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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 26, 1999
First Sierra Receivables II, Inc.
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(Exact name of Registrant as specified in its charter)
First Sierra Receivables III, Inc.
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(Exact name of Co-Registrant as specified in its charter)
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Delaware 333-12199 76-0543174
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Delaware (Commission File 76-0589331
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(State or Other Jurisdiction of Incorporation) (I.R.S. Employer Identification
No.)
c/o First Sierra Financial, Inc. 77002
Attention: E. Roger Gebhart ----------
600 Travis Street, Suite 7050 (Zip Code)
Houston, Texas
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(Address of Principal Executive Offices)
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Registrant's telephone number, including area code (713) 221-8822
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No Change
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
Description of the Notes and the Contracts
First Sierra Receivables II, Inc. and First Sierra Receivables III,
Inc. (the "Depositor" and, together with First Sierra Receivables II, Inc. (the
"Registrants") have registered issuances of an aggregate of up to
$1,537,161,697 in principal amount of lease-backed securities, on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, as
amended (the "Act"), by a Registration Statement on Form S-3 (Registration File
No. 333-12199) (as amended, the "Registration Statement"). Pursuant to the
Registration Statement, the Depositor formed a trust, the First Sierra
Equipment Contract Trust 1999-1, a common law trust acting through its trustee
First Union Trust Company, National Association, not in its individual capacity
but solely as Owner Trustee (the "Trust"), pursuant to which the Trust issued
Notes under an Indenture (the "Indenture"), attached hereto as Exhibit 4.1,
dated as of April 1, 1999, by and between the Trust, First Sierra Financial,
Inc., as servicer and originator ("First Sierra," the "Servicer" and the
"Originator") and Bankers Trust Company, as indenture trustee (the "Trustee").
This Current Report on Form 8-K is being filed to satisfy an undertaking to
file copies of certain agreements executed in connection with the issuance of
the Notes, the forms of which were filed as Exhibits to the Registration
Statement.
The Notes consist of seven classes, the Class A-1 Notes, Class A-2
Notes, Class A-3 Notes, Class A-4 Notes, Class B-1 Notes, Class B-2 Notes and
Class B-3 Notes. Only the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and
Class A-4 Notes (the "Class A Notes") were issued pursuant to the Registration
Statement. The Class A-1 Notes represent the right to receive repayment of the
Initial Class A-1 Note Principal Balance ($70,688,994) of the Class A-1 Notes
and monthly interest at a rate of 4.967% per annum on the unpaid portion of
such principal amount, the Class A-2 Notes represent the right to receive
repayment of the Initial Class A-2 Note Principal Balance ($57,258,085) of the
Class A-2 Notes and monthly interest at a rate of 5.450% per annum on the
unpaid portion of such principal amount, the Class A-3 Notes represent the
right to receive repayment of the Initial Class A-3 Note Principal Balance
($48,068,516) of the Class A-3 Notes and monthly interest at a rate of 5.540%
per annum on the unpaid portion of such principal amount and the Class A-4
Notes represent the right to receive repayment of the Initial Class A-4 Note
Principal Balance ($84,119,903) of the Class A-4 Notes and monthly interest at
a rate of 5.730% per annum on the unpaid portion of such principal amount.
The rights to receive such payments are based solely upon the
interests represented by the Class A Notes in the Trust Property (the "Trust
Property") which secures the Class A Notes. The assets of the Trust Property
will consist of certain finance leases and commercial loans received after the
close of business on April 1, 1999 (the "Initial Cut-Off Date") (such leases,
the "Initial Contracts"), and other finance leases and commercial loans
received after April 26, 1999 (the "Subsequent Contracts", and together with
the Initial Contracts, the "Contracts", a security interest in the underlying
equipment or property leased thereby (the "Equipment" and, together with the
Contracts, the "Receivables") and certain other property more fully described
in the Prospectus Supplement.
On April 26, 1999 (the "Closing Date"), the Depositor and certain
trusts sponsored by First Sierra transferred the Contracts and the related
Equipment to the Trust pursuant to the Receivables Transfer Agreement, dated as
of April 1, 1999 (the "Receivables Transfer Agreement"), attached hereto as
Exhibit 10.1, between First Sierra, the Depositor, First Union National Bank,
Variable Funding Capital Corporation, the Trustee and the Trust.
Principal and interest will be paid to the Class A Noteholders monthly
on the 15th day (or the next succeeding business day thereafter) of each month,
commencing May 17, 1999 (each, a "Payment Date"), as further described herein.
Interest will accrue on the Class A Notes from Payment Date to Payment Date, or
with respect to the initial Payment Date, from April 26, 1999.
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The Class A Notes will be unconditionally and irrevocably guaranteed
as to the payment of scheduled interest and ultimate principal thereon on each
payment date pursuant to the terms of a note insurance policy (the "Note
Insurance Policy") to be issued by MBIA Insurance Corporation and attached
hereto as Exhibit 4.2.
As of the Closing Date, the Contracts possessed the characteristics
described in the Prospectus dated November 25, 1998 and the Prospectus
Supplement dated April 21, 1999, filed pursuant to Rule 424(b)(5) of the Act.
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Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits:
*1.1 Underwriting Agreement, dated April 21, 1999, between First Sierra
Financial, Inc. and First Union Capital Markets Corp., as Representative of the
Several Underwriters.
*4.1 Indenture, dated as of April 1, 1999, among First Sierra Equipment
Contract Trust 1999-1, a common law trust acting through its trustee, First
Union Trust Company, National Association, not in its individual capacity but
solely as Owner Trustee, First Sierra Financial, Inc., as servicer and
originator, and Bankers Trust Company, as trustee.
*4.2 Note Insurance Policy of MBIA Insurance Corporation.
*8.1 Opinion of Dewey Ballantine LLP regarding tax matters, dated as of
April 26, 1999.
10.1 Receivables Transfer Agreement, dated as of April 1, 1999, among
First Sierra Financial, Inc., First Sierra Receivables III, Inc., First Union
National Bank, Variable Funding Capital Corporation, Bankers Trust Company and
First Sierra Equipment Contract Trust 1999-1, a common law trust acting through
its trustee, First Union Trust Company, National Association, not in its
individual capacity but solely as Owner Trustee.
* Previously filed.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrants have duly caused this report to be signed on their respective
behalf by the undersigned hereunto duly authorized.
FIRST SIERRA RECEIVABLES II, INC.
By: /s/ Sandy B. Ho
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Name: Sandy B. Ho
Title: Senior Vice President
FIRST SIERRA RECEIVABLES III, INC.
By: /s/ Sandy B. Ho
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Name: Sandy B. Ho
Title: Senior Vice President
Dated: May 7, 1999
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EXHIBIT INDEX
*1.1 Underwriting Agreement, dated April 21, 1999, between First Sierra
Financial, Inc. and First Union Capital Markets Corp., as Representative of the
Several Underwriters.
*4.1 Indenture, dated as of April 1, 1999, among First Sierra Equipment
Contract Trust 1999-1, a common law trust acting through its trustee, First
Union Trust Company, National Association, not in its individual capacity but
solely as Owner Trustee, First Sierra Financial, Inc., as servicer and
originator, and Bankers Trust Company, as trustee.
*4.2 Note Insurance Policy of MBIA Insurance Corporation.
*8.1 Opinion of Dewey Ballantine LLP regarding tax matters, dated as of
April 26, 1999.
10.1 Receivables Transfer Agreement, dated as of April 1, 1999, among
First Sierra Financial, Inc., First Sierra Receivables III, Inc., First Union
National Bank, Variable Funding Capital Corporation, Bankers Trust Company and
First Sierra Equipment Contract Trust 1999-1, a common law trust acting through
its trustee, First Union Trust Company, National Association, not in its
individual capacity but solely as Owner Trustee.
* Previously filed.
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EXHIBIT 10.1
RECEIVABLES TRANSFER AGREEMENT
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BETWEEN
FIRST SIERRA FINANCIAL, INC.,
FIRST SIERRA RECEIVABLES III, INC.,
FIRST UNION NATIONAL BANK,
VARIABLE FUNDING CAPITAL CORPORATION,
BANKERS TRUST COMPANY
AND
FIRST SIERRA EQUIPMENT CONTRACT TRUST 1999-1, A COMMON LAW TRUST
ACTING THROUGH FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,
NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS OWNER TRUSTEE
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DATED AS OF
APRIL 1, 1999
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS..........................................................................2
SECTION 1.01 Definitions...............................................................2
SECTION 1.02 Other Definitional Provisions.............................................3
ARTICLE II TRANSFER OF CONVEYED ASSETS.........................................................3
SECTION 2.01 Direction; Acquisition of Initial Conveyed Assets.........................3
SECTION 2.02 Conveyance of Subsequent Conveyed Assets..................................5
SECTION 2.03 Pre-Funding Account.......................................................7
SECTION 2.04 Capitalized Interest Account..............................................7
SECTION 2.05 Custody of Contract Files.................................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES.....................................................8
SECTION 3.01 Representations and Warranties............................................8
SECTION 3.02 [Reserved]...............................................................17
SECTION 3.03 Substitution of Contracts and Equipment by First Sierra..................17
ARTICLE IV COVENANTS..........................................................................18
SECTION 4.01 Seller and First Sierra Covenants........................................18
SECTION 4.02 Receivables III Covenants................................................20
SECTION 4.03 Transfer of Conveyed Assets..............................................23
ARTICLE V CONDITIONS PRECEDENT................................................................23
SECTION 5.01 Conditions to Trust Obligations..........................................23
ARTICLE VI TERMINATION........................................................................24
SECTION 6.01 Termination..............................................................24
SECTION 6.02 Effect of Termination....................................................24
ARTICLE VII MISCELLANEOUS PROVISIONS..........................................................25
SECTION 7.01 Amendment................................................................25
SECTION 7.02 GOVERNING LAW............................................................25
SECTION 7.03 Notices..................................................................25
SECTION 7.04 Severability of Provisions...............................................25
SECTION 7.05 Assignment...............................................................26
SECTION 7.06 Further Assurances.......................................................26
SECTION 7.07 No Waiver; Cumulative Remedies...........................................26
SECTION 7.08 Counterparts.............................................................26
SECTION 7.09 Binding Effect: Third-Party Beneficiaries................................26
SECTION 7.10 Merger and Integration...................................................26
SECTION 7.11 Headings.................................................................26
SECTION 7.12 Schedules and Exhibits...................................................26
SECTION 7.13 No Bankruptcy Petition Against Receivables III or the Trust..............27
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EXHIBITS, SCHEDULES & ANNEXES
Exhibit A FORM OF SUBSEQUENT TRANSFER AGREEMENT
Schedule 1 LIST OF INITIAL CONTRACTS
Annex A DEFINED TERMS
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RECEIVABLES TRANSFER AGREEMENT
THIS RECEIVABLES TRANSFER AGREEMENT (this "Agreement"), dated as of
April 1, 1999, is entered into among FIRST SIERRA FINANCIAL, INC. ("First
Sierra"), a Delaware corporation located at 600 Travis Street, Suite 7050,
Houston, Texas 77002, in its individual capacity, FIRST SIERRA RECEIVABLES III,
INC. ("Receivables III"), a Delaware corporation located at 600 Travis Street,
Suite 7050, Houston, Texas 77002, FIRST UNION NATIONAL BANK (formerly First
Union National Bank of North Carolina) ("First Union") a Delaware corporation
located at One First Union Center, 301 South College Street, Charlotte, North
Carolina 28288-0610, VARIABLE FUNDING CAPITAL CORPORATION ("VFCC") a Delaware
corporation located at One First Union Center, 301 South College Street,
Charlotte, North Carolina 28288-0610, Bankers Trust Company (the "Indenture
Trustee") a New York banking corporation located at Four Albany Street, New
York, New York 10006, not in its individual capacity but as Trustee of the
First Sierra Equipment Lease Trust 1997-A and the First Sierra Equipment Lease
Trust 1997-B (each as defined herein) and FIRST SIERRA EQUIPMENT CONTRACT TRUST
1999-1, a Delaware common law trust acting through First Union Trust Company,
National Association, not in its individual capacity but solely as Owner
Trustee (the "Issuer" or the "Trust"), located at One Rodney Square, 920 King
Street, Suite 102, Wilmington, Delaware 19801. Receivables III and each
Warehouse Trust (as defined below), are collectively referred to herein as the
"Sellers." First Union and VFCC are collectively referred to herein as the
"Investors."
WITNESSETH:
WHEREAS, First Sierra in the ordinary course of its business acquires
and originates equipment contracts in the United States; and
WHEREAS, Receivables III, First Sierra and Bankers Trust Company have
entered into an Amended and Restated Master Investment, Pooling and Servicing
Agreement, dated as of March 25, 1998 (the "Investment Agreement") whereby
Receivables III may, from time to time, sell pools of contracts, contract
receivables and equipment to one or more trusts to be formed pursuant to the
Investment Agreement and a supplement thereto; and
WHEREAS, pursuant to the Investment Agreement, the parties thereto
may, from time to time, execute a supplement to the Investment Agreement and
form a trust for the purpose of (i) accepting the transfer of a specific pool
of contracts, contract receivables, equipment and certain rights relating
thereto and arising therefrom from Receivables III, (ii) issuing senior
certificates ("Senior Certificates") and residual certificates ("Residual
Certificates" and, together with the Senior Certificates, the "Certificates")
representing beneficial ownership interests in the assets of each trust and
(iii) selling the Senior Certificates to investors; and
WHEREAS, pursuant to a Series 1997-A Supplement, dated as of June 30,
1997 (the "Series 1997-A Supplement") among Receivables III, First Sierra,
Bankers Trust Company and First Union, the parties thereto formed a trust (the
"First Sierra Equipment Lease Trust 1997-A"), issued a Senior Certificate to
First Union representing the senior beneficial ownership interest in the Leases
and Equipment conveyed by Receivables III to the First Sierra Equipment Lease
Trust 1997-A and issued a Residual Certificate to Receivables III representing
the residual
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beneficial ownership interest in the Contracts and Equipment conveyed to the
First Sierra Equipment Lease Trust 1997-A; and
WHEREAS, First Union and Receivables III, as the beneficial owners of
the Leases and Equipment in the First Sierra Equipment Lease Trust 1997-A,
desire that Bankers Trust Company, as the Trustee of such trust, convey such
Contracts and Equipment to the Trust; and
WHEREAS, pursuant to a Series 1997-B Supplement, dated as of June 26,
1997 (the "Series 1997-B Supplement") among Receivables III, First Sierra,
Bankers Trust Company, VFCC and First Union, the parties thereto formed a trust
(the "First Sierra Equipment Lease Trust 1997-B" and, together with the First
Sierra Equipment Lease Trust 1997-A, the "Warehouse Trusts"), issued a Senior
Certificate to VFCC representing the senior beneficial ownership interest in
the Leases and Equipment conveyed by Receivables III to the First Sierra
Equipment Lease Trust 1997-B and issued a Residual Certificate to Receivables
III representing the residual beneficial ownership interest in the Contracts
and Equipment conveyed to the First Sierra Equipment Lease Trust 1997-B; and
WHEREAS, VFCC and Receivables III, as the beneficial owners of the
Leases and Equipment in the First Sierra Equipment Lease Trust 1997-B, desire
that Bankers Trust Company, as trustee of such trust, convey such Contracts and
Equipment to the Trust; and
WHEREAS, each of the Sellers desires to convey, transfer, contribute
and assign all of its right, title and interest in and to the Contracts and all
of its right, title and interest in and to the Equipment and certain of its
rights under the Source Agreements (as such capitalized terms are defined
below) to the Owner Trustee, on behalf of the Trust, upon the terms and
conditions hereinafter set forth; and
WHEREAS, each of the Sellers and the Trust agree that all
representations, warranties, covenants and agreements made by it herein shall
be for the benefit of the Noteholders, the Certificateholders, the Note
Insurer, any Owner Trustee and any Indenture Trustee (as defined below).
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. Whenever used in this Agreement, capitalized
terms used and not defined herein shall have the meanings set forth in Annex A
hereto.
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SECTION 1.02 Other Definitional Provisions.
(a) Terms used in Related Documents. Each term defined in this
Agreement will have the meaning assigned to such term in this Agreement when
used in any certificate or other document made or delivered pursuant to this
Agreement, unless such term is otherwise defined therein.
(b) Accounting Terms. As used in this Agreement, accounting terms
which are not defined pursuant to Section 1.01 have the respective meanings
given to them under generally accepted accounting principles, as in effect on
the date of this Agreement. To the extent that the definitions of accounting
terms in this Agreement are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained in this
Agreement will control.
(c) "Hereof," etc. The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement will refer to this
Agreement as a whole and not to any particular provision of this Agreement; and
Section, Schedule and Exhibit references contained in this Agreement are
references to Sections, Schedules and Exhibits in or to this Agreement, unless
otherwise specified.
(d) Number and Gender. Each defined term used in this Agreement has a
comparable meaning when used in its plural or singular form. Each
gender-specific term used in this Agreement has a comparable meaning whether
used in a masculine, feminine or gender-neutral form.
(e) Including. Whenever the term "including" (whether or not that term
is followed by the phrase "but not limited to" or "without limitation" or words
of similar effect) is used in this Agreement in connection with a listing of
items within a particular classification, that listing will be interpreted to
be illustrative only and will not be interpreted as a limitation on, or
exclusive listing of, the items within that classification.
ARTICLE II
TRANSFER OF CONVEYED ASSETS
SECTION 2.01 Direction; Acquisition of Initial Conveyed Assets. (a) In
accordance with the terms of the Investment Agreement, each of the Investors,
as the Senior Certificateholders of the related Warehouse Trust, and
Receivables III, as the Residual Certificateholder of the Warehouse Trusts,
together representing all of the beneficial ownership interests in the
Warehouse Trusts, hereby direct Bankers Trust Company to convey to the Trust
those assets of each Warehouse Trust and Receivables III. Upon receipt of the
consideration specified below, each of the Investors hereby release all of its
right, title and interest in, to and under the Initial Conveyed Assets, such
receipt being hereby acknowledged by execution of this Agreement by each
Investor.
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(b) In consideration for (x) the issuance to Holding Trust I of the
Trust Certificate to be issued pursuant to the Trust Agreement, (y) the receipt
of $_________ by First Sierra Equipment Lease Trust 1997-A, $________ by First
Sierra Equipment Lease Trust 1997-B and (z) other good and valuable
consideration, each of the Sellers hereby conveys to the Trust all of its
right, title and interest in, to and under the Initial Conveyed Assets (with
respect to each Seller individually, to the extent of such Seller's interest in
such Initial Conveyed Assets, whether now existing or hereinafter arising,
without recourse (except as may be set forth in the Servicing Agreement)).
(c) In connection with such sale and conveyance, each Seller agrees to
record and file, at the expense of First Sierra, financing statements (and
thereafter will file continuation statements with respect to such financing
statements) with respect to the related Initial Conveyed Assets contributed and
to be transferred to the Trust pursuant to this Agreement, the Subsequent
Conveyed Assets to be contributed and transferred to the Trust pursuant to any
Subsequent Transfer Agreement, and the Substitute Conveyed Assets, meeting the
requirements of applicable state law in such manner and in such jurisdictions
as are necessary to perfect and to maintain the perfection of, the transfer,
conveyance and contribution of the related Initial Conveyed Assets, the related
Subsequent Conveyed Assets and the related Substitute Conveyed Assets (subject
to the Filing Requirements with respect to the Equipment) from each of the
Sellers to the Trust and the transfer, assignment and pledge of the Pledged
Property from the Trust to the Indenture Trustee on behalf of the Noteholders
and the Note Insurer, pursuant to the Indenture, and to deliver a file-stamped
copy of such financing statements or other evidence of such filings to the
Trust (and copies to the Indenture Trustee and the Note Insurer) on or prior to
each Conveyance Date; provided, however, that the Contract Files (including
each original executed Contract) will not be physically delivered to the Trust
but instead will be held by the Indenture Trustee.
(d) In connection with such assignment and conveyance, First Sierra
shall, at its own expense, on or prior to the related Conveyance Date, and with
respect to Substitute Contracts, as soon as possible, but in no event later
than two (2) Business Days after the related Conveyance Date (i) cause the
Contract Management System to be marked with a specified code (the "Contract
Management Code") to show that the Initial Conveyed Assets, the Subsequent
Conveyed Assets, or the Substitute Conveyed Assets, as the case may be, have
been assigned and transferred to the Trust in accordance with this Agreement
and any Subsequent Transfer Agreement and pledged to the Indenture Trustee on
behalf of the Noteholders and the Note Insurer, pursuant to the Indenture and
(ii) prepare and hold in its capacity as Servicer on behalf of the Trust and
the Indenture Trustee the List of Initial Contracts on or prior to the Closing
Date and the List of Subsequent Contracts on or prior to the related Subsequent
Transfer Date. Pursuant to Section 3.03, First Sierra from time to time may
convey Substitute Contracts to the Trust at any time by delivering a List of
Substitute Contracts to the Trust on each Conveyance Date containing for each
Substitute Contract transferred on such Conveyance Date the information set
forth in the definition of List of Substitute Contracts.
(e) Except for the obligations of First Sierra pursuant to the
Servicing Agreement and the Indenture with respect to any breach of a
representation, warranty or covenant made herein, the sale and conveyance of
the Conveyed Assets will be without recourse to the Sellers.
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(f) It is the intention of the parties hereto that each transfer of
the Conveyed Assets to be made pursuant to the terms hereof shall constitute an
absolute assignment and a sale of such Contract by each Seller to the Trust and
not a loan. In the event, however, that a court of competent jurisdiction were
to hold that any such transfer constitutes a loan and not a sale, it is the
intention of the parties hereto that this Agreement is deemed to be a security
agreement and that each Seller shall be deemed to have granted to the Trust as
of the date hereof a first priority perfected security interest in all of such
Seller's right, title and interest in, to and under each Conveyed Asset, and
all income and proceeds thereof.
SECTION 2.02 Conveyance of Subsequent Conveyed Assets. (a) Subject to
the conditions set forth in paragraph (c) below in consideration of the Trust's
delivery on the related Subsequent Transfer Date of all or a portion of the
balance of funds in the Pre-Funding Account, each of the Sellers shall on any
Subsequent Transfer Date sell, transfer, assign, set over and convey, without
recourse, to the Trust, but subject to the other terms and provisions of this
Agreement, all of the right, title and interest of such Seller in and to the
Subsequent Conveyed Assets identified on the related List of Subsequent
Contracts. The transfer by the Sellers to the Trust of the Subsequent Conveyed
Assets identified on each List of Subsequent Contracts shall be absolute and is
intended by the Sellers and the Trust to constitute and to be treated as a sale
of the Subsequent Conveyed Assets by each Seller to the Trust. Subsequent
Transfer Dates shall occur not more frequently than once a month without the
Note Insurer's prior written consent.
In the event such transactions shall be deemed not to be a sale, all
of the Sellers hereby grant to the Trust as of each Subsequent Transfer Date a
first priority perfected security interest in all of the Sellers' right, title
and interest in, to and under each related Subsequent Conveyed Asset, and all
income and proceeds thereof, to secure all of the Sellers' obligations
hereunder, and this Agreement shall constitute a security agreement under
applicable law, and in such event, the parties hereto acknowledge that the
Indenture Trustee, in addition to holding the Subsequent Conveyed Assets for
the benefit of the Noteholders and the Note Insurer, holds the Subsequent
Conveyed Assets as designee of the Trust.
The related Contract File for each Subsequent Contract shall be
delivered to the Indenture Trustee, on behalf of the Trust, two Business Days
prior to the related Subsequent Transfer Date.
(b) The purchase price paid by the Indenture Trustee, at the direction
of the Depositor on behalf of the Trust, from amounts released from the
Pre-Funding Account shall be equal to 96.25% of the aggregate Discounted
Contract Principal Balance of the Subsequent Contracts so transferred on the
related Subsequent Transfer Date.
(c) The Sellers shall transfer to the Trust the Subsequent Conveyed
Assets and the Depositor on behalf of the Trust shall cause to be released
funds from the Pre-Funding Account, only upon satisfaction of each of the
following conditions on or prior to the related Subsequent Transfer Date:
(i) The Sellers shall have delivered to the Indenture Trustee
(with a copy to the Note Insurer) a duly executed Subsequent Transfer
Agreement, substantially in the form of Exhibit A attached hereto,
including a List of Subsequent
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Contracts attached thereto, and confirming the satisfaction of each
condition precedent specified in this paragraph (c);
(ii) As of each Subsequent Transfer Date, as evidenced by delivery
of the Sellers' Subsequent Transfer Agreement in the form of Exhibit A,
none of the Sellers (a) shall be insolvent or have been made insolvent by
such transfers, nor shall they be aware of any pending insolvency, (b)
shall intend to incur or believe that it shall incur debts that would be
beyond its ability to pay as such debts mature, (c) shall make such
transfer with actual intent to hinder, delay or defraud any Person; and (d)
shall have assets that constitute unreasonably small capital to carry out
its business as then conducted;
(iii) Each such Subsequent Contract must satisfy the
representations and warranties made in the Servicing Agreement and each
Seller shall have performed all obligations to be performed by it hereunder
on or prior to such Subsequent Transfer Date;
(iv) The Sellers shall not have selected such Subsequent Contracts
in a manner that they reasonably believe is adverse to the interests of the
Noteholders or the Note Insurer;
(v) Such sale and transfer shall not result in a material adverse
tax consequence to the Trust or the Noteholders;
(vi) The Pre-Funding Period shall not have terminated;
(vii) The Sellers shall have provided the Indenture Trustee, the
Note Insurer and the Rating Agencies with an Addition Notice not later than
three Business Days prior to such Subsequent Transfer Date and shall have
provided any information reasonably requested by any of the foregoing with
respect to the related Subsequent Contracts;
(viii) The Sellers shall have deposited in the Collection Account
all collections in respect of the related Subsequent Contracts since the
related Subsequent Cut-Off Date;
(ix) The Sellers and the Servicer shall, at its own expense, on or
prior to the related Subsequent Transfer Date, indicate in its computer
files that the Subsequent Contracts identified in the related Subsequent
Transfer Agreement have been sold to the Trust pursuant to such Subsequent
Transfer Agreement and pledged to the Indenture Trustee pursuant to the
Indenture;
(x) Copies of relevant UCC financing statements prepared for
filing by the Servicer pursuant to Section 2.01(c) hereof shall have been
delivered to the Indenture Trustee and the Note Insurer and all Filing
Requirements shall have been complied with;
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(xi) The Sellers shall have delivered to the Rating Agencies, the
Indenture Trustee and the Note Insurer "bringdown opinions" to the Opinions
of Counsel regarding bankruptcy, corporate enforceability and perfection
delivered on the Closing Date with respect to the transfer of such
Subsequent Contracts in form and substance satisfactory to the Note
Insurer;
(xii) The Note Insurer, in its absolute and sole discretion, shall
have approved the transfer of such Subsequent Contracts to the Trust and
the Note Insurer shall have been reimbursed for any fees and expenses
incurred by the Note Insurer in connection with the granting of such
approval;
(xiii) The Note Insurer shall have received such opinions,
certificates and reports as reasonably requested by the Note Insurer.
SECTION 2.03 Pre-Funding Account. No later than the Closing Date, the
Indenture Trustee shall establish and maintain pursuant to the Indenture, the
Pre-Funding Account. On the Closing Date, the Sellers will deposit in the
Pre-Funding Account the Original Pre-Funded Amount from the net proceeds of the
sale of the Notes.
SECTION 2.04 Capitalized Interest Account. No later than the Closing
Date, the Indenture Trustee shall establish and maintain pursuant to the
Indenture, the Capitalized Interest Account. On the Closing Date, the Sellers
will deposit in the Capitalized Interest Account the Capitalized Interest
Account Deposit from the net proceeds of the sale of the Notes.
SECTION 2.05 Custody of Contract Files. In connection with the sale,
assignment, transfer and conveyance of the Contracts (including the Subsequent
Contracts) to the Trust pursuant to this Agreement and each Subsequent Transfer
Agreement, First Sierra, as Servicer under the Servicing Agreement and as agent
of the Indenture Trustee will retain the Contract Files and any related
evidence of insurance and payments; provided, however, that First Sierra will
physically convey the original executed counterparts of each Contract and the
related Certificate of Title, if applicable, to the Indenture Trustee in
accordance with the terms of the Indenture.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 Representations and Warranties. (a) First Sierra hereby
makes the following representations and warranties for the benefit of the Owner
Trustee, the Indenture Trustee, the Noteholders, the Note Insurer and the
Trust. Such representations and warranties are made as of any Conveyance Date
with respect to Contracts transferred to the Trust on such date and shall
survive each assignment, transfer and conveyance by First Sierra of the
Conveyed Assets to the Trust and its successors and assigns.
(i) Organization and Good Standing. First Sierra is a corporation
duly organized, validly existing and in good standing, under the laws of
the State of Delaware, with corporate power and authority to own its
properties and to conduct its business as such properties are currently
owned and such business is currently conducted, and had at all relevant
times, and now has, power, authority, and legal right to acquire and own
the Conveyed Assets;
(ii) Due Qualification. First Sierra is qualified as a foreign
corporation in any state where it is required to be so qualified to conduct
its business, to enforce the Source Agreements to which it is a party, and
to service the Contracts as required by the Servicing Agreement and has
obtained all necessary licenses, consents and approvals as required under
federal and state law, in each case, where the failure to be so qualified,
licensed, consented to or approved could reasonably be expected materially
and adversely to affect the ability of First Sierra to comply with the
terms of this Agreement, any Subsequent Transfer Agreement or any other
Transaction Document to which it is a party;
(iii) Power and Authority. First Sierra has the corporate power
and authority to execute and deliver this Agreement, any Subsequent
Transfer Agreement, the Source Agreements to which it is a party and the
Contracts and any other Transaction Document to which it is a party, and to
carry out their respective terms; and the execution, delivery, and
performance of this Agreement, any Subsequent Transfer Agreement, the
Source Agreements, the Contracts and any other Transaction Document to
which it is a party, has been duly authorized by First Sierra by all
necessary corporate action;
(iv) Due Execution and Delivery. This Agreement and each of the
other Transaction Documents to which it is a party have been duly executed
and delivered on behalf of First Sierra;
(v) Valid Assignment; Binding Obligations. This Agreement, any
Subsequent Transfer Agreement and the other Transaction Documents to which
First Sierra is a party, when duly executed and delivered, will constitute
legal, valid, and binding obligations of First Sierra enforceable against
First Sierra in accordance with their respective terms subject as to
enforceability to applicable bankruptcy,
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<PAGE> 12
reorganization, insolvency, moratorium or other laws affecting creditors'
rights generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law);
(vi) No Violation. The consummation of the transactions
contemplated by and the fulfillment of the terms of this Agreement and any
Subsequent Transfer Agreement will not conflict with, result in any breach
of any of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the articles of incorporation or
bylaws of First Sierra, or any material term of any indenture, agreement,
mortgage, deed of trust, or other instrument to which First Sierra is a
party or by which it is bound, or result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust, or other instrument, other
than this Agreement or any Subsequent Transfer Agreement, or violate any
law or any order, injunction, writ, rule, or regulation applicable to First
Sierra of any court or of any federal or state regulatory body,
administrative agency, or other Governmental Authority having jurisdiction
over First Sierra or any of its properties which would have a material
adverse effect on the Conveyed Assets;
(vii) Ability to Perform. No event has occurred which adversely
affects First Sierra's operations or its ability to perform its obligations
under the Transaction Documents to which it is a party;
(viii) No Proceedings. There are no Proceedings or investigations
pending, or, to the knowledge of First Sierra, threatened, before any
court, regulatory body, administrative agency, or other tribunal or
Governmental Authority (A) asserting the invalidity of this Agreement, (B)
seeking to prevent the consummation of any of the transactions contemplated
by this Agreement, or (C) seeking any determination or ruling that might
(in the reasonable judgment of First Sierra) materially and adversely
affect the performance by First Sierra of its obligations under, or the
validity or enforceability of, this Agreement;
(ix) No Consent Required. First Sierra is not required to obtain
the consent of any other Person, or any consent, license, approval or
authorization or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery or
performance of this Agreement and the Transaction Documents to which it is
a party, except for such as have been obtained, effected or made; and
(x) Consolidated Return Taxable Income from the Equipment and the
Related Contracts. The Depositor and First Sierra are members of an
affiliated group within the meaning of Section 1504 of the Code which has
filed, and will continue to file, a consolidated return for federal income
tax purposes at all times until satisfaction in full of all obligations (i)
of First Sierra hereunder and (ii) of First Sierra and the Depositor under
the Transaction Documents or other documents relating to the financing
contemplated hereby. The Depositor shall treat the Contracts as owned by it
for federal, state and local income tax purposes, and the affiliated group
of which the
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Depositor is a member within the meaning of Section 1504 of the Code shall
treat the Contracts as owned by the Depositor and shall report and include
the rental and other income from the Equipment and the Contracts in gross
income.
(b) Receivables III hereby makes the following representations and
warranties for the benefit of the Indenture Trustee, the Noteholders, the Note
Insurer and the Trust. Such representations and warranties are made as of each
Conveyance Date and shall survive each sale, assignment, transfer and
conveyance by the Sellers of the respective Conveyed Assets to the Trust and
its successors and assigns.
(i) Organization and Good Standing. Receivables III is a
corporation duly organized, validly existing and in good standing, under
the laws of the State of Delaware, with corporate power and authority to
own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at all
relevant times, and now has, power, authority, and legal right to acquire
and own the Conveyed Assets;
(ii) Due Qualification. Receivables III is qualified as a foreign
corporation in any state where it is required to be so qualified to conduct
its business and has obtained all necessary licenses, consents and
approvals as required under federal and state law, in each case, where the
failure to be so qualified, licensed, consented to or approved could
reasonably be expected materially and adversely to affect the ability of
Receivables III to comply with the terms of this Agreement, any Subsequent
Transfer Agreement or any other Transaction Document to which it is a
party;
(iii) Legal Name. The legal name of Receivables III is as set
forth in the signature line of this Agreement and Receivables III has not
changed its name since its incorporation and since its incorporation,
Receivables III did not use, nor does Receivables III now use, any trade
names, fictitious names, assumed name of "doing business as" names;
(iv) Power and Authority. Receivables III has the corporate power
and authority to execute and deliver this Agreement, any Subsequent
Transfer Agreement and any other Transaction Document to which it is a
party, and to carry out their respective terms; Receivables III has duly
authorized the sale and assignment to the Owner Trustee, on behalf of the
Trust, of all of its right, title and interest, if any, in the Conveyed
Assets by all necessary corporate action; and the execution, delivery, and
performance of this Agreement, and any other Transaction Document to which
it is a party, has been duly authorized by Receivables III by all necessary
corporate action;
(v) Due Execution and Delivery. This Agreement has been duly
executed and delivered on behalf of Receivables III;
(vi) Valid Assignment; Binding Obligations. This Agreement and any
Subsequent Transfer Agreement constitute a valid assignment, transfer and
conveyance to the Owner Trustee, on behalf of the Trust, of all right,
title, and interest
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<PAGE> 14
of Receivables III in, to and under the Conveyed Assets, and the Conveyed
Assets will be held by the Trust free and clear of any Lien of any Person
claiming through or under Receivables III, except the lien on the Conveyed
Assets in favor of the Indenture Trustee granted pursuant to the Indenture;
and this Agreement and any Subsequent Transfer Agreement when duly executed
and delivered, will constitute the legal, valid, and binding obligation of
Receivables III enforceable against Receivables III in accordance with
their respective terms subject as to enforceability to applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting
creditors' rights generally and to general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at law);
(vii) Insolvency. Receivables III is not insolvent and will not be
rendered insolvent by the transactions contemplated by this Agreement or
any Subsequent Transfer Agreement and has an adequate amount of capital to
conduct its business in the ordinary course and to carry out its
obligations hereunder and under each other Transaction Document to which it
is a party;
(viii) No Violation. The consummation of the transactions
contemplated by and the fulfillment of the terms of this Agreement and any
Subsequent Transfer Agreement will not conflict with, result in any breach
of any of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the articles of incorporation or
bylaws of Receivables III, or any material term of any indenture,
agreement, mortgage, deed of trust, or other instrument to which
Receivables III is a party or by which it is bound, or result in the
creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement, mortgage, deed of trust, or
other instrument, other than this Agreement or any Subsequent Transfer
Agreement, or violate any law or any order, injunction, writ, rule, or
regulation applicable to Receivables III of any court or of any federal or
state regulatory body, administrative agency, or other Governmental
Authority having jurisdiction over Receivables III or any of its properties
which would have a material adverse effect on the Conveyed Assets;
(ix) No Proceedings. There are no proceedings or investigations
pending, or, to the knowledge of Receivables III, threatened, before any
court, regulatory body, administrative agency, or other tribunal or
Governmental Authority (A) asserting the invalidity of this Agreement or
any Subsequent Transfer Agreement, (B) seeking to prevent the consummation
of any of the transactions contemplated by this Agreement or any Subsequent
Transfer Agreement, or (C) seeking any determination or ruling that might
(in the reasonable judgment of Receivables III) materially and adversely
affect the performance by Receivables III of its obligations under, or the
validity or enforceability of, this Agreement or any Subsequent Transfer
Agreement;
(x) No Consent Required. Receivables III is not required to obtain
the consent of any other Person, or any consent, license, approval or
authorization or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery or
performance of this Agreement and the
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<PAGE> 15
Transaction Documents to which it is a party, except for such having been
obtained, effected or made;
(xi) Fair Consideration. The consideration received by Receivables
III as set forth herein is fair consideration having value reasonably
equivalent to or in excess of the value of the Conveyed Assets conveyed by
it and the performance of Receivables III's obligation hereunder; and
(xii) Principal Place of Business. The principal place of business
and chief executive office of Receivables III is located at 600 Travis
Street, Suite 7050, Houston, Texas 77002 and, there are now no, and during
the past four months there have not been, any other locations where
Receivables III is located (as that term is used in the UCC in the state of
such location) except that, with respect to such changes occurring after
the date of this Agreement or any Subsequent Transfer Agreement, as shall
have been specifically disclosed to the Servicer and the Indenture Trustee
in writing. The principal place of business and chief executive office of
each of the Warehouse Trusts is located in care of Bankers Trust Company,
Four Albany Street, New York, New York 10006 and, there are now no, and
during the past four months there have not been, any other locations where
each Warehouse Trust is located (as that term is used in the UCC in the
state of such location).
(xiii) Valid Business Reasons. Receivables III has valid business
reasons for selling its interest in the Conveyed Assets rather than
obtaining a loan with the Conveyed Assets as collateral;
(xiv) Absence of Event. No event has occurred which adversely
affects Receivables III's operations or its ability to perform its
obligations under the Transaction Documents to which it is a party;
(xv) Accounting Treatment. Receivables III will treat the
assignment of the Conveyed Assets to the Trust pursuant to Article II as a
sale of the Conveyed Assets to the Trust for financial reporting and
accounting purposes, except with respect to a portion of the Conveyed
Assets which will be treated as owned by Receivables III and which will be
treated as consolidated for accounting purposes with First Sierra.
(c) First Union hereby makes the following representations and
warranties for the benefit of the Indenture Trustee, the Noteholders, the Note
Insurer and the Trust. Such representations and warranties are made as of each
Conveyance Date and shall survive each sale, assignment, transfer and
conveyance by the Sellers of the respective Conveyed Assets to the Trust and
its successors and assigns:
(i) Organization and Good Standing. First Union is a national bank
duly organized, validly existing and in good standing, under the laws of
the United States, with corporate power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is currently
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<PAGE> 16
conducted, and had at all relevant times, and now has, power, authority,
and legal right to acquire and own the Conveyed Assets;
(ii) Due Qualification. First Union is qualified as a foreign
corporation in any state where it is required to be so qualified to conduct
its business and has obtained all necessary licenses, consents and
approvals as required under federal and state law, in each case, where the
failure to be so qualified, licensed, consented to or approved could
reasonably be expected materially and adversely to affect the ability of
First Union to comply with the terms of this Agreement, any Subsequent
Transfer Agreement or any other Transaction Document to which it is a
party;
(iii) Power and Authority. First Union has the corporate power and
authority to execute and deliver this Agreement, any Subsequent Transfer
Agreement and any other Transaction Document to which it is a party, and to
carry out their respective terms; and the execution, delivery, and
performance of this Agreement and any other Transaction Document to which
it is a party, has been duly authorized by First Union by all necessary
corporate action;
(iv) Due Execution and Delivery. This Agreement has been duly
executed and delivered on behalf of First Union;
(v) Valid Assignment; Binding Obligations. This Agreement and any
Subsequent Transfer Agreement constitute a valid contribution, assignment,
transfer and conveyance to the Owner Trustee, on behalf of the Trust, of
all right, title, and interest of First Union in, to and under the Conveyed
Assets and the Conveyed Assets will be held by the Trust free and clear of
any Lien of any Person claiming, through or under First Union, except the
lien on the Conveyed Assets in favor of the Indenture Trustee granted
pursuant to the Indenture; and this Agreement and any Subsequent Transfer
Agreement, when duly executed and delivered, will constitute legal, valid,
and binding obligations of First Union enforceable against First Union in
accordance with their respective terms subject as to enforceability to
applicable bankruptcy, reorganization, insolvency, moratorium or other laws
affecting creditors' rights generally and to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or
at law);
(vi) No Violation. The consummation of the transactions
contemplated by and the fulfillment of the terms of this Agreement and any
Subsequent Transfer Agreement will not conflict with, result in any breach
of any of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the articles of incorporation or
bylaws of First Union, or any material term of any indenture, agreement,
mortgage, deed of trust, or other instrument to which First Union is a
party or by which it is bound, or result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust, or other instrument, other
than this Agreement or any Subsequent Transfer Agreement, or violate any
law or any order, injunction, writ, rule, or regulation applicable to First
Union of any court or of any federal or state regulatory
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<PAGE> 17
body, administrative agency, or other Governmental Authority having
jurisdiction over First Union or any of its properties which would have a
material adverse effect on the Conveyed Assets;
(vii) Valid Business Reasons. First Union has valid business
reasons for selling its interest in the Conveyed Assets rather than
obtaining a loan with the Conveyed Assets as collateral;
(viii) Absence of Event. No event has occurred which adversely
affects First Union's operations or its ability to perform its obligations
under the Transaction Documents to which it is a party;
(ix) Insolvency. First Union is not insolvent and will not be
rendered insolvent by the transactions contemplated by this Agreement or
any Subsequent Transfer Agreement and has an adequate amount of capital to
conduct its business in the ordinary course and to carry out its
obligations hereunder and under each other Transaction Document to which it
is a party;
(x) No Proceedings. There are no proceedings or investigations
pending, or, to the knowledge of First Union, threatened, before any court,
regulatory body, administrative agency, or other tribunal or Governmental
Authority (A) asserting the invalidity of this Agreement or any Subsequent
Transfer Agreement, (B) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any Subsequent Transfer
Agreement, or (C) seeking any determination or ruling that might (in the
reasonable judgment of First Union) materially and adversely affect the
performance by First Union of its obligations under, or the validity or
enforceability of, this Agreement or any Subsequent Transfer Agreement;
(xi) No Consent Required. First Union is not required to obtain
the consent of any other Person, or any consent, license, approval or
authorization or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery or
performance of this Agreement and the Transaction Documents to which it is
a party, except for such having been obtained, effected or made;
(xii) Fair Consideration. The consideration received by First
Union as set forth herein is fair consideration having value reasonably
equivalent to or in excess of the value of the Conveyed Assets conveyed by
it and the performance of First Union's obligations hereunder; and
(xiii) Accounting Treatment. First Union will treat the assignment
of the Conveyed Assets to the Trust pursuant to Article II as a sale of the
Conveyed Assets to the Trust for financial reporting and accounting
purposes.
(d) VFCC hereby makes the following representations and warranties for
the benefit of the Indenture Trustee, the Note Insurer and the Trust. Such
representations and warranties are made as of each Conveyance Date and shall
survive each sale, assignment,
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<PAGE> 18
transfer and conveyance by the Sellers of the respective Conveyed Assets to the
Trust and its successors and assigns:
(i) Organization and Good Standing. VFCC is a corporation duly
organized, validly existing and in good standing, under the laws of the
State of Delaware, with corporate power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is currently conducted, and had at all relevant times, and now
has, power, authority, and legal right to acquire and own the Conveyed
Assets;
(ii) Due Qualification. VFCC is qualified as a foreign corporation
in any state where it is required to be so qualified to conduct its
business and has obtained all necessary licenses, consents and approvals as
required under federal and state law, in each case, where the failure to be
so qualified, licensed, consented to or approved could reasonably be
expected materially and adversely to affect the ability of VFCC to comply
with the terms of this Agreement, any Subsequent Transfer Agreement or any
other Transaction Document to which it is a party;
(iii) Power and Authority. VFCC has the corporate power and
authority to execute and deliver this Agreement and any other Transaction
Document to which it is a party, and to carry out their respective terms;
and the execution, delivery, and performance of this Agreement, any
Subsequent Transfer Agreement and any other Transaction Document to which
it is a party, has been duly authorized by VFCC by all necessary corporate
action;
(iv) Due Execution and Delivery. This Agreement has been duly
executed and delivered on behalf of VFCC;
(v) Valid Assignment; Binding Obligations. This Agreement and any
Subsequent Transfer Agreement constitute a valid sale, assignment, transfer
and conveyance to the Owner Trustee, on behalf of the Trust, of all right,
title, and interest of VFCC in, to and under the Conveyed Assets and the
Conveyed Assets will be held by the Trust free and clear of any Lien of any
Person claiming, through or under VFCC, except the lien on the Conveyed
Assets in favor of the Indenture Trustee granted pursuant to the Indenture;
and this Agreement and any Subsequent Transfer Agreement, when duly
executed and delivered, will constitute the legal, valid, and binding
obligation of VFCC enforceable against VFCC in accordance with their
respective terms subject as to enforceability to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting creditors'
rights generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law);
(vi) No Violation. The consummation of the transactions
contemplated by and the fulfillment of the terms of this Agreement and any
Subsequent Transfer Agreement will not conflict with, result in any breach
of any of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the articles of incorporation or
bylaws of VFCC, or any material term of any
15
<PAGE> 19
indenture, agreement, mortgage, deed of trust, or other instrument to which
VFCC is a party or by which it is bound, or result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of
any such indenture, agreement, mortgage, deed of trust, or other
instrument, other than this Agreement or any Subsequent Transfer Agreement,
or violate any law or any order, injunction, writ, rule, or regulation
applicable to VFCC of any court or of any federal or state regulatory body,
administrative agency, or other Governmental Authority having jurisdiction
over VFCC or any of its properties which would have a material adverse
effect on the Conveyed Assets;
(vii) Valid Business Reasons. VFCC has valid business reasons for
selling its interest in the Conveyed Assets rather than obtaining a loan
with the Conveyed Assets as collateral;
(viii) Absence of Event. No event has occurred which adversely
affects VFCC's operations or its ability to perform its obligations under
the Transaction Documents to which it is a party;
(ix) Insolvency. VFCC is not insolvent and will not be rendered
insolvent by the transactions contemplated by this Agreement or any
Subsequent Transfer Agreement and has an adequate amount of capital to
conduct its business in the ordinary course and to carry out its
obligations hereunder and under each other Transaction Document to which it
is a party;
(x) No Proceedings. There are no proceedings or investigations
pending, or, to the knowledge of VFCC, threatened, before any court,
regulatory body, administrative agency, or other tribunal or Governmental
Authority (A) asserting the invalidity of this Agreement or any Subsequent
Transfer Agreement, (B) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any Subsequent Transfer
Agreement, or (C) seeking any determination or ruling that might (in the
reasonable judgment of VFCC) materially and adversely affect the
performance by VFCC of its obligations under, or the validity or
enforceability of, this Agreement or any Subsequent Transfer Agreement;
(xi) No Consent Required. VFCC is not required to obtain the
consent of any other Person, or any consent, license, approval or
authorization or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery or
performance of this Agreement and the Transaction Documents to which it is
a party, except for such having been obtained, effected or made;
(xii) Fair Consideration. The consideration received by VFCC as
set forth herein is fair consideration having value reasonably equivalent
to or in excess of the value of the Conveyed Assets conveyed by it and the
performance of VFCC's obligations hereunder; and
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<PAGE> 20
(xiii) Accounting Treatment. VFCC will treat the assignment of the
Conveyed Assets to the Trust pursuant to Article II as a sale of the
Conveyed Assets to the Trust for financial reporting and accounting
purposes.
SECTION 3.02 [Reserved]
SECTION 3.03 Substitution of Contracts and Equipment by First Sierra.
(a) With respect to a substitution of Contracts in accordance with the
provisions of this Section 3.03 and Section 4.02 of the Indenture, each
proposed Substitute Contract must (i) be an Eligible Contract, (ii) satisfy all
of the representations and warranties set forth in Section 2.02 of the
Servicing Agreement, (iii) have a Discounted Contract Principal Balance of not
less than the Discounted Contract Principal Balance of the Contract being
replaced and (iv) be eligible to be substituted by First Sierra under the
Indenture. For purposes of determining compliance with clause (iii) of the
preceding sentence, if more than one Substitute Contract is being provided on
any date, the Discounted Contract Principal Balance of the Substitute Contracts
and the Contracts being replaced shall be determined on an aggregate basis.
(b) Any substitution of a Contract pursuant to this Agreement will be
effected by (i) delivery to the Indenture Trustee of the Contract File for each
such Substitute Contract, (ii) filing of any UCC financing statements necessary
to perfect the interest of the Indenture Trustee in the Substitute Contracts,
(iii) delivery to the Indenture Trustee of a List of Substitute Contracts
reflecting such substitution and (iv) delivery to the Indenture Trustee of a
release request and the originally executed trust receipt relating thereto.
(c) The parties hereto agree that in addition to the obligation of
First Sierra to repurchase or to substitute any Contract and the related
Equipment as to which a breach of the representations set forth in the
Servicing Agreement has occurred and is continuing, First Sierra will enforce
its remedies against any Source under any Source Agreement. In consideration of
the purchase of the Equipment and the Contract, First Sierra shall remit the
Repurchase Amount to the Servicer for allocation of such Repurchase Amount
pursuant to the terms of the Indenture. Except as may be set forth in the
Transaction Documents, it is understood and agreed that the obligations of
First Sierra with respect to a breach as provided in this Section 3.03 and
Section 4.01 of the Indenture constitute the sole remedy against First Sierra
for such breach available to the Trust, the Note Insurer, the Indenture Trustee
and Noteholders. The representations and warranties set forth in Sections 3.01
and 3.02 hereof shall survive the assignment of the Conveyed Assets to the
Owner Trustee, on behalf of the Trust, and the pledge of the Pledged Property
to the Indenture Trustee.
(d) Except as provided in this Article III, upon each Seller's
transfer of its interest in the Conveyed Assets to the Trust, the Sellers will
not bear any further risk with respect to the ultimate collectibility of the
Contracts or the adequacy of the collateral securing the Contracts or the value
or sufficiency of the Equipment.
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<PAGE> 21
ARTICLE IV
COVENANTS
SECTION 4.01 Seller and First Sierra Covenants. First Sierra and the
Sellers, as applicable, hereby covenant and agree with the Trust, the Note
Insurer, the Noteholders and the Indenture Trustee with respect to itself as
follows:
(a) Preservation of Security Interest. The Sellers shall execute and
file such financing statements and cause to be executed and filed such
continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain, and protect the respective right,
title and interest of the Owner Trustee, on behalf of the Trust, and the
Indenture Trustee in the Conveyed Assets. First Sierra shall deliver (or cause
to be delivered) to the Trust file-stamped copies of, or filing receipts for,
any document filed as provided above, as soon as available following such
filing.
(b) Obligations with Respect to Conveyed Assets. Each of the Sellers
will duly fulfill all obligations on its part to be fulfilled under or in
connection with each Contract and each Source Agreement, and will do nothing to
impair the rights of the Owner Trustee, on behalf of the Trust, the Note
Insurer or the Indenture Trustee in any of the Conveyed Assets.
(c) Compliance with Law. First Sierra will comply, in all material
respects, with all acts, rules, requisitions, orders, decrees and directions of
any Governmental Authority applicable to its business and to the Conveyed
Assets or any part thereof; provided, however, that First Sierra may contest
any act, regulation, order, decree or direction in any reasonable manner which
shall not materially and adversely affect the rights of the Trust, the
Indenture Trustee, the Note Insurer or the Owner Trustee in the Conveyed
Assets.
(d) Conveyance of Conveyed Assets; Security Interests. Except for the
transfers and conveyances hereunder, under any Subsequent Transfer Agreement or
under any other Transaction Document, the Sellers will not sell, pledge, assign
or transfer to any other Person, or grant, create, incur, assume or suffer to
exist any Lien, on any Conveyed Asset, or any interest therein and First Sierra
shall defend the right, title, and interest of the Owner Trustee, on behalf of
the Trust, the Indenture Trustee, the Note Insurer and their respective
successors and assigns in, to, and under the Conveyed Assets, against all
claims of third parties claiming, through or under the Sellers; provided,
however, that nothing in this Section 4.01(d) shall prevent or be deemed to
prohibit First Sierra from suffering to exist upon any of the Conveyed Assets
any Liens for municipal or other local taxes if such taxes shall not at the
time be due and payable or if First Sierra shall concurrently be contesting the
validity thereof in good faith by appropriate proceedings and shall have set
aside on its books adequate reserves with respect thereto and such contests
pose no risk of forfeiture.
(e) Notification of Breach. The Sellers will advise the Trust, the
Indenture Trustee and the Note Insurer promptly, in reasonable detail, upon
discovery of the occurrence of any breach by First Sierra of any of its
representations, warranties and covenants contained herein.
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(f) Further Assurances.
(i) First Sierra will make, execute or endorse, acknowledge and
file or deliver to the Trust and the Indenture Trustee from time to time
such schedules, confirmatory assignments, conveyances, transfer
endorsements, powers of attorney, certificates, reports and other
assurances or instruments and take such further steps relating to the
Conveyed Assets and other rights covered by this Agreement and any
Subsequent Transfer Agreement, as the Trust, the Note Insurer or the
Indenture Trustee may request and reasonably require, provided that no UCC
filing will be required with respect to the Equipment, except as required
by the Filing Requirements.
(ii) The Sellers hereby agree to do all acts, transactions, and
things and to execute and deliver all agreements, documents, instruments,
and papers by and on behalf of the Sellers as the Trust or its counsel may
reasonably request in order to consummate the transfer of the Conveyed
Assets to the Trust and the subsequent pledge thereof to the Indenture
Trustee for the benefit of the Noteholders and the Note Insurer, and the
rating, issuance and sale of the Notes.
(g) Indemnification. First Sierra agrees to indemnify, defend and hold
the Trust, the Owner Trustee, the Note Insurer and the Indenture Trustee
harmless from and against any and all loss, liability, damage, judgment, claim,
deficiency, or expense (including interest, penalties, reasonable attorneys'
fees and amounts paid in settlement) to which any of them may become subject
insofar as such loss, liability, damage, judgment, claim, deficiency, or
expense arises out of or is based upon a breach by First Sierra of its
representations and warranties contained in Section 3.01 or its covenants
contained in Section 4.01, or any information certified or set forth in this
Agreement or any Subsequent Transfer Agreement or in any schedule delivered by
First Sierra hereunder or under any Subsequent Transfer Agreement, being untrue
in any material respect at any time. The obligations of First Sierra under this
Section 4.01(g) shall be considered to have been relied upon by the Trust, the
Owner Trustee, the Note Insurer and the Indenture Trustee and shall survive the
execution, delivery, and performance of this Agreement regardless of any
investigation made by the Trust, the Owner Trustee, the Indenture Trustee, the
Note Insurer or on their respective behalf. THE INDEMNIFICATION OBLIGATIONS OF
FIRST SIERRA PURSUANT TO THE PRECEDING PROVISIONS OF THIS PARAGRAPH SHALL APPLY
REGARDLESS OF ANY NEGLIGENCE OR OTHER FAULT ON THE PART OF THE TRUST, THE OWNER
TRUSTEE, THE INDENTURE TRUSTEE, THE NOTE INSURER OR ANY OF THEIR RESPECTIVE
OFFICERS, EMPLOYEES OR AGENTS.
(h) Notice of Liens. First Sierra shall notify the Trust, the Note
Insurer and the Indenture Trustee, promptly after becoming aware of any Lien on
any Conveyed Asset.
(i) Taxes. First Sierra shall promptly pay all applicable taxes
required to be paid in connection with the assignment of the Conveyed Assets
and acknowledges that the Trust shall have no responsibility with respect
thereto. First Sierra shall promptly pay and discharge, or cause the payment
and discharge of, all federal income taxes (and all other material taxes) when
due and payable by each such Seller, except (i) such as may be paid thereafter
without penalty or (ii) such as may be contested in good faith by appropriate
proceedings and for which an adequate reserve has been established and is
maintained in accordance with GAAP. First
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<PAGE> 23
Sierra shall promptly notify the Trust, the Indenture Trustee, the Note Insurer
and the Noteholders of any material challenge, contest or proceeding pending by
or against First Sierra before any taxing authority. First Sierra and the
Depositor shall enter into a Tax Sharing Agreement, pursuant to which (i) First
Sierra shall assume the sole responsibility for making any required payments of
taxes to the Internal Revenue Service and shall agree to indemnify and hold the
Depositor harmless against any claims of liability for such taxes and (ii) the
Depositor shall be required to make certain payments to First Sierra in respect
of its separate federal income tax liability. So long as any Notes remain
outstanding, First Sierra and the Depositor shall not terminate or amend such
Tax Sharing Agreement without the prior written consent of the Indenture
Trustee acting upon the written direction of the Note Insurer, except that
First Sierra shall not require the Depositor to make any payments to First
Sierra, pursuant to the Tax Sharing Agreement, which exceed the aggregate
federal income tax liability of the Depositor, on a separate return basis for
all taxable years covered by the Tax Sharing Agreement, that would arise if all
allowable losses arising at any time during such period were applied to reduce
the Depositor's aggregate separate taxable income for all such years.
(j) Taxes and Other Liabilities. First Sierra shall promptly pay and
discharge all material taxes, assessments, fees, claims and other governmental
charges when due and payable by First Sierra, the First Sierra Group, or any
member of the First Sierra Group, except (i) such as may be paid thereafter
without penalty or (ii) such as may be contested in good faith by appropriate
proceedings and for which an adequate reserve has been established and is
maintained in accordance with GAAP. First Sierra shall promptly notify the
Trust, the Note Insurer and the Indenture Trustee of any material challenge,
contest or proceeding pending by or against First Sierra or the First Sierra
Group before any taxing authority.
(k) Non-Consolidation. First Sierra shall be operated in such a manner
that Receivables III and/or First Sierra Holding Trust I ("Holding Trust I"),
the holder of the trust certificate to be issued by the Trust, would not be
substantively consolidated with First Sierra, such that the separate corporate
existence of First Sierra and Receivables III, on the one hand, and Holding
Trust I, on the other hand, would be ignored in the event of a bankruptcy of
First Sierra.
(l) No Agency. First Sierra will not act as an agent of Receivables
III or Holding Trust I in any capacity except to the limited extent provided in
the Transaction Documents, but instead will present itself to the public as a
corporation separate from Receivables III and/or Holding Trust I;
(m) Financial Statements. The financial statements and books and
records of First Sierra reflect the separate existence of Receivables III and
Holding Trust I.
SECTION 4.02 Receivables III Covenants. Receivables III hereby
covenants and agrees with the Trust, the Note Insurer and the Indenture Trustee
as follows:
(a) Receivables III Certificate. Prior to each date as of which
Contracts and the interest of Receivables III in the Equipment subject to such
Contracts are to be re-purchased by First Sierra pursuant to the Indenture,
Receivables III shall submit to First Sierra a certificate signed by the
president, executive vice president, any vice president or the treasurer of
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Receivables III (a "Receivables III Certificate"), executed by Receivables III
and completed as to its date and the date of this Agreement. Each Receivables
III Certificate shall operate as an assignment, without recourse,
representation, or warranty, to First Sierra of all Receivables III's right,
title, and interest in and to such purchased Contract, Receivables III's
interest in the related Equipment, and all security and documents relating
thereto, such assignment being an assignment outright and not for security; and
upon payment of the Repurchase Amount, First Sierra will thereupon own such
Contract, such interest in the related Equipment and all such security and
documents, free of any further obligation to Receivables III with respect
thereto. If in any enforcement suit or legal proceeding it is held that the
Servicer may not enforce a Contract on the ground that it is not a real party
in interest or holder entitled to enforce the Contract, Receivables III shall,
at the Servicer's expense, take such steps as the Servicer deems necessary to
enforce the Contract, including bringing suit in Receivables III's name.
(b) Obligor's Quiet Enjoyment. Receivables III hereby acknowledges and
agrees that its rights in the Equipment are expressly subject to the rights of
the related Obligors in such Equipment pursuant to the applicable Contracts.
Receivables III covenants and agrees that, so long as an Obligor shall not be
in default of any of the provisions of the applicable Contract, neither
Receivables III nor any assignee of Receivables III will disturb the Obligor's
quiet and peaceful possession of the related Equipment and the Obligor's use
thereof for its intended purpose.
(c) Operation of Receivables III. Receivables III shall be operated in
such a manner that it would not be substantively consolidated in the trust
estate of another Person (that is, such that the separate legal existence of
Receivables III and such Person would be disregarded) and in that regard,
Receivables III shall:
(i) be a limited purpose corporation whose primary activities are
restricted in its certificate of incorporation;
(ii) not engage in any action that would cause the separate legal
identity of Receivables III not to be respected, including, without
limitation, (a) holding itself out as being liable for the debts of any
other party or (b) acting other than through its duly authorized agents;
(iii) not be involved in the day-to-day management of First Sierra
and/or Holding Trust I;
(iv) not incur, assume or guarantee any indebtedness except for
such indebtedness as may be incurred by Receivables III in connection with
the issuance of the Notes or as otherwise permitted by the Note Insurer;
(v) not commingle its funds, assets and records relating thereto
with those of First Sierra or any other entity;
(vi) entitle the separate creditors of Receivables III to be
satisfied out of Receivables III's assets prior to any value in Receivables
III becoming available to Receivable III's equityholders, First Sierra's
creditors or Holding Trust I's creditors;
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(vii) act solely in its own name in the conduct of its business,
including business correspondence and other communications, and shall
conduct its business so as not to mislead others as to the identity of the
entity with which they are concerned;
(viii) maintain company records and books of account and shall not
commingle its company records and books of account with the records and
books of account of any entity;
(ix) not engage in any business or activity other than in
connection with or relating to its Certificate of Incorporation and/or
Bylaws;
(x) not form, or cause to be formed, any subsidiaries;
(xi) comply with all restrictions and covenants in, and shall not
fail to comply with the corporate formalities established in, its
Certificate of Incorporation and/or Bylaws;
(xii) maintain its assets separately from the assets of First
Sierra and/or the assets of the Holding Trust I (including, in each case,
through the maintenance of a separate bank account);
(xiii) manage its day-to-day business without the involvement of
First Sierra and/or Holding Trust I;
(xiv) maintain a separate office from that of First Sierra and/or
Holding Trust I;
(xv) not act as an agent of First Sierra or Holding Trust I,
except to the limited extent provided in the Transaction Documents; and
(xvi) maintain at all times two independent directors as required
by its Certificate of Incorporation and/or Bylaws.
(d) Merger or Consolidation. (i) Receivables III will keep in full
effect its existence, rights and franchises as a corporation and will obtain
and preserve its qualification to do business as a foreign corporation in each
jurisdiction which permits such qualification and in which it is necessary to
protect the validity and enforceability of this Agreement, any other
Transaction Document to which it is a party or any of the Contracts and to
perform its duties under this Agreement and each other Transaction Document to
which it is a party.
(ii) Any partnership or corporation (i) into which Receivables III
may be merged or consolidated, (ii) resulting from any merger, conversion,
or consolidation to which Receivables III shall be party, or (iii)
succeeding to Receivables III's business substantially as a whole, shall
execute an agreement of assumption to perform all of Receivables III's
obligations under this Agreement and any other Transaction Document, and
upon such execution will be Receivables III's successor under this
Agreement and any other Transaction Document, without the execution or
filing of any document or any further act on the part of any of the parties
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to this Agreement and any other Transaction Document, anything in this
Agreement and any other Transaction Document to the contrary
notwithstanding; provided, however, that (a) immediately after giving
effect to such transaction, no covenant made pursuant to Section 4.02(c)
shall have been breached, (b) Receivables III shall have delivered to the
Trust, the Rating Agencies, the Note Insurer, the Owner Trustee and the
Indenture Trustee an Officer's Certificate and an opinion of counsel,
satisfactory to each of them, each stating that such consolidation,
conversion, merger, or succession and such agreement of assumption comply
with this Section 4.02(d) and that all conditions precedent, if any,
provided for in this Agreement relating to such transaction have been
complied with, (c) Receivables III shall have delivered to the Trust, the
Owner Trustee, the Note Insurer, the Rating Agencies and the Indenture
Trustee an opinion of counsel, satisfactory to each of them, either (1)
stating that, in the opinion of such counsel, all financing statements and
continuation statements and amendments thereto have been executed and filed
that are necessary fully to preserve and protect the interest of the Owner
Trustee, on behalf of the Trust, in the Contracts and reciting the details
of such filings, or (2) stating that, in the opinion of such counsel, no
such action shall be necessary to preserve and protect such interest, (d)
such partnership or corporation shall have organizational documents with
similar restrictions as those of Receivables III, and (e) the Note Insurer
has given its prior written consent.
SECTION 4.03 Transfer of Conveyed Assets. Each Seller, Receivables III
and each Investor understands that the Trust intends to pledge the Pledged
Property to the Indenture Trustee on behalf of the Note Insurer and the
Noteholders, pursuant to the Indenture. Each Seller and each Investor agrees
that such assignee of the Trust may exercise the rights of the Trust hereunder
and shall be entitled to all of the benefits of the Trust hereunder to the
extent provided for in such assignment.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01 Conditions to Trust Obligations. The obligations of the
Trust to accept the transfer of the Initial Conveyed Assets on the Closing Date
shall be subject to the satisfaction of the following conditions:
(a) All representations and warranties of each Seller, Receivables III
and each Investor contained in this Agreement shall be true and correct on the
Closing Date with the same effect as though such representations and warranties
had been made on such date;
(b) All information concerning the Initial Conveyed Assets provided to
the Trust shall be true and correct as of the Initial Cut-Off Date in all
material respects;
(c) Each Seller shall have delivered to the Trust a List of Initial
Contracts with respect to its respective Initial Contracts as of the Initial
Cut-Off Date and shall have
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substantially performed all other obligations required to be performed by the
provisions of this Agreement;
(d) Each Seller shall have recorded and filed, at its expense, any
financing statement with respect to the Initial Contracts and the other Initial
Conveyed Assets to be transferred from time to time to the Owner Trustee, on
behalf of the Trust, from each Seller pursuant to this Agreement meeting the
requirements of applicable state law in such manner in such jurisdictions as
are necessary to perfect the transfer of the Initial Contracts and the other
Initial Conveyed Assets from each such Seller to the Owner Trustee, on behalf
of the Trust, and shall deliver a file-stamped copy of such financing
statements or other evidence of such filings to the Trust;
(e) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Trust, and the Trust shall have
received from each Seller copies of all documents (including, without
limitation, records of corporate proceedings) relevant to the transactions
herein contemplated as the Trust may reasonably have requested; and
(f) All respective conditions necessary to vest in each Seller good
title, free and clear of all Liens (other than Liens permitted in the proviso
contained in Section 4.01(f) hereof), to its respective Initial Contracts and
interests in Original Equipment shall have been satisfied.
ARTICLE VI
TERMINATION
SECTION 6.01 Termination. The respective obligations and
responsibilities of each Seller, First Sierra and the Trust created by this
Agreement shall terminate upon the latest of (i) the maturity or other
liquidation of the last Contract and the disposition of any amounts received
upon disposition of any Defaulted Contracts and any Equipment leased
thereunder; and (ii) the termination of the Indenture in accordance with the
terms thereof; provided, however, that the indemnifications contained in
Section 4.01(g) herein shall survive the termination of this Agreement and the
other Transaction Documents.
SECTION 6.02 Effect of Termination.
No termination or rejection or failure to assume the executory
obligations of this Agreement in the bankruptcy of any Seller or the Trust
shall be deemed to impair or affect the obligations pertaining to any executed
sale or executed obligations, including, without limitation, pre-termination
breaches of representations and warranties by any Seller. Without limiting the
foregoing, prior to termination, neither the failure of the Trust to deliver a
Trust Certificate pursuant to Section 4.02, nor the failure of First Sierra to
pay a Repurchase Amount shall render such transfer or obligation executory, nor
shall the continued duties of the parties pursuant to Article 4 or Section 7.06
of this Agreement render an executed sale executory.
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ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.01 Amendment. This Agreement may be amended from time to
time by the parties hereto only with (x) the prior written consent of the
Servicer, the Indenture Trustee and the Note Insurer and (y) prior written
notice to the Rating Agencies by the Servicer and, to the extent such amendment
materially affects the interests of the Owner Trustee, with the prior written
consent of the Owner Trustee.
SECTION 7.02 GOVERNING LAW. THIS AGREEMENT AND ANY AMENDMENT HEREOF
PURSUANT TO SECTION 7.01 SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CHOICE OF LAW
PRINCIPLES) APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN AND THE
OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 7.03 Notices. All demands, notices, and communications under
this Agreement shall be in writing and shall be deemed to have been duly given,
made and received (i) when delivered against receipt of registered or certified
mail or upon actual receipt of registered or certified mail, postage prepaid,
return receipt requested; (ii) when delivered by courier with appropriate
evidence of receipt; or (iii) upon transmission via facsimile or telex with
appropriate evidence of receipt (a) in the case of First Sierra, at the
following address: 600 Travis Street, Suite 7050, Houston, Texas 77002, Fax
No.: (713) 221-1818, (b) in the case of Receivables III, at the following
address: 600 Travis Street, Suite 6950, Houston, Texas 77002, Fax No.: (713)
221-1818, (c) in the case of First Union, One First Union Center, 301 South
College Street, Charlotte, North Carolina 28288-0610, (d) in the case of the
Indenture Trustee, Four Albany Street, New York, New York 10006, Attention:
Corporate Trust and Agency Group -- Structure & Finance, Fax No.: (212)
250-6439, (e) in the case of VFCC, One First Union Center, 301 South College
Street, Charlotte, North Carolina 28288-0610, (f) in the case of the Trust, c/o
First Union Trust Company, National Association, One Rodney Square, 920 King
Street, Suite 102, Wilmington, Delaware 19801, Attention: Corporate Trust
Administration, Fax No.: (302) 888-7544, and (g) in the case of the Note
Insurer or the Indenture Trustee at their respective addresses set forth in
Section 11.06 of the Indenture. Either party may alter the address to which
communications are to be sent by giving notice of such change of address in
conformity with the provisions of this Section 7.03 for giving notice and by
otherwise complying with any applicable terms of this Agreement, including, but
not limited to, subsections 4.01(b) and (c).
SECTION 7.04 Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.
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SECTION 7.05 Assignment. Notwithstanding anything to the contrary
contained in this Agreement, this Agreement may not be assigned by First
Sierra, without the prior written consent of the Trust, the Note Insurer and
the Indenture Trustee (acting upon the written direction of the Controlling
Parties) and, except as provided in Section 4.03, this Agreement may not be
assigned by the Trust without the prior written consent of First Sierra, the
Note Insurer and the Indenture Trustee. Whether or not expressly stated, all
representations, warranties, covenants and agreements of First Sierra,
Receivables III, the Investors and the Trust in this Agreement, or in any
document delivered by any of them in connection with this Agreement, shall be
for the benefit of, and shall be exercisable by, the Owner Trustee and the
Indenture Trustee for the benefit of the Noteholders.
SECTION 7.06 Further Assurances. Each of the parties hereto agrees to
do such further acts and things and to execute and deliver to the Indenture
Trustee such additional assignments, agreements, powers and instruments as are
required by the Indenture Trustee or the Note Insurer to carry into effect the
purposes of this Agreement or to better assure and confirm unto the Indenture
Trustee or the Note Insurer its rights, powers and remedies hereunder.
SECTION 7.07 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Trust or each Seller, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise hereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exhaustive of any rights,
remedies, powers and privilege provided by law.
SECTION 7.08 Counterparts. This Agreement may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which shall constitute one and the same
instrument.
SECTION 7.09 Binding Effect: Third-Party Beneficiaries. This Agreement
will inure to the benefit of and be binding upon the parties hereto. The
Indenture Trustee, the Owner Trustee, the Note Insurer and the Noteholders are
intended third party beneficiaries of this Agreement.
SECTION 7.10 Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
SECTION 7.11 Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
SECTION 7.12 Schedules and Exhibits. The schedules and exhibits
attached hereto and referred to herein shall constitute a part of this
Agreement and are incorporated into this Agreement for all purposes.
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SECTION 7.13 No Bankruptcy Petition Against Receivables III or the
Trust. Each of the parties hereto agrees that, prior to the date that is one
year and one day after the payment in full of the latest maturing Notes issued
by the Trust, it will not institute against Receivables III or the Trust, or
join any other Person in instituting against Receivables III or the Trust, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or other proceedings under the laws of the United States or any state of the
United States. This Section 7.13 shall survive the termination of this
Agreement.
[Signature Pages Follow]
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<PAGE> 31
IN WITNESS WHEREOF, the parties hereto have caused this Receivables
Transfer Agreement to be duly executed by their respective officers as of the
day and year first above written.
FIRST SIERRA FINANCIAL, INC., in its
individual capacity
By: /s/ E. ROGER GEBHART
-----------------------------------------
Name: E. Roger Gebhart
Title: Senior Vice President
FIRST SIERRA RECEIVABLES III, INC.
By: /s/ E. ROGER GEBHART
-----------------------------------------
Name: E. Roger Gebhart
Title: Senior Vice President
FIRST UNION NATIONAL BANK, as
Certificateholder of the First Sierra
Equipment Lease Trust 1997-A
By: /s/ C. BRAND HOSFORD
-----------------------------------------
Name: C. Brand Hosford
Title: Vice President
VARIABLE FUNDING CAPITAL CORPORATION, as
Certificateholder of the First Sierra
Equipment Lease Trust 1997-B
By: /s/ DARRELL R. BABER
-----------------------------------------
Name: Darrell R. Baber
Title: Director
[Signature Page To Receivables Transfer Agreement]
<PAGE> 32
BANKERS TRUST COMPANY, not in its individual
capacity, but solely as Trustee of each of
the First Sierra Equipment Lease Trust
1997-A and the First Sierra Equipment Lease
Trust 1997-B
By: /s/ CRAIG KANTOR
-----------------------------------------
Name: Craig Kantor
Title: Vice President
FIRST SIERRA EQUIPMENT CONTRACT TRUST
1999-1, A COMMON LAW TRUST ACTING THROUGH
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY
BUT SOLELY AS OWNER TRUSTEE, as Issuer
By: /s/ EDWARD L. TRUITT, JR.
-----------------------------------------
Name: Edward L. Truitt, Jr.
Title: Vice President
[Signature Page To Receivables Transfer Agreement]
<PAGE> 33
EXHIBIT A
SUBSEQUENT TRANSFER AGREEMENT
This Subsequent Transfer Agreement (this "Agreement"), dated as of
_______, 1999, is entered into among FIRST SIERRA FINANCIAL, INC. ("First
Sierra"), a Delaware corporation located at 600 Travis Street, Suite 7050,
Houston, Texas 77002, in its individual capacity, FIRST SIERRA RECEIVABLES III,
INC. ("Receivables III"), a Delaware corporation located at 600 Travis Street,
Suite 7050, Houston, Texas 77002, FIRST UNION NATIONAL BANK (formerly First
Union National Bank of North Carolina) ("First Union") a Delaware corporation
located at One First Union Center, 301 South College Street, Charlotte, North
Carolina 28288-0610, VARIABLE FUNDING CAPITAL CORPORATION ("VFCC") a Delaware
corporation located at One First Union Center, 301 South College Street,
Charlotte, North Carolina 28288-0610, BANKERS TRUST COMPANY (the "Indenture
Trustee") a New York banking corporation located at Four Albany Street, New
York, New York 10006, not in its individual capacity but as Trustee of the
First Sierra Equipment Lease Trust 1997-A and the First Sierra Equipment Lease
Trust 1997-B (each as defined herein) and FIRST SIERRA EQUIPMENT CONTRACT TRUST
1999-1, a Delaware common law trust acting through First Union Trust Company,
National Association, not in its individual capacity but solely as Owner
Trustee (the "Issuer" or the "Trust"), located at One Rodney Square, 920 King
Street, Suite 102, Wilmington, Delaware 19801. Receivables III, the First
Sierra Equipment Lease Trust 1997-A and the First Sierra Equipment Lease Trust
1997-B are collectively referred to herein as the "Sellers." First Union and
VFCC are collectively referred to herein as the "Investors."
Pursuant to this Agreement and the Receivables Transfer Agreement,
dated as of April 1, 1999 (the "Receivables Transfer Agreement"), among First
Sierra, Receivables III, First Union, VFCC, the Indenture Trustee and the
Trust, the parties hereto agree to the sale by the Sellers and the purchase by
the Trust of the Subsequent Conveyed Assets listed on the attached List of
Subsequent Contracts, and the pledge of the Subsequent Conveyed Assets by the
Trust to the Indenture Trustee.
Capitalized terms used and not defined herein have their respective
meanings as set forth in the definitions contained in Annex A to the Indenture,
dated as of April 1, 1999 (the "Indenture"), between the Trust, First Sierra,
as Servicer and as Originator, and the Indenture Trustee, which definitions are
incorporated by reference herein. All other capitalized terms used herein shall
have the meanings specified herein.
Section 1. Conveyance of Subsequent Conveyed Assets.
(a) Each of the Sellers does hereby sell, transfer, assign, set over
and convey to the Trust, without recourse, (i) all of its respective right,
title and interest in and to the Subsequent Equipment (except for any licensed
products that may accompany the Equipment) and any new unit or units of
Equipment substituted for any existing unit or units of Equipment, including
all income and proceeds upon any sale or other disposition of the Subsequent
Equipment, (ii) all of its respective right, title and interest in and to, but
not its obligations under, the Subsequent Contracts and all amendments,
additions and supplements including schedules, summary schedules and
subschedules made or hereafter made with respect thereto, (iii) all
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<PAGE> 34
monies due or to become due in payment of the Subsequent Contracts on or after
the related Subsequent Cut-Off Date, including without limitation, all
Scheduled Payments thereunder (whether or not due), any Prepayments, any
payments in respect of a casualty or early termination and any Liquidation
Proceeds received with respect thereto, but excluding any Excluded Amounts,
(iv) the Contract Files, (v) all Insurance Proceeds relating to the foregoing
and such Seller's rights and interests in the Insurance Policies relating to
the foregoing, (vi) all Source Agreements and Source Agreement Rights to the
extent they relate to any Subsequent Contract and any Subsequent Equipment
covered by the Subsequent Contracts and (vii) all proceeds and income of the
foregoing or relating thereto.
(b) The parties hereto intend that the transactions set forth herein
constitute a sale by the Sellers to the Trust on the Subsequent Transfer Date
of all the Sellers' right, title and interest in and to the Subsequent Conveyed
Assets. In the event the transactions set forth herein shall be deemed not to
be a sale, all of the Sellers hereby grant to the Trust as of the Subsequent
Transfer Date a first priority perfected security interest in all of the
Sellers' right, title and interest in, to and under the Subsequent Conveyed
Assets and all income and proceeds thereof, to secure all of the Sellers'
obligations hereunder, and this Agreement shall constitute a security agreement
under applicable law, and in such event, the parties hereto acknowledge that
the Indenture Trustee, in addition to holding the Subsequent Conveyed Assets
for the benefit of the Noteholders and the Note Insurer, holds the Subsequent
Conveyed Assets as designee and agent of the Trust.
(c) The expenses and costs relating to the delivery of the Subsequent
Conveyed Assets, this Agreement and such other items required under the
Receivables Transfer Agreement shall be borne by First Sierra.
(d) Annexed hereto is a List of Subsequent Contracts listing the
Contracts that constitute the Subsequent Contracts to be conveyed pursuant to
this Agreement on the date hereof.
Section 2. Representations and Warranties; Conditions Precedent.
(a) Each of the Sellers hereby affirm the representations and
warranties set forth in Section 3.01 of the Receivables Transfer Agreement that
relate to such Seller as of the date hereof.
(b) First Sierra hereby affirms that each Subsequent Contract
satisfies the representations and warranties set forth in Section 2.02 of the
Servicing Agreement relating to the Contracts.
(c) Each of the Sellers is solvent, is able to pay its debts as they
become due and has capital sufficient to carry on its business and its
obligations hereunder; each such Seller will not be rendered insolvent by the
execution and delivery of this Agreement or by the performance of its
respective obligations hereunder nor is it aware of any pending insolvency; no
petition of bankruptcy (or similar insolvency proceeding) has been filed by or
against any of the Sellers prior to the date hereof;
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<PAGE> 35
(d) All terms and conditions of the Receivables Transfer Agreement are
hereby ratified and confirmed; provided, however, that in the event of any
conflict the provisions of this Agreement shall control over the conflicting
provisions of the Receivables Transfer Agreement.
(e) Each of the Sellers and First Sierra hereby confirm that each of
the conditions precedent set forth in Sections 2.02 of the Receivables Transfer
Agreement have been satisfied as of the date hereof.
(f) Each of the Sellers and First Sierra represent and warrant that
the aggregate Discounted Contract Principal Balance of the Subsequent Contracts
listed on the List of Subsequent Contracts annexed hereto and conveyed to the
Trust pursuant to this Agreement as of the related Subsequent Cut-Off Date is
$ .
--------------
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<PAGE> 36
Section 3. Grant from Trust to Indenture Trustee.
The Trust hereby grants as of the Subsequent Transfer Date to the
Indenture Trustee, as indenture trustee for the benefit of the Noteholders and
the Note Insurer, to secure all of the Trust's obligations under the Indenture,
all of the Trust's right, title and interest in and to, whether now existing or
hereafter created, (a) the Subsequent Conveyed Assets, (b) all funds on deposit
from time to time in the Collection Account allocable to the Subsequent
Contracts, excluding any investment income from such funds; (c) all its rights
under this Agreement; and (d) all present and future claims, demands, causes
and choses in action in respect of any or all of the foregoing and all payments
on or under, and all proceeds of every kind and nature whatsoever in respect
of, any or all of the foregoing and all payments on or under, and all proceeds
of every kind and nature whatsoever in the conversion thereof, voluntary or
involuntary, into cash or other liquid property, all cash proceeds, accounts,
accounts receivable, notes, drafts acceptances, checks, deposit accounts,
rights to payment of any and every kind, and other forms of obligations and
receivables, instruments and other property which at any time constitute all or
part of or are included in the proceeds of any of the foregoing.
Section 4. Governing Law.
This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws, without giving
effect to principles of conflicts of law.
Section 5. Counterparts.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same instrument.
Section 6. Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
Sellers, the Trust and the Owner Trustee and their respective successors and
assigns. The Note Insurer and the Indenture Trustee shall be express third
party beneficiaries hereto.
Section 7. Acceptance of Contract Files by Indenture Trustee.
The Indenture Trustee acknowledges receipt of the Contract Files for
each of the Subsequent Contracts listed on the List of Subsequent Contracts
annexed hereto.
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<PAGE> 37
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first written above.
FIRST SIERRA FINANCIAL, INC., in its
individual capacity
By:
-----------------------------------------
Name:
Title:
FIRST SIERRA RECEIVABLES III, INC.
By:
-----------------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK, as
Certificateholder of the First Sierra
Equipment Lease Trust 1997-A
By:
-----------------------------------------
Name:
Title:
VARIABLE FUNDING CAPITAL CORPORATION, as
Certificateholder of the First Sierra
Equipment Lease Trust 1997-B
By:
-----------------------------------------
Name:
Title:
[Signature Page To Subsequent Transfer Agreement]
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<PAGE> 38
BANKERS TRUST COMPANY, not in its individual
capacity, but solely as Trustee of each of
the First Sierra Equipment Lease Trust
1997-A and the First Sierra Equipment Lease
Trust 1997-B
By:
-----------------------------------------
Name:
Title:
FIRST SIERRA EQUIPMENT CONTRACT TRUST
1999-1, A COMMON LAW TRUST ACTING THROUGH
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY
BUT SOLELY AS OWNER TRUSTEE, as Issuer
By:
-----------------------------------------
Name:
Title:
[Signature Page To Subsequent Transfer Agreement]
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<PAGE> 39
SCHEDULE I
LIST OF SUBSEQUENT CONTRACTS
[On file with Dewey Ballantine LLP]
<PAGE> 40
SCHEDULE II
LIST OF SUBSEQUENT CONTRACTS
SUBJECT TO OPTIONAL REDEMPTION
PURSUANT TO SECTION 9.02(b) OF THE INDENTURE
[On file with Dewey Ballantine LLP]
<PAGE> 41
Annex A
DEFINED TERMS
[SEE ANNEX A TO THE INDENTURE]
