FIRST SIERRA RECEIVABLES II INC, S-3/A, 1997-01-17

FIRST SIERRA RECEIVABLES II INC
S-3/A, 1997-01-17
ASSET-BACKED SECURITIES

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<PAGE> 1

As filed with the Securities and Exchange Commission on January 17, 1997

REGISTRATION NO. 333-12199

================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

PRE-EFFECTIVE
AMENDMENT NO. 1

FORM S-3

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

FIRST SIERRA RECEIVABLES II, INC.
(Exact name of registrant as specified in its charter)

DELAWARE
(State or other jurisdiction of incorporation or organization)

To be applied for
(I.R.S. Employer Identification Number)

1061 East Indiantown Road, Suite 204
Jupiter, Florida 33477
(407) 745-9292

(Address, including zip code and telephone number
including area code, of registrant's principal executive offices)

MR. ROBERT QUINN
Vice President
1061 East Indiantown Road, Suite 204
Jupiter, Florida 33477
(407) 745-9292

(Name, address, including zip code and telephone
number, including area code, of agent for service)

Copies to:

CHRISTOPHER J. DIANGELO, ESQ.
Dewey Ballantine
1301 Avenue of the Americas
New York, New York 10019
(212) 259-6718

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time on or after the date this Registration Statement becomes effective.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend interest
reimbursement plans, check the following box. [x]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list filed to register
additional securities for an offering pursuant to Rule 462(b) under the
Securities Act, please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

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

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
===============================================================================================================================
Proposed Proposed
Title of Each Class of Amount to Be Maximum Offering Maximum Aggregate Amount of
Securities to be Registered Registered Price Per Certificate(1) Offering Price(1) Registration Fee
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Auto Receivables Backed Securities...... $1,000,000 100% $1,000,000 $303.03(Paid)
===============================================================================================================================
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee.

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

===============================================================================
<PAGE> 2

FIRST SIERRA RECEIVABLES II, INC.

CROSS REFERENCE SHEET

<TABLE>
<CAPTION>
ITEM CAPTION IN PROSPECTUS
NO. NAME AND CAPTION IN FORM S-3 AND PROSPECTUS SUPPLEMENT
---- ---------------------------- -------------------------

<S> <C> <C>
1. Forepart of the Registration Statement and Outside Forepart of the Registration Statement; Front Cover
Front Cover Page of Prospectus Page of Prospectus; Front Cover Page of Prospectus
Supplement; Cross Reference Sheet

2. Inside Front and Outside Back Cover Pages of the Inside Front Cover and Outside Back Cover Pages of
Prospectus Prospectus; Inside Front Cover Page of Prospectus
Supplement; Available Information; Table of
Contents

3. Summary Information; Risk Factors and Ratio of Summary of Terms; Risk Factors; Certain Legal
Earnings to Fixed Charges Aspects of the Receivables; Maturity and
Prepayment Considerations

4. Use of Proceeds Use of Proceeds

5. Determination of Offering Price *

6. Dilution *

7. Selling Security Holders *

8. Plan of Distribution Method of Distribution

9. Description of Securities to be Registered Summary of Terms; Description of the Securities;
Certain Federal Income Tax Characteristics

10. Interest of Named Experts and Counsel *

11. Material Changes *

12. Incorporation of Certain Information on Reference Inside Front Cover of Prospectus, Incorporation of
Certain Documents by Reference

13. Disclosure of Commission Position on *
Indemnification for Securities Act Liabilities
</TABLE>

* Not Applicable

<PAGE> 3

PROSPECTUS

Auto Receivables Backed Securities Issuable in Series

FIRST SIERRA RECEIVABLES II, INC.
Company

First Sierra Financial Inc.,
Servicer

This Prospectus describes certain Auto Receivables Backed Notes (the
"Notes") and Auto Receivables Backed Certificates (the "Certificates" and,
together with the Notes, the "Securities") that may be sold from time to time
in one or more series, in amounts, at prices and on terms to be determined at
the time of sale and to be set forth in a supplement to this Prospectus (each,
a "Prospectus Supplement"). Each series of Securities may include one or more
classes of Notes and one or more classes of Certificates. Each Series will be
issued either by First Sierra Receivables II, Inc. (the "Company"), or by a
trust to be formed by the Company for the purpose of issuing one or more series
of such Securities (each, a "Trust"). The Company or a Trust (which may be an
owner trust), as appropriate, issuing Securities as described in this
Prospectus and the related Prospectus Supplement shall be referred to herein as
the "Issuer."

Each class of Securities of any series will evidence beneficial
ownership in a segregated pool of assets segregated from the general assets of
the Company or a segregated pool of assets owned by a Trust (each, an "Asset
Pool") (such Securities, "Certificates") or will represent indebtedness of the
Issuer secured by the Asset Pool (such Securities, "Notes"), as described
herein and in the related Prospectus Supplement. Each Asset Pool may consist
of any combination of closed-end or open-end lease contracts (the "Lease
Contracts") on new and used automobiles and light duty trucks (the "Vehicles"),
or retail installment sales contracts (the "Loan Contracts", and together with
the Lease Contracts, the "Contracts") between manufacturers, deals or certain
other originators and retail purchasers secured by the related Vehicles, or
participation interests therein, together with all monies received relating
thereto. Each Asset Pool may also include the underlying Vehicles (the
Vehicles together with the Contracts, the "Receivables"). If and to the extent
specified in the related Prospectus Supplement, credit enhancement with respect
to an Asset Pool or any class of Securities may include any one or more of the
following: a financial guaranty insurance policy (a "Policy") issued by an
insurer specified in the related Prospectus Supplement, a reserve account,
letters of credit, credit or liquidity facilities, residual value insurance,
third party payments or other support, cash deposits or other arrangements. In
addition to or in lieu of the foregoing, credit enhancement may be provided by
means of subordination, cross-support among the Receivables or over-
collateralization. See "Description of the Trust Agreements -- Credit
Enhancements." The Receivables in the Asset Pool for a series will have been
originated by First Sierra Financial, Inc. (the "Seller" or "First Sierra") or
acquired by First Sierra from other entities generally in the business of
originating or acquiring Receivables. Except to the extent provided herein and
in the related Prospectus Supplement, the Company will acquire the Receivables
from the Seller on or prior to the date of issuance of the related Securities,
as described herein and in the related Prospectus Supplement. Each series of
Securities will include one or more classes (each, a "Class"). A series may
include one or more Classes of Securities entitled to principal distributions,
with disproportionate, nominal or no interest distributions, or to interest
distributions, with disproportionate, nominal or no principal distributions.
The rights of one or more Classes of Securities of any series may be senior or
subordinate to the rights of one or more of the other Classes of Securities. A
series may include two or more Classes of Securities which differ as to the
timing, sequential order, priority of payment, interest rate or amount of
distributions of principal or interest or both. Information regarding each
Class of Securities of a series, together with certain characteristics of the
related Receivables, will be set forth in the related Prospectus Supplement.
The rate of payment in respect of principal of the Securities of any Class will
depend on the priority of payment of such a Class and the rate and timing of
payments (including prepayments, defaults, liquidations or repurchases of
Receivables) on the related Receivables. A rate of payment lower or higher
than that anticipated may affect the weighted average life of each Class of
Securities in the manner described herein and in the related Prospectus
Supplement. See "Description of the Securities."

PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" ON PAGE ___ HEREIN AND IN THE RELATED PROSPECTUS SUPPLEMENT.

THE NOTES OF A GIVEN SERIES REPRESENT OBLIGATIONS OF THE ISSUER ONLY AND DO NOT
REPRESENT INTERESTS OF FIRST SIERRA, ANY SERVICER, ANY SUBSERVICER, OR ANY OF
THEIR RESPECTIVE AFFILIATES. THE CERTIFICATES OF A GIVEN SERIES REPRESENT
BENEFICIAL INTERESTS IN THE RELATED TRUST ONLY AND DO NOT REPRESENT INTERESTS
IN OR OBLIGATIONS OF THE COMPANY, FIRST SIERRA, ANY SERVICER, ANY SUBSERVICER,
ANY LESSOR 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 FIRST SIERRA, THE COMPANY, ANY SERVICER, ANY
LESSOR, ANY TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES, EXCEPT AS SET FORTH
IN THE RELATED PROSPECTUS SUPPLEMENT. SEE ALSO "RISK FACTORS."

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

Offers of the Securities may be made through one or more
different methods, including offerings through underwriters as more fully
described under "Method of Distribution" herein and in the related Prospectus
Supplement. Prior to issuance, there will have been no market for the
Securities of any series, and there can be no assurance that a secondary market
for the Securities will develop, or if it does develop, it will continue.

RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE. THIS PROSPECTUS
MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES UNLESS ACCOMPANIED BY A
PROSPECTUS SUPPLEMENT.

The date of this Prospectus is September __, 1996.

<PAGE> 4

PROSPECTUS SUPPLEMENT

The Prospectus Supplement relating to a series of Securities to be
offered hereunder, among other things, will set forth with respect to such
series of Securities: (i) a description of the Class or Classes of such
Securities, (ii) the rate of interest, the "Pass-Through Rate" or "Interest
Rate" or other applicable rate (or the manner of determining such rate) and
authorized denominations of such Class of such Securities; (iii) certain
information concerning the Receivables and insurance polices, cash accounts,
letters of credit, financial guaranty insurance policies, third party
guarantees or other forms of credit enhancement, if any, relating to one or
more pools of Receivables or all or part of the related Securities; (iv) the
specified interest, if any, of each Class of Securities in, and manner and
priority of, the distributions from the Asset Pool; (v) information as to the
nature and extent of subordination with respect to such series of Securities,
if any; (vi) the payment date to Securityholders; (vii) information regarding
the Servicer; (viii) the circumstances, if any, under which each Asset Pool may
be subject to early termination; (ix) information regarding tax considerations;
and (x) additional information with respect to the method of distribution of
such Securities.

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (together with all amendments and
exhibits thereto, referred to herein as the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Securities offered pursuant to this Prospectus. For further information,
reference is made to the Registration Statement which may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549; and at the Commission's regional
offices at Northwest Atrium Center, 500 West Madison, Suite 1400, Chicago,
Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York
10048. Copies of the Registration Statement may be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates.

No person has been authorized to give any information or to make any
representation other than those contained in this Prospectus and any Prospectus
Supplement with respect hereto and, if given or made, such information or
representations must not be relied upon. This Prospectus and any Prospectus
Supplement with respect hereto do not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the Securities
offered hereby and thereby, nor an offer of the Securities to any person in any
state or other jurisdiction in which such offer would be unlawful. The
delivery of this Prospectus at any time does not imply that information herein
is correct as of any time subsequent to its date.

This Prospectus, together with the Prospectus Supplement for each
Series or Class of Securities will contain a summary of the material liens of
the applicable exhibits to the Registration Statement and the documents
referred to herein and therein. Copies of such exhibits are on file at the
offices of the Commission in Washington, D.C., and may be obtained at rates
prescribed by the Commission upon request and may be inspected, without charge,
at the Commission's offices.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

All documents subsequently filed by the Company, either on its own
behalf or on behalf of a Trust, relating to any series of Securities referred
to in the accompanying Prospectus Supplement, with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), after the date of this Prospectus and prior to
the termination of any offering of the Securities issued by the Company or a
Trust, shall be deemed to be incorporated by reference in this Prospectus and
to be a part of this Prospectus from the date of the filing of such documents.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
(or in the accompanying Prospectus Supplement) or in any other subsequently
filed document which also is or is deemed to be incorporated by reference
herein, modifies or replaces such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.

2
<PAGE> 5

REPORTS TO SECURITYHOLDERS

Periodic and annual reports concerning any Security and the related
Asset Pool will be provided to the Securityholders. See "Description of the
Securities -- Reports to Securityholders." If the Securities of a series are
to be issued in book-entry form, such reports will be provided to the
Securityholder of record and beneficial owners of such Securities will have to
rely on the procedures described herein under "Description of Securities -
Book-Entry Registration."

The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the documents referred to above that have been or may be
incorporated by reference in this Prospectus (not including exhibits to the
information that is incorporated by reference unless such exhibits are
specifically incorporated by reference into the information that this
Prospectus incorporates). Such requests should be directed to: First Sierra
Financial Inc., Texas Commerce Tower, 70th Floor, 600 Travis Street, Houston,
Texas 77002, Attention: Sandy Ho, Chief Financial Officer, (713) 221-8822.

3
<PAGE> 6

SUMMARY OF TERMS

The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and by reference to
the information with respect to the Securities of any series contained in the
related Prospectus Supplement to be prepared and delivered in connection with
the offering of such Securities. Certain capitalized terms used in the summary
are defined elsewhere in the Prospectus on the pages indicated in the "Index of
Terms."

Issuers . . . . . . . . . . . . With respect to each series of Securities,
either the Company or a trust (each, a
"Trust") to be formed by the Company. The
Company or a Trust issuing Securities
pursuant to this Prospectus and the
related Prospectus Supplement shall be
referred to herein as the "Issuer" with
respect to the related Securities. Each
class of Securities will be issued by the
Company or a Trust and will either
evidence a beneficial ownership in or
indebtedness secured by a segregated pool
of assets segregated from the general
assets of the Company or a segregated pool
of assets owned by a Trust (such pool of
assets, a "Asset Pool"). No Series will
be secured by more than one Asset Pool,
except to the extent that more than one
Asset Pool receives the benefit of a
common form of credit enhancement. See
"The Issuers."

Company . . . . . . . . . . . First Sierra Receivables II, Inc., a
Delaware corporation, (the "Company").
The principal office of the Company is
located at 218 South U.S. Highway 1, Suite
303, Tequesta, Florida 33469, and its
telephone number is (407)-745-9292. The
Company is a wholly-owned subsidiary of
the Servicer. See "The Company."

Servicer . . . . . . . . . . . First Sierra Financial, Inc., a Delaware
corporation (the "Servicer" 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. See "The Servicer."

Seller . . . . . . . . . . . . The Company will acquire the Receivables
from First Sierra or an affiliate
(collectively the "Seller"). The
Receivables will be acquired by the Seller
either (a) as the result of the
acquisition of receivables portfolios from
small ticket lessors (the "Portfolio
Acquisition Program") or (b) as the result
of the ongoing acquisition of receivables
which comply with certain underwriting
criteria specified by First Sierra from
certain lessors as such receivables are
originated (the "Private Label Program").
A "small-ticket" lessor, is a lessor who
leases equipment having original equipment
costs which are generally less than $1
million. For a more complete description
of the Portfolio Acquisition Program and
the Private Label Program please see the
descriptions under the caption "The
Receivables" herein and in the related
Prospectus Supplement.

Trustee . . . . . . . . . . . . The Trustee for each series of Securities
will be specified in the related
Prospectus Supplement.

4
<PAGE> 7

The Securities . . . . . . . . Each Class of Securities of any series
will evidence beneficial ownership in an
Asset Pool) (such Securities,
"Certificates") or will represent
indebtedness of the Issuer secured by the
Asset Pool (such Securities, "Notes"), as
described herein and in the related
Prospectus Supplement. Each Asset Pool
may consist of any combination of
closed-end or open-end lease contracts
(the "Lease Contracts") on new and used
automobiles and light duty trucks (the
"Vehicles") between manufacturers, deals
or certain other originators and lessees
(each such lessee being an "Obligor") and
retail installment sales contracts (the
"Loan Contracts, and, together with the
Lease Contracts, the "Contracts") between
manufactures, dealers or certain other
originators and retail purchasers secured
by the related Vehicles. The
characteristics of a particular Asset Pool
will be more fully described in the
related Prospectus Supplement. To the
extent any Asset Pool includes
participation interests in previously
issued lease-backed securities, such
securities: (a) either will have (i) been
previously registered under the Securities
Act, or (ii) held for at least the Rule
144(k) holding period; and (b) will have
been acquired in a bona fide secondary
market transaction not from the issuer of
such securities or an affiliate thereof.
In addition, (x) the inclusion of such
participation interests must not require
the issuer of such participation interests
to register such participation interests
with the Commission because such issuer
would be considered a "co-issuer" of the
securities backed in part by such
participation interests and (y) following
the inclusion of such participation
interests, the Issuer must continue to
satisfy the requirements to be an offering
of "asset-backed securities" as such term
is defined in the instructions to the
Registration Statement on Form S-3. If
and to the extent specified in the related
Prospectus Supplement, credit enhancement
with respect to an Asset Pool or any class
of Securities may include any one or more
of the following: a financial guaranty
insurance policy (a "Policy") issued by an
insurer specified in the related
Prospectus Supplement, a reserve account,
letters of credit, residual value
insurance, credit or liquidity facilities,
third party payments or other support,
cash deposits or other arrangements. In
addition to or in lieu of the foregoing,
credit enhancement may be provided by
means of subordination, cross-support
among the Receivables or over-
collateralization. The Company will
acquire the Receivables from the Seller on
or prior to the date of issuance of the
related Securities, as described herein
and in the related Prospectus Supplement.

With respect to Securities issued by a
Trust, each Trust will be established
pursuant to an agreement (each, a "Pooling
Agreement") by and between the Company and
the Trustee named therein. Each Pooling
Agreement will describe the related pool
of Receivables held by the Trust.

With respect to Securities that represent
debt issued by the Issuer, the Issuer will
enter into an indenture (each, an
"Indenture") by and

5
<PAGE> 8

between the Issuer and the trustee named
on such Indenture (the "Indenture
Trustee"). Each Indenture will describe
the related pool of Receivables comprising
the Asset Pool and securing the debt
issued by the related Issuer.

The Receivables comprising each Asset Pool
will be serviced by the Servicer pursuant
to a servicing agreement (each, a
"Servicing Agreement") by and between the
Servicer and the related Issuer. In
addition, the lessors from whom the
Receivables were acquired (each, a
"Lessor") may be required to perform
certain monitoring and collection
functions with respect to the Receivables
on behalf of the Seller and its assignee
pursuant to the purchase agreement between
the First Sierra and such Lessor (each, a
"Purchase Agreement") Such Purchase
Agreements will be assigned to the Asset
Pool.

In the case of any individual Asset Pool,
the contractual arrangements relating to
the establishment of a Trust, if any, the
servicing of the related Receivables and
the issuance of the related Securities may
be contained in a single agreement, or in
several agreements which combine certain
aspects of the Pooling Agreement, the
Servicing Agreement and the Indenture
described above (for example, a pooling
and servicing agreement, or a servicing
and collateral management agreement). For
purposes of this Prospectus, the term
"Trust Agreement" as used with respect to
an Asset Pool means, collectively, and
except as otherwise described in the
related Prospectus Supplement, any and all
agreements relating to the establishment
of a Trust, if any, the servicing of the
related Receivables and the issuance of
the related Securities. The term
"Trustee" means any and all persons acting
as a trustee pursuant to a Trust
Agreement.

Securities Will Be Non-Recourse to the Seller.

The Securities will not be obligations,
either recourse or non-recourse (except
for certain non-recourse debt described
under "Certain Tax Considerations" in the
related Prospectus Supplement), of the
Servicer, the Seller or any person other
than the related Issuer. The Notes of a
given series represent obligations of the
Issuer, and the Certificates of a given
series represent beneficial interests in
the related Trust only and do not
represent interests in or obligations of
the Company, the Seller or any of their
respective affiliates other than the
related Trust. In the case of Securities
that represent beneficial ownership
interest in the related Trust, such
Securities will represent the beneficial
ownership interests in such Trust and the
sole source of payment will be the assets
of such Trust. In the case of Securities
that represent debt issued by the related
Issuer, such Securities will be secured by
assets in the related Asset Pool.
Notwithstanding the foregoing, and as to
be described in the related Prospectus
Supplement, certain types of credit
enhancement, such as a letter

6
<PAGE> 9

of credit, financial guaranty insurance
policy Residual Value Insurance (as
defined herein )or reserve fund may
constitute a full recourse obligation of
the issuer of such credit enhancement.

General Nature of the Securities as Investments.

All of the Securities offered pursuant to
this Prospectus and the related Prospectus
Supplement will be rated in one of the
four highest rating categories by one or
more Rating Agencies (as defined herein).

Additionally, the Securities offered
pursuant to this Prospectus and the
related Prospectus Supplement generally
will be of the fixed-income type having a
principal balance (or certificate balance)
and a specified interest rate ("Interest
Rate"). Securities may either represent
beneficial ownership interests in the
related Receivables held by the related
Trust or debt secured by certain assets of
the related Issuer.

Each series or Class of Securities offered
pursuant to this Prospectus may have a
different Interest Rate, which may be a
fixed or adjustable Interest Rate. The
related Prospectus Supplement will specify
the Interest Rate for each series or Class
of Securities described therein, or the
initial Interest Rate and the method for
determining subsequent changes to the
Interest Rate.

A series may include one or more Classes
of Securities ("Strip Securities")
entitled (i) to principal distributions,
with disproportionate, nominal or no
interest distributions, or (ii) to
interest distributions, with
disproportionate, nominal or no principal
distributions. In addition, a Series of
Securities may include two or more Classes
of Securities that differ as to timing,
sequential order, priority of payment,
Interest Rate or amount of distribution of
principal or interest or both, or as to
which distributions of principal or
interest or both on any Class may be made
upon the occurrence of specified events,
in accordance with a schedule or formula,
or on the basis of collections from
designated portions of the related pool of
Receivables. Any such series may include
one or more Classes of Securities
("Accrual Securities"), as to which
certain accrued interest will not be
distributed but rather will be added to
the principal balance (or nominal balance,
in the case of Accrual Securities which
are also Strip Securities) thereof on each
Payment Date, as hereinafter defined, or
in the manner described in the related
Prospectus Supplement.

If so provided in the related Prospectus
Supplement, a series may include one or
more other Classes of Securities
(collectively, the "Senior Securities")
that are senior to one or more other
Classes of Securities (collectively, the
"Subordinate Securities") in respect of
certain distributions of principal and
interest and allocations of losses on
Receivables.

7
<PAGE> 10

In addition, certain Classes of Senior (or
Subordinate) Securities may be senior to
other Classes of Senior (or Subordinate)
Securities in respect of such
distributions or losses.

General Payment Terms of Securities.

As provided in the related Trust Agreement
and as described in the related Prospectus
Supplement, the holders of the Securities
("Securityholders") will be entitled to
receive payments on their Securities on
specified dates (each, a "Payment Date").
Payment Dates with respect to Securities
will occur monthly, quarterly or
semi-annually, as described in the related
Prospectus Supplement.

The related Prospectus Supplement will
describe a date (the "Record Date")
preceding such Payment Date, as of which
the Trustee or its paying agent will fix
the identity of the Securityholders for
the purpose of receiving payments on the
next succeeding Payment Date. As
described in the related Prospectus
Supplement, the Payment Date will be a
specified day of each month, commonly the
tenth, fifteenth or twenty-fifth day of
each month (or, in the case of
quarterly-pay Securities, the tenth,
fifteenth or twenty-fifth day of every
third month; and in the case of
semi-annual pay Securities, the tenth,
fifteenth or twenty-fifth day of every
sixth month) and the Record Date will be
the close of business as of the last day
of the calendar month that precedes the
calendar month in which such Payment Date
occurs.

As more fully described in the related
Prospectus Supplement, each Trust
Agreement will describe a period (each, a
"Remittance Period") preceding each
Payment Date (for example, in the case of
monthly-pay Securities, the calendar month
preceding the month in which a Payment
Date occurs). As more fully described in
the related Prospectus Supplement,
collections received on or with respect to
the related Receivables constituting an
Asset Pool during a Remittance Period will
be required to be remitted by the Servicer
to the related Trustee prior to the
related Payment Date and will be used to
fund payments to Securityholders on such
Payment Date. As may be described in the
related Prospectus Supplement, the related
Trust Agreement may provide that all or a
portion of the payments collected on or
with respect to the related Receivables
may be applied by the related Trustee to
the acquisition of additional Receivables
during a specified period (rather than be
used to fund payments of principal to
Securityholders during such period), with
the result that the related Securities
will possess an interest-only period, also
commonly referred to as a revolving
period, which will be followed by an
amortization period. Any such interest
only or revolving period may, upon the
occurrence of certain events to be
described in the related Prospectus
Supplement, terminate prior to the end of
the specified period and result in the
earlier than expected amortization of the
related Securities.

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<PAGE> 11

In addition, and as may be described in
the related Prospectus Supplement, the
related Trust Agreement may provide that
all or a portion of such collected
payments may be retained by the Trustee
(and held in certain temporary
investments, including Receivables
satisfying the criteria more fully
described in the related Prospectus
Supplement) for a specified period prior
to being used to fund payments of
principal to Securityholders. Such
retention and temporary investment by the
Trustee of such collected payments may be
required by the related Trust Agreement
for the purpose of (a) slowing the
amortization rate of the related
Securities relative to the rent payment
schedule of the related Receivables, or
(b) attempting to match the amortization
rate of the related Securities to an
amortization schedule established at the
time such Securities are issued. Any such
feature applicable to any Securities may
terminate upon the occurrence of events to
be described in the related Prospectus
Supplement, resulting in distributions to
the specified Securityholders and an
acceleration of the amortization of such
Securities.

As more fully specified in the related
Prospectus Supplement, neither the
Securities nor the underlying Receivables
will be guaranteed or insured by any
governmental agency or instrumentality or
the Company, First Sierra, the Servicer,
any Lessor, any Trustee, or any of their
affiliates.

No Investment Companies . . . . Neither the Company nor any Trust will
register as an "investment company" under
the Investment Company Act of 1940, as
amended (the "Investment Company Act").

The Company's Interest . . . . With respect to each Trust, the "Company's
Interest" at any time represents the
rights to the related Asset Pool in excess
of the Securityholders' interest of all
series then outstanding that were issued
by such Trust. The Company's Interest in
any Asset Pool will fluctuate as the
aggregate Discounted Contract Balance of
such Asset Pool changes from time to time.
A portion of the Company's interest may be
sold separately in one or more public or
private transactions.

The Asset Pools . . . . . . . . Each Asset Pool will include Receivables
with respect to which the related
Contracts are "chattel paper" within the
meaning of the Uniform Commercial Code, as
in effect in the relevant jurisdiction,
and the related Vehicles are subject to
federal or state registration or titling
requirements under the motor vehicle laws
of such jurisdiction. If and to the
extent specified in the related Prospectus
Supplement, credit enhancement with
respect to an Asset Pool or any class of
Securities may include any one or more of
the following: a Policy issued by an
insurer specified in the related
Prospectus Supplement, a reserve account,
letters of credit, credit or liquidity
facilities, repurchase obligations, third
party payments or other support, cash
deposits or other arrangements. In
addition

9
<PAGE> 12

to or in lieu of the foregoing, credit
enhancement may be provided by means of
subordination, cross-support among the
Receivables or over- collateralization.
See "Description of the Trust Agreements
-- Credit Enhancements." The Contracts
are obligations for the purchase of the
Vehicles, or evidence borrowings used to
acquire the Vehicles.

As specified in the related Prospectus
Supplement, the Contracts may consist of
any combination of Rule of 78s Contracts,
Fixed Value Contracts or Simple Interest
Contracts. Generally, "Rule of 78s
Contracts" provide for fixed level monthly
payments which will amortize the full
amount of the Contract over its term. The
Rule of 78s Contracts provide for
allocation of payments according to the
"sum of periodic balances" or "sum of
monthly payments" method (the "Rule of
78s"). Each Rule of 78s Contract provides
for the payment by the Obligor of a
specified total amount of payments,
payable in monthly installments on the
related due date, which total represents
the principal amount financed and finance
charges in an amount calculated on the
basis of a stated annual percentage rate
("APR") for the term of such Contract.
The rate at which such amount of finance
charges is earned and, correspondingly,
the amount of each fixed monthly payment
allocated to reduction of the outstanding
principal balance of the related Contract
are calculated in accordance with the Rule
of 78s. Under the Rule of 78s, the
portion of each payment allocable to
interest is higher during the early months
of the term of a Contract and lower during
later months than that under a constant
yield method for allocating payments
between interest and principal.
Notwithstanding the foregoing, as
specified in the related Prospectus
Supplement, all payments received by the
related Servicer on or in respect of the
Rule of 78s Contracts may be allocated on
an actuarial basis.

Generally, the "Fixed Value Contracts"
provide for monthly payments with a final
fixed value payment which is greater than
the scheduled monthly payments. A Fixed
Value Contract provides for amortization
of the loan over a series of fixed level
payment monthly installments, but also
requires a final fixed value payment due
after payment of such monthly installments
which may be satisfied by (i) payment in
full in cash of such amount, (ii) transfer
of the vehicle to the related Originator
provided certain conditions are satisfied
or (iii) refinancing the fixed value
payment in accordance with certain
conditions. With respect to Fixed Value
Contracts, as specified in the related
Prospectus Supplement, only the principal
and interest payments due prior to the
final fixed value payment and not the
final fixed value payment may be included
initially in the related Asset Pool.

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<PAGE> 13

installment of interest which is
calculated on the basis of the outstanding
principal balance of the receivable
multiplied by the stated APR and further
multiplied by the period elapsed (as a
fraction of a calendar year) since the
preceding payment of interest was made.
As payments are received under a Simple
Interest Contract, the amount received is
applied first to interest accrued to the
date of payment and the balance is applied
to reduce the unpaid principal balance.
Accordingly, if an Obligor pays a fixed
monthly installment before its scheduled
due date, the portion of the payment
allocable to interest for the period since
the preceding payment was made will be
less than it would have been had the
payment been made as scheduled, and the
portion of the payment applied to reduce
the unpaid principal balance will be
correspondingly greater. Conversely, if
an Obligor pays a fixed monthly
installment after its scheduled due date,
the portion of the payment allocable to
interest for the period since the
preceding payment was made will be greater
than it would have been had the payment
been made as scheduled, and the portion of
the payment applied to reduce the unpaid
principal balance will be correspondingly
less. In either case, the Obligor pays a
fixed monthly installment until the final
scheduled payment date, at which time the
amount of the final installment is
increased or decreased as necessary to
repay the then outstanding principal
balance.

If an Obligor elects to prepay a Rule of
78s Contract in full, it is entitled to a
rebate of the portion of the outstanding
balance then due and payable attributable
to unearned finance charges. If a Simple
Interest Contract is prepaid, rather than
receive a rebate, the Obligor is required
to pay interest only to the date of
prepayment. The amount of a rebate under
a Rule of 78s Contract calculated in
accordance with the Rule of 78s will
always be less than had such rebate been
calculated on an actuarial basis and
generally will be less than the remaining
scheduled payments of interest that would
be due under a Simple Interest Contract
for which all payments were made on
schedule. Distributions to
Securityholders may not be affected by
Rule of 78s rebates under the Rule of 78s
Contract because pursuant to the related
Prospectus Supplement such distributions
may be determined using the actuarial
method.

The "Discounted Contract Balance" of a
Contract as of any Cut-Off Date is the
present value of all of the remaining
payments scheduled to be made with respect
to such Contract, discounted at a rate
specified in the related Prospectus
Supplement and the Trust Agreement.

The Contracts will consist of closed-end
and/or open-end lease contracts pursuant
to which the related Vehicles were leased.
As specified in the related Prospectus
Supplement, the Lease Contracts are
generally each written for a "capitalized
cost" (which occasionally may be in excess
of the manufacturer's suggested

11
<PAGE> 14

price), plus an implicit finance or lease
charge calculated as an annual percentage
rate (the "APR"), on a constant yield
basis and have an original term of
generally not more than 60 months. The
Contracts provide for equal monthly
payments such that at the end of the
Contract term such capitalized cost has
been amortized to an amount equal to the
fair market value of the related Vehicle
at the end of the term of the Lease
Contract, as estimated at the time of
origination of each Lease Contract (the
"Residual Value"). The amount to which
the original capitalized cost of a Lease
Contract (exclusive of any Residual Value)
has been amortized at any point in time is
referred to herein as its "Outstanding
Principal Balance" and will be equal to
the Net Investment Value of such Lease
Contract at such time.

The "Net Investment Value" of a Contract
will represent the present value of the
related scheduled monthly payments on such
Contract, exclusive of the Residual Value
of the related Vehicle. The Net
Investment Value of a Contract will
decline over time as payments are made on
or in respect of such Lease Contract,
including scheduled payments, prepayments
and liquidations and any required
repurchase (as specified in the related
Prospectus Supplement and Trust Agreement)
of such Lease Contract (and the related
Leased Vehicle) by the Company if certain
representations, warranties or covenants
with respect thereto are breached and are
not cured.

Pre-Funding
Account . . . . . . . . . . . . If so specified in the related Prospectus
Supplement, a portion of the issuance
proceeds of the Securities of a particular
series (such amount, (the "Pre-Funded
Amount") will be deposited in an account
(the "Pre-Funding Account") to be
established with the Trustee, which will
be used to acquire Additional Receivables
from time to time during time period
specified in the related Prospectus
Supplement. Prior to the investment of
the Pre-Funded Amount in Additional
Receivables, such Pre-Funded Amount will
be invested in one or more Eligible
Investments. An "Eligible Investment" is
any of the following, in each case as
determined at the time of the investment
or contractual commitment to invest
therein (to the extent such investments
would not require registration of the
Trust as an investment company pursuant to
the Investment Company Act): (a)
negotiable instruments or securities
represented by instruments in bearer or
registered or book-entry form which
evidence: (i) obligations which have the
benefit of the full faith and credit of
the United States of America, including
depository receipts issued by a bank as
custodian with respect to any such
instrument or security held by the
custodian for the benefit of the holder of
such depository receipt, (ii) demand
deposits or time deposits in, or bankers'
acceptances issued by, any depositary
institution or trust company incorporated
under the laws of the United States of
America or any state thereof and subject
to supervision and examination by Federal
or state banking

12
<PAGE> 15

or depositary institution authorities;
provided that at the time of the Trustee's
investment or contractual commitment to
invest therein, the certificates of
deposit or short-term deposits (if any) or
long-term unsecured debt obligations
(other than such obligations whose rating
is based on collateral or on the credit of
a Person other than such institution or
trust company) of such depositary
institution or trust company has a credit
rating in highest rating category from
each Rating Agency, (iii) certificates of
deposit having a rating in the highest
rating category by the Rating Agencies, or
(iv) investments in money market funds
which are (or which are composed of
instruments or other investments which
are) rated in the highest rating category
by the Rating Agencies; (b) demand
deposits in the name of the Trustee in any
depositary institution or trust company
referred to in clause (a)(ii) above; (c)
commercial paper (having original or
remaining maturities of no more than 270
days) having a credit rating in the
highest rating category by the Rating
Agencies; (d) Eurodollar time deposits
that are obligations of institutions whose
time deposits carry a credit rating in the
highest rating category by the Rating
Agencies; (e) repurchase agreements
involving any Eligible Investment
described in any of clauses (a)(i),
(a)(iii) or (d) above, so long as the
other party to the repurchase agreement
has its long-term unsecured debt
obligations rated in the highest rating
category by the Rating Agencies; and (f)
any other investment with respect to which
the Rating Agencies rating such Securities
indicate will not result in the reduction
or withdrawal of its then-existing rating
of the Securities.Any Eligible Investment
must mature no later than the Business Day
prior to the next Payment Date.

During any Pre-Funding Period, the Company
will be obligated (subject only to the
availability thereof) to acquire from the
Seller and to either transfer to a Trust
or pledge to a Trustee on behalf of
Securityholders, additional Receivables
(the "Additional Receivables") from time
to time during such Pre-Funding Period.
Such Additional Receivables be required to
satisfy certain eligibility criteria more
fully set forth in the related Prospectus
Supplement which eligibility criteria will
be consistent with the eligibility
criteria of the Receivables included in
the Trust Estate as of the issuance date
subject to such exceptions as are
expressly stated in such Prospectus
Supplement.

Although the specific parameters of the
Pre-Funding Account with respect to any
issuance of Securities will be specified
in the related Prospectus Supplement, it
is anticipated that: (a) the Pre-Funding
Period will not exceed 120 days from the
related Closing Date, (b) that the
Additional Leases to be acquired during
the Pre-Funding Period will be subject to
the same representations and warranties as
the Leases included in the related Asset
Pool on the Closing Date (although
additional criteria may also be required
to be satisfied, as described in the
related Prospectus Supplement) and (c)
that the Pre-Funded Amount will not exceed
25% of the

13
<PAGE> 16

principal amount of the Securities issued
pursuant to a particular offering.

Registration of Securities . . Securities may be represented by global
securities registered in the name of Cede
& Co. ("Cede"), as nominee of The
Depository Trust Company ("DTC"), or
another nominee. In such case,
Securityholders will not be entitled to
receive definitive securities representing
such Securityholders' interests, except in
certain circumstances described in the
related Prospectus Supplement. See
"Description of the Securities -- Book
Entry Registration" herein.

Credit Enhancement . . . . . . If and to the extent specified in the
related Prospectus Supplement, credit
enhancement with respect to an Asset Pool
or any class of Securities may include any
one or more of the following: a Policy
issued by an insurer specified in the
related Prospectus Supplement (a "Security
Insurer"), a reserve account, letters of
credit, credit or liquidity facilities,
Residual Value Insurance (as defined
below) third party payments or other
support, cash deposits or other
arrangements. Any form of credit
enhancement will have certain limitations
and exclusions from coverage thereunder,
which will be described in the related
Prospectus Supplement. See "Description
of the Trust Agreements -- Credit
Enhancements." To the extent that
shortfalls in the proceeds of the
Contracts occur which exceed the amount
covered by the credit enhancement or which
are not covered by the credit enhancement
available to a particular Series or Class,
Certificateholders will bear their
allocable share of any deficiencies. See
"Risk Factors - Limited Assets" herein,
and to the extent applicable, in the
related Prospectus Supplement.

Any form of credit enhancement will have
certain limitations and exclusions from
coverage thereunder, which will be
described in the related Prospectus
Settlement. See "Description of the Trust
Agreements - Credit Enhancements."

As specified in the related Prospectus
Supplement, the Company may obtain an
insurance policy (the "Primary Residual
Value Insurance Policy") in respect of the
Residual Values of Vehicles relating to
Lease Contracts which have reached their
scheduled maturities (each a "Matured
Lease Contract"). As specified in the
related Prospectus Supplement, the related
Trustee may be an additional insured under
the Primary Residual Value Insurance
Policy. The Primary Residual Value
Insurance may limit the maximum amount
payable thereunder with respect to each
Vehicle or all Vehicles covered thereunder
in the aggregate.

As specified in the related Prospectus
Supplement, the Company may obtain an
additional insurance policy (the "Excess
Residual Value Insurance Policy" and
together with the Primary Residual

14
<PAGE> 17

Value Insurance Policy, the "Residual
Value Insurance") providing coverage for
losses in respect of the "insured value"
of a covered vehicle in excess of a
deductible of a specified percentage of
the insured value, depending upon the
original term of the related Lease
Contract. With respect to the Vehicles
relating to Lease Contracts, the Excess
Residual Value Insurance Policy is an
excess liability policy and insures the
Residual Values of such Vehicles in excess
of any aggregate limits of the Primary
Residual Value Insurance Policy.
Accordingly, a claim can be made under the
Excess Residual Value Insurance Policy
only after the maximum amount payable
under the Primary Residual Value Insurance
Policy has been exhausted, if ever, and
will cover only those losses remaining
after all amounts in respect of the
Residual Value of a Vehicle relating to a
Lease Contract have been recovered. As
specified in the related Prospectus
Supplement, the related Trustee may be a
loss payee under the Excess Residual
Insurance Policy.

Cross-Collateralization . . . As described in the related Trust
Agreement and the related Prospectus
Supplement, the source of payment for
Securities of each series will be the
assets of the related Asset Pool only.

However, as may be described in the
related Prospectus Supplement, a series or
class of Securities may include the right
to receive moneys from a common pool of
credit enhancement which may be available
for more than one series of Securities,
such as a master reserve account, master
insurance policy or a master collateral
pool consisting of similar Receivables.
Notwithstanding the foregoing, and as
described in the related Prospectus
Supplement, no payment received on any
Receivable held by any Trust may be
applied to the payment of Securities
issued by any other Trust (except to the
limited extent that certain collections in
excess of the amounts needed to pay the
related Securities may be deposited in a
common master reserve account or an
overcollateralization account that
provides credit enhancement for more than
one series of Securities issued pursuant
to the related Trust Agreement).

Mandatory Repurchase
of Certain Contracts . . . . . As more fully described in the related
Prospectus Supplement, the Company will be
obligated to acquire from the related
Asset Pool any Receivable transferred
pursuant to a Pooling Agreement or pledged
pursuant to an Indenture if the interest
of the Securityholders therein is
materially adversely affected by a breach
of any representation or warranty made by
the Company or the Seller with respect to
such Receivable, which breach has not been
cured. The Seller will be obligated to
acquire any such Receivable from the
Company pursuant to the related
Contribution and Sale Agreement
contemporaneously with the Company's
acquisition of any such Receivable from
the applicable Asset Pool. The obligation
of the Company to acquire any such
Receivable with

15
<PAGE> 18

respect to which the Seller has breached a
representation or warranty is subject to
the Seller's acquisition of such
Receivable from the Company. In addition,
if so specified in the related Prospectus
Supplement, the Company may from time to
time reacquire certain Receivables or
substitute other Receivables for such
Receivable held by an Asset Pool, subject
to specified conditions set forth in the
related Trust Agreement and Conveyance
Agreement.

Servicer's Compensation The Servicer shall be entitled to receive
a fee for servicing the Contracts of each
Asset Pool equal to a specified percentage
of the Discounted Contract Balance of such
Contracts, as set forth in the related
Prospectus Supplement. See "Description
of the Trust Agreements--Servicing
Compensation" herein and in the related
Prospectus Supplement.

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<PAGE> 19

Certain Legal Aspects
of the Contracts . . . . . . . With respect to the transfer of the
Contracts to the related Trust pursuant to
a Pooling Agreement or the pledge of the
related Company's right, title and
interest in and to such Contracts on
behalf of Securityholders pursuant to an
Indenture, the Company will warrant, in
each case, that such transfer is either a
valid transfer and assignment of the
Contracts to the Trust or the grant of a
security interest in the Contracts. Each
Prospectus Supplement will specify what
actions will be taken by which parties as
will be required to perfect either the
Issuer's or the Securityholders' security
interest in the Contracts. The Depositor
may also warrant that, if the transfer or
pledge by it to the Trust or to the
Securityholders is deemed to be a grant to
the Trust or to the Securityholders of a
security interest in the Contracts, then
the Company or the Securityholders will
have a first priority perfected security
interest therein, except for certain liens
which have priority over previously
perfected security interests by operation
of law, and, with certain exceptions, in
the proceeds thereof. Similar security
interest and priority representations and
warranties, as described in the related
Prospectus Supplement, may also be made by
the Depositor with respect to the
Vehicles.

In connection with Lease Contracts, the
Company will be required (to the extent
not done previously) to deliver to the
appropriate motor vehicle agency office in
the related states duly completed and
executed applications for (a) transfer of
the certificates of title to the related
Vehicles from the Company to either a
Finance Subsidiary of the Company or to
the related Trust, (b) release of any
prior liens recorded on such certificates
of title and (c) in the event that the
Vehicles are titled in the name of a
Finance Subsidiary and not the Trust, a
notation of lien in favor of the related
Trustee on such certificates of title,
except to the extent that the laws of any
particular state do not require such a
lien notation to be made to perfect the
Trustee's security interest. Various
liens and interests could be imposed upon
all or part of the related Asset Pool
that, by operation of law, would take
priority over the Trustee's interest
therein, however perfected. Such liens
include tax liens arising against the
Company, the Finance Subsidiary or the
Issuer, mechanic's, repairmen's
garagemen's and motor vehicle accident
liens and certain liens for personal
property taxes, in each case arising with
respect to a particular Vehicle, and liens
arising under various state and federal
criminal statutes. See "Certain Legal
Aspects of the Receivables."

Perfection of security interests in
automobiles and light duty trucks is
generally governed by the vehicle
registration or titling laws of the state
in which each vehicle is registered or
titled. In most states, a security
interest in a vehicle is perfected by
notation of the secured party's lien on
the vehicle's certificate of title. Each
Prospectus Supplement will specify
whether, due to the administrative burden
and expense, the Company will amend any

17
<PAGE> 20

certificate of title relating to Loan
Contracts to identify the Company or the
Trustee as the new secured party on the
certificates of title relating to the
Vehicles. See "Certain Legal Aspects of
the Receivables."

Each Prospectus Supplement will specify if
the related Company has filed or will be
required to file UCC (as herein defined)
financing statements identifying the
Vehicles as collateral pledged in favor of
the related Trust or Trustee on behalf of
the Securityholders. In the absence of
such filings any security interest in the
Vehicles will not be perfected in favor of
the related Trust or Trustee. See
"Certain Legal Aspects of the
Receivables."

Optional Termination . . . . . The Servicer, the Company, or, if
specified in the related Prospectus
Supplement, certain other entities may, at
their respective options, effect early
retirement of a series of Securities under
the circumstances and in the manner set
forth herein under "The Trust Agreement -
Termination; Retirement of Securities" and
in the related Prospectus Supplement.

Mandatory Termination . . . . . The Trustee, the Servicer or certain other
entities specified in the related
Prospectus Supplement may be required to
effect early retirement of all or any
portion of a series of Securities by
soliciting competitive bids for the
purchase of the related Asset Pool or
otherwise, under other circumstances and
in the manner specified in "The Trust
Agreement - Termination; Retirement of
Securities" and in the related Prospectus
Supplement.

Tax Considerations . . . . . . Securities of each series offered hereby
will, for federal income tax purposes,
constitute either (i) interests in a Trust
treated as a grantor trust under
applicable provisions of the Code
("Grantor Trust Securities"), (ii) debt
issued by a Trust or by the Company ("Debt
Securities") or (iii) interests in a Trust
which is treated as a partnership
("Partnership Interests"). See "Certain
Tax Considerations."

The Prospectus Supplement for each series
of Securities will summarize, subject to
the limitations stated therein, federal
income tax considerations relevant to the
purchase, ownership and disposition of
such Securities.

Investors are advised to consult their tax
advisors and to review "Certain Federal
and State Income Tax Consequences" herein
and in the related Prospectus Supplement.

ERISA Considerations . . . . . The Prospectus Supplement for each series
of Securities will summarize, subject to
the limitations discussed therein,
considerations under the Employee
Retirement Income Security Act of 1974, as
amended ("ERISA"), relevant to the
purchase of such Securities by employee
benefit plans and individual retirement

18
<PAGE> 21

accounts. See "ERISA Considerations" in
the related Prospectus Supplement.

Ratings . . . . . . . . . . . . Each Class of Securities offered pursuant
to this Prospectus and the related
Prospectus Supplement will be rated in one
of the four highest rating categories by
one or more "national statistical rating
organizations", as defined in the
Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and commonly
referred to as "Rating Agencies". Such
ratings will address, in the opinion of
such Rating Agencies, the likelihood that
the Issuer will be able to make timely
payment of all amounts due on the related
Securities in accordance with the terms
thereof. Such ratings will neither
address any prepayment or yield
considerations applicable to any
Securities nor constitute a recommendation
to buy, sell or hold any Securities.

The ratings expected to be received with
respect to any Securities will be set
forth in the related Prospectus
Supplement.

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<PAGE> 22

RISK FACTORS

Prospective investors should consider, among other things, the
following factors in connection with the purchase of the Securities:

LIMITED LIQUIDITY. There can be no assurance that a secondary market
for the Securities of any Series or Class will develop or, if it does develop,
that it will provide Securityholders with liquidity of investment or that it
will continue for the life of such Securities. The Prospectus Supplement for
any series of Securities may indicate that an underwriter specified therein
intends to establish and maintain a secondary market in such Securities;
however, no underwriter will be obligated to do so. The Securities will not be
listed on any securities exchange.

LIMITED ASSETS. Each Asset Pool will not have, nor is it permitted or
expected to have, any significant assets or sources of funds other than the
related Receivables and, to the extent provided in the related Prospectus
Supplement, the related reserve account(s) and any other credit enhancement.
The Certificates will represent beneficial interests in the related Trust only
and will not represent interests in or obligations of the Company, the
Servicer, the Seller or any of their respective affiliates other than the
related Trust. The sole source of payment with respect to any Certificate will
be the assets of the related Trust. The Notes will represent obligations of
the related Issuer only and will not represent interests in or obligations of
the Company (unless the Company is the Issuer), the Servicer, the Seller or any
of their respective affiliates other than the related Issuer. The Notes will
be secured by the assets of the related Asset Pool, and the sole source of
payment with respect to any Note will be the assets of the related Asset Pool.
No Securities will be insured or guaranteed by the Seller, the Company, the
Servicer or the applicable Trustee(s), except as set forth in the related
Prospectus Supplement. Consequently, holders of Securities must rely for
repayment primarily upon payments on the related Receivables and, if and to the
extent available, amounts on deposit in the reserve account(s), if any, and any
other credit enhancement, all as specified in the related Prospectus
Supplement.

SUBORDINATION. To the extent specified in the related Prospectus
Supplement, distributions of interest and principal on one Class or Series of
Securities may be subordinated in priority of payment to interest and principal
due on other Classes or Series of Securities. Such Class or Series of
Securities could experience delays and or reductions in the payment of
principal and/or interest to the extent that collections and other amounts
available to make distributions to the senior Class, Classes or Series of
Securities are insufficient to cover the required amount to be distributed to
such senior Class, Classes or Series. The particular terms of any
subordination will be more fully set forth in the related Prospectus
Supplement.

PERFECTION OF THE TRUSTEE'S INTERESTS. Contracts. The transfer of the
Contracts by the Company to the Trustee pursuant to the related Trust
Agreement, the perfection of the security interests in the Contracts and the
enforcement of rights to realize on the Contracts are subject to a number of
federal and state laws, including the UCC as in effect in various states. As
specified in each Prospectus Supplement, the related Servicer will take such
action as is required to perfect the rights of the Trustee in the Contracts.
If, through inadvertence or otherwise, a third party were to purchase
(including the taking of a security interest in) a Contract for new value in
the ordinary course of its business, without actual knowledge of the Trust's
interest, and take possession of a Contract, the purchaser would acquire an
interest in such Contract superior to the interest of the Trust. As further
specified in each Prospectus Supplement, no action will be taken to perfect the
rights of the Trustee in proceeds of the VSI Insurance Policy or of any other
insurance policies covering individual Vehicles or Obligors. Therefore, the
rights of a third party with an interest in such proceeds could prevail against
the rights of the Trust prior to the time such proceeds are deposited by the
related Servicer into a Trust Account. See "Certain Legal Aspects of the
Contracts".

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<PAGE> 23

VEHICLES. The Vehicles subject to Lease Contracts will be titled in
the name of either a Finance Subsidiary (which may be an Originator) or in the
name of the related Trust. In the event that such Leased Vehicles are not
titled in the name of the related Trust, a notation of lien in favor of the
related Trustee on the related certificates of title will be filed except to
the extent described in the related Prospectus Supplement or that the laws of
any particular state do not require such a lien notation to be made to perfect
the Trustee's security interest. See "Certain Legal Aspects of the
Receivables".

VICARIOUS TORT LIABILITY. Although the related Trust will own the
Vehicles subject to Lease Contracts, they will be operated by the related
lessees and their respective invitees. State laws differ as to whether anyone
suffering injury to person or property involving a leased vehicle may bring an
action against the owner of the vehicle merely by virtue of that ownership.

Other state statutes provide that the owner of a motor vehicle that is
subject to a lease having an initial term of at least one year is exempt from
liability for tort claims arising out of the negligent operation of the leased
vehicle or negligent acts of the operator in the event of an accident in which
the leased vehicle is involved if the lessee is required under the lease to
maintain certain specified levels of insurance, and such insurance is in
effect.

Generally, the Contracts contain provisions requiring the lessees to
maintain levels of insurance satisfying applicable state law, and the related
Trust Agreement will require the Servicer to monitor compliance by the lessees
therewith.

Actions by third parties might arise against the owner of a Vehicle
subject to Lease Contracts based on legal theories other than negligence, such
as a product defect or improper vehicle preparation prior to the origination of
the related lease contract. Even if the Issuer were to be the subject of an
action for damages as a result of its ownership of a Vehicle subject to Lease
Contracts, such damages may be covered by the Contingent and Excess Liability
Insurance Policies if, as specified in the related Prospectus Supplement, the
Company is named as a beneficiary of such policies. Although such insurance
coverage is generally in excess of $10 million per claim, with an allowance for
multiple claims in any policy period, in the event that all such insurance
coverage were exhausted and damages were assessed against the Issuer, claims
could be imposed against the assets of the Issuer, however, such claims would
not take priority over any items comprising the Asset Pool to the extent that
the Trustee has a perfected security interest therein. If any such claims were
imposed against the assets of the Issuer, Securityholders could incur a loss on
their investment. See "Certain Legal Aspects of the Receivables -- Vicarious
Tort Liability".

INSURANCE ON VEHICLES. Each Receivable generally requires the related
Obligor to maintain insurance covering physical damage to the Vehicle in an
amount not less than the unpaid principal balance of such Receivable pursuant
to which the Company is named as a loss payee. Since the Obligors select their
own insurers to provide the requisite coverage, the specific terms and
conditions of their policies may vary.

In addition to physical damage insurance which may be required to be
maintained by the Obligors pursuant to the Receivables, each Vehicle, as
specified in the related Prospectus Supplement, may be insured against physical
damage risks by a policy of vendor's single interest physical damage insurance
(the "VSI Insurance Policy") which provides limited coverage (subject

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<PAGE> 24

to deductibles) for, among other things, (i) physical loss or damage from any
external cause to such vehicle and (ii) inability to locate such vehicle or the
related Obligor. The VSI Insurance Policy generally provides coverage in an
amount equal to the lowest of: (i) the actual cash value of such Vehicle at the
time of loss or damage, plus $3,000; (ii) the cost of repair or replacement of
such Vehicle; (iii) the unpaid principal balance, not more than 120 days past
due, computed as of the date of loss, of the related Receivable, less interest,
insurance, finance and other carrying charges; and (iv) $50,000. Accordingly,
recovery under the VSI Insurance Policy may be less than the outstanding
principal and interest due on the related Receivable. In the event of any such
shortfall Securityholders could suffer a loss on their investment.

MATURITY AND PREPAYMENT CONSIDERATIONS. Because the rate of payment of
principal on the Securities will depend, among other things, on the rate of
payment on the Contracts, the rate of payment of principal on the Securities
cannot be predicted. Payments on the Contracts will include scheduled payments
as well as partial and full prepayments (to the extent not replaced with
substitute Contracts), payments upon the liquidation of Defaulted Contracts,
payments upon acquisitions by the Company of Contracts from the related Asset
Pool on account of a breach of certain representations and warranties in the
related Trust Agreement, payments upon an optional acquisition by the Company
of Contracts from the related Asset Pool (any such voluntary or involuntary
prepayment or other early payment of a Contract, a "Prepayment"), and residual
payments. The rate of early terminations of Contracts due to Prepayments and
defaults may be influenced by a variety of economic and other factors,
including, among others, obsolescence, then current economic conditions and tax
considerations. The risk of reinvesting distributions of the principal of the
Securities will be borne by the Securityholders. The yield to maturity on
Strip Securities or Securities purchased at premiums or discounts to par will
be extremely sensitive to the rate of Prepayments on the related Receivables.
In addition, the yield to maturity on certain other types of classes of
Securities, including Strip Securities, Accrual Securities or certain other
Classes in a series including more than one Class of Securities, may be
relatively more sensitive to the rate of prepayment of the related Contracts
than other Classes of Securities.

The Company does not have available to it any statistics as to
prepayment rates historically experienced in the equipment leasing industry and
the Seller does not accumulate information related to Prepayments with respect
to its portfolio. As a matter of practice, the Seller does not originate
Contracts which permit Prepayments. Further, in the ordinary course of
dealings, the Seller does not permit Prepayments at the request of a Lessee.
Additionally, to the extent that one or more Contracts having large Discounted
Contract Balances are prepaid, the prepayment experience of the Seller's
portfolio would not necessarily be indicative of the actual rate of Prepayments
experienced by any particular Asset Pool. The rate of Prepayments of Contracts
cannot be predicted and is influenced by a wide variety of economic, social,
and other factors, including prevailing interest rates, the availability of
alternate financing and local and regional economic conditions. Therefore, no
assurance can be given as to the level of Prepayments that an Asset Pool will
experience.

Securityholders should consider, in the case of Securities purchased at
a discount, the risk that a slower than anticipated rate of Prepayments on the
Receivables could result in an actual yield that is less than the anticipated
yield and, in the case of any Securities purchased at a premium, the risk that
a faster than anticipated rate of Prepayments on the Receivables could result
in an actual yield that is less than the anticipated yield.

EFFECT OF RESTRICTIONS ON RECOVERIES IN AMOUNTS AVAILABLE TO
SECURITYHOLDERS. The Contracts provide that the obligations of the Lessees
thereunder are absolute and unconditional, regardless of any defense, set-off
or abatement which the Lessee may have against the Seller or any other person
or entity whatsoever unless otherwise described in the related Prospectus
Supplement,. The Seller will warrant that no claims or defenses have been
asserted or threatened

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<PAGE> 25

with respect to the Contracts and that all requirements of applicable law with
respect to the Contracts have been satisfied.

In the event that the Company or the Trustee must rely on repossession
and disposition of Equipment to recover scheduled payments due on Defaulted
Contracts, the Issuer may not realize the full amount due on a Contract (or may
not realize the full amount on a timely basis). Other factors that may affect
the ability of the Issuer to realize the full amount due on a Contract include
whether financing statements to perfect the security interest in the Equipment
had been filed, depreciation, obsolescence, damage or loss of any item of
Equipment, and the application of Federal and state bankruptcy and insolvency
laws. As a result, the Securityholders may be subject to delays in receiving
payments and suffer loss of their investment in the Securities.

RISKS RELATED TO INSOLVENCY AND BANKRUPTCY MATTERS. The Company has
taken steps in structuring the transactions contemplated hereby that are
intended to ensure that the voluntary or involuntary application for relief by
the Seller under the United States Bankruptcy Code or similar applicable state
laws ("Insolvency Laws") will not result in consolidation of the assets and
liabilities of the Company with those of the Seller. These steps include the
creation of the Company as a separate, limited-purpose subsidiary pursuant to a
certificate of incorporation containing certain limitations (including
restrictions on the nature of the Company's business and a restriction on the
Company's ability to commence a voluntary case or proceeding under any
Insolvency Law without the prior unanimous affirmative vote of all of its
directors). However, there can be no assurance that the activities of the
Company would not result in a court's concluding that the assets and
liabilities of the Company should be consolidated with those of the Seller in a
proceeding under any Insolvency Law.

In addition, while the Seller is the Servicer, cash collections held by
the Seller may, subject to certain conditions, be commingled and used for the
benefit of the Seller prior to each Payment Date and, in the event of the
bankruptcy of the Seller, the Company, a Trust or Trustee may not have a
perfected interest in such collections.

The Seller believes that the transfer of the Receivables by Seller to
the Company should be treated as a valid assignment, transfer and conveyance of
the Receivables. However, in the event of an insolvency of the Seller, a
court, among other remedies, could attempt to recharacterize the transfer of
the Receivables by the Seller to the Company as a borrowing by the Seller from
the Company or the related Securityholders, secured by a pledge of such
Receivables. Such an attempt, even if unsuccessful, could result in delays in
payments on the Securities. If such an attempt were successful, a court, among
other remedies, could elect to accelerate payment of the Securities and
liquidate the Receivables, with the Securityholders entitled to the then
outstanding principal amount thereof and interest thereon at the applicable
Security Interest Rate to the date of payment. Thus, the Securityholders could
lose the right to future payments of interest and might incur reinvestment
losses. As more fully described in the related Prospectus Supplement, in the
event the Company is rendered insolvent, the Trustee for a Trust, in accordance
with the Trust Agreement, will promptly sell, dispose of or otherwise liquidate
the related Receivables in a commercially reasonable manner on commercially
reasonable terms. The proceeds from any such sale, disposition or liquidation
of such Receivables will be treated as collections on such Receivables. If the
proceeds from the liquidation of the Receivables and any amount available from
any credit enhancement, if any, are not sufficient to pay Securities of the
related series in full, the amount of principal returned to such
Securityholders will be reduced and such Securityholders will incur a loss.

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<PAGE> 26

threatened with respect to the Receivables and that all requirements of
applicable law with respect to the Receivables have been satisfied.

CONSUMER PROTECTION LAWS. Numerous federal and state consumer
protection laws, including the federal Consumer Leasing Act of 1976 and
Regulation M promulgated by the Board of Governors of the Federal Reserve
System ("Regulation M"), impose requirements on leases such as the Contracts.
These laws apply to the Originator as the original lessor and may also apply to
the Issuer as assignee of the Contracts or to the Trustee if it acts to enforce
its security interest in the Contracts. The failure by the Originator to
comply with such requirements may give rise to liabilities on the part of the
Originator, the Issuer and the Trustee, and claims by such parties may be
subject to set-off as a result of such noncompliance. Certain state laws that
provide vehicle users certain rights in respect of substandard vehicles
(commonly referred to as "Lemon Laws") may apply to one or more of the Leased
Vehicles. A successful claim under an applicable Lemon Law could result in,
among other things, the termination of the related Contract or require the
refunding of a portion of prior scheduled monthly payments. See "Certain Legal
Aspects of the Receivables - Consumer Protection Laws".

FUTURE LEVELS OF DELINQUENCIES UNCERTAIN. There can be no assurance
that the levels of delinquencies and losses experienced in recent years by the
Seller on its equipment lease portfolio are indicative of the performance of
the Contracts included in any Asset Pool or that such levels will continue in
the future. Delinquencies and losses could increase significantly for various
reasons, including changes in the federal income tax laws, changes in the
local, regional or national economies or due to other events.

CERTAIN CONSIDERATIONS RELATING TO BOOK-ENTRY REGISTRATION. Issuance
of the Securities in book-entry form may reduce the liquidity of such
Securities in the secondary trading market since investors may be unwilling to
purchase Securities for which they cannot obtain definitive physical securities
representing such Securityholders' interests, except in certain circumstances
described in the related Prospectus Supplement.

Since transactions in Securities will, in most cases, be able to be
effected only through DTC, direct or indirect participants in DTC's book-entry
system ("Direct Participants" or "Indirect Participants") or certain banks, the
ability of a Securityholder to pledge a Security to persons or entities that do
not participate in the DTC system, or otherwise to take actions in respect to
such Securities, may be limited due to lack of a physical security representing
the Securities.

Securityholders may experience some delay in their receipt of
distributions of interest on and principal of the Securities since
distributions may be required to be forwarded by the Trustee to DTC and, in
such case, DTC will be required to credit such distributions to the accounts of
its Participants which thereafter will be required to credit them to the
accounts of the applicable class of Securityholders either directly or
indirectly through Indirect Participants. See "Description of the Securities
- -- Book Entry Registration."

RATING OF SECURITIES SUBJECT TO CHANGE. The rating of Securities
credit enhanced by a letter of credit, financial guaranty insurance policy,
reserve fund, credit or liquidity facilities, cash deposits or other forms of
credit enhancement (collectively "Credit Enhancement") will depend primarily on
the creditworthiness of the issuer of such external Credit Enhancement device
(a "Credit Enhancer"). Any reduction in the rating assigned to the
claims-paying ability of the related Credit Enhancer to honor its obligations
pursuant to any such Credit Enhancement below the rating initially given to the
Securities would likely result in a reduction in the rating of the Securities.

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<PAGE> 27

RISKS RESULTING FROM FAILURE TO COMPLY WITH CERTAIN CONSUMER PROTECTION
LAWS. Numerous federal and state consumer protection laws, including the
Consumer Leasing Act of 1976 and Regulation M promulgated by the Board of
Governors of the Federal Reserve System impose requirements on leases such as
the Leases. These laws apply to the Seller as the original lessor and may also
apply to each Issuer as assignee of the Leases or to the Trustee if it acts to
enforce its security interest in the Leases. The failure by the Seller to
comply with such requirements may give rise to liabilities on the part of the
Seller, the Issuer and the Trustee, and claims by such parties may be subject
to set-off as a result of such noncompliance. The Seller will warrant in the
related Contribution and Sale Agreement (which warranties will be assigned to
the related Trust, if any) that the Leases are not subject to any right of
recession, set-off, counterclaim or defense and that the Leases did not, at the
time the Leases were made, violate state or federal law. The Seller will be
obligated to repurchase any Leases as to which such warranty has been breached
which breach has a material adverse effect on the interests of the
Securityholders in the affected Leases. See "Description of the Trust
Agreements."

TRANSFER OF SERVICING MAY DELAY PAYMENTS. If the Seller were to cease
acting as Servicer, delays in processing payments on the Receivables and
information in respect thereof could occur and result in delays in payments to
the Securityholders.

RISKS ASSOCIATED WITH INABILITY OF SELLER TO TRANSFER ADDITIONAL
RECEIVABLES TO COMPANY. In connection with the transfer of Receivables by the
Seller to the Company, the Seller will make representations and warranties with
respect to certain matters relating to such Receivables. In certain
circumstances, the Company and the Seller will be required to acquire
Receivables from the related Asset Pool with respect to which such
representations and warranties have been breached. In the event that the
Seller is incapable of complying with its reacquire obligations and no other
party is obligated to perform or satisfy such obligations, Securityholders may
be subject to delays in receiving payments and suffer loss of their investment
in the Securities.

CERTAIN RISKS ASSOCIATED WITH GEOGRAPHIC OR OTHER CONCENTRATIONS OF
CONTRACTS. As more fully set forth in the related Prospectus Supplement, the
Contracts constituting a particular Asset Pool may be concentrated such that
lessees in a particular geographic region, a particular type of equipment or a
particular lessee constitutes a significant portion of the Asset Pool. To the
extent Adverse economic conditions were particularly severe in such geographic
region or industry or in the event a lessee under a large amount of Contracts
were to experience financial difficulties the delinquency and default
experience of the Asset Pool could be adversely impacted.

CERTAIN RISKS ASSOCIATED WITH PRE-FUNDING ACCOUNT. In the event the
Company is unable to transfer Contracts with an Aggregate Discounted Contract
Balance equal to the Pre-Funded Amount prior to the expiration of the Pre-
Funding Period, Securityholders will experience a prepayment equal to their
allocable share (as more fully described in the related Prospectus Supplement)
of the uninvested Pre-Funded Amount. Such prepayment may reduce the expected
yield to investors. In addition, due to market fluctuations, investors may be
unable to reinvest such prepayment amounts in similarly yielding investments.

CERTAIN RISKS RELATING TO DIFFERING UNDERWRITING CRITERIA. The Leases
included in a particular Asset Pool may have been purchased by First Sierra
from one or more lessors pursuant to its Portfolio Acquisition Program. To the
extent described in the related Prospectus Supplement, certain Leases included
in a particular Asset Pool may have been originated using underwriting criteria
different from that of First Sierra's. However, the Leases included in a
particular Asset Pool will satisfy the criteria set forth in the related
Prospectus Supplement.

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<PAGE> 28

WAIVER OF RIGHT TO INSTITUTE PROCEEDING AGAINST COMPANY. Each
Securityholder by its purchase of Securities are deemed by their purchase of
such Securities to have covenanted that they will not at any time institute
against the Company any bankruptcy, reorganization or other proceeding under
any Insolvency Law.

USE OF PROCEEDS

The proceeds from the sale of the Securities of a given series will be
applied by the related Issuer to the acquisition of the related Receivables or
may be transferred to the Seller in connection with the conveyance of the
Receivables. The Company expects that it will make additional sales of
securities similar to the Securities from time to time, but the timing and
amount of any such additional offering will be dependent upon a number of
factors, including the volume of Contracts acquired by the Company, prevailing
interest rates, availability of funds and general market conditions.

THE ISSUERS

The Securities offered hereby will be issued either by (i) the Company
or (ii) a Trust (which may be an owner trust or a trust) established by the
Company pursuant to a Pooling Agreement or a Trust Agreement. For purposes of
this Prospectus and the related Prospectus Supplement, the Company or the Trust
issuing the related Securities shall be referred to as the "Issuer" with
respect to such Securities. Each Trust may issue Certificates and, if it is an
owner trust, Notes. The Company may issue and sell only Notes hereunder. The
Asset Pool related to each Trust will be formed and transferred to such Trust
pursuant to the related Pooling Agreement and, in the case of Notes issued by
Company, the related Asset Pool will be formed and pledged to the related
Trustee pursuant to the related Indenture.

To the extent that a Trust in an owner trust (an "Owner Trust"), it
will be organized as a business trust to be formed in accordance with the laws
of the State of Delaware, pursuant to a Trust Agreement, solely for the purpose
of effectuating the transactions described herein and in the related Prospectus
Supplements. Prior to formation, each such Trust will have had no assets or
obligations and no operating history. Upon formation, each such Trust will not
engage in any business activity other than (a) acquiring, managing and holding
the related Leases, (b) issuing the related Securities, (c) making
distributions and payments thereon and (d) engaging in those activities,
including entering into agreements, that are necessary, suitable or convenient
to accomplish the foregoing or are incidental thereto or connected therewith.
Such Owner Trust may issue Certificates pursuant to a Pooling Agreement or
issue Notes pursuant to an Indenture. The terms of any such issuance are more
fully described herein and may be fully in the related Prospectus Supplement.

THE ASSET POOLS

As specified in the related Prospectus Supplement, the
Contracts will consist of Loan Contracts and Lease Contracts.

LEASE CONTRACTS. The Lease Contracts are generally written for an
original term of not more than 60 months, for a "capitalized cost" (which
occasionally may be in excess of the manufacturer's suggested price), plus an
implicit finance or lease charge. The Lease Contracts are generally written on
a constant yield basis and provide for equal monthly payments, such that

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<PAGE> 29

at the end of the lease term the capitalized cost has been amortized to an
amount equal to the Residual Value of the related Vehicle.

With respect to each Lease Contract that is a closed-end lease, at the
end of its term, if the lessee does not elect to purchase the related Vehicle
upon exercise of the purchase option contained in the Lease Contract, the
lessee is required to return the Vehicle, at which time it will then owe only
such incidental charges for excess mileage, excessive wear and use and other
items as may be due under such Lease Contract. In contrast, under each Lease
Contract that is an open-end lease, the lessee is also obligated to pay at the
end of the lease term any deficit between the fair market value of the leased
vehicle at that time and the Residual Value established at the time of
origination of such lease.

Generally, each lessee is permitted to purchase the related Vehicle at
the end of the term of the related Lease Contract. The purchase price is
generally a fixed dollar amount equal to the Residual Value plus any applicable
taxes and all other incidental charges which may be due under the Lease
Contract. In addition, each Contract generally allows the related lessee
voluntarily to terminate such Contract by paying certain miscellaneous charges
and a termination amount more fully described below.

In most instances, the Lease Contracts are not expected to run to their
full terms. For example, from time to time there are incentive programs for
dealers to trade customers under existing leases with remaining terms of less
than one year into new lease contracts. In so doing, the dealer is able to
keep the customer, sell a new car pursuant to a new lease contract and obtain a
used car for resale.

Each Contract generally provides that the lessor may terminate the
Lease Contract and repossess the leased Vehicle in the event of a default by
the lessee. Events of default under a Lease Contract may include, but are not
limited to, failure to make payment when due, certain events of bankruptcy or
insolvency, failure to maintain the insurance required by the Lease Contract,
failure to maintain or repair the leased Vehicle as required or to comply with
any other term or condition of the Contract and the making of a material
misrepresentation by the lessee in the lease application.

Upon early termination or default, the amount owed by the lessee under
a Lease Contract is generally determined by adding (i) the amount of delinquent
and future scheduled monthly payments and any incidental charges owing under
the Contract, less unearned finance charges, and (ii) the Residual Value, and
subtracting any security deposit and any net liquidation proceeds realized from
the sale of the related leased Vehicle. As specified in the related Prospectus
Supplement, in calculating the amount of unearned finance charges under clause
(i) above, the Contracts may provide that the Rule of 78s be used. Since the
Net Investment Value will be determined on a constant yield discount basis, to
the extent the use of the Rule of 78s is enforced, the calculation of Net
Investment Value will understate the value of each Contract that is terminated
early at the option of the related lessee. From time to time, in accordance
with its customary servicing procedures, the related Servicer may reach an
agreement with a lessee to forego the use of the Rule of 78s in calculating
unearned finance charges under the related Lease Contract and to use the
constant yield calculation instead.

In the event of an early termination of, or default under, a Lease
Contract, such Lease Contract may provide that if the lessee disagrees with the
wholesale price for the leased Vehicle, the lessee has the right to obtain from
an independent third party a professional appraisal of the wholesale value of
the leased Vehicle that could be realized at sale. This appraised value then
would be used as the revised estimated fair market value for purposes of
calculating sums due from the lessee in such circumstances.

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<PAGE> 30

In the event of early termination of, or a default under, a Lease
Contract, any shortfall between the amounts collected with respect to such
Lease Contract (after deducting the costs and other sums retained by the
Servicer in connection therewith) and the Net Investment Value, together with
the Residual Value, of such Contract, including but not limited to a shortfall
due to the use of wholesale appraisal of a leased Vehicle as described above,
will reduce the value of the collateral constituting a part of the Asset Pool.
To the extent that any such shortfall is not covered through payments on or in
respect of the other Lease Contracts and leased Vehicles, from monies on
deposit in the Accounts, from claims under the Residual Value Insurance, if
any, or from other insurance proceeds or liquidation proceeds, the related
Securityholders could suffer a loss on their investment.

THE LEASED VEHICLES

As specified in the related Prospectus Supplement, each Asset Pool may
include the related leased Vehicles or a security interest in the related
leased Vehicles. The related Prospectus Supplement will specify whether the
Company will execute the requisite documents in order to convey title to a
Finance Subsidiary, or the Trustee. If the Asset Pool includes a security
interest in the related Leased Vehicles, the related Prospectus Supplement will
specify what actions, if any, will be taken to perfect such security interest
including, but not limited to, filing applications for notation of a lien in
favor of the related Trustee on the certificates of title for the leased
Vehicles on the Closing Date and/or filing in the requisite jurisdictions UCC-1
financing statements noting such a security interest in favor of the related
Trustee. See "Special Considerations - Security Interests in the Leased
Vehicles".

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<PAGE> 31

RESIDUAL VALUE INSURANCE

As specified in the related Trust Agreement, the Company may have
obtained an insurance policy in respect of the Residual Values of the leased
Vehicles relating to Matured Contracts (the "Primary Residual Value Insurance
Policy"). The Trustee may be named as an additional insured under the Primary
Residual Value Insurance Policy. Any such Primary Residual Value Insurance
Policy generally provides coverage for 100% of the amount by which the
"residual value" of any leased Vehicle exceeds the "market value" therefor.
For these purposes, "residual value" is generally determined by reference to
the Automotive Lease Guide, Percentage Edition, and will be calculated by
multiplying the manufacturer's suggested price for such Leased Vehicle (as
adjusted to reflect any optional equipment) by a percentage that varies
depending upon the original term of the related Contract. Additional
adjustments are generally then made for any excess mileage and excess damage.
"Market value" is generally the greater of (i) the price actually received by
or on behalf of the insured in a commercially reasonable sale held in
accordance with procedures approved by such insurer, or (ii) the "average
wholesale value" established by the Black Book Used Car Market Guide, monthly
edition. An insurer may unilaterally change the reference publications used
for these definitions upon providing advance notice. The Primary Residual
Value Insurance Policy generally does not have any deductibles or provide for
co-insurance, but does provide for a maximum amount payable in respect of a
leased Vehicle and an aggregate cap for all payments made in respect of the
leased Vehicles.

As specified in the related Trust Agreement, the Company may have
obtained an additional insurance policy (the "Excess Residual Value Insurance
Policy" and together with the Primary Residual Value Insurance Policy, the
"Residual Value Insurance") providing coverage in respect of the "insured
value" of a lease contract covered thereby in excess of a deductible of a
specified percentage of the insured value, depending upon the original term of
the related lease contract. For purposes of any Excess Residual Value
Insurance Policy, the "insured value" is generally equal to the lesser of (i)
the residual value set forth in the Company is Residual Lease Guide in effect
as of the date of origination of the related lease contract or (ii) the
residual value set forth in the Automotive Lease Guide, Percentage Edition in
effect for the original term of such Lease Contract.

An such Excess Residual Value Insurance Policy would be an excess
policy, and a claim thereunder would be made only after deducting any other
recovery by the Servicer in respect of the related Residual Value of a leased
Vehicle, and the "fair market value" of such leased Vehicle. The "fair market
value" of a Leased Vehicle is generally defined in such Excess Residual Value
Insurance Policy as an amount equal to the greater of (i) the best sales price
offered in respect of such leased Vehicle in commercially reasonable sales
transaction or (ii) the "Clean Wholesale" value established in the Black Book
Used Car Market Guide Monthly. Claims made under such Excess Residual Value
Insurance Policy are generally based upon a comparison of the net recoveries
for all covered vehicles disposed of during the related quarter to the
aggregate insured values therefor. As a result, the amount payable under such
Excess Residual Value Insurance Policy in respect of the Residual Value of a
leased Vehicle could be less than the insured value of such leased Vehicle.

CONTINGENT AND EXCESS LIABILITY INSURANCE POLICIES

In addition to the personal property and liability insurance coverage
which is generally required to be obtained and maintained by the lessees
pursuant to the Lease Contracts, and as additional protection in the event that
any lessee fails to maintain all such required insurance, as specified in the
related Trust Agreement, the Company may maintain contingent liability
insurance which provides coverage (with no annual or aggregate cap on the
number of claims thereunder) for property damage or personal liability suffered
by third persons caused by any vehicle owned

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<PAGE> 32

by any insured. The Company may be an additional insured under this policy
with respect to the Leased Vehicles. As specified in the related Trust
Agreement, the Company may also maintain substantial amounts of excess
insurance coverage for which the Issuer may be named as an additional named
insured (together with the aforementioned primary contingent liability
insurance policy, the "Contingent and Excess Liability Insurance Policies").
Such insurance policies generally provide insurance coverage in excess of $10
million per claim, and permit multiple claims in any policy period. With
respect to damage to the leased Vehicles themselves, each lessee is generally
obligated by the related Lease Contract to maintain collision insurance. In
the event that the Issuer was not named as an additional insured under the
Contingent and Excess Liability Insurance Policies or all of the foregoing
insurance coverage were exhausted and damages were assessed against the Issuer,
claims could be imposed against the assets of the Issuer. In such event, the
related Securityholders could incur a loss on their investment. See "Special
Considerations -- Vicarious Tort Liability" and "Certain Legal Aspects of the
Receivables -- Vicarious Tort Liability".

LOAN CONTRACTS. As specified in the related Prospectus Supplement, the
Lease Contracts may consist of any combination of Rule of 78s Contracts, Fixed
Value Contracts or Simple Interest Contracts. Generally, "Rule of 78s
Contracts" provide for fixed level monthly payments which will amortize the
full amount of the Lease Contract over its term. The Rule of 78s Contracts
provide for allocation of payments according to the "sum of periodic balances"
or "sum of monthly payments" method (the "Rule of 78s"). Each Rule of 78s
Contract provides for the payment by the Obligor of a specified total amount of
payments, payable in monthly installments on the related due date, which total
represents the principal amount financed and finance charges in an amount
calculated on the basis of a stated annual percentage rate ("APR") for the term
of such Loan Contract. The rate at which such amount of finance charges is
earned and, correspondingly, the amount of each fixed monthly payment allocated
to reduction of the outstanding principal balance of the related Loan Contract
are calculated in accordance with the Rule of 78s. Under the Rule of 78s, the
portion of each payment allocable to interest is higher during the early months
of the term of a Contract and lower during later months than that under a
constant yield method for allocating payments between interest and principal.
Notwithstanding the foregoing, as specified in the related Prospectus
Supplement, all payments received by the related Servicer on or in respect of
the Rule of 78s Contracts may be allocated on an actuarial basis.

Generally, the "Fixed Value Contracts" provide for monthly payments
with a final fixed value payment which is greater than the scheduled monthly
payments. A Fixed Value Contract provides for amortization of the loan over a
series of fixed level payment monthly installments, but also requires a final
fixed value payment due after payment of such monthly installments which may be
satisfied by (i) payment in full in cash of such amount, (ii) transfer of the
vehicle to the Company provided certain conditions are satisfied or (iii)
refinancing the fixed value payment in accordance with certain conditions.
With respect to Fixed Value Contracts, as specified in the related Prospectus
Supplement, only the principal and interest payments due prior to the final
fixed value payment and not the final fixed value payment may be included
initially in the related Asset Pool.

"Simple Interest Contracts" provide for the amortization of the amount
financed under the receivable over a series of fixed level monthly payments.
However, unlike the monthly payment under Rule of 78s Contracts, each monthly
payment consists of an installment of interest which is calculated on the basis
of the outstanding principal balance of the receivable multiplied by the stated
APR and further multiplied by the period elapsed (as a fraction of a calendar
year) since the preceding payment of interest was made. As payments are
received under a Simple Interest Contract, the amount received is applied first
to interest accrued to the date of payment and the balance is applied to reduce
the unpaid principal balance. Accordingly, if an Obligor pays a fixed monthly
installment before its scheduled due date, the portion of the payment allocable
to interest

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<PAGE> 33

for the period since the preceding payment was made will be less than it would
have been had the payment been made as scheduled, and the portion of the
payment applied to reduce the unpaid principal balance will be correspondingly
greater. Conversely, if an Obligor pays a fixed monthly installment after its
scheduled due date, the portion of the payment allocable to interest for the
period since the preceding payment was made will be greater than it would have
been had the payment been made as scheduled, and the portion of the payment
applied to reduce the unpaid principal balance will be correspondingly less.
In either case, the Obligor pays a fixed monthly installment until the final
scheduled payment date, at which time the amount of the final installment is
increased or decreased as necessary to repay the then outstanding principal
balance.

If an Obligor elects to prepay a Rule of 78s Contract in full, it is
entitled to a rebate of the portion of the outstanding balance then due and
payable attributable to unearned finance charges. If a Simple Interest
Contract is prepaid, rather than receive a rebate, the Obligor is required to
pay interest only to the date of prepayment. The amount of a rebate under a
Rule of 78s Contract calculated in accordance with the Rule of 78s will always
be less than had such rebate been calculated on an actuarial basis and
generally will be less than the remaining scheduled payments of interest that
would be due under a Simple Interest Contract for which all payments were made
on schedule. Distributions to Security holders may not be affected by Rule of
78s rebates under the Rule of 78s Contract because pursuant to the related
Prospectus Supplement such distributions may be determined using the actuarial
method.

The Receivables and related items in each Asset Pool will be acquired
by the Company from the Seller pursuant to a contribution and sale agreement
between the Seller and the Company (each, a "Contribution and Sale Agreement").
The Receivables included in each Asset Pool will be selected from those
Receivables held by the Seller based on the criteria specified in the
applicable Trust Agreement and described in the related Prospectus Supplement.
The Company will form each Asset Pool by either (i) transferring the related
Receivables to a Trust pursuant to a Pooling Agreement or (i) with respect to
Notes issued by the Company, entering into an Indenture with an Indenture
Trustee.

Information with respect to the Receivables in each Asset Pool will be
set forth in the related Prospectus Supplement, including, to the extent
appropriate, the distribution of such Receivables by equipment type, remaining
lease term, original lease term, Discounted Lease Balance and/or Discounted
Lease and Residual Balance, lessee industry and geographic distribution, in
each case, as of the applicable Cut-Off Date.

THE RECEIVABLES

PORTFOLIO ACQUISITION PROGRAM

General

First Sierra's Portfolio Acquisition Program focuses on acquisition of
receivables from independent lease financing companies, captive equipment lease
finance companies, and bank leasing companies. In general, First Sierra seeks
to acquire the portfolios of equipment lease finance companies being sold by
parent companies exiting the business, independent companies seeking a
financial partner, or companies with businesses complimentary to that of First
Sierra. It is anticipated that such transactions will generally range in size
from $20 million to $100 million.

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<PAGE> 34

Underwriting Procedures

Prior to the acquisition of a portfolio of receivables under
its Portfolio Acquisition Program, First Sierra typically reviews all or a
portion of the receivables files included in such portfolio, the loss and
delinquency experience of such portfolio and such other factors as may be
appropriate to the particular lessor. To the extent that the receivables
acquired from a particular source constitute a material portion of any Asset
Pool, the underwriting procedures with respect to such acquisition will be
described in greater detail in the related Prospectus Supplement.

PRIVATE LABEL PROGRAM

General

The Private Label Program was designed to provide financing to small
ticket lessors which were typically financed by local commercial banks. Each
Private Label transaction generally contains one or more of the following types
of loss protection (a) recourse to the lessor which requires the lessor to
repurchase leases that are typically 90 days past due up to an aggregate amount
that is 10% to 20% of the total purchase price of the leases acquired from such
lessor, (b) remarketing of the equipment that is subject to a defaulted lease
and (c) maintenance of a reserve fund funded by holdbacks of a portion of the
purchase price owing to the lessor, such reserve funds typically range from 1%
to 10% of the purchase price of the related leases. However, some Private
Label transactions contain none of the foregoing protections and are
non-recourse to the Lessor (although such Lessors are obligated to repurchase
leases as to which a breach of representation or warranty occurs.

The Private Label Program utilizes three separate forms of agreements
that utilize the above types of loss protection. Under the first, First Sierra
has recourse to the lessor in an amount ranging from 10% to 20% of the
aggregate purchase price of the leases acquired from such lessor for defaulted
leases. Under the second form of agreement, in addition to the aforementioned
recourse to the lessor, First Sierra has the benefit of a funded cash reserve
account which generally ranges from 1% to 10% of the total purchase price of
the leases acquired from such lessor. Such amount is funded by the retention
of a specified percentage of the purchase price for each lease as a reserve.
Under the third option, First Sierra has recourse only to the cash reserve
account for credit losses.

Underwriting Procedures.

In order to qualify for participation in the Private Label Program, a
lessor must satisfy certain criteria, which generally require that the majority
of the lessor's business be small ticket leases ($5,000 - $250,000), generate a
minimum volume of leases, have been in business a minimum of five years, have
established a track record in business and personal credit, and have sufficient
staff and financial resources. The specific lessor requirements vary depending
upon such things as transaction size, and type and location of equipment
leased.

First Sierra's underwriting guidelines with respect to lessees contain
specific requirements which vary according to the nature of the lessee's
business, the size of the transaction, and the type of program under which the
lessor is seeking approval. In underwriting the lessee, First Sierra
considers, among other things, time in business, bank, credit and trade
references, credit bureau reports on all officers, Dun & Bradstreet reports,
confirmation of ownership, complete financial package, personal guarantees,
maximum exposure per lessee, verification of a personal medical license, where
applicable, and historical financial statements or tax returns for exposures
exceeding $50,000.

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<PAGE> 35

The Private Label lessor typically closes the lease transaction prior
to sale to First Sierra. The lessor will have performed all the necessary
credit inquiries and documentation, and will submit this information to First
Sierra for review. Each lease submitted for funding from any approved lessor
is individually underwritten and approved by First Sierra. Individual lease
underwriting procedures generally include review of credit bureau reports and
verification of bank references, trade references, and licenses. For
transactions over $50,000, First Sierra reviews personal financial statements,
business financial statements, and tax returns with an emphasis on cash flow
and the ability to service the lease payments and debt. For each lease
application First Sierra receives, the credit department reviews all
documentation and credit reviews. First Sierra performs periodic verification
on all acquired leases on a random basis.

Additional underwriting procedures will be described in the related
Prospectus Supplement.

RECEIVABLES POOLS

Information with respect to the Receivables in each Asset Pool will be
set forth in the related Prospectus Supplement, including, to the extent
appropriate, the composition of such Receivables and the distribution of such
Receivables by equipment type, payment frequency and current principal balance
as of the applicable Cut-off Date.

DELINQUENCIES, REPOSSESSIONS, AND NET LOSSES

Certain information relating to the Seller's delinquency, repossession
and net loss experience with respect to Contracts it has originated or acquired
will be set forth in each Prospectus Supplement. This information may include,
among other things, the experience with respect to all Contracts in the
Seller's portfolio during certain specified periods, including Contracts which
may not meet the criteria for selection as a Receivable for any particular
Asset Pool. There can be no assurance that the delinquency, repossession and
net loss experience on any Asset Pool will be comparable to the Seller's prior
experience.

MATURITY AND PREPAYMENT CONSIDERATIONS

Generally, none of the Seller's originated Contracts are prepayable at
any time. As more fully described in the related Prospectus Supplement, if a
Contract permits a Prepayment such payment or upon a default that results in
such payment, will shorten the weighted average life of the related pool of
Receivables and the weighted average life of the related Securities. The rate
of Prepayments on the Receivables may be influenced by a variety of economic,
financial and other factors. In addition, under certain circumstances, the
Company or the Seller will be obligated to acquire Receivables from the related
Asset Pool pursuant to the applicable Trust Agreement or Contribution and Sale
Agreement as a result of breaches of representations and warranties. Any
reinvestment risks resulting from a faster or slower amortization of the
related Securities which results from Prepayments will be borne entirely by the
related Securityholders.

The related Prospectus Supplement will set forth certain additional
information with respect to the maturity and prepayment considerations
applicable to a particular pool of Receivables and the related series of
Securities.

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<PAGE> 36

POOL FACTORS

The "Pool Factor" for each Class of Securities will be a seven-digit
decimal, which the Servicer will compute prior to each distribution with
respect to such Class of Securities, indicating the remaining outstanding
principal balance of such Class of Securities as of the applicable Payment
Date, as a fraction of the initial outstanding principal balance of such Class
of Securities. Each Pool Factor will be initially 1.0000000, and thereafter
will decline to reflect reductions in the outstanding principal balance of the
applicable Class of Securities. A Securityholder's portion of the aggregate
outstanding principal balance of the related Class of Securities is the product
of (i) the original aggregate purchase price of such Securityholder's
Securities and (ii) the applicable Pool Factor.

THE COMPANY

First Sierra Receivables II, Inc. (the "Company") is a limited purpose
corporation organized under the laws of the State of Delaware in October, 1995.
The Company's principal executive offices are located at 218 South U.S.
Highway, Suite 303, Tequesta, Florida 33469.

The Company does not intend to engage in any business or investment
activities other than acquiring, owning, leasing, transferring, receiving or
pledging the assets transferred to the Company. The Company's certificate of
incorporation (the "Certificate of Incorporation") limits the Company's
business and investment activities to the above purposes and to any activities
necessary, suitable or convenient to accomplish the foregoing or incidental
thereto. Pursuant to the Company's Certificate of Incorporation, the
limitations so imposed on the Company's business may only be altered upon
unanimous affirmative vote of all of the Company's directors, including the
Independent Director. The Company's Certificate of Incorporation requires the
Company, at all times, to have at least one Independent Director. An
"Independent Director" is not permitted to be a director, officer or employee
of any direct or ultimate parent or affiliate of the Seller, provided, however,
that such Independent Director may serve in similar capacities for other
limited purpose corporations which are affiliated with the Originator. The
Company's Certificate of Incorporation further prohibits the Company, without
the unanimous affirmative vote of the directors, including the Independent
Director, from (1) instituting or consenting to the institution of bankruptcy
or insolvency proceedings, (2) merging or consolidating with another
corporation, (3) incurring, assuming or guaranteeing any indebtedness other
than as otherwise provided in the Certificate of Incorporation, or (4) engaging
in certain other actions that would have a negative impact upon whether the
separate legal identities of the Company and the Seller will be respected.

The Company has taken steps in structuring the transactions
contemplated hereby that are intended to ensure that the voluntary or
involuntary petition for relief by the Originator under any Insolvency Law will
not result in consolidation of the assets and liabilities of the Company with
those of the Seller. These steps include the creation of the Company as a
separate, limited purpose corporation having a restrictive Certificate of
Incorporation as described above.

In addition, with respect to each Trust, the related Trustee will
covenant that they will not at any time institute against the Company any
bankruptcy, reorganization or other proceeding under any Insolvency Law. In
addition, each Securityholder, by his or her purchase of the related Securities
will be deemed to have covenanted that he or she will not at any time institute
against the Company any bankruptcy, reorganization or other proceeding under
any Insolvency Law.

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<PAGE> 37

The Company will not acquire any assets other than the Receivables and
other assets transferred by the Seller pursuant to the Contribution and Sale
Agreements. Because the Company does not have any operating history and will
not engage in any business activity other than as described above, there has
not been included herein any historical or current financial information with
respect to the Company.

The Seller will warrant to the Company in each Contribution and Sale
Agreement that the transfer of the related Receivables by it to the Company is
a valid transfer of the Receivables to the Company. In addition, the Seller
and the Company will treat the transactions described herein and in the related
Prospectus Supplement as a transfer of the Receivables to the Company, and the
Company will take all actions that are required to perfect the Company's
ownership interest in the Receivables. Notwithstanding the foregoing, if the
Seller were to become a debtor in a bankruptcy case and a creditor or
trustee-in-bankruptcy of such debtor or such debtor itself were to take the
position that the transfer of the Receivables to the Company should be
recharacterized as a pledge of such Receivables to secure a borrowing of such
debtor, then delays in payments of collections of Receivables to the Company
could occur or (should the court rule in favor of any such trustee, debtor or
creditor) reductions in the amount of such payments could result. If the
transfer of Receivables to the Company is recharacterized as a pledge, then a
tax or government lien on the property of the Seller arising before the
transfer of Receivables to the Company may have priority over the Company's
interest in such Receivables. If the transfer of Receivables to the Company is
treated as a sale, the Receivables would not be part of the Seller's bankruptcy
estate and would not be available to the Seller's creditors.

THE SERVICER

GENERAL

First Sierra Financial, Inc., a Delaware corporation ("First Sierra"),
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 $70 million of equipment finance leases. The common
stock of First Sierra is privately held.

As of September 30, 1995, First Sierra had 13 full time employees, of
which 5 were engaged in credit and collection activities, 7 were engaged in
servicing and general administration activities and 1 was engaged in marketing
activities.

First Sierra is engaged in two principal business activities. The
first is the acquisition of equipment lease portfolios (the "Portfolio
Acquisition Program"). The second is the acquisition of small ticket leases
and a security interest in the related equipment from small independent
equipment leasing companies on an on-going basis, generally as such leases are
originated (the "Private Label Program"). See "The Receivables."

SERVICING

The Leases included in each Asset Pool will be serviced by First
Sierra, as the Servicer, pursuant to and in accordance with the related
Servicing Agreement.

DELINQUENCY AND DEFAULT EXPERIENCE

As of December 31, 1995, First Sierra Financial, Inc. had not
experienced any losses on the portfolio of leases originated since its
inception. First Sierra has recovered the full

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<PAGE> 38

value of defaulted lease receivables in its Private Label Program under the
recourse and reserve provisions the program agreements established with sources
from which First Sierra purchased the lease receivables.

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<PAGE> 39

DELINQUENCY PERFORMANCE:

<TABLE>
<CAPTION>
% of Leases Past Due September 30, December 31, March 31, June 30, September 30, December 31,
1994 1995 1995 1995 1995 1995

<S> <C> <C> <C> <C> <C> <C>
Remaining Lease Receivables $376,233 $5,917,426 $14,741,890 $35,104,025 $63,713,023 $83,892,400

31 - 60 Days Delinquent 0.00% 0.00% 3.60% 2.10% 1.30% 2.51%
61 - 90 Days Delinquent 0.00% 0.00% 0.10% 0.20% 0.50% 0.45%
Over 90 Days Delinquent 0.00% 0.00% 0.00% 0.50% 0.50% 0.08%

Total 0.00% 0.00% 3.70% 2.80% 2.3% 3.04%
</TABLE>

Updated information with respect to delinquency and default
experience will be incorporated by Reference by a filing of Form 8-K and, to
the extent so filed, will be included in each subsequent Prospectus Supplement.

COLLECTION POLICIES

On a day-to-day basis, the billing and collection process is handled by
First Sierra's automated billing system. Day-to-day collections are processed
through Texas Commerce Bank's cash management operations, which utilizes
optical code reading technology to scan the invoices and earmark payments to a
given pool, depending upon the lease funding method.

Generally, First Sierra relies on the Lessors to undertake the initial
collection efforts with respect to the lessees. First Sierra monitors lease
receipts and aging results on a daily basis. If a lease payment is not
received within 30 days of its schedule due date, First Sierra will send a
delinquency report to the lessor, which continues to subservice the leases.
The lessor in turn is obligated to take action to prevent the delinquency from
worsening. After 60 days, First Sierra contacts the lessor directly to notify
it that it has 30 days to bring the account current. After 90 days, First
Sierra notifies the lessor that it has 60 days to repurchase the lease, if it
was purchased pursuant to a recourse program, or to re-market the equipment.
After 150 days, First Sierra charges off the account.

THE TRUSTEES

The Trustee for each series of Securities will be specified in the
related Prospectus Supplement. The Trustee's liability in connection with the
issuance and sale of the related Securities is limited solely to the express
obligations of such Trustee set forth in the related Trust Agreement.

With respect to each series of Securities, no resignation or removal of
the Trustee and no appointment of a successor Trustee shall become effective
until the acceptance of appointment by the successor Trustee. The Trustee may
resign for cause at any time by giving written notice thereof to the Company
and by mailing notice of resignation by first-class mail, postage prepaid, to
the Securityholders of such series at their addresses appearing on the Security
Register. The Trustee may be removed at any time by written notice of the
holders of Securities evidencing more than 50% of the voting rights with
respect to such series, delivered to the Trustee and the Company. If the
Trustee shall resign, be removed, or become incapable of acting, or if a
vacancy shall occur in the office of Trustee for any cause, the Company shall
promptly appoint a successor Trustee. If no successor Trustee shall have been
so appointed by the Company or the Securityholders, or if no successor Trustee
shall have accepted appointment within 30 days after any such resignation or
removal, existence of incapability, or occurrence of such vacancy, the

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<PAGE> 40

Trustee or any Securityholder may petition any court of competent jurisdiction
for the appointment of a successor Trustee.

DESCRIPTION OF THE SECURITIES

GENERAL

The Securities will be issued in series. Each series of Securities
(or, in certain instances, two or more series of Securities) will be issued
pursuant to a Trust Agreement. The following summaries (together with
additional summaries under "The Trust Agreement" below) describe all material
terms and provisions relating to the Securities common to each Trust Agreement.
The summaries do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all of the provisions of the Trust
Agreement for the related Securities and the related Prospectus Supplement.

All of the Securities offered pursuant to this Prospectus and the
related Prospectus Supplement will be rated in one of the four highest rating
categories by one or more Rating Agencies.

The Securities will generally be styled as debt instruments, having a
principal balance and a specified Interest Rate. The Securities may either
represent beneficial ownership interests in the related Asset Pool held by the
related Trust or debt secured by certain assets of the related Issuer. To the
extent that the Securities represent debt secured by certain assets of the
related Asset Pool, such Securities will not represent beneficial ownership
interests in the related Receivables.

Each series or Class of Securities offered pursuant to this Prospectus
may have a different Interest Rate, which may be a fixed or adjustable interest
rate. The related Prospectus Supplement will specify the Interest Rate for
each series or Class of Securities described therein, or the initial interest
rate and the method for determining subsequent changes to the Interest Rate.

A series may include one or more Classes of Strip Securities entitled
(i) to principal distributions, with disproportionate, nominal or no interest
distributions, or (ii) to interest distributions, with disproportionate,
nominal or no principal distributions. In addition, a series of Securities may
include two or more Classes of Securities that differ as to timing, sequential
order, priority of payment, Interest Rate or amount of distribution of
principal or interest or both, or as to which distributions of principal or
interest or both on any Class may be made upon the occurrence of specified
events, in accordance with a schedule or formula, or on the basis of
collections from designated portions of the related pool of Receivables. Any
such series may include one or more Classes of Accrual Securities, as to which
certain accrued interest will not be distributed but rather will be added to
the principal balance (or nominal balance, in the case of Accrual Securities
which are also Strip Securities) thereof on each Payment Date, as hereinafter
defined, or in the manner described in the related Prospectus Supplement.

If so provided in the related Prospectus Supplement, a series may
include one or more other Classes of Senior Securities that are senior to one
or more other Classes of Subordinate Securities in respect of certain
distributions of principal and interest and allocations of losses on
Receivables.

In addition, certain Classes of Senior (or Subordinate) Securities may
be senior to other Classes of Senior (or Subordinate) Securities in respect of
such distributions or losses.

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<PAGE> 41

GENERAL PAYMENT TERMS OF SECURITIES

As provided in the related Trust Agreement and as described in the
related Prospectus Supplement, Securityholders will be entitled to receive
payments on their Securities on the specified Payment Dates. Payment Dates
with respect to the Securities will occur monthly, quarterly or semi-annually,
as described in the related Prospectus Supplement.

The related Prospectus Supplement will describe the Record Date
preceding such Payment Date, as of which the Trustee or its paying agent will
fix the identity of the Securityholders for the purpose of receiving payments
on the next succeeding Payment Date. As more fully described in the related
Prospectus Supplement, the Payment Date may be the tenth, fifteenth or
twenty-fifth day of each month (or, in the case of quarterly-pay Securities,
the tenth, fifteenth or twenty-fifth day of every third month; and in the case
of semi-annual pay Securities, the tenth, fifteenth or twenty-fifth day of
every sixth month) and the Record Date will be the close of business as of the
last day of the calendar month that precedes the calendar month in which such
Payment Date occurs.

As more fully provided in the related Prospectus Supplement, each Trust
Agreement will describe a Remittance Period preceding each Payment Date (for
example, in the case of monthly-pay Securities, the calendar month preceding
the month in which a Payment Date occurs). As more fully provided in the
related Prospectus Supplement, collections received on or with respect to the
related Receivables held by a Trust during a Remittance Period will be required
to be remitted by the Servicer to the related Trustee prior to the related
Payment Date and will be used to fund payments to Securityholders on such
Payment Date. As may be described in the related Prospectus Supplement, the
related Trust Agreement may provide that all or a portion of the payments
collected on or with respect to the related Receivables may be applied by the
related Trustee to the acquisition of additional Receivables during a specified
period (rather than be used to fund payments of principal to Securityholders
during such period) with the result that the related Securities will possess an
interest-only period, also commonly referred to as a revolving period, which
will be followed by an amortization period. Any such interest only or
revolving period may, upon the occurrence of certain events to be described in
the related Prospectus Supplement, terminate prior to the end of the specified
period and result in the earlier than expected amortization of the related
Securities. The revolving period is one of structural features related to the
conclusion that under certain structures the Securities are considered debt of
the particular issuer for federal income tax considerations. The duration of
the revolving period and the requirements to be satisfied by additional
Receivables will be specified in the related Prospectus Supplement. Any direct
or indirect costs to investors associated with a revolving period will be
discussed in the related Prospectus Supplement.

Such retention and temporary investment by the Trustee of such
collected payments may be required by the related Trust Agreement for the
purposes of (a) slowing the amortization rate of the related Securities
relative to the rent payment schedule of the related Receivables, or (b)
attempting to match the amortization rate of the related Securities to an
amortization schedule established at the time such Securities are issued. Any
such feature applicable to any Securities may terminate upon the occurrence of
events to be described in the related Prospectus Supplement, resulting in
distributions to the specified Securityholders and an acceleration of the
amortization of such Securities.

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<PAGE> 42

Neither the Securities nor the underlying Receivables will be
guaranteed or insured by any governmental agency or instrumentality or the
Company, First Sierra, the Servicer, any Seller, any Trustee or any of their
affiliates unless specifically set forth in the related Prospectus Supplement.

As may be described in the related Prospectus Supplement, Securities of
each series covered by a particular Trust Agreement will either evidence
specified beneficial ownership interest in a separate Asset Pool created
pursuant to such Trust Agreement or represent debt secured by the related Asset
Pool. To the extent that any Asset Pool includes certificates of interest or
participations in Receivables, the related Prospectus Supplement will describe
the material terms and conditions of such certificates or participations.

BOOK-ENTRY REGISTRATION

As may be described in the related Prospectus Supplement,
Securityholders of a given series may hold their Securities through DTC (in the
United States) or CEDEL or Euroclear (in Europe) if they are participants of
such systems, or indirectly through organizations that are participants in such
systems.

Cede, as nominee for DTC, will hold the global Securities in respect of
a given series. CEDEL and Euroclear will hold omnibus positions on behalf of
the CEDEL Participants (as defined below) and the Euroclear Participants (as
defined below) (collectively, the "Participants"), respectively, through
customers' securities accounts in CEDEL's and Euroclear's names on the books of
their respective depositaries (collectively, the "Depositaries") which in turn
will hold such positions in customers' securities accounts in the Depositaries'
names on the books of DTC.

DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York UCC and a "clearing agency"
registered pursuant to Section 17A of the Exchange Act. DTC was created to
hold securities for its Participants and to facilitate the clearance and
settlement of securities transactions between Participants through electronic
book-entries, thereby eliminating the need for physical movement of notes or
certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations. Indirect access to the DTC system
also is available to others such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Participant,
either directly or indirectly ("Indirect Participants").

Transfers between DTC Participants will occur in accordance with DTC
rules. Transfers between CEDEL Participants and Euroclear Participants will
occur in the ordinary way in accordance with their applicable rules and
operating procedures.

Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through CEDEL
Participants or Euroclear Participants, on the other, will be effected in DTC
in accordance with DTC rules on behalf of the relevant European international
clearing system by its Depositary; however, such cross-market transactions will
require delivery of instructions to the relevant European international
clearing system by the counterparty in such system in accordance with its rules
and procedures and within its established deadlines (European time). The
relevant European international clearing system will, if the transaction meets
its settlement requirements, deliver instructions to its Depositary to take
action to effect final settlement on its behalf by delivering or receiving
securities in DTC, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. CEDEL Participants
and Euroclear Participants may not deliver instructions directly to the
Depositaries.

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Because of time-zone differences, credits of securities in CEDEL or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant
CEDEL Participant or Euroclear Participant on such business day. Cash received
in CEDEL or Euroclear as a result of sales of securities by or through a CEDEL
Participant or a Euroclear Participant to a DTC Participant will be received
with value on the DTC settlement date but will be available in the relevant
CEDEL or Euroclear cash account only as of the business day following
settlement in DTC.

The Securityholders of a given series that are not Participants or
Indirect Participants but desire to purchase, sell or otherwise transfer
ownership of, or other interests in, Securities of such series may do so only
through Participants and Indirect Participants. In addition, Securityholders
of a given series will receive all distributions of principal and interest
through the Participants who in turn will receive them from DTC. Under a
book-entry format, Securityholders of a given series may experience some delay
in their receipt of payments, since such payments will be forwarded by the
applicable Trustee to Cede, as nominee for DTC. DTC will forward such payments
to its Participants, which thereafter will forward them to Indirect
Participants or such Securityholders. It is anticipated that the only
"Securityholder" in respect of any series will be Cede, as nominee of DTC.
Securityholder of a given series will not be recognized as Securityholders of
such series, and such Securityholders will be permitted to exercise the rights
of Securityholders of such series only indirectly through DTC and its
Participants.

Under the rules, regulations and procedures creating and affecting DTC
and its operations (the "Rules"), DTC is required to make book-entry transfers
of Securities of a given series among Participants on whose behalf it acts with
respect to such Securities and to receive and transmit distributions of
principal of, and interest on, such Securities. Participants and Indirect
Participants with which the Securityholders of a given series have accounts
with respect to such Securities similarly are required to make book-entry
transfers and receive and transmit such payments on behalf of their respective
Securityholders of such series. Accordingly, although such Securityholders
will not possess Securities, the Rules provide a mechanism by which
Participants will receive payments and will be able to transfer their
interests.

Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a
Securityholder of a given series to pledge Securities of such series to persons
or entities that do not participate in the DTC system, or to otherwise act with
respect to such Securities, may be limited due to the lack of a physical
certificate for such Securities.

DTC will advise the Trustee in respect of each Series that it will take
any action permitted to be taken by a Securityholder of the related series only
at the direction of one or more Participants to whose accounts with DTC the
Securities of such series are credited. DTC may take conflicting actions with
respect to other undivided interests to the extent that such actions are taken
on behalf of Participants whose holdings include such undivided interests.

CEDEL is incorporated under the laws of Luxembourg as a professional
depository. CEDEL holds securities for its participating organizations ("CEDEL
Participants") and facilitates the clearance and settlement of securities
transactions between CEDEL Participants through electronic book-entry changes
in accounts of CEDEL Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in CEDEL in any of 28
currencies, including United States dollars. CEDEL provides to its CEDEL
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. CEDEL interfaces with domestic markets

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in several countries. As a professional depository, CEDEL is subject to
regulation by the Luxembourg Monetary Institute. CEDEL Participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. Indirect access to CEDEL is also available to
others, such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a CEDEL Participant, either directly
or indirectly.

Euroclear was created in 1968 to hold securities for participants of
the Euroclear System ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Transactions may now be settled in any of 28 currencies,
including United States dollars. The Euroclear System includes various other
services, including securities lending and borrowing and interfaces with
domestic markets in several countries generally similar to the arrangements for
cross-market transfers with DTC described above. Euroclear is operated by
Morgan Guaranty Trust Company of New York, Brussels, Belgium office, under
contract with Euroclear Clearance System, S.C., a Belgian cooperative
corporation (the "Cooperative"). All operations are conducted by the
"Euroclear Operator" (as defined below), and all Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with the Euroclear Operator,
not the Cooperative. The Cooperative establishes policy for the Euroclear
System on behalf of Euroclear Participants. Euroclear Participants include
banks (including central banks), securities brokers and dealers and other
professional financial intermediaries and may include the Underwriters.
Indirect access to the Euroclear System is also available to other firms that
clear through or maintain a custodial relationship with a Euroclear
Participant, either directly or indirectly.

The "Euroclear Operator" is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.

Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear
and the related Operating Procedures of the Euroclear System and applicable
Belgian law (collectively, the "Terms and Conditions"). The Terms and
Conditions govern transfers of securities and cash within the Euroclear System,
withdrawal of securities and cash from the Euroclear System, and receipts of
payments with respect to securities in the Euroclear System. All securities in
the Euroclear System are held on a fungible basis without attribution of
specific certificates to specific securities clearance accounts. The Euroclear
Operator acts under the Terms and Conditions only on behalf of Euroclear
Participants and has no record of relationship with persons holding through
Euroclear Participants.

Except as required by law, the Trustee in respect of a series will not
have any liability for any aspect of the records relating to or payments made
or account of beneficial ownership interests of the related Securities held by
Cede, as nominee for DTC, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.

DEFINITIVE NOTES

As may be described in the related Prospectus Supplement, the
Securities will be issued in fully registered, certificated form ("Definitive
Securities") to the Securityholders of a given series or their nominees, rather
than to DTC or its nominee, only if (i) the Trustee in respect of the related
series advises in writing that DTC is no longer willing or able to discharge
properly its responsibilities as depository with respect to such Securities and
such Trustee is unable to locate

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a qualified successor, (ii) such Trustee, at its option, elects to terminate
the book-entry-system through DTC or (iii) after the occurrence of an "Event of
Default" under the related Indenture or a default by the Servicer under the
related Trust Agreements, Securityholders representing at least a majority of
the outstanding principal amount of such Securities advise the applicable
Trustee through DTC in writing that the continuation of a book-entry system
through DTC (or a successor thereto) is no longer in such Securityholders' best
interest.

Upon the occurrence of any event described in the immediately preceding
paragraph, the applicable Trustee will be required to notify all such
Securityholders through Participants of the availability of Definitive
Securities. Upon surrender by DTC of the definitive certificates representing
such Securities and receipt of instructions for re-registration, the applicable
Trustee will reissue such Securities as Definitive Securities to such
Securityholders.

Distributions of principal of, and interest on, such Securities will
thereafter be made by the applicable Trustee in accordance with the procedures
set forth in the related Indenture or Trust Agreement directly to holders of
Definitive Securities in whose names the Definitive Securities were registered
at the close of business on the applicable Record Date specified for such
Securities in the related Prospectus Supplement. Such distributions will be
made by check mailed to the address of such holder as it appears on the
register maintained by the applicable Trustee. The final payment on any such
Security, however, will be made only upon presentation and surrender of such
Security at the office or agency specified in the notice of final distribution
to the applicable Securityholders.

Definitive Securities in respect of a given series of Securities will
be transferable and exchangeable at the offices of the applicable Trustee or of
a certificate registrar named in a notice delivered to holders of such
Definitive Securities. No service charge will be imposed for any registration
of transfer or exchange, but the applicable Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge imposed in
connection therewith.

REPORTS TO SECURITYHOLDERS

With respect to each series of Securities, on or prior to each Payment
Date for such series, the Servicer, Company or Trustee will forward or cause to
be forwarded to each holder of record of such class of Securities a statement
or statements with respect to the related Asset Pool setting forth the
information specifically described in the related Trust Agreement which
generally will include the following information:

(i) the amount of the distribution with respect to each
class of Securities;

(ii) the amount of such distribution allocable to principal;

(iii) the amount of such distribution allocable to interest;

(iv) the Pool Balance, if applicable, as of the close of
business on the last day of the related Remittance Period;

(v) the aggregate outstanding principal balance and the Pool
Factor for each Class of Securities after giving effect to all payments
reported under (ii) above on such Payment Date;

(vi) the amount paid to the Servicer, if any, with respect to
the related Remittance Period;

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(vii) the amount of the aggregate purchase amounts for
Receivables that have been reacquired, if any, for such Remittance
Period; and

(viii) the amount of coverage under any letter of credit,
financial guaranty insurance policy, reserve account or other form of
credit enhancement covering default risk as of the close of business on
the applicable Payment Date and a description of any Credit Enhancement
substituted therefor.

Each amount set forth pursuant to subclauses (i), (ii), (iii) and (v)
with respect to the Securities of any series will be expressed as a dollar
amount per $1,000 of the initial principal balance of such Securities, as
applicable.

Within the prescribed period of time for tax reporting purposes after
the end of each calendar year, the applicable Trustee will provide to the
Securityholders a statement containing the amounts described in (ii) and (iii)
above for that calendar year and any other information required by applicable
tax laws, for the purpose of the Securityholders' preparation of federal income
tax returns.

DESCRIPTION OF THE TRUST AGREEMENTS

The following summary describes certain terms of each Trust Agreement
pursuant to which an Asset Pool will be created and the related Securities in
respect of such Asset Pool will be issued. For purposes of this Prospectus,
the term "Trust Agreement" as used with respect to a Trust means, collectively,
and except as otherwise specified, any and all agreements relating to the
establishment of the related Trust, the servicing of the related Receivables
and the issuance of the related Securities, including without limitation the
Indenture, (i.e. pursuant to which any Notes shall be issued). Forms of the
Trust Agreement have been filed as exhibits to the Registration Statement of
which the Prospectus forms a part. The summary does not purport to be
complete. It is qualified in its entirety by reference to the provisions of
the Trust Agreements.

ASSIGNMENT OF THE RECEIVABLES

On the Closing Date specified with respect to any given series of
Securities (the "Closing Date"), the Company will receive the related
Receivables from the Seller pursuant to a Contribution and Sale Agreement. The
Company will either transfer such Receivables to a Trust pursuant to a Pooling
Agreement, or will pledge the Company's right, title and interests in and to
such Receivables to a Trustee on behalf of Securityholders pursuant to an
Indenture. The rights and benefits of the Company under such Contribution and
Sale Agreement will be assigned to the Trustee on behalf of Securityholders as
collateral for the Securities of the related series issued by a Trust or
pursuant to an Indenture. The obligations of the Company and the Servicer
under such Trust Agreements include those specified below and in the related
Prospectus Supplement.

In each Contribution and Sale Agreement, the Seller will agree, and in
each Trust Agreement, the Servicer will agree, to indicate in its computer
records that the Receivables included in the related Asset Pool have been sold
to the Company, and, as appropriate, transferred to the related Trust and/or
pledged under the related Indenture. As specified in the related Trust
Agreement, a custodian, as may be specified therein (the "Custodian") or the
Trustee will have possession of that portion of the related Lease Files
representing the original lease documentation, including, any lease
documentation constituting "chattel paper" under the UCC.

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With respect to each Asset Pool, First Sierra, as Seller, will file UCC
financing statements with respect to the sale, contribution, transfer and
assignment of the related Receivables to the Company. If the Issuer is a
Trust, the Company will file UCC financing statements with respect to the sale,
transfer and assignment of such Receivables to such Trust. In addition, if
applicable, the Issuer will file UCC financing statements with respect to the
security interest in its assets granted to the Indenture Trustee under the
related Indenture. Since the Lease Files will remain in First Sierra's
possession, as Servicer, and will not be stamped or otherwise marked to reflect
the sale, contribution, transfer and assignment of the related Receivables to
the Company, the Trust and/or the Trustee, as applicable, if a subsequent
purchaser were able to take possession of the related Lease for new value in
the ordinary course of its business without actual knowledge of the
assignments, the Company's, the Trust's and/or the Trustees, as applicable,
interests in such Receivables could be defeated. See "Certain Legal Aspects of
the Receivables."

Any Receivables to be included in an Asset Pool in substitution for
other Receivables will also be acquired by the Company from the Seller under
the related Contribution and Sale Agreement. Any substitute lease would be
required to satisfy criteria set forth in the relevant transaction documents
and described in the related prospectus supplement. Any additional costs,
direct or indirect associated with the substitution of Leases will be discussed
in the related Prospectus Supplement.

REPRESENTATIONS AND WARRANTIES

With respect to each Asset Pool, the Seller will make certain
representation and warranties pursuant to the Contribution and Sale Agreement
with respect to the related Receivables. In the related Pooling Agreement (or,
if the Issuer is the Company, in the related Indenture), the Company will
assign such representations and warranties to the related Trust (or the related
Trustee) and will represent and warrant that the Company has taken no action to
which would cause such representations and warranties of the Seller to be false
in any material respect. Under the related Trust Agreement, in the event the
Servicer or the related Trustee discovers or by written notice is informed that
any such representation or warranty of the Seller or Company is untrue, the
Servicer and such Trustee will be obligated to use reasonable efforts to
enforce the obligation of the Seller or Company set forth in the related
Contribution and Sale Agreement or the related Pooling Agreement to purchase
any Receivable included in the related Asset Pool materially and adversely
affected by such untruth. The Seller or Company will be obligated to purchase
each such Receivable on or prior to the thirtieth day after such discovery or
notice (or such later date as the Seller or Company and such Trustee shall
agree); provided, that the Seller or Company will not be required to purchase
any such Receivable if such untruth has been cured in all material aspects or
if such Receivable is replaced with a substitute Receivable (if and to the
extent substitution is permitted in the related Trust Agreement). Any such
repurchase shall be the sole remedy for any such breach. The purchase price
for any Receivable so purchased (the "Warranty Purchase Price") will be based
on the then Discounted Lease Balance or Discounted Lease and Residual Balance
of such Receivable as further described in the related Prospectus Supplement.
All such payments will be deposited in the related Collection Account.

In each Contribution and Sale Agreement, the Seller will also make
representations and warranties to the Company to the effect that, among other
things, as of the closing date for the issuance of any related Securities: (a)
the Seller is duly formed as a corporation and in good standing under the laws
of the State of Delaware, it has the requisite power and authority to
consummate the transactions contemplated thereby and such Contribution and Sale
Agreement constitutes a legal, valid and binding obligation of the Seller and
(b) the contribution and sale of the related Receivables thereunder constitute
a valid contribution, sale, transfer and assignment to the Company of all
right, title and interest of the Seller therein (subject, in the case of Leased
Vehicles, to applicable titling statutes), and such Receivables will be held by
the Company free

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and clear of any lien of any person claiming through or under the Seller,
except for liens created by or permitted under the related Trust Agreement.

In each Trust Agreement, the Company will make representations and
warranties to the effect that, among other things, as of the closing date for
the issuance of any related Securities: (a) the Company is duly incorporated
and in good standing under the laws of the State of Delaware, it has the
corporate power and authority to consummate the transactions contemplated
thereby and such Trust Agreement constitutes a legal, valid and binding
agreement of the Company; and (b) if the Issuer is a Trust, the transfer of the
Receivables pursuant to such Trust Agreement constitutes a valid sale, transfer
and assignment to such Trust of all right, title and interest of the Company in
such Receivables, and such Receivables will be held by such Trust free and
clear of any lien of any person claiming through the Company, except for liens
created or permitted by the such Trust Agreement. In the related Indenture, if
any, the Issuer will represent and warrant to the related Indenture Trustee
that (a) no interest in any Receivable conveyed by such Issuer to such
Indenture Trustee thereunder has been sold, transferred or pledged by such
Issuer to any other person, (b) upon execution and delivery of such Indenture
by such Issuer, such Indenture Trustee shall have all of the right, title and
interest of the Issuer in such Receivables, free of any lien, and (c) all UCC
filings have been made to give such Indenture Trustee, a first priority
perfected security interest in the Issuer's interest in such Lease and the
related Equipment (if such Equipment is located in a state in which a UCC
filing was made), subject to liens permitted by the related Trust Agreement and
liens which have priority by operation of law.

In each Contribution and Sale Agreement, the Seller will agree to do
nothing to impair the rights of the Company in the Receivables included in the
related Asset Pool, except as it is expressly permitted to do in its capacity
as the Servicer under the related Trust Agreement. In each Trust Agreement,
the Company will covenant that, except for the sale and conveyances pursuant
thereto, and the interests created under, such Trust Agreement or as otherwise
permitted therein, the Company will not sell, pledge, assign or transfer any
interest in any Receivables included in the related Asset Pool.

ACCOUNTS

With respect to each series of Securities issued by a Trust, the
Servicer will establish and maintain with the applicable Trustee one or more
accounts, in the name of such Trustee on behalf of the related Securityholders,
into which all payments made on or with respect to the related Receivables will
be deposited (the "Collection Account"). The Servicer will also establish and
maintain with such Trustee separate accounts, in the name of such Trustee on
behalf of such Securityholders, in which amounts released from the Collection
Account and the reserve account or other Credit Enhancement, if any, and to the
extent provided, for distribution to such Securityholders will be deposited and
from which distributions to such Securityholders will be made (the
"Distribution Account").

Any other accounts to be established with respect to a Trust, including
any reserve account, will be described in the related Prospectus Supplement.

For any series of Securities, funds in the Collection Account, the
Distribution Account, any reserve account and other accounts identified as such
in the related Prospectus Supplement (collectively, the "Trust Accounts") shall
be invested as provided in the related Trust Agreement in Eligible Investments.
Subject to certain conditions, Eligible Investments may include securities
issued by the Company or its affiliates or other trusts created by the Company
or its affiliates. Except as described below or in the related Prospectus
Supplement, Eligible Investments are limited to obligations or securities that
mature not later than the business day immediately preceding the next
distribution. However, subject to certain conditions, funds in the reserve

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account may be invested in securities that will not mature prior to the date of
the next distribution and will not be sold to meet any shortfalls. Thus, the
amount of cash in any reserve account at any time may be less than the balance
of such reserve account. If the amount required to be withdrawn from any
reserve account to cover shortfalls in collections on the related Receivables
exceeds the amount of cash in such reserve account a temporary shortfall in the
amounts distributed to the related Securityholders could result, which could,
in turn, increase the average life of the Securities of such series. Except as
otherwise specified in the related Prospectus Supplement, investment earnings
on funds deposited in the applicable Trust Accounts, net of losses and
investment expenses (collectively, "Investment Earnings"), shall be deposited
in the applicable Collection Account on each Payment Date and shall be treated
as collections of interest on the related Receivables.

The Trust Accounts will be maintained as Eligible Deposit Accounts.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution has a credit rating from each Rating
Agency in one of its generic rating categories which signifies investment
grade. "Eligible Institution" means, with respect to a Trust, (a) the
corporate trust department of the related Indenture Trustee or the related
Trustee, as applicable, or (b) a depository institution organized under the
laws of the United States of America or any one of the states thereof or the
District of Columbia (or any domestic branch of a foreign bank), which (i) (A)
has either (w) a long-term unsecured debt rating acceptable to the Rating
Agencies or (x) a short-term unsecured debt rating or certificate of deposit
rating acceptable to the Rating Agencies or (B) the parent corporation of which
has either (y) a long-term unsecured debt rating acceptable to the Rating
Agencies or (z) a short-term unsecured debt rating or certificate of deposit
rating acceptable to the Rating Agencies and (ii) whose deposits are insured by
the FDIC.

To the extent that the Seller's unsecured debt ratings are acceptable
to the Rating Agencies, amounts deposited to any Trust Account may be
commingled with the Seller's general account moneys. Any rights to so
commingle moneys will be described in the related Prospectus Supplement.

PRE-FUNDING ACCOUNT

In accordance with the provisions that may be set forth in the related
Prospectus Supplement, a portion of the issuance proceeds of the Securities of
a particular series (such amount, the "Pre-Funded Amount") will be deposited in
an account (the "Pre-Funding Account") to be established with the Trustee,
which will be used to acquire Additional Receivables from time to time during
time period specified in the related Prospectus Supplement. Prior to the
investment of the Pre-Funded Amount in Additional Receivables, such Pre-Funded
Amount will be invested in certain temporary investments satisfying certain
eligibility criteria more fully described in the related Prospectus Supplement.
Although the specific criteria with respect to such temporary investments will
be specified in the related Prospectus Supplement, such temporary investments
will be highly rated, short-term securities.

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Although the specific parameters of the Pre-Funding Account with
respect to any issuance of Securities will be specified in the related
Prospectus Supplement, it is anticipated that: (a) the Pre-Funding Period will
not exceed 120 days from the related Closing Date, (b) that the Additional
Leases to be acquired during the Pre-Funding Period will be subject to the same
representations and warranties as the Leases included in the related Asset Pool
on the Closing Date (although additional criteria may also be required to be
satisfied, as described in the related Prospectus Supplement) and (c) that the
Pre-Funded Amount will not exceed 25% of the principal amount of the Securities
issued pursuant to a particular offering.

SUBSTITUTION

Subject to the limitations set forth in the related Prospectus
Supplement, pursuant to the related Trust Agreement, the Company may have the
ability to substitute a comparable Lease, together with an interest in the
related Equipment, for and replace any Lease that defaults, terminates prior to
its scheduled termination date or becomes subject to purchase by the Seller,
the Company or the Servicer as a result of the breach of the representations,
warranties or covenants by the Seller, the Company or the Servicer, as
applicable, with respect to such Lease. The related Prospectus Supplement will
describe the limitations, if any, on the ability of the Company to substitute
Receivables with respect to any Asset Pool and the criteria to be satisfied
with respect to any Receivable to be added to an Asset Pool in substitution of
another Receivable. The Company will acquire all such Receivables under the
related Contribution and Sale Agreement.

The Company will also have the right to substitute Equipment under any
Lease for comparable Equipment so long as there is no change in the amount,
number or timing of the scheduled payments with respect to such Lease and the
Residual Value of the substitute Equipment is not less than the Residual Value
of the original Equipment, and, to the extent provided in the related
Prospectus Supplement, the Company may also have the right to permit add-ons
and upgrades with respect to any Lease.

Upon the replacement of a Lease and/or Equipment with a substitute
Lease and/or Equipment as described above, the interest of the related Trustee
in such replaced Lease and/or Equipment shall be terminated and, if it has been
transferred to the related Trust, such replaced Lease and/or Equipment shall be
transferred to the Company.

SERVICING PROCEDURES

In accordance with the Servicer's procedures set forth under
"Underwriting Procedures" herein, with respect to each series of Securities,
the Servicer will make reasonable efforts to collect all payments due with
respect to the Receivables held in the related Asset Pool and, in a manner
consistent with the related Trust Agreement, will continue such collection
procedures as the Servicer follows with respect to the particular type of
Receivable in the particular pool it services for itself and others.
Consistent with its normal procedures, the Servicer may, in its discretion and
on a case-by-case basis, arrange with the Lessee on a Receivable to extend or
modify the payment schedule. Some of such arrangements (including, without
limitation any extension of the payment schedule beyond the final scheduled
Payment Date for the related Securities may result in the Servicer acquiring
such Receivable if such Contract becomes a Defaulted Contract. The Servicer
may sell the Equipment securing the respective Defaulted Contract, if any, at a
public or private sale, or take any other action permitted by applicable law.
See "Certain Legal Aspects of the Receivables".

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PAYMENTS ON RECEIVABLES

With respect to each series of Securities, the Servicer will deposit
all payments on the related Receivables (from whatever source) and all proceeds
of such Receivables collected within two (2) business days of receipt thereof
in the related collection facility (a "Lockbox"). As specified in the related
Prospectus Supplement, the Servicer will be required to deposit payments on the
related Receivables (from whatever source) collected during each collection
period (each, a "Collection Period") into the related Collection Account on a
specified day each month. Pending deposit into the related Collection Account,
collections in the Lockbox may be invested by the Servicer at its own risk and
for its own benefit, and will not be segregated from funds of the Servicer.

SERVICING COMPENSATION

As may be described in the related Prospectus Supplement with respect
to any series of securities issued by a Trust, the Servicer will be entitled to
receive a servicing fee for each Collection Period (the "Servicing Fee") in an
amount equal to a specified percentage per annum (as set forth in the related
Prospectus Supplement, the "Servicing Fee Rate") of the Pool Balance as of the
first day of such Collection Period. Each Prospectus Supplement and Servicing
Agreement will specify the priority of distributions with respect to the
Servicing Fee (together with any portion of the Servicing Fee that remains
unpaid from prior Payment Dates), such Servicing Fee may be paid prior to any
distribution to the related Securityholders.

The Servicer will also collect and retain any late fees, the penalty
portion of interest paid on past due amounts and other administrative fees or
similar charges allowed by applicable law with respect to the Receivables, and
will be entitled to reimbursement from each Trust for certain expenses to the
extent provided in the related Servicing Agreement or Pooling Agreement, as the
case may be. Payments by or on behalf of Lessees will be allocated to
scheduled payments and late fees and other charges in accordance with the
Servicer's normal practices and procedures.

The Servicing Fee will compensate the Servicer for performing the
functions of a third party servicer of similar types of receivables as an agent
for their beneficial owner, including collecting and posting all payments,
responding to inquiries of Lessees on the Receivables, investigating
delinquencies, sending payment coupons to Lessees, paying costs of collection
and disposition of defaults, and policing the collateral. The Servicing Fee
also will compensate the Servicer for administering the Receivables, accounting
for collections and furnishing statements to the applicable Trustee and the
applicable Indenture Trustee, if any, with respect to distributions. The
Servicing Fee also will reimburse the Servicer for certain taxes, accounting
fees, outside auditor fees, data processing costs and other costs incurred in
connection with administering the Receivables.

DISTRIBUTIONS

With respect to each series of Securities, beginning on the Payment
Date specified in the related Prospectus Supplement, distributions of principal
and interest (or, where applicable, of principal or interest only) on each
Class of such Securities entitled thereto will be made by the applicable
Indenture Trustee to the Noteholders and by the applicable Trustee to the
Certificateholders of such series. The timing, calculation, allocation, order,
source, priorities of and requirements for each class of Noteholders and all
distributions to each class of Certificateholders of such series will be set
forth in the related Prospectus Supplement.

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With respect to each series of Securities, on each Payment Date
collections on the related Receivables will be transferred from the Collection
Account to the Distribution Account for distribution to Securityholders,
respectively, to the extent provided in the related Prospectus Supplement.
Credit Enhancement, such as a reserve account, may be available to cover any
shortfalls in the amount available for distribution on such date, to the extent
specified in the related Prospectus Supplement. As more fully described in the
related Prospectus Supplement, and unless otherwise specified therein,
distributions in respect of principal of a Class of Securities of a given
series will be subordinate to distributions in respect of interest on such
Class, and distributions in respect of the Certificates of such series may be
subordinate to payments in respect of the Notes of such series.

CREDIT ENHANCEMENTS

The amounts and types of Credit Enhancement arrangements, if any, and
the provider thereof, if applicable, with respect to each class of Securities
of a given series will be set forth in the related Prospectus Supplement. If
and to the extent provided in the related Prospectus Supplement, credit
enhancement may be in the form of a Policy, subordination of one or more
Classes of Securities, reserve accounts, overcollateralization, letters of
credit, Residual Value Insurance, credit or liquidity facilities, third party
payments or other support, surety bonds, guaranteed cash deposits or such other
arrangements as may be described in the related Prospectus Supplement or any
combination of two or more of the foregoing. If specified in the applicable
Prospectus Supplement, Credit Enhancement for a Class of Securities may cover
one or more other Classes of Securities of the same series, and Credit
Enhancement for a series of Securities may cover one or more other series of
Securities.

The presence of Credit Enhancement for the benefit of any Class or
series of Securities is intended to enhance the likelihood of receipt by the
Securityholders or such Class or series of the full amount of principal and
interest due thereon and to decrease the likelihood that such Securityholders
will experience losses. As more specifically provided in the related
Prospectus Supplement, the credit enhancement for a Class or series of
Securities will not provide protection against all risks of loss and will not
guarantee repayment of the entire principal balance and interest thereon. If
losses occur which exceed the amount covered by any Credit Enhancement or which
are not covered by any Credit Enhancement, Securityholders of any Class or
series will bear their allocable share of deficiencies, as described in the
related Prospectus Supplement. In addition, if a form of Credit Enhancement
covers more than one series of Securities, Securityholders of any such series
will be subject to the risk that such Credit Enhancement will be exhausted by
the claims of Securityholders of other series.

STATEMENTS TO INDENTURE TRUSTEES AND TRUSTEES

Prior to each Payment Date with respect to each series of Securities,
the Servicer will provide to the applicable Indenture Trustee and/or the
applicable Trustee and Credit Enhancer as of the close of business on the last
day of the preceding related Collection Period a statement setting forth
substantially the same information as is required to be provided in the
periodic reports provided to Securityholders of such series described under
"Description of the Securities--Reports to Securityholders".

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EVIDENCE AS TO COMPLIANCE

Each Trust Agreement will provide that a firm of independent public
accountants will furnish to the related Trust and/or the applicable Indenture
Trustee and Credit Enhancer, annually, a statement as to compliance by the
Servicer during the preceding twelve months (or, in the case of the first such
certificate, the period from the applicable Closing Date) with certain
standards relating to the servicing of the Receivables.

Each Trust Agreement will also provide for delivery to the related
Trust and/or the applicable Indenture Trustee of a certificate signed by an
officer of the Servicer stating that the Servicer either has fulfilled its
obligations under such Trust Agreement in all material respects throughout the
preceding 12 months (or, in the case of the first such certificate, the period
from the applicable Closing Date) or, if there has been a default in the
fulfillment of any such obligation in any material respect, describing each
such default. The Servicer also will agree to give each Indenture Trustee and
each Trustee notice of certain "Servicer Defaults" (as defined below) under the
related Trust Agreement.

Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the applicable Indenture
Trustee or the applicable Trustee.

CERTAIN MATTERS REGARDING THE SERVICER

With respect to each series of Securities issued by a Trust, each Trust
Agreement will provide that First Sierra may not resign from its obligations
and duties as Servicer thereunder, except upon determination that First
Sierra's performance of such duties is no longer permissible under applicable
law. No such resignation will become effective until the related Trustee or a
successor servicer has assumed First Sierra's servicing obligations and duties
under the Trust Agreement.

Except as otherwise provided in the related Prospectus Supplement, each
Trust Agreement will further provide that neither the Servicer nor any of its
respective directors, officers, employees, or agents shall be under any
liability to the related Issuer or the related Securityholders for taking any
action or for refraining from taking any action pursuant to such Trust
Agreement, or for errors in judgment; provided, however, that neither the
Servicer nor any such person will be protected against any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties thereunder. In addition, such Trust Agreement will
provide that the Servicer is under no obligation to appear in, prosecute, or
defend any legal action that is not incidental to its servicing
responsibilities under such Trust Agreement and that, in its opinion, may cause
it to incur any expense or liability.

Under the circumstances specified in any such Trust Agreement, any
entity into which the Servicer may be merged or consolidated, or any entity
resulting from any merger or consolidation to which the Servicer is a party, or
any entity succeeding to the business of the Servicer or, with respect to its
obligations as Servicer, which corporation or other entity in each of the
foregoing cases assumes the obligations of the Servicer, will be the successor
of the Servicer under such Trust Agreement.

SERVICER DEFAULT

Except as otherwise provided in the related Prospectus Supplement,
"Servicer Default" under a Trust Agreement will include (i) any failure by the
Servicer to deliver to the applicable Trustee

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for deposit in any of the related Trust Accounts any required payment or to
direct such Trustee to make any required distributions therefrom, which failure
continues unremedied for greater than three (3) Business Days after written
notice from such Trustee is received by the Servicer or after discovery by the
Servicer; (ii) any failure by the Servicer or the Company, as the case may be,
duly to observe or perform in any material respect any other covenant or
agreement in such Trust Agreement, which failure materially and adversely
affects the rights of the related Securityholders and which continues
unremedied for greater than ninety (90) days after the giving of written notice
of such failure (1) to the Servicer or the Company, as the case may be, by the
applicable Trustee or (2) to the Servicer or the Company, as the case may be,
and to the applicable Trustee by holders of the related Securities, as
applicable, evidencing not less than 25% of the voting rights of such
outstanding Securities; and (iii) any Insolvency Event. An "Insolvency Event"
shall mean financial insolvency, readjustment of debt, marshalling of assets
and liabilities, or similar proceedings with respect to the Servicer or the
Company and certain actions by the Servicer or the Company indicating its
insolvency, reorganization pursuant to bankruptcy proceedings, or inability to
pay its obligations.

RIGHTS UPON SERVICER DEFAULT

As more fully described in the related Prospectus Supplement, as long
as a Servicer Default under a Trust Agreement remains unremedied, the
applicable Trustee, Credit Enhancer or holders of Securities of the related
series evidencing not less than 25% of the voting rights of such then
outstanding Securities may terminate all the rights and obligations of the
Servicer, if any, under such Trust Agreement, whereupon a successor servicer
appointed by such Trustee or such Trustee will succeed to all the
responsibilities, duties and liabilities of the Servicer under such Trust
Agreement and will be entitled to similar compensation arrangements. If,
however, a bankruptcy trustee or similar official has been appointed for the
Servicer, and no Servicer Default other than such appointment has occurred,
such bankruptcy trustee or official may have the power to prevent the
applicable Trustee or such Securityholders from effecting a transfer of
servicing. In the event that the Trustee is unwilling or unable to so act, it
may appoint, or petition a court of competent jurisdiction for the appointment
of, a successor with a net worth of at least $25,000,000 and whose regular
business includes the servicing of a similar type of receivables. Such Trustee
may make such arrangements for compensation to be paid, which in no event may
be greater than the servicing compensation payable to the Servicer under the
related Trust Agreement.

WAIVER OF PAST DEFAULTS

With respect to each Asset Pool, unless otherwise provided in the
related Prospectus Supplement and subject to the approval of any Credit
Enhancer, the holders of Notes evidencing at least a majority of the voting
rights of such then outstanding Securities may, on behalf of all
Securityholders of the related Securities, waive any default by the Servicer,
or by the Company, in the performance of its obligations under the related
Trust Agreement and its consequences, except a default in making any required
deposits to or payments from any of the Trust Accounts in accordance with such
Trust Agreement. No such waiver shall impair the Securityholders' rights with
respect to subsequent defaults.

AMENDMENT

As more fully described in the related Prospectus Supplement, each of
the Trust Agreements may be amended by the parties thereto, without the consent
of the related Securityholders, for the purpose of (a) adding any provisions to
or changing in any manner or eliminating any of the

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provisions of such Trust Agreements or (b) modifying in any manner the rights
of such Securityholders; provided that such action will not, in the opinion of
counsel satisfactory to the applicable Trustee, materially and adversely affect
the interests of any such Securityholder and, to the extent provided in the
related Prospectus Supplement, to which the related Credit Enhancer may
consent. As may be described in the related Prospectus Supplement, the Trust
Agreements may also be amended by the Company, the Servicer, and the applicable
Trustee with the consent of the holders of Securities evidencing at least a
majority of the voting rights of such then outstanding Securities for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of such Trust Agreements or of modifying in any manner
the rights of such Securityholders; provided, however, that no such amendment
may (i) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, collections of payments on the related Receivables or
distributions that are required to be made for the benefit of such
Securityholders or (ii) reduce the aforesaid percentage of the Securities of
such series which are required to consent to any such amendment, without the
consent of the Securityholders of such series.

INSOLVENCY EVENT

As described in the related Prospectus Supplement, if an Insolvency
Event occurs with respect to the Company, the Receivables held in each Asset
Pool will be liquidated and each Trust will be terminated 90 days after the
date of such Insolvency Event, unless, before the end of such 90-day period,
the Trustee of such Trust shall have received written instructions from each of
the related Securityholders (other than the Company) and/or Credit Enhancer to
the effect that such party disapproves of the liquidation of such Receivables
and termination of such Trust. Promptly after the occurrence of any Insolvency
Event with respect to the Company, notice thereof is required to be given to
such Securityholders and/or Credit Enhancer; provided, however, that any
failure to give such required notice will not prevent or delay termination of
any Trust. Upon termination of any Trust, the applicable Trustee shall direct
that the assets of such Trust be promptly sold (other than the related Trust
Accounts) in a commercially reasonable manner and on commercially reasonable
terms. The proceeds from any such sale, disposition or liquidation of such
Receivables will be treated as collections on such Receivables and deposited in
the related Collection Account. If the proceeds from the liquidation of such
Receivables and any amounts on deposit in the Reserve Account, if any, and the
related Distribution Account are not sufficient to pay the Securities of the
related series in full, and no additional Credit Enhancement is available, the
amount of principal returned to Securityholders will be reduced and some or all
of such Securityholders will incur a loss.

Each Trust Agreement will provide that the applicable Trustee does not
have the power to commence a voluntary proceeding in bankruptcy with respect to
any related Trust without the unanimous prior approval of all
Certificateholders (including the Company, if applicable) of such Trust and the
delivery to such Trustee by each such Certificateholder of a certificate
certifying that such Certificateholder reasonably believes that such Trust is
insolvent.

TERMINATION

With respect to each Trust formed by the Company to issue Securities,
the obligations of the Servicer, the Company and the applicable Trustee
pursuant to the related Trust Agreements will terminate upon the earlier to
occur of (i) the maturity or other liquidation of the last related Receivable
and the disposition of any amounts received upon liquidation of any such
remaining Receivables and (ii) the payment to Securityholders of the related
series of all amounts required to be paid to them pursuant to such Trust
Agreement. As more fully described in the related

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Prospectus Supplement, in order to avoid excessive administrative expense, the
Servicer will be permitted in respect of the applicable Asset Pool, unless
otherwise specified in the related Prospectus Supplement, at its option to
purchase from such Asset Pool, as of the end of any Collection Period
immediately preceding a Payment Date, if the Discounted Contract Balance of the
related Contracts is less than a specified percentage (set forth in the related
Prospectus Supplement) of the initial Pool Balance in respect of such Asset
Pool, all such remaining Receivables at a price equal to the Aggregate
Discounted Contract Balance of the related Securities will be redeemed
following such purchase. Unless otherwise provided in the related Prospectus
Supplement, the Trustee shall not be required to solicit bids from third
parties.

If and to the extent provided in the related Prospectus Supplement with
respect to an Asset Pool, the applicable Trustee will, within ten days
following a Payment Date as of which the Pool Balance is equal to or less than
the percentage of the initial Pool Balance specified in the related Prospectus
Supplement, solicit bids for the purchase of the Receivables remaining in such
Trust, in the manner and subject to the terms and conditions set forth in such
Prospectus Supplement. If such Trustee receives satisfactory bids as described
in such Prospectus Supplement, then the Receivables remaining in such Asset
Pool will be sold to the highest bidder.

As more fully described in the related Prospectus Supplement, any
outstanding Notes of the related series will be redeemed concurrently with
either of the events specified above and the subsequent distribution to the
related Certificateholders of all amounts required to be distributed to them
pursuant to the applicable Trust Agreement may effect the prepayment of the
Certificates of such series.

CERTAIN LEGAL ASPECTS OF THE RECEIVABLES

GENERAL

To the extent provided in the related Prospectus Supplement, the
Contracts that comprise the Receivables are "chattel paper" as defined in the
Uniform Commercial Code in effect in the State of Texas; the governing laws
chosen in the First Sierra forms of lease contract. The governing law of the
lease contracts acquired by the Seller pursuant to its Portfolio Acquisition
Program may vary as specified in the related Prospectus Supplement. Pursuant
to the UCC for most purposes, a sale of chattel paper is treated in a manner
similar to a transaction creating a security interest in chattel paper. To the
extent provided in the related Prospectus Supplement, First Sierra and the
Company will cause the filing of appropriate UCC-1 financing statements to be
made with the appropriate governmental authorities. Under the Trust Agreement,
the Servicer will be obligated from time to time to take such actions as are
necessary to protect and perfect the Trust's or the Trustee's interests in the
Contracts and their proceeds.

THE TRUSTEE'S INTEREST IN THE LEASED VEHICLES

Titling Requirements

In connection with the establishment of each Trust, the Company will be
required (to the extent not done previously) to deliver to the appropriate
motor vehicle agency office in the related states duly completed and executed
applications for (a) transfer of the certificates of title to the related
leased Vehicles from the Company to either a Finance Subsidiary or to the
related Trust, (b) release of any prior liens recorded on such certificates of
title and (c) in the event that the leased Vehicles are titled in the name of a
Finance Subsidiary and not the Trust, a notation of lien in favor of the
related Trustee on such certificates of title, except, to the extent that the
laws of any particular state do not require such a lien notation to be made to
perfect the Trustee's security

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interest. Various liens and interests could be imposed upon or all part of the
related Asset Pool that, by operation of law, would take priority over the
Trustee's interest thereon, however perfected. Such liens include tax liens
arising against the Company or, the Finance Subsidiary, mechanic's,
repairman's, garagemen's and motor vehicle accident liens and certain liens for
personal property taxes, in each case arising with respect to a particular
leased Vehicle, and liens arising under various state and federal criminal
statutes.

Perfection of Security Interests in Leased Vehicles

In the event that the leased Vehicles are not re-titled in the name of
the related Trust, the related Trustee will receive a security interest in such
leased Vehicles.

A security interest in a motor vehicle registered in most states may be
perfected against creditors and subsequent purchasers without notice for
valuable consideration only by one or more of the following: depositing with
the related Department of Motor Vehicles or analogous state office a properly
endorsed certificate of title for the vehicle showing the secured party as
legal owner or lienholder thereon, or filing a sworn notation of lien with the
related Department of Motor Vehicles or analogous state office and noting such
lien on the certificate of title, or, if the vehicle has not been previously
registered, filing an application in usual form for an original registration
together with an application for registration of the secured party as legal
owner or lienholder, as the case may be. However, under the laws of most
states, a transferee of a security interest in a motor vehicle is not required
to reapply to the related Department of Motor Vehicles or analogous state
office for a transfer of registration when the security interest is sold or
when the interest of the transferee arises from the transfer of a security
interest by the lienholder to secure payment or performance of an obligation.

Although re-registration of the vehicle is not necessary to convey a
perfected security interest in the Vehicles to the Trustee, the Trustee's
security interest could be defeated through fraud, negligence, forgery or
administrative error since it may not be listed as legal owner or lienholder on
the certificates of title to the Vehicles. However, in the absence of fraud,
negligence, forgery or administrative error, the notation of the related
Originator's lien on the certificates of title will be sufficient to protect
the Trust against the rights of subsequent purchasers of a Vehicle or
subsequent creditors who take a security interest in a Vehicle. The Company
will represent and warrant, that it has, or has taken all action necessary to
obtain, a perfected security interest in each Vehicle. If there are any
Vehicles as to which the Company failed to obtain a first priority perfected
security interest, its security interest would be subordinate to, among others,
subsequent purchasers of such Vehicles and holders of first priority perfected
security interests therein. Such a failure, however, would constitute a breach
of the Company's representations and warranties under the related Trust
Agreement. Accordingly, pursuant to the related Trust Agreement, the Company
would be required to repurchase the related Receivables from the Trustee unless
the breach were cured.

Continuity of Perfection

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as Texas), the secured party would receive notice of surrender from the state
of re-registration if the security interest is noted on the certificate of
title. Thus, the secured party would have the opportunity to reperfect its
security interest in the vehicle in the state of relocation. However, these
procedural safeguards will not protect the secured party if, through fraud,
forgery or administrative error, the debtor somehow procures a new certificate
of title that does not list the secured party's lien. Additionally, in states
that do not require surrender of a certificate of title for re-registration of
a vehicle, re-registration could defeat perfection. In each of the Trust
Agreements, the related Servicer will be required to take steps to effect
re-perfection upon receipt of notice of re-registration or information from the
Obligor as to relocation. Similarly, when an Obligor sells a Vehicle, the
related Servicer will have an opportunity to require satisfaction of the
related Receivable before release of the lien, either because the related
Servicer will be required to surrender possession of the certificate of title
in connection with the sale, or because the related Servicer will receive
notice as a result of its lien noted thereon. Pursuant to the related Trust
Agreement, the related Servicer will hold the certificates of title for the
related Vehicles as custodian for the Trustee. Under the related Trust
Agreement, the related Servicer will be obligated to take appropriate steps, at
its own expense, to maintain perfected security interests in the Vehicles.

Priority of Certain Liens Arising by Operation of Law

Under the laws of most states, certain statutory liens such as
mechanics', repairmen's and garagemen's liens for repairs performed on a motor
vehicle, motor vehicle accident liens, towing and storage liens, liens arising
under various state and federal criminal statutes and liens for unpaid taxes
take priority over even a first priority perfected security interest in such
vehicle by operation of law. The UCC also grants priority to certain federal
tax liens over the lien of a secured party. The laws of most states and
federal law permit the confiscation of motor vehicles by governmental
authorities under certain circumstances if used in or acquired with the
proceeds of unlawful activities, which may result in the loss of a secured
party's perfected security interest in a confiscated vehicle. The Company will
represent and warrant to the Trustee in the related Trust Agreement that, as of
the related Closing Date, each security interest in a Vehicle shall be a valid,
subsisting and enforceable first priority security interest in such Vehicle.
However, liens for repairs or taxes superior to the security interest of the
Trustee in any such Vehicle, or the confiscation of such Vehicle, could arise
at any time during the term of a Receivable. No notice will be given to the
Trustee or any Securityholder in the event such a lien or confiscation arises
and any such lien or confiscation arising after the related Closing Date would
not give rise to the Company's repurchase obligation under the related Trust
Agreement.

The Trustee's Interests in the Contracts

The Contracts that comprise a portion of the Receivables will be
"chattel paper" as defined in the Uniform Commercial Code. Pursuant to the UCC
for most purposes, a sale of chattel paper is treated in a manner similar to a
transaction creating a security interest in chattel paper. The Depositor, the
related Servicer and/or the related Originator(s) will cause the filing of
appropriate UCC-1 financing statements to be made with the appropriate
governmental authorities. Under the Trust Agreement, the related Servicer will
be obligated from time to time to take such actions as are necessary to protect
and perfect the Trust's or the Trustee's interests in the Contracts and their
proceeds, which will generally consist of filing UCC filing statements by or on
behalf of (i) the related Originator and the Depositor, each as a seller and
"debtor" in favor of the Issuer as buyer and "secured party" to perfect the
sale of the Contracts under the UCC and (ii) by the Issuer as "debtor" in favor
of the Trustee (on behalf of the Securityholders) as the "secured party", in
each case with respect to the perfection of a security interest in the
Contracts and any related contract rights the transfer of which is perfected
pursuant to the UCC. In addition, the related Servicer will cause the original
of each Contract to be stamped to indicate the security interest of the Trustee

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therein in order to give notice to third parties of such security interest and
thereby to prevent any sale or other transfer of an interest in the Contracts
to a third party without knowledge or actual notice of the security interest.

The Trustee's security interest in the Contracts could be subordinate
to the interest of certain other parties who take possession of the Contracts
before the stamping described above has been completed. Specifically, until
the stamping process is completed, the Trustee's security interest in a
Contract could be subordinate to the rights of a purchaser of such Contract who
takes possession thereof without knowledge or actual notice of the Trustee's
security interest.

In most states the Trustee's perfected security interest in the
Contracts will be unaffected by any change of location of any lessee, since,
under the UCC as in effect in most states, this security interest will be
perfected by the filing of a UCC-1 financing statement in the jurisdiction in
which the chief executive office of the "debtor" (in this case, the Issuer) is
located, not the location of any lessee.

VICARIOUS TORT LIABILITY WITH RESPECT TO LEASED VEHICLES

Although the Issuer may own the leased Vehicles, they will be operated
by the related lessees and their respective invitees. State laws differ as to
whether anyone suffering injury to person or property involving a leased
vehicle may bring an action against the owner of the vehicle merely by virtue
of that ownership.

Some state statutes provide that a victim of such an accident has no
such cause of action against the owner of the leased vehicle arising from the
negligent operation of such leased vehicle unless the owner has negligently
entrusted or continues to negligently entrust the vehicle to an inappropriate
lessee. Other state statutes provide that the owner of a motor vehicle that is
subject to a lease having an initial term of at least one year is exempt from
liability for tort claims arising out of the negligent operation of the leased
vehicle or negligent acts of the operator in the event of an accident in which
the leased vehicle is involved if the lessee is required under the lease to
maintain certain specified levels of insurance, and such insurance is in
effect.

Generally, the Lease Contracts contain provisions requiring the lessees
to maintain levels of insurance satisfying applicable state requirements and
the related Trust Agreement will require the Servicer to police compliance by
the lessees therewith.

Actions by third parties might arise against the owner of a leased
Vehicle based on legal theories other than negligence, such as a product defect
or improper vehicle preparation prior to the origination of the related lease
contract. Even if the Issuer were to be the subject of an action for damages
as a result of its ownership of a leased Vehicle, such damages may be covered
by Contingent and Excess Liability Insurance Policies if, as specified in the
related Prospectus Supplement, the Issuer is named as a beneficiary of such
policies. Although such insurance coverage is generally quite substantial, in
the event that all such insurance coverage were exhausted and damages were
assessed against the Issuer, claims could be imposed against the assets of the
Issuer, including the Leased Vehicles. However, such claims would not take
priority over any items comprising the Asset Pool to the extent that the
Trustee has a perfected security interest therein. If any such claims were
imposed against the assets of the Issuer, Securityholders could incur a loss on
their investment. See "Special Considerations -- Vicarious Tort Liability".

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REPOSSESSION

In the event of default by an Obligor, the holder of the related
Contract has all the remedies of a secured party under the UCC, except where
specifically limited by other state laws. The UCC remedies of a secured party
include the right to repossession by self-help means, unless such means would
constitute a breach of the peace. Unless a vehicle is voluntarily surrendered,
self-help repossession is accomplished simply by taking possession of the
related financed vehicle. In cases where the Obligor objects or raises a
defense to repossession, or if otherwise required by applicable state law, a
court order is obtained from the appropriate state court, and the vehicle must
then be recovered in accordance with that order. In some jurisdictions, the
secured party is required to notify the debtor of the default and the intent to
repossess the collateral and give the debtor a time period within which to cure
the default prior to repossession. Generally, this right of cure may only be
exercised on a limited number of occasions during the term of the related
contract. Other jurisdictions permit repossession without prior notice if it
can be accomplished without a breach of the peace (although in some states, a
course of conduct in which the creditor has accepted late payments has been
held to create a right by the Obligor to receive prior notice).

DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS

The proceeds of sale of a leased Vehicle generally will be applied
first to the expenses of resale and repossession and then to the satisfaction
of the amounts due under the related Contract. While some states impose
prohibitions or limitations on deficiency judgments if the net proceeds from
resale of a leased vehicle do not cover the full amounts due under the related
lease contract, a deficiency judgment can be sought in those states that do not
prohibit or limit such judgments. However, the deficiency judgment would be a
personal judgment against the lessee for the shortfall, and a defaulting lessee
would be expected to have little capital or sources of income available
following repossession. Therefore, in many cases, it may not be useful to seek
a deficiency judgment. Even if a deficiency judgment is obtained, it may be
settled at a significant discount.

In some states, amounts recoverable by the lessor of a leased vehicle
from a lessee upon default or early termination are not considered to be
"deficiency judgments", but damages for breach or early termination of the
related lease contract. The only limitation or prohibition on such damages is
that they not constitute a "penalty", but rather compensate the lessor for
actual damages. Generally, there are no requirements that any excess proceeds
from disposition of a leased vehicle be paid to a lessee. However, under
certain state laws, where a lessor or lessee has exercised rights against the
manufacturer and obtained a replacement vehicle and the lessor realizes a gain
from disposition of the replacement vehicle, the lessor must refund to the
lessee the lesser of any offset for use paid by the lessee to the manufacturer
or the gain realized by the lessor.

CONSUMER PROTECTION LAWS

Numerous federal and state consumer protection laws impose requirements
upon lessors and servicers involved in consumer leasing. The federal Consumer
Leasing Act of 1976 and Regulation M, issued by the Board of Governors of the
Federal Reserve System, for example, require that a number of disclosures be
made at the time a vehicle is leased, including the amount of any down payment,
a description of the lessee's liability at the end of the lease term, the
amount of any periodic payments and the circumstances under which the lessee
may terminate the lease prior to the end of the lease term. The various
consumer protection laws would apply to the Company as the initial lessor, and
may also apply to the Issuer and the Trustee as purchasers or assignees of the
Contracts. The failure to comply with such consumer protection

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laws may give rise to liabilities on the part of the Servicer, the Company and
the Trustee, including liabilities for statutory damages and attorneys' fees.
In addition, claims by the Servicer, the Company and the Trustee may be subject
to set-off as a result of such noncompliance.

Courts have applied general equitable principles in litigation relating
to repossession and deficiency balances. These equitable principles may have
the effect of relieving a lessee from some or all of the legal consequences of
a default.

In several cases, consumers have asserted that the self-help remedies
of lessors violate the due process protections provided under the Fourteenth
Amendment to the Constitution of the United States. Courts have generally
found that repossession and resale by a lessor do not involve sufficient state
action to afford constitutional protection to consumers.

Some states have adopted "Lemon Laws" providing redress to consumers
who purchase or lease a vehicle that remains out of conformance with its
manufacturer's warranty after a specified number of attempts to correct a
problem or after a specific time period. Should any leased Vehicle become
subject to an applicable Lemon Law, a lessee could compel the Issuer to
terminate the related Lease Contract and refund a portion of prior scheduled
monthly payments. Although the Issuer may be able to assert a claim against
the manufacturer of any such defective vehicle, there can be no assurance any
such claim would be successful.

Any loss, to the extent not covered by credit support (as specified in
the Related Prospectus Supplement), could result in losses to the
Securityholders. As specified in the related Prospectus Supplement, if an
Obligor were successful in asserting any such claim or defense as described in
this section, such claim or defense may constitute a breach of a representation
and warranty under the related Receivables Acquisition Agreement and the
Company unless the breach were cured.

As specified in the related Prospectus Supplement, the Company will
represent and warrant under the related Trust Agreement, that each Receivable
complies with all requirements of law in all material respects. Accordingly, if
an Obligor has a claim against the Trustee for violation of any law and such
claim materially and adversely affects the Trustee's interest in a Receivable,
such violation would constitute a breach of representation and warranty under
the related Trust Agreement and would create an obligation of the Company to
repurchase such Receivable unless the breach were cured.

OTHER LIMITATIONS

In addition to laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions including applicable Insolvency Laws, may
interfere with or affect the ability of a lessor to enforce its rights under an
automobile or light duty truck lease contract. For example, if a lessee
commences bankruptcy proceedings, the lessor's receipt of rental payments due
under the lease contract is likely to be delayed. In addition, a lessee who
commences bankruptcy proceedings might be able to assign the lease contract to
another party even though the lease prohibits assignment.

Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended (the "Relief Act"), a lessee who enters the military service after
the origination of such lessee's Contract (including a lessee who is a member
of the National Guard or is in reserve status at the time of the origination of
the Contract and is later called to active duty) may not be charged interest
above an annual rate of 6% during the period of such lessee's active duty
status, unless a court orders otherwise upon application of the lender. Any
shortfall in interest collections resulting from the application of the Relief
Act, to the extent not covered by credit support, could result in losses to

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Securityholders. In addition, the Relief Act imposes limitations which would
impair the ability of the Servicer to repossess the Leased Vehicle relating to
an affected Contract, or otherwise to take legal action with respect to such
Contract, during the lessee's period of active duty status. Thus, in the event
that such a Contract goes into default, there may be delays and losses
occasioned by the inability to realize upon the related Leased Vehicle in a
timely fashion.

SECURITY INTERESTS IN THE VEHICLES UNDER LOAN CONTRACTS

General

Retail installment sale contracts such as the Receivables evidence the
credit sale of automobiles and light duty trucks by dealers to consumers. The
contracts also constitute personal property security agreements and include
grants of security interests in the related automobiles and light duty trucks
under the UCC. Perfection of security interests in automobiles and light duty
trucks is generally governed by the vehicle registration or titling laws of the
state in which each vehicle is registered or titled. In most states a security
interest in a vehicle is perfected by notation of the secured party's lien on
the vehicle's certificate of title.

All of the Loan Contracts name the related Company as obligee or
assignee and as the secured party. The Company will represent that it has
taken all actions necessary under the laws of the state in which the related
vehicles are titled to perfect its security interest in such vehicles,
including, where applicable, having a notation of its lien recorded on the
related certificate of title.

Perfection

Pursuant to the related Trust Agreement, the Company will assign to the
Trustee the Receivables and its interest in the security interests in the
financed Vehicles. Each of the related Prospectus Supplements will specify
whether, because of the administrative burden and expense, the Company, the
related Servicer or the Trustee will amend any certificate of title to identify
the Company or the Trustee as the new secured party on the certificates of
title relating to the Vehicles. Each of the related Prospectus Supplements
will specify the UCC financing statements to be filed in order to perfect the
transfer to the Company of the Receivables and the transfer to the Trustee of
the Receivables. Further, although neither the Company nor the Trustee will
rely on possession of the Receivables as the legal basis for the perfection of
their respective interests therein or in the security interests in the
Vehicles, the related Servicer, as specified in the related Prospectus
Supplement, will continue to hold the Receivables and any certificates of title
relating to the Vehicles in its possession as custodian for the Trustee
pursuant to the related Trust Agreement which, as a practical matter, should
preclude any other party from claiming a competing security interest in the
Receivables on the basis that the security interest is perfected by possession.

A security interest in a motor vehicle registered in most states may be
perfected against creditors and subsequent purchasers without notice for
valuable consideration only by one or more of the following: depositing with
the related Department of Motor Vehicles or analogous state office a properly
endorsed certificate of title for the vehicle showing the secured party as
legal owner or lienholder thereon, or filing a sworn notice of lien with the
related Department of Motor Vehicles or analogous state office and noting such
lien on the certificate of title, or, if the vehicle has not been previously
registered, filing an application in usual form for an original registration
together with an application for registration of the secured party as legal
owner or lienholder, as the case may be. However, under the laws of most
states, a transferee of a security interest in a motor vehicle is not required
to reapply to the related Department of Motor Vehicles or analogous state
office for a transfer of registration when the security interest is sold or
when the interest of the transferee arises from the transfer of a security
interest by the lienholder to secure payment or

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performance of an obligation. Accordingly, under the laws of such states, the
assignment by the Company of its interests in the Receivables to the Trustee
under the related Trust Agreement are effective conveyances of the respective
security interests of the Company in the Receivables, and specifically, the
Vehicles, without such re- registration and without amendment of any lien noted
on the related certificate of title, and (subject to the immediately succeeding
paragraphs) the Trustee will succeed to the Company's rights as secured party.

Although re-registration of the vehicle is not necessary to convey a
perfected security interest in the Vehicles to the Trustee, the Trustee's
security interest could be defeated through fraud, negligence, forgery or
administrative error since it may not be listed as legal owner or lienholder on
the certificates of title to the Vehicles. However, in the absence of fraud,
negligence, forgery or administrative error, the notation of the Company's lien
on the certificates of title will be sufficient to protect the Trust against
the rights of subsequent purchasers of a Vehicle or subsequent creditors who
take a security interest in a Vehicle. In each Trust Agreement, the Company
will represent and warrant, and in the related Trust Agreement, the Company
will represent and warrant that it has, or has taken all action necessary to
obtain, a perfected security interest in each Vehicle. If there are any
Vehicles as to which the Company failed to obtain a first priority perfected
security interest, its security interest would be subordinate to, among others,
subsequent purchasers of such Vehicles and holders of first priority perfected
security interests therein. Such a failure, however, would constitute a breach
of the Company's representations and warranties under the related Trust
Agreement. Accordingly, pursuant to the related Trust Agreement, the Company
would be required to repurchase the related Receivables from the Trustee unless
the breach were cured.

Continuity of Perfection

Under the laws of most states, a perfected security interest in a motor
vehicle continues for four months after the vehicle is moved to a new state
from the one in which it is initially registered and thereafter until the owner
re-registers such motor vehicle in the new state. A majority of states
generally require surrender of a certificate of title to re-register a vehicle.
In those states that require a secured party to hold possession of the
certificate of title to maintain perfection of the security interest, the
secured party would learn of the reregistration through the request from the
Obligor under the related installment sale contract to surrender possession of
the certificate of title to assist in such re-registration. In the case of
vehicles registered in states providing for the notation of a lien on the
certificate of title but not requiring possession by the secured party (such as
Texas), the secured party would receive notice of surrender from the state of
re-registration if the security interest is noted on the certificate of title.
Thus, the secured party would have the opportunity to reperfect its security
interest in the vehicle in the state of relocation. However, these procedural
safeguards will not protect the secured party if, through fraud, forgery or
administrative error, the debtor somehow procures a new certificate of title
that does not list the secured party's lien. Additionally, in states that do
not require surrender of a certificate of title for re-registration of a
vehicle, re-registration could defeat perfection. In each of the Trust
Agreements, the related Servicer will be required to take steps to effect
re-perfection upon receipt of notice of re-registration or information from the
Obligor as to relocation. Similarly, when an Obligor sells a Vehicle, the
related Servicer will have an opportunity to require satisfaction of the
related Receivable before release of the lien, either because the related
Servicer will be required to surrender possession of the certificate of title
in connection with the sale, or because the related Servicer will receive
notice as a result of its lien noted thereon. Pursuant to the related Trust
Agreement, the related Servicer will hold the certificates of title for the
related Vehicles as custodian for the Trustee. Under the related Trust
Agreement, the related Servicer will be obligated to take appropriate steps, at
its own expense, to maintain perfected security interests in the Vehicles.

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Priority of Certain Liens Arising by Operation of Law

REPOSSESSION

In the event of default by an Obligor, the holder of the related retail
installment sale contract has all the remedies of a secured party under the
UCC, except where specifically limited by other state laws. The UCC remedies
of a secured party include the right to repossession by self-help means, unless
such means would constitute a breach of the peace. Unless a vehicle is
voluntarily surrendered, self-help repossession is accomplished simply by
taking possession of the related financed vehicle. In cases where the Obligor
objects or raises a defense to repossession, or if otherwise required by
applicable state law, a court order is obtained from the appropriate state
court, and the vehicle must then be recovered in accordance with that order.
In some jurisdictions, the secured party is required to notify the debtor of
the default and the intent to repossess the collateral and give the debtor a
time period within which to cure the default prior to repossession. Generally,
this right of cure may only be exercised on a limited number of occasions
during the term of the related contract. Other jurisdictions permit
repossession without prior notice if it can be accomplished without a breach of
the peace (although in some states, a course of conduct in which the creditor
has accepted late payments has been held to create a right by the Obligor to
receive prior notice).

NOTICE OF SALE; REDEMPTION RIGHTS

The UCC and other state laws require a secured party to provide the
Obligor with reasonable notice of the date, time and place of any public sale
and/or the date after which any private sale of the collateral may be held. In
addition, some states also impose substantive timing requirements on the sale
of repossessed vehicles in certain circumstances and/or various substantive
timing and content requirements on such notices. In most states, under certain
circumstances after a financed vehicle has been repossessed, the Obligor may
redeem the collateral by paying the delinquent installments and other amounts
due. The Obligor has the right to redeem the collateral prior to actual sale
or entry by the secured party into a contract for sale of the collateral by
paying the secured party the unpaid principal balance of the obligation,
accrued interest thereon, reasonable expenses for repossessing, holding, and
preparing the collateral for disposition and arranging for its sale, plus, in
some jurisdictions, reasonable attorneys' fees and legal expenses or in some
other states, by payment of delinquent installments on the unpaid principal
balance of the related obligation.

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DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS

The proceeds of resale of the Vehicles generally will be applied first
to the expenses of resale and repossession and then to the satisfaction of the
indebtedness. In many instances, the remaining principal amount of such
indebtedness will exceed such proceeds. Under the UCC and laws applicable in
some states, a creditor is entitled to bring an action to obtain a deficiency
judgment from a debtor for any deficiency on repossession and resale of a motor
vehicle securing such debtor's loan; however, in some states, a creditor may
not seek a deficiency judgment from a debtor whose financed vehicle had an
initial cash sales price of $3,450 or less. Some states, impose prohibitions
or limitations or notice requirements on actions for deficiency judgments. In
addition to the notice requirement described above, the UCC requires that every
aspect of the sale or other disposition, including the method, manner, time,
place and terms, be "commercially reasonable". Generally, courts have held that
when a sale is not "commercially reasonable", the secured party loses its right
to a deficiency judgment. In addition, the UCC permits the debtor or other
interested party to recover for any loss caused by noncompliance with the
provisions of the UCC. Also, prior to a sale, the UCC permits the debtor or
other interested person to obtain an order mandating that the secured party
refrain from disposing of the collateral if it is established that the secured
party is not proceeding in accordance with the "default" provisions under the
UCC. However, the deficiency judgment would be a personal judgment against the
Obligor for the shortfall, and a defaulting Obligor can be expected to have
very little capital or sources of income available following repossession.
Therefore, in many cases, it may not be useful to seek a deficiency judgment
or, if one is obtained, it may be settled at a significant discount or be
uncollectible.

Occasionally, after resale of a vehicle and payment of all expenses and
indebtedness, there is a surplus of funds. In that case, the UCC requires the
creditor to remit the surplus to any holder of a subordinate lien with respect
to the vehicle or if no such lienholder exists or if there are remaining funds,
the UCC requires the creditor to remit the surplus to the Obligor under the
contract.

CONSUMER PROTECTION LAWS

Numerous federal and state consumer protection laws and related
regulations impose substantial requirements upon creditors and servicers
involved in consumer finance. These laws include the Truth-in-Lending Act, the
Equal Credit Opportunity Act, the Federal Trade Commission Act, the Fair Credit
Billing, Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices
Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B
and Z, state adaptations of the National Consumer Act and of the Uniform
Consumer Credit Code, state motor vehicle retail installment sale acts, state
"lemon" laws and other similar laws. In addition, the laws of certain states,
impose finance charge ceilings and other restrictions on consumer transactions
and require contract disclosures in addition to those required under federal
law. These requirements impose specific statutory liabilities upon creditors
who fail to comply with their provisions. In some cases, this liability could
affect the ability of an assignee such as the Trustee to enforce consumer
finance contracts such as the Receivables.

The so-called "Holder-in-Due-Course Rule" of the Federal Trade
Commission (the "FTC Rule") has the effect of subjecting any assignee of the
seller in a consumer credit transaction (and certain related creditors and
their assignees) to all claims and defenses which the Obligor in the
transaction could assert against the seller. Liability under the FTC Rule is
limited to the amounts paid by the Obligor under the contract, and the holder
of the contract may also be unable to collect any balance remaining due
thereunder from the Obligor. The FTC Rule is generally duplicated by the
Uniform Consumer Credit Code, other state statutes or the common law in certain
states. To the extent that the Receivables will be subject to the requirements
of the FTC Rule, the

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Trustee, as holder of the Receivables, will be subject to any claims or
defenses that the purchaser of the related Vehicle may assert against the
seller of such Vehicle. Such claims will be limited to a maximum liability
equal to the amounts paid by the Obligor under the related Receivable.

Under most state vehicle dealer licensing laws, sellers of automobiles
and light duty trucks are required to be licensed to sell vehicles at retail
sale. In addition, with respect to used vehicles, the Federal Trade
Commission's Rule on Sale of Used Vehicles requires that all sellers of used
vehicles prepare, complete and display a "Buyer's Guide" which explains the
warranty coverage for such vehicles. Furthermore, Federal Odometer Regulations
promulgated under the Motor Vehicle Information and Cost Savings Act and the
motor vehicle title laws of most states require that all sellers of used
vehicles furnish a written statement signed by the seller certifying the
accuracy of the odometer reading. If a seller is not properly licensed or if
either a Buyer's Guide or Odometer Disclosure Statement was not provided to the
purchaser of a Vehicle, the Obligor may be able to assert a defense against the
seller of the Vehicle. If an Obligor on a Receivable were successful in
asserting any such claim or defense, the related Servicer would pursue on
behalf of the Trust any reasonable remedies against the seller or manufacturer
of the vehicle, subject to certain limitations as to the expense of any such
action to be specified in the related Trust Agreement.

Any such loss, to the extent not covered by credit support (as
specified in the Related Prospectus Supplement), could result in losses to the
Securityholders. As specified in the related Prospectus Supplement, if an
Obligor were successful in asserting any such claim or defense as described in
this paragraph or the two immediately preceding paragraphs, such claim or
defense may constitute a breach of a representation and warranty under the
related Receivables Acquisition Agreement and the related Trust Agreement and
may create an obligation of the related Originator and the Depositor to
repurchase such Receivable unless the breach were cured.

Courts have applied general equitable principles to secured parties
pursuing repossession or litigation involving deficiency balances. These
equitable principles may have the effect of relieving an Obligor from some or
all of the legal consequences of a default.

In several cases, consumers have asserted that the self-help remedies
of secured parties under the UCC and related laws violate the due process
protections of the 14th Amendment to the Constitution of the United States.
Courts have generally either upheld the notice provisions of the UCC and
related laws as reasonable or have found that the creditor's repossession and
resale do not involve sufficient state action to afford constitutional
protection to consumers.

As specified in the related Prospectus Supplement, the Company will
represent and warrant under the related Trust Agreement that each Receivable
complies with all requirements of law in all material respects. Accordingly, if
an Obligor has a claim against the Trustee for violation of any law and such
claim materially and adversely affects the Trustee's interest in a Receivable,
such violation would constitute a breach of representation and warranty under
the related Trust Agreement and would create an obligation of the Company to
repurchase such Receivable unless the breach were cured.

OTHER LIMITATIONS

In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a creditor to
realize upon collateral or enforce a deficiency judgment. For example, in a
Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a
creditor from repossessing a motor vehicle, and, as part of the rehabilitation
plan, reduce the amount of the secured indebtedness to the market value of the
motor vehicle at the time of bankruptcy (as

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determined by the court), leaving the party providing financing as a general
unsecured creditor for the remainder of the indebtedness. A bankruptcy court
may also reduce the monthly payments due under a contract or chance the rate of
interest and time of repayment of the indebtedness. Any such shortfall, to the
extent not covered by credit support (as specified in each Prospectus
Supplement), could result in losses to the Securityholders.

CERTAIN TAX CONSIDERATIONS

The Prospectus Supplement for each series of Securities will summarize,
subject to the limitations stated therein, federal income tax considerations
relevant to the purchase, ownership and disposition of such Securities.

The following is a general discussion of the anticipated Federal income
tax consequences to the holders of Securities. The tax aspects of each Series
will be reflected in the related Prospectus Supplement, and the Company will
file an additional tax opinion with respect thereto by Form 8-K.

CERTIFICATES

GENERAL

The following is a general discussion of the material
anticipated federal income tax consequences to investors of the purchase,
ownership and disposition of the Certificates offered hereby. The discussion
is based upon laws, regulations, rulings and decisions now in effect, all of
which are subject to change. The discussion below does not purport to deal
with all federal tax consequences applicable to all categories of investors,
some of which may be subject to special rules. Investors should consult their
own tax advisors in determining the federal, state, local and any other tax
consequences to them of the purchase, ownership and disposition of the Investor
Certificates.

The following discussion addresses certificates of two general
types: (i) certificates ("Grantor Trust Certificates") representing interests
in a trust estate (a "Grantor Trust Estate"); and (ii) certificates ("Debt
Certificates") that are intended to be treated for federal income tax purposes
as indebtedness secured by the Equipment and Leases. For purposes of this
discussion, references to a "Holder" are to the beneficial owner of an
Certificate.

GRANTOR TRUST CERTIFICATES

With respect to each Series of Grantor Trust Certificates,
Dewey Ballantine, special tax counsel to the Seller ("Special Counsel"), will
deliver its opinion to the Seller that (unless otherwise limited in the
applicable Prospectus Supplement) the related Grantor Trust Estate will be
classified as a grantor trust and not as a partnership or an association
taxable as a corporation. Accordingly, each Holder of a Grantor Trust
Certificate will generally be treated as the owner of an interest in the
Equipment and Leases included in the Grantor Trust Estate.

For purposes of the following discussion, a Grantor Trust
Certificate representing an undivided equitable ownership interest in the
Equipment and Leases constituting the related Grantor Trust Estate, together
with interest thereon at a pass-through rate, will be referred to as a "Grantor
Trust Fractional Interest Certificate."

In certain cases in which the Leases in the Grantor Trust
Estate consist entirely of Finance Leases, a Grantor Trust Certificate may be
issued representing ownership of all or a

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portion of the difference between the interest component of the payments on the
Finance Leases constituting the related Grantor Trust Estate and interest paid
to the Holders of Grantor Trust Fractional Interest Certificates issued with
respect to such Grantor Trust Estate. Such an Certificate will be referred to
as a "Grantor Trust Strip Certificate."

TAXATION OF HOLDERS OF GRANTOR TRUST CERTIFICATES. Holders of
Grantor Trust Fractional Interest Certificates generally will be required to
report on their federal income tax returns their respective shares of the
income from the Leases (including amounts used to pay reasonable servicing fees
and other expenses but excluding amounts payable to Holders of any
corresponding Grantor Trust Strip Certificates) and, subject to the limitations
described below, will be entitled to deduct their shares of any such reasonable
servicing fees and other expenses. If all of the Leases in the Grantor Trust
Estate consist of Finance Leases, the income from the Leases will be limited to
the interest component of the payment thereon. Payments of principal generally
will be treated as nontaxable recoveries of the Holder's investment. In such a
case, if a Holder acquires a Grantor Trust Fractional Interest Certificate for
an amount that differs from its outstanding principal amount or from the
aggregate outstanding principal amount of the underlying Finance Leases, the
amount includible in income on a Grantor Trust Fractional Interest Certificate
may differ from the amount of interest distributable thereon. See "-- Discount
and Premium," below.

To the extent that a Grantor Trust Certificate represents an
interest in True Leases, an Certificateholder will be required to include in
gross income its pro rata share of all of the payments on the True Leases and
will be allowed an offsetting deduction for a portion of its basis in the
Certificates. If the Certificateholder is treated as owning an undivided
interest in the Equipment as well as in the Leases, the Certificateholder will
be entitled to recover its basis in the form of cost recovery deductions on the
Equipment. If the Certificateholder is not so treated, the method for
amortizing basis over the life of the Certificates is unclear. It is possible
that the Internal Revenue Service (the "IRS") may take the position that basis
must be recovered in the same manner as if the Grantor Trust Certificates were
debt instruments, which generally will result in a slower recovery of basis
than under other methods.

Individuals holding a Grantor Trust Fractional Interest
Certificate directly or through certain pass-through entities will be allowed a
deduction for such reasonable servicing fees and expenses only to the extent
that the aggregate of such Holder's miscellaneous itemized deductions exceeds
two percent of such Holder's adjusted gross income. Further, Holders (other
than corporations) subject to the alternative minimum tax may not deduct
miscellaneous itemized deductions in determining alternative minimum taxable
income.

Holders of Grantor Trust Strip Certificates generally will be
required to treat such Certificates as "stripped coupons" under section 1286 of
the Internal Revenue Code of 1986 (the "Code"). Accordingly, such a Holder
will be required to treat the excess of the total amount of payments on such an
Certificate over the amount paid for such Certificate as original issue
discount and to include such discount in income as it accrues over the life of
such Certificate. See "-- Discount and Premium," below.

Grantor Trust Fractional Interest Certificates may also be
subject to the coupon stripping rules if a class of Grantor Trust Strip
Certificates is issued as part of the same series of Certificates. The
consequences of the application of the coupon stripping rules would appear to
be that any discount arising upon the purchase of such a Certificate (and
perhaps all stated interest thereon) would be classified as original issue
discount and includible in the Holder's income as it accrues (regardless of the
Holder's method of accounting), as described below under "-- Discount and
Premium." The coupon stripping rules will not apply, however, if (i) the
pass-through rate is no more than 100 basis points lower than the gross rate of
interest on the Leases

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and (ii) the difference between the outstanding principal balance on the
Certificate and the amount paid for such Certificate is less than 0.25 percent
of such principal balance times the weighted average remaining maturity of the
Certificate.

SALES OF GRANTOR TRUST CERTIFICATES. Any gain or loss
recognized on the sale of a Grantor Trust Certificate (equal to the difference
between the amount realized on the sale and the adjusted basis of such Grantor
Trust Certificate) will be capital gain or loss, except to the extent of
accrued and unrecognized market discount, which will be treated as ordinary
income, and in the case of banks and other financial institutions except as
provided under section 582(c) of the Code. The adjusted basis of a Grantor
Trust Certificate will generally equal its cost, increased by any income
reported by the seller (including original issue discount and market discount
income) and reduced (but not below zero) by any previously reported losses, any
amortized premium and by any distributions on the Certificates.

GRANTOR TRUST REPORTING. The Trustee will furnish to each
Holder of a Grantor Trust Fractional Interest Certificate with each
distribution a statement setting forth the amount of such distribution
allocable to principal on the Leases and to interest thereon at the related
Certificate Rate. In addition, within a reasonable time after the end of each
calendar year, based on information provided by the Servicer, the Trustee will
furnish to each Holder during such year such customary factual information as
the Servicer deems necessary or desirable to enable Holders of Grantor Trust
Certificates to prepare their tax returns and will furnish comparable
information to the IRS as and when required to do so by law.

DEBT CERTIFICATES

With respect to each Series of Debt Certificates, Special
Counsel will deliver its opinion to the Seller (unless otherwise limited in the
applicable Prospectus Supplement) that the Certificates will be classified as
debt of the Seller secured by the Equipment and Leases. Consequently, the Debt
Certificates will not be treated as ownership interests in the Equipment and
Leases or the Trust. Holders will be required to report income received with
respect to the Debt Certificates in accordance with their normal method of
accounting. For additional tax consequences relating to Debt Certificates
purchased at a discount or with premium, see "-- Discount and Premium," below.

SALE OR EXCHANGE OF DEBT CERTIFICATES. If a Holder of a Debt
Certificate sells or exchanges such Certificate, the Holder will recognize gain
or loss equal to the difference, if any, between the amount received and the
Holder's adjusted basis in the Certificate. The adjusted basis in the
Certificate generally will equal its initial cost, increased by any original
issue discount or market discount previously included in the seller's gross
income with respect to the Certificate and reduced by the payments previously
received on the Certificate, other than payments of qualified stated interest,
and by any amortized premium.

In general (except as described in "-- Discount and Premium --
Market Discount," below, and except for certain financial institutions subject
to section 582(c) of the Code), any gain or loss on the sale or exchange of a
Debt Certificate recognized by an investor who holds the Certificate as a
capital asset (within the meaning of section 1221 of the Code), will be capital
gain or loss and will be long-term or short-term depending on whether the
Certificate has been held for more than one year.

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<PAGE> 70

POSSIBLE CLASSIFICATION OF THE CERTIFICATES AS INTERESTS IN A PARTNERSHIP OR
ASSOCIATION

Although, as described above, it is the opinion of Special
Counsel that the Certificates will properly be characterized either as
ownership interests in a grantor trust or as debt for Federal income tax
purposes, such opinion is not binding on the IRS and thus no assurance can be
given that such a characterization will prevail. If the IRS were to contend
successfully that the Certificates were not interests in a grantor trust or
debt obligations for Federal income tax purposes, the arrangement between the
Seller and the Certificateholders might be classified as a partnership for
Federal income tax purposes, as an association taxable as a corporation or as a
"publicly traded partnership" taxable as a corporation.

If the Certificates were treated as interests in a
partnership, each item of income, gain, loss, deduction and credit generated
through the ownership of the Equipment and the Leases by the partnership would
be passed through to the partners in such a partnership (including the
Certificateholders) according to their respective interests therein. Under
current law, the income reportable by the Certificateholders as partners in
such a partnership could differ from the income reportable by the
Certificateholders as holders of debt or of interests in a grantor trust.
Except as discussed below, it is not expected that such differences would be
materially adverse to Certificateholders unless the proposed legislation,
discussed in the following paragraph, is enacted. If the Certificateholders
were treated as partners, a cash basis Certificateholder might be required to
report income when it accrues to the partnership rather than when it is
received by the Certificateholder. Moreover, if Debt Certificates were treated
as interests in a partnership, an individual Certificateholder's share of
expenses of the partnership (such as Servicing Fees) would be miscellaneous
itemized deductions that in the aggregate are allowed only to the extent they
exceed two percent of the holder's adjusted gross income, meaning that the
holder might be taxed on a greater amount of income than the stated interest on
his Debt Certificate. Finally, if the partnership is a "publicly traded
partnership" not taxable as a corporation, any taxable income allocated to an
Certificateholder that is a pension, profit sharing or employee benefit plan or
other tax-exempt entity (including an individual retirement account), that
portion of its distributive share of income from such partnership would
constitute "unrelated business taxable income" to the extent such income
constitutes unrelated business taxable income. Thus, whether a tax-exempt
entity's share of income from a partnership is treated as unrelated business
taxable income would depend on the underlying character of the income.

If, alternatively, the Certificates were treated as interests
in an association taxable as a corporation or a "publicly traded partnership"
taxable as a corporation, the resulting entity would be subject to Federal
income tax at corporate tax rates on its taxable income generated by ownership
of the Leases. Moreover, distributions by the entity on the Certificates
probably would not be deductible in computing the entity's taxable income and
all or part of distributions to Certificateholders would probably be treated as
dividend income to such Certificateholders. Such an entity-level tax could
result in a reduced amount of cash available for distributions to
Certificateholders.

Since the Seller will treat the Grantor Trust Certificates as
ownership interests in a grantor trust and Debt Certificates as indebtedness
for Federal income tax purposes, the Trustee (and Participants and Indirect
Participants) will not attempt to satisfy the tax reporting requirements that
would apply under these alternative characterizations of the Certificates.
Further, If the IRS were to contend successfully that the Certificates are
interests in a partnership or an association taxable as a corporation,
additional tax consequences would apply to Foreign Holders. Investors should
consult their own tax advisors with regard to the potential application of such
provisions.

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<PAGE> 71

DISCOUNT AND PREMIUM

A Debt Certificate purchased at original issue for an amount
other than its outstanding principal amount generally will be subject to the
rules governing original issue discount or premium. A Grantor Trust
Certificate purchased for an amount other than the aggregate outstanding
principal amount of the Leases in the Grantor Trust Estate generally will be
subject to the rules governing market discount or premium. In addition, all
Grantor Trust Strip Certificates and certain Grantor Trust Fractional Interest
Certificates will be treated as having original issue discount by virtue of the
coupon stripping rules in section 1286 of the Code. In general terms, (i)
original issue discount is treated as a form of interest and must be included
in a Holder's income as it accrues (regardless of the Holder's regular method
of accounting) using a constant yield method; (ii) market discount is treated
as ordinary income and must be included in a Holder's income as principal
payments are made on the Certificate (or upon a sale of a Certificate); and
(iii) if a Holder so elects, premium may be amortized over the life of the
Certificate and offset against inclusions of interest income. These tax
consequences are discussed in greater detail below.

ORIGINAL ISSUE DISCOUNT. In general, an Certificate will be
considered to be issued with original issue discount equal to the excess, if
any, of its "stated redemption price at maturity" over its "issue price." The
issue price of an Certificate is the initial offering price to the public
(excluding bond houses and brokers) at which a substantial amount of the
Certificates was sold. The issue price also includes any accrued interest
attributable to the period prior to the Series Issuance Date. The stated
redemption price at maturity of an Certificate is equal to the sum of all
distributions to be made under such Certificate other than amounts of
"qualified stated interest." Qualified stated interest is stated interest that
is unconditionally payable at least annually at a single fixed rate or, unless
otherwise stated in an applicable Prospectus Supplement, at one or more
variable rates. The stated redemption price at maturity of any Certificate
will include an amount equal to the excess (if any) of the interest payable on
the first Distribution Date over the interest that accrues for the period from
the Series Issuance Date to the first Distribution Date.

Notwithstanding the general definition, original issue
discount will be treated as zero if such discount is less than 0.25 percent of
the stated redemption price at maturity multiplied by its weighted average
life. The weighted average life of an Certificate is apparently computed for
this purpose as the sum, for all distributions included in the stated
redemption price at maturity, of the amounts determined by multiplying (i) the
number of complete years (rounding down for partial years) from the Series
Issuance Date until the date on which each such distribution is expected to be
made under the assumption that the Leases prepay at a specified rate (the
"Prepayment Assumption") by (ii) a fraction, the numerator of which is the
amount of such distribution and the denominator of which is the Certificate's
stated redemption price at maturity. If original issue discount is treated as
zero under this rule, the actual amount of original issue discount must be
allocated to the principal distributions on the Certificate and, when each such
distribution is received, gain equal to the discount allocated to such
distribution will be recognized.

Section 1272(a)(6) of the Code contains special original issue
discount rules directly applicable to Debt Certificates and applicable by
analogy to Grantor Trust Certificates. Investors in Grantor Trust Strip
Certificates should be aware that there can be no assurance that the rules
described below will be applied to such Certificates. Under these rules
(described in greater detail below), (i) the amount and rate of accrual of
original issue discount on each Series of Certificates will be based on (x) the
Prepayment Assumption, and (y) in the case of an Certificate calling for a
variable rate of interest, an assumption that the value of the index upon which
such variable rate is based remains equal to the value of that rate on the
Series Issuance Date, and (ii) adjustments will be made in the amount of
discount accruing in each taxable year in which the actual prepayment rate
differs from the Prepayment Assumption.

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<PAGE> 72

Section 1272(a)(6)(B)(iii) of the Code requires that the
prepayment assumption used to calculate original issue discount be determined
in the manner prescribed in Treasury regulations. To date, no such regulations
have been promulgated. The legislative history of this Code provision
indicates that the assumed prepayment rate must be the rate used by the parties
in pricing the particular transaction. The Seller anticipates that the
Prepayment Assumption for each Series of Certificates will be consistent with
this standard. The Seller makes no representation, however, that the Leases
for a given Series will prepay at the rate reflected in the Prepayment
Assumption for that Series or at any other rate. Each investor must make its
own decision as to the appropriate prepayment assumption to be used in deciding
whether or not to purchase any of the Certificates.

Each Holder must include in gross income the sum of the "daily
portions" of original issue discount on its Certificate for each day during its
taxable year on which it held such Certificate. For this purpose, in the case
of an original Holder, the daily portions of original issue discount will be
determined as follows. A calculation will first be made of the portion of the
original issue discount that accrued during each "accrual period." The Trustee
will supply, at the time and in the manner required by the IRS, to Holders,
brokers and middlemen information with respect to the original issue discount
accruing on the Certificates. Unless otherwise disclosed in the applicable
Prospectus Supplement, the Trustee will report original issue discount based on
accrual periods of one month, each beginning on a payment date (or, in the case
of the first such period, the Series Issuance Date) and ending on the day
before the next payment date.

Under section 1272(a)(6) of the Code, the portion of original
issue discount treated as accruing for any accrual period will equal the
excess, if any, of (i) the sum of (A) the present values of all the
distributions remaining to be made on the Certificate, if any, as of the end of
the accrual period and (B) the distribution made on such Certificate during the
accrual period of amounts included in the stated redemption price at maturity,
over (ii) the adjusted issue price of such Certificate at the beginning of the
accrual period. The present value of the remaining distributions referred to
in the preceding sentence will be calculated based on (i) the yield to maturity
of the Certificate, calculated as of the Series Issuance Date, giving effect to
the Prepayment Assumption, (ii) events (including actual prepayments) that have
occurred prior to the end of the accrual period, (iii) the Prepayment
Assumption, and (iv) in the case of an Certificate calling for a variable rate
of interest, an assumption that the value of the index upon which such variable
rate is based remains the same as its value on the Series Issuance Date over
the entire life of such Certificate. The adjusted issue price of an
Certificate at any time will equal the issue price of such Certificate,
increased by the aggregate amount of previously accrued original issue discount
with respect to such Certificate, and reduced by the amount of any
distributions made on such Certificate as of that time of amounts included in
the stated redemption price at maturity. The original issue discount accruing
during any accrual period will then be allocated ratably to each day during the
period to determine the daily portion of original issue discount.

In the case of Grantor Trust Strip Certificates, the
calculation described in the preceding paragraph may produce a negative amount
of original issue discount for one or more accrual periods. No definitive
guidance has been issued regarding the treatment of such negative amounts. The
legislative history to section 1272(a)(6) indicates that such negative amounts
may be used to offset subsequent positive accruals but may not offset prior
accruals and may not be allowed as a deduction item in a taxable year in which
negative accruals exceed positive accruals. Holders of such Certificates
should consult their own tax advisors concerning the treatment of such negative
accruals.

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<PAGE> 73

with respect to such Certificate (but reduced, if the cost of such Certificate
to such purchaser exceeds its adjusted issue price, by an amount equal to the
product of (i) such daily portion and (ii) a constant fraction, the numerator
of which is such excess and the denominator of which is the sum of the daily
portions of original issue discount on such Certificate for all days on or
after the day of purchase).

MARKET DISCOUNT. A Holder that purchases an Certificate at a
market discount, that is, at a purchase price less than the remaining stated
redemption price at maturity of such Certificate (or, in the case of an
Certificate with original issue discount, its adjusted issue price), will be
required to allocate each principal distribution first to accrued market
discount on the Certificate, and recognize ordinary income to the extent such
distribution does not exceed the aggregate amount of accrued market discount on
such Certificate not previously included in income. With respect to
Certificates that have unaccrued original issue discount, such market discount
must be included in income in addition to any original issue discount. A
Holder that incurs or continues indebtedness to acquire an Certificate at a
market discount may also be required to defer the deduction of all or a portion
of the interest on such indebtedness until the corresponding amount of market
discount is included in income. In general terms, market discount on an
Certificate may be treated as accruing either (i) under a constant yield method
or (ii) in proportion to remaining accruals of original issue discount, if any,
or if none, in proportion to remaining distributions of interest on the
Certificate, in any case taking into account the Prepayment Assumption. The
Trustee will make available, as required by the IRS, to Holders of Certificates
information necessary to compute the accrual of market discount.

Notwithstanding the above rules, market discount on an
Certificate will be considered to be zero if such discount is less than 0.25
percent of the remaining stated redemption price at maturity of such
Certificate multiplied by its weighted average remaining life. Weighted
average remaining life presumably would be calculated in a manner similar to
weighted average life, taking into account payments (including prepayments)
prior to the date of acquisition of the Certificate by the subsequent
purchaser. If market discount on an Certificate is treated as zero under this
rule, the actual amount of market discount must be allocated to the remaining
principal distributions on the Certificate and, when each such distribution is
received, gain equal to the discount allocated to such distribution will be
recognized.

CERTIFICATES PURCHASED AT A PREMIUM. A purchaser of an
Certificate that purchases such Certificate at a cost greater than its
remaining stated redemption price at maturity will be considered to have
purchased such Certificate (a "Premium Certificate") at a premium. Such a
purchaser need not include in income any remaining original issue discount and
may elect, under section 171(c)(2) of the Code, to treat such premium as
"amortizable bond premium." If a Holder makes such an election, the amount of
any interest payment that must be included in such Holder's income for each
period ending on a Distribution Date will be reduced by the portion of the
premium allocable to such period based on the Premium Certificate's yield to
maturity. The legislative history of the Tax Reform Act of 1986 states that
such premium amortization should be made under principles analogous to those
governing the accrual of market discount (as discussed above under "Market
Discount"). If such election is made by the Holder, the election will also
apply to all bonds the interest on which is not excludible from gross income
("fully taxable bonds") held by the Holder at the beginning of the first
taxable year to which the election applies and to all such fully taxable bonds
thereafter acquired by it, and is irrevocable without the consent of the IRS.
If such an election is not made, (i) such a Holder must include the full amount
of each interest payment in income as it accrues, and (ii) the premium must be
allocated to the principal distributions on the Premium Certificate and, when
each such distribution is received, a loss equal to the premium allocated to
such distribution will be recognized. Any tax benefit from the premium not
previously recognized will be taken into account in computing gain or loss upon
the sale or disposition of the Premium Certificate.

<PAGE> 74

Because the interest rate on a Grantor Trust Certificate
generally will be lower than the implicit interest rate on the Finance Leases
that comprise the Grantor Trust Estate, the principal amount of such
Certificates may be higher than the aggregate outstanding principal amount of
the Finance Leases. The IRS may take the position that the existence of market
discount or premium on Grantor Trust Certificates should be measured with
reference to the aggregate outstanding principal balance of the Leases, rather
than the Certificates. Accordingly, Holders of Grantor Trust Certificates
should consult with their own advisors regarding the advisability of making a
protective election to treat any premium on such Certificates as amortizable
bond premium.

SPECIAL ELECTION. A Holder may elect to include in gross
income all "interest" that accrues on the Certificate by using a constant yield
method. For purposes of the election, the term "interest" includes stated
interest, acquisition discount, original issue discount, de minimis original
issue discount, market discount, de minimis market discount and unstated
interest as adjusted by any amortizable bond premium or acquisition premium. A
Holder should consult its own tax advisor regarding the time and manner of
making and the scope of the election and the implementation of the constant
yield method.

BACKUP WITHHOLDING

Distributions of interest and principal, as well as
distributions of proceeds from the sale of Certificates, may be subject to the
"backup withholding tax" under section 3406 of the Code at a rate of 31 percent
if recipients of such distributions fail to furnish to the payor certain
information, including their taxpayer identification numbers, or otherwise fail
to establish an exemption from such tax. Any amounts deducted and withheld
from a distribution to a recipient would be allowed as a credit against such
recipient's federal income tax. Furthermore, certain penalties may be imposed
by the IRS on a recipient of distributions that is required to supply
information but that does not do so in the proper manner.

FOREIGN INVESTORS

Distributions made on a Grantor Trust Certificate or a Debt
Certificate to, or on behalf of, a Holder that is not a U.S. Person generally
will be exempt from U.S. federal income and withholding taxes. The term "U.S.
Person" means a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, or an estate or trust that
is subject to U.S. federal income tax regardless of the source of its income.
This exemption is applicable provided (a) the Holder is not subject to U.S. tax
as a result of a connection to the United States other than ownership of the
Certificate, (b) the Holder signs a statement under penalties of perjury that
certifies that such Holder is not a U.S. Person, and provides the name and
address of such Holder, and (c) the last U.S. Person in the chain of payment to
the Holder receives such statement from such Holder or a financial institution
holding on its behalf and does not have actual knowledge that such statement is
false. Holders should be aware that the IRS might take the position that this
exemption does not apply to a Holder that also owns 10 percent or more of the
total combined voting power of all classes of stock of the Seller entitled to
vote, or to a Holder that is a "controlled foreign corporation" described in
section 881(c)(3)(C) of the Code.

STATE AND LOCAL TAX CONSEQUENCES

General. State tax consequences to each Certificateholder
will depend upon the provisions of the state tax laws to which the
Certificateholder is subject. Because each state's tax law varies, it is
impossible to predict the tax consequences to the Certificateholders in all of
the state taxing jurisdictions in which they are already subject to tax.
Certificateholders are urged to consult their own tax advisors with respect to
state taxes.

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New York. New York Tax Law imposes a New York State
franchise tax and a New York City general corporation tax on corporations doing
business in New York State and City, respectively, measured by their net income
allocated and apportioned to the state and city and the municipality. This
discussion is based upon present provisions of New York law and regulations,
and applicable judicial or ruling authority, all of which are subject to
change, which change may be retroactive. No ruling on any of the issues
discussed below will be sought from any New York agency.

Assuming the Certificates are treated as ownership interests
in a grantor trust or as indebtedness for Federal income tax purposes, this
treatment will also apply for New York tax purposes. Pursuant to this
treatment, Certificateholders not otherwise subject to New York tax would not
become subject to such tax solely because of their ownership of the
Certificates. Certificateholders already subject to taxation in New York,
however, would be required to pay tax on the income generated from ownership of
these Certificates.

In the alternative, if the Certificates are treated as
interests in a partnership (not taxable as a corporation) for Federal income
tax purposes, the same treatment should also apply for New York tax purposes.
In such case, New York could view the partnership as doing business in New
York, and an Certificateholder not otherwise subject to taxation in New York
could become subject to New York State and New York City income, franchise or
withholding taxes as a result of its mere ownership of Certificates.

If the Certificates are instead treated as ownership interests
in an association taxable as a corporation or a "publicly traded partnership"
taxable as a corporation, then the entity could be subject to New York State
franchise tax and New York City general corporation tax. Such taxes could
result in reduced distributions to Certificateholders. An Certificateholder
not otherwise subject to tax in New York would not become subject to New York
taxes as a result of its mere ownership of such an interest.

NOTES

It is intended that each Series of Notes to be issued will be treated
as indebtedness of the Issuer for federal income tax purposes and not as an
ownership interest in the Leases or an equity interest in the Issuer. The
terms of each Indenture will require the Issuer and each Noteholder to treat
each Series of Notes as indebtedness of the Issuer for federal, state, local
and foreign income and other tax purposes. It is expected, however, that no
regulations, published rulings or judicial decisions confirming the
characterization for such tax purposes of securities with terms substantially
the same as the Notes.

If properly characterized as indebtedness, interest on the Notes will
be taxable as ordinary income when received by a Noteholder on the cash method
of accounting and when accrued by Noteholders on the accrual method of
accounting.

If for any reason the Notes were treated as an ownership interest in
the Leases, a proportionate share of income on such Leases would be income to
the holders of the Notes, and related fees and expenses would generally be
deductible (subject to certain limitations on the deductibility of
miscellaneous itemized deductions by individuals) and certain market discount
and premium provisions of the Internal Revenue Code of 1986, as amended (the
"Code") might apply to a purchaser of the Notes.

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<PAGE> 76

to those holders. Such an Issuer-level tax could result in a reduced amount of
cash available for distributions to the holders of the Notes.

Potential Noteholders are encouraged to consult their own tax advisors
with regard to the federal, state and local tax consequences of their ownership
of the Notes.

STATE AND LOCAL TAX CONSEQUENCES

State tax consequences to each Securityholder will depend upon the
provisions of the state tax laws to which the Certificateholder is subject.
Most states modify or adjust the taxpayer's Federal taxable income to arrive at
the amount of income potentially subject to state tax. Resident individuals
generally pay state tax on 100% of such state-modified income, while
corporations and other taxpayers generally pay state tax only on that portion
of state- modified income assigned to the taxing state under the state's own
apportionment and allocation rules. Because each state's tax law varies, it is
impossible to predict the tax consequences to the Securityholders in all the
state taxing jurisdictions in which they are already subject to tax.
Securityholders are urged to consult their own tax advisors with respect to
state taxes.

ERISA CONSIDERATIONS

The Prospectus Supplement for each series of Securities will summarize,
subject to the limitations discussed therein, considerations under ERISA
relevant to the purchase of such Securities by employee benefit plans and
individual retirement accounts.

METHOD OF DISTRIBUTION

The Securities offered hereby and by the related Prospectus Supplement
will be offered in series through one or more of the methods described below.
The Prospectus Supplement prepared for each series will describe the method of
offering being utilized for that series and will state the public offering or
purchase price of such series and the net proceeds to the Company from such
sale.

The Company intends that Securities will be offered through the
following methods from time to time and that offerings may be made concurrently
through more than one of these methods or that an offering of a particular
series of Securities may be made through a combination of two or more of these
methods. Such methods are as follows:

1. By negotiated firm commitment or best efforts underwriting
and public re-offering by underwriters;

2. By placements by the Company with institutional investors
through dealers;

3. By direct placements by the Company with institutional
investors; and

4. By competitive bid.

In addition, if specified in the related Prospectus Supplement, a
series of Securities may be offered in whole or in part in exchange for the
Receivables (and other assets, if applicable) that would comprise the Asset
Pool in respect of such Securities.

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<PAGE> 77

If underwriters are used in a sale of any Securities (other than in
connection with an underwriting on a best efforts basis), such Securities will
be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions, at
fixed public offering prices or at varying prices to be determined at the time
of sale or at the time of commitment therefor. The Securities will be set
forth on the cover of the Prospectus Supplement relating to such series and the
members of the underwriting syndicate, if any, will be named in such Prospectus
Supplement.

In connection with the sale of the Securities, underwriters may receive
compensation from the Company or from purchasers of the Securities in the form
of discounts, concessions or commissions. Underwriters and dealers
participating in the distribution of the Securities may be deemed to be
underwriters in connection with such Securities, and any discounts or
commissions received by them from the Company and any profit on the resale of
Securities by them may be deemed to be underwriting discounts and commissions
under the Securities Act. The Prospectus Supplement will describe any such
compensation paid by the Company.

It is anticipated that the underwriting agreement pertaining to the
sale of any series of Securities will provide that the obligations of the
underwriters will be subject to certain conditions precedent, that the
underwriters will be obligated to purchase all such Securities if any are
purchased (other than in connection with an underwriting on a best efforts
basis) and that, in limited circumstances, the Company will indemnify the
several underwriters and the underwriters will indemnify the Company against
certain civil liabilities, including liabilities under the Securities Act or
will contribute to payments required to be made in respect thereof.

The Prospectus Supplement with respect to any series offered by
placements through dealers will contain information regarding the nature of
such offering and any agreements to be entered into between the Company and
purchasers of Securities of such series.

Purchasers of Securities, including dealers, may, depending on the
facts and circumstances of such purchases, be deemed to be "underwriters"
within the meaning of the Securities Act in connection with reoffers and sales
by them of Securities. Holders of Securities should consult with their legal
advisors in this regard prior to any such reoffer or sale.

LEGAL OPINIONS

Certain legal matters relating to the issuance of the Securities of any
series, including certain federal and state income tax consequences with
respect thereto, will be passed upon by Dewey Ballantine, New York, New York.

FINANCIAL INFORMATION

A new Asset Pool will be formed with respect to each Series of
Securities and no Asset Pool will engage in any business activities or have any
assets or obligations prior to the issuance of the related Series of
Securities. The Company's activities will be limited solely to the activities
of Asset Pools to be formed with respect to each Series of Securities.
Accordingly, no financial statements with respect to any Asset Pool will be
included in this Prospectus or in the related Prospectus Supplement.

A Prospectus Supplement may contain the financial statements of the
related Credit Enhancer, if any.

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ADDITIONAL INFORMATION

This Prospectus, together with the Prospectus Supplement for each
series of Securities, contains a summary of the material terms of the
applicable exhibits to the Registration Statement and the documents referred to
herein and therein. Copies of such exhibits are on file at the offices of the
Securities and Exchange Commission in Washington, D.C., and may be obtained at
rates prescribed by the Commission upon request to the Commission and may be
inspected, without charge, at the Commission's offices.

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INDEX OF TERMS

Set forth below is a list of the defined terms used in this Prospectus
and the pages on which the definitions of such terms may be found herein.

<TABLE>
<S> <C>
Accrual Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Additional Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13, 47
APR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Cede . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
CEDEL Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 5
Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Collection Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 34
Company's Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Contingent and Excess Liability Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Cooperative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Credit Enhancement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Credit Enhancer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Debt Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Debt Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Definitive Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Depositaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Direct Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Distribution Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Eligible Deposit Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Eligible Institution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Eligible Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Euroclear Operator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Euroclear Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Excess Residual Value Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 19
First Sierra . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Grantor Trust Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Grantor Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Grantor Trust Fractional Interest Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Grantor Trust Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Grantor Trust Strip Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Indirect Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24, 40
Insolvency Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
</TABLE>

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<TABLE>
<S> <C>
Insolvency Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 7
Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Investment Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Lessor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Lockbox . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Matured Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Net Investment Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Originator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Outstanding Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Owner Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 5
Pool Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Pooling Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Pre-Funding Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 47
Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Primary Residual Value Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Prospectus Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 5
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Relief Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Remittance Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Residual Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Residual Value Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Rule of 78s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Security Insurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Senior Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Servicer Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Special Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Strip Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Subordinate Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Terms and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 4
Trust Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 5
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
</TABLE>

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====================================================== ==================================================

No person has been authorized to give any information
or to make any representations other than those LEASE BACKED
contained or incorporated by reference in this
Prospectus Supplement or the Prospectus in connection
with the offer made by this Prospectus Supplement and
the Prospectus and, if given or made, such information
or representations must not be relied upon as having
been authorized by the Company or the Underwriter(s).
This Prospectus Supplement and the Prospectus do not FIRST SIERRA RECEIVABLES II, INC.
constitute an offer or solicitation by anyone in any
state in which such offer or solicitation is not
authorized or in which the person making such offer or
solicitation is not qualified to do so or to anyone to
whom it is unlawful to make such offer or
solicitation. The delivery of this Prospectus
Supplement or the Prospectus at any time does not
imply that information herein or therein is correct as
of any time subsequent to its date.
--------------------------

TABLE OF CONTENTS

PROSPECTUS

Page
----
Prospectus Supplement . . . . . . . . . . . . . . . 2 [Date]
Available Information . . . . . . . . . . . . . . . 2
Incorporation of Certain
Documents by Reference . . . . . . . . . . . . . 2
Reports to Securityholders . . . . . . . . . . . . 3
Summary of Terms . . . . . . . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . . . . . . . . . 16
Use of Proceeds . . . . . . . . . . . . . . . . . . 21
The Issuers . . . . . . . . . . . . . . . . . . . . 21
The Asset Pools . . . . . . . . . . . . . . . . . . 22
The Receivables . . . . . . . . . . . . . . . . . . 23
Maturity and Prepayment Considerations . . . . . . 25
Pool Factors . . . . . . . . . . . . . . . . . . . 25
The Company . . . . . . . . . . . . . . . . . . . . 26
The Servicer . . . . . . . . . . . . . . . . . . . 27
The Trustees . . . . . . . . . . . . . . . . . . . 29
Description of the Trust Agreements . . . . . . . . 36
Certain Legal Aspects of the Receivables . . . . . 46
Certain Tax Considerations . . . . . . . . . . . . 48
ERISA Considerations . . . . . . . . . . . . . . . 52
Method of Distribution . . . . . . . . . . . . . . 52
Legal Opinions . . . . . . . . . . . . . . . . . . 53
Financial Information . . . . . . . . . . . . . . . 54
Additional Information . . . . . . . . . . . . . . 54
Index of Terms . . . . . . . . . . . . . . . . . . 55 -----------------------------
PROSPECTUS
-----------------------------
------------------------------

Until _____________, 1996(90 days after the date
of this Prospectus Supplement), all dealers effecting
transactions in the Securities, whether or not
participating in this distribution, may be required to
deliver a Prospectus Supplement and a Prospectus.
This is in addition to the obligation of dealers to
deliver a Prospectus Supplement and a Prospectus when
acting as underwriter(s) and with respect to their
unsold allotments or subscriptions. [UNDERWRITER]

====================================================== ==================================================
</TABLE>
<PAGE> 82
PROSPECTUS

Lease Backed Securities Issuable in Series

FIRST SIERRA RECEIVABLES II, INC.
Company

First Sierra Financial Inc.,
Servicer

This Prospectus describes certain Equipment Lease Backed Notes (the
"Notes") and Equipment Lease Backed Certificates (the "Certificates" and,
together with the Notes, the "Securities") that may be sold from time to time
in one or more series, in amounts, at prices and on terms to be determined at
the time of sale and to be set forth in a supplement to this Prospectus (each,
a "Prospectus Supplement"). Each series of Securities may include one or more
classes of Notes and one or more classes of Certificates. Each Series will be
issued either by First Sierra Receivables II, Inc. (the "Company"), or by a
trust to be formed by the Company for the purpose of issuing one or more series
of such Securities (each, a "Trust"). The Company or a Trust (which may be an
owner trust), as appropriate, issuing Securities as described in this
Prospectus and the related Prospectus Supplement shall be referred to herein as
the "Issuer."

Each class of Securities of any series will evidence beneficial
ownership in a segregated pool of assets segregated from the general assets of
the Company or a segregated pool of assets owned by a Trust (each, an "Asset
Pool") (such Securities, "Certificates") or will represent indebtedness of the
Issuer secured by the Asset Pool (such Securities, "Notes"), as described
herein and in the related Prospectus Supplement. Each Asset Pool may consist
of any combination of operating leases, finance leases or participation
interests in one or more pools of operating and/or finance leases, together
with all monies received relating thereto (the "Contracts"). Each Asset Pool
may also include the underlying equipment and property relating thereto,
together with the proceeds thereof (the "Equipment" together with the
Contracts, the "Receivables"). If and to the extent specified in the related
Prospectus Supplement, credit enhancement with respect to an Asset Pool or any
class of Securities may include any one or more of the following: a financial
guaranty insurance policy (a "Policy") issued by an insurer specified in the
related Prospectus Supplement, a reserve account, letters of credit, credit or
liquidity facilities, third party payments or other support, cash deposits or
other arrangements. In addition to or in lieu of the foregoing, credit
enhancement may be provided by means of subordination, cross-support among the
Receivables or over-collateralization. See "Description of the Trust
Agreements -- Credit Enhancements." The Receivables in the Asset Pool for a
series will have been originated by First Sierra Financial, Inc. (the "Seller"
or "First Sierra") or acquired by First Sierra from other entities generally in
the business of originating or acquiring Receivables. Except to the extent
provided herein and in the related Prospectus Supplement, the Company will
acquire the Receivables from the Seller on or prior to the date of issuance of
the related Securities, as described herein and in the related Prospectus
Supplement. Each series of Securities will include one or more classes (each,
a "Class"). A series may include one or more Classes of Securities entitled to
principal distributions, with disproportionate, nominal or no interest
distributions, or to interest distributions, with disproportionate, nominal or
no principal distributions. The rights of one or more Classes of Securities of
any series may be senior or subordinate to the rights of one or more of the
other Classes of Securities. A series may include two or more Classes of
Securities which differ as to the timing, sequential order, priority of
payment, interest rate or amount of distributions of principal or interest or
both. Information regarding each Class of Securities of a series, together
with certain characteristics of the related Receivables, will be set forth in
the related Prospectus Supplement. The rate of payment in respect of principal
of the Securities of any Class will depend on the priority of payment of such a
Class and the rate and timing of payments (including prepayments, defaults,
liquidations or repurchases of Receivables) on the related Receivables. A rate
of payment lower or higher than that anticipated may affect the weighted
average life of each Class of Securities in the manner described herein and in
the related Prospectus Supplement. See "Description of the Securities."

PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER
"RISK FACTORS" ON PAGE HEREIN AND IN THE RELATED PROSPECTUS SUPPLEMENT.

THE NOTES OF A GIVEN SERIES REPRESENT OBLIGATIONS OF THE ISSUER ONLY AND DO NOT
REPRESENT INTERESTS OF FIRST SIERRA, ANY SERVICER, ANY SUBSERVICER, ANY LESSOR
OR ANY OF THEIR RESPECTIVE AFFILIATES. THE CERTIFICATES OF A GIVEN SERIES
REPRESENT BENEFICIAL INTERESTS IN THE RELATED TRUST ONLY AND DO NOT REPRESENT
INTERESTS IN OR OBLIGATIONS OF THE COMPANY, FIRST SIERRA, ANY SERVICER, ANY
SUBSERVICER, ANY LESSOR 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 FIRST SIERRA, THE COMPANY, ANY
SERVICER, ANY LESSOR, ANY TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES, EXCEPT
AS SET FORTH IN THE RELATED PROSPECTUS SUPPLEMENT. SEE ALSO "RISK FACTORS."

RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE. THIS PROSPECTUS
MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES UNLESS ACCOMPANIED BY A
PROSPECTUS SUPPLEMENT.

The date of this Prospectus is April 18, 1996.
<PAGE> 83

PROSPECTUS SUPPLEMENT

AVAILABLE INFORMATION

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

REPORTS TO SECURITYHOLDERS

3
<PAGE> 85

SUMMARY OF TERMS

Issuers . . . . . . . . . . With respect to each series of Securities,
either the Company or a trust (each, a
"Trust") to be formed by the Company. The
Company or a Trust issuing Securities
pursuant to this Prospectus and the related
Prospectus Supplement shall be referred to
herein as the "Issuer" with respect to the
related Securities. Each class of Securities
will be issued by the Company or a Trust and
will either evidence a beneficial ownership
in or indebtedness secured by a segregated
pool of assets segregated from the general
assets of the Company or a segregated pool of
assets owned by a Trust (such pool of assets,
a "Asset Pool"). No Series will be secured
by more than one Asset Pool, except to the
extent that more than one Asset Pool receives
the benefit of a common form of credit
enhancement. See "The Issuers."

Company . . . . . . . . . First Sierra Receivables II, Inc., a Delaware
corporation, (the "Company"). The principal
office of the Company is located at 218 South
U.S. Highway 1, Suite 303, Tequesta, Florida
33469, and its telephone number is
(407)-745-9292. The Company is a
wholly-owned subsidiary of the Servicer. See
"The Company."

Servicer . . . . . . . . . First Sierra Financial, Inc., a Delaware
corporation (the "Servicer" 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. See
"The Servicer."

Seller . . . . . . . . . . The Company will acquire the Receivables from
First Sierra or an affiliate (collectively
the "Seller"). The Receivables will be
acquired by the Seller either (a) as the
result of the acquisition of equipment lease
portfolios from small ticket lessors (the
"Portfolio Acquisition Program") or (b) as
the result of the ongoing acquisition of
equipment leases which comply with certain
underwriting criteria specified by First
Sierra from certain lessors as such leases
are originated (the "Private Label Program").
A "small-ticket" lessor, is a lessor who
leases equipment having original equipment
costs which are generally less than $1
million. For a more complete description of
the Portfolio Acquisition Program and the
Private Label Program please see the
descriptions under the caption "The
Receivables" herein and in the related
Prospectus Supplement.

Trustee . . . . . . . . . . The Trustee for each series of Securities
will be specified in the related Prospectus
Supplement.

4
<PAGE> 86

The Securities . . . . . . Each Class of Securities of any series will
evidence beneficial ownership in an Asset
Pool) (such Securities, "Certificates") or
will represent indebtedness of the Issuer
secured by the Asset Pool (such Securities,
"Notes"), as described herein and in the
related Prospectus Supplement. Each Asset
Pool may consist of any combination of
operating leases, finance leases, or
participation interests in one or more pools
of operating and/or finance leases, together
with all monies received relating thereto
(the "Contracts"). The characteristics of a
particular Asset Pool will be more fully
described in the related Prospectus
Supplement. To the extent any Asset Pool
includes participation interests in
previously issued lease-backed securities,
such securities: (a) either will have (i)
been previously registered under the
Securities Act, or (ii) held for at least the
Rule 144(k) holding period; and (b) will have
been acquired in a bona fide secondary market
transaction not from the issuer of such
securities or an affiliate thereof. In
addition, (x) the inclusion of such
participation interests must not require the
issuer of such participation interests to
register such participation interests with
the Commission because such issuer would be
considered a "co-issuer" of the securities
backed in part by such participation
interests and (y) following the inclusion of
such participation interests, the Issuer must
continue to satisfy the requirements to be an
offering of "asset-backed securities" as such
term is defined in the instructions to the
Registration Statement on Form S-3. Each
Asset Pool also may include the underlying
equipment and property relating thereto,
together with the proceeds thereof (the
"Equipment" and together with the Contracts,
the "Receivables"). If and to the extent
specified in the related Prospectus
Supplement, credit enhancement with respect
to an Asset Pool or any class of Securities
may include any one or more of the following:
a financial guaranty insurance policy (a
"Policy") issued by an insurer specified in
the related Prospectus Supplement, a reserve
account, letters of credit, credit or
liquidity facilities, third party payments or
other support, cash deposits or other
arrangements. In addition to or in lieu of
the foregoing, credit enhancement may be
provided by means of subordination,
cross-support among the Receivables or
over-collateralization. The Company will
acquire the Receivables from the Seller on or
prior to the date of issuance of the related
Securities, as described herein and in the
related Prospectus Supplement.

With respect to Securities issued by a Trust,
each Trust will be established pursuant to an
agreement (each, a "Pooling Agreement") by
and between the Company and the Trustee named
therein. Each Pooling Agreement will
describe the related pool of Receivables held
by the Trust.

With respect to Securities that represent
debt issued by the Issuer, the Issuer will
enter into an indenture (each, an
"Indenture") by and between the Issuer and
the trustee named on such Indenture (the
"Indenture Trustee"). Each Indenture will
describe the related pool

5
<PAGE> 87

of Receivables comprising the Asset Pool and
securing the debt issued by the related
Issuer.

The Receivables comprising each Asset Pool
will be serviced by the Servicer pursuant to
a servicing agreement (each, a "Servicing
Agreement") by and between the Servicer and
the related Issuer. In addition, the lessors
from whom the Receivables were acquired
(each, a "Lessor") may be required to perform
certain monitoring and collection functions
with respect to the Receivables on behalf of
the Seller and its assignee pursuant to the
purchase agreement between the First Sierra
and such Lessor (each, a "Purchase
Agreement") Such Purchase Agreements will be
assigned to the Asset Pool.

In the case of any individual Asset Pool, the
contractual arrangements relating to the
establishment of a Trust, if any, the
servicing of the related Receivables and the
issuance of the related Securities may be
contained in a single agreement, or in
several agreements which combine certain
aspects of the Pooling Agreement, the
Servicing Agreement and the Indenture
described above (for example, a pooling and
servicing agreement, or a servicing and
collateral management agreement). For
purposes of this Prospectus, the term "Trust
Agreement" as used with respect to an Asset
Pool means, collectively, and except as
otherwise described in the related Prospectus
Supplement, any and all agreements relating
to the establishment of a Trust, if any, the
servicing of the related Receivables and the
issuance of the related Securities. The term
"Trustee" means any and all persons acting as
a trustee pursuant to a Trust Agreement.

Securities Will Be Non-Recourse to the Seller.

The Securities will not be obligations,
either recourse or non-recourse (except for
certain non-recourse debt described under
"Certain Tax Considerations" in the related
Prospectus Supplement), of the Servicer, the
Seller or any person other than the related
Issuer. The Notes of a given series
represent obligations of the Issuer, and the
Certificates of a given series represent
beneficial interests in the related Trust
only and do not represent interests in or
obligations of the Company, the Seller or any
of their respective affiliates other than the
related Trust. In the case of Securities
that represent beneficial ownership interest
in the related Trust, such Securities will
represent the beneficial ownership interests
in such Trust and the sole source of payment
will be the assets of such Trust. In the
case of Securities that represent debt issued
by the related Issuer, such Securities will
be secured by assets in the related Asset
Pool. Notwithstanding the foregoing, and as
to be described in the related Prospectus
Supplement, certain types of credit
enhancement, such as a letter of credit,
financial guaranty insurance policy or
reserve fund may

6
<PAGE> 88

constitute a full recourse obligation of the
issuer of such credit enhancement.

General Nature of the Securities as Investments.

All of the Securities offered pursuant to
this Prospectus and the related Prospectus
Supplement will be rated in one of the four
highest rating categories by one or more
Rating Agencies (as defined herein).

Additionally, the Securities offered pursuant
to this Prospectus and the related Prospectus
Supplement generally will be of the
fixed-income type having a principal balance
(or certificate balance) and a specified
interest rate ("Interest Rate"). Securities
may either represent beneficial ownership
interests in the related Receivables held by
the related Trust or debt secured by certain
assets of the related Issuer.

Each series or Class of Securities offered
pursuant to this Prospectus may have a
different Interest Rate, which may be a fixed
or adjustable Interest Rate. The related
Prospectus Supplement will specify the
Interest Rate for each series or Class of
Securities described therein, or the initial
Interest Rate and the method for determining
subsequent changes to the Interest Rate.

A series may include one or more Classes of
Securities ("Strip Securities") entitled (i)
to principal distributions, with
disproportionate, nominal or no interest
distributions, or (ii) to interest
distributions, with disproportionate, nominal
or no principal distributions. In addition,
a Series of Securities may include two or
more Classes of Securities that differ as to
timing, sequential order, priority of
payment, Interest Rate or amount of
distribution of principal or interest or
both, or as to which distributions of
principal or interest or both on any Class
may be made upon the occurrence of specified
events, in accordance with a schedule or
formula, or on the basis of collections from
designated portions of the related pool of
Receivables. Any such series may include one
or more Classes of Securities ("Accrual
Securities"), as to which certain accrued
interest will not be distributed but rather
will be added to the principal balance (or
nominal balance, in the case of Accrual
Securities which are also Strip Securities)
thereof on each Payment Date, as hereinafter
defined, or in the manner described in the
related Prospectus Supplement.

If so provided in the related Prospectus
Supplement, a series may include one or more
other Classes of Securities (collectively,
the "Senior Securities") that are senior to
one or more other Classes of Securities
(collectively, the "Subordinate Securities")
in respect of certain distributions of
principal and interest and allocations of
losses on Receivables.

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<PAGE> 89

In addition, certain Classes of Senior (or
Subordinate) Securities may be senior to
other Classes of Senior (or Subordinate)
Securities in respect of such distributions
or losses.

General Payment Terms of Securities.

As provided in the related Trust Agreement
and as described in the related Prospectus
Supplement, the holders of the Securities
("Securityholders") will be entitled to
receive payments on their Securities on
specified dates (each, a "Payment Date").
Payment Dates with respect to Securities will
occur monthly, quarterly or semi-annually,
as described in the related Prospectus
Supplement.

The related Prospectus Supplement will
describe a date (the "Record Date") preceding
such Payment Date, as of which the Trustee or
its paying agent will fix the identity of the
Securityholders for the purpose of receiving
payments on the next succeeding Payment Date.
As described in the related Prospectus
Supplement, the Payment Date will be a
specified day of each month, commonly the
tenth, fifteenth or twenty-fifth day of each
month (or, in the case of quarterly-pay
Securities, the tenth, fifteenth or
twenty-fifth day of every third month; and in
the case of semi-annual pay Securities, the
tenth, fifteenth or twenty-fifth day of every
sixth month) and the Record Date will be the
close of business as of the last day of the
calendar month that precedes the calendar
month in which such Payment Date occurs.

As more fully described in the related
Prospectus Supplement, each Trust Agreement
will describe a period (each, a "Remittance
Period") preceding each Payment Date (for
example, in the case of monthly-pay
Securities, the calendar month preceding the
month in which a Payment Date occurs). As
more fully described in the related
Prospectus Supplement, collections received
on or with respect to the related Receivables
constituting an Asset Pool during a
Remittance Period will be required to be
remitted by the Servicer to the related
Trustee prior to the related Payment Date and
will be used to fund payments to
Securityholders on such Payment Date. As may
be described in the related Prospectus
Supplement, the related Trust Agreement may
provide that all or a portion of the payments
collected on or with respect to the related
Receivables may be applied by the related
Trustee to the acquisition of additional
Receivables during a specified period (rather
than be used to fund payments of principal to
Securityholders during such period), with the
result that the related Securities will
possess an interest-only period, also
commonly referred to as a revolving period,
which will be followed by an amortization
period. Any such interest only or revolving
period may, upon the occurrence of certain
events to be described in the related
Prospectus Supplement, terminate prior to the
end of the specified period and result in the
earlier than expected amortization of the
related Securities.

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<PAGE> 90

In addition, and as may be described in the
related Prospectus Supplement, the related
Trust Agreement may provide that all or a
portion of such collected payments may be
retained by the Trustee (and held in certain
temporary investments, including Receivables
satisfying the criteria more fully described
in the related Prospectus Supplement) for a
specified period prior to being used to fund
payments of principal to Securityholders.
Such retention and temporary investment by
the Trustee of such collected payments may be
required by the related Trust Agreement for
the purpose of (a) slowing the amortization
rate of the related Securities relative to
the rent payment schedule of the related
Receivables, or (b) attempting to match the
amortization rate of the related Securities
to an amortization schedule established at
the time such Securities are issued. Any
such feature applicable to any Securities may
terminate upon the occurrence of events to be
described in the related Prospectus
Supplement, resulting in distributions to the
specified Securityholders and an acceleration
of the amortization of such Securities.

As more fully specified in the related
Prospectus Supplement, neither the Securities
nor the underlying Receivables will be
guaranteed or insured by any governmental
agency or instrumentality or the Company,
First Sierra, the Servicer, any Lessor, any
Trustee, or any of their affiliates.

No Investment Companies . . Neither the Company nor any Trust will
register as an "investment company" under the
Investment Company Act of 1940, as amended
(the "Investment Company Act").

The Company's Interest . . With respect to each Trust, the "Company's
Interest" at any time represents the rights
to the related Asset Pool in excess of the
Securityholders' interest of all series then
outstanding that were issued by such Trust.
The Company's Interest in any Asset Pool will
fluctuate as the aggregate Discounted
Contract Balance of such Asset Pool changes
from time to time. A portion of the
Company's interest may be sold separately in
one or more public or private transactions.

The Asset Pools . . . . . . As specified in the related Prospectus
Supplement, each Asset Pool will consist of
the related Contracts, and may include the
related Equipment. If and to the extent
specified in the related Prospectus
Supplement, credit enhancement with respect
to an Asset Pool or any class of Securities
may include any one or more of the following:
a Policy issued by an insurer specified in
the related Prospectus Supplement, a reserve
account, letters of credit, credit or
liquidity facilities, repurchase obligations,
third party payments or other support, cash
deposits or other arrangements. In addition
to or in lieu of the foregoing, credit
enhancement may be provided by means of
subordination, cross-support among the
Receivables or over-collateralization. See
"Description of the Trust

9
<PAGE> 91

Agreements -- Credit Enhancements." The
Contracts are obligations for the lease (a
"Lease") or purchase of the Equipment, or
evidence borrowings used to acquire the
Equipment, entitling the obligor thereunder
(the "Lessor") to payments of rent and
related payments and to either the return of
the Equipment at the termination of the
related Contract or, with respect to certain
of the Contracts, the payment of a purchase
price for the Equipment at the election of
the obligee thereunder (the "Lessee").

The Leases will be of two general types,
operating leases and finance leases.
"Operating Leases" usually have a term of
three years or less, whereas "Finance Leases"
usually have a term greater than three years.
In a Finance Lease, the Lessor transfers
substantially all benefits and risks of
ownership to the Lessee. In accordance with
Statement of Financial Accounting Standards
No. 13 ("FASB 13"), a Lease is classified as
a Finance Lease if the collectibility of
lease payments are reasonably certain and it
meets one of the following criteria: (1) the
Lease transfers title and ownership of the
Equipment to the Lessee by the end of the
Lease term; (2) the Lease contains a bargain
purchase option; (3) the Lease term at
inception is at least 75% of the estimated
life of the Equipment; or (4) the present
value of the minimum Lease payments is at
least 90% of the fair market value of the
Equipment at inception of the Lease. All
Leases which do not meet the criteria of
Finance Leases are classified, in accordance
with FASB 13, as Operating Leases. The
related Prospectus Supplement will describe
the type and characteristics of the Contracts
included in each Asset Pool relating to the
Securities offered pursuant to this
Prospectus and the related Prospectus
Supplement.

The Receivables comprising an Asset Pool
shall be either (i) originated by the Seller,
(ii) originated by Lessors and acquired by
the Seller or (iii) acquired by the Seller
from other originators or owners of
Receivables. See "The Receivables."

With respect to the Receivables comprising
each Asset Pool, the Company will receive the
related Receivables from the Seller pursuant
to a Contribution and Sale Agreement as
defined herein. The Company will either
transfer such Receivables to a Trust pursuant
to a Pooling Agreement or pledge the
Company's right, title and interest in and to
such Receivables to a Trustee on behalf of
Securityholders pursuant to an Indenture.
The Contracts transferred to a Trust or
pledged to a Trustee shall have a Discounted
Contract Balance (as defined below) specified
in the related Prospectus Supplement. The
rights and benefits of the Company under such
Contribution and Sale Agreement will be
assigned to the Trustee on behalf of the
related Securityholders. The obligations of
the Company and the Servicer under such Trust
Agreements include those specified below and
in the related Prospectus Supplement.

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<PAGE> 92

The "Discounted Contract Balance" of a
Contract as of any Cut-Off Date is the
present value of all of the remaining
payments scheduled to be made with respect to
such Contract, discounted at a rate specified
in the related Prospectus Supplement and the
Trust Agreement.

Pre-Funding Account . . . . If so specified in the related Prospectus
Supplement, a portion of the issuance
proceeds of the Securities of a particular
series (such amount, (the "Pre-Funded
Amount") will be deposited in an account (the
"Pre-Funding Account") to be established with
the Trustee, which will be used to acquire
Additional Receivables from time to time
during time period specified in the related
Prospectus Supplement. Prior to the
investment of the Pre-Funded Amount in
Additional Receivables, such Pre-Funded
Amount will be invested in one or more
Eligible Investments. An "Eligible
Investment" is any of the following, in each
case as determined at the time of the
investment or contractual commitment to
invest therein (to the extent such
investments would not require registration of
the Trust as an investment company pursuant
to the Investment Company Act): (a)
negotiable instruments or securities
represented by instruments in bearer or
registered or book-entry form which evidence:
(i) obligations which have the benefit of the
full faith and credit of the United States of
America, including depository receipts issued
by a bank as custodian with respect to any
such instrument or security held by the
custodian for the benefit of the holder of
such depository receipt, (ii) demand deposits
or time deposits in, or bankers' acceptances
issued by, any depositary institution or
trust company incorporated under the laws of
the United States of America or any state
thereof and subject to supervision and
examination by Federal or state banking or
depositary institution authorities; provided
that at the time of the Trustee's investment
or contractual commitment to invest therein,
the certificates of deposit or short-term
deposits (if any) or long-term unsecured debt
obligations (other than such obligations
whose rating is based on collateral or on the
credit of a Person other than such
institution or trust company) of such
depositary institution or trust company has a
credit rating in highest rating category from
each Rating Agency, (iii) certificates of
deposit having a rating in the highest rating
category by the Rating Agencies, or (iv)
investments in money market funds which are
(or which are composed of instruments or
other investments which are) rated in the
highest rating category by the Rating
Agencies; (b) demand deposits in the name of
the Trustee in any depositary institution or
trust company referred to in clause (a)(ii)
above; (c) commercial paper (having original
or remaining maturities of no more than 270
days) having a credit rating in the highest
rating category by the Rating Agencies; (d)
Eurodollar time deposits that are obligations
of institutions whose time deposits carry a
credit rating in the highest rating category
by the Rating Agencies; (e) repurchase
agreements involving any Eligible Investment
described

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<PAGE> 93

in any of clauses (a)(i), (a)(iii) or (d)
above, so long as the other party to the
repurchase agreement has its long-term
unsecured debt obligations rated in the
highest rating category by the Rating
Agencies; and (f) any other investment with
respect to which the Rating Agencies rating
such Securities indicate will not result in
the reduction or withdrawal of its
then-existing rating of the Securities.Any
Eligible Investment must mature no later than
the Business Day prior to the next Payment
Date.

During any Pre-Funding Period, the Company
will be obligated (subject only to the
availability thereof) to acquire from the
Seller and to either transfer to a Trust or
pledge to a Trustee on behalf of
Securityholders, additional Receivables (the
"Additional Receivables") from time to time
during such Pre-Funding Period. Such
Additional Receivables be required to satisfy
certain eligibility criteria more fully set
forth in the related Prospectus Supplement
which eligibility criteria will be consistent
with the eligibility criteria of the
Receivables included in the Trust Estate as
of the issuance date subject to such
exceptions as are expressly stated in such
Prospectus Supplement.

Although the specific parameters of the
Pre-Funding Account with respect to any
issuance of Securities will be specified in
the related Prospectus Supplement, it is
anticipated that: (a) the Pre-Funding Period
will not exceed 120 days from the related
Closing Date, (b) that the Additional Leases
to be acquired during the Pre-Funding Period
will be subject to the same representations
and warranties as the Leases included in the
related Asset Pool on the Closing Date
(although additional criteria may also be
required to be satisfied, as described in the
related Prospectus Supplement) and (c) that
the Pre-Funded Amount will not exceed 25% of
the principal amount of the Securities issued
pursuant to a particular offering.

Registration of Securities Securities may be represented by global
securities registered in the name of Cede &
Co. ("Cede"), as nominee of The Depository
Trust Company ("DTC"), or another nominee.
In such case, Securityholders will not be
entitled to receive definitive securities
representing such Securityholders' interests,
except in certain circumstances described in
the related Prospectus Supplement. See
"Description of the Securities -- Book Entry
Registration" herein.

Credit Enhancement . . . . If and to the extent specified in the related
Prospectus Supplement, credit enhancement
with respect to an Asset Pool or any class of
Securities may include any one or more of the
following: a Policy issued by an insurer
specified in the related Prospectus
Supplement (a "Security Insurer"), a reserve
account, letters of credit, credit or
liquidity facilities, third party payments or
other support, cash deposits or other
arrangements. Any form of credit

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<PAGE> 94

enhancement will have certain limitations and
exclusions from coverage thereunder, which
will be described in the related Prospectus
Supplement. See "Description of the Trust
Agreements -- Credit Enhancements." To the
extent that shortfalls in the proceeds of the
Contracts occur which exceed the amount
covered by the credit enhancement or which
are not covered by the credit enhancement
available to a particular Series or Class,
Certificateholders will bear their allocable
share of any deficiencies. See "Risk Factors
- Limited Assets" herein, and to the extent
applicable, in the related Prospectus
Supplement.

Any form of credit enhancement will have
certain limitations and exclusions from
coverage thereunder, which will be described
in the related Prospectus Settlement. See
"Description of the Trust Agreements - Credit
Enhancements."

Cross-Collateralization . As described in the related Trust Agreement
and the related Prospectus Supplement, the
source of payment for Securities of each
series will be the assets of the related
Asset Pool only.

However, as may be described in the related
Prospectus Supplement, a series or class of
Securities may include the right to receive
moneys from a common pool of credit
enhancement which may be available for more
than one series of Securities, such as a
master reserve account, master insurance
policy or a master collateral pool consisting
of similar Receivables. Notwithstanding the
foregoing, and as described in the related
Prospectus Supplement, no payment received on
any Receivable held by any Trust may be
applied to the payment of Securities issued
by any other Trust (except to the limited
extent that certain collections in excess of
the amounts needed to pay the related
Securities may be deposited in a common
master reserve account or an
overcollateralization account that provides
credit enhancement for more than one series
of Securities issued pursuant to the related
Trust Agreement).

Mandatory Repurchase
of Certain Contracts . . . As more fully described in the related
Prospectus Supplement, the Company will be
obligated to acquire from the related Asset
Pool any Receivable transferred pursuant to a
Pooling Agreement or pledged pursuant to an
Indenture if the interest of the
Securityholders therein is materially
adversely affected by a breach of any
representation or warranty made by the
Company or the Seller with respect to such
Receivable, which breach has not been cured.
The Seller will be obligated to acquire any
such Receivable from the Company pursuant to
the related Contribution and Sale Agreement
contemporaneously with the Company's
acquisition of any such Receivable from the
applicable Asset Pool. The obligation of the
Company to acquire any such Receivable with
respect to which the Seller has breached a
representation or warranty is subject to the
Seller's acquisition of such Receivable

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<PAGE> 95

from the Company. In addition, if so
specified in the related Prospectus
Supplement, the Company may from time to time
reacquire certain Receivables or substitute
other Receivables for such Receivable held by
an Asset Pool, subject to specified
conditions set forth in the related Trust
Agreement and Conveyance Agreement.

Servicer's Compensation . . The Servicer shall be entitled to receive a
fee for servicing the Contracts of each Asset
Pool equal to a specified percentage of the
Discounted Contract Balance of such
Contracts, as set forth in the related
Prospectus Supplement. See "Description of
the Trust Agreements--Servicing Compensation"
herein and in the related Prospectus
Supplement.

Certain Legal Aspects
of the Contracts . . . . . With respect to the transfer of the Contracts
to the related Trust pursuant to a Pooling
Agreement or the pledge of the Company's
right, title and interest in and to such
Contracts on behalf of Securityholders
pursuant to an Indenture, the Company will
warrant, in each case, that the transfer by
it is either a valid transfer and assignment
of the Contracts to the Trust or the grant of
a security interest in the Contracts. Each
Prospectus Supplement will specify whether
the Company will be required to take such
action as is required to perfect either the
Trust's or the Securityholders' security
interest in the Contracts. The Company may
also warrant that, if the transfer or pledge
by it to the Trust or to the Securityholders
is deemed to be a grant to the Trust or to
the Securityholders of a security interest in
the Contracts, then the Trust or the
Securityholders will have a first priority
perfected security interest therein, except
for certain liens which have priority over
previously perfected security interests by
operation of law, and, with certain
exceptions, in the proceeds thereof. Similar
security interest and priority
representations and warranties, as described
in the related Prospectus Supplement, may
also be made by the Company with respect to
the Equipment.

Each Prospectus Supplement will specify if
the Seller or the Company has filed or will
be required to file UCC (as herein defined)
financing statements identifying the
Equipment as collateral pledged in favor of
the related Trust or Trustee on behalf of the
Securityholders. In the absence of such
filings any security interest in the
Equipment will not be perfected in favor of
the related Trust or Trustee. See "Risk
Factors."

Optional Termination . . . The Servicer, the Company, or, if specified
in the related Prospectus Supplement, certain
other entities may, at their respective
options, effect early retirement of a series
of Securities under the circumstances and in
the manner set forth herein under "The Trust
Agreement - Termination; Retirement of
Securities" and in the related Prospectus
Supplement.

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<PAGE> 96

Mandatory Termination . . . The Trustee, the Servicer or certain other
entities specified in the related Prospectus
Supplement may be required to effect early
retirement of all or any portion of a series
of Securities by soliciting competitive bids
for the purchase of the related Asset Pool or
otherwise, under other circumstances and in
the manner specified in "The Trust Agreement
- Termination; Retirement of Securities" and
in the related Prospectus Supplement.

Tax Considerations . . . . Securities of each series offered hereby
will, for federal income tax purposes,
constitute either (i) interests in a Trust
treated as a grantor trust under applicable
provisions of the Code ("Grantor Trust
Securities"), (ii) debt issued by a Trust or
by the Company ("Debt Securities") or (iii)
interests in a Trust which is treated as a
partnership ("Partnership Interests"). See
"Certain Tax Considerations."

The Prospectus Supplement for each series of
Securities will summarize, subject to the
limitations stated therein, federal income
tax considerations relevant to the purchase,
ownership and disposition of such Securities.

Investors are advised to consult their tax
advisors and to review "Certain Federal and
State Income Tax Consequences" herein and in
the related Prospectus Supplement.

ERISA Considerations . . . The Prospectus Supplement for each series of
Securities will summarize, subject to the
limitations discussed therein, considerations
under the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), relevant
to the purchase of such Securities by
employee benefit plans and individual
retirement accounts. See "ERISA
Considerations" in the related Prospectus
Supplement.

Ratings . . . . . . . . . . Each Class of Securities offered pursuant to
this Prospectus and the related Prospectus
Supplement will be rated in one of the four
highest rating categories by one or more
"national statistical rating organizations",
as defined in the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and
commonly referred to as "Rating Agencies".
Such ratings will address, in the opinion of
such Rating Agencies, the likelihood that the
Issuer will be able to make timely payment of
all amounts due on the related Securities in
accordance with the terms thereof. Such
ratings will neither address any prepayment
or yield considerations applicable to any
Securities nor constitute a recommendation to
buy, sell or hold any Securities.

The ratings expected to be received with
respect to any Securities will be set forth
in the related Prospectus Supplement.

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<PAGE> 97

RISK FACTORS

Prospective investors should consider, among other things, the
following factors in connection with the purchase of the Securities:

RISK OF LOSS OR IMPAIRMENT OF SECURITY OR OWNERSHIP INTEREST IN THE
CONTRACTS AND THE EQUIPMENT. In connection with the issuance of each Series,
the Seller will transfer Contracts to the Company. The Seller will warrant in
a Contribution and Sale Agreement that the transfer of the Contracts by it to
the Company is a valid assignment, transfer and conveyance of such Contracts.
The Company will warrant in a Trust Agreement (a) if the Company retains title
to the Contracts, that it has granted to the Trustee for the benefit of
Securityholders a valid security interest in such Contracts, or (b) if the
Company transfers such Contracts to a Trust, that the transfer of the Contracts
by it to such Trust is either a valid assignment, transfer and conveyance of
the Contracts to the Trust or it has granted to the Trustee on behalf of the
Securityholders a valid security interest in such Contracts. Pursuant to each
Trust Agreement, the Trustee will be required to maintain possession of the
original copies of all Contracts that constitute chattel paper; provided that
the Servicer may take possession of such original copies as necessary for the
enforcement of any Contract. In certain circumstances, and as specified in the
related Prospectus Supplement, a portion of the Contracts may remain in the
possession of a Lessor or the Seller, subject to specific trigger events that
will require delivery to the Trustee. If the Company, the

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<PAGE> 98

Servicer, the Trustee, a Lessor or other third party, while in possession of
the Contracts, sells or pledges and delivers such Contracts to another party,
in violation of the Contribution and Sale Agreement or the Trust Agreement,
there is a risk that such other party could acquire an interest in such
Contracts having a priority over the Issuer's interest. Furthermore, if the
Servicer, a Lessor or a third party, while in possession of the Contracts, is
rendered insolvent, such event of insolvency may result in competing claims to
ownership or security interests in the Contracts. Such an attempt, even if
unsuccessful, could result in delays in payments on the Securities. If
successful such attempt could result in losses to the Securityholders or an
acceleration of the repayment of the Securities. The Seller and the Company
will make certain representations and warranties with respect to the ownership
of the Contracts as of the date of the transfer to the Company and the Trust,
if any, respectively. The Seller will be obligated to acquire any Contract
from the related Asset Pool if there is a breach of such representations and
warranties that materially adversely affects the interests of the Company or
the Trust in such Contract and such breach has not been cured.

The Seller will also sell and/or contribute all of its right, title
and interest in and to the Equipment to the Company. If title to the Equipment
is transferred, the Contribution and Sale Agreement shall require the Seller to
make certain representations and warranties with respect to the transfer of
title and perfection and priority of a security interest, if any, in the
Equipment. The Company may also transfer the Equipment to a Trust or may
pledge all of its right, title and interest in and to such Equipment to the
Trust. Pursuant to a Trust Agreement, the Company may warrant (a) if the
Company transfers such Equipment to a Trust, that such transfer is either a
valid assignment, transfer and conveyance of such Equipment to the Trust or it
has granted to the Trust a security interest in such Equipment, or (b) if the
Company retains title, that it has granted to the Trustee for the benefit of
Securityholders a valid security interest in such Equipment.

As specified herein and related Prospectus Supplement, because of the
administrative burden and expense that would be entailed in so doing, neither
the Seller nor the Company will have filed, or necessarily would be required to
file, UCC financing statements identifying the Equipment as collateral pledged
in favor of the related Trust or Trustee on behalf of the Securityholders. In
the absence of such filings any security interest in the Equipment will not be
perfected in favor of the related Trust or Trustee. As a result the Trust or
Trustee could lose priority of its security interest in such Equipment.
Neither the Seller nor the Company will have any obligation to reacquire
Equipment as to which such aforementioned occurrence results in the loss of
lien priority after the date the Company or the Trust receives an interest in
such Equipment unless otherwise obligated in the related Prospectus Supplement.

MATURITY AND PREPAYMENT CONSIDERATIONS. Because the rate of payment
of principal on the Securities will depend, among other things, on the rate of
payment on the Contracts, the rate of payment of principal on the Securities
cannot be predicted. Payments on the Contracts will include scheduled payments
as well as partial and full prepayments (to the extent not replaced with
substitute Contracts), payments upon the liquidation of Defaulted Contracts,
payments upon acquisitions by the Company of Contracts from the related Asset
Pool on account of a breach of certain representations and warranties in the
related Trust Agreement, payments upon an optional acquisition by the Company
of Contracts from the related Asset Pool (any such voluntary or involuntary
prepayment or other early payment of a Contract, a "Prepayment"), and residual
payments. The rate of early terminations of Contracts due to Prepayments and
defaults may be influenced by a variety of economic and other factors,
including, among others, obsolescence, then current economic conditions and tax
considerations. The risk of reinvesting distributions of the principal of the
Securities will be borne by the Securityholders. The yield to maturity on
Strip Securities or Securities purchased at premiums or discounts to par will
be extremely sensitive to the rate of Prepayments on the related Receivables.
In addition, the yield to maturity on certain other types of classes of
Securities, including Strip Securities, Accrual Securities or certain other

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Classes in a series including more than one Class of Securities, may be
relatively more sensitive to the rate of prepayment of the related Contracts
than other Classes of Securities.

Securityholders should consider, in the case of Securities purchased
at a discount, the risk that a slower than anticipated rate of Prepayments on
the Receivables could result in an actual yield that is less than the
anticipated yield and, in the case of any Securities purchased at a premium,
the risk that a faster than anticipated rate of Prepayments on the Receivables
could result in an actual yield that is less than the anticipated yield.

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<PAGE> 100

In addition, while the Seller is the Servicer, cash collections held
by the Seller may, subject to certain conditions, be commingled and used for
the benefit of the Seller prior to each Payment Date and, in the event of the
bankruptcy of the Seller, the Company, a Trust or Trustee may not have a
perfected interest in such collections.

Lessees of the Equipment may be entitled to assert against the Seller,
the Company, or the Trust, if any, claims and defenses which they have against
the Seller with respect to the Receivables. The Seller will warrant that no
such claims or defenses have been asserted or threatened with respect to the
Receivables and that all requirements of applicable law with respect to the
Receivables have been satisfied.

RISKS ASSOCIATED WITH EQUIPMENT OBSOLESCENCE. In the event a Contract
becomes a Defaulted Contract and the Lessee (and any guarantor) has
insufficient assets available to pay the Contract payments on the scheduled
payment dates, the only other source of moneys (other than the applicable
credit enhancements, if any) for such amounts will be the income and proceeds
from the disposition of the related Equipment. Because the market value of
equipment generally declines with age and may be subject to sudden, significant
declines in value because of technological advances, in the event of a
repossession and sale of Equipment subject to a Defaulted Contract, the Issuer
may not recover the entire amount due on such Contract. As a result, the
Securityholders may be subject to delays in receiving payments and suffer loss
of their investment in the Securities.

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definitive physical securities representing such Securityholders' interests,
except in certain circumstances described in the related Prospectus Supplement.

RATING OF SECURITIES SUBJECT TO CHANGE. The rating of Securities
credit enhanced by a letter of credit, financial guaranty insurance policy,
reserve fund, credit or liquidity facilities, cash deposits or other forms of
credit enhancement (collectively "Credit Enhancement") will depend primarily on
the creditworthiness of the issuer of such external Credit Enhancement device
(a "Credit Enhancer"). Any reduction in the rating assigned to the claims-
paying ability of the related Credit Enhancer to honor its obligations pursuant
to any such Credit Enhancement below the rating initially given to the
Securities would likely result in a reduction in the rating of the Securities.

RISKS RESULTING FROM FAILURE TO COMPLY WITH CERTAIN CONSUMER
PROTECTION LAWS. Numerous federal and state consumer protection laws,
including the Consumer Leasing Act of 1976 and Regulation M promulgated by the
Board of Governors of the Federal Reserve System impose requirements on leases
such as the Leases. These laws apply to the Seller as the original lessor and
may also apply to each Issuer as assignee of the Leases or to the Trustee if it
acts to enforce its security interest in the Leases. The failure by the Seller
to comply with such requirements may give rise to liabilities on the part of
the Seller, the Issuer and the Trustee, and claims by such parties may be
subject to set-off as a result of such noncompliance. The Seller will warrant
in the related Contribution and Sale Agreement (which warranties will be
assigned to the related Trust, if any) that the Leases are not subject to any
right of recession, set-off, counterclaim or defense and that the Leases did
not, at the time the Leases were made, violate state or federal law. The
Seller will be obligated to repurchase any Leases as to which such warranty has
been breached which breach has a material adverse effect on the interests of
the Securityholders in the affected Leases. See "Description of the Trust
Agreements."

CERTAIN CONSIDERATIONS RELATING TO CONTRACTS RELATED TO SOFTWARE AND
SERVICES. Certain Contracts, as described in the related Prospectus
Supplement, will relate to software and services that are not owned by the
Seller and in which no related interest will be transferred to the Issuer.
Instead, the Issuer will receive the right to receive payments under the
Contract. Accordingly, if any such Contract becomes a Defaulted Contract, the
Issuer will not realize any proceeds from the related software and services
from which to satisfy any unpaid payments under such Contracts.

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CERTAIN RISKS ASSOCIATED WITH PRE-FUNDING ACCOUNT. In the event the
Company is unable to transfer Contracts with an Aggregate Discounted Contract
Balance equal to the Pre-Funded Amount prior to the expiration of the
Pre-Funding Period, Securityholders will experience a prepayment equal to their
allocable share (as more fully described in the related Prospectus Supplement)
of the uninvested Pre-Funded Amount. Such prepayment may reduce the expected
yield to investors. In addition, due to market fluctuations, investors may be
unable to reinvest such prepayment amounts in similarly yielding investments.

USE OF PROCEEDS

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THE ISSUERS

THE ASSET POOLS

Each Asset Pool will include, as specified in the related Prospectus
Supplement, (i) a pool of Leases which may include operating leases, finance
leases or participation interests therein and the Receivables related thereto,
(ii) all moneys (including accrued interest) due or to become due thereunder on
or after the applicable Cut-off Date, (iii) such amounts as from time to time
may be held in one or more accounts established and maintained by the Servicer
pursuant to the related Trust Agreement, as described below and in the related
Prospectus Supplement, (iv) the security interests, if any, in the Equipment
relating to such pool of Receivables, (v) the right to proceeds from claims on
physical damage policies, if any, covering such Equipment or the related
Lessees, as the case may be, (vi) the Equipment or a security interest therein
and the proceeds of any repossessed Equipment related to such pool of
Receivables, (vii) the rights of the Seller under the related Contribution and
Sale Agreement and (viii) interest earned on short-term investments made by
such Trust. The Asset Pool will also include, if so specified in the related
Prospectus Supplement, monies on deposit in a Pre-Funding Account, which will
be used by the Trustee to acquire or receive a security interest in Additional
Receivables from the Company from time to time during the Pre-Funding Period
specified in the related Prospectus Supplement. In addition, to the extent
specified in the related Prospectus Supplement, some combination of Credit
Enhancements may be issued to or held by the Trustee on behalf of the related
Securityholders for the benefit of the holders of one or more classes of
Securities.

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pursuant to a Pooling Agreement or (i) with respect to Notes issued by the
Company, entering into an Indenture with an Indenture Trustee.

THE RECEIVABLES
GENERAL

The Leases are full payout leases with an average original equipment
cost of approximately $30,000, generally range in size from $10,000 to
$200,000, and have an average term of nearly 60 months. The equipment
currently consists of medical and business equipment; although additional
equipment types as more fully described in the related Prospectus Supplement,
may be included as the result of the inclusion of additional Participants in
the Seller's Private Label Program and Portfolio Acquisition Program.

The Leases were acquired by the Company from First Sierra or an
affiliate. As more fully described in the related Prospectus Supplement, the
Leases were either (a) originated by a lessor and acquired by First Sierra
pursuant to First Sierra's Portfolio Acquisition Program or (b) acquired by
First Sierra because such Leases comply with First Sierra's underwriting
criteria for the Private Label Program.

As more fully described in the related Prospectus Supplement, the
Equipment subject to the Leases is expected to include furniture, dentist
operatories, diagnostic equipment (including, X-ray machines and blood
diagnostic equipment), copiers, telephone systems, computers and facsimile
machines and general office equipment.

PORTFOLIO ACQUISITION PROGRAM

General

First Sierra's Portfolio Acquisition Program focuses on acquisition of
leases from independent lease financing companies, captive equipment lease
finance companies, and bank leasing companies. In general, First Sierra seeks
to acquire the portfolios of equipment lease finance companies being sold by
parent companies exiting the business, independent companies seeking a
financial partner, or companies with businesses complimentary to that of First
Sierra. It is anticipated that such transactions will generally range in size
from $20 million to $100 million.

Underwriting Procedures

Prior to the acquisition of a portfolio of leases under its
Portfolio Acquisition Program, First Sierra typically reviews all or a portion
of the lease files included in such portfolio, the loss and delinquency
experience of such portfolio and such other factors as may be appropriate to
the particular lessor. To the extent that the leases acquired from a
particular Lessor constitute a material portion of any Asset Pool, the
underwriting procedures with respect to such acquisition will be described in
greater detail in the related Prospectus Supplement.

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PRIVATE LABEL PROGRAM

General

Underwriting Procedures.

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<PAGE> 106

Sierra receives, the credit department reviews all documentation and credit
reviews. First Sierra performs periodic verification on all acquired leases on
a random basis.

Additional underwriting procedures will be described in the related
Prospectus Supplement.

RECEIVABLES POOLS

DELINQUENCIES, REPOSSESSIONS, AND NET LOSSES

MATURITY AND PREPAYMENT CONSIDERATIONS

POOL FACTORS

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THE COMPANY

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<PAGE> 108

bankruptcy case and a creditor or trustee-in-bankruptcy of such debtor or such
debtor itself were to take the position that the transfer of the Receivables to
the Company should be recharacterized as a pledge of such Receivables to secure
a borrowing of such debtor, then delays in payments of collections of
Receivables to the Company could occur or (should the court rule in favor of
any such trustee, debtor or creditor) reductions in the amount of such payments
could result. If the transfer of Receivables to the Company is recharacterized
as a pledge, then a tax or government lien on the property of the Seller
arising before the transfer of Receivables to the Company may have priority
over the Company's interest in such Receivables. If the transfer of
Receivables to the Company is treated as a sale, the Receivables would not be
part of the Seller's bankruptcy estate and would not be available to the
Seller's creditors.

THE SERVICER

GENERAL

SERVICING

The Leases included in each Asset Pool will be serviced by First
Sierra, as the Servicer, pursuant to and in accordance with the related
Servicing Agreement.

DELINQUENCY AND DEFAULT EXPERIENCE

As of December 31, 1995, First Sierra Financial, Inc. had not
experienced any losses on the portfolio of leases originated since its
inception. First Sierra has recovered the full value of defaulted lease
receivables in its Private Label Program under the recourse and reserve
provisions the program agreements established with sources from which First
Sierra purchased the lease receivables.

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DELINQUENCY PERFORMANCE:

<TABLE>
<CAPTION>
% of Leases Past Due September 30, December 31, March 31, June 30, September 30, December 31,
1994 1995 1995 1995 1995 1995
<S> <C> <C> <C> <C> <C> <C>
Remaining Lease Receivables $376,233 $5,917,426 $14,741,890 $35,104,025 $63,713,023 $83,892,400

31 - 60 Days Delinquent 0.00% 0.00% 3.60% 2.10% 1.30% 2.51%
61 - 90 Days Delinquent 0.00% 0.00% 0.10% 0.20% 0.50% 0.45%
Over 90 Days Delinquent 0.00% 0.00% 0.00% 0.50% 0.50% 0.08%

Total 0.00% 0.00% 3.70% 2.80% 2.3% 3.04%
</TABLE>

COLLECTION POLICIES

On a day-to-day basis, the billing and collection process is handled
by First Sierra's automated billing system. Day-to-day collections are
processed through Texas Commerce Bank's cash management operations, which
utilizes optical code reading technology to scan the invoices and earmark
payments to a given pool, depending upon the lease funding method.

THE TRUSTEES

With respect to each series of Securities, no resignation or removal
of the Trustee and no appointment of a successor Trustee shall become effective
until the acceptance of appointment by the successor Trustee. The Trustee may
resign for cause at any time by giving written notice thereof to the Company
and by mailing notice of resignation by first-class mail, postage prepaid, to
the Securityholders of such series at their addresses appearing on the Security
Register. The Trustee may be removed at any time by written notice of the
holders of Securities evidencing more than 50% of the voting rights with
respect to such series, delivered to the Trustee and the Company. If the
Trustee shall resign, be removed, or become incapable of acting, or if a
vacancy shall occur in the office of Trustee for any cause, the Company shall
promptly appoint a successor Trustee. If no successor Trustee shall have been
so appointed by the Company or the Securityholders, or if no successor Trustee
shall have accepted appointment within 30 days after any such resignation or
removal, existence of incapability, or occurrence of such vacancy, the

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Trustee or any Securityholder may petition any court of competent jurisdiction
for the appointment of a successor Trustee.

DESCRIPTION OF THE SECURITIES

GENERAL

All of the Securities offered pursuant to this Prospectus and the
related Prospectus Supplement will be rated in one of the four highest rating
categories by one or more Rating Agencies.

In addition, certain Classes of Senior (or Subordinate) Securities may
be senior to other Classes of Senior (or Subordinate) Securities in respect of
such distributions or losses.

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GENERAL PAYMENT TERMS OF SECURITIES

As more fully provided in the related Prospectus Supplement, each
Trust Agreement will describe a Remittance Period preceding each Payment Date
(for example, in the case of monthly-pay Securities, the calendar month
preceding the month in which a Payment Date occurs). As more fully provided in
the related Prospectus Supplement, collections received on or with respect to
the related Receivables held by a Trust during a Remittance Period will be
required to be remitted by the Servicer to the related Trustee prior to the
related Payment Date and will be used to fund payments to Securityholders on
such Payment Date. As may be described in the related Prospectus Supplement,
the related Trust Agreement may provide that all or a portion of the payments
collected on or with respect to the related Receivables may be applied by the
related Trustee to the acquisition of additional Receivables during a specified
period (rather than be used to fund payments of principal to Securityholders
during such period) with the result that the related Securities will possess an
interest-only period, also commonly referred to as a revolving period, which
will be followed by an amortization period. Any such interest only or
revolving period may, upon the occurrence of certain events to be described in
the related Prospectus Supplement, terminate prior to the end of the specified
period and result in the earlier than expected amortization of the related
Securities. The revolving period is one of structural features related to the
conclusion that under certain structures the Securities are considered debt of
the particular issuer for federal income tax considerations. The duration of
the revolving period and the requirements to be satisfied by additional
Receivables will be specified in the related Prospectus Supplement. Any direct
or indirect costs to investors associated with a revolving period will be
discussed in the related Prospectus Supplement.

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As may be described in the related Prospectus Supplement, Securities
of each series covered by a particular Trust Agreement will either evidence
specified beneficial ownership interest in a separate Asset Pool created
pursuant to such Trust Agreement or represent debt secured by the related Asset
Pool. To the extent that any Asset Pool includes certificates of interest or
participations in Receivables, the related Prospectus Supplement will describe
the material terms and conditions of such certificates or participations.

BOOK-ENTRY REGISTRATION

Cede, as nominee for DTC, will hold the global Securities in respect
of a given series. CEDEL and Euroclear will hold omnibus positions on behalf
of the CEDEL Participants (as defined below) and the Euroclear Participants (as
defined below) (collectively, the "Participants"), respectively, through
customers' securities accounts in CEDEL's and Euroclear's names on the books of
their respective depositaries (collectively, the "Depositaries") which in turn
will hold such positions in customers' securities accounts in the Depositaries'
names on the books of DTC.

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<PAGE> 113

DTC will advise the Trustee in respect of each Series that it will
take any action permitted to be taken by a Securityholder of the related series
only at the direction of one or more Participants to whose accounts with DTC
the Securities of such series are credited. DTC may take conflicting actions
with respect to other undivided interests to the extent that such actions are
taken on behalf of Participants whose holdings include such undivided interests.

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DEFINITIVE NOTES

33
<PAGE> 115

Upon the occurrence of any event described in the immediately
preceding paragraph, the applicable Trustee will be required to notify all such
Securityholders through Participants of the availability of Definitive
Securities. Upon surrender by DTC of the definitive certificates representing
such Securities and receipt of instructions for re-registration, the applicable
Trustee will reissue such Securities as Definitive Securities to such
Securityholders.

REPORTS TO SECURITYHOLDERS

(i) the amount of the distribution with respect to each
class of Securities;

(ii) the amount of such distribution allocable to principal;

(iii) the amount of such distribution allocable to interest;

(iv) the Pool Balance, if applicable, as of the close of
business on the last day of the related Remittance Period;

(v) the aggregate outstanding principal balance and the
Pool Factor for each Class of Securities after giving effect to all
payments reported under (ii) above on such Payment Date;

(vi) the amount paid to the Servicer, if any, with respect
to the related Remittance Period;

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<PAGE> 116

(vii) the amount of the aggregate purchase amounts for
Receivables that have been reacquired, if any, for such Remittance
Period; and

(viii) the amount of coverage under any letter of credit,
financial guaranty insurance policy, reserve account or other form of
credit enhancement covering default risk as of the close of business
on the applicable Payment Date and a description of any Credit
Enhancement substituted therefor.

DESCRIPTION OF THE TRUST AGREEMENTS

ASSIGNMENT OF THE RECEIVABLES

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<PAGE> 117

With respect to each Asset Pool, First Sierra, as Seller, will file
UCC financing statements with respect to the sale, contribution, transfer and
assignment of the related Receivables to the Company. If the Issuer is a
Trust, the Company will file UCC financing statements with respect to the sale,
transfer and assignment of such Receivables to such Trust. In addition, if
applicable, the Issuer will file UCC financing statements with respect to the
security interest in its assets granted to the Indenture Trustee under the
related Indenture. Since the Lease Files will remain in First Sierra's
possession, as Servicer, and will not be stamped or otherwise marked to reflect
the sale, contribution, transfer and assignment of the related Receivables to
the Company, the Trust and/or the Trustee, as applicable, if a subsequent
purchaser were able to take possession of the related Lease for new value in
the ordinary course of its business without actual knowledge of the
assignments, the Company's, the Trust's and/or the Trustees, as applicable,
interests in such Receivables could be defeated. See "Certain Legal Aspects of
the Receivables."

REPRESENTATIONS AND WARRANTIES

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<PAGE> 118

and clear of any lien of any person claiming through or under the Seller,
except for liens created by or permitted under the related Trust Agreement.

ACCOUNTS

Any other accounts to be established with respect to a Trust,
including any reserve account, will be described in the related Prospectus
Supplement.

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PRE-FUNDING ACCOUNT

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<PAGE> 120

Although the specific parameters of the Pre-Funding Account with
respect to any issuance of Securities will be specified in the related
Prospectus Supplement, it is anticipated that: (a) the Pre-Funding Period will
not exceed 120 days from the related Closing Date, (b) that the Additional
Leases to be acquired during the Pre-Funding Period will be subject to the same
representations and warranties as the Leases included in the related Asset Pool
on the Closing Date (although additional criteria may also be required to be
satisfied, as described in the related Prospectus Supplement) and (c) that the
Pre-Funded Amount will not exceed 25% of the principal amount of the Securities
issued pursuant to a particular offering.

SUBSTITUTION

SERVICING PROCEDURES

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<PAGE> 121

PAYMENTS ON RECEIVABLES

SERVICING COMPENSATION

DISTRIBUTIONS

40
<PAGE> 122

CREDIT ENHANCEMENTS

The amounts and types of Credit Enhancement arrangements, if any, and
the provider thereof, if applicable, with respect to each class of Securities
of a given series will be set forth in the related Prospectus Supplement. If
and to the extent provided in the related Prospectus Supplement, credit
enhancement may be in the form of a Policy, subordination of one or more
Classes of Securities, reserve accounts, overcollateralization, letters of
credit, credit or liquidity facilities, third party payments or other support,
surety bonds, guaranteed cash deposits or such other arrangements as may be
described in the related Prospectus Supplement or any combination of two or
more of the foregoing. If specified in the applicable Prospectus Supplement,
Credit Enhancement for a Class of Securities may cover one or more other
Classes of Securities of the same series, and Credit Enhancement for a series
of Securities may cover one or more other series of Securities.

STATEMENTS TO INDENTURE TRUSTEES AND TRUSTEES

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<PAGE> 123

EVIDENCE AS TO COMPLIANCE

Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the applicable Indenture
Trustee or the applicable Trustee.

CERTAIN MATTERS REGARDING THE SERVICER

With respect to each series of Securities issued by a Trust, each
Trust Agreement will provide that First Sierra may not resign from its
obligations and duties as Servicer thereunder, except upon determination that
First Sierra's performance of such duties is no longer permissible under
applicable law. No such resignation will become effective until the related
Trustee or a successor servicer has assumed First Sierra's servicing
obligations and duties under the Trust Agreement.

Except as otherwise provided in the related Prospectus Supplement,
each Trust Agreement will further provide that neither the Servicer nor any of
its respective directors, officers, employees, or agents shall be under any
liability to the related Issuer or the related Securityholders for taking any
action or for refraining from taking any action pursuant to such Trust
Agreement, or for errors in judgment; provided, however, that neither the
Servicer nor any such person will be protected against any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties thereunder. In addition, such Trust Agreement will
provide that the Servicer is under no obligation to appear in, prosecute, or
defend any legal action that is not incidental to its servicing
responsibilities under such Trust Agreement and that, in its opinion, may cause
it to incur any expense or liability.

SERVICER DEFAULT

Except as otherwise provided in the related Prospectus Supplement,
"Servicer Default" under a Trust Agreement will include (i) any failure by the
Servicer to deliver to the applicable Trustee

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RIGHTS UPON SERVICER DEFAULT

WAIVER OF PAST DEFAULTS

AMENDMENT

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<PAGE> 125

INSOLVENCY EVENT

Each Trust Agreement will provide that the applicable Trustee does not
have the power to commence a voluntary proceeding in bankruptcy with respect to
any related Trust without the unanimous prior approval of all Certificateholders
(including the Company, if applicable) of such Trust and the delivery to such
Trustee by each such Certificateholder of a certificate certifying that such
Certificateholder reasonably believes that such Trust is insolvent.

TERMINATION

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If and to the extent provided in the related Prospectus Supplement
with respect to an Asset Pool, the applicable Trustee will, within ten days
following a Payment Date as of which the Pool Balance is equal to or less than
the percentage of the initial Pool Balance specified in the related Prospectus
Supplement, solicit bids for the purchase of the Receivables remaining in such
Trust, in the manner and subject to the terms and conditions set forth in such
Prospectus Supplement. If such Trustee receives satisfactory bids as described
in such Prospectus Supplement, then the Receivables remaining in such Asset
Pool will be sold to the highest bidder.

CERTAIN LEGAL ASPECTS OF THE RECEIVABLES

GENERAL

THE EQUIPMENT

The Seller will convey the Seller's interest in the Equipment to the
Company. UCC financing statements will not be filed to perfect any security
interest in the Equipment unless otherwise specified in the related Prospectus
Supplement. Moreover, in the event of the repossession and resale of
Equipment, it may be subject to a superior lien. In such case, the senior
lienholder may be entitled to be paid the full amount of the indebtedness owed
to it out of the sale proceeds before such proceeds could be applied to the
payment of claims of the Servicer on behalf of the Trust.

In the event of a default by the Lessee, the Servicer on behalf of the
related Trustee may take action to enforce such Defaulted Contract by
repossession and resale of the leased Equipment.

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<PAGE> 127

Under the UCC in most states, a creditor can, without prior notice to the
debtor, repossess assets securing a defaulted contract by the Lessee's
voluntary surrender of such assets or by "self-help" repossession that does not
involve a breach of the peace and by judicial process.

In the event of a default by the Lessee, some jurisdictions require
that the Lessee be notified of the default and be given a time period within
which it may cure the default prior to repossession. Generally, this right of
reinstatement may be exercised on a limited number of occasions in any one-year
period.

The UCC and other state laws place restrictions on repossession sales,
including requirements that the secured party provide the Lessee with
reasonable notice of the date, time and place of any public sale and/or the
date after which any private sale of the collateral may be held and that any
such sale be conducted in a commercially reasonable manner. Each Trust
Agreement may require the Servicer to sell promptly any repossessed item of
Equipment, reacquire such Equipment from the Asset Pool, re-lease such
Equipment for the benefit of the Securityholders or take such other action as
specified in the related Prospectus Supplement.

Under most state laws, a Lessee has the right to redeem collateral for
its obligations prior to actual sale by paying the secured party the unpaid
balance of the obligation plus reasonable expenses for repossession, holding
and preparing the collateral for disposition and arranging for its sale, plus,
to the extent provided for in the written agreement of the parties, reasonable
attorneys' fees.

In addition, because the market value of the equipment of the type
financed pursuant to the Receivables generally declines with age and because of
obsolescence, the net disposition proceeds of leased Equipment at any time
during the term of the lease may be less than the outstanding balance on the
Contract principal balance which it secures. Because of this, and because
other creditors may have rights in the related leased Equipment superior to
those of the related Trustee, the Servicer may not be able to recover the
entire amount due on a Defaulted Contract in the event that the Servicer elects
to repossess and sell such leased Equipment at any time.

Under the UCC and laws applicable in most states, a creditor is
entitled to obtain a deficiency judgment from a Lessee for any deficiency on
repossession and resale of the asset securing the unpaid balance of such
Lessee's contract. However, some states impose prohibitions or limitations on
deficiency judgments. In most jurisdictions the courts, in interpreting the
UCC, would impose upon a creditor an obligation to repossess the equipment in a
commercially reasonable manner and to "mitigate damages" in the event of a
Lessee's failure to cure a default. The creditor would be required to exercise
reasonable judgment and follow acceptable commercial practice in seizing and
disposing of the equipment and to offset the net proceeds of such disposition
against its claim. In addition, a Lessee may successfully invoke an election
of remedies defense to a deficiency claim in the event that the Servicer's
repossession and sale of the leased Equipment is found to be a retention
discharging the Lessee from all further obligations under UCC Section 9-505(2).
If a deficiency judgment were granted, the judgment would be a personal
judgment against the Lessee for the shortfall, but a defaulting Lessee may have
very little capital or sources of income available following repossession.
Therefore, in many cases, it may not be useful to seek a deficiency judgment
or, if one is obtained, it may be settled at a significant discount.

Certain statutory provisions, including federal and state bankruptcy
and insolvency laws, may also limit the ability of the Servicer to repossess
and resell collateral or obtain a deficiency judgment. In the event of the
bankruptcy or reorganization of a Lessee, various provisions of the Bankruptcy
Code of 1978 (the "Bankruptcy Code") and related laws may interfere with or
eliminate

46
<PAGE> 128

the ability of the Servicer or the Trustee to enforce its rights under the
Receivables. If bankruptcy proceedings were instituted in respect of a Lessee,
the Trustee could be prevented from continuing to collect payments due from or
on behalf of such Lessee or exercising any remedies assigned to such Trustee
without the approval of the bankruptcy court, and the bankruptcy court could
permit the Lessee to use or dispose of the leased Equipment and provide the
Trustee with a lien on substitute collateral, so long as such substitute
collateral constituted "adequate protection" as defined under the Bankruptcy
Code.

In addition, certain of the Receivables may be leased by the Seller to
governmental entities. Payment by governmental authorities of amounts due
under such Contracts may be contingent upon legislative approval. Accordingly,
payment delays and collection difficulties as described in the related
Prospectus Supplement may limit collections with respect to certain
governmental Contracts.

These UCC and bankruptcy provisions, in addition to the possible
decrease in value of a repossessed item of Equipment (equipment leased pursuant
to a Finance Lease or an Operating Lease), may limit the amount realized on the
sale of the collateral to less than the amount due on the related Receivable.

CERTAIN TAX CONSIDERATIONS

The Prospectus Supplement for each series of Securities will
summarize, subject to the limitations stated therein, federal income tax
considerations relevant to the purchase, ownership and disposition of such
Securities.

The following is a general discussion of the anticipated Federal
income tax consequences to the holders of Securities. The tax aspects of each
Series will be reflected in the related Prospectus Supplement, and the Company
will file an additional tax opinion with respect thereto by Form 8-K.

CERTIFICATES

GENERAL

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<PAGE> 129

GRANTOR TRUST CERTIFICATES

In certain cases in which the Leases in the Grantor Trust
Estate consist entirely of Finance Leases, a Grantor Trust Certificate may be
issued representing ownership of all or a portion of the difference between the
interest component of the payments on the Finance Leases constituting the
related Grantor Trust Estate and interest paid to the Holders of Grantor Trust
Fractional Interest Certificates issued with respect to such Grantor Trust
Estate. Such an Certificate will be referred to as a "Grantor Trust Strip
Certificate."

Individuals holding a Grantor Trust Fractional Interest
Certificate directly or through certain pass-through entities will be allowed
a deduction for such reasonable servicing fees and expenses only to the extent
that the aggregate of such Holder's miscellaneous itemized deductions exceeds
two percent of such Holder's adjusted gross income. Further, Holders (other
than corporations) subject to the alternative minimum tax may not deduct
miscellaneous itemized deductions in determining alternative minimum taxable
income.

48
<PAGE> 130

DEBT CERTIFICATES

49
<PAGE> 131

or market discount previously included in the seller's gross income with
respect to the Certificate and reduced by the payments previously received on
the Certificate, other than payments of qualified stated interest, and by any
amortized premium.

POSSIBLE CLASSIFICATION OF THE CERTIFICATES AS INTERESTS IN A PARTNERSHIP OR
ASSOCIATION

50
<PAGE> 132

DISCOUNT AND PREMIUM

Section 1272(a)(6) of the Code contains special original issue
discount rules directly applicable to Debt Certificates and applicable by
analogy to Grantor Trust Certificates. Investors

51
<PAGE> 133

in Grantor Trust Strip Certificates should be aware that there can be no
assurance that the rules described below will be applied to such Certificates.
Under these rules (described in greater detail below), (i) the amount and rate
of accrual of original issue discount on each Series of Certificates will be
based on (x) the Prepayment Assumption, and (y) in the case of an Certificate
calling for a variable rate of interest, an assumption that the value of the
index upon which such variable rate is based remains equal to the value of that
rate on the Series Issuance Date, and (ii) adjustments will be made in the
amount of discount accruing in each taxable year in which the actual prepayment
rate differs from the Prepayment Assumption.

52
<PAGE> 134

amounts. The legislative history to section 1272(a)(6) indicates that such
negative amounts may be used to offset subsequent positive accruals but may not
offset prior accruals and may not be allowed as a deduction item in a taxable
year in which negative accruals exceed positive accruals. Holders of such
Certificates should consult their own tax advisors concerning the treatment of
such negative accruals.

A subsequent purchaser of an Certificate that purchases such
Certificate at a cost less than its remaining stated redemption price at
maturity also will be required to include in gross income for each day on which
it holds such Certificate, the daily portion of original issue discount with
respect to such Certificate (but reduced, if the cost of such Certificate to
such purchaser exceeds its adjusted issue price, by an amount equal to the
product of (i) such daily portion and (ii) a constant fraction, the numerator
of which is such excess and the denominator of which is the sum of the daily
portions of original issue discount on such Certificate for all days on or
after the day of purchase).

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<PAGE> 135

apply to all bonds the interest on which is not excludible from gross income
("fully taxable bonds") held by the Holder at the beginning of the first
taxable year to which the election applies and to all such fully taxable bonds
thereafter acquired by it, and is irrevocable without the consent of the IRS.
If such an election is not made, (i) such a Holder must include the full amount
of each interest payment in income as it accrues, and (ii) the premium must be
allocated to the principal distributions on the Premium Certificate and, when
each such distribution is received, a loss equal to the premium allocated to
such distribution will be recognized. Any tax benefit from the premium not
previously recognized will be taken into account in computing gain or loss upon
the sale or disposition of the Premium Certificate.

BACKUP WITHHOLDING

FOREIGN INVESTORS

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<PAGE> 136

total combined voting power of all classes of stock of the Seller entitled to
vote, or to a Holder that is a "controlled foreign corporation" described in
section 881(c)(3)(C) of the Code.

STATE AND LOCAL TAX CONSEQUENCES

New York. New York Tax Law imposes a New York State franchise
tax and a New York City general corporation tax on corporations doing business
in New York State and City, respectively, measured by their net income
allocated and apportioned to the state and city and the municipality. This
discussion is based upon present provisions of New York law and regulations,
and applicable judicial or ruling authority, all of which are subject to
change, which change may be retroactive. No ruling on any of the issues
discussed below will be sought from any New York agency.

NOTES

55
<PAGE> 137

If, alternatively, the Notes were treated as an equity interest in the
Issuer, distributions on the Notes probably would not be deductible in
computing the taxable income of the Issuer and all or a part of distributions
to the holders of the Notes probably would be treated as dividend income to
those holders. Such an Issuer-level tax could result in a reduced amount of
cash available for distributions to the holders of the Notes.

Potential Noteholders are encouraged to consult their own tax advisors
with regard to the federal, state and local tax consequences of their ownership
of the Notes.

STATE AND LOCAL TAX CONSEQUENCES

State tax consequences to each Securityholder will depend upon the
provisions of the state tax laws to which the Certificateholder is subject.
Most states modify or adjust the taxpayer's Federal taxable income to arrive at
the amount of income potentially subject to state tax. Resident individuals
generally pay state tax on 100% of such state-modified income, while
corporations and other taxpayers generally pay state tax only on that portion
of state-modified income assigned to the taxing state under the state's own
apportionment and allocation rules. Because each state's tax law varies, it is
impossible to predict the tax consequences to the Securityholders in all the
state taxing jurisdictions in which they are already subject to tax.
Securityholders are urged to consult their own tax advisors with respect to
state taxes.

ERISA CONSIDERATIONS

The Prospectus Supplement for each series of Securities will
summarize, subject to the limitations discussed therein, considerations under
ERISA relevant to the purchase of such Securities by employee benefit plans and
individual retirement accounts.

METHOD OF DISTRIBUTION

1. By negotiated firm commitment or best efforts underwriting
and public re-offering by underwriters;

56
<PAGE> 138

2. By placements by the Company with institutional investors
through dealers;

3. By direct placements by the Company with institutional
investors; and

4. By competitive bid.

In connection with the sale of the Securities, underwriters may
receive compensation from the Company or from purchasers of the Securities in
the form of discounts, concessions or commissions. Underwriters and dealers
participating in the distribution of the Securities may be deemed to be
underwriters in connection with such Securities, and any discounts or
commissions received by them from the Company and any profit on the resale of
Securities by them may be deemed to be underwriting discounts and commissions
under the Securities Act. The Prospectus Supplement will describe any such
compensation paid by the Company.

LEGAL OPINIONS

Certain legal matters relating to the issuance of the Securities of
any series, including certain federal and state income tax consequences with
respect thereto, will be passed upon by Dewey Ballantine, New York, New York.

57
<PAGE> 139

FINANCIAL INFORMATION

A Prospectus Supplement may contain the financial statements of the
related Credit Enhancer, if any.

ADDITIONAL INFORMATION

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<PAGE> 140
INDEX OF TERMS

Set forth below is a list of the defined terms used in this Prospectus
and the pages on which the definitions of such terms may be found herein.

<TABLE>
<S> <C>
Accrual Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Additional Receivables . . . . . . . . . . . . . . . . . . . . . . . . 12, 38
Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Cede . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
CEDEL Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . . . 26
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 5
Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Collection Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 26
Company's Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Cooperative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Credit Enhancement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Credit Enhancer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Debt Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Debt Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Definitive Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Depositaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Direct Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Discounted Contract Balance . . . . . . . . . . . . . . . . . . . . . . . . 11
Distribution Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Eligible Deposit Account . . . . . . . . . . . . . . . . . . . . . . . . . 38
Eligible Institution . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Eligible Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Euroclear Operator . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Euroclear Participants . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 15
FASB 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Finance Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
First Sierra . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Grantor Trust Certificates . . . . . . . . . . . . . . . . . . . . . . . . 47
Grantor Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Grantor Trust Fractional Interest Certificate . . . . . . . . . . . . . . . 48
Grantor Trust Securities . . . . . . . . . . . . . . . . . . . . . . . . . 15
Grantor Trust Strip Certificate . . . . . . . . . . . . . . . . . . . . . . 48
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Indirect Participants . . . . . . . . . . . . . . . . . . . . . . . . . 20, 31
</TABLE>

59
<PAGE> 141

<TABLE>
<S> <C>
Insolvency Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Insolvency Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 7
Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Investment Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Lessor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 10
Lockbox . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Operating Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Originator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Owner Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 5
Pool Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Pooling Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Pre-Funding Account . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 38
Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Prospectus Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 5
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Remittance Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Security Insurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Senior Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Servicer Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Special Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Strip Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Subordinate Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Terms and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 4
Trust Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 5
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
</TABLE>

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<PAGE> 142
================================================================================

No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Prospectus Supplement or the Prospectus in connection with the offer made by
this Prospectus Supplement and the Prospectus and, if given or made, such
information or representations must not be relied upon as having been
authorized by the Company or the Underwriter(s). This Prospectus Supplement
and the Prospectus do not constitute an offer or solicitation by anyone in any
state in which such offer or solicitation is not authorized or in which the
person making such offer or solicitation is not qualified to do so or to anyone
to whom it is unlawful to make such offer or solicitation. The delivery of
this Prospectus Supplement or the Prospectus at any time does not imply that
information herein or therein is correct as of any time subsequent to its date.

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

TABLE OF CONTENTS

PROSPECTUS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference . . . . . . . . . . . . . . . 2
Reports to Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . 3
Summary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
The Issuers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
The Trust Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
The Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Maturity and Prepayment Considerations . . . . . . . . . . . . . . . . . . 25
Pool Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
The Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
The Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Description of the Trust Agreements . . . . . . . . . . . . . . . . . . . . 36
Certain Legal Aspects of the Receivables . . . . . . . . . . . . . . . . . 46
Certain Tax Considerations . . . . . . . . . . . . . . . . . . . . . . . . 48
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Method of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Index of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
</TABLE>

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

Until _____________, 1996(90 days after the date of this Prospectus
Supplement), all dealers effecting transactions in the Securities, whether or
not participating in this distribution, may be required to deliver a Prospectus
Supplement and a Prospectus. This is in addition to the obligation of dealers
to deliver a Prospectus Supplement and a Prospectus when acting as
underwriter(s) and with respect to their unsold allotments or subscriptions.

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LEASE BACKED

FIRST SIERRA RECEIVABLES II, INC.

[Date]

PROSPECTUS

[UNDERWRITER]

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution

The following is an itemized list of the estimated expenses to
be incurred in connection with the offering of the securities being offered
hereunder other than underwriting discounts and commissions.

<TABLE>
<S> <C>
Registration Fee . . . . . . . . . . . . . . . . . . . . . . $ 303.03*
Printing and Engraving Expenses . . . . . . . . . . . . . . . . . **
Trustee's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . **
Legal Fees and Expenses . . . . . . . . . . . . . . . . . . . . . **
Blue Sky Fees and Expenses . . . . . . . . . . . . . . . . . . . . **
Accountants' Fees and Expenses . . . . . . . . . . . . . . . . . . **
Rating Agency Fees . . . . . . . . . . . . . . . . . . . . . . . . **
Miscellaneous Fees . . . . . . . . . . . . . . . . . . . . . . . . **
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . **
</TABLE>

* Paid.
** To be filed by amendment.

Item 15. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS

The General Corporation Law of Delaware (Section 145) gives Delaware
corporations broad powers to indemnify their present and former directors and
officers and those affiliated corporations against expenses incurred in the
defense of any lawsuit to which they are made parties by reason of being or
having been such directors or officers, subject to specified conditions and
exclusions; gives a director or officer who successfully defends an action the
right to be so indemnified; and authorizes said corporation to buy director's
and officers' liability insurance. Such indemnification is not exclusive of
any other right to which those indemnified may be entitled under any bylaw,
agreement, vote of stockholders or otherwise.

Pursuant to agreements which the Registrant may enter into with
underwriters or agents (forms of which will be included as exhibits to this
Registration Statement), officers and directors of the Registrant, and
affiliates thereof, may be entitled to indemnification by such underwriters or
agents against certain liabilities, including liabilities under the Securities
Act of 1933, arising from information which has been or will be furnished to
the Registrant by such underwriters or agents that appears in the Registration
Statement or any Prospectus.

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Item 16. EXHIBITS AND FINANCIAL STATEMENTS

(a) Exhibits

1.1* -- Form of Underwriting Agreement for the Notes.
1.2* __ Form of Underwriting Agreement for the
Certificates.
3.1* -- Certificate of Limited Partnership of the Issuer.
3.2* -- Agreement of Limited Partnership of the Issuer.
4.1* -- Form of Indenture between the Trust and the
Indenture Trustee, including forms of Notes
and certain other related agreements as Exhibits
thereto.
4.2* __ Form of Indenture between the Company and the
Indenture Trustee, including forms of Notes
and certain other related agreements as Exhibits
thereto.
4.3* __ Form of Pooling and Servicing Agreement between
the Trust, the Company and the Servicer.
4.4* -- Form of Trust Agreement between the Company and
the Trustee.
5.1* -- Opinion of Dewey Ballantine with respect to
legality.
8.1* __ Opinion of Dewey Ballantine as to tax matters.
10.1* -- Form of Bond Insurance Policy.
23.1* -- Consent of Dewey Ballantine (included in
Exhibits 5.1 and 8.1).
23.2* -- Consent of Independent Auditor of Bond Insurer.
24.1* -- Power of Attorney.
25.1* -- Statement of Eligibility and Qualification of
Trustee (Form T-1).
99.1* -- Form of Prospectus Summary -- Notes.
99.2* -- Form of Prospectus Summary --Certificates.
99.3* -- Form of Prospectus Summary -- Notes and
Certificates.

* Incorporated by reference to Registration Statement No. 33-98822.

(b) All financial statements, schedules and historical financial
information have been omitted as they are not applicable.

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Item 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes:

(a) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in
the information set forth in the registration statement;

(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in
the registration statement.

provided that paragraph (a)(i) and (a)(ii) do not apply if such information is
contained in periodic reports filed or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934.

(b) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

(c) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.

(d) That insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the provisions
described under item 15 above, or otherwise, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its

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counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

(e) That, for the purpose of determining any liability
under the Securities Act of 1933, each post-effective amendment that contains
a form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(f) The undersigned registrant hereby undertakes that,
for purposes of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(g) (i) That, for purposes of determining any liability
under the Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in reliance upon Rule
430A and contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared effective.

(ii) That for the purpose of determining any
liability under the Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

(h) The undersigned registrant hereby undertakes to file
an application for the purpose of determining the eligibility of the trustee to
act under subsection (a) of section 310 of the Trust Indenture Act (the "TIA")
in accordance with the rules and regulations prescribed by the Commission under
section 305(b)(2) of the TIA.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment to Registration Statement No.
333-12199 on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston, State of Texas on January 17, 1997.

FIRST SIERRA RECEIVABLES II, INC.
Registrant

By: /s/ Thomas Depping
-------------------------------------
Thomas Depping
President

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Pursuant to the requirements of the Securities Act of 1933, this
Amendment to Registration Statement No. 333-12199 on Form S-3 has been signed
by the following person in the capacities indicated on the 17th day of January,
1997.

SIGNATURE TITLE

/s/ Thomas Depping Director and President
- ---------------------------
Thomas Depping

/s/ Sandy Ho Director, Chief Financial Officer
- --------------------------- and Principal Accounting Officer
Sandy Ho

/s/ Fred Van Etten Director
- ---------------------------
Fred Van Etten

/s/ Robert Quinn Director and Vice President
- ---------------------------
Robert Quinn

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