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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 15, 1998
FIRST SIERRA FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-22525 76-0438432
(Commission File Number) (IRS Employer Identification No.)
CHASE TOWER, SUITE 7050, 600 TRAVIS STREET, HOUSTON, TEXAS 77002
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: (713) 221-8822
NOT APPLICABLE
(Former name or former address, if changed since last report)
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Item 5. Other Events.
On December 15, 1998, the Board of Directors of First Sierra Financial,
Inc., a Delaware corporation (the "Company"), declared a dividend distribution
of one preferred stock purchase right (a "Right") for each share of common
stock, par value $0.01 per share (the "Common Stock"), of the Company. The
dividend is payable on December 30, 1998 to stockholders of record at the close
of business on December 28, 1998 (the "Record Date") and in respect of all
shares of Common Stock that become outstanding after the Record Date and prior
to the earliest of (a) the Distribution Date (as such term is hereinafter
defined), (b) the redemption of the Rights, (c) the exchange of the Rights and
(d) the expiration of the Rights. Except as described herein and subject to
adjustment as provided in the Rights Agreement (as such term is hereinafter
defined), each Right entitles the registered holder to purchase from the Company
one one-hundredth of a share of the Company's Junior Preferred Stock, Series C,
par value $0.01 per share (the "Preferred Stock"), at a purchase price of $65.25
per one one-hundredth of a share (the "Purchase Price"). The description and
terms of the Rights are set forth in a Rights Agreement, dated as of December
30, 1998 (the "Rights Agreement"), between the Company and Harris Trust and
Savings Bank, as Rights Agent (the "Rights Agent").
The Rights will be evidenced by Common Stock certificates and not
separate certificates until the earliest of (i) 10 days following the date of
public disclosure that a person or group, together with persons affiliated or
associated with it (an "Acquiring Person"), has acquired, or obtained the right
to acquire, beneficial ownership of 15% or more of the outstanding shares of
Common Stock (the "Stock Acquisition Date") and (ii) 10 business days following
commencement or disclosure of an intention to commence a tender offer or
exchange offer by a person or group other than the Company and certain related
entities if, upon consummation of such offer, such person or group, together
with persons affiliated or associated therewith, would beneficially own 15% or
more of the outstanding shares of Common Stock (the earlier of such dates being
the "Distribution Date"). Until the Distribution Date (or earlier redemption or
expiration of the Rights), the transfer of Common Stock will also constitute
transfer of the associated Rights. Following the Distribution Date, separate
certificates will evidence the Rights.
The Rights will first become exercisable on the Distribution Date
(unless sooner redeemed); provided, however, that no Rights will be exercisable
at any time that the Rights are subject to redemption by the Company in
accordance with the terms of the Rights Agreement. The Rights will expire at the
close of business on December 30, 2008 (the "Expiration Date"), unless earlier
redeemed by the Company as hereinafter described.
The Purchase Price and the number of shares of Preferred Stock or other
securities, cash or other property issuable upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend or distribution on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) upon the grant to holders of the
Preferred Stock of certain rights, options or warrants to subscribe for
Preferred Stock or securities convertible into Preferred Stock at less than the
current market price of the Preferred Stock or (iii) upon the distribution to
holders of the Preferred Stock of other securities, cash (excluding regular
periodic cash dividends), property, evidences of indebtedness or assets.
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The number of outstanding Rights and the number of one one-hundredths of
a share of Preferred Stock issuable upon exercise of each Right and the Purchase
Price are also subject to adjustment in the event of a stock dividend on the
Common Stock or a stock split of the Common Stock or subdivision, consolidation
or combination of the Common Stock occurring, in any case, prior to the
Distribution Date.
If a person acquires beneficial ownership of 20% or more of the Common
Stock or the Company is the surviving corporation in a merger with an Acquiring
Person and the Common Stock remains outstanding and unchanged, the Rights will
"flip in" and entitle each holder of a Right, except as provided below, to
purchase, upon exercise at the then-current Purchase Price, that number of
shares of Common Stock having a market value of two times the Purchase Price.
In the event that, following the Distribution Date, the Company is
acquired in a merger or other business combination in which the Common Stock
does not remain outstanding or is changed or 50% or more of the Company's
consolidated assets or earning power is sold, leased, exchanged or otherwise
transferred or disposed of (in one transaction or a series of related
transactions), the Rights will "flip over" and entitle each holder of a Right to
purchase, upon the exercise of the Right at the then-current Purchase Price,
that number of shares of common stock of the acquiring company (or, in certain
circumstances, one of its affiliates) which at the time of the transaction would
have a market value of two times the Purchase Price.
Any "flip-in" event or "flip-over" event is a "Triggering Event."
Any Rights beneficially owned at any time on or after the Distribution
Date by an Acquiring Person or any affiliate or associate of an Acquiring Person
(whether or not ownership is subsequently transferred) will become null and void
upon the occurrence of a Triggering Event, and any holder of such Rights will
have no right to exercise such Rights.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. Holders will have no right to receive fractional shares of
Preferred Stock (other than fractions that are integral multiples of one
one-hundredth of a share of Preferred Stock) upon the exercise of Rights. In
lieu of fractional shares, an adjustment in cash may be made based on the market
price of the Preferred Stock on the last trading date prior to the date of
exercise.
At any time prior to the earlier of (i) the close of business on the
10th day following the Stock Acquisition Date (with the possibility for the
Board of Directors to extend this time for an additional 10 days) and (ii) the
Expiration Date, the Company may redeem the Rights in whole, but not in part, at
a price of $0.01 per Right. The Company may, at its option, pay such redemption
price in cash, shares of Common Stock (based on the market price of the Common
Stock at the time of redemption) or any other form of consideration deemed
appropriate by the Board of Directors of the Company. Immediately upon the
action of the Company's Board of Directors electing to redeem the Rights, the
right to exercise the Rights will terminate and the only right of the holders of
Rights thereafter will be to receive the applicable redemption price.
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The Company may, at any time after the occurrence of a Triggering Event,
provided that all necessary regulatory approvals have been obtained, exchange
the Rights (other than Rights owned by the Acquiring Person), in whole or in
part, at a ratio of one share of Common Stock per Right, subject to adjustment.
Until a Right is exercised, the holder has no rights as a Stockholder of
the Company, including, without limitation, the right to vote or to receive
dividends or distributions.
At any time prior to the Distribution Date, the Company may, without the
approval of any holder of the Rights, supplement or amend any provision of the
Rights Agreement (including the date on which the Distribution Date will occur),
except the Purchase Price, the number of shares of Preferred Stock, other
securities, cash or other property obtainable upon exercise of a Right, the
redemption price or the Expiration Date. Thereafter, the Rights Agreement may be
amended only to cure ambiguities, to correct inconsistent provisions or in ways
that do not adversely affect the holders of the Rights.
Preferred Stock purchasable upon exercise of the Rights will not be
redeemable. Each share of Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment of $1.00 per share but will be entitled
to an aggregate dividend of 100 times the dividend declared per share of Common
Stock, if greater. In the event of liquidation, the holders of the Preferred
Stock will be entitled to a minimum preferential liquidation payment of $100 per
share, but will be entitled to an aggregate payment of 100 times the payment
made per share of Common Stock, if greater. In the event of any merger or other
business combination in which Common Stock is exchanged, each share of Preferred
Stock will be entitled to receive 100 times the amount received per share of
Common Stock. Customary anti-dilution provisions protect these rights.
Because of the nature of the Preferred Stock's dividend, liquidation and
voting rights, the value of the one one-hundredth of a share of Preferred Stock
purchasable upon exercise of each Right is intended to approximate the value of
one share of Common Stock.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors. The Rights should not
interfere with any merger or other business combination approved by the Board of
Directors of the Company because, at any time until 10 days following the Stock
Acquisition Date, subject to extension by the Board of Directors for a period of
time up to 10 additional days, the Rights may be redeemed by the Company at
$0.01 per Right.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
4.1 Rights Agreement, dated December 30, 1998, between First
Sierra Financial, Inc. and Harris Trust and Savings
Bank, as Rights Agent, together with the Form of
Certificate of Designations of Preferred Stock attached
thereto as Exhibit A, the Form of Rights Certificate
attached thereto as Exhibit B and the Summary of Rights
to Purchase Preferred Stock attached thereto as Exhibit
C.
99.1 Press release of First Sierra Financial, Inc. issued on
December 17, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST SIERRA FINANCIAL, INC.
Dated: December 30, 1998 By: /s/ Sandy B. Ho
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Sandy B. Ho
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit
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4.1 Rights Agreement, dated December 30, 1998, between First Sierra
Financial, Inc. and Harris Trust and Savings Bank, as Rights
Agent, together with the Form of Certificate of Designations of
Preferred Stock attached thereto as Exhibit A, the Form of Rights
Certificate attached thereto as Exhibit B and the Summary of
Rights to Purchase Preferred Stock attached thereto as Exhibit C.
99.1 Press release of First Sierra Financial, Inc. issued on December
17, 1998.
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