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EXHIBIT 10.1
EXECUTION COPY
RECEIVABLES TRANSFER AGREEMENT
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between
FIRST SIERRA FINANCIAL, INC.,
FIRST SIERRA RECEIVABLES III, INC.,
PRUDENTIAL SECURITIES CREDIT CORPORATION,
FIRST UNION NATIONAL BANK,
VARIABLE FUNDING CAPITAL CORPORATION,
BANKERS TRUST COMPANY
and
FIRST SIERRA EQUIPMENT CONTRACT TRUST 1998-1, A COMMON LAW TRUST
ACTING THROUGH FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,
NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS OWNER TRUSTEE
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Dated as of
December 1, 1998
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TABLE OF CONTENTS
Page
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.......................................................................4
SECTION 2.02 Custody of Contract Files....................................................................5
SECTION 2.03 Intention of the Parties; Grant of Security Interest.........................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES........................................................................5
SECTION 3.01 Representations and Warranties...............................................................5
SECTION 3.02 [Reserved]..................................................................................16
SECTION 3.03 Substitution of Contracts and Equipment by First Sierra.....................................16
ARTICLE IV COVENANTS.............................................................................................17
SECTION 4.01 Seller and First Sierra Covenants...........................................................17
SECTION 4.02 Receivables III Covenants...................................................................19
SECTION 4.03 Transfer of Conveyed Assets.................................................................22
ARTICLE V CONDITIONS PRECEDENT...................................................................................23
SECTION 5.01 Conditions to Trust Obligations.............................................................23
ARTICLE VI TERMINATION...........................................................................................23
SECTION 6.01 Termination.................................................................................23
SECTION 6.02 Effect of Termination.......................................................................24
ARTICLE VII MISCELLANEOUS PROVISIONS.............................................................................24
SECTION 7.01 Amendment...................................................................................24
SECTION 7.02 GOVERNING LAW...............................................................................24
SECTION 7.03 Notices.....................................................................................24
SECTION 7.04 Severability of Provisions..................................................................25
SECTION 7.05 Assignment..................................................................................25
SECTION 7.06 Further Assurances..........................................................................25
SECTION 7.07 No Waiver; Cumulative Remedies..............................................................25
SECTION 7.08 Counterparts................................................................................26
SECTION 7.09 Binding Effect: Third-Party Beneficiaries...................................................26
SECTION 7.10 Merger and Integration......................................................................26
SECTION 7.11 Headings....................................................................................26
SECTION 7.12 Schedules and Exhibits......................................................................26
SECTION 7.13 No Bankruptcy Petition Against Receivables III or the Trust.................................26
Schedules & Annexes
Schedule 1 LIST OF CONTRACTS
Annex A DEFINED TERMS
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RECEIVABLES TRANSFER AGREEMENT
THIS RECEIVABLES TRANSFER AGREEMENT (this "Agreement"), dated
as of December 1, 1998 is entered into between FIRST SIERRA FINANCIAL, INC.
("First Sierra"), a Delaware corporation located at 000 Xxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxx 00000, in its individual capacity, FIRST SIERRA RECEIVABLES
III, INC. ("Receivables III"), a Delaware corporation located at 000 Xxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000, PRUDENTIAL SECURITIES CREDIT
CORPORATION ("Prudential") a Delaware corporation located at 0000 X. Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, FIRST UNION NATIONAL BANK (formerly First
Union National Bank of North Carolina) ("First Union") a Delaware corporation
located at One First Union Center, 000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxx
Xxxxxxxx 00000-0000, VARIABLE FUNDING CAPITAL CORPORATION ("VFCC") a Delaware
corporation located at One First Union Center, 000 Xxxxx Xxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000, Bankers Trust Company (the "Indenture
Trustee") a New York banking corporation located at Four Xxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, 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 1997-C (each as defined
herein) and FIRST SIERRA EQUIPMENT CONTRACT TRUST 1998-1, a Delaware common law
trust acting through First Union Trust Company, National Association, not in its
individual capacity but solely as Owner Trustee (the "Issuer" or the "Trust"),
located at One Xxxxxx Square, 000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx
00000. Receivables III and each Warehouse Trust (as defined below), are
collectively referred to herein as the "Sellers." Prudential, First Union and
VFCC are collectively referred to herein as the "Investors."
WITNESSETH:
WHEREAS, First Sierra in the ordinary course of its business
acquires and originates equipment contracts in the United States; and
WHEREAS, Receivables III, First Sierra and Bankers Trust
Company have entered into an Amended and Restated Master Investment, Pooling and
Servicing Agreement, dated as of March 25, 1998 (the "Investment Agreement")
whereby Receivables III may, from time to time, sell pools of contracts,
contract receivables and equipment to one or more trusts to be formed pursuant
to the Investment Agreement and a supplement thereto; and
WHEREAS, pursuant to the Investment Agreement, the parties
thereto may, from time to time, execute a supplement to the Investment Agreement
and form a trust for the purpose of (i) accepting the transfer of a specific
pool of contracts, contract receivables, equipment and certain rights relating
thereto and arising therefrom from Receivables III, (ii) issuing senior
certificates ("Senior Certificates") and residual certificates ("Residual
Certificates" and, together with the Senior Certificates, the "Certificates")
representing beneficial ownership interests in the assets of each trust and
(iii) selling the Senior Certificates to investors; and
WHEREAS, pursuant to a Series 1997-A Supplement, dated as of
June 30, 1997 (the "Series 1997-A Supplement") among Receivables III, First
Sierra, Bankers Trust Company
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and First Union, the parties thereto formed a trust (the "First Sierra Equipment
Lease Trust 1997-A"), issued a Senior Certificate to First Union representing
the senior beneficial ownership interest in the Leases and Equipment conveyed by
Receivables III to the First Sierra Equipment Lease Trust 1997-A and issued a
Residual Certificate to Receivables III representing the residual beneficial
ownership interest in the Contracts and Equipment conveyed to the First Sierra
Equipment Lease Trust 1997-A; and
WHEREAS, First Union and Receivables III, as the beneficial
owners of the Leases and Equipment in the First Sierra Equipment Lease Trust
1997-A, desire that Bankers Trust Company, as the Trustee of such trust, convey
such Contracts and Equipment to the Trust; and
WHEREAS, pursuant to a Series 1997-B Supplement, dated as of
June 26, 1997 (the "Series 1997-B Supplement") among Receivables III, First
Sierra, Bankers Trust Company, VFCC and First Union, the parties thereto formed
a trust (the "First Sierra Equipment Lease Trust 1997-B"), issued a Senior
Certificate to VFCC representing the senior beneficial ownership interest in the
Leases and Equipment conveyed by Receivables III to the First Sierra Equipment
Lease Trust 1997-B and issued a Residual Certificate to Receivables III
representing the residual beneficial ownership interest in the Contracts and
Equipment conveyed to the First Sierra Equipment Lease Trust 1997-B; and
WHEREAS, VFCC and Receivables III, as the beneficial owners of
the Leases and Equipment in the First Sierra Equipment Lease Trust 1997-B,
desire that Bankers Trust Company, as trustee of such trust, convey such
Contracts and Equipment to the Trust; and
WHEREAS, pursuant to a Series 1997-C Supplement, dated as of
March 31, 1997 (the "Series 1997-C Supplement") among Receivables III, First
Sierra, Bankers Trust Company and Prudential, the parties thereto formed a trust
(the "First Sierra Equipment Lease Trust 1997-C" and, together with the First
Sierra Equipment Lease Trust 1997-A and the First Sierra Equipment Lease Trust
1997-B, the "Warehouse Trusts"), issued a Senior Certificate to Prudential
representing the senior beneficial ownership interest in the Leases and
Equipment conveyed by Receivables III to the First Sierra Equipment Lease Trust
1997-C and issued a Residual Certificate to Receivables III representing the
residual beneficial ownership interest in the Contracts and Equipment conveyed
to the First Sierra Equipment Lease Trust 1997-C; and
WHEREAS, Prudential and Receivables III, as the beneficial
owners of the Leases and Equipment in the First Sierra Equipment Lease Trust
1997-C, desire that Bankers Trust Company, as trustee of such trust, convey such
Contracts and Equipment to the Trust; and
WHEREAS, each of the Sellers desires to convey, transfer,
contribute and assign all of its right, title and interest in and to the
Contracts and all of its right, title and interest in and to the Equipment and
certain of its rights under the Source Agreements (as such capitalized terms are
defined below) to the Owner Trustee, on behalf of the Trust, upon the terms and
conditions hereinafter set forth; and
WHEREAS, each of the Sellers and the Trust agree that all
representations, warranties, covenants and agreements made by it herein shall be
for the benefit of the
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Noteholders, the Certificateholders, the Note Insurer, any Owner Trustee and any
Indenture Trustee (as defined below).
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. Whenever used in this Agreement,
capitalized terms used and not defined herein shall have the meanings set forth
in Annex A hereto.
SECTION 1.02 Other Definitional Provisions.
(a) Terms used in Related Documents. Each term defined in this
Agreement will have the meaning assigned to such term in this Agreement when
used in any certificate or other document made or delivered pursuant to this
Agreement, unless such term is otherwise defined therein.
(b) Accounting Terms. As used in this Agreement, accounting
terms which are not defined pursuant to Section 1.01 have the respective
meanings given to them under generally accepted accounting principles, as in
effect on the date of this Agreement. To the extent that the definitions of
accounting terms in this Agreement are inconsistent with the meanings of such
terms under generally accepted accounting principles, the definitions contained
in this Agreement will control.
(c) "Hereof," etc. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement will refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and Section, Schedule and Exhibit references contained in this
Agreement are references to Sections, Schedules and Exhibits in or to this
Agreement, unless otherwise specified.
(d) Number and Gender. Each defined term used in this
Agreement has a comparable meaning when used in its plural or singular form.
Each gender-specific term used in this Agreement has a comparable meaning
whether used in a masculine, feminine or gender-neutral form.
(e) Including. Whenever the term "including" (whether or not
that term is followed by the phrase "but not limited to" or "without limitation"
or words of similar effect) is used in this Agreement in connection with a
listing of items within a particular classification, that listing will be
interpreted to be illustrative only and will not be interpreted as a limitation
on, or exclusive listing of, the items within that classification.
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ARTICLE II
TRANSFER OF CONVEYED ASSETS
SECTION 2.01 Direction; Acquisition.
(a) In accordance with the terms of the Investment Agreement,
each of the Investors, as the Senior Certificateholders of the related Warehouse
Trust, and Receivables III, as the Residual Certificateholder of the Warehouse
Trusts, together representing all of the beneficial ownership interests in the
Warehouse Trusts, hereby direct Bankers Trust Company to convey to the Trust
those assets of each Warehouse Trust and Receivables III related to the leases
set forth in the related schedule (each, a "Release Schedule") listing those
leases being transferred from the related Warehouse Trust and Receivables III.
Upon receipt of the consideration specified below, each of the Investors hereby
release all of its right, title and interest in, to and under the Conveyed
Assets. Such receipt being hereby acknowledged by execution of this Agreement by
each Investor.
(b) In consideration for (x) the issuance to Holding Trust I
of the Trust Certificate to be issued pursuant to the Trust Agreement, (y) the
receipt of $40,533,048.81 by First Sierra Equipment Lease Trust 1997-A,
$128,563,073.23 by First Sierra Equipment Lease Trust 1997-B and $85,318,497.25
by First Sierra Equipment Lease Trust 1997-C and (z) other good and valuable
consideration, each of the Sellers hereby conveys to the Trust all of its right,
title and interest in, to and under those Conveyed Assets related to the leases
set forth in the related Release Schedule, (such Conveyed Assets, the "Conveyed
Released Assets" with respect to the related Warehouse Trust and Receivables
III) whether now existing or hereinafter arising, without recourse (except as
may be set forth in the Servicing Agreement).
(c) In connection with such sale and conveyance, each Seller
agrees to record and file, at the expense of First Sierra, financing statements
(and thereafter will file continuation statements with respect to such financing
statements) with respect to the related Conveyed Released Assets contributed and
to be transferred to the Trust pursuant to this Agreement, meeting the
requirements of applicable state law in such manner and in such jurisdictions as
are necessary to perfect and to maintain the perfection of, the transfer,
conveyance and contribution of the related Conveyed Released Assets (subject to
the Filing Requirements with respect to the Equipment) from each of the Sellers
to the Trust and the transfer, assignment and pledge of the Pledged Property
from the Trust to the Indenture Trustee on behalf of the Noteholders and the
Note Insurer, pursuant to the Indenture, and to deliver a file-stamped copy of
such financing statements or other evidence of such filings to the Trust (and
copies to the Indenture Trustee and the Note Insurer) on or prior to each
Conveyance Date; provided, however, that the Contract Files (including each
original executed Contract) will not be physically delivered to the Trust but
instead will be held by the Indenture Trustee.
(d) In connection with such assignment and conveyance, First
Sierra shall, at its own expense, on or prior to the Closing 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 Conveyed Released Assets have been assigned
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and transferred to the Trust in accordance with this Agreement and pledged to
the Indenture Trustee on behalf of the Noteholders and the Note Insurer,
pursuant to the Indenture and (ii) prepare and hold in its capacity as Servicer
on behalf of the Trust and the Indenture Trustee the List of Contracts on or
prior to the Closing Date. Pursuant to Section 3.03, First Sierra from time to
time may convey Substitute Contracts to the Trust at any time by delivering a
supplemented List of 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 Contracts. Upon delivery of any such
supplement to the List of Contracts, the List of Contracts shall be deemed
amended to incorporate therein the information contained in such supplement.
(e) Except for the obligations of First Sierra pursuant to the
Servicing Agreement and the Indenture with respect to any breach of a
representation, warranty or covenant made herein, the sale and conveyance of the
Contracts will be without recourse to the Sellers.
SECTION 2.02 Custody of Contract Files. In connection with the
sale, assignment, transfer and conveyance of the Contracts to the Trust pursuant
to this Agreement, First Sierra, as Servicer under the Servicing Agreement and
as agent of the Indenture Trustee will retain the Contract Files and any related
evidence of insurance and payments; provided, however, that First Sierra will
physically convey the original executed counterparts of each Contract and the
related Certificate of Title, if applicable, to the Indenture Trustee in
accordance with the terms of the Indenture.
SECTION 2.03 Intention of the Parties; Grant of Security
Interest. It is the intention of the parties hereto that each transfer of the
Conveyed Released 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
Released Asset, and all income and proceeds thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 Representations and Warranties. (a) First Sierra
hereby makes the following representations and warranties for the benefit of the
Indenture Trustee, the Noteholders, the Note Insurer and the Trust. Such
representations and warranties are made as of any Conveyance Date with respect
to Contracts transferred to the Trust on such date and shall survive each
assignment, transfer and conveyance by First Sierra of the Conveyed Assets to
the Trust and its successors and assigns.
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(i) Organization and Good Standing. First Sierra is
a corporation duly organized, validly existing and in good
standing, under the laws of the State of Delaware, with corporate
power and authority to own its properties and to conduct its
business as such properties are currently owned and such business
is currently conducted, and had at all relevant times, and now has,
power, authority, and legal right to acquire and own the Substitute
Conveyed Assets;
(ii) Due Qualification. First Sierra is qualified
as a foreign corporation in any state where it is required to be so
qualified to conduct its business, to enforce the Source Agreements
to which it is a party, and to service the Contracts as required by
the Servicing Agreement and has obtained all necessary licenses,
consents and approvals as required under federal and state law, in
each case, where the failure to be so qualified, licensed,
consented to or approved could reasonably be expected materially
and adversely to affect the ability of First Sierra to comply with
the terms of this Agreement or any other Transaction Document to
which it is a party;
(iii) Power and Authority. First Sierra has the
corporate power and authority to execute and deliver this
Agreement, the Source Agreements to which it is a party and the
Contracts and any other Transaction Document to which it is a
party, and to carry out their respective terms; and the execution,
delivery, and performance of this Agreement, the Source Agreements,
the Contracts and any other Transaction Document to which it is a
party, has been duly authorized by First Sierra by all necessary
corporate action;
(iv) Due Execution and Delivery. This Agreement and
each of the other Transaction Documents to which it is a party have
been duly executed and delivered on behalf of First Sierra;
(v) Valid Assignment; Binding Obligations. This
Agreement, and the other Transaction Documents to which First
Sierra is a party, when duly executed and delivered, will
constitute legal, valid, and binding obligations of First Sierra
enforceable against First Sierra in accordance with their
respective terms subject as to enforceability to applicable
bankruptcy, reorganization, insolvency, moratorium or other laws
affecting creditors' rights generally and to general principles of
equity (regardless of whether enforcement is sought in a proceeding
in equity or at law);
(vi) No Violation. The consummation of the
transactions contemplated by and the fulfillment of the terms of
this Agreement will not conflict with, result in any breach of any
of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the articles of
incorporation or bylaws of First Sierra, or any material term of
any indenture, agreement, mortgage, deed of trust, or other
instrument to which First Sierra is a party or by which it is
bound, or result in the creation or imposition of any Lien upon any
of its properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust, or other instrument, other than
this Agreement, or violate any law or any order, injunction, writ,
rule, or regulation applicable to First Sierra of any court or of
any federal or state regulatory body, administrative agency, or
other Governmental Authority having jurisdiction over First
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Sierra or any of its properties which would have a material
adverse effect on the Conveyed Assets;
(vii) Ability to Perform. No event has occurred
which adversely affects First Sierra's operations or its ability to
perform its obligations under the Transaction Documents to which it
is a party;
(viii) No Proceedings. There are no Proceedings or
investigations pending, or, to the knowledge of First Sierra,
threatened, before any court, regulatory body, administrative
agency, or other tribunal or Governmental Authority (A) asserting
the invalidity of this Agreement, (B) seeking to prevent the
consummation of any of the transactions contemplated by this
Agreement, or (C) seeking any determination or ruling that might
(in the reasonable judgment of First Sierra) materially and
adversely affect the performance by First Sierra of its obligations
under, or the validity or enforceability of, this Agreement;
(ix) No Consent Required. First Sierra is not
required to obtain the consent of any other Person, or any consent,
license, approval or authorization or registration or declaration
with, any governmental authority, bureau or agency in connection
with the execution, delivery or performance of this Agreement and
the Transaction Documents to which it is a party, except for such
as have been obtained, effected or made; and
(x) Consolidated Return Taxable Income from the
Equipment and the Related Contracts. The Depositor and First Sierra
are members of an affiliated group within the meaning of Section
1504 of the Code which has filed, and will continue to file, a
consolidated return for federal income tax purposes at all times
until satisfaction in full of all obligations (i) of First Sierra
hereunder and (ii) of First Sierra and the Depositor under the
Transaction Documents or other documents relating to the financing
contemplated hereby. The Depositor shall treat the Contracts as
owned by it for federal, state and local income tax purposes, and
the affiliated group of which the Depositor is a member within the
meaning of Section 1504 of the Code shall treat the Contracts as
owned by the Depositor and shall report and include the rental and
other income from the Equipment and the Contracts in gross income.
(b) Receivables III hereby makes the following representations
and warranties for the benefit of the Indenture Trustee, the Noteholders, the
Note Insurer and the Trust. Such representations and warranties are made as of
the Closing 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;
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(ii) Due Qualification. Receivables III is
qualified as a foreign corporation in any state where it is
required to be so qualified to conduct its business and has
obtained all necessary licenses, consents and approvals as required
under federal and state law, in each case, where the failure to be
so qualified, licensed, consented to or approved could reasonably
be expected materially and adversely to affect the ability of
Receivables III to comply with the terms of this Agreement or any
other Transaction Document to which it is a party;
(iii) Legal Name. The legal name of Receivables III
is as set forth in the signature line of this Agreement and
Receivables III has not changed its name since its incorporation
and since its incorporation, Receivables III did not use, nor does
Receivables III now use, any trade names, fictitious names, assumed
name of "doing business as" names;
(iv) Power and Authority. Receivables III has the
corporate power and authority to execute and deliver this Agreement
and any other Transaction Document to which it is a party, and to
carry out their respective terms; Receivables III has duly
authorized the sale and assignment to the Owner Trustee, on behalf
of the Trust, of all of its right, title and interest, if any, in
the Conveyed Assets by all necessary corporate action; and the
execution, delivery, and performance of this Agreement, and any
other Transaction Document to which it is a party, has been duly
authorized by Receivables III by all necessary corporate action;
(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 its 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 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 will not conflict with, result in
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any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time) a default under, the
articles of incorporation or bylaws of Receivables III, or any
material term of any indenture, agreement, mortgage, deed of
trust, or other instrument to which Receivables III is a party or
by which it is bound, or result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any
such indenture, agreement, mortgage, deed of trust, or other
instrument, other than this Agreement, or violate any law or any
order, injunction, writ, rule, or regulation applicable to
Receivables III of any court or of any federal or state regulatory
body, administrative agency, or other Governmental Authority
having jurisdiction over Receivables III or any of its properties
which would have a material adverse effect on the Conveyed Assets;
(ix) No Proceedings. There are no proceedings or
investigations pending, or, to the knowledge of Receivables III,
threatened, before any court, regulatory body, administrative
agency, or other tribunal or Governmental Authority (A) asserting
the invalidity of this Agreement, (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;
(x) No Consent Required. Receivables III is not
required to obtain the consent of any other Person, or any consent,
license, approval or authorization or registration or declaration
with, any governmental authority, bureau or agency in connection
with the execution, delivery or performance of this Agreement and
the Transaction Documents to which it is a party, except for such
having been obtained, effected or made;
(xi) Fair Consideration. The consideration received
by Receivables III as set forth herein is fair consideration having
value reasonably equivalent to or in excess of the value of the
Conveyed Assets conveyed by it and the performance of Receivables
III's obligation hereunder; and
(xii) Principal Place of Business. The principal
place of business and chief executive office of Receivables III is
located at 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 and,
there are now no, and during the past four months there have not
been, any other locations where Receivables III is located (as that
term is used in the UCC in the state of such location) except that,
with respect to such changes occurring after the date of this
Agreement, as shall have been specifically disclosed to the
Servicer and the Indenture Trustee in writing. The principal place
of business and chief executive office of each of the Warehouse
Trusts is located in care of Bankers Trust Company, Four Xxxxxx
Xxxxxx, Xxx Xxxx 00000 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).
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(xiii) Valid Business Reasons. Receivables III has
valid business reasons for selling its interest in the Conveyed
Assets rather than obtaining a loan with the Conveyed Assets as
collateral;
(xiv) Absence of Event. No event has occurred which
adversely affects Receivables III's operations or its ability to
perform its obligations under the Transaction Documents to which it
is a party;
(xv) Accounting Treatment. Receivables III will
treat the assignment of the Conveyed Assets to the Trust pursuant
to Article II as a sale of the Conveyed Assets to the Trust for
financial reporting and accounting purposes, except with respect to
a portion of the Conveyed Assets which will be treated as owned by
Receivables III and which will be treated as consolidated for
accounting purposes with First Sierra.
(c) Prudential hereby makes the following representations and
warranties for the benefit of the Indenture Trustee, the Noteholders, the Note
Insurer and the Trust. Such representations and warranties are made as of the
Closing 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. Prudential 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. Prudential 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 Prudential to
comply with the terms of this Agreement or any other transaction
document to which it is a party;
(iii) Power and Authority. Prudential 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 any other Transaction Document to
which it is a party, has been duly authorized by Prudential by all
necessary corporate action;
(iv) Due Execution and Delivery. This Agreement has
been duly executed and delivered on behalf of Prudential;
(v) Valid Assignment; Binding Obligations. This
Agreement constitutes a valid sale, assignment, transfer and
conveyance to the Owner Trustee, on
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behalf of the Trust, of all right, title, and interest of
Prudential 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 Prudential, 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 Prudential enforceable against Prudential in
accordance with its 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 Prudential, or any material term of any
indenture, agreement, mortgage, deed of trust, or other instrument
to which Prudential 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 Prudential of any court or of any
federal or state regulatory body, administrative agency, or other
Governmental Authority having jurisdiction over Prudential or any
of its properties which would have a material adverse effect on the
Conveyed Assets;
(vii) Valid Business Reasons. Prudential 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 Prudential's operations or its ability to
perform its obligations under the Transaction Documents to which it
is a party;
(ix) Insolvency. Prudential 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 Transaction Document to which it is a
party;
(x) No Proceedings. There are no proceedings or
investigations pending, or, to the knowledge of Prudential,
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 Prudential) materially and adversely
affect the performance by Prudential of its obligations under, or
the validity or enforceability of, this Agreement;
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(xi) No Consent Required. Prudential 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 Prudential 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
Prudential's obligations hereunder; and
(xiii) Accounting Treatment. Prudential 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) First Union hereby makes the following representations and
warranties for the benefit of the Indenture Trustee, the Noteholders, the Note
Insurer and the Trust. Such representations and warranties are made as of the
Closing 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 any other Transaction Document to which it is a party, and to
carry out their respective terms; and the execution, delivery, and
performance of this Agreement and any other Transaction Document to
which it is a party, has been duly authorized by First Union by all
necessary corporate action;
(iv) Due Execution and Delivery. This Agreement has
been duly executed and delivered on behalf of First Union;
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(v) Valid Assignment; Binding Obligations. This
Agreement constitutes a valid contribution, assignment, transfer
and conveyance to the Owner Trustee, on behalf of the Trust, of all
right, title, and interest of First Union in, to and under the
Conveyed Assets and the Conveyed Assets will be held by the Trust
free and clear of any Lien of any Person claiming, through or under
First Union, except the lien on the Conveyed Assets in favor of the
Indenture Trustee granted pursuant to the Indenture; and this
Agreement, when duly executed and delivered, will constitute legal,
valid, and binding obligation 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 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
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Union) materially and adversely affect the performance by First
Union of its obligations under, or the validity or enforceability
of, this Agreement;
(xi) No Consent Required. First Union is not
required to obtain the consent of any other Person, or any consent,
license, approval or authorization or registration or declaration
with, any governmental authority, bureau or agency in connection
with the execution, delivery or performance of this Agreement and
the Transaction Documents to which it is a party, except for such
having been obtained, effected or made;
(xii) Fair Consideration. The consideration
received by First Union as set forth herein is fair consideration
having value reasonably equivalent to or in excess of the value of
the Conveyed Assets conveyed by it and the performance of First
Union's obligations hereunder; and
(xiii) Accounting Treatment. First Union will treat
the assignment of the Conveyed Assets to the Trust pursuant to
Article II as a sale of the Conveyed Assets to the Trust for
financial reporting and accounting purposes.
(e) VFCC hereby makes the following representations and
warranties for the benefit of the Indenture Trustee, the Note Insurer and the
Trust. Such representations and warranties are made as of the Closing 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 any
other Transaction Document to which it is a party, and to carry out
their respective terms; and the execution, delivery, and
performance of this Agreement and any other Transaction Document to
which it is a party, has been duly authorized by 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 Transaction Document to which it is a
party
(x) No Proceedings. There are no proceedings or
investigations pending, or, to the knowledge of VFCC, threatened,
before any court, regulatory body, administrative agency, or other
tribunal or Governmental Authority (A) asserting the invalidity of
this Agreement, (B) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement, or (C) seeking any
determination or ruling that might (in the reasonable judgment of
VFCC) materially and adversely
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affect the performance by VFCC of its obligations under, or the
validity or enforceability of, this Agreement;
(xi) No Consent Required. VFCC is not required to
obtain the consent of any other Person, or any consent, license,
approval or authorization or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery or performance of this Agreement and the
Transaction Documents to which it is a party, except for such
having been obtained, effected or made;
(xii) Fair Consideration. The consideration
received by VFCC as set forth herein is fair consideration having
value reasonably equivalent to or in excess of the value of the
Conveyed Assets conveyed by it and the performance of VFCC's
obligations hereunder; and
(xiii) Accounting Treatment. VFCC will treat the
assignment of the Conveyed Assets to the Trust pursuant to Article
II as a sale of the Conveyed Assets to the Trust for financial
reporting and accounting purposes.
SECTION 3.02 [Reserved]
SECTION 3.03 Substitution of Contracts and Equipment by First
Sierra.
(a) With respect to a substitution of Contracts in accordance
with the provisions of this Section 3.03 and Section 4.02 of the Indenture, each
proposed Substitute Contract must (i) be an Eligible Contract, (ii) satisfy all
of the representations and warranties set forth in Section 2.02 of the Servicing
Agreement, (iii) have a Discounted Contract Principal Balance of not less than
the Discounted Contract Principal Balance of the Contract being replaced and
(iv) is eligible to be substituted by First Sierra under the Indenture. For
purposes of determining compliance with clause (iii) of the preceding sentence,
if more than one Substitute Contract is being provided on any date, the
Discounted Contract Principal Balance of the Substitute Contracts and the
Contracts being replaced shall be determined on an aggregate basis.
(b) Any substitution of a Contract pursuant to this Agreement
will be effected by (i) delivery to the Indenture Trustee of the Contract File
for each such Substitute Contracts, (ii) filing of any UCC financing statements
necessary to perfect the interest of the Indenture Trustee in the Substitute
Contracts, (iii) delivery to the Indenture Trustee of a supplement to the List
of Contracts reflecting such substitution and (iv) delivery to the Indenture
Trustee of a release request and the originally executed trust receipt relating
thereto.
(c) The parties hereto agree that in addition to the
obligation of First Sierra to repurchase or to substitute any Contract and the
related Equipment as to which a breach of the representations set forth in the
Servicing Agreement has occurred and is continuing, First Sierra will enforce
its remedies against any Source under any Source Agreement. In consideration of
the purchase of the Equipment and the Contract, First Sierra shall remit the
Repurchase Amount to the Servicer for allocation of such Repurchase Amount
pursuant to the terms of the Indenture. Except as may be set forth in the
Transaction Documents, it is understood and agreed that the obligations of First
Sierra with respect to a breach as provided in this Section 3.03 and Section
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4.01 of the Indenture constitute the sole remedy against First Sierra for such
breach available to the Trust, the Note Insurer, the Indenture Trustee and
Noteholders. The representations and warranties set forth in Sections 3.01 and
3.02 shall survive the assignment of the Conveyed Assets to 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 First Sierra Covenants. First Sierra
and the Sellers, as applicable, hereby covenant and agree with the Trust, the
Note Insurer, the Noteholders and the Indenture Trustee with respect to itself
as follows:
(a) Preservation of Security Interest. The Sellers shall
execute and file such financing statements and cause to be executed and filed
such continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain, and protect the respective right,
title and interest of the Owner Trustee, on behalf of the Trust, and the
Indenture Trustee in the Conveyed Assets. First Sierra shall deliver (or cause
to be delivered) to the Trust file-stamped copies of, or filing receipts for,
any document filed as provided above, as soon as available following such
filing.
(b) Obligations with Respect to Conveyed Assets. Each of the
Sellers will duly fulfill all obligations on its part to be fulfilled under or
in connection with each Contract and each Source Agreement, and will do nothing
to impair the rights of the Trust, the Note Insurer or the Indenture Trustee in
any of the Conveyed Assets.
(c) Compliance with Law. First Sierra will comply, in all
material respects, with all acts, rules, requisitions, orders, decrees and
directions of any Governmental Authority applicable to its business and to the
Conveyed Assets or any part thereof; provided, however, that First Sierra may
contest any act, regulation, order, decree or direction in any reasonable manner
which shall not materially and adversely affect the rights of the Trust, the
Indenture Trustee, the Note Insurer or the Owner Trustee in the Conveyed Assets.
(d) Conveyance of Conveyed Assets; Security Interests. Except
for the transfers and conveyances hereunder, or under any Transaction Document,
the Sellers will not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any Lien, on any Conveyed Asset,
or any interest therein and First Sierra shall defend the right, title, and
interest of the Owner Trustee, on behalf of the Trust, the Indenture Trustee,
the Note Insurer and their respective successors and assigns in, to, and under
the Conveyed Assets, against all claims of third parties claiming, through or
under the Sellers; provided, however, that nothing in this Section 4.01(f) shall
prevent or be deemed to prohibit First Sierra from suffering to exist upon any
of the Conveyed Assets any Liens for municipal or other local taxes if such
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taxes shall not at the time be due and payable or if First Sierra shall
concurrently be contesting the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate reserves with respect
thereto and such contests pose no risk of forfeiture.
(e) Notification of Breach. The Sellers will advise the Trust,
the Indenture Trustee and the Note Insurer promptly, in reasonable detail, upon
discovery of the occurrence of any breach by First Sierra of any of its
representations, warranties and covenants contained herein.
(f) Further Assurances. (i) First Sierra will make, execute or
endorse, acknowledge and file or deliver to the Trust and the
Indenture Trustee from time to time such schedules, confirmatory
assignments, conveyances, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments
and take such further steps relating to the Conveyed Assets and
other rights covered by this Agreement, as the Trust, the Note
Insurer or the Indenture Trustee may request and reasonably
require, provided that no UCC filing will be required with respect
to the Equipment, except as required by the Filing Requirements.
(ii) The Sellers hereby agree to do all acts,
transactions, and things and to execute and deliver all agreements,
documents, instruments, and papers by and on behalf of the Sellers
as the Trust or its counsel may reasonably request in order to
consummate the transfer of the Conveyed Assets to the Trust and the
subsequent pledge thereof to the Indenture Trustee for the benefit
of the Noteholders and the Note Insurer, and the rating, issuance
and sale of the Notes.
(g) Indemnification. First Sierra agrees to indemnify, defend
and hold the Trust, the Note Insurer and the Indenture Trustee harmless from and
against any and all loss, liability, damage, judgment, claim, deficiency, or
expense (including interest, penalties, reasonable attorneys' fees and amounts
paid in settlement) to which any of them may become subject insofar as such
loss, liability, damage, judgment, claim, deficiency, or expense arises out of
or is based upon a breach by First Sierra of its covenants contained in Section
4.01, or any information certified set forth in this Agreement or in any
schedule delivered by First Sierra hereunder, being untrue in any material
respect at any time. The obligations of First Sierra under this Section 4.01(g)
shall be considered to have been relied upon by the Trust, the Note Insurer and
the Indenture Trustee and shall survive the execution, delivery, and performance
of this Agreement regardless of any investigation made by the Trust, the
Indenture Trustee, the Note Insurer or on their respective behalf. THE
INDEMNIFICATION OBLIGATIONS OF FIRST SIERRA PURSUANT TO THE PRECEDING PROVISIONS
OF THIS PARAGRAPH SHALL APPLY REGARDLESS OF ANY NEGLIGENCE OR OTHER FAULT ON THE
PART OF THE TRUST, THE INDENTURE TRUSTEE, THE NOTE INSURER OR ANY OF THEIR
RESPECTIVE OFFICERS, EMPLOYEES OR AGENTS.
(h) Notice of Liens. First Sierra shall notify the Trust, the
Note Insurer and the Indenture Trustee, promptly after becoming aware of any
Lien on any Conveyed Asset.
(i) Taxes. First Sierra shall promptly pay all applicable
taxes required to be paid in connection with the assignment of the Conveyed
Assets and acknowledges that the Trust
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shall have no responsibility with respect thereto. First Sierra shall promptly
pay and discharge, or cause the payment and discharge of, all federal income
taxes (and all other material taxes) when due and payable by each such Seller,
except (i) such as may be paid thereafter without penalty or (ii) such as may be
contested in good faith by appropriate proceedings and for which an adequate
reserve has been established and is maintained in accordance with GAAP. First
Sierra shall promptly notify the Trust, the Indenture Trustee, the Note Insurer
and the Noteholders of any material challenge, contest or proceeding pending by
or against First Sierra before any taxing authority. First Sierra and the
Depositor shall enter into a Tax Sharing Agreement, pursuant to which (i) First
Sierra shall assume the sole responsibility for making any required payments of
taxes to the Internal Revenue Service and shall agree to indemnify and hold the
Depositor harmless against any claims of liability for such taxes and (ii) the
Depositor shall be required to make certain payments to First Sierra in respect
of its separate federal income tax liability. So long as any Notes remain
outstanding, First Sierra and the Depositor shall not terminate or amend such
Tax Sharing Agreement without the prior written consent of the Indenture Trustee
acting upon the written direction of the Note Insurer, except that First Sierra
shall not require the Depositor to make any payments to First Sierra, pursuant
to the Tax Sharing Agreement, which exceed the aggregate federal income tax
liability of the Depositor, on a separate return basis for all taxable years
covered by the Tax Sharing Agreement, that would arise if all allowable losses
arising at any time during such period were applied to reduce the Depositor's
aggregate separate taxable income for all such years.
(j) Taxes and Other Liabilities. First Sierra shall promptly
pay and discharge all material taxes, assessments, fees, claims and other
governmental charges when due and payable by First Sierra, the First Sierra
Group, or any member of the First Sierra Group, except (i) such as may be paid
thereafter without penalty or (ii) such as may be contested in good faith by
appropriate proceedings and for which an adequate reserve has been established
and is maintained in accordance with GAAP. First Sierra shall promptly notify
the Trust, the Note Insurer and the Indenture Trustee of any material challenge,
contest or proceeding pending by or against First Sierra or the First Sierra
Group before any taxing authority.
(k) Non-Consolidation. First Sierra shall be operated in such
a manner that Receivables III and/or First Sierra Holding Trust I ("Holding
Trust I"), the holder of the trust certificate to be issued by the Trust, would
not be substantively consolidated with First Sierra, such that the separate
corporate existence of First Sierra and Receivables III, on the one hand, and
Holding Trust I, on the other hand, would be ignored in the event of a
bankruptcy of First Sierra.
(l) No Agency. First Sierra will not act as an agent of
Receivables III or Holding Trust I in any capacity except to the limited extent
provided in the Transaction Documents, but instead will present itself to the
public as a corporation separate from Receivables III and/or Holding Trust I;
(m) Financial Statements. The financial statements and books
and records of First Sierra reflect the separate existence of Receivables III
and Holding Trust I.
SECTION 4.02 Receivables III Covenants. Receivables III hereby
covenants and agrees with the Trust, the Note Insurer and the Indenture Trustee
as follows:
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(a) Receivables III Certificate. Prior to each date as of
which Contracts and the interest of Receivables III in the Equipment subject to
such Contracts are to be re-purchased by First Sierra pursuant to the Indenture,
Receivables III shall submit to First Sierra a certificate signed by the
president, executive vice president, any vice president or the treasurer of
Receivables III (a "Receivables III Certificate"), executed by Receivables III
and completed as to its date and the date of this Agreement. Each Receivables
III Certificate shall operate as an assignment, without recourse,
representation, or warranty, to First Sierra of all Receivables III's right,
title, and interest in and to such purchased Contract, Receivables III's
interest in the related Equipment, and all security and documents relating
thereto, such assignment being an assignment outright and not for security; and
upon payment of the Repurchase Amount, First Sierra will thereupon own such
Contract, such interest in the related Equipment and all such security and
documents, free of any further obligation to Receivables III with respect
thereto. If in any enforcement suit or legal proceeding it is held that the
Servicer may not enforce a Contract on the ground that it is not a real party in
interest or holder entitled to enforce the Contract, Receivables III shall, at
the Servicer's expense, take such steps as the Servicer deems necessary to
enforce the Contract, including bringing suit in Receivables III's name.
(b) Obligor's Quiet Enjoyment. Receivables III hereby
acknowledges and agrees that its rights in the Equipment are expressly subject
to the rights of the related Obligors in such Equipment pursuant to the
applicable Contracts. Receivables III covenants and agrees that, so long as an
Obligor shall not be in default of any of the provisions of the applicable
Contract, neither Receivables III nor any assignee of Receivables III will
disturb the Obligor's quiet and peaceful possession of the related Equipment and
the Obligor's use thereof for its intended purpose.
(c) Operation of Receivables III. Receivables III shall be
operated in such a manner that it would not be substantively consolidated in the
trust estate of another Person (that is, such that the separate legal existence
of Receivables III and such Person would be disregarded) and in that regard,
Receivables III shall:
(i) be a limited purpose corporation whose primary
activities are restricted in its certificate of incorporation;
(ii) not engage in any action that would cause the
separate legal identity of Receivables III not to be respected,
including, without limitation, (a) holding itself out as being liable
for the debts of any other party or (b) acting other than through its
duly authorized agents;
(iii) not be involved in the day-to-day management of
First Sierra and/or Holding Trust I;
(iv) not incur, assume or guarantee any indebtedness
except for such indebtedness as may be incurred by Receivables III in
connection with the issuance of the Notes or as otherwise permitted by
the Note Insurer;
(v) not commingle its funds, assets and records
relating thereto with those of First Sierra or any other entity;
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(vi) entitle the separate creditors of Receivables
III to be satisfied out of Receivables III's assets prior to any
value in Receivables III becoming available to Receivable III's
equityholders, First Sierra's creditors or Holding Trust I's
creditors;
(vii) act solely in its own name in the conduct of
its business, including business correspondence and other
communications, and shall conduct its business so as not to mislead
others as to the identity of the entity with which they are
concerned;
(viii) maintain company records and books of
account and shall not commingle its company records and books of
account with the records and books of account of any entity;
(ix) not engage in any business or activity other
than in connection with or relating to its Certificate of
Incorporation and/or Bylaws;
(x) not form, or cause to be formed, any
subsidiaries;
(xi) comply with all restrictions and covenants in,
and shall not fail to comply with the corporate formalities
established in, its Certificate of Incorporation and/or Bylaws;
(xii) maintain its assets separately from the
assets of First Sierra (including through the maintenance of a
separate bank account);
(xiii) manage its day-to-day business without the
involvement of First Sierra and/or Holding Trust I;
(xiv) maintain a separate office from that of First
Sierra and/or Holding Trust I;
(xv) not act as an agent of First Sierra or Holding
Trust I, except to the limited extent provided in the Transaction
Documents; and
(xvi) maintain at all times two independent
directors as required by its Certificate of Incorporation and/or
Bylaws.
(d) Merger or Consolidation. (i) Receivables III will keep in
full effect its existence, rights and franchises as a corporation and will
obtain and preserve its qualification to do business as a foreign corporation in
each jurisdiction which permits such qualification and in which it is necessary
to protect the validity and enforceability of this Agreement, any other
Transaction Document to which it is a party or any of the Contracts and to
perform its duties under this Agreement and each other Transaction Document to
which it is a party.
(ii) Any partnership or corporation (i) into which
Receivables III may be merged or consolidated, (ii) resulting from
any merger, conversion, or consolidation to which Receivables III
shall be party, or (iii) succeeding to Receivables III's business
substantially as a whole, shall execute an agreement of
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assumption to perform all of Receivables III's obligations under this
Agreement, and upon such execution will be Receivables III's successor
under this Agreement, without the execution or filing of any document
or any further act on the part of any of the parties to this Agreement,
anything in this Agreement to the contrary notwithstanding; provided,
however, that (a) immediately after giving effect to such transaction,
no covenant made pursuant to Section 4.02(c) shall have been breached,
(b) Receivables III shall have delivered to the Trust, the Rating
Agencies, the Note Insurer, the Owner Trustee and the Indenture Trustee
an Officer's Certificate and an opinion of counsel, satisfactory to
each of them, each stating that such consolidation, merger, or
succession and such agreement of assumption comply with this Section
4.02(d) and that all conditions precedent, if any, provided for in this
Agreement relating to such transaction have been complied with, (c)
Receivables III shall have delivered to the Trust, the Owner Trustee,
the Note Insurer, the Rating Agencies and the Indenture Trustee an
opinion of counsel, satisfactory to each of them, either (1) stating
that, in the opinion of such counsel, all financing statements and
continuation statements and amendments thereto have been executed and
filed that are necessary fully to preserve and protect the interest of
the Owner Trustee, on behalf of the Trust, in the Contracts and
reciting the details of such filings, or (2) stating that, in the
opinion of such counsel, no such action shall be necessary to preserve
and protect such interest, (d) such partnership or corporation shall
have organizational documents with similar restrictions as those of
Receivables III, and (e) the Note Insurer has given its prior written
consent.
SECTION 4.03 Transfer of Conveyed Assets. Each Seller,
Receivables III and each Investor understands that the Trust intends to pledge
the Pledged Property to the Indenture Trustee on behalf of the Note Insurer and
the Noteholders, pursuant to the Indenture. Each Seller and each Investor agrees
that such assignee of the Trust may exercise the rights of the Trust hereunder
and shall be entitled to all of the benefits of the Trust hereunder to the
extent provided for in such assignment.
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ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01 Conditions to Trust Obligations. The obligations
of the Trust to accept the transfer of the Conveyed Assets on the Closing Date
shall be subject to the satisfaction of the following conditions:
(a) All representations and warranties of each Seller,
Receivables III and each Investor contained in this Agreement shall be true and
correct on the Closing Date with the same effect as though such representations
and warranties had been made on such date;
(b) All information concerning the Conveyed Assets provided to
the Trust shall be true and correct as of the Cut-Off Date in all material
respects;
(c) Each Seller shall have delivered to the Trust a List of
Contracts with respect to its respective Contracts as of the Cut-Off Date and
shall have substantially performed all other obligations required to be
performed by the provisions of this Agreement;
(d) Each Seller shall have recorded and filed, at its expense,
any financing statement with respect to the Contracts and the other Conveyed
Assets to be transferred from time to time to 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 Contracts and the other Conveyed Assets from each such Seller to the Owner
Trustee, on behalf of Trust, and shall deliver a file-stamped copy of such
financing statements or other evidence of such filings to the Trust;
(e) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Trust, and the Trust shall have
received from each Seller copies of all documents (including, without
limitation, records of corporate proceedings) relevant to the transactions
herein contemplated as the Trust may reasonably have requested; and
(f) All respective conditions necessary to vest in each Seller
good title, free and clear of all Liens (other than Liens permitted in the
proviso contained in Section 4.01(f) hereof), to its respective Contracts and
interests in Equipment shall have been satisfied.
ARTICLE VI
TERMINATION
SECTION 6.01 Termination. The respective obligations and
responsibilities of each Seller, First Sierra and the Trust created by this
Agreement shall terminate upon the latest of (i) the maturity or other
liquidation of the last Contract and the disposition of any amounts received
upon disposition of any Defaulted Contracts and any Equipment leased thereunder;
and (ii) the termination of the Indenture in accordance with the terms thereof;
provided, however,
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that the indemnifications contained in Section 4.01(g) herein shall survive the
termination of this Agreement.
SECTION 6.02 Effect of Termination. No termination or
rejection or failure to assume the executory obligations of this Agreement in
the bankruptcy of any Seller or the Trust shall be deemed to impair or affect
the obligations pertaining to any executed sale or executed obligations,
including, without limitation, pre-termination breaches of representations and
warranties by any Seller. Without limiting the foregoing, prior to termination,
neither the failure of the Trust to deliver a Trust Certificate pursuant to
Section 4.02, nor the failure of First Sierra to pay a Repurchase Amount shall
render such transfer or obligation executory, nor shall the continued duties of
the parties pursuant to Article 4 or Section 7.06 of this Agreement render an
executed sale executory.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.01 Amendment. This Agreement may be amended from
time to time by the parties hereto only with (x) the prior written consent of
the Servicer, the Indenture Trustee and the Note Insurer and (y) prior written
notice to the Rating Agencies by the Servicer.
SECTION 7.02 GOVERNING LAW. THIS AGREEMENT AND ANY AMENDMENT
HEREOF PURSUANT TO SECTION 7.01 SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO
CHOICE OF LAW PRINCIPLES) APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
THEREIN AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES UNDER THIS
AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 7.03 Notices. All demands, notices, and communications
under this Agreement shall be in writing and shall be deemed to have been duly
given, made and received (i) when delivered against receipt of registered or
certified mail or upon actual receipt of registered or certified mail, postage
prepaid, return receipt requested; (ii) when delivered by courier with
appropriate evidence of receipt; or (iii) upon transmission via facsimile or
telex with appropriate evidence of receipt (a) in the case of First Sierra, at
the following address: 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000, Fax
No.: (000) 000-0000, (b) in the case of Receivables III, at the following
address: 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000, Fax No.: (713)
000-0000, (c) in the case of Prudential, 0000 X. Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000, (d) in the case of First Union, One First Union Center, 000
Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000, (e) in the case of
the Indenture Trustee, Four Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Corporate Trust and Agency Group - Structure & Finance, Fax No.: (000) 000-0000,
(f) in the case of VFCC, One First Union Center, 000 Xxxxx Xxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000, (g) in the case of the Trust, c/o First
Union Trust Company, National Association, One Xxxxxx Square, 000 Xxxx Xxxxxx,
Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust
Administration, Fax No.: (000) 000-0000, and (h) in the case of the Note Insurer
or the Indenture Trustee at their respective
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addresses set forth in Section 11.06 of the Indenture. Either party may alter
the address to which communications are to be sent by giving notice of such
change of address in conformity with the provisions of this Section 7.03 for
giving notice and by otherwise complying with any applicable terms of this
Agreement, including, but not limited to, subsections 4.01(b) and (c).
SECTION 7.04 Severability of Provisions. If any one or more of
the covenants, agreements, provisions, or terms of this Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements, provisions,
or terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.
SECTION 7.05 Assignment. Notwithstanding anything to the
contrary contained in this Agreement, this Agreement may not be assigned by
First Sierra, without the prior written consent of the Trust, the Note Insurer
and the Indenture Trustee (acting upon the written direction of the Controlling
Parties) and, except as provided in Section 4.03, this Agreement may not be
assigned by the Trust without the prior written consent of First Sierra, the
Note Insurer and the Indenture Trustee. Whether or not expressly stated, all
representations, warranties, covenants and agreements of First Sierra,
Receivables III, the Investors and the Trust in this Agreement, or in any
document delivered by any of them in connection with this Agreement, shall be
for the benefit of, and shall be exercisable by, the Indenture Trustee for the
benefit of the Noteholders.
SECTION 7.06 Further Assurances. Each of the parties hereto
agrees to do such further acts and things and to execute and deliver to the
Indenture Trustee such additional assignments, agreements, powers and
instruments as are required by the Indenture Trustee or the Note Insurer to
carry into effect the purposes of this Agreement or to better assure and confirm
unto the Indenture Trustee or the Note Insurer its rights, powers and remedies
hereunder.
SECTION 7.07 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Trust or each Seller,
any right, remedy, power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise hereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exhaustive of any
rights, remedies, powers and privilege provided by law.
SECTION 7.08 Counterparts. This Agreement may be executed in
two or more counterparts (and by different parties on separate counterparts),
each of which shall be an original, but all of which shall constitute one and
the same instrument.
SECTION 7.09 Binding Effect: Third-Party Beneficiaries. This
Agreement will inure to the benefit of and be binding upon the parties hereto.
The Indenture Trustee, the Owner Trustee, the Note Insurer and the Noteholders
are intended third party beneficiaries of this Agreement.
SECTION 7.10 Merger and Integration. Except as specifically
stated otherwise herein, this Agreement sets forth the entire understanding of
the parties relating to the subject
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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 of the latest maturing Notes
issued by the Trust, it will not institute against Receivables III or the Trust,
or join any other Person in instituting against Receivables III or the Trust,
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other proceedings under the laws of the United States or any
state of the United States. This Section 7.13 shall survive the termination of
this Agreement.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this
Receivables Transfer Agreement to be duly executed by their respective officers
as of the day and year first above written.
FIRST SIERRA FINANCIAL, INC.,
in its individual capacity
By:/s/ E. Xxxxxx Xxxxxxx
---------------------------------------
Name: E. Xxxxxx Xxxxxxx
Title: Senior Vice President
FIRST SIERRA RECEIVABLES III, INC.
By:/s/ E. Xxxxxx Xxxxxxx
---------------------------------------
Name: E. Xxxxxx Xxxxxxx
Title: Senior Vice President
FIRST UNION NATIONAL BANK,
as Certificateholder of the First
Sierra Equipment Lease Trust 1997-A
By:/s/ C. Brand Xxxxxxx
---------------------------------------
Name: C. Brand Xxxxxxx
Title: Vice President
VARIABLE FUNDING CAPITAL CORPORATION,
as Certificateholder of the First Sierra
Equipment Lease Trust 1997-B
By:/s/ Xxxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Director
[Signature Pages To Receivables Transfer Agreement]
30
PRUDENTIAL SECURITIES CREDIT
CORPORATION, as Certificateholder of
the First Sierra Equipment Lease Trust
1997-C
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 1997-C
By:/s/ Xxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
FIRST SIERRA EQUIPMENT CONTRACT TRUST
1998-1, A COMMON LAW TRUST ACTING
THROUGH FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY AS OWNER
TRUSTEE, as Issuer
By:/s/ Xxxxxxx X. Xxxx
---------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President
[Signature Pages To Receivables Transfer Agreement]
31
Schedule I
LIST OF CONTRACTS
[ON FILE WITH XXXXX XXXXXXXXXX LLP]
32
Annex A
DEFINED TERMS
[SEE ANNEX A TO THE INDENTURE]
