FIRST SIERRA RECEIVABLES II INC, 424B5, 1996-11-15

FIRST SIERRA RECEIVABLES II INC
424B5, 1996-11-15
ASSET-BACKED SECURITIES

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<PAGE> 1
Filed Pursuant to Rule 424(b)(5)
Registration Statement No. 033-98822

PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED APRIL 18, 1996)
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$63,381,510
FIRST SIERRA EQUIPMENT LEASE TRUST 1996-2
6.29% EQUIPMENT LEASE BACKED CERTIFICATES, CLASS A

FIRST SIERRA RECEIVABLES II, INC.
DEPOSITOR

FIRST SIERRA FINANCIAL, INC.
SELLER

FIRST SIERRA FINANCIAL, INC.
SERVICER
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The Class A Equipment Lease Backed Certificates (the "Class A
Certificates") hereby offered by First Sierra Receivables II, Inc. represent the
right to receive repayment of the Initial Class A Certificate Principal Balance
($63,381,510) of the Class A Certificates and monthly interest at a rate of
6.29% per annum on the unpaid portion of such principal amount. The rights to
receive such payments are based solely upon the interests represented by the
Class A Certificates in the First Sierra Equipment Lease Trust 1996-2 (the
"Trust" or the "Issuer") formed pursuant to a Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement"), dated as of November 1, 1996, among
First Sierra Financial, Inc., as servicer of the receivables (the "Servicer"),
First Sierra Receivables II, Inc. (the "Depositor") and Bankers Trust Company,
as trustee (the "Trustee" or "Bankers Trust"). The assets of the Trust will
consist of certain operating and finance leases received after the close of
business on November 1, 1996 (the "Cut-Off Date") (such leases, the
"Contracts"), the underlying equipment or other property leased thereby (the
"Equipment," together with the Contracts, the "Receivables") and certain other
property.

Principal and interest will be paid to the holders of the Class A
Certificates (the "Class A Certificateholders") monthly on the 10th day (or the
next succeeding business day thereafter) of each month, commencing on December
10, 1996 (each, a "Payment Date"), as further described herein. Interest will
accrue on the Class A Certificates from Payment Date to Payment Date, or with
respect to the initial Payment Date, from November 10, 1996. The final payment
of principal and interest on the Class A Certificates is expected to be made on
the June 10, 2002 Payment Date (the "Expected Final Payment Date") but, in any
event, shall be made no later than the November 10, 2004 Payment Date.

The Class A Certificates will be unconditionally and irrevocably guaranteed
as to the payment of scheduled interest and ultimate principal thereon on each
payment date pursuant to the terms of a certificate insurance policy (the
"Certificate Insurance Policy") to be issued by
[MBIA LOGO] (cover page continued)

THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST ONLY AND DO NOT REPRESENT
INTERESTS IN OR OBLIGATIONS OF THE DEPOSITOR, THE SERVICER, ANY SUCCESSOR
SERVICER OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THE SECURITIES NOR THE
UNDERLYING RECEIVABLES WILL BE GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY
OR INSTRUMENTALITY OR BY THE DEPOSITOR OR THE SERVICER. SEE ALSO "RISK FACTORS"
HEREIN AND IN THE PROSPECTUS.

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.

PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" ON PAGE S-20 HEREOF AND PAGE 16 IN THE PROSPECTUS.

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INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) DISCOUNT SELLER(2)
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Per Class A Equipment Lease Backed Certificate... 99.9825% 0.30% 99.6825%
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Total............................................ $63,370,418.24 $190,144.53 $63,180,273.71
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(1) Plus accrued interest from November 10, 1996.
(2) Before deducting expenses, estimated to be $200,000.
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The Class A Certificates are offered subject to receipt and acceptance by
the Underwriter, to prior sale and to the Underwriter's right to reject any
order in whole or in part and to withdraw, cancel, or modify any order without
notice. It is expected that delivery of the Class A Certificates will be made in
book-entry form through the facilities of The Depository Trust Company on or
about November 15, 1996.

FIRST UNION CAPITAL MARKETS CORP.
November 8, 1996
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(cover page continued)

First Sierra Financial, Inc., a financial services and asset management
company (the "Seller" or "First Sierra"), will agree in the Sale and
Contribution Agreement, dated as of November 1, 1996, between the Seller and the
Depositor (the "Sale and Contribution Agreement"), to use its best efforts to
cause the transfer to the Depositor, of additional, qualifying Contracts and a
security interest in the related Equipment during the period from and including
the Closing Date to but excluding the November 10, 1997 Payment Date, or, if a
Required Amortization Event (as defined herein) occurs with respect to a Payment
Date prior to the November 10, 1997 Payment Date, such earlier Payment Date (the
November 10, 1997 or such earlier Payment Date being the "Initial Amortization
Date") (such period being the "Interest-Only Period" and the period following
the Initial Amortization Date, the "Amortization Period"). The Pooling and
Servicing Agreement will provide that, to the extent such additional qualifying
Contracts (the "New Contracts") and security interests in the related Equipment
(the "New Equipment") (the New Equipment, New Contracts and other property
appurtenant thereto is the "New Transferred Property") are available from First
Sierra during the Interest-Only Period, an amount generally equal to all Base
Principal Amounts (as defined herein) will be disbursed by the Trust in
consideration of the transfer to the Trust of New Transferred Property.
Beginning with the Initial Amortization Date, an amount equal to the Base
Principal Amount (as defined herein) shall be distributed to the holders of the
Certificates as described herein.

On and after the Initial Amortization Date, the Depositor will have the
option on each Payment Date to transfer New Transferred Property to the Trust.
Such New Transferred Property shall relate to New Contracts having an Aggregate
Discounted Contract Principal Balance (as defined herein) not in excess of the
aggregate amount of Prepayments (as defined herein) deposited to the Collection
Account (as defined herein) with respect to the prior Collection Period (as
defined herein). The Trust shall disburse upon the order of the Depositor, as
stated in the Pooling and Servicing Agreement, an amount equal to the Aggregate
Discounted Contract Principal Balances (as defined herein) of such New
Contracts.

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THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT THE
OFFERING OF THE CLASS A CERTIFICATES. ADDITIONAL INFORMATION IS CONTAINED IN THE
PROSPECTUS AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE CLASS A CERTIFICATES MAY NOT
BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS.

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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE CLASS A
CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

---------------------

AVAILABLE INFORMATION

The Depositor has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement under the Securities Act of 1933, as
amended, with respect to the Class A Certificates offered pursuant to this
Prospectus Supplement. This Prospectus Supplement and the related Prospectus,
which form a part of the Registration Statement, omit certain information
contained in such Registration Statement pursuant to the Rules and Regulations
of the Commission. The Registration Statement can be inspected and copied at the
Public Reference Room at the Commission at 450 Fifth Street, N.W., Washington,
D.C. and the Commission's regional offices at Seven World Trade Center, 13th
Floor, New York, New York, 10048 and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials
can be obtained at prescribed rates from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.

---------------------

REPORTS TO CERTIFICATEHOLDERS

Unless and until Definitive Certificates are issued, periodic and annual
unaudited reports containing information concerning the Receivables will be
prepared by the Servicer and sent on behalf of the Trust only to Cede & Company
("Cede"), as nominee of The Depository Trust Company ("DTC") and registered
holders of the Certificates (as defined herein). See "Description of the
Securities -- Reports to Securityholders" in the accompanying Prospectus (the
"Prospectus"). Such reports will not constitute financial statements prepared in
accordance with generally accepted accounting principles. The Depositor will
cause to be filed with the Commission such periodic reports as are required
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the rules and regulations thereunder and as are otherwise agreed to by the
Commission. Copies of such periodic reports may be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates.

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SUMMARY OF TERMS

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE DETAILED INFORMATION APPEARING ELSEWHERE HEREIN AND IN THE
PROSPECTUS. CERTAIN CAPITALIZED TERMS USED HEREIN ARE DEFINED ELSEWHERE IN THIS
PROSPECTUS SUPPLEMENT ON THE PAGES INDICATED IN THE "INDEX OF TERMS" OR, TO THE
EXTENT NOT DEFINED HEREIN, HAVE THE MEANINGS ASSIGNED TO SUCH TERMS IN THE
PROSPECTUS.
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ISSUER......................... First Sierra Equipment Lease Trust 1996-2 (the "Trust" or the "Issuer").

DEPOSITOR...................... First Sierra Receivables II, Inc. (the "Depositor"), a Delaware corporation.
The Depositor will acquire the Receivables pursuant to the Sale and
Contribution Agreement, whereupon the Depositor will then transfer the
Receivables to the Trust. The principal office of the Depositor is located
at 1061 East Indiantown Road, Suite 204, Jupiter, Florida 33477, and its
telephone number is (561)-745-9292. The Depositor is a wholly-owned
subsidiary of First Sierra Financial, Inc. See "The Company" in the
Prospectus.

SELLER......................... First Sierra Financial, Inc., a Delaware corporation (the "Seller" or "First
Sierra"). The principal office of First Sierra is Texas Commerce Tower, 600
Travis Street, 70th Floor, Houston, Texas 77002, and its telephone number
is (713) 221-8822.

SERVICER....................... First Sierra Financial, Inc. (the "Servicer"). See "The Servicer" herein and
in the Prospectus.

TRUSTEE........................ Bankers Trust Company (the "Trustee" or "Bankers Trust Company"), a
New York trust company. The corporate trust offices of the Trustee are
located at Four Albany Street, New York, New York 10006 and its
telephone number is (212) 250-5326.

BACK-UP SERVICER............... Bankers Trust Company (in such capacity, the "Back-up Servicer").

CUT-OFF DATE................... With respect to the Initial Contracts, the Cut-Off Date shall be the close of
business on November 1, 1996. With respect to any Additional Contract
or Substitute Contract transferred to the Trust, the Cut-Off Date shall be the
close of business on the first day of the calendar month in which such
transfer occurs (each of such dates a "Cut-Off Date," an "Additional
Contract Cut-Off Date" or a "Substitute Contract Cut-Off Date,"
respectively).

CLOSING DATE................... The Closing Date shall be on or about November 15, 1996.

COLLECTION PERIODS,
PAYMENT DATES
AND RECORD DATES............... Collection Periods are the periods from and including the second day of
each calendar month to and including the first day of the following
calendar month (such first day, the "Calculation Date" and each such
period, a "Collection Period"). Payment Dates will be on the 10th day of
each month, or the next succeeding Business Day, commencing December
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10, 1996 (each, a "Payment Date"). Record Dates are the last calendar day
of each Collection Period (each, a "Record Date").

THE TRANSFER
AGREEMENTS..................... Each Initial Contract acquired by the Servicer has been originated by a
lessor (a "Source") and has been acquired by the Servicer through its
Private Label Program. Each Initial Contract has been acquired by the
Servicer pursuant to an agreement between the Servicer and the related
Source to which the Servicer has acquired all right, title and interest of
such Source in and to the related Contract and a security interest in such
Source's right, title and interest in and to the related Equipment (each such
agreement, a "Source Agreement"). The Initial Contracts, the Initial
Equipment and the property appurtenant thereto (collectively, the "Initial
Transferred Property") have been assigned by First Sierra to First Sierra
Receivables, Inc. (the "Subsidiary"), a wholly owned subsidiary of First
Sierra. The Subsidiary has entered into a warehouse financing facility with
First Union National Bank of North Carolina (the "Warehouse Lender"), an
affiliate of First Union Capital Markets Corp. Prior to their transfer by First
Sierra to the Depositor pursuant to the Sale and Contribution Agreement,
First Sierra and the Subsidiary will enter into a Receivables Transfer
Agreement, dated as of November 1, 1996 (the "Receivables Transfer
Agreement" and together with the Sale and Contribution Agreement, the
"Transfer Agreements"), pursuant to which the Subsidiary will sell, transfer
and assign such Initial Contracts, the Initial Equipment and the property
appurtenant thereto to First Sierra. First Sierra will in turn sell, transfer and
assign the Initial Transferred Property to the Depositor pursuant to a Sale
and Contribution Agreement. Pursuant to the Pooling and Servicing
Agreement, the Depositor will transfer the Trust Assets (including from time
to time the Additional Receivables to the Trust. The Initial Transferred
Property, together with any Additional Receivables are referred to as the
"Transferred Property." Concurrently with such transfer the lien of the
Warehouse Lender with respect to such Initial Transferred Property will be
released.

THE CLASS A
CERTIFICATES................... The 6.29% Class A Equipment Lease Backed Certificates (the "Class A
Certificates") in the initial principal amount of $63,381,510 (the "Initial
Class A Certificate Principal Balance") will be issued pursuant to a Pooling
and Servicing Agreement to be dated as of November 1, 1996 (the
"Pooling and Servicing Agreement") among the Depositor, the Servicer and
the Trustee. The Initial Class A Certificate Principal Balance to be issued
hereunder is equal to approximately 88% (the "Class A Percentage") of the
initial Aggregate Discounted Contract Principal Balance of the Contracts.
The Class A Certificates will initially be issued in book-entry form only in
minimum denominations of $1,000 and integral multiples thereof. The holder or
holders of the Class A Certificates shall be referred to herein as the "Class
A Certificateholders."

The Class A Certificates are available in book-entry form only, through the
facilities of DTC.
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The Trust will also issue three classes of subordinate certificates, the 7.01%
Class B-1 Lease Backed Certificates (the "Class B-1 Certificates"), the 8.22%
Class B-2 Lease Backed Certificates (the "Class B-2 Certificates," and
collectively with the Class B-1 Certificates, the "Class B Certificates") and
the Trust Certificate (the "Trust Certificate," together with the Class B
Certificates, the "Subordinate Certificates," and collectively with the Class
A Certificates and the Class B Certificates, the "Certificates"). The
Subordinate Certificates are not offered hereby and the Class B Certificates
will be privately placed with one or more qualified institutional investors.
The Servicer or an affiliate expects to retain the Trust Certificate. The
holder or holders of the Class B-1 Certificates shall be referred to herein as
the "Class B-1 Certificateholders," the holder or holders of the Class B-2
Certificates shall be referred to herein as the "Class B-2 Certificateholders"
(the Class B-1 Certificateholders and the Class B-2 Certificateholders,
together, the "Class B Certificateholders," and with the Class A
Certificateholders, the "Certificateholders") and the holder of the Trust
Certificate shall be referred to herein as the "Holder of the Trust
Certificate."

As described below under "The Trust Assets" and "Flow of Funds," the
Depositor may transfer Additional Transferred Property to the Trust. The
Pooling and Servicing Agreement provides that, unless a Required
Amortization Event occurs prior to the November 10, 1997 Payment Date,
all amounts on deposit in the Collection Account following the payment
of amounts owing the Servicer, the Back-up Servicer, the Certificate Insurer,
the Trustee and accrued and unpaid interest on the Class A Certificates and
the Class B Certificates will be disbursed upon the order of the Depositor,
as stated in the Pooling and Servicing Agreement, in consideration of the
transfer of Additional Contracts. As a result the Certificateholders will
receive payments of interest only, and no payments of principal, on each
Payment Date prior to the earlier to occur of (a) the November 10, 1997
Payment Date and (b) the date on which a Required Amortization Event
has occurred. See "Description of the Certificates" and "Prepayment and
Yield Considerations" herein.

THE TRUST ASSETS............... The assets of the Trust (the "Trust Assets") will consist of, initially, a
segregated pool of operating leases and direct finance leases (the "Initial
Contracts"), together with all monies received relating thereto on or after
the Cut-Off Date, the interest of First Sierra in the equipment or other
property leased thereunder and the proceeds thereof (the "Initial
Equipment," together with the Initial Contracts, the "Initial Receivables"),
all funds on deposit in the Lockbox Account relating to the Initial
Transferred Property and the Additional Transferred Property and the
Collection Account and certain other property, all as more fully described
below (collectively, the "Collateral"). The Collateral will also include a
perfected security interest in the Contracts and a security interest in the
Equipment, in each case subject to certain limitations. The Trust Assets also
will include the Certificate Insurance Policy, certain of the Sellers' rights
under certain insurance policies relating to the Receivables, the purchase
option payments, if any, and any amounts deposited from time to time in
certain collection and distribution accounts as described herein.
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See "The Asset Pools" in the Prospectus. Thereafter, additional operating
leases and direct finance leases ("Additional Contracts"), together with all
monies received relating thereto on or after the related Cut-Off Date, the
interest of First Sierra in equipment or other property leased thereunder
(the "Additional Equipment") and the proceeds thereof (the "Additional
Transferred Property") may be transferred to the Trust and included in the
Trust Assets and the Collateral during the Interest-Only Period as described
in the following paragraph and by substitution as described under
"Substitutions and Modifications" below. The "Cut-Off Date" with respect to
each transfer of Additional Transferred Property shall be the close of
business on the first day of the calendar month in which such transfer
occurs. The Initial Contracts together with any Additional Contracts are
referred to as the "Contracts," the Initial Equipment together with the
Additional Equipment is referred to as the "Equipment" and the Initial
Receivables together with the Additional Receivables are referred to as the
"Receivables."

On each Payment Date prior to the Initial Amortization Date, an amount
generally equal to all Base Principal Amounts will be disbursed by the
Trust in consideration of the transfer of Additional Transferred Property
relating to Contracts having an Aggregate Discounted Contract Principal
Balance on such Payment Date equal generally equal to such Base
Principal Amount. Beginning with the Initial Amortization Date , an
amount generally equal to Base Principal Amount shall be distributed to
the holders of the Certificates as described herein.

The "Interest-Only Period" is the period from and including the Closing
Date to but excluding the November 10, 1997 Payment Date or if a
Required Amortization Event occurs with respect to a Payment Date prior
to the November 10, 1997 Payment Date, such earlier Payment Date. The
Payment Date following the end of the Interest-Only Period is referred to
as the "Initial Amortization Date."

Pursuant to the Sale and Contribution Agreement, First Sierra will make
certain representations and warranties to the Depositor, with respect to,
among other things, the Equipment and the Contracts, which
representations and warranties will be assigned to the Trustee under the
Pooling and Servicing Agreement.

THE RECEIVABLES................ The Contracts consist or, in the case of the Additional Contracts, will
consist, of transactions acquired by First Sierra pursuant to its Private Label
Program.

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"Discount Rate") and was calculated using the actual Class A Certificate
Rate of 6.29% (the "Class A Certificate Rate"), the actual Class B-1
Certificate Rate of 7.01% (the "Class B-1 Certificate Rate") and the actual
Class B-2 Certificate Rate of 8.22% (the "Class B-2 Certificate Rate"), as
well as the Servicing Fee Rate, the Back-up Servicing Fee Rate, the rate
payable to the Certificate Insurer (the "Premium Rate") pursuant to that
certain insurance agreement among the Certificate Insurer, the Trustee, the
Depositor and First Sierra, as Seller and as Servicer (the "Insurance
Agreement"), and the rate payable to the Trustee pursuant to the Pooling
and Servicing Agreement, and shall be utilized to calculate the actual
discount rate set forth in the Pooling and Servicing Agreement, the actual
Initial Class A Certificate Principal Balance and the actual Initial Aggregate
Discounted Contract Principal Balance of the Initial Contracts. The Initial
Aggregate Discounted Contract Principal Balance calculated at the
Discount Rate equals $72,024,443.60. Between the Cut-Off Date and the
Closing Date some amortization of the pool is expected to occur. In
addition, certain Contracts included in the pool as of the Cut-Off Date may
be determined not to meet the eligibility requirements for the final pool,
and may not be included in the final pool. While the statistical
distribution of the characteristics as of the Closing Date for the final Initial
Receivables pool will vary somewhat from the statistical distribution of
such characteristics as of the Cut-Off Date as presented in this Prospectus
Supplement, such variance will not be material.

The "Discounted Contract Principal Balance" with respect to any Contract, at
any time of determination, is the sum of (a) the present value of all of the
remaining Scheduled Payments becoming due under such Contract after such date of
determination, discounted monthly at the Discount Rate in the manner described below
and (b) the aggregate amount of all Scheduled Payments (due after the applicable Cut-Off
Date) then due and payable under such Contract which have not been received by the
Servicer (or with respect to the calculation of the Base Principal Amount for which a
Servicer Advance has been made in accordance with the provisions of the Pooling and
Servicing Agreement); provided, however, that except to the extent expressly provided
in the Pooling and Servicing Agreement, the Discounted Contract Principal Balance of any
Defaulted Contract, Early Termination Contract, or Expired Contract or Contract purchased
by First Sierra pursuant to the Sale Agreement or the Depositor or the Servicer pursuant
to the Pooling and Servicing Agreement shall be equal to zero.

In connection with all calculations required to be made pursuant to the
Pooling and Servicing Agreement, the Sale and Contribution Agreement,
the Receivables Transfer Agreement, the Lockbox Agreement and the
Insurance Agreement (collectively, the "Transaction Documents"), as
applicable, with respect to the determination of Discounted Contract
Principal Balances, for any date of determination the Discounted Contract
Principal Balance for each Contract shall be calculated assuming:

(i) all payments are due on the last day of such calculation period
which shall be the 30 day period following such date of
determination;
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(ii) payments are discounted on a monthly basis using a 30 day month
and a 360 day year; and

(iii) payments are discounted to the last day of the calculation period in
which the date of determination falls.

The "Aggregate Discounted Contract Principal Balance" as determined from
time to time is the sum of the Discounted Contract Principal Balances of
all Initial Contracts, Additional Contracts and any Substitute Contracts.

All of the Contracts require the periodic, scheduled payment of rent or
other payments on a monthly, quarterly, semi-annual or annual basis, in
arrears or in advance. Such periodic payments are referred to herein as
"Contract Payments." As of any Determination Date, the total of all
remaining Contract Payments on and after the Cut-Off Date scheduled to
be paid on a Contract, subject to Servicer Advances and prepayments, are
referred to herein as its "Contract Balance."

As of the Cut-Off Date, not more than 5% of the Initial Aggregate
Discounted Contract Principal Balance is comprised of "true leases" and at
least 95% is comprised of direct finance leases. All of the Contracts
require that the obligor under any Contract (the "Lessee") assumes all
responsibility with respect to the Equipment, including the obligation to
pay all costs relating to its operation, maintenance, repair and, with certain
exceptions described herein, insurance or self insurance. All of the
Contracts also contain "hell or high water" provisions, which
unconditionally obligate the Lessee to make all Contract Payments without
setoff.

The Contracts have been selected by First Sierra from its portfolio of
contracts and have the characteristics specified in the Sale and
Contribution Agreement and described herein, and the Contracts eligible
to be designated as Additional Contracts or Substitute Contracts will
conform to the characteristics specified in the Sale and Contribution
Agreement and herein.

The terms of the Initial Contracts generally range from 7 to 85 months.
The final scheduled payment date on the Initial Contract with the latest
maturity is October 20, 2003. As of the Cut-Off Date, all of the Contracts
had (i) original terms to maturity of 7 months to 85 months, with a
weighted average original term to maturity of approximately 52.22 months
and (ii) a remaining term to maturity of not less than 2 months and not
more than 84 months with a weighted average remaining term to maturity
of approximately 46.67 months.

As of the Cut-Off Date, Lessees having billing addresses in the States of
California and Kentucky had Contracts having an Aggregate Discounted
Contract Principal Balance in excess of 10% of the Initial Aggregate
Discounted Contract Principal Balance.

See "The Receivables" herein and in the Prospectus.
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AFFIRMATIVE
COVENANTS...................... First Sierra will covenant and agree in the Sale and Contribution
Agreement, among other things, during the Interest-Only Period, (a) to
remain in the business of originating leases substantially similar to the
Initial Equipment and Initial Contracts, (b) to use its best efforts to originate
and purchase such equipment and related leases in a quantity no less than
the cumulative amount of the Base Principal Amount for each Collection
Period during the Interest-Only Period, (c) not to sell, or enter into
agreements to sell, such equipment or related leases to others in a manner
which would materially and adversely affect its ability to perform its
obligations under the Sale and Contribution Agreement to make available
Additional Contracts for transfer to the Trust.

FLOW OF FUNDS.................. The Pooling and Servicing Agreement will require that the Servicer
establish an account to which the Lessees shall be directed to make
payments (the "Lockbox Account"). In addition, the Pooling and Servicing
Agreement will require that the Servicer establish an account to be
maintained by the Trustee (the "Collection Account") and that the Servicer
deposit to the Collection Account all collections deposited in the Lockbox
Account on an "as collected" basis (other than Advance Payments which
will be retained in the Lockbox Account until the last day of the Collection
Period in which such Advance Payment or portion thereof is due in
accordance with the provisions of the related Contract unless such
Advance Payment is in respect of a Scheduled Payment owing in the
immediately following Collection Period to the extent the Servicer has sent
an invoice to the related Lessee for such Scheduled Payment) and all
collections received by the Servicer on the Contracts no later than two
business days following the Servicer's determination that such amounts
relate to the Contracts or the Equipment.

On each Payment Date prior to the Initial Amortization Date, the Trustee
will be required to make the following payments from the Available Funds
then on deposit in the Collection Account, in the following order of
priority (to the extent funds are available therefor):

(i) to the Servicer, an amount equal to any unreimbursed Servicer
Advances (other than Servicer Advances for the current Collection
Period);

(ii) to the Servicer, an amount equal to the Servicer Fee then due,
together with any accrued and unpaid Servicer Fees from prior
Collection Periods;

(iii) to the Servicer, any Servicing Charges, if any, deposited in the
Collection Account;

(iv) to the Back-up Servicer, an amount equal to the Back-up Servicer
Fee then due, together with any accrued and unpaid Back-up Servicer
Fees from prior Collection Periods;
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(v) to the Certificate Insurer, an amount equal to the Premium
Amount then due, together with any accrued and unpaid Premium
Amounts from prior Collection Periods;

(vi) to the Trustee, the Trustee Fees then due, together with any
Trustee Fees from prior Collection Periods (the amounts to be
distributed pursuant to clause (i) through (vi), the "Trust Operating
Expenses");

(vii) to the Trustee, the Trustee Expenses then due, together with any
Trustee Expenses from prior Collection Periods, in an amount not to
exceed in the aggregate $75,000;

(viii) to the Class A Certificateholders, the Class A Certificate Interest
and Class A Overdue Interest for the related Collection Period;

(ix) to the Class B-1 Certificateholders, first in respect of the
Class B-1 Overdue Interest for the related Collection Period and then in
respect of the Class B-1 Certificate Interest for the related Collection
Period;

(x) to the Class B-2 Certificateholders, first in respect of the Class B-2
Overdue Interest for the related Collection Period and then in respect
of the Class B-2 Certificate Interest for the related Collection Period;

(xi) to the Certificate Insurer, the unpaid Reimbursement Amount, if
any;

(xii) to the Trustee, the Trustee Expenses then due, together with any
Trustee Expenses, from prior Collection Periods, in excess of the
$75,000 limitation set forth in clause (vii);

(xiii) to the Servicer, any other amounts due the Servicer as expressly
provided in the Pooling and Servicing Agreement;

(xiv) to the Depositor, an amount equal to the Base Principal
Amount up to an amount equal to the Aggregate Discounted Contract Principal
Balances of the new Contracts available to be transferred to the Trust and the
remainder to the New Transferred Property Funding Account; and

(xv) to the Holder of the Trust Certificate, any remaining amounts.

On and after the Payment Date which is also the Initial Amortization
Date, the Trustee will be required to make the following payments from
the Available Funds then on deposit in the Collection Account, in the
following order of priority (to the extent funds are available therefor):

(i) to the Servicer, an amount equal to any unreimbursed Servicer
Advances (other than Servicer Advances for the current Collection
Period);
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(ii) to the Servicer, an amount equal to the Servicer Fee then due,
together with any accrued and unpaid Servicer Fees from prior
Collection Periods;

(iii) to the Servicer, any Servicing Charges, if any, deposited in the
Collection Account;

(iv) to the Back-up Servicer, an amount equal to the Back-up Servicer
Fee then due, together with any accrued and unpaid Back-up Servicer
Fees from prior Collection Periods;

(v) to the Certificate Insurer, an amount equal to the Premium
Amount then due, together with any accrued and unpaid Premium
Amounts from prior Collection Periods;

(vi) to the Trustee, the Trustee Fees then due, together with any
Trustee Fees from prior Collection Periods;

(vii) to the Trustee, the Trustee Expenses then due, together with any
Trustee Expenses from prior Collection Periods, in an amount not to
exceed in the aggregate $75,000;

(viii) to the Class A Certificateholders, the Class A Certificate Interest
and Class A Overdue Interest for the related Collection Period;

(ix) to the Class B-1 Certificateholders, the Class B-1 Overdue Interest
and the Class B-1 Certificate Interest for the related Collection Period (to
the extent the disbursement of the Class B-1 Certificate Interest will not
result in an Available Funds Shortfall );

(x) to the Class B-2 Certificateholders, the Class B-2 Overdue Interest
and the Class B-2 Certificate Interest for the related Collection Period (to
the extent the disbursement of the Class B-2 Certificate Interest will not
result in an Available Funds Shortfall);

(xi) until the Class A Certificate Principal Balance has been reduced
to zero, to the Class A Certificateholders, the sum of (a) the Class A
Base Principal Distribution Amount for such Payment Date, and (b) any
Class A Overdue Principal;

(xii) to the Certificate Insurer, the unpaid Reimbursement Amount ,
if any;

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Date) exceeds zero, the amount otherwise required to be paid to the
Class B-1 Certificateholders under this clause (xiii), the Class B-2
Certificateholders under clause (xiv) and the Holder of the Trust
Certificate under clause (xviii) shall be paid to the Class A
Certificateholders as an additional reduction of the Outstanding Class
A Principal Balance up to the amount necessary to reduce the
Outstanding Class A Principal Balance to zero;

(xiv) until the Class B-2 Certificate Principal Balance has been
reduced to zero, to the Class B-2 Certificateholders, from the Available
Funds then remaining in the Collection Account, the sum of (a) the
Class B-2 Base Principal Distribution Amount for such Payment Date,
and (b) any Class B-2 Overdue Principal; provided, however, that if a
Restricting Event exists on such Payment Date and the Outstanding
Class A Certificate Principal Balance on such Payment Date (after giving
effect to the payments to the Class A Certificateholders made on such
Payment Date) exceeds zero, the amount otherwise required to be paid
to the Class B-2 Certificateholders under this clause (xiv) shall be paid
to the Class A Certificateholders during such time as a Restricting Event
is continuing as an additional reduction of the Outstanding Class A
Principal Balance up to the amount necessary to reduce such balance
to zero; provided, further that if an Issuer Restricting Event exists on
such Payment Date and the Outstanding Class B-1 Certificate Principal
Balance on such Payment Date (after giving effect to the payments to
the Class B-1 Certificateholders made on such Payment Date) is greater
than zero, then so long as a Restricting Event is not continuing, to the
Class B-1 Certificateholders during such time as an Issuer Restricting
Event is continuing as an additional reduction of the Outstanding Class
B-1 Principal Balance up to the amount necessary to reduce the
Outstanding Class B-1 Principal Balance to zero;

(xv) to the Trustee, the Trustee Expenses then due, together with any
Trustee Expenses from prior Collection Periods, in excess of the
$75,000 limitation set forth in clause (vii);

(xvi) to the Servicer, any other amounts due the Servicer as expressly
provided in the Pooling and Servicing Agreement;

(xvii) upon the order of the Depositor, the amount of Prepayments
retained in the Lockbox Account with respect to the related Collection
Period may be deposited to the Collection Account and disbursed in
consideration of the transfer of New Transferred Property relating to
New Contracts having a cumulative aggregate Discounted Contract
Principal Balance not in excess of $5,000,000 in accordance with the
Pooling and Servicing Agreement; and

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B Certificateholders made on such Payment Date) exceeds zero, the
amount otherwise required to be paid to the Holder of the Trust
Certificate under this clause (xviii) shall be paid to the Class B
Certificateholders first to the Class B-1 Certificateholders up to the
amount necessary to reduce the Outstanding Class B-1 Principal
Balance to zero and thereafter to the Class B-2 Certificateholders up to
the amount necessary to reduce the Outstanding Class B-2 Principal
Balance to zero; provided, further, in the event that any disbursement
of funds to the Holder of the Trust Certificate would result in the total
of (i) the Aggregate Discounted Contract Principal Balance as of the end
of the immediately preceding Collection Period, minus (ii) the Class A
Certificate Principal Balance, minus (iii) the Class B-1 Certificate
Principal Balance and minus (iv) the Class B-2 Certificate Principal
Balance (calculated with respect to clauses (ii), (iii) and (iv) after giving
effect to the disbursements to be made on such Payment Date) being
less than 3% of the Initial Aggregate Discounted Contract Principal
Balance such amount shall not be disbursed to the Holder of the Trust
Certificate but shall instead be disbursed to the Class A
Certificateholders, the Class B-1 Certificateholders and the Class B-2
Certificateholders as an additional reduction of principal in an amount
equal to the product of (x) a fraction, the numerator of which is the
Class A Percentage, the Class B-1 Percentage, or the Class B-2
Percentage, as the case may be, and the denominator of which is the
sum of the Class A Percentage, the Class B-1 Percentage and the Class
B-2 Percentage (to the extent such class is outstanding) and (y) the
amount that would otherwise be distributable to the Holder of the Trust
Certificate pursuant to this clause (xviii).

See "Description of the Certificates - Flow of Funds" in this Prospectus
Supplement for the definitions of certain defined terms used above.

SUBORDINATION
PROVISIONS..................... The credit enhancement available for the benefit of the Class A
Certificateholders is provided by the Subordinate Certificates. In addition,
the Class A Certificateholders will have the benefit of the Certificate
Insurance Policy . See "The Certificate Insurance Policy and the Certificate
Insurer" herein. The credit enhancement available to the Class B-1
Certificates is provided by the Class B-2 Certificates and the Trust
Certificate.

The cash flow and subordination provisions of the Pooling and Servicing
Agreement provide that Available Funds on each Payment Date will be
used to fund payments to the Certificateholders (and to pay the fees and
expenses of the Servicer). Available Funds with respect to a Payment Date
generally includes amounts collected during or in respect of the
immediately preceding Collection Period with respect to the Contracts and
the Equipment including any Prepayments retained in the Lockbox
Account.

On each Payment Date prior to the Initial Amortization Date, with respect
to amounts due to the Certificateholders, the Pooling and Servicing
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Agreement first requires that there be paid interest (together with any
overdue interest and interest thereon) to the Class A Certificateholders,
and, second, interest (together with any overdue interest and interest
thereon) to the Class B Certificateholders; provided, however, that the Class
B Certificateholders shall only be entitled to receive current interest on the
Class B Certificates at the Class B-1 Certificate Rate or the Class B-2
Certificate Rate, as applicable, to the extent that the disbursement of such
current interest would not result in an Available Funds Shortfall.

On and after the Payment Date which is also the Initial Amortization Date,
with respect to amounts due to the Certificateholders, the Pooling and
Servicing Agreement first requires funding of interest payments to the Class
A Certificateholders, second, the funding of interest payments to the Class
B Certificateholders (to the extent that the funding of current interest
payments will not result in an Available Funds Shortfall), third, the funding
of principal payments to the Class A Certificateholders and fourth, the
funding of principal payments to the Class B Certificateholders, as further
described herein.

The amount to be allocated as a payment of principal is generally equal to the
Base Principal Amount. The Base Principal Amount, with respect to any Payment Date,
is generally equal to the decrease in the Aggregate Discounted Contract Principal
Balance from the beginning of the prior Collection Period to the end of the prior
Collection Period. This decrease will generally be an amount equal to the sum of
actual principal collections during the Collection Period, Reconveyance Amounts
delivered to the Trustee in connection with the removal of Contracts, plus the Discounted
Contract Principal Balance of any Contract which became a Defaulted Contract during such
Collection Period. A Contract becomes a Defaulted Contract at the earlier of the date
on which (i) the Servicer has determined in its sole discretion, in accordance with the
Servicing Standard and its customary servicing procedures that such Contract is not
collectible, (ii) all or part of a Scheduled Payment thereunder is more than 160 days
delinquent, (iii) the Servicer elected not to make a Servicer Advance or for which the
Servicer has determined that a prior Servicer Advance is not recoverable or (iv) that
was repurchased by a Source pursuant to a Source Agreement (a "Defaulted Contract").

On each Payment Date on and after the Payment Date which is also the
Initial Amortization Date, the Class A Percentage of the Base Principal
Amount will be due to the Class A Certificateholders as the "Class A Base
Principal Distribution Amount" until the Class A Certificate Principal
Balance has been reduced to zero. Approximately 3% (the "Class B-1
Percentage") of the Base Principal Amount will be due to the Class B-1
Certificateholders as the "Class B-1 Base Principal Distribution Amount"
until the Class B-1 Certificate Principal Balance has been reduced to zero
and approximately 2.5% (the "Class B-2 Percentage") of the Base Principal
Amount will be due to the Class B-2 Certificateholders as the "Class B-2
Base Principal Distribution Amount" until the Class B-2 Certificate Principal
Balance has been reduced to zero. The Class A Percentage, the Class B-1
Percentage and the Class B-2 Percentage shall be referred to herein as the
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"Percentage Interest" with respect to the Class A Certificates, the Class B-1
Percentage and the Class B-2 Certificates, respectively.

Since the Available Funds on any Payment Date on and after the Initial
Amortization Date, are applied in the order of priority described above
under "Flow of Funds" until such Available Funds are exhausted, the effect
of (x) including deemed losses (i.e., the Discounted Contract Principal
Balance of any Defaulted Contract) in the Base Principal Amount and
(y) assigning payment of the Class A Base Principal Distribution Amount
a higher priority than either (i) the Class B-1 Base Principal Amount ,
(ii) the Class B-2 Base Principal Amount, or (iii) payments to the Holder of
the Trust Certificate is to allocate losses first, to the Holder of the Trust
Certificate, second, to the Class B-2 Certificateholders and third, to the
Class B-1 Class Certificateholders.

Through the operation of the "Class A Overdue Principal," the "Class B-1
Overdue Principal" and "Class B-2 Overdue Principal" provisions, the Class
A Certificateholders, the Class B-1 Certificateholders and Class B-2
Certificateholders are entitled to receive any aggregate, cumulative
shortfalls of Class A Base Principal Amounts, the Class B-1 Base Principal
Amounts and Class B-2 Base Principal Amounts not paid on prior Payment
Dates.

In addition, upon the occurrence of a Restricting Event , amounts otherwise
payable to the Class B Certificateholders and the Trust Certificateholders
will be suspended and shall be disbursed to the Class A Certificateholders
as a further reduction of the unpaid Class A Certificate Principal Balance.

CERTIFICATE INSURER............ MBIA Insurance Corporation (the "Certificate Insurer").

CERTIFICATE INSURANCE
POLICY....................... First Sierra will obtain the Certificate Insurance Policy, which is non-
cancelable, in favor of the Trustee on behalf of the Class A
Certificateholders (the "Certificate Insurance Policy"). Pursuant to the
Certificate Insurance Policy, the Certificate Insurer is required to make
available to the Trustee, on each Payment Date, the amount of any
insufficiency in Available Funds as of such Payment Date necessary to
distribute the Class A Insured Distribution Amount (an "Available Funds
Shortfall"). The Certificate Insurance Policy does not guarantee any
specified rate of prepayments. See "The Certificate Insurance Policy and
the Certificate Insurer" herein.

SERVICING...................... The Servicer will be responsible for servicing, managing and administering
the Transferred Property and enforcing and making collections on the
Contracts. The Servicer will be required to exercise the degree of skill and
care in performing these functions that it customarily exercises with respect
to similar property owned or serviced by the Servicer. The Servicer will
be entitled to receive (a) a monthly fee (the "Servicer Fee") of the product
of (i) one-twelfth of 0.50% (the "Servicing Fee Rate") and (ii) the aggregate
outstanding Discounted Contract Principal Balance of all Contracts as of
the beginning of the previous Collection Period, payable out of the
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Collection Account, (b) late payment fees and (c) certain other fees paid by
the Lessees ("Servicing Charges"), as compensation for acting as Servicer.

Under certain limited circumstances, the Servicer may resign or be
removed, in which event either the Trustee or a third party meeting the
requirements set forth in the Pooling and Servicing Agreement will be
appointed as successor Servicer. See "Description of the Certificates --
Events of Servicing Termination" herein.

The Servicer will be required to cause amounts collected on the Contracts
on behalf of the Trust to be deposited to the Collection Account
maintained by the Trustee no later than two business days following the
Servicer's determination that such amounts relate to the Contracts or the
Equipment. The Servicer will also be required to make advances for
delinquent Scheduled Payments and Final Contract Payments, but only to
the extent it determines in its sole discretion that such advances will be
recoverable in future periods. See "Description of the Certificates --
Servicer Advances."

BACK-UP SERVICER............... Pursuant to the Pooling and Servicing Agreement, the Back-up Servicer
agrees to reconcile the monthly Servicer reports. In addition, following
the resignation or removal of the Servicer, the Back-up Servicer shall
assume the duties of the Servicer as the Successor Servicer under the
Pooling and Servicing Agreement. The Back-up Servicer will be required
to exercise the degree of skill and care in performing these functions that
it customarily exercises with respect to similar property owned or serviced
by the Back-up Servicer. The Back-up Servicer will be entitled to receive
(a) a monthly fee (the "Back-up Servicer Fee") of the product of (i) one-
twelfth of 0.02% (the "Back-up Servicing Fee Rate") and (ii) the aggregate
outstanding Discounted Contract Principal Balance of all Contracts as of
the beginning of the previous Collection Period, payable out of the
Collection Account, as compensation for as Back-up Servicer.

SUBSTITUTION AND
MODIFICATIONS.................. The Pooling and Servicing Agreement permits the Depositor, subject to
certain requirements, to make substitutions provided that the Aggregate
Discounted Contract Principal Balance of all Contracts substituted does not
exceed 10% of the Initial Aggregate Discounted Contract Principal Balance.

ADVANCES....................... Subject to the limitations described herein, on the third business day prior
to any Payment Date, the Servicer will be required to make an advance to
the Trustee in an amount sufficient to cover all amounts due and unpaid
on any Delinquent Contract (a "Servicer Advance") as of the seventh day
immediately preceding such Payment Date (the "Determination Date").

A "Delinquent Contract" will mean, as of any date of determination, any
Contract (other than a Contract which became a Defaulted Contract prior
to such Determination Date) with respect to which all or a portion of the
Scheduled Payment was not received when due by the Servicer as of the
close of business on the last day of the month in which such payment was
due. With respect to any Delinquent Contract, whenever the Servicer shall
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have determined that it will be unable to recover a Servicer Advance or a
portion thereof on such Delinquent Contract, the Servicer will not be
required to make such Servicer Advance or portion thereof, but will be
required to enforce its remedies (including acceleration) under such
Contract. Furthermore, if at any time First Sierra Financial, Inc. or an
affiliate is no longer the Servicer, no Servicer Advances will be required.
The Pooling and Servicing Agreement shall provide that, in the event that
the Servicer determines that any Servicer Advances previously made are
not recoverable from the related Lessee or from the liquidation of the
underlying Equipment, or any Delinquent Contracts for which the Servicer
has made a Servicer Advance in respect thereof become Defaulted
Contracts, the Trustee shall draw on the Collection Account to repay such
Servicer Advances in accordance with the provisions of the Pooling and
Servicing Agreement.

OPTIONAL REMOVAL............... The holder of the Trust Certificate will have the option, subject to certain
conditions set forth in the Pooling and Servicing Agreement, including the
deposit of the sum specified in the Pooling and Servicing Agreement and the
consent of the Certificate Insurer, to remove all, but not less than all, of
the property in the Trust, and thereby cause early retirement of the
Certificates as of any Payment Date following the date on which the sum of
the Class A Certificate Principal Balance and the Class B Certificate
Principal Balance is less than 10% of the sum of the Initial Class A
Certificate Principal Balance, the Class B-1 Certificate Principal Balance
and the Class B-2 Certificate Principal Balance is less than 10% of the sum of
the Initial Class A Certificate Principal Balance, the Initial Class B-1
Certificate Principal Balance and the Initial Class B-2 Certificate Principal
Balance. In the event of such a removal, the entire outstanding Class A
Certificate Principal Balance, the Class B-1 Certificate Principal Balance
and the Class B-2 Certificate Principal Balance, together with accrued
interest thereon at the related Certificate Rate, will be required to be paid
to the Class A Certificateholders, the Class B-1 Certificateholders and the
Class B- 2 Certificateholders on such Payment Date.

REPURCHASE FOR
CERTAIN BREACHES
OF REPRESENTATIONS
AND WARRANTIES ................ The Depositor under the Pooling and Servicing Agreement and First Sierra
under the Sale and Contribution Agreement will be obligated to accept the
reconveyance of the Contract and the security interest in the related
Equipment from the Trustee and to deposit the Reconveyance Amount if
the interest of the Trust, in any of the related Equipment, the related
Contract, or the related Contract File is materially adversely affected by a
breach of a representation or warranty made by such party with respect to
such Contract and if such breach has not been cured within thirty days of
discovery of such breach.
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CERTAIN LEGAL
ASPECTS OF THE
CONTRACTS...................... The Depositor will warrant that the transfer to the Trust of the Transferred
Property is either a valid transfer and assignment of the Transferred
Property or the grant of a security interest in the Transferred Property. The
Depositor will warrant that if the transfer to the Trust is deemed to be a
grant to the Trust of a security interest in the Transferred Property, then the
Trust will have a first priority perfected security interest therein, except for
the Equipment and certain liens which have priority over previously
perfected security interests by operation of law, and, with certain
exceptions, in the proceeds thereof. The Servicer will be required to take
such action as is required to perfect the Trust's interest in the Transferred
Property except as discussed below with respect to the Equipment. If the
Subsidiary, the Depositor, the Servicer or the Trustee, while in possession
of an item of Transferred Property, sells or pledges and delivers such
Transferred Property to another party, in violation of the Pooling and
Servicing Agreement, there is a risk that the purchaser could acquire an
interest in such an item of Transferred Property having priority over the
Trust's interest.

First Sierra and the Depositor will file financing statements in accordance
with the Uniform Commercial Code as in effect in the applicable
jurisdiction (the "UCC") evidencing the interest of the Trust in the Trust
Assets as follows: (i) a UCC-1 financing statement with respect to the
assignment of all Contracts to the Trust pursuant to the Pooling and
Servicing Agreement and (ii) with respect to each Contract which is a
finance lease for which First Sierra has filed a UCC-1 with respect to the
related Equipment, UCC-3 financing statement assigning First Sierra's lien
on the related Equipment to the Trustee on behalf of the Trust. Subject to
certain limitations in the Pooling and Servicing Agreement, First Sierra has
represented that it has filed UCC-1 financing statements with respect to
Contracts as to which the related Equipment
had an original cost of $75,000 or more.

Except as described in the immediately preceding sentence, because of the
administrative burden and expense that would be entailed in so doing,
none of First Sierra, the Depositor nor the Servicer has filed or will be
required to file UCC financing statements in favor of the Trustee identifying
the Equipment as collateral pledged to the Trustee on behalf of the Trust.
In the absence of such filings any security interest in the related Equipment
will not be perfected in favor of the Trustee and the Trustee shall have no
liability with respect to such lack of perfection. Upon request, the Servicer
will be required to make such filings with respect to Defaulted Contracts.

TAX STATUS..................... Tax Counsel is of the opinion that under existing law the Class A
Certificates will be characterized as indebtedness for federal income tax
purposes. Under the Pooling and Servicing Agreement, the Depositor, the
Servicer, the Certificateholders and other parties will agree to treat the
Class A Certificates as debt for all income tax purposes. See "Certain
Federal Income Tax Consequences" in the Prospectus Supplement for
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additional information concerning the application of federal income tax
laws.

RATING OF THE
CLASS A CERTIFICATES........... It is a condition to the issuance of the Class A Certificates that they be
rated at least "AAA" by Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies ("S&P") and "Aaa" by Moody's Investors Service ("Moody's")
(each, a "Rating Agency").

ERISA
CONSIDERATIONS................. The Class A Certificates are not eligible for purchase by entities using the
assets of employee benefit plans that are subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or a plan
described in Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended. See "ERISA Considerations" herein and in the Prospectus.

RISK FACTORS................... For a discussion of certain factors that should be considered by prospective
Investors in the Class A Certificates, see "Risk Factors" herein and in the
Prospectus.

LEGAL MATTERS.................. Certain legal matters relating to the Certificates will be passed upon for the
Subsidiary, the Servicer and the Underwriter by Dewey Ballantine, New
York, New York. Certain Federal income tax matters will be passed upon
for the Issuer by Dewey Ballantine, New York, New York. Certain legal
matters relating to the Certificate Insurer will be passed upon for the
Certificate Insurer by Kutak Rock, Omaha, Nebraska.
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RISK FACTORS

In addition to the Risk Factors discussed in the Prospectus,
prospective Class A Certificateholders should consider, among other things, the
following additional factors in connection with the purchase of the Class A
Certificates:

RISK OF DOWNGRADE OF INITIAL RATINGS ASSIGNED TO CERTIFICATES.
It is a condition to the issuance of the Class A Certificates that they be rated
"AAA" by S&P and "Aaa" by Moody's. A rating is not a recommendation to purchase,
hold or sell Class A Certificates, inasmuch as such rating does not comment as
to market price or suitability for a particular investor. The rating of the
Class A Certificates addresses the likelihood of the timely payment of interest
on and the ultimate repayment of principal of the Class A Certificates pursuant
to their terms. There is no assurance that a rating will remain for any given
period of time or that a rating will not be lowered or withdrawn entirely by the
Rating Agency if in its judgment circumstances in the future so warrant. The
rating of the Class A Certificates is based primarily on the Rating Agency's
analysis of the Contracts and the Equipment, overcollateralization and the
subordination provided by the Class B Certificates and the Trust Certificate and
the Certificate Insurance Policy.

THE RECEIVABLES

THE EQUIPMENT

The Equipment subject to the Contracts consists of small to
medium sized equipment used in a wide variety of business consistent with small
ticket equipment leasing. The equipment and other property underlying the
Contracts may include, but is not limited to, the following: equipment utilized
in the offices and clinics of dentists, medical doctors, chiropractors and other
professional service providers, equipment utilized in the offices and clinics of
veterinarians, restaurant equipment, point of sale equipment, delivery and
business use vehicles, computer equipment, copier and facsimile equipment,
telecommunications equipment, automobile servicing equipment and other similar
general use equipment in the service sector.

THE CONTRACTS

The Contracts consist or, in the case of the Additional
Contracts, will consist of small ticket leases and security interests in the
related equipment or other property acquired by First Sierra from small
independent leasing companies on an on-going basis (the "Private Label
Program"). See "The Receivables" in the Prospectus.

The Initial Receivables consist of the Initial Contracts and the
Initial Equipment. As of the Cut-Off Date, the Initial Contracts will have an
Aggregate Discounted Contract Principal Balance (calculated at the statistical
discount rate of 7.33%) of approximately $72,556,684.38 (the "Initial Aggregate
Discounted Contract Principal Balance"). The statistical information concerning
the pool of Receivables set forth herein is based upon information as of the
opening of business on the Cut-Off Date and a statistical discount rate of
7.33%. The actual discount rate of 7.10% (the "Discount Rate") is calculated
using the actual Class A Certificate Rate of 6.29%, the actual Class B-1
Certificate Rate of 7.01% and the actual Class B-2 Certificate Rate of 8.22% and
shall be used to calculate the actual Initial Class A Certificate Principal
Balance and the actual Initial Aggregate Discounted Contract Principal Balance
of the Initial Contracts. The Aggregate Discounted Contract Principal Balance of
the Initial Contracts as of the Cut-Off Date calculated using the Discount Rate
is $72,024,443.60. Between the Cut-Off Date and the Closing Date some
amortization of the pool is expected to occur. In addition, certain Contracts
included in the pool as of the Cut-Off Date may be determined not to meet the
eligibility requirements for the final pool, and may not be included in the
final pool. While the statistical distribution of the characteristics as

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of the Closing Date for the final Initial Receivables pool and calculated at
the Discount Rate will vary somewhat from the statistical distribution of such
characteristics as of the Cut-Off Date and calculated at the statistical
Discount Rate as presented in this Prospectus Supplement, such variance will
not be material.

The "Discounted Contract Principal Balance" with respect to any
Contract, at any time of determination, is the sum of (a) the present value of
all of the remaining Scheduled Payments becoming due under such Contract after
such date of determination, discounted monthly at the Discount Rate in the
manner described below and (b) the aggregate amount of all Scheduled Payments
(due after the applicable Cut-Off Date) then due and payable under such Contract
which have not been received by the Servicer (or with respect to the calculation
of the Base Principal Amount for which a Servicer Advance has been made in
accordance with the provisions of the Pooling and Servicing Agreement);
provided, however, that except to the extent expressly provided in the Pooling
and Servicing Agreement, the Discounted Contract Principal Balance of any
Defaulted Contract, Early Termination Contract, or Expired Contract or Contract
purchased by First Sierra pursuant to the Sale Agreement or the Depositor or the
Servicer pursuant to the Pooling and Servicing Agreement shall be equal to zero.

In connection with all calculations required to be made pursuant
to the Transaction Documents with respect to the determination of Discounted
Contract Principal Balances, for any date of determination the Discounted
Contract Principal Balance for each Contract shall be calculated assuming:

(i) all payments are due on the last day of such
calculation period which shall be the thirty day
period preceding such date of determination;

(ii) payments are discounted on a monthly basis using
a 30 day month and a 360 day year; and

(iii) payments are discounted to the last day of the
calculation period in which the date of
determination falls.

The "Aggregate Discounted Contract Principal Balance" as
determined from time to time is the sum of the Discounted Contract Principal
Balances of all Initial Contracts, Additional Contracts and any Substitute
Contracts.

All of the Contracts require the periodic, scheduled payment of
rent or other payments on a monthly, quarterly, semi-annual or annual basis, in
arrears or in advance. Such periodic payments are referred to herein as
"Contract Payments." As of any Determination Date, the total of all remaining
Contract Payments on and after the Cut-Off Date scheduled to be paid on a
Contract, subject to Servicer Advances and prepayments, are referred to herein
as its "Contract Balance."

The Contracts have been selected by the Seller from its
portfolio of contracts and have the characteristics specified in the Sale and
Contribution Agreement and described herein, and the Contracts eligible to be
designated as Additional Contracts or Substitute Contracts will conform to the
characteristics specified in the Sale and Contribution Agreement and herein.

As of the Cut-Off Date, the Initial Contracts had remaining
terms to maturity of 2 to 84 months. The final scheduled payment date on the
Initial Contract with the latest maturity is October 20, 2003. As of the Cut-Off
Date, all of the Contracts had (i) original terms to maturity of 7 months to 85
months, with a weighted average original term to maturity of approximately 52.22
months; and (ii) a remaining term to maturity of not less than 2 months and not
more than 84 months, with a weighted average remaining term to maturity of
approximately 46.67 months.

S-21

<PAGE> 22

References herein to percentages of Lessees refer in each case
to the percentage of the Aggregate Discounted Contract Principal Balance of the
Initial Contracts as of the Cut-Off Date.

As of the Cut-Off Date, the Discounted Contract Principal
Balances of the Initial Contracts range from $95.40 to $318,660.91. No more than
1.15% of the Initial Aggregate Discounted Contract Principal Balance is
attributable to any one Lessee (including affiliates of such Lessee), and the
average Discounted Contract Principal Balance is approximately $17,602.30.

Under the Pooling and Servicing Agreement, the Servicer is
permitted to allow prepayment in an amount not less than the Prepayment Amount.
In addition, in the event that a Lessee requests an upgrade or trade-in of
Equipment, the Servicer may remove such Equipment and related Contract from the
Trust Assets, but only upon payment of an amount equal to the sum of (i) the
Discounted Contract Principal Balance as of the first day of the Collection
Period preceding such removal, (ii) one month's interest thereon at the Discount
Rate, and (iii) any Scheduled Payments due and outstanding under such Contract
that have not been paid by the Lessee (collectively the "Reconveyance Amount").

See "The Receivables" in the Prospectus.

SUBSTITUTIONS AND MODIFICATIONS

Pursuant to the Pooling and Servicing Agreement, the Depositor,
with the consent of the Certificate Insurer and upon notice from the Servicer,
may substitute one or more Contracts and the related Equipment for and replace
Contracts and the related Equipment that (i) becomes a Defaulted Contract, a
Prepayment or an Early Termination Contract or (ii) are required to be
repurchased by the Depositor pursuant to the Pooling and Servicing Agreement.

Each Substitute Contract shall be a Contract, which satisfies
certain representations and warranties set forth in the Pooling and Servicing
Agreement (a "Substitute Contract") as of the related Substitute Contract
Cut-Off Date. In addition, a substitution will not be permitted if:

(i) on a cumulative basis from the Cut-Off Date, the sum of the
Discounted Contract Principal Balance (as of the related Substitute
Contract Cut-Off Date) of Contracts substituted for Contracts would
exceed ten percent (10%) of the Aggregate Discounted Contract Principal
Balance of the Contracts as of the Cut-Off Date;

(ii) on a cumulative basis, the sum of the Discounted Contract
Principal Balances (as of the related Substitute Contract Cut-Off Dates)
of Contracts substituted for Defaulted Contracts would exceed five
percent (5%) of the Aggregate Discounted Contract Principal Balance of
the Contracts as of the Cut-Off Date;

(iii) as of the related Substitute Contract Cut-Off Date, the
Substitute Contracts and the related Equipment have a Discounted
Contract Principal Balance that is less than the Discounted Contract
Principal Balance of the Contracts being replaced;

(iv) on the related Conveyance Date, the sum of the Scheduled
Payments on all Contracts (including any Substitute Contracts) then
subject to the Agreement due in any Collection Period prior to the
October 2003 Collection Period would be less than the Scheduled Payments
due on all Contracts prior to such substitution for such Collection
Period (a "Payment Deficiency"), or increase the amount of such a
Payment Deficiency;

(v) as of the related Conveyance Date, a Restricting Event has
occurred and is continuing; or

S-22

<PAGE> 23

(vi) the addition of such Contract would result in the Aggregate
Discounted Contract Principal Balance of all Contracts with the same
Lessee exceeding 1.2% of the Aggregate Discounted Contract Principal
Balance of all Contracts.

Pursuant to the Pooling and Servicing Agreement, the Servicer
will manage, administer, service and make collections on the Contracts, in
accordance with the terms of the Pooling and Servicing Agreement, the Contracts,
the Servicer's current credit and collection policies and applicable law and, to
the extent consistent with such terms, in the same manner in which, and with the
same care, skill, prudence and diligence with which, it services and administers
leases of similar credit quality for itself or others, if any, giving due
consideration to customary and usual standards of practice of prudent
institutional small ticket equipment finance lease servicers and, in each case,
taking into account its other obligations under the Pooling and Servicing
Agreement (collectively, the "Servicing Standard"). The Servicer shall use
commercially reasonable best efforts consistent with the Servicing Standard and
its customary servicing procedures, to repossess or otherwise comparably convert
the ownership of any Equipment that it has reasonably determined should be
repossessed or otherwise converted following a default under the Contract
remarket, either through sale or release, the Equipment upon the expiration of
the term of the related Contract and act as sales and processing agent for
Equipment which it repossesses. The Servicer shall follow such practices and
procedures as are consistent with the Servicing Standard and as it shall deem
necessary or advisable and as shall be customary and usual in its servicing of
equipment leases and other actions by the Servicer in order to realize upon such
a Contract, which may include reasonable efforts to enforce any recourse
obligations of Lessees and repossessing and selling the Equipment at public or
private sale. The foregoing is subject to the provision that, in any case in
which the Equipment shall have suffered damage, the Servicer shall not be
required to expend funds in connection with any repair or towards the
repossession of such Equipment unless it shall determine in its discretion that
such repair and/or repossession will increase the proceeds and recoveries on
such Equipment by an amount greater than the amount of such expenses.

Following is certain statistical information relating to the
Receivables Pool, calculated as of the Cut-Off Date and assuming a statistical
Discount Rate of 7.33%. Certain columns may not total 100% due to rounding.

S-23

<PAGE> 24

DISTRIBUTION OF THE CONTRACTS BY DISCOUNTED CONTRACT PRINCIPAL BALANCES
<TABLE>
<CAPTION>

Percentage of
Initial Aggregate Initial Aggregate
Discounted Contract Number of Discounted Contract Discounted Contract
Principal Balance Contracts Principal Balance Principal Balance
----------------- --------- ----------------- -----------------
Greater Less Than
Than or Equal to
- -------- ----------
<C> <C> <C> <C> <C>
$ 1 $ 10,000 2,341 $ 7,813,653 10.77%
$ 10,000 $ 20,000 711 10,422,932 14.37
$ 20,000 $ 30,000 402 9,855,568 13.58
$ 30,000 $ 40,000 233 8,037,930 11.08
$ 40,000 $ 50,000 109 4,919,679 6.78
$ 50,000 $ 60,000 90 4,874,868 6.72
$ 60,000 $ 70,000 39 2,499,133 3.44
$ 70,000 $ 80,000 29 2,152,725 2.97
$ 80,000 $ 90,000 23 1,934,646 2.67
$ 90,000 $ 100,000 17 1,597,599 2.20
$100,000 $ 110,000 36 3,807,735 5.25
$110,000 $ 120,000 13 1,473,059 2.03
$120,000 $ 130,000 13 1,616,739 2.23
$130,000 $ 140,000 12 1,637,378 2.26
$140,000 $ 150,000 8 1,163,446 1.60
$150,000 $ 160,000 7 1,076,395 1.48
$160,000 $ 170,000 7 1,151,617 1.59
$170,000 $ 180,000 11 1,906,816 2.63
$180,000 $ 190,000 7 1,287,335 1.77
$190,000 $ 200,000 3 585,385 0.81
$200,000 $ 250,000 6 1,327,288 1.83
$250,000 $1,000,000 5 1,414,759 1.95
- -------------------------------------------------------------------------------------------------
Total.................. 4,122 $72,556,684 100.00%
=================================================================================================
</TABLE>

S-24

<PAGE> 25

DISTRIBUTION OF THE CONTRACTS BY DEFINED LESSEE INDUSTRY (TOP 20)
<TABLE>
<CAPTION>

Initial Aggregate Percentage of Initial
Number Discounted Aggregate
of Contract Discounted Contract
Industry Type Contracts Principal Balance Principal Balance
------------- --------- ----------------- -----------------
<S> <C> <C> <C>
Offices and Clinics of Dentists 223 $14,740,927 20.32%
Offices and Clinics of Medical Doctors 197 7,820,104 10.78
Eating Places 205 3,807,935 5.25
Offices and Clinics of Chiropractors 98 3,246,930 4.48
Veterinary Services 44 2,654,803 3.66
Business Services, NEC 216 2,611,662 3.60
New and Used Car Dealers 94 1,815,146 2.50
Commercial Printing, Lithographic 22 890,712 1.23
Womens, Juniors and Misses Dresses 13 834,418 1.15
Automotive Dealers, NEC 53 779,646 1.07
Offices and Clinics of Optometrists 18 607,907 0.84
Eating and Drinking Places 70 579,240 0.80
Automotive Repair Shops 83 573,201 0.79
Gasoline Service Stations 40 545,949 0.75
Miscellaneous Business Services 36 470,933 0.65
Commercial Printing 24 405,694 0.56
Drinking Places 42 397,191 0.55
Computer Programming Services 17 353,467 0.49
Drug Stores and Proprietary Stores 30 333,701 0.46
Miscellaneous Food Stores 31 309,963 0.43
- ----------------------------------------------------------------------------------------
Total (Top 20 Defined Industries)...1,556 $43,779,534 60.34%
- ----------------------------------------------------------------------------------------
All Others..........................2,566 $28,777,150 39.66%
- ----------------------------------------------------------------------------------------
Total...............................4,122 $72,556,684 100.00%
========================================================================================
</TABLE>

S-25

<PAGE> 26

DISTRIBUTION BY LESSEE (TOP 20)
<TABLE>
<CAPTION>

Percentage of Initial
Initial Aggregate Aggregate Discounted
Number of Discounted Contract Contract
Lessees Contracts Principal Balance Principal Balance
------- ---------- ------------------ ------------------
<S> <C> <C> <C>
The Donna Karan Company & Affiliates 13 $ 834,418 1.15%
Rescare Home Health, Inc. 167 526,342 0.73
Florida Restaurant Group, Inc. 1 318,661 0.44
Meadows Dental Assoc. 1 305,288 0.42
Morris County Cardiology 2 291,208 0.40
Papa Johns/Rohoho 8 284,309 0.39
Georgia/Florida Children Today 34 280,285 0.39
Robert S. Watine, M.D.P.A. 1 275,041 0.38
Baughman Group Ltd., The 7 273,544 0.38
Papa Johns/Three S Development 7 262,309 0.36
Contractors' Warehouse 1 261,525 0.36
Fariborz Matian, D.D.S. 1 254,244 0.35
Nagaoka Int'l Corp & Nagaoka USA Corp. 1 247,586 0.34
Health Care Associates, P.A. 1 244,731 0.34
Papa Johns/Performance Pizza 8 244,728 0.34
Ross D. Rodig, D.D.S. 1 224,390 0.31
Glenn R. Edwards, Inc. 2 212,866 0.29
Daniel E. Jones, D.V.M. 2 206,225 0.28
John D. Meola, Jr., D.D.S. and 1 205,492 0.28
Lanier Professional Services, Inc. 1 204,799 0.28
- --------------------------------------------------------------------------------------------------------------
Total (Top 20 Lessees)................ 260 $ 5,957,992 8.21%
- --------------------------------------------------------------------------------------------------------------
All Others............................ 3,862 $ 66,598,692 91.79%
- --------------------------------------------------------------------------------------------------------------
Total................................. 4,122 $ 72,556,684 100.00%
==============================================================================================================
</TABLE>

S-26

<PAGE> 27

DISTRIBUTION OF THE CONTRACTS BY LESSEE BILLING ADDRESS
<TABLE>
<CAPTION>

Initial Aggregate Percentage of Initial
Number of Discounted Contract Aggregate Discounted
State Contracts Principal Balance Principal Contract Balance
----- --------- ----------------- --------------------------
<S> <C> <C> <C>
California 494 $ 13,879,163 19.13%
Kentucky 849 8,549,361 11.78
Florida 280 5,806,821 8.00
New York 397 5,277,401 7.27
New Jersey 210 5,135,094 7.08
Texas 319 4,400,324 6.06
North Carolina 118 2,446,101 3.37
Virginia 96 2,359,393 3.25
Massachusetts 104 1,981,520 2.73
Illinois 101 1,963,044 2.71
Ohio 104 1,892,952 2.61
Georgia 101 1,874,077 2.58
Arizona 45 1,472,153 2.03
Pennsylvania 77 1,269,341 1.75
Michigan 123 1,090,380 1.50
Maryland 109 1,084,512 1.49
Connecticut 79 1,050,492 1.45
Missouri 62 1,031,830 1.42
Indiana 73 1,020,149 1.41
Tennessee 32 982,610 1.35
- -----------------------------------------------------------------------------------------------------------------
Total (Top 20 States)....... 3,773 $ 64,566,718 88.99%
- -----------------------------------------------------------------------------------------------------------------
All Others*................. 349 $ 7,989,966 11.01%
- -----------------------------------------------------------------------------------------------------------------
Total....................... 4,122 $ 72,556,684 100.00%
=================================================================================================================
</TABLE>

* No other state accounts for more than 1.19% of the Initial Aggregate
Discounted Contract Principal Balance.

S-27

<PAGE> 28

DISTRIBUTION OF THE CONTRACTS BY REMAINING TERM TO MATURITY

- ---------------------------------------------------------------------------------------------------------------------------
Remaining Term in Months
- ---------------------------------------------------------------------------------------------------------------------------
Percentage of Initial
Initial Aggregate Aggregate
Greater Less Than Number Discounted Contract Discounted Contract
Than or Equal to of Contracts Principal Balance Principal Balance
---- ----------- ------------ ----------------- -----------------
<S> <C> <C> <C> <C>
0 12 403 $ 1,543,687 2.13%
12 24 635 5,854,770 8.07
24 36 979 16,299,430 22.46
36 48 1,338 11,579,204 15.96
48 60 630 23,981,353 33.05
60 72 93 8,962,003 12.35
72 84 44 4,336,237 5.98
84 100 0 0 0.00
- ---------------------------------------------------------------------------------------------------------------------------
Total...................... 4,122 $ 72,556,684 100.00%
- ---------------------------------------------------------------------------------------------------------------------------
===========================================================================================================================
</TABLE>

DISTRIBUTION OF THE CONTRACTS BY ORIGINAL TERM TO MATURITY

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Original Term in Months
- ------------------------------------------------------------------------------------------------------------------------------
Percentage of Initial
Initial Aggregate Aggregate
Greater Less Than Number Discounted Contract Discounted Contract
Than or Equal to of Contracts Principal Balance Principal Balance
---- ----------- ------------ ----------------- -----------------
<S> <C> <C> <C> <C>
1 12 62 $ 343,191 0.47%
12 24 250 1,902,815 2.62
24 36 1,045 15,048,981 20.74
36 48 1,822 13,070,877 18.01
48 60 758 27,294,952 37.62
60 72 152 12,173,203 16.78
72 84 32 2,553,466 3.52
84 100 1 169,200 0.23
- ------------------------------------------------------------------------------------------------------------------------------
Total...................... 4,122 $ 72,556,684 100.00%
- ------------------------------------------------------------------------------------------------------------------------------
==============================================================================================================================
</TABLE>

S-28

<PAGE> 29

THE SERVICER

GENERAL

First Sierra Financial, Inc., a Delaware corporation (the
"Servicer"), was founded in June 1994. Its principal office is located at 600
Travis Street, Suite 7050, Houston, Texas 77002. Since its incorporation, First
Sierra has acquired over $180 million of contracts for equipment and other
property. The common stock of First Sierra is privately held.

As of September 30, 1996, First Sierra had 49 full time
employees, of which 9 were engaged in credit and collection activities, 27 were
engaged in servicing and general administration activities and 13 were engaged
in marketing activities.

First Sierra is engaged in two principal business activities.
The first is the acquisition of portfolios of leases for equipment and other
property. The second is the acquisition of small ticket leases and a security
interest in the related equipment or other property from small independent
leasing companies, vendors and brokers on an on-going basis, generally as such
leases are originated. See "The Servicer" in the Prospectus.

DELINQUENCY AND LOSS EXPERIENCE

As of September 30, 1996, the Servicer had not experienced any
losses on the portfolio of contracts originated since inception. The Servicer
has recovered full value of the defaulted contracts in its Private Label Program
under the recourse and reserve provisions in the program agreements established
with Sources from which the Servicer purchased the contracts.

The table set forth below present certain information
regarding the delinquency experience of the Servicer's portfolio of leases for
equipment and other property for the periods indicated. There can be no
assurance that the levels of delinquency experience reflected in the following
table are indicative of the performance of the Contracts.

DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>

% of Contracts Past Due September December March June
30, 1994 31, 1994 31, 1995 30, 1995

Gross Remaining Lease Receivable $ 376,233 $ 5,917,426 $ 14,741,890 $ 35,104,025
31 - 60 Days 0.00% 0.00% 3.60% 2.10%
61 - 90 Days 0.00% 0.00% 0.10% 0.20%
Over 90 Days 0.00% 0.00% 0.00% 0.50%

Total 0.00% 0.00% 3.70% 2.80%
</TABLE>

% of Contracts Past Due September December March June September
30, 1995 31, 1995 31, 1996 30, 1996 30, 1996
<S> <C> <C> <C> <C> <C>

Gross Remaining Lease $63,713,023 $83,892,400 $107,142,387 $144,252,932 $197,288,273
Receivable
31 - 60 Days 1.30% 2.51% 2.40% 2.00% 2.20%
61 - 90 Days 0.50% 0.45% 0.70% 0.70% 0.80%
Over 90 Days 0.50% 0.08% 0.10% 0.50% 0.40%

Total 2.3% 3.04% 3.20% 3.20% 3.40%
</TABLE>

THE TRUST

The Trust will be formed in accordance with the laws of the
State of New York, pursuant to the Pooling and Servicing Agreement, solely for
the purpose of effectuating the transactions described herein. Prior to
formation, the Trust will have had no assets or obligations and no operating
history. Upon formation, the Trust will not engage in any business activity
other than acquiring and holding the Receivables, issuing the Certificates and
distributing payments thereon. As described under "Description of the
Certificates - Servicing Compensation and Payment of Expenses," a portion of the
monthly

S-29

<PAGE> 30

collections with respect to the Contracts will be paid to the Servicer as
servicing compensation. All other expenses of the Trust will be paid on behalf
of the Holder of the Trust Certificate by the Servicer as provided in the
Pooling and Servicing Agreement.

The Trust Assets will consist of the Equipment, the Contracts
and any Scheduled Payments, Final Contract Payments, Residual Receipts and
Defaulted Residual Receipts to be made by Lessees (but not including any
payments due on or prior to the applicable Cut-Off Date); any guaranties of a
Lessee's obligations under a Contract; with respect to any Contract, copies of
the Contract, any UCC financing statement and other original documents related
to the Contract, the application of the related Lessee, documentation evidencing
the information with respect to such Contract input into the computerized
electronic contract management system maintained by the Servicer for all
Contracts and other agreements similar to the Contracts, and any other
information required by the Servicer pursuant to its customary policies and
procedures or the Certificate Insurer (the "Contract Files"); the insurance
policies maintained by the Lessees with respect to the Equipment (the "Insurance
Policies") and the proceeds of such Insurance Policies; any rights of the
Depositor under the Sale and Contribution Agreement (including the right to
instruct First Sierra to exercise any unassignable rights of enforcement under
the Contracts and any guaranties thereof); funds from time to time deposited in
the Collection Account, the Security Deposit Account and the New Transferred
Property Funding Account; and any and all income and proceeds of foregoing. The
Pooling and Servicing Agreement does not permit the Trust to acquire any
additional assets other than New Transferred Property. Because the Trust does
not have any operating history and will not engage in any business activity
other than owning the Trust Assets, issuing the Certificates and making
distributions thereon, there has not been included any historical or pro forma
ratio of earnings to fixed charges with respect to the Trust.

DESCRIPTION OF THE CERTIFICATES

The Certificates will be issued pursuant to the Pooling and
Servicing Agreement to be entered into by the Servicer, the Depositor, and the
Trustee. The Servicer will provide a copy of the Pooling and Servicing Agreement
to subsequent Certificateholders without charge on written request addressed to
it at Texas Commerce Tower, 600 Travis Street, 70th Floor, Houston, Texas 77002.

The following summary describes certain terms of the Transfer
Agreements and the Pooling and Servicing Agreement, does not purport to be
complete and is subject to and qualified in its entirety by reference to the
Transfer Agreements and the Pooling and Servicing Agreement. Wherever provisions
of the Transfer Agreements and the Pooling and Servicing Agreement are referred
to, such provisions are hereby incorporated herein by reference.

GENERAL

The obligations evidenced by the Certificates are recourse to
the assets of the Trust only and are not recourse to the Depositor, the
Subsidiary, the Servicer, the Trustee, or any other Person.

The Trustee will agree in the Pooling and Servicing Agreement
and in the Class A Certificates to pay to the Class A Certificateholders (i) an
amount of principal equal to the Initial Class A Certificate Principal Amount
and (ii) Class A Certificate Interest in each case at the times, from the
Sources and on the terms and conditions set forth in the Pooling and Servicing
Agreement and in the Class A Certificates.

The 6.29% Class A Equipment Lease Backed Certificates (the
"Class A Certificates") in the initial principal amount of $63,381,510 (the
"Initial Class A Certificate Principal Balance") will be issued pursuant to the
Pooling and Servicing Agreement. The Initial Class A Certificate Principal
Balance to be issued hereunder is equal to approximately 88% (the "Class A
Percentage") of the initial Aggregate

S-30

<PAGE> 31

Discounted Contract Principal Balance of the Contracts. The
Class A Certificates will initially be issued in book-entry form only through
DTC in minimum denominations of $1,000 and integral multiples thereof. Payments
on the Class A Certificates are required to be made by the Trustee on each
Payment Date.

The first Payment Date for distributions to the Class A
Certificateholders will be December 10, 1996. Payments are required to be made
by the Trustee, by check mailed or, if requested by the Certificateholder, by
wire transfer of immediately available funds, to Certificateholders entitled
thereto at the address appearing on the certificate register on the Record Date,
which, for so long as the Class A Certificates are in book-entry form through
DTC, will be Cede & Co.

The following table sets forth the expected repayment of
principal to the Class A Certificateholders assuming, among other things, (i)
the Modeling Assumptions and (ii) there are no prepayments on the Contracts.

S-31

<PAGE> 32

AMORTIZATION OF CLASS A CERTIFICATE PRINCIPAL BALANCE

Class A Certificate Expected Principal
Payment Date Principal Balance Repayment Amount
------------ ----------------- ----------------
<S> <C> <C>
Closing Date $ 63,381,510 $ 0
December 10, 1996 63,381,510 0
January 10, 1997 63,381,510 0
February 10, 1997 63,381,510 0
March 10, 1997 63,381,510 0
April 10, 1997 63,381,510 0
May 10, 1997 63,381,510 0
June 10, 1997 63,381,510 0
July 10, 1997 63,381,510 0
August 10, 1997 63,381,510 0
September 10, 1997 63,381,510 0
October 10, 1997 63,381,510 0
November 10, 1997 61,609,440 1,772,070
December 10, 1997 59,931,417 1,678,023
January 10, 1998 58,207,184 1,724,233
February 10, 1998 56,551,866 1,655,318
March 10, 1998 54,866,009 1,685,857
April 10, 1998 53,157,204 1,708,805
May 10, 1998 51,508,413 1,648,791
June 10, 1998 49,885,947 1,622,466
July 10, 1998 48,281,783 1,604,164
August 10, 1998 46,690,681 1,591,102
September 10, 1998 45,139,225 1,551,457
October 10, 1998 43,549,856 1,589,369
November 10, 1998 42,041,025 1,508,831
December 10, 1998 40,501,361 1,539,664
January 10, 1999 39,001,212 1,500,149
February 10, 1999 37,504,278 1,496,934
March 10, 1999 36,044,841 1,459,437
April 10, 1999 34,619,624 1,425,217
May 10, 1999 33,214,567 1,405,057
June 10, 1999 31,906,978 1,307,589
July 10, 1999 30,676,823 1,230,155
August 10, 1999 29,494,720 1,182,103
September 10, 1999 28,269,827 1,224,893
October 10, 1999 27,060,355 1,209,472

</TABLE>

S-32

<PAGE> 33

Class A Certificate Expected Principal
Payment Date Principal Balance Repayment Amount
------------ ----------------- ----------------
<S> <C> <C>
November 10, 1999 25,891,428 1,168,927
December 10, 1999 24,704,579 1,186,848
January 10, 2000 23,545,758 1,158,821
February 10, 2000 22,374,722 1,171,036
March 10, 2000 21,322,746 1,051,977
April 10, 2000 20,210,426 1,112,320
May 10, 2000 19,102,554 1,107,872
June 10, 2000 18,051,470 1,051,084
July 10, 2000 17,015,962 1,035,508
August 10, 2000 16,014,550 1,001,412
September 10, 2000 15,101,074 913,476
October 10, 2000 14,118,051 983,023
November 10, 2000 13,136,166 981,885
December 10, 2000 12,162,799 973,366
January 10, 2001 11,185,201 977,598
February 10, 2001 10,212,418 972,783
March 10, 2001 9,227,378 985,040
April 10, 2001 8,315,898 911,479
May 10, 2001 7,391,996 923,902
June 10, 2001 6,494,628 897,367
July 10, 2001 5,667,868 826,760
August 10, 2001 4,827,668 840,200
September 10, 2001 4,099,865 727,803
October 10, 2001 3,427,547 672,318
November 10, 2001 2,806,894 620,653
December 10, 2001 2,189,625 617,269
January 10, 2002 1,643,975 545,650
February 10, 2002 1,216,615 427,360
March 10, 2002 769,632 446,984
April 10, 2002 393,854 375,778
May 10, 2002 22,217 371,637
June 10, 2002 0 22,217

</TABLE>

S-33

<PAGE> 34

In addition to the Class A Certificates, the Trust will also
issue three classes of subordinate certificates, the 7.01% Class B-1 Equipment
Lease Backed Certificates (the "Class B-1 Certificates"), the 8.22% Class B-2
Equipment Lease Backed Certificates (the "Class B-2 Certificates," and
collectively with the Class B-1 Certificates, the "Class B Certificates") and
the Trust Certificate (the "Trust Certificate" together with the Class B
Certificates, the "Subordinate Certificates," and collectively with the Class B
Certificates and the Class A Certificates, the "Certificates").

The Subordinate Certificates are not offered hereby, and will
be issued initially to the Depositor. The Depositor expects that some of the
Class B Certificates will be privately placed with one or more qualified
institutional investors. The Depositor expects to retain the Class B
Certificates which are not privately placed and the Trust Certificate.

One-hundred percent of the Class A Insured Distribution Amount
due to the Class A Certificateholders on each Payment Date is insured by the
Certificate Insurer pursuant to the Certificate Insurance Policy. See "The
Certificate Insurance Policy and the Certificate Insurer" herein.

CONVEYANCE OF RECEIVABLES

On the Closing Date, the Trust will acquire all the right,
title, and interest of the Depositor in and to (a)(i) any Initial Equipment that
is owned by the Depositor and any and all income and proceeds from such Initial
Equipment, but subject to the rights of the Lessee to quiet enjoyment of such
Initial Equipment under the related Initial Contract and (ii) any security
interest of the Depositor in any of the Initial Equipment that is not owned by
the Depositor, (b) the Initial Contracts, including, without limitation, all
Scheduled Payments, Residual Receipts, Defaulted Residual Receipts and any other
payments due or made with respect to the Initial Contracts after the Cut-Off
Date relating to such Initial Contracts, (c) any guarantees of a Lessee's
obligations under an Initial Contract, (d) all other documents in the Contract
Files relating to the Initial Contracts, including, without limitation, any UCC
financing statements related to the Initial Contracts or the Initial Equipment,
(e) any Insurance Policies and Insurance Proceeds with respect to the Initial
Contracts, (f) all of the Depositor's right, title and interest in and to, and
rights under, the Sale and Contribution Agreement executed and delivered in
accordance therewith, (g) the Certificate Insurance Policy, (h) all amounts on
deposit in the Collection Account, the Security Deposit Account and the New
Transferred Property Funding Account; and (i) any and all income and proceeds of
any of the foregoing; provided, however, that the transfer shall not include the
Initial Unpaid Amounts relating thereto (collectively, the "Receivables").

During the Interest-Only Period, and provided that no Required
Amortization Event has occurred, an amount generally equal to all Base Principal
Amounts deposited to the Collection Account with respect to each Collection
Period shall be disbursed on the next Payment Date by the Trust in consideration
of the conveyance of New Transferred Property. The New Contracts relating to
such New Transferred Property shall have an Aggregate Discounted Contract
Principal Balance generally equal to the Base Principal Amounts deposited to the
Collection Account with respect to the prior Collection Period.

On and after the Initial Amortization Date, the Depositor will
have the option to transfer to the Trust New Transferred Property relating to
and including New Contracts having an Aggregate Discounted Contract Principal
Balance not in excess of the aggregate amount of Prepayments received by the
Servicer during the prior Collection Period. In consideration of the conveyance
of such New Transferred Property, the Trust shall disburse upon the order of the
Depositor, as stated in the Pooling and Servicing Agreement, an amount equal to
the aggregate Discounted Contract Principal Balances of such New Contracts. This
option of the Depositor is limited to $5,000,000 Aggregate Discounted Contract
Principal Balance of such New Contracts.

If a Required Amortization Event occurs, then no further
conveyances of New Transferred Property shall occur, and all amounts that would
otherwise have been paid in consideration of such

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conveyances shall be retained in the Collection Account and shall be
distributed, in the case of amounts on deposit in the Collection Account, on
each Payment Date.

The Trustee will have possession of the Contracts and the
Contract Files, and the Servicer will retain copies of any other documents which
relate to the Receivables, any related evidence of insurance and payment,
delinquency and related reports maintained by the Servicer in the ordinary
course of business with respect to each Receivable. Prior to transfer of the
Receivables to the Trust, the Servicer will cause its electronic ledger to be
marked to show that such Receivables have been transferred to the Depositor and
then to the Trust, and the Depositor and the Subsidiary will file UCC financing
statements reflecting the transfer and assignment of the Receivables in certain
jurisdictions, as required by the Transfer Agreements and the Pooling and
Servicing Agreement. See "Certain Legal Aspects of the Receivables" in the
Prospectus.

REPRESENTATIONS AND WARRANTIES OF FIRST SIERRA

First Sierra will make certain warranties in the Sale and
Contribution Agreement (as of the Closing Date with respect to the Initial
Contracts and as of the date on which the Trust acquires New Transferred
Property or a Substitute Contract (each, a "Transfer Date") with respect to the
New Contracts unless otherwise indicated), the benefits of which will be
assigned to the Depositor and then to the Trustee, including that: (i) no
provision of any Contract has been waived, altered or modified in any respect,
except by instrument or documents contained in its Contract File and identified
by First Sierra and no modification or amendment of any Contract would
individually or in the aggregate materially and adversely affect the Depositor
or the Trustee's rights thereunder or has reduced the amount of any Scheduled
Payment (or the aggregate Scheduled Payments) owing thereunder or extended the
expiration date thereof; (ii) each Contract is a valid and binding payment
obligation of the related Lessee and is enforceable in accordance with its terms
(except as may be limited by applicable insolvency, bankruptcy, moratorium,
reorganization, or other similar laws affecting enforceability of creditors'
rights generally and the availability of equitable remedies) and is in full
force and effect; (iii) each Contract contains a "hell or high water" clause
under which the Lessee's obligations are non-cancelable and unconditional and
not subject to any right of set-off, defense, abatement, counterclaim, reduction
or recoupment; no Contract is or will be subject to rights of rescission,
set-off, counterclaim or defense, and each Contract provides for acceleration of
the Scheduled Payments upon default by the Lessee; (iv) the Contracts, at the
time they were made, did not violate the laws of any applicable state or of the
United States, including, without limitation, usury, truth-in-lending and equal
credit opportunities laws applicable to such Contract; (v) no Contract permits
the prepayment thereof at the option of the Lessee for an amount that is less
than the Prepayment Amount related to such Contract; (vi) no Contract provides
for the substitution, addition or exchange of any item of Equipment which would
result in any reduction of payments due under such Contract; (vii) the right,
title and interest of First Sierra in and to each Contract and the related
Equipment (or any other property conveyed by First Sierra pursuant to the
Pooling and Servicing Agreement) have not been sold, transferred, assigned or
pledged by First Sierra to any other Person (or any such pledge has been
released as evidenced by releases of collateral) and at the time of the
conveyance of such Contract to the Depositor, First Sierra was the sole owner of
such Contract and the rights thereunder in and to the related Equipment and had
good and marketable title to each Contract and had the power to convey such
Contract and assign its interest in the related Equipment free and clear of any
liens; (viii) as of the Closing Date (or with respect to Additional Contracts or
Substitute Contracts, as of the Transfer Date (each such date, a "Conveyance
Date")), all action required by the Transfer Agreements and the Pooling and
Servicing Agreement shall have been taken by First Sierra to convey all of its
right, title and interest in and to the Contracts and the related Equipment to
the Depositor, (ix) all filings (including UCC filings) necessary to evidence
the conveyance of the Contracts to the Depositor and to perfect the first
perfected priority security interest of the Depositor and the Trustee in the
Contracts and related Equipment in accordance with the filing requirements of
the Transfer Agreements and the Pooling and Servicing Agreement have been made
in all appropriate jurisdictions and are in full force and effect; (x) as of the
applicable Cut-Off Date, no Lessee will have been released, in whole or in part,
from any of its obligations

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in respect of any such Contract; no such Contract will have been satisfied,
canceled, extended or subordinated, in whole or in part, or rescinded, and no
Equipment covered by any such Contract will have been released from such
Contract, in whole or in part, nor will any instrument have been executed that
would effect any such satisfaction, release, cancellation, subordination or
rescission; and (xi) as of the initial Cut-Off Date (in each case calculated
using the statistical discount rate of 7.33%) no one Lessee (including its
affiliates) is the Lessee under Contracts for which the sum of the Discounted
Contract Principal Balances exceeds $834,418.06; no more than $3,651,406.28 of
the Aggregate Discounted Contract Principal Balance is attributable to any 10
Lessees (including their respective affiliates), the average original cost
(based on GAAP) of the Equipment subject to the Contracts shall not exceed
$100,000.

First Sierra will also represent that the Initial Transferred
Property have the following characteristics: (A) each Contract was originated
after October 31, 1994, and will commence no later than March 1, 1997, and no
Contract has a final payment date later than 84 months; (B) as of the time of
each assignment, transfer and contribution pursuant to the terms hereof (and
based upon the Aggregate Discounted Contract Principal Balance of the Contracts
as of the Cut-off Date), (i) the sum of the Aggregate Discounted Contract
Principal Balance of all Contracts in any one state will not exceed 12% of the
Aggregate Discounted Contract Principal Balance of all Contracts except for (a)
Contracts in Kentucky which will not exceed 14% of the Aggregate Discounted
Contract Principal Balance and (b) Contracts in California which will not exceed
25% of the Aggregate Discounted Contract Principal Balance, and (ii) the maximum
collateral value of any Additional Contract will not exceed the lesser of (a)
1.1% of the Aggregate Discounted Contract Principal Balance and (b) $813,000.

First Sierra will make similar representations and warranties
with respect to Additional Contracts and Substitute Contracts (collectively,
"New Contracts") as of the date of the related transfer of such New Contracts.

Such representations and warranties will survive the transfer
of the Transferred Property to the Trust.

Under the terms of the Sale and Contribution Agreement and the
Pooling and Servicing Agreement, First Sierra will be obligated to accept the
reconveyance of any item of Receivables and deposit the Reconveyance Amount on
or before the end of the calendar month following the month of its discovery or
receipt of notice of a breach of a representation or warranty that materially
adversely affects such item of Receivables, which breach has not been cured or
waived in all material respects. This obligation to accept the reconveyance of
the Receivables and remit the Reconveyance Amount will constitute the sole
remedy against First Sierra available to the Subsidiary, the Depositor, the
Trust and the Certificateholders for a breach of a representation or warranty
made by First Sierra with respect to the required characteristics of the
Receivables.

INDEMNIFICATION

The Sale and Contribution Agreement and the Pooling and
Servicing Agreement will provide that First Sierra will defend and indemnify the
Servicer, the Certificate Insurer, the Depositor, the Trustee, the Trust and the
Certificateholders against any and all losses, claims, damages and liabilities
to the extent, but only to the extent, that the same have been suffered by any
such party by virtue of (i) a breach by First Sierra of its obligations (other
than breach of First Sierra's representations and warranties, with respect to
which the sole remedy is expressly limited to First Sierra's acceptance of the
reconveyance of the affected Receivables and the remittance of the Reconveyance
Amount by First Sierra as discussed above) under the Pooling and Servicing
Agreement or (ii) in the case of the Trustee, its performance of its duties
hereunder, except to the extent that such loss, claim, damage or liability
resulted from the Trustee's gross negligence or wilful misconduct.

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The Pooling and Servicing Agreement will also provide that the
Servicer will defend and indemnify the Depositor, First Sierra, the Trustee, the
Certificate Insurer, the Trust and the Certificateholders against any and all
costs, expenses, losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel and expenses of litigation, reasonably incurred,
arising out of or resulting from (i) the use, repossession or operation by the
Servicer or any affiliate thereof of any Equipment and (ii) (A) the failure of
the Servicer to perform its duties under the Pooling and Servicing Agreement or
(B) in the case of the Trustee, its performance of its duties hereunder, except
to the extent that such cost, expense, loss, damage, claim or liability resulted
from the Trustee's gross negligence or wilful misconduct. First Sierra's
obligations, as Servicer, to indemnify the Trust, the Certificate Insurer and
the Certificateholders for acts or omissions of First Sierra as Servicer will
survive the removal of the Servicer but will not apply to any acts or omissions
of a successor Servicer. Such indemnification does not extend to indirect,
incidental, special or consequential damages.

THE ACCOUNTS

The Servicer is required to establish and maintain in
accordance with the Pooling and Servicing Agreement four accounts, the Lockbox
Account, the Collection Account, the Security Deposit Account (the "Security
Deposit Account") and the New Transferred Property Funding Account (the "New
Transferred Property Funding Account"). The Collection Account, the Security
Deposit Account and the New Transferred Property Funding Account are each to be
held by the Trustee in the name of the Trust and for the benefit of
Certificateholders and the Certificate Insurer. Each of the Collection Account,
the Security Deposit Account and the New Transferred Property Funding Account
will be one or more segregated trust accounts. The Lockbox Account will be a
demand deposit account maintained at Texas Commerce Bank, National Association
(the "Lockbox Bank") in accordance with the provisions of that certain Lockbox
Agreement among First Sierra, the Depositor, the Lockbox Bank and the Trustee
(the "Lockbox Agreement").

The Servicer is required to deposit all security deposits
received by the Servicer from, or on behalf of, the Lessees (each, a "Security
Deposit") into the Security Deposit Account.

"Advance Payments" are amounts paid by a Lessee during a
Collection Period with respect to amounts due from such Lessee in subsequent
Collection Periods. Advance Payments will be retained in the Lockbox Account
until the Determination Date relating to the Collection Period in which such
Advance Payment (or portion thereof) is due in accordance with the provisions of
the related Contract unless the Servicer has invoiced the related Lessee for the
Scheduled Payment constituting such Advance Payment.

The New Transferred Property Funding Account will hold amounts
required to be disbursed upon the instruction of the Depositor (with the consent
of the Certificate Insurer), as stated in the Pooling and Servicing Agreement,
pending the transfer of New Transferred Property to the Trust.

The Pooling and Servicing Agreement permits the Servicer to
direct the investment of amounts in the Collection Account, the Security Deposit
Account and the New Transferred Property Funding Account in certain eligible
investments that mature not later than the business day prior to the next
succeeding Payment Date. Generally, the Holder of the Trust Certificate shall be
entitled to any income from such investments.

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SERVICER ADVANCES

In the event that any Lessee fails to remit its full Scheduled
Payment by the Calculation Date, the Servicer is required to make an advance
from its own funds of an amount equal to such unpaid Scheduled Payment (a
"Servicer Advance") if the Servicer, in its sole discretion, determines that
eventual repayment of such Servicer Advance is likely from collections from or
on behalf of the related Lessee. The Pooling and Servicing Agreement provides
for the reimbursement of the Servicer for such Servicer Advances from funds
available for distribution in the Collection Account on each Payment Date before
the Required Payments to Certificateholders have been made as set forth below in
"Flow of Funds".

FLOW OF FUNDS

On each Determination Date, the Servicer is required to
deliver to the Trustee, the Certificate Insurer and each Rating Agency a
certificate (the "Servicer's Certificate") setting forth the information needed
to make payments on the upcoming Payment Date.

See "Subordination Provisions" in the Summary of Terms to this
Prospectus Supplement for a description of the operation and effect of the "Flow
of Funds" mechanics with respect to the various classes of Certificates.

On each Payment Date prior to the Initial Amortization Date,
the Trustee will be required to make the following payments from the Available
Funds then on deposit in the Collection Account, in the following order of
priority (to the extent funds are available therefor):

(i) to the Servicer, an amount equal to any unreimbursed
Servicer Advances (other than Servicer Advances for the current
Collection Period);

(ii) to the Servicer, an amount equal to the Servicer Fee then
due, together with any accrued and unpaid Servicer Fees from prior
Collection Periods;

(iii) to the Servicer, any Servicing Charges, if any,
deposited in the Collection Account;

(iv) to the Back-up Servicer, an amount equal to the Back-up
Servicer Fee then due, together with any accrued and unpaid Back-up
Servicer Fees from prior Collection Periods;

(v) to the Certificate Insurer, an amount equal to the Premium
Amount then due, together with any accrued and unpaid Premium Amounts
from prior Collection Periods;

(vi) to the Trustee, the Trustee Fees then due, together with
any Trustee Fees from prior Collection Periods;

(vii) to the Trustee, the Trustee Expenses then due, together
with any Trustee Expenses from prior Collection Periods, in an amount
not to exceed in the aggregate $75,000;

(viii) to the Class A Certificateholders, the Class A
Certificate Interest and Class A Overdue Interest for the related
Collection Period;

(ix) to the Class B-1 Certificateholders, first in respect of
the Class B-1 Overdue Interest for the related Collection Period and
then in respect of the Class B-1 Certificate Interest for the related
Collection Period;

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(x) to the Class B-2 Certificateholders, first in respect of
the Class B-2 Overdue Interest for the related Collection Period and
then in respect of the Class B-2 Certificate Interest for the related
Collection Period;

(xi) to the Certificate Insurer, the unpaid Reimbursement
Amount, if any;

(xii) to the Trustee, the Trustee Expenses then due, together
with any Trustee Expenses, from prior Collection Periods, in excess of
the $75,000 limitation set forth in clause (vii);

(xiii) to the Servicer, any other amounts due the Servicer as
expressly provided in the Pooling and Servicing Agreement;

(xiv) to the Depositor, an amount equal to the Base Principal
Amount up to an amount equal to the Aggregate Discounted Contract
Principal Balances of the new Contracts available to be transferred to
the Trust and the remainder to the New Transferred Property Funding
Account; and

(xv) to the Holder of the Trust Certificate, any remaining
amounts.