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EXHIBIT 10.6
ASSET PURCHASE AGREEMENT
between
LEASE PRO, INC.,
XXXXXXX X. XXXXXX
AND
FIRST SIERRA FINANCIAL, INC.
February 4, 1997
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TABLE OF CONTENTS
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. The Sale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Consideration . . . . . . . . . . . . . . . . . . . . . . . . 4
(d) Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(e) The Closing . . . . . . . . . . . . . . . . . . . . . . . . . 7
(f) Deliveries at the Closing . . . . . . . . . . . . . . . . . . 7
3. Representations and Warranties of the Company
and Shareholder. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(a) Organization, Qualification, and Corporate Power. . . . . . . 8
(b) Ownership of the Company. . . . . . . . . . . . . . . . . . . 8
(c) Authorization of Transaction . . . . . . . . . . . . . . . . . 8
(d) Noncontravention . . . . . . . . . . . . . . . . . . . . . . . 8
(e) Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . . 8
(f) Financial Statements . . . . . . . . . . . . . . . . . . . . . 8
(g) Events Subsequent to Most Recent Fiscal Year End . . . . . . . 9
(h) Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . 9
(i) Title to Assets . . . . . . . . . . . . . . . . . . . . . . . 9
(j) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(k) Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . 9
(l) Employee Benefits . . . . . . . . . . . . . . . . . . . . . . 9
(m) Lease Volume . . . . . . . . . . . . . . . . . . . . . . . . . 9
(p) Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 10
4. Representations and Warranties of First Sierra. . . . . . . . . . . . 10
(a) Organization . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Authorization of Transaction . . . . . . . . . . . . . . . . . 10
(c) Noncontravention . . . . . . . . . . . . . . . . . . . . . . . 10
(d) Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . . 10
5. Post-Closing Covenants . . . . . . . . . . . . . . . . . . . . . . . 11
(a) General . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(b) Transition . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(c) Covenant Not to Compete . . . . . . . . . . . . . . . . . . . 11
6. Conditions to Obligation to Close . . . . . . . . . . . . . . . . . . 12
(a) Conditions to Obligation of First Sierra . . . . . . . . . . . 12
(b) Conditions to Obligation of the Company and Shareholder . . . 13
7. Remedies for Breaches of This Agreement . . . . . . . . . . . . . . . 13
(a) Survival of Representations and Warranties . . . . . . . . . . 13
(b) Indemnification Provisions for Benefit of First Sierra . . . . 13
(c) Indemnification Provisions for Benefit of the Company and
Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . 14
(d) Matters Involving Third Parties . . . . . . . . . . . . . . . 14
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(e) Claims for Indemnification. . . . . . . . . . . . . . . . . . 15
(f) Determination of Adverse Consequences . . . . . . . . . . . . 16
(g) Other Indemnification Provisions . . . . . . . . . . . . . . . 16
8. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(a) Press Releases and Public Announcements . . . . . . . . . . . 16
(b) No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . 16
(c) Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 16
(d) Succession and Assignment . . . . . . . . . . . . . . . . . . 16
(e) Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 16
(f) Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(g) Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 17
(h) Amendments and Waivers . . . . . . . . . . . . . . . . . . . . 17
(i) Severability . . . . . . . . . . . . . . . . . . . . . . . . . 17
(j) Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(k) Construction . . . . . . . . . . . . . . . . . . . . . . . . . 17
(l) Incorporation of Exhibits, Annexes, and Schedules . . . . . . 18
(m) Specific Performance . . . . . . . . . . . . . . . . . . . . . 18
(n) Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . 18
Exhibit A - Employment Agreement
Exhibit B - Financial Statements
Exhibit C - Lease Volume Information
Exhibit D - Opinion of the Company's Counsel
Exhibit E - Opinion of First Sierra's Counsel
Exhibit F - Xxxx of Sale
Exhibit G - Lease Assignment
Exhibit H - Release
Schedule 1 - Furniture, Fixture and Equipment
Schedule 3(n) - List of Equipment Residuals
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into as of February 4, 1997, by
and between Xxxxxxx X. Xxxxxx, a resident of Xxxx County, Georgia
("Shareholder"), Lease Pro, Inc., a Georgia corporation (the "Company"), and
First Sierra Financial, Inc., a Delaware corporation ("First Sierra"). First
Sierra, Shareholder and the Company are referred to collectively herein as the
"Parties".
Recitals
Shareholder owns 74% the outstanding capital stock of the Company.
This Agreement contemplates a transaction in which First Sierra will
purchase certain assets of the Company.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows:
1. DEFINITIONS.
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues,
penalties, fines, costs, amounts paid in settlement, Liabilities,
obligations, Taxes, liens, losses, expenses and fees, including court
costs and reasonable attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"Applicable Rate" means the corporate base rate or prime rate of
interest publicly announced from time to time by Texas Commerce Bank,
National Association, Houston, Texas plus 3.0% per annum.
"Balance Sheet" means the balance sheet contained within the
Financial Statements.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction that forms or could
form the basis for any specified consequences.
"Business Day" means any day that is not a Saturday, a Sunday, or
a day that is a banking holiday under United States or Texas Law.
"Closing" has the meaning set forth in Section 2(c).
"Closing Date" has the meaning set forth in Section 2(c).
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"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the
businesses and affairs of the Company or First Sierra that is not
already generally available to the public.
"Disclosure Schedule" has the meaning set forth in Section 3.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement that is an Employee
Pension Benefit Plan, (b) qualified defined contribution retirement plan
or arrangement that is an Employee Pension Benefit Plan, (c) qualified
defined benefit retirement plan or arrangement that is an Employee
Pension Benefit Plan (including any Multiemployer Plan), or (d) Employee
Welfare Benefit Plan or material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in
ERISA Sec. 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in
ERISA Sec. 3(1).
"Employees" has the meaning set forth in Section 2(d).
"Employment Agreement" means the Employment Agreement to be
entered into by First Sierra and Shareholder in the form of Exhibit A.
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the
Resource Conservation and Recovery Act of 1976, and the Occupational
Safety and Health Act of 1970, each as amended, together with all other
Laws concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including Laws
relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes into ambient air, surface water, ground water, or
lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling
of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Extremely Hazardous Substance" has the meaning set forth in Sec.
302 of the Emergency Planning and Community Right-to-Know Act of 1986,
as amended.
"FF&E" means those items of furniture, fixtures and equipment
listed on Schedule 1, being all of the furniture, fixtures and equipment
owned by the Company as of 12-31-96.
"Financial Statements" has the meaning set forth in Section 3(h).
"First Sierra" has the meaning set forth in the preface above.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
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"Governmental Authority" means any government or any department,
agency, political subdivision, or court thereof.
"Indemnified Party" has the meaning set forth in Section 10(d).
"Indemnifying Party" has the meaning set forth in Section 10(d).
"Knowledge" means actual knowledge.
"Law" means any constitution, statute, code, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any applicable Governmental Authority.
"Liability" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and whether
due or to become due), including any liability for Taxes.
"Most Recent Fiscal Year End" has the meaning set forth in
Section 3(h).
"Multiemployer Plan" has the meaning set forth in ERISA Sec.
3(37).
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice.
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or a Governmental Authority.
"Purchase Price" has the meaning set forth in Section 2(b).
"Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (a)
mechanic's, materialmen's, and similar liens, (b) liens for Taxes not
yet due and payable or for Taxes that the taxpayer is contesting in good
faith through appropriate proceedings, (c) purchase money liens and
liens securing rental payments under capital lease arrangements, and (d)
other liens arising in the Ordinary Course of Business and not incurred
in connection with the borrowing of money.
"Shareholder" has the meaning set forth in the preface above.
"Specified Assets" means (a) the FF&E, (b) all tradenames,
fictitious names and assumed names of the Company including, without
limitation, the names "Lease Pro" and "Lease Pro, Inc.", (c) all vendor,
broker, dealer and customer lists of the Company, and (d) all goodwill
of the Company including, without limitation, the relationships between
the Company and its customers.
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"Subsidiary" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the common
stock or has the power to vote or direct the voting of sufficient
securities to elect a majority of the directors.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium windfall profits, environmental (including taxes
under Code Sec. 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration,
value added, alternative or add-on minimum, estimated, or other tax of
any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 7(d).
2. THE SALE.
(a) ASSETS. Upon the terms and subject to the provisions of this
Agreement, the Company shall sell and assign to First Sierra, and First Sierra
will purchase from the Company, the Specified Assets.
(b) CONSIDERATION. (i) As consideration for the sale of the Assets,
First Sierra shall pay to Shareholder and Shareholder shall receive at the
Closing, subject to the terms and conditions of this Agreement, a purchase
price ("Purchase Price") payable as follows:
(1) $158,470 in cash payable to the Company at Closing
for the FF&E;
(2) $750,000 in cash payable to the Company at Closing
for all of the Specified Assets other than the FF&E;
(3) a maximum of an additional $250,000 payable to the
Company in accordance with and subject to the terms of Section
2(b)(ii).
(ii) (1) An "Earnings Period" shall mean the first 15 month
period commencing as of the Closing Date and the two succeeding 12 month
periods. Following the expiration of each Earnings Period a determination
shall be made as to the Income Amount and Margin applicable to such Earnings
Period. The Income Amount and Margin for each Earnings Period will be
determined as follows.
An "Income Amount" shall be determined for each new
lease/financing instrument (collectively, "leases") booked by the Lease Pro
Division during each Earnings Period. The "Lease Pro Division" means the
division of First Sierra headed by Shareholder, although such division may be
given a different name within First Sierra. In instances where First Sierra
acquires the lease, the Income Amount with respect to each such lease booked by
the Lease Pro Division will be equal to the excess of (a) the present value of
the scheduled rental payments under such lease during
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its initial term, such present value to be determined using a discount rate
equal to the average yield to maturity on the 2 year U.S. Treasury security
during the month such lease was generated plus 250 basis points, over (b) the
total amount funded by First Sierra in respect of such lease including, without
limitation, equipment cost, software license fees and fees and commissions paid
to brokers. In instances where First Sierra does not acquire the lease but
rather acts as a broker in respect of the lease, the Income Amount with respect
to each such lease booked by the Lease Pro Division will be equal to the profit
realized by First Sierra with respect to such lease (however, it is
acknowledged that First Sierra may decide, in its discretion, to not broker any
leases to other funding sources).
The "Margin" for each Earnings Period shall be equal to
(i) the Income Amount for such period, less (ii) the aggregate operating
expenses incurred by First Sierra during such Earnings Period that are directly
associated with the Lease Pro Division including, without limitation, the
salaries, bonuses and commissions paid to Shareholder (exclusive of this
earnout) and expenses incurred at the First Sierra corporate level (excluding
general and administrative expenses of First Sierra) that are directly
associated with the Lease Pro Division such as fees for credit bureau and Dun &
Bradstreet reports, advertising for the Lease Pro Division and credit documents
and funding costs.
(2) As soon as practicable following the expiration of
an Earnings Period, First Sierra will provide to the Company a calculation of
the Margin and aggregate Income Amount for such Earnings Period. If the
Company has any questions regarding the calculation of or particular items
comprising the Margin or Income Amount, then First Sierra will make available
for inspection by the Company the relevant parts of its books and records. If
the Company believes any part of the Margin or Income Amount was incorrectly
calculated, Shareholder shall give First Sierra written notice thereof within
30 days following Shareholder's receipt from First Sierra of the calculation of
such Margin and Income Amount; and if no such notice is given by the Company to
First Sierra within such 30 day period, then Shareholder shall be deemed to
have agreed with the calculation of such Margin and aggregate Income Amount.
If the Company does so notify First Sierra (an "Audit Notice"), and the Company
and First Sierra are unable to resolve the disputed calculation within 30 days
following receipt by First Sierra of the Audit Notice, then First Sierra's
independent auditors (currently Xxxxxx Xxxxxxxx) shall be engaged to determine
whether the part of the Margin or Income Amount alleged by the Company to be
incorrectly calculated was in fact incorrectly calculated, and the
determination of such auditors shall be conclusive and binding on the Company
and First Sierra. The Company and First Sierra agree that the submission to
such independent auditors of disputes regarding the calculation of and items
comprising the Margin and aggregate Income Amount shall be the sole method of
resolving such disputes. If, pursuant to the preceding provisions, as to a
particular Earnings Period the calculation of the Margin and aggregate Income
Amount (or any part thereof) for such period is submitted to the independent
auditors and the final determination by such independent auditors results in
the Company being entitled to additional consideration under this earnout, then
the fees of such auditors shall be paid by First Sierra, otherwise such fees
shall be paid by the Company.
(3) As to each Earnings Period, if the Margin for such
period is equal to or greater than $1,300,000, then First Sierra will pay to
the Company in cash $83,334; if the Margin for such period is less than
$1,300,000 but equal to or greater than $1,075,000, then First Sierra will pay
to the Company in cash $62,500; if the Margin for such period is less than
$1,075,000 but equal to or greater than $800,000, then First Sierra will pay to
the Company in cash $41,667; and if the Margin for such period is less than
$800,000, then First Sierra shall not be obligated to pay any amount to the
Company under this earn-out for such period.
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(4) Reference is made to the Employment Agreement to be
entered into between First Sierra and Shareholder in connection with the
Closing. If (aa) Shareholder resigns his employment with First Sierra prior to
the expiration of the last Earnings Period or (bb) pursuant to the terms of
such Employment Agreement First Sierra terminates Shareholder's employment for
cause at any time prior to the expiration of the last Earnings Period, then the
Company's rights under this Section 2(b)(ii) as to the Earnings Period in which
such termination occurs and any subsequent Earnings Period shall terminate. In
the event of a termination of Shareholder's employment by virtue of
Shareholder's death or termination of Shareholder's employment by First Sierra
without cause, the aforesaid earnout provisions will not terminate; however,
First Sierra reserves the right to restructure or otherwise modify the Lease
Pro Division (which restructuring or modification may result in a reduction in
consideration being earned pursuant to this Section 2(b)(ii), but in no event
to be less than $41,667 per each unexpired Earnings Period), and in no such
event shall the Company have any claim or cause of action against First Sierra
arising out of or any manner attributable to any such action or event, the same
being hereby expressly waived and released by the Company.
(c) MASTER AGREEMENT. As of the Closing the Company's and
Shareholder's liability under the existing private label program Master
Agreement dated _________ with First Sierra will be terminated in return for
the Company and Shareholder delivering the Release Consideration Amount (as
hereinafter defined) to First Sierra at the Closing. The "Release
Consideration Amount" shall be determined as of the day preceding the Closing
Date and shall equal the product obtained by multiplying the aggregate
principal balance of the Leases (as such term is defined in such Master
Agreement) covered by such Master Agreement as of such day multiplied by 2%,
with such resulting product to be multiplied by the weighted average life in
months of such Leases, plus $76,072 (such $76,072 amount representing the
aggregate security deposit amounts currently held by the Company applicable to
such Leases). The Parties stipulate that $293,363 constitutes the Release
Consideration Amount as determined pursuant to the preceding sentence. The
Release Consideration Amount will be funded at the Closing with the following:
(i) An assignment by the Company to First Sierra of all funds
then contained in the Reserve Pool (as such term is
defined in such Master Agreement) established pursuant to
such Master Agreement (stipulated to be $75,812);
(ii) An assignment to First Sierra of all security deposit
amounts currently held by First Sierra applicable to such
Leases (stipulated to be $72,405);
(iii) An assignment to First Sierra of the late charges
collected on such Leases during 1996 and currently owed to
the Company by First Sierra (stipulated to be $14,847) and
a release of any obligations owed to the Company by First
Sierra in respect thereof;
(iv) An assignment of the Company's residual interest in the
Equipment (as such term is defined in such Master
Agreement) covered by such Leases at the Company's book
value net of the security deposit amount described in
clause (ii) preceding (stipulated to be $123,597); and
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(v) $6,702 credited against the cash portion of the Purchase
Price payable at the Closing.
Upon payment of the Release Consideration Amount First Sierra
shall execute a written release substantially in the form of
Exhibit H.
(d) EMPLOYEES. (1) Shareholder will in good faith cooperate with
First Sierra in First Sierra's attempt to retain the employees of the Company
as new employees of First Sierra (such employees are referred to herein as the
"Employees"). Set forth in Section 2(d) of the Disclosure Schedule is a list
of all Employees together with a complete description of all vacation, holiday
and sick leave policies, all incentive compensation policies, and any other
policies of the Company relating to the Employees. Group health insurance will
be provided by First Sierra effective as of the Closing Date to all Employees
who become employees of First Sierra, such insurance either to be consistent
with the health insurance provided to the other employees of First Sierra or to
be a continuation of the existing health insurance maintained by the Company
for its employees. Employee records for the Employees who become employees of
First Sierra, including payroll and wage and hour records, will become the
property of First Sierra who will preserve the records for any time required by
applicable governmental regulations.
(2) In connection with the Closing First Sierra and
Shareholder shall enter into an Employment Agreement in the form of Exhibit A.
(e) THE CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place on February 4, 1997 (the
"Closing Date").
(f) DELIVERIES AT THE CLOSING. At the Closing, (i) Shareholder will
deliver to First Sierra the various certificates, instruments, and documents
referred to in Section 6(a), (ii) First Sierra will deliver to the Company the
various certificates, instruments, and documents referred to in Section 6(b),
(iii) First Sierra will pay and deliver to the Company the consideration
specified in Section 2(b), in the case of Section 2(b)(i)(3) subject to the
earn out provisions of Section 2(b)(ii).
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SHAREHOLDER.
The Company and Shareholder jointly and severally represent and warrant
to First Sierra that the statements contained in this Section 3 are correct and
complete as of the date of this Agreement and will be correct and complete as
of the Closing Date (as though made then and as though the Closing Date was
substituted for the date of this Agreement throughout this Section 3), except
as set forth in the disclosure schedule delivered by Shareholder to First
Sierra on the date hereof and initialed by Shareholder and First Sierra (the
"Disclosure Schedule"). Nothing in the Disclosure Schedule shall be deemed
adequate to disclose an exception to a representation or warranty made herein,
however, unless the Disclosure Schedule identifies the exception with
reasonable particularity and describes the relevant facts in reasonable detail.
Without limiting the generality of the foregoing, the mere listing (or
inclusion of a copy) of a document or other item shall not be deemed adequate
to disclose an exception to a representation or warranty made herein. The
Disclosure Schedule will be arranged in paragraphs corresponding to the
lettered and numbered paragraphs contained in this Section 3, and the inclusion
of an item as an exception in one portion of the Disclosure Schedule shall
cause such item to be an exception under any other portion of the Disclosure
Schedule that addresses the same issue.
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(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. The Company
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Georgia. The Company is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction where such
qualification is required except where the failure to qualify would not have a
material adverse effect on the financial condition of the Company. The Company
has full corporate power and authority and all licenses, permits, and
authorizations necessary to carry on the businesses in which it is engaged and
to own and use the properties owned and used by it except where the failure to
do so would not have a material adverse effect on the Company.
(b) OWNERSHIP OF THE COMPANY. Shareholder is the owner of 74%
outstanding capital stock of the Company.
(c) AUTHORIZATION OF TRANSACTION. The Company has full corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of Shareholder and the Company, enforceable in accordance
with its terms and conditions except to the extent that enforceability may be
limited by bankruptcy, insolvency and other similar laws affecting the
enforcement of creditors' rights generally and except for the application of
general principles of equity. Except as set forth in Section 3(c) of the
Disclosure Schedule and consents that have already been obtained, neither
Shareholder nor the Company need to give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any Governmental Authority
or any other party in order to consummate the transactions contemplated by this
Agreement. Shareholder and the other shareholder of the Company, being Xxxxxxx
X. Xxxx, Xxxxxxx X. Xxxx and Xxxxxxxx X. Xxxxxxx have consented to the Company
entering into this Agreement and consummating the transaction contemplated
hereby and a copy of such consent(s) have been delivered to First Sierra.
(d) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any Law to which either of Shareholder or the Company is subject or
any provision of the charter or bylaws of the Company or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice or consent under any material agreement, contract, lease,
license, instrument, or other arrangement to which either of Shareholder or the
Company is a party or by which any of them is bound or to which any of the
assets of any of them is subject (or result in the imposition of any Security
Interest upon any such assets).
(e) BROKERS' FEES. Shareholder has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which First Sierra could become
liable or obligated, and the Company has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement [except as set forth in Section
3(e) of the Disclosure Schedule].
(f) FINANCIAL STATEMENTS. Attached hereto as Exhibit B are the
following financial statements (the "Financial Statements"): internally
prepared and unaudited balance sheets and statements of income, as of and for
the fiscal year ended 12-31-96 (the "Most Recent Fiscal Year End") for the
Company. The Financial Statements have been prepared on a modified cash basis
on a consistent basis throughout the periods covered thereby, present fairly
the financial condition of the
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Company as of such dates and the results of operations of the Company for such
periods, and are correct and complete, and are consistent with the books and
records of the Company (which books and records are correct and complete).
(g) EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Since the Most
Recent Fiscal Year End, there has not been any material adverse change in the
business, financial condition, operations, results of operations, or future
prospects of the Company.
(h) TAX MATTERS. Each of the Company and Shareholder has filed all
federal income Tax Returns and all other material Tax Returns that such party
was required to file. All such Tax Returns were correct and complete in all
material respects. All previously due federal income Taxes and other material
Taxes of the Company or Shareholder attributable to periods on or prior to
12-31-96 have been paid or adequately reserved for in the Financial Statements.
(i) TITLE TO ASSETS. The Company has good and marketable title to
the Specified Assets and a valid leasehold interest in the office premises that
it occupies. The Specified Assets and the lease covering such office premises
are free and clear of any security interests, liens or other encumbrances.
(j) LITIGATION. Section 3(j) of the Disclosure Schedule sets forth
each instance in which the Company or Shareholder, (i) is subject to any
outstanding injunction, judgment, order, decree or ruling or (ii) is a party to
any action, suit, proceeding, hearing or investigation, in or before any court
or quasi-judicial or administrative agency of any federal, state, local or
foreign jurisdiction or before any arbitrator.
(k) LABOR MATTERS. The Company has not committed any unfair labor
practice which would have a material adverse effect on the Company. The
Company has no Knowledge of any organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees of the
Company.
(l) EMPLOYEE BENEFITS.
(i) The Company does not currently maintain or contribute to
any Employee Benefit Plan except those Employee Benefit Plans listed in
Section 3(l) of the Disclosure Statement;
(ii) The Company does not contribute to, never has contributed
to, and never has been required to contribute to any Multiemployer Plan
or has any Liability (including withdrawal Liability) under any
Multiemployer Plan; and
(iii) The Company does not currently maintain or contribute to
any Employee Welfare Benefit Plan providing medical health, or life
insurance or other welfare-type benefits for current or future retired
or terminated employees, their spouses, or their dependents except those
Employee Welfare Benefit Plans listed in Section 3(l) of the Disclosure
Statement.
(m) LEASE VOLUME. The information reflected on Exhibit C is true and
correct in all material respects; and without limiting the preceding, the
aggregate gross lease receivables under equipment leases and equipment finance
contracts booked by the Company during 1996 exceeded $12,000,000, and the
average implicit yield rate on such leases was not less than 18% per annum.
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13
(n) RESIDUALS. Schedule 3(n) sets forth a true and accurate listing
of all Equipment covered by the Leases referenced in Section 2(c).
(o) TRADENAMES. The Company conducts its business only under the
names "Lease Pro" or "Lease Pro, Inc." and the Company has no other fictitious
or assumed names. The Company has not licensed or granted any rights in and to
the names "Lease Pro" or "Lease Pro, Inc.".
(p) DISCLOSURE. The representations and warranties contained in
this Section 3 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained in this Section 3 not misleading.
4. REPRESENTATIONS AND WARRANTIES OF FIRST SIERRA. First Sierra represents
and warrants to Shareholder that the statements contained in this Section 4 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date was substituted for the date of this Agreement throughout this Section 4).
(a) ORGANIZATION. First Sierra is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware.
First Sierra is duly authorized to conduct business and is in good standing
under the laws of each jurisdiction where such qualification is required except
where the failure to qualify would not have a material adverse effect on the
financial condition of First Sierra. First Sierra has full corporate power and
authority and all licenses, permits, and authorizations necessary to carry on
the businesses in which it is engaged and to own and use the properties owned
and used by it except where the failure to do so would not have a material
adverse effect on First Sierra.
(b) AUTHORIZATION OF TRANSACTION. First Sierra has full corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of First Sierra, enforceable in accordance with its terms
and conditions except to the extent that enforceability may be limited by
bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors' rights generally and except for the application of general
principles of equity. Except for consents that have already been obtained,
First Sierra need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any Governmental Authority or any other
party in order to consummate the transactions contemplated by this Agreement.
(c) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any Law to which First Sierra is subject or any provision of its
charter or bylaws or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice or consent
under any agreement, contract, lease, license, instrument, or other arrangement
to which First Sierra is a party or by which it is bound or to which any of its
assets is subject.
(d) BROKERS' FEES. First Sierra has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Company or
Shareholder could become liable or obligated.
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5. POST-CLOSING COVENANTS. If the Closing occurs, the Parties agree as
follows with respect to the period following the Closing.
(a) GENERAL. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party
reasonably may request all at the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification therefor under
Section 6).
(b) TRANSITION. Shareholder and the Company will not take any action
that is designed or intended to have the effect of discouraging any lessor,
vendor, broker, customer, supplier, or other business associate of the Company
from maintaining the same business relationships with First Sierra after the
Closing as it maintained with the Company prior to the Closing.
(c) COVENANT NOT TO COMPETE. For the period commencing as of the
Closing Date and terminating upon the earlier to occur of (i) the expiration of
the one or two year period, as applicable, that First Sierra agrees to pay
Shareholder following a termination pursuant to Section 4.04 of the Employment
Agreement and (ii) the expiration of six years following the Closing Date, each
of the Company and Shareholder agree that it shall not, directly or indirectly,
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 or entity, without the prior written consent of the
Board of Directors of First Sierra, within any geographic area that First
Sierra does business during the five year period following the Closing Date,
engage in any equipment or software lease or financing business in which First
Sierra or any of its subsidiaries engages in during such period. If the final
judgment of a court of competent jurisdiction declares that any term or
provision of this Section 5(d) is invalid or unenforceable, the Parties agree
that the court making the determination of invalidity or unenforceability shall
have the power to reduce the scope, duration, or area of the term or provision,
to delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be enforceable as so modified after
the expiration of the time within which the judgment may be appealed.
(d) REPURCHASE RIGHT. The Company shall have the right to purchase
such items out of the FF&E as are needed by the Company to manage and service
the lease portfolio of the Company in existence as of the Closing Date, such
purchase to occur no later than 60 days following the Closing Date. The
purchase price for such items shall be the book value thereof on the Company's
books as of the Closing Date (estimated to be around $15,000), payable in cash.
Such items will be sold and transferred by First Sierra as-is and with all
faults, and First Sierra shall make no representation or warranty with regard
to such items except to the effect that the same are being transferred free and
clear of any lien or security interest granted by First Sierra.
(e) CORPORATE NAME. Promptly after the Closing the Company shall
change its corporate name to a name that does not include the words "Lease" or
"Pro" and that is not otherwise similar to "Lease Pro". Neither the Company
nor any of its affiliates shall conduct any business under or otherwise use any
tradename, fictitious name or assumed name that includes the words "Lease" or
"Pro" or that is otherwise similar to "Lease Pro".
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6. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF FIRST SIERRA. The obligation of
First Sierra to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3
shall be true and correct in all material respects at and as of the
Closing Date;
(ii) Shareholder and the Company shall have performed and
complied with all of their respective covenants hereunder in all
material respects through the Closing;
(iii) Shareholder and the Company shall have procured all of
consents of third parties required in connection with the consummation
of the transactions contemplated by this Agreement;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would
(A) prevent consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, (C) affect adversely
the right of First Sierra to own the Specified Assets, or (D) affect
adversely the right of First Sierra to conduct the business previously
engaged in by the Company (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
(v) Shareholder shall have delivered to First Sierra a
certificate to the effect that each of the conditions specified above in
Section 8(a)(i)-(iv) is satisfied in all respects;
(vi) First Sierra shall have received from Xxxxxxxx X. Xxxxxxx,
counsel to Shareholder, an opinion in form and substance as set forth in
Exhibit D attached hereto, addressed to First Sierra, and dated as of
the Closing Date;
(vii) The Company shall have executed and delivered to First
Sierra a Xxxx of Sale and Assignment in the form of Exhibit F;
(viii) The Company shall have executed and delivered to First
Sierra a Lease Assignment in the form of Exhibit G;
(ix) Shareholder shall have executed and delivered to First
Sierra the Employment Agreement.
All actions to be taken by the Company and Shareholder in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
First Sierra. First Sierra may waive any condition specified in this Section
6(a) if it executes a writing so stating at or prior to the Closing.
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(b) CONDITIONS TO OBLIGATION OF THE COMPANY AND SHAREHOLDER. The
obligation of the Company and Shareholder to consummate the transactions to be
performed by such parties in connection with the Closing is subject to
satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 4
shall be true and correct in all material respects at and as of the
Closing Date;
(ii) First Sierra shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would
prevent consummation of any of the transactions contemplated by this
Agreement to be rescinded following consummation (and no such
injunction, judgment, order, decree, ruling, or charge shall be in
effect);
(iv) First Sierra shall have delivered to the Company a
certificate to the effect that each of the conditions specified above in
Section 8(b)(i)-(iii) is satisfied in all respects;
(v) The Company shall have received from Xxxxxx & Xxxxxx,
L.L.P., counsel to First Sierra, an opinion in form and substance as set
forth in Exhibit E attached hereto, addressed to the Company, and dated
as of the Closing Date;
(vi) First Sierra shall have executed and delivered to
Shareholder the Employment Agreement;
(viii) First Sierra shall have paid and delivered to the Company
the cash consideration required to be paid to the Company on the Closing
Date pursuant to Section 2.1(b); and
(vii) First Sierra shall have executed and delivered to Company
the Lease Assignment in the form of Exhibit G.
All actions to be taken by First Sierra in connection with consummation
of the transactions contemplated hereby and all certificates, opinions,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Shareholder. The Company and Shareholder may waive any condition specified in
this Section 6(b) if such parties execute a writing so stating at or prior to
the Closing.
7. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Parties contained in Sections 3 and 4
shall survive the Closing hereunder (even if the damaged Party had Knowledge of
or had reason to know of any misrepresentation or breach of warranty at the
time of Closing).
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF FIRST SIERRA. If any
representation or warranty set forth in Section 3 or any covenant or agreement
set forth herein is made by the Company
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or Shareholder is breached, then the Company and Shareholder jointly and
severally agree to indemnify First Sierra from and against any Adverse
Consequences that First Sierra may suffer through and after the date of the
claim for indemnification to the extent resulting from, arising out of,
relating to, or caused by such breach Other than the obligations assumed by
First Sierra pursuant to the Lease Assignment, First Sierra has not assumed
(and hereby disclaims any assumption of) any Liabilities of the Company and
accordingly the Company and Shareholder jointly and severally agree to
indemnify First Sierra from and against any Adverse Consequences that First
Sierra may suffer through and after the date of the claim for indemnification
to the extent resulting from, arising out of or relating to Liabilities of the
Company (excluding those Liabilities of the Company assumed pursuant to the
Lease Assignment and the security deposit liabilities referenced in Section
7(b) above).
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE COMPANY AND
SHAREHOLDER. If First Sierra breaches any of its representations and
warranties in Section 4 or any covenant or agreement set forth herein made by
First Sierra, then First Sierra agrees to indemnify the Company and Shareholder
from and against any Adverse Consequences the Company or Shareholder may suffer
through and after the date of the claim for indemnification to the extent
resulting from, arising out of, relating to, or caused by such breach. In
addition, as to those Leases described in Sections 2(c)(ii) and (v), First
Sierra agrees to assume the obligations of the Company under such Leases
regarding the return of the security deposits described in such sections and
agrees to indemnify the Company from and against any Adverse Consequences the
Company may suffer through and after the date of claim for indemnification to
the extent resulting from, arising out of, relating to or caused by a breach of
such assumption obligation.
(d) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party Claim")
that may give rise to a claim for indemnification against any other
Party (the "Indemnifying Party") under this Section 7, then the
Indemnified Party shall promptly notify the Indemnifying Party thereof
in writing; provided, no delay on the part of the Indemnified Party in
notifying the Indemnifying Party shall relieve the Indemnifying Party
from any obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(ii) The Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of the
former's choice reasonably satisfactory to the Indemnified Party so long
as (1) the Indemnifying Party notifies the Indemnified Party in writing
within 15 days after the Indemnified Party has give notice of the Third
Party Claim that the Indemnifying Party will indemnify the Indemnified
Party from and against the entirety of any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim, (2) the
Indemnifying Party provides the Indemnified Party with evidence
reasonably acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against the Third
Party Claim and fulfill its indemnification obligations hereunder, (3)
the Third Party Claim involves only money damages and does not seek an
injunction or other equitable relief, (4) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not in the good faith
judgment of the Indemnified Party, likely to establish a precedential
custom or practice materially adverse to the continuing business
interests of the Indemnified Party, and (5) the Indemnifying Party
conducts the defense of the Third Party Claim actively and diligently.
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(iii) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 7(d)(ii),
(1) the Indemnified Party may retain separate co-counsel at its sole
cost and expense and participate in the defense of the Third Party
Claim, (2) the Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the Third Party
Claim without the prior written consent of the Indemnifying Party (not
to be withheld unreasonably), and (3) the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of
the Indemnified Party (not to be withheld unreasonably).
(iv) In the event any of the conditions in Section 7(d)(ii) is
or becomes unsatisfied, however, (1) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, the Indemnifying Party in
connection therewith), (2) the Indemnifying Party will reimburse the
Indemnified Party promptly and periodically for the costs of defending
against the Third Party Claim (including reasonable attorneys' fees and
expenses), and (3) the Indemnifying Party will remain responsible for
any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the
Third Party Claim to the fullest extent provided in this Section 7.
(e) CLAIMS FOR INDEMNIFICATION.
(i) Whenever any claim shall arise for indemnification under
Section 7(b) or 7(c), the indemnified party shall describe such claim in
a written notice ("Notice of Claim") to the indemnifying party (and for
purposes of this Section 7(e), a notice given pursuant to Section 7(d)
shall constitute a "Notice of Claim") and, when known, specify the facts
constituting the basis for such claim and the amount or an estimate of
the amount of such claim.
(ii) Following the receipt by the indemnifying party of each
Notice of Claim, the indemnifying party may give the indemnified party
written notice ("Notice of Objection") (1) attaching a copy of such
Notice of Claim, (2) stating that, in the opinion of the indemnifying
party, the claim described in such Notice of Claim is invalid (either in
whole or in specified part) under the terms of Section 10 hereof, (3)
giving the reasons for the alleged invalidity, and (4) stating that,
based on such alleged invalidity, the indemnifying party objects to the
payment of any portion of the amount claimed pursuant to such Notice of
Claim. If a Notice of Objection alleges that a Notice of Claim is only
partially invalid, the indemnifying party within 30 days of the receipt
of such Notice of Claim, agrees to deliver to the indemnified party that
portion of the amount claimed pursuant to such Notice of Claim as to
which no objection is made.
(iii) First Sierra and Shareholder agree to submit to final and
binding arbitration pursuant to Section 11(n) any and all disputes which
have been specified in a Notice of Objection or either party has
specified in a Notice of Claim to which the other party has not
responded within 30 days of receipt of such Notice of Claim. If
pursuant to any such arbitration proceeding it is determined that any
party is obligated to make payment to the other party, then such payment
shall be made to either party no later than 30 days following such
determination.
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(f) DETERMINATION OF ADVERSE CONSEQUENCES. There shall be taken into
account the time cost of money (using the Applicable Rate as the discount rate)
in determining Adverse Consequences for purposes of this Section 7. All
indemnification payments by Shareholder under this Section 7 shall be deemed
adjustments to the Purchase Price.
(g) OTHER INDEMNIFICATION PROVISIONS. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy any Party may have for breach of this
Agreement.
8. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue
any press release or make any public announcement relating to the subject
matter of this Agreement prior to the Closing without the prior written
approval of First Sierra and Shareholder; provided, either Party may make any
public disclosure it believes in good faith is required by applicable law and
First Sierra may include a description of the transaction, the Company, the
Company's business and Shareholder in any registration statement, prospectus or
similar document to be prepared, filed or issued in connection with the
contemplated initial public offering of shares of First Sierra's common stock.
Subject to the proviso in the preceding sentence, each Party shall keep
confidential all Confidential Information obtained from any other Party
excluding any such information that is required to be disclosed pursuant to a
legal process and except disclosures to each Party's lenders, attorneys,
accountants and other representatives and to First Sierra's underwriter.
(b) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(c) ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) and the Employment Agreement to be entered into between
First Sierra and the Shareholder constitute the entire agreement among the
Parties and supersede any prior understandings, agreements, statements, or
representations between the Parties, written or oral, to the extent they relate
in any manner to the subject matter hereof including that certain letter of
intent dated January __, 1997.
(d) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior
written approval of other Parties.
(e) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be sent by (i) personal delivery
(including courier service), (ii) telecopier during normal business hours to
the number indicated, or (iii) registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set
forth below (any communication shall be deemed given upon receipt):
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IF TO SHAREHOLDER OR THE COMPANY:
[Name of Addressee]
c/o Lease Pro, Inc.
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopier No.: 000-000-0000
IF TO FIRST SIERRA:
First Sierra Financial, Inc.
Texas Commerce Tower, Suite 7050
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopier No.: 713-221-1818
Any Party may change its telecopier number or its address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Party notice in the manner herein set forth.
(g) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas.
(h) AMENDMENTS AND WAIVERS. No amendments of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
First Sierra, the Company and Shareholder. No waiver by either Party of any
default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
(i) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(j) EXPENSES. Each of the Parties will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
(k) CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties, and no presumption or burden of proof
shall arise favoring or disfavoring either Party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has
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breached any representation, warranty, or covenant contained herein in any
respect, the fact that there exists another representation, warranty, or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) which the Party has not breached shall not detract from or
mitigate the fact that the Party is in breach of the first representation,
warranty, or covenant.
(l) INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES. The Exhibits,
Annexes, and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
(m) SPECIFIC PERFORMANCE. Each of the Parties acknowledges and
agrees that the other Party would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Party shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter, in addition to any other remedy
to which they may be entitled, at law or in equity.
(n) ARBITRATION. If a Party makes a good faith determination that a
breach (or potential breach) of any of the confidentiality or non-competition
provisions of this Agreement by another Party may result in damages or
consequences that will be immediate, severe and incapable of adequate redress
after the fact, that Party may seek a temporary restraining order or other
immediate injunctive relief without first seeking relief through arbitration.
After the court has ruled on the request for a temporary restraining order or
injunctive relief, the Parties will thereafter proceed with arbitration of the
dispute and stay the litigation pending arbitration. Subject to the foregoing,
any dispute arising out of this Agreement, or its performance or breach, shall
be resolved by binding arbitration under the Commercial Arbitration Rules (the
"AAA Rules") of the American Arbitration Association (the "AAA"). This
arbitration provision is expressly made pursuant to and shall be governed by
the Federal Arbitration Act, 9 U.S.C. Sections 1-14. The Parties agree that
pursuant to Section 9 of the Federal Arbitration Act, a judgment of a United
States District Court of competent jurisdiction shall be entered upon the award
made pursuant to the arbitration. A single arbitrator, who shall have the
authority to allocate the costs of any arbitration initiated under this
paragraph, shall be selected according to the AAA Rules within ten days of the
submission to the AAA of the response to the statement of claim or the date on
which any such response is due, whichever is earlier. The arbitrator shall
conduct the arbitration in accordance with the Federal Rules of Evidence. The
arbitrator shall decide the amount and extent of pre-hearing discovery which is
appropriate. The arbitrator shall have the power to enter any award of
monetary and/or injunctive relief (including the power to issue permanent
injunctive relief and also the power to reconsider any prior request for
immediate injunctive relief by any of the Parties and any order as to immediate
injunctive relief previously granted or denied by a court in response to a
request therefor by any of the Parties), including the power to render an award
as provided in Rule 43 of the AAA Rules; provided, the arbitrator shall not
have the power to award any punitive or exemplary damages (the parties hereby
waiving and releasing any rights that they may have to recover punitive and
exemplary damages). The arbitrator shall award the prevailing Party its costs
and reasonable attorneys' fees, and the losing Party shall bear the entire cost
of the arbitration, including the arbitrator's fees. Any arbitration shall be
held in Houston, Texas for any claim brought by the Parties hereto. In
addition to the above courts, the arbitration award may be enforced in any
court having jurisdiction over the Parties and the subject matter of the
arbitration.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
FIRST SIERRA FINANCIAL, INC.
By: /s/ XXXXX X. XX
----------------------------------
Xxxxx X. Xx
Chief Financial Officer
LEASE PRO, INC.
By: /s/ XXXXXXX X. XXXXXX
----------------------------------
Xxxxxxx X. Xxxxxx
President
/s/ XXXXXXX X. XXXXXX
-------------------------------------
XXXXXXX X. XXXXXX
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