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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) March 31, 2000
First Sierra Receivables II, Inc.
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(Exact name of Registrant as specified in its charter)
First Sierra Receivables III, Inc.
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(Exact name of Co-Registrant as specified in its charter)
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Delaware 333-12199 76-0543174
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Delaware (Commission File 76-0589331
- ---------------------------- Number) -------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation) Identification No.)
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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
$188,652,729 in principal amount of contract-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 Healthcare Equipment
Contract Trust 2000-1, a common law trust acting through its trustee Christiana
Bank & Trust Company, not in its individual capacity but solely as Owner Trustee
(the "Trust"), pursuant to which the Trust issued Notes under an Indenture (the
"Indenture"), attached hereto as Exhibit 4.1, dated as of April 1, 2000, by and
among the Trust, SierraCities.com Inc., as servicer ("SierraCities.com," and the
"Servicer") 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 three classes, the Class A-1 Notes, Class
A-2 Notes and Class B Notes. The Class A-1 Notes represent the right to receive
repayment of the initial Class A-1 Note Principal Balance ($75,000,000) of the
Class A-1 Notes and monthly interest at a rate of 7.49% 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 ($99,600,000)
of the Class A-2 Notes and monthly interest at a rate of 7.77% 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
($14,052,729) of the Class B Notes and monthly interest at a rate of 7.95% 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
Assets (the "Trust Assets") which secures the Class A Notes and the Class B
Notes. The assets of the Trust will consist of certain finance leases and
commercial loans received after the close of business on March 1, 2000 (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 Initial Contracts, the "Receivables") and certain other
property more fully described in the Prospectus Supplement.
On April 11, 2000 (the "Closing Date"), the Depositor and
certain trusts sponsored by First Sierra transferred the Initial Contracts and
the related Equipment to the Trust pursuant to the Receivables Transfer
Agreement, dated as of March 1, 2000 (the "Receivables Transfer Agreement"),
attached hereto as Exhibit 10.1, among SierraCities.com, the Depositor, First
Union National Bank, Variable Funding Capital Corporation, Fairway Finance
Corporation, First Sierra Equipment Contract Trust 1999-H, the Trustee and the
Trust.
Principal and interest will be paid to the Class A Noteholders
monthly on the 18th day (or the next succeeding business day thereafter) of each
month, commencing May 18, 2000 (each, a "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
April 11, 2000.
As of the Closing Date, the Contracts possessed the
characteristics described in the Prospectus dated March 28, 2000 , the
Prospectus Supplement dated March 31, 2000 and the Supplement to the Prospectus
Supplement dated April 11, 2000, filed pursuant to Rule 424(b) 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 March 31, 2000, among First
Sierra Receivables III, Inc., SierraCities.com Inc., Merrill Lynch & Co. and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Representative of the
several Underwriters.
4.1 Indenture, dated as of March 1, 2000, among First Sierra
Healthcare Equipment Contract Trust 200-1, a common law trust acting through
Christiana Bank & Trust Company, not in its individual capacity but solely as
Owner Trustee, SierraCities.com Inc., as servicer, and Bankers Trust Company, as
Indenture Trustee.
8.1 Opinion of Dewey Ballantine LLP regarding tax matters,
dated as of April 11, 2000.
10.1 Receivables Transfer Agreement, dated as of March 1,
2000, among SierraCities.com Inc., First Sierra Receivables III, Inc., First
Union National Bank, Variable Funding Capital Corporation, Fairway Finance
Corporation, First Sierra Equipment Contract Trust 1999-H, Bankers Trust Company
and First Sierra Healthcare Equipment Contract Trust 2000-1, a common law trust
acting through Christiana Bank & Trust Company, 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: April 11, 2000
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
1.1 Underwriting Agreement, dated March 31, 2000, among First
Sierra Receivables III, Inc., SierraCities.com Inc., Merrill
Lynch & Co. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as Representative of the several Underwriters.
4.1 Indenture, dated as of March 1, 2000, among First Sierra
Healthcare Equipment Contract Trust 200-1, a common law trust
acting through Christiana Bank & Trust Company, not in its
individual capacity but solely as Owner Trustee,
SierraCities.com Inc., as servicer, and Bankers Trust Company,
as Indenture Trustee.
8.1 Opinion of Dewey Ballantine LLP regarding tax matters, dated
as of April 11, 2000.
10.1 Receivables Transfer Agreement, dated as of March 1, 2000,
among SierraCities.com Inc., First Sierra Receivables III,
Inc., First Union National Bank, Variable Funding Capital
Corporation, Fairway Finance Corporation, First Sierra
Equipment Contract Trust 1999-H, Bankers Trust Company and
First Sierra Healthcare Equipment Contract Trust 2000-1, a
common law trust acting through Christiana Bank & Trust
Company, not in its individual capacity but solely as Owner
Trustee.
</TABLE>
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EXHIBIT 1.1
EXECUTION COPY
FIRST SIERRA HEALTHCARE EQUIPMENT CONTRACT TRUST 2000-1
$75,000,000
7.49% Asset Backed Notes, Class A-1
$99,600,000
7.77% Asset Backed Notes, Class A-2
$14,052,729
7.95% Asset Backed Notes, Class B
UNDERWRITING AGREEMENT
March 31, 2000
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
As Representative of the several Underwriters
World Financial Center
North Tower
New York, New York 10281-1201
Dear Sirs:
First Sierra Receivables III, Inc., a Delaware corporation (the
"Depositor"), and a wholly owned subsidiary of SierraCities.com Inc., a Delaware
corporation ("SierraCities.com"), hereby confirm their respective agreements
with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") and each of the other underwriters named in Schedule A hereto
(collectively, the "Underwriters," which term shall also include any underwriter
substituted as hereinafter provided in Section 10), for whom Merrill Lynch is
acting as representative (in such capacity, the "Representative"), with respect
to the sale by the Depositor and the purchase by the Underwriters, acting
severally and not jointly, of the respective principal amounts set forth in
Schedule A of $75,000,000 aggregate principal amount of 7.49% Asset Backed
Notes, Class A-1 (the "Class A-1 Notes"), $99,600,000 aggregate principal amount
of 7.77% Asset Backed Notes, Class A-2 (the "Class A-2 Notes," and together with
the Class A-1 Notes, the "Class A Notes") and $14,052,729 aggregate principal
amount of 7.95% Asset Backed Notes, Class B (the "Class B Notes," and together
with the Class A Notes, the "Notes") of the First Sierra Healthcare Equipment
Contract Trust 2000-1 (the "Trust") under the terms and conditions contained
herein.
The Notes will be issued pursuant to an indenture, to be dated as of
March 1, 2000 (the "Indenture"), among the Trust, SierraCities.com, as servicer
(in such capacity, the "Servicer"), and Bankers Trust Company ("Bankers Trust"),
as trustee (the "Indenture Trustee"). The Trust
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will issue to the Depositor a certificate (the "Trust Certificate," and together
with the Notes, the "Securities") pursuant to a trust agreement, to be dated as
of March 1, 2000 (the "Trust Agreement"), among the Depositor, the Servicer and
Christiana Bank & Trust Company, as owner trustee (the "Owner Trustee"). Each
Note will represent an obligation of, and the Trust Certificate will represent
an undivided interest in, the Trust. Payments in respect of the Trust
Certificate will be subordinate to payments in respect of the Notes to the
extent described in the Indenture and the Trust Agreement.
The Notes will be secured by the assets of the Trust (the "Trust
Assets") which will consist primarily of a pool of direct finance lease and
commercial loan contracts (collectively, the "Initial Contracts"), payments made
on the Contracts after March 1, 2000 (the "Initial Transfer Date"), amounts on
deposit in a pre-funding account (the "Pre-Funding Account"), a capitalized
interest account (the "Capitalized Interest Account"), a supplemental interest
reserve account (the "Supplemental Interest Reserve Account"), security
interests in the equipment or other property (the "Equipment") securing the
Contracts (including certain recoveries on the Contracts but excluding residual
proceeds, if any) and certain other property. The Trust Assets also will include
certain rights under the (i) master agreement, dated October 1, 1999, as amended
by the amendment to master agreement dated as of March 1, 2000 (the "Master
Agreement"), between Sky Financial Solutions, Inc. ("Sky"), as seller, and
SierraCities.com, as purchaser, by which SierraCities.com will acquire the
Contracts, (ii) reserve pool equal to 2.35% of the aggregate purchase cost of
the Contracts (the "Reserve Pool"), (iii) guaranty, dated as of December 1, 1999
(the "Guaranty"), executed by Sky Financial Group, Inc. (the "Sky Parent") in
favor of SierraCities.com, and assigned to the Trust, (iv) letter of credit
dated December 30, 1999 issued by Sky Bank Salineville ("Issuing Bank No. 1")
and confirmed by The Northern Trust Company ("Confirming Bank No. 1") in favor
of SierraCities.com in the amount of $10 million and transferred to the Trust as
new beneficiary thereunder, ("Letter of Credit No. 1") and (v) letter of credit
dated December 30, 1999 issued by Mid Am Bank, Toledo ("Issuing Bank No. 2" and,
together with Issuing Bank No. 1, the "Issuing Banks") and confirmed by Bank
One, N.A., Chicago ("Confirming Bank No. 2" and, together with Confirming Bank
No. 1, the Confirming Banks") in favor of SierraCities.com in the amount of $10
million and transferred to the Trust as new beneficiary thereunder, ("Letter of
Credit No. 2" and together with Letter of Credit No. 1, the "Letters of Credit")
(the Issuing Banks and the Confirming Banks are hereinafter collectively
referred to as the "Letter of Credit Banks").
The Initial Contracts will be or previously have been sold by
SierraCities.com to the Depositor pursuant to the lease acquisition, sale and
contribution agreement, dated as of March 1, 1999 (the "Contribution
Agreement"), between SierraCities.com Inc., as seller (in such capacity, the
"Seller"), and the Depositor, as purchaser. The Depositor, which has previously
entered in an Investment Agreement, dated March 1, 1997, as amended and restated
by agreement dated as of March 25, 1998 (the "Investment Agreement"), among the
Depositor, as seller, SierraCities.com, as servicer, Bankers Trust, as trustee,
and the Investors named therein, pursuant to which the Initial Contracts were
placed in warehouse trusts. On the Initial Transfer Date, the Warehouse Trusts
(as hereinafter defined) and the Depositor will sell the Initial Contracts to
the Trust pursuant to a Receivables Transfer Agreement, dated as of March 1,
2000 (the "Receivables Transfer Agreement"), among First Sierra Equipment Lease
Trust 1997-A, First Sierra Equipment Lease Trust 1997-B, First Sierra Equipment
Lease Trust 1998-E and First Sierra
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Equipment Lease Trust 1999-H (the "Warehouse Trusts") and the Depositor, as
sellers (the "Sellers"), the Investors named therein and the Trust. From time to
time during the Pre-Funding Period (as such term is defined in the Receivables
Transfer Agreement), pursuant to the Contribution Agreement, SierraCities.com
will be obligated to sell, and the Depositor will be obligated to purchase,
additional direct finance lease and commercial loan contracts (the "Subsequent
Contracts" and, together with the Initial Contracts, the "Contracts"), which
Subsequent Contracts will be described in one or more agreements between
SierraCities.com and the Depositor (each, a "Subsequent Contribution
Agreement"), dated as of the related date of transfer (each, a "Subsequent
Transfer Date" and together with the Initial Transfer Date, the "Transfer
Dates"). The Subsequent Contracts will in turn be sold by the Sellers to the
Trust pursuant to the Receivables Transfer Agreement and one or more agreements
among the Sellers, the Investors named therein and the Trust ("Subsequent
Transfer Agreements"). The maximum aggregate discounted contract principal
amount of Subsequent Contracts to be sold during the Pre-Funding Period by
SierraCities.com to the Sellers and then conveyed by the Sellers to the Trust is
$17,500,000.
The Indenture, the Contribution Agreement, each Subsequent Contribution
Agreement, the Receivables Transfer Agreement, each Subsequent Transfer
Agreement, the Trust Agreement and the servicing agreement, to be dated as of
March 1, 2000 (the "Servicing Agreement"), among the Trust, the Servicer and the
Indenture Trustee, are referred to herein collectively as the "Transaction
Documents". "Collateral" shall mean the (i) Contracts, (ii) security interests
in the equipment and other property securing the Contracts (the "Equipment"),
(iii) SierraCities.com's rights under the Guaranty and the Master Agreement,
(iv) Letters of Credit, and (v) proceeds of the Collateral described in clauses
(i) through (iv). "Trust Estate Collateral" shall mean Collateral and also shall
include all amounts on deposit in the Reserve Account, the Collection Account,
the Capitalized Interest Account, the Supplemental Interest Account, the Letter
of Credit Deposit Account and the Lockbox Account. Capitalized terms used herein
that are not otherwise defined shall have the meanings ascribed thereto in the
Trust Agreement or the Indenture, as the case may be.
The Depositor and SierraCities.com understand that the Underwriters
propose to make a public offering of the Notes as soon as the Representative
deems advisable after this Agreement has been executed and delivered and the
Indenture has been qualified under the Trust Indenture Act of 1939, as amended
(the "1939 Act").
The Depositor 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 "1933 Act"), of
Equipment Lease Backed Notes and Equipment Lease Backed Certificates (issuable
in series), which registration statement, as amended at the date hereof, has
become effective and the offering thereof from time to time in accordance with
Rule 415 of the rules and regulations of the Commission under the 1933 Act (the
"1933 Act Regulations"). Such registration statement meets the requirements set
forth in Rule 415(a)(1) under the 1933 Act and complies in all other material
respects with such Rule. The Depositor proposes to file with the Commission
pursuant to Rule 424(b)(2) under the 1933 Act a supplement dated March 31, 2000
to the prospectus dated March 28, 2000, relating to the Notes and the method of
distribution thereof and has previously advised the Representative of all
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further information (financial and other) with respect to the Notes to be set
forth or incorporated by reference therein. Such registration statement,
including the exhibits thereto, the documents incorporated by reference therein,
and the information, if any, deemed to be a part thereof pursuant to Rule 430A
of the 1933 Act (the "Rule 430A Information"), as amended at the date hereof, is
hereinafter called the "Registration Statement;" such prospectus dated March 28,
2000, in the form in which it will be filed with the Commission pursuant to Rule
424(b)(2) under the 1933 Act is hereinafter called the "Basic Prospectus;" such
supplement dated March 31, 2000 to the Basic Prospectus, in the form in which it
will be filed with the Commission pursuant to Rule 424(b)(2) of the 1933 Act, is
hereinafter called the "Prospectus Supplement"; and the Basic Prospectus and the
Prospectus Supplement together are hereinafter called the "Prospectus". A
preliminary prospectus shall be deemed to refer to any prospectus that omitted
the Rule 430A Information or other information to be included upon pricing in a
form of prospectus filed with the Commission pursuant to Rule 424(b) of the 1933
Act Regulations. For purposes of this Agreement, all references to the
Registration Statement, the Prospectus or any amendment or supplement to any of
the foregoing shall be deemed to include the copy filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("EDGAR").
All references in this Underwriting Agreement to financial statements
and schedules and other information which is "contained," "included" or "stated"
(or other references of like import) in the Registration Statement, Prospectus
or preliminary prospectus shall be deemed to mean and include all such financial
statements and schedules and other information which is incorporated by
reference in the Registration Statement, Prospectus or preliminary prospectus,
as the case may be; and all references in this Underwriting Agreement to
amendments or supplements to the Registration Statement, Prospectus or
preliminary prospectus shall be deemed to mean and include the filing of any
document under the Securities Exchange Act of 1934, as amended (the "1934 Act"),
which is incorporated by reference in the Registration Statement, Prospectus or
preliminary prospectus, as the case may be. References herein to "this
Agreement" shall, unless the context provides otherwise, refer to this
Underwriting Agreement.
Section 1. Representations and Warranties.
(a) Representations and Warranties by the Depositor and
SierraCities.com. Each of the Depositor and SierraCities.com jointly and
severally represents and warrants to each of the Underwriters as of the date
hereof and as of the Closing Time referred to in Section 2(b) and agrees with
the each Underwriter as follows:
(i) Compliance with Registration Requirements. The
Registration Statement has become effective under the 1933 Act and no
stop order suspending the effectiveness of the Registration Statement
has been issued under the 1933 Act (or, if issued, such order has been
lifted) and no proceedings for that purpose have been instituted or are
pending or, to the knowledge of the Depositor or SierraCities.com, are
contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with.
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As of the date hereof, when the Registration Statement became
effective, when the Prospectus is first filed pursuant to Rule
424(b)(2) under the 1933 Act, when, prior to Closing Time, 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 Time, (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 requirements of the 1933
Act and the 1933 Act Regulations and the Trust Indenture Act of 1939
Act, as amended (the "1939 Act"), if any, and the rules and regulations
of the Commission under the 1939 Act (the "1939 Act Regulations"), (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 the light of the circumstances under which
they were made, not misleading; provided, however, that neither the
Depositor nor SierraCities.com makes no representation or warranty 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 made in
reliance upon and in conformity with information furnished to the
Depositor or SierraCities.com in writing by any Underwriter through
Merrill Lynch expressly for use in the Registration Statement or
Prospectus. The Depositor will file with the Commission within 15 days
of issuance of the Notes, a report on Form 8-K setting forth specific
information concerning the Notes and the Transaction Documents.
Each preliminary prospectus and the Prospectus delivered to
the Underwriters for use in connection with the offering was identical
in all material respects to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T.
(ii) Financial Statements. The financial statements of
SierraCities.com and its consolidated subsidiaries which include
SierraCities.com and the Depositor (the "Sierra Group"), dated December
31, 1999, December 31, 1998 and December 31, 1997 provided to the
Representative, together with the related schedules and notes
(collectively, the "Financial Statements"), present fairly the
financial position of the Sierra Group at the dates indicated and the
statement of operations, stockholders' equity and cash flows of the
Sierra Group for the periods specified; said financial statements have
been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods
involved.
(iii) Independent Accountants. Arthur Andersen LLP, who
certified the audited portion of the Financial Statements are
independent public accountants with respect to SierraCities.com and its
subsidiaries within the meaning of Regulation S-X under the 1933 Act.
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(iv) No Material Adverse Change. Since the respective dates
as of which information is given in the Registration Statement and the
Prospectus, except as otherwise set forth therein, (A) there has been
no material adverse change in the condition, financial or otherwise, or
in the earnings, business affairs or business prospects of the
Depositor or SierraCities.com whether or not arising in the ordinary
course of business, (B) there have been no transactions entered into by
Depositor or SierraCities.com, other than those in the ordinary course
of business, which are material with respect to such entity and (C)
there has been no material adverse change in the Financial Statements.
(v) Authorization of this Agreement. This Agreement has been
duly authorized, executed and delivered by the Depositor and
SierraCities.com.
(vi) Authorization of Transaction Documents; Qualification
of Indenture. As of the Closing Time, each of the Transaction Documents
to which any of the Depositor, SierraCities.com or the Trust is a party
has been duly authorized, executed and delivered by each such entity,
and, assuming the due authorization, execution and delivery thereof by
the other parties thereto, will constitute the legal, valid and binding
agreement of the Depositor, SierraCities.com or the Trust, as the case
may be, enforceable against such persons in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting
enforcement of creditors' rights generally and by general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law). The Indenture has been qualified under
the 1939 Act.
(vii) Issuance of the Notes. The Notes have been duly
authorized and, at the Closing Time, when executed, authenticated,
issued and delivered in the manner provided for in the Indenture and
delivered against payment of the purchase price therefor as provided in
this Agreement, will constitute valid and binding obligations of the
Trust, enforceable against the Trust in accordance with their terms,
except as the enforcement may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting enforcement
of creditors' rights generally and by general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law), and will be in the form contemplated
by the Indenture and entitled to the benefits of the Indenture and
Trust Agreement.
(viii) Issuance of Trust Certificate. The Trust Certificate
has been duly authorized and, at the Closing Time, will have been duly
executed and, when authenticated, issued and delivered in the manner
provided for in the Trust Agreement and delivered to the Depositor,
will constitute the valid and binding obligation of the Trust,
enforceable against the Trust in accordance with its terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws or affecting enforcement of
creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law), and
will be in the form contemplated by, and entitled to the benefits of,
the Trust Agreement.
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(ix) Description of Securities and Transaction Documents.
The Securities and each of the Transaction Documents conform in all
material respects to the descriptions thereof and the statements
relating thereto contained in the Prospectus.
(x) No Investment Company Registration. None of the
Depositor, SierraCities.com or the Trust is now or, as a result of the
transactions contemplated by this Agreement, will be, required to be
registered as an "investment company" under the Investment Company Act
of 1940, as amended (the "1940 Act").
(xi) The Contracts. At or prior to the Closing Time, the
Contracts 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.
(xii) Use of Proceeds. The Depositor will cause the Trust to
use the net proceeds of the Notes as described in the Base Prospectus
under the caption "Use of Proceeds."
(xiii) Incorporation of Representations and Warranties. The
representations and warranties of each of SierraCities.com and the
Depositor in each of the Transaction Documents to which they are
parties are true and correct in all material respects and are hereby
restated and incorporated by reference herein with the same effect as
if set forth in full herein and as of each Subsequent Transfer Date the
representations and warranties of each of SierraCities.com and the
Depositor in each of the Transaction Documents will be true and
correct.
(xiv) Due Organization. Each of the Depositor and
SierraCities.com is duly organized, validly existing and in good
standing under the laws of the State of Delaware, has, or will have
prior to the Closing Time, 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 to enter into and to
perform its obligations under this Agreement, each Transaction Document
to which it is a party or by which it may be bound and the Notes and
each is duly qualified or registered 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 each of the Depositor and
SierraCities.com, respectively or (ii) any risk whatsoever as to the
enforceability of any Contract.
(xv) Absence of Defaults and Conflicts. Neither the
Depositor nor SierraCities.com is in violation of its organizational or
charter documents or bylaws, as the case may be, or in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which it is a party or by
which it may be bound, or to which any of its properties or assets is
subject, except for violations or
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defaults that, individually or in the aggregate, have not had, and are
not reasonably expected to have, a material adverse effect on their
collective condition, financial or otherwise, earnings, business
affairs or business prospects; the execution, delivery and performance
by each of the Depositor or SierraCities.com of this Agreement, each
Transaction Document to which it is a party and the Securities, the
consummation of the transactions contemplated herein and therein or in
the Prospectus and compliance by each of them with its obligations
hereunder and thereunder have been, or will be prior to the Closing
Time, duly and validly authorized by all necessary action (corporate or
otherwise) and will not conflict with or constitute a breach of, a
default under, or result in the creation or imposition of any Lien
(except as permitted by the Transaction Documents) upon any of its
property or assets pursuant to any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which it may be a party,
by which it may be bound or to which any of its properties or assets is
subject, except for conflicts, breaches, defaults or Liens that,
individually or in the aggregate, will not have a material adverse
effect on their collective condition, financial or otherwise, earnings,
business affairs or business prospects, nor will such action result in
any violation of the provisions of the entity's charter or
organizational documents, bylaws, or any applicable law, administrative
regulation or administrative or court decree.
(xvi) Absence of Proceedings. There are no actions,
proceedings or investigations pending, or, to the knowledge of each of
the Depositor and SierraCities.com, threatened, before any court,
governmental agency or body or other tribunal (i) asserting the
invalidity of this Agreement, the Notes or the Transaction Documents,
(ii) seeking to prevent the issuance of the Notes or the consummation
of any of the transactions contemplated by this Agreement or the
Transaction Documents, (iii) which may, individually or in the
aggregate, materially and adversely affect the performance by either
the Depositor or SierraCities.com of its obligations under, or the
validity or enforceability of, this Agreement, the Notes or the
Transaction Documents, or (iv) which may affect adversely the federal
income tax attributes of the Notes as described in the Prospectus.
(xvii) Absence of Further Requirements. No authorization,
approval or consent of any court, governmental authority or agency or
any other person is necessary in connection with (A) the issuance of
the Securities or the offering and sale of the Notes, (B) the
execution, delivery and performance by the Depositor or
SierraCities.com of this Agreement or any Transaction Document to which
it is a party or (C) the consummation by the Depositor or
SierraCities.com of the transactions contemplated hereby or thereby,
except such authorizations, approvals or consents as have been obtained
and are in full force and effect as of the Closing Time.
(xviii) Possession of Licenses and Permits. Each of the
Depositor and SierraCities.com possesses all material certificates,
authorities, licenses and permits issued by the appropriate state,
federal or foreign regulatory agencies or bodies as are necessary to
conduct the business now operated by it; all such certificates,
authorities, licenses and permits are valid and in full force and
effect except where such invalidity or failure to be in full force and
effect does not have a material adverse effect on its
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condition, financial or otherwise, earnings, business affairs or
business prospects; and neither the Depositor or SierraCities.com has
received notice of any proceedings relating to the revocation or
modification of any such certificate, authority, license or permit
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would materially and adversely affect its
condition, financial or otherwise, earnings, business affairs or
business prospects or its ability to perform its respective obligations
under each Transaction Document to which it is a party or by which it
may be bound.
(xix) Absence of Business with Cuba. Neither
SierraCities.com nor Depositor conducts business or has Affiliates who
conduct business in Cuba or with the government of Cuba within the
meaning of Section 517.075 of the Florida Securities and Investors
Protection Act or Regulation Section 3E-900.001 promulgated thereunder.
(xx) Payment of Taxes, Fees, Etc. Any taxes, fees and other
governmental charges in connection with the execution and delivery of
this Agreement or the Transaction Documents, or the execution and
issuance of the Notes have been or will be paid at or prior to the
Closing Time.
(xxi) Authorization of Master Agreement. As of the Closing
Time, the Master Agreement has been duly authorized, executed and
delivered by SierraCities.com, and assuming the due authorization,
execution and delivery thereof by the other parties thereto, will
constitute the legal, valid and binding agreement of SierraCities.com,
enforceable against SierraCities.com in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting
enforcement of creditors' rights generally and by general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(xxii) Principal Place of Business. The principal place of
business of SierraCities.com and the Depositor is 600 Travis Street,
Houston, Texas 77002. The principal place of business of each of the
Warehouse Trust's is c/o Bankers Trust Company, Four Albany Street,
10th Floor, New York, New York 10006 except for First Sierra Equipment
Contract Trust 1999-H, the principal place of business which is c/o
Christiana Bank and Trust Company, 3801 Kennett Pike, Greenville,
Delaware 19807.
(b) Officer's Certificates. Any certificate respecting the Securities
signed by any officer of the Depositor, SierraCities.com or any of their
respective Affiliates and delivered at the Closing Time to the Underwriters or
to counsel to the Underwriters shall be deemed a representation and warranty by
the Depositor, SierraCities.com or such Affiliate, as the case may be, to the
Underwriters as to the matters covered thereby.
Section 2. Sale and Delivery to the Underwriters; Closing.
(a) Notes. On the basis of and in reliance on the representations,
warranties and agreements herein contained and subject to the terms and
conditions herein set forth, the
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Depositor agrees to sell to each Underwriter, severally and not jointly, and
each Underwriter, severally and not jointly, agrees to purchase from the
Depositor, the aggregate principal amount of each Class of Notes set forth in
Schedule A opposite the name of such Underwriter (plus any additional principal
amount of Notes which such Underwriter may become obligated to purchase pursuant
to the provisions of Section 10) at a purchase price equal to the following
percentages of the aggregate initial principal balances thereof, in the case of
(i) the Class A-1 Notes, 7.49%, (ii) the Class A-2 Notes, 7.77% and (iii) the
Class B Notes, 7.95%.
(b) Payment. Payment of the purchase price for, and delivery of, the
Notes shall be made at the offices of Dewey Ballantine, 1301 Avenue of the
Americas, New York, New York or at such other place as shall be agreed upon by
the Representative, the Depositor and SierraCities.com, at 10:00 A.M. (New York
time) on April 11, 2000, or such other time not later than ten business days
after such date as shall be agreed upon by the Representative, the Depositor and
SierraCities.com (such date and time of payment and delivery being called the
"Closing Time"). Pursuant to Rule 15c6-1(d) under the 1934 Act, the Depositor,
SierraCities.com and the Representative have agreed that the Closing Time will
be not less than five business days following the date hereof.
Payment shall be made to the Depositor by wire transfer of immediately
available funds to a bank account designated by the Depositor, against delivery
to the Representative for the respective accounts of the Underwriters of
certificates for the Notes to be purchased by them (which delivery shall be made
through the facilities of the DTC). It is understood that each Underwriter has
authorized the Representative, for its account, to accept delivery of, receipt
for, and make payment of the purchase price for, the Notes which it has agreed
to purchase. Merrill Lynch, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Notes to be purchased by any Underwriter whose funds have not been
received by the Closing Time, but such payment shall not relieve such
Underwriter from its obligations hereunder.
(c) Book Entry Registration. Each Class of Notes will initially be
represented by one or more certificates registered in the name of Cede & Co., as
nominee of The Depository Trust Company ("DTC"), the Euroclear System
("Euroclear") or Clearstream Banking ("Clearstream"). The interests of
beneficial owners of each Class of Notes will be represented by book entries on
the records of DTC, Euroclear, Clearstream and participating members thereof.
Definitive certificates evidencing the Notes will be available only under the
limited circumstances specified in the Indenture. Certificates for the Notes
shall be made available for examination and packaging by the Underwriters in The
City of New York not later than 10:00 A.M. (New York time) on the last business
day prior to the Closing Time.
Section 3. Covenants of the Depositor and SierraCities.com. The
Depositor and SierraCities.com jointly and severally covenant with the each
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Depositor, subject to Section 3(b), will comply with the requirements of Rule
430A and will notify the Representative and its counsel immediately, and confirm
the notice in writing, (i) when any post-effective amendment to the Registration
Statement shall become effective, or any supplement to
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the Prospectus or any amended Prospectus shall have been filed, (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information, and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of the Notes
for offering or sale in any jurisdiction, or of the initiation or threatening of
any proceedings for any of such purposes. The Depositor will promptly effect the
filings necessary pursuant to Rule 424(b) and will take such steps as it deems
necessary to ascertain promptly whether the form of prospectus transmitted for
filing under Rule 424(b) was received for filing by the Commission and, in the
event that it was not, it will promptly file such Prospectus. The Depositor will
notify the Representative promptly of any filing pursuant to Rule 424(b). The
Depositor will make every reasonable effort to prevent the issuance of any stop
order and, if any stop order is issued, to obtain the lifting thereof at the
earliest possible moment.
(b) Filing of Amendments. The Depositor will not file any amendment,
supplement or revision to the Registration Statement or any amendment,
supplement or revision to either the prospectus included in the Registration
Statement at the time it became effective or to the Prospectus after the date
hereof and prior to the Closing Time unless the Depositor has furnished to the
Representative 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 the Representative reasonably objects, unless the Depositor
determines that such filing is required by law.
(c) Delivery of Registration Statement. The Depositor has furnished or
will deliver to the Representative and counsel for the Underwriters, without
charge, signed copies of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Representative, without charge, a
conformed copy of the Registration Statement as originally filed and of each
amendment thereto (without exhibits) for each of the Underwriters. The copies of
the Registration Statement and each amendment thereto furnished to the
Underwriters will be substantially identical to the electronically transmitted
copies thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.
(d) Delivery of Prospectus. The Depositor has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Depositor hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Depositor will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be substantially
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.
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(e) Continued Compliance with Securities Laws. The Depositor will
comply with the 1933 Act and the 1933 Act Regulations, the 1934 Act and rules
and regulations of the Commission promulgated under the 1934 Act so as to permit
the completion of the distribution of the Notes as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is required by
the 1933 Act and the 1933 Act Regulations to be delivered in connection with
sales of the Notes, any event shall occur or condition shall exist as a result
of which it is necessary, in the opinion of counsel for the Underwriters or for
the Depositor, to amend the Registration Statement or amend or supplement the
Prospectus in order that the Prospectus will not include any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein not misleading in the light of the circumstances existing at
the time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of either such counsel, at any such time to amend the Registration
Statement or amend or supplement the Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations, the Depositor will
promptly prepare and file with the Commission, subject to Section 3(b), such
amendment or supplement as may be necessary to correct such statement or
omission or to make the Registration Statement or the Prospectus comply with
such requirements, and the Depositor will furnish to the Underwriters such
number of copies of such amendment or supplement as the Underwriters may
reasonably request. Neither the consent of the Representative to, nor the
delivery by any Underwriter of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 5.
(f) Blue Sky Qualifications. The Depositor will use its reasonable
efforts, in cooperation with the Underwriters, to qualify the Notes for offering
and sale under the applicable securities laws of such states and other
jurisdictions as may be reasonably requested by the Representative and to
maintain such qualifications in effect for a period of not less than one year
from the effective date of the Registration Statement.
(g) Rule 158. As soon as practicable, but not later than 16 months
after the effective date of the Underwriting Agreement, the Depositor will cause
the Trust to make generally available to Noteholders an earnings statement of
the Trust covering a period of at least 12 months beginning after the effective
date of the Underwriting Agreement which will satisfy the provisions of Section
11(a) of the 1933 Act and, at the option of the Depositor, will satisfy the
requirements of Rule 158 under the 1933 Act.
(h) Use of Proceeds. The Depositor shall cause the Trust to use the net
proceeds received by it from the sale of the Notes in the manner specified in
the Prospectus under "Use of Proceeds."
(i) Restriction on Sale of Notes. For a period of 30 days from the date
hereof, none of SierraCities.com, the Depositor or any of their respective
Affiliates will, without the prior written consent of the Representative,
directly or indirectly, offer, sell or contract to sell or announce the offering
of, in a public or private transaction, any other collateralized securities
similar to the Notes other than private warehouse funding arrangements supported
by direct finance lease and commercial loan contracts.
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(j) Reporting Requirements. The Depositor will file with the Commission
such report on Form SR as may be required pursuant to Rule 463 under the 1933
Act and, during the period when the Prospectus is required to be delivered under
the 1933 Act, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act.
(k) Reports, Statements and Certificates. The Depositor and
SierraCities.com agree that, so long as any Notes are outstanding, the Depositor
or SierraCities.com, as the case may be, deliver or cause to be delivered to the
Representative, as soon as copies become available, copies of (i) all documents
required to be delivered to the Noteholders under the Transaction Documents,
(ii) each periodic report required to be filed by the Depositor with the
Commission pursuant to the 1934 Act relating to the Notes or any order of the
Commission thereunder and (iii) such other information with respect to the
Securities concerning SierraCities.com, the Depositor or the Trust as the
Representative may reasonably request from time to time.
Section 4. Payment of Expenses.
(a) Expenses. The Depositor shall pay all of its own expenses incident
to the performance of its obligations under this Agreement, including without
limitation (i) the preparation, printing and filing of the Registration
Statement (including financial statements, exhibits and documents incorporated
by reference) as originally filed and of each amendment thereto, (ii) the
preparation, reproduction and delivery to the Underwriters of this Agreement,
each Transaction Document and such other documents as may be required in
connection with the issuance of the Securities or the offering, purchase, sale
or delivery of the Notes, (iii) the preparation, issuance and delivery of the
certificates for the Notes to the Underwriters, (iv) the fees and expenses of
the counsel, accountants and other advisors of the Depositor, SierraCities.com
and their respective Affiliates in connection with the transactions contemplated
by this Agreement, (v) the qualification of the Notes under state securities
laws in accordance with the provisions of Section 3(f), including filing fees
and the reasonable fees and disbursements of counsel for the Underwriters in
connection therewith, (vi) the fees and expenses of the Indenture Trustee and
the Trustee, including the reasonable fees and disbursements of their respective
counsel in connection with the transactions contemplated by this Agreement and
(vii) any fees payable in connection with the rating of the Notes.
(b) Termination of Agreement. If this Agreement is terminated by the
Representative in accordance with the provisions of Section 5 or Section
9(a)(i), the Depositor shall reimburse the Underwriters for all of their
reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Underwriters.
Section 5. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters are subject to the accuracy of the
representations and warranties of the Depositor and SierraCities.com contained
in Section 1 or in certificates of any officer of the Depositor,
SierraCities.com or any of their respective Affiliates delivered pursuant to the
provisions hereof, to the performance by the Depositor and SierraCities.com of
their covenants and other obligations hereunder and to the following additional
conditions:
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(a) Effectiveness of Registration Statement. The Registration Statement
shall have become effective and, at the Closing Time, no stop order suspending
the effectiveness of the Registration Statement shall have been issued under the
1933 Act or proceedings therefor initiated or threatened by the Commission (or,
if issued, such stop order shall have been lifted), and any request on the part
of the Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel for the Underwriters. The Prospectus
shall have been filed with the Commission in accordance with Rule 424(b) (or a
post-effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A).
(b) Accountants' Comfort Letter. At the Closing Time, the
Representative, SierraCities.com and the Depositor shall have received from
Arthur Andersen LLP a letter or letters dated as of the date of the Prospectus,
in form and substance as previously agreed to by the Representative and
otherwise satisfactory in form and substance to the Representative and counsel
for the Underwriters, containing statements and information of the type
ordinarily included in accountants' "comfort letters," with respect to certain
financial, statistical and other information contained in the Prospectus.
(c) Officers' Certificate. At the Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectus, any material adverse changes in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Depositor, SierraCities.com and their respective
Affiliates, whether or not arising in the ordinary course of business, and the
Representative shall have received (i) certificates of authorized officers of
the Depositor and SierraCities.com, dated as of the Closing Time, to the effect
that (A) there has been no such material adverse change, (B) the representations
and warranties in Section 1 are true and correct with the same force and effect
as though expressly made at and as of the Closing Time, (C) each of the
Depositor and SierraCities.com has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to the
Closing Time and (D) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are pending or are contemplated by the Commission (or, if a
stop order has been issued, such order has been subsequently lifted) and (ii) a
certificate of authorized officers of Sky, dated as of the Closing Time, as to
(A) the due authorization, execution and delivery of the Master Agreement, (B)
the enforceability of the Master Agreement and (C) the due organization and
valid existence of Sky and the absence of proceedings in relation to Sky which
could have a material adverse affect on Sky's ability to perform its obligations
under the Master Agreement.
(d) Opinion of Special Counsel for the Depositor. At the Closing Time,
the Representative shall have received the favorable opinion of Dewey Ballantine
LLP, counsel to the Depositor, dated the Closing Time and in form and substance
satisfactory to counsel for the Underwriters, substantially to the effect that:
(i) The Depositor has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Delaware; the Depositor has corporate power and authority to carry
on its business as described in the Prospectus and
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to enter into and perform its obligations under this Agreement and each
Transaction Document to which it is a party and is duly qualified as a
foreign corporation to transact business in each state necessary to
enable it to perform its obligations and is in good standing in such
states.
(ii) The Notes have been duly and validly authorized and,
when executed, issued, authenticated and delivered pursuant to the
Indenture, and delivered against payment of the consideration specified
in this Agreement, will be duly and validly issued and outstanding,
constitute valid and binding obligations of the Trust, enforceable
against the Trust in accordance with their terms, and will be entitled
to the benefits of the Indenture. The Trust Certificate has been duly
and validly authorized and, when executed, issued, authenticated and
delivered pursuant to the Trust Agreement, and delivered to the
Depositor, will be duly and validly issued and outstanding and entitled
to the benefits of the Trust Agreement.
(iii) Each of the Indenture, the Contribution Agreement, the
Receivables Transfer Agreement, the Trust Agreement and the Servicing
Agreement, and assuming no change in law or factual circumstances, any
Subsequent Contribution Agreement or Subsequent Transfer Agreement, has
been duly authorized, executed and delivered by the Depositor and
assuming the due authorization, execution and delivery thereof by the
other parties thereto, constitute the legal, valid and binding
agreement of the Depositor enforceable against the Depositor in
accordance with its terms (in each case, subject to certain generally
applicable limitations set forth in such opinion).
(iv) To such counsel's knowledge, there is no action, suit,
proceeding, inquiry or investigation pending or threatened to which the
Depositor is a party or to which any of its properties or assets is
subject, before or brought by any court or governmental agency or body,
(i) asserting the invalidity of this Agreement, any Transaction
Document or the Notes, (ii) seeking to prevent the issuance of the
Notes or the consummation of any of the transactions contemplated by
this Agreement or any Transaction Document or (iii) that would, if
determined adversely to the Depositor, materially and adversely affect
the performance by the Depositor of its respective obligations under,
or the validity or enforceability of, this Agreement or any Transaction
Document to which it is a party or the Notes, or materially adversely
affect its condition or operations.
(v) The statements in the Prospectus under the captions
"Summary," "Risk Factors," "Description of the Notes" and "Description
of the Transaction Documents," insofar as such statements purport to
summarize certain terms or provisions of the Notes, the Transaction
Documents and the Master Agreement, provide a fair summary of such
provisions and the statements in the Prospectus under the captions
"Risk Factors," "Description of the Transaction Documents," "Material
Federal Income Tax Considerations," "State and Local Tax Consequences"
and "ERISA Considerations," to the extent that they constitute matters
of law, summaries of legal matters, documents or proceedings or legal
conclusions relating to U.S. federal law or the laws of the States of
Delaware or New York have been prepared or reviewed by such counsel and
provide a fair summary in all material respects.
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(vi) To such counsel's knowledge, no order, consent,
authorization or approval of any Delaware, New York or federal court or
governmental authority or agency applicable to the Depositor, is
required in connection with the issuance of the Notes or the offering
or the sale of the Notes, except those authorizations, approvals,
consents and orders which have previously been obtained and are in full
force and effect as of the Closing Time.
(vii) None of (A) the execution, delivery and performance by
the Depositor of this Agreement or any Transaction Document to which
such entity is a party, (B) the consummation of the transactions
contemplated herein or therein by the Depositor or (C) the fulfillment
of the terms hereof or thereof by the Depositor, will conflict with,
result in a breach of or constitute a default under, or with the giving
of notice or the passage of time or both, would constitute a default
under or result in the creation or imposition of any Lien (except as
permitted by the Transaction Documents) upon any property or assets of
such entity pursuant to the terms of (i) the charter or bylaws of such
entity, (ii) to such counsel's knowledge and except as otherwise
provided in the Transaction Documents, any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which such
entity is a party or by which it may be bound, or to which any of the
properties or assets of such entity is subject or (iii) to such
counsel's knowledge, any applicable law, statute or regulation or any
judgment, order or decree applicable to such entity of any court,
regulatory body or other governmental instrumentality having
jurisdiction over such entity; excepting, in the case of clauses (ii)
and (iii) above, defaults, breaches or violations that do not, in the
aggregate, have a material adverse effect on the condition, financial
or otherwise, or on the earnings, business affairs or business
prospects of such entity or a material adverse effect in the ability of
such entity to perform its obligations under any Transaction Document
to which it is a party.
(viii) Neither the Depositor nor the Trust is required to be
registered as an "investment company" under the 1940 Act.
(ix) The Indenture has been qualified under the 1939 Act.
(x) To such counsel's knowledge, the Depositor possesses
such certificates, authorities, licenses, permits and other
governmental authorizations necessary to conduct the business now
operated by it, and has not received any notice of proceedings relating
to the revocation or modification of any such certificate, authority,
license or permit that, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would materially and
adversely affect the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Depositor or
the ability of the Depositor to perform its obligations under the
Transaction Documents to which it is a party.
(xi) Nothing has come to such counsel's attention that would
lead it to believe that the Registration Statement or any amendment
thereto, including any 430A Information (other than the financial
statements and schedules and other financial data
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included therein, as to which no opinion need be expressed), at the
time such Registration Statement or any such amendment became
effective, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus or
any amendment or supplement thereto (other than the financial
statements and schedules and other financial data included therein, as
to which no opinion need be expressed), at the time the Prospectus was
issued, at the time any such amended or supplemented prospectus was
issued or at the Closing Time, included or includes an untrue statement
of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(xii) All descriptions in the Registration Statement of the
Transaction Documents, the Master Agreement or other contracts or
documents filed as exhibits to the Registration Statement to which the
Depositor, SierraCities.com or its Affiliates is a party are accurate
in all material respects; to the best of such counsel's knowledge,
there are no franchises, contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments required to be described
or referred to in the Registration Statement or to be filed as exhibits
thereto other than those described or referred to therein or filed or
incorporated by reference as exhibits thereto, and the descriptions
thereof or references thereto are correct in all material respects.
(xiii) The Registration Statement has been declared
effective under the 1933 Act; any required filing of the Prospectus
pursuant to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); and, to the best knowledge of such
counsel, no stop order suspending the effectiveness of the Registration
Statement has been issued under the 1933 Act and no proceedings for
that purpose have been instituted or are pending or threatened by the
Commission.
(xiv) The Registration Statement, the Prospectus and each
amendment or supplement to the Registration Statement or the
Prospectus, as of their respective effective or issue dates (other than
the financial statements and schedules and other financial data
included therein, and the Trustee's Statement of Eligibility on Form
T-1, as to which no opinion need be expressed), complied as to form in
all material respects with the requirements of the 1933 Act and the
1933 Act Regulations.
(xv) For federal income tax purposes, the Notes will be
considered debt, the Trust will not be an association taxable as a
corporation and the Trust will not be a publicly traded partnership
taxable as a corporation.
(xvi) Assuming no change in law or factual circumstances, on
each Transfer Date, the Contribution Agreement and each Subsequent
Contribution Agreement either (i) transfers an ownership interest in
the related Collateral being transferred on such Transfer Date by
SierraCities.com to the Sellers or (ii) creates a valid security
interest in the related Collateral in favor of the Sellers as security
for the obligations of SierraCities.com set forth in the Contribution
Agreement.
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(xvii) Assuming no change in the law or the factual
circumstances, on each Transfer Date, the Receivables Transfer
Agreement and each related Subsequent Transfer Agreement either (i)
transfers an ownership interest in the related Collateral being
transferred on such Transfer Date by the Sellers to the Trust or (ii)
creates a valid security interest in the related Collateral, in favor
of the Trust as security for the obligations of the Sellers set forth
in the Receivables Transfer Agreement.
(xviii) The Indenture constitutes a grant by the Trust to
the Indenture Trustee of a valid security interest in the Collateral as
security for the Secured Obligations.
(xix) The Contracts are chattel paper as defined in the UCC.
(xx) The Guaranty is not required to be registered as a
security under the 1933 Act.
(xxi) The Letters of Credit are not required to be
registered under the 1933 Act.
(xxii) The Receivables Transfer Agreement has been duly
authorized, executed and delivered by the Sellers, and assuming the due
authorization, execution and delivery thereof by the other parties
thereto, will constitute the legal, valid and binding agreement of the
Sellers, enforceable against such parties, in accordance with its
terms.
(xxiii) To the extent that the UCC as in effect in the State
of New York (the "New York UCC") is applicable, following the filing of
the financing statement naming the Trust, as secured party, and the
Warehouse Trusts, as debtors (the "New York Trust Financing
Statement"), assuming no change in the law or factual circumstances:
(a) on each Transfer Date, the security interest in favor of the Trust
in the Collateral being transferred on such Transfer Date will be
perfected as of the related Transfer Date and (ii) before giving effect
to the pledge of such collateral by the Trust to the Indenture Trustee,
no other security interest in such Collateral will be equal to or prior
to such security interest. The New York Trust Financing Statement is in
appropriate form for filing under the New York UCC.
(e) Opinion of Counsel for SierraCities.com. At the Closing Time, the
Representative shall have received the favorable opinion of Vinson & Elkins,
counsel to the SierraCities.com, dated the Closing Time and in form and
substance satisfactory to counsel for the Underwriters, substantially to the
effect that:
(i) SierraCities.com has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Delaware; SierraCities.com has corporate power and authority to
carry on its business as described in the Prospectus and to enter into
and perform its obligations under this Agreement, the Master Agreement
and each Transaction Document to which it is a party and is duly
qualified as a foreign corporation to transact business in each state
necessary to enable it to perform its obligations and is in good
standing in such states.
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(ii) Each of the Master Agreement and the Transaction
Document to which SierraCities.com is a party has been duly authorized,
executed and delivered by SierraCities.com and assuming the due
authorization, execution and delivery thereof by the other parties
thereto, will constitute the legal, valid and binding agreement of
SierraCities.com enforceable against SierraCities.com in accordance
with its terms (in each case, subject to certain generally applicable
limitations set forth in such opinion).
(iii) To such counsel's knowledge, there is no action, suit,
proceeding, inquiry or investigation pending or threatened, to which
SierraCities.com is a party or to which any of its properties or assets
is subject, before or brought by any court or governmental agency or
body, (i) asserting the invalidity of this Agreement, the Master
Agreement, any Transaction Document or the Notes, (ii) seeking to
prevent the issuance of the Notes, or the consummation of any of the
transactions contemplated by this Agreement, the Master Agreement or
any Transaction Document or (iii) that would, if determined adversely
to SierraCities.com, materially and adversely affect the performance by
SierraCities.com of its obligations under, or the validity or
enforceability of, this Agreement, the Master Agreement or any
Transaction Document to which it is a party or the Notes, or materially
adversely affect its condition or operations.
(iv) To such counsel's knowledge, no order, consent,
authorization or approval of any Delaware, New York or federal court or
governmental authority or agency applicable to SierraCities.com, is
required in connection with the issuance of the Notes or the offering
or the sale of the Notes, except those authorizations, approvals,
consents and orders which have previously been obtained and are in full
force and effect as of the Closing Time.
(v) None of (A) the execution, delivery and performance by
SierraCities.com of this Agreement or by SierraCities.com of the Master
Agreement or any Transaction Document to which such entity is a party,
(B) the consummation of the transactions contemplated herein or therein
by SierraCities.com or (C) the fulfillment of the terms hereof or
thereof by SierraCities.com, will conflict with, result in a breach of
or constitute a default under, or with the giving of notice or the
passage of time or both, would constitute a default under or result in
the creation or imposition of any Lien (except as permitted by the
Master Agreement or the Transaction Documents) upon any property or
assets of such entity pursuant to the terms of (i) the charter or
bylaws of SierraCities.com, (ii) to such counsel's knowledge and except
as otherwise provided in the Master Agreement or the Transaction
Documents, any contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which such entity is a party or by which
it may be bound, or to which any of the properties or assets of such
entity is subject or (iii) to such counsel's knowledge, any applicable
law, statute or regulation or any judgment, order or decree applicable
to such entity of any court, regulatory body or other governmental
instrumentality having jurisdiction over such entity; excepting, in the
case of clauses (ii) and (iii) above, defaults, breaches or violations
that do not, in the aggregate, have a material adverse effect on the
condition, financial or otherwise, or on the earnings, business affairs
or business prospects of such entity or a material adverse
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<PAGE> 20
effect in the ability of such entity to perform its obligations under
the Master Agreement or any Transaction Document to which it is a
party, as the case may be.
(vi) SierraCities.com is not required to be registered as an
"investment company" under the 1940 Act.
(vii) To such counsel's knowledge, SierraCities.com
possesses such certificates, authorities, licenses, permits and other
governmental authorizations necessary to conduct the business now
operated by it, and none of such entities has received any notice of
proceedings relating to the revocation or modification of any such
certificate, authority, license or permit that, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially and adversely affect the condition, financial
or otherwise, or the earnings, business affairs or business prospects
of such entity or the ability of such entity to perform its obligations
under the Master Agreement or any Transaction Document to which it is a
party.
(f) Opinion of Special Delaware Counsel to the Depositor and
SierraCities.com. At the Closing Time, the Representative shall have received
the favorable opinion of Stradley, Ronon, Stevens & Young LLP special Delaware
counsel to the Depositor and SierraCities.com, dated the Closing Time and in
form and substance satisfactory to Counsel for the Underwriters, substantially
to the effect that:
(i) The Trust has been duly formed and is validly existing
in good standing as a common law trust under the laws of the State of
Delaware.
(ii) Under Delaware law and its related formation documents,
the Trust has all necessary power and authority to execute and deliver,
and to perform its obligations under, the Transaction Documents to
which it is a party.
(iii) Under Delaware law and its related formation
documents, the execution and delivery by the Trust of the Transaction
Documents to which it is a party, and the performance by it thereunder,
have been duly authorized by all necessary business trust action on the
part of the Trust.
(iv) The Trust Agreement is a legal, valid and binding
agreement of the parties thereto, enforceable against such parties, in
accordance with its terms.
(v) To the extent that the UCC as in effect in the State of
Delaware (the "Delaware UCC") is applicable, following the filing of
the financing statement naming the Trust, as secured party, and the
Warehouse Trusts, as debtors (the "Delaware Trust Financing
Statement"), assuming no change in the law or factual circumstances:
(a) on each Transfer Date, the security interest in favor of the Trust
in the Collateral being transferred on such Transfer Date will be
perfected as of the related Transfer Date and (ii) before giving effect
to the pledge of such collateral by the Trust to the Indenture Trustee,
no other security interest in such Collateral will be equal to or prior
to such security
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interest. The Delaware Seller Financing Statement is in appropriate
form for filing under the Delaware UCC.
(vi) To the extent that the Delaware UCC is applicable
(without regard to conflict of laws principles), and assuming that the
security interest created by the Indenture in the Trust Estate
Collateral has been duly created and has attached, following the filing
of the financing statement naming the Indenture Trustee, as secured
party, and the Trust, as debtor (the "Delaware Indenture Trustee
Financing Statement"), the Indenture Trustee will have a perfected
security interest therein, and such security interest will be prior to
any other security interest therein. The Delaware Indenture Trustee
Financing Statement is in appropriate form for filing under the
Delaware UCC.
(g) Opinion of Special Bankruptcy Counsel to the Depositor and
SierraCities.com. At the Closing Time, the Representative shall have received
the favorable opinion of Dewey Ballantine LLP, special bankruptcy counsel to the
Depositor and SierraCities.com, dated the Closing Time and in form and substance
satisfactory to counsel for the Underwriters, with respect to certain true sale
and bankruptcy matters, including an opinion that a trustee in bankruptcy of
Sky, or Sky as debtor in possession would not prevail in an action (i) to
enforce the automatic stay of Section 362(a) of the Bankruptcy Code to prevent
payment of the Contracts and the proceeds to SierraCities.com or (ii) compel the
turnover of the contracts and the proceeds by SierraCities.com, as property of
Sky's estate, under Section 541 or 542 of the Bankruptcy Code.
(h) Opinion of Special Texas Counsel to the Depositor and
SierraCities.com. At the Closing Time, the Representative shall have received
the favorable opinion of Vinson & Elkins, special Texas counsel to the Depositor
and SierraCities.com, dated the Closing Time and in form and substance
satisfactory to counsel for the Underwriters, substantially to the effect that:
(i) To the extent that the UCC as in effect in the State of
Texas (the "Texas UCC") is applicable, following the filing of the
financing statement naming Sellers, as secured parties, and
SierraCities.com, as debtor (the "Texas Sellers Financing Statement"),
assuming no change in the law or the factual circumstances: (i) on each
Transfer Date, the security interest in favor of the Sellers in the
Collateral being transferred on such Transfer Date will be perfected as
of the related Transfer Date and (ii) before giving effect to the
transfer of the Collateral by the Sellers to the Trust, no other
security interest in such Collateral will be equal or prior to such
security interest. The Texas Sellers Financing Statement is in
appropriate form for filing in the relevant office under the Texas UCC.
(ii) To the extent that the Texas UCC is applicable,
following the filing of the financing statement naming the Trust, as
secured party, and the Sellers, as debtors (the "Texas Trust Financing
Statement"), assuming no change in the law or the factual
circumstances: (i) on each Transfer Date, the security interest in
favor of the Trust in the Collateral being transferred on such Transfer
Date will be perfected as of the related Transfer Date and (ii) before
giving effect to the pledge of such collateral by the Trust to the
Indenture Trustee, no other security interest in the Collateral being
transferred on such
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Transfer Date will be equal or prior to such security interest. The
Texas Trust Financing Statement is in appropriate form for filing in
the relevant office under the Texas UCC.
(iii) Under Texas law, the Notes will be considered debt and
the Trust will not, for Texas income tax purposes, be classified as an
association taxable as a corporation, and Noteholders who are not
residents of or otherwise subject to tax in Texas will not, solely by
reason of their acquisition of an interest in any Class of Notes, be
subject to Texas income, franchise, excise or similar taxes with
respect to interest on any Class of Notes or with respect to any of the
other Trust property.
(i) Opinion of Counsel for Indenture Trustee. At the Closing Time, the
Representative shall have received the favorable opinion of Seward & Kissell
LLP, counsel to Banker's Trust, as Indenture Trustee and Trust Agent, dated the
Closing Time and in form and substance satisfactory to counsel for the
Underwriters, substantially to the effect that:
(i) Banker's Trust has been duly incorporated and is validly
existing as a national banking corporation, in good standing under the
federal laws of the United States of America with full power and
authority (corporate and other) to own its properties and conduct its
business, as presently conducted by it, and to enter into and perform
its obligations as Indenture Trustee under each Transaction Document to
which Banker's Trust is a party.
(ii) Each Transaction Document to which Banker's Trust is a
party has been duly authorized, executed and delivered by Banker's
Trust and, assuming the due authorization, execution and delivery
thereof by the other parties thereto, will constitute a legal, valid
and binding obligation of Banker's Trust enforceable in accordance with
its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar
laws affecting enforcement of creditors' rights generally and by
general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(iii) The Notes have been duly executed, authenticated and
delivered by Banker's Trust, as Indenture Trustee.
(iv) Neither the execution nor delivery by Banker's Trust of
each Transaction Document to which it is a party nor the consummation
of any of the transactions by Banker's Trust contemplated thereby
require the consent or approval of, the giving of notice to, the
registration with or the taking of any other action with respect to,
any governmental authority or agency under any existing federal or
state law governing the banking or trust powers of Banker's Trust.
(v) The execution and delivery of each Transaction Document
to which Banker's Trust is a party and the performance by Banker's
Trust of its terms do not conflict with or result in a violation of (A)
any federal or state law or regulation governing the banking or trust
powers of Banker's Trust, (B) the Articles of Association or Bylaws of
Banker's Trust or (C) to the best knowledge of such counsel, any
indenture,
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lease or material agreement to which Banker's Trust is a party or to
which its assets are subject.
(j) Opinion of Counsel for Owner Trustee. At the Closing Time, the
Representative shall have received the favorable opinion of Stradley, Ronon,
Stevens & Young LLP, counsel to the Owner Trustee, dated the Closing Time and
satisfactory in form and substance to counsel for the Underwriters,
substantially to the effect that:
(i) The Owner Trustee has been duly incorporated and is
validly existing as a national banking corporation, in good standing
under the laws of Delaware the federal laws of the United States of
America.
(ii) The Owner Trustee has full power and authority
(corporate and other) to own its properties and conduct its business,
as presently conducted by it, and to enter into and perform its
obligations as Owner Trustee under each Transaction Document to which
it is a party.
(iii) The execution and delivery of the Trust Agreement and,
on behalf of the Trust, each other Transaction Document to which the
Owner Trustee is a party, the Certificates and the Notes and the
performance by the Owner Trustee of its obligations under the Trust
Agreement have been duly authorized by all necessary corporate action
and each has been executed and delivered by the Owner Trustee.
(iv) The Trust Agreement constitutes a valid binding
agreement of the Owner Trustee, enforceable against the Owner Trustee
in accordance with its terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, moratorium, reorganization or
other similar laws affecting enforcement of creditors' rights generally
and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(v) Neither the execution nor delivery by the Owner Trustee
of each Transaction Document to which it is a party nor the
consummation of any of the transactions by the Owner Trustee
contemplated thereby require the consent or approval of, the giving of
notice to, the registration with or the taking of any other action with
respect to, any governmental authority or agency under any existing
federal or state law governing the banking or trust powers of the Owner
Trustee, other than those consents, approvals or authorizations as have
been obtained.
(vi) Each of the Notes and the Trust Certificate have been
duly executed, authenticated and delivered by the Owner Trustee.
(vii) The execution and delivery of each Transaction
Document to which the Owner Trustee is a party and the performance by
the Owner Trustee of its terms do not conflict with or result in a
violation of (A) any federal or state law or regulation governing the
banking or trust powers of the Owner Trustee, (B) the Articles of
Association or Bylaws of the Owner Trustee or (C) to the best knowledge
of such
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counsel, any indenture, lease or material agreement to which the Owner
Trustee is a party or to which its assets are subject.
(k) Opinion of Counsel for Letter of Credit Banks. At the Closing Time,
the Representative shall have received the favorable opinion of in-house counsel
to the Letter of Credit Banks, dated as of the Closing Time and in form and
substance satisfactory to counsel for the Underwriters, substantially to the
effect that:
(i) The Letter of Credit Banks are duly organized as a
corporation and is validly existing under the laws of the country of
their organization, and have the full power and authority (corporate
and other) to issue, and to take all action required of it under, the
Letters of Credit.
(ii) The execution, delivery and performance by the Letter
of Credit Banks of the Letters of Credit have been duly authorized by
all necessary corporate action on the part of the Letter of Credit
Banks.
(iii) The execution, delivery and performance by the Letter
of Credit Banks of the Letters of Credit do not require the consent or
approval of, the giving of notice to, the registration with, or the
taking of any other action in respect of any state or other
governmental agency or authority which has not previously been
effected.
(iv) The Letters of Credit have been duly authorized,
executed and delivered by the Letter of Credit Banks and constitute
legal, valid and binding obligations of the Letter of Credit Banks,
enforceable against each Letter of Credit Bank in accordance with their
respective terms (subject, as to enforcement, to bankruptcy,
reorganization, insolvency, moratorium and other laws affecting
creditors' rights generally and to general equity principles).
(l) Opinion of Counsel for Sky and Sky Parent. At the Closing Time, the
Representative shall have received the favorable opinion of in-house counsel to
Sky and Sky Parent, dated the Closing Time and in form and substance
satisfactory to counsel for the Underwriters, substantially to the effect that:
(i) Each of Sky and Sky Parent have been duly incorporated
and are validly existing as corporations, in good standing under the
laws of Ohio with full power and authority (corporate and other) to own
their respective properties and conduct their respective businesses, as
presently conducted by them, and to enter into and perform their
respective obligations under the Master Agreement and the Letters of
Credit and the Guaranty (collectively, the "Sky Documents").
(ii) The Sky Documents have been duly authorized, executed
and delivered by each of Sky and Sky Parent and, assuming the due
authorization, execution and delivery thereof by the other parties
thereto, will constitute a legal, valid and binding obligations of Sky
and Sky Parent enforceable in accordance with their terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium,
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reorganization or other similar laws affecting enforcement of
creditors' rights generally and by general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(iii) The endorsement and delivery of each Contract, and the
execution of the Master Agreement is sufficient to fully transfer to
SierraCities.com all right, title and interest of Sky in the Contracts,
the security interests in the Equipment and the proceeds relating
thereto, and will be sufficient to permit SierraCities.com to avail
itself of all protection available lender applicable law against the
claims, if any, present or future creditors of SierraCities.com and to
prevent any other sale, transfer, assignment, pledge or other
encumbrance of the Contracts, the security interests in the Equipment
and the proceeds relating thereto, by Sky from being enforceable.
(m) Opinion of Counsel for the Underwriters. At the Closing Time, the
Representative shall have received the favorable opinion, dated as of the
Closing Time, of Brown & Wood LLP, counsel for the Underwriters, in form and
substance satisfactory to the Representative. In giving such opinion, such
counsel may rely, as to all matters governed by the laws of jurisdictions other
than the law of the State of New York and the federal law of the United States,
upon the opinions of counsel to the Depositor, SierraCities.com, Sky and the
Letter of Credit Banks satisfactory to the Representative. Such counsel may also
state that, insofar as such opinion involves factual matters, they have relied,
to the extent they deem proper, upon certificates of officers of the Depositor,
SierraCities.com and their subsidiaries and certificates of public officials.
(n) Reliance Letters. Counsel to the Depositor, SierraCities.com, the
Letters of Credit Banks and Sky, and counsel delivering any opinions prior to or
at the end of the Pre-Funding Period, shall provide reliance letters to the
Representative relating to each legal opinion relating to the transaction
contemplated hereby rendered to the Indenture Trustee, the Trustee or either
Rating Agency.
(o) Maintenance of Rating. At the Closing Time, (i) the Class A Notes
shall be rated by Moody's Investors Service, Inc. and Duff & Phelps Credit
Rating Co. (the "Rating Agencies") in their highest rating category and (ii) the
Class B Notes shall be rated by the Rating Agencies at least "Aa3" or its
equivalent, and SierraCities.com and the Depositor shall have delivered to the
Representative a letter dated the Closing Time from the Rating Agencies, or
other evidence satisfactory to the Representative, confirming that the Class A
Notes and Class B Notes have such ratings; and since the date of this Agreement,
there shall not have occurred a downgrading in the rating assigned to the Class
A Notes and Class B Notes or any other securities of the Depositor or
SierraCities.com by any "nationally recognized statistical rating agency," as
that term is defined by the Commission for purposes of Rule 436(g)(2) under the
1933 Act, and no such securities rating agency shall have publicly announced
that it has under surveillance or review, with possible negative implications,
its rating of any Class of Notes or any other securities of the Depositor or
SierraCities.com.
(p) Transaction Documents. At the Closing Time, the representations and
warranties of each of the Depositor, the Sellers, SierraCities.com, the
Indenture Trustee, the Owner Trustee
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and the Trust contained in the Transaction Documents shall be true and correct
in all material respects and each party shall perform its obligations
thereunder.
(q) Additional Documents. At the Closing Time, counsel for the
Underwriters shall have been furnished with such documents and opinions as it
may reasonably require for the purpose of enabling it to pass upon the issuance
of the Securities and the sale of the Notes as herein contemplated, or in order
to evidence the accuracy of any of the representations or warranties or the
fulfillment of any of the conditions herein contained; and all proceedings taken
by the Depositor or SierraCities.com in connection with the foregoing shall be
reasonably satisfactory in form and substance to counsel for the Underwriters.
(r) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled in all material respects when and as
required to be fulfilled, this Agreement may be terminated by the Representative
by notice to the Depositor and SierraCities.com at any time at or prior to the
Closing Time, and such termination shall be without liability of any party to
any other party except as provided in Section 4 and except that Sections 1, 6, 7
and 8 shall survive any such termination and remain in full force and effect.
Section 6. Indemnification.
(a) Indemnification of Underwriters. The Depositor and SierraCities.com
jointly and severally agree to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including any Rule
430A Information, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading or arising out of any
untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever, based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided
that (subject to Section 6(d)) any such settlement is effected with the
written consent of the Depositor and SierraCities.com; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill
Lynch), reasonably incurred in investigating,
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preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or any claim whatsoever, based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under clause (i) or (ii)
above;
provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of
any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with written
information furnished to the Depositor or SierraCities.com by any
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto), including any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(b) Indemnification of the Depositor and SierraCities.com. Each
Underwriter severally agrees to indemnify and hold harmless the Depositor,
SierraCities.com, each person who signed the Registration Statement, each person
who was a director of the Depositor at the time of filing the Registration
Statement and each person, if any, who controls the Depositor or
SierraCities.com within the meaning of Section 15 of the 1993 Act or Section 20
of the 1934 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in Section 6(a), as incurred, but only with
respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto),
including any Rule 430A Information or any Preliminary Prospectus Supplement or
the Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Depositor or
SierraCities.com by such Underwriter through Merrill Lynch expressly for use in
the Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(c) Actions Against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a), counsel
to the indemnified parties shall be selected by Merrill Lynch, and, in the case
of parties indemnified pursuant to Section 6(b), counsel to the indemnified
parties shall be selected by the Depositor or SierraCities.com, as applicable.
An indemnifying party may participate at its own expense in the defense of any
such action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which
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indemnification or contribution could be sought under this Section or Section 7
(whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
Section 7. Contribution. If the indemnification provided for in Section
6 is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Depositor and
SierraCities.com, on the one hand, and the Underwriters, on the other hand, from
the offering of the Notes pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Depositor and SierraCities.com, on
the one hand, and of the Underwriters, on the other hand, in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Depositor and SierraCities.com,
on the one hand, and the Underwriters, on the other hand, in connection with the
offering of the Notes pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the
Notes pursuant to this Agreement (before deducting expenses) received by the
Depositor and the total underwriting discount received by the Underwriters, in
each case as set forth on the cover of the Prospectus, bear to the aggregate
initial offering price of the Notes as set forth on the cover.
The relative fault of the Depositor and SierraCities.com, on the one
hand, and the Underwriters, on the other hand, shall be determined by reference
to, among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Depositor or SierraCities.com or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
28
<PAGE> 29
The Depositor, SierraCities.com and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section were
determined by pro rata allocation (even if the Underwriters are treated as one
entity for such purposes) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section.
The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever, based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Notes underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of any such untrue or alleged
untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Depositor, each person who signed the Registration
Statement, and each person, if any, who controls the Depositor or
SierraCities.com within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as the Depositor and
SierraCities.com. The Underwriters' respective obligations to contribute
pursuant to this Section are several in proportion to the principal amount of
Notes set forth opposite their respective names in Schedule A and not joint.
Section 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Depositor, SierraCities.com and
their respective Affiliates submitted pursuant hereto shall remain operative and
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter or controlling person, or by or on behalf of the Depositor,
SierraCities.com and their respective Affiliates, and shall survive delivery of
the Notes to the Underwriters.
Section 9. Termination of Agreement.
(a) Termination; General. The Representative may terminate this
Agreement, by notice to the Depositor and SierraCities.com, at any time at or
prior to the Closing Time (i) if there has been, since the time of execution of
this Agreement or since the respective dates as of which information is given in
the Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Depositor,
29
<PAGE> 30
SierraCities.com or SierraCities.com and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, (ii) if
there has occurred any material adverse change in the financial markets in the
United States, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the
Representative, impracticable to market the Notes or to enforce contracts for
the sale of the Notes, (iii) if trading in any securities of the Depositor or
SierraCities.com has been suspended or materially limited by the Commission or
if trading generally on the American Stock Exchange or the New York Stock
Exchange or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the National Association of Securities Dealers,
Inc. or any other governmental authority or (iv) if a banking moratorium has
been declared by either Federal, New York or Texas authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.
Section 10. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at Closing Time to purchase the Notes which it or
they are obligated to purchase under this Agreement (the "Defaulted
Securities"), the Representative shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representative shall not have completed
such arrangements within such 24-hour period, then:
(a) if the amount of Defaulted Securities does not exceed
10% of the aggregate principal amount of the Notes to be purchased
hereunder, each of the non-defaulting Underwriters shall be obligated,
severally and not jointly, to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder
bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the amount of Defaulted Securities exceeds 10% of the
aggregate principal amount of the Notes to be purchased hereunder, this
Agreement shall terminate without liability on the part of any
non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement, either the Representative or the Depositor shall have the
right to postpone Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration
30
<PAGE> 31
Statement or Prospectus or in any other documents or arrangements. As used
herein, the term "Underwriter" includes any person substituted for an
Underwriter under this Section.
Section 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representative at North Tower, World
Financial Center, New York, New York 10281-1201, attention of Theodore F. Breck;
notices to the Depositor or SierraCities.com shall be directed to it at 600
Travis Street, Houston, Texas 77002, Attention: Sandy Ho (in the case of
SierraCities.com) or to the Depositor at 600 Travis Street, Houston, Texas
77002, Attention: E. Roger Gebhart (in the case of the Depositor).
Section 12. Parties. This Agreement shall inure to the benefit of and
be binding upon each of the Underwriters, the Depositor, SierraCities.com and
their respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Underwriters, the Depositor, SierraCities.com and their respective
successors and the controlling persons, directors and officers referred to in
Sections 6 and 7 and their heirs and legal representatives any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the
Underwriters, the Depositor, SierraCities.com and their respective successors,
and the controlling persons, directors and officers referred to in Sections 6
and 7 and their heirs and legal representatives and for the benefit of no other
person, firm or corporation. No purchaser of Notes from any Underwriter shall be
deemed to be a successor by reason merely of such purchase.
Section 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 14. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not effect the
construction hereof.
31
<PAGE> 32
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Depositor and SierraCities.com a
counterpart hereof, whereupon this instrument, along with all counterparts, will
become a binding agreement among the Underwriters, the Depositor and
SierraCities.com in accordance with its terms.
Very truly yours,
FIRST SIERRA RECEIVABLES III, INC.
By: /s/ E. Roger Gebhart
------------------------------------
E. Roger Gebhart
Vice President
SIERRACITIES.COM INC.
By: /s/ E. Roger Gebhart
------------------------------------
E. Roger Gebhart
Vice President
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Theodore F. Breck
-----------------------------------
Theodore F. Breck
Authorized Signatory
For itself and as Representative of the other Underwriters named in
Schedule A hereto.
<PAGE> 33
SCHEDULE A
<TABLE>
<CAPTION>
Principal Amount of
Principal Amount of Principal Amount of Class B
Name of Underwriter Class A-1 Notes Class A-2 Notes Notes
- ------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................... $ 63,000,000 $ 83,600,000 $ 14,052,729.00
First Union Securities, Inc................... 12,000,000 16,000,000 0
------------------- ------------------- -------------------
Total $ 75,000,000.00 $ 99,600,000.00 $ 13,306,118.00
=================== =================== ===================
</TABLE>
SA-1
<PAGE> 1
EXHIBIT 4.1
Execution Copy
================================================================================
INDENTURE
by and among
FIRST SIERRA HEALTHCARE EQUIPMENT CONTRACT TRUST 2000-1, A COMMON
LAW TRUST ACTING THROUGH ITS TRUSTEE, CHRISTIANA BANK & TRUST
COMPANY, NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS OWNER TRUSTEE
as Issuer,
SIERRACITIES.COM INC.
as Servicer
and
BANKERS TRUST COMPANY
as the Indenture Trustee
-----------------------------------------
Dated as of March 1, 2000
-----------------------------------------
First Sierra Healthcare Equipment Contract Trust 2000-1
Healthcare Equipment Contract Backed Notes
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <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 Pre-Funding Account and Capitalized Interest Account..................................7
Section 3.03 Investment of Monies Held in the Accounts; Subaccounts................................8
Section 3.04 Reserve Account.......................................................................8
Section 3.05 Disbursements From Collection Account.................................................9
Section 3.06 Statements to Noteholders............................................................11
Section 3.07 Compliance With Withholding Requirements.............................................13
Section 3.08 Letters of Credit; Letter of Credit Deposit Account..................................13
Section 3.09 Supplemental Interest Reserve Account................................................14
ARTICLE IV. REMOVAL OF PLEDGED PROPERTY; SUBSTITUTION OF
CONTRACTS................................................................................15
Section 4.01 Removal of Non-Conforming Pledged Property...........................................15
Section 4.02 Substitution of Contracts............................................................15
Section 4.03 Removal of Pledged Property Following Enforcement of Source Agreement Rights.........17
Section 4.04 Release of Pledged Property..........................................................17
ARTICLE V. THE NOTES ............................................................................................18
Section 5.01 The Notes............................................................................17
Section 5.02 Initial Issuance of Notes............................................................19
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>
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE VI. THE TRUST ...................................................................................21
Section 6.01 Liability of the Trust.......................................................21
Section 6.02 Limitation on Liability of the Trust.........................................22
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...............................................25
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............................29
Section 6.19 Capital Expenditures.........................................................29
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.........................................................31
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.............................35
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..............38
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
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE VIII. EVENTS OF DEFAULT; REMEDIES..........................................................39
Section 8.01 Events of Default......................................................39
Section 8.02 Acceleration of Maturity, Rescission and Annulment.....................41
Section 8.03 Remedies...............................................................41
Section 8.04 Notice of Event of Default.............................................42
Section 8.05 Exercise of Power by Indenture Trustee.................................42
Section 8.06 Indenture Trustee May File Proofs of Claim.............................42
Section 8.07 Allocation of Money Collected..........................................43
Section 8.08 Waiver of Events of Default............................................43
Section 8.09 Limitation On Suits....................................................44
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.........................................45
Section 8.13 Delay or Omission Not Waiver...........................................45
Section 8.14 Control by Majority Holders............................................45
Section 8.15 Sale of Pledged Property...............................................45
Section 8.16 Action on Notes........................................................46
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.............48
Section 10.03 Reports by the Trust...................................................48
Section 10.04 Reports by Indenture Trustee...........................................49
Section 10.05 Compliance Certificates and Opinions, etc..............................49
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...........................................................51
Section 11.05 Governing Law..........................................................51
Section 11.06 Notices................................................................51
Section 11.07 Severability of Provisions.............................................51
Section 11.08 Conflict with Trust Indenture Act......................................52
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
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C>
Section 11.15 Calculations..........................................................52
Section 11.16 No Proceedings........................................................52
</TABLE>
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 Class B Notes
Exhibit E - Default Notice
Exhibit F - Form of Drawing Certificate
Annex A - Defined Terms
<PAGE> 6
FIRST SIERRA HEALTHCARE EQUIPMENT CONTRACT TRUST 1999-2
Reconciliation and Tie between the Indenture
dated as of March 1, 2000 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; 4.04
(b)(2) 10.04
(c) 10.03; 10.04
(d) 10.04
314(a) 10.03; 3.05; 6.06
(b) Not Applicable
(c) 4.04
(c)(1) 10.05
(c)(2) 10.05
(c)(3) 10.05
(d) 4.04
(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) 8.03; 8.14
(a)(1)(B) 8.08
317(a)(1) 8.03
(a)(2) 8.04
(b) 6.09
318(a) 11.08
(c) 11.08
</TABLE>
<PAGE> 7
This INDENTURE, dated as of March 1, 2000, is made by and
among First Sierra Healthcare Equipment Contract Trust 2000-1 (the "Issuer" or
the "Trust"), a common law trust acting through its trustee, Christiana Bank &
Trust Company, not in its individual capacity but solely as Owner Trustee(the
"Owner Trustee"), SierraCities.com, Inc., as servicer (in such capacity, the
"Servicer") and in its individual capacity (in such capacity "SierraCities.com")
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, to secure
payment of principal of and interest on, and any other amounts owing in respect
of the Notes, equally and ratably, without prejudice, priority or distinction
except as set forth herein, and to secure compliance with the provision of this
Indenture, 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, whether now owned or hereafter acquired 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, Early Termination Contract
Proceeds, Liquidation Proceeds, Source Repurchase Price 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
2
<PAGE> 9
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 and the related Equipment, (f)
all of the Trust's right, title and interest in and to, and rights under the
Receivables Transfer Agreement, each Subsequent 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, the
Supplemental Interest Reserve Account, the Pre-Funding Account, the Capitalized
Interest Account and the Letter of Credit Deposit Account, held by the Indenture
Trustee, and all amounts on deposit in the Lockbox Account, (h) all of the
Trust's right, title and interest in and to, and rights and claims under, the
Source Agreement and the Source Agreement Rights, including but not limited to,
all rights and claims under the Guaranty, to the extent they relate to any
Contract and any Equipment covered by the Contracts, (i) all of the trust's
right, title and interest in and to the Letters of Credit, including the right
to draw thereon and (j) all present and future claims, demands, causes and
choses in action in respect of any or all of the foregoing and all payments on
or under and all proceeds of every kind and nature whatsoever in respect of any
or all of the foregoing, including all proceeds of the conversion, voluntary or
involuntary, into cash or other liquid property, all cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of any and
every kind and other forms of obligations and receivables, instruments,
securities, financial assets and other property that at any time constitute all
or part of or are included in the 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 or on behalf of 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 and the Class B
Notes in authorized denominations equal in the aggregate to the Initial Class A
Note Principal Balance and the Initial Class B 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;
3
<PAGE> 10
(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;
(g) Executed copies of the Transaction Documents executed on
or prior to the Closing Date;
(h) Copies of resolutions of the Board of Directors of
SierraCities.com 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 SierraCities.com;
(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 SierraCities.com in the State of Delaware and the good standing of
SierraCities.com in the State of 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)
"Aaa" to the Class A-1 Notes, (ii) "Aaa" to the Class A-2 Notes and (iii) "Aa3"
to the Class B Notes;
(m) A letter from DCR that it has assigned a rating of (i)
"AAA" to the Class A-1 Notes, (ii) "AAA" to the Class A-2 Notes and (iii) "AA-"
to the Class B Notes;
(n) Opinions of counsel to SierraCities.com 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
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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
SierraCities.com and the Depositor hereunder, under the Receivables Transfer
Agreement and under the Servicing 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
SierraCities.com, the Depositor, the Servicer, the Indenture Trustee, the Owner
Trustee or any other Person, except as set forth in paragraph (b) below and as
may be set forth in the Transaction Documents.
(b) Neither SierraCities.com, 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 SierraCities.com 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, 5.03 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 SierraCities.com 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 SierraCities.com 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 Class B
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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 Class B 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 of or permit to be taken, any
action that is inconsistent with the treatment of the Class A Notes or of the
Class B 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 SierraCities.com,
any other obligor upon the Notes or any Affiliate of SierraCities.com 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 Healthcare Equipment Contract Backed Notes
2000-1 Collection Account, in trust for the registered holders of Healthcare
Equipment Contract Backed Notes, Series 2000-1." 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
SierraCities.com pursuant to Section 4.01 hereof; and
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(iv) Investment Earnings, as described in Section
3.03(a) hereof and except as may be set forth herein.
(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 Business Day prior to the related Payment Date. The Servicer
shall instruct the Indenture Trustee in writing to deposit the portion of any
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.
(d) 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 Pre-Funding Account and Capitalized Interest
Account. (a) The Indenture Trustee shall establish and maintain the Pre-Funding
Account as an Eligible Bank Account in the name of "First Sierra Healthcare
Equipment Contract Backed Notes 2000-1 Pre-Funding Account, in trust for the
registered holders of Healthcare Equipment Contract Backed Notes." The Indenture
Trustee will make or permit withdrawals from the Pre-Funding Account only as
provided in this Indenture. On the Closing Date, the Indenture Trustee will
deposit from the proceeds of the sale of the Notes, the Original Pre-Funded
Amount in the Pre-Funding Account. On each Subsequent Transfer Date occurring
during the Pre-Funding Period, upon satisfaction of each of the conditions set
forth in Section 2.02 of the Receivables Transfer Agreement with respect to the
transfer of Subsequent Contracts to the Trust, the Servicer, on behalf of the
Trust, shall instruct the Indenture Trustee in writing to withdraw from the
Pre-Funding Account and (i) release to the Trust an amount equal to 97.65% the
aggregate Discounted Contract Principal Balance of the Subsequent Contracts to
be transferred to the Trust as of the applicable Subsequent Cut-Off Date and
(ii) deposit into the Reserve Account an amount equal to 2.35% of the aggregate
Discounted Contract Principal Balance of the Subsequent Contracts to be
transferred to the Trust as of the applicable Subsequent Cut-Off Date. In
addition, on or prior to each Payment Date, all income and gain realized from
investment of funds deposited in the Pre-Funding Account shall be transferred to
the Capitalized Interest Account prior to the withdrawal of the Capitalized
Interest Requirement from the Capitalized Interest Account. Any amount remaining
on deposit in the Pre-Funding Account at the end of the Pre-Funding Period, less
any undistributed investment earnings on deposit in the Pre-Funding Account,
shall be distributed by the Indenture Trustee on the Payment Date immediately
following the end of the Pre-Funding Period to the Noteholders as a prepayment
of principal.
(b) The Indenture Trustee shall establish and maintain the
Capitalized Interest Account as an Eligible Bank Account in the name of "First
Sierra Healthcare Equipment Contract Backed Notes 2000-1 Capitalized Interest
Account, in trust for the registered holders of Healthcare Equipment Contract
Backed Notes." The Indenture Trustee shall make or permit
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withdrawals from the Capitalized Interest Account only as provided in this
Indenture. On the Closing Date, the Indenture Trustee will deposit from the
proceeds of the sale of the Notes, the Capitalized Interest Account Deposit in
the Capitalized Interest Account. On each Payment Date occurring during the
Pre-Funding Period only, the Indenture Trustee shall transfer from the
Capitalized Interest Account into the Collection Account the Capitalized
Interest Requirement, if any, for such Payment Date. If, on any Payment Date,
the amount on deposit in the Capitalized Interest Account exceeds the
Capitalized Interest Required Reserve Amount, the Indenture Trustee will
distribute such excess to SierraCities.com. Any amount remaining on deposit in
the Capitalized Interest Account on the Payment Date immediately following the
end of the Pre-Funding Period (after taking into account any transfer to be made
from the Capitalized Interest Account into the Collection Account on such
Payment Date) shall be released by the Indenture Trustee to SierraCities.com,
and the Capitalized Interest Account shall thereafter be closed.
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. Except as otherwise specified in the
Transaction Documents, the Trust Certificate Holder shall be entitled to the
Investment Earnings on amounts held in the Accounts as earned. In the absence of
any direction from the Servicer, amounts on deposit in each Account shall be
invested in money market funds as described in clause (a)(iv) in the definition
of "Eligible Investments" in Annex A hereto.
(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 Healthcare Equipment Contract Backed Notes
2000-1 Reserve Account, in trust for the registered holders of Healthcare
Equipment Contract Backed Notes, Series 2000-1." 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.
(b) On the Closing Date and on each Subsequent Transfer Date,
the Indenture Trustee shall deposit the amount necessary so that the Requisite
Amount is on deposit in the Reserve Account from the proceeds of the sale of the
Notes or from amounts released from the Pre-Funding Account on the related
Subsequent Transfer Date. Amounts on deposit in the Reserve Account shall be
invested in accordance with Section 3.03 hereof and the net income from such
investment shall be deposited into the Reserve Account.
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(c) On or prior to each Payment Date, the Indenture Trustee
shall withdraw from the Reserve Account the amount indicated on the Monthly
Statement for the related Collection Period, equal to the lesser of (x) the
amount then on deposit in the Reserve Account and (y) the aggregate of all
Source Repurchase Prices for all Contracts which are required to be repurchased
pursuant to the Source Agreement during the related Collection Period, less any
amount received from the Source or from the Guarantor with respect to such
Contracts during the related Collection Period. All amounts withdrawn from the
Reserve Account to repurchase Contracts shall be deposited into the Collection
Account for distribution in accordance with the priorities set forth in Section
3.05(b) hereof.
(d) Following the payment in full of interest and principal on
the Notes, the Trust Operating Expenses and all fees and expenses payable to the
Servicer and the Trustee pursuant to the terms of the Transaction Documents, all
amounts then remaining on deposit in the Reserve Account shall be distributed at
the written instruction of the Servicer.
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:
(i) To SierraCities.com by wire transfer of
immediately available funds, the aggregate amount of any Initial Unpaid
Amounts and Servicing Charges 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); and
(B) An amount equal to the Servicer Fee
owing on such Payment Date, plus any unpaid Servicer Fee owing
from prior Collection Periods;
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(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
Supplemental Interest Reserve Account with respect to such Payment
Date, to the Class A-1 Noteholders, the Class A-1 Note Interest for the
related Collection Period and to the Class A-2 Noteholders, the Class
A-2 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
Supplemental Interest Reserve Account with respect to such Payment Date
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 on any Class A Maturity Date from amounts,
transferred, from the Supplemental Interest Reserve Account with
respect to such Payment Date, first until the Class A-1 Note Principal
Balance has been reduced to zero, to the Class A-1 Noteholders, the
Class A Principal Payment Amount for such Payment Date and second,
after the Class A-1 Note Principal Balance has been reduced to zero, to
the Class A-2 Noteholders, the Class A Principal Payment Amount until
the Class A-2 Note Principal Balance has been reduced to zero;
(ix) From the Available Funds then remaining in the
Collection Account and on the Class B Maturity Date from amounts,
transferred, from the Supplemental Interest Reserve Account with
respect to such Payment Date, 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;
(x) From the Available Funds remaining in the
Collection Account, to the Supplemental Interest Reserve Account, the
amount necessary to maintain the amount on deposit therein at the
Supplemental Interest Required Amount for such Payment Date;
(xi) 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
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(xii) 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 and the Class B Percentage
Interest in the case of the Class B 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 two Business Days 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 or the
Initial Class B 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 or a Class B Noteholder, the amount of such payment
allocable to such Noteholder's Percentage Interest of the Class A
Principal Payment Amount or Class B 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, or Class B Note 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 and the Class
A-2 Note Principal Balance), the aggregate Class B Note Principal
Balance, the Class A Percentage, the Class B Percentage, the Class A
Note Factor, the Class B Note Factor, the Pool Factor and the Aggregate
Discounted Contract 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 Defaulted Contract Recoveries for
the related Collection Period and the Aggregate Discounted Contract
Balances for all Contracts that became Defaulted Contracts during the
related Collection Period;
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(vii) The total number of Contracts and the Aggregate
Discounted Contract Balances thereof, together with the number and
Aggregate Discounted Contract 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; and
(viii) The amount on deposit in the Pre-Funding
Account, the Capitalized Interest Account, the Reserve Account, the
Supplemental Interest Reserve Account and the Letter of Credit Deposit
Account, in each case after giving effect to all deposits and
withdrawals from such accounts on the related Payment Date.
(b) By January 31 of each calendar year, commencing January
31, 2001, 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
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) [Reserved]
(d) The Indenture Trustee shall promptly send to each
Noteholder and to the Rating Agencies in writing:
(i) Notice of any breach by SierraCities.com, the
Depositor, the Trust, any Seller 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 quarterly 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.
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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 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.
Section 3.08 Letters of Credit; Letter of Credit Deposit
Account. (a) The Servicer shall establish and maintain with the Indenture
Trustee an Eligible Bank Account (the "Letter of Credit Deposit Account") for
the benefit of the Noteholders as an Eligible Bank Account, in the name of
"First Sierra Healthcare Equipment Contract Backed Notes 2000-1 Letter of Credit
Deposit Account, in trust for the registered holders of Healthcare Equipment
Contract Backed Notes, Series 2000-1." At the Servicer's written direction, the
Indenture Trustee shall make withdrawals from the Letter of Credit Deposit
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
Letter of Credit Deposit Account and all proceeds thereof. The Letter of Credit
Deposit Account shall be under the sole dominion and control of the Indenture
Trustee for the benefit of the Noteholders. Amounts on deposit in the Letter of
Credit Deposit Account shall be invested in accordance with Section 3.03 hereof.
Any net income from such investment shall be deposited into the Letter of Credit
Deposit Account.
(b) Upon the receipt of written notice from the Servicer, any
Rating Agency, the Trust, the Depositor or the Owner Trustee of the occurrence
of a Letter of Credit Draw Event with respect to one or both of the Letters of
Credit which notice shall specify which Letter of Credit Draw Event has
occurred, or in the event that a Responsible Officer of the Indenture Trustee
obtains actual knowledge that a Letter of Credit Draw Event has occurred, the
Indenture Trustee shall execute a Drawing Certificate and submit such Drawing
Certificate to the related Letter of Credit Confirming Bank as a claim for a
draw in the full amount of the related Letter of Credit (such amount, the
"Letter of Credit Draw"). Upon receipt of Letter of Credit Drawings from a
Letter of Credit Confirming Bank, the Indenture Trustee shall immediately
deposit such Letter of Credit Draw into the Letter of Credit Deposit Account.
(c) On or prior to each Payment Date, the Indenture Trustee
shall withdraw from the Letter of Credit Deposit Account the amount indicated on
the Monthly Statement for the related Collection Period, equal to the lesser of
(x) the amount then on deposit in the Letter of Credit Deposit Account and (y)
the sum of (i) the aggregate of all Source Purchase Prices for all Contracts
which have been defaulted during the related Collection Period, less (ii) any
amount received from the Source or from the Guarantor with respect to such
Contracts during the related Collection Period and less (iii) any amount
withdrawn from the Reserve Account with respect to such Contracts during the
related Collection Period. All amounts withdrawn from the Letter of Credit
Deposit Account to repurchase Contracts shall be deposited into the Collection
Account for distribution in accordance with the priorities set forth in Section
3.05(b) hereof.
(d) Following the payment in full of interest and principal on
the Notes, the Trust Operating Expenses and all fees and expenses payable to the
Servicer and the Trustee
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pursuant to the terms of the Transaction Documents, all amounts then remaining
on deposit in the Letter of Credit Deposit Account shall be distributed at the
written instruction of the Servicer.
Section 3.09 Supplemental Interest Reserve Account.
(a) The Servicer shall establish and maintain with the
Indenture Trustee an Eligible Bank Account (the "Supplemental Interest Reserve
Account") for the benefit of the Noteholders as an Eligible Bank Account, in the
name of "First Sierra Healthcare Equipment Contract Backed Notes 2000-1
Supplemental Interest Reserve Account, in trust for the registered holders of
Healthcare Equipment Contract Backed Notes, Series 2000-1." At the Servicer's
written direction, the Indenture Trustee shall make withdrawals from the
Supplemental Interest 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 Supplemental Interest Reserve Account and all
proceeds thereof. The Supplemental Interest Reserve Account shall be under the
sole dominion and control of the Indenture Trustee for the benefit of the
Noteholders.
(b) On each Payment Date prior to the first Payment Date on
which the amount on deposit in the Supplemental Interest Reserve Account equals
the Supplemental Interest Required Amount, the Indenture Trustee, in accordance
with the distributions set forth in Section 3.05(b) herein, shall deposit all
Available Funds remaining in the Collection Account on such Payment Date after
making the distributions pursuant to Section 3.05(b)(i) through (ix) hereof into
the Supplemental Interest Reserve Account until the amount on deposit therein is
equal to the Supplemental Interest Required Amount. After the first Payment Date
on which amounts on deposit in the Supplemental Interest Reserve Account are
equal to the Supplemental Interest Required Amount, Available Funds shall no
longer be deposited therein. Amounts on deposit in the Supplemental Interest
Reserve Account shall be invested in accordance with Section 3.03 hereof and the
net income from such investment shall be deposited into the Supplemental
Interest Reserve Account for application on future Payment Dates.
(c) On each Payment Date, to the extent that the related
Monthly Statement discloses that Available Funds for such Payment Date are not
sufficient to make distributions of (i) Note Interest on such Payment Date (ii)
on a Class A Maturity Date, the amount necessary to reduce the Note Principal
Balance of the related Class A Note, to zero and (iii) on the Class B Maturity
Date, the amount necessary to reduce the Class B Note Principal Balance to zero,
the Indenture Trustee shall withdraw from Supplemental Interest Reserve Account,
to the extent necessary, the amounts, if any, necessary to fund such
deficiencies and shall distribute such amounts in the priorities set forth in
Section 3.05(b) hereof.
(d) Following the payment in full of interest and principal on
the Notes, all amounts then remaining on deposit in the Supplemental Interest
Reserve Account shall be distributed at the instruction of the Servicer.
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ARTICLE IV.
REMOVAL OF PLEDGED
PROPERTY; SUBSTITUTION OF CONTRACTS
Section 4.01 Removal of Non-Conforming Pledged Property. (a)
Upon discovery by the Trust, the Servicer 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 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 SierraCities.com's
election, any earlier date), SierraCities.com 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 SierraCities.com 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 SierraCities.com 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 SierraCities.com.
(c) Upon the removal of a Contract and the related Equipment
and the payment of the related Repurchase Amount 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 released to the Trust.
Section 4.02 Substitution of Contracts. (a) Subject to the
provisions of Sections 4.02(b) through (d) hereof, SierraCities.com, 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)
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the filing of any UCC financing statements in accordance with the Filing
Requirements necessary to perfect 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 related Cut-Off
Date, the sum of the Aggregate Discounted Contract Balances (as of the
related Substitute Cut-Off Date) of such Substitute Contracts would
equal or exceed ten percent (10%) of the sum of the Aggregate
Discounted Contract Balance of all Contracts as of the related Cut-Off
Dates;
(ii) as of the related Substitute Cut-Off Date, the
Substitute Contracts then being transferred have a Discounted Contract
Balance less than the Discounted Contract Balance of the Contracts
being replaced or have a maturity date later than the latest maturity
date of any Contract then held by the Trust; 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 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 SierraCities.com.
Section 4.03 Removal of Pledged Property Following Enforcement
of Source Agreement Rights. (a) In the event that a Contract is repurchased
due to enforcement of the Source Agreement Rights by the Servicer pursuant to
the terms of the Servicing Agreement, upon the deposit of the related Source
Repurchase Price to the Collection Account (either directly by the Servicer
through enforcement of the Source's obligations under Source Agreement, or the
Guarantor's obligations under the Guaranty, through a withdrawal from the
Reserve Account or through a withdrawal from the Letter of Credit Deposit
Account, the related Contract shall be removed from Pledged Property. Any such
Contract so removed shall not be deemed to be a Defaulted Contract for purposes
of this Article IV.
(b) Upon the removal of a Contract and the related Equipment
and the deposit of amounts to the Collection Account as described above, the
security interest of the Indenture
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Trustee in such removed Contract, the related Equipment and all proceeds thereon
shall be terminated and the removed Contract and the related Equipment shall be
released to the Trust.
Section 4.04 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 4.04(b) only upon receipt of an Issuer Request
accompanied by an Officer's Certificate, an 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, and the Class B 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. Each Note shall represent a validly issued and binding
obligation of the Trust, 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 and Class
A-2 Notes shall be substantially in the forms set forth in Exhibits C-1 and C-2
hereto, respectively, all Class B Notes shall be substantially in the form set
forth in Exhibit D-1 hereto. Each Note shall be dated the date of its
authentication. Neither the Notes nor the
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Contracts are insured by the Federal Deposit Insurance Corporation or any other
governmental agency.
(b) It is intended that the Notes be registered so as to
participate in a global book-entry system with the Trust, as set forth herein.
The 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, 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, and
the Initial Class B Note Principal Balance, respectively. Upon initial issuance,
the ownership of each such Note shall be registered in the Register in the name
of Cede & Co., or any successor thereto, as nominee for the Trustee.
The Trust and the Indenture Trustee are hereby authorized to
execute and deliver the Representation Letter with the Depository.
With respect to 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 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 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 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 Notes. No Person other than a Noteholder shall
receive a certificate evidencing such 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 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
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 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 Notes may be registered in whatever name or names Noteholders
transferring Notes shall designate, in accordance with the provisions hereof;
provided, however, that any such registration shall be at the expense of the
Servicer.
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(d) Notwithstanding any other provision of this Indenture to
the contrary, so long as any Note is registered in the name of Cede & Co., as
nominee of the Depository, all distributions of principal or interest on such
Notes, as the case may be, and all notices with respect to such 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 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.
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 Class B Notes
executed by the Trust in authorized denominations equaling in the aggregate the
Initial Class A Note Principal Balance and the Initial Class B 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, 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, and Class B 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 Class B Notes) of a like aggregate Class A-1 Percentage Interest,
Class A-2 Percentage Interest, and Class B 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.
(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
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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 a 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) 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.
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, 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 or a Class B Percentage Interest of
not
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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, 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, SierraCities.com 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. 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.
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Section 6.02 Limitation on Liability of the Trust. 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, SierraCities.com, 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, the Noteholders, SierraCities.com, 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. 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)(xii) 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 or a Class B Noteholder in the capacity
of an investor in the Class A Notes or the Class B 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 Class B 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
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(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.
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
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(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.
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.
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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, 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
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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.
(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 an Event of
Servicing Termination 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 other 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:
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(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;
(ii) immediately after giving effect to such
transaction, no Event of Default 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;
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(ii) immediately after giving effect to such
transaction, no Event of Default 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 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.
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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).
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;
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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;
(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% of the Outstanding Amount of the
related Class of Notes, 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 or any Event of Default
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
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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 in respect of the related
Collection Period 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 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
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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;
(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
SierraCities.com, 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
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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 any covenant or the breach
by SierraCities.com 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 SierraCities.com 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 pledgee
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 cause the Indenture Trustee to be paid
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);
(ii) except to the extent otherwise expressly
provided herein, to cause the Indenture Trustee to be reimbursed
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
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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; and
(iii) to cause the Indenture Trustee to be reimbursed
pursuant to Section 3.05(b)(x), 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 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.
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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.
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
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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 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.
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(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:
(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.
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(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 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
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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
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 Payment Date when such amount is due and payable;
(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
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Maturity Date, or the Class B Maturity Date, as the case may be, any remaining
principal owed on the Outstanding Class A-1 Notes, Class A-2 Notes, or Class B
Notes, as the case may be;
(c) any failure on the part of the Trust duly to observe or
perform in any material respect any other covenants or agreements of the Trust
set forth in the Notes, in this Agreement or in any of the Transaction
Documents, as the case may be, or any breach of a representation or warranty of
the Trust set forth in the Transaction Documents, which failure or breach (A)
materially and adversely affects the rights of the Indenture Trustee or the
Noteholders and (B) continues unremedied for a period of 30 days after the
earlier to occur of (x) the date on which written notice of such failure or
breach, requiring the situation giving rise to such failure or breach to be
remedied, shall have been given to an Authorized Officer by the Indenture
Trustee or to an Authorized Officer or a Responsible Officer of the Indenture
Trustee by the Servicer or any Noteholders or (y) the date on which any
Authorized Officer is required pursuant to the terms of the Transaction
Documents to provide notice to the Noteholders of any such failure or breach;
(d) the Trust shall consent to the appointment of a custodian,
receiver, trustee or liquidator (or other similar official) of itself, or of a
substantial part of its property, or shall admit in writing its inability to pay
its debts generally as they come due, a court of competent jurisdiction shall
determine that the Trust is generally not paying its debts as they come due or
the Trust shall make a general assignment for the benefit of creditors;
(e) the Trust shall file a voluntary petition in bankruptcy or
a voluntary petition or an answer seeking reorganization in a proceeding under
any bankruptcy laws (as now or hereafter in effect) or an answer admitting the
material allegation of a petition filed against the Trust in any such
proceeding, or the Trust shall, by voluntary petition, answer or consent, seek
relief under the provisions of any now existing or future bankruptcy or other
similar law providing for the reorganization or winding up of debtors, or
providing for an agreement, composition, extension or adjustment with its
creditors; or
(f) a petition against the Trust in a proceeding under
applicable bankruptcy laws or other insolvency laws, as now or hereafter in
effect, shall be filed and shall be consented to by the Trust or shall not be
stayed, withdrawn or dismissed within 60 days thereafter, or if, under the
provisions of any law providing for reorganization or winding-up of debtors
which may apply to the Trust, any court of competent jurisdiction shall assume
jurisdiction, custody or control of the Trust, or any substantial part of its
property, and such jurisdiction, custody or control shall remain in force
unrelinquished, unstayed or unterminated for a period of 60 days.
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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 Majority
Holders, 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 Majority
Holders, 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 Class B Notes;
(ii) the principal of any of the Class A Notes or the
Class B 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 Class B 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.
Section 8.03 Remedies. If an Event of Default shall have
occurred and be continuing, the Indenture Trustee, at the written direction of
the Majority Holders, may do one or more of the following:
(i) 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;
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(ii) 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;
(iii) 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
(iv) 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;
(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
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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:
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 and Class A-2 Note Interest to the Class A-2
Noteholders, pari passu;
Third: To the payment of the Class B Note
Interest to the Class B Noteholders;
Fourth: To the payment of the outstanding Class A
Note Principal Balance to the Class A Noteholders, pari passu;
Fifth: To the payment of the outstanding Class B
Note Principal Balance to the Class B Noteholders;
Sixth: 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
Seventh: 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 Outstanding Amount 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).
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(b) A copy of each waiver pursuant to Section 8.08(a) shall be
furnished by the Servicer 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:
(a) such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(b) the Majority Holders 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 Majority Holders;
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
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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.
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 Majority Holders. The Majority Holders 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.
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(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 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 SierraCities.com, the Servicer,
the Indenture Trustee and the Trust created hereby shall terminate 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 and the Class B Note
Principal Balance to zero; 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
SierraCities.com 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 and the Class B 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 Balance is less than ten percent (10%) of the sum of the
Aggregate Discounted Contract Balance of the Initial Contracts as of the Closing
Date plus the aggregate Discounted Contract Principal Balance of all Subsequent
Contracts as of the related Subsequent Transfer 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 and the Class B Note Principal Balance
and (2) the Class A Note Interest
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and the Class B 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).
(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 Class B
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 Class B
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
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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.
(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;
(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; and
(iv) supply to the Indenture Trustee a report that
complies with TIA Section 314(a)(4), as set forth in Section 6.06
hereof.
(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.
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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,
2000, 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 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, SierraCities.com and the Indenture
Trustee, without the consent of any of the Noteholders, to cure any ambiguity
herein; provided, however, that such action
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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, SierraCities.com 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.
(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
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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 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, Christiana Bank & Trust Company, at Greenville
Center, 3801 Kennett Pike, Greenville, Delaware 19807, Attention: Corporate
Trust Administration, telephone (302) 421-5800, telecopy (302) 421-5815, (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 Moody's,
99 Church Street, New York, New York 10004, Attention: ABS Monitoring Group,
telephone (212) 553-0300, telecopy (212) 553-3856, (e) 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 (f) 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.
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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 TIA, 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.
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, 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, SierraCities.com,
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.
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IN WITNESS WHEREOF, the Trust, the Servicer, SierraCities.com
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 HEALTHCARE EQUIPMENT
CONTRACT TRUST 2000-1, a common law trust
acting through its trustee, CHRISTIANA BANK
& TRUST COMPANY, not in its individual
capacity but solely as owner trustee, as
Issuer
By /s/ Louis W. Geibel
-------------------------------------------
Louis W. Geibel
Vice President
SIERRACITIES.COM INC., as Servicer
By /s/ E. Roger Gebhart
-------------------------------------------
E. Roger Gebhart
Executive Vice President
BANKERS TRUST COMPANY, not in its individual
capacity but solely as Indenture Trustee
By /s/ Patricia Russo
-------------------------------------------
Patricia Russo
Vice President
[Signature Page to Indenture]
<PAGE> 60
FIRST SIERRA HEALTHCARE EQUIPMENT CONTRACT TRUST
SERIES 2000-1
ANNEX A -- DEFINED TERMS
"Account" means any account established pursuant to Article III of the
Indenture.
"Addition Notice" means, with respect to any transfer of Subsequent
Contracts to the Trust pursuant to Section 2.02(c) of the Receivables Transfer
Agreement, notice of a Seller's election to transfer Subsequent Contracts to the
Trust, such notice to designate the related Subsequent Transfer Date and the
approximate aggregate Discounted Contract Principal Balance of the Subsequent
Contracts to be transferred on such Subsequent Transfer Date.
"Advance Payment" means, with respect to a Contract and a Collection
Period, any Scheduled Payment, Final Scheduled Payment or portion of either made
by or on behalf of an Obligor and received by the Servicer during such
Collection Period, which Scheduled Payment, Final Scheduled Payment or portion
thereof does not become due until a subsequent Collection Period.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control," when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Aggregate Discounted Contract Principal Balance" means, at any time of
determination, an amount equal to the sum of the Discounted Contract Principal
Balances of all Contracts then comprising the Pledged Property.
"Aggregate Initial Note Principal Balance" means the aggregate of the
Initial Class A Note Principal Balance and the Initial Class B Note Principal
Balance.
"Aggregate Note Principal Balance" means, as of any date of
determination, the aggregate of the Class A Note Principal Balance and the Class
B Note Principal Balance Outstanding on such date of determination.
"Applicable Securities" means, for so long as the Class A Note
Principal Balance is greater than zero, the Class A Notes; following reduction
of the Class A Note Principal Balance to zero, and for so long as the Class B
Note Principal Balance is greater than zero, the Class B Notes; following
reduction of the Class B Note Principal Balance to zero, the Trust Certificate.
"Applicant" has the meaning specified in Section 5.06 of the Indenture.
"Authorized Officer" means, with respect to the Issuer and the
Servicer, any officer or agent acting pursuant to a power of attorney of the
Owner Trustee or the Servicer, as applicable, who is authorized to act for the
Owner Trustee or the Servicer, as applicable, in
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matters relating to the Trust and who is identified on the list of Authorized
Officers delivered by each of the Owner Trustee and the Servicer to the
Indenture Trustee on the Closing Date (as such list may be modified or
supplemented from time to time thereafter).
"Available Funds" means, with respect to a Payment Date, (i) all
amounts held in the Collection Account on the related Determination Date for the
related Collection Period, after taking into account all deposits to be made on
such Determination Date, (ii) proceeds of any Servicer Advances to be made no
later than the Business Day immediately prior to the Payment Date, other than
any such amounts which relate to any subsequent Collection Period, (iii) any
Repurchase Amounts to be deposited by the Trust Certificate Holder two Business
Days prior to the Payment Date pursuant to Section 4.01 of the Indenture (iv) on
each Payment Date on or prior to the Payment Date in June 2000, the Capitalized
Interest Requirement, if any, and (v) on the Payment Date immediately following
the termination of the Pre-Funding Period, the amount on deposit in the
Pre-Funding Account at such time.
"Bankruptcy Code" means the Bankruptcy Code of 1978, as amended, as
codified under Title 11 of the United States Code, and the Bankruptcy Rules
promulgated thereunder, as the same may be in effect from time to time.
"Base Principal Amount" means, with respect to any Payment Date, an
amount equal to the sum of (i) the excess of (x) the Aggregate Discounted
Contract Principal Balances of the Contracts as of the close of business on the
last day of the second preceding Collection Period over (y) the Aggregate
Discounted Contract Principal Balances of the Contracts as of the close of
business on the last day of the immediately preceding Collection Period plus
(ii) on the Payment Date immediately following the termination of the
Pre-Funding Period, the amount on deposit in the Pre-Funding Account at such
time.
"Benefit Plan" has the meaning as specified in Section 5.03(f) of the
Indenture.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in New York, New York, Houston, Texas, Greenville,
Delaware, in the city and State where the Indenture Trustee's principal
corporate trust office is located, or in the city and State where the Servicer's
principal office is located, are authorized or obligated by law, executive order
or governmental decree to be closed; provided, however, that the Servicer shall,
from time to time, deliver written notice to the other parties hereto of any
differences in Business Days between the States of Texas (or any other state
where the Servicer has its principal office) and New York.
"Capitalized Interest Account" means the account established and
maintained pursuant to Section 3.02(b) of the Indenture.
"Capitalized Interest Account Deposit" means $12.79.
"Capitalized Interest Requirement" means with respect to any Payment
Date occurring during the Pre-Funding Period, an amount equal to interest for
the related Interest Accrual Period on the amount on deposit in the Pre-Funding
Account, calculated at the sum of the weighted average of the Note Rates on the
Notes.
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"Capitalized Interest Required Reserve Amount" means on any Payment
Date, an amount equal to the product of (i) the Discount Rate less the sum of
(a) the Servicing Fee Rate and (b) 2.5%, (ii) the amount on deposit in the
Pre-Funding Account as of such Payment Date, and (iii) a fraction, the numerator
of which is the number of days remaining until the Payment Date immediately
following the termination of the Pre-Funding Period and the denominator of which
is 360.
"Calculation Date" means, with respect to a Collection Period, the
close of business on the last day of such Collection Period, or if such day is
not a Business Day, the immediately succeeding Business Day.
"Casualty Loss" means, with respect to a Contract, any loss, theft,
condemnation, governmental taking, destruction, or damage beyond repair of any
item of Equipment subject thereto which results, in accordance with the terms of
the Contract, in a reduction in the number or amount of any future Scheduled
Payments due thereunder or in the termination of the Obligor's obligation to
make future Scheduled Payments thereunder.
"Certificate Register" and "Certificate Registrar" shall mean the
register mentioned and the registrar appointed pursuant to Section 3.4 of the
Trust Agreement.
"Class" means all of the Class A-1 Notes, and all of the Class A-2
Notes and all of the Class B Notes, as applicable.
"Class A Base Principal Distribution Amount" means with respect to any
Payment Date, the sum of (a) the product of (i) the Class A Percentage and (ii)
the Base Principal Amount for the related Collection Period plus (b) Overdue
Principal with respect to the Class A Notes.
"Class A Maturity Date" means the Class A-1 Maturity Date or the Class
A-2 Maturity Date, as applicable.
"Class A Note" means any one of the Class A-1 Notes, or the Class A-2
Notes.
"Class A Note Factor" means the seven digit decimal number that the
Servicer will compute or cause to be computed for each Collection Period and
will make available to the Indenture Trustee on the related Determination Date
representing the ratio of (a) the Class A Note Principal Balance which will be
outstanding on the next Payment Date (after taking into account all
distributions to be made on such Payment Date) to (b) the Initial Class A Note
Principal Balance.
"Class A Noteholder" means the Person in whose name a Class A Note is
registered in the Register.
"Class A Note Interest" means the Class A-1 Note Interest or the Class
A-2 Note Interest, as applicable.
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"Class A Note Principal Balance" means, at any time, the Initial Class
A Note Principal Balance minus all payments theretofore received by the Class A
Noteholders on account of principal.
"Class A Overdue Principal" means, with respect to any Payment Date,
the difference, if any, equal to (a) the aggregate of the Class A Principal
Payment Amounts due on all prior Payment Dates and (b) the aggregate amount of
the principal (from whatever source) actually distributed to Class A Noteholders
on all prior Payment Dates.
"Class A Percentage" means (a) with respect to the earlier of (i) each
Payment Date prior to and including the May 2001 Payment Date or (ii) the
Payment Date on which the Class A-1 Note Principal Balance has been reduced to
zero, 100.0% and (b) on each Payment Date beginning with the June 2001 Payment
Date until the Class A Note Principal Balance has been reduced to zero 92.55%;
provided, however, that following the occurrence of a Gross Charge-Off Event,
the Class A Percentage shall be equal to 100.0% until the Class A Note Principal
Balance has been reduced to zero.
"Class A Percentage Interest" means the interest in the Class A Portion
of the Trust that is evidenced by a Class A Note and that is set forth on the
face of such Note; provided, however, that the Issuer shall only issue Class A
Notes evidencing in the aggregate Class A Percentage Interests totaling 100%. To
the extent that, for federal income tax purposes, the Class A Notes constitute
indebtedness, all references in this Agreement to Holders of Class A Notes
owning a specified percentage of the outstanding Class A Note Principal Balance
shall be construed to mean Holders of Class A Notes evidencing such specified
percentage of the then outstanding indebtedness.
"Class A Portion" means the aggregate interest in the Trust evidenced
by the Class A Notes.
"Class A Principal Payment Amount" means, for any Payment Date, the
lesser of (i) the Class A Base Principal Distribution Amount for such Payment
Date, and (ii) the Class A Note Principal Balance as of such Payment Date (prior
to making any distributions of principal on such Payment Date); provided,
however, for any Payment Date which occurs on a Class A Maturity Date for any
Class A Note, the Class A Principal Payment Amount shall not be less than the
amount required to reduce the Note Principal Balance of such Class of Class A
Notes to zero.
"Class A Termination Date" means the date on which all amounts owing to
the Class A Noteholders have each been paid in full.
"Class A-1 Maturity Date" means the Payment Date in January 2005.
"Class A-1 Note" means any one of the Class A-1 Notes executed and
authenticated by the Indenture Trustee, substantially in the form of Exhibit C-1
to the Indenture.
"Class A-1 Note Current Interest" means, with respect to any Collection
Period, the interest accrued during the related Interest Accrual Period, equal
to the product of (x) a fraction, the numerator of which is the number of actual
days elapsed during the related Interest
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Accrual Period and the denominator of which is 360, (y) the Class A-1 Note Rate
and (z) the aggregate Class A-1 Note Principal Balance outstanding immediately
prior to such Payment Date.
"Class A-1 Noteholder" means the Person in whose name a Class A-1 Note
is registered in the Register.
"Class A-1 Note Interest" means, with respect to any Collection Period,
the Class A-1 Note Current Interest and the Class A-1 Overdue Interest.
"Class A-1 Note Principal Balance" means, at any time, the Initial
Class A-1 Note Principal Balance minus all payments theretofore received by the
Class A-1 Noteholders on account of principal.
"Class A-1 Note Rate" means 7.49% per annum.
"Class A-1 Overdue Interest" means, with respect to any Payment Date,
the difference between (a) the sum of (i) the excess, if any, of any Class A-1
Note Interest due on the immediately preceding Payment Date over the Class A-1
Note Interest paid on such immediately preceding Payment Date and (ii) without
duplication of the amount described in clause (i), the amount of the Class A-1
Overdue Interest due and unpaid as of the immediately preceding Payment Date and
(b) any Class A-1 Overdue Interest paid on such Payment Date.
"Class A-1 Percentage Interest" means the interest in the Class A-1
Portion of the Trust that is evidenced by a Class A-1 Note and that is set forth
on the face of such Note; provided, however, that the Issuer shall only issue
Class A-1 Notes evidencing in the aggregate Class A-1 Percentage Interests
totaling 100%. To the extent that, for federal income tax purposes, the Class
A-1 Notes constitute indebtedness, all references in the Transaction Documents
to Holders of Class A-1 Notes owning a specified percentage of the outstanding
Class A-1 Note Principal Balance shall be construed to mean Holders of Class
A-1 Notes evidencing such specified percentage of the then outstanding
indebtedness.
"Class A-1 Portion" means the aggregate interest in the Trust evidenced
by the Class A-1 Notes.
"Class A-2 Maturity Date" means the Payment Date in December 2010.
"Class A-2 Note" means any one of the Class A-2 Notes executed and
authenticated by the Indenture Trustee, substantially in the form of Exhibit C-2
to the Indenture.
"Class A-2 Note Current Interest" means, with respect to any Collection
Period, the interest accrued during the related Interest Accrual Period, equal
to the product of (x) one-twelfth of the Class A-2 Note Rate and (y) the
aggregate Class A-2 Note Principal Balance outstanding immediately prior to such
Payment Date.
"Class A-2 Noteholder" means the Person in whose name a Class A-2 Note
is registered in the Register.
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"Class A-2 Note Interest" means, with respect to any Collection Period,
the Class A-2 Note Current Interest and the Class A -2 Overdue Interest.
"Class A-2 Note Principal Balance" means, at any time, the Initial
Class A-2 Note Principal Balance minus all payments theretofore received by the
Class A-2 Noteholders on account of principal.
"Class A-2 Note Rate" means 7.77% per annum.
"Class A-2 Overdue Interest" means, with respect to any Payment Date,
the difference between (a) the sum of (i) the excess, if any, of any Class A-2
Note Interest due on the immediately preceding Payment Date over the Class A-2
Note Interest paid on such immediately preceding Payment Date and (ii) without
duplication of the amount described in clause (i), the amount of the Class A-2
Overdue Interest due and unpaid as of the immediately preceding Payment Date,
and (b) any Class A-2 Overdue Interest paid on such Payment Date.
"Class A-2 Percentage Interest" means the interest in the Class A-2
Portion of the Trust that is evidenced by a Class A-2 Note and that is set forth
on the face of such Note; provided, however, that the Issuer shall only issue
Class A-2 Notes evidencing in the aggregate Class A-2 Percentage Interests
totaling 100%. To the extent that, for federal income tax purposes, the Class
A-2 Notes constitute indebtedness, all references in the Transaction Documents
to Holders of Class A-2 Notes owning a specified percentage of the outstanding
Class A-2 Note Principal Balance shall be construed to mean Holders of Class A-2
Notes evidencing such specified percentage of the then outstanding indebtedness.
"Class A-2 Portion" means the aggregate interest in the Trust evidenced
by the Class A-2 Notes.
"Class B Base Principal Distribution Amount" means, with respect to any
Payment Date, the sum of (a) the product of (i) the Class B Percentage and (ii)
the Base Principal Amount for the related Collection Period plus (b) Overdue
Principal with respect to the Class B Notes.
"Class B Maturity Date" means the Payment Date in May 2011.
"Class B Note" means any one of the Class B Notes executed and
authenticated by the Indenture Trustee, substantially in the form of Exhibit D-1
to the Indenture.
"Class B Note Current Interest" means, with respect to any Payment
Date, the interest accrued during the related Interest Accrual Period, equal to
the product of (x) one-twelfth of the Class B Note Rate and (y) the Class B Note
Principal Balance outstanding immediately prior to such Payment Date.
"Class B Note Factor" means the seven digit decimal number that the
Servicer will compute or cause to be computed for each Collection Period and
will make available to the Indenture Trustee on the related Determination Date
representing the ratio of (a) the Class B Note Principal Balance which will be
outstanding on the next Payment Date (after taking into
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account all distributions to be made on such Payment Date) to (b) the Initial
Class B Note Principal Balance.
"Class B Noteholder" means the Person in whose name a Class B Note is
registered in the Register.
"Class B Note Interest" means, with respect to any Payment Date, the
Class B Note Current Interest and the Class B Overdue Interest.
"Class B Note Principal Balance" means, at any time, the Initial Class
B Note Principal Balance minus all payments theretofore received by the Class B
Noteholders on account of principal.
"Class B Note Rate" means 7.95% per annum.
"Class B Overdue Interest" means, with respect to any Payment Date, the
difference between (a) the sum of (i) the excess, if any, of any Class B Note
Interest due on the immediately preceding Payment Date over the Class B Note
Interest paid on such immediately preceding Payment Date and (ii) without
duplication of the amount described in clause (i), the amount of the Class B
Overdue Interest due and unpaid as of the immediately preceding Payment Date,
and (b) any Class B Overdue Interest paid on such Payment Date.
"Class B Overdue Principal" means, with respect to any Payment Date,
the difference, if any, equal to (a) the aggregate of the Class B Principal
Payment Amounts due on all prior Payment Dates and (b) the aggregate amount of
the principal (from whatever source) actually distributed to Class B Noteholders
on all prior Payment Dates.
"Class B Percentage" means on any date of determination, 100% minus the
Class A Percentage as of such date of determination.
"Class B Percentage Interest" means the interest in the Class B Portion
of the Trust that is evidenced by a Class B Note and that is set forth on the
face of such Note; provided, however, that the Issuer shall only issue Class B
Notes evidencing in the aggregate Class B Percentage Interests totaling 100%. To
the extent that, for federal income tax purposes, the Class B Notes constitute
indebtedness, all references in the Transaction Documents to Holders of Class B
Notes owning a specified percentage of the outstanding Class B Note Principal
Balance shall be construed to mean Holders of Class B Notes evidencing such
specified percentage of the then outstanding indebtedness.
"Class B Portion" means the aggregate interest in the Trust evidenced
by the Class B Notes.
"Class B Principal Payment Amount" means, for any Payment Date, the
lesser of (i) the Class B Base Principal Distribution Amount for such Payment
Date and (ii) the amount necessary to reduce the Class B Note Principal Balance
to zero.
"Closing Date" means April 11, 2000.
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"Code" means the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations adopted thereunder, as the same may be in effect from time
to time and any successor thereto.
"Collection Account" means the Eligible Bank Account established
pursuant to Section 3.01 of the Indenture.
"Collection Period" means, with respect to any Payment Date, the period
from the opening of business on the second day of the immediately preceding
calendar month through the close of business on the first day of the calendar
month in which such Payment Date occurs.
"Collections" means, with respect to a Collection Period and a
Contract, all Scheduled Payments, Liquidation Proceeds, Insurance Proceeds,
Early Termination Contract Proceeds, Prepayments, proceeds from any Contract
subject to a Casualty Loss, Final Scheduled Payments, Prepayments and amounts
received in respect of the Contracts or related Equipment pursuant to any Source
Agreements (including amounts received as a Source Repurchase Price from the
Source under any recourse agreements, amounts received as a Source Repurchase
Price from the Guarantor, amounts withdrawn from the Reserve Account or amounts
withdrawn from the Letter of Credit Deposit Account) and Defaulted Contract
Recoveries received by the Servicer from or on behalf of an Obligor with respect
to such Contract during such Collection Period. Collections do not include
Servicing Charges, Excluded Amounts, Repurchase Amounts, Advance Payments and
Servicer Advances.
"Computer Tape" means, collectively, the computer tapes generated by
the Servicer which provide information relating to the Contracts and which were,
or will be, used by the Servicer in selecting the Contracts conveyed to the
Issuer pursuant to the Receivables Transfer Agreement and any Subsequent
Transfer Agreement.
"Contract" means each of the agreements evidencing the indebtedness of
the related Obligor, including, as applicable, schedules, supplements and
amendments thereto, under which the Source or SierraCities.com, as applicable,
leases or finances specified Equipment to an Obligor and which are conveyed to
the Trust and identified on the List of Initial Contracts delivered on the
Closing Date, with respect to Subsequent Contracts, on the List of Subsequent
Contracts delivered on the related Subsequent Transfer Date or, with respect to
Substitute Contracts, on the List of Substitute Contracts delivered on the
related Substitute Transfer Date.
"Contract File" means, with respect to each Contract, (1) a certified
copy of the master Contract, if applicable, (2) the executed original
counterpart of the Contract that constitutes "chattel paper" or an "instrument"
for purposes of Sections 9-105(1)(b), 9-105(l)(i) or 9-305 of the UCC, (3) an
original certificate, executed by an Obligor, evidencing delivery and acceptance
of the Equipment, (4) Obligor's corporate resolutions and secretary's
certificate, if required under the Credit and Collection Policies and
Procedures, (5) a guaranty, if any, (6) copies of documentation relating to the
purchase of the Equipment, (7) documents evidencing or related to any Insurance
Policy (such documents required to be included therein only with respect to
Equipment which had an Original Equipment Cost of more than $40,000), (8)
evidence of filing or copies of all UCC financing statements filed with respect
to the Equipment or the Contract in accordance with the Filing Requirements; all
such UCC financing statements
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shall include either (a) UCC standard forms executed by the debtor and the
secured party, as required, or (b) evidence of the electronic filing of such UCC
financing statement, in which case acknowledgement copies shall be forwarded
promptly as they are received, (9) with respect to a Contract originated by the
Source, a certified copy of the related sale and assignment between the Source
and SierraCities.com, as well as any other Contract assignments, (10) copies of
any additional Contract documents evidencing any changes or modifications of a
Contract by the Servicer in accordance with the terms of the Servicing
Agreement, and (11) reference to the applicable contract management code on the
Contract Management System and any other documents relating thereto held by
SierraCities.com, as Servicer.
"Contract Management Code" has the meaning set forth in Section 2.01 of
the Receivables Transfer Agreement.
"Contract Management System" means the computerized electronic contract
management system maintained by SierraCities.com for all Contracts and other
agreements similar to the Contracts.
"Contract Number" means, with respect to each Contract, its identifying
number.
"Contract Pool" means, at any time, all Contracts held as part of the
Pledged Property.
"Conveyance Date" means, with respect to the Initial Contracts, the
Closing Date, with respect to a Subsequent Contract, the related Subsequent
Transfer Date and with respect to Substitute Contracts, the Substitute Transfer
Date.
"Conveyed Assets" means the Initial Conveyed Assets, the Subsequent
Conveyed Assets and the Substitute Conveyed Assets.
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of this Agreement is specified in Section
11.06 of the Indenture.
"Credit and Collection Policies and Procedures" means the credit and
collection policies and procedures of the Servicer.
"Credit File" means, with respect to each Contract, the following
documents: (a) copies of the Contract, any UCC financing statements and any
other original documents related to the Contract, (b) the application of the
related Obligor, (c) documentation evidencing the information with respect to
such Contract input into the Contract Management System and (d) any other
information required by the Servicer pursuant to its customary policies and
procedures.
"Cut-Off Date" means, with respect to the Initial Contracts, the
Initial Cut-Off Date, with respect to the Subsequent Contracts, the related
Subsequent Cut-Off Date and with respect to each Substitute Contract, the
related Substitute Cut-Off Date.
"DCR" means Duff & Phelps Credit Rating Co.
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"Default Notice" means the notice, substantially in the form of Exhibit
E to the Indenture, delivered by the Servicer to the Indenture Trustee, the
Source and the Guarantor of the Source's obligation, whereby the Servicer seeks
to enforce Source Agreement Rights.
"Defaulted Contract" means a Contract that becomes defaulted at the
earlier of the date on which (i) the Servicer has determined in its sole
discretion, in accordance with the Servicing Standard and its customary
servicing procedures, that such Contract is not collectible, (ii) all or part of
a Scheduled Payment thereunder is more than 180 days delinquent, or (iii) such
Contract was repurchased by the Source pursuant to the Source Agreement. The
determination as to delinquency of Scheduled Payments shall be made after the
application of amounts received in accordance with the Servicer's accounting
procedures related to classification of delinquency consistent with its
delinquency results for financial reporting purposes.
"Defaulted Contract Recoveries" means all proceeds of the sale of
Equipment related to Defaulted Contracts and any amounts collected as judgments
against an Obligor or others related to the failure of such Obligor to pay any
required amounts under the related Contract or to return the Equipment, in each
case as reduced by (i) any unreimbursed Servicer Advances with respect to such
Contract or such Equipment and (ii) any reasonably incurred out-of-pocket
expenses incurred by the Servicer in enforcing such Contract or in liquidating
such Equipment.
"Delinquent Contract" means, as of any Determination Date, any Contract
(other than a Contract which became a Defaulted Contract prior to such
Determination Date) with respect to which all or a portion of any Scheduled
Payment was not received when due by the Servicer as of the close of business on
the last day of the month in which such payment was due. The determination as to
delinquency of Scheduled Payments shall be made after the application of amounts
received in accordance with the Servicer's accounting procedures related to
classification of delinquency consistent with its delinquency results for
financial reporting purposes.
"Depositor" means First Sierra Receivables III, Inc., a Delaware
corporation.
"Depository" means The Depository Trust Company, 55 Water Street, New
York, New York 10041 and any successor Depository hereafter named.
"Determination Date" means, with respect to a Payment Date, a date
which is two Business Days prior to such Payment Date.
"Direct Participant" means any broker-dealer, bank or other financial
institution for which the Depository holds the Class A and Class B Notes from
time to time as a securities depositary.
"Discounted Contract Principal Balance" means, with respect to any
Contract, on any Determination Date, the sum of the present value of all of the
remaining Scheduled Payments becoming due under such Contract after the end of
the prior Collection Period, discounted monthly at the Discount Rate in the
manner described below; provided, however, that except to the extent expressly
provided in the Indenture or the Servicing Agreement, the Discounted Contract
Principal Balance of any Defaulted Contract, Early Termination Contract,
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or Expired Contract or Contract purchased by the Servicer or SierraCities.com
pursuant to the Servicing Agreement or by the Trust Certificate Holder pursuant
to the Indenture, shall be deemed to be equal to zero as of the last day of the
immediately preceding Collection Period.
In connection with all calculations required to be made pursuant to the
Transaction Documents with respect to the determination of Discounted Contract
Principal Balances, for any date of determination the "Discounted Contract
Principal Balance" for each Contract shall be calculated assuming:
Scheduled Payments are due on the last day of each Collection
Period;
Scheduled Payments are discounted on a monthly basis using a
30 day month and a 360 day year; and
Scheduled Payments are discounted to the last day of the
Collection Period prior to the Determination Date.
"Discount Rate" means, as of any date, 8.45%. The Discount Rate is
equal to the sum of (a) the Class B Note Rate and (b) the Servicer Fee Rate.
"Drawing Certificate" means the drawing certificate delivered by the
Indenture Trustee to a Letter of Credit Confirming Bank to request a draw on a
Letter of Credit, substantially in the form of Exhibit F-1 and F-2 to the
Indenture.
"Early Termination Contract" means any Contract that has terminated
pursuant to the terms of such Contract prior to its scheduled expiration date,
other than a Defaulted Contract.
"Early Termination Contract Proceeds" means any and all cash proceeds
or rents realized from the sale or re-lease of Equipment under an Early
Termination Contract (net of reasonable out-of-pocket remarketing expenses).
"Eligible Bank Account" means a segregated account, which may be an
account maintained with the Indenture Trustee, which is either (a) maintained
with a depository institution or trust company whose long term unsecured debt
obligations are rated at least, if deposits are to be held in such account for
more than thirty days, (i) "AA-" or better by S&P, (ii)"A2" or better by Moody's
and (iii) A by DCR and whose short-term unsecured obligations are rated at
least, if deposits are to be held in such account for thirty days or less, (i)
"A-1+" by S&P, (ii) "P-1" by Moody's and (iii) D-1 by DCR; provided, that if DCR
does not rate such entity then the ratings of S&P and Moody's shall suffice, or
(b) a segregated trust account or similar account maintained with a federally or
state chartered depository institution subject to regulations regarding
fiduciary funds on deposit substantially similar to 12 C.F.R. Section 9.10(b).
"Eligible Contract" means any Contract that is not a Defaulted Contract
and 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 date made.
"Eligible Investments" means any of the following, in each case as
determined at the time of the investment or contractual commitment to invest
therein (to the extent such
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investments would not require the registration of the Trust as an investment
company pursuant to the Investment Company Act):
(a) negotiable instruments or securities represented by
instruments in bearer or registered or book-entry form which evidence:
(i) obligations which have the benefit of the full
faith and credit of the United States of America, including depository
receipts issued by a bank as custodian with respect to any such
instrument or security held by the custodian for the benefit of the
holder of such depository receipt,
(ii) demand deposits or time deposits in, or bankers'
acceptances issued by, any depository institution or trust company
incorporated under the laws of the United States of America or any
state thereof and subject to supervision and examination by Federal or
state banking or depositary institution authorities; provided that at
the time of the Indenture Trustee's investment or contractual
commitment to invest therein, the certificates of deposit or short-term
deposits (if any) or long-term unsecured debt obligations (other than
such obligations whose rating is based on collateral or on the credit
of a Person other than such institution or trust company) of such
depositary institution or trust company has a credit rating in the
highest rating category from each Rating Agency, or, if not rated by
DCR or Moody's, the highest rating category provided by S&P;
(iii) certificates of deposit having a rating in the
highest rating category by each of the Rating Agencies, or, if not
rated by DCR and Moody's, the highest rating category provided by S&P;
or
(iv) investments in money market funds which are (or
which are composed of instruments or other investments which are) rated
in the highest rating category by each of the Rating Agencies
(including funds for which the Indenture Trustee or any of its
Affiliates is investment manager or advisor), or, if not rated by DCR
and Moody's, the highest rating category provided by S&P;
(b) demand deposits in the name of the Indenture Trustee in
any depositary institution or trust company referred to in clause
(a)(ii) above;
(c) commercial paper (having original or remaining maturities
of no more than 270 days) having a credit rating in the highest rating
category by each of the Rating Agencies, or, if not rated by DCR and
Moody's, the highest rating category provided by S&P;
(d) Eurodollar time deposits that are obligations of
institutions whose time deposits carry a credit rating in the highest
rating category by each of the Rating Agencies, or, if not rated by DCR
and Moody's, the highest rating category provided by S&P;
(e) repurchase agreements involving any Eligible Investment
described in any of clauses (a)(i), (a)(iii) or (d) above, so long as
the other party to the repurchase
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agreement has its long-term unsecured debt obligations rated in the
highest rating category by each of the Rating Agencies, or, if not
rated by DCR and Moody's, the highest rating category provided by S&P;
and
(f) any other investment with respect to which the Rating
Agency Condition has been satisfied.
Any Eligible Investment must mature no later than the Business Day
prior to the next Payment Date.
"Equipment" means, with respect to a Contract, the equipment leased,
sold or financed, as applicable, to an Obligor pursuant to such Contract, and
any inventory, accounts and other general intangibles or assets, as the case may
be, that secure payment under such Contract which Equipment includes the
Original Equipment, the Subsequent Equipment and the Substitute Equipment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" has the meaning specified in Section 8.01 of the
Indenture.
"Event of Servicing Termination" has the meaning specified in Section
6.01 of the Servicing Agreement.
"Excess Amounts" means, with respect to any Contract, any payment
required to be paid by the related Obligor pursuant to such Contract at the
maturity of such Contract in excess of the final Scheduled Payment with respect
to such Contract.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Amounts" means any payments received from an Obligor or the
Source in connection with any application fees, tax processing fees, wire
transfer fees, express mail fees, insurance premiums, late charges and other
penalty amounts, taxes, fees or other charges imposed by any governmental
authority, any indemnity payments made by an Obligor for the benefit of the
obligee under the related Contract or any payments collected from an Obligor or
received from the Source relating to servicing and/or maintenance payments
pursuant to the related Contract or maintenance agreement, as applicable,
Expired Contract Proceeds (other than any amounts then due from a related Source
under the related Source Agreement) or any other non-rental charges reimbursable
to the Servicer in accordance with the Servicer's customary policies and
procedures plus any collections received following the end of the immediately
preceding Collection Period up to the amount of the Servicer Advance made on the
immediately preceding Payment Date.
"Expired Contract" means any Contract that has terminated on its
scheduled expiration date after full payment of all Scheduled Payments and the
Final Scheduled Payment.
"Expired Contract Proceeds" means any and all cash proceeds or rents
realized from the sale or re-lease of Equipment under an Expired Contract.
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"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System and any successor thereto.
"Filing Locations" means the jurisdictions in which any Equipment is
located under Contracts as of the applicable Cut-Off Date.
"Filing Requirements" means
(a) with respect to the Contracts, a UCC-1 financing statement with
respect to the assignment of all Contracts and any related Source Agreement
Rights by the related Source to SierraCities.com pursuant to the related Source
Agreement, by SierraCities.com to the Sellers pursuant to the Warehouse Trusts,
by the Sellers to the Owner Trustee, on behalf of the Issuer pursuant to the
Receivables Transfer Agreement,
(b) with respect to the Contracts and any related Source Agreement
Rights, a UCC-1 financing statement with respect to the pledge by the Owner
Trustee, on behalf of the Issuer, of all Contracts and any related Source
Agreement Rights to the Indenture Trustee pursuant to the Indenture,
(c) with respect to Equipment, (i) in each Filing Location in which
Equipment with an Original Equipment Cost of $75,000 or greater is then located,
financing statements on Form UCC-1 for Contracts originated by the Source,
naming the Obligor as debtor and the Source as secured party and First Sierra
Financial, Inc. or SierraCities.com as assignee; and (ii) with respect to clause
(i), the filings in paragraph (b) above in favor of the Indenture Trustee in
respect of the Contracts shall include all related rights relating to such
Contracts, including the security interests in the Equipment subject to this
clause (c).
"Final Scheduled Payment" means, with respect to any Contract, any
payment set forth in such Contract other than the regular Scheduled Payment
which is required to be paid by the related Obligor at the maturity of such
Contract.
"Financing Statements" means a form UCC-1 financing statement.
"First Sierra Group" means, as of any relevant date, the affiliated
group within the meaning of section 1504 of the Code of which SierraCities.com,
or any successor thereto, is the common parent, or of which SierraCities.com is
a member, and shall mean any group eligible to file consolidated, combined or
unitary returns for state, local or foreign tax purposes which includes
SierraCities.com, regardless of the identity of the common parent.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar function of comparable stature and authority within the accounting
profession), or in such other statements by such other entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.
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"Governmental Authority" means (a) any federal, state, county,
municipal or foreign government, or political subdivision thereof, (b) any
governmental or quasi-governmental agency, authority, board, bureau, commission,
department, instrumentality or public body, (c) any court or administrative
tribunal or (d) with respect to any Person, any arbitration tribunal or other
non-governmental authority to the jurisdiction of which such Person has
consented.
"Gross Charge-Off Event" exists on any Payment Date on which the Gross
Charge-Off Ratio exceeds 10.0 %.
"Gross Charge-Off Ratio" means, with respect to any Payment Date, the
quotient, expressed as a percentage, of (a) the sum of the aggregate Discounted
Contract Principal Balance of all Defaulted Contracts divided by (b) the
Aggregate Discounted Contract Principal Balance of all Contracts as of the
related Conveyance Date. For the purposes of the calculation of the Gross
Charge-Off Ratio, the Discounted Contract Principal Balance of any Contract
which is a Defaulted Contract shall not be zero, but shall instead be calculated
as provided in the definition of Discounted Contract Principal Balance without
reference to the last proviso in such definition.
"Guarantor" means Sky Financial Group, Inc. as guarantor of the
Source's obligations under the Source Agreement.
"Guaranty" means that certain Guaranty dated as of October 1, 1999 in
favor of SierraCities.com by Sky Financial Group, Inc.
"Holder" means the Person in whose name a Note is registered in the
Register, or in the case of a Trust Certificate, in the Certificate Register, as
the case may be.
"Holding Trust Agreement" means the First Sierra Holding Trust III
Trust Agreement, dated as of March 1, 2000, between the Depositor of the Holding
Trust and the Owner Trustee of the Holding Trust.
"Holding Trust" means First Sierra Holding Trust III.
"Income Taxes" means any federal, state, local or foreign taxes based
upon, measured by, or imposed upon gross or net income, gross or net receipts,
capital, net worth, or the privilege of doing business, and any minimum taxes or
withholding taxes based upon any of the foregoing, including any penalties,
interest or additions to tax imposed with respect thereto.
"Indebtedness" means, as to any Person, (a) all indebtedness of such
Person for borrowed money, (b) all leases of equipment of such Person as
Obligor, (c) to the extent not included in clause (b), above, all capital leases
of such Person as Obligor, (d) any obligation of such Person for the deferred
purchase price of Property or services (other than trade or other accounts
payable in the ordinary course of business and not more than ninety (90) days
past due), (e) any obligation of such Person that is secured by a Lien on assets
of such Person, whether or not that Person has assumed such obligation or
whether or not such obligation is non-recourse to the credit of such Person, (f)
obligations of such Person arising under acceptance facilities or under
facilities for the discount of accounts receivable of such Person and (g) any
obligation of
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such Person to reimburse the issuer of any letter of credit issued for the
account of such Person upon which a draw has been made.
"Indenture" means the Indenture, dated as of March 1, 2000, among the
Trust, the Servicer and the Indenture Trustee, as amended, supplemented or
otherwise modified from time to time.
"Indenture Trustee" means the institution executing the Indenture and
Servicing Agreement as Indenture Trustee, or its successor in interest, and any
successor indenture trustee appointed as provided herein, or any successor to
the Indenture Trustee's corporate trust business (or a substantial portion
thereof) and initially shall mean Bankers Trust Company, a New York banking
corporation.
"Indenture Trustee Fee" means, with respect to each Payment Date, an
amount equal to $416.67.
"Indenture Trustee Expenses" means, the reasonable expenses of the
Indenture Trustee, as set forth in Section 7.07(a)(ii) of the Indenture.
"Independent Certificate" means a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 10.05 of the
Indenture, prepared by an Independent appraiser or other expert appointed
pursuant to an Issuer Order and approved by the Indenture Trustee in the
exercise of reasonable care, and such opinion or certificate shall state that
the signer has read the definition of "Independent" in the Indenture and that
the signer is Independent within the meaning thereof.
"Independent Public Accountant" means any of (a) Arthur Andersen LLP,
(b) Deloitte & Touche, (c) PricewaterhouseCoopers, (d) Ernst & Young, and (e)
KPMG Peat Marwick (and any successors thereof); provided, that such firm is
independent with respect to the Servicer or any subservicer, as the case may be,
within the meaning of the Securities Act of 1933, as amended.
"Indirect Participant" means any financial institution for whom any
Direct Participant holds an interest in a Class A or Class B Note.
"Initial Aggregate Discounted Contract Principal Balance" means the
Aggregate Discounted Contract Principal Balance as of the Initial Cut-Off Date,
which amount is equal to $188,652,640.43.
"Initial Class A Note Principal Balance" $174,600,000
"Initial Class A-1 Note Principal Balance" $ 75,000,000
"Initial Class A-2 Note Principal Balance" $ 99,600,000
"Initial Class B Note Principal Balance" $ 14,052,729
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"Initial Contracts" means the Contracts pledged by the Trust to the
Indenture Trustee for the benefit of the Noteholders pursuant to the Indenture
on the Closing Date.
"Initial Conveyed Assets" means, with respect to the Receivables
Transfer Agreement (a) all of the Sellers' right, title and interest in and to
the Original Equipment, (except for any licensed products that may accompany the
Original Equipment) and any new unit or units of Equipment substituted for any
existing unit or units of Original Equipment, including all income and proceeds
upon any sale or other disposition of the Original Equipment, (b) all of the
Sellers' right, title and interest in and to, but not its obligations under, the
Initial Contracts and all amendments, additions and supplements including
schedules, summary schedules and subschedules made or hereafter made with
respect thereto, (c) all monies due or to become due in payment of the Initial
Contracts on or after the Initial Cut-Off Date, including without limitation,
all Scheduled Payments thereunder (whether or not due), any Prepayments, any
payments in respect of a casualty or early termination and any Liquidation
Proceeds received with respect thereto, but excluding any Excluded Amounts, (d)
the Contract Files, (e) all Insurance Proceeds relating to the foregoing and the
Sellers' rights and interests in the Insurance Policies relating to the
foregoing, (f) all Source Agreements and Source Agreement Rights to the extent
they relate to any Initial Contract and any Original Equipment covered by the
Initial Contracts and (g) all proceeds and income of the foregoing or relating
thereto.
"Initial Cut-Off Date" means the close of business on March 1, 2000.
"Initial Receivables" means the Initial Contracts and the Original
Equipment.
"Initial Unpaid Amount" means, with respect to a Contract, the excess
of (x) the aggregate amount of all Scheduled Payments due prior to the related
Cut-Off Date over (y) the aggregate of all Scheduled Payments made prior to the
related Cut-Off Date with respect to such Contract.
"Insurance Policy" means, with respect to an item of Equipment and the
related Contract, any insurance policy required to be maintained by the Obligor
pursuant to such Contract that covers physical damage to such physical Equipment
and liability resulting from the use, operation or possession of such Equipment
(including policies procured by or on behalf of SierraCities.com on behalf of
the Obligor).
"Insurance Proceeds" means, with respect to an item of Equipment and
the related Contract, any amount received during a Collection Period pursuant to
an Insurance Policy issued with respect to such Equipment and related Contract.
"Interest Accrual Period" means, with respect to any Payment Date, the
period from and including the prior Payment Date to but excluding such Payment
Date and with respect to the initial Payment Date, the period from and including
the Closing Date to but excluding such Payment Date.
"Investment Company Act" means the Investment Company Act of 1940, as
amended (15 U.S.C. 80a-1 et seq.), as the same may be in effect from time to
time, or any successor statute thereto.
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"Investment Earnings" means any and all income from the investment of
monies held, from time to time, in the Collection Account, the Reserve Account,
the Supplemental Interest Reserve Account the Letter of Credit Deposit Account,
the Pre-Funding Account and the Capitalized Interest Account pursuant to Section
3.03 of the Indenture, net of any losses on any investments held in such
accounts.
"IRS" means the Internal Revenue Service and any successor thereto.
"Issuer" or "Trust" means First Sierra Healthcare Equipment Contract
Trust 2000-1, a common law trust acting through Christiana Bank & Trust Company,
not in its individual capacity but solely as Owner Trustee.
"Issuer Order" and "Issuer Request" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Indenture Trustee.
"Letters of Credit" means (i) the irrevocable standby letter of credit
number 452 dated as of December 30, 1999 issued by Sky Bank for the benefit of
First Sierra Financial, Inc., as amended by Amendment No. 1 dated March 31, 2000
(the "Sky Letter of Credit") which Letter of Credit was confirmed by The
Northern Trust Company Chicago in an Advice of Letter of Credit, Advice No.
K274605, dated January 3, 2000, which advice was confirmed by the Confirming
Bank on April 4, 2000 and which advice was transferred to the Trust by the
Confirming Bank pursuant to a Transfer Advice of Irrevocable Letter of Credit
dated April 7, 2000 and (ii) the irrevocable standby letter of credit number
SLC99-1850 dated as of December 30, 1999 issued by MidAm Bank for the benefit of
First Sierra Financial, Inc., as amended by Amendment No. 1 dated March 31, 2000
(the "MidAm Letter of Credit") as confirmed by Bank One N.A. on January 3, 2000,
reference number 00321781, which confirmation was amended by Amendment No. 1
dated April 4, 2000, which Letter of Credit was transferred in its entity to the
Trust by Bank One N.A. on April 7, 2000.
"Letter of Credit Confirming Bank" means (i) with respect to the Sky
Letter of Credit, Northern Trust Company, Chicago and (ii) with respect to the
MidAm Letter of Credit, Bank One, N.A., Chicago.
"Letter of Credit Deposit Account" means the Eligible Bank Account
established pursuant to Section 3.08 of the Indenture.
"Letter of Credit Draw Event" means the occurrence or continuation of
any of the following events:
(i) Sky Financial Group, Inc. has failed to meet its repurchase
obligations set forth in its Guaranty dated December 30, 1999; or
(ii) Sky Financial Group, Inc. or MidAm Bank has notified First Sierra
Financial Inc that the related Letter of Credit will not be renewed for an
additional 364 days (or the prior banking day if the expiry date falls on a
non-banking date) from its current expiry; or
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(iii) the long term debt credit rating of (x) Bank One N.A. has dropped
below an S&P rating of "A" or a Moody's rating of "Aa" or (y) the long term debt
credit rating of Northern Trust Company, Chicago has dropped below an S&P rating
of "AA" or a Moody's rating of "Aa"; or
(iv) a Letter of Credit Confirming Bank has notified First Sierra
Financial, Inc. that it will not continue to confirm the related Letter of
Credit for an additional 364 days(or the prior banking day if the expiry date
falls on a non-banking date) from its current expiry.
"Letter of Credit Draw" has the meaning set forth in Section 3.08(b) of
the Indenture.
"Lien" means any mortgage, pledge, hypothecation, assignment for
security, security interest, encumbrance, levy, lien or charge of any kind,
whether voluntarily incurred or arising by operation of law or otherwise,
affecting any property, including any agreement to grant any of the foregoing,
any conditional sale or other title retention agreement, any Contract in the
nature of a security interest, and the filing of or agreement to file or deliver
any financing statement (other than a precautionary financing statement with
respect to a lease that is not in the nature of a security interest) under the
UCC or comparable law of any jurisdiction.
"Liquidation Proceeds" means, with respect to a Defaulted Contract,
proceeds from the sale or re-lease of the Equipment, proceeds of the related
Insurance Policy, proceeds from any Source Agreements and any other recoveries
with respect to such Defaulted Contract and the related Equipment, net of
reasonable remarketing expenses and amounts so received that are required to be
refunded to the Obligor on such Contract.
"List of Contracts" means the List of Initial Contracts, each List of
Subsequent Contracts and each List of Substitute Contracts.
"List of Initial Contracts" means the List of Initial Contracts
delivered pursuant to Section 2.03(a) of the Indenture.
"List of Subsequent Contracts" means the List of Subsequent Contracts
delivered pursuant to Section 2.02(c) of the Receivables Transfer Agreement.
"List of Substitute Contracts" means the List of Substitute Contracts
delivered pursuant to Section 4.02 of the Indenture.
"Lockbox Account" means the lockbox account established pursuant to the
Lockbox Agreement.
"Lockbox Agreement" means the Lockbox Agreement dated as of February
13, 1995, among SierraCities.com and Chase Bank of Texas, N.A.
"Lockbox Bank" means Chase Bank of Texas, N.A.
"Majority Holders" means the holders of the Applicable Securities that
together own Applicable Securities with an aggregate Percentage Interest in
excess of 50%.
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"Monthly Statement" has the meaning specified in Section 4.08 of the
Servicing Agreement.
"Moody's" means Moody's Investors Service, Inc.
"Necessary Consents" means, with respect to any Person, all necessary
consents to the closing of the transactions contemplated by the Transaction
Documents.
"Notes" means the Class A Notes and the Class B Notes.
"Noteholder" means the Person in whose name a Note is registered in the
Register held by the Note Registrar.
"Note Principal Balance" means, with respect to any Class of Notes, the
Class A-1 Note Principal Balance, the Class A-2 Note Principal Balance, and the
Class B Note Principal Balance, as applicable.
"Note Rate" means, with respect to any Class of Notes, the Class A-1
Note Rate, the Class A-2 Note Rate, and the Class B Note Rate, as applicable.
"Note Registrar" means, initially, the Indenture Trustee pursuant to
Section 5.03 of the Indenture.
"Obligor" means, with respect to any Contract, the Person or Persons
obligated to make payments with respect to such Contract, including any
guarantor thereof.
"Officer's Certificate" means a certificate delivered by an Authorized
Officer.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel employed by the Servicer or other counsel, in each case acceptable to
the addressees thereof.
"Original Equipment" means any of the Equipment relating to the Initial
Contracts.
"Original Equipment Cost" means the invoice price of the Equipment,
exclusive of amounts, if any, paid for taxes, warranty extensions or service
contracts.
"Original Pre-Funded Amount" means $1,000.00.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under the Indenture except:
(i) Notes theretofore canceled by the Note Registrar or delivered to
the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Indenture Trustee in
trust for the Holders of such Notes (provided, however, that if such Notes are
to be redeemed, notice of such redemption has
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been duly given pursuant to the Indenture or provision therefor, satisfactory to
the Indenture Trustee, has been made);
(iii) Notes in exchange for or in lieu of other Notes which have been
authenticated and delivered pursuant to the Indenture unless proof satisfactory
to the Trustee is presented that any such Notes are held by a bona fide
purchaser; and
(iv) Notes that have been alleged to be destroyed, lost or stolen for
which replacement Notes have been issued as provided for in Section 5.04 of the
Indenture;
provided, however, that in determining whether the Holders of the requisite
Outstanding Amount of the Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any Transaction
Document, Notes owned by the Issuer, any other obligor upon the Notes, the
Sellers or any Affiliate of any of the foregoing Persons shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
Indenture Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Notes that a
Responsible Officer of the Indenture Trustee either actually knows to be so
owned or has received written notice thereof shall be so disregarded. Notes so
owned that have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Indenture Trustee the pledgee's
right so to act with respect to such Notes and that the pledgee is not the
Issuer, any other obligor upon the Notes, the Sellers or any Affiliate of any of
the foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of all Notes
or class of Notes, as applicable, Outstanding at the date of determination.
"Owner Trustee" means Christina Bank & Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as owner trustee
under the Trust Agreement and the Holding Trust Agreement, and any successor
owner trustee.
"Payment Date" means the 18th day of each calendar month, or if such
day is not a Business Day, the immediately following Business Day, commencing on
May 18, 2000 until such time as the Indenture has been terminated in accordance
with Article IX thereof.
"Percentage Interest" means, with respect to a Noteholder and a Class
of Notes on any date of determination, the percentage obtained by dividing the
Note Principal Balance of the Note held by such Noteholder as of the Closing
Date by the related Note Principal Balance of the related Class of Notes as of
the Closing Date.
"Permitted Liens" means:
(a) Liens granted in favor of the Trust under the Receivables
Transfer Agreement or the Indenture Trustee on behalf of the Noteholders
pursuant to the Indenture; and
(b) Liens constituting the rights of Obligors under Contracts.
"Person" means a natural person, partnership, limited partnership,
limited liability company, trust, estate, association, corporation, custodian,
nominee or any other individual or entity in its own or any representative
capacity.
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"Pledged Property" means the property pledged by the Trust to the
Indenture Trustee on behalf of the Noteholders pursuant to Section 2.01 of the
Indenture, except for the Initial Unpaid Amounts relating thereto.
"Pool Factor" means the seven digit decimal number that the Servicer
will compute or cause to be computed for each Collection Period and will make
available on the related Determination Date representing the ratio of (a) the
Aggregate Discounted Contract Principal Balance of the Contracts as of the
immediately preceding Calculation Date to (b) the Initial Aggregate Discounted
Contract Principal Balance.
"Pre-Funded Amount" means the Original Pre-Funded Amount reduced by
amounts withdrawn from the Pre-Funding Account in accordance with Section 3.02
of the Indenture.
"Pre-Funding Earnings" means with respect to any Payment Date, the
actual Investment Earnings then on deposit in the Pre-Funding Account.
"Pre-Funding Account" means that certain account established and
maintained by the Indenture Trustee pursuant to Section 3.02(a) of the
Indenture.
"Pre-Funding Period" means the period from and including the Closing
Date until the earlier of (i) the date on which the balance of funds on deposit
in the Pre-Funding Account is reduced to an amount less than $100,000, (ii) the
date on which an Event of Default or an Event of Servicing Termination occurs,
or (iii) the close of business on June 10, 2000.
"Prepayment" means, with respect to a Collection Period and a Contract
(except a Defaulted Contract), the amount received by the Servicer during such
Collection Period from or on behalf of an Obligor with respect to such Contract
in excess of the sum of (x) the Scheduled Payment and any Final Scheduled
Payment due during such Collection Period, plus (y) the aggregate of any overdue
Scheduled Payments, Initial Unpaid Amounts and unpaid Servicing Charges for such
Contract, so long as such amount is designated by the Obligor as a prepayment
and the Servicer has consented to such prepayment. Defaulted Contract Recoveries
are not considered to be Prepayments.
"Prepayment Amount" means, with respect to a Payment Date and a
Contract, an amount, without duplication, equal to the sum of (i) the Discounted
Contract Principal Balance as of the close of business on the second preceding
Collection Period (without any deduction for any security deposit paid by an
Obligor, unless such security deposit has been deposited in the Collection
Account pursuant to the Indenture); (ii) the product of (x) such Contract's
Discounted Contract Principal Balance as of the beginning of the immediately
preceding Payment Date and (y) one-twelfth of the Discount Rate; (iii) any
Scheduled Payments theretofore due and not paid by an Obligor; and (iv) any
Final Scheduled Payment due or to become due under the Contract.
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
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"Rating Agency Condition" means written confirmation from each Rating
Agency that the use of such investment will not result in the reduction or
withdrawal of the rating assigned by such Rating Agency to any of the Notes.
"Rating Agencies" means DCR and Moody's.
"Receivables" means the Contracts together with the Equipment.
"Receivables Transfer Agreement" means the Receivables Transfer
Agreement, dated as of March 1, 2000, among SierraCities.com, the Depositor,
First Union National Bank, Variable Funding Capital Corporation, Fairway Finance
Corporation, Merrill Lynch Mortgage Capital, Inc., First Sierra Equipment
Contract Trust 1999-H, Bankers Trust Company, as trustee of the Sellers, and the
Issuer.
"Record Date" means, with respect to any Payment Date, the last day of
the related Interest Accrual Period.
"Register" means the register kept by the Indenture Trustee pursuant to
Section 5.03 of the Indenture.
"Registration Statement" shall mean the Registration Statement filed
with the SEC under the Securities Act (No. 333-12199) materially in the form in
which it was declared effective.
"Regulations G, T, U and X" means, collectively, Regulations G, T, U
and X adopted by the Federal Reserve Board (12 C.F.R. Parts 207, 220, 221 and
224, respectively) and any other regulation in substance substituted therefor.
"Representation Letter" means letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Class A and
Class B Notes registered in the Register under the nominee name of the
Depository.
"Repurchase Amount" means, with respect to a Payment Date and a
Contract, the sum, without duplication, of (a) the Discounted Contract Principal
Balance as of the close of business on the last day of the second preceding
Collection Period (without any deduction for any security deposit paid by an
Obligor, unless such security deposit has been deposited in the Collection
Account pursuant to the Indenture); (b) the product of (i) such Contract's
Discounted Contract Principal Balance as of the beginning of the immediately
preceding Collection Period and (ii) one-twelfth of the Discount Rate; (c) any
Scheduled Payments theretofore due and not paid by an Obligor; and (d) any Final
Scheduled Payment due or to become due under the Contract.
"Repurchase Contract" means any Contract that has been repurchased by
SierraCities.com pursuant to Section 4.01 of the Indenture.
"Requisite Amount" means, with respect to the Closing Date and any
Subsequent Transfer Date, an amount equal to the product of (x) 2.35% and (y)
the sum of (i) Initial Aggregate Discounted Contract Principal Balance as of the
Initial Cut-Off Date and (ii) the
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aggregate Discounted Contract Principal Balance of all Subsequent Contracts as
of the related Subsequent Cut-Off Date, which amount shall be equal to
$4,433,337.05.
"Reserve Account" means the Eligible Bank Account established pursuant
to Section 3.04 of the Indenture.
"Responsible Officer" means (i) when used with respect to the Indenture
Trustee, any officer assigned to the Corporate Trust Office, including any
Principal, Managing Director, Vice President, Assistant Vice President,
Secretary, Assistant Secretary, any trust officer or any other officer of the
Indenture Trustee customarily performing functions similar to those performed by
any of the above designated officers, and also, with respect to a particular
matter, any other officer to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject and (ii) when
used with respect to the Owner Trustee, any Vice President, Assistant Vice
President, Secretary, Assistant Secretary, Managing Director, any trust officer
or any other officer of the Owner Trustee customarily performing functions
similar to those performed by any of the above designated officers, and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"Scheduled Payments" means, with respect to a Contract, the periodic
payment (exclusive of any amounts in respect of late charges, insurance,
warranty extensions, service contracts or taxes and reflecting any adjustment
for any partial Prepayment and further reflecting the effect of any permitted
modification to such Contract) set forth in such Contract due from the Obligor
in the related Collection Period; provided, however, that with respect to any
Contract as to which SierraCities.com retained the security deposit, a Scheduled
Payment shall not include the final payment or payments to be made thereon equal
to the amount of such security deposit.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw Hill Companies, Inc.
"SEC" means the Securities and Exchange Commission and any successor
thereto.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" means First Sierra Receivables III, Inc.
"Servicer" means the Person performing the duties of the Servicer under
the Indenture and the Servicing Agreement, initially SierraCities.com.
"Servicer Advance" means any amount paid by the Servicer with respect
to a Delinquent Contract pursuant to Section 4.03 of the Servicing Agreement.
"Servicer Fee" means the fee payable to the Servicer on each Payment
Date in consideration for the Servicer's performance of its duties pursuant to
Article 4 of the Servicing Agreement in an amount equal to the product of (a)
one-twelfth of the Servicer Fee Rate and (b) the Aggregate Discounted Contract
Principal Balance as of the opening of business on the first day of the related
Collection Period.
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"Servicer Fee Rate" means 0.50% per annum.
"Servicer Termination Notice" means the notice described in Section
6.01 of the Servicing Agreement.
"Servicing Agreement" means the Servicing Agreement, dated as of March
1, 2000, among the Servicer, SierraCities.com, the Trust and the Indenture
Trustee, as amended, supplemented or otherwise modified from time to time.
"Servicing Charges" means the sum of (a) any late payment charges paid
by an Obligor on a Delinquent Contract after application of any such charges to
amounts then due under such Contract and (b) any other incidental charges or
fees received from an Obligor.
"Servicing Officer" means any representative of the Servicer involved
in, or responsible for, the administration and servicing of the Contracts whose
name appears on a list of servicing officers furnished to the Indenture Trustee
by the Servicer, as such list may from time to time be amended.
"Servicing Standard" has the meaning specified in Section 4.01(a) of
the Servicing Agreement.
"SierraCities.com" means SierraCities.com Inc., formerly First Sierra
Financial, Inc., a Delaware corporation.
"Source" means Sky Financial Solutions, Inc., the third party from whom
SierraCities.com acquired the Contracts pursuant to SierraCities.com's "private
label program".
"Source Agreement" means the agreement between SierraCitities.com, Inc.
and the Source pursuant to which SierraCities.com acquired all right, title and
interest of the Source in and to a Contract and a security interest in the
Source's right, title and interest in and to the related Equipment.
"Source Agreement Rights" means (i) any and all rights of
SierraCities.com under the Source Agreement with respect to such Source
Agreement to the extent such Source Agreement relates to any Contract and any
Equipment covered by the Contracts and (ii) any and all rights of
SierraCities.com under the Guaranty or any letters of credit with respect to the
Source Agreement to the extent the Guaranty, any letter of credit or Source
Agreement relates to any Contract and any Equipment covered by the Contracts.
"Source Repurchase Price" means, with respect to any Contract required
to be repurchased by the Source pursuant to the terms of the Source Agreement
and as of the date such Contract is required to be repurchased, an amount equal
to the sum of (i) the Discounted Contract Balance of such Contract, plus (ii)
any costs and expenses incurred by the Servicer in enforcing its rights and
remedies under the Source Agreement and under such Contract, plus (iii) any
accrued but unpaid late charges, taxes or other charges due under such Contract.
Solely for the purposes of calculating the Source Repurchase Price, "Discounted
Contract Balance" shall mean, with respect to any Contract required to be
repurchased by the Source pursuant to the terms of the Source Agreement and as
the date such Contract is required to be repurchased, an
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amount equal to the sum of (i) all Scheduled Payments due under such Contract
and unpaid as of such date, plus (ii) the present value of the remaining
Scheduled Payments to become due under such Contract, discounted to such date of
determination using a "Purchase Cost Discount Rate" specified by the Servicer in
the related Default Notice.
"State" means any state of the United States of America and, in
addition, the District of Columbia and Puerto Rico.
"Subsequent Contracts" means those contracts listed on the List of
Subsequent Contracts attached to the related Subsequent Transfer Agreement.
"Subsequent Conveyed Assets" means, with respect to any Subsequent
Transfer Agreement (a) all of the Sellers' right, title and interest in and to
the Subsequent Equipment relating to Subsequent Contracts (except for any
licensed products that may accompany the Subsequent Equipment) and any new unit
or units of Equipment substituted for any existing unit or units of Subsequent
Equipment, including all income and proceeds upon any sale or other disposition
of the Subsequent Equipment, (b) all of the Sellers' right, title and interest
in and to, but not its obligations under, the Subsequent Contracts, and all
amendments, additions and supplements including schedules, summary schedules and
subschedules made or hereafter made with respect thereto, (c) all monies due or
to become due in payment of the Subsequent Contracts on or after the related
Subsequent Cut-Off Date, including without limitation, all Scheduled Payments
thereunder (whether or not due), any Prepayments, any payments in respect of a
casualty or early termination and any Liquidation Proceeds received with respect
thereto, but excluding any Excluded Amounts, (d) the Contract Files, (e) all
Insurance Proceeds relating to the foregoing and the Sellers' rights and
interests in the Insurance Policies relating to the foregoing, (f) the Source
Agreement and Source Agreement Rights to the extent they relate to any
Subsequent Contract and any Subsequent Equipment covered by the Subsequent
Contracts and (g) all proceeds and income of the foregoing or relating thereto.
"Subsequent Cut-Off Date" means with respect those Subsequent Contracts
which are pledged to the Indenture Trustee pursuant to a Subsequent Transfer
Agreement, three Business Days prior to such Subsequent Transfer Date.
"Subsequent Equipment" means the Equipment relating to the Subsequent
Contracts, a security interest in which will be pledged to the Indenture Trustee
on the related Subsequent Transfer Date.
"Subsequent Receivables" means the Subsequent Contracts and the
Subsequent Equipment.
"Subsequent Transfer Agreement" means each Subsequent Transfer
Agreement dated as of a Subsequent Transfer Date executed by the Sellers and the
Trust substantially in the form of Exhibit A to the Receivables Transfer
Agreement, by which Subsequent Receivables are sold to the Trust.
"Subsequent Transfer Date" means any date on which a Subsequent
Contract is pledged to the Indenture Trustee pursuant to Section 2.01 of the
Indenture.
A-26
<PAGE> 86
"Substitute Contract" has the meaning specified in Section 4.02(a) of
the Indenture.
"Substitute Conveyed Assets" means, with respect to the Receivables
Transfer Agreement (a) all of the Sellers' right, title and interest in and to
the Substitute Equipment relating to Substitute Contracts (except for any
licensed products that may accompany the Substitute Equipment) and any new unit
or units of Equipment substituted for any existing unit or units of Substitute
Equipment, including all income and proceeds upon any sale or other disposition
of the Substitute Equipment, (b) all of the Sellers' right, title and interest
in and to, but not its obligations under, the Substitute Contracts and all
amendments, additions and supplements including schedules, summary schedules and
subschedules made or hereafter made with respect thereto, (c) all monies due or
to become due in payment of the Substitute Contracts on or after the related
Substitute Cut-Off Date, including without limitation, all Scheduled Payments
thereunder (whether or not due), any Prepayments, any payments in respect of a
casualty or early termination and any Liquidation Proceeds received with respect
thereto, but excluding any Excluded Amounts, (d) the Contract Files, (e) all
Insurance Proceeds relating to the foregoing and the Sellers' rights and
interests in the Insurance Policies relating to the foregoing, (f) the Source
Agreement and Source Agreement Rights to the extent they relate to any
Substitute Contract and any Substitute Equipment covered by the Substitute
Contracts and (g) all proceeds and income of the foregoing or relating thereto.
"Substitute Cut-Off Date" means, with respect to a Substitute Contract,
the close of business on the first day of the calendar month in which the
related Substitute Transfer Date occurs.
"Substitute Equipment" means the Equipment pledged to the Indenture
Trustee on each Substitute Transfer Date.
"Substitute Transfer Date" means any date on which a Substitute
Contract is pledged pursuant to Section 4.02 of the Indenture.
"Subsequent Transfer Agreement" has the meaning set forth in Section
2.02(c) of the Receivables Transfer Agreement.
"Supplemental Interest Required Amount" means an amount equal to the
excess of (i) the product of (x) 1.0% and (y) the sum of (i) Initial Aggregate
Discounted Contract Principal Balance as of the Initial Cut-Off Date and (ii)
the aggregate Discounted Contract Principal Balance of all Subsequent Contracts
as of the related Subsequent Cut-Off Date over (ii) the amount previously
withdrawn from the Supplemental Interest Reserve Account pursuant to Section
3.09(c) of the Indenture.
"Supplemental Interest Reserve Account" means the Eligible Bank Account
established pursuant to Section 3.09 of the Indenture.
"Tape" means the data base with respect to the Contracts used to
calculate the information in the Monthly Statement.
A-27
<PAGE> 87
"Tax Sharing Agreement" means any tax allocation agreement or
arrangement with respect to the First Sierra Group, including any arrangement
for payments by or to a member of the First Sierra Group with respect to its
liability for taxes (including taxes excluded from the definition of Income
Taxes hereunder) of the First Sierra Group or arising from its contribution to
taxable income or loss of the First Sierra Group.
"TIA" means the Trust Indenture Act of 1939.
"Transaction Documents" means the Receivables Transfer Agreement, each
Subsequent Transfer Agreement, the Indenture, this Annex A, the Servicing
Agreement, the Notes, the Trust Certificate, the Trust Agreement and the Holding
Trust Agreement.
"Trust Agreement" shall mean the Trust Agreement, dated as of March 1,
2000, between the Depositor and the Owner Trustee, as amended, supplemented or
otherwise modified from time to time.
"Trust Certificate" means the Trust Certificate evidencing the
beneficial ownership interest of a Holder of the Trust Certificate in the Trust,
initially issued by the Issuer to the Holding Trust.
"Trust Certificate Holder" means the holder of the Trust Certificate
issued pursuant to the Trust Agreement.
"Trust Certificate Principal Balance" means, as of any Payment Date,
the difference, if any, between (i) the sum of (x) the Aggregate Discounted
Contract Principal Balances of all Contracts as of the end of the immediately
preceding Collection Period and (y) the Aggregate Discounted Contract Principal
Balances as of the day prior to such Payment Date of all Substitute Contracts to
be conveyed to the Trust on such Payment Date and (ii) the Aggregate Note
Principal Balance, after taking into account any distributions on such Payment
Date.
"Trust Operating Expenses" means, with respect to any Payment Date, the
aggregate amount described in clauses (iii) through (vi), inclusive, of Section
3.05(b) of the Indenture with respect to such Payment Date.
"UCC" means the Uniform Commercial Code as in effect in the applicable
jurisdiction.
"Underwriters" means Merrill Lynch, Pierce Fenner & Smith., a Delaware
corporation and First Union Securities, Inc., a North Carolina corporation.
"Unscheduled Principal Payments" means, with respect to any Payment
Date, the aggregate amounts received during the immediately preceding Collection
Period pursuant to any Source Agreement, in respect of Contracts, or the related
Equipment (excluding Excluded Amounts).
"Warranty Event" has the meaning provided in Section 4.01(a) of the
Indenture.
A-28
<PAGE> 1
EXHIBIT 8.1
April 11, 2000
To the Parties Listed on Schedule I:
Ladies and Gentlemen:
We have acted as tax counsel to SierraCities.com Inc.
("SierraCities.com") and First Sierra Receivables III, Inc. (the "Depositor"),
in connection with the issuance by First Sierra Healthcare Equipment Contract
Trust 2000-1, a Delaware common law trust acting through Christiana Bank & Trust
Company, not in its individual capacity but solely as Owner Trustee (the
"Trust"), established pursuant to a Trust Agreement, dated as of March 1, 2000,
between the Depositor and Christiana Bank & Trust Company, not in its individual
capacity but solely as owner trustee, of (i) $75,000,000 of 7.49% Healthcare
Equipment Contract Backed Notes, Class A-1 (the "Class A-1 Notes"), (ii)
$99,600,000 of 7.77% Healthcare Equipment Contract Backed Notes, Class A-2 (the
"Class A-2 Notes" and, together with the Class A-1 Notes, the "Class A Notes")
and (iii) $14,052,729 of 7.95% Healthcare Equipment Contract Backed Notes, Class
B (the "Class B Notes"). The Class A Notes and the Class B Notes are
collectively referred to as the "Notes." The Notes were issued pursuant to an
Indenture, dated as of March 1, 2000 (the "Indenture"), among the Trust,
SierraCities.com, as servicer and as originator, and Bankers Trust Company, as
indenture trustee (the "Indenture Trustee"). Pursuant to the Indenture, the
Pledged Property 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 March 31, 2000 (the
"Prospectus Supplement"). 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 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 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
<PAGE> 2
April 11, 2000
Page 2
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 representations made by the
Underwriters, as well as other 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 and the Class B Notes will 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; (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 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. This opinion is furnished by us as tax
counsel in connection with the issuance of the Notes, and is not to be used,
circulated, quoted or otherwise referred to for any purpose without our express
written consent.
Very truly yours,
/s/ Dewey Ballantine LLP
-----------------------------------------
<PAGE> 3
Schedule I
Bankers Trust Company
Four Albany Street, 10th Floor
New York, New York 10006
Christiana Bank & Trust Company
Greenville Center
3801 Kennett Pike
Greenville, Delaware 19807
First Sierra Healthcare
Equipment Contract Trust 2000-1
c/o Christiana Bank & Trust Company
Greenville Center
3801 Kennett Pike
Greenville, Delaware 19807
SierraCities.com Inc.
600 Travis Street, Suite 7050
Houston, Texas 77002
First Sierra Receivables III, Inc.
600 Travis Street, Suite 7050
Houston, Texas 77002
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
as Representative of the several underwriters
World Financial Center
North Tower
200 Vesey Street
New York, New York 10281-1201
First Union Capital Markets Corp.
One First Union Center, TW-10
301 South College Street
Charlotte, N.C. 28288-0610
Duff & Phelps Credit Rating Co.
55 East Monroe, Suite 4200
Chicago, Illinois 60601
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10004
<PAGE> 1
EXHIBIT 10.1
EXECUTION COPY
RECEIVABLES TRANSFER AGREEMENT
--------------------------------------------------
BETWEEN
SIERRACITIES.COM INC.
FIRST SIERRA RECEIVABLES III, INC.,
FIRST UNION NATIONAL BANK,
VARIABLE FUNDING CAPITAL CORPORATION,
FIRST SIERRA EQUIPMENT CONTRACT TRUST 1999-H,
FAIRWAY FINANCE CORPORATION,
BANKERS TRUST COMPANY
AND
FIRST SIERRA HEALTHCARE EQUIPMENT CONTRACT TRUST 2000-1
COMMON LAW TRUST ACTING THROUGH CHRISTIANA BANK AND
TRUST COMPANY, NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS
OWNER TRUSTEE
--------------------------------------------------
DATED AS OF
MARCH 1, 2000
<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 Conveyance of Subsequent Conveyed Assets.......................................6
SECTION 2.03 Custody of Contract Files......................................................8
SECTION 2.04 Intention of the Parties; Grant of Security Interest...........................8
ARTICLE III REPRESENTATIONS AND WARRANTIES...............................................................8
SECTION 3.01 Representations and Warranties.................................................8
SECTION 3.02 Removal of Non-Conforming Contracts by SierraCities.com.......................20
SECTION 3.03 Substitution of Contracts and Equipment by SierraCities.com...................20
ARTICLE IV COVENANTS....................................................................................21
SECTION 4.01 Seller and SierraCities.com Covenants.........................................21
SECTION 4.02 Receivables III Covenants.....................................................24
SECTION 4.03 Transfer of Conveyed Assets...................................................27
ARTICLE V CONDITIONS PRECEDENT..........................................................................27
SECTION 5.01 Conditions to Trust Obligations...............................................27
ARTICLE VI TERMINATION..................................................................................28
SECTION 6.01 Termination...................................................................28
SECTION 6.02 Effect of Termination.........................................................28
ARTICLE VII MISCELLANEOUS PROVISIONS....................................................................28
SECTION 7.01 Amendment.....................................................................28
SECTION 7.02 GOVERNING LAW.................................................................28
SECTION 7.03 Notices.......................................................................29
SECTION 7.04 Severability of Provisions....................................................30
SECTION 7.05 Assignment....................................................................30
SECTION 7.06 Further Assurances............................................................30
SECTION 7.07 No Waiver; Cumulative Remedies................................................30
SECTION 7.08 Counterparts..................................................................30
SECTION 7.09 Binding Effect: Third-Party Beneficiaries.....................................30
SECTION 7.10 Merger and Integration........................................................30
SECTION 7.11 Headings......................................................................30
SECTION 7.12 Schedules and Exhibits........................................................30
SECTION 7.13 No Bankruptcy Petition Against Receivables III or the Trust...................30
</TABLE>
i
<PAGE> 3
Exhibits, Schedules & Annexes
EXHIBIT A FORM OF SUBSEQUENT TRANSFER AGREEMENT
Schedule 1 LIST OF INITIAL CONTRACTS
Annex A DEFINED TERMS
ii
<PAGE> 4
RECEIVABLES TRANSFER AGREEMENT
THIS RECEIVABLES TRANSFER AGREEMENT (this "Agreement"), dated
as of March 1, 2000, is entered into among SIERRACITIES.COM INC., formerly
First Sierra Financial Inc. ("SierraCities.com"), 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, 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), FIRST SIERRA EQUIPMENT CONTRACT TRUST 1999-H, a Delaware
business trust (the "Series 1999-H Trust") and FIRST SIERRA HEALTHCARE
EQUIPMENT CONTRACT TRUST 2000-1 (the "Issuer" or the "Trust"), a Delaware
common law trust acting through Christiana Bank and Trust Company, not in its
individual capacity but solely as Owner Trustee, located at Greenville Center,
3801 Kennett Pike, Greenville, Delaware 19807. The First Sierra Equipment Lease
Trust 1997-A, the First Sierra Equipment Lease Trust 1997-B, the First Sierra
Equipment Lease Trust 1998-E and the First Sierra Equipment Contract Trust
1999-H are collectively referred to herein as the "Warehouse Trusts."
Receivables III and each Warehouse Trust are collectively referred to herein as
the "Sellers." First Union, VFCC and FCC are collectively referred to herein as
the "Investors."
WITNESSETH:
WHEREAS, SierraCities.com in the ordinary course of its
business acquires and originates equipment contracts and commercial loans in
the United States; and
WHEREAS, Receivables III, SierraCities.com 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, equipment and certain rights related thereto and arising
therefrom ("Assets") 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 Assets from
<PAGE> 5
Receivables III, (ii) issuing one or more senior certificates ("Senior
Certificates"), junior certificates ("Junior Certificates") and residual
certificates ("Residual Certificates" and, together with the Senior
Certificates, the "Certificates") representing beneficial ownership interests
in the assets of each trust and (iii) selling the Senior Certificates to
investors; and
WHEREAS, pursuant to a Series 1997-A Supplement, dated as of
June 30, 1997, as amended (the "Series 1997-A Supplement"), among Receivables
III, SierraCities.com, 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 Assets conveyed by Receivables III to the First
Sierra Equipment Lease Trust 1997-A (the "1997-A Assets") and issued a Residual
Certificate to Receivables III representing the residual beneficial ownership
interest in the 1997-A Assets conveyed to the First Sierra Equipment Lease
Trust 1997-A; and
WHEREAS, First Union and Receivables III, as the beneficial
owners of the 1997-A Assets in the First Sierra Equipment Lease Trust 1997-A,
have directed that Bankers Trust Company, as the Trustee of such trust, convey
the 1997-A Assets 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, SierraCities.com, 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 Assets conveyed by Receivables III to the First Sierra
Equipment Lease Trust 1997-B (the "1997-B Assets") and issued a Residual
Certificate to Receivables III representing the residual beneficial ownership
interest in the 1997-B Assets conveyed to the First Sierra Equipment Lease
Trust 1997-B; and
WHEREAS, VFCC and Receivables III, as the beneficial owners
of the 1997-B Assets in the First Sierra Equipment Lease Trust 1997-B, have
directed that Bankers Trust Company, as trustee of such trust, convey the
1997-B Assets 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,
SierraCities.com, Bankers Trust Company, FFC and Nesbitt Burns Securities,
Inc., the parties thereto formed a trust (the "First Sierra Equipment Lease
Trust 1998-E"), issued a Senior Certificate to FFC representing a senior
beneficial ownership interest in the Assets conveyed by Receivables III to the
First Sierra Equipment Lease Trust 1998-E and issued a junior certificate
representing a junior beneficial ownership interest in the Assets conveyed by
Receivables III to the First Sierra Equipment Lease Trust 1998-E (the "1998-E
Assets") and a Residual Certificate to Receivables III representing the
residual beneficial ownership interest in the 1998-E Assets conveyed to the
First Sierra Equipment Lease Trust 1998-E; and
2
<PAGE> 6
WHEREAS, FFC and Receivables III, as the beneficial owners of
the 1998-E Assets in the First Sierra Equipment Lease Trust 1998-E, have
directed that Bankers Trust Company, as trustee of such trust, convey the
1998-E Assets to the Trust; and
WHEREAS, pursuant to a Facility Agreement, dated as of August
1, 1999 (the "Series 1999-H Facility Agreement"), among Receivables III,
SierraCities.com, the Series 1999-H Trust, Bankers Trust Company, issued a
secured note to Merrill Lynch Mortgage Capital Inc., secured by the Assets
conveyed by Receivables III to the Series 1999-H Trust (the "1999-H Assets")
and a trust certificate to Receivables III representing the beneficial
ownership interest in the Series 1999-H Trust and the 1999-H Assets; and
WHEREAS, the Series 1999-H Trust, as the beneficial owner of
the 1999-H Assets, and Receivables III, as the holder of the trust certificate
issued by the Series 1999-H Trust, desire to convey the 1999-H Assets to the
Trust; and
WHEREAS, each of the Warehouse Trusts, on behalf of and at
the request of Receivables III, have agreed to, and Receivables III desires to
convey, transfer, contribute and assign all of its right, title and interest in
and to the 1997-A Assets, the 1997-B Assets, the 1998-E Assets and the 1999-H
Assets, as applicable, 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 Trust Certificateholder, the Owner
Trustee and Indenture Trustee.
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 101. 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 102. 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.
3
<PAGE> 7
(b) Accounting Terms. As used in this Agreement, accounting
terms which are not defined pursuant to Section 1.01 have the respective
meanings given to them under generally accepted accounting principles, as in
effect on the date of this Agreement. To the extent that the definitions of
accounting terms in this Agreement are inconsistent with the meanings of such
terms under generally accepted accounting principles, the definitions contained
in this Agreement will control.
(c) "Hereof," etc. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement will refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and Section, Schedule and Exhibit references contained in this
Agreement are references to Sections, Schedules and Exhibits in or to this
Agreement, unless otherwise specified.
(d) Number and Gender. Each defined term used in this
Agreement has a comparable meaning when used in its plural or singular form.
Each gender-specific term used in this Agreement has a comparable meaning
whether used in a masculine, feminine or gender-neutral form.
(e) Including. Whenever the term "including" (whether or not
that term is followed by the phrase "but not limited to" or "without
limitation" or words of similar effect) is used in this Agreement in connection
with a listing of items within a particular classification, that listing will
be interpreted to be illustrative only and will not be interpreted as a
limitation on, or exclusive listing of, the items within that classification.
ARTICLE II
TRANSFER OF CONVEYED ASSETS
SECTION 2.01 Direction; Acquisition of Initial Conveyed
Assets.
(a) (i) 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 which comprise the Initial Conveyed Assets. 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.
(ii) Receivables III, as the Residual Certificateholder
of the Warehouse Trusts, hereby requests the Warehouse Trusts to join
in the conveyance of the Initial Conveyed Assets.
4
<PAGE> 8
(iii) Receivables III, as the holder of the trust
certificate issued by the Series 1999-H Trust, hereby directs the
Series 1999-H Trust to convey to the Trust those assets of the Series
1999-H Trust which comprise the Initial Conveyed Assets. Upon receipt
of the consideration specified below, Merrill Lynch Mortgage Capital,
Inc. hereby releases 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 Merrill Lynch Mortgage
Capital, Inc.
(b) In consideration for (w) the issuance to Receivables III
of the trust certificate to be issued by the Holding Trust pursuant to the
Holding Trust Agreement, (x) the issuance to the Holding Trust of the trust
certificate to be issued by the Trust pursuant to the Trust Agreement, (y) the
receipt of $1,849,154.00 by First Sierra Equipment Lease Trust 1997-A,
$92,970,672.00 by First Sierra Equipment Lease Trust 1997-B, $38,758,611.00 by
First Sierra Equipment Lease Trust 1998-E and $49,770,430.00 by the Series
1999-H Trust on behalf of Merrill Lynch Mortgage Capital, Inc. and (z) other
good and valuable consideration, each of the Sellers hereby sells, transfers,
assigns, sets over and 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 the Servicer, financing statements
(and thereafter will file continuation statements with respect to such
financing statements) with respect to the related Initial Conveyed Assets
contributed and to be transferred to the Trust pursuant to this Agreement, the
related Subsequent Conveyed Assets to be contributed and transferred to the
Trust pursuant to a Subsequent Transfer 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, the related Subsequent
Conveyed Assets and the related Substitute Conveyed Assets (subject to the
Filing Requirements with respect to the Equipment) from each of the Sellers to
the Trust and the transfer, assignment and pledge of the Pledged Property from
the Trust to the Indenture Trustee on behalf of the Noteholders, pursuant to
the Indenture, and to deliver an executed 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 delivered to and held by
the Indenture Trustee on behalf of the Trust.
(d) In connection with such assignment and conveyance,
SierraCities.com shall, at its own expense, on or prior to the related
Conveyance Date, and with respect to Substitute Contracts, as soon as possible,
but in no event later than two (2) Business Days after the related Conveyance
Date (i) cause the Contract Management System to be marked with a specified code
(the "Contract Management Code") to show that the Initial Conveyed Assets, the
Subsequent Conveyed Assets or the
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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, as agent of the Trust and
the Indenture Trustee the List of Initial Contracts on or prior to the Closing
Date. Pursuant to Section 2.02 hereof, the Sellers may during the Pre-Funding
Period, convey Subsequent Contracts to the Trust at any time by delivering a
List of Subsequent Contracts to the Trust on each Conveyance Date containing
for each Subsequent Contract transferred on such Conveyance Date the
information set forth in the definition of List of Subsequent Contracts.
Pursuant to Section 3.03 hereof, SierraCities.com 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) The sale and conveyance of the Conveyed Assets will be
without recourse to the Sellers.
SECTION 2.02 Conveyance of Subsequent Conveyed Assets.
(a) Subject to the conditions set forth in paragraph (c)
below, in consideration of the Trust's delivery on the related Subsequent
Transfer Date of funds in the Pre-Funding Account in the amount determined in
accordance with Section 2.02(b) hereof, each of the Sellers shall on any
Subsequent Transfer Date sell, transfer, assign, set over and convey, without
recourse, to the Trust, but subject to the other terms and provisions of this
Agreement, all of the right, title and interest of such Seller in, to and under
the Subsequent Conveyed Assets identified on the related List of Subsequent
Contracts (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)). The transfer by the Sellers to the Trust of the
Subsequent Conveyed Assets identified on each List of Subsequent Contracts shall
be absolute and is intended by the Sellers and the Trust to constitute and to be
treated as a sale of the Subsequent Conveyed Assets by each Seller to the Trust.
Subsequent Transfer Dates occur not more frequently than once a month.
The original executed counterpart for each Subsequent
Contract shall be delivered to the Indenture Trustee, on behalf of the Trust,
two Business Days prior to the related Subsequent Transfer Date.
(b) The purchase price paid by the Indenture Trustee, at the
direction of the Depositor, on behalf of the Trust, from amounts released from
the Pre-Funding Account shall be equal to the aggregate Discounted Contract
Balance of the Subsequent Contracts so transferred on the related Subsequent
Transfer Date.
(c) The Sellers shall transfer to the Trust the Subsequent
Conveyed Assets and the Depositor on behalf of the Trust shall cause to be
released funds from the
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Pre-Funding Account, only upon satisfaction of each of the following conditions
on or prior to the related Subsequent Transfer Date:
(i) The Sellers shall have delivered to the Indenture
Trustee, as custodian, a duly executed Subsequent Transfer Agreement,
substantially in the form of Exhibit A attached hereto, including a
List of Subsequent Contracts attached thereto, and confirming the
satisfaction of each condition precedent specified in this paragraph
(c);
(ii) As of each Subsequent Transfer Date, as evidenced by
delivery of the Subsequent Transfer Agreement, none of the Sellers (a)
shall be insolvent or have been made insolvent by such transfers, nor
shall they be aware of any pending insolvency, (b) shall intend to
incur or believe that it shall incur debts that would be beyond its
ability to pay as such debts mature, (c) shall make such transfer with
actual intent to hinder, delay or defraud any Person, and (d) shall
have assets that constitute unreasonably small capital to carry out
its business as then conducted;
(iii) Each such Subsequent Contract must satisfy the
representations and warranties made in the Servicing Agreement and
each Seller shall have performed all obligations to be performed by it
hereunder on or prior to such Subsequent Transfer Date;
(iv) The Sellers shall not have selected such Subsequent
Contracts in a manner that they reasonably believe is adverse to the
interests of the Noteholders;
(v) Such sale and transfer shall not result in a material
adverse tax consequence to the Trust;
(vi) The Pre-Funding Period shall not have terminated;
(vii) The Sellers shall have provided the Indenture Trustee
and the Rating Agencies with an Addition Notice not later than three
Business Days prior to such Subsequent Transfer Date and shall have
provided any information reasonably requested by any of the foregoing
with respect to the related Subsequent Contracts;
(viii) The Sellers shall have deposited in the Collection
Account all collections in respect of the related Subsequent Contracts
since the related Subsequent Cut-Off Date;
(ix) Each Seller shall, at its own expense, on or prior to
the related Subsequent Transfer Date, indicate in its computer files
that the Subsequent Contracts identified in the related Subsequent
Transfer Agreement have been sold to the Trust pursuant to such
Subsequent Transfer Agreement and pledged to the Indenture Trustee
pursuant to the Indenture;
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(x) Copies of relevant UCC financing statements prepared for
filing by the Servicer pursuant to Section 2.01(c) hereof shall have
been delivered to the Indenture Trustee and all Filing Requirements
shall have been complied with;
(xi) SierraCities.com and the Sellers shall have delivered to
the Rating Agencies and the Indenture Trustee "bringdown opinions" to
the Opinions of Counsel regarding bankruptcy, corporate enforceability
and perfection delivered on the Closing Date and such other opinions
as the Indenture Trustee may reasonably request with respect to the
transfer of such Subsequent Contracts.
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, the Indenture Trustee will retain the Contract
Files and any related evidence of insurance and payments 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 and each Subsequent
Transfer Agreement is deemed to be a security agreement and that each Seller
shall be deemed to have granted to the Trust as of the related Conveyance Date
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. Such grant is made to secure the payment of all amounts
payable under this Agreement and each related Subsequent Transfer Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 Representations and Warranties.
(a) SierraCities.com 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 SierraCities.com of the Conveyed Assets to the Trust
and its successors and assigns.
(i) Organization and Good Standing. SierraCities.com 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;
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<PAGE> 12
(ii) Due Qualification. SierraCities.com 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 SierraCities.com 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 SierraCities.com is as
set forth on the signature line of this Agreement and, other than the
change from First Sierra Financial, Inc. to SierraCities.com Inc.,
SierraCities.com has not changed its name since its incorporation and
since its incorporation, SierraCities.com did not use, nor does
SierraCities.com now use, any trade names, fictitious names, assumed
name of "doing business as" names;
(iv) Power and Authority. SierraCities.com 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 SierraCities.com by all necessary corporate action;
(v) 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 SierraCities.com;
(vi) Valid Assignment; Binding Obligations. This Agreement
and the other Transaction Documents to which SierraCities.com is a
party, when duly executed and delivered, will constitute legal, valid,
and binding obligations of SierraCities.com enforceable against
SierraCities.com 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. SierraCities.com 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
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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 SierraCities.com, or any material term of any indenture,
agreement, mortgage, deed of trust, or other instrument to which
SierraCities.com 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
SierraCities.com of any court or of any federal or state regulatory
body, administrative agency, or other Governmental Authority having
jurisdiction over SierraCities.com or any of its properties which
would have a material adverse effect on the Conveyed Assets;
(ix) Ability to Perform. No event has occurred which
adversely affects SierraCities.com's operations or its ability to
perform its obligations under the Transaction Documents to which it is
a party;
(x) No Proceedings. There are no Proceedings or
investigations pending, or, to the knowledge of SierraCities.com,
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
SierraCities.com) materially and adversely affect the performance by
SierraCities.com of its obligations under, or the validity or
enforceability of, this Agreement or each other Transaction Document
to which it is a party;
(xi) No Consent Required. SierraCities.com 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 other
Transaction Documents to which it is a party, except for such as have
been obtained, effected or made;
(xii) Consolidated Return Taxable Income from the Equipment
and the Related Contracts. The Depositor and SierraCities.com are
members of an affiliated group within the meaning of Section 1504 of
the Code which has filed, and will continue to file, a consolidated
return for federal income tax purposes at all times until satisfaction
in full of all obligations (i) of SierraCities.com hereunder and (ii)
of SierraCities.com 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;
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(xiii) Principal Place of Business. The principal place of
business and chief executive office of SierraCities.com 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 SierraCities.com 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;
(xiv) Tax Returns. SierraCities.com has filed on a timely
basis all tax returns (federal, state and local) required to be filed
and has paid or made adequate provisions for the payment of all taxes,
assessments and other governmental charges due from SierraCities.com;
and
(xv) Pensions. Each pension plan or profit sharing plan to
which SierraCities.com is a party has been fully funded in accordance
with the obligations of SierraCities.com set forth in such plan.
(b) Receivables III, on its own behalf and as beneficial
owner of the trust certificate issued by the Series 1999-H Trust, hereby makes
the following representations and warranties for the benefit of the Indenture
Trustee, the Owner 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.
Receivables III has no subsidiaries other than special purpose trusts
created to finance the acquisition of Contracts and Equipment;
(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;
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(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;
(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
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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 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;
(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 (other than the Series 1999-H Trust)
is located in care of Bankers Trust Company, Four Albany Street, New
York, New York 10006 and the principal place of business of the Series
1999-H Trust is located in care of Christiana Bank & Trust Company,
3801 Kennett Pike, Greenville, Delaware 19807 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;
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<PAGE> 17
(xiv) Absence of Event. No event has occurred which adversely
affects Receivables III's operations or its ability to perform its
obligations under the Transaction Documents to which it is a party;
(xv) Non Consolidation. Receivables III is operated in such a
manner that it will not be consolidated in the estate of
SierraCities.com such that the separate existence of Receivables III
and SierraCities.com would be disregarded in the event of a bankruptcy
or insolvency of SierraCities.com; and
(xvi) Receivables III will treat its conveyance of the
Conveyed Assets as a sale for all financial reporting and accounting
purposes.
(c) First Union hereby makes the following representations
and warranties for the benefit of the Indenture Trustee, the Owner 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. 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
other Transaction Document to which it is a party, and to carry out
their respective terms; and the execution, delivery, and performance
of this Agreement and any other Transaction Document to which it is a
party has been duly authorized by First Union by all necessary
corporate action;
(iv) Due Execution and Delivery. This Agreement has been duly
executed and delivered on behalf of First Union;
(v) Valid Assignment; Binding Obligations. This Agreement
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
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<PAGE> 18
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, 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;
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(xi) No Consent Required. First Union is not required to
obtain the consent of any other Person, or any consent, license,
approval or authorization or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery or performance of this Agreement and the
Transaction Documents to which it is a party, except for such having
been obtained, effected or made;
(xii) Fair Consideration. The consideration received by First
Union as set forth herein is fair consideration having value
reasonably equivalent to or in excess of the value of the Conveyed
Assets conveyed by it and the performance of First Union's obligations
hereunder; and
(xiii) Accounting Treatment. First Union will treat the
assignment of the Conveyed Assets to the Trust pursuant to Article II
as a sale of the Conveyed Assets to the Trust for financial reporting
and accounting purposes.
(d) VFCC hereby makes the following representations and
warranties for the benefit of the Indenture Trustee, the 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. 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 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 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;
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(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, 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
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(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 other 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.
(e) FFC 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. 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;
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(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 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
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(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
(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
SierraCities.com. Upon the occurrence of a Warranty Event with respect to a
Contract, SierraCities.com 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. Upon the repurchase of a
Contract pursuant to the terms of the Source Agreement, SierraCities.com will
cause the Source Repurchase Price with respect to such Contract to be deposited
to the Collection Account in accordance with the terms of Section 4.03 of the
Indenture.
SECTION 3.03 Substitution of Contracts and Equipment by
SierraCities.com.
(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 SierraCities.com 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, as custodian of the
original executed counterpart of each such Substitute Contract, (ii) filing of
any UCC financing statements in accordance with the Filing Requirements
necessary to perfect the interest of the Trust and 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.
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(c) The parties hereto agree that in addition to the
obligation of SierraCities.com 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, SierraCities.com will
enforce its remedies against the Source under the Source Agreement. In
consideration of the purchase of the Equipment and the Contract,
SierraCities.com 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 SierraCities.com with respect to a breach as
provided in this Section 3.03 and Section 4.01 of the Indenture constitute the
sole remedy against SierraCities.com 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.
ARTICLE IV
COVENANTS
SECTION 4.01 Seller and SierraCities.com Covenants.
SierraCities.com 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.
SierraCities.com 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 and SierraCities.com will duly fulfill all obligations on its part to
be fulfilled under or in connection with each Contract and the 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.
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(c) Compliance with Law. SierraCities.com 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 SierraCities.com
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 SierraCities.com 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 SierraCities.com 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 SierraCities.com
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 breach by SierraCities.com of any of its representations,
warranties and covenants contained herein.
(f) Further Assurances.
(i) SierraCities.com 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.
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(g) Indemnification. SierraCities.com 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 SierraCities.com 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 SierraCities.com hereunder, being
untrue in any material respect at any time. The obligations of SierraCities.com
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 SIERRACITIES.COM
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. SierraCities.com shall notify the Trust
and the Indenture Trustee, promptly after becoming aware of any Lien on any
Conveyed Asset.
(i) Taxes. SierraCities.com 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. SierraCities.com shall promptly pay and discharge, or cause
the payment and discharge of, all federal income taxes (and all other material
taxes) when due and payable by each such Seller, except (i) such as may be paid
thereafter without penalty or (ii) such as may be contested in good faith by
appropriate proceedings and for which an adequate reserve has been established
and is maintained in accordance with GAAP. SierraCities.com shall promptly
notify the Trust, the Indenture Trustee and the Noteholders of any material
challenge, contest or proceeding pending by or against SierraCities.com before
any taxing authority. SierraCities.com and the Depositor shall have entered
into a Tax Sharing Agreement, pursuant to which (i) SierraCities.com 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 SierraCities.com in respect of
its separate federal income tax liability. So long as any Notes remain
outstanding, SierraCities.com and the Depositor shall not terminate or amend
such Tax Sharing Agreement without the prior written consent of the Indenture
Trustee, except that SierraCities.com shall not require the Depositor to make
any payments to SierraCities.com, 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.
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(j) Taxes and Other Liabilities. SierraCities.com shall
promptly pay and discharge all material taxes, assessments, fees, claims and
other governmental charges when due and payable by SierraCities.com, 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. SierraCities.com shall
promptly notify the Trust and the Indenture Trustee of any material challenge,
contest or proceeding pending by or against SierraCities.com or the First
Sierra Group before any taxing authority.
(k) Non-Consolidation. SierraCities.com 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 SierraCities.com, such that the separate corporate existence
of SierraCities.com and Receivables III, on the one hand, and Holding Trust
and/or the Trust, on the other hand, would be ignored in the event of a
bankruptcy of SierraCities.com.
(l) No Agency. SierraCities.com will not act as an agent of
Receivables III, Holding Trust 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 or the Trust;
(m) Financial Statements. The financial statements and books
and records of SierraCities.com reflect the separate existence of Receivables
III, Holding Trust and the Trust.
SECTION 4.02 Receivables III Covenants. Receivables III
hereby covenants and agrees with the Trust, the Noteholders 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;
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(iii) not be involved in the day-to-day management of
SierraCities.com and/or Holding Trust;
(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 SierraCities.com 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,
or SierraCities.com's creditors or Holding Trust'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;
(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
SierraCities.com, Holding Trust and First Sierra Healthcare Equipment
Contract Trust 2000-1 (including, in each case, through the
maintenance of a separate bank account);
(xiii) manage its day-to-day business without the involvement
of SierraCities.com and/or Holding Trust;
(xiv) maintain a separate office from that of
SierraCities.com and/or Holding Trust;
(xv) not act as an agent of SierraCities.com or Holding
Trust, except to the limited extent provided in the Transaction
Documents; and
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(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 to which Receivables III is a party, and upon
such execution will be Receivables III's successor under this
Agreement and any other such 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 such Transaction
Document, anything in this Agreement and any other Transaction
Document to the contrary notwithstanding; provided, however, that (a)
immediately after giving effect to such transaction, no covenant made
pursuant to Section 4.02(c) shall have been breached, (b) Receivables
III shall have delivered to the Trust, the Rating Agencies, the 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(c) 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 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 or the Trust, on the
other hand, would be ignored in the event of a bankruptcy of Receivables III.
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(e) No Agency. Receivables III will not act as an agent of
Holding Trust 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 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, Receivables III 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 SierraCities.com,
each Seller, Receivables III and each Investor contained in this Agreement
shall be true and correct on the Closing Date with the same effect as though
such representations and warranties had been made on such date;
(b) All information concerning the Initial Conveyed Assets
provided to the Trust shall be true and correct as of the Initial Cut-Off Date
in all material respects;
(c) Each Seller shall have delivered to the Trust a List of
Initial Contracts with respect to its respective Initial Contracts as of the
Initial Cut-Off Date and shall have substantially performed all other
obligations required to be performed by the provisions of this Agreement;
(d) SierraCities.com and 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
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(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(d) 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, SierraCities.com and the Trust created by this
Agreement shall terminate upon the latest of (i) the maturity or other
liquidation of the last Contract and the disposition of any amounts received
upon disposition of any Defaulted Contracts and any Equipment leased
thereunder; and (ii) the termination of the Indenture in accordance with the
terms thereof; provided, however, that the indemnifications contained in
Section 4.01(g) herein shall survive the termination of this Agreement and the
other Transaction Documents.
SECTION 6.02 Effect of Termination.
No termination or rejection or failure to assume the
executory obligations of this Agreement in the bankruptcy of any Seller or the
Trust shall be deemed to impair or affect the obligations pertaining to any
executed sale or executed obligations, including, without limitation,
pre-termination breaches of representations and warranties by any Seller.
Without limiting the foregoing, prior to termination, the failure of
SierraCities.com to pay a Repurchase Amount shall render such transfer or
obligation executory, nor shall the continued duties of the parties pursuant to
Article IV 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 (i) the prior written consent of
the Servicer and the Indenture Trustee and (ii) 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 APPLICABLE TO
28
<PAGE> 32
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
SierraCities.com, 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 Christiana Bank and Trust
Company, 3801 Kennett Pike, Greenville, Delaware 19807, Attention: Corporate
Trust Administration, Fax No.: (302) 421-5815, 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 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 the
Sellers or SierraCities.com, without the prior written consent of the Trust and
the Indenture Trustee (acting upon the written direction of the Majority
Holders) and, except as provided in Section 4.03, this Agreement may not be
assigned by the Trust without the prior written consent of SierraCities.com,
the Sellers and the Indenture Trustee. Whether or not expressly stated, all
representations, warranties, covenants and agreements of SierraCities.com,
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.
29
<PAGE> 33
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.
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]
30
<PAGE> 34
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.
SIERRACITIES.COM INC.,
in its individual capacity
By: /s/ E. Roger Gebhart
-----------------------------------------------
E. Roger Gebhart
Executive Vice President/ Treasurer
FIRST SIERRA RECEIVABLES III, INC., in its
individual capacity and as Junior
Certificateholder of the First Sierra Equipment
Lease Trust 1998-E
By: /s/ E. Roger Gebhart
-----------------------------------------------
E. Roger Gebhart
Vice President
FIRST UNION NATIONAL BANK,
as Certificateholder of the First Sierra
Equipment Lease Trust 1997-A
By: /s/ Bill A. Shirley
------------------------------------------------
Bill A. Shirley
Senior Vice President
VARIABLE FUNDING CAPITAL CORPORATION, as
Certificateholder of the First Sierra Equipment
Lease Trust 1997-B
By: /s/ Darrell R. Baber
------------------------------------------------
Darrell R. Baber
Director
<PAGE> 35
FAIRWAY FINANCE CORPORATION, as Senior
Certificateholder of the First Sierra Equipment
Lease Trust 1998-E
By: /s/ Dwight Jenkins
------------------------------------------------
Dwight Jenkins
Vice President
FIRST SIERRA EQUIPMENT CONTRACT
TRUST 1999-H, A DELAWARE BUSINESS
TRUST ACTING THROUGH CHRISTIANA
BANK & TRUST COMPANY, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY AS
OWNER TRUSTEE, as Issuer
By: /s/ Louis W. Geibel
------------------------------------------------
Louis W. Geibel
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 Russo
------------------------------------------------
Patricia Russo
Vice President
<PAGE> 36
FIRST SIERRA HEALTHCARE EQUIPMENT
TRUST 2000-1, A COMMON LAW TRUST
ACTING THROUGH CHRISTIANA BANK
AND TRUST COMPANY NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY AS
OWNER TRUSTEE, as Issuer
By: /s/ Louis W. Geibel
------------------------------------------------
Louis W. Geibel
Vice President
Acknowledged and Agreed:
MERRILL LYNCH
MORTGAGE CAPITAL, INC.
By: /s/ Jeffrey Cohen
------------------------------
Jeffrey Cohen
Authorized Signatory
[Signature Page To Receivables Transfer Agreement]
<PAGE> 37
EXHIBIT A
FORM OF SUBSEQUENT TRANSFER AGREEMENT
This Subsequent Transfer Agreement (this "Agreement"), dated
as of _______, 1999, is entered into among SIERRACITIES.COM INC., formerly
First Sierra Financial, Inc. ("SierraCities.Com"), 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), FIRST SIERRA EQUIPMENT CONTRACT TRUST 1999-H,
a Delaware business trust (the "Series 1999-H Trust") and FIRST SIERRA
HEALTHCARE EQUIPMENT CONTRACT TRUST 2000-1 (the "Issuer" or the "Trust"), a
Delaware common law trust acting through Christiana Bank and Trust Company, not
in its individual capacity but solely as Owner Trustee, located at Greenville
Center, 3801 Kennett Pike, Greenville, Delaware 19807.
The First Sierra Equipment Lease Trust 1997-A, the First
Sierra Equipment Lease Trust 1997-B, the First Sierra Equipment Lease Trust
1998-E and the First Sierra Equipment Contract Trust 1999-H are collectively
referred to herein as the "Warehouse Trusts." Receivables III and the Warehouse
Trusts are collectively referred to herein as the "Sellers." First Union, VFCC
and FFC are collectively referred to herein as the "Investors."
Pursuant to this Agreement and the Receivables Transfer
Agreement, dated as of March 1, 2000 (the "Receivables Transfer Agreement"),
among SierraCities.com, Receivables III, First Union, VFCC, the Series 1999-H
Trust, FFC, the Indenture Trustee and the Trust, the parties hereto agree to
the sale by the Sellers and the purchase by the Trust of the Subsequent
Conveyed Assets listed on the attached List of Subsequent Contracts, and the
pledge of the Subsequent Conveyed Assets by the Trust to the Indenture Trustee.
Capitalized terms used and not defined herein have their
respective meanings as set forth in the definitions contained in Annex A to the
Indenture, dated as of March 1, 2000 (the "Indenture"), among the Trust,
SierraCities.com, as Servicer, and the Indenture Trustee, which definitions are
incorporated by reference herein. All other capitalized terms used herein shall
have the meanings specified herein.
A-1
<PAGE> 38
Section 1. Conveyance of Subsequent Conveyed Assets.
(a) Each of the Sellers does hereby sell, transfer, assign,
set over and convey to the Trust, without recourse, (i) all of its respective
right, title and interest in and to the Subsequent Equipment (except for any
licensed products that may accompany the Equipment) and any new unit or units
of Equipment substituted for any existing unit or units of Equipment, including
all income and proceeds upon any sale or other disposition of the Subsequent
Equipment, (ii) all of its respective right, title and interest in and to, but
not its obligations under, the Subsequent Contracts and all amendments,
additions and supplements including schedules, summary schedules and
subschedules made or hereafter made with respect thereto, (iii) all monies due
or to become due in payment of the Subsequent Contracts on or after the related
Subsequent Cut-Off Date, including without limitation, all Scheduled Payments
thereunder (whether or not due), any Prepayments, any payments in respect of a
casualty or early termination and any Liquidation Proceeds received with
respect thereto, but excluding any Excluded Amounts, (iv) the Contract Files,
(v) all Insurance Proceeds relating to the foregoing and such Seller's rights
and interests in the Insurance Policies relating to the foregoing, (vi) all
Source Agreements and Source Agreement Rights to the extent they relate to any
Subsequent Contract and any Subsequent Equipment covered by the Subsequent
Contracts and (vii) all proceeds and income of the foregoing or relating
thereto.
(b) 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 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. Such grant is made to secure the payment of
all amounts payable under this Agreement.
(c) The expenses and costs relating to the delivery of the
Subsequent Conveyed Assets, this Agreement and such other items required under
the Receivables Transfer Agreement shall be borne by SierraCities.com.
(d) Annexed hereto is a List of Subsequent Contracts listing
the Contracts that constitute the Subsequent Contracts to be conveyed pursuant
to this Agreement on the date hereof.
Section 2. Representations and Warranties; Conditions
Precedent.
(a) Each of the Sellers hereby affirm the representations and
warranties set forth in Section 3.01 of the Receivables Transfer Agreement that
relate to such Seller as of the date hereof.
A-2
<PAGE> 39
(b) SierraCities.com hereby affirms that each Subsequent
Contract satisfies the representations and warranties set forth in Section 2.02
of the Servicing Agreement relating to the Contracts.
(c) Each of the Sellers is solvent, is able to pay its debts
as they become due and has capital sufficient to carry on its business and its
obligations hereunder; each such Seller will not be rendered insolvent by the
execution and delivery of this Agreement or by the performance of its
respective obligations hereunder nor is it aware of any pending insolvency; no
petition of bankruptcy (or similar insolvency proceeding) has been filed by or
against any of the Sellers prior to the date hereof;
(d) All terms and conditions of the Receivables Transfer
Agreement are hereby ratified and confirmed; provided, however, that in the
event of any conflict the provisions of this Agreement shall control over the
conflicting provisions of the Receivables Transfer Agreement.
(e) Each of the Sellers and SierraCities.com hereby confirm
that each of the conditions precedent set forth in Sections 2.02 of the
Receivables Transfer Agreement have been satisfied as of the date hereof.
(f) Each of the Sellers and SierraCities.com represent and
warrant that the aggregate Discounted Contract Balance of the Subsequent
Contracts listed on the List of Subsequent Contracts annexed hereto and
conveyed to the Trust pursuant to this Agreement as of the related Subsequent
Cut-Off Date is $__________.
Section 3. Grant from Trust to Indenture Trustee.
The Trust hereby grants as of the Subsequent Transfer Date to
the Indenture Trustee, as indenture trustee for the benefit of the Noteholders,
to secure all of the Trust's obligations under the Indenture, all of the
Trust's right, title and interest in and to, whether now existing or hereafter
created, (a) the Subsequent Conveyed Assets, (b) all funds on deposit from time
to time in the Collection Account allocable to the Subsequent Contracts,
excluding any investment income from such funds; (c) all its rights under this
Agreement; and (d) all present and future claims, demands, causes and choses in
action in respect of any or all of the foregoing and all payments on or under,
and all proceeds of every kind and nature whatsoever in respect of, any or all
of the foregoing and all payments on or under, and all proceeds of every kind
and nature whatsoever in the conversion thereof, voluntary or involuntary, into
cash or other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts acceptances, checks, deposit accounts, rights to
payment of any and every kind, and other forms of obligations and receivables,
instruments and other property which at any time constitute all or part of or
are included in the proceeds of any of the foregoing.
Section 4. Governing Law.
This Agreement shall be construed in accordance with the laws
of the State of New York and the obligations, rights and remedies of the
parties hereunder shall
A-3
<PAGE> 40
be determined in accordance with such laws, without giving effect to principles
of conflicts of law.
Section 5. Counterparts.
This Agreement may be executed in one or more counterparts
and by the different parties hereto on separate counterparts, each of which,
when so executed, shall be deemed to be an original; such counterparts,
together, shall constitute one and the same instrument.
Section 6. Successors and Assigns.
This Agreement shall inure to the benefit of and be binding
upon the Sellers, the Trust and the Owner Trustee and their respective
successors and assigns. The Indenture Trustee shall be express third party
beneficiaries hereto.
Section 7. Acceptance of Contract Files by Indenture Trustee.
The Indenture Trustee acknowledges receipt of the Contract
Files for each of the Subsequent Contracts listed on the List of Subsequent
Contracts annexed hereto.
Section 8. Ratification of Receivables Transfer Agreement.
Each party hereto hereby agrees that the Receivables Transfer
Agreement is in all respects ratified and confirmed and the Receivables
Transfer Agreement, as so supplemented by this Agreement shall be read, taken
and construed as one and the same instrument. In the event of any conflict
between the terms contained in the Receivables Transfer Agreement and in this
Agreement, the terms contained in this Agreement shall govern.
Section 9. 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.
A-4
<PAGE> 41
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the day and year first written above.
SIERRACITIES.COM INC.,
in its individual capacity
By:
-----------------------------------------------
Name:
Title:
FIRST SIERRA RECEIVABLES III, INC. in its
individual capacity and as Junior Certificateholder
of the First Sierra Equipment Lease Trust 1998-E
By:
-----------------------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK,
as Certificateholder of the First Sierra Equipment
Lease Trust 1997-A
By:
-----------------------------------------------
Name:
Title:
VARIABLE FUNDING CAPITAL CORPORATION, as
Certificateholder of the First Sierra Equipment
Lease Trust 1997-B
By:
-----------------------------------------------
Name:
Title:
A-5
<PAGE> 42
FAIRWAY FINANCE CORPORATION, as Senior
Certificateholder of the First Sierra Equipment
Lease Trust 1998-E
By:
-----------------------------------------------
Name:
Title:
FIRST SIERRA EQUIPMENT CONTRACT
TRUST 1999-H, A DELAWARE BUSINESS
TRUST ACTING THROUGH CHRISTIANA
BANK & TRUST COMPANY, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY AS
OWNER TRUSTEE, as Issuer
By:
-----------------------------------------------
Name:
Title:
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:
-----------------------------------------------
Name:
Title:
A-6
<PAGE> 43
FIRST SIERRA HEALTHCARE EQUIPMENT
CONTRACT TRUST 2000-1, A COMMON
LAW TRUST ACTING THROUGH
CHRISTIANA BANK AND TRUST COMPANY, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY AS OWNER TRUSTEE,
as Issuer
By:
-----------------------------------------------
Name:
Title:
Acknowledged and Agreed:
MERRILL LYNCH
MORTGAGE CAPITAL, INC.
By:
-----------------------------------------------
Name:
Title:
[Signature Page To Subsequent Transfer Agreement]
A-7
<PAGE> 44
SCHEDULE 1
LIST OF INITIAL CONTRACTS
[On File With Dewey Ballantine LLP]
<PAGE> 45
FIRST SIERRA HEALTHCARE EQUIPMENT CONTRACT TRUST
SERIES 2000-1
ANNEX A -- DEFINED TERMS
"Account" means any account established pursuant to Article III of the
Indenture.
"Addition Notice" means, with respect to any transfer of Subsequent
Contracts to the Trust pursuant to Section 2.02(c) of the Receivables Transfer
Agreement, notice of a Seller's election to transfer Subsequent Contracts to
the Trust, such notice to designate the related Subsequent Transfer Date and
the approximate aggregate Discounted Contract Principal Balance of the
Subsequent Contracts to be transferred on such Subsequent Transfer Date.
"Advance Payment" means, with respect to a Contract and a Collection Period,
any Scheduled Payment, Final Scheduled Payment or portion of either made by or
on behalf of an Obligor and received by the Servicer during such Collection
Period, which Scheduled Payment, Final Scheduled Payment or portion thereof
does not become due until a subsequent Collection Period.
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control," when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Aggregate Discounted Contract Principal Balance" means, at any time of
determination, an amount equal to the sum of the Discounted Contract Principal
Balances of all Contracts then comprising the Pledged Property.
"Aggregate Initial Note Principal Balance" means the aggregate of the
Initial Class A Note Principal Balance and the Initial Class B Note Principal
Balance.
"Aggregate Note Principal Balance" means, as of any date of determination,
the aggregate of the Class A Note Principal Balance and the Class B Note
Principal Balance Outstanding on such date of determination.
"Applicable Securities" means, for so long as the Class A Note Principal
Balance is greater than zero, the Class A Notes; following reduction of the
Class A Note Principal Balance to zero, and for so long as the Class B Note
Principal Balance is greater than zero, the Class B Notes; following reduction
of the Class B Note Principal Balance to zero, the Trust Certificate.
"Applicant" has the meaning specified in Section 5.06 of the Indenture.
"Authorized Officer" means, with respect to the Issuer and the Servicer, any
officer or agent acting pursuant to a power of attorney of the Owner Trustee or
the Servicer, as applicable, who is authorized to act for the Owner Trustee or
the Servicer, as applicable, in matters relating to the Trust and who is
identified on the list of Authorized Officers delivered by each of the Owner
Trustee and the Servicer to the Indenture Trustee on the Closing Date (as such
list may be modified or supplemented from time to time thereafter).
"Available Funds" means, with respect to a Payment Date, (i) all amounts
held in the Collection Account on the related Determination Date for the
related Collection Period, after
<PAGE> 46
taking into account all deposits to be made on such Determination Date, (ii)
proceeds of any Servicer Advances to be made no later than the Business Day
immediately prior to the Payment Date, other than any such amounts which relate
to any subsequent Collection Period, (iii) any Repurchase Amounts to be
deposited by the Trust Certificate Holder two Business Days prior to the
Payment Date pursuant to Section 4.01 of the Indenture (iv) on each Payment
Date on or prior to the Payment Date in June 2000, the Capitalized Interest
Requirement, if any, and (v) on the Payment Date immediately following the
termination of the Pre-Funding Period, the amount on deposit in the Pre-Funding
Account at such time.
"Bankruptcy Code" means the Bankruptcy Code of 1978, as amended, as codified
under Title 11 of the United States Code, and the Bankruptcy Rules promulgated
thereunder, as the same may be in effect from time to time.
"Base Principal Amount" means, with respect to any Payment Date, an amount
equal to the sum of (i) the excess of (x) the Aggregate Discounted Contract
Principal Balances of the Contracts as of the close of business on the last day
of the second preceding Collection Period over (y) the Aggregate Discounted
Contract Principal Balances of the Contracts as of the close of business on the
last day of the immediately preceding Collection Period plus (ii) on the
Payment Date immediately following the termination of the Pre-Funding Period,
the amount on deposit in the Pre-Funding Account at such time.
"Benefit Plan" has the meaning as specified in Section 5.03(f) of the
Indenture.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in New York, New York, Houston, Texas, Greenville,
Delaware, in the city and State where the Indenture Trustee's principal
corporate trust office is located, or in the city and State where the
Servicer's principal office is located, are authorized or obligated by law,
executive order or governmental decree to be closed; provided, however, that
the Servicer shall, from time to time, deliver written notice to the other
parties hereto of any differences in Business Days between the States of Texas
(or any other state where the Servicer has its principal office) and New York.
"Capitalized Interest Account" means the account established and maintained
pursuant to Section 3.02(b) of the Indenture.
"Capitalized Interest Account Deposit" means $12.79.
"Capitalized Interest Requirement" means with respect to any Payment Date
occurring during the Pre-Funding Period, an amount equal to interest for the
related Interest Accrual Period on the amount on deposit in the Pre-Funding
Account, calculated at the sum of the weighted average of the Note Rates on the
Notes.
"Capitalized Interest Required Reserve Amount" means on any Payment Date, an
amount equal to the product of (i) the Discount Rate less the sum of (a) the
Servicing Fee Rate and (b) 2.5%, (ii) the amount on deposit in the Pre-Funding
Account as of such Payment Date, and (iii) a fraction, the numerator of which
is the number of days remaining until the Payment Date immediately following
the termination of the Pre-Funding Period and the denominator of which is 360.
"Calculation Date" means, with respect to a Collection Period, the close of
business on the last day of such Collection Period, or if such day is not a
Business Day, the immediately succeeding Business Day.
Annex-2
<PAGE> 47
"Casualty Loss" means, with respect to a Contract, any loss, theft,
condemnation, governmental taking, destruction, or damage beyond repair of any
item of Equipment subject thereto which results, in accordance with the terms
of the Contract, in a reduction in the number or amount of any future Scheduled
Payments due thereunder or in the termination of the Obligor's obligation to
make future Scheduled Payments thereunder.
"Certificate Register" and "Certificate Registrar" shall mean the register
mentioned and the registrar appointed pursuant to Section 3.4 of the Trust
Agreement.
"Class" means all of the Class A-1 Notes, and all of the Class A-2 Notes and
all of the Class B Notes, as applicable.
"Class A Base Principal Distribution Amount" means with respect to any
Payment Date, the sum of (a) the product of (i) the Class A Percentage and (ii)
the Base Principal Amount for the related Collection Period plus (b) Overdue
Principal with respect to the Class A Notes.
"Class A Maturity Date" means the Class A-1 Maturity Date or the Class A-2
Maturity Date, as applicable.
"Class A Note" means any one of the Class A-1 Notes, or the Class A-2 Notes.
"Class A Note Factor" means the seven digit decimal number that the Servicer
will compute or cause to be computed for each Collection Period and will make
available to the Indenture Trustee on the related Determination Date
representing the ratio of (a) the Class A Note Principal Balance which will be
outstanding on the next Payment Date (after taking into account all
distributions to be made on such Payment Date) to (b) the Initial Class A Note
Principal Balance.
"Class A Noteholder" means the Person in whose name a Class A Note is
registered in the Register.
"Class A Note Interest" means the Class A-1 Note Interest or the Class A-2
Note Interest, as applicable.
"Class A Note Principal Balance" means, at any time, the Initial Class A
Note Principal Balance minus all payments theretofore received by the Class A
Noteholders on account of principal.
"Class A Overdue Principal" means, with respect to any Payment Date, the
difference, if any, equal to (a) the aggregate of the Class A Principal Payment
Amounts due on all prior Payment Dates and (b) the aggregate amount of the
principal (from whatever source) actually distributed to Class A Noteholders on
all prior Payment Dates.
"Class A Percentage" means (a) with respect to the earlier of (i) each
Payment Date prior to and including the May 2001 Payment Date or (ii) the
Payment Date on which the Class A-1 Note Principal Balance has been reduced to
zero, 100.0% and (b) on each Payment Date beginning with the June 2001 Payment
Date until the Class A Note Principal Balance has been reduced to zero 92.55%;
provided, however, that following the occurrence of a Gross Charge-Off Event,
the Class A Percentage shall be equal to 100.0% until the Class A Note
Principal Balance has been reduced to zero.
"Class A Percentage Interest" means the interest in the Class A Portion of
the Trust that is evidenced by a Class A Note and that is set forth on the face
of such Note; provided, however, that the Issuer shall only issue Class A Notes
evidencing in the aggregate Class A Percentage
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<PAGE> 48
Interests totaling 100%. To the extent that, for federal income tax purposes,
the Class A Notes constitute indebtedness, all references in this Agreement to
Holders of Class A Notes owning a specified percentage of the outstanding Class
A Note Principal Balance shall be construed to mean Holders of Class A Notes
evidencing such specified percentage of the then outstanding indebtedness.
"Class A Portion" means the aggregate interest in the Trust evidenced by the
Class A Notes.
"Class A Principal Payment Amount" means, for any Payment Date, the lesser
of (i) the Class A Base Principal Distribution Amount for such Payment Date,
and (ii) the Class A Note Principal Balance as of such Payment Date (prior to
making any distributions of principal on such Payment Date); provided, however,
for any Payment Date which occurs on a Class A Maturity Date for any Class A
Note, the Class A Principal Payment Amount shall not be less than the amount
required to reduce the Note Principal Balance of such Class of Class A Notes to
zero.
"Class A Termination Date" means the date on which all amounts owing to the
Class A Noteholders have each been paid in full.
"Class A-1 Maturity Date" means the Payment Date in January 2005.
"Class A-1 Note" means any one of the Class A-1 Notes executed and
authenticated by the Indenture Trustee, substantially in the form of Exhibit
C-1 to the Indenture.
"Class A-1 Note Current Interest" means, with respect to any Collection
Period, the interest accrued during the related Interest Accrual Period, equal
to the product of (x) a fraction, the numerator of which is the number of
actual days elapsed during the related Interest Accrual Period and the
denominator of which is 360, (y) the Class A-1 Note Rate and (z) the aggregate
Class A-1 Note Principal Balance outstanding immediately prior to such Payment
Date.
"Class A-1 Noteholder" means the Person in whose name a Class A-1 Note is
registered in the Register.
"Class A-1 Note Interest" means, with respect to any Collection Period, the
Class A-1 Note Current Interest and the Class A -1 Overdue Interest.
"Class A-1 Note Principal Balance" means, at any time, the Initial Class A-1
Note Principal Balance minus all payments theretofore received by the Class A-1
Noteholders on account of principal.
"Class A-1 Note Rate" means 7.49% per annum.
"Class A-1 Overdue Interest" means, with respect to any Payment Date, the
difference between (a) the sum of (i) the excess, if any, of any Class A-1 Note
Interest due on the immediately preceding Payment Date over the Class A-1 Note
Interest paid on such immediately preceding Payment Date and (ii) without
duplication of the amount described in clause (i), the amount of the Class A-1
Overdue Interest due and unpaid as of the immediately preceding Payment Date
and (b) any Class A-1 Overdue Interest paid on such Payment Date.
"Class A-1 Percentage Interest" means the interest in the Class A-1 Portion
of the Trust that is evidenced by a Class A-1 Note and that is set forth on the
face of such Note; provided, however, that the Issuer shall only issue Class
A-1 Notes evidencing in the aggregate Class A-1 Percentage Interests totaling
100%. To the extent that, for federal income tax purposes, the Class A-1 Notes
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constitute indebtedness, all references in the Transaction Documents to Holders
of Class A-1 Notes owning a specified percentage of the outstanding Class A-1
Note Principal Balance shall be construed to mean Holders of Class A-1 Notes
evidencing such specified percentage of the then outstanding indebtedness.
"Class A-1 Portion" means the aggregate interest in the Trust evidenced by
the Class A-1 Notes.
"Class A-2 Maturity Date" means the Payment Date in December 2010.
"Class A-2 Note" means any one of the Class A-2 Notes executed and
authenticated by the Indenture Trustee, substantially in the form of Exhibit
C-2 to the Indenture.
"Class A-2 Note Current Interest" means, with respect to any Collection
Period, the interest accrued during the related Interest Accrual Period, equal
to the product of (x) one-twelfth of the Class A-2 Note Rate and (y) the
aggregate Class A-2 Note Principal Balance outstanding immediately prior to
such Payment Date.
"Class A-2 Noteholder" means the Person in whose name a Class A-2 Note is
registered in the Register.
"Class A-2 Note Interest" means, with respect to any Collection Period, the
Class A-2 Note Current Interest and the Class A-2 Overdue Interest.
"Class A-2 Note Principal Balance" means, at any time, the Initial Class A-2
Note Principal Balance minus all payments theretofore received by the Class A-2
Noteholders on account of principal.
"Class A-2 Note Rate" means 7.77% per annum.
"Class A-2 Overdue Interest" means, with respect to any Payment Date, the
difference between (a) the sum of (i) the excess, if any, of any Class A-2 Note
Interest due on the immediately preceding Payment Date over the Class A-2 Note
Interest paid on such immediately preceding Payment Date and (ii) without
duplication of the amount described in clause (i), the amount of the Class A-2
Overdue Interest due and unpaid as of the immediately preceding Payment Date,
and (b) any Class A-2 Overdue Interest paid on such Payment Date.
"Class A-2 Percentage Interest" means the interest in the Class A-2 Portion
of the Trust that is evidenced by a Class A-2 Note and that is set forth on the
face of such Note; provided, however, that the Issuer shall only issue Class
A-2 Notes evidencing in the aggregate Class A-2 Percentage Interests totaling
100%. To the extent that, for federal income tax purposes, the Class A-2 Notes
constitute indebtedness, all references in the Transaction Documents to Holders
of Class A-2 Notes owning a specified percentage of the outstanding Class A-2
Note Principal Balance shall be construed to mean Holders of Class A-2 Notes
evidencing such specified percentage of the then outstanding indebtedness.
"Class A-2 Portion" means the aggregate interest in the Trust evidenced by
the Class A-2 Notes.
"Class B Base Principal Distribution Amount" means, with respect to any
Payment Date, the sum of (a) the product of (i) the Class B Percentage and (ii)
the Base Principal Amount for the related Collection Period plus (b) Overdue
Principal with respect to the Class B Notes.
"Class B Maturity Date" means the Payment Date in May 2011.
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<PAGE> 50
"Class B Note" means any one of the Class B Notes executed and authenticated
by the Indenture Trustee, substantially in the form of Exhibit D-1 to the
Indenture
"Class B Note Current Interest" means, with respect to any Payment Date, the
interest accrued during the related Interest Accrual Period, equal to the
product of (x) one-twelfth of the Class B Note Rate and (y) the Class B Note
Principal Balance outstanding immediately prior to such Payment Date.
"Class B Note Factor" means the seven digit decimal number that the Servicer
will compute or cause to be computed for each Collection Period and will make
available to the Indenture Trustee on the related Determination Date
representing the ratio of (a) the Class B Note Principal Balance which will be
outstanding on the next Payment Date (after taking into account all
distributions to be made on such Payment Date) to (b) the Initial Class B Note
Principal Balance.
"Class B Noteholder" means the Person in whose name a Class B Note is
registered in the Register.
"Class B Note Interest" means, with respect to any Payment Date, the Class B
Note Current Interest and the Class B Overdue Interest.
"Class B Note Principal Balance" means, at any time, the Initial Class B
Note Principal Balance minus all payments theretofore received by the Class B
Noteholders on account of principal.
"Class B Note Rate" means 7.95% per annum.
"Class B Overdue Interest" means, with respect to any Payment Date, the
difference between (a) the sum of (i) the excess, if any, of any Class B Note
Interest due on the immediately preceding Payment Date over the Class B Note
Interest paid on such immediately preceding Payment Date and (ii) without
duplication of the amount described in clause (i), the amount of the Class B
Overdue Interest due and unpaid as of the immediately preceding Payment Date,
and (b) any Class B Overdue Interest paid on such Payment Date.
"Class B Overdue Principal" means, with respect to any Payment Date, the
difference, if any, equal to (a) the aggregate of the Class B Principal Payment
Amounts due on all prior Payment Dates and (b) the aggregate amount of the
principal (from whatever source) actually distributed to Class B Noteholders on
all prior Payment Dates.
"Class B Percentage" means on any date of determination, 100% minus the
Class A Percentage as of such date of determination.
"Class B Percentage Interest" means the interest in the Class B Portion of
the Trust that is evidenced by a Class B Note and that is set forth on the face
of such Note; provided, however, that the Issuer shall only issue Class B Notes
evidencing in the aggregate Class B Percentage Interests totaling 100%. To the
extent that, for federal income tax purposes, the Class B Notes constitute
indebtedness, all references in the Transaction Documents to Holders of Class B
Notes owning a specified percentage of the outstanding Class B Note Principal
Balance shall be construed to mean Holders of Class B Notes evidencing such
specified percentage of the then outstanding indebtedness.
"Class B Portion" means the aggregate interest in the Trust evidenced by the
Class B Notes.
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<PAGE> 51
"Class B Principal Payment Amount" means, for any Payment Date, the lesser
of (i) the Class B Base Principal Distribution Amount for such Payment Date and
(ii) the amount necessary to reduce the Class B Note Principal Balance to zero.
"Closing Date" means April 11, 2000.
"Code" means the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations adopted thereunder, as the same may be in effect from time to time
and any successor thereto.
"Collection Account" means the Eligible Bank Account established pursuant to
Section 3.01 of the Indenture.
"Collection Period" means, with respect to any Payment Date, the period from
the opening of business on the second day of the immediately preceding calendar
month through the close of business on the first day of the calendar month in
which such Payment Date occurs.
"Collections" means, with respect to a Collection Period and a Contract, all
Scheduled Payments, Liquidation Proceeds, Insurance Proceeds, Early Termination
Contract Proceeds, Prepayments, proceeds from any Contract subject to a
Casualty Loss, Final Scheduled Payments, Prepayments and amounts received in
respect of the Contracts or related Equipment pursuant to any Source Agreements
(including amounts received as a Source Repurchase Price from the Source under
any recourse agreements, amounts received as a Source Repurchase Price from the
Guarantor, amounts withdrawn from the Reserve Account or amounts withdrawn from
the Letter of Credit Deposit Account) and Defaulted Contract Recoveries
received by the Servicer from or on behalf of an Obligor with respect to such
Contract during such Collection Period. Collections do not include Servicing
Charges, Excluded Amounts, Repurchase Amounts, Advance Payments and Servicer
Advances.
"Computer Tape" means, collectively, the computer tapes generated by the
Servicer which provide information relating to the Contracts and which were, or
will be, used by the Servicer in selecting the Contracts conveyed to the Issuer
pursuant to the Receivables Transfer Agreement and any Subsequent Transfer
Agreement.
"Contract" means each of the agreements evidencing the indebtedness of the
related Obligor, including, as applicable, schedules, supplements and
amendments thereto, under which the Source or SierraCities.com, as applicable,
leases or finances specified Equipment to an Obligor and which are conveyed to
the Trust and identified on the List of Initial Contracts delivered on the
Closing Date, with respect to Subsequent Contracts, on the List of Subsequent
Contracts delivered on the related Subsequent Transfer Date or, with respect to
Substitute Contracts, on the List of Substitute Contracts delivered on the
related Substitute Transfer Date.
"Contract File" means, with respect to each Contract, (1) a certified copy
of the master Contract, if applicable, (2) the executed original counterpart of
the Contract that constitutes "chattel paper" or an "instrument" for purposes
of Sections 9-105(1)(b), 9-105(l)(i) or 9-305 of the UCC, (3) an original
certificate, executed by an Obligor, evidencing delivery and acceptance of the
Equipment, (4) Obligor's corporate resolutions and secretary's certificate, if
required under the Credit and Collection Policies and Procedures, (5) a
guaranty, if any, (6) copies of documentation relating to the purchase of the
Equipment, (7) documents evidencing or related to any Insurance Policy (such
documents required to be included therein only with respect to Equipment which
had an Original Equipment Cost of more than $40,000), (8) evidence of filing or
copies of all UCC financing statements filed with respect to the Equipment or
the Contract in
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<PAGE> 52
accordance with the Filing Requirements; all such UCC financing statements
shall include either (a) UCC standard forms executed by the debtor and the
secured party, as required, or (b) evidence of the electronic filing of such
UCC financing statement, in which case acknowledgement copies shall be
forwarded promptly as they are received, (9) with respect to a Contract
originated by the Source, a certified copy of the related sale and assignment
between the Source and SierraCities.com, as well as any other Contract
assignments, (10) copies of any additional Contract documents evidencing any
changes or modifications of a Contract by the Servicer in accordance with the
terms of the Servicing Agreement, and (11) reference to the applicable contract
management code on the Contract Management System and any other documents
relating thereto held by SierraCities.com, as Servicer.
"Contract Management Code" has the meaning set forth in Section 2.01 of the
Receivables Transfer Agreement.
"Contract Management System" means the computerized electronic contract
management system maintained by SierraCities.com for all Contracts and other
agreements similar to the Contracts.
"Contract Number" means, with respect to each Contract, its identifying
number.
"Contract Pool" means, at any time, all Contracts held as part of the
Pledged Property.
"Conveyance Date" means, with respect to the Initial Contracts, the Closing
Date, with respect to a Subsequent Contract, the related Subsequent Transfer
Date and with respect to Substitute Contracts, the Substitute Transfer Date.
"Conveyed Assets" means the Initial Conveyed Assets, the Subsequent Conveyed
Assets and the Substitute Conveyed Assets.
"Corporate Trust Office" means the principal office of the Indenture Trustee
at which at any particular time its corporate trust business shall be
administered, which office at the date of this Agreement is specified in
Section 11.06 of the Indenture.
"Credit and Collection Policies and Procedures" means the credit and
collection policies and procedures of the Servicer.
"Credit File" means, with respect to each Contract, the following documents:
(a) copies of the Contract, any UCC financing statements and any other original
documents related to the Contract, (b) the application of the related Obligor,
(c) documentation evidencing the information with respect to such Contract
input into the Contract Management System and (d) any other information
required by the Servicer pursuant to its customary policies and procedures.
"Cut-Off Date" means, with respect to the Initial Contracts, the Initial
Cut-Off Date, with respect to the Subsequent Contracts, the related Subsequent
Cut-Off Date and with respect to each Substitute Contract, the related
Substitute Cut-Off Date.
"DCR" means Duff & Phelps Credit Rating Co.
"Default Notice" means the notice, substantially in the form of Exhibit E to
the Indenture, delivered by the Servicer to the Indenture Trustee, the Source
and the Guarantor of the Source's obligation, whereby the Servicer seeks to
enforce Source Agreement Rights.
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<PAGE> 53
"Defaulted Contract" means a Contract that becomes defaulted at the earlier
of the date on which (i) the Servicer has determined in its sole discretion, in
accordance with the Servicing Standard and its customary servicing procedures,
that such Contract is not collectible, (ii) all or part of a Scheduled Payment
thereunder is more than 180 days delinquent, or (iii) such Contract was
repurchased by the Source pursuant to the Source Agreement. The determination
as to delinquency of Scheduled Payments shall be made after the application of
amounts received in accordance with the Servicer's accounting procedures
related to classification of delinquency consistent with its delinquency
results for financial reporting purposes.
"Defaulted Contract Recoveries" means all proceeds of the sale of Equipment
related to Defaulted Contracts and any amounts collected as judgments against
an Obligor or others related to the failure of such Obligor to pay any required
amounts under the related Contract or to return the Equipment, in each case as
reduced by (i) any unreimbursed Servicer Advances with respect to such Contract
or such Equipment and (ii) any reasonably incurred out-of-pocket expenses
incurred by the Servicer in enforcing such Contract or in liquidating such
Equipment.
"Delinquent Contract" means, as of any Determination Date, any Contract
(other than a Contract which became a Defaulted Contract prior to such
Determination Date) with respect to which all or a portion of any Scheduled
Payment was not received when due by the Servicer as of the close of business
on the last day of the month in which such payment was due. The determination
as to delinquency of Scheduled Payments shall be made after the application of
amounts received in accordance with the Servicer's accounting procedures
related to classification of delinquency consistent with its delinquency
results for financial reporting purposes.
"Depositor" means First Sierra Receivables III, Inc., a Delaware corporation.
"Depository" means The Depository Trust Company, 55 Water Street, New York,
New York 10041 and any successor Depository hereafter named.
"Determination Date" means, with respect to a Payment Date, a date which is
two Business Days prior to such Payment Date.
"Direct Participant" means any broker-dealer, bank or other financial
institution for which the Depository holds the Class A and Class B Notes from
time to time as a securities depositary.
"Discounted Contract Principal Balance" means, with respect to any Contract,
on any Determination Date, the sum of the present value of all of the remaining
Scheduled Payments becoming due under such Contract after the end of the prior
Collection Period, discounted monthly at the Discount Rate in the manner
described below; provided, however, that except to the extent expressly
provided in the Indenture or the Servicing Agreement, the Discounted Contract
Principal Balance of any Defaulted Contract, Early Termination Contract, or
Expired Contract or Contract purchased by the Servicer or SierraCities.com
pursuant to the Servicing Agreement or by the Trust Certificate Holder pursuant
to the Indenture, shall be deemed to be equal to zero as of the last day of the
immediately preceding Collection Period.
In connection with all calculations required to be made pursuant to the
Transaction Documents with respect to the determination of Discounted Contract
Principal Balances, for any date of determination the "Discounted Contract
Principal Balance" for each Contract shall be calculated assuming:
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<PAGE> 54
Scheduled Payments are due on the last day of each Collection Period;
Scheduled Payments are discounted on a monthly basis using a 30 day
month and a 360 day year; and
Scheduled Payments are discounted to the last day of the Collection
Period prior to the Determination Date.
"Discount Rate" means, as of any date, 8.45%. The Discount Rate is equal to
the sum of (a) the Class B Note Rate and (b) the Servicer Fee Rate.
"Drawing Certificate" means the drawing certificate delivered by the
Indenture Trustee to a Letter of Credit Confirming Bank to request a draw on a
Letter of Credit, substantially in the form of Exhibit F-1 and F-2 to the
Indenture.
"Early Termination Contract" means any Contract that has terminated pursuant
to the terms of such Contract prior to its scheduled expiration date, other
than a Defaulted Contract.
"Early Termination Contract Proceeds" means any and all cash proceeds or
rents realized from the sale or re-lease of Equipment under an Early
Termination Contract (net of reasonable out-of-pocket remarketing expenses).
"Eligible Bank Account" means a segregated account, which may be an account
maintained with the Indenture Trustee, which is either (a) maintained with a
depository institution or trust company whose long term unsecured debt
obligations are rated at least, if deposits are to be held in such account for
more than thirty days, (i) "AA-" or better by S&P, (ii)"A2" or better by Moody's
and (iii) A by DCR and whose short-term unsecured obligations are rated at
least, if deposits are to be held in such account for thirty days or less, (i)
"A-1+" by S&P, (ii) "P-1" by Moody's and (iii) D-1 by DCR; provided, that if DCR
does not rate such entity then the ratings of S&P and Moody's shall suffice, or
(b) a segregated trust account or similar account maintained with a federally or
state chartered depository institution subject to regulations regarding
fiduciary funds on deposit substantially similar to 12 C.F.R. Section 9.10(b).
"Eligible Contract" means any Contract that is not a Defaulted Contract and
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 date made.
"Eligible Investments" means any of the following, in each case as
determined at the time of the investment or contractual commitment to invest
therein (to the extent such investments would not require the registration of
the Trust as an investment company pursuant to the Investment Company Act):
(a) negotiable instruments or securities represented by
instruments in bearer or registered or book-entry form which evidence:
(i) obligations which have the benefit of the full faith and credit
of the United States of America, including depository receipts issued
by a bank as custodian with respect to any such instrument or security
held by the custodian for the benefit of the holder of such depository
receipt,
(ii) demand deposits or time deposits in, or bankers' acceptances
issued by, any depository institution or trust company incorporated
under the laws of the United States of America or any state thereof
and subject to supervision and examination by Federal or state banking
or depositary institution authorities; provided that at the time of
the Indenture Trustee's investment or contractual commitment to invest
therein, the
Annex-10
<PAGE> 55
certificates of deposit or short-term deposits (if any) or long-term
unsecured debt obligations (other than such obligations whose rating
is based on collateral or on the credit of a Person other than such
institution or trust company) of such depositary institution or trust
company has a credit rating in the highest rating category from each
Rating Agency, or, if not rated by DCR or Moody's, the highest rating
category provided by S&P;
(iii) certificates of deposit having a rating in the highest rating
category by each of the Rating Agencies, or, if not rated by DCR and
Moody's, the highest rating category provided by S&P; or
(iv) investments in money market funds which are (or which are
composed of instruments or other investments which are) rated in the
highest rating category by each of the Rating Agencies (including
funds for which the Indenture Trustee or any of its Affiliates is
investment manager or advisor), or, if not rated by DCR and Moody's,
the highest rating category provided by S&P;
(b) demand deposits in the name of the Indenture Trustee in
any depositary institution or trust company referred to in clause
(a)(ii) above;
(c) commercial paper (having original or remaining maturities
of no more than 270 days) having a credit rating in the highest rating
category by each of the Rating Agencies, or, if not rated by DCR and
Moody's, the highest rating category provided by S&P;
(d) Eurodollar time deposits that are obligations of
institutions whose time deposits carry a credit rating in the highest
rating category by each of the Rating Agencies, or, if not rated by
DCR and Moody's, the highest rating category provided by S&P;
(e) repurchase agreements involving any Eligible Investment
described in any of clauses (a)(i), (a)(iii) or (d) above, so long as
the other party to the repurchase agreement has its long-term
unsecured debt obligations rated in the highest rating category by
each of the Rating Agencies, or, if not rated by DCR and Moody's, the
highest rating category provided by S&P; and
(f) any other investment with respect to which the Rating
Agency Condition has been satisfied.
Any Eligible Investment must mature no later than the Business Day prior to
the next Payment Date.
"Equipment" means, with respect to a Contract, the equipment leased, sold or
financed, as applicable, to an Obligor pursuant to such Contract, and any
inventory, accounts and other general intangibles or assets, as the case may
be, that secure payment under such Contract which Equipment includes the
Original Equipment, the Subsequent Equipment and the Substitute Equipment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" has the meaning specified in Section 8.01 of the
Indenture.
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<PAGE> 56
"Event of Servicing Termination" has the meaning specified in Section 6.01
of the Servicing Agreement.
"Excess Amounts" means, with respect to any Contract, any payment required
to be paid by the related Obligor pursuant to such Contract at the maturity of
such Contract in excess of the final Scheduled Payment with respect to such
Contract.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Amounts" means any payments received from an Obligor or the Source
in connection with any application fees, tax processing fees, wire transfer
fees, express mail fees, insurance premiums, late charges and other penalty
amounts, taxes, fees or other charges imposed by any governmental authority,
any indemnity payments made by an Obligor for the benefit of the obligee under
the related Contract or any payments collected from an Obligor or received from
the Source relating to servicing and/or maintenance payments pursuant to the
related Contract or maintenance agreement, as applicable, Expired Contract
Proceeds (other than any amounts then due from a related Source under the
related Source Agreement) or any other non-rental charges reimbursable to the
Servicer in accordance with the Servicer's customary policies and procedures
plus any collections received following the end of the immediately preceding
Collection Period up to the amount of the Servicer Advance made on the
immediately preceding Payment Date.
"Expired Contract" means any Contract that has terminated on its scheduled
expiration date after full payment of all Scheduled Payments and the Final
Scheduled Payment.
"Expired Contract Proceeds" means any and all cash proceeds or rents
realized from the sale or re-lease of Equipment under an Expired Contract.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System and any successor thereto.
"Filing Locations" means the jurisdictions in which any Equipment is located
under Contracts as of the applicable Cut-Off Date.
"Filing Requirements" means
(a) with respect to the Contracts, a UCC-1 financing statement with respect
to the assignment of all Contracts and any related Source Agreement Rights by
the related Source to SierraCities.com pursuant to the related Source
Agreement, by SierraCities.com to the Sellers pursuant to the Warehouse Trusts,
by the Sellers to the Owner Trustee, on behalf of the Issuer pursuant to the
Receivables Transfer Agreement,
(b) with respect to the Contracts and any related Source Agreement Rights, a
UCC-1 financing statement with respect to the pledge by the Owner Trustee, on
behalf of the Issuer, of all Contracts and any related Source Agreement Rights
to the Indenture Trustee pursuant to the Indenture,
(c) with respect to Equipment, (i) in each Filing Location in which
Equipment with an Original Equipment Cost of $75,000 or greater is then
located, financing statements on Form UCC-1 for Contracts originated by the
Source, naming the Obligor as debtor and the Source as secured party and First
Sierra Financial, Inc. or SierraCities.com as assignee; and (ii) with respect
to clause (i), the filings in paragraph (b) above in favor of the Indenture
Trustee in
Annex-12
<PAGE> 57
respect of the Contracts shall include all related rights relating to such
Contracts, including the security interests in the Equipment subject to this
clause (c).
"Final Scheduled Payment" means, with respect to any Contract, any payment
set forth in such Contract other than the regular Scheduled Payment which is
required to be paid by the related Obligor at the maturity of such Contract.
"Financing Statements" means a form UCC-1 financing statement.
"First Sierra Group" means, as of any relevant date, the affiliated group
within the meaning of section 1504 of the Code of which SierraCities.com, or
any successor thereto, is the common parent, or of which SierraCities.com is a
member, and shall mean any group eligible to file consolidated, combined or
unitary returns for state, local or foreign tax purposes which includes
SierraCities.com, regardless of the identity of the common parent.
"GAAP" means generally accepted accounting principles set forth from time to
time in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar function of comparable stature and authority within the accounting
profession), or in such other statements by such other entity as may be in
general use by significant segments of the U.S. accounting profession, which
are applicable to the circumstances as of the date of determination.
"Governmental Authority" means (a) any federal, state, county, municipal or
foreign government, or political subdivision thereof, (b) any governmental or
quasi-governmental agency, authority, board, bureau, commission, department,
instrumentality or public body, (c) any court or administrative tribunal or (d)
with respect to any Person, any arbitration tribunal or other non-governmental
authority to the jurisdiction of which such Person has consented.
"Gross Charge-Off Event" exists on any Payment Date on which the Gross
Charge-Off Ratio exceeds 10.0%.
"Gross Charge-Off Ratio" means, with respect to any Payment Date, the
quotient, expressed as a percentage, of (a) the sum of the aggregate Discounted
Contract Principal Balance of all Defaulted Contracts divided by (b) the
Aggregate Discounted Contract Principal Balance of all Contracts as of the
related Conveyance Date. For the purposes of the calculation of the Gross
Charge-Off Ratio, the Discounted Contract Principal Balance of any Contract
which is a Defaulted Contract shall not be zero, but shall instead be
calculated as provided in the definition of Discounted Contract Principal
Balance without reference to the last proviso in such definition.
"Guarantor" means Sky Financial Group, Inc. as guarantor of the Source's
obligations under the Source Agreement.
"Guaranty" means that certain Guaranty dated as of October 1, 1999 in favor
of SierraCities.com by Sky Financial Group, Inc.
"Holder" means the Person in whose name a Note is registered in the
Register, or in the case of a Trust Certificate, in the Certificate Register,
as the case may be.
"Holding Trust Agreement" means the First Sierra Holding Trust III Trust
Agreement, dated as of March 1, 2000, between the Depositor of the Holding
Trust and the Owner Trustee of the Holding Trust.
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"Holding Trust" means First Sierra Holding Trust III.
"Income Taxes" means any federal, state, local or foreign taxes based upon,
measured by, or imposed upon gross or net income, gross or net receipts,
capital, net worth, or the privilege of doing business, and any minimum taxes
or withholding taxes based upon any of the foregoing, including any penalties,
interest or additions to tax imposed with respect thereto.
"Indebtedness" means, as to any Person, (a) all indebtedness of such Person
for borrowed money, (b) all leases of equipment of such Person as Obligor, (c)
to the extent not included in clause (b), above, all capital leases of such
Person as Obligor, (d) any obligation of such Person for the deferred purchase
price of Property or services (other than trade or other accounts payable in
the ordinary course of business and not more than ninety (90) days past due),
(e) any obligation of such Person that is secured by a Lien on assets of such
Person, whether or not that Person has assumed such obligation or whether or
not such obligation is non-recourse to the credit of such Person, (f)
obligations of such Person arising under acceptance facilities or under
facilities for the discount of accounts receivable of such Person and (g) any
obligation of such Person to reimburse the issuer of any letter of credit
issued for the account of such Person upon which a draw has been made.
"Indenture" means the Indenture, dated as of March 1, 2000, among the Trust,
the Servicer and the Indenture Trustee, as amended, supplemented or otherwise
modified from time to time.
"Indenture Trustee" means the institution executing the Indenture and
Servicing Agreement as Indenture Trustee, or its successor in interest, and any
successor indenture trustee appointed as provided herein, or any successor to
the Indenture Trustee's corporate trust business (or a substantial portion
thereof) and initially shall mean Bankers Trust Company, a New York banking
corporation.
"Indenture Trustee Fee" means, with respect to each Payment Date, an amount
equal to $416.67.
"Indenture Trustee Expenses" means, the reasonable expenses of the Indenture
Trustee, as set forth in Section 7.07(a)(ii) of the Indenture.
"Independent Certificate" means a certificate or opinion to be delivered to
the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 10.05 of the Indenture,
prepared by an Independent appraiser or other expert appointed pursuant to an
Issuer Order and approved by the Indenture Trustee in the exercise of
reasonable care, and such opinion or certificate shall state that the signer
has read the definition of "Independent" in the Indenture and that the signer
is Independent within the meaning thereof.
"Independent Public Accountant" means any of (a) Arthur Andersen LLP, (b)
Deloitte & Touche, (c) PricewaterhouseCoopers, (d) Ernst & Young, and (e) KPMG
Peat Marwick (and any successors thereof); provided, that such firm is
independent with respect to the Servicer or any subservicer, as the case may
be, within the meaning of the Securities Act of 1933, as amended.
"Indirect Participant" means any financial institution for whom any Direct
Participant holds an interest in a Class A or Class B Note.
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"Initial Aggregate Discounted Contract Principal Balance" means the
Aggregate Discounted Contract Principal Balance as of the Initial Cut-Off Date,
which amount is equal to $188,652,640.43.
"Initial Class A Note Principal Balance" $174,600,000
"Initial Class A-1 Note Principal Balance" $ 75,000,000
"Initial Class A-2 Note Principal Balance" $ 99,600,000
"Initial Class B Note Principal Balance" $ 14,052,729
"Initial Contracts" means the Contracts pledged by the Trust to the
Indenture Trustee for the benefit of the Noteholders pursuant to the Indenture
on the Closing Date.
"Initial Conveyed Assets" means, with respect to the Receivables Transfer
Agreement (a) all of the Sellers' right, title and interest in and to the
Original Equipment, (except for any licensed products that may accompany the
Original Equipment) and any new unit or units of Equipment substituted for any
existing unit or units of Original Equipment, including all income and proceeds
upon any sale or other disposition of the Original Equipment, (b) all of the
Sellers' right, title and interest in and to, but not its obligations under,
the Initial Contracts and all amendments, additions and supplements including
schedules, summary schedules and subschedules made or hereafter made with
respect thereto, (c) all monies due or to become due in payment of the Initial
Contracts on or after the Initial Cut-Off Date, including without limitation,
all Scheduled Payments thereunder (whether or not due), any Prepayments, any
payments in respect of a casualty or early termination and any Liquidation
Proceeds received with respect thereto, but excluding any Excluded Amounts, (d)
the Contract Files, (e) all Insurance Proceeds relating to the foregoing and
the Sellers' rights and interests in the Insurance Policies relating to the
foregoing, (f) all Source Agreements and Source Agreement Rights to the extent
they relate to any Initial Contract and any Original Equipment covered by the
Initial Contracts and (g) all proceeds and income of the foregoing or relating
thereto.
"Initial Cut-Off Date" means the close of business on March 1, 2000.
"Initial Receivables" means the Initial Contracts and the Original Equipment.
"Initial Unpaid Amount" means, with respect to a Contract, the excess of (x)
the aggregate amount of all Scheduled Payments due prior to the related Cut-Off
Date over (y) the aggregate of all Scheduled Payments made prior to the related
Cut-Off Date with respect to such Contract.
"Insurance Policy" means, with respect to an item of Equipment and the
related Contract, any insurance policy required to be maintained by the Obligor
pursuant to such Contract that covers physical damage to such physical
Equipment and liability resulting from the use, operation or possession of such
Equipment (including policies procured by or on behalf of SierraCities.com on
behalf of the Obligor).
"Insurance Proceeds" means, with respect to an item of Equipment and the
related Contract, any amount received during a Collection Period pursuant to an
Insurance Policy issued with respect to such Equipment and related Contract.
"Interest Accrual Period" means, with respect to any Payment Date, the
period from and including the prior Payment Date to but excluding such Payment
Date and with respect to the initial Payment Date, the period from and
including the Closing Date to but excluding such Payment Date.
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"Investment Company Act" means the Investment Company Act of 1940, as
amended (15 U.S.C. 80a-1 et seq.), as the same may be in effect from time to
time, or any successor statute thereto.
"Investment Earnings" means any and all income from the investment of monies
held, from time to time, in the Collection Account, the Reserve Account, the
Supplemental Interest Reserve Account the Letter of Credit Deposit Account, the
Pre-Funding Account and the Capitalized Interest Account pursuant to Section
3.03 of the Indenture, net of any losses on any investments held in such
accounts.
"IRS" means the Internal Revenue Service and any successor thereto.
"Issuer" or "Trust" means First Sierra Healthcare Equipment Contract Trust
2000-1, a common law trust acting through Christiana Bank & Trust Company, not
in its individual capacity but solely as Owner Trustee.
"Issuer Order" and "Issuer Request" means a written order or request signed
in the name of the Issuer by any one of its Authorized Officers and delivered
to the Indenture Trustee.
"Letters of Credit" means (i) the irrevocable standby letter of credit
number 452 dated as of December 30, 1999 issued by Sky Bank for the benefit of
First Sierra Financial, Inc., as amended by Amendment No. 1 dated March 31,
2000 (the "Sky Letter of Credit") which Letter of Credit was confirmed by The
Northern Trust Company Chicago in an Advice of Letter of Credit, Advice No.
K274605, dated January 3, 2000, which advice was confirmed by the Confirming
Bank on April 4, 2000 and which advice was transferred to the Trust by the
Confirming Bank pursuant to a Transfer Advice of Irrevocable Letter of Credit
dated April 7, 2000 and (ii) the irrevocable standby letter of credit number
SLC99-1850 dated as of December 30, 1999 issued by MidAm Bank for the benefit
of First Sierra Financial, Inc., as amended by Amendment No. 1 dated March 31,
2000 (the "MidAm Letter of Credit") as confirmed by Bank One N.A. on January 3,
2000, reference number 00321781, which confirmation was amended by Amendment
No. 1 dated April 4, 2000, which Letter of Credit was transferred in its entity
to the Trust by Bank One N.A. on April 7, 2000.
"Letter of Credit Confirming Bank" means (i) with respect to the Sky Letter
of Credit, Northern Trust Company, Chicago and (ii) with respect to the MidAm
Letter of Credit, Bank One, N.A., Chicago.
"Letter of Credit Deposit Account" means the Eligible Bank Account
established pursuant to Section 3.08 of the Indenture.
"Letter of Credit Draw Event" means the occurrence or continuation of any of
the following events:
(i) Sky Financial Group, Inc. has failed to meet its repurchase obligations
set forth in its Guaranty dated December 30, 1999; or
(ii) Sky Financial Group, Inc. or MidAm Bank has notified First Sierra
Financial Inc that the related Letter of Credit will not be renewed for an
additional 364 days (or the prior banking day if the expiry date falls on a
non-banking date) from its current expiry; or
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(iii) the long term debt credit rating of (x) Bank One N.A. has dropped
below an S&P rating of "A" or a Moody's rating of "Aa" or (y) the long term
debt credit rating of Northern Trust Company, Chicago has dropped below an S&P
rating of "AA" or a Moody's rating of "Aa"; or
(iv) a Letter of Credit Confirming Bank has notified First Sierra Financial,
Inc. that it will not continue to confirm the related Letter of Credit for an
additional 364 days(or the prior banking day if the expiry date falls on a
non-banking date) from its current expiry.
"Letter of Credit Draw" has the meaning set forth in Section 3.08(b) of the
Indenture.
"Lien" means any mortgage, pledge, hypothecation, assignment for security,
security interest, encumbrance, levy, lien or charge of any kind, whether
voluntarily incurred or arising by operation of law or otherwise, affecting any
property, including any agreement to grant any of the foregoing, any
conditional sale or other title retention agreement, any Contract in the nature
of a security interest, and the filing of or agreement to file or deliver any
financing statement (other than a precautionary financing statement with
respect to a lease that is not in the nature of a security interest) under the
UCC or comparable law of any jurisdiction.
"Liquidation Proceeds" means, with respect to a Defaulted Contract, proceeds
from the sale or re-lease of the Equipment, proceeds of the related Insurance
Policy, proceeds from any Source Agreements and any other recoveries with
respect to such Defaulted Contract and the related Equipment, net of reasonable
remarketing expenses and amounts so received that are required to be refunded
to the Obligor on such Contract.
"List of Contracts" means the List of Initial Contracts, each List of
Subsequent Contracts and each List of Substitute Contracts.
"List of Initial Contracts" means the List of Initial Contracts delivered
pursuant to Section 2.03(a) of the Indenture.
"List of Subsequent Contracts" means the List of Subsequent Contracts
delivered pursuant to Section 2.02(c) of the Receivables Transfer Agreement.
"List of Substitute Contracts" means the List of Substitute Contracts
delivered pursuant to Section 4.02 of the Indenture.
"Lockbox Account" means the lockbox account established pursuant to the
Lockbox Agreement.
"Lockbox Agreement" means the Lockbox Agreement dated as of February 13,
1995, among SierraCities.com and Chase Bank of Texas, N.A.
"Lockbox Bank" means Chase Bank of Texas, N.A.
"Majority Holders" means the holders of the Applicable Securities that
together own Applicable Securities with an aggregate Percentage Interest in
excess of 50%.
"Monthly Statement" has the meaning specified in Section 4.08 of the
Servicing Agreement.
"Moody's" means Moody's Investors Service, Inc.
"Necessary Consents" means, with respect to any Person, all necessary
consents to the closing of the transactions contemplated by the Transaction
Documents.
"Notes" means the Class A Notes and the Class B Notes.
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"Noteholder" means the Person in whose name a Note is registered in the
Register held by the Note Registrar.
"Note Principal Balance" means, with respect to any Class of Notes, the
Class A-1 Note Principal Balance, the Class A-2 Note Principal Balance, and the
Class B Note Principal Balance, as applicable.
"Note Rate" means, with respect to any Class of Notes, the Class A-1 Note
Rate, the Class A-2 Note Rate, and the Class B Note Rate, as applicable.
"Note Registrar" means, initially, the Indenture Trustee pursuant to Section
5.03 of the Indenture.
"Obligor" means, with respect to any Contract, the Person or Persons
obligated to make payments with respect to such Contract, including any
guarantor thereof.
"Officer's Certificate" means a certificate delivered by an Authorized
Officer.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
employed by the Servicer or other counsel, in each case acceptable to the
addressees thereof.
"Original Equipment" means any of the Equipment relating to the Initial
Contracts.
"Original Equipment Cost" means the invoice price of the Equipment,
exclusive of amounts, if any, paid for taxes, warranty extensions or service
contracts.
"Original Pre-Funded Amount" means $1,000.00.
"Outstanding" means, as of the date of determination, all Notes theretofore
authenticated and delivered under the Indenture except:
(i) Notes theretofore canceled by the Note Registrar or delivered to the
Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the necessary
amount has been theretofore deposited with the Indenture Trustee in trust for
the Holders of such Notes (provided, however, that if such Notes are to be
redeemed, notice of such redemption has been duly given pursuant to the
Indenture or provision therefor, satisfactory to the Indenture Trustee, has
been made);
(iii) Notes in exchange for or in lieu of other Notes which have been
authenticated and delivered pursuant to the Indenture unless proof satisfactory
to the Trustee is presented that any such Notes are held by a bona fide
purchaser; and
(iv) Notes that have been alleged to be destroyed, lost or stolen for which
replacement Notes have been issued as provided for in Section 5.04 of the
Indenture;
provided, however, that in determining whether the Holders of the requisite
Outstanding Amount of the Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any Transaction
Document, Notes owned by the Issuer, any other obligor upon the Notes, the
Sellers or any Affiliate of any of the foregoing Persons shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
Indenture Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Notes that a
Responsible Officer of the Indenture Trustee either actually knows to be so
owned or has received written notice thereof shall be so disregarded. Notes so
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owned that have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Indenture Trustee the
pledgee's right so to act with respect to such Notes and that the pledgee is
not the Issuer, any other obligor upon the Notes, the Sellers or any Affiliate
of any of the foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of all Notes or
class of Notes, as applicable, Outstanding at the date of determination.
"Owner Trustee" means Christina Bank & Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as owner trustee under
the Trust Agreement and the Holding Trust Agreement, and any successor owner
trustee.
"Payment Date" means the 18th day of each calendar month, or if such day is
not a Business Day, the immediately following Business Day, commencing on May
18, 2000 until such time as the Indenture has been terminated in accordance
with Article IX thereof.
"Percentage Interest" means, with respect to a Noteholder and a Class of
Notes on any date of determination, the percentage obtained by dividing the
Note Principal Balance of the Note held by such Noteholder as of the Closing
Date by the related Note Principal Balance of the related Class of Notes as of
the Closing Date.
"Permitted Liens" means:
(a) Liens granted in favor of the Trust under the Receivables Transfer
Agreement or the Indenture Trustee on behalf of the Noteholders pursuant to the
Indenture; and
(b) Liens constituting the rights of Obligors under Contracts.
"Person" means a natural person, partnership, limited partnership, limited
liability company, trust, estate, association, corporation, custodian, nominee
or any other individual or entity in its own or any representative capacity.
"Pledged Property" means the property pledged by the Trust to the Indenture
Trustee on behalf of the Noteholders pursuant to Section 2.01 of the Indenture,
except for the Initial Unpaid Amounts relating thereto.
"Pool Factor" means the seven digit decimal number that the Servicer will
compute or cause to be computed for each Collection Period and will make
available on the related Determination Date representing the ratio of (a) the
Aggregate Discounted Contract Principal Balance of the Contracts as of the
immediately preceding Calculation Date to (b) the Initial Aggregate Discounted
Contract Principal Balance.
"Pre-Funded Amount" means the Original Pre-Funded Amount reduced by amounts
withdrawn from the Pre-Funding Account in accordance with Section 3.02 of the
Indenture.
"Pre-Funding Earnings" means with respect to any Payment Date, the actual
Investment Earnings then on deposit in the Pre-Funding Account.
"Pre-Funding Account" means that certain account established and maintained
by the Indenture Trustee pursuant to Section 3.02(a) of the Indenture.
"Pre-Funding Period" means the period from and including the Closing Date
until the earlier of (i) the date on which the balance of funds on deposit in
the Pre-Funding Account is reduced to an amount less than $100,000, (ii) the
date on which an Event of Default or an Event of Servicing Termination occurs,
or (iii) the close of business on June 10, 2000.
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"Prepayment" means, with respect to a Collection Period and a Contract
(except a Defaulted Contract), the amount received by the Servicer during such
Collection Period from or on behalf of an Obligor with respect to such Contract
in excess of the sum of (x) the Scheduled Payment and any Final Scheduled
Payment due during such Collection Period, plus (y) the aggregate of any
overdue Scheduled Payments, Initial Unpaid Amounts and unpaid Servicing Charges
for such Contract, so long as such amount is designated by the Obligor as a
prepayment and the Servicer has consented to such prepayment. Defaulted
Contract Recoveries are not considered to be Prepayments.
"Prepayment Amount" means, with respect to a Payment Date and a Contract, an
amount, without duplication, equal to the sum of (i) the Discounted Contract
Principal Balance as of the close of business on the second preceding
Collection Period (without any deduction for any security deposit paid by an
Obligor, unless such security deposit has been deposited in the Collection
Account pursuant to the Indenture); (ii) the product of (x) such Contract's
Discounted Contract Principal Balance as of the beginning of the immediately
preceding Payment Date and (y) one-twelfth of the Discount Rate; (iii) any
Scheduled Payments theretofore due and not paid by an Obligor; and (iv) any
Final Scheduled Payment due or to become due under the Contract.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
"Rating Agency Condition" means written confirmation from each Rating Agency
that the use of such investment will not result in the reduction or withdrawal
of the rating assigned by such Rating Agency to any of the Notes.
"Rating Agencies" means DCR and Moody's.
"Receivables" means the Contracts together with the Equipment.
"Receivables Transfer Agreement" means the Receivables Transfer Agreement,
dated as of March 1, 2000, among SierraCities.com, the Depositor, First Union
National Bank, Variable Funding Capital Corporation, Fairway Finance
Corporation, Merrill Lynch Mortgage Capital, Inc., First Sierra Equipment
Contract Trust 1999-H, Bankers Trust Company, as trustee of the Sellers, and
the Issuer.
"Record Date" means, with respect to any Payment Date, the last day of the
related Interest Accrual Period.
"Register" means the register kept by the Indenture Trustee pursuant to
Section 5.03 of the Indenture.
"Registration Statement" shall mean the Registration Statement filed with
the SEC under the Securities Act (No. 333-12199) materially in the form in
which it was declared effective.
"Regulations G, T, U and X" means, collectively, Regulations G, T, U and X
adopted by the Federal Reserve Board (12 C.F.R. Parts 207, 220, 221 and 224,
respectively) and any other regulation in substance substituted therefor.
"Representation Letter" means letters to, or agreements with, the Depository
to effectuate a book entry system with respect to the Class A and Class B Notes
registered in the Register under the nominee name of the Depository.
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"Repurchase Amount" means, with respect to a Payment Date and a Contract,
the sum, without duplication, of (a) the Discounted Contract Principal Balance
as of the close of business on the last day of the second preceding Collection
Period (without any deduction for any security deposit paid by an Obligor,
unless such security deposit has been deposited in the Collection Account
pursuant to the Indenture); (b) the product of (i) such Contract's Discounted
Contract Principal Balance as of the beginning of the immediately preceding
Collection Period and (ii) one-twelfth of the Discount Rate; (c) any Scheduled
Payments theretofore due and not paid by an Obligor; and (d) any Final
Scheduled Payment due or to become due under the Contract.
"Repurchase Contract" means any Contract that has been repurchased by
SierraCities.com pursuant to Section 4.01 of the Indenture.
"Requisite Amount" means, with respect to the Closing Date and any
Subsequent Transfer Date, an amount equal to the product of (x) 2.35% and (y)
the sum of (i) Initial Aggregate Discounted Contract Principal Balance as of
the Initial Cut-Off Date and (ii) the aggregate Discounted Contract Principal
Balance of all Subsequent Contracts as of the related Subsequent Cut-Off Date,
which amount shall be equal to $4,433,337.05.
"Reserve Account" means the Eligible Bank Account established pursuant to
Section 3.04 of the Indenture.
"Responsible Officer" means (i) when used with respect to the Indenture
Trustee, any officer assigned to the Corporate Trust Office, including any
Principal, Managing Director, Vice President, Assistant Vice President,
Secretary, Assistant Secretary, any trust officer or any other officer of the
Indenture Trustee customarily performing functions similar to those performed
by any of the above designated officers, and also, with respect to a particular
matter, any other officer to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject and (ii)
when used with respect to the Owner Trustee, any Vice President, Assistant Vice
President, Secretary, Assistant Secretary, Managing Director, any trust officer
or any other officer of the Owner Trustee customarily performing functions
similar to those performed by any of the above designated officers, and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"Scheduled Payments" means, with respect to a Contract, the periodic payment
(exclusive of any amounts in respect of late charges, insurance, warranty
extensions, service contracts or taxes and reflecting any adjustment for any
partial Prepayment and further reflecting the effect of any permitted
modification to such Contract) set forth in such Contract due from the Obligor
in the related Collection Period; provided, however, that with respect to any
Contract as to which SierraCities.com retained the security deposit, a
Scheduled Payment shall not include the final payment or payments to be made
thereon equal to the amount of such security deposit.
"S&P" means Standard & Poor's Ratings Services, a division of The McGraw
Hill Companies, Inc.
"SEC" means the Securities and Exchange Commission and any successor
thereto.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" means First Sierra Receivables III, Inc.
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"Servicer" means the Person performing the duties of the Servicer under the
Indenture and the Servicing Agreement, initially SierraCities.com.
"Servicer Advance" means any amount paid by the Servicer with respect to a
Delinquent Contract pursuant to Section 4.03 of the Servicing Agreement.
"Servicer Fee" means the fee payable to the Servicer on each Payment Date in
consideration for the Servicer's performance of its duties pursuant to Article
4 of the Servicing Agreement in an amount equal to the product of (a)
one-twelfth of the Servicer Fee Rate and (b) the Aggregate Discounted Contract
Principal Balance as of the opening of business on the first day of the related
Collection Period.
"Servicer Fee Rate" means 0.50% per annum.
"Servicer Termination Notice" means the notice described in Section 6.01 of
the Servicing Agreement.
"Servicing Agreement" means the Servicing Agreement, dated as of March 1,
2000, among the Servicer, SierraCities.com, the Trust and the Indenture
Trustee, as amended, supplemented or otherwise modified from time to time.
"Servicing Charges" means the sum of (a) any late payment charges paid by an
Obligor on a Delinquent Contract after application of any such charges to
amounts then due under such Contract and (b) any other incidental charges or
fees received from an Obligor.
"Servicing Officer" means any representative of the Servicer involved in, or
responsible for, the administration and servicing of the Contracts whose name
appears on a list of servicing officers furnished to the Indenture Trustee by
the Servicer, as such list may from time to time be amended.
"Servicing Standard" has the meaning specified in Section 4.01(a) of the
Servicing Agreement.
"SierraCities.com" means SierraCities.com Inc., formerly First Sierra
Financial, Inc., a Delaware corporation.
"Source" means Sky Financial Solutions, Inc., the third party from whom
SierraCities.com acquired the Contracts pursuant to SierraCities.com's "private
label program".
"Source Agreement" means the agreement between SierraCitities.com, Inc. and
the Source pursuant to which SierraCities.com acquired all right, title and
interest of the Source in and to a Contract and a security interest in the
Source's right, title and interest in and to the related Equipment.
"Source Agreement Rights" means (i) any and all rights of SierraCities.com
under the Source Agreement with respect to such Source Agreement to the extent
such Source Agreement relates to any Contract and any Equipment covered by the
Contracts and (ii) any and all rights of SierraCities.com under the Guaranty or
any letters of credit with respect to the Source Agreement to the extent the
Guaranty, any letter of credit or Source Agreement relates to any Contract and
any Equipment covered by the Contracts.
"Source Repurchase Price" means, with respect to any Contract required to be
repurchased by the Source pursuant to the terms of the Source Agreement and as
of the date such Contract is required to be repurchased, an amount equal to the
sum of (i) the Discounted Contract Balance of such Contract, plus (ii) any
costs and expenses incurred by the Servicer in enforcing its rights
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and remedies under the Source Agreement and under such Contract, plus (iii) any
accrued but unpaid late charges, taxes or other charges due under such
Contract. Solely for the purposes of calculating the Source Repurchase Price,
"Discounted Contract Balance" shall mean, with respect to any Contract required
to be repurchased by the Source pursuant to the terms of the Source Agreement
and as the date such Contract is required to be repurchased, an amount equal to
the sum of (i) all Scheduled Payments due under such Contract and unpaid as of
such date, plus (ii) the present value of the remaining Scheduled Payments to
become due under such Contract, discounted to such date of determination using
a "Purchase Cost Discount Rate" specified by the Servicer in the related
Default Notice.
"State" means any state of the United States of America and, in addition,
the District of Columbia and Puerto Rico.
"Subsequent Contracts" means those contracts listed on the List of
Subsequent Contracts attached to the related Subsequent Transfer Agreement.
"Subsequent Conveyed Assets" means, with respect to any Subsequent Transfer
Agreement (a) all of the Sellers' right, title and interest in and to the
Subsequent Equipment relating to Subsequent Contracts (except for any licensed
products that may accompany the Subsequent Equipment) and any new unit or units
of Equipment substituted for any existing unit or units of Subsequent
Equipment, including all income and proceeds upon any sale or other disposition
of the Subsequent Equipment, (b) all of the Sellers' right, title and interest
in and to, but not its obligations under, the Subsequent Contracts, and all
amendments, additions and supplements including schedules, summary schedules
and subschedules made or hereafter made with respect thereto, (c) all monies
due or to become due in payment of the Subsequent Contracts on or after the
related Subsequent Cut-Off Date, including without limitation, all Scheduled
Payments thereunder (whether or not due), any Prepayments, any payments in
respect of a casualty or early termination and any Liquidation Proceeds
received with respect thereto, but excluding any Excluded Amounts, (d) the
Contract Files, (e) all Insurance Proceeds relating to the foregoing and the
Sellers' rights and interests in the Insurance Policies relating to the
foregoing, (f) the Source Agreement and Source Agreement Rights to the extent
they relate to any Subsequent Contract and any Subsequent Equipment covered by
the Subsequent Contracts and (g) all proceeds and income of the foregoing or
relating thereto.
"Subsequent Cut-Off Date" means with respect those Subsequent Contracts
which are pledged to the Indenture Trustee pursuant to a Subsequent Transfer
Agreement, three Business Days prior to such Subsequent Transfer Date.
"Subsequent Equipment" means the Equipment relating to the Subsequent
Contracts, a security interest in which will be pledged to the Indenture
Trustee on the related Subsequent Transfer Date.
"Subsequent Receivables" means the Subsequent Contracts and the Subsequent
Equipment.
"Subsequent Transfer Agreement" means each Subsequent Transfer Agreement
dated as of a Subsequent Transfer Date executed by the Sellers and the Trust
substantially in the form of Exhibit A to the Receivables Transfer Agreement,
by which Subsequent Receivables are sold to the Trust.
"Subsequent Transfer Date" means any date on which a Subsequent Contract is
pledged to the Indenture Trustee pursuant to Section 2.01 of the Indenture.
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"Substitute Contract" has the meaning specified in Section 4.02(a) of the
Indenture.
"Substitute Conveyed Assets" means, with respect to the Receivables Transfer
Agreement (a) all of the Sellers' right, title and interest in and to the
Substitute Equipment relating to Substitute Contracts (except for any licensed
products that may accompany the Substitute Equipment) and any new unit or units
of Equipment substituted for any existing unit or units of Substitute Equipment,
including all income and proceeds upon any sale or other disposition of the
Substitute Equipment, (b) all of the Sellers' right, title and interest in and
to, but not its obligations under, the Substitute Contracts and all amendments,
additions and supplements including schedules, summary schedules and
subschedules made or hereafter made with respect thereto, (c) all monies due or
to become due in payment of the Substitute Contracts on or after the related
Substitute Cut-Off Date, including without limitation, all Scheduled Payments
thereunder (whether or not due), any Prepayments, any payments in respect of a
casualty or early termination and any Liquidation Proceeds received with respect
thereto, but excluding any Excluded Amounts, (d) the Contract Files, (e) all
Insurance Proceeds relating to the foregoing and the Sellers' rights and
interests in the Insurance Policies relating to the foregoing, (f) the Source
Agreement and Source Agreement Rights to the extent they relate to any
Substitute Contract and any Substitute Equipment covered by the Substitute
Contracts and (g) all proceeds and income of the foregoing or relating thereto.
"Substitute Cut-Off Date" means, with respect to a Substitute Contract, the
close of business on the first day of the calendar month in which the related
Substitute Transfer Date occurs.
"Substitute Equipment" means the Equipment pledged to the Indenture Trustee
on each Substitute Transfer Date.
"Substitute Transfer Date" means any date on which a Substitute Contract is
pledged pursuant to Section 4.02 of the Indenture.
"Subsequent Transfer Agreement" has the meaning set forth in Section 2.02(c)
of the Receivables Transfer Agreement.
"Supplemental Interest Required Amount" means an amount equal to the excess
of (i) the product of (x) 1.0% and (y) the sum of (i) Initial Aggregate
Discounted Contract Principal Balance as of the Initial Cut-Off Date and (ii)
the aggregate Discounted Contract Principal Balance of all Subsequent Contracts
as of the related Subsequent Cut-Off Date over (ii) the amount previously
withdrawn from the Supplemental Interest Reserve Account pursuant to Section
3.09(c) of the Indenture.
"Supplemental Interest Reserve Account" means the Eligible Bank Account
established pursuant to Section 3.09 of the Indenture.
"Tape" means the data base with respect to the Contracts used to calculate
the information in the Monthly Statement.
"Tax Sharing Agreement" means any tax allocation agreement or arrangement
with respect to the First Sierra Group, including any arrangement for payments
by or to a member of the First Sierra Group with respect to its liability for
taxes (including taxes excluded from the definition of Income Taxes hereunder)
of the First Sierra Group or arising from its contribution to taxable income or
loss of the First Sierra Group.
"TIA" means the Trust Indenture Act of 1939.
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"Transaction Documents" means the Receivables Transfer Agreement, each
Subsequent Transfer Agreement, the Indenture, this Annex A, the Servicing
Agreement, the Notes, the Trust Certificate, the Trust Agreement and the
Holding Trust Agreement.
"Trust Agreement" shall mean the Trust Agreement, dated as of March 1, 2000,
between the Depositor and the Owner Trustee, as amended, supplemented or
otherwise modified from time to time.
"Trust Certificate" means the Trust Certificate evidencing the beneficial
ownership interest of a Holder of the Trust Certificate in the Trust, initially
issued by the Issuer to the Holding Trust.
"Trust Certificate Holder" means the holder of the Trust Certificate issued
pursuant to the Trust Agreement.
"Trust Certificate Principal Balance" means, as of any Payment Date, the
difference, if any, between (i) the sum of (x) the Aggregate Discounted
Contract Principal Balances of all Contracts as of the end of the immediately
preceding Collection Period and (y) the Aggregate Discounted Contract Principal
Balances as of the day prior to such Payment Date of all Substitute Contracts
to be conveyed to the Trust on such Payment Date and (ii) the Aggregate Note
Principal Balance, after taking into account any distributions on such Payment
Date.
"Trust Operating Expenses" means, with respect to any Payment Date, the
aggregate amount described in clauses (iii) through (vi), inclusive, of Section
3.05(b) of the Indenture with respect to such Payment Date.
"UCC" means the Uniform Commercial Code as in effect in the applicable
jurisdiction.
"Underwriters" means Merrill Lynch, Pierce Fenner & Smith., a Delaware
corporation and First Union Securities, Inc., a North Carolina corporation.
"Unscheduled Principal Payments" means, with respect to any Payment Date,
the aggregate amounts received during the immediately preceding Collection
Period pursuant to any Source Agreement, in respect of Contracts, or the
related Equipment (excluding Excluded Amounts).
"Warranty Event" has the meaning provided in Section 4.01(a) of the
Indenture.
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