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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 29, 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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(Commission File
Delaware Number) 76-0589331
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(State or Other Jurisdiction (I.R.S. Employer Identification
of Incorporation) 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)
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 $157,155,372
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 1999-2,
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 September 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 eight classes, the Class A-1 Notes, Class A-2
Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes, Class C Notes, Class D
Notes and Class E Notes. Only the Class A-1 Notes, Class A-2 Notes, Class A-3
Notes and Class A-4 Notes (the "Class A Notes") and the Class B 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
($30,818,212) of the Class A-1 Notes and monthly interest at a rate of 5.85535%
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 ($31,965,385) of the Class A-2 Notes and monthly interest at a rate of
6.46% 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 ($18,823,624) of the Class A-3 Notes and monthly interest at a
rate of 6.70% per annum on the unpaid portion of such principal amount, the
Class A-4 Notes represent the right to receive repayment of the Initial Class
A-4 Note Principal Balance ($61,986,631) of the Class A-4 Notes and monthly
interest at a rate of 6.98% per annum on the unpaid portion of such principal
amount and the Class B Notes represent the right to receive repayment of the
Initial Class B Note Principal Balance ($13,570,520) of the Class B Notes and
monthly interest at a rate of 7.28% 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 and the Class B Notes in the Trust Property
(the "Trust Property") which secures the Class A Notes and the Class B Notes.
The assets of the Trust Property will consist of certain finance leases and
commercial loans received after the close of business on September 1, 1999 (the
"Initial Cut-Off Date") (such leases, the "Initial 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 September 29, 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 September 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, Fairway Finance Corporation, the Trustee
and the Trust.
Principal and interest will be paid to the Class A Noteholders monthly
on the 16th day (or the next succeeding business day thereafter) of each month,
commencing October 18, 1999 (each, a
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"Payment Date"), as further described herein. Interest will accrue on the Class
A Notes and the Class B Notes from Payment Date to Payment Date, or with respect
to the initial Payment Date, from September 29, 1999.
As of the Closing Date, the Contracts possessed the characteristics
described in the Prospectus dated November 25, 1998 and the Prospectus
Supplement dated September 22, 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 September 22, 1999, between First
Sierra Financial, Inc. and First Union Capital Markets Corp., as Representative
of the Several Underwriters.
4.1 Indenture, dated as of September 1, 1999, among First Sierra
Equipment Contract Trust 1999-2, 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.
8.1 Opinion of Dewey Ballantine LLP regarding tax matters, dated as of
September 29, 1999.
10.1 Receivables Transfer Agreement, dated as of September 1, 1999,
among First Sierra Financial, Inc., First Sierra Receivables III, Inc., First
Union National Bank, Variable Funding Capital Corporation, Fairway Finance
Corporation, Bankers Trust Company and First Sierra Equipment Contract Trust
1999-2, a common law trust acting through its trustee, First Union Trust
Company, National Association, not in its individual capacity but solely as
Owner Trustee.
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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: October 4, 1999
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
-------- -----------
<S> <C>
1.1 Underwriting Agreement, dated September 22, 1999, between First
Sierra Financial, Inc. and First Union Capital Markets Corp., as
Representative of the Several Underwriters.
4.1 Indenture, dated as of September 1, 1999, among First Sierra
Equipment Contract Trust 1999-2, 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.
8.1 Opinion of Dewey Ballantine LLP regarding tax matters, dated as
of September 29, 1999.
10.1 Receivables Transfer Agreement, dated as of September 1, 1999,
among First Sierra Financial, Inc., First Sierra Receivables III,
Inc., First Union National Bank, Variable Funding Capital
Corporation, Fairway Finance Corporation, Bankers Trust Company
and First Sierra Equipment Contract Trust 1999-2, a common law
trust acting through its trustee, First Union Trust Company,
National Association, not in its individual capacity but solely
as Owner Trustee.
</TABLE>
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EXHIBIT 1.1
Execution
September 22, 1999
First Union Capital Markets Corp.
One First Union Center, TW-10
301 South College Street
Charlotte, North Carolina 28288-0610
First Sierra Financial, Inc. (the "Company") hereby confirms
its agreement to sell certain equipment contract backed notes to First Union
Capital Markets Corp. (the "Representative"), Nesbitt Burns Securities, Inc.
("Nesbitt Burns") and PNC Capital Markets, Inc. ("PNC Capital Markets", and
together with the Representative and Nesbitt Burns, the "Underwriters") as
described herein. The notes will be secured by the assets of a trust consisting
primarily of a segregated pool (the "Receivable Pool") of certain finance
leases and commercial loans (the "Contracts"), the security interest of the
Company, as originator (in such capacity, the "Originator") or its affiliate,
which was acquired by the Originator or such affiliate at the time of its
origination or purchase of the related Contracts in the underlying equipment or
other property servicing such Contracts (collectively, the "Equipment,"
together with the Contracts, the "Receivables") and certain other property.
First Sierra Equipment Contract Trust 1999-2, a 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"), established pursuant
to the Trust Agreement dated as of September 1, 1999 (the "Trust Agreement")
between the Company and First Union Trust Company, National Association, not in
its individual capacity but solely as owner trustee (the "Owner Trustee"),
pursuant to the Indenture to be dated as of September 1, 1999 (the
"Indenture"), among the Trust, the Company, as Originator and as servicer (in
such capacity, the "Servicer") and Bankers Trust Company, as indenture trustee
(the "Indenture Trustee"), will pledge the Receivables to the Indenture Trustee
and issue the Class A Notes and the Class B Notes as described herein.
All capitalized terms used but not otherwise defined herein
have the respective meanings set forth in the Indenture. The phrase "This
Agreement" shall refer to this letter by the Company to the Underwriters as
agreed to and accepted by the Underwriters as of the date hereof.
1. Securities. The securities will be issued in classes as follows:
(i) four classes of senior notes consisting of: (a) 5.85535% Receivable-Backed
Notes, Class A-1 (the "Class A-1 Notes"), 6.46% Receivable-Backed Notes, Class
A-2 (the "Class A-2 Notes"), 6.70% Receivable-Backed Notes, Class A-3 (the
"Class A-3 Notes") and 6.98% Receivable-Backed Notes, Class A-4 (the "Class A-4
Notes and collectively with the Class A-1 Notes, the Class A-2 Notes and the
Class A-3 Notes, the "Class A Notes"); (ii) 7.28% Receivable-Backed Notes,
Class B (the "Class B Notes" and, collectively with the Class A Notes, the
"Offered Notes"); (iii) three Classes of Notes subordinate to the Offered
Notes, the 8.01% Receivable-Backed Notes, Class C (the "Class D Notes"), the
10.27% Receivable-Backed Notes, Class D (the "Class D Notes") and the 7.03%
Receivable-Backed Notes, Class E (the "Class E Notes"); and (iv) a class of
certificates subordinate to the Offered Notes, the Class C Notes, the Class D
Notes and the
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Class E Notes (the "Trust Certificate"). The Class C Notes, the Class D Notes,
the Class E Notes and the Trust Certificate are not being sold hereby.
2. Representations and Warranties of the Company. The Company
represents and warrants to, and covenants with, the Underwriters that:
A. The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement (No. 333-12199) on Form
S-3 for the registration under the Securities Act of 1933, as amended (the
"Act"), of Equipment Contract Backed Securities (issuable in series), which
registration statement, as amended at the date hereof, has become effective.
Such registration statement, as amended to the date of this Agreement, meets
the requirements set forth in Rule 415(a)(1)(x) under the Act and complies in
all other material respects with such Rule. The Company proposes to file with
the Commission pursuant to Rule 424(b)(2) under the Act a supplement dated the
date hereof to the prospectus dated November 25, 1998 relating to the Offered
Notes and the method of distribution thereof and has previously advised the
Underwriters of all further information (financial and other) with respect to
the Offered Notes to be set forth therein. Such registration statement,
including the exhibits thereto, as amended at the date hereof, is hereinafter
called the "Registration Statement"; such prospectus dated November 25, 1998,
in the form in which it will be filed with the Commission pursuant to Rule
424(b)(2) under the Act is hereinafter called the "Basic Prospectus"; such
supplement dated the date hereof to the Basic Prospectus, in the form in which
it will be filed with the Commission pursuant to Rule 424(b)(2) of the Act, is
hereinafter called the "Prospectus Supplement"; and the Basic Prospectus and
the Prospectus Supplement together are hereinafter called the "Prospectus." Any
preliminary form of the Prospectus Supplement which has heretofore been filed
pursuant to Rule 424 is hereinafter called a "Preliminary Prospectus
Supplement." The Company will file with the Commission within fifteen days of
the issuance of the Offered Notes a report on Form 8-K setting forth specific
information concerning the related Receivables (the "8-K").
B. As of the date hereof, when the Registration Statement
became effective, when the Prospectus Supplement is first filed pursuant to
Rule 424(b)(2) under the Act, when, prior to the Closing Date (as defined
below), any other amendment to the Registration Statement becomes effective,
and when any supplement to the Prospectus is filed with the Commission, and at
the Closing Date, (i) the Registration Statement, as amended as of any such
time, and the Prospectus, as amended or supplemented as of any such time, will
comply in all material respects with the applicable requirements of the Act and
the rules thereunder and (ii) the Registration Statement, as amended as of any
such time, did not and will not contain any untrue statement of a material fact
and did not and will not omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and the
Prospectus, as amended or supplemented as of any such time, did not and will
not contain an untrue statement of a material fact and did not and will not
omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no representations or
warranties as to the information contained in or omitted from the Registration
Statement or the Prospectus or any amendment thereof or supplement thereto in
reliance upon and in conformity with the information furnished in writing to
the Company by or on behalf of the Underwriters specifically for use in
connection with the preparation of the Registration Statement and the
Prospectus.
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C. The Company is duly organized, validly existing and in
good standing under the laws of the State of Delaware, has full power and
authority (corporate and other) to own its properties and conduct its business
as now conducted by it, and as described in the Prospectus, and is duly
qualified to do business in each jurisdiction in which it owns or leases
equipment (to the extent such qualification is required by applicable law) or
in which the conduct of its business requires such qualification except where
the failure to be so qualified does not involve (i) a material risk to, or a
material adverse effect on, the business, properties, financial position,
operations or results of operations of the Company or (ii) any risk whatsoever
as to the enforceability of any Contract.
D. There are no actions, proceedings or investigations
pending, or, to the knowledge of the Company, threatened, before any court,
governmental agency or body or other tribunal (i) asserting the invalidity of
this Agreement, the Indenture, the Receivables Transfer Agreement or the
Servicing Agreement dated as of September 1, 1999 (the "Servicing Agreement"
and together with this Agreement, the Indenture and the Receivables Transfer
Agreement, the "Agreements"), among the Company, as Servicer and as Originator,
the Issuer and the Indenture Trustee, or the Offered Notes; (ii) seeking to
prevent the issuance of the Offered Notes or the consummation of any of the
transactions contemplated by the Agreements; (iii) which may, individually or
in the aggregate, materially and adversely affect the performance by the
Company of its obligations under, or the validity or enforceability of, the
Agreements or the Offered Notes; or (iv) which may affect adversely the federal
income tax attributes of the Offered Notes as described in the Prospectus.
E. The execution and delivery by the Company of the
Agreements are within the corporate power of the Company and have been, or will
be, prior to the Closing Date duly authorized by all necessary corporate action
on the part of the Company and the execution and delivery of such instruments,
the consummation of the transactions therein contemplated and compliance with
the provisions thereof will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any statute or any
agreement or instrument to which the Company or any of its affiliates is a
party or by which it or any of them is bound or to which any of the property of
the Company or any of its affiliates is subject, the Company's charter or
bylaws, or any order, rule or regulation of any court, governmental agency or
body or other tribunal having jurisdiction over the Company, any of its
affiliates or any of its or their properties; and no consent, approval,
authorization or order of, or filing with, any court or governmental agency or
body or other tribunal is required for the consummation of the transactions
contemplated by this Agreement or the Prospectus in connection with the
issuance and sale of the Offered Notes. Neither the Company nor any of its
affiliates is a party to, bound by or in breach or violation of any indenture
or other agreement or instrument, or subject to or in violation of any statute,
order, rule or regulation of any court, governmental agency or body or other
tribunal having jurisdiction over the Company or any of its affiliates, which
materially and adversely affects, or may in the future materially and adversely
affect, (i) the ability of the Company to perform its obligations under the
Agreements or (ii) the business, operations, results of operations, financial
position, income, properties or assets of the Company.
F. This Agreement has been duly executed and delivered by the
Company, and the other Agreements will be duly executed and delivered by the
Company, and each constitutes and will constitute the legal, valid and binding
obligation of the Company enforceable in accordance
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with their respective terms, except as enforceability may be limited by (i)
bankruptcy, insolvency, liquidation, receivership, moratorium, reorganization
or other similar laws affecting the enforcement of the rights of creditors and
(ii) general principles of equity, whether enforcement is sought in a
proceeding at law or in equity.
G. The Offered Notes will conform in all material respects to
the description thereof to be contained in the Prospectus and will be duly and
validly authorized and, when duly and validly executed, authenticated, issued
and delivered in accordance with the Indenture and sold to the Underwriters as
provided herein, will be validly issued and outstanding and entitled to the
benefits of the Indenture.
H. On the Closing Date, the Receivables will conform in all
material respects to the description thereof contained in the Prospectus and
the representations and warranties contained in this Agreement will be true and
correct in all material respects. The representations and warranties set out in
the Servicing Agreement and the Indenture are hereby made to the Underwriters
as though set out herein, and at the dates specified therein, such
representations and warranties were or will be true and correct in all material
respects.
I. The Company possesses all material licenses, certificates,
permits or other authorizations issued by the appropriate state, federal or
foreign regulatory agencies or bodies necessary to conduct the business now
operated by it and as described in the Prospectus and there are no proceedings,
pending or, to the best knowledge of the Company, threatened, relating to the
revocation or modification of any such license, certificate, permit or other
authorization which singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and adversely affect
the business, operations, results of operations, financial position, income,
property or assets of the Company.
J. Any taxes, fees and other governmental charges in
connection with the execution and delivery of the Agreements or the execution
and issuance of the Offered Notes have been or will be paid at or prior to the
Closing Date.
K. There has not been any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company or its subsidiaries, taken as a whole, from June 30, 1999.
L. The Agreements will conform in all material respects to
the descriptions thereof, if any, contained in the Prospectus.
M. The Company is not aware of (i) any request by the
Commission for any further amendment of the Registration Statement or the
Prospectus or for any additional information; (ii) the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the institution or threatening of any proceeding for that purpose;
or (iii) any notification with respect to the suspension of the qualification
of the Offered Notes for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose.
3. Agreements of the Underwriters. Each Underwriter, severally and not
jointly, agrees with the Company that upon the execution of this Agreement and
authorization by each
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Underwriter of the release of the Offered Notes, each Underwriter shall offer
the Offered Notes for sale upon the terms and conditions set forth in the
Prospectus as amended or supplemented in the amounts set forth in Annex A
hereto.
4. Purchase, Sale and Delivery of the Offered Notes. The Company
hereby agrees, subject to the terms and conditions hereof, to sell the Offered
Notes the Underwriters, who, upon the basis of the representations and
warranties herein contained, but subject to the conditions hereinafter stated,
hereby severally and not jointly agree to purchase the principal amount of the
Offered Notes set forth in Annex A hereto. At the time of issuance of the
Offered Notes, the Receivables will be transferred by the Sellers, at the
direction of the Company, to the Trust pursuant to the Receivables Transfer
Agreement.
The Offered Notes to be purchased by each Underwriter will be
delivered by the Company to each Underwriter (which delivery shall be made
through the facilities of The Depository Trust Company ("DTC")) against payment
of the purchase price therefor, equal to $260,135,498, by a same day federal
funds wire payable to the order of the Company.
Settlement shall take place at the offices of Dewey
Ballantine LLP, 1301 Avenue of the Americas, New York, New York 10019 at 10
a.m., on September 29, 1999, or at such other time thereafter as each of the
Underwriters and the Company determine (such time being herein referred to as
the "Closing Date"). The Offered Notes will be prepared in definitive form and
in such authorized denominations as each Underwriter may request, registered in
the name of Cede & Co., as nominee of DTC.
The Company agrees to have the Offered Notes available for
inspection and review by the Underwriters in New York not later than 10 a.m.
New York time on the business day prior to the Closing Date.
5. Covenants of the Company. The Company covenants and agrees with the
Underwriters that:
A. The Company will promptly advise each Underwriter and its
counsel (i) when any amendment to the Registration Statement shall have become
effective; (ii) of any request by the Commission for any amendment to the
Registration Statement or the Prospectus or for any additional information;
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or threatening
of any proceeding for that purpose; and (iv) of the receipt by the Company of
any notification with respect to the suspension of the qualification of the
Offered Notes for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. The Company will not file any amendment to the
Registration Statement or supplement to the Prospectus after the date hereof
and prior to the Closing Date for the Offered Notes unless the Company has
furnished each Underwriter and its counsel copies of such amendment or
supplement for their review prior to filing and will not file any such proposed
amendment or supplement to which such Underwriter reasonably objects, unless
such filing is required by law. The Company will use its best efforts to
prevent the issuance of any stop order suspending the effectiveness of the
Registration Statement and, if issued, to obtain as soon as possible the
withdrawal thereof.
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B. If, at any time during the period in which the Prospectus
is required by law to be delivered, any event occurs as a result of which the
Prospectus as then amended or supplemented would include any untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it shall be necessary to amend or supplement the
Prospectus to comply with the Act or the rules under the Act, the Company will
promptly prepare and file with the Commission, subject to Paragraph A of this
Section 5, an amendment or supplement that will correct such statement or
omission or an amendment that will effect such compliance and, if such
amendment or supplement is required to be contained in a post-effective
amendment to the Registration Statement, will use its best efforts to cause
such amendment of the Registration Statement to be made effective as soon as
possible.
C. The Company will furnish to each Underwriter, without
charge, executed copies of the Registration Statement (including exhibits
thereto) and, so long as delivery of a Prospectus by the Underwriters or a
dealer may be required by the Act, as many copies of the Prospectus, as amended
or supplemented, and any amendments and supplements thereto as the Underwriters
may reasonably request. The Company will pay the expenses of printing all
offering documents relating to the offering of the Offered Notes.
D. As soon as practicable, but not later than sixteen months
after the effective date of the Registration Statement, the Company will make
generally available to Holders of Offered Notes Noteholders an earnings
statement covering a period of at least twelve months beginning after the
effective date of the Registration Statement which will satisfy the provisions
of Section 11(a) of the Act and, at the option of the Company, will satisfy the
requirements of Rule 158 under the Act.
E. So long as any of the Offered Notes are outstanding, the
Company will cause to be delivered to each Underwriter (i) all documents
required to be distributed to the Offered Noteholders and (ii) from time to
time, any other information filed with any government or regulatory authority
that is otherwise publicly available, as any of the Underwriters may reasonably
request.
F. The Company, whether or not the transactions contemplated
hereunder are consummated or this Agreement is terminated, will pay all
expenses in connection with the transactions contemplated herein, including but
not limited to the expenses of printing (or otherwise reproducing) all
documents relating to the offering, the fees and disbursements of its counsel
and expenses of each Underwriter incurred in connection with (i) the issuance
and delivery of the Offered Notes; (ii) preparation of all documents specified
in this Agreement; (iii) any fees and expenses of the Indenture Trustee; (iv)
any fees and expenses of the Owner Trustee; (v) any fees and expenses of the
Insurer; and (vi) any fees charged by investment rating agencies for rating the
Offered Notes.
G. The Company agrees that, so long as any of the Offered
Notes shall be outstanding, it will deliver or cause to be delivered to each
Underwriter (i) the annual statement as to compliance delivered to the
Indenture Trustee pursuant to the Servicing Agreement; (ii) the annual
statement of a firm of independent public accountants furnished to the
Indenture Trustee pursuant to the Servicing Agreement as soon as such statement
is furnished to the Company; and
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(iii) any information and reports required to be delivered by the Servicer
pursuant to Article 4 of the Servicing Agreement.
H. The Company will enter into the Agreements and all related
agreements on or prior to the Closing Date.
I. The Company will endeavor to qualify the Offered Notes for
sale to the extent necessary under any state securities or Blue Sky laws in any
jurisdictions as may be reasonably requested by the Underwriters, if any, and
will pay all expenses (including fees and disbursements of counsel) in
connection with such qualification and in connection with the determination of
the eligibility of the Offered Notes for investment under the laws of such
jurisdictions as the Underwriters may reasonably designate, if any.
6. Conditions of the Underwriters' Obligation. The obligation of each
Underwriter to purchase and pay for the Offered Notes as provided herein shall
be subject to the accuracy as of the date hereof and the Closing Date (as if
made at the Closing Date) of the representations and warranties of the Company
contained herein (including those representations and warranties set forth in
the Servicing Agreement and the Indenture and incorporated herein), to the
accuracy of the statements of the Company made in any certificate or other
document delivered pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder, and to the following additional
conditions:
A. The Registration Statement shall have become effective no
later than the date hereof, and no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened, and the Prospectus shall have
been filed pursuant to Rule 424(b).
B. The Underwriters shall have received the Indenture and the
Offered Notes in form and substance satisfactory to the Underwriters, duly
executed by all signatories required pursuant to the respective terms thereof.
C. The Underwriters shall have received the favorable opinion
of Dewey Ballantine LLP, counsel to the Company with respect to the following
items, dated the Closing Date, to the effect that:
(1) The Company has been duly organized and is
validly existing as a corporation in good standing under the
laws of the State of Delaware, and is qualified to do
business in each state necessary to enable it to perform its
obligations under each of the Agreements. The Company has the
requisite power and authority to execute and deliver, engage
in the transactions contemplated by, and perform and observe
the conditions of each of the Agreements.
(2) Each of the Agreements has been duly and validly
authorized, executed and delivered by the Company, all
requisite corporate action having been taken with respect
thereto, and each constitutes the valid, legal and binding
agreement of the Company, and would be enforceable against
the Company in accordance with their respective terms.
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<PAGE> 8
(3) Neither the transfer of the Receivables to the
Trust, the issuance or sale of the Offered Notes nor the
execution, delivery or performance by the Company of, the
Agreements (A) conflicts or will conflict with or results or
will result in a breach of, or constitutes or will constitute
a default under, (i) any term or provision of the certificate
of incorporation or bylaws of the Company; (ii) to the best
of such counsel's knowledge, any term or provision of any
material agreement, contract, instrument or indenture, to
which the Company is a party or is bound; or (iii) to the
best of such counsel's knowledge, any order, judgment, writ,
injunction or decree of any court or governmental agency or
body or other tribunal having jurisdiction over the Company;
or (B) results in, or will result in the creation or
imposition of any lien, charge or encumbrance upon the Trust
or upon the Offered Notes, except as otherwise contemplated
by the Indenture.
(4) No consent, approval, authorization or order of,
registration or filing with, or notice to, courts,
governmental agency or body or other tribunal is required
under the laws of the State of New York, for the execution,
delivery and performance of the Agreements, or the offer,
issuance, sale or delivery of the Offered Notes or the
consummation of any other transaction contemplated thereby by
the Company, except such which have been obtained.
(5) There are no actions, proceedings or
investigations pending or, to such counsel's knowledge,
threatened against the Company before any court, governmental
agency or body or other tribunal (i) asserting the invalidity
of the Agreements or the Offered Notes; (ii) seeking to
prevent the issuance of the Offered Notes or the consummation
of any of the transactions contemplated by the Agreements; or
(iii) which would materially and adversely affect the
performance by the Company of obligations under, or the
validity or enforceability of, the Offered Notes or the
Agreements.
(6) Except as to any financial or statistical data
contained in the Registration Statement, to the best of such
counsel's knowledge, the Registration Statement does not
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary in order to make the statements therein not
misleading.
(7) To the best of the knowledge of such counsel,
the Commission has not issued any stop order suspending the
effectiveness of the Registration Statement or any order
directed to any prospectus relating to the Offered Notes
(including the Prospectus), and has not initiated or
threatened any proceeding for that purpose.
In rendering their opinions, the counsel described in this
Paragraph C may rely, as to matters of fact, on certificates of responsible
officers of the Company, the Indenture Trustee and public officials. Such
opinions may also assume the due authorization, execution and delivery of the
instruments and documents referred to therein by the parties thereto other than
the Company.
D. The Underwriters shall have received a letter from Arthur
Andersen LLP, dated on or before the Closing Date, in form and substance
satisfactory to the Underwriters and
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<PAGE> 9
counsel for the Underwriters, to the effect that they have performed certain
specified procedures requested by the Underwriters with respect to the
information set forth in the Prospectus and certain matters relating to the
Company.
E. The Class A-1 Notes shall have been rated "P-1" by Moody's
Investors Service, Inc. ("Moody's"), "A-1+" by Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc. ("S&P"), "F1+/AAA" by
Fitch IBCA, Inc. ("Fitch") and "D-1+" by Duff & Phelps Credit Rating Co.
("DCR"), the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes shall
have been rated "Aaa" by Moody's and "AAA" by S&P, Fitch and DCR and the Class
B Notes shall have been rated "A2" by Moody's and "A" by S&P, Fitch and DCR and
none of such ratings shall have been rescinded. The Underwriters and their
counsel shall have received copies of any opinions of counsel supplied to the
rating organizations relating to any matters with respect to the Offered Notes.
Any such opinions shall be dated the Closing Date and addressed to the
Underwriters or accompanied by reliance letters to the Underwriters or shall
state that the Underwriters may rely upon them.
F. The Underwriters shall have received from the Company a
certificate, signed by the president, a senior vice president or a vice
president of the Company, dated the Closing Date, to the effect that the signer
of such certificate has carefully examined the Registration Statement and the
Agreements and that, to the best of his or her knowledge based upon reasonable
investigation:
(1) the representations and warranties of the Company in this
Agreement, as of the Closing Date, and in the other Agreements and in
all related Agreements, as of the date specified in such Agreements,
are true and correct, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date;
(2) there are no actions, suits or proceedings pending, or to
the best of such officer's knowledge, threatened against or affecting
the Company which if adversely determined, individually or in the
aggregate, would be reasonably likely to adversely affect the
Company's obligations under the Agreements in any material way; and no
merger, liquidation, dissolution or bankruptcy of the Company is
pending or contemplated;
(3) the information contained in the Registration Statement
relating to the Company and the Receivables is true and accurate in
all material respects and nothing has come to his or her attention
that would lead such officer to believe that the Registration
Statement includes any untrue statement of a material fact or omits to
state a material fact necessary to make the statements therein not
misleading;
(4) the information set forth in the List of Contracts
required to be furnished pursuant to the Receivables Transfer
Agreement is true and correct in all material respects;
(5) there has been no amendment or other document filed
affecting the articles of incorporation or bylaws of the Company since
June 30, 1999, and no such amendment has been authorized. No event has
occurred since September __, 1999,
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<PAGE> 10
which has affected the good standing of the Company under the laws of
the State of Delaware;
(6) there has not occurred any material adverse change, or
any development involving a prospective material adverse change, in
the condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
June 30, 1999; and
(7) each person who, as an officer or representative of the
Company, signed or signs the Registration Statement, the Agreements or
any other document delivered pursuant hereto, on the date of such
execution, or on the Closing Date, as the case may be, in connection
with the transactions described in this Agreement was, at the
respective times of such signing and delivery, and is now, duly
elected or appointed, qualified and acting as such officer or
representative, and the signatures of such persons appearing on such
documents are their genuine signatures.
The Company shall attach to such certificate a true and
correct copy of its articles of incorporation and bylaws which are in full
force and effect on the date of such certificate, and a certified true copy of
the resolutions of its Board of Directors with respect to the transactions
contemplated herein.
G. There shall not have occurred any change, or any
development involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations, since June 30, 1999, of
(A) the Company its subsidiaries and affiliates or (B) the Insurer, that is in
the Underwriters' judgment material and adverse and that makes it in the
Underwriters' judgment impracticable to market the Offered Notes on the terms
and in the manner contemplated in the Prospectus.
H. The Underwriters shall have received a favorable opinion
of counsel to the Indenture Trustee, dated the Closing Date and in form and
substance satisfactory to the Underwriters, to the effect that:
(1) the Indenture Trustee is a banking corporation duly
organized, validly existing and in good standing under the laws of the
State of New York and has the power and authority to enter into and to
take all actions required of it under the Indenture;
(2) each of (i) the Indenture and (ii) the Servicing
Agreement has been duly authorized, executed and delivered by the
Indenture Trustee and each constitutes the legal, valid and binding
obligation of the Indenture Trustee, enforceable against the Indenture
Trustee in accordance with its respective terms, except as
enforceability thereof may be limited by (A) bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally, as such laws would apply in the event of
a bankruptcy, insolvency or reorganization or similar occurrence
affecting the Indenture Trustee, and (B) general principles of equity
regardless of whether such enforcement is sought in a proceeding at
law or in equity;
(3) no consent, approval, authorization or other action by
any governmental agency or body or other tribunal is required on the
part of the Indenture
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<PAGE> 11
Trustee in connection with its execution and delivery of the Indenture
or the Servicing Agreement or the performance of its obligations
thereunder;
(4) the Offered Notes have been duly executed, authenticated
and delivered by the Indenture Trustee and assuming delivery and
payment are validly issued therefor and outstanding and are entitled
to the benefits of the Indenture; and
(5) the execution and delivery of, and performance by the
Indenture Trustee of its obligations under, the Indenture or the
Servicing Agreement do not conflict with or result in a violation of
any statute or regulation applicable to the Indenture Trustee, or the
charter or bylaws of the Indenture Trustee, or to the best knowledge
of such counsel, any governmental authority having jurisdiction over
the Indenture Trustee or the terms of any indenture or other agreement
or instrument to which the Indenture Trustee is a party or by which it
is bound.
In rendering such opinion, such counsel may rely, as to
matters of fact, on certificates of responsible officers of the Company, the
Indenture Trustee and public officials. Such opinion may also assume the due
authorization, execution and delivery of the instruments and documents referred
to therein by the parties thereto other than the Indenture Trustee.
I. The Underwriters shall have received from the Indenture
Trustee a certificate, signed by the president, a senior vice president or a
vice president of the Indenture Trustee, dated the Closing Date, to the effect
that each person who, as an officer or representative of the Indenture Trustee,
signed or signs the Offered Notes, the Indenture, the Servicing Agreement or
any other document delivered pursuant hereto, on the date hereof or on the
Closing Date, in connection with the transactions described in the Indenture
was, at the respective times of such signing and delivery, and is now, duly
elected or appointed, qualified and acting as such officer or representative,
and the signatures of such persons appearing on such documents are their
genuine signatures.
J. The Underwriters shall have received a favorable opinion
of counsel to the Owner Trustee, dated the Closing Date and in form and
substance satisfactory to the Underwriters, to the effect that:
(1) The Owner Trustee is duly incorporated, validly existing
and in good standing as a banking corporation under the laws of the
State of Delaware.
(2) The Owner Trustee has the power and authority to execute,
deliver and perform the Trust Agreement, the Receivables Transfer
Agreement, the Servicing Agreement and the Indenture (collectively,
the "Owner Trustee Agreements").
(3) Each of the Owner Trust Agreements has been duly
authorized, executed and delivered by the Owner Trustee and
constitutes a legal, valid and binding obligation of the Owner
Trustee, enforceable against the Owner Trustee, in accordance with its
terms.
(4) To the best of counsel's knowledge, without independent
investigation, neither the execution or delivery by the Owner Trustee
of the Owner
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<PAGE> 12
Trustee Agreements nor the compliance by the Owner Trustee with any of
the terms thereof or consummation of the transactions contemplated
thereby requires the consent or approval of, the giving of notice to,
the registration with, or the taking of any action with respect to,
any governmental authority or agency under the laws of the State of
Delaware.
(5) Neither the execution, delivery and performance by the
Owner Trustee of the Owner Trustee Agreements, nor the consummation of
the transactions contemplated thereby, nor compliance with the terms
thereof, will violate or result in a breach of, or constitute a
default under the provisions of such Owner Trustee Agreements or the
articles of association or by-laws of the Owner Trustee or, to the
best of counsel's knowledge, without independent investigation, any
law, rule or regulation of the State of Delaware applicable to the
Owner Trustee.
K. The Underwriters shall have received from the Owner
Trustee a certificate, signed by the president, a senior vice president or a
vice president of the Owner Trustee, dated the Closing Date, to the effect that
each person who, as an officer or representative of the Owner Trustee, signed
or signs the Certificates, the Owner Trustee Agreements or any other document
delivered pursuant hereto, on the date hereof or on the Closing Date, in
connection with the transactions described in the Indenture was, at the
respective times of such signing and delivery, and is now, duly elected or
appointed, qualified and acting as such officer or representative, and the
signatures of such persons appearing on such documents are their genuine
signatures.
L. The Underwriters shall have received from Dewey Ballantine
LLP, special counsel to the Underwriters, such opinion or opinions, dated the
Closing Date, with respect to the issuance and sale of the Offered Notes, the
Prospectus and such other related matters as the Underwriters shall reasonably
require.
M. The Underwriters and their counsel shall have received
copies of any opinions of counsel to the Company or the Indenture Trustee
supplied to the Indenture Trustee relating to matters with respect to the
Notes, the formation of the Trust or the acquisition of the Receivables. Any
such opinions shall be satisfactory to the Underwriters in form and substance.
N. The Underwriters shall have received an opinion from Dewey
Ballantine LLP, special tax counsel to the Company to the effect that the
statements in the Prospectus Supplement under the heading "CERTAIN FEDERAL
INCOME TAX CONSIDERATIONS" accurately describe the material federal income tax
consequences to the holders of the Offered Notes.
O. The Underwriters shall have received such further
information, certificates and documents as the Underwriters may reasonably have
requested not fewer than three (3) full business days prior to the Closing
Date.
If any of the conditions specified in this Section 6 shall
not have been fulfilled in all respects when and as provided in this Agreement,
if the Company is in breach of any covenants or agreements contained herein or
if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Underwriters and their counsel, this Agreement and all
obligations of the Underwriters
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<PAGE> 13
hereunder, may be canceled on, or at any time prior to, the Closing Date by the
Underwriters. Notice of such cancellation shall be given to the Company in
writing, or by telephone or telegraph confirmed in writing.
7. Expenses. If the sale of the Offered Notes provided for herein is
not consummated by reason of a default by the Company in its obligations
hereunder, then the Company will reimburse the Underwriters, upon demand, for
all reasonable out-of-pocket expenses (including, but not limited to, the
reasonable fees and expenses of counsel for the Underwriters) that shall have
been incurred by it in connection with its investigation with regard to the
Company and the Offered Notes and the proposed purchase and sale of the Offered
Notes.
8. Indemnification and Contribution.
A. Regardless of whether any Offered Notes are sold, the
Company will indemnify and hold harmless each Underwriter, each of their
respective officers and directors and each person who controls each Underwriter
within the meaning of the Act or the Securities Exchange Act of 1934 (the "1934
Act"), against any and all losses, claims, damages, or liabilities (including
the cost of any investigation, legal and other expenses incurred in connection
with and amounts paid in settlement of any action, suit, proceeding or claim
asserted), joint or several, to which they may become subject, under the Act,
the 1934 Act or other federal or state law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained (i) in the Registration
Statement, or any amendment thereof or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact necessary to make the statements therein, not misleading or (ii) in the
Basic Prospectus or the Prospectus Supplement or any amendment thereto or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and will reimburse each such indemnified party for any legal or
other expenses reasonably incurred by it in connection with investigating or
defending against such loss, claim, damage, liability or action; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
relating to the Underwriter furnished to the Company by such Underwriter
specifically for use in connection with the preparation thereof.
B. Regardless of whether any Offered Notes are sold, each
Underwriter, severally and not jointly, will indemnify and hold harmless the
Company, each of its officers and directors and each person, if any, who
controls the Company within the meaning of the Act or the 1934 Act against any
losses, claims, damages or liabilities to which they become subject under the
Act, the 1934 Act or other federal or state law or regulation, at common law or
otherwise, to the same extent as the foregoing indemnity, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in (i) the Registration Statement, or any amendment
thereof or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact necessary to make the
statements therein not misleading or in (ii) the Basic Prospectus or the
Prospectus Supplement or any amendment thereto or supplement thereto, or arise
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<PAGE> 14
out of or are based upon the omission or alleged omission to state therein a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made therein in reliance upon and
in conformity with written information relating to the Underwriter furnished to
the Company by such Underwriter specifically for use in the preparation thereof
and so acknowledged in writing, and will reimburse the Company for any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending against such loss, claim, damage, liability or
action.
C. In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to paragraphs A, B and E of this Section 8,
such person (hereinafter called the indemnified party) shall promptly notify
the person against whom such indemnity may be sought (hereinafter called the
indemnifying party) in writing thereof; but the omission to notify the
indemnifying party shall not relieve such indemnifying party from any liability
which it may have to any indemnified party otherwise than under such Paragraph.
The indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding. In any such proceeding any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel, or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all such indemnified parties, and that all such fees and expenses
shall be reimbursed as they are incurred. Such firm shall be designated in
writing by the Underwriters in the case of parties indemnified pursuant to
paragraph A of this Section 8 and by the Company in the case of parties
indemnified pursuant to paragraphs B and E of this Section 8. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel as contemplated above,
the indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
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<PAGE> 15
D. Each Underwriter agrees, severally and not jointly, to
provide the Company no later than the date on which the Prospectus Supplement
is required to be filed pursuant to Rule 424 with a copy of any Derived
Information (defined below) for filing with the Commission on Form 8-K.
E. Each Underwriter agrees, jointly and not severally,
assuming all Company-Provided Information (defined below) is accurate and
complete in all material respects, to indemnify and hold harmless the Company,
its respective officers and directors and each person who controls the Company
within the meaning of the Securities Act or the Exchange Act against any and
all losses, claims, damages or liabilities, joint or several, to which they may
become subject under the Securities Act or the Exchange Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement of a material fact
contained in the Derived Information provided by such Underwriter, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and agrees to reimburse each such indemnified party for any legal
or other expenses reasonably incurred by him, her or it in connection with
investigating or defending or preparing to defend any such loss, claim, damage,
liability or action as such expenses are incurred. The several obligations of
each Underwriter under this Section 8(E) shall be in addition to any liability
which each Underwriter may otherwise have.
The procedures set forth in Section 8(C) shall be equally
applicable to this Section 8(E).
F. For purposes of this Section 8, the term "Derived
Information" means such portion, if any, of the information delivered to the
Companies pursuant to Section 8(D) for filing with the Commission on Form 8-K
as: (i) is not contained in the Prospectus without taking into account
information incorporated therein by reference; and (ii) does not constitute
Company-Provided Information. "Company-Provided Information" means any computer
tape furnished to the Underwriters by the Company concerning the assets
comprising the Trust.
G. If the indemnification provided for in this Section 8 is
unavailable to an indemnified party in respect of any losses, claims, damages
or liabilities referred to herein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages
or liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and each Underwriter from the sale of the
Offered Notes or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only relative benefits referred to in clause (i) above but also the
relative fault of the Company and of each Underwriter in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company and each Underwriter shall be deemed
to be in such proportion so that each Underwriter is responsible for that
portion determined by multiplying the total amount of such losses, claims,
damages and liabilities, including legal and other expenses, by a fraction, the
numerator of which is (x) the excess of the Aggregate Resale Price (as defined
below) of the Offered Notes underwritten by such Underwriter over the aggregate
purchase price of such Offered Notes specified in Section 4 of this Agreement
and the related Prospectus Supplement, and the
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<PAGE> 16
denominator of which is (y) the Aggregate Resale Price of such Offered Notes,
and the Company is responsible for the balance; provided, however, that no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of the immediately
preceding sentence, the "Aggregate Resale Price" of the Offered Notes at the
time of any determination shall be the weighted average of the purchase prices
(in each case expressed as a percentage of the aggregate principal amount of
the Offered Notes so purchased), determined on the basis of such principal
amounts, paid to the Underwriter by all subsequent purchasers that purchased
the Offered Notes on or prior to such date of determination. The relative fault
of the Company and each Underwriter shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by any of the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
H. The Company and each Underwriter agree that it would not
be just and equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in paragraph
G of this Section 8. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages and liabilities referred to in paragraph
G of this Section 8 shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 8, none of the
Underwriters shall be required to contribute any amount by which the amount of
any damages that such Underwriter has otherwise been required to pay by reason
of any untrue or alleged untrue statement or omission or alleged omission
exceeds the Aggregate Resale Price.
I. The Company and each Underwriter each expressly waive, and
agree not to assert, any defense to their respective indemnification and
contribution obligations under this Section 8 which they might otherwise assert
based upon any claim that such obligations are unenforceable under federal or
state securities laws or by reasons of public policy.
J. The obligations of the Company under this Section 8 shall
be in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls the Underwriter within the meaning of the Act or the 1934 Act; and the
obligations of the Underwriters under this Section 8 shall be in addition to
any liability that the Underwriters may otherwise have and shall extend, upon
the same terms and conditions, to each director of the Company and to each
person, if any, who controls the Company within the meaning of the Act or the
1934 Act; provided, however, that in no event shall the Company or the
Underwriters be liable for double indemnification.
9. Information Supplied by Underwriters. The statements set forth on
the front cover page of the Prospectus Supplement regarding market-making and
under the heading "Method of Distribution" in the Prospectus Supplement (to the
extent such statements relate to the Underwriter) constitute the only
information furnished by the Underwriters to the Company for the purposes of
Sections 2(B) and 8(A) hereof. Each Underwriter confirms that such statements
(to such extent) are correct.
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<PAGE> 17
10. Notices. All communications hereunder shall be in writing and, if
sent to the Underwriters, shall be mailed or delivered or telecopied and
confirmed in writing to First Union Capital Markets Corp., One First Union
Center, TW-06, Charlotte, North Carolina 28288, Attention: Leah Torstrick; and,
if sent to the Company, shall be mailed, delivered or telegraphed and confirmed
in writing to First Sierra Financial, Inc., 600 Travis Street, Suite 7050,
Houston, Texas 77002, Attention: Roger Gebhart.
11. Survival. All representations, warranties, covenants and
agreements of the Company contained herein or in agreements or certificates
delivered pursuant hereto, the agreements of the Underwriters and the Company
contained in Section 8 hereof, and the agreement of the Underwriters contained
in Section 3 hereof, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Underwriters or any
controlling persons, or any subsequent purchaser or the Company or any of its
officers, directors or any controlling persons, and shall survive delivery of
and payment for the Offered Notes. The provisions of Sections 5, 7 and 8 hereof
shall survive the termination or cancellation of this Agreement.
12. Termination. The Underwriters shall have the right to terminate
this Agreement by giving notice as hereinafter specified at any time at or
prior to the Closing Date if (a) trading generally shall have been suspended or
materially limited on or by, as the case may be, the New York Stock Exchange or
the American Stock Exchange, (b) trading of any securities of the Company shall
have been suspended on any exchange or in any over-the-counter market, (c) a
general moratorium on commercial banking activities shall have been declared by
either federal or New York State authorities, (d) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any
calamity or crisis which, in the Underwriters' reasonable judgment, is material
and adverse, and, in the case of any of the events specified in clauses (a)
through (d), such event singly or together with any other such event makes it
in the Underwriters' reasonable judgment impractical to market the Offered
Notes. Any such termination shall be without liability of any other party
except that the provisions of Paragraph G of Section 5 (except with respect to
expenses of the Underwriters) and Sections 7 and 8 hereof shall at all times be
effective.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the signatories hereto and their respective successors and assigns
(which successors and assigns do not include any person purchasing an Offered
Note from the Underwriters), and the officers and directors and controlling
persons referred to in Section 8 hereof and their respective successors and
assigns, and no other persons will have any right or obligations hereunder.
14. APPLICABLE LAW; VENUE. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. ANY
ACTION OR PROCEEDING BROUGHT TO ENFORCE OR ARISING OUT OF ANY PROVISION OF THIS
AGREEMENT SHALL BE BROUGHT ONLY IN A STATE OR FEDERAL COURT LOCATED IN THE
BOROUGH OF MANHATTAN, NEW YORK CITY, NEW YORK, AND THE PARTIES HERETO EXPRESSLY
CONSENT TO THE JURISDICTION OF SUCH COURTS AND AGREE TO WAIVE ANY DEFENSE OR
CLAIM OF FORUM NON CONVENIENS THEY MAY HAVE WITH RESPECT TO ANY SUCH ACTION OR
PROCEEDING BROUGHT.
17
<PAGE> 18
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall together constitute but one and the same
instrument.
16. Amendments and Waivers. This Agreement may be amended, modified,
altered or terminated, and any of its provisions waived, only in a writing
signed on behalf of the signatories hereto.
17. Default of Underwriters. If any of the Underwriters defaults in
its obligations to purchase the Offered Notes offered to it hereunder (such
Underwriter, the "Defaulting Underwriter"), then the remaining Underwriters
(the "Performing Underwriters") shall have the option, but not the obligation,
to purchase all, but not less than all, of the Offered Notes offered to the
Defaulting Underwriter. If a Performing Underwriter elects not to exercise such
option, then this Agreement will terminate without liability on the part of
such Performing Underwriter. Nothing contained herein shall relieve the
Defaulting Underwriter from any and all liabilities to the Company and the
Performing Underwriters resulting from the default of the Defaulting
Underwriter.
18
<PAGE> 19
Execution
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon
this instrument along with all counterparts will become a binding agreement
between you and the Company in accordance with its terms.
Very truly yours,
FIRST SIERRA FINANCIAL, INC.
By: /s/ E. Roger Gebhart
------------------------------------
Name: E. Roger Gebhart
Title: Senior Vice President
Agreed to and Accepted by:
(as of the date hereof)
FIRST UNION CAPITAL MARKETS CORP.
as Representative of the Several Underwriters
By: /s/ Blake O'Connor
--------------------------------------
Name: Blake O'Connor
Title: Vice President
[Underwriting Agreement Signature Page]
<PAGE> 20
Execution
Annex A
Underwriting
Class A-1 Notes
---------------
<TABLE>
<CAPTION>
Principal
Underwriter Percentage Amount
----------- ---------- ---------
<S> <C> <C>
First Union Capital Markets 60% $18,490,927
Nesbitt Burns Securities, Inc. 30% 9,245,464
PNC Capital Markets, Inc. 10% 3,081,821
</TABLE>
Class A-2 Notes
---------------
<TABLE>
<CAPTION>
Principal
Underwriter Percentage Amount
----------- ---------- ---------
<S> <C> <C>
First Union Capital Markets 60% $19,173,831
Nesbitt Burns Securities, Inc. 30% 9,586,916
PNC Capital Markets, Inc. 10% 3,195,639
</TABLE>
Class A-3 Notes
---------------
<TABLE>
<CAPTION>
Principal
Underwriter Percentage Amount
----------- ---------- ---------
<S> <C> <C>
First Union Capital Markets 60% $11,294,174
Nesbitt Burns Securities, Inc. 30% 5,647,087
PNC Capital Markets, Inc. 10% 1,882,362
</TABLE>
Class A-4 Notes
---------------
<TABLE>
<CAPTION>
Principal
Underwriter Percentage Amount
----------- ---------- ---------
<S> <C> <C>
First Union Capital Markets 60% $37,191,979
Nesbitt Burns Securities, Inc. 30% 18,595,989
PNC Capital Markets, Inc. 10% 6,198,663
</TABLE>
<PAGE> 21
Class B Notes
-------------
<TABLE>
<CAPTION>
Principal
Underwriter Percentage Amount
----------- ---------- ---------
<S> <C> <C>
First Union Capital Markets 100% $13,570,520
</TABLE>
ii
<PAGE> 1
EXHIBIT 4.1
================================================================================
INDENTURE
by and between
FIRST SIERRA EQUIPMENT CONTRACT TRUST 1999-2, A COMMON LAW TRUST
ACTING THROUGH ITS TRUSTEE, FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS OWNER TRUSTEE
as Issuer,
FIRST SIERRA FINANCIAL, INC.
as Servicer and Originator
and
BANKERS TRUST COMPANY
as the Indenture Trustee
-------------------------------------------
Dated as of September 1, 1999
-------------------------------------------
First Sierra Equipment Contract Trust 1999-2
Equipment Contract-Backed Notes
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. DEFINITIONS............................................................................................1
Section 1.01 Definitions............................................................................1
Section 1.02 Incorporation by Reference of the Trust Indenture Act..................................1
Section 1.03 General Interpretive Principles........................................................1
Section 1.04 Conflict with TIA......................................................................2
ARTICLE II. PLEDGE OF PLEDGED PROPERTY; ORIGINAL ISSUANCE OF NOTES AND RESIDUAL CLASS.............................2
Section 2.01 Pledge of Pledged Property.............................................................2
Section 2.02 Indenture Trustee to Act as Custodian..................................................3
Section 2.03 Conditions to Closing..................................................................3
Section 2.04 Acceptance by Indenture Trustee........................................................4
Section 2.05 Liabilities of the Trust and Parties to this Indenture; Limitations Thereon............5
Section 2.06 Intended Tax Characterization..........................................................5
Section 2.07 Treasury Securities....................................................................6
ARTICLE III. ACCOUNTS; ALLOCATION AND APPLICATION OF THE TRUST FUND..............................................6
Section 3.01 Collection Account.....................................................................6
Section 3.02 Reserved...............................................................................7
Section 3.03 Investment of Monies Held in the Accounts; Subaccounts.................................7
Section 3.04 Reserve Account........................................................................7
Section 3.05 Disbursements From Collection Account..................................................8
Section 3.06 Statements to Noteholders.............................................................11
Section 3.07 Compliance With Withholding Requirements..............................................13
ARTICLE IV. REMOVAL OF NON-CONFORMING PLEDGED PROPERTY; SUBSTITUTION OF CONTRACTS................................14
Section 4.01 Removal of Non-Conforming Pledged Property............................................14
Section 4.02 Substitution of Contracts.............................................................14
Section 4.03 Release of Pledged Property...........................................................15
ARTICLE V. THE NOTES.............................................................................................16
Section 5.01 The Notes.............................................................................16
Section 5.02 Initial Issuance of Notes.............................................................18
Section 5.03 Registration of Transfer and Exchange of Notes........................................19
Section 5.04 Mutilated, Destroyed, Lost or Stolen Notes............................................20
Section 5.05 Persons Deemed Owners.................................................................20
Section 5.06 Access to List of Noteholders' Names and Addresses....................................20
Section 5.07 Acts of Noteholders...................................................................21
Section 5.08 No Proceedings........................................................................21
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VI. THE TRUST............................................................................................21
Section 6.01 Liability of the Trust................................................................21
Section 6.02 Limitation on Liability of the Trust..................................................21
Section 6.03 Indemnity for Liability Claims........................................................22
Section 6.04 Liabilities...........................................................................22
Section 6.05 [Reserved.]...........................................................................22
Section 6.06 Annual Statement as to Compliance.....................................................22
Section 6.07 Payment of Principal and Interest.....................................................23
Section 6.08 Maintenance of Office or Agency.......................................................23
Section 6.09 Money for Payments to be Held in Trust................................................23
Section 6.10 Existence.............................................................................24
Section 6.11 Protection of Pledged Property........................................................24
Section 6.12 Performance of Obligations; Servicing of Receivables..................................25
Section 6.13 Negative Covenants....................................................................26
Section 6.14 Trust May Consolidate, Etc. Only on Certain Terms.....................................26
Section 6.15 Successor or Transferee...............................................................28
Section 6.16 No Other Business.....................................................................28
Section 6.17 No Borrowing..........................................................................28
Section 6.18 Guarantees, Loans, Advances and Other Liabilities.....................................28
Section 6.19 Capital Expenditures..................................................................28
Section 6.20 Compliance with Laws..................................................................29
Section 6.21 Further Instruments and Acts..........................................................29
ARTICLE VII. THE INDENTURE TRUSTEE...............................................................................29
Section 7.01 Duties of Indenture Trustee...........................................................29
Section 7.02 Eligible Investments..................................................................30
Section 7.03 Indenture Trustee's Assignment of Contracts...........................................31
Section 7.04 Certain Matters Affecting the Indenture Trustee.......................................31
Section 7.05 Indenture Trustee Not Liable for Notes or Contracts...................................32
Section 7.06 Indenture Trustee May Own Notes.......................................................33
Section 7.07 Indenture Trustee's Fees and Expenses.................................................33
Section 7.08 Eligibility Requirements for Indenture Trustee........................................34
Section 7.09 Preferential Collection of Claims Against Issuer......................................34
Section 7.10 Resignation or Removal of Indenture Trustee...........................................35
Section 7.11 Successor Indenture Trustee...........................................................35
Section 7.12 Merger or Consolidation of Indenture Trustee..........................................36
Section 7.13 Appointment of Co-Indenture Trustee or Separate Indenture Trustee.....................36
Section 7.14 Indenture Trustee May Enforce Claims Without Possession of Note.......................37
Section 7.15 Suits for Enforcement.................................................................38
Section 7.16 Undertaking for Costs.................................................................38
Section 7.17 Representations and Warranties of Indenture Trustee...................................38
Section 7.18 Tax Returns...........................................................................39
ARTICLE VIII. EVENTS OF DEFAULT; REMEDIES........................................................................39
Section 8.01 Events of Default.....................................................................39
Section 8.02 Acceleration of Maturity, Rescission and Annulment....................................40
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 8.03 Remedies..............................................................................41
Section 8.04 Notice of Event of Default............................................................41
Section 8.05 Exercise of Power by Indenture Trustee................................................41
Section 8.06 Indenture Trustee May File Proofs of Claim............................................41
Section 8.07 Allocation of Money Collected.........................................................42
Section 8.08 Waiver of Events of Default...........................................................43
Section 8.09 Limitation On Suits...................................................................43
Section 8.10 Unconditional Right of Noteholders to Receive Principal and Interest..................44
Section 8.11 Restoration of Rights and Remedies....................................................44
Section 8.12 Rights and Remedies Cumulative........................................................44
Section 8.13 Delay or Omission Not Waiver..........................................................45
Section 8.14 Control by Controlling Parties........................................................45
Section 8.15 Sale of Pledged Property..............................................................45
Section 8.16 Action on Notes.......................................................................45
ARTICLE IX. TERMINATION..........................................................................................46
Section 9.01 Termination of Obligations and Responsibilities.......................................46
Section 9.02 Optional Redemption of Notes; Final Disposition of Funds..............................46
ARTICLE X. NOTEHOLDERS' LISTS AND REPORTS........................................................................47
Section 10.01 Note Registrar To Furnish To Indenture Trustee Names and Addresses of Noteholders.....47
Section 10.02 Preservation of Information; Communications to Noteholders............................47
Section 10.03 Reports by the Trust..................................................................48
Section 10.04 Reports by Indenture Trustee..........................................................48
Section 10.05 Compliance Certificates and Opinions, etc.............................................48
ARTICLE XI. MISCELLANEOUS PROVISIONS.............................................................................49
Section 11.01 Amendment.............................................................................49
Section 11.02 Conformity With Trust Indenture Act...................................................50
Section 11.03 Limitation on Rights of Noteholders...................................................50
Section 11.04 Counterparts..........................................................................50
Section 11.05 Governing Law.........................................................................50
Section 11.06 Notices...............................................................................51
Section 11.07 Severability of Provisions............................................................51
Section 11.08 Conflict with Trust Indenture Act.....................................................51
Section 11.09 Reserved..............................................................................52
Section 11.10 Assignment............................................................................52
Section 11.11 Binding Effect........................................................................52
Section 11.12 Survival of Agreement.................................................................52
Section 11.13 Captions..............................................................................52
Section 11.14 Exhibits..............................................................................52
Section 11.15 Calculations..........................................................................52
Section 11.16 No Proceedings........................................................................52
</TABLE>
iii
<PAGE> 5
Exhibits
Exhibit A - Form of Trustee's Receipt
Exhibit B - Form of Wiring Instructions
Exhibit C - Form of Class A Notes
Exhibit D - Form of Subordinate Notes
Exhibit E - Form of Transferee Certification (Non-144A)
Exhibit F - Form of Transferee Certification (144A QIB)
Exhibit G - Form of Transferee Certification (Investment Company)
Exhibit H - Form of Instrument of Transfer
Annex A - Defined Terms
iv
<PAGE> 6
FIRST SIERRA EQUIPMENT CONTRACT TRUST 1999-2
Reconciliation and Tie between the Indenture
dated as of September 1, 1999 and the
Trust Indenture Act of 1939, as amended
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
--------------------------- -----------------
<S> <C>
Section 310(a)(1) Section 7.08
(a)(2) 7.08
(a)(3) 7.13
(a)(4) Not Applicable
(b) 7.08; 7.10
(c) Not Applicable
311(a) 7.09
(b) 7.09
312(a) 10.02
(b) 10.02
(c) 10.02
313(a) 10.04
(b)(1) 10.02; 10.04; 4.01; 4.02; 4.03
(b)(2) 10.04
(c) 10.04
(d) 10.04
314(a) 10.03; 3.05; 6.06
(b) Not Applicable
(c)(1) 10.05
(c)(2) 10.05
(c)(3) Not Applicable
(d) Not Applicable
(e) 10.05
(f) Not Applicable
315(a) 7.01; 7.05
(b) 8.04
(c) 8.05
(d) 7.01
(e) 7.01
316(a) (last sentence) 2.07
(a)(1)(A) 7.17
(a)(1)(B) 8.06
317(a)(1) 8.03
(a)(2) 8.04
(b) 6.09
318(a) 11.09
(c) 11.09
</TABLE>
<PAGE> 7
This INDENTURE, dated as of September 1, 1999, is made by and
between First Sierra Equipment Contract Trust 1999-2, 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 "Issuer" or the "Trust"),
First Sierra Financial, Inc., as servicer (in such capacity, the "Servicer"), as
originator (in such capacity, the "Originator") and, in its individual capacity
(in such capacity "First Sierra") and Bankers Trust Company, a New York banking
corporation, not in its individual capacity but solely as the indenture trustee
(the "Indenture Trustee").
WITNESSETH:
In consideration of the mutual agreements herein contained,
and of other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the parties agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01 Definitions. Capitalized terms used and not
defined herein shall have the meanings specified in Annex A hereto.
Section 1.02 Incorporation by Reference of the Trust Indenture
Act. Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"Indenture Trustee" or "institutional trustee" means the
Indenture Trustee.
"obligor" on the indenture securities means the Issuer.
All other TIA terms used in this Indenture that are defined by
the TIA, or defined by Commission rule have the meaning assigned to them by such
definitions.
Section 1.03 General Interpretive Principles. For purposes of
this Indenture except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Indenture have the meanings
assigned to them in this Indenture and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the other
gender;
1
<PAGE> 8
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "Paragraphs" and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, Paragraphs and other
subdivisions of this Indenture;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
Section 1.04 Conflict with TIA. If any provision hereof
limits, qualifies or conflicts with a provision of the TIA that is required
under the TIA to be part of and govern this Indenture, the latter provision
shall control and all provisions required by the TIA are hereby incorporated by
reference. If any provision of this Indenture modifies or excludes any provision
of the TIA that may be so modified or excluded, the latter provisions shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be.
ARTICLE II.
PLEDGE OF PLEDGED PROPERTY;
ORIGINAL ISSUANCE OF NOTES AND RESIDUAL CLASS
Section 2.01 Pledge of Pledged Property. The Trust,
simultaneously with the execution and delivery of this Indenture, does hereby
pledge, deposit, transfer, assign, and otherwise grant to the Indenture Trustee,
without recourse (except as otherwise expressly set forth herein), to be held in
trust for the benefit of the Noteholders, as provided in this Indenture, all the
right, title, and interest of the Owner Trustee on behalf of the Trust in and to
(a)(i) any Equipment that is owned by the Owner Trustee on behalf of the Trust
and any and all income and proceeds from such Equipment, but subject to the
rights of the Obligor to quiet enjoyment of such Equipment under the related
Contract and (ii) any security interest of the Owner Trustee on behalf of the
Trust in any of the Equipment that is not owned by the Owner Trustee on behalf
of the Trust, (b) the Contracts, including, without limitation, all Scheduled
Payments, Final Scheduled Payments, Defaulted Contract Recoveries and any other
payments due or made with respect to the Contracts after the related Cut-Off
Date, (c) any guarantees of an Obligor's obligations under a Contract, (d) all
other documents in the Contract Files relating to the Contracts, including,
without limitation, any UCC financing statements related to the Contracts or the
Equipment, (e) any Insurance Policies and Insurance Proceeds with respect to the
Contracts, (f) all of the Trust's right, title and interest in and to, and
rights under the Receivables Transfer Agreement and the Servicing Agreement,
each as executed and delivered in accordance therewith, (g) all amounts on
deposit in the Collection Account, the Reserve Account and the
2
<PAGE> 9
Lockbox Account, held by the Indenture Trustee, (h) all of the Trust's right,
title and interest in and to, and rights and claims under, all Source Agreements
and Source Agreement Rights to the extent they relate to any Contract and any
Equipment covered by the Contracts, and (i) any and all income and proceeds of
any of the foregoing (all of the foregoing, collectively, constituting the
"Pledged Property"); provided, however, that the pledge, transfer and assignment
effected by this Section 2.01 shall not include the Initial Unpaid Amounts
relating thereto.
This Indenture is a security agreement within the meaning of
Article 8 and Article 9 of the Uniform Commercial Code as in effect in the
States of Delaware, New York and Texas. The pledge provided for in this Section
2.01 is intended by the Trust to be a grant by the Trust to the Indenture
Trustee on behalf of the Noteholders, of a valid first priority perfected
security interest in all of the Owner Trustee's right, title and interest (on
behalf of the Trust) in and to the Pledged Property whether now or hereafter
owned and wherever located.
Section 2.02 Indenture Trustee to Act as Custodian. The
executed original counterpart of each Contract, together with the other
documents or instruments, if any, which constitute a part of a Contract File
shall be held by the Indenture Trustee for the benefit of the Noteholders.
Section 2.03 Conditions to Closing. As conditions to the
execution, authentication and delivery of the Notes by the Indenture Trustee and
the sale of the Notes by the Trust (by issuance thereof by the Trust upon the
Trust's instructions) on the Closing Date, (i) the Trust shall have received by
wire transfer the net proceeds of sale of the Class A Notes, the Class B Notes,
the Class C Notes, the Class D Notes and the Class E Notes in authorized
denominations equal in the aggregate to the Initial Class A Note Principal
Balance, the Initial Class B Note Principal Balance, the Initial Class C Note
Principal Balance, the Initial D Principal Balance and the Initial Class E Note
Principal Balance, and (ii) the Indenture Trustee shall have received the
following on or before the Closing Date:
(a) The List of Initial Contracts, certified by the President,
any Senior Vice President, any Vice President or any Assistant Vice President of
the Servicer;
(b) Copies of resolutions of the Depositor approving the
execution, delivery and performance of the Transaction Documents to which it is
a party and the transactions contemplated hereby and thereby, certified by a
Secretary or an Assistant Secretary of the Depositor;
(c) A copy of an officially certified document, dated not more
than 30 days prior to the Closing Date, evidencing the due organization and good
standing of the Depositor in the State of Delaware;
(d) A copy of the Trust Certificate;
(e) Delivery of the executed Financing Statements with respect
to the Initial Contracts, in accordance with the Filing Requirements, prepared
for filing;
(f) A certificate listing the Servicing Officers as of the
Closing Date;
3
<PAGE> 10
(g) Executed copies of the Transaction Documents;;
(h) Copies of resolutions of the Board of Directors of First
Sierra approving the execution, delivery and performance of this Indenture and
the other Transaction Documents to which it is a party and the transactions
contemplated hereby and thereby, certified by a Secretary or an Assistant
Secretary of First Sierra;
(i) A copy of an officially certified document, dated not more
than 30 days prior to the Closing Date, evidencing the due organization and good
standing of First Sierra in the States of Delaware and Texas;
(j) A custody receipt, substantially in the form of Exhibit A
hereto, pursuant to which the Indenture Trustee certifies that it has received a
contract file with respect to each Initial Contract on the List of Initial
Contracts;
(k) All Necessary Consents;
(l) A letter from Moody's that it has assigned a rating of (i)
"P-1" to the Class A-1 Notes, (ii) "Aaa" to the Class A-2 Notes, the Class A-3
Notes and the Class A-4 Notes and (iii) "A2" to the Class B Notes;
(m) A letter from S&P that it has assigned a rating of (i)
"A-1+" to the Class A-1 Notes, (ii) "AAA" to the Class A-2 Notes, the Class A-3
Notes and the Class A-4 Notes and (iii) "A" to the Class B Notes;
(n) A letter from DCR that it has assigned a rating of (i)
"D-1+" to the Class A-1 Notes, (ii) AAA to the Class A-2 Notes, the Class A-3
Notes and the Class A-4 Notes, (iii) "A" to the Class B Notes, (iv) "BBB" to the
Class C Notes, (v) "BB" to the Class D Notes; and (vi) "B" to the Class E Notes;
(o) A letter from Fitch that it has assigned a rating of (i)
F1+ to the Class A-1 Notes, (ii) "AAA" to the Class A-2 Notes, the Class A-3
Notes and the Class A-4 Notes, (iii) "A" to the Class B Notes, (iv) "BBB" to the
Class C Notes, (v) "BB" to the Class D Notes, and (vi) "B" to the Class E Notes;
and
(p) Opinions of counsel to First Sierra and the Depositor, in
form and substance acceptable to the Indenture Trustee, covering such matters as
the Indenture Trustee may reasonably request including, without limitation,
opinions concerning nonconsolidation, true sale, security interest, federal tax
and general corporate matters.
Section 2.04 Acceptance by Indenture Trustee. The Indenture
Trustee acknowledges its acceptance, simultaneously with the execution and
delivery of this Indenture, of all right, title and interest in and to the
Pledged Property on behalf of the Noteholders and declares that the Indenture
Trustee holds and will hold such right, title and interest for the benefit of
all present and future Noteholders for the use and purpose and subject to the
terms and provisions of this Indenture. The Trust hereby (a) appoints the
Indenture Trustee as the Trust's attorney-in-fact with all power independently
to enforce all of the Trust's rights against the Originator hereunder, under the
Receivables Transfer Agreement and under the Servicing
4
<PAGE> 11
Agreement and (b) directs the Indenture Trustee to enforce such rights. The
Indenture Trustee hereby accepts such appointment and agrees to enforce such
rights.
Section 2.05 Liabilities of the Trust and Parties to this
Indenture; Limitations Thereon. (a) The obligations evidenced by the Notes
provide recourse only to the Pledged Property and provide no recourse against
First Sierra, the Depositor, the Servicer, the Indenture Trustee, the Owner
Trustee or any other Person, except as set forth in paragraph (b) below.
(b) Neither First Sierra, the Trust, the Depositor, the
Servicer nor any other Person shall be liable to the Indenture Trustee or the
Noteholders except as provided in Article VI hereof and Sections 5.01, 5.03, and
5.07 of the Servicing Agreement and Section 4.01(g) of the Receivables Transfer
Agreement. Without limiting the generality of the foregoing, if any Obligor
fails to pay any Scheduled Payment, Final Scheduled Payment or other amounts due
under a Contract, then neither the Indenture Trustee nor the Noteholders will
have any recourse against First Sierra or the Servicer for such Scheduled
Payment, Final Scheduled Payment, other amounts due under the Contract or any
losses, damages, claims, liabilities or expenses incurred by the Indenture
Trustee or any Noteholder as a direct or indirect result thereof, except as may
be provided for in Article VI hereof and Sections 5.01, and 5.07 of the
Servicing Agreement and Section 4.01(g) of the Receivables Transfer Agreement.
(c) The Indenture Trustee agrees that in the event of a
default by an Obligor under the terms of a Contract, which default is not cured
within any applicable cure period set forth in such Contract, the Indenture
Trustee and the Noteholders shall be expressly limited to the sources of payment
specified herein. In addition, the Indenture Trustee shall have the right to
exercise the rights of the Originator under the Contracts, the Insurance
Policies and any document in any Contract File in the name of the Indenture
Trustee and the Noteholders, either directly or through the Servicer as agent,
and the Indenture Trustee is hereby directed by the Trust to exercise such
rights; provided, however, that the Indenture Trustee shall not be required to
take any action pursuant to this Section 2.05(c) except upon written
instructions from the Servicer. A carbon, photographic or other reproduction of
this Indenture or any financing statement is sufficient as a financing statement
in any State.
(d) The pledge of the Pledged Property by the Trust pursuant
to this Indenture does not constitute and is not intended to result in an
assumption by the Indenture Trustee, the Trust or any Noteholder of any
obligation (except for the obligation not to disturb an Obligor's right of quiet
enjoyment) of the Originator or the Servicer to any Obligor or other Person in
connection with the Equipment, the Contracts, the Insurance Policies or any
document in the Contract Files.
Section 2.06 Intended Tax Characterization. The parties hereto
agree that it is their mutual intent that, for all applicable tax purposes, the
Class A Notes and the Subordinate Notes will constitute indebtedness and that
for all applicable tax purposes, accordingly, the Trust will be treated as sole
and exclusive owner of the Pledged Property. Further, each party hereto and each
Noteholder (by receiving and holding a Note), hereby covenants to every other
party hereto and to every other Noteholder to treat the Class A Notes and the
Subordinate Notes as indebtedness for all applicable tax purposes in all tax
filings, reports and returns and otherwise, and further covenants that neither
it nor any of its Affiliates will take, or participate in the taking
5
<PAGE> 12
of or permit to be taken, any action that is inconsistent with the treatment of
the Class A Notes or of the Subordinate Notes as indebtedness for tax purposes.
All successors and assigns of the parties hereto shall be bound by the
provisions hereof.
Section 2.07 Treasury Securities. In determining whether the
Noteholders of the required outstanding principal balance of the Notes have
concurred in any direction, waiver or consent, Notes owned by First Sierra, any
other obligor upon the Notes or any Affiliate of First Sierra shall be
considered as though not outstanding, except that for the purposes of
determining whether the Indenture Trustee shall be protected in relying on any
such direction, waiver or consent, only Notes which a Responsible Officer
actually knows are so owned shall be so disregarded.
ARTICLE III.
ACCOUNTS; ALLOCATION AND APPLICATION OF
THE TRUST FUND
Section 3.01 Collection Account. (a) The Servicer shall
establish and maintain with the Indenture Trustee an Eligible Bank Account (the
"Collection Account") for the benefit of the Noteholders as an Eligible Bank
Account, in the name of "First Sierra Equipment Contract-Backed Notes 1999-2
Collection Account, in trust for the registered holders of Equipment
Contract-Backed Notes, Series 1999-2." At the Servicer's written direction, the
Indenture Trustee shall make withdrawals from the Collection Account only as
provided in this Indenture. The Indenture Trustee shall possess all right, title
and interest in all funds on deposit from time to time in the Collection Account
and all proceeds thereof. The Collection Account shall be under the sole
dominion and control of the Indenture Trustee for the benefit of the
Noteholders.
(b) At the times indicated in this Section 3.01(b) or in
Section 3.01(c) below, the following amounts (net of Excluded Amounts) shall be
deposited in the Collection Account in immediately available funds:
(i) The Servicer shall deposit or cause to be
deposited the aggregate amounts of Collections;
(ii) The Servicer shall deposit the aggregate
Servicer Advances payable pursuant to Section 4.03 of the
Servicing Agreement;
(iii) The Servicer shall deposit any Repurchase
Amounts payable by it under the Servicing Agreement, or by the
Originator pursuant to Section 4.01 hereof; and
(iv) Investment Earnings, as described in Section
3.03(a) hereof.
(c) The Servicer shall so transfer the aggregate amount of
Collections no later than two Business Days after the Servicer's receipt of such
amount. The Servicer shall so deposit the aggregate amount of Servicer Advances
no later than one day prior to the related Payment Date. The Servicer shall
instruct the Indenture Trustee in writing to deposit the portion of any
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Advance Payment due and owing for a Collection Period no later than the related
Determination Date. Except as otherwise expressly set forth, any other deposits
and transfers of funds to be made pursuant to this Section 3.01 shall be made no
later than the third Business Day immediately preceding the related Payment
Date.
Notwithstanding the foregoing, the Servicer may deduct from
amounts otherwise payable to the Collection Account amounts previously deposited
by the Servicer into the Collection Account but (i) subsequently uncollectable
as a result of dishonor of the instrument of payment for or on behalf of the
Obligor or (ii) later determined to have resulted from mistaken deposits.
Section 3.02 Reserved.
Section 3.03 Investment of Monies Held in the Accounts;
Subaccounts. (a) The Servicer shall direct the Indenture Trustee in writing to
invest the amounts in each Account in Eligible Investments that mature not later
than the Business Day immediately preceding the next Payment Date following the
investment of such amounts. Eligible Investments shall not be sold or disposed
of prior to their maturities. The Trust Certificate Holder shall be entitled to
the Investment Earnings on amounts held in the Accounts as earned. The amount of
any Insured Payment shall be held uninvested.
(b) The Indenture Trustee and the Servicer may, from time to
time and in connection with the administration of any Account, establish and
maintain with the Indenture Trustee one or more sub-accounts of any of the
Accounts, as the Indenture Trustee and/or the Servicer may consider useful.
Section 3.04 Reserve Account. (a) The Servicer shall establish
and maintain with the Indenture Trustee an Eligible Bank Account (the "Reserve
Account") for the benefit of the Noteholders as an Eligible Bank Account, in the
name of "First Sierra Equipment Contract-Backed Notes 1999-2 Collection Account,
in trust for the registered holders of Equipment Contract-Backed Notes, Series
1999-2." At the Servicer's written direction, the Indenture Trustee shall make
withdrawals from the Reserve Account only as provided in this Indenture. The
Indenture Trustee shall possess all right, title and interest in all funds on
deposit from time to time in the Reserve Account and all proceeds thereof. The
Reserve Account shall be under the sole dominion and control of the Indenture
Trustee for the benefit of the Noteholders.
(a) On the Closing Date, the Indenture Trustee shall deposit
the Requisite Amount into the Reserve Account from the proceeds of the sale of
the Notes. Amounts on deposit in the Reserve Account shall be invested in
accordance with Section 3.02 hereof. The Trust Certificate Holder shall be
entitled to any net income from such investment.
(b) On each Payment Date, to the extent that the related
Monthly Statement discloses a deficiency, the Indenture Trustee shall withdraw
from Reserve Account, to the extent necessary, the amounts, if any, necessary to
fund such deficiencies in the following amounts, in the following order of
priority:
(i) the Class A Note Interest then due;
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(ii) the Class B Note Interest then due;
(iii) the Class C Note Interest then due;
(iv) the Class D Note Interest then due;
(v) the amount necessary to reduce the Note Principal
Balance of any Class of Notes having its stated
Maturity Date on such Payment Date to zero;
(vi) the Class A Principal Payment Amount, the Class B
Principal Payment Amount, the Class C Principal
Payment Amount, the Class D Principal Payment Amount,
and Reallocated Principal in accordance with the
payment priorities set forth in clauses (x) through
(xiv) of Section 3.05(b) hereof;
(vii) the Class E Note Interest then due; and
(viii) the Class E Principal Payment Amount due on such
Payment Date;
provided; however, that in the event that payments on the
Contracts may not be used to make payments on the Notes due to the bankruptcy of
First Sierra, amounts on deposit in the Reserve Account shall only be available
to pay Note Interest on the related Class of Notes and principal payments on the
related Maturity Date of the Notes in the priorities set forth above.
(c) On each Payment Date, (after giving effect to any
withdrawals therefrom on such Payment Date in accordance with the foregoing),
the Available Funds remaining after the distributions made pursuant to clauses
(i) through (xvii) of Section 3.05(b) hereof, if any, will be deposited in the
Reserve Account in the amount necessary to maintain the amount on deposit in the
Reserve Account at the Requisite Amount with respect to such Payment Date. On
any Payment Date, if the amount on deposit in the Reserve Account (after giving
effect to any withdrawals therefrom on such Payment Date in accordance with the
foregoing) is in excess of the Requisite Amount with respect to such Payment
Date, such excess shall be distributed to the Trust Certificate Holder.
Section 3.05 Disbursements From Collection Account. (a) On
each Payment Date, the Indenture Trustee shall pay the entire amount of money
then on deposit in the Collection Account with respect to the related Collection
Period, as indicated on the Monthly Statement, as applicable, to the Persons to
which such money is then due, calculated on the basis of and in accordance with
the Monthly Statement for the related Collection Period; provided, however, that
in the event the Servicer fails to deliver a Monthly Statement by a Payment Date
the Indenture Trustee shall, nevertheless, pay interest on each Class of Notes
from the sources of funding set forth herein, in each case in an amount with
respect to each Class equal to the product of (i) one-twelfth, (ii) the related
Note Rate and (iii) the related Note Principal Balance, as reflected on the
Monthly Statement most recently delivered by the Servicer (net of any principal
payments in respect thereof on the immediately preceding Payment Date).
(b) On each Payment Date, the Indenture Trustee shall pay such
money to the following Persons, in the following order of priority, without
duplication:
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(i) To First Sierra by wire transfer of immediately
available funds, the aggregate amount of any Initial Unpaid
Amounts inadvertently deposited in the Collection Account;
(ii) From the amount then remaining in the Collection
Account, to any party entitled thereto, by check, any
indemnity payments paid pursuant to any Contract, to the
extent that such amounts are inadvertently deposited in the
Collection Account;
(iii) From the Available Funds then remaining in the
Collection Account, to the Servicer by wire transfer to the
account designated in writing by the Servicer of immediately
available funds, the aggregate amount of the following:
(A) An amount equal to the unreimbursed
Servicer Advances (other than Servicer Advances for
the current Collection Period);
(B) An amount equal to the Servicer Fee
owing on such Payment Date, plus any unpaid Servicer
Fee owing from prior Collection Periods; and
(C) Any Servicing Charges inadvertently
deposited in the Collection Account;
(iv) From the Available Funds then remaining in the
Collection Account, to the Indenture Trustee by wire transfer
to the account designated in writing by the Indenture Trustee,
an amount equal to the Indenture Trustee Fees owing on such
Payment Date, plus any unpaid Indenture Trustee Fees from
prior Collection Periods, subject to the limitation set forth
in Section 7.07 (a)(i) hereof;
(v) From the Available Funds then remaining in the
Collection Account, to the Indenture Trustee by wire transfer
to the account designated in writing by the Indenture Trustee,
an amount equal to the reimbursable expenses due and unpaid to
the Indenture Trustee in accordance with and subject to
Section 7.07(a)(ii) hereof;
(vi) From the Available Funds then remaining in the
Collection Account and from amounts, if any, transferred from
the Reserve Account, to the Class A-1 Noteholders, the Class
A-1 Note Interest for the related Collection Period, to the
Class A-2 Noteholders, the Class A-2 Note Interest for the
related Collection Period, to the Class A-3 Noteholders, the
Class A-3 Note Interest for the related Collection Period, and
to the Class A-4 Noteholders, the Class A-4 Note Interest for
the related Collection Period pari passu;
(vii) From the Available Funds then remaining in the
Collection Account and from amounts, if any, transferred from
the Reserve Account, to the Class B Noteholders an amount
equal to the Class B Note Interest for the related Collection
Period;
(viii) From the Available Funds then remaining in the
Collection Account and from amounts, if any, transferred from
the Reserve Account, to the Class C
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Noteholders an amount equal to the Class C Note Interest for
the related Collection Period;
(ix) From the Available Funds then remaining in the
Collection Account and from amounts, if any, transferred from
the Reserve Account, to the Class D Noteholders an amount
equal to the Class D Note Interest for the related Collection
Period;
(x) From the Available Funds then remaining in the
Collection Account and from amounts, if any, transferred from
the Reserve Account until the Class A Note Principal Balance
has been reduced to zero, to the Class A Noteholders from the
Available Funds then remaining in the Collection Account, the
Class A Principal Payment Amount for such Payment Date, such
amount to be applied sequentially, with 100% of such amount
being applied to reduce the Note Principal Balance of the
Class A Notes then Outstanding and having the lowest numerical
designation (e.g., first to the Class A-1 Notes) to zero
before any principal payment is made to the next Class;
(xi) From the Available Funds then remaining in the
Collection Account and from amounts, if any, transferred from
the Reserve Account, until the Class B Note Principal Balance
has been reduced to zero, to the Class B Noteholders, the
Class B Principal Payment Amount for such Payment Date;
(xii) From the Available Funds then remaining in the
Collection Account and from amounts, if any, transferred from
the Reserve Account, until the Class C Note Principal Balance
has been reduced to zero, to the Class C Noteholders, Class C
Principal Payment Amount for such Payment Date;
(xiii) From the Available Funds then remaining in the
Collection Account and from amounts, if any, transferred from
the Reserve Account, until the Class D Note Principal Balance
has been reduced to zero, to the Class D Noteholders, the
Class D Principal Payment Amount for such Payment Date;
(xiv) From the Available Funds then on deposit in the
Collection Account and from amounts, if any, transferred from
the Reserve Account, to pay the Reallocated Principal, if any,
as an additional reduction of principal to the Class A
Noteholders, as provided in clause (x) above, until the Note
Principal Balance on all of the Class A Notes has been reduced
to zero, then to Class B Noteholders until the Note Principal
Balance on the Class B Notes has been reduced to zero, then to
the Class C Noteholders until the Note Principal Balance on
the Class C Notes has been reduced to zero, then to the Class
D Noteholders until the Note Principal Balance on the Class D
Notes has been reduced to zero, and finally to the Class E
Noteholders, until the Note Principal Balances on the Class E
Notes has been reduced to zero;
(xv) From the Available Funds then remaining in the
Collection Account and from amounts, if any, transferred from
the Reserve Account, to the Class E Noteholders an amount
equal to the Class E Note Interest for the related Collection
Period;
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(xvi) From the Available Funds then remaining in the
Collection Account and from amounts, if any, transferred from
the Reserve Account, until the Class E Note Principal Balance
has been reduced to zero, to the Class E Noteholders, the
Class E Principal Payment Amount for such Payment Date;
(xvii) From the Available Funds then on deposit in
the Collection Account, to pay the Supplemental Principal
Payment Amount, if any, first, to the Class A-1 Noteholders,
until the Class A-1 Note Principal Balance has been reduced to
zero and second, after the Class A-1 Note Principal Balance
has been reduced to zero, to the Noteholders of each Class of
Notes then Outstanding, on a pro rata basis;
(xviii) From Available Funds then remaining in the
Collection Account, to the Reserve Account, the amount
necessary to maintain the amount on deposit therein at the
Requisite Amount for such Payment Date;
(xix) From the Available Funds then remaining in the
Collection Account, to the Indenture Trustee, the Indenture
Trustee Expenses then due together with any Indenture Trustee
Expenses from prior Collection Periods, in excess of the
$75,000 limitation set forth in Section 7.07(a)(ii) hereof,
and
(xx) From the Available Funds then remaining in the
Collection Account, to the Trust Certificate Holder, any
remaining amounts.
(c) All payments to Noteholders shall be made on each Payment
Date to each Noteholder of record on the related Record Date by check, or, if
requested by such Noteholder, by wire transfer to the account designated in
writing in the form of Exhibit B hereto (or such other account as the Noteholder
may designate in writing) delivered to the Indenture Trustee on or prior to the
related Determination Date, in immediately available funds, in amounts equal to
such Noteholder's pro rata share (based on the aggregate Class A Percentage
Interest in the case of the Class A Noteholders, the Class B Percentage Interest
in the case of the Class B Noteholders, the Class C Percentage Interest in the
case of the Class C Noteholders, the Class D Percentage in the case of the Class
D Noteholders and the Class E Percentage in the case of the Class E Noteholders)
of such payment.
Section 3.06 Statements to Noteholders. (a) If the Servicer
has delivered the Monthly Statement on the preceding Determination Date, then on
each Payment Date, the Servicer will forward such Monthly Statement to the
Indenture Trustee. Not later than one Business Day prior to such Payment Date,
the Indenture Trustee will mail to the Rating Agencies a statement (which
statement will be prepared by the Servicer furnished to the Indenture Trustee in
the Monthly Statement delivered pursuant to Section 4.07 of the Servicing
Agreement or otherwise pursuant to this Indenture), setting forth the following
information (per $1,000 of the Initial Class A Note Principal Amount, the
Initial Class B Note Principal Amount, the Initial Class C Note Principal
Amount, the Initial Class D Note Principal Amount or the Initial Class D Note
Principal Amount (as the case may be) as to (i) and (ii) below):
(i) With respect to a statement to a Class A
Noteholder, a Class B Noteholder, a Class C Noteholder, a
Class D Noteholder or a Class E Noteholder, the amount of such
payment allocable to such Noteholder's Percentage Interest of
the Class A
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Principal Payment Amount, Class B Principal Payment Amount,
Class C Principal Payment Amount, Class D Principal Payment
Amount or Class E Principal Payment Amount, as applicable;
(ii) With respect to a statement to a Noteholder, the
amount of such payment allocable to such Noteholder's
Percentage Interest of Class A-1, Class A-2, Class A-3, Class
A-4, Class B, Class C, Class D or Class E Note Current
Interest and Class A-1, Class A-2, Class A-3, Class A-4, Class
B, Class C, Class D or Class E Overdue Interest, as
applicable;
(iii) The aggregate amount of fees and compensation
received by the Servicer pursuant to Section 3.05 hereof for
the Collection Period;
(iv) The aggregate Class A Note Principal Balance
(and, individually, the Class A-1 Note Principal Balance, the
Class A-2 Note Principal Balance, the Class A-3 Note Principal
Balance, the Class A-4 Note Principal Balance), the aggregate
Class B Note Principal Balance, the aggregate Class C Note
Principal Balance, the aggregate Class D Note Principal
Balance and the aggregate Class E Note Principal Balance, the
Class A Percentage, the Class B Percentage, the Class C
Percentage, the Class D Percentage, the Class E Percentage,
the Class A Note Factor, the Class B Note Factor, the Class C
Note Factor, the Class D Note Factor, the Class E Note Factor,
the Pool Factor and the Aggregate Discounted Contract
Principal Balance, after taking into account all distributions
made on such Payment Date;
(v) The total unreimbursed Servicer Advances with
respect to the related Collection Period;
(vi) The amount of Residual Receipts and Defaulted
Contract Recoveries for the related Collection Period and the
Aggregate Discounted Contract Principal Balances for all
Contracts that became Defaulted Contracts during the related
Collection Period; and
(vii) The total number of Contracts and the Aggregate
Discounted Contract Principal Balances thereof, together with
the number and Aggregate Discounted Contract Principal
Balances of all Contracts as to which the Obligors, as of the
related Calculation Date, have missed one, two, three or four
Scheduled Payments (including Final Scheduled Payments), and
Delinquent Contracts reconveyed.
(b) By January 31 of each calendar year, commencing January
31, 2000, or as otherwise required by applicable law, the Indenture Trustee
shall furnish to each Person who at any time during the immediately preceding
calendar year was a Noteholder a statement prepared by the Servicer, and
delivered to the Indenture Trustee, containing the applicable aggregate amounts
distributed with respect to such Noteholder hereof for such calendar year or, in
the event such Person was a Noteholder during a portion of such calendar year,
for the applicable portion of such year, for the purposes of such Noteholder's
preparation of federal income tax returns. In addition to the foregoing the
Servicer and the Indenture Trustee (to the extent the Servicer has provided the
necessary information to the Indenture Trustee) shall make available to
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Noteholders any other information provided to the Servicer or the Indenture
Trustee or otherwise in the Indenture Trustee's possession reasonably requested
by Noteholders in connection with tax matters, in accordance with the written
directions of the Servicer.
(c) The Servicer shall furnish to each Subordinate Noteholder,
on request, during the term of this Indenture, such periodic, special or other
reports or information not specifically provided for herein, as shall be
necessary, reasonable or appropriate with respect to such Subordinate Noteholder
all such reports or information to be provided by and in accordance with such
applicable instructions and directions as the Subordinate Noteholder may
reasonably require and as the Servicer may reasonably be able to produce;
provided, however, that the Servicer may require such Subordinate Noteholder to
execute a confidentiality agreement in form and substance acceptable to the
Servicer.
(d) The Indenture Trustee shall promptly send to each
Noteholder and to the Rating Agencies in writing:
(i) Notice of any breach by First Sierra, the
Depositor, the Trust, the Originator or the Servicer of any of
their respective representations, warranties and covenants
made herein, the Servicing Agreement or in the Receivables
Transfer Agreement.
(ii) A copy of each Servicer compliance statement
delivered to the Indenture Trustee pursuant to Section 4.09 of
the Servicing Agreement.;
(iii) Notice of any breach by the Indenture Trustee
of its representations and warranties set forth in Section
7.17 hereof of which a Responsible Officer has actual
knowledge;
(iv) Notice of the occurrence of any Event of Default
(which shall also be given to the Rating Agencies);
(v) Notice of any Event of Servicing Termination, or
any other default under any of the Transaction Documents; and
(vi) Notice of the resignation or removal of the
Indenture Trustee;
provided, however, that in each case the Indenture Trustee shall only be
required to send such notices and other items to the Subordinate Noteholders to
the extent that the Indenture Trustee has itself received the related
information and the Subordinate Noteholders have not already received such
notice or other items. Except as may be specifically provided herein, the
Indenture Trustee shall have no obligation to seek to obtain any such
information.
Section 3.07 Compliance With Withholding Requirements.
Notwithstanding any other provisions of this Indenture, the Indenture Trustee,
as paying agent for and on behalf of, and at the direction of the Servicer,
shall comply with all federal withholding requirements respecting payments (or
advances thereof) to Noteholders as may be applicable to instruments
constituting indebtedness for federal income tax purposes. Any amounts so
withheld shall be
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treated as having been paid to the related Noteholder for all purposes of this
Indenture. In no event shall the consent of Noteholders be required for any
withholding.
ARTICLE IV.
REMOVAL OF NON-CONFORMING PLEDGED
PROPERTY; SUBSTITUTION OF CONTRACTS
Section 4.01 Removal of Non-Conforming Pledged Property. (a)
Upon discovery by the Trust, the Servicer (or any of its successors or assigns)
or in the case of the Indenture Trustee, upon actual knowledge of a Responsible
Officer of the Indenture Trustee, of a breach of any of the representations or
warranties set forth in Section 2.02 of the Servicing Agreement that materially
and adversely affects any Contract, the related Equipment or the related
Contract File, as the case may be, or if the Servicer fails to cause delivery of
evidence of filing or copies of any UCC financing statement or delivery of any
Certificate of Title in accordance with the Servicing Agreement (any such event,
a "Warranty Event"), the party (including any such successor or assign)
discovering such breach shall give prompt written notice to the other parties.
As of the last day of the calendar month following the month of its discovery or
its receipt of notice of breach (or, at First Sierra's election, any earlier
date), First Sierra shall deposit (or cause to be deposited) to the Collection
Account the Repurchase Amount with respect to such Contract or replace such
contract with a Substitute Contract pursuant to Section 4.02 hereof. Any such
nonconforming Contract so removed shall not be deemed to be a Defaulted Contract
for purposes of this Article IV.
(b) The obligation of First Sierra to remove any Pledged
Property from the Trust and to remit the Repurchase Amount or substitute a
Substitute Contract, as appropriate, with respect to the related Contract as to
which a breach has occurred and is continuing shall constitute the sole remedy
against First Sierra for such breach available to the Indenture Trustee and the
Noteholders, except to the extent that such breach is the result of any fraud or
willful misconduct on the part of First Sierra.
Section 4.02 Substitution of Contracts. (a) Subject to the
provisions of Sections 4.02(b) through (d) hereof, First Sierra, upon notice
from the Servicer, may substitute one or more Contracts (each a "Substitute
Contract") and transfer all of its right, title and interest in the Substitute
Conveyed Assets for and replace any Contract and terminate the security interest
in the related Equipment that (i) becomes a Delinquent Contract, Defaulted
Contract or an Early Termination Contract or (ii) is the subject of a
Prepayment, a Casualty Loss or a Warranty Event.
(b)Each Substitute Contract shall be a Contract with respect
to which all of the representations and warranties set forth in Section 2.02 of
the Servicing Agreement were true as of the related Substitute Cut-Off Date.
(c) Any substitution of a Contract pursuant to this Section
4.02 will be effected by (i) delivery to the Trustee of the Contract File for
each such Substitute Contract, (ii) the filing of any UCC financing statements
in accordance with the Filing Requirements necessary to perfect
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the interest of the Indenture Trustee in the Substitute Contract, (iii) delivery
to the Indenture Trustee of the List of Substitute Contracts reflecting the
substitution, and (iv) delivering to the Indenture Trustee a release request, in
form and substance acceptable to the Indenture Trustee, with respect to the
Contract being replaced and the originally executed trust receipt relating
thereto.
(d) No such substitution under this Section 4.02 shall be
permitted on any Substitute Transfer Date if:
(i) on a cumulative basis from the Initial Cut-Off
Date, the sum of the Discounted Contract Principal Balances
(as of the related Substitute Cut-Off Date) of such Substitute
Contracts would exceed ten percent (10%) of the sum of the
Aggregate Discounted Contract Principal Balance of all
Contracts as of the Initial Cut-Off Date;
(ii) as of the related Substitute Cut-Off Date, the
Substitute Contracts then being transferred have a Discounted
Contract Principal Balance less than the Discounted Contract
Principal Balance of the Contracts being replaced; and
(iii) as a result thereof, (x) the sum of the
Scheduled Payments on all Contracts due in any Collection
Period thereafter would be less than or increase the amount by
which it is less than (y) the sum of the Scheduled Payments
which would otherwise be due in such Collection Period.
For purposes of determining compliance with clause
(ii), 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.
(e) Upon the replacement of a Contract and the related
Equipment with a Substitute Contract as described above, the security interest
of the Indenture Trustee in such replaced Contract, the related Equipment and
all proceeds thereon shall be terminated and the replaced Contract and the
related Equipment shall be transferred to the Trust and to First Sierra.
Section 4.03 Release of Pledged Property. (a) The Indenture
Trustee, when required by the Trust and the provisions of this Indenture, shall
execute instruments provided to it in order to release property from the lien of
this Indenture in a manner and under circumstances that are not inconsistent
with the provisions of this Indenture and the Servicing Agreement. No party
relying upon an instrument executed by the Indenture Trustee as provided in this
Article IV shall be bound to ascertain the Indenture Trustee's authority,
inquire into the satisfaction of any conditions precedent or see to the
application of any monies.
(b)The Indenture Trustee shall, at such time as there are no
Notes outstanding and all sums due the Indenture Trustee have each been paid,
release any remaining portion of the Pledged Property that secured the Note from
the lien of this Indenture and release to the Trust or any other Person entitled
thereto any funds then on deposit in the Collection Account or any subaccounts
thereof as may have been established pursuant to Sections 3.01 and 3.02. The
Indenture Trustee shall release property from the lien of this Indenture
pursuant to this Section 4.03(b) only upon receipt of an Issuer Request
accompanied by an Officer's Certificate, an
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Opinion of Counsel and (if required by the TIA) Independent Certificates in
accordance with TIA Sections 314(c) and 314(d)(1) meeting the applicable
requirements of Section 10.05 hereof.
ARTICLE V.
THE NOTES
Section 5.01 The Notes. (a) The Class A Notes will be issued
in denominations of $1,000 and multiples of $1,000 in excess thereof (with the
exception of one Note of each class which will be issued in an odd amount) of
the Initial Class A-1 Note Principal Balance, the Initial Class A-2 Note
Principal Balance, the Initial Class A-3 Note Principal Balance, the Initial
Class A-4 Note Principal Balance and the Subordinate Notes will be issued in
denominations of $1,000,000 and $1,000 increments above $1,000,000 of the
Initial Class B Note Principal Balance, the Initial Class C Note Principal
Balance, the Initial Class D Note Balance and the Initial Class E Note Principal
Balance. Each Note shall represent a validly issued and binding obligation, but
only if such Note has been executed on behalf of the Trust by a Responsible
Officer of the Owner Trustee by manual signature, and authenticated on behalf of
the Indenture Trustee by a Responsible Officer of the Indenture Trustee by
manual signature. Each Note bearing the manual signatures of individuals who
were, at the time when such signatures were affixed, authorized to sign on
behalf of the Trust shall be valid and binding obligations, notwithstanding that
such individuals or any of them have ceased to be so authorized prior to the
authentication and delivery of such Note or did not hold such offices at the
date of such Note. No Note shall be entitled to any benefit under this
Indenture, or be valid for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form set forth in the form of
the Notes of the related Class, each attached as Exhibits hereto, signed by the
Indenture Trustee by manual signature, and such signature upon any Note shall be
conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder. All Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes and Class A-4 Notes shall be substantially in the forms set
forth in Exhibits C-1, C-2, C-3 and C-4 hereto, respectively, all Class B Notes
shall be substantially in the form set forth in Exhibit D-1 hereto, all Class C
Notes shall be substantially in the form set forth in Exhibit D-2 hereto, all
Class D Notes shall be substantially in the form set forth in Exhibit D-3
hereto, and all Class E Notes shall be in substantially the same form as set
forth in Exhibit D-4. Each Note shall be dated the date of its authentication.
Neither the Notes nor the Contracts are insured by the Federal Deposit Insurance
Corporation or any other governmental agency.
(b)It is intended that the Offered Notes be registered so as
to participate in a global book-entry system with the Trust, as set forth
herein. The Offered Notes shall, except as otherwise provided in the next
paragraph, be initially issued in the form of a single fully registered Class
A-1 Note, Class A-2 Note, Class A-3 Note, Class A-4 Note and Class B Note, each
with a denomination equal to the Initial Class A-1 Note Principal Balance, the
Initial Class A-2 Note Principal Balance, the Initial Class A-3 Note Principal
Balance the Initial Class A-4 Principal Balance and the Initial Class B Note
Principal Balance, respectively. Upon initial issuance, the ownership of each
such Offered Note shall be registered in the Register in the name of Cede & Co.,
or any successor thereto, as nominee for the Trustee.
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The Trust and the Indenture Trustee are hereby authorized to
execute and deliver the Representation Letter with the Depository.
With respect to Offered Notes registered in the Register in
the name of Cede & Co., as nominee of the Depository, the Trust and the
Indenture Trustee shall have no responsibility or obligation to Direct or
Indirect Participants or beneficial owners for which the Depository holds
Offered Notes from time to time as a trustee. Without limiting the immediately
preceding sentence, the Trust, the Servicer and the Indenture Trustee shall have
no responsibility or obligation with respect to (i) the accuracy of the records
of the Depository, Cede & Co., or any Direct or Indirect Participant with
respect to any ownership interest in any Offered Note, (ii) the delivery to any
Direct or Indirect Participant or any other Person, other than a Noteholder, of
any notice with respect to the Offered Notes or (iii) the payment to any Direct
or Indirect Participant or any other Person, other than a Noteholder, of any
amount with respect to any distribution of principal or interest on the Offered
Notes. No Person other than a Noteholder shall receive a certificate evidencing
such Offered Note.
Upon delivery by the Depository to the Indenture Trustee of
written notice to the effect that the Depository has determined to substitute a
new nominee in place of Cede & Co., and subject to the provisions hereof with
respect to the payment of interest by the mailing of checks or drafts to the
Noteholders appearing as Noteholders at the close of business on a Record Date,
the name "Cede & Co." in this Indenture shall refer to such new nominee of the
Depository.
(c) In the event that (i) the Depository or the Servicer
advises the Indenture Trustee in writing that the Depository is no longer
willing or able to discharge properly its responsibilities as nominee and
depository with respect to the Offered Notes and the Servicer or the Depository
is unable to locate a qualified successor or (ii) the Indenture Trustee at its
sole option elects to terminate the book-entry system through the Depository,
the Offered Notes shall no longer be restricted to being registered in the
Register in the name of Cede & Co. (or a successor nominee) as nominee of the
Depository. At that time, the Servicer may determine that the Offered Notes
shall be registered in the name of and deposited with a successor depository
operating a global book-entry system, as may be acceptable to the Servicer, or
such depository's agent or designee but, if the Servicer does not select such
alternative global book-entry system, then the Offered Notes may be registered
in whatever name or names Noteholders transferring Offered Notes shall
designate, in accordance with the provisions hereof; provided, however, that any
such registration shall be at the expense of the Servicer.
(d) Notwithstanding any other provision of this Indenture to
the contrary, so long as any Offered Note is registered in the name of Cede &
Co., as nominee of the Depository, all distributions of principal or interest on
such Offered Notes, as the case may be, and all notices with respect to such
Offered Notes, as the case may be, shall be made and given, respectively, in the
manner provided in the Representation Letter.
In the event any Notes are issued in book-entry form with the
Depository: (i) the Indenture Trustee may deal with the Depository as the
authorized representative of the Noteholders; (ii) the rights of the Noteholders
shall be exercised only through the Depository and shall be limited to those
established by law and agreement between the Noteholders and the
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Depository; (iii) the Depository will make book-entry transfers among the direct
participants of the Depository and will receive and transmit distributions of
principal and interest on the Notes to such direct participants; and (iv) the
direct participants of the Depository shall have no rights under this Indenture
under or with respect to any of the Notes held on their behalf by the
Depository, and the Depository may be treated by the Indenture Trustee and its
agents, employees, officers and directors as the absolute owner of the Notes for
all purposes whatsoever.
(e) No transfer of any Subordinate Note shall be made unless
such transfer is made in a transaction which does not require registration or
qualification under the Securities Act or qualification under any state
securities or "Blue Sky" laws. If such a transfer is to be made in reliance upon
an exemption from the Securities Act other than Rule 144A thereunder, (A) the
Indenture Trustee shall receive an Opinion of Counsel that such transfer may be
made pursuant to an exemption from the Securities Act, describing the applicable
exemption and the basis therefor, which Opinion of Counsel shall not be an
expense of First Sierra, the Depositor, the Servicer, the Trust or the Indenture
Trustee or (B) the Indenture Trustee shall require the transferee to execute a
certification, substantially in the form of Exhibit F hereto, setting forth the
facts surrounding such transfer. In the event that a transfer is to be made in
reliance on Rule 144A under the Securities Act, the Subordinate Noteholder shall
cause its prospective transferee to execute and deliver a certificate
substantially in the form of Exhibit G hereto; provided, however, that with
respect to any sale of a Subordinate Note by an investment company registered
under the Investment Company Act of 1940, as amended, made in reliance on Rule
144A, the Subordinate Noteholder may (in lieu of delivering a certificate in the
form of Exhibit G) deliver to the Indenture Trustee a certificate in the form of
Exhibit H hereto with a copy of a Qualified Institutional Buyer Certificate in
the form of Addendum 1 thereto. The Servicer promptly shall furnish to any
Holder, or any prospective purchaser designated by a Holder, the information
required to be delivered to Holders and prospective purchasers of Subordinate
Notes in connection with the resale of the Subordinate Notes to permit
compliance with Rule 144A in connection with such resale. No Subordinate Note
may be subdivided for resale or other transfer into a unit smaller than a unit
the initial offering price of which would have been in the aggregate $1,000,000.
No resale or other transfer of the Subordinate Notes may be made to a
nonresident alien individual, foreign corporation or other non-United States
person.
(f) Notwithstanding anything else contained in this Indenture,
neither the Indenture Trustee nor the Note Registrar shall effect the
registration of any transfer of a Subordinate Note (i) unless, prior to such
transfer, the Indenture Trustee shall have received from the Subordinate
Noteholder (with a copy to each Rating Agency) an Opinion of Counsel to the
effect that such transfer will not result in the Trust becoming subject to
taxation as an association taxable as a corporation or (ii) if following such
transfer the sum of (a) the number of Holders of a Subordinate Note and (b) the
number of Holders of the Trust Certificate, would be more than 99. Ownership of
the Trust Certificate shall be nontransferable, but may be pledged to secure
non-recourse debt of the Depositor.
Section 5.02 Initial Issuance of Notes. The Indenture Trustee
shall, upon the written instruction of the Trust, in exchange for the Pledged
Property, authenticate and deliver the Class A Notes and the Subordinate Notes
executed by the Trust in authorized denominations equaling in the aggregate the
Initial Class A Note Principal Balance, the Initial Class B Note
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Principal Balance, the Initial Class C Note Principal Balance, the Initial Class
D Note Principal Balance and the Initial Class D Note Principal Balance.
Section 5.03 Registration of Transfer and Exchange of Notes.
(a) The Indenture Trustee, as initial Note Registrar, shall maintain, or cause
to be maintained, at the Corporate Trust Office, a register (the "Register") in
which the Indenture Trustee shall provide for the registration of Notes and of
transfers and exchanges of Notes as herein provided. All Notes shall be so
registered.
(b) Upon surrender for registration of transfer of any Note at
the Corporate Trust Office, the Trust shall execute, and the Indenture Trustee
shall authenticate and deliver, subject to the requirements of Sections 5.01(e)
and (f) hereof in the case of the Subordinate Notes, in the name of the
designated transferee or transferees, one or more new Notes in authorized
denominations of the same class, of a like aggregate Class A-1 Percentage
Interest, Class A-2 Percentage Interest, Class A-3 Percentage Interest, Class
A-4 Percentage Interest, Class B Percentage Interest, Class C Percentage
Interest, Class D Percentage Interest or Class E Percentage Interest, as the
case may be, dated the date of such authentication.
(c) At the option of a Noteholder, Notes may be exchanged for
other Notes of the same class (of authorized denominations in the case of Class
A Notes and Subordinate Notes) of a like aggregate Class A-1 Percentage
Interest, Class A-2 Percentage Interest, Class A-3 Percentage Interest, Class
A-4 Percentage Interest, Class B Percentage Interest, Class C Percentage
Interest, Class D Percentage Interest or Class E Percentage Interest, as the
case may be, upon surrender of the Notes to be exchanged at any such office or
agency. Whenever any Notes are so surrendered for exchange, the Trust shall
execute, and the Indenture Trustee shall authenticate and deliver the Notes that
the Noteholder making the exchange is entitled to receive. Every Note presented
or surrendered for registration of transfer or exchange shall be accompanied by
a written instrument of transfer substantially in the form of Exhibit H hereto,
duly executed by the Noteholder thereof or its attorney duly authorized in
writing.
(d) No service charge shall be made for any registration of
transfer of any Note or for the exchange of any Note, but the Indenture Trustee
may require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer of any Note or exchange of
any Note.
(e) All Notes surrendered for registration of transfer and all
Notes surrendered for exchange shall be delivered to the Indenture Trustee and
cancelled and subsequently destroyed by the Indenture Trustee in accordance with
its customary practices in effect from time to time.
(f) The Note Registrar shall not register the transfer of any
Note (other than the transfer of an Offered Note to the nominee of the
Depository or a successor depository) unless the transferee has executed and
delivered to the Indenture Trustee a certification to the effect that either (i)
the transferee is not (A) an employee benefit plan (as defined in Section 3(3)
of ERISA) that is subject to the provisions of Title I of ERISA or (B) a plan
(as defined in Section 4975(e)(1) of the Code) that is subject to Section 4975
of the Code (each of the foregoing, a "Benefit Plan"), and is not acting on
behalf of or investing the assets of a Benefit Plan, or (ii)
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with respect to the transfer of any Note other than a Class D Note and a Class E
Note, that the transferee's acquisition and continued holding of the Note will
be entitled to exemptive relief pursuant to a U.S. Department of Labor
prohibited transaction class exemption. Each transferee of a beneficial interest
in a Note that is registered in the name of, and deposited with, a depository
operating a global book-entry system shall be deemed to make one of the
foregoing representations. No Class D Note or Class E Note may be sold or
transferred (including, without limitation, by pledge or hypothecation) if the
sale or transfer thereof increases the number of the sum of (A) the number of
holders of Class D Notes, (B) the number of holders of Class E Notes, and (C)
the number of holders of trust certificates of the Issuer, to more than 99.
Section 5.04 Mutilated, Destroyed, Lost or Stolen Notes. If
any mutilated Note is surrendered to the Indenture Trustee, or the Indenture
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, and (a) there is delivered to the Trust, the Owner Trustee, the
Servicer and the Indenture Trustee such security or indemnity satisfactory to
each of them as may be required by them to save each of them harmless (provided,
that with respect to a Subordinate Noteholder which is an insurance company
whose long-term debt or claims paying ability is rated investment grade or
better by the Rating Agencies at such time, a letter of indemnity furnished by
it shall be sufficient for this purpose), then, in the absence of notice to the
Indenture Trustee that any such Note has been acquired by a bona fide purchaser,
the Trust shall execute and the Indenture Trustee shall authenticate and deliver
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note
a new Note of like Class and Percentage Interest. In connection with the
issuance of any new Note under this Section 5.04, the Indenture Trustee may
require the payment by the Noteholder of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto. Any other
expenses (including the fees and expenses of the Indenture Trustee) in
connection therewith shall be paid by the Servicer. Any duplicate Note issued
pursuant to this Section 5.04 shall constitute a Note duly issued by the Trust,
as if originally issued, whether or not the lost, stolen or destroyed Note shall
be found at any time.
Section 5.05 Persons Deemed Owners. The Indenture Trustee may
treat the Person in whose name any Note is registered as the owner of such Note
for the purpose of receiving distributions pursuant to Section 3.05 hereof and
for all other purposes whatsoever, and the Indenture Trustee shall not be
affected by any notice to the contrary.
Section 5.06 Access to List of Noteholders' Names and
Addresses. (a) The Indenture Trustee will furnish or cause to be furnished to
the Servicer within 15 days after receipt by the Indenture Trustee of a request
therefor from the Servicer in writing, a list of the names and addresses of the
Noteholders as of the most recent Record Date. If one or more Noteholders
representing a Class A Percentage Interest, a Class B Percentage Interest, a
Class C Percentage Interest, a Class D Percentage Interest or a Class E
Percentage Interest of not less than 25% (an "Applicant") shall apply in writing
to the Indenture Trustee, and such application shall state that the Applicant
desires to communicate with other Noteholders with respect to its rights under
this Indenture or under the Notes, then the Indenture Trustee shall, within five
Business Days after the receipt of such application, send such notice to the
current list of Noteholders. Every Noteholder, by receiving and holding a Note,
agrees with the Trust, the Owner Trustee, the Servicer and the Indenture Trustee
that none of the Trust, the Owner Trustee,
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the Servicer nor the Indenture Trustee shall be held accountable by reason of
the disclosure of any such information, regardless of the source from which such
information was derived.
Section 5.07 Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by an agent duly appointed in writing, and, except
as herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Indenture Trustee and, where
required, to the Trust or the Servicer. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 7.01 hereof) conclusive in
favor of the Indenture Trustee, the Trust, First Sierra and the Servicer, if
made in the manner provided in this Section 5.07.
(b) The fact and date of the execution by any Noteholder of
any such instrument or writing may be proven in any reasonable manner which the
Indenture Trustee deems sufficient.
(c) The ownership of Notes shall be proven by the Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other act by a Noteholder shall bind every holder of every
Note issued upon the registration of transfer thereof or in exchange therefor or
in lieu thereof, in respect of anything done or omitted to be done by the
Indenture Trustee, the Owner Trustee, the Trust or the Servicer in reliance
thereon, whether or not notation of such action is made upon such Note.
Section 5.08 No Proceedings. By its acceptance of a Note, each
Noteholder shall be deemed to have agreed that it will not directly or
indirectly institute, or cause to be instituted, against the Trust Certificate
Holder or the Trust any bankruptcy or insolvency proceeding so long as there
shall not have elapsed one year plus one day since the maturity date of the
latest maturing securities of the Trust.
ARTICLE VI.
THE TRUST
Section 6.01 Liability of the Trust. (a) The Trust shall be
liable for payments in respect of the Notes in accordance herewith only to the
extent of the obligations specifically undertaken by the Trust herein.
Section 6.02 Limitation on Liability of the Trust. (a) Neither
the Owner Trustee nor the directors, officers, employees or agents of the Trust
or the Owner Trustee shall be under any liability to the Indenture Trustee, the
Noteholders, First Sierra, the Servicer, the Trust Certificate Holder or any
other Person hereunder or pursuant to any document delivered hereunder, it being
expressly understood that all such liability is expressly waived and released as
a condition of, and as consideration for, the Trust's execution and delivery of
this Indenture and the issuance of the Notes. The Trust shall not be under any
liability to the Indenture Trustee,
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the Noteholders, First Sierra, the Servicer, the Trust Certificate Holder or any
other Person for any action taken or for refraining from the taking of any
action in its capacity as Trust pursuant to this Indenture whether arising from
express or implied duties under this Indenture; provided, however, that this
provision shall not protect the Trust against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith,
misrepresentation or gross negligence in the performance of duties or by reason
of reckless disregard of obligations and duties hereunder. The Trust may rely in
good faith on any document of any kind prima facie properly executed and
submitted by any other Person respecting any matters arising hereunder.
Section 6.03 Indemnity for Liability Claims. (a) The Trust
Certificate Holder on behalf of the Trust shall be deemed to have agreed to
indemnify, defend and hold harmless the Indenture Trustee (which shall include
any of its directors, employees, officers and agents), the Owner Trustee (which
shall include any of its directors, employees, officers and agents), the
Noteholders against and from any and all costs, expenses, losses, damages,
claims and liabilities arising out of or resulting from the use, repossession or
operation of the Equipment to the extent not covered by the Servicer's indemnity
provided by Section 5.01 of the Servicing Agreement; provided, however, that
such amounts shall be payable solely from amounts payable to the Trust
Certificate Holder pursuant to Section 3.05(b)(xviii) hereof.
Section 6.04 Liabilities. Notwithstanding any provision of
this Indenture, by entering into this Indenture, the Trust and the Trust
Certificate Holder agrees to be liable, directly to the injured party, for the
entire amount of any losses, claims, damages or liabilities (other than those
losses incurred by a Class A Noteholder, a Class B Noteholder, a Class C
Noteholder, a Class D Noteholder or a Class E Noteholder in the capacity of an
investor in the Class A Notes, the Class B Notes, the Class C Notes, the Class D
Notes or the Class E Notes) imposed on or asserted against the Trust or
otherwise arising out of or based on the arrangements created by this Indenture
(to the extent of the Trust assets remaining after the Class A Noteholders and
the Subordinate Noteholders have been paid in full are insufficient to pay such
losses, claims, damages or liabilities).
Section 6.05 [Reserved.]
Section 6.06 Annual Statement as to Compliance. The Servicer
on behalf of the Trust will deliver to the Indenture Trustee, within 90 days
after the end of each fiscal year of the Trust (commencing with the fiscal year
ended December 31, 2000), and otherwise in compliance with the requirements of
TIA Section 314(a)(4) an Officer's Certificate stating, as to the Authorized
Officer signing such Officer's Certificate, that
(i) a review of the activities of the Trust during
such year and of performance under this Indenture has been
made under such Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's
knowledge, based on such review, the Trust has complied with
all conditions and covenants under this Indenture throughout
such year, or, if there has been a default in the compliance
of any such condition or covenant, specifying each such
default known to such Authorized Officer and the nature and
status thereof.
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Section 6.07 Payment of Principal and Interest. The Indenture
Trustee on behalf of the Trust will pay or cause to be duly and punctually paid
the principal of and interest on the Notes in accordance with the terms of the
Notes and this Indenture. Amounts properly withheld under the Code by any Person
from a payment to any Noteholder of interest and/or principal shall be
considered as having been paid by the Trust to such Noteholder for all purposes
of this Indenture.
Section 6.08 Maintenance of Office or Agency. The Note
Registrar shall, and the Indenture Trustee, as initial Note Registrar agrees to,
maintain in New York, New York, an office or agency where Notes may be
surrendered for registration of transfer or exchange, and where notices and
demands to or upon the Trust in respect of the Notes and this Indenture may be
served. The Indenture Trustee will give prompt written notice to the Trust of
the location, and of any change in the location, of any such office or agency.
Section 6.09 Money for Payments to be Held in Trust. On or
before each Payment Date, the Servicer on behalf of the Trust shall deposit or
cause to be deposited in the Collection Account, but only from the sources
described herein, an aggregate sum sufficient to pay the amounts then becoming
due under the Notes, such sum to be held in trust for the benefit of the Persons
entitled thereto and (unless the paying agent is the Indenture Trustee) shall
promptly notify the Indenture Trustee of its action or failure so to act.
The Servicer on behalf of the Trust will cause each paying
agent other than the Indenture Trustee to execute and deliver to the Indenture
Trustee an instrument in which such paying agent shall agree with the Indenture
Trustee (and if the Indenture Trustee acts as paying agent, it hereby so
agrees), subject to the provisions of this Section, that such paying agent will:
(i) hold all sums held by it for the payment of
amounts due with respect to the Notes in trust for the benefit
of the Persons entitled thereto until such sums shall be paid
to such Persons or otherwise disposed of as herein provided
and pay such sums to such Persons as herein provided;
(ii) give the Indenture Trustee notice of any default
by the Trust (or any other obligor upon the Notes) of which it
has actual knowledge in the making of any payment required to
be made with respect to the Notes;
(iii) at any time during the continuance of any such
default, upon the written request of the Indenture Trustee,
forthwith pay to the Indenture Trustee all sums so held in
trust by such paying agent;
(iv) immediately resign as a paying agent and
forthwith pay to the Indenture Trustee all sums held by it in
trust for the payment of Notes if at any time it ceases to
meet the standards required to be met by a paying agent at the
time of its appointment; and
(v) comply with all requirements of the Code with
respect to the withholding from any payments made by it on any
Notes of any applicable withholding taxes imposed thereon and
with respect to any applicable reporting requirements in
connection therewith.
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The Trust may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, direct
any paying agent to pay to the Indenture Trustee all sums held in trust by such
paying agent, such sums to be held by the Indenture Trustee upon the same trusts
as those upon which the sums were held by such paying agent; and upon such a
payment by any paying agent to the Indenture Trustee, such paying agent shall be
released from all further liability with respect to such money.
Subject to applicable laws with respect to the escheat of
funds, any money held by the Indenture Trustee or any paying agent in trust for
the payment of any amount due with respect to any Note and remaining unclaimed
for two years after such amount has become due and payable shall be discharged
from such trust and be paid to the Trust and shall be deposited by the Indenture
Trustee in the Collection Account; and the Holder of such Note shall thereafter,
as an unsecured general creditor, look only to the Trust for payment thereof
(but only to the extent of the amounts so paid to the Trust), and all liability
of the Indenture Trustee or such paying agent with respect to such trust money
shall thereupon cease; provided, however, that the Indenture Trustee or such
paying agent, before being required to make any such repayment, shall at the
expense of the Trust cause to be published once, in a newspaper published in the
English language, customarily published on each Business Day and of general
circulation in The City of New York, notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such publication, any unclaimed balance of such money then
remaining will be repaid to the Trust. The Indenture Trustee shall also adopt
and employ, at the expense of the Trust, any other reasonable means of
notification of such repayment (including, but not limited to, mailing notice of
such repayment to Holders whose Notes have been called but have not been
surrendered for redemption or whose right to or interest in moneys due and
payable but not claimed is determinable from the records of the Indenture
Trustee or of any paying agent, at the last address of record for each such
Holder).
Section 6.10 Existence. Except as otherwise permitted by the
provisions of Section 6.13, the Owner Trustee, on behalf of the Trust, will keep
in full effect the Trust's existence, rights and franchises as a common law
trust under the laws of the State of Delaware (unless the Trust becomes, or any
successor Trust hereunder is or becomes, organized under the laws of any other
state or of the United States of America, in which case the Owner Trustee or a
successor Owner Trustee, on behalf of the Trust, will keep in full effect the
Trust's existence, rights and franchises under the laws of such other
jurisdiction) and the Servicer, on behalf of the Trust, will obtain and preserve
the Trust's qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes and each other instrument or
agreement included in the Pledged Property.
Section 6.11 Protection of Pledged Property. The Trust intends
the security interest granted pursuant to this Indenture in favor of the
Indenture Trustee and the Noteholders, as their interests appear herein, to be
prior to all other liens in respect of the Pledged Property, and the Servicer on
behalf of the Trust shall take all actions necessary to obtain and maintain, in
favor of the Indenture Trustee, for the benefit of the Noteholders, a first lien
on and a first priority, perfected security interest in the Pledged Property.
The Servicer on behalf of the Trust will from time to time prepare (or shall
cause to be prepared), execute and deliver all such supplements and amendments
hereto and all such financing statements, continuation statements,
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instruments of further assurance and other instruments, and will take such other
action necessary or advisable to:
(i) grant more effectively all or any portion of the
Pledged Property;
(ii) maintain or preserve the lien and security
interest (and the priority thereof) in favor of the Indenture
Trustee for the benefit of the Noteholders, created by this
Indenture or carry out more effectively the purposes hereof;
(iii) perfect, publish notice of or protect the
validity of any grant made or to be made by this Indenture;
(iv) enforce any of the Pledged Property;
(v) preserve and defend title to the Pledged Property
and the rights of the Indenture Trustee in such Pledged
Property against the claims of all persons and parties; and
(vi) pay all taxes or assessments levied or assessed
upon the Pledged Property when due.
The Trust hereby designates the Indenture Trustee its agent and attorney-in-fact
to execute any financing statement, continuation statement or other instrument
required by the Indenture Trustee pursuant to this Section 6.11.
Section 6.12 Performance of Obligations; Servicing of
Receivables. (a) The Trust will not take any action and will use its best
efforts not to permit any action to be taken by others that would release any
Person from any of such Person's material covenants or obligations under any
instrument or agreement included in the Pledged Property or that would result in
the amendment, hypothecation, subordination, termination or discharge of, or
impair the validity or effectiveness of, any such instrument or agreement,
except as ordered by any bankruptcy or other court or as expressly provided in
this Indenture, the other Transaction Documents or any other instrument or
agreement.
(b) The Trust may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Indenture Trustee in an Officer's Certificate of
the Trust shall be deemed to be action taken by the Trust. Initially, the Trust
has contracted with the Servicer to substantially perform the Trust's duties
under this Indenture, and in such regard, the Trust may rely upon information
provided by the Servicer in connection with any Officer's Certificates of the
Trust to be provided pursuant to this Indenture and any other action to be take
by the Trust pursuant to this Indenture.
(c) The Trust will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the other Transaction
Documents and in the instruments and agreements included in the Pledged
Property, including, but not limited to, preparing (or causing to be prepared)
and filing (or causing to be filed) all UCC financing statements and
continuation statements required to be filed by the terms of this Indenture and
the Servicing Agreement in accordance with and within the time periods provided
for herein and therein.
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(d) If a Responsible Officer of the Owner Trustee shall have
actual knowledge of the occurrence of an Event of Servicing Termination under
the Servicing Agreement, the Trust shall promptly notify the Indenture Trustee
and the Rating Agencies in writing thereof, and shall specify in such notice the
action, if any, the Trust is taking in respect of such default. If a Servicer
Termination Event shall arise from the failure of the Servicer to perform any of
its duties or obligations under the Servicing Agreement with respect to the
Contracts, the Trust shall take all reasonable steps available to it to remedy
such failure.
Section 6.13 Negative Covenants. So long as any Notes are
Outstanding, the Trust shall not:
(i) except as expressly permitted by this Indenture
or the Transaction Documents, sell, transfer, exchange or
otherwise dispose of any of the properties or assets of the
Trust, including those included in the Pledged Property;
(ii) claim any credit on, or make any deduction from
the principal or interest payable in respect of, the Notes
(other than amounts properly withheld from such payments under
the Code) or assert any claim against any present or former
Noteholder by reason of the payment of the taxes levied or
assessed upon any part of the Pledged Property; or
(iii) (A) permit the validity or effectiveness of
this Indenture to be impaired, or permit the lien in favor of
the Indenture Trustee created by this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenants or
obligations with respect to the Notes under this Indenture
except as may be expressly permitted hereby, (B) permit any
lien, charge, excise, claim, security interest, mortgage or
other encumbrance (other than the lien of this Indenture) to
be created on or extend to or otherwise arise upon or burden
the Pledged Property or any part thereof or any interest
therein or the proceeds thereof (other than tax liens,
mechanics' liens and other liens that arise by operation of
law, in each case on Equipment and arising solely as a result
of an action or omission of the related Obligor), or (C)
permit the lien of this Indenture not to constitute a valid
first priority (other than with respect to any such tax,
mechanics' or other lien) security interest in the Pledged
Property;
Section 6.14 Trust May Consolidate, Etc. Only on Certain
Terms. (a) The Trust shall not consolidate or merge with or into any other
Person, unless
(i) the Person (if other than the Trust) formed by or
surviving such consolidation or merger shall be a Person
organized and existing under the laws of the United States of
America or any state and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the
Indenture Trustee, in form satisfactory to the Indenture
Trustee, the due and punctual payment of the principal of and
interest on all Notes and the performance or observance of
every agreement and covenant of this Indenture on the part of
the Trust to be performed or observed, all as provided herein;
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(ii) immediately after giving effect to such
transaction, no Event of Default or Restricting Event shall
have occurred and be continuing;
(iii) the Trust shall have received an Opinion of
Counsel (and shall have delivered copies thereof to the
Indenture Trustee) to the effect that such transaction will
not have any material adverse tax consequence to the Trust or
any Noteholder;
(iv) any action as is necessary to maintain the lien
and security interest created by this Indenture shall have
been taken;
(v) the Trust shall have delivered to the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel
each stating that such consolidation or merger and such
supplemental indenture comply with this Article VI and that
all conditions precedent herein provided for relating to such
transaction have been complied with (including any filing
required by the Exchange Act); and
(vi) the Rating Agencies have confirmed that such
transaction will not result in the reduction or withdrawal of
any rating on any class of Notes.
(b) The Trust shall not convey or transfer all or
substantially all of its properties or assets, including those included in the
Pledged Property, to any Person, unless
(i) the Person that acquires by conveyance or
transfer the properties and assets of the Trust the conveyance
or transfer of which is hereby restricted shall (A) be a
United States citizen or a Person organized and existing under
the laws of the United States of America or any state, (B)
expressly assume, by an indenture supplemental hereto,
executed and delivered to the Indenture Trustee, in form
satisfactory to the Indenture Trustee, the due and punctual
payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of
this Indenture and each of the Transaction Documents on the
part of the Trust to be performed or observed, all as provided
herein, (C) expressly agree by means of such supplemental
indenture that all right, title and interest so conveyed or
transferred shall be subject and subordinate to the rights of
Holders of the Notes, (D) unless otherwise provided in such
supplemental indenture, expressly agree to indemnify, defend
and hold harmless the Trust against and from any loss,
liability or expense arising under or related to this
Indenture and the Notes and (E) expressly agree by means of
such supplemental indenture that such Person (or if a group of
persons, then one specified Person) shall prepare (or cause to
be prepared) and make all filings with the Commission (and any
other appropriate Person) required by the Exchange Act in
connection with the Notes;
(ii) immediately after giving effect to such
transaction, no Event of Default or Restricting Event shall
have occurred and be continuing;
(iii) the Trust shall have received an Opinion of
Counsel (and shall have delivered copies thereof to the
Indenture Trustee) to the effect that such transaction will
not have any material adverse tax consequence to the Trust or
any Noteholder;
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(iv) any action as is necessary to maintain the lien
and security interest created by this Indenture shall have
been taken;
(v) the Trust shall have delivered to the Indenture
Trustee an Officers' Certificate and an Opinion of Counsel
each stating that such conveyance or transfer and such
supplemental indenture comply with this Article VI and that
all conditions precedent herein provided for relating to such
transaction have been complied with (including any filing
required by the Exchange Act); and
(vi) the Rating Agencies have confirmed that such
transaction will not result in the reduction or withdrawal of
any rating on any class of Notes.
Section 6.15 Successor or Transferee. (a) Upon any
consolidation or merger of the Trust in accordance with Section 6.14, the Person
formed by or surviving such consolidation or merger (if other than the Issuer)
shall succeed to, and be substituted for, and may exercise every right and power
of, the Trust under this Indenture with the same effect as if such Person had
been named as the Trust herein.
(b) Upon a conveyance or transfer of all the assets and
properties of the Trust pursuant to Section 6.14(b), the Trust will be released
from every covenant and agreement of this Indenture to be observed or performed
on the part of the Trust with respect to the Notes immediately upon the delivery
of written notice to the Indenture Trustee stating that the Trust is to be so
released.
Section 6.16 No Other Business. The Trust shall not engage in
any business other than financing, purchasing, owning, selling and managing the
Receivables in the manner contemplated by this Indenture and the other
Transaction Documents and activities incidental thereto.
Section 6.17 No Borrowing. The Trust shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes and (ii) any other Indebtedness permitted
by or arising under the Transaction Documents. The proceeds of the Notes shall
be used exclusively to fund the Trust's purchase of the Contracts and the other
assets constituting the Pledged Property and to pay the Trust's organizational,
transactional and start-up expenses.
Section 6.18 Guarantees, Loans, Advances and Other
Liabilities. Except as contemplated by the Servicing Agreement or this
Indenture, the Trust shall not make any loan or advance or credit to, or
guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance on any obligation or capability of so
doing or otherwise), endorse or otherwise become contingently liable, directly
or indirectly, in connection with the obligations, stocks or dividends of, or
own, purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
Section 6.19 Capital Expenditures. The Trust shall not make
any expenditure (by long-term or operating lease or otherwise) for capital
assets (either realty or personal).
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Section 6.20 Compliance with Laws. The Trust shall comply with
the requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Trust to perform its obligations under the Notes, this Indenture or any
other Transaction Document.
Section 6.21 Further Instruments and Acts. Upon request of the
Indenture Trustee, the Trust will execute and deliver such further instruments
and do such further acts as may be reasonably necessary or proper to carry out
more effectively the purpose of this Indenture and the other Transaction
Documents.
ARTICLE VII.
THE INDENTURE TRUSTEE
Section 7.01 Duties of Indenture Trustee. (a) The Indenture
Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture. If an Event of Default of which a
Responsible Officer of the Indenture Trustee shall have actual knowledge has
occurred and has not been cured or waived, the Indenture Trustee shall exercise
such of the rights and powers vested in it by this Indenture, and use the same
degree of care and skill in their exercise as a prudent Person would exercise or
use under the circumstances in the conduct of such Person's own affairs.
(b) The Indenture Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Indenture Trustee that are specifically required to
be furnished pursuant to any provision of this Indenture, shall examine them to
determine whether they conform as to form to the requirements of this Indenture.
No acceptance of, or reliance on, any such item by the Indenture Trustee shall
constitute a representation by the Indenture Trustee of the enforceability or
sufficiency of such item.
(c) No provision of this Indenture shall be construed to
relieve the Indenture Trustee from liability for its own grossly negligent
action, its own grossly negligent failure to act or its own willful misconduct;
provided, however, that:
(i) Prior to the occurrence of an Event of Default,
and after the curing of all such Events of Default that may
have occurred, the duties and obligations of the Indenture
Trustee shall be determined solely by the express provisions
of this Indenture; the Indenture Trustee shall not be liable
except for the performance of such duties and obligations as
are specifically set forth in this Indenture; no implied
covenants or obligations shall be read into this Indenture
against the Indenture Trustee; and in the absence of bad faith
on the part of the Indenture Trustee, the Indenture Trustee
may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Indenture Trustee
and, if specifically required to be furnished pursuant to any
provision of this Indenture, conforming to the requirements of
this Indenture;
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(ii) The Indenture Trustee shall not be liable for an
error of judgment made in good faith by a Responsible Officer
of the Indenture Trustee unless it shall be proved that the
Indenture Trustee was grossly negligent in ascertaining the
pertinent facts;
(iii) The Indenture Trustee shall not be personally
liable with respect to any action taken, suffered or omitted
to be taken by it in good faith in accordance with this
Indenture, pursuant to the direction of the Notes evidencing
Percentage Interests in the related Class of not less than
25%, relating to the time, method and place of conducting any
proceeding for any remedy available to the Indenture Trustee,
or exercising, suffering or omitting to take any trust or
power conferred upon the Indenture Trustee, under this
Indenture;
(iv) The Indenture Trustee shall not be charged with
knowledge of any Event of Servicing Termination, any Event of
Default or Restricting Event unless a Responsible Officer of
the Indenture Trustee obtains actual knowledge of such failure
or event or the Indenture Trustee receives written notice of
such failure or event from the Servicer, the Trust or any
Noteholder; and
(v) The Indenture Trustee shall have no duty to
monitor the performance of the Servicer (as custodian or
otherwise), nor shall it have any liability in connection with
the malfeasance or nonfeasance by the Servicer. The Indenture
Trustee shall have no liability in connection with compliance
of the Servicer or the Trust with statutory or regulatory
requirements related to the Contracts or the related
Equipment. The Indenture Trustee shall not make or be deemed
to have made any representations or warranties with respect to
the Contracts or related Equipment or the validity or
sufficiency of any assignment of the Contracts to the Trust or
the Indenture Trustee. The Indenture Trustee shall have no
obligation or liability in respect of the maintenance of
casualty or liability insurance in connection with the
Contracts or the related Equipment.
(d) The Indenture Trustee shall not be required to expend or
risk its own funds or otherwise incur financial liability in the performance of
any of its duties hereunder, or in the exercise of any of its rights or powers,
if there is reasonable ground for believing that the repayment of such funds or
indemnity satisfactory to it against such risk or liability is not assured to
it, and none of the provisions contained in this Indenture shall in any event
require the Indenture Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Servicer under this Indenture or
the Servicing Agreement except during such time, if any, as the Indenture
Trustee shall be the successor to, and be vested with the rights, duties, powers
and privileges of, the Servicer in accordance with the terms of this Indenture.
(e) On each Determination Date, the Indenture Trustee shall
give notice, by facsimile, to a Servicing Officer of the Servicer if the total
amount then on deposit in the Collection Account is less than the amount
indicated in the Monthly Statement.
Section 7.02 Eligible Investments. The Servicer shall direct
the Indenture Trustee to invest in Eligible Investments, as further specified
from time to time by written notice to the Indenture Trustee executed by a
Servicing Officer, any cash amounts deposited in the
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Collection Account pursuant to the terms of this Indenture or the Servicing
Agreement, immediately upon deposit of any such cash amounts; provided, however,
that each such Eligible Investment (i) shall mature no later than the Business
Day immediately preceding the Payment Date in respect of the Collection Period
during which such deposit was made and (ii) shall not be sold or disposed of
prior to its maturity. The Indenture Trustee shall not be liable or responsible
for the selection of or losses on any investments made by it pursuant to and in
compliance with such instructions of the Servicer pursuant to this Section 7.02.
The Indenture Trustee shall have no obligation to initiate any investments in
the absence of such written direction.
Section 7.03 Indenture Trustee's Assignment of Contracts. If
in any enforcement suit or legal proceeding it is held, or in connection with
the collection of a Defaulted Contract the Servicer or its assigns reasonably
anticipates, that the Servicer or its assigns may not or will not be able to
enforce a Contract on the ground that neither the Servicer nor its assigns are a
real party in interest or a holder entitled to enforce the Contract, then the
Indenture Trustee shall, at the Servicer's or its assigns' expense, take such
steps as the Indenture Trustee deems necessary to enforce the Contract,
including (i) bringing suit in the Indenture Trustee's name or the names of the
Noteholders and (ii) executing and delivering all such instruments or documents
as shall be required to transfer title to a Contract to the Servicer or its
assigns or otherwise enforce such Contract.
Section 7.04 Certain Matters Affecting the Indenture Trustee.
Except as otherwise provided in Section 7.01:
(i) The Indenture Trustee may conclusively rely and
shall be fully protected in acting or refraining from acting
upon any resolution, Officer's Certificate, certificate of
auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or
parties;
(ii) The Indenture Trustee may consult with counsel
and any Opinion of Counsel or advice shall constitute full and
complete authorization and protection in respect of any action
taken or suffered or omitted by it hereunder in good faith and
in accordance with such Opinion of Counsel or advice;
(iii) The Indenture Trustee shall be under no
obligation to exercise any of the rights or powers vested in
it by this Indenture, or to institute, conduct or defend any
litigation hereunder or in relation hereto, at the request,
order or direction of any of the Noteholders, pursuant to the
provisions of this Indenture unless such Noteholders shall
have offered to the Indenture Trustee such security or
indemnity satisfactory to it against the costs, expenses, and
liabilities that may be incurred therein or thereby that are
reasonable in the opinion of the Indenture Trustee; provided,
however, that nothing contained herein shall relieve the
Indenture Trustee of the obligations, upon the occurrence of
an Event of Default (that has not been cured), to exercise
such of the rights and powers vested in it by this Indenture
and to use the same degree of skill and care in their exercise
as a prudent Person would exercise under the circumstances in
the conduct of such Person's own affairs;
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(iv) The Indenture Trustee shall not be personally
liable for any action taken, suffered or omitted by it in good
faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this
Indenture;
(v) Prior to the occurrence of an Event of Default of
which a Responsible Officer of the Indenture Trustee shall
have actual knowledge and after the curing of all Events of
Default that may have occurred, the Indenture Trustee shall
not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in
writing to do so by the Holders of Notes of any Class
evidencing Percentage Interests of not less than 25% of such
Class; provided, however, that if the payment within a
reasonable time to the Indenture Trustee of the costs,
expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the
Indenture Trustee, not reasonably assured to the Indenture
Trustee by the security afforded to it by the terms of this
Indenture, the Indenture Trustee may require indemnity
satisfactory to it against such cost, expense or liability as
a condition to so proceeding. The reasonable expense of every
such examination shall be paid by the requesting party or, if
paid by the Indenture Trustee, shall be reimbursed by the
Servicer upon demand. Nothing in this clause (v) shall
derogate from the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding
the Obligors; and
(vi) The Indenture Trustee may execute any of the
trusts or powers or perform any duties hereunder either
directly or by or through agents or attorneys or a custodian.
The Indenture Trustee shall not be responsible for the
misconduct, negligence or for the supervision of any of the
Indenture Trustee's agents or attorneys appointed with due
care by the Indenture Trustee hereunder or that of First
Sierra, the Servicer or the Trust.
Section 7.05 Indenture Trustee Not Liable for Notes or
Contracts. The Notes do not represent an obligation issued by the Indenture
Trustee or any Affiliate thereof. The promise to pay the Notes according to
their terms and the terms of this Indenture set forth in the Notes and in
Section 2.05 hereof provides recourse to the Pledged Property only. The
Indenture Trustee does not assume any responsibility for the accuracy of the
statements herein or in the Notes (other than as set forth in Section 7.17 and
the certificate of authentication on the Notes). The Indenture Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes (other than the certificate of authentication on the Notes) or of any
Contract or related document. The Indenture Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity or
enforceability of any security interest in any Equipment or any Contract, to the
perfection or priority thereof, or to the efficacy of the Trust or any portion
thereof to pay any Note, the existence or validity of any Contract, the validity
of the assignment of any Contract or the related Pledged Property to the Trust
or of any intervening assignment, the review of any Contract, any Contract File
or the Computer Tape (it being understood that neither the Indenture Trustee nor
any of its agents have reviewed or intend to review such matters, the sole
responsibility for such review being vested in the Trust), the completeness of
any Contract File, the receipt by it or its custodian of any Contract, the
performance or enforcement of any Contract, subject to Section 4.01 of the
Servicing Agreement, the compliance by the Trust with
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any covenant or the breach by First Sierra or the Trust of any warranty or
representation made under the Servicing Agreement, the Receivables Transfer
Agreement or in any related document or the accuracy of any such warranty or
representation, any investment of monies in the Collection Account (except to
the extent that the Indenture Trustee, in its individual capacity, is an obligor
with respect to any such investment) or any loss resulting therefrom, the acts
or omissions of the Servicer, or any Obligor, any action of the Servicer taken
in the name of the Indenture Trustee, any action by the Indenture Trustee taken
at the instruction of the Servicer or the preparation and filing of tax returns
for the Trust. No recourse shall be had for any claim based on any provision of
this Indenture, the Notes or any Contract or assignment thereof against Bankers
Trust Company in its individual capacity, and Bankers Trust Company shall not
have any personal obligation, liability or duty whatsoever to any Noteholder or
any other Person with respect to any such claim, and any such claim shall be
asserted solely against the Trust or any indemnitor who shall furnish indemnity
as provided herein, except for such liability as is determined to have resulted
from its own gross negligence or willful misconduct. The Indenture Trustee shall
not be accountable for the use or application by First Sierra or the Trust of
any of the Notes or of the proceeds of such Notes or for the use or application
of any funds paid to the Servicer in respect of the Contracts.
Section 7.06 Indenture Trustee May Own Notes. The Indenture
Trustee in its individual or any other capacity may become the owner or pledge
of Notes with the same rights as it would have if it were not Indenture Trustee,
subject to the definition of the term "Noteholder" in Annex A hereto.
Section 7.07 Indenture Trustee's Fees and Expenses. (a) The
Servicer on behalf of the Trust Certificate Holder agrees:
(i) to pay to the Indenture Trustee, pursuant to
Section 3.05(b)(v), as applicable, on each Payment Date
reasonable compensation for all services rendered by it
hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a Indenture
Trustee of an express trust); provided, however, that to the
extent payment of any such Indenture Trustee Fees from the
Collection Account would result in an Available Funds
Shortfall, such Indenture Trustee Fees in an amount equal to
the amount of the Available Funds Shortfall shall instead be
paid directly by First Sierra to the Indenture Trustee;
(ii) except to the extent otherwise expressly
provided herein, to reimburse the Indenture Trustee, pursuant
to Section 3.05(b)(vi), as applicable, upon its request, for
all reasonable expenses, disbursements and advances incurred
or made by the Indenture Trustee in accordance with any
provision of this Indenture (including the reasonable
compensation and expenses and disbursements of any of its
agents and counsel), except any such expense, disbursement or
advance as may be attributable to its gross negligence or
willful misconduct; provided, however, that for purposes of
this clause (ii), such expenses, disbursements and advances
shall be limited to an aggregate amount of $75,000; provided,
further, however, that to the extent payment of any such
Indenture Trustee Expenses from the Collection Account would
result in an Available Funds Shortfall, such Indenture Trustee
Expenses in an amount equal to the amount of the
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Available Funds Shortfall shall instead be paid directly by
First Sierra to the Indenture Trustee; and
(iii) to reimburse the Indenture Trustee, pursuant to
Section 3.05(b)(xviii), as applicable, for all reasonable
expenses, disbursements and advances that would have been paid
pursuant to Section 7.07(a)(ii) but for the $75,000
limitation.
(b) The Servicer's obligations under this Section 7.07 shall
survive the termination of this Indenture or the earlier resignation or removal
of the Indenture Trustee. The Indenture Trustee shall not be entitled to any
other or additional compensation or reimbursement, except as expressly provided
herein or as otherwise agreed from time to time.
(c) Subject to Section 7.10 hereof, the failure by the
Servicer to pay to the Indenture Trustee any compensation or other expenses
shall not relieve the Indenture Trustee of its obligations hereunder.
(d) In the event the Indenture Trustee performs services or
incurs expenses in the context of a proceeding described in Sections
6.01(a)(iv), 6.01(a)(v) or 6.01(a)(vii) of the Servicing Agreement, the fees for
such services and such expenses shall be considered expenses of administration
for the purposes of any bankruptcy laws or laws relating to creditors rights
generally.
Section 7.08 Eligibility Requirements for Indenture Trustee.
The Indenture Trustee shall at all times satisfy the requirements of TIA Section
310(a). The Indenture Trustee hereunder shall at all times be a corporation
having its principal office in a State, organized and doing business under the
laws of any State or the United States of America, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by federal or State
authority; provided, however, that no entity shall qualify as Indenture Trustee
hereunder to the extent that such qualification would, in itself, affect any
then current rating of the Offered Notes or the Subordinate Notes by the Rating
Agencies. If such corporation publishes reports of condition at least annually,
pursuant to law or the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section 7.08, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. Any
successor Indenture Trustee's deposit ratings shall be at least "investment
grade" by the Rating Agencies. In case at any time the Indenture Trustee shall
cease to be eligible in accordance with the provisions of this Section 7.08, the
Indenture Trustee shall resign immediately in the manner and with the effect
specified in Section 7.10 hereof. The Indenture Trustee shall comply with TIA
Section 310(b), including the optional provision permitted by the second
sentence of TIA Section 310(b)(9); provided, however, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or indentures
under which other securities of the Trust are outstanding if the requirements
for such exclusion set forth in TIA Section 310(b)(1) are met.
Section 7.09 Preferential Collection of Claims Against Issuer.
The Indenture Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). An Indenture Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
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Section 7.10 Resignation or Removal of Indenture Trustee. The
Indenture Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Servicer, the Trust and
each Noteholder, which resignation will not become effective until such time as
a successor Indenture Trustee has been appointed in accordance with the
provisions of this Section 7.10. Upon receiving such notice of resignation, the
Servicer shall promptly appoint a successor Indenture Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Indenture Trustee and one copy to the successor Indenture Trustee. If
no successor Indenture Trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Indenture Trustee may petition any court of competent jurisdiction for
the appointment of a successor Indenture Trustee.
(a) If at any time the Indenture Trustee shall cease to be
eligible in accordance with the provisions of Section 7.08 hereof and shall fail
to resign after written request therefor by the Servicer, or the Holders of
Notes of any Class evidencing Percentage Interests of more than 25% of such
Class, or, if at any time the Indenture Trustee shall be legally unable to act,
or shall be adjudged a bankrupt or insolvent, or a receiver of the Indenture
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Indenture Trustee or of its property or affairs for the
purpose of rehabilitation, conservation, or liquidation, then the Servicer
shall, at the direction of the Holders of Notes of any Class evidencing
Percentage Interests of more than 25% of the related Class remove the Indenture
Trustee. If the Servicer or Noteholders remove the Indenture Trustee, the
Servicer or such Noteholders shall promptly appoint a successor Indenture
Trustee by written instrument, in duplicate, one copy of which instrument shall
be delivered to the Indenture Trustee so removed and one copy to the successor
Indenture Trustee.
(b) Any resignation or removal of the Indenture Trustee and
appointment of a successor Indenture Trustee pursuant to this Section 7.10 shall
not become effective until acceptance of appointment by the successor Indenture
Trustee as provided in Section 7.11 hereof. Notice of the resignation or removal
of the Indenture Trustee shall be given in writing to the Rating Agencies by the
Servicer. In the event no successor Indenture Trustee has been appointed within
30 days of the resignation or removal of the Indenture Trustee, the Indenture
Trustee or the Majority Holders of the Notes may petition a court of competent
jurisdiction to appoint a successor Indenture Trustee.
Section 7.11 Successor Indenture Trustee. (a) Any successor
Indenture Trustee appointed as provided in Section 7.10 hereof shall execute,
acknowledge and deliver to the Servicer, the Trust and the predecessor Indenture
Trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor Indenture Trustee shall become
effective and such successor Indenture Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Indenture Trustee. The predecessor Indenture Trustee shall deliver to
the successor Indenture Trustee all documents and statements held by it
hereunder. The Servicer, the Trust and the predecessor Indenture Trustee shall
execute and deliver such instruments and do such other things as may reasonably
be required for fully and certainly vesting and confirming in the successor
Indenture Trustee all
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such rights, powers, duties and obligations. The predecessor Indenture Trustee
shall not be liable for the acts or omissions of any successor Indenture Trustee
hereunder.
(b) No successor Indenture Trustee shall accept appointment as
provided in this Section 7.11 unless at the time of such acceptance such
successor Indenture Trustee shall be eligible as the Indenture Trustee under the
provisions of Section 7.08 hereof, and as a successor Servicer under the
provisions of Section 6.02 of the Servicing Agreement.
(c) Upon acceptance of appointment by a successor Indenture
Trustee as provided in this Section 7.11, the Servicer shall mail notice of the
succession of such Indenture Trustee hereunder to all Noteholders at their
addresses as shown in the Note Register. If the Servicer fails to mail such
notice within 10 days after acceptance of appointment by such successor
Indenture Trustee, then the successor Indenture Trustee shall cause such notice
to be mailed at the expense of the Servicer.
Section 7.12 Merger or Consolidation of Indenture Trustee. Any
corporation into which the Indenture Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion, or consolidation to which the Indenture Trustee shall be a party, or
any corporation succeeding to the corporate trust business of the Indenture
Trustee, shall be the successor of the Indenture Trustee hereunder, provided
such corporation shall be eligible under the provisions of Section 7.08 hereof,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.
Section 7.13 Appointment of Co-Indenture Trustee or Separate
Indenture Trustee. (a) Notwithstanding any other provisions of this Indenture,
at any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust or any Equipment may at the time be
located, the Indenture Trustee shall execute and deliver all instruments to
appoint one or more Persons approved by the Indenture Trustee to act as
co-Indenture Trustee or co-Indenture Trustees, jointly with the Indenture
Trustee, or separate Indenture Trustee or separate Indenture Trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity
and for the benefit of the Noteholders, such title to the Trust, or any part
thereof, and, subject to the other provisions of this Section 7.13, such powers,
duties, obligations, rights and trusts as the Servicer, the Trust and the
Indenture Trustee may consider necessary or desirable. If the Servicer shall not
have joined in such appointment within 15 days after the receipt by it of a
request so to do, or in the case an Event of Servicing Termination shall have
occurred and be continuing, the Indenture Trustee alone shall have the power to
make such appointment; provided, however, that if the Trust shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, the Indenture Trustee alone shall have the power to make such
appointment. No co-Indenture Trustee or separate Indenture Trustee hereunder
shall be required to meet the terms of eligibility as a successor Indenture
Trustee under Section 7.08 hereof, and no notice to Noteholders of the
appointment of any co-Indenture Trustee or separate Indenture Trustee shall be
required under Section 7.12 hereof.
(b) Every separate Indenture Trustee and co-Indenture Trustee
shall, to the extent permitted by law, be appointed and act subject to the
following provisions and conditions:
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(i) All rights, powers, duties and obligations
conferred or imposed upon the Indenture Trustee shall be
conferred or imposed upon and exercised or performed by the
Indenture Trustee and such separate Indenture Trustee or
co-Indenture Trustee jointly (it being understood that such
separate Indenture Trustee or co-Indenture Trustee is not
authorized to act separately without the Indenture Trustee
joining in such act), except to the extent that under any law
of any jurisdiction in which any particular act or acts are to
be performed (whether as Indenture Trustee hereunder or as
successor to the Servicer hereunder), the Indenture Trustee
shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Pledged
Property or any portion thereof in any such jurisdiction)
shall be exercised and performed singly by such separate
Indenture Trustee or co-Indenture Trustee but solely at the
direction of the Indenture Trustee;
(ii) No separate Indenture Trustee or co-Indenture
Trustee hereunder shall be personally liable by reason of any
act or omission of any other separate Indenture Trustee or
co-Indenture Trustee hereunder; and
(iii) The Indenture Trustee may at any time accept
the resignation of or remove any separate Indenture Trustee or
co-Indenture Trustee.
(c) Any notice, request or other writing given to the
Indenture Trustee shall be deemed to have been given to each of the then
separate Indenture Trustees and co-Indenture Trustees, as effectively as if
given to each of them. Every instrument appointing any separate Indenture
Trustee or co-Indenture Trustee shall refer to this Indenture and the conditions
of this Article VII. Each separate Indenture Trustee and co-Indenture Trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee and a copy thereof given to the Servicer and the Trust.
(d) Any separate Indenture Trustee or co-Indenture Trustee may
at any time constitute the Indenture Trustee, its agent or attorney-in-fact,
with full power and authority, to the extent not prohibited by law, to do any
lawful act under or in respect of this Indenture on its behalf and in its name.
If any separate Indenture Trustee or co-Indenture Trustee shall die, become
incapable of acting, resign or be removed, then all of its estates, properties,
rights, remedies and trusts shall vest in and be exercised by the Indenture
Trustee, to the extent permitted by law, without the appointment of a new or
successor separate Indenture Trustee or successor co-Indenture Trustee.
(e) The Servicer shall be responsible for the payment of any
fees or expenses of any separate Indenture Trustee or co-Indenture Trustee.
Section 7.14 Indenture Trustee May Enforce Claims Without
Possession of Note. All rights of action and claims under this Indenture or the
Notes may be prosecuted and enforced by the Indenture Trustee without the
possession of any of the Notes or the production
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thereof in any proceeding relating thereto, and any such proceeding instituted
by the Indenture Trustee shall be brought in its own name or in its capacity as
Indenture Trustee. Any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Indenture Trustee, its agents and counsel, be for the ratable benefit of the
Noteholders in respect of which such judgment has been recovered.
Section 7.15 Suits for Enforcement. In case an Event of
Servicing Termination or other default by the Servicer under the Servicing
Agreement or under this Indenture shall occur and be continuing, the Indenture
Trustee, in its discretion, may, subject to the provisions of 6.04 of the
Servicing Agreement, proceed to protect and enforce its rights and the rights of
the Noteholders under this Indenture by a suit, action or proceeding in equity
or at law or otherwise, whether for the specific performance of any covenant or
agreement contained in this Indenture or in aid of the execution of any power
granted in this Indenture or for the enforcement of any other legal, equitable
or other remedy, as the Indenture Trustee, being advised by counsel, shall deem
most effectual to protect and enforce any of the rights of the Indenture Trustee
and the Noteholders.
Section 7.16 Undertaking for Costs. All parties to this
Indenture agree (and each holder of any Note by its acceptance thereof shall be
deemed to have agreed) that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Indenture Trustee, to any suit instituted by any Noteholder, or group of
Noteholders, holding in the aggregate more than 10% of the then outstanding
principal balance of the Notes, or to any suit instituted by any Noteholder for
the enforcement of the payment of the principal of or interest on any Note on or
after the maturities for such payments, including the stated maturity as
applicable.
Section 7.17 Representations and Warranties of Indenture
Trustee. The Indenture Trustee represents and warrants for the benefit of the
Noteholders that:
(a) Organization and Good Standing. The Indenture Trustee is a
banking corporation duly organized, validly existing and in good standing under
the laws of the state of New York.
(b) Authorization. The Indenture Trustee has the power,
authority and legal right to execute, deliver and perform this Indenture, and
the execution, delivery and performance of this Indenture have been duly
authorized by the Indenture Trustee by all necessary corporate action.
(c) Binding Obligations. This Indenture, assuming due
authorization, execution and delivery by all other parties thereto, constitutes
the legal, valid and binding obligation of the Indenture Trustee, enforceable
against the Indenture Trustee in accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
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or other similar laws (whether statutory, regulatory or decisional) now or
hereafter in effect relating to creditors' rights generally and the rights of
trust companies in particular and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to certain
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, whether in a proceeding at law or in equity.
Section 7.18 Tax Returns. In the event the Trust shall be
required to file tax returns, the Servicer shall prepare or shall cause to be
prepared any tax returns required to be filed by the Trust and shall remit such
returns to the Owner Trustee for signature at least five days before such
returns are due to be filed. The Indenture Trustee, upon request, will furnish
the Servicer with all such information known to the Indenture Trustee as may be
reasonably required in connection with the preparation of all tax returns of the
Trust. In no event shall the Indenture Trustee or the Owner Trustee in their
respective individual capacities be liable for any liabilities, costs or
expenses of the Trust, the Noteholders or the Servicer arising under any tax law
or regulation, including, without limitation, federal, state or local income or
excise taxes or any other tax imposed on or measured by income (or any interest
or penalty with respect thereto or arising from any failure to comply
therewith).
ARTICLE VIII.
EVENTS OF DEFAULT; REMEDIES
Section 8.01 Events of Default. "Event of Default" wherever
used herein means any one of the following events (whatever the reason for such
Event of Default and without regard to whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) failure to distribute or cause to be distributed to the Indenture Trustee,
for the benefit of the Noteholders, all or part of any payment of interest
required to be made under the terms of such Notes or this Indenture on each
monthly Payment Date when such amount is due and payable; and
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(b) failure to distribute or cause to be distributed to the
Indenture Trustee, for the benefit of the Noteholders (x) on any Payment Date,
an amount equal to the principal due on the Outstanding Notes as of such Payment
Date to the extent that sufficient Available Funds are on deposit in the
Collection Account or (y) on the Class A-1 Maturity Date, the Class A-2 Maturity
Date, the Class A-3 Maturity Date, the Class A-4 Maturity Date, the Class B
Maturity Date, the Class C Maturity Date, the Class D Maturity Date or the Class
E Maturity Date, as the case may be, any remaining principal owed on the
Outstanding Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes,
Class B Notes, Class C Notes, Class D Notes or Class E Notes, as the case may
be.
Section 8.02 Acceleration of Maturity, Rescission and Annulment.
(a) If an Event of Default occurs and is continuing, then and in every such case
the Indenture Trustee, at the written direction of the Controlling Parties,
shall declare the principal of all of the Notes to be immediately due and
payable, by a notice in writing to the Servicer, and upon any such declaration
such principal (together with all accrued and previously unpaid interest) shall
become immediately due and payable. The Indenture Trustee shall give notice to
each Noteholder and the Rating Agencies of such declaration.
(b) At any time, after such a declaration of acceleration has been
made, but before any sale of the Pledged Property has been made or a judgment or
decree for payment of the money due has been obtained by the Indenture Trustee
as hereinafter in this Article VIII provided, the Controlling Parties, by
written notice to the Servicer and the Indenture Trustee, may rescind and annul
such declaration and its consequence if monies have been paid or deposited with
the Indenture Trustee in a sum sufficient to pay:
(i) all overdue installments of interest on all Class
A Notes and the Subordinate Notes;
(ii) the principal of any of the Class A Notes or the
Subordinate Notes which has become due otherwise than by such
declaration of acceleration and interest thereon at the
applicable Note Rate;
(iii) to the extent that payment of such interest is
lawful, interest upon overdue installments of interest on the
Class A Notes and the Subordinate Notes at the rate specified
therefor in the applicable Notes; and
(iv) all sums paid or advanced, together with
interest thereon, by the Indenture Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances
of the Indenture Trustee and its agents and counsel.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Subsequent to any such declaration of acceleration and so long as such
declaration and its consequences have not been rescinded and annulled, prior to
the exercise by the Indenture Trustee of the remedies set forth in Section
8.03(b) or (c) hereof, the Indenture Trustee shall give the Noteholders ten days
notice of its intention to take such actions.
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Section 8.03 Remedies. (a) If an Event of Default shall have
occurred and be continuing, the Indenture Trustee, at the written direction of
the Controlling Parties, may do one or more of the following:
(b) institute, in its own name and as Indenture Trustee,
Proceedings for the collection of the entire amount of principal and interest
remaining unpaid on the Notes, or under this Indenture in respect of the Notes,
whether by declaration or otherwise, enforce any judgment obtained, and collect
from the Pledged Property securing the Notes the monies adjudged due;
(c) sell the Pledged Property or any portion thereof or rights
or interest therein, at one or more sales called and conducted in any manner
permitted by law;
(d) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Pledged Property
securing the Notes; or
(e) exercise any remedies of a secured party under the UCC or
other applicable law and take any other appropriate action to protect and
enforce the rights and remedies of the Indenture Trustee or the Noteholders
hereunder.
Section 8.04 Notice of Event of Default. Within two Business
Days after a Responsible Officer obtaining actual knowledge of the occurrence of
any Event of Default, the Indenture Trustee shall transmit, by certified mail
return receipt requested, hand delivery or overnight courier, to all
Noteholders, as their names and addresses appear in the Register, notice of such
Event of Default, unless such Event of Default shall have been cured or waived.
Section 8.05 Exercise of Power by Indenture Trustee In case an
Event of Default has occurred and is continuing to the actual knowledge of a
Responsible Officer of the Indenture Trustee, the Indenture Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his own affairs.
Section 8.06 Indenture Trustee May File Proofs of Claim. In
case of the pendency of any receivership, insolvency, liquidation,
reorganization, arrangement, adjustment, composition or other judicial
Proceeding, relating to the Trust or any other obligor upon the Notes or the
property of the Trust or of such other obligor or their creditors, the Indenture
Trustee (irrespective of whether the principal of any class of Notes shall then
be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Indenture Trustee shall have made any demand for the
payment of overdue principal or interest) shall be entitled and empowered, to
intervene in such proceeding or otherwise:
(a) to file and prove a claim for all amounts owing and unpaid
in respect of the Notes and to file such other papers or documents and take such
other action including participating as a member, voting or otherwise, in any
committee of creditors appointed in the matter, as may be necessary or advisable
in order to have the claims of the Indenture Trustee (including, in each case,
any claim for the reasonable compensation, expenses, disbursements and advances
of the Indenture Trustee and its agents and counsel) and the Noteholders allowed
in such judicial Proceeding;
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(b) to petition for lifting of the automatic stay and
thereupon to foreclose upon the Pledged Property as elsewhere provided herein;
and
(c) to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, liquidator, or sequestrator (or other
similar official) in any such judicial Proceeding is hereby authorized by each
Noteholder to make such payments to the Indenture Trustee, and in the event that
the Indenture Trustee shall consent to the making of such payments directly to
the Noteholders, to pay to the Indenture Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee, its agents and counsel.
Nothing herein contained shall be deemed to authorize the Indenture Trustee to
authorize or to consent or accept or adopt on behalf of any Noteholder any plan
of reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Indenture Trustee to vote
in respect of the claim of any Noteholder in any such Proceeding.
Section 8.07 Allocation of Money Collected. Any money collected by the
Indenture Trustee with respect to the Notes pursuant to the remedies set forth
in Section 8.03 (and any funds then held or thereafter received by the Indenture
Trustee) shall be applied in the following order, at the date or dates fixed by
the Indenture Trustee; provided, however, that the provisions of this Section
8.07 shall not preclude the Indenture Trustee from receiving indemnities
satisfactory to it from the Noteholders against the costs, expenses and
liabilities it may incur in acting in compliance with the written directions of
any Noteholder or Noteholders; provided, further, that any such indemnities
shall not be withheld or offset from the amounts payable to any Noteholders
pursuant to clauses THIRD through SEVENTH, NINTH and TENTH below:
FIRST: To the payment of all amounts due the
Indenture Trustee under Section 7.07 hereof;
SECOND: To the payment of Class A-1 Note
Interest to the Class A-1 Noteholders, Class A-2 Note Interest to the Class A-2
Noteholders, Class A-3 Note Interest to the Class A-3 Noteholders and Class A-4
Note Interest to the Class A-4 Noteholders, pari passu;
THIRD: To the payment of the Class B Note
Interest to the Class B Noteholders;
FOURTH: To the payment of Class C Note Interest
to the Class C Noteholders;
FIFTH: To the payment of Class D Note Interest
to the Class D Noteholders;
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SIXTH: To the payment of the outstanding Class
A Note Principal Balance to the Class A Noteholders (in the sequential-pay
fashion described in Section 3.05(b)(xi) hereof);
SEVENTH: To the payment of the outstanding
Class B Note Principal Balance to the Class B Noteholders;
EIGHTH: To the payment of the outstanding Class
C Note Principal Balance to the Class C Noteholders;
NINTH: To the payment of the outstanding Class
D Note Principal Balance to the Class D Noteholders;
TENTH: To the payment of Class E Note Interest
to the Class E Noteholders
ELEVENTH: To the payment of the outstanding
Class E Note Principal Balance to the Class E Noteholders
TWELFTH: To the payment of all reasonable costs
and expenses incurred by any Noteholder in connection with the enforcement of
its rights hereunder or under the Notes, ratably, without preference or priority
of any kind; and
THIRTEENTH: To the payment of any surplus to or
at the written direction of the Trust Certificate Holder.
Section 8.08 Waiver of Events of Default. (a) The holders of
66-2/3% of the then outstanding principal balance of the Notes may, by one or
more instruments in writing, waive any Event of Default hereunder and its
consequences, except a continuing Event of Default:
(i) in respect of the payment of the principal of or
interest on any Note (which may only be waived by the Holder
of such Note), or
(ii) in respect of a covenant or provision hereof
which under Article XI cannot be modified or amended without
the consent of the Holder of each Note outstanding affected
(which only may be waived by the Holders of all Notes
outstanding affected).
(b) A copy of each waiver pursuant to Section 8.08(a) shall be
furnished by First Sierra to the Indenture Trustee. Upon any such waiver, such
Event of Default shall cease to exist and shall be deemed to have been cured,
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Event of Default or impair any right consequent thereon.
Section 8.09 Limitation On Suits. No Holder shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
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(a) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(b) the Controlling Parties shall have made written request to
the Indenture Trustee to institute Proceedings in respect of such Event of
Default in its own name as Indenture Trustee hereunder;
(c) such Holder or Holders have offered to the Indenture
Trustee indemnity reasonably satisfactory to it against the costs, expenses and
liabilities to be incurred in compliance with such request;
(d) the Indenture Trustee for 30 days after its receipt of
such notice, request and offer of indemnity has failed to institute any such
Proceeding; and
(e) no direction inconsistent with such written request has
been given to the Indenture Trustee during such 30 day period by the Controlling
Parties;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided.
Section 8.10 Unconditional Right of Noteholders to Receive
Principal and Interest. Notwithstanding any other provision in this Indenture,
the Noteholders shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest on such Note as such principal
and interest becomes due and payable in accordance with the terms of this
Indenture (including, without limitation, the limitation on such payments to the
extent of Available Funds on each Payment Date) and to institute suit for the
enforcement of any such payment, and such right shall not be impaired without
the consent of such Noteholder.
Section 8.11 Restoration of Rights and Remedies. If the
Indenture Trustee or any Noteholder has instituted any Proceeding to enforce any
right or remedy in accordance with the terms of this Indenture and such
Proceeding has been discontinued or abandoned for any reason, or has been
determined adverse to the Indenture Trustee or to such Noteholder, then and in
every such case, the Indenture Trustee and the Noteholders shall, subject to any
determination in such Proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies
hereunder shall continue as though no such Proceeding has been instituted.
Section 8.12 Rights and Remedies Cumulative. No right or
remedy herein conferred upon or reserved to the Indenture Trustee or the
Noteholders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
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Section 8.13 Delay or Omission Not Waiver. No delay or
omission of the Indenture Trustee or any Noteholder to exercise any right or
remedy accruing upon any Event of Default shall impair any such right or remedy
or constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Indenture Trustee
or the Noteholders, or any of them, may be exercised from time to time, as often
as may be deemed expedient, by the Indenture Trustee or the Noteholders.
Section 8.14 Control by Controlling Parties. The Controlling
Parties shall have the right to direct in writing the decision whether to
conduct, and the time, method and place of conducting, any Proceeding for any
remedy available to the Indenture Trustee with respect to the Notes or
exercising any trust or power conferred on the Indenture Trustee with respect to
the Notes; provided, that:
(a) such direction shall not be in conflict with any rule of
law or with this Indenture; and
(b) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee which is not inconsistent with such direction;
provided, however, that the Indenture Trustee need not take any action which it
determines might involve it in liability or be unjustly prejudicial to the
Holders not consenting.
Section 8.15 Sale of Pledged Property. (a) The power to effect
any sale pursuant to Section 8.03 hereof shall not be exhausted by any one or
more sales as to any portion of the Pledged Property remaining unsold, but shall
continue unimpaired until the entire Pledged Property securing the Notes shall
have been sold or all amounts payable under this Indenture with respect thereto
shall have been paid. The Indenture Trustee may from time to time postpone any
sale by public announcement made at the time and place of such sale.
(b) Any Noteholder may bid for and acquire any portion of the
Pledged Property securing the Notes in connection with any sale thereof.
(c) Each of the parties hereby covenants and agrees that a
sale of the entirety of the Contracts and the Equipment by a public sale held
not less than ten days after notice thereof is commercially reasonable.
(d) The Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance, provided to it by the Servicer,
transferring its interest in any portion of the Pledged Property in connection
with a sale thereof. In addition, the Indenture Trustee is hereby irrevocably
appointed the agent and attorney-in-fact of the Trust to transfer and convey its
interest in any portion of the Pledged Property in connection with a sale
thereof, and to take all action necessary to effect such sale. No purchaser or
transferee at such a sale shall be bound to ascertain the Indenture Trustee's
authority, inquire into the satisfaction of any conditions precedent or see to
the application of any monies.
Section 8.16 Action on Notes. The Indenture Trustee's right to
seek and recover judgment on the Notes or under this Indenture shall not be
affected by the seeking, obtaining or application of any other relief under or
with respect to this Indenture. Neither the lien of this Indenture nor any
rights or remedies of the Indenture Trustee or the Noteholders shall
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be impaired by the recovery of any judgment by the Indenture Trustee against the
Trust or the Depositor or by the levy of any execution under such judgment upon
any portion of the Pledged Property or upon any of the assets of the Trust or
the Depositor.
ARTICLE IX.
TERMINATION
Section 9.01 Termination of Obligations and Responsibilities.
The respective obligations and responsibilities of First Sierra, the Servicer,
the Indenture Trustee and the Trust created hereby shall terminate (i) at the
option of the Trust Certificate Holder, at any time which is 123 days after the
payment to Noteholders of all amounts required to be paid to them pursuant to
this Indenture, reducing the Class A Note Principal Balance, the Class B Note
Principal Balance, the Class C Note Principal Balance, the Class D Note Balance
and the Class E Note Principal Balance to zero or (ii) after the 120th day
following the Class A-4 Maturity Date; provided that all amounts then owing to
the Indenture Trustee pursuant to the Transaction Documents have been paid to
such parties; and provided, however, that in no event shall the trust created
hereby continue beyond the expiration of 21 years from the death of the last
survivor of the descendants living on the date of this Indenture of Joseph P.
Kennedy, late Ambassador to the Court of St. James. Notwithstanding the
foregoing, the representations and warranties and indemnification obligations of
First Sierra and the Servicer hereunder and under the Servicing Agreement shall
survive the termination of the Trust and of this Indenture. Upon termination of
the Trust, the Indenture Trustee shall release any remaining Pledged Property to
the Trust Certificate Holder but not if the Class A Note Principal Balance, the
Class B Note Principal Balance, the Class C Note Principal Balance, the Class D
Note Principal Balance and the Class E Note Principal Balance have not been
reduced to zero or any amounts are owing to the Indenture Trustee.
Section 9.02 Optional Redemption of Notes; Final Disposition
of Funds. (a) On any Payment Date following any Calculation Date on which the
Aggregate Discounted Contract Principal Balance is less than fifteen percent
(15%) of the sum of the Aggregate Discounted Contract Principal Balance as of
the Closing Date, the Trust Certificate Holder shall have the option to redeem
the Notes in whole by depositing or causing to be deposited into the Collection
Account the greater of (x) the sum of (1) the Class A Note Principal Balance,
the Class B Note Principal Balance, the Class C Note Principal Balance, the
Class D Note Principal Balance and the Class E Note Principal Balance and (2)
the Class A Note Interest, the Class B Note Interest, the Class C Note Interest,
the Class D Note Interest and the Class E Note Interest and (y) the Repurchase
Amount for each Contract that was not a Defaulted Contract as of the close of
business on the second preceding Collection Period, by two Business Days prior
to such Payment Date; it being understood that in the event the purchase price
paid is equal to the amount in clause (y) above, any Defaulted Contracts and any
related recoveries shall remain property of the Trust. In the event that the
Trust Certificate Holder elects to redeem the Notes in accordance with this
Section 9.02(a), the Trust Certificate Holder shall be required to notify the
Indenture Trustee in writing by no later than two (2) Business Days prior to a
notice required to be sent by the Indenture Trustee pursuant to Section 9.02(b).
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(b) Notice of any termination pursuant to Section 9.02(a)
shall be given promptly by the Indenture Trustee, by letter to Noteholders
mailed not later than the 10th day of the month immediately preceding the month
of such final Payment Date specifying (i) the Payment Date upon which final
payment of the Notes will be made, (ii) the scheduled amount of any such final
payment, (iii) that interest shall cease to accrue on the Class A Notes and the
Subordinate Notes on such final Payment Date and (iv) the address for
presentation of the Notes for final payment. On such final Payment Date, the
Indenture Trustee shall cause to be distributed the amounts otherwise
distributable on such Payment Date pursuant to Section 3.05 hereof, taking into
account the purchase pursuant to Section 9.02(a). After such Payment Date,
interest on the Class A and Subordinate Notes shall cease to accrue.
(c) The final payment on any Note shall only be made upon the
presentation of such Note to the Indenture Trustee at the office specified in
the notice described in Section 9.02(b) above.
(d) In the event that any amount due to any Noteholder remains
unclaimed, the Servicer shall, at its expense, cause to be published once, in
the eastern edition of The Wall Street Journal, notice that such money remains
unclaimed. If, within two years after such publication, such amount remains
unclaimed, the Servicer shall be entitled to all unclaimed funds and other
assets which remain subject hereto, and the Indenture Trustee upon written
direction from the Servicer shall transfer such funds and shall be discharged of
any responsibility for such funds and, the Noteholders shall look to the
Servicer for payment.
ARTICLE X.
Noteholders' Lists and Reports
Section 10.01 Note Registrar To Furnish To Indenture Trustee
Names and Addresses of Noteholders. The Note Registrar will furnish or cause to
be furnished to the Indenture Trustee (a) not more than five days after the
earlier of (i) each Record Date and (ii) three months after the last Record
Date, a list, in such form as the Indenture Trustee may reasonably require, of
the names and addresses of the Holders as of such Record Date, (b) at such other
times as the Indenture Trustee may request in writing, within 30 days after
receipt by the Issuer of any such request, a list of similar form and content as
of a date not more than 10 days prior to the time such list is furnished;
provided, however, that so long as the Indenture Trustee is the Note Registrar,
no such list shall be required to be furnished. The Indenture Trustee or, if the
Indenture Trustee is not the Note Registrar, the Note Registrar shall furnish to
the Trust in writing upon their written request and at such other times as the
Trust may request a copy of the list of Noteholders.
Section 10.02 Preservation of Information; Communications to
Noteholders. (a) The Indenture Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of the Noteholders contained
in the most recent list furnished to the Indenture Trustee and the names and
addresses of Noteholders received by the Indenture Trustee in its capacity as
Note Registrar.
47
<PAGE> 54
(b) Noteholders may communicate pursuant to TIA Section 312(b)
with other Noteholders with respect to their rights under this Indenture or
under the Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar
shall have the protection of TIA Section 312(c).
Section 10.03 Reports by the Trust. (a) The Servicer, on
behalf of the Trust, shall:
(i) file with the Indenture Trustee, within 15 days
after the Trust is required to file the same with the
Commission, copies of the annual reports and copies of the
information documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the
Trust may be required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the
Commission in accordance with rules and regulations prescribed
from time to time by the Commission such additional
information, documents and reports with respect to compliance
by the Issuer with the conditions and covenants of this
Indenture as may be required from time to time by such rules
and regulations; and
(iii) supply to the Indenture Trustee (and the
Indenture Trustee shall transmit by mail to all Noteholders
described in TIA Section 313(c)) such summaries of any
information, documents and reports required to be filed by the
Trust pursuant to clauses (i) and (ii) of this Section
10.03(a) as may be required by rules and regulations
prescribed from time to time by the Commission.
(b) Unless the Trust otherwise determines, the fiscal year of
the Trust shall end as of December 31 of each year for purposes of this section.
Section 10.04 Reports by Indenture Trustee. If required by TIA
Section 313(a), within 60 days after each August 31, beginning with August 31,
1999, the Indenture Trustee shall mail to each Noteholder as required by TIA
Section 313(c) a brief report dated as of such date that complies with TIA
Section 313(a). The Indenture Trustee also shall comply with TIA Section
313(b).
A copy of each report at the time of its mailing to
Noteholders shall be filed by the Indenture Trustee with the Commission and each
stock exchange, if any, on which the Notes are listed. The Trust shall notify
the Indenture Trustee if and when the Notes are listed on any stock exchange.
Section 10.05 Compliance Certificates and Opinions, etc. Upon
any application or request by the Trust to the Indenture Trustee to take any
action under any provision of this Indenture, the Trust shall furnish to the
Indenture Trustee (i) an Officer's Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with, (ii) an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants
48
<PAGE> 55
meeting the applicable requirements of this Section, except that, in the case of
any such application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such
certificate or opinion has read or has caused to be read such
covenant or condition and the definitions herein relating
thereto;
(ii) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such
signatory, such signatory has made such examination or
investigation as is necessary to enable such signatory to
express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(iv) a statement as to whether, in the opinion of
each such signatory such condition or covenant has been
complied with.
ARTICLE XI.
MISCELLANEOUS PROVISIONS
Section 11.01 Amendment. (a) This Indenture may be amended
from time to time by the Trust, the Servicer, the Originator and the Indenture
Trustee, without the consent of any of the Noteholders, to cure any ambiguity
herein; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel acceptable to the Indenture Trustee, adversely affect in any
respect the interests of any Noteholder.
(b) This Indenture may also be amended from time to time by
the Trust, the Servicer, the Originator and the Indenture Trustee with the
consent of the Majority Holders for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of modifying in any manner the rights of the Noteholders; provided, however,
that no such amendment shall (i) increase or reduce in any manner the amount of,
or accelerate or delay the timing of, collections of payments on Contracts or
distributions that are required to be made on any Note without the consent of
the Holder of such Note or (ii) reduce the aforesaid percentage required to
consent to any such amendment, without the consent of the Holders of all Notes
then outstanding.
(c) Prior to the effectiveness of any amendment under Section
11.01(a) or (b), the Rating Agencies shall have confirmed in writing their
respective ratings of the Notes.
49
<PAGE> 56
(d) Promptly after the execution of any such amendment, the
Indenture Trustee shall furnish a written copy of the text of such amendment
(and any consent required with respect thereto) to each Noteholder and the
Rating Agencies.
(e) Approval of the particular form of any proposed amendment
or consent shall not be necessary for the consent of the Noteholders under
Section 11.01(b), but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by the Noteholders shall be subject to
such reasonable requirements as the Indenture Trustee may prescribe.
(f) The Indenture Trustee shall be entitled to receive an
Officer's Certificate and an Opinion of Counsel to the effect that all
conditions precedent to the amendment of this Indenture have been satisfied. The
Indenture Trustee may, but shall not be obligated to, execute and deliver any
such amendment which affects that Indenture Trustee's rights, powers, immunities
or indemnifications hereunder.
Section 11.02 Conformity With Trust Indenture Act. Every
amendment of this Indenture and every supplemental indenture executed pursuant
to this Article XI shall conform to the requirements of the Trust Indenture Act
as then in effect so long as this Indenture shall then be qualified under the
TIA.
Section 11.03 Limitation on Rights of Noteholders. (a) The
death or incapacity of any Noteholder shall not operate to terminate this
Indenture or the Trust, nor entitle such Noteholder's legal representatives or
heirs to claim an accounting or to take any action or commence any proceeding in
any court for a partition or winding up of the Trust, nor otherwise affect the
rights, obligations and liabilities of the parties hereto or any of them.
(b) It is understood and intended, and expressly covenanted by
each Noteholder with every other Noteholder and the Indenture Trustee, that no
one or more Holders of Notes shall have any right in any manner whatever by
virtue or by availing itself or themselves of any provisions of this Indenture
to affect, disturb or prejudice the rights of the Holders of any other of the
Notes, to obtain or seek to obtain priority over or preference to any other
Holder of the same class of Notes or to enforce any right under this Indenture,
except in the manner herein provided and for the equal, ratable and common
benefit of all Noteholders of the same class. For the protection and enforcement
of the provisions of this Section 11.03, each and every Noteholder and the
Indenture Trustee shall be entitled to such relief as can be given either at law
or in equity.
Section 11.04 Counterparts. For the purpose of facilitating
the execution of this Indenture and for other purposes, this Indenture may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
Section 11.05 Governing Law. THIS INDENTURE SHALL BE GOVERNED
BY, AND 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
50
<PAGE> 57
SUCH LAWS, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS OF ANY STATE.
Section 11.06 Notices. All demands, notices, instructions,
directions and communications (other than periodic communications of a routine
nature made in connection with the dissemination of information regarding the
Pledged Property, the Servicer and the Trust required to be delivered hereunder,
which shall be delivered or mailed by first class mail or facsimile
transmission) hereunder shall be in writing, personally delivered or mailed by
overnight courier, and shall be deemed to have been duly given upon receipt (a)
in the case of the Servicer, at 600 Travis Street, Suite 7050, Houston, Texas
77002, Attention: Sandy Ho, telephone (713) 221-8822, telecopy (713) 221-1818,
(b) in the case of the Trust, First Union Trust Company, National Association,
at One Rodney Square, 920 King Street, Suite 102, Wilmington, Delaware 19801,
Attention: Corporate Trust Administration, telephone (302) 888-7539, telecopy
(302) 888-7544, (c) in the case of the Indenture Trustee, at Four Albany Street,
10th Floor, New York, New York 10006, Attention: Corporate Trust and Agency
Group Structured Finance Team, telephone 212-250-4237, telecopy 212-250-6439,
(d) in the case of S&P, at 55 Water Street, 41st Floor, New York, NY 10041,
Attention: Asset Backed Surveillance, telephone (212) 438-2435, telecopy (212)
438-2664, (e) in the case of Fitch, at One State Street Plaza, New York, New
York 10004, Attention: Asset Backed Surveillance, telephone (212) 908-0500,
telephone (212) 514-9879, (f) in the case of Moody's, 99 Church Street, New
York, New York 10004, Attention: ABS Monitoring Group, telephone (212) 553-0300,
telecopy (212) 553-3856, (g) in the case of DCR, 55 East Monroe Street, Suite
3800, Chicago, Illinois 60603, Attention: Asset Backed Monitoring - Equipment
Leases, telephone (312) 368-3160, telecopy (312) 368-2069 and (h) any notice so
mailed within the time prescribed in this Indenture shall be conclusively
presumed to have been duly given on the fifth Business Day following mailing,
whether or not the Noteholder receives such notice.
Section 11.07 Severability of Provisions. If any one or more
of the covenants, agreements, provisions, or terms of this Indenture 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 Indenture and shall in no way affect the
validity or enforceability of the other provisions of this Indenture or of the
Notes or the rights of the Holders thereof.
Section 11.08 Conflict with Trust Indenture Act. If any
provision hereof limits, qualifies or conflicts with another provision hereof
that is required to be included in this indenture by any of the provisions of
the Trust Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose
duties on any person (including the provisions automatically deemed included
herein unless expressly excluded by this Indenture) are a part of and govern
this Indenture, whether or not physically contained herein.
51
<PAGE> 58
Section 11.09 Reserved.
Section 11.10 Assignment. Notwithstanding anything to the
contrary contained herein, except as provided in Section 5.02 of the Servicing
Agreement, this Indenture may not be assigned by the Servicer except with the
prior written consent of the Trust and the Holders of the Notes of the
applicable Class evidencing Percentage Interests of not less than 66-2/3%.
Notice of any such assignment received by a Responsible Officer of the Indenture
Trustee shall be given to the Rating Agencies by the Indenture Trustee.
Section 11.11 Binding Effect. This Indenture shall inure to
the benefit of, and shall be binding upon the Servicer, the Trust, the Indenture
Trustee and the Noteholders and their respective successors and permitted
assigns, subject, however, to the limitations contained in this Indenture. This
Indenture shall not inure to the benefit of any Person other than the Trust, the
Servicer, the Indenture Trustee and the Noteholders.
Section 11.12 Survival of Agreement. All covenants,
agreements, representations and warranties made herein and in the other
documents delivered pursuant hereto shall survive the pledge of the Pledged
Property and the issuance of the Notes and shall continue in full force and
effect until terminated pursuant to Section 9.01 hereof.
Section 11.13 Captions. The captions or headings in this
Indenture are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Indenture.
Section 11.14 Exhibits. The Exhibits to this Indenture are
hereby incorporated herein and made a part hereof and are an integral part of
this Indenture.
Section 11.15 Calculations. Except as otherwise provided in
this Indenture, including, without limitation, with respect to the calculation
of interest on the Class A-1 Notes, all interest rate calculations under this
Indenture, including those with respect to the Contracts, will be made on the
basis of a 360-day year and twelve 30-day months (i.e., each Interest Accrual
Period shall be deemed to be equal 30 day periods) and will be carried out to at
least seven decimal places.
Section 11.16 No Proceedings. The Servicer, the Originator,
the Trust and the Indenture Trustee each hereby agrees that it will not directly
or indirectly institute, or cause to be instituted, against the Trust
Certificate Holder or the Trust any bankruptcy or insolvency proceeding so long
as there shall not have elapsed one year plus one day since the maturity date of
the latest maturing securities of the Trust.
52
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IN WITNESS WHEREOF, the Trust, the Servicer, the Originator
and the Indenture Trustee have caused this Indenture to be duly executed by
their respective officers, all as of the day and year first above written.
FIRST SIERRA EQUIPMENT CONTRACT
TRUST 1999-2, a common law
trust acting through its trustee,
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
FIRST SIERRA FINANCIAL, INC., as
Servicer and as Originator
By /s/ E. Roger Gebhart
---------------------------------
Name: E. Roger. Gebhart
Title: Senior Vice President
BANKERS TRUST COMPANY, not in its
individual capacity but solely as
Indenture Trustee
By /s/ Patricia M.F. Russo
---------------------------------
Name: Patricia M.F. Russo
Title: Vice President
[Signature Page to Indenture]
<PAGE> 1
EXHIBIT 8.1
September 29, 1999
To the Parties Listed on Schedule I:
Ladies and Gentlemen:
We have acted as special tax counsel to First Sierra Financial, Inc.
("First Sierra") and First Sierra Receivables III, Inc. (the "Depositor"), in
connection with the issuance by First Sierra Equipment Contract Trust 1999-2, a
Delaware common law trust acting through First Union Trust Company, National
Association, not in its individual capacity but solely as Owner Trustee (the
"Trust"), established pursuant to a Trust Agreement, dated as of September 1,
1999, between the Depositor and First Union Trust Company, National Association,
not in its individual capacity but solely as owner trustee, of (i) $30,818,212
of 5.85535% Equipment Contract Backed Notes, Class A-1 (the "Class A-1 Notes"),
(ii) $31,956,385 of 6.46% Equipment Contract Backed Notes, Class A-2 (the "Class
A-2 Notes"), (iii) $18,823,624 of 6.70% Equipment Contract Backed Notes, Class
A-3 (the "Class A-3 Notes"), (iv) $61,986,631 of 6.98% Equipment Contract Backed
Notes, Class A-4 (the "Class A-4 Notes" and, together with the Class A-1 Notes,
the Class A-2 Notes and the Class A-3 Notes, the "Class A Notes"), (v)
$13,570,520 of 7.28% Equipment Contract Backed Notes, Class B (the "Class B
Notes"), (vi) $9,192,933 of 8.01% Equipment Contract Backed Notes, Class C (the
"Class C Notes"), $2,188,793 of 10.27% Equipment Contract Backed Notes, Class D
(the "Class D Notes") and (vii) $2,363,897 of 7.03% Equipment Contract Backed
Notes, Class E (the "Class E Notes"). The Class A Notes, the Class B Notes, the
Class C Notes, the Class D Notes and the Class E Notes are collectively referred
to as the "Notes." The Notes were issued pursuant to an Indenture, dated as of
September 1, 1999 (the "Indenture"), among the Trust, First Sierra, as servicer
and as originator, and Bankers Trust Company, as indenture trustee (the
"Indenture Trustee"). Pursuant to the Indenture, the Pledged Property (as
defined in the Indenture) will be pledged by the Trust to the Indenture Trustee
for the benefit of the Noteholders. The Class A Notes and the Class B Notes will
be offered for sale pursuant to a prospectus supplement dated September 22, 1999
(the "Prospectus Supplement"). The Class C Notes, the Class D Notes and the
Class E Notes will be offered for sale pursuant to a private placement
memorandum dated September 22, 1999 (the "Memorandum"). Capitalized terms used
herein, unless otherwise defined, shall have the meanings set forth in Annex A
to the Indenture.
We have examined the question of whether the Notes issued under the
Indenture will be treated as indebtedness for federal income tax purposes. Our
analysis is based on the provisions of the Internal Revenue Code of 1986, as
amended, and the Treasury Regulations
<PAGE> 2
promulgated thereunder as in effect on the date hereof and on existing judicial
and administrative interpretations thereof. These authorities are subject to
change and to differing interpretations, which could apply retroactively. The
opinion of special tax counsel is not binding on the courts or the Internal
Revenue Service (the "IRS").
In general, whether a transaction constitutes the issuance of
indebtedness for federal income tax purposes is a question of fact, the
resolution of which is based primarily upon the economic substance of the
instruments and the transaction pursuant to which they are issued rather than
the form of the transaction or the manner in which the instruments are labeled.
No transaction closely comparable to the transactions contemplated by the
Indenture has been the subject of any Treasury regulation, revenue ruling, or
judicial decision. The IRS and the courts have set forth various factors to be
taken into account in determining whether or not a transaction constitutes the
issuance of indebtedness for federal income tax purposes, which we have reviewed
as they apply to this transaction.
Based on the foregoing, and such legal and factual investigations as we
have deemed appropriate, we are of the opinion that for federal income tax
purposes:
(1) The Class A Notes, the Class B Notes and the Class C Notes will be
characterized as indebtedness and the Class D Notes should be characterized as
indebtedness because (i) the characteristics of the transaction strongly
indicate that in economic substance, the transaction is the issuance of
indebtedness by the Trust, and the Trust will be a disregarded entity with
respect to the Depositor; (ii) the form of the transaction is an issuance of
indebtedness by the Trust; and (iii) the parties have stated unambiguously their
intention to treat the transaction as an issuance of indebtedness for all
applicable tax purposes.
(2) Assuming compliance with the terms of the Trust Agreement and
related documents, the Trust will not be characterized as an association (or a
publicly traded partnership) taxable as a corporation.
(3) The statements in the Prospectus Supplement and the Memorandum
under the heading "Material Federal Income Tax Consequences" accurately describe
the material federal income tax consequences to the holders of the Notes.
Our opinion contained herein is rendered only as of the date hereof,
and we undertake no obligation to update this letter or the opinion contained
herein after the date hereof. We hereby expressly reserve our opinion with
regard to the Class E Notes.
This opinion is furnished by us as counsel in connection with the
issuance of the Notes, and is not to be used, circulated, quoted, or otherwise
referred to for any other purpose without our express written consent.
Very truly yours,
/s/ Dewey Ballantine LLP
-----------------------------------------------
2
<PAGE> 3
Schedule I
Bankers Trust Company
Four Albany Street, 10th Floor
New York, New York 10006
First Union Trust Company, National Association
920 King Street, Suite 102
Wilmington, Delaware 19801
Duff & Phelps Credit Rating Co.
55 East Monroe, Suite 4200
Chicago, Illinois 60601
First Sierra Financial, Inc.
600 Travis Street, Suite 7050
Houston, Texas 77002
First Sierra Receivables III, Inc.
600 Travis Street, Suite 7050
Houston, Texas 77002
First Union Capital Markets Corp.
One First Union Center, TW-10
301 South College Street
Charlotte, N.C. 28288-0610
Nesbitt Burns Securities, Inc.
115 LaSalle Street, 20th Floor
Chicago, IL 60603
PNC Capital Markets
Asset-Backed Securities, 3rd Floor
One PNC Plaza
249 Fifth Avenue
Pittsburgh, PA 15222-2707
Fitch IBCA, Inc.
One State Street Plaza
New York, New York 10004
Standard & Poor's Ratings Group, a
division of The McGraw Hill Companies
26 Broadway 15th Floor
New York, New York 10004
3
<PAGE> 4
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10004
4
<PAGE> 1
EXHIBIT 10.1
RECEIVABLES TRANSFER AGREEMENT
----------------------------------------------
BETWEEN
FIRST SIERRA FINANCIAL, INC.,
FIRST SIERRA RECEIVABLES III, INC.,
FIRST UNION NATIONAL BANK,
VARIABLE FUNDING CAPITAL CORPORATION,
FAIRWAY FINANCE CORPORATION,
BANKERS TRUST COMPANY
AND
FIRST SIERRA EQUIPMENT CONTRACT TRUST 1999-2, A COMMON LAW
TRUST ACTING THROUGH FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS OWNER TRUSTEE
----------------------------------------------
DATED AS OF
SEPTEMBER 1, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I DEFINITIONS...................................................................................3
SECTION 1.01 Definitions....................................................................3
SECTION 1.02 Other Definitional Provisions..................................................3
ARTICLE II TRANSFER OF CONVEYED ASSETS..................................................................4
SECTION 2.01 Direction; Acquisition of Initial Conveyed Assets..............................4
SECTION 2.02 Reserved.......................................................................5
SECTION 2.03 Custody of Contract Files......................................................5
SECTION 2.04 Intention of the Parties; Grant of Security Interest...........................5
ARTICLE III REPRESENTATIONS AND WARRANTIES..............................................................6
SECTION 3.01 Representations and Warranties.................................................6
SECTION 3.02 Removal of Non-Conforming Contracts by First Sierra...........................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.....................................................21
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....................................................26
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........................................................27
SECTION 7.11 Headings......................................................................27
SECTION 7.12 Schedules and Exhibits........................................................27
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 7.13 No Bankruptcy Petition Against Receivables III or the Trust...................27
</TABLE>
<TABLE>
Exhibits, Schedules & Annexes
-----------------------------
<S> <C>
Schedule 1 LIST OF INITIAL CONTRACTS
Annex A DEFINED TERMS
</TABLE>
ii
<PAGE> 4
RECEIVABLES TRANSFER AGREEMENT
THIS RECEIVABLES TRANSFER AGREEMENT (this "Agreement"), dated
as of September 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, FAIRWAY FINANCE
CORPORATION, ("FFC") a Delaware corporation located at 11 West Monroe, Floor 20
East, Chicago, Illinois 60603, 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, the First Sierra Equipment Lease Trust 1997-B and
the First Sierra Equipment Lease Trust 1998-E (each as defined herein) and FIRST
SIERRA EQUIPMENT CONTRACT TRUST 1999-2, 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, VFCC and FFC 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
<PAGE> 5
WHEREAS, pursuant to a Series 1997-A Supplement, dated as of
June 30, 1997, as amended (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 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, as amended (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", 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, pursuant to a Series 1998-E Supplement, dated as of
December 21, 1998 (the "Series 1998-E Supplement"), among Receivables III, First
Sierra, Bankers Trust Company, FFC and Nesbitt Burns Securities, Inc., the
parties thereto formed a trust (the "First Sierra Equipment Lease Trust 1998-E"
and, together with the First Sierra Equipment Lease Trust 1997-A and the First
Sierra Equipment Lease Trust 1997-B, the "Warehouse Trusts"), issued a Senior
Certificate to FFC representing the senior beneficial ownership interest in the
Leases and Equipment conveyed by Receivables III to the First Sierra Equipment
Lease Trust 1998-E and issued a Junior Certificate representing the junior
beneficial ownership interest in the Leases and Equipment conveyed by
Receivables III to the First Sierra Equipment Lease Trust 1998-E and a Residual
Certificate to Receivables III representing the residual beneficial ownership
interest in the Leases and Equipment conveyed to the First Sierra Equipment
Lease Trust 1998-E; and
WHEREAS, FFC and Receivables III, as the beneficial owners of
the Leases and Equipment in the First Sierra Equipment Lease Trust 1998-E,
desire that
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<PAGE> 6
Bankers Trust Company, as trustee of such trust, convey such Leases 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, 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 to the Indenture.
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.
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<PAGE> 7
(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 Junior Certificateholder and 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.
(b) In consideration for (x) the issuance to Holding Trust II
of the Trust Certificate to be issued pursuant to the Trust Agreement, (y) the
receipt of $71,408,628.38 by First Sierra Equipment Lease Trust 1997-A,
$3,169,497.80 by First Sierra Equipment Lease Trust 1997-B, $91,006,909.53 by
First Sierra Equipment Lease Trust 1998-E 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 and the Substitute
Conveyed Assets, meeting the requirements of applicable state law and the Filing
Requirements 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 and the related Substitute
Conveyed
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<PAGE> 8
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, 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) 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 or the Substitute
Conveyed Assets, as the case may be, have been assigned and transferred to the
Trust in accordance with this Agreement and pledged to the Indenture Trustee on
behalf of the Noteholders, 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. Pursuant to Section
3.03 hereof, 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.
SECTION 2.02 Reserved.
SECTION 2.03 Custody of Contract Files. In connection with the
sale, assignment, transfer and conveyance of the Contracts to the Trust pursuant
to this 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.
SECTION 2.04 Intention of the Parties; Grant of Security
Interest. 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
5
<PAGE> 9
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.
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 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 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, 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, 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 and the other Transaction Documents to which First
Sierra is a party, when duly
6
<PAGE> 10
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, 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 each Transaction Document to which it is
a party 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 each Transaction
Document to which it is a party 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 or each other
Transaction Document to which it is a party, (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 or each other
Transaction Document to which it is a party;
(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
7
<PAGE> 11
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 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 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 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 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;
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<PAGE> 12
(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 constitutes a valid assignment, transfer and
conveyance to the Owner Trustee, on behalf of the Trust, of all
right, title, and interest 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, 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 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 each Transaction Document to which it is
a party 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 and each
Transaction Document to which it is a party, 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
Transaction Document to which it is a party, (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 Receivables III) materially and adversely affect the
performance by Receivables III of its
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<PAGE> 13
obligations under, or the validity or enforceability of, this
Agreement or any Transaction Document to which it is a party;
(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 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, 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; and
(xv) Non Consolidation. First Sierra is operated in
such a manner that it will not be consolidated in the estate of
First Sierra such that the separate existence of Receivables
III and First Sierra would be disregarded in the event of a
bankruptcy or insolvency of First Sierra.
(c) First Union hereby makes the following representations and
warranties for the benefit of the Indenture Trustee, the Noteholders 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:
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<PAGE> 14
(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 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 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 and each 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 constitutes 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, 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 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,
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<PAGE> 15
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 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 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 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, (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 Union) materially and adversely affect the performance
by First Union of its obligations under, or the validity or
enforceability of, this 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 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> 16
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 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
each 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 each 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 constitutes 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, 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 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
indenture,
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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 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 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, (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 VFCC) materially and adversely affect the performance by
VFCC of its obligations under, or the validity or
enforceability of, this 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
(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.
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(e) FFC hereby makes the following representations and
warranties for the benefit of the Indenture Trustee 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. FFC 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. FFC 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
FFC to comply with the terms of this Agreement or each
Transaction Document to which it is a party;
(iii) Power and Authority. FFC 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 and each Transaction Document
to which it is a party, has been duly authorized by FFC by all
necessary corporate action;
(iv) Due Execution and Delivery. This Agreement has
been duly executed and delivered on behalf of FFC;
(v) Valid Assignment; Binding Obligations. This
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 FFC 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
FFC, except the lien on the Conveyed Assets in favor of the
Indenture Trustee granted pursuant to the Indenture; and this
Agreement, when duly executed and delivered, will constitute
the legal, valid, and binding obligation of FFC enforceable
against FFC 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 will not conflict with, result in any breach
of any of the terms and provisions of, or
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constitute (with or without notice or lapse of time) a default
under, the articles of incorporation or bylaws of FFC, or any
material term of any indenture, agreement, mortgage, deed of
trust, or other instrument to which FFC 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 violate any law or
any order, injunction, writ, rule, or regulation applicable to
FFC of any court or of any federal or state regulatory body,
administrative agency, or other Governmental Authority having
jurisdiction over FFC or any of its properties which would have
a material adverse effect on the Conveyed Assets;
(vii) Valid Business Reasons. FFC 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 FFC's operations or its ability to perform
its obligations under the Transaction Documents to which it is
a party;
(ix) Insolvency. FFC is not insolvent and will not
be rendered insolvent by the transactions contemplated by this
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 FFC,
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 FFC) materially and adversely affect the performance by FFC
of its obligations under, or the validity or enforceability of,
this Agreement;
(xi) No Consent Required. FFC 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 FFC 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 FFC's
obligations hereunder; and
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(xiii) Accounting Treatment. FFC 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 Removal of Non-Conforming Contracts by First
Sierra. Upon the occurrence of a Warranty Event with respect to a Contract,
First Sierra will repurchase such Contract by depositing (or causing to be
deposited) to the Collection Account the Repurchase Amount with respect to such
Contract in accordance with the terms of Section 4.01 of the Indenture or
replace such Contract with a Substitute Contract pursuant to Section 3.03 hereof
and Section 4.02 of the Indenture.
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 be an Eligible Contract, and be eligible to be
substituted by First Sierra pursuant to Section 4.02 of the Indenture.
(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
in accordance with the Filing Requirements 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 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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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
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 the Filing Requirements and 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 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 or the Owner Trustee in the Conveyed Assets.
(d) Conveyance of Conveyed Assets; Security Interests. Except
for the transfers and conveyances hereunder 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 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
and the Indenture Trustee promptly, in reasonable detail, upon discovery of the
occurrence of any
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breach by First Sierra of any of its representations, warranties and covenants
contained herein.
(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, as
the Trust 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 rating, issuance and sale of the Notes.
(g) Indemnification. First Sierra agrees to indemnify, defend
and hold the Trust, the Owner Trustee 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 in any schedule
delivered by First Sierra hereunder, 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 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 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 OR ANY OF THEIR
RESPECTIVE OFFICERS, EMPLOYEES OR AGENTS.
(h) Notice of Liens. First Sierra shall notify the Trust 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
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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 Sierra shall
promptly notify the Trust, the Indenture Trustee 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, 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 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 the Holding Trust, 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 II or the Trust, 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, Holding Trust II or the Trust 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 II or the Trust;
(m) Financial Statements. The financial statements and books
and records of First Sierra reflect the separate existence of Receivables III,
the Trust and Holding Trust II.
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SECTION 4.02 Receivables III Covenants. Receivables III hereby
covenants and agrees with the Trust and the Indenture Trustee as follows:
(a) 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.
(b) 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 II;
(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;
(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
II's creditors;
(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;
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(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
II (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 II;
(xiv) maintain a separate office from that of First
Sierra and/or Holding Trust II;
(xv) not act as an agent of First Sierra or Holding
Trust II, 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.
(C) 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
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
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Rating Agencies, 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 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 and (d) such partnership
or corporation shall have organizational documents with
similar restrictions as those of Receivables III.
(d) Non-Consolidation. Receivables III shall be operated in
such a manner that Holding Trust II or the Trust, would not be substantively
consolidated with Receivables III, such that the separate corporate existence of
Receivables III, on the one hand, and Holding Trust II or the Trust, on the
other hand, would be ignored in the event of a bankruptcy of Receivables III.
(e) No Agency. Receivables III will not act as an agent of
Holding Trust II or the Trust 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 Holding Trust II or the Trust.
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 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;
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(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 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,
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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.
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 and the Indenture Trustee 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 FFC, c/o Nesbitt Burns
Securities, Inc., 11 West Monroe, Floor 20 East, Chicago, Illinois 60603 (g) 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 (h) in
the case of the Indenture Trustee at its address set forth in Section 11.06 of
the Indenture. Either party may alter the address to which
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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.
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 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 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 to carry into effect the
purposes of this Agreement or to better assure and confirm unto the Indenture
Trustee 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 and the Noteholders are intended third
party beneficiaries of this Agreement.
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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.
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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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 and Treasurer
FIRST SIERRA RECEIVABLES III, INC.
By: /s/ E. Roger Gebhart
-------------------------------------------------
Name: E. Roger Gebhart
Title: Senior Vice President and Treasurer
FIRST UNION NATIONAL BANK,
as Certificate holder 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
<PAGE> 32
FAIRWAY FINANCE CORPORATION, as
Certificateholder of the First Sierra
Equipment Lease Trust 1998-E
By: /s/ Dwight Jenkins
-------------------------------------------------
Name: Dwight Jenkins
Title: Vice President
BANKERS TRUST COMPANY, not in its individual capacity,
but solely as Trustee of each of the First Sierra
Equipment Lease Trust 1997-A, the First Sierra
Equipment Lease Trust 1997-B and the First Sierra
Equipment Lease Trust 1998-E
By: /s/ Patricia M.F. Russo
-------------------------------------------------
Name: Patricia M.F. Russo
Title: Vice President
FIRST SIERRA EQUIPMENT CONTRACT TRUST 1999-2, 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]
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SCHEDULE 1
LIST OF INITIAL CONTRACTS
[On File With Dewey Ballantine LLP]
