<PAGE> 1
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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First Sierra Financial, Inc.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
DELAWARE 76-0438432
<S> <C>
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification
Number)
</TABLE>
600 TRAVIS STREET, SUITE 7050
HOUSTON, TEXAS 77002
(713) 229-6800
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
THOMAS J. DEPPING
PRESIDENT
FIRST SIERRA FINANCIAL, INC.
600 TRAVIS STREET, SUITE 7050
HOUSTON, TEXAS 77002
(713) 229-6800
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
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Copies To:
Scott N. Gierke, P.C.
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement as
determined in light of market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
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If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. X
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the
Securities Act, please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED (1) PER SHARE (2) OFFERING PRICE (2) REGISTRATION FEE
Common Stock (par value $.01 per share) 4,188,054 $23.375 $97,895,762 $28,880
</TABLE>
(1) Maximum number of shares which may be offered.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to the Rule 457(c) based on the average of the high and low sales
prices of the Common Shares on the Nasdaq National Market on
August 14, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
PROSPECTUS
4,188,054 Shares
FIRST SIERRA FINANCIAL, INC.
COMMON STOCK
____________________
This Prospectus relates to up to 4,188,054 shares (the "Shares") of
Common Stock, par value $.01 per share (the "Common Stock"), of First Sierra
Financial, Inc., a Delaware corporation (the "Company"), which may be offered
for sale by certain stockholders of the Company (the "Selling Stockholders").
The distribution of the Shares by the Selling Stockholders may be effected from
time to time by the Selling Stockholders directly or through one or more
broker- dealers, in one or more transactions on the Nasdaq National Market, or
stock exchanges on which the Shares may be listed pursuant to and in accordance
with the rules of such exchanges, in the over-the-counter market, in negotiated
transactions or otherwise, at prices related to the prevailing market prices or
at negotiated prices. See "Plan of Distribution."
The Company will not receive any of the proceeds from the sale of the
Shares. The Company will bear all expenses of the registration of the Shares,
except that the Selling Stockholders will pay any applicable underwriting
commissions and expenses, brokerage fees and transfer taxes, as well as the
fees and disbursements of counsel to and experts for the Selling Stockholders.
The Company's Common Stock is traded on the Nasdaq National Market
under the symbol "FSFH." The last reported sale price of the Common Stock on
the Nasdaq National Market on August 18, 1998 was $24.00 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 OF THIS PROSPECTUS FOR
INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES
OFFERED HEREBY.
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES
OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY
PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE UNLAWFUL. THE DELIVERY OF
THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT INFORMATION HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO ITS DATE.
_________________________
The date of this Prospectus is August ___, 1998
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). The Company's
registration statement on Form S-3 (together with all amendments and exhibits,
the "Registration Statement") and the reports, proxy statements and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the following Regional Offices of
the Commission: 7 World Trade Center, Suite 1300, New York, New York 10048; and
Suite 1400, 500 West Madison, Chicago, Illinois 60661. Copies of such material
can also be obtained from the Public Reference Section of the Commission, Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission maintains a Web site that contains reports,
proxy and information statements and other information filed by the Company at
http://www.sec.gov.
This Prospectus constitutes a part of the Registration Statement filed
with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Shares offered hereby. This Prospectus
does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information with respect to the
Company and the Shares offered hereby, reference is made to the Registration
Statement and the documents incorporated therein by reference. Statements made
in the Prospectus as to the provisions of any document are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission, and each such statement shall be deemed qualified in its entirety
by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the
Commission are incorporated herein by reference: (i) the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997; (ii) the
Company's Quarterly Reports on Form 10-Q, for the quarterly periods ended March
31, 1998, and June 30, 1998; (iii) the Company's Current Reports on Form 8-K
dated July 16, 1998, July 27, 1998, and August 10, 1998; (iv) the Company's
Proxy Statement dated July 28, 1998; and (v) the description of the Company's
Common Stock contained in the Company's Form 8-A Registration Statement for
such securities.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of this offering shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained in this Prospectus, or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any subsequently filed document that also is
or is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon the written or oral request of such
person, a copy of any and all of the documents incorporated by reference herein
(other than exhibits to such documents, unless such exhibits are specifically
incorporated by reference in such documents). Requests for such copies should
be directed to: First Sierra Financial, Inc., 600 Travis Street, Suite 7050,
Houston, Texas, 77002, Attention: Secretary.
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THE COMPANY
The Company is a specialized finance company that acquires and
originates, sells and services equipment leases. The underlying leases
financed by the Company relate to a wide range of equipment, including
computers and peripherals, computer software, medical, dental and diagnostic,
telecommunications, office, automotive servicing, hotel security, food
services, tree service and industrial, as well as specialty vehicles. The
equipment generally has a purchase price of less than $250,000 (with an average
of approximately $22,000 from inception through June 30, 1998), and thus the
Company's leases are commonly refereed to as "small ticket leases." The
Company initially funds the acquisition or origination of its leases through
its warehouse facilities or from working capital and, upon achieving a
sufficient portfolio size, sells such receivables in the public and private
markets, principally through its securitization program. The Company focuses
on maximizing the spread between the yield received on it leases and its cost
of funds by obtaining favorable terms on its warehouse facilities,
securitizations and other structured finance transactions.
The Company has established strategic alliances with a network of
independent leasing companies, lease brokers and equipment vendors, each of
which acts as a source from which the Company obtains access to equipment
leases (collectively, "Sources"). The Company customizes lease financing
products to meet the specific equipment financing needs of its Sources and in
many cases provides such Sources with servicing and technological support via
on-line connections to the Company's state-of-the-art computer system.
The Company views acquisitions of equipment leasing companies as a
fundamental part of its growth strategy. Since July 1996, the Company has
completed nineteen acquisitions of equipment leasing companies. The Company's
acquisitions have substantially increased its ability to generate lease
origination volume and have allowed it to introduce new programs and enter new
markets. The Company intends to continue to seek acquisition opportunities in
additional markets to further expand its business.
The principal executive offices of First Sierra and Subsidiary are
located at 600 Travis Street, Suite 7050, Houston, Texas 77002 and the
telephone number is 713-221-8822.
Additional information concerning the Company is included in the
Company's reports filed under the Exchange Act that are incorporated by
reference in this Prospectus. See "Available Information" and "Incorporation
of Certain Documents by Reference."
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RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully by prospective investors in evaluating
the Company and its business before purchasing the Shares offered hereby.
Except for historical information contained herein and in the documents
incorporated by reference herein, this Prospectus and the documents
incorporated by reference herein contain forward-looking statements that
involve risks and uncertainties, such as statements of the Company's plans,
objectives, expectations and intentions. The cautionary statements made in
this Prospectus and the documents incorporated by reference herein should be
read as being applicable to all related forward-looking statements wherever
they appear in this Prospectus and the documents incorporated by reference
herein. The Company's actual results could differ materially from those
discussed herein. Factors that could cause or contribute to such differences
include those discussed below, as well as those discussed elsewhere herein and
in the documents incorporated by reference herein and in the documents included
by reference herein.
DEPENDENCE ON SECURITIZATION TRANSACTIONS
The Company sells a large percentage of the equipment leases it
acquires and originates through the issuance of securities backed by such
leases in securitization transactions or other structured finance techniques.
In a securitization transaction, the Company sells and transfers a pool of
leases to a wholly-owned, special purpose subsidiary of the Company. The
special purpose subsidiary simultaneously sells and transfers an interest in
the leases to a trust, which issues beneficial interests in the leases in the
form of senior and subordinated securities and sells such securities through
public offerings and private placement transactions. The Company generally
retains the right to receive any excess cash flows of the trust, which right is
represented by a trust certificate (the "Trust Certificate"). The gain on sale
of leases sold through securitization transactions has in the past represented
a significant portion of the Company's revenues and is expected to comprise a
significant portion of the Company's revenues in future periods.
The Company is dependent on securitizations for refinancing of amounts
outstanding under its warehouse facilities, which the Company utilizes to
acquire and originate additional leases. Several factors affect the Company's
ability to complete securitizations, including conditions in the securities
markets generally, conditions in the asset- backed securities markets, the
credit quality of the Company's lease portfolio, compliance of the Company's
leases with the eligibility requirements established in connection with the
securitizations, the Company's ability to obtain third- party credit
enhancement, absence of any material downgrading or withdrawal of ratings given
to securities previously issued in the Company's securitizations. Any
substantial reduction in the availability of the securitization market for the
Company's leases or any adverse change in the terms of such securitizations
could have a material adverse effect on the Company's financial condition an
results of operations.
NON-REALIZATION OF INVESTMENT IN TRUST CERTIFICATES
The cash flows available to the Trust Certificates are calculated as
the difference between (a) cash flows received from the leases and (b) the sum
of (i) interest and principal payable to the holders of the senior and
subordinated securities, (ii) trustee fees, (iii) third-party credit
enhancement fees, (iv) service fees, and (v) backup service fees. The
Company's right to receive this excess cash flow is subject to certain
conditions specified in the related trust documents designed to provide
additional credit enhancement to holders of the senior and subordinated
securities issued in the securitization. The Company estimates the expected
levels of cash flows available to the Trust Certificate taking into
consideration estimated prepayments, defaults, recoveries and other factors
which may affect the cash flows available to the holder of the Trust
Certificate. The cash flows ultimately available to the Trust Certificate are
largely dependent upon the actual default rates and recovery levels experienced
on the leases sold to the Trust. Losses incurred on leases held by the Trust
are borne solely by the holder of the Trust Certificate. Because the Company,
as holder of the Trust Certificates issued in its securitization transactions,
is typically entitled to receive from 2.0% to 6.5% of the cash flows of the
Trust, yet bears the risk of loss on the entire portfolio of leases held by the
Trust, relatively small fluctuations in default rates, recovery levels and
other factors impacting cash flows of the leases could have a material adverse
effect on the Company's ability to realize its recorded basis in the Trust
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Certificate. In such event, the Company would be required to reduce the
carrying amount of its Trust Certificate and record a charge to earnings in the
period in which the event occurred or became known to management.
ACQUISITION RISKS
A key component of the Company's growth strategy is the acquisition of
other equipment leasing companies. The inability of the Company to identify
suitable acquisition candidates or to complete acquisitions on reasonable terms
could adversely affect the Company's ability to grow its business. In
addition, any acquisition made by the Company may result in potentially
dilutive issuances of equity securities, the incurrence of additional debt and
the amortization of expenses related to goodwill and other intangible assets,
any of which could have a material adverse effect on the Company's financial
condition and results of operations. The Company also may experience
difficulties in the assimilation of the operations, services, products and
personnel of acquired companies, an inability to sustain or improve the
historical revenue levels of acquired companies, the diversion of management's
attention from ongoing business operations, and the potential loss of key
employees of such acquired companies. There can be no assurance that any
future acquisitions will be consummated.
DEPENDENCE ON EXTERNAL FINANCING
The Company funds a large percentage of the equipment leases that it
acquires or originates through its warehouse facilities. The warehouse
facilities are available to fund leases which satisfy eligibility criteria for
inclusion in the Company's securitizations. Borrowings under the warehouse
facilities are repaid with the proceeds received by the Company from
securitization transactions. Any adverse impact on the Company's ability to
complete securitizations could have a material adverse effect on the Company's
ability to obtain or maintain warehouse facilities or the amount available
under such facilities. Any failure by the Company to renew its existing
warehouse facilities or obtain additional warehouse facilities or other
financings with pricing, advance rates and other terms consistent with its
existing facilities could have a material adverse effect on the Company's
financial condition and results of operations.
INTEREST RATE RISKS
Leases underwritten by the Company are non-cancelable and require
payments to be made by the lessee at fixed rates for specified terms. The
rates charged by the Company are based on interest rates prevailing in the
market at the time of lease approval. Until the Company's leases are
securitized or otherwise sold, the Company generally funds such leases under
its warehouse facilities or from working capital. Should the Company be unable
to securitize or otherwise sell leases with fixed rates within a reasonable
period of time after funding, the Company's operating margins could be
adversely affected by increases in interest rates. Moreover, increases in
interest rates which cause Company to raise the implicit rate charged to its
customers could cause a reduction in demand for the Company's lease funding.
The Company generally undertakes to hedge against the risk of interest rate
increases when its equipment lease portfolio exceeds $10.0 million. Such
hedging activities limit the Company's ability to participate in the benefits
of lower interest rates with respect to the hedged portfolio of leases. In
addition, there can be no assurance that the Company's hedging activities will
adequately insulate the Company from interest rate risks.
DEPENDENCE ON CREDITWORTHINESS OF LESSEES
The Company specializes in acquiring and originating equipment leases
with a purchase price of less than $250,000, generally involving small and
mid-size commercial businesses located throughout the United States. Small
business leases generally entail a greater risk of non-performance and higher
delinquencies and losses than leases entered into with larger, more
creditworthy lessees. Because of the Company's short operating history, only
limited performance data is available with respect to leases funded by the
Company. Thus, historical delinquency and loss statistics are not necessarily
indicative of future performance. In addition, the vast majority of leases
acquired or originated by the Company through December 31, 1996 were funded
through the Company's Private Label program under which Sources provide the
Company with credit protection through a combination of recourse and purchase
price holdback features. Under the Company's Broker and
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Vendor programs, the Sources do not provide any credit protection to the
Company. Management believes that increasingly larger percentages of the
Company's lease originations in the future will be derived through its Broker
and Vendor programs. The failure of the Company's lessees to comply with the
terms of their leases will result in the inability of such leases to qualify to
serve as collateral under the Company's warehouse facilities and securitization
program and may have a material adverse effect on the Company's liquidity.
Additionally, delinquencies and defaults experienced in excess of levels
estimated by management in determining the Company's allowance for credit
losses and in valuing the Company's right to receive excess cash flows under
its securitization program could have a material diverse effect on the
Company's ability to obtain financing and effect securitization transactions
which may, in turn, have a material adverse effect on the Company's financial
condition and results of operations.
FLUCTUATIONS IN QUARTERLY RESULTS
The Company experiences significant fluctuations in quarterly operating
results due to a number of factors, including, among others, the interest rate
on the securities issued in connection with the Company's securitization
transactions, variations in the volume of leases funded by the Company,
differences between the Company's cost of funds and the average implicit yield
to the Company on its leases prior to being securitized or otherwise sold, the
effectiveness of the Company's hedging strategy, the degree to which the
Company encounters competition in its markets and general economic conditions.
As a result of these fluctuations, results for any one quarter should not be
relied upon as being indicative of performance in future quarters.
ABILITY TO SUSTAIN INCREASING VOLUMES OF RECEIVABLES
The Company's ability to sustain continued growth is dependent on its
capacity to attract, evaluate, finance and service increasing volumes of leases
of suitable yield and credit quality. Accomplishing this on a cost-effective
basis is largely a function of the Company's ability to market its products
effectively, to manage the credit evaluation process to assure adequate
portfolio quality, to provide competent, attentive and efficient servicing and
to maintain access to institutional financing sources to achieve an acceptable
cost of funds for its financing programs. Any failure by the Company to market
its products effectively, to maintain its portfolio quality, to effectively
service its leases or to obtain institutional financing at reasonable rates
would have a material adverse effect on the company's financial condition and
results of operations.
DEPENDENCE UPON KEY PERSONNEL
The Company depends to a large extent upon the experience, abilities
and continued efforts of its senior management, including the management of
companies it has acquired. The Company has entered into employment agreements
with its principal executive officers. The loss of the services of one or more
of the key members of the Company's senior management could have a material
adverse effect on the Company's financial condition and results of operations.
The Company's future success also will depend upon its ability to attract and
retain additional skilled management personnel necessary to support anticipated
future growth.
COMPETITION
The financing of small ticket equipment is highly competitive. The
Company competes for customers with a number of national, regional and local
finance companies. In addition, the Company's competitors include those
equipment manufacturers that finance the sale or lease of their products
themselves and other traditional types of financial services companies, such as
commercial banks and savings and loan associations, all of which provide
financing for the purchase of equipment. Many of the Company's competitors and
potential competitors possess substantially greater financial, marketing and
operational resources than the Company. The Company's competitors and
potential competitors include many larger, more established companies which may
have a lower cost of funds than the Company and access to capital markets and
to other funding sources which may be unavailable to the Company.
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CONCENTRATION OF LEASE SOURCES AND CREDIT RISKS
Although the Company's portfolio of leases includes lessees located
throughout the United States, the Company acquires or originates a majority of
its leases from Sources operating in five states: Texas, Florida, New York,
New Jersey and California. The ability of the Company's lessees to honor their
contracts may be substantially dependent on economic conditions in these
states. All such leases are collateralized by the related equipment. The
recourse and holdback provisions of the Private Label program mitigate, but do
not eliminate, a significant portion of any economic risk not recoverable
through the sale of the related equipment.
Additionally, a substantial portion of the Company's leases are
concentrated in certain industries, including the medical industry, the dental
industry and the veterinary industry. To the extent that the economic or
regulatory conditions prevalent in such industries change, the ability of the
Company's lessees to honor their lease obligations may be adversely impacted.
In the event that the Company's significant Sources were to
substantially reduce the number of leases sold to the Company, and the Company
was not able to replace the lost lease volume, such reduction could have a
material adverse effect on the Company's financial condition and results of
operations.
MANAGEMENT OF GROWTH
The Company has grown dramatically since its inception in June 1994.
This significant growth has placed, and if sustained will continue to place, a
burden on the administrative and financial resources of the Company.
Accordingly, the Company's future financial condition and results of operations
will depend on management's ability to effectively manage future growth, the
success of which cannot be assured.
RESIDUAL VALUE RISK
The Company retains a residual interest in the equipment covered by
certain of its leases. The estimated fair market value of the equipment at the
end of the contract term of the lease, if any, is reflected as an asset on the
Company's balance sheet. The company's results of operations depend, to some
degree, upon its ability to realize these residual values. Realization of
residual values depends on many factors, several of which are outside the
Company's control, including general market conditions at the time of
expiration of the lease, whether there has been unusual wear and tear on, or
use of, the equipment, the cost of comparable new equipment, the extent, if
any, to which the equipment has become technologically or economically obsolete
during the contract term and the effects of any additional or amended
government regulations. If, upon the expiration of a lease, the Company sells
or refinances the underlying equipment and the amount realized is less than the
recorded value of the residual interest in such equipment, a loss reflecting
the difference will be recognized. Any failure by the Company to realize
aggregate recorded residual values could have a material adverse effect on its
financial condition and results of operations.
USE OF PROCEEDS
The Company will receive none of the proceeds from the offering and
sale of the Shares.
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SELLING STOCKHOLDERS
The Shares have been or will be acquired by the Selling Stockholders under
the circumstances specified in the following table. Such table sets forth for
each Selling Stockholder the number of Shares owned, or to be owned, and the
number of such Shares which may be offered and sold from time to time pursuant
to this Prospectus.
<TABLE>
SHARES WHICH MAY
<CAPTION> SHARES BENEFICIALLY OWNED BE SOLD
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NAME NUMBER NUMBER NUMBER
---- ------ ------ ------
<S> <C> <C> <C>
John F. Allen and Elizabeth H. Allen, 2,454,267 17.6% 2,454,267
Trustees, John F. Allen and Elizabeth
H. Allen Family Trust, U/T/D July 10,
1992(2)
John R. Domingos, Trustee, Elizabeth 347,600 2.5% 347,600
W.F. Allen Trust, U/T/D December 26,
1992(2)
John R. Domingos, Trustee, Nicholas M. 347,600 2.5% 347,600
Allen Trust, U/T/D/ December 26,
1992(2)
The Marin Community Foundation(2) 10,533 * 10,533
Oren M. Hall(3) 450,000 3.2% 450,000
Dennis Meyer(4) 6,052 * 6,052
Nancy Meyer(4) 6,052 * 6,052
James N. Borland(5) 15,789 * 15,789
James T. Raeder(6) 535,476 3.8% 267,738
Mark G. McQuitty(7) 535,476 3.8% 267,738
Randal L. Meinke(8) 11,747 * 5,874
W. Scott McCallum(9) 11,747 * 5,874
Dale R. Davis(10) 5,873 * 2,937
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</TABLE>
* Less than 1%.
(1) Percentage of beneficial ownership is based on 13,953,592 Common Shares
outstanding as of August 12, 1998.
(2) These Shares will be acquired pursuant to the Agreement and Plan of
Merger, dated as of June 10, 1998, by and among the Company, a wholly-owned
acquisition subsidiary of the Company, and Oliver-Allen Corporation, Inc.,
a California corporation ("OAC") (the "OAC Agreement"). Pursuant to the
OAC Agreement, the Company is to acquire all the outstanding shares of OAC
in exchange for 3,160,000 Shares. The OAC Agreement further provides that
at the effective time of the merger, John Allen will become President of
Oliver-Allen Corporation, Inc., a wholly- owned subsidiary of the Company.
(3) These Shares were acquired by Mr. Hall in connection with the acquisition
by the Company of the outstanding capital stock of Heritage Credit
Services, Inc. on May 20, 1997. Mr. Hall is the Executive Vice President
and Chief Operating Officer of the Company.
(4) The Shares of each of Dennis Meyer and Nancy Meyer were acquired in
connection with the acquisition by the Company of all the outstanding
capital stock of Heritage Credit Services of Oregon, Inc. on November 6,
1997.
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<PAGE> 10
Mr. Meyer and Ms. Meyer are married, and each of Mr. Meyer and Ms. Meyer
disclaims beneficial ownership of the Shares owned by the other. Dennis
Meyer and Nancy Meyer are employees of the Company.
(5) These Shares were acquired in connection with the acquisition by the
Company of the outstanding capital stock of All American Financial
Services, Inc. on November 26, 1997. Mr. Borland is an employee of the
Company.
(6) These Shares were acquired pursuant to the Agreement and Plan of Merger,
dated as of June 24, 1998 and as amended on July 22, 1998, by and among
the Company, a wholly-owned acquisition subsidiary of the Company, The
Republic Group, Inc., a California corporation ("Republic"), and
Mr. Raeder and Mark G. McQuitty (the "Republic Agreement"). Pursuant
to the Republic Agreement, the Company acquired all the outstanding
shares of Republic owned by Mr. Raeder in exchange for these Shares.
Mr. Raeder is an employee of the Company.
(7) These Shares were acquired pursuant to the Republic Agreement. Pursuant
to the Republic Agreement, the Company acquired all the outstanding
shares of Republic owned by Mr. McQuitty in exchange for these Shares.
Mr. McQuitty is an employee of the Company.
(8) These Shares were acquired pursuant to the Amended and Restated Interest
Purchase Agreement, dated as of July 22, 1998, by and among the Company,
Republic Commercial Credit, LLC, a California limited liability company
("RCC"), Mr. Meinke and W. Scott McCallum (the "RCC Agreement"). Republic
owned seventy percent of the outstanding membership interest in RCC.
Pursuant to the RCC Agreement, the Company acquired the membership interest
of Mr. Meinke in RCC in exchange for cash and these Shares.
(9) Pursuant to the RCC Agreement, the Company acquired the membership interest
of Mr. McCallum in RCC in exchange for cash and these Shares.
(10) These Shares were acquired pursuant to the Amended and Restated Interest
Purchase Agreement, dated as of July 22, 1998, by and among the Company,
Republic Fleet Services, LLC, a California limited liability company
("RFS"), and Mr. Davis (the "RFS Agreement"). Republic owned eighty-five
percent of the outstanding membership interest in RFS. Pursuant to the RFS
Agreement, the Company acquired the membership interest of Mr. Davis in RFS
in exchange for cash and these Shares.
-9-
<PAGE> 11
PLAN OF DISTRIBUTION
Sales of the Shares being sold by the Selling Stockholders are for the
Selling Stockholders' own accounts. The Company will not receive any of the
proceeds from the sale of the Shares.
The distribution of the Shares by the Selling Stockholders may be effected
from time to time by the Selling Stockholders directly or through one or more
broker-dealers or agents, in one or more transactions on the Nasdaq National
Market or stock exchanges on which the Common Stock may be listed pursuant to
and in accordance with the rules of such exchanges, in the over-the-counter
market, in negotiated transactions or otherwise, at prices related to prevailing
market prices or at negotiated prices. In the event that one or more
broker-dealers or agents agree to sell the Shares, it may do so by purchasing
Shares as principals or by selling the Shares as agents for the Selling
Stockholders. Any such broker-dealer may receive compensation from the Selling
Stockholders in the form of underwriting discounts or commissions and may
receive commissions from purchasers of the Shares for whom it may act as agent.
If any such broker-dealer purchases the Shares as principal it may effect
resales of the Shares from time to time or through other broker-dealers, and
such other broker-dealers may receive compensation in the form of concessions or
commissions from the Selling Stockholders or purchasers of the Shares for whom
they may act as agents. To the extent required at the time a particular offer
of the Shares is made, a supplement to this Prospectus will be distributed which
will set forth the aggregate principal amount of Shares being offered and the
terms of the offering, including the name or names of any broker-dealers or
agents, the purchase price paid by any underwriter for the Shares purchased from
the Selling Stockholders, any discounts, commissions and other items
constituting compensation from the Selling Stockholders and any discounts,
commissions or concessions allowed or reallowed or paid to broker-dealers,
including the proposed selling price to the public.
In addition and without limiting the foregoing, the Selling Stockholders
will be subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder including, without limitation, Regulation M.
In order to comply with certain states' securities laws, if applicable,
the Shares will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In certain states the Shares may not be sold
unless the Shares have been registered or qualified for sale in such state or an
exemption from registration or qualification is available and is complied with.
The Company will bear all expenses of the registration of the Shares,
except that the Selling Stockholders will pay any applicable underwriting
commissions and expenses, brokerage fees and transfer taxes, as well as the fees
and disbursements of counsel to and experts for the Selling Stockholders.
The Company has agreed to keep the Registration Statement of which this
Prospectus is a part, continuously effective and usable for a period of at least
two years from the date on which the Commission declares the Registration
Statement effective or such shorter period which will terminate when all of the
Shares covered by the Registration Statement have been sold pursuant to the
Registration Statement.
EXPERTS
The audited consolidated financial statements of the Company included in
the Company's Current Report on Form 8-K dated July 16, 1998, incorporated by
reference herein have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
incorporated herein in reliance upon the authority of said firm as experts in
giving said report. It should be noted that the independent public accountant's
report on financial statements previously filed on Form 10-K and incorporated
by reference in this registration statement is no longer appropriate since
restated financial statements have been presented giving effect to business
combinations accounted for as poolings of interests.
The financial statements of Oliver-Allen Corporation, Inc. at June 30,
1997 and 1996, and for the year ended June 30, 1997 and the thirteen months
ended June 30, 1996, included in the Proxy Statement of First Sierra Financial,
Inc., which is referred to and made a part of this Prospectus and Registration
Statement, have been audited by Ernst & Young, LLP, independent auditors, as set
forth in their report therein and incorporated herein by reference. Such
financial statements are incorporated by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
-10-
<PAGE> 12
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following are the estimated expenses (other than the SEC
registration fee) of the issuance and distribution of the securities being
registered, all of which will be paid by the Company.
<TABLE>
<S> <C>
SEC registration fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $28,880
Fees and expenses of counsel . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000
Fees and expenses of accountants . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,120
--------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $60,000
</TABLE>
The Corporation has agreed to bear all expenses (other than
underwriting discounts and selling commissions, brokerage fees and transfer
taxes, if any, and the fees and expenses of counsel and other advisors to the
Selling Stockholders) in connection with the registration and sale of the
Shares being offered by the Selling Stockholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company, a Delaware corporation, is empowered by Section 145 of
the Delaware General Corporation Law (the "DGCL"), subject to the procedures
and limitations stated therein, to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding by reason of the fact that such person is or was a
director, officer, employee or agent of the Company, or is or was serving at
the request of the Company as a director, officer, employee or agent of another
corporation or other enterprise, against reasonable expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually
incurred by him in connection with such action, suit or proceeding, if such
director, officer, employee or agent acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The Company is required
by Section 145 to indemnify any person against reasonable expenses (including
attorneys' fees) actually incurred by him in connection with an action, suit or
proceeding in which he is a party because he is or was a director, officer,
employee or agent of the Company or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation or
other enterprise, if he has been successful, on the merits or otherwise, in the
defense of the action, suit or proceeding. Section 145 also allows a
corporation to purchase and maintain insurance on behalf of any such person
against any liability asserted against him in any such capacity, or arising out
of his status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of Section 145. In
addition, Section 145 provides that indemnification pursuant to its provisions
is not exclusive of other rights of indemnification to which a person may be
entitled under any bylaw, agreement, vote of shareholders or disinterested
directors, or otherwise.
Article XI of the Company's Restated Certificate of Incorporation (the
"Charter") provides that the Company shall indemnify and hold harmless any
person who was, is, or is threatened to be made a party to a proceeding by
reason of the fact that he or she (i) is or was a director or officer of the
Company or (ii) while a director or officer of the Company, is or was serving
at the request of the Company as a director, officer, partner, venturer,
proprietor, trustee, employee, agent, or similar functionary of another foreign
or domestic corporation, partnership, joint venture, sole proprietorship,
trust, employee benefit plan, or other enterprise, to the fullest extent
permitted under the DGCL. The right to indemnification under Article XI of the
Charter is a contract right which includes, with respect to directors and
officers, the right to be paid by the Company the expenses incurred in
defending any such proceeding in advance of its disposition.
II-1
<PAGE> 13
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
4.1 Restated Certificate of Incorporation of the Company incorporated herein by reference to Exhibit 3.1 to
Amendment No. 3 to Registrant's Registration Statement on Form S-1 (Registration No. 333-22629)
4.2 Amended and Restated By-Laws of the Company, incorporated herein by reference to the Exhibit 3.1 to
Amendment No. 3 to Registrant's Registration Statement on Form S-1, (Registration No. 333-22629)
5.1 Opinion of McDermott, Will & Emery regarding legality
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of McDermott, Will & Emery (included in Exhibit 5.1)
24.1 Powers of Attorney (included with the signature page to the Registration Statement)
</TABLE>
ITEM 17. UNDERTAKINGS.
(1) The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement
to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
(b) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(2) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officer
and controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(3) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to section 13(a) or
15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-2
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Houston, Texas, on the 20th day of August, 1998.
First Sierra Financial, Inc.
By: /s/ Thomas J. Depping President
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned directors and
officers of First Sierra Financial, Inc., a Delaware corporation, which is
filing a Registration Statement on Form S-3 with the Securities and Exchange
Commission, under the provisions of the Securities Act of 1933, as amended (the
"Securities Act"), hereby constitute and appoint Thomas J. Depping and Sandy B.
Ho, and each of them, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign such Registration Statement and any
and all amendments, including post-effective amendments, to the Registration
Statement, including a Prospectus or an amended Prospectus therein and any
registration statement for the same offering that is to be effective upon
filing pursuant to Rule 462(b) under the Securities Act, and all other
documents in connection therewith to be filed with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the 20th day of August, 1998:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ THOMAS J. DEPPING President, Chief Executive
------------------------------------------------------------
(Thomas J. Depping) Officer and Chairman of the
Board of Directors (principal
executive officer)
/s/ SANDY B. HO Executive Vice President and
------------------------------------------------------------
(Sandy B. Ho) Chief Financial Officer
(principal financial officer)
/s/ CRAIG M. SPENCER Senior Vice President and
------------------------------------------------------------
(Craig M. Spencer) Chief Accounting Officer
(principal accounting
officer)
/s/ DAVID C. SHINDELDECKER Director
------------------------------------------------------------
(David C. Shindeldecker)
/s/ DAVID L. SOLOMON Director
------------------------------------------------------------
(David L. Solomon)
/s/ RICHARD J. CAMPO Director
------------------------------------------------------------
(Richard J. Campo)
/s/ NORMAN J. METCALFE Director
------------------------------------------------------------
(Norman J. Metcalfe)
/s/ ROBERT TED ENLOE, III Director
------------------------------------------------------------
(Robert Ted Enloe, III)
</TABLE>
II-3
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
4.1 Restated Certificate of Incorporation of the Company incorporated herein by reference to Exhibit 3.1 to
Amendment No. 3 to Registrant's Registration Statement on Form S-1 (Registration No. 333-22629)
4.2 Amended and Restated By-Laws of the Company, incorporated herein by reference to the Exhibit 3.1 to
Amendment No. 3 to Registrant's Registration Statement on Form S-1, (Registration No. 333-22629)
5.1 Opinion of McDermott, Will & Emery regarding legality
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of McDermott, Will & Emery (included in Exhibit 5.1)
24.1 Powers of Attorney (included with the signature page to the Registration Statement)
</TABLE>
<PAGE> 1
August 20, 1998
First Sierra Financial, Inc.
600 Travis Street, Suite 7050
Houston, TX 77002
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
You have requested our opinion in connection with the above-referenced
registration statement (the "Registration Statement"), under which certain
stockholders of First Sierra Financial, Inc. (the "Company") intend to sell up
to 4,188,054 shares of Common Stock, par value $.01 per share, of the Company
(the "Shares").
In arriving at the opinion expressed below, we have examined the
Registration Statement and such other documents as we have deemed necessary to
enable us to express the opinion hereinafter set forth. In addition, we have
examined and relied, to the extent we deem proper, on certificates of officers
of the Company as to factual matters, and on the originals or copies certified
or otherwise identified to our satisfaction, of all such corporate records of
the Company and such other instruments and certificates of public officials and
other persons as we have deemed appropriate. In our examination, we have
assumed the authenticity of all documents submitted to us as originals, the
conformity to the original documents of all documents submitted to us as
copies, the genuineness of all signatures on documents reviewed by us and the
legal capacity of natural persons.
Based upon and subject to the foregoing, we are of the opinion that (i)
the Shares which are issued and outstanding on the date of this opinion have
been duly authorized and validly issued and are fully paid and non-assessable,
and (ii) the Shares to be issued after the date of this opinion in connection
with the transactions described in the Registration Statement under "Selling
Stockholders" will, when issued and delivered pursuant to and in accordance
with the terms of the applicable definitive merger agreement described in the
Registration Statement, be validly issued, fully paid and non-assessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not hereby admit that we
come within the category of persons whose consent is required under Section 7
of the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
McDERMOTT, WILL & EMERY
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated July 10, 1998
included in the Company's Current Report on Form 8-K on the consolidated
financial statements of First Sierra Financial, Inc. as of December 31, 1997
and 1996 and for each of the three years in the period ended December 31, 1997
and to all references to our Firm included in this registration statement. It
should be noted that the independent public accountant's report on financial
statements previously filed on Form 10-K and incorporated by reference in this
registration statement is no longer appropriate since restated financial
statements have been presented giving effect to business combinations accounted
for as poolings-of-interests.
ARTHUR ANDERSEN LLP
Houston, Texas
August 19, 1998
<PAGE> 1
EXHIBIT 23.2
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. xxxxxx) and Prospectus of First Sierra
Financial, Inc. and to the use of our report dated June 12, 1998 with respect
to the financial statements of Oliver-Allen Corporation, Inc., included in the
Proxy Statement of First Sierra Financial, Inc. that is made a part of the
Registration Statement (Form S-3 No. xxxxxx) and Prospectus of First Sierra
Financial, Inc. for the registration of 4,188,054 shares of its common stock.
/s/ Ernst & Young LLP
--------------------------
August 19, 1998
San Francisco, CA
