Conformed Copy
RECEIVABLES TRANSFER AGREEMENT
--------------
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 RECEIVABLES IV, INC.
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Dated as of
September 1, 1997
TABLE OF CONTENTS
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; Capital Contribution..............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.....................................6
SECTION 3.01 Representations and Warranties............................6
SECTION 3.02 Representations and Warranties of the Transferor.........16
SECTION 3.03 Substitution of Contracts and Equipment
by First Sierra.........................................18
ARTICLE IV COVENANTS..........................................................19
SECTION 4.01 Seller Covenants.........................................19
SECTION 4.02 Transferor Covenants.....................................22
SECTION 4.03 Transfer of Conveyed Assets..............................24
ARTICLE V CONDITIONS PRECEDENT................................................24
SECTION 5.01 Conditions to Transferor Obligations.....................24
SECTION 5.02 Conditions to Sellers' and Investors' Obligations........25
ARTICLE VI TERMINATION 25
SECTION 6.01 Termination..............................................25
SECTION 6.02 Effect of Termination....................................25
ARTICLE VII MISCELLANEOUS PROVISIONS..........................................26
SECTION 7.01 Amendment................................................26
SECTION 7.02 GOVERNING LAW............................................26
SECTION 7.03 Notices..................................................26
SECTION 7.04 Severability of Provisions...............................26
SECTION 7.05 Assignment...............................................27
SECTION 7.06 Further Assurances.......................................27
SECTION 7.07 No Waiver; Cumulative Remedies...........................27
SECTION 7.08 Counterparts.............................................27
SECTION 7.09 Binding Effect: Third-Party Beneficiaries................27
SECTION 7.10 Merger and Integration...................................27
i
SECTION 7.11 Headings.................................................28
SECTION 7.12 Schedules and Exhibits...................................28
SECTION 7.13 No Bankruptcy Petition Against
the Transferor or the Trust.............................28
Schedules & Annexes
Schedule 1 LIST OF CONTRACTS
Annex A DEFINED TERMS
ii
RECEIVABLES TRANSFER AGREEMENT
THIS RECEIVABLES TRANSFER AGREEMENT (this "Agreement"), dated as of
September 1, 1997, is entered into between FIRST SIERRA FINANCIAL, INC. ("First
Sierra"), a Delaware corporation located at Texas Commerce Tower, 70th Floor,
000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000, FIRST SIERRA RECEIVABLES III, INC.,
("Receivables III"), a Delaware corporation located at Texas Commerce Tower,
70th Floor, 000 Xxxxxx Xxxxxx, 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 RECEIVABLES IV, INC. (the "Transferor"), a
Delaware corporation, located at Texas Commerce Tower, 000 Xxxxxx Xxxxxx,
Xxxxxxx, Xxxxx 00000. First Sierra, 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 a Master Investment, Pooling and Servicing Agreement, dated as of
March 1, 1997 (the "Investment Agreement") whereby Receivables III may, from
time to time, sell pools of contracts, contract receivables and equipment to one
or more trusts to be formed pursuant to the Investment Agreement and a
supplement thereto; and
WHEREAS, pursuant to the Investment Agreement, the parties thereto may,
from time to time, execute a supplement to the Investment Agreement and form a
trust for the purpose of (i) accepting the transfer of a specific pool of
contracts, contract receivables, equipment and certain rights relating thereto
and arising therefrom from Receivables III, (ii) issuing senior certificates
("Senior Certificates") and residual certificates ("Residual Certificates" and,
together with the Senior Certificates, the "Certificates") representing
beneficial ownership interests in the assets of each trust and (iii) selling the
Senior Certificates to investors; and
WHEREAS, pursuant to a Series 1997-A Supplement, dated as of June 30,
1997 (the "Series 1997-A Supplement") among Receivables III, First Sierra,
Bankers Trust Company and First Union National Bank of North Carolina, the
parties thereto formed a trust (the "First Sierra Equipment Lease Trust
1997-A"), issued a Senior Certificate to First Union National Bank of North
Carolina 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 Transferor; 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 National Bank of North Carolina, 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 Transferor; 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 Transferor; and
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WHEREAS, in addition to Contracts and Equipment in the Warehouse
Trusts, First Sierra desires to convey, transfer, contribute and assign all of
its right title and interest in and to certain other Contracts and Equipment to
the Transferor; 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 Transferor upon the terms and conditions hereinafter set forth; and
WHEREAS, each of the Sellers and the Transferor agree that all
representations, warranties, covenants and agreements made by it herein shall be
for the benefit of the Noteholders, the Certificateholders, the Note Insurer,
the Letter of Credit Bank, 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.
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(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; Capital Contribution.
(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 all of the assets of each
Warehouse Trust to the Transferor. 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 First Sierra of all shares
of the Transferor's issued and outstanding capital stock, (y) the receipt of
$7,896,613.45 by First Sierra, $3,745,521.50 by First Sierra Equipment Lease
Trust 1997-A, $73,812,899.92 by First Sierra Equipment Lease Trust 1997-B and
$73,760,045.92 by First Sierra Equipment Lease Trust 1997-C and (z) other good
and valuable consideration, each of the Sellers hereby conveys to the Transferor
all of its right, title and interest in, to and under the Conveyed Assets,
whether now existing or hereinafter arising, without recourse (except as may be
set forth in the Servicing Agreement). In connection with such conveyance, each
of the Sellers, as applicable, hereby makes a capital contribution to the
Transferor in the amount by which the fair market value of the related Conveyed
Assets exceeds the cash consideration received by such Seller in connection
therewith.
(c) In connection with such contribution 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 Assets contributed and to be
transferred to the Transferor 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
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perfection of, the transfer, conveyance and contribution of the related Conveyed
Assets (subject to the Filing Requirements with respect to the Equipment) from
each of the Sellers to the Transferor, the transfer, conveyance and assignment
of the Conveyed Assets (subject to the Filing Requirements with respect to the
Equipment) from the Transferor to the Trust and the transfer, assignment and
pledge of the Pledged Property from the Transferor to the Indenture Trustee on
behalf of the Noteholders, the Note Insurer and the Letter of Credit Bank, as
their interests may appear, pursuant to the Indenture, and to deliver a
file-stamped copy of such financing statements or other evidence of such filings
to the Transferor (and copies to the Indenture Trustee, the Letter of Credit
Bank 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 Transferor 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 Assets have been assigned and transferred to
the Transferor in accordance with this Agreement, subsequently assigned and
transferred to the Trust in accordance with the Depositor Transfer Agreement and
pledged to the Indenture Trustee on behalf of the Noteholders, the Note Insurer
and the Letter of Credit Bank, as their interests may appear, pursuant to the
Indenture and (ii) prepare and hold in its capacity as Servicer on behalf of the
Transferor 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 make
capital contributions of Substitute Contracts to the Transferor at any time by
delivering a supplemented List of Contracts to the Transferor 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 contribution of
the Contracts will be without recourse to the Sellers.
SECTION 1.02 Custody of Contract Files . In connection with the
contribution, assignment, transfer and conveyance of the Contracts to the
Transferor 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 Conveyed Assets to
be made pursuant to the terms hereof shall constitute a sale or capital
contribution of such Contract
5
by each Seller to the Transferor 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 or capital contribution, 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 Transferor 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.
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, the Letter of Credit Bank
and the Transferor. Such representations and warranties are made as of the
Closing Date or any Transfer Date (with respect to Substitute Contracts
transferred to Transferor on such date) and shall survive each contribution,
assignment, transfer and conveyance by First Sierra of the respective Conveyed
Assets to the Transferor and its successors and assigns.
(i) Organization and Good Standing. First Sierra is a
corporation duly organized, validly existing and in good standing,
under the laws of the State of Delaware, with corporate power and
authority to own its properties and to conduct its business as such
properties are currently owned and such business is currently
conducted, and had at all relevant times, and now has, power,
authority, and legal right to acquire and own the Conveyed Assets;
(ii) Due Qualification. First Sierra is qualified as a
foreign corporation in any state where it is required to be so
qualified to conduct its business, to enforce the Source Agreements to
which it is a party, and to service the Contracts as required by the
Servicing Agreement and has obtained all necessary licenses, consents
and approvals as required under federal and state law, in each case,
where the failure to be so qualified, licensed, consented to or
approved could reasonably be expected materially and adversely to
affect the ability of First Sierra to comply with the terms of this
Agreement or any other Transaction Document to which it is a party;
(iii) Power and Authority. First Sierra has the corporate
power and authority to execute and deliver this Agreement, the Source
Agreements to which it is a party and the Contracts and any other
Transaction Document to which it is a party, and to carry out their
respective terms; First Sierra has duly authorized the contribution
and assignment to the Transferor of the Conveyed Assets by all
necessary corporate action; 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;
6
(iv) Due Execution and Delivery. This Agreement has been
duly executed and delivered on behalf of First Sierra;
(v) Valid Assignment; Binding Obligations. This Agreement
constitutes a valid contribution, assignment, transfer and conveyance
to the Transferor of all right, title, and interest of First Sierra
in, to and under the Conveyed Assets and the Conveyed Assets will be
held by the Transferor free and clear of any Lien of any Person
claiming, through or under First Sierra, except for Liens permitted
under, or to be created by the Indenture; and this Agreement, and the
other Transaction Documents to which it 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
Sierra or any of its properties which would have a material adverse
effect on the Conveyed Assets;
(vii) 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;
(viii) Tax Returns. First Sierra 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 First Sierra;
7
(ix) Pensions. Each pension plan or profit sharing plan to
which First Sierra is a party has been fully funded in accordance with
the obligations of First Sierra set forth in such plan;
(x) Valid Business Reasons. First Sierra has valid business
reasons for selling its interests in the Conveyed Assets rather than
obtaining a loan with the Conveyed Assets as collateral;
(xi) Insolvency. First Sierra 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;
(xii) Principal Place of Business. The principal place of
business and chief executive office of First Sierra are located at the
address of First Sierra set forth herein and, there are now no, and
during the past four months there have not been, any other locations
where First Sierra 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;
(xiii) Accounting and Tax Treatment. First Sierra will treat
the assignment of the Conveyed Assets to the Transferor pursuant to
Article II as a sale and contribution of the Conveyed Assets to the
capital of the Transferor for federal income tax purposes, and as a
sale for financial reporting and accounting purposes;
(xiv) Legal Name. The legal name of First Sierra is as set
forth in the signature line of this Agreement and First Sierra has not
changed its name since its incorporation and since its incorporation,
First Sierra did not use, nor does First Sierra now use, any trade
names, fictitious names, assumed names or "doing business as" names;
(xv) Material Adverse Change. As of June 30, 1997, no event
has occurred and is continuing which materially and adversely affects
First Sierra's operations including, without limitation, the ability
of First Sierra to perform the transactions contemplated hereunder;
(xvi) 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;
(xvii) Fair Consideration. The consideration received by
First Sierra as set forth herein is fair consideration having value
reasonably
8
equivalent to or in excess of the value of the Conveyed Assets
conveyed by it and the performance of First Sierra's obligations
hereunder; and
(xviii) Consolidated Return Taxable Income from the
Equipment and the Related Contracts. The Transferor 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 Transferor under the Transaction Documents or
other document relating to the financing contemplated hereby. The
Transferor shall treat the Contracts as owned by it and any True Lease
Equipment as owned by it for federal, state and local income tax
purposes, and the affiliated group of which the Transferor is a member
within the meaning of section 1504 of the Code shall treat the
Contracts owned by the Transferor and any True Lease Equipment as
owned by the Transferor for federal income tax purposes 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, the Letter of Credit Bank and the Transferor. Such representations and
warranties are made as of the Closing Date and shall survive each contribution,
assignment, transfer and conveyance by the Sellers of the respective Conveyed
Assets to the Transferor and its successors and assigns.
(i) Organization and Good Standing. Receivables III is a
corporation duly organized, validly existing and in good standing,
under the laws of the State of Delaware, with corporate power and
authority to own its properties and to conduct its business as such
properties are currently owned and such business is currently
conducted, and had at all relevant times, and now has, power,
authority, and legal right to acquire and own the Conveyed Assets;
(ii) Due Qualification. Receivables III is qualified as a
foreign corporation in any state where it is required to be so
qualified to conduct its business and has obtained all necessary
licenses, consents and approvals as required under federal and state
law, in each case, where the failure to be so qualified, licensed,
consented to or approved could reasonably be expected materially and
adversely to affect the ability of Receivables III to comply with the
terms of this Agreement or any other Transaction Document to which it
is a party;
(iii) 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
contribution and assignment to the Transferor of all of its right,
title and interest, if any, in the Conveyed Assets by all necessary
corporate action; and the execution, delivery, and
9
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;
(iv) Due Execution and Delivery. This Agreement has been
duly executed and delivered on behalf of Receivables III;
(v) Valid Assignment; Binding Obligations. This Agreement
constitutes a valid assignment, transfer and conveyance to the
Transferor 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 Transferor free and clear of any Lien of any Person claiming,
through or under Receivables III; 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);
(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
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;
(vii) 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;
(viii) 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
10
this Agreement and the Transaction Documents to which it is a party,
except for such having been obtained, effected or made;
(ix) 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
obligations hereunder; and
(x) Principal Place of Business. The principal place of
business and chief executive office of Receivables III are located at
0000 Xxxx Xxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 and,
there are now no, and during the past four months there have not been,
any other locations where First Sierra 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 are 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).
(c) Prudential hereby makes the following representations and
warranties for the benefit of the Indenture Trustee, the Noteholders, the Note
Insurer, the Letter of Credit Bank and the Transferor. Such representations and
warranties are made as of the Closing Date and shall survive each contribution,
assignment, transfer and conveyance by the Sellers of the respective Conveyed
Assets to the Transferor 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
11
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 contribution, assignment, transfer and conveyance
to the Transferor of all right, title, and interest of Prudential in,
to and under the Conveyed Assets and the Conveyed Assets will be held
by the Transferor free and clear of any Lien of any Person claiming,
through or under Prudential; 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) 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;
(viii) 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,
12
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;
and
(ix) 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.
(d) First Union hereby makes the following representations and
warranties for the benefit of the Indenture Trustee, the Noteholders, the Note
Insurer, the Letter of Credit Bank and the Transferor. Such representations and
warranties are made as of the Closing Date and shall survive each contribution,
assignment, transfer and conveyance by the Sellers of the respective Conveyed
Assets to the Transferor 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;
(v) Valid Assignment; Binding Obligations. This Agreement
constitutes a valid contribution, assignment, transfer and conveyance
to the Transferor 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 Transferor free and clear of any Lien of any Person claiming,
through or under First Union;
13
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) 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;
(viii) 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; and
(ix) 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.
(e) VFCC hereby makes the following representations and warranties for
the benefit of the Indenture Trustee, the Noteholders, the Note Insurer, the
Letter of Credit Bank and the Transferor. Such representations and warranties
are made as of the Closing Date and shall survive each contribution, assignment,
transfer and conveyance by
14
the Sellers of the respective Conveyed Assets to the Transferor 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;
(v) Valid Assignment; Binding Obligations. This Agreement
constitutes a valid contribution, assignment, transfer and conveyance
to the Transferor of all right, title, and interest of VFCC in, to and
under the Conveyed Assets and the Conveyed Assets will be held by the
Transferor free and clear of any Lien of any Person claiming, through
or under VFCC; 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,
15
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) No Proceedings. There are no proceedings or
investigations pending, or, to the knowledge of VFCC, threatened,
before any court, regulatory body, administrative agency, or other
tribunal or Governmental Authority (A) asserting the invalidity of
this Agreement, (B) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement, or (C) seeking any
determination or ruling that might (in the reasonable judgment of
VFCC) materially and adversely affect the performance by VFCC of its
obligations under, or the validity or enforceability of, this
Agreement;
(viii) 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; and
(ix) 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.
SECTION 3.02 Representations and Warranties of the Transferor. The
Transferor hereby makes the following representations and warranties for the
benefit of the Sellers, the Investors, Receivables III, the Note Insurer, the
Indenture Trustee, the Letter of Credit Bank and the Noteholders. Such
representations and warranties speak as of the Closing Date and each Transfer
Date.
(i) Organization and Good Standing. The Transferor is a corporation
duly organized and validly existing in good standing under the laws of the State
of Delaware, with full power and authority to own its properties and to conduct
its business as presently conducted and has the power, authority and legal right
to acquire and own the Conveyed Assets;
(ii) Due Qualification. The Transferor is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business requires such qualification, except to
the extent that the failure to be so qualified, licensed or approved would not,
in the aggregate, materially and adversely affect the ability of the Transferor
to comply with the terms of this Agreement and the other Transaction Documents
to which it is a party;
16
(iii) Power and Authority. The Transferor has the power and authority
to execute and deliver this Agreement and the other Transaction Documents to
which it is a party and to carry out their respective terms; and the execution,
delivery, and performance of this Agreement and other Transaction Documents to
which it is a party have been duly authorized by the Transferor by all necessary
action;
(iv) Due Execution and Delivery. This Agreement and the other
Transaction Documents to which it is a party have been duly executed and
delivered on behalf of the Transferor;
(v) Binding Obligations. This Agreement and the other Transaction
Documents to which it is a party constitute legal, valid, and binding
obligations of the Transferor and are enforceable in accordance with their
respective terms subject as to enforceability to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting creditors' rights
generally and to general principles of equity (regardless of whether enforcement
is sought in a proceeding in equity or at law);
(vi) No Violation. The consummation of the transactions contemplated by
and the fulfillment of the terms of this Agreement and other Transaction
Documents 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 of
lapse of time) a default under, the Certificate of Incorporation or By Laws of
the Transferor, or any material term to any indenture to which the Transferor is
a party or violate any law or any order, injunction, writ, rule or regulation
applicable to the Transferor of any court or of any federal or state regulatory
body, administrative agency or other Governmental Authority having jurisdiction
over the Transferor or any of its properties which would have a material adverse
effect on the Conveyed Assets;
(vii) Common Stock. First Sierra is the registered owner of all of the
issued and outstanding common stock of the Transferor, all of which common stock
is validly issued, fully paid and nonassessable and, to the best of its
knowledge, owned of record, free and clear of all mortgages, assignments,
pledges, security interests, warrants, options and rights to purchase;
(viii) No Proceedings. There are no proceedings or investigations of
which the Transferor has received service of process to which the Transferor is
a party pending or, to the knowledge of the Transferor, threatened, before any
court, regulatory body, administrative agency or other tribunal or governmental
instrumentality (A) asserting the invalidity of or any of the Transaction
Documents, (B) seeking to prevent the consummation of any of the transactions
contemplated by any of the Transaction Documents or (C) seeking any
determination or ruling that would materially and adversely affect the
performance by the Transferor of its obligations under, or the validity or
enforceability of, any of the Transaction Documents;
(ix) Approvals and Compliance. All approvals, authorizations, consents,
orders or other actions of any person, corporation or other organization, or of
any court, governmental agency or body or official, required in connection with
the execution and delivery of the Transaction Documents, have been or will be
taken or
17
obtained on or prior to the Closing Date and the Transferor is in compliance
with all applicable laws, rules, regulations and orders with respect to the
Transferor, its business and properties and all purchased Contracts;
(x) Solvency. The Transferor is solvent and will not be rendered
insolvent by the transactions contemplated by this Agreement and the other
Transaction Documents and the Transferor has an adequate amount of capital to
conduct its business in the ordinary course and to carry out its obligations
under this Agreement and the other Transaction Documents;
(xi) Subsidiaries. The Transferor has no subsidiaries;
(xii) Tax Returns. The Transferor 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 the Transferor;
(xiii) Principal Place of Business. The principal place of business and
chief executive office of the Transferor are located at the address of the
Transferor set forth herein and, there are now no, and during the past four
months there have not been, any other locations where the Transferor 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, the Note Insurer, the
Letter of Credit Bank and the Indenture Trustee in writing;
(xiv) Accounting and Tax Treatment. The Transferor will treat the
assignment of the Conveyed Assets to the Trust pursuant to the Depositor
Transfer Agreement as a sale of the Conveyed Assets for federal income tax
purposes, and as a sale for financial reporting and accounting purposes; and
(xv) Legal Name. The legal name of the Transferor is as set forth in the
signature line of this Agreement and the Transferor has not changed its name
since its incorporation and since its incorporation, the Transferor did not use,
nor does the Transferor now use, any trade names, fictitious names, assumed
names or "doing business as" names.
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, 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.
18
(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 4.01 of the Indenture
constitute the sole remedy against First Sierra for such breach available to the
Transferor, the Note Insurer, the Letter of Credit Bank, 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 Transferor,
the assignment of the Conveyed Assets to the Trust and the pledge of the Pledged
Property to the Indenture Trustee.
ARTICLE IV
COVENANTS
SECTION 4.01 Seller Covenants. First Sierra and the Sellers, as
applicable, hereby covenant and agree with the Transferor, the Note Insurer, the
Letter of Credit Bank, 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 Transferor, the Trust and the Indenture Trustee in the
Conveyed Assets. First Sierra shall deliver (or cause to be delivered) to the
Transferor file-stamped copies of, or filing receipts for, any document filed as
provided above, as soon as available following such filing.
(b) Preservation of Name, etc. First Sierra will not change its name,
identity or corporate structure in any manner that would, could, or might make
any financing statement or continuation statement filed by First Sierra in
accordance with paragraph (a) above or under any Transaction Document seriously
misleading within the meaning of ss. 9-402(7) of the UCC, unless it shall have
given the Transferor, the Note Insurer, the Letter of Credit Bank and the
Indenture Trustee at least 60 days' prior written notice thereof.
19
(c) Preservation of Office. First Sierra will give the Transferor, the
Note Insurer, the Letter of Credit Bank and the Indenture Trustee at least 60
days' prior written notice of any relocation of its principal executive office
if, as a result of such relocation, the applicable provisions of the UCC would
require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement.
(d) 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 Transferor, the Trust, the Note Insurer, the Letter of
Credit Bank or the Indenture Trustee in any of the Conveyed Assets.
(e) 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 Transferor, the Indenture
Trustee, the Note Insurer, the Letter of Credit Bank or the Owner Trustee in the
Conveyed Assets.
(f) 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 Transferor, the Trust, the Indenture Trustee, the Note Insurer, the Letter
of Credit Bank 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
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.
(g) Notification of Breach. The Sellers will advise the Transferor, the
Indenture Trustee, the Letter of Credit Bank 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.
(h) Further Assurances. First Sierra will make, execute or endorse,
acknowledge and file or deliver to the Transferor, 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 Transferor, the Trust,
the Indenture Trustee, the Letter of Credit Bank and the Note Insurer may
request and reasonably require, provided that no
20
UCC filing will be required with respect to the Equipment, except as required by
the Filing Requirements.
(i) Indemnification. First Sierra agrees to indemnify, defend and hold
the Transferor, the Indenture Trustee, the Letter of Credit Bank and the Note
Insurer 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(i) shall be considered to have been relied upon by the Transferor,
the Indenture Trustee, the Letter of Credit Bank and the Note Insurer and shall
survive the execution, delivery, and performance of this Agreement regardless of
any investigation made by the Transferor, the Indenture Trustee, the Letter of
Credit Bank and 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 TRANSFEROR, THE INDENTURE TRUSTEE, THE LETTER OF CREDIT BANK, THE
NOTE INSURER OR ANY OF THEIR RESPECTIVE OFFICERS, EMPLOYEES OR AGENTS.
(j) Notice of Liens. First Sierra shall notify the Transferor, the
Indenture Trustee, the Letter of Credit Bank and the Note Insurer promptly after
becoming aware of any Lien on any Conveyed Asset.
(k) 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 Transferor 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
Transferor, the Indenture Trustee, the Noteholders, the Letter of Credit Bank
and the Note Insurer of any material challenge, contest or proceeding pending by
or against First Sierra before any taxing authority. First Sierra and the
Transferor 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
Transferor harmless against any claims of liability for such taxes and (ii) the
Transferor 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 Transferor 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 (or, following the Class A
Termination Date, the Letter of Credit Bank), except that First Sierra shall not
require the Transferor to make any payments to First Sierra, pursuant to the Tax
Sharing Agreement, which exceed the
21
aggregate federal income tax liability of the Transferor, on a separate return
basis for all taxable years covered by Tax Sharing Agreement, that would arise
if all allowable losses arising at an time during such period were applied to
reduce the Transferor`s aggregate separate taxable income for all such years.
(l) 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, including the Transferor, 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 Transferor, the Note Insurer, the Letter of Credit Bank 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.
(m) Non-Consolidation. First Sierra shall take all action necessary to
ensure that the Transferor would not be substantially consolidated with First
Sierra, such that the separate corporate existence of First Sierra and the
Transferor would be ignored in the event of a bankruptcy of First Sierra.
SECTION 4.02 Transferor Covenants. The Transferor hereby covenants and
agrees with the Sellers, the Note Insurer, the Letter of Credit Bank and the
Indenture Trustee as follows:
(a) Transferor Certificate. Prior to each date as of which Contracts
and the interest of the Transferor in the Equipment subject to such Contracts
are to be re-purchased by First Sierra pursuant to the Indenture, the Transferor
shall submit to First Sierra a certificate signed by the president, executive
vice president, any vice president or the treasurer of the Transferor (a
"Transferor Certificate"), executed by the Transferor and completed as to its
date and the date of this Agreement. Each Transferor Certificate shall operate
as an assignment, without recourse, representation, or warranty, to First Sierra
of all the Transferor's right, title, and interest in and to such purchased
Contract, the Transferor'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 the Transferor 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, the Transferor
shall, at the Servicer's expense, take such steps as the Servicer deems
necessary to enforce the Contract, including bringing suit in the Transferor's
name.
(b) Obligor's Quiet Enjoyment. The Transferor 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. The
Transferor covenants and agrees that, so long as an Obligor shall not be in
default of any of the provisions of the applicable Contract, neither the
Transferor nor any assignee of the
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Transferor 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 Transferor. The Transferor 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 the
Transferor and such Person would be disregarded) and in that regard, the
Transferor shall:
(i) not engage in any action that would cause the separate legal
identity of the Transferor 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;
(ii) not incur, assume or guarantee any indebtedness except for such
indebtedness as may be incurred by the Transferor in connection with the
issuance of the Notes or as otherwise permitted by the Note Insurer;
(iii) not commingle its funds with those of any other entity;
(iv) act solely in its name in the conduct of its business and shall
conduct its business so as not to mislead others as to the identity of the
entity with which they are concerned;
(v) 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;
(vi) not engage in any business or activity other than in connection
with or relating to the Articles of Incorporation and/or Bylaws;
(vii) not form, or cause to be formed, any subsidiaries;
(viii) comply with all restrictions and covenants in, and shall not
fail to comply with the corporate formalities established in, the Articles of
Incorporation and/or Bylaws;
(ix) maintain separate bank accounts;
(x) manage its day-to-day business without the involvement of First
Sierra;
(xi) maintain a separate office from that of First Sierra;
(xii) not act as an agent of First Sierra; and
(xiii) maintain at all times two independent directors as required by
the Articles of Incorporation and/or Bylaws.
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SECTION 4.03 Transfer of Conveyed Assets. Each Seller, Receivables III
and each Investor understands that the Transferor intends to convey the Conveyed
Assets and its rights under this Agreement to the Trust and the Trust intends to
pledge the Pledged Property to the Indenture Trustee on behalf of the Note
Insurer, the Letter of Credit Bank and the Noteholders, as their interests may
appear, pursuant to the Indenture. Each Seller and each Investor agrees that any
such assignee of the Transferor may exercise the rights of the Transferor
hereunder and shall be entitled to all of the benefits of the Transferor
hereunder to the extent provided for in such assignment.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01 Conditions to Transferor Obligations. The obligations of
the Transferor 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
Transferor shall be true and correct as of the Cut-Off Date in all material
respects;
(c) Each Seller shall have delivered to the Transferor 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 Transferor 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 Transferor,
and shall deliver a file-stamped copy of such financing statements or other
evidence of such filings to the Transferor;
(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 Transferor, and the Transferor 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 Transferor 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
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Section 4.01(f) hereof), to its respective Contracts and interests in Equipment
shall have been satisfied.
SECTION 5.02 Conditions to Sellers' and Investors' Obligations. The
obligations of each Seller to convey and contribute the Conveyed Assets on the
Closing Date and the obligations of each Investor and Receivables III to direct
Bankers Trust Company, as Trustee of each of the Warehouse Trusts, to convey the
assets of the Warehouse Trusts to the Transferor on the Closing Date shall be
subject to the satisfaction of the following conditions:
(a) All representations and warranties of the Transferor contained in
this Agreement shall be true and correct with the same effect as though such
representations and warranties had been made on such date; and
(b) 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 each Seller, and each Seller shall have
received from the Transferor copies of all documents (including, without
limitation, records of corporate proceedings) relevant to the transactions
herein contemplated as each Seller may reasonably have requested.
ARTICLE VI
TERMINATION
SECTION 6.01 Termination. The respective obligations and
responsibilities of each Seller and the Transferor 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; (ii) the
distribution to the Transferor of all amounts required to be paid to it pursuant
to this Agreement; and (iii) the termination of the Indenture in accordance with
the terms thereof; provided, however, that the indemnifications contained in
Section 4.01(i) 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 Transferor shall be deemed to impair or affect the
obligations pertaining to any executed contribution or executed obligations,
including, without limitation, pre-termination breaches of representations and
warranties by any Seller or the Transferor. Without limiting the foregoing,
prior to termination, neither the failure of the Transferor to deliver a
Transferor 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 contribution executory.
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ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.01 Amendment. This Agreement may be amended from time to time
by the parties hereto only with (x) the prior written consent of the Servicer,
the Indenture Trustee and the Note Insurer and (y) prior written notice to the
Rating Agencies by the Servicer; provided, however, that no such amendment shall
materially and adversely affect the interests of the Letter of Credit Bank,
without the prior written consent of the Letter of Credit Bank.
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: Texas Commerce Tower 70th Floor, 000 Xxxxxx Xxxxxx, Xxxxxxx,
Xxxxx 00000, Fax No.: (000) 000-0000, (b) in the case of Receivables III, at the
following address: Texas Commerce Tower 70th Floor, 000 Xxxxxx Xxxxxx, Xxxxxxx,
Xxxxx 00000, Fax No.: (000) 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,(x) in
the case of the Transferor, Texas Commerce Tower 70th Floor, 000 Xxxxxx Xxxxxx,
Xxxxxxx, Xxxxx 00000, Fax No.: (000) 000-0000, and (h) in the case of the Note
Insurer, the Letter of Credit Bank or the Indenture Trustee at their respective
addresses set forth in Section 11.06 of the Indenture. Either party may alter
the address to which communications are to be sent by giving notice of such
change of address in conformity with the provisions of this Section 7.03 for
giving notice and by otherwise complying with any applicable terms of this
Agreement, including, but not limited to, subsections 4.01(b) and (c).
SECTION 7.04 Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason
26
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 Transferor, the Note Insurer (or,
following the Class A Termination Date, the Letter of Credit Bank) 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 Transferor without the prior written consent of First Sierra, the Note
Insurer (or, following the Class A Termination Date, the Letter of Credit Bank)
and the Indenture Trustee. Whether or not expressly stated, all representations,
warranties, covenants and agreements of First Sierra, Receivables III, the
Investors and the Transferor 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, the Note Insurer and the Letter of Credit Bank, as their interests
may appear.
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, the Letter of Credit Bank or the Note Insurer
to carry into effect the purposes of this Agreement or to better assure and
confirm unto the Indenture Trustee, the Letter of Credit Bank 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 Transferor 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 Trust, the Note Insurer, the Letter of
Credit Bank 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.
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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 the Transferor 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 the Transferor or the Trust,
or join any other Person in instituting against the Transferor 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.,
as Seller
By:________________________________
Name:
Title:
FIRST SIERRA RECEIVABLES III, INC
By:________________________________
Name:
Title:
FIRST UNION NATIONAL BANK,
as Certificateholder of the
First Sierra Equipment Lease
Trust 1997-A
By:________________________________
Name:
Title:
VARIABLE FUNDING CAPITAL
CORPORATION, as Certificateholder
of the First Sierra Equipment Lease
Trust 1997-B
By:________________________________
Name:
Title:
29
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
Equipment Lease Trust 1997-A, the
First Sierra Equipment Lease
Trust 1997-B and the First Sierra
Equipment Lease Trust 1997-C
By:________________________________
Name:
Title:
FIRST SIERRA RECEIVABLES IV, INC.,
as Transferor
By:________________________________
Name:
Title:
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