Stockholders indemnify Newco and First Sierra against:
(a) any recourse debt;
(b) any federal, state, local or foreign income, sales, real or
personal property, gross receipts, estimated income, transfer,
use franchise, profits, stamp, employment taxes (whether
payable directly or via withholding) or other taxes,
assessments, fees, levies, imposts, duties, deductions or
other charges of any nature whatsoever (including without
limitation interest and penalties) imposed by any law, rule or
regulation (collectively, the "Taxes") which are attributable
or related to the Acquired Assets or the operations and
business of GIC for any periods ending on or before the
Closing, or which may be applicable because of GIC's sale of
its business or any of the Acquired Assets to the Newco
(collectively, the "Tax Obligations"), as well as any
liability in excess of Closing Date Deferred Taxes for Federal
or state income taxes, interest or penalties attributable any
issue or tax return reporting position adopted by GIC which is
required to be continued by Newco or First Sierra, by virtue
of this transaction, in tax periods after the Closing Date;
(c) (i) any obligation to bring, or liability for failure to have
brought, any of the Acquired Assets or GIC's business in
compliance with any building, zoning, environmental, health or
safety laws if the conditions giving rise to such obligation
or liability exist by reason of actions or inactions with
respect to such Acquired Assets or GIC's business prior to the
Closing; (ii) any obligation or liability with respect to the
clean-up of hazardous materials arising from GIC's actions;
and (iii) any obligation or liability which Seller may have to
third parties resulting from any violation by GIC of any such
laws or from a breach or a default by GIC under any permit;
(d) any liability or obligation under any of GIC's employee
benefit plan;
(e) any liability or obligation resulting from or arising out of
claims based on the service, work performed, product
manufactured or distributed, in whole or in part,
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by GIC, arising out of any act, omission, event, occurrence or
circumstance that existed on or before Closing, or relating to
any service or work performed.
(f) any liability or obligation arising from the breach by GIC of
any representation or warranty to any of its funding sources,
lenders, customers, or lessees;
(g) any liabilities or obligations incurred, arising from or out
of or in connection with any alleged or actual defect in the
Equipment (as defined in Section 3.9) or in connection with
any alleged or actual breach of warranty (whether express or
implied) in relation to any Equipment, where the facts giving
rise to such liabilities or such obligations occur prior to
the Closing Date;
(h) any liability based on any injury incurred prior to the
Closing Date to any of GIC's employees (which term when used
in this Section 1.7 shall include any such employee's
dependents, heirs, successors and assigns), whether or not
working, retired, laid off or deceased as of the Closing Date,
including but not limited to employee-employer discrimination
claims, any worker's compensation laws of any state, any
employment security laws or similar laws of any state, the
Xxxxx Acts, the Longshoreman's and Harbor Worker's
Compensation Act, or any other choses in action that may be
vested or may vest in any of the employees (collectively,
"Worker's Compensation Liabilities"); and
(i) any other liability or obligation except to the extent
expressly set forth in Section 1.6.
1.8 Procedures before Closing. The parties shall cooperate fully
in an orderly transition of the Acquired Assets and shall establish mutually
agreeable procedures: (i) to appropriately effect the transfer of the Acquired
Assets (including the Leases); and (ii) to allocate costs, expenses, and
revenues as of the Closing Date.
1.9 Tax Effect of Merger Transaction. It is the intention of the
parties that the Merger constitute a "reorganization" within the meaning of
Section 368(a)(1)(C) of the Internal Revenue Code of 1986, as amended (the
"Code"). The parties agree to file all of their respective tax returns and
reports in a manner consistent with such intention, and to not take any filing
position in a manner inconsistent with such intention unless compelled to do so
by court order or administrative decree. Each party agrees to furnish such
information and take such action as may be reasonably requested of the other
party in connection with the foregoing (which action shall not include any
change in the commercial terms of this Agreement and the other transactions
incident thereto). In no event, however, shall First Sierra or Newco be
required to incur any out-of-pocket expenses in defending such position or
providing such information or taking such action, nor shall the foregoing
constitute a warranty or guaranty that the transactions contemplated by this
Agreement will, in fact constitute such a reorganization.
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1.10 Stockholder Consents. The Stockholders, in their capacity as
the only shareholders of GIC, and First Sierra, in its capacity as the sole
shareholder of Newco, hereby consents to this Agreement and the transactions
contemplated hereby.
1.11 Further Assurances. Each party agrees to execute and deliver
from time to time after the Closing Date, at the reasonable request of the
other party or parties, and without further consideration, such additional
instruments of conveyance and transfer, and to take such other action as the
other party or parties may reasonably require to more effectively carry out the
terms and provisions of this Agreement.
SECTION 2 - OTHER AGREEMENTS
2.1 Taxes and Utilities. Any and all ad valorem taxes, rents,
utilities, and any other costs and expenses associated with the Acquired Assets
shall be prorated as of the Closing Date.
2.2 Sales Taxes. GIC agrees to furnish to Newco a status letter
from the state taxing authorities as evidence that all sales and use tax
liabilities of GIC as of the most recent available date have been fully
satisfied or provided for.
2.3 Name Change. GIC shall change its name immediately after the
Closing Date to a name that will not prevent Newco from utilizing the name
"General Interlease Corporation."
2.4 Employees. GIC will in good faith cooperate with Newco in
Newco's attempt to retain the employees of GIC (such employees are referred to
herein as the "Employees"). With regard to the Employees, Newco shall credit
the Employees with their length of service with GIC prior to Closing. Newco
shall credit the Employees for any accrued and untaken vacations and holidays
that such Employees may have had as employees of GIC immediately prior to the
Closing. Set forth hereto as Schedule 3.21 is a list of all such Employees,
along with a complete description of all vacation, holiday, and sick leave
policies, all incentive compensation policies, and any other policies of GIC
relating to Employees. Group health insurance will be provided by Newco
effective the date of Closing to all Employees comparable to current coverage.
Employee records for current employees, including payroll and wage and hour
records, will become the property of Newco which agrees to preserve the records
for any time required by governmental regulations.
2.5 Litigation Costs. Newco agrees to pay, up to an aggregate
amount not to exceed $2,000 per month, litigation costs and expenses of GIC in
defending those claims described in Section 3.26; provided, however, that such
litigation costs and expenses so paid shall be amounts for which Newco shall be
entitled to indemnification under Section 6 hereunder.
SECTION 3 - REPRESENTATIONS AND WARRANTIES
OF GIC AND STOCKHOLDERS
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GIC and the Stockholders hereby jointly and severally make the
following representations and warranties to Newco and First Sierra as of the
date hereof, and all such representations and warranties shall survive the
Closing Date:
3.1 Ownership of Shares. The Stockholders are the record and
beneficial owners of all of the issued and outstanding capital stock of GIC
(the "Shares"). The Shares are not subject to, nor were they issued in
violation of, any preemptive rights. The Stockholders own and hold good and
valid title to the Shares, free and clear of all liens, encumbrances, pledges,
options, proxies, voting trusts, voting agreements, charges or assessments of
any kind whatsoever.
3.2 Corporate Organization, Authorization, etc. GIC is a
corporation duly organized, validly existing and in good standing under laws of
the State of Florida and has all requisite corporate power and authority to
conduct its business as it is now being conducted and to own or lease the
properties and assets it now owns or holds under lease; is duly qualified or
licensed to do business and is in good standing in every other state of the
United States and other jurisdictions where the character of its business or
the nature of its properties make such qualification or licensing necessary,
other than those in which the failure to be so qualified would not have a
material adverse effect on the current financial condition, business, or
operations of GIC. True, correct and complete copies of the Articles of
Incorporation, as amended to date and certified by the Florida Secretary of
State, and Bylaws, as amended to date, of GIC, certified by its corporate
secretary, as are now in effect are attached hereto as Schedule 3.2.
3.3 Capitalization. The issued and outstanding capital stock of
GIC consists of 100 shares of Common Stock, $5 par value. All of such issued
shares are validly issued, fully paid and nonassessable. GIC does not have
outstanding, and is not bound by, any subscriptions, options, warrants, calls,
commitments or agreements to issue any additional shares of its capital stock,
including any right of conversion or exchange under any outstanding security or
other instrument, and GIC is not obligated to issue any shares of its capital
stock for any purpose. There are no unsatisfied preemptive rights in respect
of GIC's capital stock.
3.4 Due Execution and Enforceability. GIC and the Stockholder
have full power and authority to execute and deliver this Agreement and all
other agreements contemplated hereby, and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
the Stockholders and by GIC and constitutes the valid, binding and legally
enforceable obligation of the Stockholders and GIC, enforceable in accordance
with its terms, except to the extent that enforcement may be affected by
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting the enforcement of the rights and remedies of creditors generally and
general equitable principles.
3.5 Approval of Transactions. The Stockholders, as the owners of
100% of the voting stock of GIC, have (i) approved the transactions and
agreements herein to which GIC is a party and (ii) authorized the officers and
directors of GIC to take such actions as any of them may deem appropriate in
order to accomplish the transactions contemplated hereby.
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3.6 Validity of Contemplated Transactions. Neither the execution
and delivery of this Agreement by GIC and the Stockholders nor the consummation
of the transactions contemplated hereby will violate, require any filing,
consent or approval under, be in conflict with, or constitute a default under
(i) any law, ordinance or governmental rule or regulation to which GIC or the
Stockholders is subject, (ii) any judgment or order of any court or any other
governmental authority which is applicable to GIC or the Stockholders, or (iii)
the Articles of Incorporation or Bylaws of GIC. Such execution, delivery and
consummation will not violate, be in conflict with, or constitute a default
under (with or without the giving of notice or lapse of time, or both) any
note, lease, loan agreement, or other agreement, instrument, document, or
understanding (written or oral) to which GIC or the Stockholders is a party or
by which any of their properties or other assets may be subject, except for any
violations, conflicts or defaults which in the aggregate would not materially
hinder or impair the consummation of the transactions contemplated hereby.
3.7 Subsidiaries, Affiliates, etc. GIC does not own any shares of
stock or other security of any corporation or any equity interest in a
partnership, joint venture or other business entity, and GIC does not control
any other corporation, partnership, joint venture or other business entity by
means of ownership, management contract or otherwise.
3.8 Financial Statements. The Stockholders have delivered to
First Sierra and Newco as set out below the following financial statements of
GIC as Schedule 3.8:
(a) An unaudited balance sheet of GIC as of June 30, 1994, and the
related unaudited income statement and statement of cash flows
for the year then ended;
(b) An unaudited balance sheet of GIC as of June 30, 1995, and the
related income statement and statement of cash flows for the
year then ended; and
(c) An unaudited balance sheet of GIC (the "Balance Sheet") as of
May 31, 1996 (the "Balance Sheet Date") and GIC's unaudited
income statement for the period ended May 31, 1996.
All of the financial statements referred to in this Paragraph 3.8 have been
prepared in accordance with generally accepted accounting principles in the
United States consistently applied throughout the periods involved; and they
present fairly the financial positions to which they relate at the respective
dates thereof, the related results of operations for the periods therein
referred to, and the related changes in financial position for such periods.
Except as and to the extent disclosed and specifically reserved for or against
in the Balance Sheet or disclosed in the notes thereto or as incurred by GIC in
the ordinary course of business (and not in violation of any representation,
warranty or other term or provision of this Agreement) since the date of the
Balance Sheet, GIC has not incurred or become liable for and is not subject to
any liability or obligation of any kind, whether accrued, absolute, fixed,
contingent or otherwise, and whether due or to become due. Except as set forth
in Schedule 3.8, there is no oral or written guarantee, assurance or other
credit maintenance arrangement by GIC of any obligation of any person or entity
for the borrowing of
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money, for the payment of any monetary obligation of any nature whatsoever
(whether due or to become due), or for the performance of any obligation of any
nature whatsoever or otherwise. As of Closing, the net book value of GIC is no
less than the net book value as reflected on the Balance Sheet, and there have
been no cash distributions to shareholders of GIC except as disclosed to First
Sierra.
3.9 Condition of Assets. Schedule 3.9 hereto sets forth GIC's
leases/financing arrangements as of May 31, 1996 (which, together with all
other lease/financing arrangements entered into by GIC between such date and
the Closing Date, are referred to herein as the "Leases"). As used herein, the
term "Lease Documents" shall mean and refer to the lease agreements and
financing contracts evidencing the leases/financing arrangements described in
Schedule 3.9, together with all related documents and agreements including,
without limitation, master lease agreements, schedules or other addenda to such
lease agreements and financing contracts, certificates of delivery and
acceptance, UCC financing statements, remarketing agreements, residual guaranty
agreements, insurance policies, and guaranty agreements and other credit
supports. As used herein, the term "Equipment" shall mean and refer to all
equipment, inventory, and other property described as being leased pursuant to
or in which GIC is granted a security interest in pursuant to a Lease. As used
herein, the term "Obligor" shall mean and refer to any lessee party or other
party obligated to pay or perform any obligations under or in respect of a
Lease or the Equipment covered by a Lease (excluding the lessor party
thereunder, but otherwise including, without limitation, any guarantor of a
Lease or any vendor, manufacturer or similar party under a remarketing
agreement, residual guaranty or similar agreement). As used herein, the term
"Scheduled Payments" means the monthly rental payments or installments of
principal and interest under the terms of the Leases.
(a) There is no restriction or limitation in any of the Lease
Documents or otherwise restricting GIC from executing this
Agreement, terminating the Lease Documents, or otherwise
entering into the transaction contemplated by this Agreement,
or if the Lease Documents require the consents of the Obligors
to the transactions contemplated by this Agreement, such
consents have been obtained.
(b) (i) GIC either owns the Equipment covered by each Lease
that has a booked residual amount relating to the
same as indicated on Schedule 3.9 or GIC has a right
to purchase the Equipment at the end of the lease
term for a nominal amount.
(ii) As to all other Equipment, GIC owns such Equipment or
has a first perfected security interest in such
Equipment; and to the best knowledge of Stockholders,
such interest is a first priority perfected interest.
(c) With respect to each Lease, only one original of such Lease
exists.
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(d) Each Lease is genuine and in full force and effect in
accordance with its terms, and nothing has occurred or failed
to be performed which would or might permit any Obligor to
terminate such Lease or suspend or reduce any payments or
obligations due or to become due in respect of such Lease or
the related Lease Documents by reason of default by the lessor
party under such Lease. Except as set forth on Schedule 3.9,
to the best knowledge of the Shareholders none of the Obligors
in respect of a Lease or the related Lease Documents is the
subject of a bankruptcy, insolvency or other similar
proceeding.
(e) Except for the delinquency in the payment of any Scheduled
Payment that is not more than 60 days past due, there does not
exist any default in the payment of any Scheduled Payments due
under any Lease or the related Lease Documents; and to the
best knowledge of the Shareholders there does not exist any
other default, breach, violation or event permitting
acceleration, termination or repossession under any Lease or
the related Lease Documents (or under any other agreement
between the Obligor(s) in respect of such Lease and the
Company) or any event which, with notice and the expiration of
any applicable grace or cure period, would constitute such a
default, breach, violation or event permitting acceleration,
termination or repossession under such Lease or the related
Lease Documents (or under any other agreement between the
Obligor(s) in respect of such Lease and the Company).
(f) All requirements of any federal, state or local law, including
without limitation, usury laws, applicable to each Lease
(including the origination, acquisition and servicing thereof)
have been complied with in all material respects.
(g) Each Lease has the following characteristics:
(i) such Lease was originated in the United States and
the Scheduled Payments thereunder are payable in U.S.
dollars by Obligors domiciled in the United States;
(ii) at least one Scheduled Payment has been made by the
Obligor under each such Lease that was entered into
by GIC prior to the Closing Date;
(iii) no Obligor in respect of such Lease is an affiliate
of GIC or the Stockholder;
(iv) the lessee party under such Lease has unconditionally
accepted the Equipment covered by such Lease;
(v) such Lease was not in GIC's "legal" account category
as of May 31, 1996; and
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(vi) such Lease is not currently in GIC's "legal" account
category.
(h) Each Lease and the related Lease Documents are valid, binding
and legally enforceable obligations of the parties thereto,
enforceable in accordance with their respective terms (subject
to bankruptcy, insolvency and other similar laws).
(i) Each item of Equipment is subject to a Lease.
(j) Each Lease is a fixed rate lease contract.
(k) Pursuant to the terms of the Lease Documents related to each
Lease, as of the Closing the lessee in respect of such Lease
is absolutely required to make to GIC or GIC's designee all
payments and perform all obligations under such Lease and the
related Lease Documents without abatement, deferment or
defense of any kind or for any reason. No Lease or any
related Lease Document is subject to any right of rescission,
set-off, counterclaim, abatement or defense, including
(without limitation) any defense of usury, nor will the
operation of any of the terms of any Lease or any related
Lease Document or the exercise of any right or remedy
thereunder render such Lease or any related Lease Document or
the obligations thereunder unenforceable, or subject the same
to any right of rescission, set-off, counterclaim, abatement
or defense. No Obligor in respect of a Lease has asserted any
such right of rescission, set-off, counterclaim, abatement or
defense to its obligations under its Lease or any related
Lease Document, or under any other Lease (or any related Lease
Document) to which such Obligor is a party.
(l) None of the Leases or their related Lease Documents has been
modified, amended or extended (in the manner of an extension
in the maturity date, a change in the amount or time of
payment of any installment of rent or otherwise), no
indulgences or waivers have been granted in respect of the
obligations of any Obligor under any Lease, and neither GIC
nor any affiliate of GIC has advanced any monies on behalf of
or to cure any breach or default by any Obligor.
(m) Each Lease requires the Obligor thereunder at its own cost and
expense to maintain the Equipment leased thereunder in good
repair, condition and working order, and each Obligor under a
Lease is currently in compliance with such requirement.
(n) Each Lease requires the Obligor thereunder to pay all fees,
taxes (except income taxes), and other charges or liabilities
arising with respect to the Equipment leased thereunder or the
use thereof, to keep the Equipment free and clear of any and
all liens, security interests and other encumbrances (other
than the security interest of the Company), to hold harmless
the lessor thereunder and its successors and assigns against
the imposition of any such fees, charges, liabilities and
encumbrances, to bear all risk of loss associated with the
Equipment covered by or
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securing the obligations under such Lease during the term of
such Leases and to maintain at the cost of the Obligor public
liability and casualty insurance in respect of such Equipment
covered by the Lease.
(o) Except for Leases relating to rolling stock, each Lease
prohibits without the lessor's prior written consent any
relocation of the Equipment covered by such Lease and requires
the Obligor thereunder to execute such agreements and
documents (including without limitation any UCC-1 financing
statements or amendments thereto) as may reasonably be
requested by the lessor in connection with any such
relocation.
(p) All federal, state and local sales, use, property and other
similar taxes (and penalties and interest thereon) payable by
GIC as lessor, in respect to the Leases, any Equipment covered
by or securing the obligations under the Leases, or any
payments on the Leases, that have become due and payable have
been paid to every applicable governmental authority.
(q) As to each Lease, at the time the Lease was entered into, the
interest of GIC in respect of the Equipment covered by or
securing the obligations under such Lease was duly perfected
by the filing or recording in applicable jurisdictions of UCC
financing statements or other documents sufficient to perfect
GIC's interest in such Equipment, and GIC has not taken any
action on its behalf to change such perfected status. All
Equipment is located within the United States.
(r) Each Lease involves either the lease of tangible personal
property owned by GIC or the loan of money secured by a
security interest in tangible personal property owned by the
Obligor thereunder.
(s) Except as disclosed on Schedule 3.25 or 3.26, GIC has not
received any notice challenging its ownership or the priority
of its security interest in the Equipment covered by each
Lease, and there are no proceedings pending before any court
or governmental entity or, to the best of the Shareholders'
knowledge, threatened by any Obligor or other party, (i)
asserting the invalidity of any Lease or any of the related
Lease Documents, (ii) seeking to prevent payment and
performance by any Obligor of any Lease or any of the terms
and provisions of the related Lease Document or any other
agreement between such Obligor and GIC, or (iii) seeking any
determination or ruling that might adversely affect the
validity or enforceability of any Lease or any of the terms
and provisions of the related Lease Documents.
(t) As to each Lease, there are no agreements or understandings
between GIC and the Obligors in respect of such Lease or
otherwise binding on GIC other than as expressly set forth in
the related Lease Documents.
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(u) None of the Obligors is a governmental entity with leases
containing "non-appropriation" and/or "essential use" clauses.
(v) Schedule 3.9-A attached hereto is a true and complete list as
of May 31, 1996, of the maturity date by lease of all
residuals and the balances of all residuals. GIC owns all
rights in and to such residuals as listed on Schedule 3.9-A as
well as all residuals of GIC from the time of such date
through Closing. All such residuals are listed at 10% of
original equipment cost unless otherwise noted, there are no
"side" or other agreements, arrangements, or understandings
relating to such residuals, and the provisions of the Leases
relating to such residuals do not permit the lesee or any
other person to purchase the Equipment under such Lease for an
amount less than the amount listed on Schedule 3.9-A for such
residual.
3.10 Lease Volume. Schedule 3.10 hereto sets forth the lease
volumes generated by GIC for the periods indicated thereon, and GIC and the
Stockholder represent and warrant that Schedule 3.10 is accurate in all
respects and that such volumes were generated for the periods indicated.
3.11 Lease Funding. GIC is in compliance with all of the terms and
covenants of each agreement, contract, understanding or arrangement with any
funding source for the Leases referred to in Section 3.11 and GIC is not in
default of or in breach of any representation or warranty in any agreement,
contract, understanding or arrangement with any such funding source. GIC is
not in default or in breach of any representation or warranty or in violation
of any covenant or agreement, contained in GIC's Pegasus Service Center
Agreement. The execution of this Agreement by GIC and the consummation of the
transactions contemplated hereby will not be a violation of GIC's Pegasus
Service Center Agreement or any other agreement, contract, arrangement or
understanding with any of GIC's funding sources.
3.12 Liabilities. Schedule 3.12 is a true and complete list, as of
May 31, 1996, of all known liabilities of GIC of any nature, character and
description, except (i) obligations under contracts or commitments described in
Schedule 3.17 or under contracts and commitments which are not required to be
disclosed thereon (but not liabilities for breaches thereof), (ii) liabilities
reflected on the liabilities side of the Balance Sheet, (iii) contingent or
liquidated liabilities described on Schedule 3.25 or 3.26, (iv) liabilities
which have arisen after the date of the Balance Sheet in the ordinary course of
business or otherwise in accordance with the terms and conditions of this
Agreement (none of which is a liability for breach of contract, breach of
warranty, tort or infringement, or a claim or lawsuit, or an environmental
liability).
3.13 Accounts and Notes Receivable. GIC and the Stockholder have
delivered to First Sierra and Newco a true and complete list (Schedule 3.13),
as of May 31, 1996, of the accounts receivable and notes receivable of GIC.
Except to the extent collected prior to the date hereof, all of GIC's accounts
and notes (without reserves) are collectable in the amounts shown on Schedule
3.13 and the accounts and notes receivable reflected on the books and records
of GIC
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as outstanding on the Closing Date (including those on Schedule 3.13) are valid
debts owing to GIC arising in the ordinary course of business, and such
accounts and notes receivable are by their terms payable within ninety (90)
days of the invoice date of each such receivable. As of May 31, 1996, the cash
and cash equivalents of GIC were $447,416 and such cash and cash equivalents
have been utilized since May 31, 1996 only for the proper conduct of GIC's
business, in the ordinary course of its business. "Cash equivalents" shall
mean liquid investments with maturities of three (3) months or less. The
Stockholders have no knowledge that any single customer represents fifteen
percent (15%) or more of the revenues of GIC.
3.14 Patents, Trademarks, Copyrights, etc.
(a) "Proprietary Rights" shall mean all of the following items
owned by or licensed to GIC, and any and all corresponding
rights that, now or prior to Closing, may be secured by GIC:
(i) patents, patent applications, patent disclosures and
inventions (whether or not patentable and whether or not
reduced to practice) and any reissue, continuation,
continuation-in-part, division, revision, extension or
reexamination thereof; (ii) trademarks, service marks, trade
dress, logos, trade names and corporate names together with
all goodwill associated therewith, copyrights registered or
unregistered and copyrightable works and mask works; (iii) all
registrations, applications and renewals for any of the
foregoing; (iv) trade secrets and confidential information
(including, without limitation, ideas, formulae, compositions,
know-how, manufacturing and production processes and
techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data,
financial, business and marketing plans, and customer and
supplier lists and related information); (v) computer software
and software systems (including, without limitation, data,
databases, related documentation and the Lease Team lease
accounting software); (vi) other proprietary rights; (vii)
licenses or other agreements to or from third parties
regarding the foregoing; and (viii) all copies and tangible
embodiments of the foregoing (in whatever form or medium), in
each case including, without limitation, the items set forth
on Schedule 3.14.
(b) GIC does not own any patents, trademarks, service marks,
copyrights or trade secrets.
(c) GIC has not infringed, misappropriated or otherwise conflicted
with any Proprietary Rights of any third parties and the
Stockholders are not aware of any infringement,
misappropriation or conflict which shall occur as a result of
the continued operation of GIC's business as currently
conducted or as currently proposed to be conducted.
3.15 Real Property. Schedule 3.15 to this Agreement is a true and
complete copy of the lease of the real property leased by GIC. Schedule 3.15
contains a summary description of all
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buildings, fixtures and other improvements located on this leased real
property. The lease listed on Schedule 3.15 is valid and in full force, and
there does not exist any default by GIC or event that with notice or lapse of
time, or both, would constitute a default under the lease.
3.16 Furniture and Equipment. Schedule 3.16 to this Agreement is a
true and complete schedule describing and specifying the location of all
furniture equipment owned by, in the possession of, or used by GIC in
connection with its business. The property listed in Schedule 3.16 constitutes
all such tangible personal property presently utilized by GIC in its business
as now conducted. All items of such equipment are in reasonably good operating
condition, order and repair, subject to ordinary wear and tear, and have been
maintained in accordance with standard industry practice, (ii) are adequate for
the purposes for which they are being used in the operations and business of
GIC as presently being conducted without present need for repair or replacement
except in the ordinary course of the operations and business of GIC, (iii) to
the best knowledge and belief of GIC, conform in all material respects with all
applicable legal requirements, and (iv) in the aggregate provide the capacity
to enable GIC to engage in commercial operation on a continuous basis subject
to normal maintenance and repair outages in the ordinary course of its
business.
3.17 Material Contracts. Schedule 3.17 is an accurate list, as of
the date hereof, of all contracts, agreements, and understandings to which GIC
is a party or by which it or any of its property is bound with respect to
which the obligations of or the benefits to be received by GIC could reasonably
be expected to have a value in excess of $5,000 in any consecutive 12 month
period (each a "Material Agreement"). Schedule 3.17 does not include the
Leases listed on Schedule 3.9, those insurance policies listed on Schedule 3.20
or those employment agreements listed on Schedule 3.21, but does include all
(if any) other contracts, agreements, and understandings to which GIC is a
party including, but not limited to, joint venture or partnership agreements,
contracts with municipalities and labor organizations, loan agreements,
pension agreements, bonds, mortgages, liens, pledges, guaranties or other
security agreements, noncompetition agreements, license or royalty agreements,
agreements with respect to investing funds, contracts relating to the
distribution, marketing or sales of its services or products, and warranty
agreements with respect to its services or products, and the Stockholder has
delivered true copies of such agreements to First Sierra. Except to the extent
set forth on Schedule 3.17, GIC and, to the knowledge of the Stockholder, all
other respective parties thereto have complied with all material commitments
and obligations under all such contracts and agreements and there are not any
pending unresolved claims of which GIC has received notice.
3.18 Title and Condition of Property. GIC has good and marketable
title to all property, assets and leasehold estates, real and personal, owned
and used in its business, subject to no mortgage, pledge, lien, conditional
sales agreement, encumbrance or charge, except for liens in favor of funding
sources relating to the leases in which GIC is the original lessor and
statutory liens for taxes not yet due or delinquent. There are no claims
against GIC and the Stockholder is not aware of any facts or circumstances
which could reasonably be expected to lead to any claims, which would if
determined adversely to GIC result in a lien against any of the assets or
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property of GIC. All buildings, structures, and material equipment currently
utilized in normal operations of GIC are suitable for the purposes for which
they are used, and are in reasonably good working order and in reasonable
repair.
3.19 Insurance. Schedule 3.19 is a true and complete list, as of
the date hereof, of all insurance policies carried by GIC (with a notation as
to the status of premiums paid or payable thereon, specifying the insurer, the
amount of coverage, the deductible amount, the type of insurance, the policy
number, the cash surrender value, the owner, the beneficiary, the loss payee,
and all pending claims thereunder). GIC has not been refused any insurance by
any insurance carrier to which it has applied for insurance during the past
three years because of unacceptable risk.
3.20 Employee Arrangements. Schedule 3.21 is a true and complete
list showing all officers and directors of GIC and the rate of compensation
(and the portions thereof attributable to salary, commissions and bonuses,
respectively) of the officers and key employees of GIC, as of the date of this
Agreement, and showing all employment contracts and compensation arrangements
and benefit plans and classifications of employees covered thereby as of the
date of this Agreement. The Stockholders have provided First Sierra true and
complete copies of all of GIC's employment contracts and compensation
arrangements with its employees, and all non-compete agreements with employees,
and a copy of GIC's current major medical and employee health plans.
3.21 Employee Benefit, Pension, Bonus Plans, etc. Except for the
plans and agreements listed in Schedule 3.21 hereto, GIC is not and has not
within the last three years been a party to or obligated under any material
plan, program, trust, contract, agreement, or arrangement, either oral or
written, for the benefit of employees of GIC, whether a single employer or
multi-employer plan, and including welfare, fringe benefit, pension, profit
sharing, retirement and deferred compensation plans. There has not been any
(i) termination of any "defined benefit plan" within the meaning of ERISA
maintained by GIC or any person, firm or corporation ("Affiliate") which is
under "common control" (within the meaning of Section 4001(b) of ERISA) with
GIC, or (ii) commencement of any proceeding to terminate any such plan pursuant
to ERISA, or otherwise or (iii) written notice given to GIC or any affiliate of
the intention to commence or seek the commencement of any such proceeding. GIC
does not maintain or contribute to any multi-employer plan within the meaning
of Section 3(37) of ERISA or any defined benefit plan within the meaning of
Section 3(35) of ERISA.
3.22 Employee Relations. Except as disclosed in Schedule 3.22,
there are no controversies pending or, to the knowledge of the Stockholders,
threatened between GIC and any employee, former employee or job applicant of
GIC or any association or any group of current or former employees of GIC, and
the general relationship between GIC and its employees is good. To the
knowledge of the Stockholders, no salesman or other key employee is currently
intending to leave or has informed the Stockholders that he or she will leave
upon consummation of this Agreement. Except as set forth on Schedule 3.22, GIC
has not entered into any labor contracts
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with any bargaining agency or union representing its employees, and no union is
known to be organizing or attempting to organize any of the employees of GIC
who are not already members of a labor union. To the knowledge of the
Stockholders, the services of all essential employees of GIC will continue to
be available on substantially the same terms and at the same locations for the
continuation of the business of Newco after the Closing. The Stockholders have
delivered to First Sierra true and complete copies of all employment
agreements, collective bargaining and labor agreements to which GIC is a party.
GIC has complied in all material respects with all laws applicable to it
relating to the employment of labor, including any provisions relating to
wages, hours, collective bargaining and the payment of social security and
other taxes.
3.23 Bank or Other Accounts. Schedule 3.23 is a true and complete
list showing as of the date of this Agreement (i) the name of each institution
in which GIC has funds, certificates representing deposits, accounts, safe
deposit boxes or securities, (ii) the names in which the funds, certificates,
boxes or securities are held and (iii) the names of each person authorized to
draw thereon or have access thereto.
3.24 Tax Matters. All federal, state and local tax returns of GIC
that are required to be filed on or before the Closing Date have been (or will
have been by the Closing Date) timely filed (subject to any extensions that
have been obtained) with the appropriate governmental authorities. All income,
gross receipts, sales, transfer, use, employment, franchise, profits, property,
stamp and other taxes of any kind whatsoever (whether payable directly or via
withholding), together with any interest thereon and any penalties, additions
to tax or additional amounts imposed by any governmental authority responsible
for the imposition of any such tax, including, without limitation, estimated
taxes and those taxes that are shown on the tax returns described in the
preceding sentence as due from GIC (collectively, "taxes"), have been (or will
have been by the Closing Date) properly accrued (in accordance with GAAP), paid
or deposited. The accruals for taxes contained in GIC's Financial Statements
as of the date of the most recent balance sheet included in such financial
statements are adequate to cover the material tax liabilities of GIC taken as a
whole as of that date and include adequate provisions for all material deferred
taxes, and nothing has occurred subsequent to such date to make such accruals
materially inadequate. Except as set forth on Schedule 3.24, GIC has not
received any knowledge of any notice of deficiency or assessment in connection
with any tax returns, and there are not any pending tax examinations of, or tax
claims asserted against GIC. GIC has not extended, nor waived the application
of, any statute of limitations of any jurisdiction regarding the assessment or
collection of any taxes. There are no requests for rulings or determinations
in respect of any taxes pending between GIC and the Internal Revenue Service or
any other taxing authority. GIC has not filed a consent under Section 341(f)
of the Code concerning collapsible corporations. GIC has not made any payments
nor is obligated to make any payments, nor is a party to any agreement that
under certain circumstances could obligate it to make any payments that will
not be deductible under Section 280G of the Code. There is no lien for taxes
(other than any lien for current taxes not due and payable) on or with respect
to any assets of GIC. GIC has not been a party to any tax allocation or
sharing agreement. None of the shareholders are a "foreign person" for
purposes of U.S. income taxation. GIC has never been a member of an affiliated
group within the meaning of Section 1504(a) of the
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Code. GIC made all deposits required by law to be made with respect to
employees' withholding and other employment taxes. GIC is responsible for the
timely preparation and filing of all current GIC income tax returns and the
payment of all related income taxes for the current tax periods (or "short" tax
periods) ending prior to or on the Closing Date. Copies of the current income
tax returns will be provided to First Sierra at the time they are signed and
filed with the related taxing authorities. "Income taxes" as used herein
include (but may not be limited to) all federal, state taxes based upon income,
gross receipts, net capital, profits, intangible assets, etc.).
3.25 No Defaults under Contracts. All contracts, agreements,
plans, leases, licenses, certificates, insurance policies, permits and
franchise agreements listed in any schedule provided to First Sierra hereunder
are valid and in full force and effect, except to the extent disclosed in any
schedule hereto. Except as set forth in Schedule 3.25, GIC has not breached
any material provision of, nor is in default in any material respect under the
terms of, any such contract, agreement, lease, license, or permit, and GIC is
not in default in any material respect as to its performance on any such
contracts.
3.26 Litigation, Defaults under Laws, etc. Except as set forth in
Schedule 3.26, GIC has complied in all material respects with and is not in
default in any material respect under, any law, rule, permit, regulation,
ordinance, order, writ, injunction or court decree applicable to it. Except as
set forth in Schedule 3.26, GIC is not subject to any order, ruling, decree or
judgment, having continuing effect, of any court, arbitrator or governmental
agency or instrumentality. Except as set forth in Schedule 3.27, there are no
claims, actions, suits, arbitrations, investigations, disputes or other
proceedings against GIC, pending or, to the knowledge of the Stockholders,
threatened; and the Stockholders have no knowledge of any factual basis
existing that could reasonably be expected to result in any such claim, action,
suit, arbitration, investigation, dispute or other proceeding.
3.27 No Consents Required. Except as set forth on Schedule 3.28,
no consents are required by GIC in connection with the execution and delivery
of this Agreement and the consummation of the transactions contemplated herein,
or to avoid or prevent any acceleration of maturity or performance under, or
any default or breach of, or any material adverse effect with respect to any
indebtedness, contract, right, franchise, permit or other privilege to which
GIC is a party or by which any of its assets are bound.
3.28 Brokers and Finders. The parties have agreed that the
Stockholder and First Sierra will equally share (up to $35,000 each) any fees
due to Xxxxx Xxxxxxxxx. No other broker or finder has acted directly or
indirectly for GIC or the Stockholders in connection with this Agreement or the
transactions contemplated hereby, and no other broker or finder is entitled to
any brokerage or finder's fee or other commission in respect thereof based in
any way on agreements, arrangements or understandings made by or on behalf of
GIC or the Stockholders.
3.29 Absence of Changes. Since the Balance Sheet Date, there has
been no adverse change in the business, results of operations, prospects,
financial condition or liabilities (accrued,
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absolute, contingent or otherwise), of GIC. Since the Balance Sheet Date, the
following events have not occurred, except as have been previously disclosed in
writing to First Sierra:
(a) the issuance, sale or delivery, split, reclassification,
combination, or other adjustment, or any agreement to do the
same, of any stock, bonds or other corporate securities of
which GIC is the issuer (whether authorized and unissued or
held in treasury), or the granting or issuance, or agreement
to grant or issue, any options, warrants or other rights
(including convertible securities) calling for the issue
thereof;
(b) the borrowing, or agreement to borrow, of any funds or the
voluntary incurrence, or assumption, whether directly or by
way of guarantee or otherwise, of any obligation or liability
(absolute or contingent), except with respect to accounts
payable arising out of the ordinary course of business;
(c) the mortgage or pledge of any of GIC's assets, tangible or
intangible;
(d) except for the sale of inventory and other operating assets in
the ordinary course of business, the sale, lease, exchange or
other transfer, or the entering into of any agreement to sale,
lease, exchange or otherwise transfer, any of the GIC's
assets, property or rights or cancel, or the agreement to
cancel, any debts or claims;
(e) the entering into, or any agreement to enter into, any
agreement or arrangement granting any preferential rights to
purchase any of the assets, property or rights of GIC or
requiring the consent of any party to the transfer or
assignment of any such assets, property or rights;
(f) the making or permitting of any amendment or termination of
any contract, agreement or license to which it is a party;
(g) the making of any change in, or adoption of, any
profit-sharing bonus, deferred compensation, insurance,
pension, retirement, severance or other employee benefit plan,
payment or arrangement or the entering into of any employment,
consulting or management contract;
(h) the entering into of any employment, labor or collective
bargaining agreement;
(i) the increase of the compensation payable or to become payable
to any officer, employee or agent, or the making of any bonus
or other type of compensation payment to any such person;
(j) the merger or consolidation with any other corporation, the
acquisition of control of any other corporation or business
entity, or the taking of any steps incident to,
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or in furtherance of, any of such actions, whether by entering
into an agreement providing therefor or otherwise;
(k) the entering into of any contract, agreement or course of
action which (i) may materially increase its liabilities or
(ii) which requires or will require expenditure of more than
$5,000 in the singular or $10,000 in the aggregate;
(l) except as required by law, the making of any alteration in the
manner of keeping its books, accounts or records, or in the
accounting practices therein reflected;
(m) the solicitation, either directly or indirectly, or the
initiation or encouragement of any offer for the purchase or
acquisition of GIC or any of its assets by any party other
than First Sierra or the investigation of any unsolicited
offer or the entering into of any negotiations with any party
other than Purchaser concerning any such acquisition;
(n) the declaration, setting aside or payment of any dividend on
its stock in cash, stock or property, or directly or
indirectly, the redemption, purchase or other acquisition of
any of its own stock, or any other distribution of its assets
to its stockholders, or the reclassification,
recapitalization, splitting up or otherwise adjusting any of
its capital stock;
(o) the amendment or alteration of the certificate of
incorporation or bylaws of GIC; or
(p) the entering into of any other transaction other than in the
ordinary course of business.
3.30 Environmental. Except as specifically set forth in Schedule
3.30 attached hereto and incorporated herein:
(a) the occupancy of and operations by GIC at its leased
properties (the "Properties") are and were in material
compliance with applicable federal, state, local, or foreign
health, safety and environmental laws;
(b) to the Stockholders' best knowledge, the Properties are not
currently under investigation by any governmental agencies
under any laws pertaining to health, safety or the
environment;
(c) there are no lawsuits or administrative proceedings by third
parties or governmental agencies involving health, safety or
environmental matters with respect to any of the Properties;
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(d) the uses and operations conducted by GIC employees at any of
the Properties do not presently involve, and have not
previously involved, the treatment, storage, disposal,
incineration or recycling of Hazardous Materials;
(e) to the Stockholders' best knowledge, the Properties have never
been used for industrial or commercial operations involving
Hazardous Materials;
(f) there are no aboveground or, to the best knowledge of the
Stockholders, underground storage tanks on the Properties;
(g) to the best knowledge of the Stockholders, there are no
asbestos containing materials on or in any structures,
improvements or equipment on or in the Properties;
(h) to the best knowledge of the Stockholder, there are no PCBs or
PCB containing electrical equipment on or in the Properties;
(i) any waste generated from the uses and operations conducted at
the Properties has been and is being stored and disposed of in
compliance with all applicable environmental laws; and
(j) there are no discharges of industrial wastewater on or from
the Premises.
As used herein, the term "Hazardous Materials" shall mean (i)
asbestos, polychlorinated biphenyls, urea formaldehyde, lead based paint, radon
gas, petroleum, oil, solid waste, pollutants and contaminants, and (ii) any
chemicals, materials, wastes or substances which are defined, regulated,
determined or identified as toxic or hazardous in any environmental laws,
including but not limited to substances defined as "hazardous substances,"
"hazardous materials," or "hazardous waste" in XXXX; the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Sec.
9601, et. seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Sec.
1801, et. seq.; the Resource Conservation and Recovery Act, 42 U.S.C. Sec.
6901, et. seq.; or comparable state and local statutes or in the regulations
adopted and publications promulgated pursuant to said statutes.
3.31 Worker's Compensation Claims. Schedule 3.31 contains a true
and complete listing of all pending worker's compensation claims (including all
such claims that have arisen in the past two years). All possible worker's
compensation claims of which the Stockholders have received notice or is aware
of are also listed. The Stockholders are not aware of any events that are not
generally applicable to similar businesses which would cause its workmen's
compensation insurance premiums to increase or of any notifications of
increases or possible increases.
3.32 Product Warranties. There is no claim against or liability of
GIC on account of product warranties or with respect to the manufacture,
licensing, sale or rental of defective
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products (except minor claims arising in the ordinary course of business and
which may be satisfied at only a nominal cost), and, there is no basis for any
such claim on account of defective products heretofore manufactured, licensed,
sold or rented which is not fully covered by insurance.
3.33 Acquisition of Series A Preferred Shares. The Series A
Preferred Shares to be acquired by GIC pursuant to this Agreement and required
to be distributed to the Stockholders as part of the reorganization will be
held for investment purposes only and not with the present intention or view
to, or resale in connection with, any distribution thereof within the meaning
of the Securities Act of 1933, as amended. The Stockholders understand that
except as provided by its terms, such Series A Preferred Shares will not be
registered under such Securities Act or any state securities or blue sky laws,
that transferability of such Series A Preferred Shares will be restricted in
accordance with applicable state and federal securities laws, and that a
restrictive legend to such effect will be inscribed on each certificate
representing such Series A Preferred Shares. Prior to the Closing, the
Stockholders will have had full opportunity to receive such information and ask
such questions of representatives of First Sierra concerning First Sierra, its
subsidiaries and their business, operations, assets and prospects, and
concerning an investment in the Series A Preferred Shares, as the Stockholders
will then have deemed appropriate in order to make an informed investment
decision with respect to the Series A Preferred Shares.
3.34 Disclosure. No representation or warranty by the Stockholders
or GIC in this Agreement, nor in any exhibit or schedule delivered herewith,
nor any statement or certificate furnished or to be furnished by or on behalf
of the Stockholders or GIC pursuant to this Agreement or in connection with the
consummation of the transactions herein contemplated, contains, or will
contain, any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements herein and therein not
misleading. Notwithstanding any investigation made at any time by or on behalf
of First Sierra or Newco, and notwithstanding any actual or implied knowledge
or notice of any facts or circumstances which First Sierra or Newco may have as
a result of such investigation or otherwise, the Stockholder or GIC by its
execution and delivery of this Agreement acknowledges that the accuracy of such
representations, warranties, schedules, exhibits, statements and certificates
have been relied upon by First Sierra or Newco in entering into and in
performing and observing the obligations pursuant to this Agreement.
SECTION 4 - REPRESENTATIONS AND WARRANTIES OF FIRST SIERRA
AND NEWCO
First Sierra and Newco hereby jointly and severally make the following
representations and warranties to Sellers as of the date hereof, and all such
representations and warranties shall be true, complete and correct as of the
Closing Date:
4.1 Due Incorporation and Good Standing of First Sierra and Newco.
First Sierra is a corporation duly incorporated, validly existing and in good
standing under the laws of the State
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of Delaware. Newco is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware. Newco is a wholly owned
subsidiary of First Sierra.
4.2 Corporate Authorization. First Sierra and Newco each have
full power and authority to enter into this Agreement and have all requisite
corporate power and authority to conduct its business as it is now being
conducted and to own or lease the properties and assets it now owns or holds
under lease. First Sierra and Newco are authorized to do business and are in
good standing in every state of the United States and other jurisdictions where
the character of its business or the nature of its properties make such
qualification or licensing necessary, other than those in which the failure to
be so qualified would not have a material adverse effect on the current
financial condition, business, or operations. True, correct and complete
copies of the Articles of Incorporation, as amended to date and certified by
the Delaware Secretary of State, and Bylaws, as amended to date, of GIC,
certified by its corporate secretary, have been (or will be before Closing)
delivered to GIC. Neither the execution nor delivery of this Agreement by
First Sierra or Newco, nor First Sierra's or Newco's performance hereunder will
result in a violation or breach of any term or provision, or constitute a
default or accelerate the performance required under, any indenture, mortgage,
deed of trust, or other contract or agreement to which First Sierra or Newco is
a party or by which First Sierra or Newco is bound or under any provision of
their respective Charter or Bylaws. The execution, delivery and performance by
each of First Sierra and Newco of this Agreement have been duly authorized by
the Board of Directors of First Sierra and Newco, respectively, and no further
corporate action is necessary on the part of First Sierra or Newco to make this
Agreement valid and binding upon First Sierra and Newco and enforceable in
accordance with its terms.
4.3 Capitalization. The authorized capital stock of First Sierra
consists of 1,000,000 authorized shares of Common Stock, $.01 par value per
share, and 500,000 shares of Preferred Stock, $.01 par value. There are no
unsatisfied preemptive rights in respect of First Sierra's capital stock. Upon
issuance to the Stockholders, the shares of the Series A Preferred Stock will
be duly issued, validly authorized and non-assessable.
4.4 Financial Statements. First Sierra has delivered to the
Stockholders an audited balance sheet of First Sierra as of December 31, 1995,
and the related audited income statement and statement of cash flows for the
year then ended. Such financial statements have been prepared in accordance
with generally accepted accounting principles in the United States consistently
applied throughout the periods involved; and they present fairly the financial
positions to which they relate at the respective dates thereof, the related
results of operations for the periods therein referred to, and the related
changes in financial position for such periods.
4.5 No Conflict. No provision exists in any article, document or
instrument to which First Sierra or Newco is a party or by which either First
Sierra or Newco is bound which would be violated by consummation of the
transaction as contemplated by this Agreement.
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4.6 Governmental Authorities and Consents. No consent, approval
or authorization of any governmental or regulatory authority or any other party
or person is required to be obtained by First Sierra or Newco in connection
with its execution, delivery and performance of this Agreement and the other
agreements contemplated hereby to which First Sierra or Newco is a party or the
transactions contemplated hereby or thereby.
4.7 Litigation. There are no actions, suits, proceedings, orders
or investigations pending or, to First Sierra's or Newco's knowledge,
threatened against or involving the assets of First Sierra or Newco at law or
in equity, or before or by any federal, state, provincial, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which would adversely affect First Sierra's or Newco's
performance under this Agreement and the other agreements contemplated hereby
to which First Sierra or Newco is a party or the consummation of the
transactions contemplated hereby or thereby.
4.8 Disclosure. No representation or warranty by First Sierra or
Newco in this Agreement, nor in any exhibit or schedule delivered herewith, nor
any statement or certificate furnished or to be furnished by or on behalf of
First Sierra or Newco pursuant to this Agreement or in connection with the
consummation of the transactions herein contemplated, contains, or will
contain, any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements herein and therein not
misleading. Notwithstanding any investigation made at any time by or on behalf
of the Stockholder, and notwithstanding any actual or implied knowledge or
notice of any facts or circumstances which the Stockholder may have as a result
of such investigation or otherwise, each of First Sierra or Newco by its
execution and delivery of this Agreement acknowledges that the accuracy of such
representations, warranties, schedules, exhibits, statements and certificates
have been relied upon by the Stockholder in entering into and in performing and
observing the obligations pursuant to this Agreement.
SECTION 5 - NONCOMPETITION AGREEMENTS; OTHER AGREEMENTS
5.1 Prohibition Against Certain Activities. In consideration of
the mutual covenants and agreements provided for in this Agreement, and in
further consideration of the amounts paid to the Stockholder for the covenants
described herein as set forth in Section 1.2, each Stockholder hereby covenants
and agrees that he will not, directly or indirectly, except in connection with
such Stockholder's duties of employment with Newco, either through any form of
ownership, or as a director, officer, principal, agent, employee, employer,
advisor, consultant, partner or in any individual or representative capacity
whatsoever, either for his own benefit or for the benefit of any other person,
without the prior written consent of the Board of Directors, for a period of
six (6) years from on the Closing Date or for the period provided under Article
V of the Employment Agreement for such Stockholder executed on the Closing
Date, whichever is shorter, within a geographic area in which Newco or First
Sierra is engaged in business, engage in any of the following acts, which acts
shall be considered violations of this Section 5.1:
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(a) Engage in the business of leasing and/or financing revenue
producing equipment and rolling stock;
(b) Request or advise any customer of Newco or First Sierra to
withdraw, curtail or cancel any of its business with Newco or
First Sierra;
(c) Assist any person in soliciting any customer of Newco or First
Sierra for the performance of any type of work performed by
Newco or First Sierra;
(d) Induce or attempt to influence any employee of Newco or First
Sierra to terminate his or her employment with Newco or First
Sierra;
(e) Disclose or communicate to any other person, firm, or
corporation the names of any customers of GIC, Newco or First
Sierra or other knowledge of the operations and business of
GIC, Newco or First Sierra, unless such information is
publicly known, has been disclosed by First Sierra in a
disclosure that was not intended to be confidential, or unless
otherwise required by law;
(f) Employ or cause to be employed any individual employed by GIC
at any time prior to the Closing Date or Newco or First Sierra
during the term of this Agreement;
(g) Overtly do or perform any act that is designed or intended to
materially and adversely affect the goodwill or operation and
business of Newco or First Sierra;
(h) Request, advise or attempt to influence any person which is a
source of materials, supplies, personnel, services, funds or
information for Newco or First Sierra to withdraw, cancel or
curtail the sale or furnishing of such items to Newco or First
Sierra; or
(i) Use for his own benefit or otherwise, or communicate to,
divulge to, or use for the benefit of, any other person
Confidential Information (as defined in Section 5.6 below),
and/or trade secrets disclosed to, discovered by or otherwise
known by such Stockholder through his employment and/or
association with (a) GIC prior to the Closing and (b) Newco or
First Sierra after the Closing which is not generally known in
the businesses in which Newco or First Sierra is engaged during
the term of this Agreement, it being the intent of this
subsection (i) that the Stockholder will honor the Confidential
Information and will not, directly or indirectly, use the
Confidential Information in such a way as to adversely affect
Newco or First Sierra or their business relations.
5.2 Acknowledgement of Need for Covenants. Insofar as the
covenants set out in Section 5.1 are concerned, each Stockholder specifically
acknowledges and agrees as follows:
30
(a) The covenants are reasonable and necessary to protect the
goodwill and the operations and business of Newco or First
Sierra;
(b) The time duration of the covenants are reasonable and
necessary to protect the goodwill and the operations and
business of Newco or First Sierra;
(c) The geographical area limitations of the covenants are
reasonable and necessary to protect the goodwill and the
operations and business of Newco or First Sierra;
(d) The covenants are not oppressive to such Stockholder and do
not impose a greater restraint on such Stockholder than is
necessary to protect the goodwill and the operations and
business of Newco or First Sierra.
5.3 Damages. In the event any Stockholder violates any of the
covenants set out in Section 5.1, Newco and First Sierra shall suffer
irreparable damage and shall be entitled to full injunctive relief or such
other relief against the Stockholder as may be provided by law or in equity
together with such damages as may be provided at law or in equity. Newco and
First Sierra shall be entitled as a matter of right to specific performance of
the requirements of Section 5.1 or to temporary or permanent injunctive relief
against any breach of any provision of Section 5.1 by the Stockholder. Such
Stockholder will be responsible for all court costs and reasonable attorneys'
fees incurred by Newco and First Sierra if it obtains specific performance of,
or any injunction against violation of, the requirements of Section 5.1, and if
Newco or First Sierra is unable to obtain specific performance or an
injunction, they shall be responsible for all court costs and reasonable
attorneys fees of such Stockholders.
5.4 Judicial Modification. It is the express intention of the
parties to comply with all laws which may be applicable to the covenants
contained in Section 5.1. Therefore, the parties have attempted to limit the
Stockholder's right to compete only to the extent necessary to protect (i)
Newco and First Sierra from unfair competition, and (ii) Newco's and First
Sierra's goodwill and its operations and business. The parties recognize,
however, that reasonable people may differ in making such a determination.
Consequently, the parties hereby specifically agree that, in the event that any
covenant contained in Section 5.1 shall be determined by any court or other
constituted legal authority to be effective in any particular area or
jurisdiction only if such covenant is modified to limit its duration or scope,
such covenant may be reformed or modified by the judgment or order of such
court or authority to reflect a lawful and enforceable duration or scope. Such
covenant shall automatically be deemed to be amended and modified with respect
to that particular area or jurisdiction so as to comply with the judgment or
order of such court or authority and, as to all other areas and jurisdictions
covered by this Agreement, the terms and provisions hereof shall remain in full
force and effect as originally written.
5.5 Void or Unenforceable. In the event any covenants contained
in Section 5.1 shall be held by any court or other constituted legal authority
to be void or otherwise unenforceable in any particular area or jurisdiction
notwithstanding the operation of Section 5.1, such covenant
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automatically shall be deemed to be amended so as to eliminate therefrom that
particular area or jurisdiction as to which such covenant is so held void or
otherwise unenforceable and, as to all other areas and jurisdictions covered by
Section 5.1, the terms and provisions hereof shall remain in full force and
effect as originally written.
5.6 Confidential Information. As used in this Agreement, the term
"Confidential Information" shall mean information of any kind, nature or
description which is disclosed to, discovered by or otherwise known to a person
by reason of such person's employment and/or association, whether past, present
or future, with another person and/or its affiliates, which information is not
generally known in the businesses in which the latter person and/or its
affiliates were or are engaged. Such information includes but is not limited
to ideas, discoveries, inventions, techniques, methods, practices, processes,
formulas, technical information, data, information concerning products, goods,
services and manufacturing methods, customers, customer requirements, marketing
methods and plans as well as any other information regarding a person's methods
of conducting its business, whether patentable or not, and whether implemented
or not, provided, that such information shall not include information which is
or becomes generally available to the public other than as a result of a
disclosure in breach of this Agreement.
5.7 Regular Course of Business of the Company. The Stockholders
and GIC covenant and agree that from the date hereof to and including the
Closing Date GIC will:
(a) carry on its business in substantially the same manner as it
has heretofore;
(b) maintain its properties and facilities in as good working
order and condition as at present, ordinary wear and tear
excepted;
(c) perform all its obligations under agreements relating to or
affecting its assets, properties and rights;
(d) keep in full force and effect present insurance policies or
other comparable insurance coverage; and
(e) in the ordinary course of its business, maintain and preserve
its business organization intact, retain its present employees
and maintain its relationship with suppliers, customers and
others having business relations with it.
5.8 Restricted Activities and Transactions of Stockholder and GIC.
The Stockholders and GIC covenant and agree that from the date hereof to and
including the Closing Date, GIC shall not, except with the express written
consent of Newco and First Sierra:
(a) issue, sell or deliver, split, reclassify, combine or
otherwise adjust, or agree to issue, sell or deliver, split,
reclassify, combine or otherwise adjust, any stock,
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bonds or other corporate securities of which GIC is the issuer
(whether authorized and unissued or held in treasury), or grant
or issue, or agree to grant or issue, any options, warrants or
other rights (including convertible securities) calling for the
issue thereof;
(b) borrow, or agree to borrow, any funds or voluntarily incur,
assume or become subject to, whether directly or by way of
guarantee or otherwise, any obligation or liability (absolute
or contingent), in excess of $5,000 except in the ordinary
course of business;
(c) mortgage or pledge any of its assets, tangible or intangible;
(d) except for the sale of inventory and other operating assets in
the ordinary course of business, sell, lease, license,
exchange or otherwise transfer, or agree to sell, lease,
license, exchange or otherwise transfer, any of its assets,
property or rights or cancel, or agree to cancel, any debts or
claims;
(e) enter, or agree to enter, into any agreement or arrangement
granting any preferential rights to purchase any of the
assets, property or rights of the Company or requiring the
consent of any party to the transfer or assignment of any such
assets, property or rights;
(f) except in ordinary course of business, make or permit any
amendment or termination of any material contract, agreement
or license to which it is a party;
(g) except in ordinary course of business, make any change in, or
adopt, any profit-sharing bonus, deferred compensation,
insurance, pension, retirement, severance or other employee
benefit plan, payment or arrangement or enter into any
employment, consulting or management contract;
(h) except in ordinary course of business, enter into any
employment, labor or collective bargaining agreement;
(i) except in the ordinary and normal course of business
consistent with past practices, increase or agree to increase
the compensation payable or to become payable to any officer,
employee or agent, or, make any bonus or other type of
compensation payment to any such person;
(j) merge or consolidate with any other corporation, acquire
control of any other corporation or business entity, or take
any steps incident to, or in furtherance of, any of such
actions, whether by entering into an agreement providing
therefor or otherwise;
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(k) except in the normal and ordinary course of business
consistent with past practices, enter into any contract,
agreement or course of action which (i) may materially
increase its liabilities or (ii) which requires or will
require expenditure of more than $5,000 in the singular or
$10,000 in the aggregate;
(l) except as required by law, make any alteration in the manner
of keeping its books, accounts or records, or in the
accounting practices therein reflected;
(m) solicit, either directly or indirectly, initiate or encourage
any offer for the purchase or acquisition of GIC or any of its
assets by any party other than First Sierra or investigate any
unsolicited offer or enter into any negotiations with any
party other than First Sierra concerning any such acquisition;
(n) declare, set aside or pay any dividend on its stock in cash,
stock or property or directly or indirectly redeem, purchase
or otherwise acquire any of its own stock, or make any other
distributions of its assets to its stockholders, or
reclassify, recapitalize, split up or otherwise adjust any of
its capital stock, or become obligated to do any of the
foregoing;
(o) amend or alter the certificate of incorporation or bylaws of
GIC;
(p) make, or agree to make, any investment in, advance to, or
acquisition of securities of any entity or person or provide,
or agree to provide, any guarantee of, assurance or support
arrangement involving any obligation of any person except in
the ordinary course of business;
(q) enter into any other transaction other than in the ordinary
course of business.
5.9 No Further Negotiations. Unless this Agreement is closed or
sooner terminated, from the date of this Agreement until 5:00 p.m., Central
Standard Time, on July 31, 1996, the Stockholders and GIC will not, directly or
indirectly, whether through any of GIC's officers, directors, employees, or
shareholders, or through any of their or GIC's affiliates, representatives,
agents or otherwise, encourage or solicit any inquiries or proposals by or
engage in any discussions or negotiations with, or furnish any non-public
information to any person concerning, or cause any other merger, consolidation,
asset acquisition, disposition or tender offer involving GIC, and the
Stockholders will promptly communicate to First Sierra the substance of any
inquiry or proposal concerning any such transaction which may be received.
SECTION 6 - INDEMNIFICATION
6.1 Indemnification by the Stockholders. The Stockholders hereby
jointly and severally covenant and agree that they will indemnify and hold
harmless Newco and First Sierra at all times from and after the date of this
Agreement against any loss, liability, damage or expense (including
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attorney's fees) which Newco or First Sierra may suffer, sustain or become
subject to as a result of: (i) any breach of any representation or warranty, or
nonfulfillment of any covenant or agreement on the part of the Stockholder or
GIC under this Agreement, or from any misrepresentation or omission in
connection with any list, schedule, certificate, or other instrument furnished
or to be furnished to Newco or First Sierra pursuant to the terms of this
Agreement; (ii) notwithstanding any qualifications, notifications, or
limitations set forth in any representation or warranty under this Agreement or
in any of the items referred to in Section 6.1(i), to the extent not covered by
Section 6.1 (i) above, any and all debts, liabilities or obligations of GIC,
direct or indirect, fixed, contingent or otherwise, which exist at or as of the
Closing or which arise after the Closing but which are based upon or arise from
any act, omission, transaction, circumstance, sale of goods or services, state
of facts or other condition which occurred or existed on or before the date of
the Closing, whether or not known or unknown, due or payable, except to the
extent expressly assumed by Newco pursuant to the terms of this Agreement; (iii)
claims relating to or arising out of the events, circumstances, facts or
occurrences giving rise to the litigation disclosed in Section 3.26 of this
Agreement, including but not limited to the litigation involving Recomm
International Display, Ltd., including, without limitation, claims by third
party plaintiffs and claims by Colonial Pacific seeking recourse for any leases
arising from the facts giving rise to the Recomm litigation; (iv) claims by
Colonial Pacific that GIC has violated or is in breach of the Pegasus Service
Center Agreement or any other agreement between GIC or the Stockholder and
Colonial Pacific; and (v) all actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses, including, but not limited to attorneys' fees
and court costs, incident to any of the foregoing. It is expressly understood
and agreed that First Sierra and Newco shall be entitled to indemnification
hereunder from the Stockholders for a breach of the representation and
warranties set forth in Section 3.9(v), notwithstanding any investigations of
First Sierra or any actual or implied knowledge First Sierra or Newco may have
as a result of such investigation.
6.2 Indemnification by First Sierra and Newco. First Sierra and
Newco shall indemnify GIC and the Stockholders and hold GIC and the
Stockholders harmless from any and all claims, costs, damages, losses, costs,
expenses, obligations, liabilities, recoveries, suits, causes of action, and
deficiencies, including interest, penalties and reasonable attorneys' fees,
that it or they shall incur or suffer, which arise, result from or relate to
any breach of, or failure by the First Sierra and Newco to perform, any of its
representations, warranties, covenants or agreements in this Agreement or in
any schedule, certificate, exhibit or other instrument furnished or to be
furnished by or on behalf of the First Sierra and Newco under this Agreement,
or for any debts, liabilities, claims or obligations of First Sierra or Newco
arising from the operations of their businesses after the Closing Date (except
to the extent such gives rise to an indemnifiable claim by First Sierra or
Newco under Section 6.1).
6.3 Third-Party Claims. The indemnified party under Section 6.1
or 6.2 above (the "Indemnified Party") shall give the indemnifying party (the
"Indemnifying Party") written notice within ten (10) days of receiving written
notice of any loss for which the Indemnified Party is entitled to
indemnification pursuant to this Section 6 (an "Indemnifiable Claim") resulting
from the assertion of liability by third parties. The Indemnifying Party shall
have thirty (30) days after
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receipt of notice to (i) cooperate in its defense or (ii) assume its defense
with counsel satisfactory to both parties. If, within thirty (30) days of
receipt of notice of an Indemnifiable Claim, the Indemnifying Party fails to
cooperate or assume such defense, the Indemnified Party shall have the right to
undertake the defense, compromise or settlement of such Indemnifiable Claim on
behalf of and for the account, risk and cost of the Indemnifying Party.
6.4 Other Claims. Indemnified Party shall give Indemnifying Party
written notice of any Indemnifiable Claim other than an Indemnifiable Claim
resulting from the assertion of liability by third parties. Indemnifying Party
shall have thirty (30) days following receipt of such notice to remedy the
inaccuracy, breach or misrepresentation on which the Indemnifiable Claim is
based, including, without limitation, providing monetary payment or
reimbursement to the Indemnified Party.
6.5 Closing Date Deferred Taxes. Newco is assuming Closing Date
Deferred Taxes (as defined in Section 1.6 hereof) in an amount not to exceed
$683,000. In the event the Closing Date Deferred Taxes exceed $683,000, GIC
and the Stockholders shall indemnify and hold First Sierra and Newco harmless
from and against any such excess amount (the "Non-Assumed Closing Date
Deferred Taxes"), and GIC and the Stockholders shall, at least twenty (20) days
prior to the date a tax return is due relating to the Closing Date Deferred
Taxes, pay to Newco or First Sierra in full the amount of the Non-Assumed
Closing Date Deferred Taxes.
6.6 Limitation on Indemnity. The indemnity obligations of the
Stockholder hereunder shall be limited to $1,400,000 (the "Cap Amount"). The
parties agree that the Cap Amount shall be reduced by an amount equal to the
result of the following calculation: (x) the amount, if any, by which the
actual performance results of the GIC Division (determined over the first 15
months after Closing and every 12 months thereafter) minus the Minimum Dividend
Performance Results (as defined in Section 1.6(b)) exceeds the amount of the
aggregate of the Indemnifiable Claims for such applicable 15 month or 12 month
period, (y) multiplied by 66%. If the Cap Amount is reduced below $1,320,000
pursuant to the terms of this Section, then the Escrowed Stock (as defined in
Section 6.7) shall be released dollar-for-dollar as such Cap Amount is reduced
in accordance with this Section. New business generated by Xxxx X. Xxxxxx that
is not part of the GIC division shall be counted toward the reduction in the
Cap amount upon notice and approval by First Sierra in amounts to be agreed
upon on a transaction-by-transaction basis. Any Indemnifiable Claim that does
not result from the assertion of liablity by a third party shall expire unless
notice of such claim is provided to the Indemnifying Party within three (3)
years of the date of this Agreement.
6.7 Escrow. The parties hereto have agreed that 28,359 shares of
Series A Preferred Stock to be paid to the Stockholders (the "Escrowed Stock")
will be held in escrow with and will be held subject to the terms of the Escrow
Agreement attached hereto as Exhibit H. In addition to any other rights and
remedies that First Sierra and Newco may have at law or in equity or under this
Agreement, any amounts for which First Sierra and Newco are entitled to
indemnification under this Section 6 may be paid from such Escrowed Stock. If
the Stockholder contests First
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Sierra's and Newco's right to such Indemnifiable Claim, and such dispute cannot
be settled within 90 days of the offset, the matter shall be submitted to
binding arbitration in Houston, Texas, in accordance with the rules of the
American Arbitration Association. On December 31, 2001, the Escrow Agent shall
deliver the full amount of all remaining Escrowed Stock, less any portion
thereof for which a notice of an Indemnifiable Claim has been delivered and
which remains unresolved, to the Stockholders in accordance with their
respective interests, and such portion so retained shall continue to be held and
maintained and disbursed as described in the Escrow Agreement.
SECTION 7 - CONDITIONS PRECEDENT
TO OBLIGATIONS OF FIRST SIERRA AND NEWCO
Each and every obligation of First Sierra and Newco under this
Agreement is subject to the fulfillment, on or before the Closing Date, of each
of the following conditions, any one or more of which may, in the absolute
discretion of First Sierra and Newco, be waived by First Sierra and Newco in
writing:
7.1 Schedules and Exhibits. The timely receipt by First Sierra
and Newco of all schedules, exhibits, documents and related information as
described in this Agreement.
7.2 Representations and Warranties. The representations and
warranties of GIC and the Stockholders contained in this Agreement and in the
exhibits and schedules delivered hereunder shall be deemed to have been made
again at and as of the Closing Date and shall then be true and correct in all
material respects. GIC and the Stockholders shall have performed and complied
in all material respects with all agreements and conditions required by this
Agreement to be performed or complied with by them prior to or on the Closing
Date, and First Sierra and Newco shall have been furnished a certificate of GIC
and the Stockholders, dated the Closing Date, certifying to the fulfillment of
the foregoing conditions.
7.3 No Governmental or Other Proceeding or Litigation. No order
of any court or administrative agency shall be in effect which restrains or
prohibits the transactions contemplated hereby or which restricts the right of
Newco to own or operate any part of the business of GIC, and no suit, action,
investigation, inquiry or proceeding by any governmental body or other person
or legal or administrative proceeding shall have been instituted or threatened
which questions the validity or legality of the transactions contemplated
hereby or which challenges the right of GIC or Newco to own or operate any part
of the business of GIC.
7.4 No Material Adverse Change. No material adverse change in the
results of operations, financial condition or business of GIC shall have
occurred, and GIC shall not have suffered any material loss to its properties
or assets, whether or not covered by insurance, since the Balance Sheet Date,
which change, loss or damage affects or impairs its ability to conduct its
business.
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7.5 Approval and Consents. All approvals of applications to
public authorities, federal, state, foreign or local, and all approvals and
consents of any private persons, including all major suppliers and any banks or
other lending institutions, if any, the granting of which is necessary for the
consummation of this Agreement.
7.6 Opinion of the Stockholders' and GIC's Counsel. GIC and the
Stockholder shall have delivered to First Sierra and Newco the opinion of
Xxxxxx & Zeder, counsel for GIC and the Stockholders, dated the Closing Date,
in form and substance satisfactory to First Sierra, Newco and its counsel, in
substantially the same form as set forth in Exhibit "F" hereto.
7.7 Resolutions. GIC shall have delivered to First Sierra and
Newco copies of the resolutions of its Board of Directors and Shareholders,
authorizing and approving the execution of this Agreement and the consummation
of the transactions contemplated hereby, certified as true and correct on the
Closing Date by its Secretary.
7.8 Employment Agreements. First Sierra and Newco shall have
entered into the Employment Agreements set forth respectively in Exhibits "C",
"D" and "E".
SECTION 8 - CONDITIONS PRECEDENT TO OBLIGATIONS OF THE STOCKHOLDER
Each and every obligation of the Stockholders under this Agreement is
subject to the fulfillment, on or before the Closing Date, of each of the
following conditions, any one or more of which may, in the absolute discretion
of the Stockholders, be waived in writing:
8.1 Representations and Warranties. The representations and
warranties of First Sierra and Newco contained in this Agreement and in the
exhibits and schedules delivered hereunder shall be deemed to have been made
again at and as of the Closing Date and shall then be true and correct in all
material respects. First Sierra and Newco shall have performed and complied in
all material respects with all agreements and conditions required by this
Agreement to be performed or complied with prior to or on the Closing Date, and
the Stockholders shall have been furnished a certificate of First Sierra and
Newco, dated the Closing Date, certifying to the fulfillment of the foregoing
conditions.
8.2 No Litigation. No suit, action or other proceeding shall be
pending or threatened before any court or other governmental agency in which it
is sought to restrain or prohibit or to obtain damages or other relief in
connection with this Agreement or the consummation of the transactions
contemplated hereby.
8.3 No Material Adverse Change. No material adverse change in the
results of operations, financial condition or business of First Sierra and
Newco shall have occurred, and neither First Sierra nor Newco shall have
suffered any material loss to its properties or assets, whether or not covered
by insurance, since the date of its most recent audited balance sheet, which
change, loss or damage affects or impairs its ability to conduct its business.
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8.4 Approval and Consents. All approvals of applications to
public authorities, federal, state, foreign or local, and all approvals and
consents of any private persons, including all major suppliers and any banks or
other lending institutions, if any, the granting of which is necessary for the
consummation of this Agreement.
8.5 Opinion of First Sierra's and Newco's Counsel. First Sierra
and Newco shall have delivered to the Stockholder the opinion of Xxxx & Sudan,
L.L.P., counsel for First Sierra and Newco, dated the Closing Date, in form and
substance satisfactory to the Stockholder and its counsel, in substantially the
same form as set forth in Exhibit "G" hereto.
8.6 Resolutions. First Sierra and Newco shall have delivered to
the Stockholder copies of the resolutions of their Boards of Directors,
authorizing and approving the execution of this Agreement and the consummation
of the transactions contemplated hereby, certified as true and correct on the
Closing Date by their respective Secretary.
8.7 Employment Agreements. Xxxx X. Xxxxxx, Xxxxxx Xxxxxxx and
Xxxxxxx Xxxxxxxxxxxx shall have entered into the Employment Agreements set
forth respectively on Exhibits "C", "D" and "E."
8.8 Consideration. First Sierra and Newco shall have delivered to
GIC and to the Escrow Agent the purchase price described in Section 1.2 to be
delivered as of the Closing Date.
SECTION 9
CLOSING
9.1 Closing and Effective Date. Closing of the transactions
provided for in this Agreement (the "Closing") shall take place on or before
July 12, 1996 or at such other later date as the parties may agree upon in
writing (the "Closing Date"). The closing shall take place at the offices of
First Sierra Financial, Inc., Texas Commerce Tower, 70th Floor, 000 Xxxxxx
Xxxxxx, Xxxxxxx, Xxxxx 00000, or at such other place as the parties may agree
upon in writing. For all purposes the transactions provided for in this
Agreement shall be effective as of the Closing Date and all revenues and
expenses incurred and accruing from and after such date shall be deemed to be
for the account of Newco, save and except any expense incurred without Newco's
consent in violation of this Agreement which shall be for the account of GIC
incurring such expense.
9.2 Delivery by GIC at the Closing. At the Closing, GIC shall
deliver to Newco (or shall ensure is delivered):
(a) General warranty deeds, bills of sale, instruments of
transfer, assignment and conveyance, and other instruments in
form and substance reasonably required and satisfactory to
Newco and Newco's counsel and sufficient to convey, transfer
and
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assign to Newco and effectively vest in Newco all right, title
and interest in the Acquired Assets, together with possession
of the Acquired Assets;
(b) All Lease Documents duly assigned or otherwise duly
transferred to Newco, including, without limitation:
(i) manually executed lease agreements together with the
manually executed equipment schedules or other
instruments that constitute the chattel paper
original or counterpart of each Lease and all
amendments, addenda, exhibits and riders thereto; and
(ii) all guaranties or other support arrangements relating
to the Leases.
(c) At GIC's offices, the files of GIC (and the contents of such
files; the file relating to each Lease to include at a
minimum, the manually executed original of the lease
agreement, the certificate of delivery and acceptance, and any
guaranty agreement, residual guaranty or remarketing agreement
relating to such Lease, and the original or a copy of the
invoice covering GIC's purchase of the Equipment covered by
such Lease) in respect of the Acquired Assets. Each of the
original lease agreements will be stamped on the front page
thereof to reflect the assignment and transfer of such lease
agreement to Newco.
(d) The certificate or certificates referred to in Section 7.2;
(e) The legal opinion referred to in Section 7.6;
(f) All consents, approvals, authorizations or orders obtained by
Seller;
(g) Certified copies of the resolutions, duly adopted by the Board
of Directors of GIC and by the Stockholders, that shall be in
full force and effect on the Closing Date, authorizing the
execution, delivery and performance of this Agreement and all
instruments and documents contemplated by this Agreement;
(h) Simultaneously with the consummation of the transfer as
contemplated herein, Seller, through its officers, agents and
employees, will put Newco into full possession and enjoyment
of all Acquired Assets;
(i) All books and records, memoranda, data and other documents
related to the Acquired Assets;
(j) The Employment Agreements with Xxxx X. Xxxxxx, Xxxxxx Xxxxxxx,
and Xxxxxxx Xxxxxxxxxxxx;
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(k) A certificate from the Secretary of State of Florida
certifying the due incorporation and existence of GIC, and a
status letter from the Florida taxing authority to the effect
that GIC has paid all franchise taxes owed as of the Closing
Date, and has paid as of the last reporting period all sales
and use taxes;
(l) Executed Amendments to the Articles of Incorporation of GIC
and each of its subsidiaries, if any, that, when filed, will
change the name of each corporation so that none of the names
contain "General Interlease Corporation," and a certificate
from the secretary of each corporation certifying that the
name changes have been approved by a majority of the Board of
Directors and the holders of at least a majority of all issued
and outstanding shares of each corporation; and
(m) Such other instruments and documents relating to the
transactions contemplated by this Agreement as may reasonably
be requested by the Newco.
9.3 Delivery by Newco and First Sierra at the Closing. At the
Closing, Newco and First Sierra shall deliver (or cause to be delivered) to
GIC.
(a) The certificates for Series A Preferred Shares to GIC and into
escrow as described in Section 1.2;
(b) The certificate or certificates referred to in Section 8.1;
(c) The legal opinion referred to in Section 8.5;
(d) All consents, approvals, authorizations or orders obtained by
Newco;
(e) Certified copies of the resolutions duly adopted by the Board
of Directors of First Sierra and Newco, authorizing the
execution, delivery and performance of this Agreement and all
instruments and documents contemplated by this Agreement;
(f) Such other instruments and documents relating to the
transactions contemplated by this Agreement as may reasonably
be requested by GIC; and
(g) The Letters of Credit referred to in Section 1.3(d).
SECTION 10 - MISCELLANEOUS PROVISIONS
10.1 Expenses. Each of the parties shall be responsible for its
own expenses in connection with this transaction, including but not limited to
legal expenses and out-of-pocket costs. All attorneys' fees and other costs
and expenses incurred by GIC in the preparation, negotiation and execution of
this Agreement shall be the financial responsibility of the Stockholder and
will not be charged to GIC, and the Stockholders, by their execution and
delivery of this
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Agreement, agrees to, and shall indemnify and hold harmless First Sierra and
Newco from and against any and all liabilities or claims with respect to any
such expenses, costs or fees. Notwithstanding the foregoing, in the event the
parties do not close this transaction because of the failure of any of the
conditions to close set forth in Section 7, or because the Stockholders or GIC
refuses to close for a reason other than a failure of the conditions to close
set forth in Section 8, then the parties will share equally all reasonable costs
and expenses associated with the negotiation and preparation of this Agreement
and the costs and expenses of Xxxxxx Xxxxxxxx, LLP, in conducting its due
diligence of GIC for First Sierra and in preparing its comfort letter of GIC's
annual volumes.
10.2 Assignment. This Agreement and the rights of the Stockholders
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, and their heirs,
successors and assigns. First Sierra or Newco may assign its rights under this
Agreement for collateral security purposes to any lenders providing financing
to First Sierra and Newco, and any such lender may exercise all of the rights
and remedies of the First Sierra and Newco hereunder. First Sierra and Newco
may assign its rights under this Agreement, in whole or in part, to any
subsequent purchaser of First Sierra and Newco, any of their divisions or any
material portion of their assets (whether such sale is structured as a sale of
stock, a sale of assets, a merger or otherwise).
10.3 Entire Agreement. This Agreement (including the schedules and
exhibits hereto) and the documents delivered pursuant thereto constitute the
entire agreement and understanding between the parties hereto, and supersede
any prior agreement or understanding relating to the subject matter of this
Agreement. This Agreement may be modified and amended only by a written
instrument executed by all parties hereto.
10.4 Multiple Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original and all of which together shall constitute but one and the same
instrument.
10.5 Remedies Cumulative. The rights and remedies granted herein
are cumulative and not exclusive of any other right or remedy granted herein or
provided by law.
10.6 Notice. Any notice or communication required or permitted
hereunder shall be in writing and shall be deemed received (a) when personally
delivered to the relevant party at such party's address as set forth below, or
(b) if sent by mail, on the third day following the date when deposited in the
United States mail, certified or registered mail, postage prepaid, to the
relevant party at its or his address indicated below:
(a) If to First Sierra or Newco:
First Sierra Financial, Inc.
Texas Commerce Tower, 00xx Xxxxx
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000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxxx
Chief Executive Officer
With copy to:
Xxxxxx X. Xxxxxxx
Xxxx & Sudan, LLP
Xxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
(b) If to the Stockholders:
Xxxx X. Xxxxxx
__________________________
__________________________
Xxxxxx Xxxxxxx
__________________________
__________________________
With copy to:
Xx. Xxxxxxx Xxxxx
Xxxxxx & Zeder
__________________________
Each party may change its, his or her address for purposes of this Section 10.6
by proper notice to the other parties.
10.7 Cooperation of the Stockholder. The Stockholders will
cooperate and use their best efforts to have the present officers, directors
and employees of GIC cooperate with First Sierra on and after the Closing Date
in furnishing information, evidence, testimony and other assistance in
connection with any actions, proceedings, arrangements or disputes of any
nature with respect to matters pertaining to all periods prior to the Closing
Date.
10.8 Choice of Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Texas.
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10.9 Section and Section Headings. The section and section
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
10.10 Separability. If any covenant, condition or other provision
of this Agreement is declared by a court of last resort to be invalid and not
binding on the parties, such declaration shall in no way effect the validity of
the other and remaining covenants, conditions and provisions of this Agreement.
10.11 Waiver. No delay in the exercise of any right under this
Agreement shall waive such right.
10.12 Schedules and Exhibits. All Schedules and Exhibits attached
to this Agreement are hereby incorporated in and made a part of this Agreement.
10.13 Attorneys' Fees. In the event of any action for the breach of
this Agreement, the prevailing party shall be entitled to reasonable attorneys'
fees, and other costs and expenses incurred in any such action.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
"FIRST SIERRA"
FIRST SIERRA FINANCIAL, INC.
By: /s/ XXXXXX X. XXXXXXX
-----------------------------------
Xxxxxx X. Xxxxxxx
Chief Executive Officer
"NEWCO"
FIRST SIERRA ACQUISITION, INC.
By: /s/ XXXXXX X. XXXXXXX
-----------------------------------
Xxxxxx X. Xxxxxxx
Chief Executive Officer
"STOCKHOLDERS"
/s/ XXXX X. XXXXXX
--------------------------------------
Xxxx X. Xxxxxx
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/s/ XXXXXX XXXXXXX
-------------------------------------
Xxxxxx Xxxxxxx
"GIC"
GENERAL INTERLEASE CORPORATION
By: /s/ XXXX X. XXXXXX
----------------------------------
Xxxx X. Xxxxxx
President
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ASSET PURCHASE AGREEMENT
List of Schedules and Exhibits
SCHEDULES:
1.1(f) Vehicles
1.4 Allocation of Purchase Price (to be attached after Closing)
3.2 Company's Articles of Incorporation and Bylaws
3.8 Financial Statements of Company
3.9 Schedule of Leases and Leased Equipment as of ________, 1996
3.9-A Schedule of Balance of Residuals (at Fair Market Value) and Maturity Date by Lease of all Residuals
3.10 Lease Volumes
3.12 Schedule of Liabilities
3.13 Accounts and Notes Receivables and Cash
3.14 List of all Patents, Trademarks, Copyrights, Patent Applications, etc.; Infringements of same
3.15 Description of Real Property and Improvements
3.16 Furniture and Equipment
3.17 Material Contracts
3.18 List of Liens, Pledges and Encumbrances
3.19 List of all Insurance Policies
3.20 Employment Arrangements
-List of all officers, directors, and key employees (with compensation and bonuses)
-List of all employee contracts and benefit plans for key employees
3.21 List of Employee Benefit, Pension, Bonus, Profit Sharing Plans
46
3.22 -Employee or Labor Controversies or Disputes
3.23 Bank or Other Accounts and Persons Authorized to Draw on Accounts
3.24 Tax Disputes or Contingencies
3.25 Defaults under Contracts and Agreements
3.26 Litigation, Claims, or Investigations
3.29 Consents Required
3.30 Environmental Matters
3.31 Worker's Compensation Claims
EXHIBITS
A Certificate of Designation, Preferences, Rights and Limitations of Series A Preferred Stock
B Letter of Credit
C Employment Agreement with Xxxx X. Xxxxxx
D Employment Agreement with Xxxxxx Xxxxxxx
E Employment Agreement with Xxxxxxx Xxxxxxxxxxxx
F Opinion of Stockholder's and GIC's Counsel
G Opinion of First Sierra's and Newco's Counsel
H Escrow Agreement
