<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 20, 1996
FORD CREDIT AUTO OWNER TRUST Series 1996-A
(Ford Credit Auto Receivables Two L.P. - Originator)
-------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 333-1245 38-3295857
- -------- --------- ----------
(State or other juris- (Commission File Number) (IRS Employer
diction of incorporation I.D. No.)
The American Road, Dearborn, Michigan 48121
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 313-322-3000
<PAGE> 2
Item 5. Other Events
In connection with the registration under the Securities Act of 1933, as
amended, by Ford Credit Auto Receivables Two L.P. ("FCARTLP") of $5,000,000,000
aggregate principal amount of Asset Backed Securities and the issuance by Ford
Credit Auto Owner Trust 1996-A (the "Trust") of $1,043,322,567 aggregate
principal amount of such Asset Backed Securities designated as $320,031,000
Class A-1 5.67% Money Market Asset Backed Notes, $283,049,000 Class A-2 6.30%
Asset Backed Notes, $219,119,000 Class A-3 6.50% Asset Backed Notes,
$184,607,000 Class A-4 6.75% Asset Backed Notes and $36,516,567 7.00% Asset
Backed Certificates pursuant to the Prospectus dated June 11, 1996 and the
Prospectus Settlement dated June 13, 1996 filed with the Securities and
Exchange Commission pursuant to its Rule 424(b)(2), FCARTLP is filing as
exhibits to this Current Report on Form 8-K (i) the Restated Limited
Partnership Agreement between FCARTLP and Ford Motor Credit Company ("Ford
Credit"), (ii) a conformed copy of Indenture dated as of June 1, 1996 between
the Trust and Chemical Bank ("Indenture Trustee"), (iii) a conformed copy of
Restated Trust Agreement between FCARTLP and PNC Bank, Delaware, (iv) a
conformed copy of Purchase Agreement dated as of June 1, 1996 between Ford
Credit and FCARTLP, (v) opinion of Skadden, Arps, Slate, Meagher & Flom with
respect to certain federal income tax matters, (vi) opinion of J. D. Bringard,
General Counsel of Ford Credit, relating to certain Michigan tax matters, (vii)
a conformed copy of Sale and Servicing Agreement dated as of June 1, 1996 among
FCARTLP, Ford Credit and the Trust, (viii) a conformed copy of Administration
Agreement dated as of June 1, 1996 among the Trust, Ford Credit, as
administrator, and the Indenture Trustee and (ix) the Appendix A - Defined
Terms. Such exhibits are incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
EXHIBITS
<TABLE>
<CAPTION>
Designation Description Method of
Filing
- ----------- ------------ ----------------
<S> <C> <C>
Exhibit 3.2 Restated Limited Partnership Filed with
Agreement between FCARTLP and this Report.
Ford Credit.
Exhibit 4.1 Conformed copy of Indenture Filed with
dated as of June 1, 1996 between this Report.
the Trust and Indenture Trustee.
Exhibit 4.2 Conformed copy of Restated Trust Filed with
Agreement between FCARTLP and PNC this Report.
Bank, Delaware.
Exhibit 8.1 Opinion of Skadden, Arps, Slate, Filed with
Meagher & Flom with respect to this Report.
certain federal income tax matters.
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Designation Description Method of
Filing
- ----------- ------------ --------------
<S> <C> <C>
Exhibit 8.2 Opinion of J. D. Bringard, General Filed with
Counsel of Ford Credit relating to this Report.
certain Michigan tax matters.
Exhibit 23.1 Consent of Skadden, Arps, Slate,
Meagher & Flom (included as part
of Exhibit 8.1).
Exhibit 23.2 Consent of J.D. Bringard, General
Counsel of Ford Credit (included
as part of Exhibit 8.2).
Exhibit 99.1 Conformed copy of Sale and Servicing Filed with
Agreement dated as of June 1, 1996 this Report.
among FCARTLP, Ford Credit and the
Trust.
Exhibit 99.2 Conformed copy of Administration Filed with
Agreement dated as of June 1, 1996 this Report.
among Ford Credit, as administrator,
the Indenture Trustee and the Trust.
Exhibit 99.3 Conformed copy of Purchase Agreement Filed with
dated as of June 1, 1996 between this Report.
Ford Credit and FCARTLP.
Exhibit 99.4 Appendix A - Defined Terms. Filed with
this Report.
</TABLE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on the date indicated.
Ford Credit Auto Receivables Two L.P.
(Registrant)
By: Ford Credit Auto Receivables
Two, Inc., General Partner
Date: July 1, 1996 By:/s/R. P. Conrad
----------------------------------------
Assistant Secretary
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
Designation Description
- ----------- -----------
<S> <C>
Exhibit 3.2 Restated Limited Partnership
Agreement between FCARTLP and
Ford Credit.
Exhibit 4.1 Conformed copy of Indenture
dated as of June 1, 1996 between
the Trust and Indenture Trustee.
Exhibit 4.2 Conformed copy of Restated Trust
Agreement between FCARTLP and PNC
Bank, Delaware.
Exhibit 8.1 Opinion of Skadden, Arps, Slate,
Meagher & Flom with respect to
certain federal income tax matters.
Exhibit 8.2 Opinion of J. D. Bringard, General
Counsel of Ford Credit, relating to
certain Michigan tax matters.
Exhibit 23.1 Consent of Skadden, Arps, Slate,
Meagher & Flom (included as part
of Exhibit 8.1).
Exhibit 23.2 Consent of J.D. Bringard, General
Counsel of Ford Credit (included
as part of Exhibit 8.2).
Exhibit 99.1 Conformed copy of Sale and Servicing
Agreement dated as of June 1, 1996
among FCARTLP, Ford Credit and the
Trust.
Exhibit 99.2 Conformed copy of Administration
Agreement dated as of June 1, 1996
among Ford Credit, as administrator,
the Indenture Trustee and the Trust.
Exhibit 99.3 Conformed copy of Purchase Agreement
dated as of June 1, 1996 between
Ford Credit and FCARTLP.
Exhibit 99.4 Appendix A - Defined Terms.
</TABLE>
<PAGE> 1
EXHIBIT 3.2
=========================================================
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
FORD CREDIT AUTO RECEIVABLES TWO L.P.
by and between
FORD CREDIT AUTO RECEIVABLES TWO, INC.,
as General Partner,
and
FORD MOTOR CREDIT COMPANY,
as Limited Partner
Dated as of June 1, 1996
=========================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.1. Capitalized Terms . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Other Definitional Provisions . . . . . . . . . . . 7
ARTICLE II
FORMATION OF THE LIMITED PARTNERSHIP
SECTION 2.1. Formation; Filings . . . . . . . . . . . . . . . . . 9
SECTION 2.2. Name and Office . . . . . . . . . . . . . . . . . . 9
SECTION 2.3. Purposes . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE GENERAL PARTNER
SECTION 3.1. Representations, Warranties and
Covenants of the General Partner . . . . .. . . . . 12
ARTICLE IV
RIGHTS AND DUTIES OF THE GENERAL PARTNER
SECTION 4.1. Management . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.2. Exculpation and Indemnification . . . . . . . . . . 16
SECTION 4.3. Fees and Expenses . . . . . . . . . . . . . . . . . 17
SECTION 4.4. Resignation of the General Partner . . . . . . . . . 17
SECTION 4.5. Transfer of a General Partnership
Interest . . . . .. . . . . . . . . . . . . . . . . 17
SECTION 4.6. No Partition or Sale . . . . . . . . . . . . . . . . 18
SECTION 4.7. Execution of Contracts . . . . . . . . . . . . . . . 18
SECTION 4.8. No Other Obligations . . . . . . . . . . . . . . . . 18
SECTION 4.9. No Priority . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
SECTION 5.1. No Participation in Management . . . . . . . . . . . 19
SECTION 5.2. Other Activities . . . . . . . . . . . . . . . . . . 19
SECTION 5.3. Limitation of Liability . . . . . . . . . . . . . . 19
SECTION 5.4. No Right to Property; No Priority . . . . . . . . . 20
SECTION 5.5. Voting Rights of Limited Partners . . . . . . . . . 20
i
<PAGE> 3
ARTICLE VI
CAPITAL CONTRIBUTIONS
SECTION 6.1. Initial Limited Partner Contribution
and Partnership Interest . . . . . . .. . . . . . . . 22
SECTION 6.2. General Partner Contributions and
Partnership Interest . . . . . . . . . . . . . . . . . 22
SECTION 6.3. Restoration of Negative Capital Account . . . . . . . 22
SECTION 6.4. Additional Capital Contributions and
New Limited Partners . . . . . . . . . . . . . . . . . 22
ARTICLE VII
CAPITAL ACCOUNTS, TAX ALLOCATIONS AND DISTRIBUTIONS
SECTION 7.1. Capital Accounts . . . . . . . . . . . . . . . . . . . 23
SECTION 7.2. Allocations . . . . . . . . . . . . . . . . . . . . . 23
SECTION 7.3. Other Allocation Provisions . . . . . . . . . . . . . 25
SECTION 7.4. Tax Allocation . . . . . . . . . . . . . . . . . . . . 27
SECTION 7.5. Allocations of Excess Nonrecourse
Liabilities . . . . . . . . . . .. . . . . . . . . . . 27
SECTION 7.6. Return of Capital . . . . . . . . . . . . . . . . . 27
SECTION 7.7. Distributions . . . . . . . . . . . . . . . . . . . . 27
SECTION 7.8. Distributions upon Dissolution and
Termination . . . . . . . . . . . . . . . . . . . . . 28
SECTION 7.9. Liability to Extent of Distributions
and Capital Contributions . . . . . . . . . . . . . . 28
ARTICLE VIII
BANKING, ACCOUNTING, BOOKS AND RECORDS
SECTION 8.1. Banking . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 8.2. Maintenance of Accounts . . . . . . . . . . . . . . . 29
SECTION 8.3. Partnership Tax Returns . . . . . . . . . . . . . . . 29
SECTION 8.4. Designation of Tax Matters Partner . . . . . . . . . . 29
SECTION 8.5. Accrual Basis and Generally Accepted
Accounting Principles . . . . . . . . . . . . . . . . 30
ARTICLE IX
REPORTS TO PARTNERS
SECTION 9.1. Independent Auditors . . . . . . . . . . . . . . . . . 31
SECTION 9.2. Reports to Current Partners . . . . . . . . . . . . . 31
SECTION 9.3. Reports to Current and Former Partners. . . . . . . . 31
ARTICLE X
TRANSFER OF LIMITED PARTNERSHIP INTERESTS;
WITHDRAWAL OF LIMITED PARTNERS
ii
<PAGE> 4
SECTION 10.1. Admission and Substitution of
Limited Partners . . . . . . . . . . . . . . . . . . . 32
SECTION 10.2. Withdrawal of Limited Partners . . . . . . . . . . . . 34
ARTICLE XI
DISSOLUTION AND TERMINATION OF PARTNERSHIP
SECTION 11.1. Dissolution Events . . . . . . . . . . . . . . . . . . 35
SECTION 11.2. Death, Insanity, etc., of
Limited Partners . . . . . . . . . . . . . . . . . . . 35
SECTION 11.3. Distribution upon Dissolution . . . . . . . . . . . . 35
SECTION 11.4. No Recourse Against the Partners . . . . . . . . . . . 37
SECTION 11.5. General Partner's Discretion . . . . . . . . . . . . . 37
SECTION 11.6. Termination . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE XII
POWER OF ATTORNEY
SECTION 12.1. Grant of Power of Attorney . . . . . . . . . . . . . . 38
SECTION 12.2. Powers of Attorney Irrevocable and
Coupled With an Interest; Copies to be
Retained . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 12.3. Survival of Power of Attorney . . . . . . . . . . . . 39
SECTION 12.4. Limitation on Power of Attorney . . . . . . . . . . . 39
ARTICLE XII
AMENDMENTS
SECTION 13.1. Amendments . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE XIV
MISCELLANEOUS PROVISIONS
SECTION 14.1. Notices . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 14.2. Counterparts . . . . . . . . . . . . . . . . . . . . . 41
SECTION 14.3. Headings . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 14.4. Successors and Assigns . . . . . . . . . . . . . . . . 42
SECTION 14.5. Severability . . . . . . . . . . . . . . . . . . . . . 42
SECTION 14.6. Non-Waiver . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 14.7. Applicable Law . . . . . . . . . . . . . . . . . . . . 42
SECTION 14.8. Entire Agreement . . . . . . . . . . . . . . . . . . . 42
SECTION 14.9. Business Day . . . . . . . . . . . . . . . . . . . . . 42
SECTION 14.10. Survivability . . . . . . . . . . . . . . . . . . . . 42
iii
<PAGE> 5
THIS AGREEMENT, made and entered into as of June 1, 1996 by
and between Ford Credit Auto Receivables Two, Inc., a Delaware corporation, as
General Partner, and Ford Motor Credit Company, a Delaware corporation, as
Limited Partner, shall be and become the Agreement of Limited Partnership of
Ford Credit Auto Receivables Two L.P., a Delaware limited partnership.
Capitalized terms used herein shall have the meanings set forth in Article I
hereof.
WHEREAS, the parties hereto desire to amend and restate their
Agreement of Limited Partnership dated February 23, 1996;
NOW, THEREFORE, in consideration of the mutual terms,
covenants and conditions herein contained and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Capitalized Terms. For all purposes of this
Agreement, the following terms shall have the meanings set forth below:
"Act" shall mean the Delaware Revised Uniform Limited
Partnership Act, as amended, as in effect on the date hereof (currently Chapter
17 of Title 6, Sections 17-101 through 17-1111, of the Delaware Code) and as it
may be amended hereafter, from time to time.
"Affiliate" shall mean, in respect of any specified Person (as
defined below), any other Person that directly or indirectly controls, is
controlled by or is under direct or indirect common control with the specified
Person. For purposes of this Agreement, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by agreement
or otherwise.
<PAGE> 6
"Agreement" shall mean this Amended and Restated Agreement of
Limited Partnership, as the same may be amended from time to time in accordance
with the provisions hereof.
"Basic Documents" shall mean this Agreement, any Transfer and
Servicing Agreement, Indenture, trust agreement, purchase agreement,
administration agreement, Note depositary agreement and other agreements
relating to the issuance of Notes, including the other documents and
certificates delivered in connection with such agreements, as such agreements
may be amended from time to time.
"Capital Account" shall mean the account established pursuant
to Section 7.1 and the amount of any Partner's Capital Account shall be the
amount determined in accordance with such Section 7.1.
"Capital Contributions" shall mean the total amount of cash
(or the fair market value of property other than cash, reduced by any
liabilities to which such property is subject) contributed by each Partner or,
as the context may require, all Partners, in accordance with Article VI.
"Certificate of Limited Partnership" shall mean the
Certificate of Limited Partnership of the Partnership executed by the General
Partner and filed pursuant to Section 2.1.
"Code" shall mean the Internal Revenue Code of 1986, as
amended (or any successor law).
"Commission" shall mean the Securities and Exchange
Commission.
"Consent" shall mean either the written consent of a Person,
or the affirmative vote of such Person at a meeting duly called and held
pursuant to this Agreement, as the case may be, to permit the act or thing for
which the Consent is solicited, or the act of granting such Consent, as the
context may require. Reference to the Consent of a Requisite Portion or a
stated percentage of Partnership Interests means the Consent of so many of the
Partners whose combined Partnership Interests represent a
2
<PAGE> 7
Requisite Portion or at least such stated percentage of the total Partnership
Interests of the Partners.
"control" shall have the meaning set forth in the definition
of the term "Affiliate" above.
"Damages" shall have the meaning set forth in Section 4.2(a).
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and the regulations promulgated thereunder.
"Fiscal Year" shall mean, unless the General Partner shall at
any time determine otherwise pursuant to the requirements of the Code, for each
year, the period commencing on January 1 and ending on December 31, except that
the initial fiscal year of the Partnership shall commence on the filing of a
Certificate of Limited Partnership in the office of the Secretary of State of
the State of Delaware and shall end as required pursuant to the Code.
"Ford" shall mean Ford Motor Company, a Delaware corporation.
"Ford Credit" shall mean Ford Motor Credit Company, a Delaware
corporation.
"General Partner" shall mean Ford Credit Auto Receivables Two,
Inc., a Delaware corporation, or any Substitute General Partner.
"Indemnified Parties" shall have the meaning set forth in
Section 4.2(a).
"Indenture" shall have the meaning set forth in Section
2.3(h).
"Independent Director" shall be an individual who is not at
such time and shall not have been at any time during the preceding five years
(i) a director, officer or employee of Ford Credit or any of its subsidiaries
or Affiliates, or of a major creditor thereof, or (ii) the beneficial owner at
the time of such individual's appointment as an Independent Director or at such
time thereafter while serving as an Independent
3
<PAGE> 8
Director, of more than 1,000 shares in the aggregate of all classes of common
stock of Ford, or if greater, such number of such shares the value of which
constitutes more than 10% of such individual's net worth. The term "major
creditor" shall mean a financial institution to which Ford Credit has
outstanding indebtedness for borrowed money in a sum sufficiently large as
would reasonably be expected to influence the judgment of the proposed
Independent Director adversely to the interests of the corporation when its
interests are adverse to those of Ford Credit.
"Investment Company" shall mean any Person that is an
"investment company" as defined in the Investment Company Act and is not exempt
from the provisions of the Investment Company Act.
"Investment Company Act" shall mean the Investment Company Act
of 1940, as amended, and the rules and regulations of the Commission
promulgated thereunder.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever, including, without limitation,
any conditional sale or other title retention agreement, any financing lease
having substantially the same economic effect as any of the foregoing and the
filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction to evidence any of the foregoing.
"Limited Partner" shall mean Ford Credit and any other Person
who is admitted as an additional Limited Partner or a Substitute Limited
Partner.
"Liquidation Period" shall mean the period beginning on the
date of the occurrence of any event set forth in Section 11.1 and ending on the
date on which the General Partner shall certify to the Partners that the assets
of the Partnership have been fully liquidated in accordance with this
Agreement.
"Liquidator" shall have the meaning set forth in Section
11.3(a).
4
<PAGE> 9
"major creditor" shall have the meaning set forth in the
definition of the term "Independent Director" above.
"Minimum Gain" shall have the meaning set forth in Section
7.2(d).
"Moody's" shall mean Moody's Investors Service, Inc.
"Notes" shall have the meaning set forth in Section 2.3(f).
"Organizational Expenses" shall mean all costs and expenses
incurred in the organization of the Partnership, including, without limitation,
legal, accounting, printing, consultation, travel, administrative and filing
fees and expenses.
"Partner" or "Partners" shall mean each, any or all of the
General Partner and the Limited Partners, as the context requires.
"Partnership" shall mean the limited partnership which is
being formed pursuant to this Agreement.
"Partnership Interest" shall mean a Partner's percentage
ownership interest in the Partnership at any time, including the right of such
Partner to any and all benefits to which such Partner may be entitled as
provided in this Agreement and in the Act, together with the obligations of
such Partner to comply with all the terms and provisions of this Agreement and
of the Act.
"Person" shall mean any individual, entity, corporation,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, government or governmental agency or subdivision.
"Rating Agency" shall mean, with respect to any outstanding
series or class of Notes, each statistical rating agency selected by the
Partnership to rate such series or class of Notes.
"Rating Agency Condition" shall mean, with respect to any
action, that each Rating Agency shall have notified the Partnership and the
servicer and the trust-
5
<PAGE> 10
ees under the related Transfer and Servicing Agreements and Indentures in
writing that such action will not result in a reduction or withdrawal of the
rating of any outstanding series or class of Notes with respect to which it is
a Rating Agency.
"Rating Event" shall mean the earlier to occur of (i) the
downgrading of Ford Credit's short-term unsecured debt to or below (A) A-2 by
S&P or (B) P-2 by Moody's or (ii) the downgrading of Ford Credit's senior
long-term debt to or below (A) A- by S&P or (B) A3 by Moody's, and shall be
deemed to exist only for so long as (x) Ford Credit's short-term unsecured debt
is rated at or below (A) A-2 by S&P or (B) P-2 by Moody's or (y) Ford Credit's
senior long-term debt is rated at or below (A) A- by S&P or (B) A3 by Moody's.
"Receivables" shall have the meaning set forth in Section
2.3(a).
"Requisite Portion" shall mean 66-2/3% of the applicable
Partnership Interests, but in no event fewer than two Partners (unless there is
only one Limited Partner or one General Partner, in which event it shall mean
all of the applicable Partnership Interests).
"S&P" shall mean Standard & Poor's Ratings Services.
"Securities Act" shall mean the Securities Act Of 1933, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
"Service" shall mean the Internal Revenue Service.
"Substitute General Partner" shall mean a Person who is a
permitted transferee of all of the Partnership Interest of the existing General
Partner and who is admitted as a Substitute General Partner in accordance with
the provisions of Section 4.5.
"Substitute Limited Partner" shall mean a Person who is a
permitted transferee of all or any portion of the Partnership Interest of an
existing Limited Partner and who is admitted as a Substitute Limited Partner in
accordance with the provisions of Section 10.1.
6
<PAGE> 11
"Tax Matters Partner" shall have the meaning set forth in
Section 8.4.
"Tax Returns" shall have the meaning set forth in Section 8.3.
"Transfer and Servicing Agreements" shall have the meaning set
forth in Section 2.3(c).
"Treasury Regulations" shall mean regulations, including
proposed or temporary regulations, promulgated under the Code. References
herein to specific provisions of proposed or temporary regulations shall
include analogous provisions of final Treasury Regulations or other successor
Treasury Regulations.
"Trusts" shall have the meaning set forth in Section 2.3(c).
SECTION 1.2. Other Definitional Provisions.
(a) All terms in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(b) As used in this Agreement and in any certificate or other
documents made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles. To the extent
that the definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Agreement or in any such certificate or other document shall control.
(c) The words "hereof", "herein", "hereunder", and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section references
contained in this Agreement are references to Sections in this Agreement unless
otherwise specified; and the
7
<PAGE> 12
term "including" shall mean "including without limitation".
(d) The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments incorporated
therein; references to a Person are also to its permitted successors and
assigns.
8
<PAGE> 13
ARTICLE II
FORMATION OF THE LIMITED PARTNERSHIP
SECTION 2.1. Formation; Filings. Pursuant to the Act and in
accordance with the further terms and provisions hereof, the parties hereto
hereby agree to form a limited partnership. Promptly following the execution
hereof, the General Partner shall execute or cause to be executed a Certificate
of Limited Partnership of the Partnership, and shall execute or cause to be
executed for itself and, pursuant to the power of attorney granted in Section
12.1, on behalf of each Limited Partner all other instruments, certificates,
notices and documents, and shall do or cause to be done all such filings,
recordings, publications and other acts as may be necessary or appropriate from
time to time to comply with all applicable requirements for the formation
and/or operation and, when appropriate, termination of a limited partnership in
the State of Delaware and all other jurisdictions where the Partnership shall
desire to conduct its business.
SECTION 2.2. Name and Office.
(a) The name of the Partnership shall be "Ford
Credit Auto Receivables Two L.P." and its business shall be carried on in this
name with such variations and changes as the General Partner in its sole
judgment deems necessary or appropriate to comply with any legal or other
requirements of the jurisdictions in which operations are conducted.
(b) The Partnership and the General Partner shall
maintain their principal office at The American Road, Dearborn, Michigan 48121
or at such other location as the General Partner may from time to time select.
The General Partner will notify the Limited Partners of any change in the
location of the principal office of the General Partner or the Partnership.
(c) The registered office of the Partnership within
the State of Delaware is located at the Corporation Trust Center, 1209 Orange
Street, Wilmington, New Castle County, Delaware 19801, and the registered agent
for service of process on the Partnership at such address is The Corporation
Trust Company.
9
<PAGE> 14
SECTION 2.3. Purposes. The limited purposes for which the
Partnership is organized are:
(a) to acquire from time to time all right, title and
interest in and to receivables or leases arising out of or relating to the sale
or lease of new or used motor vehicles and farm or industrial equipment,
including automobiles, light and heavy duty trucks, tractors and recreational
vehicles, monies due thereunder, security interests in the motor vehicles or
equipment financed thereby, proceeds from claims on insurance policies related
thereto, and related rights (collectively, "Receivables");
(b) to acquire, own, hold, service, sell, assign, pledge and
otherwise deal with the Receivables, collateral securing the Receivables,
related insurance policies, agreements with motor vehicles or equipment dealers
or lessors or other originators or servicers of Receivables and any proceeds or
further rights associated with any of the foregoing;
(c) to transfer Receivables to trusts (the "Trusts") pursuant
to one or more pooling and servicing agreements, transfer and servicing
agreements or other agreements (the "Transfer and Servicing Agreements") to be
entered into by and among, among others, the Partnership, the trustees named
therein and any entity acting as servicer of the Receivables;
(d) to authorize, sell and deliver any class of certificates
or other securities issued by the Trusts under the related Transfer and
Servicing Agreements;
(e) to acquire from Ford Credit or Ford Credit Auto
Receivables Corporation or any Affiliate thereof certificates issued by one or
more trusts to which Ford Credit or Ford Credit Auto Receivables Corporation or
any Affiliate thereof transferred Receivables;
(f) to issue, sell, authorize and deliver one or more series
and classes of bonds, notes or other evidences of indebtedness secured or
collateralized by one or more pools of Receivables or by certificates of any
class issued by one or more Trusts or by certificates of any class issued by a
trust established by Ford Credit or Ford Credit Auto Receivables Corporation or
any Affil-
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iate thereof (collectively, the "Notes"), provided that the Partnership shall
have no liability under any Notes except to the extent of the one or more pools
of Receivables or the certificates securing or collateralizing such Notes;
(g) to hold and enjoy all of the rights and privileges of any
certificates issued by the Trusts to the Partnership under the related Transfer
and Servicing Agreements and to hold and enjoy all of the rights and privileges
of any class of any series of Notes, including any class of Notes or
certificates which may be subordinate to any other class of Notes or
certificates, respectively;
(h) to perform its obligations under the Transfer and
Servicing Agreements and any indenture or other agreement (each, an
"Indenture") pursuant to which any Notes are issued; and
(i) to engage in any activity and to exercise any powers
permitted to limited partnerships under the laws of the State of Delaware that
are related or incidental to the foregoing and necessary, convenient or
advisable to accomplish the foregoing.
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ARTICLE III
REPRESENTATIONS, WARRANTIES, AND COVENANTS OF
THE GENERAL PARTNER
SECTION 3.1. Representations, Warranties and Covenants of the
General Partner. The General Partner represents, warrants and covenants, and
each Substitute General Partner shall represent, warrant and covenant, to the
Limited Partners that:
(a) it is a corporation organized and existing under
the laws of the state of its organization with corporate power and authority to
act as a General Partner of the Partnership;
(b) it 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 qualifications;
(c) this Agreement has been duly authorized and
executed by it and, subject to delivery to it of counterparts of this Agreement
duly executed by the other Partner, this Agreement will constitute the valid
and binding obligation of the General Partner enforceable in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of creditors'
rights in general and by general principles of equity, regardless of whether
such enforceability is considered in a proceeding in equity or at law;
(d) the consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms of this
Agreement do 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 or both) a
default under, its certificate of incorporation or by-laws, or any indenture,
agreement or other instrument to which it 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 or other instrument, or
violate any law or, to the best of its knowledge, any order, rule or regulation
applicable to it of any court or of any feder-
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al or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over it or any of its properties;
(e) it shall at all times maintain a net worth of
not less than 5% of the aggregate amount of Capital Accounts of all the
Partners, unless it shall have obtained an opinion of counsel that failure to
maintain such net worth will not adversely affect the status of the Partnership
as a partnership for federal income tax purposes;
(f) its certificate of incorporation shall contain
provisions substantially to the effect that:
(i) its purpose is limited to (A) issuing,
selling, authorizing and delivering Notes, (B) acting as a general
partner of one or more limited partnerships formed for the purpose of
issuing, selling, authorizing and delivering Notes and (C) performing
activities related or incidental to the foregoing;
(ii) its ability to incur indebtedness is
limited to indebtedness incurred in connection with Notes and
indebtedness incurred in connection with the acquisition of
Receivables or certificates issued by Trusts established by Ford
Credit or Ford Credit Auto Receivables Corporation or any Affiliate
thereof; and
(iii) the unanimous consent of its directors
is required for it to (A) file, or consent to the filing of, a
bankruptcy or insolvency petition or otherwise institute insolvency
proceedings or cause a limited partnership of which it is the general
partner to do so; (B) dissolve, liquidate, consolidate, merge, or sell
all or substantially all of its assets; (C) engage in any other
business activity; and (D) amend its certificate or articles of
incorporation or vote to amend the limited partnership agreement of a
limited partnership of which it is the general partner; and
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(g) it shall at all times during the existence of a
Rating Event have at least two directors who are Independent Directors.
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ARTICLE IV
RIGHTS AND DUTIES OF THE GENERAL PARTNER
SECTION 4.1. Management. (a) The management of the
Partnership and its business and affairs shall be vested exclusively in the
General Partner, which shall use all reasonable efforts to carry out the
purposes of the Partnership and shall devote such time thereto as the General
Partner in its sole judgment shall deem reasonably necessary, proper,
convenient or advisable for the proper performance of its duties under this
Agreement. The General Partner may exercise on behalf of the Partnership all
of the powers set forth in Section 2.3. In furtherance, and not in limitation,
of such powers, the General Partner is hereby vested with the following powers:
(i) to open, maintain and close bank and
other accounts, including the power to draw checks or other orders for
the payment of moneys;
(ii) to bring and defend actions and
proceedings at law or in equity or before any governmental,
administrative or other regulatory agency, body or commission;
(iii) to enter into, perform and carry out
contracts and agreements of every kind necessary or incidental to the
accomplishment of the Partnership's objectives and purposes, and to
take or omit to take such other action in connection with the business
of the Partnership as may be necessary or desirable to further the
objectives and purposes of the Partnership;
(iv) to purchase, cancel or otherwise retire
or dispose of or arrange for such purchase, cancellation, retirement,
or disposition of a Partnership Interest, or any part thereof, of any
Partner pursuant to the provisions of this Agreement; and
(v) to employ such Persons (including
accountants, attorneys and appraisers) or appoint an advisory board or
otherwise retain outside consultants as the General Partner deems
advisable
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for the conduct of the business of the Partnership, on such terms and
for such compensation as the General Partner may determine.
SECTION 4.2. Exculpation and Indemnification.
(a) Neither the General Partner nor any director,
officer, partner, agent or legal representative of the General Partner or the
Partnership, nor any of their Affiliates or the respective directors, officers,
partners, stockholders, agents or legal representatives of any of their
Affiliates (collectively, the "Indemnified Parties") shall have any liability
(whether direct or indirect, in contract, tort or otherwise) to any Partner (or
its Affiliates) for any losses, claims, damages, liabilities or expenses,
including, without limitation, judgments, interest on such judgments, fines,
charges, costs, amounts paid in settlement, expenses and attorneys' fees
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or any appeal taken from the foregoing by or
before any court or governmental, administrative or other regulatory agency,
body or commission, whether pending or merely threatened, whether or not any
Indemnified Party is or may be a party thereto, including interest on any of
the foregoing (collectively, "Damages"), arising out of, or in connection with,
the management or conduct of the business and affairs of the Partnership,
except for any such Damages to the extent that they are found by a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of the Indemnified Parties or willful violations of the express
provisions hereof by the Indemnified Parties. The Indemnified Parties may
consult with counsel and accountants with respect to the affairs of the
Partnership and shall be fully protected and justified, to the extent allowed
by law, in acting, or failing to act, if such action or failure to act is in
accordance with the advice or opinion of such counsel or accountants.
(b) The Partnership will, to the extent permitted by
law, indemnify and hold harmless any and all of the Indemnified Parties for any
and all Damages arising out of or in connection with the management or conduct
of the business and affairs of the Partnership or their activities with respect
thereto, except to the extent that any such Damages are found by a court of
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competent jurisdiction to have resulted from the gross negligence or willful
misconduct of the person seeking indemnification (or willful violation of the
express provisions hereof). No Indemnified Party may satisfy any right of
indemnity or reimbursement granted in this Section 4.3(b) or to which it may
otherwise be entitled except out of the assets of the Partnership, and no
Partner shall be personally liable with respect to any such claim for indemnity
or reimbursement.
SECTION 4.3. Fees and Expenses. Unless otherwise provided by
one or more of the Basic Documents, the Partnership shall bear the following
fees and expenses:
(a) all Organizational Expenses;
(b) all costs incurred in the management of the
Partnership;
(c) all costs and expenses incurred in the
acquisition, holding or disposition of Partnership property;
(d) the fees of any public accounting firm that are
incurred in connection with the annual audit of the Partnership's books and the
preparation of the Tax Returns; and
(e) all expenses that are not normal operating
expenses, including legal fees and expenses incurred in prosecuting or
defending administrative or legal proceedings brought by or against the
Partnership or the General Partner or their Affiliates relating to the
Partnership, including all costs and expenses arising out of or resulting from
the Partnership's indemnification of Indemnified Parties pursuant to Section
4.2.
SECTION 4.4. Resignation of the General Partner. The General
Partner may not resign except (i) upon the occurrence of its bankruptcy or
insolvency (as defined in Section 11.1), at which time it shall be deemed to
have resigned immediately, or (ii) in the event it is legally prohibited from
acting in the capacity of general partner of the Partnership.
SECTION 4.5. Transfer of a General Partnership Interest. The
General Partner shall not transfer, sell,
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convey, assign, pledge, mortgage, encumber, hypothecate or otherwise dispose of
all or any part of its Partnership Interest unless (i) Limited Partners holding
100% of the Partnership Interests held by the Limited Partners Consent thereto,
(ii) the General Partner obtains an opinion of counsel that such transfer,
sale, conveyance, assignment, pledge, mortgage, hypothecation, encumbrance or
other form of disposal will not adversely affect the classification of the
Partnership as a partnership for federal income tax purposes, and (iii) the
Rating Agency Condition has been satisfied in connection therewith. Upon
satisfaction of the foregoing conditions, a transferee of all of the
Partnership Interest of the General Partner shall be treated as a Substitute
General Partner.
SECTION 4.6. No Partition or Sale. No Partner shall have the
right to require a partition of any property of the Partnership or to compel
any sale or appraisal of its assets.
SECTION 4.7. Execution of Contracts. Any contract or
instrument executed on behalf of the Partnership must be executed by a
representative of the General Partner.
SECTION 4.8. No Other Obligations. No Partner shall have any
right or authority to assume or create any obligation or responsibility,
express or implied, on behalf of the remaining Partners or the Partnership, or
to bind the remaining Partners or the Partnership in any respect unless the
obligations or responsibilities have been expressly authorized by the remaining
Partners or have been incurred by the General Partner acting within the scope
of its authority under, and in accordance with, this Agreement.
SECTION 4.9. No Priority. Except as otherwise provided in
this Agreement, the General Partner shall not have priority over any other
Partner, as to the return of the amount of its Capital Contribution, the
allocations of the income, gains, deductions, credits or losses of the
Partnership, or Partnership distributions.
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ARTICLE V
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
SECTION 5.1. No Participation in Management. No Limited
Partner shall take part in the control of the Partnership's business, transact
any business in the Partnership's name or have the power to sign documents for
or otherwise bind the Partnership. No Limited Partner shall have the right to
be consulted with respect to the affairs of the Partnership or to vote on
matters other than the matters on which the Limited Partners may vote as set
forth in Section 5.5.
SECTION 5.2. Other Activities. The parties hereto agree that
any Limited Partner and its respective officers, directors, employees, agents
and Affiliates may engage in or possess interests in business ventures of every
kind and description, independently or with others, and may serve as officers,
directors, advisers or agents of any companies or other entities. Each Limited
Partner and the General Partner authorizes, consents to and approves of such
present and future activities by such persons, whether or not any such
activities may conflict with any interest of the Partnership, the Limited
Partners or the General Partner.
SECTION 5.3. Limitation of Liability. Except as otherwise
provided by law, the liability of each Limited Partner shall be limited to the
amount of its Capital Contribution. No Limited Partner shall have any personal
liability whatsoever, whether to the Partnership, to any of the Partners, or to
the creditors of the Partnership, for the debts of the Partnership or any of
its Damages as a result of the exercise by such Limited Partner of the powers
permitted under this Agreement. Notwithstanding the foregoing, a Limited
Partner will, pursuant to the Act, be liable for three years after the date of
the distribution for the amount of the distribution if such Limited Partner
knew at the time of the distribution that, after giving effect to the
distribution, all liabilities of the Partnership, other than liabilities to
Partners on account of their Partnership Interests and liabilities for which
the recourse of creditors is limited to specific property of the Partnership,
exceed the fair value of the assets of the Partnership, except that the fair
value of property that is
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subject to a liability for which the recourse of creditors is limited shall be
included in the assets of the Partnership only to the extent that the fair
value of that property exceeds that liability.
SECTION 5.4. No Right to Property; No Priority. In
connection with any distribution, whether upon the winding up of the
Partnership or otherwise, and whether or not it shall constitute a return of
capital, no Limited Partner shall have the right to demand or receive property
other than cash, although the General Partner may, in its sole discretion and
in accordance with the provisions of Article VII and Article XI hereof,
distribute property other than cash. Except as otherwise provided in this
Agreement, no Limited Partner shall have priority over any other Partner, as to
the return of the amount of its Capital Contribution, the allocations of the
income, gains, deductions, credits or losses of the Partnership, or Partnership
distributions.
SECTION 5.5. Voting Rights of Limited Partners. The Limited
Partners shall be entitled to cast one vote for each full $1.00 of such
Partner's Partnership Interest at the time of any Consent. Limited Partners
shall be entitled to Consent only with respect to the following Partnership
matters:
(a) upon the happening of an event set forth in
Section ll.l(c), the election of a Substitute General Partner, which shall
require the Consent of 100% of the Limited Partners;
(b) any removal with or without cause of a General
Partner or any Substitute General Partner, which shall require the Consent of a
Requisite Portion of the Limited Partners and satisfaction of the Rating Agency
Condition in connection therewith; provided, however, for purposes of this
Agreement, the General Partner may not be removed except (i) for any gross
negligence or willful misconduct of the General Partner in the performance of
its duties as the General Partner which is not cured within 30 days after
notice thereof from a Requisite Portion of the Limited Partners, or (ii) in the
event the General Partner is legally prohibited from acting in the capacity of
general partner of the Partnership;
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(c) subject to Section 13.1, any amendment to this
Agreement, which shall require the Consent of a Requisite Portion of the
Limited Partners, together with the Consent of the General Partner;
(d) the voluntary dissolution and termination of the
Partnership, which shall require the Consent of 100% of the Partnership
Interests of the Limited Partners, together with the Consent of the General
Partner;
(e) the transfer of a Partnership Interest by any
Limited Partner shall require the Consent of a Requisite Portion of the
nontransferring Limited Partners in accordance with Section 10.1(a); and
(f) the transfer by the General Partner of its
Partnership Interest shall require the Consent of all Limited Partners in
accordance with Section 4.5.
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ARTICLE VI
CAPITAL CONTRIBUTIONS
SECTION 6.1. Initial Limited Partner Contribution and
Partnership Interest. Ford Credit, as the initial Limited Partner, shall make
a Capital Contribution to the Partnership on the date hereof in the amount of
$98 and shall have a Partnership Interest of 98%.
SECTION 6.2. General Partner Contributions and Partnership
Interest. Ford Credit Auto Receivables Two, Inc., as the initial General
Partner, shall make a Capital Contribution to the Partnership on the date
hereof in the amount of $2 and shall have a Partnership Interest of 2%.
Thereafter, the General Partner shall make additional Capital Contributions to
the extent necessary to maintain its Capital Account at all times at least
equal to 2% of the aggregate amount in the Capital Accounts of all the
Partners. The General Partner's Capital Contributions shall be made in the
form of cash payments.
SECTION 6.3. Restoration of Negative Capital Account. At no
time during the term of the Partnership or upon the dissolution and liquidation
of the Partnership shall a Limited Partner with a negative balance in his
Capital Account have any obligation to the Partnership or to any other Partner
to restore such negative balance, except as may be required by law or in
respect of any negative balance resulting from withdrawal of capital or a
distribution in contravention of this Agreement or of law.
SECTION 6.4. Additional Capital Contributions and New Limited
Partners. The General Partner may, with the Consent of a Requisite Portion of
the Limited Partners, (i) accept capital contributions from existing Partners
or (ii) upon satisfaction of the Rating Agency Condition with respect thereto,
admit new Limited Partners to the Partnership.
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ARTICLE VII
CAPITAL ACCOUNTS, TAX ALLOCATIONS
AND DISTRIBUTIONS
SECTION 7.1. Capital Accounts.
(a) Establishment and Maintenance of Capital
Accounts. The Partnership shall establish and maintain a separate account (the
"Capital Account") for each Partner. The initial balance of the Capital
Account for each Partner shall be such Partner's initial Capital Contribution
to the Partnership. The Capital Account of each Partner shall also be
increased by (i) the dollar amount of any additional cash contributions made by
such Partner, (ii) the fair market value of any property (other than cash)
contributed to the Partnership by such Partner (net of any liabilities to which
the property is subject), and (iii) allocations to such Partner of income and
gain (including income exempt from tax). The Capital Account of each Partner
shall be decreased by (i) the dollar amount of any cash distributions made to
such Partner, (ii) the fair market value of any property (other than cash)
distributed to such Partner (net of any liabilities to which the property is
subject), (iii) allocations to such Partner of loss or deductions (or items
thereof), and (iv) any allocations of expenditures of the Partnership described
in Section 705(a)(2)(B) of the Code. A Partner who has more than one interest
in the Partnership shall have a single Capital Account that reflects all such
interests, regardless of the class of interests owned by such Partner.
(b) Compliance with Regulations. Notwithstanding
any other provision of this Agreement to the contrary, the foregoing provisions
of Section 7.1 regarding the maintenance of Capital Accounts shall be construed
so as to comply with the provisions of the Treasury Regulations promulgated
pursuant to Section 704 of the Code. The General Partner is hereby authorized
to modify these provisions to the minimum extent necessary to comply with such
regulations.
SECTION 7.2. Allocations.
(a) Allocations. Except as otherwise provided, or
as otherwise required by the Code, all items
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of income, gain, loss, deduction and credit of the Partnership shall be
allocated among the Partners pro rata in accordance with their respective
Partnership Interests.
(b) Allocations Upon Liquidation. In the year of
the dissolution or liquidation of the Partnership all items of income, gain,
loss, deduction and credit of the Partnership shall be allocated in the
following order and manner:
(i) to eliminate any deficit Capital Account
Balances,
(ii) to each Partner until its Capital
Account equals its initial Capital Account, and
(iii) thereafter, to each Partner pro rata
in accordance with its Partnership Interest.
(c) Allocation Restriction. Notwithstanding any
provision hereof to the contrary, no allocation of deduction or loss shall be
made to any Partner to the extent that such allocation would create or increase
a deficit with respect to such Partner's Capital Account if any other Partner
has a positive balance in its Capital Account. In such event, any such
deduction or loss shall be allocated to eliminate the positive balances
contained in the Partners' Capital Accounts in the ratio of such positive
balances. Notwithstanding Section 7.2(a), in the event that no Partner has a
positive balance in its Capital Account, additional deductions or losses shall
be allocated to those Partners that hold debt of the Partnership in the ratio,
and to the extent, of such holdings. To the extent deductions or losses are
allocated to any Partners under this Section 7.2(c), income or gain shall first
be allocated to such Partners in the same ratios as, and to the extent of, such
deductions or losses.
(d) Minimum Gain. Notwithstanding the provisions of
Sections 7.2(a) and 7.2(c), if the allocation of deduction or loss as provided
therein would cause the deficit balance of a Partner's Capital Account to
exceed such Partner's share of the Minimum Gain (as defined below), there shall
be allocated to such Partner only that amount of deduction or loss as will not
(i)
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cause such balance to exceed that Partner's share of the Minimum Gain and (ii)
will comply with Treasury Regulation Section 1.704-2. For purposes of this
Agreement, the term "Minimum Gain" shall mean the partnership minimum gain as
defined in Treasury Regulation Section 1.7042(b)(2).
(e) Notwithstanding any other provision of this
Article VII, if there is a net decrease in Minimum Gain as defined in Treasury
Regulation Section 1.704-2(b)(2) during any taxable year, each Partner shall be
specially allocated items of Partnership income and gain for such taxable year
(and, if necessary, subsequent taxable years) equal to its share of such net
decrease, except to the extent such allocation would not be required by
Treasury Regulation Section 1.704-2(f). The amounts referred to in this Section
7.2(e) and the items to be so allocated shall be determined in accordance with
Treasury Regulation Section 1.704-2. This Section 7.2(e) is intended to comply
with the minimum gain chargeback requirement for partnership minimum gain in
such section of the Regulations and shall be interpreted consistently
therewith. Nonrecourse deductions for any taxable year shall be specially
allocated to the Partners in proportion to their Partnership Interests.
SECTION 7.3. Other Allocation Provisions.
(a) If any Partner unexpectedly receives an
adjustment, allocation or distribution described in Treasury Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), a pro rata portion of each item of Partnership income
and gain shall be specially allocated to such Partner in an amount and manner
sufficient to eliminate any deficit in its Capital Account created by such
adjustment, allocation or distribution as quickly as possible. This Section
7.3(a) is intended to constitute a "qualified income offset" within the meaning
of Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(3).
(b) Notwithstanding anything to the contrary that
may be expressed or implied in this Agreement, but subject to Sections 7.2(c)
and (d), the interest of the General Partner in each item of Partnership
income, gain, loss, deduction or credit shall be equal to
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at least 2% of each of those items at all times during the existence of the
Partnership.
(c) All Partner nonrecourse deductions shall be
allocated in accordance with Treasury Regulation Section 1.704-2.
(d) The General Partner is authorized to make any
adjustments in the allocation of the income, gain, loss, deduction or credit of
the Partnerships to the minimum extent necessary to comply with Section 704 of
the Code, including any adjustments to any item thereof required as a result of
(i) any amendments to Section 704 of the Code, (ii) the adjustment of any item
thereof by the Service or (iii) the admission of a new Partner, an additional
Capital Contribution, the redemption of a Partnership Interest, or the
distribution of property (other than cash) to a Partner.
(e) To determine possible varying interests of
Partners during a taxable year, the Partnership shall use a method acceptable
to the Service, and all income, gain or loss (including each item of income or
expense) shall be allocated as realized or accrued by the Partnership during
such period.
(f) To the extent income or gain is allocated to any
Partner who previously has been allocated losses or deductions, the income or
gain shall first be allocated, if feasible, in the order and manner as losses
or deductions with the same character were allocated. To the extent that
losses or deductions are allocated to any Partner who previously has been
allocated income or gain, losses or deductions shall be first allocated, if
feasible, in the order and manner as income or gain with the same character was
allocated.
(g) The General Partner may, and, at the request of
the Requisite Portion of the Limited Partners shall, cause the Partnership to
make an election under Section 754 of the Code to adjust the basis of the
assets of the Partnership.
SECTION 7.4. Tax Allocation. For income tax purposes each
item of income, gain, loss and deduction of the Partnership shall be allocated
among the Partners in accordance with their respective shares of income and
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loss, as determined by taking into account all allocations under this Article
VII, subject to the rules of Section 704(c)(1)(A) of the Code and the
regulations promulgated thereunder.
SECTION 7.5. Allocations of Excess Nonrecourse Liabilities.
Nonrecourse liabilities of the Partnership which constitute excess nonrecourse
liabilities shall be allocated among the Partners in proportion to their
Partnership interests.
SECTION 7.6. Return of Capital. No Limited Partner shall be
liable for the return of the Capital Contributions (or any portion thereof) of
any other Partner. No Partner shall be entitled to withdraw any part of its
Capital Contributions or Capital Account, to receive interest on its Capital
Contributions or Capital Account or to receive any distributions from the
Partnership, except as expressly provided herein or as required under the Act
as then in effect. Except as otherwise provided in this Agreement, no Partner
shall be entitled to the return of any part of its Capital Contribution until
all liabilities of the Partnership have been paid or there remains property of
the Partnership sufficient to pay such liabilities.
SECTION 7.7. Distributions.
(a) Distributions in General. The General Partner
shall review the Partnership's books periodically to determine whether
distributions are appropriate. Subject to the terms of the Basic Documents,
the General Partner may create reasonable cash reserves considered appropriate
in its good faith judgment to provide for payment of, and to pay, taxes and
other costs, expenses and liabilities, contingent or otherwise, of the
Partnership, payment of which is not then due. Subject to this Section 7.7 and
the terms of the Basic Documents, the General Partner may make distributions to
Partners. Any distributions to Partners may be made from Partnership revenues,
Capital Contributions, Partnership property or Partnership borrowings. Subject
to this Section 7.7, all distributions shall be made concurrently to all
Partners on the date set for purposes of such distribution. The General
Partner shall determine the date of each such distribution and the date for
ascertaining all Partners' Partnership interests for each such distribution.
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(b) Priority of Distributions. Any distribution of
Partnership cash or property, other than distributions in final liquidation of
the Partnership, shall be made among the Partners pro rata in accordance with
their respective Partnership Interests.
SECTION 7.8. Distributions upon Dissolution and Termination.
Upon dissolution and termination of the Partnership, the final distribution of
the Partnership's assets shall be made pursuant to the provisions of Section
11.3(b).
SECTION 7.9. Liability to Extent of Distributions and Capital
Contributions. In addition to the limitations on liability with respect to
Limited Partners set forth in Section 5.3 and as to the General Partner set
forth in Section 11.4, no Partner will be liable for the return of such
Partner's Capital Contribution or for any other distribution made to such
Partner except as otherwise provided by law.
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ARTICLE VIII
BANKING, ACCOUNTING, BOOKS AND RECORDS
SECTION 8.1. Banking. Except as otherwise required by the
Basic Documents, all funds of the Partnership shall be deposited in such bank
accounts as shall be established by the General Partner. Such accounts shall
be maintained separate from those of the General Partner or of any other
Person. Withdrawals from and checks drawn on any such account shall be made
upon such signature or signatures of a representative of the General Partner.
SECTION 8.2. Maintenance of Accounts. The General Partner
shall keep or cause to be kept at the address of the General Partner (or at
such other place as the General Partner shall advise the other Partners in
writing) full and accurate accounts of the transactions of the Partnership in
proper books of account. Such books and records shall be maintained separate
from those of the General Partner or of any other Person and shall be
available, upon three (3) business days' notice to the General Partner, for
inspection and copying at reasonable times during business hours by the
Partners or their duly authorized agents or representatives.
SECTION 8.3. Partnership Tax Returns. The General Partner
shall cause the Partnership initially to elect the Partnership's Fiscal Year as
its taxable year and shall cause to be prepared and timely filed all tax
returns (the "Tax Returns") required to be filed for the Partnership in the
jurisdictions in which the Partnership conducts business or derives income for
all applicable taxable years. The General Partner may, in its sole discretion,
make, or refrain from making, any income or other tax elections for the
Partnership which it deems necessary or advisable.
SECTION 8.4. Designation of Tax Matters Partner. The General
Partner is hereby designated as the "Tax Matters Partner" under Section
6231(a)(7) of the Code to manage administrative tax proceedings conducted at
the Partnership level by the Service with respect to Partnership matters. The
General Partner is specifically directed and authorized to take whatever steps
the General Partner, in its sole discretion, deems necessary or
29
<PAGE> 34
desirable to perfect such designation, including, without limitation, filing
any forms or documents with the Service and taking such other action as may
from time to time be required under Treasury Regulations. The Tax Matters
Partner shall provide notice of any Partnership tax proceeding to the other
Partners (and former Partners affected thereby, if any). Further, the cost of
any adjustment of any Partnership item to any Partner and the cost of any
resulting audit or adjustment of a Partner's tax return, including any interest
and penalties, will be borne solely by such Partner.
SECTION 8.5. Accrual Basis and Generally Accepted Accounting
Principles. Unless otherwise provided in this Agreement, the General Partner
is required to keep the books and records of the Partnership on the accrual
basis of accounting and all determinations will be made in accordance with
generally accepted accounting principles in effect in the United States on the
date on which such determination is being made or such term is being applied.
The determination of the treatment of any item or allocation for Federal, state
or local tax purposes will be binding upon all Partners, so long as that
determination is not inconsistent with any term of this Agreement.
30
<PAGE> 35
ARTICLE IX
REPORTS TO PARTNERS
SECTION 9.1. Independent Auditors. The books of account and
records of the Partnership shall be audited as of the end of each Fiscal Year
by a public accounting firm of national standing in the United States selected
by the General Partner.
SECTION 9.2. Reports to Current Partners. Within ninety (90)
days after the end of each Fiscal Year and within forty-five (45) days after
the end of each of the first three quarters thereof, the General Partner shall
prepare and mail to each Partner a financial report setting forth as of the end
of such Fiscal Year or quarter:
(i) the assets and liabilities of the
Partnership;
(ii) the net income or loss of the
Partnership for such Fiscal Year or quarter; and
(iii) such Partner's closing Capital Account
in the Partnership as of the end of such Fiscal Year or quarter and
the manner of the calculation thereof.
SECTION 9.3. Reports to Current and Former Partners. Within
ninety (90) days after the end of each Fiscal Year, the General Partner shall
cause to be prepared and mailed by the Partnership's independent certified
public accountants (i) to each Partner and (ii) to each former Partner (or its
legal representatives), to the extent requested, a financial report setting
forth in sufficient detail such transactions effected by the Partnership during
such Fiscal Year as shall enable such Partner or former Partner (or its legal
representatives) to prepare their respective income tax returns in accordance
with the laws, rules and regulations then prevailing.
31
<PAGE> 36
ARTICLE X
TRANSFER OF LIMITED PARTNERSHIP INTERESTS;
WITHDRAWAL OF LIMITED PARTNERS
SECTION 10.1. Admission and Substitution of Limited Partners.
(a) No Limited Partner shall, without (i) the
Consent of the General Partner, (ii) the Consent of a Requisite Portion of the
Limited Partners (excluding the transferring Limited Partner and any Limited
Partners that are Affiliates of the Limited Partner proposing to make such
transfer) and (iii) satisfaction of the Rating Agency Condition in connection
therewith, sell, transfer, assign, convey, pledge, mortgage, encumber,
hypothecate or otherwise dispose of all or any part of its Partnership
Interest. Such Consents may be granted or withheld in the sole and absolute
discretion of each of the Partners. No such transaction shall be permitted if,
after giving effect to such transaction, the Partnership would be deemed to be
terminated under Section 708 of the Code. Any such transaction in violation of
this Article X shall be null and void as against the Partnership, except as
otherwise provided by law.
(b) Any purported transfer, assignment, conveyance,
sale or other disposition by a Limited Partner pursuant to the terms of this
Article X shall, in addition to meeting the requirements of 10.1(a) above,
satisfy the following conditions:
(i) the transferor or transferee shall
undertake to pay all expenses incurred by the Partnership or the
General Partner on behalf of the Partnership in connection therewith;
(ii) the Partnership shall receive from the
Person to whom such transfer, assignment, conveyance, sale or other
disposition is made (and in the case of clause (B) from such Limited
Partner to the extent specified by the General Partner) (A) such
documents, instruments and certificates as may be reasonably requested
by the General Partner, pursuant to which such transferee shall become
bound by this Agreement and (B) such other documents, opinions,
instruments and certificates as the Gener-
32
<PAGE> 37
al Partner shall reasonably request, including an opinion of counsel
to the effect that such action will not cause the Partnership to be
classified as a publicly traded partnership within the meaning of
Section 7704 of the Code;
(iii) such transferring Limited Partner
shall, prior to making any such transfer, assignment, conveyance, sale
or other disposition, deliver to the Partnership the opinion of
counsel described in Section 10.1(c);
(iv) if the General Partner, in its sole
discretion, so requires, any Limited Partner wishing to make a
transfer or assignment under this Article X shall guarantee the
performance of its transferee or assignee as to all obligations
applicable to a Limited Partner under this Agreement, and in
connection therewith, shall execute and deliver such documents,
instruments and certificates and opinions of counsel as the General
Partner shall reasonably request; and
(v) the General Partner shall be given at
least five (5) business days' prior written notice of such desired
transfer, assignment, conveyance, sale or other disposition.
(c) The opinion of counsel referred to in Section
10.1(b) hereof shall be in form and substance reasonably satis- factory to the
General Partner, shall be from counsel reasonably satisfactory to the General
Partner and shall be substantially to the effect that the proposed transfer,
assignment, conveyance, sale or other disposition contemplated by the opinion:
(i) will not violate any provisions of the
Securities Act, or the securities laws of any state or other
jurisdiction;
(ii) will not require that either of the
General Partner or the Partnership register as an Investment Company;
and
(iii) will not violate the laws of any state
or the rules and regulations of any governmental authority applicable
to such transfers.
33
<PAGE> 38
(d) Any transferee of a Partnership Interest
pursuant to the terms of this Article X shall be admitted to the Partnership as
a Substitute Limited Partner as of the day following the satisfaction of the
foregoing conditions. In such event, all references herein that shall be
applicable to the transferor shall be deemed to apply to such Substitute
Limited Partner and such Substitute Limited Partner shall succeed to a portion
(which shall equal the percentage Partnership Interest transferred to such
Substitute Limited Partner) of all of the Capital Accounts, rights and
obligations of such transferor. Such portion of the transferor's Capital
Accounts, rights and obligations shall thereafter become and be deemed to be
those of the transferee (in addition to such amounts of the foregoing as such
transferee may already have in the event the transferee was already a Partner).
SECTION 10.2. Withdrawal of Limited Partners. Without the
Consent of the General Partner and satisfaction of the Rating Agency Condition
in connection therewith, no Limited Partner shall have a right to (i) withdraw
from the Partnership, (ii) require the Partnership to redeem all or any part of
its Partnership Interest or (iii) reduce its Capital Contribution to the
Partnership.
34
<PAGE> 39
ARTICLE XI
DISSOLUTION AND TERMINATION OF PARTNERSHIP
SECTION 11.1. Dissolution Events. The Partnership shall be
dissolved, the Liquidation Period shall commence and the Partnership business
shall be wound up upon the earliest to occur of:
(a) the date determined by the General Partner with
the Consent of the Limited Partners holding a majority of the Partnership
Interests held by Limited Partners;
(b) the bankruptcy of the Partnership;
(c) the bankruptcy, insolvency, resignation,
removal, withdrawal or dissolution of the General Partner or Substitute General
Partner; or
(d) any event causing the Partnership to be required
to register as an Investment Company under the Investment Company Act if such
requirement has not been eliminated within 60 days;
provided, however, that the Partnership shall not be dissolved pursuant to
paragraph (a) above at any time while there are Notes outstanding (other than
Notes owned by the Partnership).
For purposes of this Agreement, the bankruptcy or insolvency
of a Person shall be deemed to occur when (i) such Person files a petition in
bankruptcy; (ii) such Person voluntarily takes advantage of any bankruptcy or
insolvency law; (iii) such Person is adjudicated a bankrupt; or (iv) a petition
or answer is filed proposing the adjudication of such Person as a bankrupt and
such Person either consents to the filing thereof or such petition or answer is
not discharged or denied prior to the expiration of sixty (60) days from the
date of such filing.
SECTION 11.2. Death, Insanity, etc., of Limited Partners.
The death, insanity, insolvency, incompetency, bankruptcy or dissolution of any
Limited Partner shall not dissolve the Partnership.
SECTION 11.3. Distribution upon Dissolution.
35
<PAGE> 40
(a) Upon a dissolution requiring the winding up of
the business of the Partnership, all or part of the remaining assets, as
determined by the General Partner or, in the event of a dissolution arising
under Section ll.l(c), such other Person as may be elected with the Consent of
a majority of the Partnership Interests of the Limited Partners to wind up the
business of the Partnership (the General Partner or such other Person elected,
as the case may be, being referred to as the "Liquidator"), shall be sold and
the proceeds thereof applied in accordance with Section 11.3(b).
(b) Upon dissolution and termination of the
Partnership, its remaining assets shall be applied in the following order of
priority:
(i) to the payment of the debts and
liabilities of the Partnership and the expenses of liquidation;
(ii) to the establishment of any reserves
that the Liquidator shall deem reasonably necessary for contingent or
unforeseen liabilities or obligations of the Partnership or of the
Liquidator arising out of or in connection with the Partnership or its
liquidation. Such reserves shall be deposited by the Liquidator with
an escrow agent, to be held by it for the purpose of disbursing such
reserves in payment of any of the aforementioned contingencies, and,
at the expiration of such period as the Liquidator shall deem
advisable, to distribute the balance thereafter remaining in the
manner provided in the following subdivisions hereof;
(iii) to the repayment of the balance
remaining due on any loans or advances by the Partners to the
Partnership, together with the interest accrued thereon, if any, but
if the amount available for such repayment shall be insufficient, then
pro rata to all of such Partners in proportion to the unpaid amount of
their respective loans or advances; and
(iv) to the Partners, in accordance with
their respective positive Capital Account balances after all
appropriate adjustments and allocations under Article VII.
36
<PAGE> 41
(c) Within six (6) months after the dissolution and
termination of the Partnership, the Liquidator shall arrange for the
preparation of a report from the Partnership with respect to final payments on
liquidation and shall furnish to each Partner a copy of such report upon its
completion.
SECTION 11.4. No Recourse Against the Partners. A Partner
shall look solely to the assets of the Partnership for the return of its
investment, and if the Partnership assets remaining after the payment or
discharge of debts and liabilities of the Partnership are insufficient to
return such investment, it shall have no recourse against any other Partner.
SECTION 11.5. General Partner's Discretion. The winding up
of the Partnership's affairs and the liquidation and distribution of its assets
shall be conducted exclusively by the General Partner (or another Liquidator,
if one is appointed), which is authorized to do any and all acts authorized by
law for these purposes. Distributions in accordance with the provisions of
this Article XI upon dissolution and termination of the Partnership will
constitute (i) satisfaction to the Partners of their Capital Accounts; (ii) a
final distribution to the Partners of all their interests in the Partnership
assets; and (iii) a final termination and settlement of any and all of the
Partners' other interests in the Partnership.
SECTION 11.6. Termination. Thirty (30) days after completion
of the foregoing distribution plan, the Partnership shall cease to be such and
the General Partner, its successors or other representatives shall execute,
acknowledge and cause to be filed a certificate of cancellation of the
Partnership pursuant to the power of attorney contained in Article XII hereof.
37
<PAGE> 42
ARTICLE XII
POWER OF ATTORNEY
SECTION 12.1. Grant of Power of Attorney.
(a) Each Limited Partner hereby irrevocably makes,
constitutes and appoints the General Partner its true and lawful attorney, with
full power of substitution, for it and in its name, place and stead for its use
and benefit, to execute, acknowledge, swear to, and, to the extent necessary,
to file and record:
(i) this Agreement and all amendments
thereto;
(ii) any other instrument that may be
required to be filed by the Partnership, or which the General Partner
deems it advisable to file; and
(iii) any documents that may be required to
effect the continuation of the Partnership, the admission or
substitution of a Partner, or the dissolution and termination of the
Partnership, provided such continuation, admission, substitution or
dissolution and termination are in accordance with the terms of this
Agreement.
(b) The foregoing grant of authority:
(i) is a special Power of Attorney coupled
with an interest, is irrevocable and shall survive the appointment of
a Substitute General Partner and the death, disability, dissolution,
termination or incapacity of the undersigned Partners;
(ii) may be exercised by the General Partner
for each Partner by the signature of the General Partner or by listing
all of the Partners executing any instrument with the single signature
of the General Partner as attorney-in-fact for all of them; and
(iii) shall survive the assignment or other
disposition by a Partner of the whole or a portion of its Partnership
Interest.
38
<PAGE> 43
This special Power of Attorney does not supersede any part of
this Agreement nor is it to be used to deprive the undersigned Limited Partners
of any rights hereunder. It is intended only to provide a simplified system
for execution of documents. If required, the undersigned shall execute and
deliver to the General Partner, within five (5) days after the receipt of a
request therefor, such additional designations, powers of attorney or other
instruments as the General Partner shall reasonably deem necessary for the
purposes of this provision.
SECTION 12.2. Powers of Attorney Irrevocable and Coupled With
an Interest; Copies to be Retained. The powers of attorney granted in Section
12.1 shall be deemed irrevocable and to be coupled with an interest. A copy of
each document executed by the General Partner pursuant to the powers of
attorney granted in Section 12.1 hereof will be kept on file by the General
Partner and, if requested by any Partner, a copy thereof will be transmitted to
such Partner promptly after the date of such request.
SECTION 12.3. Survival of Power of Attorney. The powers of
attorney granted in Section 12.1 shall survive the transfer or delivery of an
assignment by any Partner of the whole or any part of its Partnership Interest.
Such powers of attorney shall also survive the appointment of a successor
General Partner and the death, disability, incapacity, dissolution or
termination of a Partner and shall extend to such Partner's successors and
assigns.
SECTION 12.4. Limitation on Power of Attorney. The powers of
attorney granted under Section 12.1 cannot be utilized by the General Partner
to increase or extend any financial obligation or liability of a Partner beyond
the liability set forth herein without the written consent of such Partner.
39
<PAGE> 44
ARTICLE XIII
AMENDMENTS
SECTION 13.1. Amendments. The terms and provisions of this
Agreement may be modified or amended at any time and from time to time with the
written Consent of (i) the General Partner and (ii) those Limited Partners who
hold at such time a majority of the Partnership Interests held by Limited
Partners; provided, however, that without the Consent of any of the Limited
Partners, the General Partner may enter into agreements with Persons who are
transferees of Partnership Interests, pursuant to the terms of this Agreement,
providing in substance that such Persons will be bound by this Agreement, and
that such transferees will become Substitute Limited Partners in the
Partnership; and provided further, that no amendment of this Agreement shall
(i) increase or extend any financial obligation or liability of a Limited
Partner beyond that set forth herein or permitted hereby without such Limited
Partner's Consent, (ii) materially and adversely affect the rights of a Limited
Partner in a manner that discriminates against such Limited Partner vis-a-vis
other Limited Partners without the Consent of such Limited Partner, (iii) amend
this Section 13.1 without the Consent of each Limited Partner, or (iv) amend
Section 5.5 without the Consent of 100% of the Partnership Interests held by
the Limited Partners. There shall be no amendment of Sections 2.3 and 11.1.
Nothing in this Section 13.1, however, shall prevent the General Partner, in
its sole discretion, from amending or supplementing this Agreement in order (i)
to cure any ambiguity or (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein
and to make any other amendment necessary to carry out the intent of the
Partnership, provided that any such amendment or supplement is not materially
adverse to the remaining Partners or to holders of Notes issued pursuant to the
Basic Documents.
40
<PAGE> 45
ARTICLE XIV
MISCELLANEOUS PROVISIONS
SECTION 14.1. Notices. Each notice relating to this
Agreement shall be in writing and shall be delivered in person, by registered
or certified mail. All notices to the Partnership or the General Partner shall
be addressed to the General Partner at the following address:
The American Road
Dearborn, Michigan 48121
Attention: Secretary
All notices to the initial Limited Partner shall be addressed to such Limited
Partner at the following address:
The American Road
Dearborn, Michigan 48121
Attention: Secretary
All notices to any other Limited Partner shall be addressed to such Limited
Partner at the address as such Limited Partner may have designated by notice in
writing to the General Partner. Any Limited Partner may designate a new
address by notice to that effect given to the Partnership. The General Partner
may designate a new address by notice to that effect given to each of the
Partners. Unless otherwise specifically provided in this Agreement, a notice
shall be deemed to have been effectively given when mailed by registered or
certified mail, return receipt requested, to the proper address or delivered in
person. All notices given by the General Partner shall specifically state: (i)
the provision (or provisions) of this Agreement with respect to which such
notice is given, and (ii) the relevant time period, if any, in which the
Partner given such notice must respond.
SECTION 14.2. Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be considered an original.
SECTION 14.3. Headings. The headings of the sections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part hereof.
41
<PAGE> 46
SECTION 14.4. Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the parties and any additional or
Substitute Limited Partners or Substitute General Partners and to their
respective heirs, executors, administrators, successors and permitted assigns.
SECTION 14.5. Severability. Every provision of this
Agreement is intended to be severable. If any term or provision hereof is
illegal or invalid for any reason whatsoever, such term or provision will be
enforced to the maximum extent permitted by law and, in any event, such
illegality or invalidity shall not affect the validity of the remainder of the
Agreement.
SECTION 14.6. Non-Waiver. No provision of this Agreement
shall be deemed to have been waived except if the giving of such waiver is
contained in a written notice given to the party claiming such waiver and no
such waiver shall be deemed to be a waiver of any other or further obligation
or liability of the party or parties in whose favor the waiver was given.
SECTION 14.7. Applicable Law. This Agreement and the rights
and obligations of the parties hereto shall be interpreted and enforced in
accordance with and governed by the laws of the State of Delaware applicable to
agreements made and to be performed wholly within that jurisdiction.
SECTION 14.8. Entire Agreement. This Agreement constitutes
the entire agreement among the parties hereto with respect to the subject
matter hereof (without giving effect to the conflicts of laws principles
thereof).
SECTION 14.9. Business Day. If any payment, determination or
valuation date referred to herein is not a business day, such payment,
determination or valuation shall be made on the next succeeding day that is a
business day, and no interest shall accrue for the intervening period.
SECTION 14.10. Survivability. The representations,
warranties and covenants shall survive the delivery of this Agreement.
42
<PAGE> 47
IN WITNESS WHEREOF, the undersigned have duly executed this
Amended and Restated Agreement of Limited Partnership of Ford Credit Auto
Receivables Two L.P., as of the day and year first above written.
GENERAL PARTNER:
FORD CREDIT AUTO RECEIVABLES
TWO, INC.
By: /s/ R.P. Conrad
---------------------------
Name: R.P. Conrad
Title: Assistant Secretary
LIMITED PARTNER:
FORD MOTOR CREDIT COMPANY
By: /s/ Hurley D. Smith
---------------------------
Name: H.D. Smith
Title: Secretary
<PAGE> 1
EXHIBIT 4.1
==========================================================
INDENTURE
between
FORD CREDIT AUTO OWNER TRUST 1996-A,
as Issuer
and
CHEMICAL BANK,
as Indenture Trustee
Dated as of June 1, 1996
=========================================================
<PAGE> 2
CROSS REFERENCE TABLE1
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- -------
<S> <C>
310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.(2)
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8;6.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4
313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3
314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.15
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1
315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5;11.5
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.13
316 (a) (last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A
317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3
318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.7
</TABLE>
_______________________
1 Note: This Cross Reference Table shall not, for any purpose, be deemed to
be part of this Indenture.
2 N.A. means Not Applicable.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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ARTICLE I
DEFINITIONS, USAGE AND INCORPORATION BY REFERENCE . . . . . . . . . . . . 2
SECTION 1.1. Definitions and Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2. Incorporation by Reference of Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
THE NOTES . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.1. Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.2. Execution, Authentication and Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.3. Temporary Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.4. Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.5. Registration; Registration of Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.6. Mutilated, Destroyed, Lost or Stolen Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.7. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.8. Payment of Principal and Interest; Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.9. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.10. Release of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.11. Book-Entry Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.12. Notices to Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.13. Definitive Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.14. Authenticating Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE III
COVENANTS . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.1. Payment of Principal and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.2. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.3. Money for Payments To Be Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.4. Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.5. Protection of Indenture Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.6. Opinions as to Indenture Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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SECTION 3.7. Performance of Obligations; Servicing of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.8. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.9. Annual Statement as to Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.11. Successor or Transferee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.12. No Other Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 3.13. No Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 3.14. Servicer's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 3.16. Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 3.17. Further Instruments and Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 3.18. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 3.19. Notice of Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 3.20. Removal of Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE IV
SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . 30
SECTION 4.1. Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.2. Satisfaction, Discharge and Defeasance of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.3. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.4. Repayment of Monies Held by Note Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE V
REMEDIES . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee . . . . . . . . . . . . . . . 37
SECTION 5.4. Remedies; Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.5. Optional Preservation of the Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.6. Limitation of Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.7. Unconditional Rights of Noteholders To Receive Principal and Interest . . . . . . . . . . . . . . . . . 44
SECTION 5.8. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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SECTION 5.9. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.10. Delay or Omission Not a Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.11. Control by Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.12. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.13. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 5.14. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 5.15. Action on Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 5.16. Performance and Enforcement of Certain Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE VI
THE INDENTURE TRUSTEE . . . . . . . . . . . . . . . . . 50
SECTION 6.1. Duties of Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.2. Rights of Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 6.3. Individual Rights of Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 6.4. Indenture Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 6.5. Notice of Defaults; Insolvency or Dissolution of Depositor or General Partner . . . . . . . . . . . 53
SECTION 6.6. Reports by Indenture Trustee to Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.7. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.8. Replacement of Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 6.9. Successor Indenture Trustee by Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate Indenture Trustee . . . . . . . . . . . . . . . . . 57
SECTION 6.11. Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 6.12. Preferential Collection of Claims Against Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS . . . . . . . . . . . . . . 61
SECTION 7.1. Issuer To Furnish Indenture Trustee Names and Addresses of Noteholders . . . . . . . . . . . . . . . 61
SECTION 7.2. Preservation of Information; Communications to Noteholders . . . . . . . . . . . . . . . . . . . . . 61
SECTION 7.3. Reports by Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 7.4. Reports by Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
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ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES . . . . . . . . . . . . . . . . . . 64
SECTION 8.1. Collection of Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 8.2. Trust Accounts and Payahead Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 8.3. General Provisions Regarding Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 8.4. Release of Indenture Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 8.5. Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
ARTICLE IX
SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . . . . 69
SECTION 9.1. Supplemental Indentures Without Consent of Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 9.2. Supplemental Indentures with Consent of Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 9.3. Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 9.4. Effect of Supplemental Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 9.5. Conformity with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 9.6. Reference in Notes to Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE X
REDEMPTION OF NOTES . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 10.1. Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 10.2. Form of Redemption Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 10.3. Notes Payable on Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE XI
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 11.1. Compliance Certificates and Opinions, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 11.2. Form of Documents Delivered to Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 11.3. Acts of Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 11.4. Notices, etc., to Indenture Trustee, Issuer and Rating Agencies . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 11.5. Notices to Noteholders; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 11.6. Alternate Payment and Notice Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 11.7. Conflict with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
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SECTION 11.8. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 11.9. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 11.10. Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 11.11. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 11.12. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 11.13. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 11.14. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 11.15. Recording of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 11.16. Trust Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 11.17. No Petition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 11.18. Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
EXHIBIT A-1 Form of Class A-1 Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1-1
EXHIBIT A-2 Form of Class A-2 Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-2-1
EXHIBIT A-3 Form of Class A-3 Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-3-1
EXHIBIT A-4 Form of Class A-4 Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-4-1
EXHIBIT B Form of Note Depository Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
SCHEDULE A Schedule of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SA-1
APPENDIX A Definitions and Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . AA-1
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INDENTURE, dated as of June 1, 1996, (as from time to time
amended, supplemented or otherwise modified and in effect, this "Indenture")
between FORD CREDIT AUTO OWNER TRUST 1996-A, a Delaware business trust, as
Issuer, and Chemical Bank, a New York corporation, as trustee and not in its
individual capacity (in such capacity, the "Indenture Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the holders of the Issuer's
Class A-1 5.67% Money Market Asset Backed Notes (the "Class A-1 Notes"), Class
A-2 6.30% Asset Backed Notes (the "Class A-2 Notes"), Class A-3 6.50% Asset
Backed Notes (the "Class A-3 Notes") and Class A-4 6.75% Asset Backed Notes
(the "Class A-4 Notes") and, together with the Class A-1 Notes, the Class A-2
Notes and the Class A-3 Notes, the "Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the
Closing Date, as Indenture Trustee for the benefit of the Noteholders, all of
the Issuer's right, title and interest in, to and under, whether now owned or
existing or hereafter acquired or arising, (a) the Receivables; (b) with
respect to Precomputed Receivables, monies due thereunder on or after the
Cutoff Date (including Payaheads) and, with respect to Simple Interest
Receivables, monies due or received thereunder on or after the Cutoff Date
(including in each case any monies received prior to the Cutoff Date that are
due on or after the Cutoff Date and were not used to reduce the principal
balance of the Receivable); (c) the security interests in the Financed Vehicles
granted by Obligors pursuant to the Receivables and any other interest of the
Issuer in the Financed Vehicles; (d) rights to receive proceeds with respect to
the Receivables from claims on any physical damage, credit life, credit
disability, or other insurance policies covering Financed Vehicles or Obligors;
(e) Dealer Recourse; (f) all of the Seller's rights to the Receivable Files;
(g) the Trust Accounts and all amounts, securities, investments and other
property deposited in or credited to any of the foregoing and all proceeds
thereof; (h) the Sale and Servicing Agreement; (i) all of the Seller's rights
under the Purchase Agreement, including the right of the Seller to cause Ford
Credit to repurchase Receivables from the Seller;
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(j) payments and proceeds with respect to the Receivables held by the Servicer;
(k) all property (including the right to receive Liquidation Proceeds) securing
a Receivable (other than a Receivable repurchased by the Servicer or purchased
by the Seller); (l) rebates of premiums and other amounts relating to insurance
policies and other items financed under the Receivables in effect as of the
Cutoff Date; and (m) all present and future claims, demands, causes of action
and choses in action in respect of any or all of the foregoing and all payments
on or under and all proceeds of every kind and nature whatsoever in respect of
any or all of the foregoing, including all proceeds of the conversion thereof,
voluntary or involuntary, into cash or other liquid property, all cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel
paper, checks, deposit accounts, insurance proceeds, condemnation awards,
rights to payment of any and every kind and other forms of obligations and
receivables, instruments and other property which at any time constitute all or
part of or are included in the proceeds of any of the foregoing (collectively,
the "Collateral").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, equally and ratably without prejudice, priority or distinction, and to
secure compliance with the provisions of this Indenture, all as provided in
this Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the
Noteholders, acknowledges such Grant, accepts the trusts under this Indenture
in accordance with the provisions of this Indenture and agrees to perform its
duties required in this Indenture to the best of its ability to the end that
the interests of the Noteholders may be adequately and effectively protected.
ARTICLE I
DEFINITIONS, USAGE AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions and Usage. Except as otherwise
specified herein or as the context may otherwise require, capitalized terms
used but not otherwise defined herein are defined in Appendix A hereto, which
2
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also contains rules as to usage that shall be applicable herein.
SECTION 1.2. Incorporation by Reference of Trust Indenture
Act. Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"indenture securities" shall mean the Notes.
"indenture security holder" shall mean a Noteholder.
"indenture to be qualified" shall mean this Indenture.
"indenture trustee" or "institutional trustee" shall mean the
Indenture Trustee.
"obligor" on the indenture securities shall mean the Issuer
and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined in
the TIA, defined by TIA reference to another statute or defined by Commission
rule have the meaning assigned to them by such definitions.
3
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ARTICLE II
THE NOTES
SECTION 2.1. Form. (a) The Class A-1 Notes, the Class A-2
Notes, the Class A-3 Notes and the Class A-4 Notes, together with the Indenture
Trustee's certificates of authentication, shall be in substantially the form
set forth in Exhibit A-1, Exhibit A-2, Exhibit A-3 and Exhibit A-4,
respectively, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture, and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing such Notes, as evidenced by their execution thereof. Any
portion of the text of any Note may be set forth on the reverse thereof, with
an appropriate reference thereto on the face of the Note.
(b) The definitive Notes shall be typewritten, printed,
lithographed or engraved or produced by any combination of these methods (with
or without steel engraved borders), all as determined by the officers executing
such Notes, as evidenced by their execution of such Notes.
(c) Each Note shall be dated the date of its authentication.
The terms of the Notes set forth in Exhibit A-1, Exhibit A-2, Exhibit A-3 and
Exhibit A-4 are part of the terms of this Indenture and are incorporated herein
by reference.
SECTION 2.2. Execution, Authentication and Delivery. (a)
The Notes shall be executed on behalf of the Issuer by any of its Authorized
Officers. The signature of any such Authorized Officer on the Notes may be
manual or facsimile.
(b) Notes bearing the manual or facsimile signature of
individuals who were at any time Authorized Officers of the Issuer shall bind
the Issuer, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Notes or did
not hold such offices at the date of such Notes.
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(c) The Indenture Trustee shall, upon Issuer Order,
authenticate and deliver Class A-1 Notes for original issue in an aggregate
principal amount of $320,031,000, Class A-2 Notes for original issue in an
aggregate principal amount of $283,049,000, Class A-3 Notes for original issue
in an aggregate principal amount of $219,119,000 and Class A-4 Notes for
original issue in an aggregate principal amount of $184,607,000. The aggregate
principal amount of Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class
A-4 Notes outstanding at any time may not exceed those respective amounts
except as provided in Section 2.6.
(d) The Notes shall be issuable as registered Notes in
minimum denominations of $1,000 and in integral multiples of $1,000 in excess
thereof.
(e) No Note shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose, unless there appears on
such Note a certificate of authentication substantially in the form provided
for herein executed by the Indenture Trustee by the manual signature of one of
its authorized signatories, and such certificate upon any Note shall be
conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.
SECTION 2.3. Temporary Notes. (a) Pending the preparation
of definitive Notes, the Issuer may execute, and upon receipt of an Issuer
Order the Indenture Trustee shall authenticate and deliver, temporary Notes
that are printed, lithographed, typewritten, mimeographed or otherwise
produced, substantially of the tenor of the definitive Notes in lieu of which
they are issued and with such variations not inconsistent with the terms of
this Indenture as the officers executing the temporary Notes may determine, as
evidenced by their execution of such temporary Notes.
If temporary Notes are issued, the Issuer shall cause
definitive Notes to be prepared without unreasonable delay. After the
preparation of definitive Notes, the temporary Notes shall be exchangeable for
definitive Notes upon surrender of the temporary Notes at the office or agency
of the Issuer to be maintained as provided in Section 3.2, without charge to
the Noteholder. Upon surrender for cancellation of any one or more temporary
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Notes, the Issuer shall execute, and the Indenture Trustee shall authenticate
and deliver in exchange therefor, a like principal amount of definitive Notes
of authorized denominations. Until so exchanged, the temporary Notes shall in
all respects be entitled to the same benefits under this Indenture as
definitive Notes.
SECTION 2.4. Tax Treatment. The Issuer has entered into this
Indenture, and the Notes shall be issued, with the intention that, for federal,
State and local income and franchise tax purposes, the Notes shall qualify as
indebtedness of the Issuer secured by the Indenture Trust Estate. The Issuer,
by entering into this Indenture, and each Noteholder, by its acceptance of a
Note (and each Note Owner by its acceptance of an interest in the applicable
Book-Entry Note), agree to treat the Notes for federal, State and local income
and franchise tax purposes as indebtedness of the Issuer.
SECTION 2.5. Registration; Registration of Transfer and
Exchange. (a) The Issuer shall cause to be kept a register (the "Note
Register") in which, subject to such reasonable regulations as it may
prescribe, the Issuer shall provide for the registration of Notes and the
registration of transfers of Notes. The Indenture Trustee initially shall be
the "Note Registrar" for the purpose of registering Notes and transfers of
Notes as herein provided. Upon any resignation of any Note Registrar, the
Issuer shall promptly appoint a successor or, if it elects not to make such an
appointment, assume the duties of Note Registrar.
(b) If a Person other than the Indenture Trustee is appointed
by the Issuer as Note Registrar, (i) the Issuer shall give the Indenture
Trustee prompt written notice of the appointment of such Note Registrar and of
the location, and any change in the location, of the Note Register, (ii) the
Indenture Trustee shall have the right to inspect the Note Register at all
reasonable times and to obtain copies thereof, and (iii) the Indenture Trustee
shall have the right to rely upon a certificate executed on behalf of the Note
Registrar by an Executive Officer thereof as to the names and addresses of the
Noteholders and the principal amounts and number of such Notes.
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(c) Upon surrender for registration of transfer of any Note
at the office or agency of the Issuer to be maintained as provided in Section
3.2, if the requirements of Section 8-401(l) of the UCC are met the Issuer
shall execute, and the Indenture Trustee shall authenticate and the Noteholder
shall obtain from the Indenture Trustee, in the name of the designated
transferee or transferees, one or more new Notes of the same Class in any
authorized denomination, of a like aggregate principal amount.
(d) At the option of the Noteholder, Notes may be exchanged
for other Notes of the same Class in any authorized denominations, of a like
aggregate principal amount, upon surrender of the Notes to be exchanged at such
office or agency. Whenever any Notes are so surrendered for exchange, if the
requirements of Section 8-401(l) of the UCC are met, the Issuer shall execute,
the Indenture Trustee shall authenticate, and the Noteholder shall obtain from
the Indenture Trustee, the Notes which the Noteholder making such exchange is
entitled to receive.
(e) All Notes issued upon any registration of transfer or
exchange of Notes shall be the valid obligations of the Issuer, evidencing the
same debt, and entitled to the same benefits under this Indenture as the Notes
surrendered upon such registration of transfer or exchange.
(f) Every Note presented or surrendered for registration of
transfer or exchange shall be (i) duly endorsed by, or be accompanied by a
written instrument of transfer in form satisfactory to the Indenture Trustee
duly executed by, the Noteholder thereof or such Noteholder's attorney duly
authorized in writing, with such signature guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar and (ii)
accompanied by such other documents or evidence as the Indenture Trustee may
require.
(g) No service charge shall be made to a Noteholder for any
registration of transfer or exchange of Notes, but the Issuer may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Notes, other than exchanges
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pursuant to Section 2.3 or 9.6 not involving any transfer.
(h) The preceding provisions of this Section 2.5
notwithstanding, the Issuer shall not be required to make and the Note
Registrar need not register transfers or exchanges of Notes selected for
redemption or of any Note for a period of fifteen (15) days preceding the
Distribution Date for any payment with respect to such Note.
SECTION 2.6. Mutilated, Destroyed, Lost or Stolen Notes. (a)
If (i) any mutilated Note is surrendered to the Indenture Trustee, or the
Indenture Trustee receives evidence to its satisfaction of the destruction,
loss or theft of any Note, and (ii) there is delivered to the Indenture Trustee
such security or indemnity as may be required by it to hold the Issuer and the
Indenture Trustee harmless, then, in the absence of notice to the Issuer, the
Note Registrar or the Indenture Trustee that such Note has been acquired by a
bona fide purchaser, and provided that the requirements of Section 8-405 of the
UCC are met, the Issuer shall execute, and upon Issuer Request the Indenture
Trustee shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a replacement Note of the same
Class; provided, however, that if any such destroyed, lost or stolen Note, but
not a mutilated Note, shall have become or within seven (7) days shall be due
and payable, or shall have been called for redemption, instead of issuing a
replacement Note, the Issuer may pay such destroyed, lost or stolen Note when
so due or payable or upon the Redemption Date without surrender thereof. If,
after the delivery of such replacement Note or payment of a destroyed, lost or
stolen Note pursuant to the proviso to the preceding sentence, a bona fide
purchaser of the original Note in lieu of which such replacement Note was
issued presents for payment such original Note, the Issuer and the Indenture
Trustee shall be entitled to recover such replacement Note (or such payment)
from the Person to whom it was delivered or any Person taking such replacement
Note from such Person to whom such replacement Note was delivered or any
assignee of such Person, except a bona fide purchaser, and shall be entitled to
recover upon the security or indemnity provided therefor to the extent of any
loss, damage, cost
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or expense incurred by the Issuer or the Indenture Trustee in connection
therewith.
(b) Upon the issuance of any replacement Note under this
Section 2.6, the Issuer may require the payment by the Noteholder of such Note
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other reasonable expenses (including the
fees and expenses of the Indenture Trustee) connected therewith.
(c) Every replacement Note issued pursuant to this Section
2.6 in replacement of any mutilated, destroyed, lost or stolen Note shall
constitute an original additional contractual obligation of the Issuer, whether
or not the mutilated, destroyed, lost or stolen Note shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Notes duly issued
hereunder.
(d) The provisions of this Section 2.6 are exclusive and
shall preclude (to the extent lawful) all other rights and remedies with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Notes.
SECTION 2.7. Persons Deemed Owners. Prior to due presentment
for registration of transfer of any Note, the Issuer, the Indenture Trustee and
any agent of the Issuer or the Indenture Trustee may treat the Person in whose
name any Note is registered (as of the day of determination) as the owner of
such Note for the purpose of receiving payments of principal of and interest,
if any, on such Note and for all other purposes whatsoever, whether or not such
Note be overdue, and none of the Issuer, the Indenture Trustee or any agent of
the Issuer or the Indenture Trustee shall be affected by notice to the
contrary.
SECTION 2.8. Payment of Principal and Interest; Defaulted
Interest. (a) The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes
and the Class A-4 Notes shall accrue interest at the Class A-1 Rate, the Class
A-2 Rate, the Class A-3 Rate and the Class A-4 Rate, respectively, as set forth
in Exhibit A-1, Exhibit A-2, Exhibit A-3 and Exhibit A-4, respectively, and
such interest shall be due and payable on each Distribution
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Date as specified therein, subject to Section 3.1. Any installment of interest
or principal, if any, payable on any Note that is punctually paid or duly
provided for by the Issuer on the applicable Distribution Date shall be paid to
the Person in whose name such Note (or one or more Predecessor Notes) is
registered on the Record Date by check mailed first-class postage prepaid to
such Person's address as it appears on the Note Register on such Record Date;
provided that, unless Definitive Notes have been issued pursuant to Section
2.13, with respect to Notes registered on the Record Date in the name of the
nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payment shall be made by wire transfer in immediately available funds to the
account designated by such nominee, and except for the final installment of
principal payable with respect to such Note on a Distribution Date, Redemption
Date or the applicable Final Scheduled Distribution Date, which shall be
payable as provided below. The funds represented by any such checks returned
undelivered shall be held in accordance with Section 3.3.
(b) The principal of each Note shall be payable in
installments on each Distribution Date as provided in the forms of Notes set
forth in Exhibit A-1, Exhibit A-2, Exhibit A-3 and Exhibit A-4 hereto.
Notwithstanding the foregoing, the entire unpaid principal amount of each Class
of Notes shall be due and payable, if not previously paid, on the date on which
an Event of Default shall have occurred and be continuing, if the Indenture
Trustee or the Noteholders of Notes evidencing not less than a majority of the
principal amount of the Notes Outstanding have declared the Notes to be
immediately due and payable in the manner provided in Section 5.2. All
principal payments on each Class of Notes shall be made pro rata to the
Noteholders of such Class entitled thereto. The Indenture Trustee shall notify
the Person in whose name a Note is registered at the close of business on the
Record Date preceding the Distribution Date on which the Issuer expects that
the final installment of principal of and interest on such Note shall be paid.
Such notice shall be mailed or transmitted by facsimile prior to such final
Distribution Date and shall specify that such final installment shall be
payable only upon presentation and surrender of such Note and shall specify the
place where such Note may be presented and surrendered for payment of such
installment. Notices in
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connection with redemption of Notes shall be mailed to Noteholders as provided
in Section 10.2.
(c) If the Issuer defaults in a payment of interest on the
Notes, the Issuer shall pay defaulted interest (plus interest on such defaulted
interest to the extent lawful) at the applicable Note Interest Rate plus 2.00%
per annum on the Distribution Date following such default. The Issuer shall
pay such defaulted interest to the Persons who are Noteholders on the Record
Date for such following Distribution Date.
SECTION 2.9. Cancellation. All Notes surrendered for
payment, registration of transfer, exchange or redemption shall, if surrendered
to any Person other than the Indenture Trustee, be delivered to the Indenture
Trustee and shall be promptly cancelled by the Indenture Trustee. The Issuer
may at any time deliver to the Indenture Trustee for cancellation any Notes
previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Notes so delivered shall be promptly
cancelled by the Indenture Trustee. No Notes shall be authenticated in lieu of
or in exchange for any Notes cancelled as provided in this Section 2.9, except
as expressly permitted by this Indenture. All cancelled Notes may be held or
disposed of by the Indenture Trustee in accordance with its standard retention
or disposal policy as in effect at the time unless the Issuer shall direct by
an Issuer Order that they be destroyed or returned to it and so long as such
Issuer Order is timely and the Notes have not been previously disposed of by
the Indenture Trustee.
SECTION 2.10. Release of Collateral. Subject to Section 11.1
and the terms of the Basic Documents, the Indenture Trustee shall release
property from the lien of this Indenture only upon receipt of an Issuer Request
accompanied by an Officer's Certificate, an Opinion of Counsel and Independent
Certificates in accordance with TIA Sections 314(c) and 314(d)(1) or an Opinion
of Counsel in lieu of such Independent Certificates to the effect that the TIA
does not require any such Independent Certificates. If the Commission shall
issue an exemptive order under TIA Section 304(d) modifying the Owner Trustee's
obligations under TIA Sections 314(c) and 314(d)(1), subject to Section 11.1
and the terms of the Basic Documents, the Indenture Trustee shall release
property from
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the lien of this Indenture in accordance with the conditions and procedures set
forth in such exemptive order.
SECTION 2.11. Book-Entry Notes. The Notes, upon original
issuance, shall be issued in the form of typewritten Notes representing the
Book-Entry Notes, to be delivered to The Depository Trust Company, the initial
Clearing Agency, by, or on behalf of, the Issuer. The Book-Entry Notes shall
be registered initially on the Note Register in the name of Cede & Co., the
nominee of the initial Clearing Agency, and no Note Owner thereof shall receive
a Definitive Note (as defined below) representing such Note Owner's interest in
such Note, except as provided in Section 2.13. Unless and until definitive,
fully registered Notes (the "Definitive Notes") have been issued to such Note
Owners pursuant to Section 2.13:
(i) the provisions of this Section 2.11 shall be
in full force and effect;
(ii) the Note Registrar and the Indenture Trustee
shall be entitled to deal with the Clearing Agency for all
purposes of this Indenture (including the payment of principal
of and interest on the Notes and the giving of instructions or
directions hereunder) as the sole Noteholder, and shall have
no obligation to the Note Owners;
(iii) to the extent that the provisions of this
Section 2.11 conflict with any other provisions of this
Indenture, the provisions of this Section 2.11 shall control;
(iv) the rights of Note Owners shall be exercised
only through the Clearing Agency and shall be limited to those
established by law and agreements between such Note Owners and
the Clearing Agency and/or the Clearing Agency Participants
pursuant to the Note Depository Agreement. Unless and until
Definitive Notes are issued pursuant to Section 2.13, the
initial Clearing Agency shall make book-entry transfers among
the Clearing Agency Participants and receive and transmit
payments of
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principal of and interest on the Notes to such Clearing
Agency Participants; and
(v) whenever this Indenture requires or permits
actions to be taken based upon instructions or directions of
Noteholders of Notes evidencing a specified percentage of the
principal amount of the Notes Outstanding, the Clearing Agency
shall be deemed to represent such percentage only to the
extent that it has received instructions to such effect from
Note Owners and/or Clearing Agency Participants owning or
representing, respectively, such required percentage of the
beneficial interest in the Notes Outstanding and has delivered
such instructions to the Indenture Trustee.
SECTION 2.12. Notices to Clearing Agency. Whenever a notice
or other communication to the Noteholders is required under this Indenture,
unless and until Definitive Notes shall have been issued to the Note Owners
pursuant to Section 2.13, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Noteholders to the Clearing
Agency, and shall have no obligation to such Note Owners.
SECTION 2.13. Definitive Notes. If (i) the Administrator
advises the Indenture Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities with respect to the
Notes and the Administrator is unable to locate a qualified successor, (ii) the
Administrator, at its option, advises the Indenture Trustee in writing that it
elects to terminate the book-entry system through the Clearing Agency or (iii)
after the occurrence of an Event of Default or an Event of Servicing
Termination, Note Owners of Notes evidencing beneficial interests aggregating
not less than a majority of the principal amount of the Notes Outstanding
advise the Indenture Trustee and the Clearing Agency in writing that the
continuation of a book-entry system through the Clearing Agency is no longer in
the best interests of the Note Owners, then the Clearing Agency shall notify
all Note Owners and the Indenture Trustee of the occurrence of such event and
of the availability of Definitive Notes to Note Owners requesting the same.
Upon surrender to the Indenture Trustee of the typewritten Notes representing
the Book-
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Entry Notes by the Clearing Agency, accompanied by registration instructions,
the Issuer shall execute and the Indenture Trustee shall authenticate the
Definitive Notes in accordance with the instructions of the Clearing Agency.
None of the Issuer, the Note Registrar or the Indenture Trustee shall be liable
for any delay in delivery of such instructions and may conclusively rely on,
and shall be protected in relying on, such instructions. Upon the issuance of
Definitive Notes, the Indenture Trustee shall recognize the holders of the
Definitive Notes as Noteholders.
SECTION 2.14. Authenticating Agents. (a) The Indenture
Trustee may appoint one or more Persons (each, an "Authenticating Agent") with
power to act on its behalf and subject to its direction in the authentication
of Notes in connection with issuance, transfers and exchanges under Sections
2.2, 2.3, 2.5, 2.6 and 9.6, as fully to all intents and purposes as though each
such Authenticating Agent had been expressly authorized by those Sections to
authenticate such Notes. For all purposes of this Indenture, the
authentication of Notes by an Authenticating Agent pursuant to this Section
2.14 shall be deemed to be the authentication of Notes "by the Indenture
Trustee."
(b) Any corporation into which any Authenticating Agent may
be merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, consolidation or conversion to which any
Authenticating Agent shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of any Authenticating Agent,
shall be the successor of such Authenticating Agent hereunder, without the
execution or filing of any further act on the part of the parties hereto or
such Authenticating Agent or such successor corporation.
(c) Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Indenture Trustee and the Owner Trustee.
The Indenture Trustee may at any time terminate the agency of any
Authenticating Agent by giving written notice of termination to such
Authenticating Agent and the Owner Trustee. Upon receiving such notice of
resignation or upon such a termination, the Indenture Trustee may appoint a
succes-
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sor Authenticating Agent and shall give written notice of any such appointment
to the Owner Trustee.
(d) The Administrator agrees to pay to each Authenticating
Agent from time to time reasonable compensation for its services. The
provisions of Sections 2.9 and 6.4 shall be applicable to any Authenticating
Agent.
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ARTICLE III
COVENANTS
SECTION 3.1. Payment of Principal and Interest. The Issuer
shall duly and punctually pay the principal of and interest, if any, on the
Notes in accordance with the terms of the Notes and this Indenture. Without
limiting the foregoing, the Issuer shall cause to be paid all amounts on
deposit in the Note Payment Account on a Distribution Date deposited therein
pursuant to the Sale and Servicing Agreement (i) for the benefit of the Class
A-1 Notes, to the Class A-1 Noteholders, (ii) for the benefit of the Class A-2
Notes, to the Class A-2 Noteholders, (iii) for the benefit of the Class A-3
Notes, to the Class A-3 Noteholders and (iv) for the benefit of the Class A-4
Notes, to the Class A-4 Noteholders. Amounts properly withheld under the Code
by any Person from a payment to any Noteholder of interest and/or principal
shall be considered as having been paid by the Issuer to such Noteholder for
all purposes of this Indenture.
SECTION 3.2. Maintenance of Office or Agency. The Issuer
shall maintain in the Borough of Manhattan, The City of New York, an office or
agency where Notes may be surrendered for registration of transfer or exchange,
and where notices and demands to or upon the Issuer in respect of the Notes and
this Indenture may be served. The Issuer hereby initially appoints the
Indenture Trustee to serve as its agent for the foregoing purposes. The Issuer
shall give prompt written notice to the Indenture Trustee of the location, and
of any change in the location, of any such office or agency. If, at any time,
the Issuer shall fail to maintain any such office or agency or shall fail to
furnish the Indenture Trustee with the address thereof, such surrenders,
notices and demands may be made or served at the Corporate Trust Office, and
the Issuer hereby appoints the Indenture Trustee as its agent to receive all
such surrenders, notices and demands.
SECTION 3.3. Money for Payments To Be Held in Trust. (a) As
provided in Sections 8.2 and 5.4(b), all payments of amounts due and payable
with respect to any Notes that are to be made from amounts withdrawn from the
Trust Accounts and the Payahead Account shall be made on behalf of the Issuer
by the Indenture Trustee or by
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another Note Paying Agent, and no amounts so withdrawn from the Trust Accounts
and the Payahead Account for payments of Notes shall be paid over to the
Issuer, except as provided in this Section 3.3.
(b) On or before each Distribution Date and Redemption Date,
the Issuer shall deposit or cause to be deposited in the Note Payment Account
an aggregate sum sufficient to pay the amounts then becoming due under the
Notes, such sum to be held in trust for the benefit of the Persons entitled
thereto, and (unless the Note Paying Agent is the Indenture Trustee) shall
promptly notify the Indenture Trustee of its action or failure so to act.
(c) The Issuer shall cause each Note Paying Agent other than
the Indenture Trustee to execute and deliver to the Indenture Trustee an
instrument in which such Note Paying Agent shall agree with the Indenture
Trustee (and if the Indenture Trustee acts as Note Paying Agent, it hereby so
agrees), subject to the provisions of this Section 3.3, that such Note Paying
Agent shall:
(i) hold all sums held by it for the payment of
amounts due with respect to the Notes in trust for the benefit
of the Persons entitled thereto until such sums shall be paid
to such Persons or otherwise disposed of as herein provided
and pay such sums to such Persons as herein provided;
(ii) give the Indenture Trustee notice of any
default by the Issuer (or any other obligor upon the Notes) of
which it has actual knowledge in the making of any payment
required to be made with respect to the Notes;
(iii) at any time during the continuance of any
such default, upon the written request of the Indenture
Trustee, forthwith pay to the Indenture Trustee all sums so
held in trust by such Note Paying Agent;
(iv) immediately resign as a Note Paying Agent and
forthwith pay to the Indenture Trustee all sums held by it in
trust for the payment of Notes if at any time it ceases to
meet the standards required to be met by a Note
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Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code and
any State or local tax law with respect to the withholding
from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
(d) The Issuer may at any time, for the purpose of obtaining
the satisfaction and discharge of this Indenture or for any other purpose, by
Issuer Order direct any Note Paying Agent to pay to the Indenture Trustee all
sums held in trust by such Note Paying Agent, such sums to be held by the
Indenture Trustee upon the same trusts as those upon which the sums were held
by such Note Paying Agent; and upon such payment by any Note Paying Agent to
the Indenture Trustee, such Note Paying Agent shall be released from all
further liability with respect to such money.
(e) Subject to applicable laws with respect to escheat of
funds, any money held by the Indenture Trustee or any Note Paying Agent in
trust for the payment of any amount due with respect to any Note and remaining
unclaimed for two (2) years after such amount has become due and payable shall
be discharged from such trust and be paid to the Issuer on Issuer Request; and
the Noteholder of such Note shall thereafter, as an unsecured general creditor,
look only to the Issuer for payment thereof (but only to the extent of the
amounts so paid to the Issuer), and all liability of the Indenture Trustee or
such Note Paying Agent with respect to such trust money shall thereupon cease;
provided, however, that the Indenture Trustee or such Note Paying Agent, before
being required to make any such repayment, shall at the expense and direction
of the Issuer cause to be published once, in a newspaper published in the
English language, customarily published on each Business Day and of general
circulation in The City of New York, notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than thirty
(30) days from the date of such publication, any unclaimed balance of such
money then remaining shall be repaid to the Issuer. The Indenture Trustee
shall also adopt and
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employ, at the expense and direction of the Issuer, any other reasonable means
of notification of such repayment (including, but not limited to, mailing
notice of such repayment to Noteholders whose Notes have been called but have
not been surrendered for redemption or whose right to or interest in monies due
and payable but not claimed is determinable from the records of the Indenture
Trustee or of any Note Paying Agent, at the last address of record for each
such Noteholder).
SECTION 3.4. Existence. The Issuer shall keep in full effect
its existence, rights and franchises as a business trust under the laws of the
State of Delaware (unless it becomes, or any successor Issuer hereunder is or
becomes, organized under the laws of any other State or of the United States of
America, in which case the Issuer shall keep in full effect its existence,
rights and franchises under the laws of such other jurisdiction) and shall
obtain and preserve its qualification to do business in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Collateral and each other
instrument or agreement included in the Indenture Trust Estate.
SECTION 3.5. Protection of Indenture Trust Estate. The
Issuer shall from time to time execute and deliver all such supplements and
amendments hereto and all such financing statements, continuation statements,
instruments of further assurance and other instruments, and shall take such
other action necessary or advisable to:
(i) maintain or preserve the lien and security
interest (and the priority thereof) of this Indenture or carry
out more effectively the purposes hereof;
(ii) perfect, publish notice of or protect the
validity of any Grant made or to be made by this Indenture;
(iii) enforce any of the Collateral; or
(iv) preserve and defend title to the Indenture
Trust Estate and the rights of the Indenture Trustee and the
Noteholders in such
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Indenture Trust Estate against the claims of all Persons.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required to be executed pursuant to this Section 3.5;
provided, however, that the Indenture Trustee shall be under no obligation to
file any such financing statement, continuation statement or other instrument
required to be executed pursuant to this Section 3.5.
SECTION 3.6. Opinions as to Indenture Trust Estate. (a) On
the Closing Date, the Issuer shall furnish to the Indenture Trustee an Opinion
of Counsel either stating that, in the opinion of such counsel, such action has
been taken with respect to the recording and filing of this Indenture, any
indentures supplemental hereto, and any other requisite documents, and with
respect to the execution and filing of any financing statements and
continuation statements, as are necessary to perfect and make effective the
lien and security interest of this Indenture and reciting the details of such
action, or stating that, in the opinion of such counsel, no such action is
necessary to make such lien and security interest effective.
(b) On or before April 30 in each calendar year, beginning in
1997, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel
either stating that, in the opinion of such counsel, such action has been taken
with respect to the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental hereto and any other requisite documents
and with respect to the execution and filing of any financing statements and
continuation statements and any other action that may be required by law as is
necessary to maintain the lien and security interest created by this Indenture
and reciting the details of such action or stating that in the opinion of such
counsel no such action is necessary to maintain such lien and security
interest. Such Opinion of Counsel shall also describe the recording, filing,
re-recording and refiling of this Indenture, any indentures supplemental hereto
and any other requisite documents and the execution and filing of any financing
statements and continuation statements that shall, in the opinion of such
counsel, be required to
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maintain the lien and security interest of this Indenture until April 30 in the
following calendar year.
SECTION 3.7. Performance of Obligations; Servicing of
Receivables. (a) The Issuer shall not take any action and shall use its best
efforts not to permit any action to be taken by others that would release any
Person from any of such Person's material covenants or obligations under any
instrument or agreement included in the Indenture Trust Estate or that would
result in the amendment, hypothecation, subordination, termination or discharge
of, or impair the validity or effectiveness of, any such instrument or
agreement, except as expressly provided in this Indenture and the other Basic
Documents.
(b) The Issuer may contract with other Persons to assist it
in performing its duties under this Indenture, and any performance of such
duties by a Person identified to the Indenture Trustee in an Officer's
Certificate of the Issuer shall be deemed to be action taken by the Issuer.
Initially, the Issuer has contracted with the Servicer and the Administrator to
assist the Issuer in performing its duties under this Indenture.
(c) The Issuer shall punctually perform and observe all of
its obligations and agreements contained in this Indenture, the other Basic
Documents and in the instruments and agreements included in the Indenture Trust
Estate, including, but not limited to, filing or causing to be filed all
financing statements and continuation statements required to be filed under the
UCC by the terms of this Indenture and the Sale and Servicing Agreement in
accordance with and within the time periods provided for herein and therein.
Except as otherwise expressly provided therein, the Issuer shall not waive,
amend, modify, supplement or terminate any Basic Document or any provision
thereof without the consent of the Indenture Trustee or the Noteholders of
Notes evidencing not less than a majority of the principal amount of the Notes
Outstanding.
(d) If the Issuer shall have knowledge of the occurrence of
an Event of Servicing Termination under the Sale and Servicing Agreement, the
Issuer shall promptly notify the Indenture Trustee and the Rating Agencies
thereof and shall specify in such notice the action, if any, the Issuer is
taking in respect of such default. If
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an Event of Servicing Termination shall arise from the failure of the Servicer
to perform any of its duties or obligations under the Sale and Servicing
Agreement with respect to the Receivables, the Issuer shall take all reasonable
steps available to it to remedy such failure.
(e) As promptly as possible after the giving of notice of
termination to the Servicer of the Servicer's rights and powers pursuant to
Section 8.1 of the Sale and Servicing Agreement or the Servicer's resignation
in accordance with the terms of the Sale and Servicing Agreement, the Issuer
shall appoint a successor servicer (the "Successor Servicer") meeting the
requirements of the Sale and Servicing Agreement, and such Successor Servicer
shall accept its appointment by a written assumption in a form acceptable to
the Indenture Trustee. In the event that a Successor Servicer has not been
appointed at the time when the Servicer ceases to act as Servicer, the
Indenture Trustee without further action shall automatically be appointed the
Successor Servicer. If the Indenture Trustee shall be legally unable to act as
Successor Servicer, it may appoint, or petition a court of competent
jurisdiction to appoint, a Successor Servicer. The Indenture Trustee may
resign as the Servicer by giving written notice of such resignation to the
Issuer and in such event shall be released from such duties and obligations,
such release not to be effective until the date a new servicer enters into a
servicing agreement with the Issuer as provided below. Upon delivery of any
such notice to the Issuer, the Issuer shall obtain a new servicer as the
Successor Servicer under the Sale and Servicing Agreement. Any Successor
Servicer (other than the Indenture Trustee) shall (i) be an established
institution having a net worth of not less than $100,000,000 and whose regular
business shall include the servicing of automotive receivables and (ii) enter
into a servicing agreement with the Issuer having substantially the same
provisions as the provisions of the Sale and Servicing Agreement applicable to
the Servicer. If, within thirty (30) days after the delivery of the notice
referred to above, the Issuer shall not have obtained such a new servicer, the
Indenture Trustee may appoint, or may petition a court of competent
jurisdiction to appoint, a Successor Servicer. In connection with any such
appointment, the Indenture Trustee may make such arrangements for the
compensation of such successor as it and such successor shall agree, subject to
the limita-
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tions set forth below and in the Sale and Servicing Agreement, and, in
accordance with Section 8.2 of the Sale and Servicing Agreement, the Issuer
shall enter into an agreement with such successor for the servicing of the
Receivables (such agreement to be in form and substance satisfactory to the
Indenture Trustee). If the Indenture Trustee shall succeed to the Servicer's
duties as servicer of the Receivables as provided herein, it shall do so in its
individual capacity and not in its capacity as Indenture Trustee and,
accordingly, the provisions of Article VI hereof shall be inapplicable to the
Indenture Trustee in its duties as the successor to the Servicer and the
servicing of the Receivables. In case the Indenture Trustee shall become
successor to the Servicer under the Sale and Servicing Agreement, the Indenture
Trustee shall be entitled to appoint as Servicer any one of its Affiliates;
provided that the Indenture Trustee, in its capacity as the Servicer, shall be
fully liable for the actions and omissions of such Affiliate in such capacity
as Successor Servicer.
(f) Upon any termination of the Servicer's rights and powers
pursuant to the Sale and Servicing Agreement, the Issuer shall promptly notify
the Indenture Trustee. As soon as a Successor Servicer is appointed by the
Issuer, the Issuer shall notify the Indenture Trustee of such appointment,
specifying in such notice the name and address of such Successor Servicer.
(g) Without derogating from the absolute nature of the
assignment granted to the Indenture Trustee under this Indenture or the rights
of the Indenture Trustee hereunder, the Issuer hereby agrees that it shall not,
without the prior written consent of the Indenture Trustee or the Noteholders
of Notes evidencing not less than a majority in principal amount of the Notes
Outstanding, amend, modify, waive, supplement, terminate or surrender, or agree
to any amendment, modification, supplement, termination, waiver or surrender
of, the terms of any Collateral (except to the extent otherwise provided in the
Sale and Servicing Agreement or the other Basic Documents).
SECTION 3.8. Negative Covenants. So long as any Notes are
Outstanding, the Issuer shall not:
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(i) except as expressly permitted by this
Indenture, the Trust Agreement, the Purchase Agreement or the
Sale and Servicing Agreement, sell, transfer, exchange or
otherwise dispose of any of the properties or assets of the
Issuer, including those included in the Indenture Trust
Estate, unless directed to do so by the Indenture Trustee;
(ii) claim any credit on, or make any deduction
from the principal or interest payable in respect of, the
Notes (other than amounts properly withheld from such payments
under the Code) or assert any claim against any present or
former Noteholder by reason of the payment of the taxes levied
or assessed upon the Trust or the Indenture Trust Estate;
(iii) dissolve or liquidate in whole or in part; or
(iv) (A) permit the validity or effectiveness of
this Indenture to be impaired, or permit the lien of this
Indenture to be amended, hypothecated, subordinated,
terminated or discharged, or permit any Person to be released
from any covenants or obligations with respect to the Notes
under this Indenture except as may be expressly permitted
hereby, (B) permit any lien, charge, excise, claim, security
interest, mortgage or other encumbrance (other than the lien
of this Indenture) to be created on or extend to or
otherwise arise upon or burden the assets of the Issuer,
including those included in the Indenture Trust Estate, or any
part thereof or any interest therein or the proceeds thereof
(other than tax liens, mechanics' liens and other liens that
arise by operation of law, in each case on any of the Financed
Vehicles and arising solely as a result of an action or
omission of the related Obligor) or (C) permit the lien of
this Indenture not to constitute a valid first priority (other
than with respect to any such tax, mechanics' or other lien)
security interest in the Indenture Trust Estate.
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SECTION 3.9. Annual Statement as to Compliance. The Issuer
shall deliver to the Indenture Trustee, within 120 days after the end of each
calendar year (commencing with the year 1997), an Officer's Certificate
stating, as to the Authorized Officer signing such Officer's Certificate, that:
(i) a review of the activities of the Issuer
during such year and of its performance under this Indenture
has been made under such Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's
knowledge, based on such review, the Issuer has complied with
all conditions and covenants under this Indenture throughout
such year, or, if there has been a default in its compliance
with any such condition or covenant, specifying each such
default known to such Authorized Officer and the nature and
status thereof.
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain
Terms. (a) The Issuer shall not consolidate or merge with or into any other
Person, unless:
(i) the Person (if other than the Issuer) formed
by or surviving such consolidation or merger shall be a Person
organized and existing under the laws of the United States of
America or any State and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the
Indenture Trustee, in form satisfactory to the Indenture
Trustee, the due and punctual payment of the principal of and
interest on all Notes and the performance or observance of
every agreement and covenant of this Indenture on the part of
the Issuer to be performed or observed, all as provided
herein;
(ii) immediately after giving effect to such
transaction, no Default or Event of Default shall have
occurred and be continuing;
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(iii) the Rating Agency Condition shall have been
satisfied with respect to such transaction;
(iv) the Issuer shall have received an Opinion of
Counsel (and shall have delivered copies thereof to the
Indenture Trustee) to the effect that such transaction will
not have any material adverse tax consequence to the Issuer,
any Noteholder or any Certificateholder;
(v) any action that is necessary to maintain the
lien and security interest created by this Indenture shall
have been taken; and
(vi) the Issuer shall have delivered to the
Indenture Trustee an Officer's Certificate and an Opinion of
Counsel each stating that such consolidation or merger and
such supplemental indenture comply with this Article III and
that all conditions precedent herein provided for relating to
such transaction have been complied with (including any filing
required by the Exchange Act).
(b) Other than as specifically contemplated by the Basic
Documents, the Issuer shall not convey or transfer any of its properties or
assets, including those included in the Indenture Trust Estate, to any Person,
unless:
(i) the Person that acquires by conveyance or
transfer the properties and assets of the Issuer the
conveyance or transfer of which is hereby restricted shall (A)
be a United States citizen or a Person organized and existing
under the laws of the United States of America or any State,
(B) expressly assumes, by an indenture supplemental hereto,
executed and delivered to the Indenture Trustee, in form
satisfactory to the Indenture Trustee, the due and punctual
payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of
this Indenture on the part of the Issuer to be performed or
observed, all as provided herein, (C) expressly agrees by
means of such supple-
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mental indenture that all right, title and interest so
conveyed or transferred shall be subject and subordinate to
the rights of Noteholders, (D) unless otherwise provided in
such supplemental indenture, expressly agrees to indemnify,
defend and hold harmless the Issuer against and from any loss,
liability or expense arising under or related to this
Indenture and the Notes, and (E) expressly agrees by means of
such supplemental indenture that such Person (or if a group of
Persons, then one specified Person) shall make all filings
with the Commission (and any other appropriate Person)
required by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such
transaction, no Default or Event of Default shall have
occurred and be continuing;
(iii) the Rating Agency Condition shall have been
satisfied with respect to such transaction;
(iv) the Issuer shall have received an Opinion of
Counsel (and shall have delivered copies thereof to the
Indenture Trustee) to the effect that such transaction will
not have any material adverse tax consequence to the Issuer,
any Noteholder or any Certificateholder;
(v) any action that is necessary to maintain the
lien and security interest created by this Indenture shall
have been taken; and
(vi) the Issuer shall have delivered to the
Indenture Trustee an Officer's Certificate and an Opinion of
Counsel each stating that such conveyance or transfer and such
supplemental indenture comply with this Article III and that
all conditions precedent herein provided for relating to such
transaction have been complied with (including any filing
required by the Exchange Act).
SECTION 3.11. Successor or Transferee. (a) Upon any
consolidation or merger of the Issuer in accor-
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dance with Section 3.10(a), the Person formed by or surviving such
consolidation or merger (if other than the Issuer) shall succeed to, and be
substituted for, and may exercise every right and power of, the Issuer under
this Indenture with the same effect as if such Person had been named as the
Issuer herein.
(b) Upon a conveyance or transfer of all the assets and
properties of the Issuer pursuant to Section 3.10(b), the Issuer shall be
released from every covenant and agreement of this Indenture to be observed or
performed on the part of the Issuer with respect to the Notes immediately upon
the delivery of written notice to the Indenture Trustee stating that the Issuer
is to be so released.
SECTION 3.12. No Other Business. The Issuer shall not engage
in any business other than financing, acquiring, owning and pledging the
Receivables in the manner contemplated by this Indenture and the Basic
Documents and activities incidental thereto.
SECTION 3.13. No Borrowing. The Issuer shall not issue,
incur, assume, guarantee or otherwise become liable, directly or indirectly,
for any indebtedness except for the Notes and the Certificates.
SECTION 3.14. Servicer's Obligations. The Issuer shall cause
the Servicer to comply with the Sale and Servicing Agreement, including
Sections 3.9, 3.10, 3.11, 3.12, 3.13 and 4.9 and Article VII thereof.
SECTION 3.15. Guarantees, Loans, Advances and Other
Liabilities. Except as contemplated by this Indenture and the other Basic
Documents, the Issuer shall not make any loan or advance or credit to, or
guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance on any obligation or capability of so
doing or otherwise), endorse or otherwise become contingently liable, directly
or indirectly, in connection with the obligations, stocks or dividends of, or
own, purchase, repurchase or acquire (or agree contingently to do so) any
stock, obligations, assets or securities of, or any other interest in, or make
any capital contribution to, any other Person.
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SECTION 3.16. Capital Expenditures. The Issuer shall not
make any expenditure (by long-term or operating lease or otherwise) for capital
assets (either realty or personalty).
SECTION 3.17. Further Instruments and Acts. Upon request of
the Indenture Trustee, the Issuer shall execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper
to carry out more effectively the purpose of this Indenture.
SECTION 3.18. Restricted Payments. The Issuer shall not,
directly or indirectly, (i) make any distribution (by reduction of capital or
otherwise), whether in cash, property, securities or a combination thereof, to
the Owner Trustee or any owner of a beneficial interest in the Issuer or
otherwise with respect to any ownership or equity interest or security in or of
the Issuer or to the Servicer or the Administrator, (ii) redeem, purchase,
retire or otherwise acquire for value any such ownership or equity interest or
security or (iii) set aside or otherwise segregate any amounts for any such
purpose; provided, however, that the Issuer may make, or cause to be made, (x)
payments to the Servicer, the Administrator, the Owner Trustee, the Indenture
Trustee, the Noteholders and the Certificateholders as contemplated by, and to
the extent funds are available for such purpose under, this Indenture and the
other Basic Documents and (y) payments to the Indenture Trustee pursuant to
Section 2(a)(ii) of the Administration Agreement. The Issuer shall not,
directly or indirectly, make payments to or distributions from the Collection
Account except in accordance with this Indenture and the other Basic Documents.
SECTION 3.19. Notice of Events of Default. The Issuer shall
give the Indenture Trustee and the Rating Agencies prompt written notice of
each Event of Default hereunder and of each default on the part of any party to
the Sale and Servicing Agreement or the Purchase Agreement with respect to any
of the provisions thereof.
SECTION 3.20. Removal of Administrator. For so long as any
Notes are Outstanding, the Issuer shall not remove the Administrator without
cause unless the Rating Agency Condition shall have been satisfied in
connection therewith.
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ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture. This
Indenture shall cease to be of further effect with respect to the Notes except
as to (i) rights of registration of transfer and exchange, (ii) substitution of
mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to
receive payments of principal thereof and interest thereon, (iv) Sections 3.3,
3.4, 3.5, 3.8, 3.10, 3.12 and 3.13, (v) the rights, obligations and immunities
of the Indenture Trustee hereunder (including the rights of the Indenture
Trustee under Section 6.7 and the obligations of the Indenture Trustee under
Section 4.3), and (vi) the rights of Noteholders as beneficiaries hereof with
respect to the property so deposited with the Indenture Trustee payable to all
or any of them, and the Indenture Trustee, on demand of and at the expense of
the Issuer, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture with respect to the Notes, when:
(A) either
(1) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and
that have been replaced or paid as provided in Section 2.6 and
(ii) Notes for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the
Issuer and thereafter repaid to the Issuer or discharged from
such trust, as provided in Section 3.3) have been delivered to
the Indenture Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Indenture
Trustee for cancellation have become due and payable and the
Issuer has irrevocably deposited or caused to be irrevocably
deposited with the Indenture Trustee cash or direct
obligations of or obligations guaranteed by the United States
of America (which will mature prior to the date such amounts
are payable), in trust for such purpose, in an amount
sufficient without reinvestment to pay and discharge the
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entire indebtedness on such Notes not theretofore delivered to the
Indenture Trustee for cancellation when due to the applicable Final
Scheduled Distribution Date or Redemption Date (if Notes shall have
been called for redemption pursuant to Section 10.1(a)), as the case
may be, and all fees due and payable to the Indenture Trustee;
(B) the Issuer has paid or caused to be paid all other sums payable
hereunder and under any of the other Basic Documents by the Issuer;
(C) the Issuer has delivered to the Indenture Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA or the
Indenture Trustee) an Independent Certificate from a firm of certified
public accountants, each meeting the applicable requirements of Section
11.1(a) and, subject to Section 11.2, each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with; and
(D) the Issuer has delivered to the Indenture Trustee an Opinion of
Counsel to the effect that the satisfaction and discharge of the Notes
pursuant to this Section 4.1 will not cause any Noteholder to be
treated as having sold or exchanged any of its Notes for purposes of
Section 1001 of the Code.
SECTION 4.2. Satisfaction, Discharge and Defeasance of Notes.
(a) Upon satisfaction of the conditions set forth in subsection (b)
below, the Issuer shall be deemed to have paid and discharged the entire
indebtedness on all the outstanding Notes, and the provisions of this Indenture,
as it relates to such Notes, shall no longer be in effect (and the Indenture
Trustee, at the expense of the Issuer, shall execute proper instruments
acknowledging the same), except as to (i) rights of registration of transfer and
exchange, (ii) substitution of mutilated, destroyed, lost or stolen Notes, (iii)
rights of Noteholders to receive payments of principal thereof and
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interest thereon, (iv) Sections 3.2, 3.3, 3.4, 3.5, 3.8, 3.10, 3.12 and 3.13,
(v) the rights, obligations and immunities of the Indenture Trustee hereunder
(including the rights of the Indenture Trustee under Section 6.7 and the
obligations of the Indenture Trustee under Section 4.3), and (vi) the rights of
Noteholders as beneficiaries hereof with respect to the property so deposited
with the Indenture Trustee payable to all or any of them.
(b) The satisfaction, discharge and defeasance of the Notes
pursuant to subsection (a) of this Section 4.2 is subject to the satisfaction
of all of the following conditions:
(i) the Issuer has deposited or caused to be
deposited irrevocably (except as provided in Section 4.4) with the
Indenture Trustee as trust funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the Noteholders,
which, through the payment of interest and principal in respect
thereof in accordance with their terms will provide, not later than
one day prior to the due date of any payment referred to below, money
in an amount sufficient, in the opinion of a nationally recognized
firm of independent certified public accountants expressed in a
written certification thereof delivered to the Indenture Trustee, to
pay and discharge the entire indebtedness on the outstanding Notes,
for principal thereof and interest thereon to the date of such deposit
(in the case of Notes that have become due and payable) or to the
maturity of such principal and interest, as the case may be;
(ii) such deposit will not result in a breach or
violation of, or constitute an event of default under, any other
agreement or instrument to which the Issuer is bound;
(iii) no Event of Default with respect to the
Notes shall have occurred and be continuing on the date of such
deposit or on the ninety-first (91st) day after such date;
(iv) the Issuer has delivered to the Indenture
Trustee an Opinion of Counsel to the effect that the satisfaction,
discharge and defea-
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sance of the Notes pursuant to this Section 4.2 will not cause any
Noteholder to be treated as having sold or exchanged any of its Notes
for purposes of Section 1001 of the Code; and
(v) the Issuer has delivered to the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel, each
stating that all conditions precedent relating to the defeasance
contemplated by this Section 4.2 have been complied with.
SECTION 4.3. Application of Trust Money. All monies
deposited with the Indenture Trustee pursuant to Sections 4.1 and 4.2 shall be
held in trust and applied by it, in accordance with the provisions of the Notes
and this Indenture, to the payment, either directly or through any Note Paying
Agent, as the Indenture Trustee may determine, to the Noteholders of the
particular Notes for the payment or redemption of which such monies have been
deposited with the Indenture Trustee, of all sums due and to become due thereon
for principal and interest, but such monies need not be segregated from other
funds except to the extent required herein or in the Sale and Servicing
Agreement or required by law.
SECTION 4.4. Repayment of Monies Held by Note Paying Agent.
In connection with the satisfaction and discharge of this Indenture with
respect to the Notes, all monies then held by any Note Paying Agent other than
the Indenture Trustee under the provisions of this Indenture with respect to
such Notes shall, upon demand of the Issuer, be paid to the Indenture Trustee
to be held and applied according to Section 3.3 and thereupon such Note Paying
Agent shall be released from all further liability with respect to such monies.
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ARTICLE V
REMEDIES
SECTION 5.1. Events of Default. "Event of Default," wherever
used herein, means the occurrence of any one of the following events (whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) default in the payment of any interest on any
Note when the same becomes due and payable on each
Distribution Date, and such default shall continue for a
period of five (5) days or more; or
(ii) default in the payment of the principal of or
any installment of the principal of any Note when the same
becomes due and payable; or
(iii) default in the observance or performance of
any material covenant or agreement of the Issuer made in this
Indenture (other than a covenant or agreement, a default in
the observance or performance of which is elsewhere in this
Section 5.1 specifically dealt with), or any representation or
warranty of the Issuer made in this Indenture or in any
certificate or other writing delivered pursuant hereto or in
connection herewith proving to have been incorrect in any
material respect as of the time when the same shall have been
made, and such default shall continue or not be cured, or the
circumstance or condition in respect of which such
misrepresentation or warranty was incorrect shall not have
been eliminated or otherwise cured, for a period of sixty (60)
days or in the case of a materially incorrect representation
and warranty thirty (30) days, after there shall have been
given, by registered or certified mail, to the Issuer by the
Indenture Trustee or to the Issuer and the Indenture Trustee
by the Noteholders of Notes evidencing
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not less than 25% of the principal amount of the Notes
Outstanding, a written notice specifying such default or
incorrect representation or warranty and requiring it to be
remedied and stating that such notice is a "Notice of Default"
hereunder; or
(iv) the filing of a decree or order for relief by
a court having jurisdiction in the premises in respect of the
Issuer or any substantial part of the Indenture Trust Estate
in an involuntary case under any applicable federal or State
bankruptcy, insolvency or other similar law now or hereafter
in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the
Issuer or for any substantial part of the Indenture Trust
Estate, or ordering the winding-up or liquidation of the
Issuer's affairs, and such decree or order shall remain
unstayed and in effect for a period of sixty (60) consecutive
days; or
(v) the commencement by the Issuer of a voluntary
case under any applicable federal or State bankruptcy,
insolvency or other similar law now or hereafter in effect, or
the consent by the Issuer to the entry of an order for relief
in an involuntary case under any such law, or the consent by
the Issuer to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any
substantial part of the Indenture Trust Estate, or the making
by the Issuer of any general assignment for the benefit of
creditors, or the failure by the Issuer generally to pay its
debts as such debts become due, or the taking of any action by
the Issuer in furtherance of any of the foregoing.
The Issuer shall deliver to the Indenture Trustee, within five (5) days after
the occurrence thereof, written notice in the form of an Officer's Certificate
of any event which with the giving of notice and the lapse of time would become
an Event of Default under clause (iii)
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above, its status and what action the Issuer is taking or proposes to take with
respect thereto.
SECTION 5.2. Acceleration of Maturity; Rescission and
Annulment. (a) If an Event of Default should occur and be continuing, then
and in every such case the Indenture Trustee or the Noteholders of Notes
evidencing not less than a majority of the principal amount of the Notes
Outstanding may declare all the Notes to be immediately due and payable, by a
notice in writing to the Issuer (and to the Indenture Trustee if given by
Noteholders), and upon any such declaration the unpaid principal amount of such
Notes, together with accrued and unpaid interest thereon through the date of
acceleration, shall become immediately due and payable.
(b) At any time after a declaration of acceleration of
maturity has been made and before a judgment or decree for payment of the
amount due has been obtained by the Indenture Trustee as hereinafter provided
in this Article V, the Noteholders of Notes evidencing not less than a majority
of the principal amount of the Notes Outstanding, by written notice to the
Issuer and the Indenture Trustee, may rescind and annul such declaration and
its consequences if:
(i) the Issuer has paid or deposited with the I
Indenture Trustee a sum sufficient to pay:
(A) all payments of principal of and
interest on all Notes and all other amounts that would then be
due hereunder or upon such Notes if the Event of Default
giving rise to such acceleration had not occurred; and
(B) all sums paid or advanced by the
Indenture Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Indenture Trustee
and its agents and counsel; and
(ii) all Events of Default, other than the
nonpayment of the principal of the Notes that has become due
solely by such acceleration, have been cured or waived as
provided in Section 5.12.
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No such rescission shall affect any subsequent default or impair any right
consequent thereto.
SECTION 5.3. Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee. (a) The Issuer covenants that if (i)
default is made in the payment of any interest on any Note when the same
becomes due and payable, and such default continues for a period of five (5)
days, or (ii) default is made in the payment of the principal of or any
installment of the principal of any Note when the same becomes due and payable,
the Issuer shall, upon demand of the Indenture Trustee, pay to the Indenture
Trustee, for the benefit of the Noteholders, the whole amount then due and
payable on such Notes for principal and interest, with interest upon the
overdue principal and, to the extent payment at such rate of interest shall be
legally enforceable, upon overdue installments of interest at the rate
specified in Section 2.8 and in addition thereto such further amount as shall
be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee and its agents, attorneys and counsel.
(b) In case the Issuer shall fail forthwith to pay such
amounts upon such demand, the Indenture Trustee, in its own name and as trustee
of an express trust, may institute a Proceeding for the collection of the sums
so due and unpaid, and may prosecute such Proceeding to judgment or final
decree, and may enforce the same against the Issuer or other obligor upon such
Notes and collect in the manner provided by law out of the property of the
Issuer or other obligor upon such Notes, wherever situated, the monies adjudged
or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the
Indenture Trustee may, as more particularly provided in Section 5.4, in its
discretion, proceed to protect and enforce its rights and the rights of the
Noteholders, by such appropriate Proceedings as the Indenture Trustee shall
deem most effective to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid
of the exercise of any power granted herein, or to enforce any other proper
remedy or legal or equitable right vested in the Indenture Trustee by this
Indenture or by law.
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(d) In case there shall be pending, relative to the Issuer or
any other obligor upon the Notes or any Person having or claiming an ownership
interest in the Indenture Trust Estate, Proceedings under Title 11 of the
United States Code or any other applicable federal or State bankruptcy,
insolvency or other similar law, or in case a receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, sequestrator or similar official
shall have been appointed for or taken possession of the Issuer or its property
or such other obligor or Person, or in case of any other comparable judicial
Proceedings relative to the Issuer or other obligor upon the Notes, or to the
creditors or property of the Issuer or such other obligor, the Indenture
Trustee, irrespective of whether the principal of any Notes shall then be due
and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Indenture Trustee shall have made any demand
pursuant to the provisions of this Section 5.3, shall be entitled and
empowered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the
whole amount of principal and interest owing and unpaid in
respect of the Notes and to file such other papers or
documents as may be necessary or advisable in order to have
the claims of the Indenture Trustee (including any claim for
reasonable compensation to the Indenture Trustee and each
predecessor Indenture Trustee, and their respective agents,
attorneys and counsel, and for reimbursement of all expenses
and liabilities incurred, and all advances and disbursements
made, by the Indenture Trustee and each predecessor Indenture
Trustee, except as a result of negligence or bad faith) and of
the Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and
regulations, to vote on behalf of the Noteholders in any
election of a trustee, a standby trustee or Person performing
similar functions in any such Proceedings;
(iii) to collect and receive any monies or other
property payable or deliverable on any such claims and to pay
all amounts received
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with respect to the claims of the Noteholders and of the
Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have
the claims of the Indenture Trustee or the Noteholders allowed
in any judicial proceedings relative to the Issuer, its
creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances and disbursements made, by the Indenture
Trustee and each predecessor Indenture Trustee, except as a result of
negligence or bad faith, and any other amounts due the Indenture Trustee
pursuant to Section 6.7.
(e) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Noteholder or to authorize
the Indenture Trustee to vote in respect of the claim of any Noteholder in any
such proceeding except, as aforesaid, to vote for the election of a trustee in
bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the Indenture Trustee
without the possession of any of the Notes or the production thereof in any
trial or other Proceedings relative thereto, and any such action or Proceedings
instituted by the Indenture Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment, subject to the payment of
the expenses, disbursements and
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compensation of the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, shall be for the ratable
benefit of the Noteholders in respect of which such judgment has been
recovered.
(g) In any Proceedings brought by the Indenture Trustee (and
also any Proceedings involving the interpretation of any provision of this
Indenture to which the Indenture Trustee shall be a party), the Indenture
Trustee shall be held to represent all the Noteholders, and it shall not be
necessary to make any Noteholder a party to any such Proceedings.
SECTION 5.4. Remedies; Priorities. (a) If an Event of
Default shall have occurred and be continuing, the Indenture Trustee may do one
or more of the following (subject to Section 5.5):
(i) institute Proceedings in its own name and as
trustee of an express trust for the collection of all amounts
then payable on the Notes or under this Indenture with respect
thereto, whether by declaration or otherwise, enforce any
judgment obtained, and collect from the Issuer and any other
obligor upon such Notes monies adjudged due;
(ii) institute Proceedings from time to time for
the complete or partial foreclosure of this Indenture with
respect to the Indenture Trust Estate;
(iii) exercise any remedies of a secured party
under the UCC and take any other appropriate action to protect
and enforce the rights and remedies of the Indenture Trustee
and the Noteholders; and
(iv) sell the Indenture Trust Estate or any
portion thereof or rights or interest therein, at one or more
public or private sales called and conducted in any manner
permitted by law;
provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Indenture Trust Estate
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following an Event of Default, other than an Event of Default described in
Section 5.1(i) or (ii) and other than if required to sell the Indenture Trust
Estate pursuant to the Trust Agreement as a result of the occurrence of an
Insolvency Event or a dissolution with respect to the Seller or the General
Partner, unless (A) the Noteholders of Notes evidencing 100% of the principal
amount of the Notes Outstanding consent thereto, (B) the proceeds of such sale
or liquidation are sufficient to pay in full the principal of and the accrued
interest on the outstanding Notes and Certificates or (C) the Indenture Trustee
determines (but shall have no obligation to make such determination) that the
Indenture Trust Estate will not continue to provide sufficient funds for the
payment of principal of and interest on the Notes as they would have become due
if the Notes had not been declared due and payable, and the Indenture Trustee
obtains the consent of Noteholders of Notes evidencing not less than 66-2/3% of
the principal amount of the Notes Outstanding. In determining such sufficiency
or insufficiency with respect to clauses (B) and (C) above, the Indenture
Trustee may, but need not, obtain and rely upon an opinion of an Independent
investment banking or accounting firm of national reputation as to the
feasibility of such proposed action and as to the sufficiency of the Indenture
Trust Estate for such purpose.
(b) If the Indenture Trustee collects any money or property
pursuant to this Article V, it shall pay out the money or property in the
following order:
(i) first, to the Indenture Trustee for amounts
due under Section 6.7;
(ii) second, to the Servicer for due and unpaid
Servicing Fees;
(iii) third, to Noteholders for amounts due and
unpaid on the Notes in respect of interest, ratably, without
preference or priority of any kind, according to the amounts
due and payable on the Notes for interest;
(iv) fourth, to Noteholders of the Class A-1 Notes
for amounts due and unpaid on the Class A-1 Notes for
principal, ratably, without preference or priority of any
kind,
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according to the amounts due and payable on the Class A-1
Notes for principal, until the principal amount of the
outstanding Class A-1 Notes is reduced to zero;
(v) fifth, to Noteholders of the Class A-2 Notes
for amounts due and unpaid on the Class A-2 Notes for
principal, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Class
A-2 Notes for principal, until the principal amount of the
outstanding Class A-2 Notes is reduced to zero;
(vi) sixth, to Noteholders of the Class A-3 Notes
for amounts due and unpaid on the Class A-3 Notes for
principal, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Class
A-3 Notes for principal, until the principal amount of the
outstanding Class A-3 Notes is reduced to zero;
(vii) seventh, to Noteholders of the Class A-4
Notes for amounts due and unpaid on the Class A-4 Notes for
principal, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Class
A-4 Notes for principal, until the principal amount of the
outstanding Class A-4 Notes is reduced to zero; and
(viii) eighth, to the Issuer for amounts required
to be distributed to the Certificateholders pursuant to the
Trust Agreement and the Sale and Servicing Agreement.
The Indenture Trustee may fix a record date and payment date for any payment to
Noteholders pursuant to this Section 5.4. At least fifteen (15) days before
such record date, the Issuer shall mail to each Noteholder and the Indenture
Trustee a notice that states the record date, the payment date and the amount
to be paid.
SECTION 5.5. Optional Preservation of the Receivables. If
the Notes have been declared to be due and payable under Section 5.2 following
an Event of
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Default, and such declaration and its consequences have not been rescinded and
annulled, the Indenture Trustee may, but need not, elect to maintain possession
of the Indenture Trust Estate and apply proceeds as if there had been no
declaration of acceleration; provided, however, that funds on deposit in the
Collection Account (including funds, if any, deposited therein from the Reserve
Account and the Payahead Account) shall be applied in accordance with such
declaration of acceleration in the manner specified in Section 4.6(c) of the
Sale and Servicing Agreement. It is the desire of the parties hereto and the
Noteholders that there be at all times sufficient funds for the payment of
principal of and interest on the Notes, and the Indenture Trustee shall take
such desire into account when determining whether or not to maintain possession
of the Indenture Trust Estate. In determining whether to maintain possession
of the Indenture Trust Estate, the Indenture Trustee may, but need not, obtain
and rely upon an opinion of an Independent investment banking or accounting
firm of national reputation as to the feasibility of such proposed action and
as to the sufficiency of the Indenture Trust Estate for such purpose.
SECTION 5.6. Limitation of Suits. No Noteholder shall have
any right to institute any Proceeding, judicial or otherwise, with respect to
this Indenture or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(a) such Noteholder has previously given written
notice to the Indenture Trustee of a continuing Event of
Default;
(b) the Noteholders of Notes evidencing not less
than 25% of the principal amount of the Notes Outstanding have
made written request to the Indenture Trustee to institute
such Proceeding in respect of such Event of Default in its own
name as Indenture Trustee hereunder;
(c) such Noteholder or Noteholders have offered to
the Indenture Trustee reasonable indemnity against the costs,
expenses and liabilities to be incurred in complying with such
request;
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(d) the Indenture Trustee for sixty (60) days
after its receipt of such notice, request and offer of
indemnity has failed to institute such Proceedings; and
(e) no direction inconsistent with such written
request has been given to the Indenture Trustee during such
sixty- day period by the Noteholders of Notes evidencing not
less than a majority of the principal amount of the Notes
Outstanding.
It is understood and intended that no one or more Noteholders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other
Noteholders or to obtain or to seek to obtain priority or preference over any
other Noteholders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Indenture Trustee shall receive conflicting
or inconsistent requests and indemnity from two or more groups of Noteholders,
each evidencing less than a majority of the principal amount of the Notes
Outstanding, the Indenture Trustee in its sole discretion may determine what
action, if any, shall be taken, notwithstanding any other provisions of this
Indenture.
SECTION 5.7. Unconditional Rights of Noteholders To Receive
Principal and Interest. Notwithstanding any other provisions in this
Indenture, any Noteholder shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest, if any, on
its Note on or after the respective due dates thereof expressed in such Note or
in this Indenture (or, in the case of redemption, on or after the Redemption
Date) and to institute suit for the enforcement of any such payment, and such
right shall not be impaired without the consent of such Noteholder.
SECTION 5.8. Restoration of Rights and Remedies. If the
Indenture Trustee or any Noteholder has instituted any Proceeding to enforce
any right or remedy under this Indenture and such Proceeding has been
discontinued or abandoned for any reason or has been determined adversely to
the Indenture Trustee or to such Noteholder,
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then and in every such case the Issuer, the Indenture Trustee and the
Noteholders shall, subject to any determination in such Proceeding, be restored
severally and respectively to their former positions hereunder, and thereafter
all rights and remedies of the Indenture Trustee and the Noteholders shall
continue as though no such Proceeding had been instituted.
SECTION 5.9. Rights and Remedies Cumulative. No right or
remedy herein conferred upon or reserved to the Indenture Trustee or to the
Noteholders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 5.10. Delay or Omission Not a Waiver. No delay or
omission of the Indenture Trustee or any Noteholder to exercise any right or
remedy accruing upon any Default or Event of Default shall impair any such
right or remedy or constitute a waiver of any such Default or Event of Default
or any acquiescence therein. Every right and remedy given by this Article V or
by law to the Indenture Trustee or to the Noteholders may be exercised from
time to time, and as often as may be deemed expedient, by the Indenture Trustee
or by the Noteholders, as the case may be.
SECTION 5.11. Control by Noteholders. The Noteholders of
Notes evidencing not less than a majority of the principal amount of the Notes
Outstanding shall have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the Indenture Trustee
with respect to the Notes or exercising any trust or power conferred on the
Indenture Trustee; provided that:
(a) such direction shall not be in conflict with any
rule of law or with this Indenture;
(b) subject to the express terms of Section 5.4, any
direction to the Indenture
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Trustee to sell or liquidate the Indenture Trust Estate shall
be by Noteholders of Notes evidencing not less than 100% of
the principal amount of the Notes Outstanding;
(c) if the conditions set forth in Section 5.5
have been satisfied and the Indenture Trustee elects to retain
the Indenture Trust Estate pursuant to such Section 5.5, then
any direction to the Indenture Trustee by Noteholders of Notes
evidencing less than 100% of the principal amount of the Notes
Outstanding to sell or liquidate the Indenture Trust Estate
shall be of no force and effect; and
(d) the Indenture Trustee may take any other
action deemed proper by the Indenture Trustee that is not
inconsistent with such direction.
Notwithstanding the rights of Noteholders set forth in this Section 5.11,
subject to Section 6.1, the Indenture Trustee need not take any action that it
determines might involve it in costs or expenses for which it would not be
adequately indemnified or expose it to personal liability or might materially
adversely affect or unduly prejudice the rights of any Noteholders not
consenting to such action.
SECTION 5.12. Waiver of Past Defaults. Prior to the
declaration of the acceleration of the maturity of the Notes as provided in
Section 5.2, the Noteholders of Notes evidencing not less than a majority of
the principal amount of the Notes Outstanding may waive any past Default or
Event of Default and its consequences except a Default (a) in the payment of
principal of or interest on any of the Notes or (b) in respect of a covenant or
provision hereof that cannot be amended, supplemented or modified without the
consent of each Noteholder. In the case of any such waiver, the Issuer, the
Indenture Trustee and the Noteholders shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be
deemed to have been cured and not to have
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occurred, and any Event of Default arising therefrom shall be deemed to have
been cured and not to have occurred, for every purpose of this Indenture; but
no such waiver shall extend to any subsequent or other Default or Event of
Default or impair any right consequent thereto.
SECTION 5.13. Undertaking for Costs. All parties to this
Indenture agree, and each Noteholder by such Noteholder's acceptance thereof
shall be deemed to have agreed, that any court may in its discretion require,
in any suit for the enforcement of any right or remedy under this Indenture, or
in any suit against the Indenture Trustee for any action taken, suffered or
omitted by it as Indenture Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.13 shall not apply to (a) any suit instituted by
the Indenture Trustee, (b) any suit instituted by any Noteholder or group of
Noteholders, in each case holding in the aggregate more than 10% of the
principal amount of the Notes Outstanding or (c) any suit instituted by any
Noteholder for the enforcement of the payment of principal of or interest on
any Note on or after the respective due dates expressed in such Note and in
this Indenture (or, in the case of redemption, on or after the Redemption
Date).
SECTION 5.14. Waiver of Stay or Extension Laws. The Issuer
covenants (to the extent that it may lawfully do so) that it shall not at any
time insist upon, or plead or in any manner whatsoever, claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, that may affect the covenants or the performance
of this Indenture, and the Issuer (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it shall not hinder, delay or impede the execution of any power herein
granted to the Indenture Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
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SECTION 5.15. Action on Notes. The Indenture Trustee's right
to seek and recover judgment on the Notes or under this Indenture shall not be
affected by the seeking, obtaining or application of any other relief under or
with respect to this Indenture. Neither the lien of this Indenture nor any
rights or remedies of the Indenture Trustee or the Noteholders shall be
impaired by the recovery of any judgment by the Indenture Trustee against the
Issuer or by the levy of any execution under such judgment upon any portion of
the Indenture Trust Estate or upon any of the assets of the Issuer. Any money
or property collected by the Indenture Trustee shall be applied in accordance
with Section 5.4(b).
SECTION 5.16. Performance and Enforcement of Certain
Obligations. (a) Promptly following a request from the Indenture Trustee to do
so, and at the Administrator's expense, the Issuer shall take all such lawful
action as the Indenture Trustee may request to compel or secure the performance
and observance by the Seller and the Servicer, as applicable, of each of their
obligations to the Issuer under or in connection with the Sale and Servicing
Agreement, or by the Seller and Ford Credit, as applicable, of each of their
obligations under or in connection with the Purchase Agreement, and to exercise
any and all rights, remedies, powers and privileges lawfully available to the
Issuer under or in connection with the Sale and Servicing Agreement and the
Purchase Agreement, as the case may be, to the extent and in the manner
directed by the Indenture Trustee, including the transmission of notices of
default on the part of the Seller, the Servicer or Ford Credit thereunder and
the institution of legal or administrative actions or proceedings to compel or
secure performance by the Seller or the Servicer of each of their obligations
under the Sale and Servicing Agreement or by the Seller or Ford Credit of each
of their obligations under the Purchase Agreement.
(b) If an Event of Default has occurred and is continuing,
the Indenture Trustee may, and at the direction (which direction shall be in
writing or by telephone, confirmed in writing promptly thereafter) of the
Noteholders of Notes evidencing not less than 66-2/3% of the principal amount
of the Notes Outstanding shall, exercise all rights, remedies, powers,
privileges and claims of the Issuer against the Seller or the Servicer
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under or in connection with the Sale and Servicing Agreement, or against the
Seller or Ford Credit under or in connection with the Purchase Agreement,
including the right or power to take any action to compel or secure performance
or observance by the Seller, the Servicer or Ford Credit, as the case may be,
of each of their obligations to the Issuer thereunder and to give any consent,
request, notice, direction, approval, extension, or waiver under the Sale and
Servicing Agreement or the Purchase Agreement, as the case may be, and any
right of the Issuer to take such action shall be suspended.
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ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.1. Duties of Indenture Trustee. (a) If an Event
of Default has occurred and is continuing, the Indenture Trustee shall exercise
the rights and powers vested in it by this Indenture and use the same degree of
care and skill in their exercise as a prudent Person would exercise or use
under the circumstances in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform
such duties and only such duties as are specifically set forth
in this Indenture and no implied covenants or obligations
shall be read into this Indenture against the Indenture
Trustee; and
(ii) in the absence of bad faith on its part, the
Indenture Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Indenture Trustee and, if required by the terms of this
Indenture, conforming to the requirements of this Indenture;
provided, however, that the Indenture Trustee shall examine
the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability
for its own negligent action, its own negligent failure to act or its own
willful misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section 6.1;
(ii) the Indenture Trustee shall not be liable for
any error of judgment made in good faith by a Trustee Officer
unless it is proved
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that the Indenture Trustee was negligent in ascertaining the
pertinent facts; and
(iii) the Indenture Trustee shall not be liable
with respect to any action it takes or omits to take in good
faith in accordance with a direction received by it pursuant
to Section 5.11.
(d) The Indenture Trustee shall not be liable for interest on
any money received by it except as the Indenture Trustee may agree in writing
with the Issuer.
(e) Money held in trust by the Indenture Trustee need not be
segregated from other funds except to the extent required by law or the terms
of this Indenture or the Sale and Servicing Agreement.
(f) No provision of this Indenture shall require the
Indenture Trustee to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties hereunder or in the exercise
of any of its rights or powers, if it shall have reasonable grounds to believe
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(g) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section 6.1 and to the provisions of
the TIA.
(h) The Indenture Trustee shall not be charged with knowledge
of any Event of Default unless either (1) a Trustee Officer shall have actual
knowledge of such Event of Default or (2) written notice of such Event of
Default shall have been given to the Indenture Trustee in accordance with the
provisions of this Indenture.
SECTION 6.2. Rights of Indenture Trustee. (a) The Indenture
Trustee may rely and shall be protected in acting or refraining from acting
upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture or other paper or
document believed by it to be genuine and to have been signed or presented by
the
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proper Person. The Indenture Trustee need not investigate any fact or matters
stated in any such document.
(b) Before the Indenture Trustee acts or refrains from
acting, it may require an Officer's Certificate or an Opinion of Counsel. The
Indenture Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on an Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian or nominee, and the Indenture
Trustee shall not be responsible for any misconduct or negligence on the part
of, or for the supervision of, any such agent, attorney, custodian or nominee
appointed with due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action
it takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; provided, however, that such action or omission by
the Indenture Trustee does not constitute willful misconduct, negligence or bad
faith.
(e) The Indenture Trustee may consult with counsel, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Notes shall be full and complete authorization and protection
from liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of such
counsel.
(f) The Indenture Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Indenture or to honor
the request or direction of any of the Noteholders pursuant to this Indenture
unless such Noteholders shall have offered to the Indenture Trustee reasonable
security or indemnity against the reasonable costs, expenses, disbursements,
advances and liabilities which might be incurred by it, its agents and its
counsel in compliance with such request or direction.
(g) Any request or direction of the Issuer mentioned herein
shall be sufficiently evidenced by an Issuer Request.
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SECTION 6.3. Individual Rights of Indenture Trustee. The
Indenture Trustee, in its individual or any other capacity, may become the
owner or pledgee of Notes and may otherwise deal with the Issuer or its
Affiliates with the same rights it would have if it were not Indenture Trustee.
Any Note Paying Agent, Note Registrar, co-registrar or co-paying agent
hereunder may do the same with like rights.
SECTION 6.4. Indenture Trustee's Disclaimer. The Indenture
Trustee (i) shall not be responsible for, and makes no representation as to,
the validity or adequacy of this Indenture or the Notes and (ii) shall not be
accountable for the Issuer's use of the proceeds from the Notes, or responsible
for any statement of the Issuer in this Indenture or in any document issued in
connection with the sale of the Notes or in the Notes (all of which shall be
taken as statements of the Issuer) other than the Indenture Trustee's
certificate of authentication.
SECTION 6.5. Notice of Defaults; Insolvency or Dissolution of
Depositor or General Partner. (a) If a Default occurs and is continuing and
if it is known to a Trustee Officer of the Indenture Trustee, the Indenture
Trustee shall mail to each Noteholder notice of such Default within ninety (90)
days after it occurs. Except in the case of a Default in payment of principal
of or interest on any Note (including payments pursuant to the mandatory
redemption provisions of such Note), the Indenture Trustee may withhold the
notice if and so long as a committee of its Trustee Officers in good faith
determines that withholding the notice is in the interests of Noteholders.
(b) If the Indenture Trustee receives notice from the Owner
Trustee of the occurrence of an Insolvency Event or a dissolution with respect
to the Depositor or the General Partner pursuant to Section 9.2 of the Trust
Agreement, the Indenture Trustee shall give prompt written notice to the
Noteholders of the occurrence of such event. If the Indenture Trustee receives
notice from the Owner Trustee pursuant to such Section 9.2 that the requisite
percentages of Noteholders, Certificateholders and holders of interests, if
any, in the Reserve Account disapprove of the liquidation of the Receivables
and termination of the Trust pursuant to such Section 9.2, the Indenture
Trustee, at the expense of the Issuer,
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shall (i) appoint an entity acceptable to Ford Credit to acquire an interest in
the Trust and to act as substitute "general partner" of the Trust for federal
income tax purposes and (ii) obtain an Opinion of Counsel that the Trust will
not thereafter be classified as an association (or publicly traded partnership)
taxable as a corporation for federal income tax and Applicable Tax State
purposes. If the Indenture Trustee is unable to locate such an entity or
obtain such Opinion of Counsel within ninety (90) days after the date of the
applicable Insolvency Event or dissolution, the Indenture Trustee shall so
notify the Owner Trustee promptly in writing. Upon termination of the Trust
pursuant to such Section 9.2, the Indenture Trustee shall, if so directed by
the Owner Trustee, sell the assets of the Trust (other than the Trust Accounts
and the Certificate Distribution Account) in a commercially reasonable manner
and on commercially reasonable terms. The proceeds of such a sale of the
assets of the Trust shall be treated as collections of Receivables under the
Sale and Servicing Agreement and deposited in the Collection Account and the
Notes and Certificates shall be paid in accordance with Section 4.6 of the Sale
and Servicing Agreement.
SECTION 6.6. Reports by Indenture Trustee to Noteholders.
Upon delivery to the Indenture Trustee by the Servicer of such information
prepared by the Servicer pursuant to Section 3.9 of the Sale and Servicing
Agreement as may be required to enable each Noteholder to prepare its federal
and State income tax returns, the Indenture Trustee shall deliver such
information to the Noteholders.
SECTION 6.7. Compensation and Indemnity. (a) The Issuer
shall, or shall cause the Administrator to, pay to the Indenture Trustee from
time to time reasonable compensation for its services. The Indenture Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Issuer shall, or shall cause the Administrator to,
reimburse the Indenture Trustee for all reasonable out-of-pocket expenses
incurred or made by it, including costs of collection, in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Indenture
Trustee's agents, counsel, accountants and experts. The Issuer shall, or shall
cause the Administrator to, indem-
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nify the Indenture Trustee for, and to hold it harmless against, any and all
loss, liability or expense (including attorneys' fees) incurred by it in
connection with the administration of this trust and the performance of its
duties hereunder, including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder. The Indenture Trustee shall notify the Issuer
and the Administrator promptly of any claim for which it may seek indemnity.
Failure by the Indenture Trustee to so notify the Issuer and the Administrator
shall not relieve the Issuer or the Administrator of its obligations hereunder.
The Issuer shall, or shall cause the Administrator to, defend any such claim,
and the Indenture Trustee may have separate counsel and the Issuer shall, or
shall cause the Administrator to, pay the fees and expenses of such counsel.
Neither the Issuer nor the Administrator need reimburse any expense or
indemnity against any loss, liability or expense incurred by the Indenture
Trustee through the Indenture Trustee's own willful misconduct, negligence or
bad faith.
(b) The Issuer's payment obligations to the Indenture Trustee
pursuant to this Section 6.7 shall survive the resignation or removal of the
Indenture Trustee and the discharge of this Indenture. When the Indenture
Trustee incurs expenses after the occurrence of a Default specified in Section
5.1(iv) or (v) with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the United States Code
or any other applicable federal or State bankruptcy, insolvency or similar law.
SECTION 6.8. Replacement of Indenture Trustee. (a) No
resignation or removal of the Indenture Trustee, and no appointment of a
successor Indenture Trustee, shall become effective until the acceptance of
appointment by the successor Indenture Trustee pursuant to this Section 6.8 and
payment in full of all sums due to the Indenture Trustee pursuant to Section
6.7. The Indenture Trustee may resign at any time by so notifying the Issuer.
The Noteholders of Notes evidencing not less than a majority in principal
amount of the Notes Outstanding may remove the Indenture Trustee without cause
by so notifying the Indenture Trustee and the Issuer and may appoint
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a successor Indenture Trustee. The Issuer shall remove the Indenture Trustee
if:
(i) the Indenture Trustee fails to comply with Section
6.11;
(ii) an Insolvency Event occurs with respect to the
Indenture Trustee;
(iii) a receiver or other public officer takes charge of
the Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of
acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in the
office of Indenture Trustee for any reason (the Indenture Trustee in such event
being referred to herein as the retiring Indenture Trustee), the Issuer shall
promptly appoint a successor Indenture Trustee.
(b) Any successor Indenture Trustee shall deliver a written
acceptance of its appointment to the retiring Indenture Trustee and to the
Issuer. Thereupon, if all sums due the retiring Indenture Trustee pursuant to
Section 6.7 have been paid in full, the resignation or removal of the retiring
Indenture Trustee shall become effective, and the successor Indenture Trustee
shall have all the rights, powers and duties of the Indenture Trustee under
this Indenture. The successor Indenture Trustee shall mail a notice of its
succession to Noteholders. If all sums due the retiring Indenture Trustee
pursuant to Section 6.7 have been paid in full, the retiring Indenture Trustee
shall promptly transfer all property held by it as Indenture Trustee to the
successor Indenture Trustee.
(c) If a successor Indenture Trustee does not take office
within sixty (60) days after the retiring Indenture Trustee resigns or is
removed, the retiring Indenture Trustee, the Issuer or the Noteholders of Notes
evidencing not less than a majority in principal amount of the Notes
Outstanding may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee. If the Indenture Trustee fails
to
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comply with Section 6.11, any Noteholder who has been a bona fide Noteholder
for at least six (6) months may petition any court of competent jurisdiction
for the removal of the Indenture Trustee and the appointment of a successor
Indenture Trustee.
(d) Notwithstanding the replacement of the Indenture Trustee
pursuant to this Section 6.8, the obligations of the Issuer and the
Administrator under Section 6.7 shall continue for the benefit of the retiring
Indenture Trustee.
SECTION 6.9. Successor Indenture Trustee by Merger. (a) If
the Indenture Trustee consolidates with, merges or converts into, or transfers
all or substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation or banking association without any further act shall be the
successor Indenture Trustee; provided that such corporation or banking
association shall be otherwise qualified and eligible under Section 6.11. The
Indenture Trustee shall provide the Rating Agencies with prior written notice
of any such transaction.
(b) In case at the time such successor or successors by
merger, conversion or consolidation to the Indenture Trustee shall succeed to
the trusts created by this Indenture any of the Notes shall have been
authenticated but not delivered, any such successor to the Indenture Trustee
may adopt the certificate of authentication of any predecessor trustee, and
deliver such Notes so authenticated; and in case at that time any of the Notes
shall not have been authenticated, any successor to the Indenture Trustee may
authenticate such Notes either in the name of any predecessor hereunder or in
the name of the successor to the Indenture Trustee. In all such cases such
certificates shall have the full force which it is anywhere in the Notes or in
this Indenture provided that the certificate of the Indenture Trustee shall
have.
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee. (a) Notwithstanding any other provisions of this
Indenture, at any time, for the purpose of meeting any legal requirement of any
jurisdiction in which any part of the Indenture Trust Estate may at the time be
located, the Indenture Trustee
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shall have the power and may execute and deliver an instrument to appoint one
or more Persons to act as a co-trustee or co-trustees, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such Person
or Persons, in such capacity and for the benefit of the Noteholders, such title
to the Indenture Trust Estate, or any part hereof, and, subject to the other
provisions of this Section 6.10, such powers, duties, obligations, rights and
trusts as the Indenture Trustee may consider necessary or desirable. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 6.11 and no notice to
Noteholders of the appointment of any co-trustee or separate trustee shall be
required under Section 6.8.
(b) Every separate trustee and co-trustee shall, to the
extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon the Indenture Trustee shall be
conferred or imposed upon and exercised or performed by the
Indenture Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or
co-trustee shall not be authorized to act separately without
the Indenture Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any
particular act or acts are to be performed the Indenture
Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Indenture
Trust Estate or any portion thereof in any such jurisdiction)
shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the
Indenture Trustee;
(ii) no trustee hereunder shall be personally
liable by reason of any act or omission of any other trustee
hereunder; and
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(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the
Indenture Trustee shall be deemed to have been given to each of the then
separate trustees and co-trustees, as effectively as if given to each of them.
Every instrument appointing any separate trustee or co- trustee shall refer to
this Indenture and the conditions of this Article VI. Each separate trustee
and co-trustee, upon its acceptance of the trusts conferred, shall be vested
with the estates or property specified in its instrument of appointment, either
jointly with the Indenture Trustee or separately, as may be provided therein,
subject to all the provisions of this Indenture, specifically including every
provision of this Indenture relating to the conduct of, affecting the liability
of, or affording protection to, the Indenture Trustee. Every such instrument
shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time
constitute the Indenture Trustee its agent or attorney-in-fact with full power
and authority, to the extent not prohibited by law, to do any lawful act under
or in respect of this Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall vest
in and be exercised by the Indenture Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
SECTION 6.11. Eligibility; Disqualification. The Indenture
Trustee shall at all times satisfy the requirements of TIA Section 310(a). The
Indenture Trustee or its parent shall have a combined capital and surplus of at
least $50,000,000 as set forth in its most recent published annual report of
condition and shall have a long-term debt rating of investment grade by each of
the Rating Agencies or shall otherwise be acceptable to each of the Rating
Agencies. The Indenture Trustee shall comply with TIA Section 310(b).
SECTION 6.12. Preferential Collection of Claims Against
Issuer. The Indenture Trustee shall comply with TIA Section 311(a), excluding
any creditor
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relationship listed in TIA Section 311(b). An Indenture Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
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ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1. Issuer To Furnish Indenture Trustee Names and
Addresses of Noteholders. The Issuer shall furnish or cause to be furnished to
the Indenture Trustee (a) not more than five (5) days after each Record Date, a
list, in such form as the Indenture Trustee may reasonably require, of the
names and addresses of the Noteholders as of such Record Date and (b) at such
other times as the Indenture Trustee may request in writing, within thirty (30)
days after receipt by the Issuer of any such request, a list of similar form
and content as of a date not more than ten (10) days prior to the time such
list is furnished; provided, however, that so long as (i) the Indenture Trustee
is the Note Registrar or (ii) the Notes are issued as Book-Entry Notes, no such
list shall be required to be furnished.
SECTION 7.2. Preservation of Information; Communications to
Noteholders. (a) The Indenture Trustee shall preserve, in as current a form
as is reasonably practicable, the names and addresses of the Noteholders
contained in the most recent list furnished to the Indenture Trustee as
provided in Section 7.1 and the names and addresses of Noteholders received by
the Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee
may destroy any list furnished to it as provided in such Section 7.1 upon
receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section
312(b) with other Noteholders with respect to their rights under this Indenture
or under the Notes. Upon receipt by the Indenture Trustee of any request by
three or more Noteholders or by one or more Noteholders of Notes evidencing not
less than 25% of the Notes Outstanding to receive a copy of the current list of
Noteholders (whether or not made pursuant to TIA Section 312(b)), the Indenture
Trustee shall promptly notify the Administrator thereof by providing to the
Administrator a copy of such request and a copy of the list of Noteholders
produced in response thereto.
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(c) The Issuer, the Indenture Trustee and the Note Registrar
shall have the protection of TIA Section 312(c).
SECTION 7.3. Reports by Issuer. (a) The Issuer shall:
(i) file with the Indenture Trustee, within
fifteen (15) days after the Issuer is required to file the
same with the Commission, copies of the annual reports and of
the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may
from time to time by rules and regulations prescribe) that the
Issuer may be required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the
Commission in accordance with the rules and regulations
prescribed from time to time by the Commission such additional
information, documents and reports with respect to compliance
by the Issuer with the conditions and covenants of this
Indenture as may be required from time to time by such rules
and regulations; and
(iii) supply to the Indenture Trustee (and the
Indenture Trustee shall transmit by mail to all Noteholders
described in TIA Section 313(c)) such summaries of any
information, documents and reports required to be filed by the
Issuer pursuant to clauses (i) and (ii) of this Section 7.3(a)
and by rules and regulations prescribed from time to time by
the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year
of the Issuer shall correspond to the calendar year.
SECTION 7.4. Reports by Indenture Trustee. (a) If required
by TIA Section 313(a), within sixty (60) days after each May 15, beginning with
May 15, 1997, the Indenture Trustee shall mail to each Noteholder as required
by TIA Section 313(c) a brief report dated as of
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such date that complies with TIA Section 313(a). The Indenture Trustee also
shall comply with TIA Section 313(b).
(b) A copy of each report at the time of its mailing to
Noteholders shall be filed by the Indenture Trustee with the Commission and
each stock exchange, if any, on which the Notes are listed. The Issuer shall
notify the Indenture Trustee if and when the Notes are listed on any stock
exchange.
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ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1. Collection of Money. Except as otherwise
expressly provided herein, the Indenture Trustee may demand payment or delivery
of, and shall receive and collect, directly and without intervention or
assistance of any fiscal agent or other intermediary, all money and other
property payable to or receivable by the Indenture Trustee pursuant to this
Indenture and the Sale and Servicing Agreement. The Indenture Trustee shall
apply all such money received by it as provided in this Indenture and the Sale
and Servicing Agreement. Except as otherwise expressly provided in this
Indenture, if any default occurs in the making of any payment or performance
under any agreement or instrument that is part of the Indenture Trust Estate,
the Indenture Trustee may take such action as may be appropriate to enforce
such payment or performance, including the institution and prosecution of
appropriate Proceedings. Any such action shall be without prejudice to any
right to claim a Default or Event of Default under this Indenture and any right
to proceed thereafter as provided in Article V.
SECTION 8.2. Trust Accounts and Payahead Account. (a) On or
prior to the Closing Date, the Issuer shall cause the Servicer to establish and
maintain the Trust Accounts and the Payahead Account as provided in Sections
4.1 and 4.7 of the Sale and Servicing Agreement.
(b) On or before each Distribution Date, the Servicer shall
deposit all Available Funds with respect to the preceding Collection Period in
the Collection Account as provided in Section 4.2 of the Sale and Servicing
Agreement. On or before each Distribution Date, all amounts required to be
deposited in the Note Payment Account with respect to the preceding Collection
Period pursuant to Section 4.6 of the Sale and Servicing Agreement shall be
withdrawn by the Indenture Trustee from the Collection Account and deposited to
the Note Payment Account for payment to Noteholders on such Distribution Date.
(c) On each Distribution Date and Redemption Date, the
Indenture Trustee (or any other Note Paying Agent) shall distribute all amounts
deposited in the Note
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Payment Account pursuant to paragraph (b) above to Noteholders in respect of
the Notes to the extent of amounts payable on the Notes for principal and
interest in the following amounts and in the following order of priority
(except as otherwise provided in Section 5.4(b)):
(i) the Accrued Note Interest, to the Noteholders;
provided that if there are not sufficient funds received to pay the
entire amount of the Accrued Note Interest, the amounts so received
shall be applied to the payment of such interest on the Notes on a pro
rata basis;
(ii) the Noteholders' Principal Payment Amount, to the
Noteholders of the Class A-1 Notes until the principal amount of the
outstanding Class A-1 Notes has been paid in full; provided that if
there are not sufficient funds received to pay the principal amount of
the outstanding Class A-1 Notes in full, the amounts so received shall
be applied to the payment of principal on the Class A-1 Notes on a
pro rata basis;
(iii) the Noteholders' Principal Payment Amount, to the
Noteholders of the Class A-2 Notes until the principal amount of the
outstanding Class A-2 Notes has been paid in full; provided that if
there are not sufficient funds received to pay the principal amount of
the outstanding Class A-2 Notes in full, the amounts so received shall
be applied to the payment of principal on the Class A-2 Notes on a
pro rata basis;
(iv) the Noteholders' Principal Payment Amount, to the
Noteholders of the Class A-3 Notes until the principal amount of the
outstanding Class A-3 Notes has been paid in full; provided that if
there are not sufficient funds received to pay the principal amount of
the outstanding Class A-3 Notes in full, the amounts so received shall
be applied to the payment of principal on the Class A-3 Notes on a
pro rata basis; and
(v) the Noteholders' Principal Payment Amount, to the
Noteholders of the Class A-4 Notes until the principal amount of the
outstanding Class
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A-4 Notes has been paid in full; provided that if there are not
sufficient funds received to pay the principal amount of the
outstanding Class A-4 Notes in full,the amounts so received shall be
applied to the payment of principal on the Class A-4 Notes on a pro
rata basis.
SECTION 8.3. General Provisions Regarding Accounts. (a) So
long as no Default or Event of Default shall have occurred and be continuing,
all or a portion of the funds in the Collection Account, the Payahead Account
and the Reserve Account shall be invested by the Indenture Trustee at the
direction of the Servicer in Permitted Investments as provided in Sections 4.1
and 4.7 of the Sale and Servicing Agreement. All income or other gain (net of
losses and investment expenses) from investments of monies deposited in the
Collection Account, the Payahead Account and the Reserve Account shall be
withdrawn by the Indenture Trustee from such accounts (but only under the
circumstances set forth in the Sale and Servicing Agreement in the case of the
Reserve Account) and distributed as provided in Sections 4.1 and 4.7 of the
Sale and Servicing Agreement. The Servicer shall not direct the Indenture
Trustee to make any investment of any funds or to sell any investment held in
any of the Trust Accounts unless the security interest Granted and perfected in
such account will continue to be perfected in such investment or the proceeds
of such sale, in either case without any further action by any Person, and, in
connection with any direction to the Indenture Trustee to make any such
investment or sale, if requested by the Indenture Trustee, the Issuer shall
deliver to the Indenture Trustee an Opinion of Counsel, acceptable to the
Indenture Trustee, to such effect.
(b) Subject to Section 6.1(c), the Indenture Trustee shall
not in any way be held liable by reason of any insufficiency in any of the
Trust Accounts or in the Payahead Account resulting from any loss on any
Permitted Investment included therein, except for losses attributable to the
Indenture Trustee's failure to make payments on such Permitted Investments
issued by the Indenture Trustee, in its commercial capacity as principal
obligor and not as trustee, in accordance with their terms.
(c) If (i) the Servicer shall have failed to give investment
directions for any funds on deposit in
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the Collection Account, the Payahead Account or the Reserve Account to the
Indenture Trustee by 11:00 a.m. New York Time (or such other time as may be
agreed by the Issuer and Indenture Trustee) on the Business Day preceding each
Distribution Date or (ii) to the knowledge of a Trustee Officer of the
Indenture Trustee, a Default or Event of Default shall have occurred and be
continuing with respect to the Notes but the Notes shall not have been declared
due and payable pursuant to Section 5.2 or (iii) if such Notes shall have been
declared due and payable following an Event of Default, amounts collected or
receivable from the Indenture Trust Estate are being applied in accordance with
Section 5.4 as if there had not been such a declaration, then the Indenture
Trustee shall, to the fullest extent practicable, invest and reinvest funds in
the Collection Account, the Payahead Account or the Reserve Account, as the
case may be, in one or more Permitted Investments described in clause (b) of
the definition thereof.
SECTION 8.4. Release of Indenture Trust Estate. (a) Subject
to the payment of its fees and expenses pursuant to Section 6.7, the Indenture
Trustee may, and when required by the provisions of this Indenture shall,
execute instruments to release property from the lien of this Indenture, or
convey the Indenture Trustee's interest in the same, in a manner and under
circumstances that are not inconsistent with the provisions of this Indenture.
No party relying upon an instrument executed by the Indenture Trustee as
provided in this Article VIII shall be bound to ascertain the Indenture
Trustee's authority, inquire into the satisfaction of any conditions precedent
or see to the application of any monies.
(b) The Indenture Trustee shall, at such time as there are no
Notes Outstanding and all sums due the Indenture Trustee pursuant to Section
6.7 have been paid in full, release any remaining portion of the Indenture
Trust Estate that secured the Notes from the lien of this Indenture and release
to the Issuer or any other Person entitled thereto any funds then on deposit in
the Trust Accounts. The Indenture Trustee shall release property from the lien
of this Indenture pursuant to this Section 8.4(b) only upon receipt of an
Issuer Request accompanied by an Officer's Certificate, an Opinion of Counsel
and (if required by the TIA) Independent Certificates in
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accordance with TIA Sections 314(c) and 314(d)(1) meeting the applicable
requirements of Section 11.1.
(c) Each Noteholder or Note Owner, by its acceptance of a
Note or, in the case of a Note Owner, a beneficial interest in a Note,
acknowledges that from time to time the Indenture Trustee shall release the
lien of this Indenture on any Receivable to be sold to (i) the Seller in
accordance with Section 2.3 of the Sale and Servicing Agreement and (ii) to the
Servicer in accordance with Section 3.7 of the Sale and Servicing Agreement.
SECTION 8.5. Opinion of Counsel. The Indenture Trustee shall
receive at least seven (7) days notice when requested by the Issuer to take any
action pursuant to Section 8.4(a), accompanied by copies of any instruments
involved, and the Indenture Trustee shall also require, except in connection
with any action contemplated by Section 8.4(c), as a condition to such action,
an Opinion of Counsel, in form and substance satisfactory to the Indenture
Trustee, stating the legal effect of any such action, outlining the steps
required to complete the same, and concluding that all conditions precedent to
the taking of such action have been complied with and such action will not
materially and adversely impair the security for the Notes or the rights of the
Noteholders in contravention of the provisions of this Indenture; provided,
however, that such Opinion of Counsel shall not be required to express an
opinion as to the fair value of the Indenture Trust Estate. Counsel rendering
any such opinion may rely, without independent investigation, on the accuracy
and validity of any certificate or other instrument delivered to the Indenture
Trustee in connection with any such action.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent of
Noteholders. (a) Without the consent of the Noteholders but with prior notice
to the Rating Agencies, the Issuer and the Indenture Trustee, when authorized
by an Issuer Order, at any time and from time to time, may enter into one or
more indentures supplemental hereto (which shall conform to the provisions of
the Trust Indenture Act as in force at the date of the execution thereof), in
form satisfactory to the Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any
property at any time subject to the lien of this Indenture, or
better to assure, convey and confirm unto the Indenture Trustee
any property subject or required to be subjected to the lien of
this Indenture, or to subject to the lien of this Indenture
additional property;
(ii) to evidence the succession, in compliance
with the applicable provisions hereof, of another Person to
the Issuer, and the assumption by any such successor of the
covenants of the Issuer herein and in the Notes contained;
(iii) to add to the covenants of the Issuer, for
the benefit of the Noteholders, or to surrender any right or
power herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or
pledge any property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or
supplement any provision herein or in any supplemental
indenture that may be inconsistent with any other provision
herein or in any supplemental indenture or to make any other
provisions with respect to matters or questions arising under
this Indenture or under any sup-
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plemental indenture which shall not be inconsistent with the
provisions of the Indenture; provided that such action shall
not materially adversely affect the interests of the
Noteholders;
(vi) to evidence and provide for the acceptance of
the appointment hereunder by a successor trustee with respect
to the Notes and to add to or change any of the provisions of
this Indenture as shall be necessary to facilitate the
administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI; or
(vii) to modify, eliminate or add to the
provisions of this Indenture to such extent as shall be
necessary to affect the qualification of this Indenture under
the TIA or under any similar federal statute hereafter enacted
and to add to this Indenture such other provisions as may be
expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the
execution of any such supplemental indenture and to make any further
appropriate agreements and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by
an Issuer Order, may, also without the consent of any of the Noteholders but
with prior notice to the Rating Agencies, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner (other than the modifications set forth in Section 9.2)
the rights of the Noteholders under this Indenture; provided, however, that (i)
such action shall not, as evidenced by an Opinion of Counsel, adversely affect
in any material respect the interests of any Noteholder, (ii) the Rating Agency
Condition shall have been satisfied with respect to such action and (iii) such
action shall not, as evidenced by an Opinion of Counsel, cause the Issuer to be
characterized for federal or any then Applicable Tax State income tax purposes
as an association taxable as a corporation or otherwise have any material
adverse impact on the federal or any then
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Applicable Tax State income taxation of any Notes Outstanding or outstanding
Certificates or any Noteholder or Certificateholder.
SECTION 9.2. Supplemental Indentures with Consent of
Noteholders. The Issuer and the Indenture Trustee, when authorized by an
Issuer Order, also may, with prior notice to the Rating Agencies and with the
consent of the Noteholders of Notes evidencing not less than a majority of the
principal amount of the Notes Outstanding, by Act of such Noteholders delivered
to the Issuer and the Indenture Trustee, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or modifying
in any manner the rights of the Noteholders under this Indenture; provided,
however, that (i) the Rating Agency Condition shall have been satisfied with
respect to such action and (ii) such action shall not, as evidenced by an
Opinion of Counsel, cause the Issuer to be characterized for federal or any
then Applicable Tax State income tax purposes as an association taxable as a
corporation or otherwise have any material adverse impact on the federal or any
then Applicable Tax State income taxation of any Notes Outstanding or
outstanding Certificates or any Noteholder or Certificateholder; and provided,
further, that no such supplemental indenture shall, without the consent of the
Noteholder of each Outstanding Note affected thereby:
(i) change the Final Scheduled Distribution Date
or the date of payment of any installment of principal of or
interest on any Note, or reduce the principal amount thereof,
the interest rate thereon or the Redemption Price with respect
thereto, change the provisions of this Indenture relating to
the application of collections on, or the proceeds of the sale
of, the Indenture Trust Estate to payment of principal of or
interest on the Notes, or change any place of payment where,
or the coin or currency in which, any Note or the interest
thereon is payable, or impair the right to institute suit for
the enforcement of the provisions of this Indenture requiring
the application of funds available therefor, as provided in
Article V, to the payment of any
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such amount due on the Notes on or after the respective due
dates thereof (or, in the case of redemption, on or after the
Redemption Date);
(ii) reduce the percentage of the principal amount
of the Notes Outstanding, the consent of the Noteholders of
which is required for any such supplemental indenture, or the
consent of the Noteholders of which is required for any waiver
of compliance with certain provisions of this Indenture or
certain Defaults or Events of Default hereunder and their
conse- quences provided for in this Indenture;
(iii) modify or alter the provisions of the proviso
to the definition of the term "Outstanding";
(iv) reduce the percentage of the principal amount
of the Notes Outstanding required to direct the Indenture
Trustee to sell or liquidate the Indenture Trust Estate
pursuant to Section 5.4 if the proceeds of such sale or
liquidation would be insufficient to pay the principal amount
and accrued but unpaid interest on the Notes and the
Certificates;
(v) modify any provision of this Indenture
specifying a percentage of the aggregate principal amount of
the Notes necessary to amend this Indenture or the other Basic
Documents except to increase any percentage specified herein
or to provide that certain additional provisions of this
Indenture or the other Basic Documents cannot be modified or
waived without the consent of the Noteholder of each
Outstanding Note affected thereby;
(vi) modify any of the provisions of this
Indenture in such manner as to affect the calculation of the
amount of any payment of interest or principal due on any Note
on any Distribution Date (including the calculation of any of
the individual components of such calculation) or to affect
the rights of the Noteholders to the benefit of any provisions
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for the mandatory redemption of the Notes contained herein; or
(vii) permit the creation of any lien ranking
prior to or on a parity with the lien of this Indenture with
respect to any part of the Indenture Trust Estate or, except
as otherwise permitted or contemplated herein, terminate the
lien of this Indenture on any such collateral at any time
subject hereto or deprive any Noteholder of the security
provided by the lien of this Indenture.
The Indenture Trustee may in its discretion or upon receipt of an Opinion of
Counsel determine whether or not any Notes would be affected by any
supplemental indenture and any such determination shall be conclusive upon the
Noteholders of all Notes, whether theretofore or thereafter authenticated and
delivered hereunder. The Indenture Trustee shall not be liable for any such
determination made in good faith.
It shall not be necessary for any Act of Noteholders under
this Section 9.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
Promptly after the execution by the Issuer and the Indenture
Trustee of any supplemental indenture pursuant to this Section 9.2, the
Indenture Trustee shall mail to the Noteholders of the Notes to which such
amendment or supplemental indenture relates a notice setting forth in general
terms the substance of such supplemental indenture. Any failure of the
Indenture Trustee to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
indenture.
SECTION 9.3. Execution of Supplemental Indentures. In
executing, or permitting the additional trusts created by, any supplemental
indenture permitted by this Article IX or the modification thereby of the
trusts created by this Indenture, the Indenture Trustee shall be entitled to
receive, and subject to Sections 6.1 and 6.2, shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental
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indenture is authorized or permitted by this Indenture and that all conditions
precedent to the execution and delivery of such supplemental indenture have
been satisfied. The Indenture Trustee may, but shall not be obligated to,
enter into any such supplemental indenture that affects the Indenture Trustee's
own rights, duties, liabilities or immunities under this Indenture or
otherwise.
SECTION 9.4. Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and shall be deemed to be modified and amended in accordance
therewith with respect to the Notes affected thereby, and the respective
rights, limitations of rights, obligations, duties, liabilities and immunities
under this Indenture of the Indenture Trustee, the Issuer and the Noteholders
shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
SECTION 9.5. Conformity with Trust Indenture Act. Every
amendment of this Indenture and every supplemental indenture executed pursuant
to this Article IX shall conform to the requirements of the Trust Indenture Act
as then in effect so long as this Indenture shall then be qualified under the
Trust Indenture Act.
SECTION 9.6. Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article IX may, and if required by the Indenture
Trustee shall, bear a notation in form approved by the Indenture Trustee as to
any matter provided for in such supplemental indenture. If the Issuer or the
Indenture Trustee shall so determine, new Notes so modified as to conform, in
the opinion of the Indenture Trustee and the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Indenture Trustee in exchange for outstanding Notes.
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ARTICLE X
REDEMPTION OF NOTES
SECTION 10.1. Redemption. (a) The Notes are subject to
redemption in whole, but not in part, at the direction of the Servicer pursuant
to Section 9.1 of the Sale and Servicing Agreement, on any Distribution Date on
which the Servicer exercises its option to purchase the assets of the Issuer
pursuant to such Section 9.1, and the amount paid by the Servicer shall be
treated as collections of Receivables and applied to pay the unpaid principal
amount of the Notes and the Certificate Balance of the Certificates plus
accrued and unpaid interest thereon. The Servicer or the Issuer shall furnish
the Rating Agencies and the Noteholders notice of such redemption. If the
Notes are to be redeemed pursuant to this Section 10.1(a), the Servicer or the
Issuer shall furnish notice of such election to the Indenture Trustee not later
than forty (40) days prior to the Redemption Date and the Issuer shall deposit
by 10:00 a.m. (New York City time) on the Redemption Date with the Indenture
Trustee in the Note Payment Account the Redemption Price of the Notes to be
redeemed, whereupon all such Notes shall be due and payable on the Redemption
Date.
(b) In the event that the assets of the Issuer are sold
pursuant to Section 9.2 of the Trust Agreement, all amounts on deposit in the
Note Payment Account shall be paid to the Noteholders up to an amount equal to
the unpaid principal amount of the Notes and all accrued and unpaid interest
thereon. If the amounts in the Note Payment Account are to be paid to
Noteholders pursuant to this Section 10.1(b), the Servicer or the Issuer shall,
to the extent practicable, furnish notice of such event to the Indenture
Trustee not later than forty (40) days prior to the Redemption Date, whereupon
all such amounts shall be payable on the Redemption Date.
SECTION 10.2. Form of Redemption Notice. Notice of
redemption under Section 10.1(a) shall be given by the Indenture Trustee by
first-class mail, postage prepaid, or by facsimile mailed or transmitted
promptly following receipt of notice from the Issuer or Servicer pursuant to
Section 10.1(a), but not later than thirty (30) days prior to the applicable
Redemption Date, to each Noteholder as of the close of business on the Record
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Date preceding the applicable Redemption Date, at such Noteholder's address or
facsimile number appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the place where such Notes are to be
surrendered for payment of the Redemption Price (which
shall be the office or agency of the Issuer to be
maintained as provided in Section 3.2); and
(iv) that on the Redemption Date, the Redemption
Price will become due and payable upon each such Note and
that interest thereon shall cease to accrue for and after
said date.
Notice of redemption of the Notes shall be given by the Indenture Trustee in
the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Noteholder shall not impair or affect
the validity of the redemption of any other Note.
SECTION 10.3. Notes Payable on Redemption Date. The Notes to
be redeemed shall, following notice of redemption as required by Section 10.2
(in the case of redemption pursuant to Section 10.1(a)), shall on the
Redemption Date become due and payable at the Redemption Price and (unless the
Issuer shall default in the payment of the Redemption Price) no interest shall
accrue on the Redemption Price for any period after the date to which accrued
interest is calculated for purposes of calculating the Redemption Price.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Compliance Certificates and Opinions, etc. (a)
Upon any application or request by the Issuer to the Indenture Trustee to take
any action under any provision of this Indenture, the Issuer shall furnish to
the Indenture Trustee (i) an Officer's Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with, (ii) an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate
from a firm of certified public accountants meeting the applicable requirements
of this Section 11.1, except that, in the case of any such application or
request as to which the furnishing of such documents is specifically required
by any provision of this Indenture, no additional certificate or opinion need
be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(A) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(B) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(C) a statement that, in the opinion of each such
signatory, such signatory has made such examination or investigation
as is necessary to enable such signatory to express an informed
opinion as to whether or not such covenant or condition has been
complied with; and
(D) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
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(b)(i) Prior to the deposit of any Collateral or other
property or securities with the Indenture Trustee that is to be made the basis
for the release of any property or securities subject to the lien of this
Indenture, the Issuer shall, in addition to any obligation imposed in Section
11.1(a) or elsewhere in this Indenture, furnish to the Indenture Trustee an
Officer's Certificate certifying or stating the opinion of each person signing
such certificate as to the fair value (within ninety (90) days of such deposit)
to the Issuer of the Collateral or other property or securities to be so
deposited.
(ii) Whenever the Issuer is required to furnish to
the Indenture Trustee an Officer's Certificate certifying or
stating the opinion of any signer thereof as to the matters
described in clause (i) above, the Issuer shall also deliver
to the Indenture Trustee an Independent Certificate as to the
same matters, if the fair value to the Issuer of the
securities to be so deposited and of all other such securities
made the basis of any such withdrawal or release since the
commencement of the then-current fiscal year of the Issuer, as
set forth in the certificates delivered pursuant to clause (i)
above and this clause (ii), is ten percent (10%) or more of
the principal amount of the Notes Outstanding, but such a
certificate need not be furnished with respect to any
securities so deposited, if the fair value thereof to the
Issuer as set forth in the related Officer's Certificate is
less than $25,000 or less than one percent (1%) of the
principal amount of the Notes Outstanding.
(iii) Whenever any property or securities are to be
released from the lien of this Indenture, the Issuer shall
also furnish to the Indenture Trustee an Officer's Certificate
certifying or stating the opinion of each person signing such
certificate as to the fair value (within ninety (90) days of
such release) of the property or securities proposed to be
released and stating that in the opinion of such person the
proposed release will not im-
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pair the security under this Indenture in contravention of the
provisions hereof.
(iv) Whenever the Issuer is required to furnish to
the Indenture Trustee an Officer's Certificate certifying or
stating the opinion of any signer thereof as to the matters
described in clause (iii) above, the Issuer shall also furnish
to the Indenture Trustee an Independent Certificate as to the
same matters if the fair value of the property or securities
and of all other property, other than property as contemplated
by clause (v) below or securities released from the lien of
this Indenture since the commencement of the then-current
calendar year, as set forth in the certificates required by
clause (iii) above and this clause (iv), equals ten percent
(10%) or more of the principal amount of the Notes
Outstanding, but such certificate need not be furnished in the
case of any release of property or securities if the fair
value thereof as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent (1%)
of the principal amount of the Notes Outstanding.
(v) Notwithstanding Section 2.10 or any other
provisions of this Section 11.1, the Issuer may, without
compliance with the requirements of the other provisions of
this Section 11.1, (A) collect, liquidate, sell or otherwise
dispose of Receivables and Financed Vehicles as and to the
extent permitted or required by the Basic Documents and (B)
make cash payments out of the Trust Accounts and the Payahead
Account as and to the extent permitted or required by the
Basic Documents.
SECTION 11.2. Form of Documents Delivered to Indenture
Trustee. (a) In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to
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other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
(b) Any certificate or opinion of an Authorized Officer of
the Issuer may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which such
officer's certificate or opinion is based are erroneous. Any such certificate
of an Authorized Officer or opinion of counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Servicer, the Seller, the
Administrator or the Issuer, stating that the information with respect to such
factual matters is in the possession of the Servicer, the Seller, the
Administrator or the Issuer, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to such matters
are erroneous.
(c) Where any Person is required to make, give or execute two
or more applications, requests, comments, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
(d) Whenever in this Indenture, in connection with any
application or certificate or report to the Indenture Trustee, it is provided
that the Issuer shall deliver any document as a condition of the granting of
such application, or as evidence of the Issuer's compliance with any term
hereof, it is intended that the truth and accuracy, at the time of the granting
of such application or at the effective date of such certificate or report (as
the case may be), of the facts and opinions stated in such document shall in
such case be conditions precedent to the right of the Issuer to have such
application granted or to the sufficiency of such certificate or report. The
foregoing shall not, however, be construed to affect the Indenture Trustee's
right to rely upon the truth and accuracy of any statement or opinion contained
in any such document as provided in Article VI.
SECTION 11.3. Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in
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and evidenced by one or more instruments of substantially similar tenor signed
by such Noteholders in person or by agents duly appointed in writing; and
except as herein otherwise expressly provided such action shall become
effective when such instrument or instruments are delivered to the Indenture
Trustee, and, where it is hereby expressly required, to the Issuer. Such
instrument or instruments (and the action embodied herein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Noteholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for
any purpose of this Indenture and (subject to Section 6.1) conclusive in favor
of the Indenture Trustee and the Issuer, if made in the manner provided in this
Section 11.3.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved in any manner that the Indenture
Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Noteholder of any Notes shall bind the
Noteholder of every Note issued upon the registration thereof or in exchange
therefor or in lieu thereof, in respect of anything done, omitted or suffered
to be done by the Indenture Trustee or the Issuer in reliance thereon, whether
or not notation of such action is made upon such Note.
SECTION 11.4. Notices, etc., to Indenture Trustee, Issuer and
Rating Agencies. Any request, demand, authorization, direction, notice,
consent, waiver or Act of Noteholders or other documents provided or permitted
by this Indenture shall be in writing and if such request, demand,
authorization, direction, notice, consent, waiver or Act of Noteholders is to
be made upon, given or furnished to or filed with:
(i) the Indenture Trustee by any Noteholder, the
Servicer, the Administrator or the Issuer shall be sufficient
for every purpose hereunder if made, given, furnished or
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filed in writing to or with the Indenture Trustee at its
Corporate Trust office; or
(ii) the Issuer by the Indenture Trustee or by any
Noteholder shall be sufficient for every purpose hereunder if
in writing and mailed first-class, postage prepaid to the
Issuer addressed to: Ford Credit Auto Owner Trust 1996-A, in
care of PNC Bank, Delaware, 222 Delaware Avenue, Wilmington,
Delaware 19801, Attention: Michael B. McCarthy, with a copy
to the Administrator at The American Road, Dearborn, Michigan
48121, Attention: Secretary, or at any other address
previously furnished in writing to the Indenture Trustee by
the Issuer or the Administrator. The Issuer shall promptly
transmit any notice received by it from the Noteholders to the
Indenture Trustee.
Notices required to be given to the Rating Agencies by the
Issuer, the Indenture Trustee or the Owner Trustee shall be in writing,
personally delivered, telecopied or mailed by certified mail, return receipt
requested, to (i) in the case of Moody's, at the following address: Moody's
Investors Service, Inc., ABS Monitoring Department, 99 Church Street, New York,
New York 10007 and (ii) in case of Standard & Poor's, at the following address:
Standard & Poor's Ratings Services, 26 Broadway (15th Floor), New York, New
York 10004, Attention: Asset Backed Surveillance Department.
SECTION 11.5. Notices to Noteholders; Waiver. (a) Where this
Indenture provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner
herein provided shall conclusively be presumed to have been duly given.
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(b) Where this Indenture provides for notice in any manner,
such notice may be waived in writing by any Person entitled to receive such
notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Noteholders shall be filed
with the Indenture Trustee but such filing shall not be a condition precedent
to the validity of any action taken in reliance upon such a waiver.
(c) In case, by reason of the suspension of regular mail
service as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Indenture Trustee
shall be deemed to be a sufficient giving of such notice.
(d) Where this Indenture provides for notice to the Rating
Agencies, failure to give such notice shall not affect any other rights or
obligations created hereunder, and shall not under any circumstance constitute
a Default or Event of Default.
SECTION 11.6. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Noteholder providing
for a method of payment, or notice by the Indenture Trustee or any Note Paying
Agent to such Noteholder, that is different from the methods provided for in
this Indenture for such payments or notices. The Issuer shall furnish to the
Indenture Trustee a copy of each such agreement and the Indenture Trustee shall
cause payments to be made and notices to be given in accordance with such
agreements.
SECTION 11.7. Conflict with Trust Indenture Act. If any
provision hereof limits, qualifies or conflicts with another provision hereof
that is required or deemed to be included in this Indenture by any of the
provisions of the Trust Indenture Act, such required or deemed provision shall
control.
The provisions of TIA Sections 310 through 317 that impose
duties on any Person (including the provisions automatically deemed included
herein unless ex-
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pressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.8. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 11.9. Successors and Assigns. All covenants and
agreements in this Indenture and the Notes by the Issuer shall bind its
successors and assigns, whether so expressed or not. All agreements of the
Indenture Trustee in this Indenture shall bind its successors, co-trustees and
agents.
SECTION 11.10. Separability. In case any provision in this
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 11.11. Benefits of Indenture. Nothing in this
Indenture or in the Notes, express or implied, shall give to any Person, other
than the parties hereto and their successors hereunder, and the Noteholders,
and any other party secured hereunder, and any other Person with an ownership
interest in any part of the Indenture Trust Estate, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 11.12. Legal Holidays. In any case where the date on
which any payment is due shall not be a Business Day, then (notwithstanding any
other provision of the Notes or this Indenture) payment need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on the date on which nominally due, and no interest
shall accrue for the period from and after any such nominal date.
SECTION 11.13. Governing Law. This Indenture shall be
construed in accordance with the laws of the State of New York, without
reference to its conflict of law provisions.
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SECTION 11.14. Counterparts. This Indenture may be executed
in any number of counterparts, each of which so executed shall be deemed to be
an original, but all such counterparts shall together constitute but one and
the same instrument.
SECTION 11.15. Recording of Indenture. If this Indenture is
subject to recording in any appropriate public recording offices, such
recording is to be effected by the Issuer and at its expense accompanied by an
Opinion of Counsel (which may be counsel to the Indenture Trustee or any other
counsel reasonably acceptable to the Indenture Trustee) to the effect that such
recording is necessary either for the protection of the Noteholders or any
other Person secured hereunder or for the enforcement of any right or remedy
granted to the Indenture Trustee under this Indenture.
SECTION 11.16. Trust Obligation. No recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer, the
Owner Trustee or the Indenture Trustee on the Notes or under this Indenture or
any certificate or other writing delivered in connection herewith or therewith,
against (i) the Indenture Trustee or the Owner Trustee in their individual
capacities, (ii) any owner of a beneficial interest in the Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director, employee or agent of the
Indenture Trustee or the Owner Trustee in their individual capacities, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in their individual capacities, except as any such Person may
have expressly agreed (it being understood that the Indenture Trustee and the
Owner Trustee have no such obligations in their individual capacities), and
except that any such partner, owner or beneficiary shall be fully liable, to
the extent provided by applicable law, for any unpaid consideration for stock,
unpaid capital contribution or failure to pay any installment or call owing to
such entity. For all purposes of this Indenture, in the performance of any
duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Article VI, VII and VIII of the Trust Agreement.
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SECTION 11.17. No Petition. The Indenture Trustee, by
entering into this Indenture, and each Noteholder or Note Owner, by accepting a
Note or, in the case of a Note Owner, a beneficial interest in a Note, hereby
covenant and agree that they will not at any time institute against the Seller,
the General Partner or the Issuer, or join in any institution against the
Seller, the General Partner or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States federal or State bankruptcy or similar law in connection with
any obligations relating to the Notes, this Indenture or any of the other Basic
Documents.
SECTION 11.18. Inspection. The Issuer agrees that, with
reasonable prior notice, it will permit any representative of the Indenture
Trustee, during the Issuer's normal business hours, to examine all the books of
account, records, reports and other papers of the Issuer, to make copies and
extracts therefrom, to cause such books to be audited by Independent certified
public accountants, and to discuss the Issuer's affairs, finances and accounts
with the Issuer's officers, employees, and Independent certified public
accountants, all at such reasonable times and as often as may be reasonably
requested. The Indenture Trustee shall and shall cause its representatives to
hold in confidence all such information except to the extent disclosure may be
required by law (and all reasonable applications for confidential treatment are
unavailing) and except to the extent that the Indenture Trustee may reasonably
determine that such disclosure is consistent with its obligations hereunder.
86
<PAGE> 94
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have
caused this Indenture to be duly executed by their respective officers,
thereunto duly authorized and duly attested, all as of the day and year first
above written.
FORD CREDIT AUTO OWNER TRUST 1996-A
By: PNC BANK, DELAWARE,
not in its individual
capacity but solely as Owner
Trustee of Ford Credit Auto Owner
Trust 1996-A
By: /s/ M.B. McCarthy
--------------------------
Name: Michael B. McCarthy
Title: Vice President
CHEMICAL BANK,
not in its individual
capacity but solely as
Indenture Trustee
By: /s/ Michael A. Smith
-------------------------------
Name: Michael A. Smith
Title: Vice President
87
<PAGE> 95
EXHIBIT A-1
[FORM OF CLASS A-1 NOTE]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
REGISTERED $320,031,000
No. R-1 CUSIP NO. 34527RAA1
FORD CREDIT AUTO OWNER TRUST 1996-A
CLASS A-1 5.67% MONEY MARKET ASSET BACKED NOTES
Ford Credit Auto Owner Trust 1996-A, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO.,
or registered assigns, the principal sum of THREE HUNDRED TWENTY MILLION
THIRTY-ONE THOUSAND DOLLARS payable on each Distribution Date in an amount
equal to the result obtained by multiplying (i) a fraction the numerator of
which is $320,031,000 (the original face amount of this Note) and the
denominator of which is $320,031,000 by (ii) the aggregate amount, if any,
payable to Noteholders of Class A-1 Notes on such Distribution Date from the
Note Payment Account in respect of principal on the Notes pursuant to Section
3.1 of the Indenture dated as of June
A-1-1
<PAGE> 96
1, 1996, (as from time to time amended, supplemented or otherwise modified and
in effect, the "Indenture") between the Issuer and Chemical Bank, a New York
corporation, as Indenture Trustee (in such capacity the "Indenture Trustee");
provided, however, that the entire unpaid principal amount of this Note shall
be due and payable on the earlier of the July 1997 Distribution Date (the
"Class A-1 Final Scheduled Distribution Date") and the Redemption Date, if any,
pursuant to Section 10.1(a) of the Indenture. Capitalized terms used but not
defined herein are defined in Article I of the Indenture, which also contains
rules as to construction that shall be applicable herein.
The Issuer shall pay interest on this Note at the rate per
annum shown above on each Distribution Date until the principal of this Note is
paid or made available for payment, on the principal amount of this Note
outstanding on the preceding Distribution Date (after giving effect to all
payments of principal made on the preceding Distribution Date), subject to
certain limitations contained in Section 3.1 of the Indenture. Interest on
this Note will accrue for each Distribution Date from and including the
previous Distribution Date on which interest has been paid (or, in the case of
the initial Distribution Date, from the Closing Date) to but excluding such
Distribution Date. Interest will be computed on the basis of actual days
elapsed and a 360-day year. Such principal of and interest on this Note shall
be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of this
Note.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Note.
A-1-2
<PAGE> 97
Unless the certificate of authentication hereon has been
executed by the Indenture Trustee whose name appears below by manual signature,
this Note shall not be entitled to any benefit under the Indenture referred to
on the reverse hereof, or be valid or obligatory for any purpose.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
A-1-3
<PAGE> 98
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be signed, manually or in facsimile, by its Authorized Officer, as of the date
set forth below.
Date: June 20, 1996
FORD CREDIT AUTO OWNER TRUST 1996-A,
By: PNC BANK, DELAWARE,
not in its individual capacity
but solely as Owner Trustee
under the Trust Agreement
By:
--------------------------------
Authorized Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A-1 Notes designated above and referred to in the
within-mentioned Indenture.
Date: June 20, 1996
CHEMICAL BANK,
not in its individual capacity but
solely as Indenture Trustee
By: ___________________________
Authorized Officer
A-1-4
<PAGE> 99
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the
Issuer, designated as its Class A-1 5.67% Money Market Asset Backed Notes (the
"Class A-1 Notes") which, together with the Issuer's Class A-2 6.30% Asset
Backed Notes (the "Class A-2 Notes"), Class A-3 6.50% Asset Backed Notes (the
"Class A-3 Notes") and Class A-4 6.75% Asset Backed Notes (the "Class A-4
Notes" and, together with the Class A-1 Notes , the Class A-2 Notes and the
Class A-3 Notes, the "Notes"), are issued under the Indenture, to which
Indenture and all indentures supplemental thereto reference is hereby made for
a statement of the respective rights and obligations thereunder of the Issuer,
the Indenture Trustee and the Noteholders. The Notes are subject to all terms
of the Indenture.
The Class A-1 Notes are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture. The Class A-1 Notes are senior in right of payment to the Class A-2
Notes, the Class A-3 Notes and the Class A-4 Notes as and to the extent
provided in the Indenture.
Principal of the Class A-1 Notes will be payable on each
Distribution Date in an amount described on the face hereof. "Distribution
Date" means the fifteenth day of each month, or, if any such day is not a
Business Day, the next succeeding Business Day, commencing July 15, 1996.
As described on the face hereof, the entire unpaid principal
amount of this Note shall be due and payable on the earlier of the Class A-1
Final Scheduled Distribution Date and the Redemption Date, if any, pursuant to
Section 10.1(a) of the Indenture. Notwithstanding the foregoing, the entire
unpaid principal amount of the Notes shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing and the
Indenture Trustee or the Noteholders of Notes evidencing not less than a
majority of the principal amount of the Notes Outstanding have declared the
Notes to be immediately due and payable in the manner provided in Section 5.2
of the Indenture. All principal payments on the Class A-1 Notes shall be made
pro rata to the Noteholders entitled thereto.
A-1-5
<PAGE> 100
Payments of interest on this Note on each Distribution Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by check mailed to the Person whose name
appears as the Registered Noteholder of the Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of
this Note (or any one or more Predecessor Notes) effected by any payments made
on any Distribution Date shall be binding upon all future Noteholders of this
Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Note on a Distribution Date,
then the Indenture Trustee, in the name of and on behalf of the Issuer, will
notify the Person who was the Registered Noteholder hereof as of the Record
Date preceding such Distribution Date by notice mailed or transmitted by
facsimile prior to such Distribution Date, and the amount then due and payable
shall be payable only upon presentation and surrender of this Note at the
Indenture Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes located in The City of
New York.
The Issuer shall pay interest on overdue installments of
interest at the Class A-1 Rate plus 2.00% per annum to the extent lawful.
As provided in the Indenture, the Notes may be redeemed, in
whole but not in part, in the manner and to the extent described in the
Indenture and the Sale and Servicing Agreement.
As provided in the Indenture, and subject to certain
limitations set forth therein, the transfer of
A-1-6
<PAGE> 101
this Note may be registered on the Note Register upon surrender of this Note
for registration of transfer at the office or agency designated by the Issuer
pursuant to the Indenture, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Indenture Trustee duly
executed by, the Noteholder hereof or such Noteholder's attorney duly
authorized in writing, with such signature guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, and thereupon one
or more new Notes of the same Class in authorized denominations and in the same
aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the transferor may be required to pay a
sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by its acceptance of a Note or,
in the case of a Note Owner, a beneficial interest in a Note, covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on
the Notes or under the Indenture or any certificate or other writing delivered
in connection therewith, against (i) the Indenture Trustee or the Owner
Trustee, each in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent,
officer, director or employee of the Indenture Trustee or the Owner Trustee,
each in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee, each in its individual
capacity, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution for stock, unpaid capital contribution or failure to pay
any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in a Note, covenants and agrees
by accepting the benefits of the Indenture that such Noteholder or Note
A-1-7
<PAGE> 102
Owner will not at any time institute against the Seller, the General Partner or
the Issuer, or join in any institution against the Seller, the General Partner
or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or State bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the other Basic Documents.
The Issuer has entered into the Indenture and this Note is
issued with the intention that, for federal, State and local income, and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Indenture Trust Estate. Each Noteholder, by its acceptance of a
Note (and each Note Owner by its acceptance of a beneficial interest in a
Note), will be deemed to agree to treat the Notes for federal, State and local
income, single business and franchise tax purposes as indebtedness of the
Issuer.
Prior to the due presentment for registration of transfer of
this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day
of determination or as of such other date as may be specified in the Indenture)
is registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Noteholders under the Indenture
at any time by the Issuer with the consent of the Noteholders of Notes
evidencing not less than a majority of the principal amount of the Notes
Outstanding. The Indenture also contains provisions permitting the Noteholders
of Notes evidencing specified percentages of the principal amount of the Notes
Outstanding, on behalf of all Noteholders, to waive compliance by the Issuer
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Noteholder
of this Note (or any one or more Predecessor Notes) shall be conclusive and
binding upon such Noteholder and upon all future Noteholders of this
A-1-8
<PAGE> 103
Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note. The Indenture also permits the Indenture
Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of the Noteholders.
The term "Issuer", as used in this Note, includes any
successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the Noteholders under the Indenture.
The Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.
This Note and the Indenture shall be governed by, and
construed in accordance with the laws of the State of New York, without
reference to its conflicts of law provisions.
No reference herein to the Indenture, and no provision of this
Note or of the Indenture, shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the times, place and rate, and in the coin or currency herein
prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Basic Documents, none of Chemical Bank, in its
individual capacity, PNC Bank, Delaware, in its individual capacity, any owner
of a beneficial interest in the Issuer, or any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or assigns
shall be personally liable for, nor shall recourse be had to any of them for,
the payment of principal or of interest on this Note or performance of, or
omission to perform, any of the covenants, obligations or indemnifications
contained in the Indenture. The Noteholder of this Note, by his acceptance
hereof, agrees that, except as expressly provided in the Basic Documents, in
the case of an Event of Default under the Indenture, the Noteholder shall have
A-1-9
<PAGE> 104
no claim against any of the foregoing for any deficiency, loss or claim
therefrom; provided, however, that nothing contained herein shall be taken to
prevent recourse to, and enforcement against, the assets of the Issuer for any
and all liabilities, obligations and undertakings contained in the Indenture or
in this Note.
A-1-10
<PAGE> 105
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
_________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
________________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _________________, attorney, to transfer said Note on the books
kept for registration thereof, with full power of substitution in the premises.
Dated: ___________________________ ________________________*/
Signature Guaranteed
________________________*/
__________________________________
*/ NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the within
Note in every particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar.
A-1-11
<PAGE> 106
EXHIBIT A-2
[FORM OF CLASS A-2 NOTE]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
REGISTERED $283,049,000
No. R-1 CUSIP NO. 34527AB9
FORD CREDIT AUTO OWNER TRUST 1996-A
CLASS A-2 6.30% ASSET BACKED NOTES
Ford Credit Auto Owner Trust 1996-A, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO.,
or registered assigns, the principal sum of TWO HUNDRED EIGHTY-THREE MILLION
FORTY-NINE THOUSAND DOLLARS payable on each Distribution Date in an amount
equal to the result obtained by multiplying (i) a fraction the numerator of
which is $283,049,000 (the original face amount of this Note) and the
denominator of which is $283,049,000 by (ii) the aggregate amount, if any,
payable to Noteholders of Class A-2 Notes on such Distribution Date from the
Note Payment Account in respect of principal on the Notes pursuant to Section
3.1 of the
A-2-1
<PAGE> 107
Indenture dated as of June 1, 1996, (as from time to time amended, supplemented
or otherwise modified and in effect, the "Indenture") between the Issuer and
Chemical Bank, a New York corporation, as Indenture Trustee (in such capacity
the "Indenture Trustee"); provided, however, that the entire unpaid principal
amount of this Note shall be due and payable on the earlier of the December
1998 Distribution Date (the "Class A-2 Final Scheduled Distribution Date") and
the Redemption Date, if any, pursuant to Section 10.1(a) of the Indenture.
Capitalized terms used but not defined herein are defined in Article I of the
Indenture, which also contains rules as to construction that shall be
applicable herein.
The Issuer shall pay interest on this Note at the rate per
annum shown above on each Distribution Date until the principal of this Note is
paid or made available for payment, on the principal amount of this Note
outstanding on the preceding Distribution Date (after giving effect to all
payments of principal made on the preceding Distribution Date), subject to
certain limitations contained in Section 3.1 of the Indenture. Interest on
this Note will accrue for each Distribution Date from and including the
fifteenth day of the calendar month immediately preceding such Distribution
Date (or, in the case of the initial Distribution Date, from the Closing Date)
to but excluding the fifteenth day of the following calendar month. Interest
will be computed on the basis of a 360-day year of twelve 30-day months. Such
principal of and interest on this Note shall be paid in the manner specified on
the reverse hereof.
The principal of and interest on this Note are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of this
Note.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Note.
A-2-2
<PAGE> 108
Unless the certificate of authentication hereon has been
executed by the Indenture Trustee whose name appears below by manual signature,
this Note shall not be entitled to any benefit under the Indenture referred to
on the reverse hereof, or be valid or obligatory for any purpose.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
A-2-3
<PAGE> 109
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be signed, manually or in facsimile, by its Authorized Officer, as of the date
set forth below.
Date: June 20, 1996
FORD CREDIT AUTO OWNER TRUST 1996-A,
By: PNC BANK, DELAWARE,
not in its individual capacity
but solely as Owner Trustee
under the Trust Agreement
By:
---------------------------
Authorized Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A-2 Notes designated above and referred to in the
within-mentioned Indenture.
Date: June 20, 1996
CHEMICAL BANK,
not in its individual capacity but
solely as Indenture Trustee
By:___________________________
Authorized Officer
A-2-4
<PAGE> 110
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the
Issuer, designated as its Class A-2 6.30% Asset Backed Notes (the "Class A-2
Notes") which, together with the Issuer's Class A-1 5.67% Money Market Asset
Backed Notes (the "Class A-1 Notes"), Class A-3 6.50% Asset Backed Notes (the
"Class A-3 Notes"), and Class A-4 6.75% Asset Backed Notes (the "Class A-4
Notes" and, together with the Class A-1 Notes, the Class A-2 Notes and the
Class A-3 Notes, the "Notes"), are issued under the Indenture, to which
Indenture and all indentures supplemental thereto reference is hereby made for
a statement of the respective rights and obligations thereunder of the Issuer,
the Indenture Trustee and the Noteholders. The Notes are subject to all terms
of the Indenture.
The Class A-2 Notes are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture. The Class A-2 Notes are subordinated in right of payment to the
Class A-1 Notes and senior in right of payment to the Class A-3 Notes and the
Class A-4 Notes, each as and to the extent provided in the Indenture.
Principal of the Class A-2 Notes will be payable on each
Distribution Date in an amount described on the face hereof. "Distribution
Date" means the fifteenth day of each month, or, if any such day is not a
Business Day, the next succeeding Business Day, commencing July 15, 1996.
As described on the face hereof, the entire unpaid principal
amount of this Note shall be due and payable on the earlier of the Class A-2
Final Scheduled Distribution Date and the Redemption Date, if any, pursuant to
Section 10.1(a) of the Indenture. Notwithstanding the foregoing, the entire
unpaid principal amount of the Notes shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing and the
Indenture Trustee or the Noteholders of Notes evidencing not less than a
majority of the principal amount of the Notes Outstanding have declared the
Notes to be immediately due and payable in the manner provided in Section 5.2
of the Indenture. All principal payments on the Class A-2 Notes shall be made
pro rata to the Noteholders entitled thereto.
A-2-5
<PAGE> 111
Payments of interest on this Note on each Distribution Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by check mailed to the Person whose name
appears as the Registered Noteholder of the Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of
this Note (or any one or more Predecessor Notes) effected by any payments made
on any Distribution Date shall be binding upon all future Noteholders of this
Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Note on a Distribution Date,
then the Indenture Trustee, in the name of and on behalf of the Issuer, will
notify the Person who was the Registered Noteholder hereof as of the Record
Date preceding such Distribution Date by notice mailed or transmitted by
facsimile prior to such Distribution Date, and the amount then due and payable
shall be payable only upon presentation and surrender of this Note at the
Indenture Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes located in The City of
New York.
The Issuer shall pay interest on overdue installments of
interest at the Class A-2 Rate plus 2.00% per annum to the extent lawful.
As provided in the Indenture, the Notes may be redeemed, in
whole but not in part, in the manner and to the extent described in the
Indenture and the Sale and Servicing Agreement.
As provided in the Indenture, and subject to certain
limitations set forth therein, the transfer of
A-2-6
<PAGE> 112
this Note may be registered on the Note Register upon surrender of this Note
for registration of transfer at the office or agency designated by the Issuer
pursuant to the Indenture, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Indenture Trustee duly
executed by, the Noteholder hereof or such Noteholder's attorney duly
authorized in writing, with such signature guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, and thereupon one
or more new Notes of the same Class in authorized denominations and in the same
aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the transferor may be required to pay a
sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by its acceptance of a Note or,
in the case of a Note Owner, a beneficial interest in a Note, covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on
the Notes or under the Indenture or any certificate or other writing delivered
in connection therewith, against (i) the Indenture Trustee or the Owner
Trustee, each in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent,
officer, director or employee of the Indenture Trustee or the Owner Trustee,
each in its individual capaci- ty, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee, each in its individual
capacity, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution for stock, unpaid capital contribution or failure to pay
any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in a Note, covenants and agrees
by accepting the benefits of the Indenture that such Noteholder or Note
A-2-7
<PAGE> 113
Owner will not at any time institute against the Seller, the General Partner or
the Issuer, or join in any institution against the Seller, the General Partner
or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or State bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the other Basic Documents.
The Issuer has entered into the Indenture and this Note is
issued with the intention that, for federal, State and local income, and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Indenture Trust Estate. Each Noteholder, by its acceptance of a
Note (and each Note Owner by its acceptance of a beneficial interest in a
Note), will be deemed to agree to treat the Notes for federal, State and local
income, single business and franchise tax purposes as indebtedness of the
Issuer.
Prior to the due presentment for registration of transfer of
this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day
of determination or as of such other date as may be specified in the Indenture)
is registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Noteholders under the Indenture
at any time by the Issuer with the consent of the Noteholders of Notes
evidencing not less than a majority of the principal amount of the Notes
Outstanding. The Indenture also contains provisions permitting the Noteholders
of Notes evidencing specified percentages of the principal amount of the Notes
Outstanding, on behalf of all Noteholders, to waive compliance by the Issuer
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Noteholder
of this Note (or any one or more Predecessor Notes) shall be conclusive and
binding upon such Noteholder and upon all future Noteholders of this
A-2-8
<PAGE> 114
Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note. The Indenture also permits the Indenture
Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of the Noteholders.
The term "Issuer", as used in this Note, includes any
successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the Noteholders under the Indenture.
The Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.
This Note and the Indenture shall be governed by, and
construed in accordance with the laws of the State of New York, without
reference to its conflicts of law provisions.
No reference herein to the Indenture, and no provision of this
Note or of the Indenture, shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the times, place and rate, and in the coin or currency herein
prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Basic Documents, none of Chemical Bank, in its
individual capacity, PNC Bank, Delaware, in its individual capacity, any owner
of a beneficial interest in the Issuer, or any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or assigns
shall be personally liable for, nor shall recourse be had to any of them for,
the payment of principal or of interest on this Note or performance of, or
omission to perform, any of the covenants, obligations or indemnifications
contained in the Indenture. The Noteholder of this Note, by his acceptance
hereof, agrees that, except as expressly provided in the Basic Documents, in
the case of an Event of Default under the Indenture, the Noteholder shall have
A-2-9
<PAGE> 115
no claim against any of the foregoing for any deficiency, loss or claim
therefrom; provided, however, that nothing contained herein shall be taken to
prevent recourse to, and enforcement against, the assets of the Issuer for any
and all liabilities, obligations and undertakings contained in the Indenture or
in this Note.
A-2-10
<PAGE> 116
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
___________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
________________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _________________, attorney, to transfer said Note on the books
kept for registration thereof, with full power of substitution in the premises.
Dated: ___________________________ ________________________*/
Signature Guaranteed
________________________*/
__________________________________
*/ NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the within
Note in every particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar.
A-2-11
<PAGE> 117
EXHIBIT A-3
[FORM OF CLASS A-3 NOTE]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
REGISTERED $219,119,000
No. R-1 CUSIP NO. 34527RAC7
FORD CREDIT AUTO OWNER TRUST 1996-A
CLASS A-3 6.50% ASSET BACKED NOTES
Ford Credit Auto Owner Trust 1996-A, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO.,
or registered assigns, the principal sum of TWO HUNDRED NINETEEN MILLION ONE
HUNDRED NINETEEN THOUSAND DOLLARS payable on each Distribution Date in an
amount equal to the result obtained by multiplying (i) a fraction the numerator
of which is $219,119,000 (the original face amount of this Note) and the
denominator of which is $219,119,000 by (ii) the aggregate amount, if any,
payable to Noteholders of Class A-3 Notes on such Distribution Date from the
Note Payment Account in respect of principal on the Notes pursuant to Section
3.1 of the
A-3-1
<PAGE> 118
Indenture dated as of June 1, 1996 (as from time to time amended, supplemented
or otherwise modified and in effect, the "Indenture") between the Issuer and
Chemical Bank, a New York corporation, as Indenture Trustee (in such capacity
the "Indenture Trustee"); provided, however, that the entire unpaid principal
amount of this Note shall be due and payable on the earlier of the November
1999 Distribution Date (the "Class A-3 Final Scheduled Distribution Date") and
the Redemption Date, if any, pursuant to Section 10.1(a) of the Indenture.
Capitalized terms used but not defined herein are defined in Article I of the
Indenture, which also contains rules as to construction that shall be
applicable herein.
The Issuer shall pay interest on this Note at the rate per
annum shown above on each Distribution Date until the principal of this Note is
paid or made available for payment, on the principal amount of this Note
outstanding on the preceding Distribution Date (after giving effect to all
payments of principal made on the preceding Distribution Date), subject to
certain limitations contained in Section 3.1 of the Indenture. Interest on
this Note will accrue for each Distribution Date from and including the
fifteenth day of the calendar month immediately preceding such Distribution
Date (or, in the case of the initial Distribution Date, from the Closing Date)
to but excluding the fifteenth day of the following calendar month. Interest
will be computed on the basis of a 360-day year of twelve 30-day months. Such
principal of and interest on this Note shall be paid in the manner specified on
the reverse hereof.
The principal of and interest on this Note are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of this
Note.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Note.
A-3-2
<PAGE> 119
Unless the certificate of authentication hereon has been
executed by the Indenture Trustee whose name appears below by manual signature,
this Note shall not be entitled to any benefit under the Indenture referred to
on the reverse hereof, or be valid or obligatory for any purpose.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
A-3-3
<PAGE> 120
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be signed, manually or in facsimile, by its Authorized Officer, as of the date
set forth below.
Date: June 20, 1996
FORD CREDIT AUTO OWNER TRUST 1996-A,
By: PNC BANK, DELAWARE,
not in its individual capacity
but solely as Owner Trustee
under the Trust Agreement
By:
-----------------------
Authorized Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A-3 Notes designated above and referred to in the
within-mentioned Indenture.
Date: June 20, 1996
CHEMICAL BANK,
not in its individual capacity but
solely as Indenture Trustee
By:
--------------------
Authorized Officer
A-3-4
<PAGE> 121
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the
Issuer, designated as its Class A-3 6.50% Asset Backed Notes (the "Class A-3
Notes") which, together with the Issuer's Class A-1 5.67% Money Market Asset
Backed Notes (the "Class A-1 Notes"), Class A-2 6.30% Asset Backed Notes (the
"Class A-2 Notes") and Class A-4 6.75% Asset Backed Notes (the "Class A-4
Notes" and, together with the Class A-1 Notes, the Class A-2 Notes and the
Class A-3 Notes, the "Notes"), are issued under the Indenture, to which
Indenture and all indentures supplemental thereto reference is hereby made for
a statement of the respective rights and obligations thereunder of the Issuer,
the Indenture Trustee and the Noteholders. The Notes are subject to all terms
of the Indenture.
The Class A-3 Notes are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture. The Class A-3 Notes are subordinated in right of payment to the
Class A-1 Notes and the Class A-2 Notes and are senior in right of payment to
the Class A-4 Notes as and to the extent provided in the Indenture.
Principal of the Class A-3 Notes will be payable on each
Distribution Date in an amount described on the face hereof. "Distribution
Date" means the fifteenth day of each month, or, if any such day is not a
Business Day, the next succeeding Business Day, commencing July 15, 1996.
As described on the face hereof, the entire unpaid principal
amount of this Note shall be due and payable on the earlier of the Class A-3
Final Scheduled Distribution Date and the Redemption Date, if any, pursuant to
Section 10.1(a) of the Indenture. Notwithstanding the foregoing, the entire
unpaid principal amount of the Notes shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing and the
Indenture Trustee or the Noteholders of Notes evidencing not less than a
majority of the principal amount of the Notes Outstanding have declared the
Notes to be immediately due and payable in the manner provided in Section 5.2
of the Indenture. All principal payments on the Class A-3 Notes shall be made
pro rata to the Noteholders entitled thereto.
A-3-5
<PAGE> 122
Payments of interest on this Note on each Distribution Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by check mailed to the Person whose name
appears as the Registered Noteholder of the Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of
this Note (or any one or more Predecessor Notes) effected by any payments made
on any Distribution Date shall be binding upon all future Noteholders of this
Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Note on a Distribution Date,
then the Indenture Trustee, in the name of and on behalf of the Issuer, will
notify the Person who was the Registered Noteholder hereof as of the Record
Date preceding such Distribution Date by notice mailed or transmitted by
facsimile prior to such Distribution Date, and the amount then due and payable
shall be payable only upon presentation and surrender of this Note at the
Indenture Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes located in The City of
New York.
The Issuer shall pay interest on overdue installments of
interest at the Class A-3 Rate plus 2.00% per annum to the extent lawful.
As provided in the Indenture, the Notes may be redeemed, in
whole but not in part, in the manner and to the extent described in the
Indenture and the Sale and Servicing Agreement.
As provided in the Indenture, and subject to certain
limitations set forth therein, the transfer of
A-3-6
<PAGE> 123
this Note may be registered on the Note Register upon surrender of this Note
for registration of transfer at the office or agency designated by the Issuer
pursuant to the Indenture, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Indenture Trustee duly
executed by, the Noteholder hereof or such Noteholder's attorney duly
authorized in writing, with such signature guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, and thereupon one
or more new Notes of the same Class in authorized denominations and in the same
aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the transferor may be required to pay a
sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by its acceptance of a Note or,
in the case of a Note Owner, a beneficial interest in a Note, covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on
the Notes or under the Indenture or any certificate or other writing delivered
in connection therewith, against (i) the Indenture Trustee or the Owner
Trustee, each in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent,
officer, director or employee of the Indenture Trustee or the Owner Trustee,
each in its individual capaci- ty, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee, each in its individual
capacity, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution for stock, unpaid capital contribution or failure to pay
any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in a Note, covenants and agrees
by accepting the benefits of the Indenture that such Noteholder or Note
A-3-7
<PAGE> 124
Owner will not at any time institute against the Seller, the General Partner or
the Issuer, or join in any institution against the Seller, the General Partner
or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or State bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the other Basic Documents.
The Issuer has entered into the Indenture and this Note is
issued with the intention that, for federal, State and local income, and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Indenture Trust Estate. Each Noteholder, by its acceptance of a
Note (and each Note Owner by its acceptance of a beneficial interest in a
Note), will be deemed to agree to treat the Notes for federal, State and local
income, single business and franchise tax purposes as indebtedness of the
Issuer.
Prior to the due presentment for registration of transfer of
this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day
of determination or as of such other date as may be specified in the Indenture)
is registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Noteholders under the Indenture
at any time by the Issuer with the consent of the Noteholders of Notes
evidencing not less than a majority of the principal amount of the Notes
Outstanding. The Indenture also contains provisions permitting the Noteholders
of Notes evidencing specified percentages of the principal amount of the Notes
Outstanding, on behalf of all Noteholders, to waive compliance by the Issuer
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Noteholder
of this Note (or any one or more Predecessor Notes) shall be conclusive and
binding upon such Noteholder and upon all future Noteholders of this
A-3-8
<PAGE> 125
Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note. The Indenture also permits the Indenture
Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of the Noteholders.
The term "Issuer", as used in this Note, includes any
successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the Noteholders under the Indenture.
The Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.
This Note and the Indenture shall be governed by, and
construed in accordance with the laws of the State of New York, without
reference to its conflicts of law provisions.
No reference herein to the Indenture, and no provision of this
Note or of the Indenture, shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the times, place and rate, and in the coin or currency herein
prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Basic Documents, none of Chemical Bank, in its
individual capacity, PNC Bank, Delaware, in its individual capacity, any owner
of a beneficial interest in the Issuer, or any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or assigns
shall be personally liable for, nor shall recourse be had to any of them for,
the payment of principal or of interest on this Note or performance of, or
omission to perform, any of the covenants, obligations or indemnifications
contained in the Indenture. The Noteholder of this Note, by his acceptance
hereof, agrees that, except as expressly provided in the Basic Documents, in
the case of an Event of Default under the Indenture, the Noteholder shall have
A-3-9
<PAGE> 126
no claim against any of the foregoing for any deficiency, loss or claim
therefrom; provided, however, that nothing contained herein shall be taken to
prevent recourse to, and enforcement against, the assets of the Issuer for any
and all liabilities, obligations and undertakings contained in the Indenture or
in this Note.
A-3-10
<PAGE> 127
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
___________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
________________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _________________, attorney, to transfer said Note on the books
kept for registration thereof, with full power of substitution in the premises.
Dated: ___________________________ __________________________*/
Signature Guaranteed
__________________________*/
__________________________________
*/ NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the within
Note in every particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar.
A-3-11
<PAGE> 128
EXHIBIT A-4
[FORM OF CLASS A-4 NOTE]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
REGISTERED $184,607,000
No. R-1 CUSIP NO. 34527RAD6
FORD CREDIT AUTO OWNER TRUST 1996-A
CLASS A-4 6.75% ASSET BACKED NOTES
Ford Credit Auto Owner Trust 1996-A, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO.,
or registered assigns, the principal sum of ONE HUNDRED EIGHTY-FOUR MILLION SIX
HUNDRED SEVEN THOUSAND DOLLARS payable on each Distribution Date in an amount
equal to the result obtained by multiplying (i) a fraction the numerator of
which is $184,607,000 (the original face amount of this Note) and the
denominator of which is $184,607,000 by (ii) the aggregate amount, if any,
payable to Noteholders of Class A-4 Notes on such Distribution Date from the
Note Payment Account in respect of principal on the Notes pursuant to Section
3.1 of the
A-4-1
<PAGE> 129
Indenture dated as of June 1, 1996 (as from time to time amended, supplemented
or otherwise modified and in effect, the "Indenture") between the Issuer and
Chemical Bank, a New York corporation, as Indenture Trustee (in such capacity
the "Indenture Trustee"); provided, however, that the entire unpaid principal
amount of this Note shall be due and payable on the earlier of the September
2000 Distribution Date (the "Class A-4 Final Scheduled Distribution Date") and
the Redemption Date, if any, pursuant to Section 10.1(a) of the Indenture.
Capitalized terms used but not defined herein are defined in Article I of the
Indenture, which also contains rules as to construction that shall be
applicable herein.
The Issuer shall pay interest on this Note at the rate per
annum shown above on each Distribution Date until the principal of this Note is
paid or made available for payment, on the principal amount of this Note
outstanding on the preceding Distribution Date (after giving effect to all
payments of principal made on the preceding Distribution Date), subject to
certain limitations contained in Section 3.1 of the Indenture. Interest on
this Note will accrue for each Distribution Date from and including the
fifteenth day of the calendar month immediately preceding such Distribution
Date (or, in the case of the initial Distribution Date, from the Closing Date)
to but excluding the fifteenth day of the following calendar month. Interest
will be computed on the basis of a 360-day year of twelve 30-day months. Such
principal of and interest on this Note shall be paid in the manner specified on
the reverse hereof.
The principal of and interest on this Note are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of this
Note.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Note.
A-4-2
<PAGE> 130
Unless the certificate of authentication hereon has been
executed by the Indenture Trustee whose name appears below by manual signature,
this Note shall not be entitled to any benefit under the Indenture referred to
on the reverse hereof, or be valid or obligatory for any purpose.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
A-4-3
<PAGE> 131
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be signed, manually or in facsimile, by its Authorized Officer, as of the date
set forth below.
Date: June 20, 1996
FORD CREDIT AUTO OWNER TRUST 1996-A,
By: PNC BANK, DELAWARE,
not in its individual capacity
but solely as Owner Trustee
under the Trust Agreement
By:
-------------------------
Authorized Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A-4 Notes designated above and referred to in the
within-mentioned Indenture.
Date: June 20, 1996
CHEMICAL BANK,
not in its individual capacity but
solely as Indenture Trustee
By:
-------------------------
Authorized Officer
A-4-4
<PAGE> 132
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the
Issuer, designated as its Class A-4 6.75% Asset Backed Notes (the "Class A-4
Notes") which, together with the Issuer's Class A-1 5.67% Money Market Asset
Backed Notes (the "Class A-1 Notes"), Class A-2 6.30% Asset Backed Notes (the
"Class A-2 Notes") and Class A-3 6.50% Asset Backed Notes (the "Class A-3
Notes" and, together with the Class A-1 Notes, the Class A-2 Notes and the
Class A-4 Notes, the "Notes"), are issued under the Indenture, to which
Indenture and all indentures supplemental thereto reference is hereby made for
a statement of the respective rights and obligations thereunder of the Issuer,
the Indenture Trustee and the Noteholders. The Notes are subject to all terms
of the Indenture.
The Class A-4 Notes are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture. The Class A-4 Notes are subordinated in right of payment to the
Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes as and to the
extent provided in the Indenture.
Principal of the Class A-4 Notes will be payable on each
Distribution Date in an amount described on the face hereof. "Distribution
Date" means the fifteenth day of each month, or, if any such day is not a
Business Day, the next succeeding Business Day, commencing July 15, 1996.
As described on the face hereof, the entire unpaid principal
amount of this Note shall be due and payable on the earlier of the Class A-4
Final Scheduled Distribution Date and the Redemption Date, if any, pursuant to
Section 10.1(a) of the Indenture. Notwithstanding the foregoing, the entire
unpaid principal amount of the Notes shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing and the
Indenture Trustee or the Noteholders of Notes evidencing not less than a
majority of the principal amount of the Notes Outstanding have declared the
Notes to be immediately due and payable in the manner provided in Section 5.2
of the Indenture. All principal payments on the Class A-4 Notes shall be made
pro rata to the Noteholders entitled thereto.
A-4-5
<PAGE> 133
Payments of interest on this Note on each Distribution Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by check mailed to the Person whose name
appears as the Registered Noteholder of the Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of
this Note (or any one or more Predecessor Notes) effected by any payments made
on any Distribution Date shall be binding upon all future Noteholders of this
Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Note on a Distribution Date,
then the Indenture Trustee, in the name of and on behalf of the Issuer, will
notify the Person who was the Registered Noteholder hereof as of the Record
Date preceding such Distribution Date by notice mailed or transmitted by
facsimile prior to such Distribution Date, and the amount then due and payable
shall be payable only upon presentation and surrender of this Note at the
Indenture Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes located in The City of
New York.
The Issuer shall pay interest on overdue installments of
interest at the Class A-4 Rate plus 2.00% per annum to the extent lawful.
As provided in the Indenture, the Notes may be redeemed, in
whole but not in part, in the manner and to the extent described in the
Indenture and the Sale and Servicing Agreement.
As provided in the Indenture, and subject to certain
limitations set forth therein, the transfer of
A-4-6
<PAGE> 134
this Note may be registered on the Note Register upon surrender of this Note
for registration of transfer at the office or agency designated by the Issuer
pursuant to the Indenture, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Indenture Trustee duly
executed by, the Noteholder hereof or such Noteholder's attorney duly
authorized in writing, with such signature guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, and thereupon one
or more new Notes of the same Class in the same Class in authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for
any registration of transfer or exchange of this Note, but the transferor may
be required to pay a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any such registration of transfer
or exchange.
Each Noteholder or Note Owner, by its acceptance of a Note or,
in the case of a Note Owner, a beneficial interest in a Note, covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on
the Notes or under the Indenture or any certificate or other writing delivered
in connection therewith, against (i) the Indenture Trustee or the Owner
Trustee, each in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent,
officer, director or employee of the Indenture Trustee or the Owner Trustee,
each in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee, each in its individual
capacity, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution for stock, unpaid capital contribution or failure to pay
any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in a Note, covenants and agrees
by accepting the benefits of the Indenture that such Noteholder or Note
A-4-7
<PAGE> 135
Owner will not at any time institute against the Seller, the General Partner or
the Issuer, or join in any institution against the Seller, the General Partner
or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or State bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the other Basic Documents.
The Issuer has entered into the Indenture and this Note is
issued with the intention that, for federal, State and local income, and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Indenture Trust Estate. Each Noteholder, by its acceptance of a
Note (and each Note Owner by its acceptance of a beneficial interest in a
Note), will be deemed to agree to treat the Notes for federal, State and local
income, single business and franchise tax purposes as indebtedness of the
Issuer.
Prior to the due presentment for registration of transfer of
this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day
of determination or as of such other date as may be specified in the Indenture)
is registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Noteholders under the Indenture
at any time by the Issuer with the consent of the Noteholders of Notes
evidencing not less than a majority of the principal amount of the Notes
Outstanding. The Indenture also contains provisions permitting the Noteholders
of Notes evidencing specified percentages of the principal amount of the Notes
Outstanding, on behalf of all Noteholders, to waive compliance by the Issuer
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Noteholder
of this Note (or any one or more Predecessor Notes) shall be conclusive and
binding upon such Noteholder and upon all future Noteholders of this
A-4-8
<PAGE> 136
Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note. The Indenture also permits the Indenture
Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of the Noteholders.
The term "Issuer", as used in this Note, includes any
successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the Noteholders under the Indenture.
The Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.
This Note and the Indenture shall be governed by, and
construed in accordance with the laws of the State of New York, without
reference to its conflicts of law provisions.
No reference herein to the Indenture, and no provision of this
Note or of the Indenture, shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the times, place and rate, and in the coin or currency herein
prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Basic Documents, none of Chemical Bank, in its
individual capacity, PNC Bank, Delaware, in its individual capacity, any owner
of a beneficial interest in the Issuer, or any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or assigns
shall be personally liable for, nor shall recourse be had to any of them for,
the payment of principal or of interest on this Note or performance of, or
omission to perform, any of the covenants, obligations or indemnifications
contained in the Indenture. The Noteholder of this Note, by his acceptance
hereof, agrees that, except as expressly provided in the Basic Documents, in
the case of an Event of Default under the Indenture, the Noteholder shall have
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<PAGE> 137
no claim against any of the foregoing for any deficiency, loss or claim
therefrom; provided, however, that nothing contained herein shall be taken to
prevent recourse to, and enforcement against, the assets of the Issuer for any
and all liabilities, obligations and undertakings contained in the Indenture or
in this Note.
A-4-10
<PAGE> 138
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
___________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
________________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _________________, attorney, to transfer said Note on the books
kept for registration thereof, with full power of substitution in the premises.
Dated: ___________________________ ___________________________*/
Signature Guaranteed
___________________________*/
_______________________
*/ NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the within
Note in every particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar.
A-4-11
<PAGE> 139
EXHIBIT B
[FORM OF NOTE DEPOSITORY AGREEMENT]
B-1
<PAGE> 140
SCHEDULE A
Schedule of Receivables
[Provided to the Indenture Trustee at the Closing]
SA-1
<PAGE> 141
APPENDIX A
Definitions and Usage
AA-1
<PAGE> 1
EXHIBIT 4.2
================================================================================
AMENDED AND RESTATED
TRUST AGREEMENT
between
FORD CREDIT AUTO RECEIVABLES TWO L.P.
as Depositor,
and
PNC BANK, DELAWARE,
as Owner Trustee
Dated as of June 1, 1996
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
DEFINITIONS AND USAGE
ARTICLE II
ORGANIZATION OF THE TRUST
<S> <C> <C>
SECTION 2.1. Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.2. Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.3. Purposes and Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.4. Appointment of Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.5. Capital Contribution of Owner Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.6. Declaration of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.7. Liability of the Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.8. Title to Trust Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.9. Situs of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.10. Representations and Warranties of the Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.11. Federal Income Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1. Initial Beneficial Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.2. Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.3. The Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.4. Authentication of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3.5. Registration of Certificates; Transfer and Exchange of Certificates . . . . . . . . . . . . . . . . 12
SECTION 3.6. Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.7. Persons Deemed Owners of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.8. Access to List of Certificateholders' Names and Addresses . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.9. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.10. Appointment of Certificate Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.11. Ownership by Depositor of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1. Prior Notice to Certificateholders with Respect to Certain Matters . . . . . . . . . . . . . . . . 18
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 4.2. Action by Certificateholders with Respect to Certain Matters . . . . . . . . . . . . . . . . . . . 19
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.4. Restrictions on Certificateholders' Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.5. Majority Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1. Establishment of Certificate Distribution Account . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.2. Application of Trust Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.3. Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 5.4. No Segregation of Monies; No Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 5.5. Accounting and Reports to Noteholders, Certificateholders, Internal Revenue Service and Others. . . 23
SECTION 5.6. Signature on Returns; Tax Matters Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1. General Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.2. General Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.3. Action upon Instruction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.4. No Duties Except as Specified in this Agreement or in Instructions . . . . . . . . . . . . . . . . 27
SECTION 6.5. No Action Except Under Specified Documents or Instructions . . . . . . . . . . . . . . . . . . . . 28
SECTION 6.6. Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VII
REGARDING THE OWNER TRUSTEE
SECTION 7.1. Acceptance of Trusts and Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 7.2. Furnishing of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 7.3. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 7.4. Reliance; Advice of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 7.5. Not Acting in Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.6. Owner Trustee Not Liable for Certificates or Receivables . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.7. Bank May Own Certificates and Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE VIII
COMPENSATION AND INDEMNITY OF OWNER TRUSTEE
SECTION 8.1. Owner Trustee's Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 8.2. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 8.3. Payments to Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE IX
TERMINATION
SECTION 9.1. Termination of Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 9.2. Dissolution upon Insolvency or Dissolution of Depositor or General Partner . . . . . . . . . . . . 37
SECTION 9.3. Prepayment of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1. Eligibility Requirements for Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.2. Resignation or Removal of Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10.3. Successor Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 10.4. Merger or Consolidation of Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 11.2. No Legal Title to Owner Trust Estate in Certificateholders . . . . . . . . . . . . . . . . . . . . 48
SECTION 11.3. Limitation on Rights of Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 11.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 11.5. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 11.6. Separate Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 11.7. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 11.8. No Petition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 11.9. No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 11.10. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 11.11. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 11.12. Maintenance of Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
EXHIBIT A Form of Certificate
EXHIBIT B Form of Certificate of Trust
EXHIBIT C Form of Investment Letter
APPENDIX A Definitions and Usage
</TABLE>
iii
<PAGE> 5
AMENDED AND RESTATED TRUST AGREEMENT, dated as of June 1, 1996 (as
from time to time amended, supplemented or otherwise modified and in effect,
this "Agreement"), between FORD CREDIT AUTO RECEIVABLES TWO L.P., a Delaware
limited partnership, as Depositor, having its principal executive office at The
American Road, Dearborn, Michigan 48121; and PNC BANK, DELAWARE, a Delaware
banking corporation (the "Bank"), not in its individual capacity but solely as
trustee under this Agreement (in such capacity, the "Owner Trustee"), having
its principal corporate trust office at 222 Delaware Avenue, Wilmington,
Delaware 19801.
WHEREAS, the parties hereto intend to amend and restate that
certain Trust Agreement, dated as of June 1, 1996, between the Depositor and
the Owner Trustee, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the receipt and sufficiency of which are hereby
acknowledged, the Depositor and the Owner Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS AND USAGE
Except as otherwise specified herein or as the context may
otherwise require, capitalized terms used but not otherwise defined herein are
defined in Appendix A hereto, which also contains rules as to usage that shall
be applicable herein.
<PAGE> 6
ARTICLE II
ORGANIZATION OF THE TRUST
SECTION 2.1. Name. The Trust created hereby shall be known
as "Ford Credit Auto Owner Trust 1996-A", in which name the Owner Trustee may
conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued.
SECTION 2.2. Office. The office of the Trust shall be in
care of the Owner Trustee at the Corporate Trust Office or at such other
address in the State of Delaware as the Owner Trustee may designate by written
notice to the Certificateholders and the Depositor.
SECTION 2.3. Purposes and Powers. (a) The purpose of the
Trust is, and the Trust shall have the power and authority, to engage in the
following activities:
(i) to issue the Notes pursuant to the Indenture, and the
Certificates pursuant to this Agreement, and to sell the Notes and the
Certificates upon the written order of the Depositor;
(ii) with the proceeds of the sale of the Notes and the
Certificates, to fund the Reserve Account, to pay the organizational,
start-up and transactional expenses of the Trust, and to pay the
balance to the Depositor pursuant to the Sale and Servicing Agreement;
(iii) to pay interest on and principal of the Notes and
distributions on the Certificates;
(iv) to Grant the Owner Trust Estate (other than the
Certificate Distribution Account and the proceeds thereof) to the
Indenture Trustee pursuant to the Indenture;
(v) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
2
<PAGE> 7
(vi) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith; and
(vii) subject to compliance with the Basic Documents, to
engage in such other activities as may be required in connection with
conservation of the Owner Trust Estate and the making of distributions
to the Noteholders and the Certificateholders.
The Trust is hereby authorized to engage in the foregoing activities. The
Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this
Agreement or the other Basic Documents.
SECTION 2.4. Appointment of Owner Trustee. The Depositor
hereby appoints the Owner Trustee as trustee of the Trust effective as of the
date hereof, to have all the rights, powers and duties set forth herein.
SECTION 2.5. Capital Contribution of Owner Trust Estate. As
of June 1, 1996, the Depositor sold, assigned, transferred, conveyed and set
over to the Owner Trustee the sum of $1. The Owner Trustee hereby acknowledges
receipt in trust from the Depositor, as of such date, of the foregoing
contribution, which shall constitute the initial Owner Trust Estate and shall
be deposited in the Certificate Distribution Account. The Depositor shall pay
the organizational expenses of the Trust as they may arise or shall, upon the
request of the Owner Trustee, promptly reimburse the Owner Trustee for any such
expenses paid by the Owner Trustee. On the Closing Date, the Depositor shall
convey to the Trust the Trust Property and the Owner Trustee shall convey to
the Depositor the Notes and the Certificates.
SECTION 2.6. Declaration of Trust. The Owner Trustee hereby
declares that it will hold the Owner Trust Estate in trust upon and subject to
the conditions set forth herein for the use and benefit of the
Certificateholders, subject to the obligations of the Trust under the Basic
Documents. It is the intention of the parties hereto that (i) the Trust
constitute a business trust under the Business Trust Statute and that this
Agreement constitute the governing instrument of such business
3
<PAGE> 8
trust and (ii) for income and franchise tax purposes, the Trust shall be
treated as a partnership, with the assets of the partnership being the
Receivables and other assets held by the Trust, the partners of the partnership
being the Certificateholders (including the Depositor) and the Notes
constituting indebtedness of the partnership. The parties agree that, unless
otherwise required by the appropriate tax authorities, the Depositor, on behalf
of the Trust, will file or cause to be filed annual or other necessary returns,
reports and other forms consistent with the characterization of the Trust as a
partnership for such tax purposes. Effective as of the date hereof, the Owner
Trustee shall have the rights, powers and duties set forth herein and in the
Business Trust Statute with respect to accomplishing the purposes of the Trust.
The Owner Trustee has filed the Certificate of Trust with the Secretary of
State.
SECTION 2.7. Liability of the Depositor. (a)
Notwithstanding Section 3803 of the Business Trust Statute, the Depositor in
its capacity as a Certificateholder shall be liable directly to, and will
indemnify each injured party for, all losses, claims, damages, liabilities and
expenses of the Trust (including Expenses, to the extent that the assets of the
Trust that would remain if all of the Notes were paid in full would be
insufficient to pay any such losses, claims, damages, liabilities or expenses,
or to the extent that such losses, claims, damages, liabilities and expenses in
fact are not paid out of the Owner Trust Estate) that the Depositor would be
liable if the Trust were a partnership under the Limited Partnership Act in
which the Depositor were a general partner; provided, however, that the
Depositor shall not be liable to or indemnify Noteholders or Note Owners for
any losses incurred by Noteholders or Note Owners in their capacity as holders
of or beneficial owners of interests in limited recourse debt secured by the
Owner Trust Estate or be liable to or indemnify Certificateholders for any
losses incurred by the Certificateholders if such losses would nevertheless
have been incurred if the Certificates were limited recourse debt secured by
the Owner Trust Estate. In addition, any third-party creditors of the Trust,
or the arrangement between the Depositor and the Trust (other than in
connection with the obligations described in the preceding sentence for which
the Depositor shall not be liable), shall be deemed third-party beneficiaries
of this para-
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graph. The obligations of the Depositor under this paragraph shall be
evidenced by the Certificates described in Section 3.11, which, for purposes of
the Business Trust Statute, shall be deemed to be a separate class of
Certificates from all other classes of Certificates issued by the Trust.
(b) No Certificateholder other than the Depositor to the
extent set forth in paragraph (a) of this Section 2.7, shall have any personal
liability for any liability or obligation of the Trust.
SECTION 2.8. Title to Trust Property. Legal title to the
entirety of the Owner Trust Estate shall be vested at all times in the Trust as
a separate legal entity, except where applicable law in any jurisdiction
requires title to any part of the Owner Trust Estate to be vested in a trustee
or trustees, in which case title shall be deemed to be vested in the Owner
Trustee, a co-trustee and/or a separate trustee, as the case may be.
SECTION 2.9. Situs of Trust. The Trust shall be located and
administered in the State of Delaware. All bank accounts maintained by the
Owner Trustee on behalf of the Trust shall be located in the State of Delaware
or the State of New York. The Trust shall not have any employees in any state
other than the State of Delaware; provided, however, that nothing herein shall
restrict or prohibit the Bank or the Owner Trustee from having employees within
or without the State of Delaware. Payments will be received by the Trust only
in Delaware or New York, and payments will be made by the Trust only from
Delaware or New York. The only office of the Trust will be at the Corporate
Trust Office in the State of Delaware.
SECTION 2.10. Representations and Warranties of the
Depositor. The Depositor hereby represents and warrants to the Owner Trustee
that:
(a) The Depositor is duly organized and validly existing as a
limited partnership in good standing under the laws of the State of Delaware,
with power and authority to own its properties and to conduct its business as
such properties are currently owned and such business is presently conducted.
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(b) The Depositor is duly qualified to do business as a
foreign limited partnership 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 shall require such qualifications.
(c) The Depositor has the power and authority to execute and
deliver this Agreement and to carry out its terms, and the Depositor has full
power and authority to sell and assign the property to be sold and assigned to,
and deposited with, the Trust, and the Depositor has duly authorized such sale
and assignment and deposit to the Trust; and the execution, delivery and
performance of this Agreement has been duly authorized by the Depositor.
(d) This Agreement constitutes a legal, valid, and binding
obligation of the Depositor, enforceable against the Depositor in accordance
with its terms, subject, as to enforceability, to applicable bankruptcy,
insolvency, reorganization, conservatorship, receivership, liquidation and
other similar laws and to general equitable principles.
(e) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do 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 or both) a default under, the Certificate of
Limited Partnership or the Limited Partnership Agreement, or any indenture,
agreement or other instrument to which the Depositor is a party or by which it
is bound; nor result in the creation or imposition of any lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than pursuant to the Basic Documents); nor violate any law
or, to the best of the Depositor's knowledge, any order, rule or regulation
applicable to the Depositor of any court or of any federal or state regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Depositor or its properties.
(f) There are no proceedings or investigations pending or, to
the Depositor's best knowledge, threatened before any court, regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
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over the Depositor or its properties: (i) asserting the invalidity of this
Agreement, the Indenture, any of the other Basic Documents, the Notes or the
Certificates, (ii) seeking to prevent the issuance of the Notes or the
Certificates or the consummation of any of the transactions contemplated by
this Agreement, the Indenture or any of the other Basic Documents, (iii)
seeking any determination or ruling that might materially and adversely affect
the performance by the Depositor of its obligations under, or the validity or
enforceability of, this Agreement or (iv) which might adversely affect the
federal income tax attributes, or Applicable Tax State franchise or income tax
attributes, of the Notes and the Certificates.
(g) The representations and warranties of the Depositor in
Section 3.1 of the Purchase Agreement are true and correct.
SECTION 2.11. Federal Income Tax Matters. The
Certificateholders acknowledge that it is their intent and that they understand
it is the intent of the Depositor and the Servicer that, for purposes of
federal income, state and local income and franchise tax and any other income
taxes, the Trust will be treated as a partnership and the Certificateholders
(including the Depositor) will be treated as partners in that partnership. The
Depositor and the other Certificateholders by acceptance of a Certificate agree
to such treatment and agree to take no action inconsistent with such treatment.
For purposes of federal income, state and local income and franchise tax and
any other income taxes each month:
(a) amounts paid to any Certificateholder pursuant to
Section 5.2(a)(i) shall be treated as a guaranteed payment within the
meaning of Section 707(c) of the Code;
(b) to the extent the characterization provided for in
paragraph (a) of this Section 2.11 is not respected, gross ordinary
income of the Trust for such month as determined for federal income
tax purposes shall be allocated among the Certificateholders as of the
Record Date occurring within such month, in proportion to their
ownership of the aggregate Certificate Balance on such date, in an
amount up to the sum of (i) the Accrued Certificate
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Interest for such month, (ii) the portion of the market discount on
the Receivables accrued during such month that is allocable to the
excess, if any, of the aggregate Initial Certificate Balance of the
Certificates over their initial aggregate issue price and (iii) any
amount expected to be distributed to the Certificateholders pursuant
to Section 4.6(c) of the Sale and Servicing Agreement (to the extent
not previously allocated pursuant to this paragraph (b)) to the extent
necessary to reverse any net loss previously allocated to
Certificateholders (to the extent not previously reversed pursuant to
this clause (iii));
(c) thereafter all remaining net income of the Trust
(subject to the modifications set forth below) for such month as
determined for federal income tax purposes (and each item of income,
gain, credit, loss or deduction entering into the computation thereof)
shall be allocated to the Depositor, to the extent thereof; and
(d) any other provision of this Agreement to the contrary
notwithstanding, the Depositor shall be allocated no less than 2% of
each item of income, gain, credit, loss and deduction (which
allocation shall be made only to the extent the other allocations of
this Section 2.11 are insufficient to provide for such 2% allocation
for such month).
If the gross ordinary income of the Trust for any month is insufficient for the
allocations described in paragraph (b) above, subsequent gross ordinary income
shall first be allocated to make up such shortfall before any allocation
pursuant to paragraph (c) above. Net losses of the Trust, if any, for any
month as determined for federal income tax purposes (and each item of income,
gain, credit, loss or deduction entering into the computation thereof) shall be
allocated to the Depositor to the extent the Depositor, in its capacity as
"general partner," is reasonably expected to bear the economic burden of such
net losses, and any remaining net losses shall be allocated among the
Certificateholders as of the Record Date occurring within such month in
proportion to their ownership of the aggregate Certificate Balance on such
Record Date. The Depositor is authorized to modify the allocations in this
paragraph if necessary or appro-
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priate, in its sole discretion, for the allocations to fairly reflect the
economic income, gain or loss to the Depositor or the Certificateholders or as
otherwise required by the Code.
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ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1. Initial Beneficial Ownership. Upon the
formation of the Trust by the contribution by the Depositor pursuant to Section
2.5 and until the issuance of the Certificates, the Depositor shall be the sole
beneficial owner of the Trust.
SECTION 3.2. Capital Accounts. (a) The Owner Trustee shall
establish and maintain a separate bookkeeping account (a "Capital Account") for
each Certificateholder. The initial balance of the Capital Account for each
Certificateholder shall be (i) in the case of Certificateholders other than the
Depositor, the amount initially paid for the Certificate and (ii) in the case
of the Depositor, (x) the fair market value of the Receivables minus (y) the
proceeds of the sale of Notes and Certificates (other than Certificates held by
the Depositor) net of the Reserve Initial Deposit. The Capital Account of each
Certificateholder shall also be increased by (i) the dollar amount of any
additional cash contributions made by such Certificateholder, (ii) the fair
market value of any property (other than cash) contributed to the Trust by such
Certificateholder (net of any liabilities to which the property is subject),
and (iii) allocations to such Certificateholder of income and gain (including
income exempt from tax). The Capital Account of each Certificateholder shall
be decreased by (i) the dollar amount of any cash distributions made to such
Certificateholder (ii) the fair market value of any property (other than cash)
distributed to such Certificateholder (net of any liabilities to which the
property is subject), (iii) allocations to such Certificateholder of loss or
deductions (or items thereof), and (iv) any allocations of expenditures of the
Trust described in Section 705(a)(2)(B) of the Code.
(b) Notwithstanding any other provision of this
Agreement to the contrary, the foregoing provisions of this Section 3.2
regarding the maintenance of Capital Accounts shall be construed so as to
comply with the provisions of the Treasury Regulations promulgated pursuant to
Section 704 of the Code. The Depositor is hereby authorized to modify these
provisions to the minimum extent necessary to comply with such regulations.
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SECTION 3.3. The Certificates. The Certificates shall be
issued in one or more registered, definitive, physical certificates, in the
form set forth in Exhibit A, in denominations of at least $20,000 and in
integral multiples of $1,000 in excess thereof; provided, however, that
Certificates may be issued to the Depositor pursuant to Section 3.11 in such
denominations as to represent at least 2% of the Initial Certificate Balance.
No Certificate may be sold, transferred, assigned, participated, pledged, or
otherwise disposed of (any such act, a "Transfer") to any Person except in
accordance with the provisions of Section 3.5 and any attempted Transfer in
violation of Section 3.5 shall be null and void (each a "Void Transfer"). The
Certificates issued to the Depositor pursuant to Section 3.11 or any benefi-
cial interest therein may not be Transferred to any Person, and any attempted
Transfer shall be null and void.
The Certificates shall be executed on behalf of the Trust by
manual or facsimile signature of an authorized officer of the Owner Trustee.
Certificates bearing the manual or facsimile signatures of individuals who
were, at the time when such signatures shall have been affixed, authorized to
sign on behalf of the Trust, shall be validly issued and entitled to the
benefits of this Agreement, notwithstanding that such individuals or any of
them shall have ceased to be so authorized prior to the authentication and
delivery of such Certificates or did not hold such offices at the date of
authentication and delivery of such Certificates.
If Transfer of the Certificates is permitted pursuant to
Section 3.5, a transferee of a Certificate shall become a Certificateholder,
and shall be entitled to the rights and subject to the obligations of a
Certificateholder hereunder upon such transferee's acceptance of a Certificate
duly registered in such transferee's name pursuant to Section 3.5.
SECTION 3.4. Authentication of Certificates. Concurrently
with the initial sale of the Receivables to the Trust pursuant to the Sale and
Servicing Agreement, the Owner Trustee shall cause the Certificates, in an
aggregate principal balance equal to the Initial Certificate Balance, to be
executed on behalf of the Trust, authenticated and delivered to or upon the
written order of
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the Depositor, signed by the chairman of the board, the president, any
executive vice president, any vice president, the secretary, any assistant
secretary, the treasurer or any assistant treasurer of the General Partner,
without further action by the Depositor, in authorized denominations. No
Certificate shall entitle its Certificateholder to any benefit under this
Agreement, or shall be valid for any purpose, unless there shall appear on such
Certificate a certificate of authentication substantially in the form set forth
in Exhibit A attached hereto executed by the Owner Trustee by manual signature;
such authentication shall constitute conclusive evidence that such Certificate
shall have been duly authenticated and delivered hereunder. All Certificates
shall be dated the date of their authentication.
SECTION 3.5. Registration of Certificates; Transfer and
Exchange of Certificates. (a) The Certificate Registrar shall keep or cause
to be kept, at the office or agency maintained pursuant to Section 3.9, a
Certificate Register in which, subject to such reasonable regulations as it may
prescribe, the Trust shall provide for the registration of Certificates and of
Transfers and exchanges of Certificates as herein provided. The Bank shall be
the initial Certificate Registrar. No Transfer of a Certificate shall be
recognized except upon registration of such Transfer in the Certificate
Register.
(b) No Transfer of any Certificate shall be permitted,
recognized or recorded unless the prospective transferee of such Certificate
shall provide a letter in the form of Exhibit C to the Owner Trustee and the
Certificate Registrar, in which such prospective transferee shall represent the
following:
(i) It is not (A) an employee benefit plan, as defined in
Section 3(3) of ERISA, that is subject to Title I of ERISA, (B) a plan
described in Section 4975(e)(1) of the Code, (C) a governmental plan,
as defined in Section 3(32) of ERISA, subject to any federal, state or
local law which is, to a material extent, similar to the provisions of
Section 406 of ERISA or Section 4975 of the Code, (D) an entity whose
underlying assets include plan assets by reason of a plan's investment
in the entity (within the meaning of Department of Labor Regulation 29
C.F.R. Section 2510.3-101) or (E) a person investing "plan
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assets" of any such plan (including without limitation, for purposes
of this clause (E), any insurance company general account, but
excluding any entity registered under the Investment Company Act of
1940, as amended).
(ii) It is a Person who is either (A)(1) a citizen or
resident of the United States, (2) a corporation, partnership or other
entity organized in or under the laws of the United States or any
political subdivision thereof or (3) a Person not described in (1) or
(2) whose ownership of the Certificates is effectively connected with
such Person's conduct of a trade or business within the United States
(within the meaning of the Code) and who provides the Depositor and
the Owner Trustee an IRS Form 4224 (and such other certifications,
representations or opinions of counsel as may be requested by the
Depositor or the Owner Trustee) or (B) an estate or trust the income
of which is includible in gross income for United States federal
income tax purposes, regardless of source.
(iii) It understands that any purported Transfer of any
Certificate (or any interest therein) to any Person who does not meet
the conditions of paragraphs (i) and (ii) above shall be a Void
Transfer, and the purported transferee in a Void Transfer shall not be
recognized by the Trust or any other Person as a Certificateholder for
any purpose.
(iv) It agrees that if it determines to Transfer any of the
Certificates it will cause its proposed transferee to provide to the
Trust and the Certificate Registrar a letter substantially in the form
of Exhibit C hereof or such other written statement as the Depositor
shall prescribe.
(c) Upon surrender for registration of Transfer of any
Certificate at the office or agency maintained pursuant to Section 3.9, the
Owner Trustee shall execute, authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates in
authorized denominations of a like aggregate amount dated the date of
authentication by the Owner Trustee or any authenticating agent. At the option
of a Certificateholder, Certificates (other than the Certificates
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issued to the Depositor pursuant to Section 3.11) may be exchanged for other
Certificates of authorized denominations of a like aggregate amount upon
surrender of the Certificates to be exchanged at the office or agency
maintained pursuant to Section 3.9.
Every Certificate presented or surrendered for registration of
Transfer or exchange shall be accompanied by a written instrument of transfer
in form satisfactory to the Owner Trustee and the Certificate Registrar, duly
executed by the Certificateholder or his attorney duly authorized in writing,
with such signature guaranteed by a member firm of the New York Stock Exchange
or a commercial bank or trust company. Each Certificate surrendered for
registration of Transfer or exchange shall be cancelled and subsequently
disposed of by the Certificate Registrar in accordance with its customary
practice.
No service charge shall be made for any registration of
Transfer or exchange of Certificates, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any Transfer or
exchange of Certificates.
The preceding provisions of this Section 3.5 notwithstanding,
the Owner Trustee shall not make and the Certificate Registrar need not
register any Transfer or exchange of Certificates for a period of fifteen (15)
days preceding any Distribution Date for any payment with respect to the
Certificates.
SECTION 3.6. Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate shall be surrendered to the
Certificate Registrar, or if the Certificate Registrar shall receive evidence
to its satisfaction of the destruction, loss or theft of any Certificate and
(b) there shall be delivered to the Certificate Registrar and the Owner Trustee
such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice that such Certificate shall have been
acquired by a bona fide purchaser, the Owner Trustee on behalf of the Trust
shall execute and the Owner Trustee shall authenticate and deliver, in exchange
for, or in lieu of, any such mutilated, destroyed, lost or stolen Certificate a
new Certificate of like tenor and denomination. In connection
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with the issuance of any new Certificate under this Section 3.6, the Owner
Trustee or the Certificate Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Certificate issued pursuant to this
Section 3.6 shall constitute conclusive evidence of ownership in the Trust, as
if originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
SECTION 3.7. Persons Deemed Owners of Certificates. Prior to
due presentation of a Certificate for registration of Transfer, the Owner
Trustee, the Certificate Registrar and any Certificate Paying Agent may treat
the Person in whose name any Certificate shall be registered in the Certificate
Register as the owner of such Certificate for the purpose of receiving
distributions pursuant to Section 5.2 and for all other purposes whatsoever,
and none of the Owner Trustee, the Certificate Registrar or any Certificate
Paying Agent shall be bound by any notice to the contrary.
SECTION 3.8. Access to List of Certificateholders' Names and
Addresses. The Owner Trustee shall furnish or cause to be furnished to the
Servicer and the Depositor, or to the Indenture Trustee, within fifteen (15)
days after receipt by the Owner Trustee of a written request therefor from the
Servicer or the Depositor, or the Indenture Trustee, as the case may be, a
list, in such form as the requesting party may reasonably require, of the names
and addresses of the Certificateholders as of the most recent Record Date. If
three or more Certificateholders or one or more Certificateholders of
Certificates evidencing not less than 25% of the Certificate Balance apply in
writing to the Owner Trustee, and such application states that the applicants
desire to communicate with other Certificateholders with respect to their
rights under this Agreement or under the Certificates and such application is
accompanied by a copy of the communication that such applicants propose to
transmit, then the Owner Trustee shall, within five (5) Business Days after the
receipt of such application, afford such applicants access during normal
business hours to the current list of Certificateholders. Each
Certificateholder, by receiving and holding a Certificate, shall be deemed to
have agreed not to hold any of the Depositor, the Certificate Registrar or the
Owner Trustee accountable by
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reason of the disclosure of its name and address, regardless of the source from
which such information was derived.
SECTION 3.9. Maintenance of Office or Agency. The Owner
Trustee shall maintain in the State of Delaware, an office or offices or agency
or agencies where Certificates may be surrendered for registration of Transfer
or exchange and where notices and demands to or upon the Owner Trustee in
respect of the Certificates and the Basic Documents may be served. The Owner
Trustee initially designates PNC Bank, Delaware, 222 Delaware Avenue,
Wilmington, Delaware 19801, Attention: Michael B. McCarthy as its principal
corporate trust office for such purposes. The Owner Trustee shall give prompt
written notice to the Depositor and to the Certificateholders of any change in
the location of the Certificate Registrar or any such office or agency.
SECTION 3.10. Appointment of Certificate Paying Agent. The
Certificate Paying Agent shall make distributions to Certifi- cateholders from
the Certificate Distribution Account pursuant to Section 5.2 and shall report
the amounts of such distributions to the Owner Trustee. Any Certificate Paying
Agent shall have the revocable power to withdraw funds from the Certificate
Distribution Account for the purpose of making the distributions referred to
above. The Owner Trustee may revoke such power and remove the Certificate
Paying Agent if the Owner Trustee determines in its sole discretion that the
Certificate Paying Agent shall have failed to perform its obligations under
this Agreement in any material respect. The Certificate Paying Agent shall
initially be the Owner Trustee, and any co-paying agent chosen by the Owner
Trustee. The Owner Trustee shall be permitted to resign as Certificate Paying
Agent upon thirty (30) days' written notice to the Owner Trustee. In the event
that the Bank shall no longer be the Certificate Paying Agent, the Owner
Trustee shall appoint a successor to act as Certificate Paying Agent (which
shall be a bank or trust company). The Owner Trustee shall cause such
successor Certificate Paying Agent or any additional Certificate Paying Agent
appointed by the Owner Trustee to execute and deliver to the Owner Trustee an
instrument in which such successor Certificate Paying Agent or additional
Certificate Paying Agent shall agree with the Owner Trustee that as Certificate
Paying Agent,
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such successor Certificate Paying Agent or additional Certificate Paying Agent
will hold all sums, if any, held by it for payment to the Certificateholders in
trust for the benefit of the Certificateholders entitled thereto until such
sums shall be paid to such Certificateholders. The Certificate Paying Agent
shall return all unclaimed funds to the Owner Trustee and upon removal of a
Certificate Paying Agent such Certificate Paying Agent shall also return all
funds in its possession to the Owner Trustee. The provisions of Sections 7.1,
7.3, 7.4 and 8.1 shall apply to the Owner Trustee also in its role as
Certificate Paying Agent, for so long as the Owner Trustee shall act as
Certificate Paying Agent and, to the extent applicable, to any other paying
agent appointed hereunder. Any reference in this Agreement to the Certificate
Paying Agent shall include any co-paying agent unless the context requires
otherwise.
SECTION 3.11. Ownership by Depositor of Certificates. The
Depositor shall, on the Closing Date, acquire, and shall thereafter retain,
beneficial and record ownership of, Certificates representing at least 2% of
the Certificate Balance. The Depositor shall also be entitled to receive
amounts released from the Reserve Account and any amounts not needed on any
Distribution Date to make payments on the Notes or the Certificates or to make
deposits to the Reserve Account pursuant to Section 4.6 of the Sale and
Servicing Agreement. The Depositor may not Transfer any such rights unless it
shall have received an Opinion of Counsel that such Transfer shall not cause
the Trust to be classified as an association (or publicly traded partnership)
taxable as a corporation. Any attempted Transfer of any Certificate that would
reduce such interest of the Depositor (including the right to receive
distributions in respect of interest on the Certificates held by the Depositor)
below 2% of (x) the Certificate Balance and (y) the aggregate of the
distributions in respect of interest on the Certificate Balance shall be null
and void. The Owner Trustee shall cause any Certificate issued to the
Depositor to contain a legend to the following effect: "THIS CERTIFICATE IS NOT
TRANSFERABLE AND ANY ATTEMPTED TRANSFER OF THIS CERTIFICATE SHALL BE NULL AND
VOID".
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ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1. Prior Notice to Certificateholders with Respect
to Certain Matters. With respect to the following matters, the Owner Trustee
shall not take action unless, (I) at least thirty (30) days before the taking
of such action, the Owner Trustee shall have notified the Certificateholders
and the Rating Agencies in writing of the proposed action and (II)
Certificateholders holding not less than a majority of the aggregate
Certificate Balance shall not have notified the Owner Trustee in writing prior
to the 30th day after such notice is given that such Certificateholders have
withheld consent or provided alternative direction:
(a) the initiation of any material claim or lawsuit by
the Trust (except claims or lawsuits brought by the Servicer in
connection with the collection of the Receivables) and the settlement
of any material action, claim or lawsuit brought by or against the
Trust (except with respect to the aforementioned claims or lawsuits
for collection by the Servicer of the Receivables);
(b) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed
under the Business Trust Statute);
(c) the amendment of the Indenture by a supplemental
indenture in circumstances where the consent of any Noteholder is
required;
(d) the amendment of the Indenture by a supplemental
indenture in circumstances where the consent of any Noteholder is not
required and such amendment materially adversely affects the interests
of the Certificateholders;
(e) the amendment, change or modification of the Sale and
Servicing Agreement or the Administration Agreement, except to cure
any ambiguity or to amend or supplement any provision in a manner or
to add any provision that would not materially adverse-
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ly affect the interests of the Certificateholders; or
(f) the appointment pursuant to the Indenture of a
successor Note Registrar, Note Paying Agent or Indenture Trustee, or
pursuant to this Agreement of a successor Certificate Registrar, or
the consent to the assignment by the Note Registrar, Note Paying Agent
or Indenture Trustee or Certificate Registrar of its obligations under
the Indenture or this Agreement, as applicable.
SECTION 4.2. Action by Certificateholders with Respect to
Certain Matters. The Owner Trustee may not, except upon the occurrence of an
Event of Servicing Termination subsequent to the payment in full of the Notes
and in accordance with the written direction of Certificateholders holding not
less than a majority of the aggregate Certificate Balance, (a) remove the
Servicer under the Sale and Servicing Agreement pursuant to Article VIII
thereof, (b) appoint a successor Servicer pursuant to Article VIII of the Sale
and Servicing Agreement, (c) remove the Administrator under the Administration
Agreement pursuant to Section 9 thereof or (d) appoint a successor
Administrator pursuant to Section 9 of the Administration Agreement.
SECTION 4.3. Action by Certificateholders with Respect to
Bankruptcy. The Owner Trustee shall not have the power to commence a voluntary
proceeding in bankruptcy relating to the Trust unless the Notes have been paid
in full and each Certificateholder (other than the Depositor) approves of such
commencement in advance and delivers to the Owner Trustee a certificate
certifying that such Certificateholder reasonably believes that the Trust is
insolvent.
SECTION 4.4. Restrictions on Certificateholders' Power. The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any
obligation of the Trust or the Owner Trustee under this Agreement or any of the
other Basic Documents or would be contrary to Section 2.3, nor shall the Owner
Trustee be obligated to follow any such direction, if given.
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SECTION 4.5. Majority Control. Except as expressly provided
herein, any action that may be taken by the Certificateholders under this
Agreement may be taken by the Certificateholders of Certificates evidencing not
less than a majority of the Certificate Balance. Except as expressly provided
herein, any written notice of the Certificateholders delivered pursuant to this
Agreement shall be effective if signed by Certificateholders of Certificates
evidencing not less than a majority of the Certificate Balance at the time of
the delivery of such notice.
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ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1. Establishment of Certificate Distribution
Account. Pursuant to Section 4.1(c) of the Sale and Servicing Agreement, there
has been established and there shall be maintained a segregated trust account
in the name of "PNC Bank, Delaware, as Owner Trustee" at a Qualified
Institution or Qualified Trust Institution (which shall initially be the
corporate trust department of the Bank), which shall be designated as the
"Certificate Distribution Account." Except as expressly provided in Section
3.10, the Certificate Distribution Account shall be under the sole dominion and
control of the Owner Trustee. All monies deposited from time to time in the
Certificate Distribution Account pursuant to the Sale and Servicing Agreement
shall be applied as provided in the Basic Documents. In the event that the
Certificate Distribution Account is no longer to be maintained at the corporate
trust department of the Bank, the Servicer shall, with the Owner Trustee's
assistance as necessary, cause the Certificate Distribution Account to be moved
to a Qualified Institution or a Qualified Trust Institution within ten (10)
Business Days (or such longer period not to exceed thirty (30) calendar days as
to which each Rating Agency may consent). The Certificate Distribution Account
will be established and maintained pursuant to an account agreement which
specifies New York law as the governing law.
SECTION 5.2. Application of Trust Funds.
(a) On each Distribution Date, the Owner Trustee (if other than the
Certificate Paying Agent) shall, based on the information contained in the
Servicer's Certificate delivered on the relevant Determination Date pursuant to
Section 3.9 of the Sale and Servicing Agreement, transfer the amount deposited
in the Certificate Distribution Account pursuant to Section 4.6(c) of the Sale
and Servicing Agreement on or prior to such Distribution Date to the
Certificate Paying Agent, or the Certificate Paying Agent, based upon such
information, shall withdraw from the Certificate Distribution Account, for
distribution to the Certificateholders as of the related Record Date on a pro
rata basis, to the extent of funds available, in the following order of
priority:
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(i) first, an amount equal to the Accrued
Certificate Interest; and
(ii) second, an amount equal to the
Certificateholders' Regular Principal.
(b) On each Distribution Date, the Owner Trustee shall, or
shall cause the Certificate Paying Agent to, send to each Certificateholder as
of the related Record Date the statement provided to the Owner Trustee by the
Servicer pursuant to Section 4.9 of the Sale and Servicing Agreement with
respect to such Distribution Date.
(c) In the event that any withholding tax is imposed on the
Trust's payment (or allocations of income) to a Certifica- teholder, such tax
shall reduce the amount otherwise distributable to such Certificateholder in
accordance with this Section 5.2. The Owner Trustee and each Certificate
Paying Agent is hereby authorized and directed to retain from amounts otherwise
distributable to the Certificateholders sufficient funds for the payment of any
such withholding tax that is legally owed by the Trust (but such authorization
shall not prevent the Owner Trustee from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings). The amount of any withholding tax imposed
with respect to a Certificateholder shall be treated as cash distributed to
such Certificateholder at the time it is withheld by the Trust and remitted to
the appropriate taxing authority. If there is a possibility that withholding
tax is payable with respect to a distribution (such as a distribution to a
non-U.S. Certificateholder), the Owner Trustee may, in its sole discretion,
withhold such amounts in accordance with this paragraph (d). In the event that
a Certificateholder wishes to apply for a refund of any such withholding tax,
the Owner Trustee shall reasonably cooperate with such Certificateholder in
making such claim so long as such Certificateholder agrees to reimburse the
Owner Trustee for any out-of-pocket expenses incurred.
SECTION 5.3. Method of Payment. Subject to Section 9.1(c),
distributions required to be made to Certificateholders on any Distribution
Date shall be made to each Certificateholder of record on the preceding Record
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Date either by wire transfer, in immediately available funds, to the account of
such Certificateholder at a bank or other entity having appropriate facilities
therefor, if (i) such Certificateholder shall have provided to the Certificate
Registrar appropriate written instructions at least five (5) Business Days
prior to such Distribution Date and such Certificateholder's Certificates in
the aggregate evidence a denomination of not less than $1,000,000, or (ii) such
Certificateholder is the Depositor or, if not, by check mailed to such
Certificateholder at the address of such Certificateholder appearing in the
Certificate Register. Notwithstanding the foregoing, the final distribution in
respect of any Certificate (whether on the Final Scheduled Distribution Date or
otherwise) will be payable only upon presentation and surrender of such
Certificate at the office or agency maintained for that purpose by the Owner
Trustee pursuant to Section 3.9.
SECTION 5.4. No Segregation of Monies; No Interest. Subject
to Sections 5.1 and 5.2, monies received by the Owner Trustee hereunder need
not be segregated in any manner except to the extent required by law, the
Indenture or the Sale and Servicing Agreement, and may be deposited under such
general conditions as may be prescribed by law, and the Owner Trustee shall not
be liable for any interest thereon.
SECTION 5.5. Accounting and Reports to Noteholders,
Certificateholders, Internal Revenue Service and Others. The Owner Trustee
shall, based on information provided by or on behalf of the Depositor, (a)
maintain (or cause to be maintained) the books of the Trust on a calendar year
basis on the accrual method of accounting, (b) deliver (or cause to be
delivered) to each Certificateholder, as may be required by the Code and
applicable Treasury Regulations, such information as may be required (including
Schedule K-1) to enable each Certificateholder to prepare its federal and state
income tax returns, (c) file (or cause to be filed) such tax returns relating
to the Trust (including a partnership information return, IRS Form 1065), and
make such elections as may from time to time be required or appropriate under
any applicable state or federal statute or rule or regulation thereunder so as
to maintain the Trust's characterization as a partnership for federal income
tax purposes, (d) cause such tax returns to be signed in the
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manner required by law and (e) collect (or cause to be collected) any
withholding tax as described in and in accordance with Section 5.2(c) with
respect to income or distributions to Certificateholders. The Owner Trustee
shall elect under Section 1278 of the Code to include in income currently any
market discount that accrues with respect to the Receivables. The Owner
Trustee shall not make the election provided under Section 754 of the Code.
SECTION 5.6. Signature on Returns; Tax Matters Partner. (a)
The Depositor, as general partner for income tax purposes, shall prepare (or
cause to be prepared) and sign, on behalf of the Trust, the tax returns of the
Trust.
(b) The Depositor shall be designated the "tax matters
partner" of the Trust pursuant to Section 6231(a)(7)(A) of the Code and
applicable Treasury Regulations.
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ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1. General Authority. The Owner Trustee is
authorized and directed to execute and deliver the Basic Documents to which the
Trust is to be a party and each certificate or other document attached as an
exhibit to or contemplated by the Basic Documents to which the Trust is to be a
party and any amendment or other agreement, in each case, in such form as the
Depositor shall approve, as evidenced conclusively by the Owner Trustee's
execution thereof and the Depositor's execution of this Agreement, and to
direct the Indenture Trustee to authenticate and deliver (i) Class A-1 Notes in
the aggregate principal amount of $320,031,000, (ii) Class A-2 Notes in the
aggregate principal amount of $283,049,000, (iii) Class A-3 Notes in the
aggregate principal amount of $219,119,000 and (iv) Class A-4 Notes in the
aggregate principal amount of $184,607,000. In addition to the foregoing, the
Owner Trustee is authorized to take all actions required of the Trust pursuant
to the Basic Documents. The Owner Trustee is further authorized from time to
time to take such action on behalf of the Trust as is permitted by the Basic
Documents and which the Servicer or the Administrator recommends with respect
to the Basic Documents, except to the extent that this Agreement expressly
requires the consent of Certificateholders for such action.
SECTION 6.2. General Duties. It shall be the duty of the
Owner Trustee to discharge (or cause to be discharged) all of its
responsibilities pursuant to the terms of this Agreement and the other Basic
Documents to which the Trust is a party and to administer the Trust in the
interest of the Certificateholders, subject to the lien of the Indenture and in
accordance with the provisions of this Agreement and the other Basic Documents.
Notwithstanding the foregoing, the Owner Trustee shall be deemed to have
discharged its duties and responsibilities hereunder and under the Basic
Documents to the extent the Administrator is required in the Administration
Agreement to perform any act or to discharge such duty of the Owner Trustee or
the Trust hereunder or under any other Basic Document, and the Owner Trustee
shall not be held liable for the default or failure of the Administrator to
carry out its obligations under the Administration Agreement.
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Except as expressly provided in the Basic Documents, the Owner Trustee shall
have no obligation to administer, service or collect the Receivables or to
maintain, monitor or otherwise supervise the administration, servicing or
collection of the Receivables.
SECTION 6.3. Action upon Instruction. (a) Subject to
Article IV, and in accordance with the terms of the Basic Documents, the
Certificateholders may, by written instruction, direct the Owner Trustee in the
management of the Trust.
(b) The Owner Trustee shall not be required to take any
action hereunder or under any Basic Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such action
is likely to result in liability on the part of the Owner Trustee or is
contrary to the terms hereof or of any other Basic Document or is otherwise
contrary to law.
(c) Whenever the Owner Trustee is unable to decide
between alternative courses of action permitted or required by the terms of
this Agreement or any other Basic Document, the Owner Trustee shall promptly
give notice (in such form as shall be appropriate under the circumstances) to
the Certificateholders requesting instruction as to the course of action to be
adopted, and to the extent the Owner Trustee acts in good faith in accordance
with any written instruction of the Certificateholders received, the Owner
Trustee shall not be liable on account of such action to any Person. If the
Owner Trustee shall not have received appropriate instruction within ten (10)
days of such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action, not
inconsistent with this Agreement or the other Basic Documents, as it shall deem
to be in the best interests of the Certificateholders, and shall have no
liability to any Person for such action or inaction.
(d) In the event the Owner Trustee is unsure as to the
application of any provision of this Agreement or any other Basic Document or
any such provision is ambiguous as to its application, or is, or appears to be,
in conflict with any other applicable provision, or in
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the event that this Agreement permits any determination by the Owner Trustee or
is silent or is incomplete as to the course of action that the Owner Trustee is
required to take with respect to a particular set of facts, the Owner Trustee
may give notice (in such form as shall be appropriate under the circumstances)
to the Certificateholders requesting instruction and, to the extent that the
Owner Trustee acts or refrains from acting in good faith in accordance with any
such instruction received, the Owner Trustee shall not be liable, on account of
such action or inaction, to any Person. If the Owner Trustee shall not have
received appropriate instruction within ten (10) days of such notice (or within
such shorter period of time as reasonably may be specified in such notice or
may be necessary under the circumstances) it may, but shall be under no duty
to, take or refrain from taking such action not inconsistent with this
Agreement or the other Basic Documents, as it shall deem to be in the best
interests of the Certificateholders, and shall have no liability to any Person
for such action or inaction.
SECTION 6.4. No Duties Except as Specified in this Agreement
or in Instructions. The Owner Trustee shall not have any duty or obligation to
manage, make any payment with respect to, register, record, sell, dispose of,
or otherwise deal with the Owner Trust Estate, or to otherwise take or refrain
from taking any action under, or in connection with, any document contemplated
hereby to which the Owner Trustee or the Trust is a party, except as expressly
provided by the terms of this Agreement or in any document or written
instruction received by the Owner Trustee pursuant to Section 6.3; and no
implied duties or obligations shall be read into this Agreement or any other
Basic Document against the Owner Trustee. The Owner Trustee shall have no
responsibility for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder or to prepare or file any
Commission filing for the Trust or to record this Agreement or any other Basic
Document. The Owner Trustee nevertheless agrees that it will, at its own cost
and expense, promptly take all action as may be necessary to discharge any lien
(other than the lien of the Indenture) on any part of the Owner Trust Estate
that results from actions by, or claims against, the Owner Trustee that are not
related
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to the ownership or the administration of the Owner Trust Estate.
SECTION 6.5. No Action Except Under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose
of or otherwise deal with any part of the Owner Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the
Owner Trustee pursuant to this Agreement, (ii) in accordance with the other
Basic Documents to which the Trust or the Owner Trust is a party and (iii) in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.3.
SECTION 6.6. Restrictions. The Owner Trustee shall not take
any action (a) that is inconsistent with the purposes of the Trust set forth in
Section 2.3 or (b) that, to the actual knowledge of the Owner Trustee, would
(i) affect the treatment of the Notes as indebtedness for federal income or
Applicable Tax State income or franchise tax purposes, (ii) be deemed to cause
a taxable exchange of the Notes for federal income or Applicable Tax State
income or franchise tax purposes or (iii) cause the Trust or any portion
thereof to be taxable as an association (or publicly traded partnership)
taxable as a corporation for federal income or Applicable Tax State income or
franchise tax purposes. The Certificateholders shall not direct the Owner
Trustee to take action that would violate the provisions of this Section 6.6.
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ARTICLE VII
REGARDING THE OWNER TRUSTEE
SECTION 7.1. Acceptance of Trusts and Duties. The Owner
Trustee accepts the trusts hereby created and agrees to perform its duties
hereunder with respect to such trusts but only upon the terms of this
Agreement. The Owner Trustee also agrees to disburse all monies actually
received by it constituting part of the Owner Trust Estate upon the terms of
this Agreement to which the Trust or Owner Trustee is a party and the other
Basic Documents. The Owner Trustee shall not be answerable or accountable
hereunder or under any other Basic Document under any circumstances, except (i)
for its own willful misconduct, bad faith or negligence or (ii) in the case of
the inaccuracy of any representation or warranty contained in Section 7.3
expressly made by the Owner Trustee. In particular, but not by way of
limitation (and subject to the exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error
of judgment made by a responsible officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in accordance with the
instructions of any Certificateholder, the Indenture Trustee, the
Depositor, the Administrator or the Servicer;
(c) no provision of this Agreement or any other Basic
Document shall require the Owner Trustee to expend or risk funds or
otherwise incur any financial liability in the performance of any of
its rights or powers hereunder or under any other Basic Document if
the Owner Trustee shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be
liable for indebtedness evidenced by or arising under any of the Basic
Documents, including the principal of and interest on the Notes or
amounts distributable on the Certificates;
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(e) the Owner Trustee shall not be responsible for or in
respect of the validity or sufficiency of this Agreement or for the
due execution hereof by the Depositor or for the form, character,
genuineness, sufficiency, value or validity of any of the Owner Trust
Estate or for or in respect of the validity or sufficiency of the
other Basic Documents, other than the certificate of authentication on
the Certificates, and the Owner Trustee shall in no event assume or
incur any liability, duty, or obligation to any Noteholder or to any
Certificateholder, other than as expressly provided for herein and in
the other Basic Documents;
(f) the Owner Trustee shall not be liable for the default
or misconduct of the Servicer, the Administrator, the Depositor or the
Indenture Trustee under any of the Basic Documents or otherwise and
the Owner Trustee shall have no obligation or liability to perform the
obligations of the Trust under this Agreement or the other Basic
Documents that are required to be performed by the Administrator under
the Administration Agreement, the Servicer under the Sale and
Servicing Agreement or the Indenture Trustee under the Indenture; and
(g) the Owner Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement,
or to institute, conduct or defend any litigation under this Agreement
or otherwise or in relation to this Agreement or any other Basic
Document, at the request, order or direction of any of the
Certificateholders, unless such Certificateholders have offered to the
Owner Trustee security or indemnity satisfactory to it against the
costs, expenses and liabilities that may be incurred by the Owner
Trustee therein or thereby. The right of the Owner Trustee to perform
any discretionary act enumerated in this Agreement or in any other
Basic Document shall not be construed as a duty, and the Owner Trustee
shall not be answerable for other than its willful misconduct, bad
faith or negligence in the performance of any such act.
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SECTION 7.2. Furnishing of Documents. The Owner Trustee
shall furnish to the Certificateholders, promptly upon receipt of a written
request therefor, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and any other instruments furnished
to the Owner Trustee under the Basic Documents.
SECTION 7.3. Representations and Warranties. The Owner
Trustee hereby represents and warrants to the Depositor, for the benefit of the
Certificateholders, that:
(a) It is a banking corporation duly organized and
validly existing in good standing under the laws of the State of
Delaware. It has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement.
(b) It has taken all corporate action necessary to
authorize the execution and delivery by it of this Agreement, and this
Agreement will be executed and delivered by one of its officers who is
duly authorized to execute and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any federal or Delaware State law, governmental rule
or regulation governing the banking or trust powers of the Owner
Trustee or any judgment or order binding on it, or constitute any
default under its charter documents or by-laws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or
by which any of its properties may be bound.
SECTION 7.4. Reliance; Advice of Counsel. (a) The Owner
Trustee may rely upon, shall be protected in relying upon, and shall incur no
liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond, or
other document or paper believed by it to be genuine and believed by it to be
signed by the proper party or parties. The Owner Trustee may accept a
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certified copy of a resolution of the board of directors or other governing
body of any corporate party as conclusive evidence that such resolution has
been duly adopted by such body and that the same is in full force and effect.
As to any fact or matter the method of the determination of which is not
specifically prescribed herein, the Owner Trustee may for all purposes hereof
rely on a certificate, signed by the president or any vice president or by the
treasurer or other authorized officers of the relevant party, as to such fact
or matter and such certificate shall constitute full protection to the Owner
Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon.
(b) In the exercise or administration of the trusts
hereunder and in the performance of its duties and obligations under this
Agreement or the other Basic Documents, the Owner Trustee (i) may act directly
or through its agents or attorneys pursuant to agreements entered into with any
of them, and the Owner Trustee shall not be liable for the conduct or
misconduct of such agents or attorneys if such agents or attorneys shall have
been selected by the Owner Trustee with reasonable care, and (ii) may consult
with counsel, accountants and other skilled Persons to be selected with
reasonable care and employed by it. The Owner Trustee shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the
written opinion or advice of any such counsel, accountants or other such
Persons and not contrary to this Agreement or any other Basic Document.
SECTION 7.5. Not Acting in Individual Capacity. Except as
provided in this Article VII, in accepting the trusts hereby created, the Bank
acts solely as Owner Trustee hereunder and not in its individual capacity, and
all Persons having any claim against the Owner Trustee by reason of the
transactions contemplated by this Agreement or any other Basic Document shall
look only to the Owner Trust Estate for payment or satisfaction thereof.
SECTION 7.6. Owner Trustee Not Liable for Certificates or
Receivables. The recitals contained herein and in the Certificates (other than
the signature and countersignature of the Owner Trustee on the Certificates)
shall be taken as the statements of the Depositor, and the Owner Trustee
assumes no responsibility for the
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correctness thereof. The Owner Trustee makes no representations as to the
validity or sufficiency of this Agreement, of any other Basic Document or of
the Certificates (other than the signature and countersignature of the Owner
Trustee on the Certificates) or the Notes, or of any Receivable or related
documents. The Owner Trustee and the Bank shall at no time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Receivable, or the perfection and priority of any
security interest created by any Receivable in any Financed Vehicle or the
maintenance of any such perfection and priority, or for or with respect to the
sufficiency of the Owner Trust Estate or its ability to generate the payments
to be distributed to Certificateholders under this Agreement or the Noteholders
under the Indenture, including, without limitation: the existence, condition
and ownership of any Financed Vehicle; the existence and enforceability of any
insurance thereon; the existence and contents of any Receivable on any computer
or other record thereof; the validity of the assignment of any Receivable to
the Trust or any intervening assignment; the completeness of any Receivable;
the performance or enforcement of any Receivable; the compliance by the
Depositor or the Servicer with any warranty or representation made under any
Basic Document or in any related document, or the accuracy of any such warranty
or representation or any action of the Indenture Trustee, the Administrator or
the Servicer or any subservicer taken in the name of the Owner Trustee.
SECTION 7.7. Bank May Own Certificates and Notes. The Bank,
in its individual or any other capacity, may become the owner or pledgee of
Certificates or Notes and may deal with the Depositor, the Servicer, the
Administrator and the Indenture Trustee in banking transactions with the same
rights as it would have if it were not Owner Trustee.
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ARTICLE VIII
COMPENSATION AND INDEMNITY OF OWNER TRUSTEE
SECTION 8.1. Owner Trustee's Fees and Expenses. The Owner
Trustee shall receive as compensation for its services hereunder such fees as
have been separately agreed upon before the date hereof between the Depositor
and the Owner Trustee, and the Owner Trustee shall be entitled to and
reimbursed by the Depositor for its other reasonable expenses hereunder,
including the reasonable compensation, expenses and disbursements of such
agents, representatives, experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its rights and its duties
hereunder. Such amounts shall be treated for tax purposes as having been
contributed to the Trust by the Depositor and the tax deduction for such
amounts shall be allocated to the Depositor.
SECTION 8.2. Indemnification. The Depositor shall be liable
as prime obligor for, and shall indemnify the Owner Trustee and its successors,
assigns, agents and servants (collectively, the "Indemnified Parties") from and
against, any and all liabilities, obligations, losses, damages, taxes, claims,
actions and suits, and any and all reasonable costs, expenses and disbursements
(including reasonable legal fees and expenses) of any kind and nature
whatsoever (collectively, "Expenses") which may at any time be imposed on,
incurred by, or asserted against the Owner Trustee or any Indemnified Party in
any way relating to or arising out of this Agreement, the other Basic
Documents, the Owner Trust Estate, the administration of the Owner Trust Estate
or the action or inaction of the Owner Trustee hereunder; provided that the
Depositor shall not be liable for or required to indemnify an Indemnified Party
from and against Expenses arising or resulting from (i) the Indemnified Party's
own willful misconduct, bad faith or negligence, or (ii) the inaccuracy of any
representation or warranty contained in Section 7.3 expressly made by the
Indemnified Party. The indemnities contained in this Section 8.2 shall survive
the resignation or termination of the Owner Trustee or the termination of this
Agreement. In the event of any claim, action or proceeding for which indemnity
will be sought pursuant to this Section 8.2, the Owner Trustee's choice of
legal counsel shall be subject to the approval
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of the Depositor, which approval shall not be unreasonably withheld.
SECTION 8.3. Payments to Owner Trustee. Any amounts paid to
the Owner Trustee pursuant to this Article VIII shall be deemed not to be a
part of the Owner Trust Estate immediately after such payment.
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ARTICLE IX
TERMINATION
SECTION 9.1. Termination of Trust Agreement. (a) This
Agreement (other than the provisions of Article VIII) and the Trust shall
terminate and be of no further force or effect, (i) upon the maturity or other
liquidation of the last remaining Receivable and the disposition of any amounts
received upon such maturity or liquidation, (ii) upon the payment to the
Noteholders and the Certificateholders of all amounts required to be paid to
them pursuant to the terms of the Indenture, the Sale and Servicing Agreement
and Article V or (ii) at the time provided in Section 9.2. Any Insolvency
Event, liquidation, dissolution, death or incapacity with respect to any
Certificateholder, other than the Depositor as described in Section 9.2, shall
not (x) operate to terminate this Agreement or the Trust, nor (y) entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of all
or any part of the Trust or Owner Trust Estate nor (z) otherwise affect the
rights, obligations and liabilities of the parties hereto.
(b) Except as provided in Section 9.1(a), neither the
Depositor nor any Certificateholder shall be entitled to revoke or terminate
the Trust.
(c) Notice of any termination of the Trust, specifying
the Distribution Date upon which the Certificateholders shall surrender their
Certificates to the Certificate Paying Agent for payment of the final
distribution and cancellation, shall be given by the Owner Trustee by letter to
Certificateholders mailed within five (5) Business Days of receipt of notice of
such termination from the Servicer, stating (i) the Distribution Date upon or
with respect to which final payment of the Certificates shall be made upon
presentation and surrender of the Certificates at the office of the Certificate
Paying Agent therein designated, (ii) the amount of any such final payment and
(iii) that the Record Date otherwise applicable to such Distribution Date is
not applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Certificate Paying Agent therein specified.
The Owner
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Trustee shall give such notice to the Certificate Registrar (if other than the
Owner Trustee) and the Certificate Paying Agent at the time such notice is
given to Certificateholders. Upon presentation and surrender of the
Certificates, the Certificate Paying Agent shall cause to be distributed to
Certificateholders amounts distributable on such Distribution Date pursuant to
Section 5.2.
In the event that all of the Certificateholders shall not
surrender their Certificates for cancellation within six (6) months after the
date specified in the above mentioned written notice, the Owner Trustee shall
give a second written notice to the remaining Certificateholders to surrender
their Certificates for cancellation and receive the final distribution with
respect thereto. If within one year after the second notice all the
Certificates shall not have been surrendered for cancellation, the Owner
Trustee may take appropriate steps, or may appoint an agent to take appropriate
steps, to contact the remaining Certificateholders concerning surrender of
their Certificates and the cost thereof shall be paid out of the funds and
other assets that shall remain subject to this Agreement. Subject to
applicable escheat laws, any funds remaining in the Trust after exhaustion of
such remedies shall be distributed by the Owner Trustee to the Depositor.
(d) Upon final distribution of any funds remaining in the
Trust, the Owner Trustee shall cause the Certificate of Trust to be cancelled
by filing a certificate of cancellation with the Secretary of State in
accordance with the provisions of Section 3810(c) of the Business Trust
Statute.
SECTION 9.2. Dissolution upon Insolvency or Dissolution of
Depositor or General Partner. Notwithstanding the provisions of Section 3808
of the Business Trust Statute, in the event that an Insolvency Event or a
dissolution shall occur with respect to the Depositor or the General Partner,
the Receivables shall be sold and this Agreement and the Trust shall be
terminated in accordance with Section 9.1 ninety (90) days after the date of
such Insolvency Event or the event giving rise to such dissolution, unless,
before the end of such 90-day period, the Owner Trustee shall have received
written instructions from (a) Certificateholders (other than the
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Depositor) of Certificates evidencing not less than a majority of the
Certificate Balance and a majority of the right to receive distributions in
respect of interest on the Certificate Balance (including in each case the
Certificate Balance of Certificates owned by the Servicer and any of its
Affiliates other than the Depositor), (b) the Noteholders (other than the
Depositor) of Notes evidencing not less than a majority of the principal amount
of the outstanding Notes and a majority of the right to receive interest on the
outstanding Notes (including in each case the Notes owned by the Servicer and
any of its Affiliates other than the Depositor), and (c) holders of other
interests, if any (the existence of which interests the Administrator will have
advised the Owner Trustee in writing), in the Reserve Account (other than the
Depositor) having interests with a value not less than a majority of the value
of all interests in the Reserve Account (other than any such interests held by
the Depositor), to the effect that each such party disapproves of the
liquidation of the Receivables and termination of the Trust and in connection
therewith the Indenture Trustee (i) appoints an entity acceptable to Ford
Credit to acquire an interest in the Trust and to act as substitute "general
partner" of the Trust for federal income tax purposes and (ii) obtains an
Opinion of Counsel that the Trust will not thereafter be classified as an
association (or publicly traded partnership) taxable as a corporation for
federal income tax and Applicable Tax State purposes. Promptly after the
occurrence of any Insolvency Event or dissolution with respect to the Depositor
or the General Partner, (A) the Depositor shall give the Indenture Trustee and
the Owner Trustee written notice of such Insolvency Event, (B) the Owner
Trustee shall, upon the receipt of such written notice from the Depositor, give
prompt written notice to the Certificateholders, holders of interests, if any,
in the Reserve Account and the Indenture Trustee, of the occurrence of such
event, (C) the Indenture Trustee shall, upon receipt of written notice of such
Insolvency Event or dissolution from the Owner Trustee or the Depositor, give
prompt written notice to the Noteholders of the occurrence of such event, and
(D) the Owner Trustee shall, upon receipt of written instructions from the
applicable percentages of Noteholders, Certificateholders and holders of
interests, if any, in the Reserve Account disapproving of liquidation and
termination, give prompt written notice thereof to the Indenture Trustee;
provided, however, that
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any failure to give a notice required by this sentence shall not prevent or
delay, in any manner, a termination of the Trust pursuant to the first sentence
of this Section 9.2. Upon a termination pursuant to this Section 9.2, the
Owner Trustee shall direct the Indenture Trustee promptly to sell the assets of
the Trust (other than the Trust Accounts and the Certificate Distribution
Account) in a commercially reasonable manner and on commercially reasonable
terms. The proceeds of such a sale of the assets of the Trust shall be treated
as collections of Receivables under the Sale and Servicing Agreement and
deposited in the Collection Account and the Notes and Certificates shall be
paid in accordance with Section 4.6 of the Sale and Servicing Agreement.
SECTION 9.3. Prepayment of Certificates. (a) The
Certificates shall be prepaid in whole, but not in part, at the direction of
the Servicer pursuant to Section 9.1 of the Sale and Servicing Agreement, on
any Distribution Date on which the Servicer exercises its option to purchase
the assets of the Trust pursuant to said Section 9.1, and the amount paid by
the Servicer shall be treated as collections of Receivables and applied to pay
the unpaid principal amount of the Notes and the Certificate Balance plus
accrued and unpaid interest (including any overdue interest) thereon. The
Servicer shall furnish the Rating Agencies and the Certificateholders notice of
such prepayment. If the Certificates are to be prepaid pursuant to this
Section 9.3(a), the Servicer shall furnish notice of such election to the Owner
Trustee not later than twenty (20) days prior to the Prepayment Date and the
Trust shall deposit by 10:00 A.M. (New York City time) on the Prepayment Date
in the Certificate Distribution Account the Prepayment Price of the
Certificates to be redeemed, whereupon all such Certificates shall be due and
payable on the Prepayment Date.
(b) Notice of prepayment under Section 9.3(a) shall be given
by the Owner Trustee by first-class mail, postage prepaid, or by facsimile
mailed or transmitted immediately following receipt of notice from the Trust or
Servicer pursuant to Section 9.3(a), but not later than ten (10) days prior to
the applicable Prepayment Date, to each Certificateholder as of the close of
business on the Record Date preceding the applicable Prepayment Date, at such
Certificateholder's address or facsimile number appearing in the Certificate
Register.
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All notices of prepayment shall state:
(i) the Prepayment Date;
(ii) the Prepayment Price; and
(iii) the place where such Certificates are to be
surrendered for payment of the Prepayment Price (which
shall be the office or agency of the Owner Trustee to be
maintained as provided in Section 3.9).
Notice of prepayment of the Certificates shall be given by the Owner Trustee in
the name and at the expense of the Trust. Failure to give notice of
prepayment, or any defect therein, to any Certificateholder shall not impair or
affect the validity of the prepayment of any other Certificate.
(c) Following notice of prepayment as required by Section
9.3(b), the Certificates shall on the Prepayment Date be paid by the Trust at
the Prepayment Price and (unless the Trust shall default in the payment of the
Prepayment Price) no interest shall accrue on the Prepayment Price for any
period after the date to which accrued interest is calculated for purposes of
calculating the Prepayment Price. Following payment in full of the Prepayment
Price, this Agreement and the Trust shall terminate.
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<PAGE> 45
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1. Eligibility Requirements for Owner Trustee.
The Owner Trustee shall at all times (i) be a corporation satisfying the
provisions of Section 3807(a) of the Business Trust Statute; (ii) be authorized
to exercise corporate trust powers; (iii) have a combined capital and surplus
of at least $50,000,000 and shall be subject to supervision or examination by
federal or state authorities; and (iv) shall have (or shall have a parent that
has) a long-term debt rating of investment grade by each of the Rating Agencies
or be otherwise acceptable to the Rating Agencies. If such corporation shall
publish reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purpose of this Section 10.1, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In case at any time the
Owner Trustee shall cease to be eligible in accordance with the provisions of
this Section 10.1, the Owner Trustee shall resign immediately in the manner and
with the effect specified in Section 10.2.
SECTION 10.2. Resignation or Removal of Owner Trustee. The
Owner Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Administrator. Upon receiving
such notice of resignation, the Administrator shall promptly appoint a
successor Owner Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Owner Trustee and one copy to
the successor Owner Trustee. If no successor Owner Trustee shall have been so
appointed and have accepted appointment within thirty (30) days after the
giving of such notice of resignation, the resigning Owner Trustee may petition
any court of competent jurisdiction for the appointment of a successor Owner
Trustee; provided, however, that such right to appoint or to petition for the
appointment of any such successor shall in no event relieve the resigning Owner
Trustee from any obligations otherwise imposed on it under the Basic Documents
until such successor has in fact assumed such appointment.
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<PAGE> 46
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Administrator, or if at any time the Owner
Trustee shall be legally unable to act, or if at any time an Insolvency Event
with respect to the Owner Trustee shall have occurred and be continuing, then
the Administrator may remove the Owner Trustee. If the Administrator shall
remove the Owner Trustee under the authority of the immediately preceding
sentence, the Administrator shall promptly appoint a successor Owner Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the outgoing Owner Trustee so removed and one copy to the
successor Owner Trustee, and shall pay all fees owed to the outgoing Owner
Trustee.
Any resignation or removal of the Owner Trustee and
appointment of a successor Owner Trustee pursuant to any of the provisions of
this Section 10.2 shall not become effective until acceptance of appointment by
the successor Owner Trustee pursuant to Section 10.3, payment of all fees and
expenses owed to the outgoing Owner Trustee and the filing of a certificate of
amendment to the Certificate of Trust if required by the Business Trust
Statute. The Administrator shall provide notice of such resignation or removal
of the Owner Trustee to the Certificateholders, the Indenture Trustee, the
Noteholders and each of the Rating Agencies.
SECTION 10.3. Successor Owner Trustee. Any successor Owner
Trustee appointed pursuant to Section 10.2 shall execute, acknowledge and
deliver to the Administrator and to its predecessor Owner Trustee an instrument
accepting such appointment under this Agreement. Upon the resignation or
removal of the predecessor Owner Trustee becoming effective pursuant to Section
10.2, such successor Owner Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties, and
obligations of its predecessor under this Agreement, with like effect as if
originally named as Owner Trustee. The predecessor Owner Trustee shall, upon
payment of its fees and expenses, deliver to the successor Owner Trustee all
documents and statements and monies held by it under this Agreement, and the
Administrator and the predecessor Owner Trustee shall execute and deliver such
instruments and do such
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<PAGE> 47
other things as may reasonably be required for fully and certainly vesting and
confirming in the successor Owner Trustee all such rights, powers, duties, and
obligations.
No successor Owner Trustee shall accept appointment as
provided in this Section 10.3 unless, at the time of such acceptance, such
successor Owner Trustee shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee
pursuant to this Section 10.3, the Administrator shall mail notice of the
successor of such Owner Trustee to all Certificateholders, the Indenture
Trustee, the Noteholders and the Rating Agencies. If the Administrator shall
fail to mail such notice within ten (10) days after acceptance of appointment
by the successor Owner Trustee, the successor Owner Trustee shall cause such
notice to be mailed at the expense of the Administrator.
SECTION 10.4. Merger or Consolidation of Owner Trustee. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall, without the execution or filing of any
instrument or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding, be the successor of the Owner
Trustee hereunder; provided that such corporation shall be eligible pursuant to
Section 10.1; and provided further, that the Owner Trustee shall mail notice of
such merger or consolidation to the Rating Agencies not less than fifteen (15)
days prior to the effective date thereof.
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Owner Trust Estate or any Financed Vehicle may at the time be located,
the Administrator and the Owner Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Owner Trustee to act as co-trustee, jointly with the Owner
Trustee, or separate
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<PAGE> 48
trustee or separate trustees, of all or any part of the Trust, and to vest in
such Person, in such capacity, such title to the Owner Trust Estate, or any
part thereof, and, subject to the other provisions of this Section 10.5, such
powers, duties, obligations, rights and trusts as the Administrator and the
Owner Trustee may consider necessary or desirable. If the Administrator shall
not have joined in such appointment within fifteen (15) days after the receipt
by it of a request so to do, the Owner Trustee alone shall have the power to
make such appointment. No co-trustee or separate trustee under this Agreement
shall be required to meet the terms of eligibility as a successor trustee
pursuant to Section 10.1 and no notice of the appointment of any co-trustee or
separate trustee shall be required pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties, and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised
or performed by the Owner Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Owner
Trustee joining in such act), except to the extent that under any law
of any jurisdiction in which any particular act or acts are to be
performed, the Owner Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties,
and obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co- trustee, but solely
at the direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under
this Agreement; and
(iii) the Administrator and the Owner Trustee acting jointly
may at any time accept the resignation of or remove any separate
trustee or co-trustee.
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<PAGE> 49
Any notice, request or other writing given to the Owner
Trustee shall be deemed to have been given to each of the then separate
trustees and co-trustees, as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee shall refer to this
Agreement and the conditions of this Article X. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Owner Trustee or separately, as may be provided therein,
subject to all the provisions of this Agreement, specifically including every
provision of this Agreement relating to the conduct of, affecting the liability
of, or affording protection to, the Owner Trustee. Each such instrument shall
be filed with the Owner Trustee and a copy thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the
Owner Trustee as its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect
of this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Owner Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Supplements and Amendments. (a) This
Agreement may be amended by the Depositor and the Owner Trustee, with prior
written notice to the Rating Agencies, without the consent of any of the
Noteholders or the Certificateholders, to cure any ambiguity, to correct or
supplement any provisions in this Agreement inconsistent with any other
provision of this Agreement or for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions in this Agreement;
provided, however, that such action shall not, as evidenced by an Opinion of
Counsel satisfactory to the Owner Trustee and the Indenture Trustee adversely
affect in any material respect the interests of any Noteholder or
Certificateholder; and provided further that an Opinion of Counsel shall be
furnished to the Indenture Trustee and the Owner Trustee to the effect that
such amendment (A) will not materially adversely affect the federal or any
Applicable Tax State income or franchise taxation of any outstanding Note or
Certificate, or any Noteholder or Certificateholder and (B) will not cause the
Trust to be taxable as a corporation for federal or any Applicable Tax State
income or franchise tax purposes.
(b) This Agreement may also be amended from time to time by
the Depositor and the Owner Trustee, with prior written notice to the Rating
Agencies, with the consent of (i) the Noteholders of Notes evidencing not less
than a majority of the principal amount of the Notes Outstanding and (ii) the
Certificateholders of Certificates evidencing not less than a majority of the
Certificate Balance, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, however, that no such amendment shall (i)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, or change the allocation or priority of, collections of payments on
Receivables or distributions that are required to be made for the benefit of
the Noteholders or the Certificateholders, or (ii) reduce the aforesaid
percentage of the principal amount of the Notes Outstanding and the Certificate
Bal-
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<PAGE> 51
ance required to consent to any such amendment, without the consent of all the
Noteholders and Certificateholders affected thereby; and provided further, that
an Opinion of Counsel shall be furnished to the Indenture Trustee and the Owner
Trustee to the effect that such amendment (A) will not materially adversely
affect the federal or any Applicable Tax State income or franchise taxation of
any outstanding Note or Certificate, or any Noteholder or Certificateholder and
(B) will not cause the Trust to be taxable as a corporation for federal or any
Applicable Tax State income or franchise tax purposes.
(c) Promptly after the execution of any such amendment or
consent, the Owner Trustee shall furnish written notification of the substance
of such amendment or consent to each Certificateholder, the Indenture Trustee
and each of the Rating Agencies.
(d) It shall not be necessary for the consent of
Certificateholders, the Noteholders or the Indenture Trustee pursuant to this
Section 11.1 to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents (and any other consents of
Certificateholders provided for in this Agreement or in any other Basic
Document) and of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable requirements as the
Owner Trustee may prescribe.
(e) Promptly after the execution of any amendment to the
Certificate of Trust, the Owner Trustee shall cause the filing of such
amendment with the Secretary of State.
(f) Prior to the execution of any amendment to this Agreement
or the Certificate of Trust, the Owner Trustee shall be entitled to receive and
rely upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall
not be obligated to, enter into any such amendment which affects the Owner
Trustee's own rights, duties or immunities under this Agreement or otherwise.
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(g) In connection with the execution of any amendment to this
Agreement or any amendment to any other agreement to which the Trust is a
party, the Owner Trustee shall be entitled to receive and conclusively rely
upon an Opinion of Counsel to the effect that such amendment is authorized or
permitted by the Basic Documents and that all conditions precedent in the Basic
Documents for the execution and delivery thereof by the Trust or the Owner
Trustee, as the case may be, have been satisfied.
SECTION 11.2. No Legal Title to Owner Trust Estate in
Certificateholders. The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. The Certificateholders shall be entitled to
receive distributions with respect to their beneficial interests therein only
in accordance with Articles V and IX. No transfer, by operation of law or
otherwise, of any right, title, or interest of the Certificateholders to and in
their beneficial interest in the Owner Trust Estate shall operate to terminate
this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Owner
Trust Estate.
SECTION 11.3. Limitation on Rights of Others. Except for
Section 2.7, the provisions of this Agreement are solely for the benefit of the
Owner Trustee, the Depositor, the Administrator, the Certificateholders, the
Servicer and, to the extent expressly provided herein, the Indenture Trustee
and the Noteholders, and nothing in this Agreement (other than Section 2.7),
whether express or implied, shall be construed to give to any other Person any
legal or equitable right, remedy or claim in the Owner Trust Estate or under or
in respect of this Agreement or any covenants, conditions or provisions
contained herein.
SECTION 11.4. Notices. (a) Unless otherwise expressly
specified or permitted by the terms hereof, all notices shall be in writing and
shall be deemed given upon receipt by the intended recipient or three (3)
Business Days after mailing if mailed by certified mail, postage prepaid
(except that notice to the Owner Trustee shall be deemed given only upon actual
receipt by the Owner Trustee), if to the Owner Trustee, addressed to the
Corporate Trust Office; if to the Depositor, addressed to
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<PAGE> 53
Ford Credit Auto Receivables Two L.P. at the address of its principal executive
office first above written; or, as to each party, at such other address as
shall be designated by such party in a written notice to each other party.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Certificateholder as shown in the Certificate Register. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
SECTION 11.5. Severability. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforce-ability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
SECTION 11.6. Separate Counterparts. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 11.7. Successors and Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the Depositor, the Owner Trustee and its successors and each Certificateholder
and its successors and permitted assigns, all as herein provided. Any request,
notice, direction, consent, waiver or other instrument or action by a
Certificateholder shall bind the successors and assigns of such
Certificateholder.
SECTION 11.8. No Petition. The Owner Trustee (not in its
individual capacity but solely as Owner Trustee), by entering into this
Agreement, and each Certificateholder, by accepting a Certificate, hereby
covenant and agree that they will not, until after the Notes have been paid in
full, institute against the Depositor,
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<PAGE> 54
the General Partner or the Trust, or join in any institution against the
Depositor, the General Partner or the Trust of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States federal or state bankruptcy or similar law in connection with
any obligations relating to the Certificates, the Notes, this Agreement or any
of the other Basic Documents.
SECTION 11.9. No Recourse. Each Certificateholder, by
accepting a Certificate, acknowledges that such Certificateholder's
Certificates represent beneficial interests in the Trust only and do not
represent interests in or obligations of the Depositor, the General Partner,
the Servicer, the Administrator, the Owner Trustee, the Indenture Trustee or
any Affiliate thereof, and no recourse may be had against such parties or their
assets, except as may be expressly set forth or contemplated in this Agreement,
the Certificates or the other Basic Documents.
SECTION 11.10. Headings. The headings of the various
Articles and Sections herein are for convenience of reference only and shall
not define or limit any of the terms or provisions hereof.
SECTION 11.11. Governing Law. This Agreement shall be
construed in accordance with the laws of the State of Delaware and the
obligations, rights and remedies of the parties hereunder shall be determined
in accordance with such laws.
SECTION 11.12. Maintenance of Net Worth. The Depositor shall
at all times maintain a net worth, exclusive of its partnership interest or
interests in the Trust (or any similar entity), at least equal to 5% (or such
lesser percentage as permitted by the Code or Treasury Regulations, as
evidenced by an opinion of counsel) of (i) the greater of (x) the principal
balance or (y) the fair market value of receivables (including the Receivables)
held by each entity of which it is intended to serve as the "general partner"
for federal income tax purposes, less (ii) the outstanding amount of the
related asset backed notes (including the Notes) issued by each such entity and
held by investors not affiliated with such entity or Ford Motor Company.
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<PAGE> 55
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
FORD CREDIT AUTO RECEIVABLES
TWO L.P., as Depositor
By: FORD CREDIT AUTO RECEIVABLES
TWO, INC.,
as General Partner
By: /s/ Katherine Kjolhede
---------------------------
Name:
Title:
PNC BANK, DELAWARE,
not in its individual capacity
but solely as Owner Trustee
By: /s/ M.B. McCarthy
-----------------------------
Name: Michael B. McCarthy
Title: Vice President
<PAGE> 56
EXHIBIT A
[FORM OF CERTIFICATE]
NUMBER $________
R-_____ CUSIP NO. 34527RAE
[CERTIFICATE ISSUED TO THE DEPOSITOR: THIS CERTIFICATE IS NOT TRANSFERABLE AND
ANY ATTEMPTED TRANSFER OF THIS CERTIFICATE SHALL BE NULL AND VOID.]
THE PRINCIPAL OF THIS CERTIFICATE IS DISTRIBUTABLE AS SET FORTH IN THE TRUST
AGREEMENT. ACCORDINGLY, THE OUTSTANDING PRINCIPAL OF THIS CERTIFICATE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
FORD CREDIT AUTO OWNER TRUST 1996-A
7.00% ASSET BACKED CERTIFICATE
evidencing a beneficial interest in the property of the Trust, as defined
below, which property includes a pool of motor vehicle retail installment sale
contracts, secured by security interests in the motor vehicles financed
thereby, conveyed to Ford Credit Auto Receivables Two L.P. by Ford Motor Credit
Company and conveyed by Ford Credit Auto Receivables Two L.P. to the Trust.
The property of the Trust has been pledged to the Indenture Trustee pursuant to
the Indenture to secure the payment of the Notes issued thereunder.
(This Certificate does not represent an interest in or obligation of Ford Motor
Credit Company, Ford Credit Auto Receivables Two L.P. or any of their
respective Affiliates, except to the extent described below.)
THIS CERTIFIES THAT __________ is the registered owner of
___________ DOLLARS nonassessable, fully-paid, beneficial interest in
Certificates of Ford Credit Auto Owner Trust 1996-A (the "Trust") formed by
Ford Credit Auto Receivables Two L.P., a Delaware limited partnership (the
"Depositor"). The Certificates have an aggregate Initial Certificate Balance
of $36,516,567 and bear interest at a rate of 7.00% per annum (the "Certificate
Rate").
A-1
<PAGE> 57
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Trust Agreement.
Dated:
PNC BANK, DELAWARE,
not in its individual capacity but solely as Owner
Trustee
By:______________________
Authorized Officer
A-2
<PAGE> 58
The Trust was created pursuant to an Amended and Restated Trust
Agreement, dated as of June 1, 1996 (as from time to time amended, supplemented
or otherwise modified and in effect, the "Trust Agreement"), by and among the
Depositor and PNC Bank, Delaware, not in its individual capacity but solely as
owner trustee (the "Owner Trustee"), a summary of certain of the pertinent
provisions of which is set forth below. To the extent not otherwise defined
herein, the capitalized terms used herein have the meanings assigned to them in
the Trust Agreement.
This Certificate is one of the duly authorized Certificates designated as
"7.00% Asset Backed Certificates" (herein called the "Certificates"). Also
issued under the Indenture, dated as of June 1, 1996 (as from time to time
amended, supplemented or otherwise modified and in effect, the "Indenture"),
between the Trust and Chemical Bank, as indenture trustee (in such capacity,
the "Indenture Trustee"), are the Notes designated as "Class A-1 5.67% Money
Market Asset Backed Notes", "Class A-2 6.30% Asset Backed Notes", "Class A-3
6.50% Asset Backed Notes" and "Class A-4 6.75% Asset Backed Notes"
(collectively, the "Notes"). This Certificate is issued under and is subject
to the terms, provisions and conditions of the Trust Agreement, to which Trust
Agreement the Certificateholder of this Certificate by virtue of the acceptance
hereof assents and by which such Certificateholder is bound. The property of
the Trust includes (i) a pool of motor vehicle retail installment sale
contracts for new and used automobiles and light trucks and certain rights and
obligations thereunder (the "Receivables"); (ii) with respect to Precomputed
Receivables, all monies due thereunder on or after the Cutoff Date and, with
respect to Simple Interest Receivables, all monies due or received thereunder
on or after the Cutoff Date; (iii) the security interests in the Financed
Vehicles granted by Obligors pursuant to the Receivables and any other interest
of the Issuer in the Financed Vehicles; (iv) rights to proceeds from claims on
certain physical damage, credit life, credit disability or other insurance
policies, if any, covering Financed Vehicles or Obligors; (v) Dealer Recourse;
(vi) all of the Seller's rights to the Receivable Files; (vii) such amounts as
from time to time may be held in one or more accounts maintained pursuant to
the Sale and Servicing Agreement, dated as of June 1, 1996 (as from time to
time amended, supplemented or otherwise modified and in effect, the "Sale and
Ser-
A-3
<PAGE> 59
vicing Agreement"), by and among the Trust, the Depositor, as seller (in such
capacity, the "Seller"), and Ford Motor Credit Company, as servicer (the
"Servicer"), including the Reserve Account; (viii) the Seller's rights under
the Sale and Servicing Agreement; (ix) the Seller's rights under the Purchase
Agreement; (x) payments and proceeds with respect to the Receivables held by
the Servicer; (xi) all property (including the right to receive Liquidation
Proceeds) securing a Receivable (other than a Receivable repurchased by the
Servicer or purchased by the Seller); (xii) rebates of premiums and other
amounts relating to insurance policies and other items financed under the
Receivables in effect as of the Cutoff Date; and (xiii) any and all proceeds of
the foregoing. THE RIGHTS OF THE OWNER TRUSTEE IN THE FOREGOING PROPERTY OF
THE TRUST HAVE BEEN PLEDGED TO THE INDENTURE TRUSTEE TO SECURE THE PAYMENT OF
THE NOTES.
Under the Trust Agreement, there will be distributed on the fifteenth day
of each month or, if such fifteenth day is not a Business Day, the next
Business Day (each, a "Distribution Date"), commencing July 15, 1996, to the
Person in whose name this Certificate is registered at the close of business on
the last day of the preceding month (the "Record Date") such
Certificateholder's percentage interest in the amount to be distributed to
Certificateholders on such Distribution Date; provided, however, that principal
will be distributed to the Certificateholders on each Distribution Date on (to
the extent of funds remaining after all classes of the Notes have been paid in
full) and after the date on which all classes of the Notes have been paid in
full. Notwithstanding the foregoing, following the occurrence and during the
continuation of an event of default under the Indenture which has resulted in
an acceleration of the Notes or following certain events of insolvency or a
dissolution with respect to the Depositor or the General Partner, no
distributions of principal or interest will be made on the Certificates until
all principal and interest on the Notes has been paid in full.
THE HOLDER OF THIS CERTIFICATE ACKNOWLEDGES AND AGREES THAT ITS RIGHTS TO
RECEIVE DISTRIBUTIONS IN RESPECT OF THIS CERTIFICATE ARE SUBORDINATED TO THE
RIGHTS OF THE NOTEHOLDERS AS DESCRIBED IN THE SALE AND SERVICING AGREEMENT, THE
INDENTURE AND THE TRUST AGREEMENT.
A-4
<PAGE> 60
It is the intent of the Depositor, the Servicer and the
Certificateholders that, for purposes of federal income, state and local
franchise and income tax and any other income taxes, the Trust will be treated
as a partnership and the Certificateholders (including the Depositor) will be
treated as partners in that partnership. The Depositor and the other
Certificateholders by acceptance of a Certificate agree to treat, and to take
no action inconsistent with the treatment of, the Certificates for such tax
purposes as partnership interests in the Trust.
Each Certificateholder, by its acceptance of a Certificate, covenants and
agrees that such Certificateholder will not, until after the Notes have been
paid in full, institute against the Depositor, the General Partner or the
Trust, or join in any institution against the Depositor, the General Partner or
the Trust of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States federal
or state bankruptcy or similar law in connection with any obligations relating
to the Notes, the Certificates, the Trust Agreement or any of the other Basic
Documents.
Distributions on this Certificate will be made as provided in the Trust
Agreement by the Owner Trustee or the Certificate Paying Agent by wire transfer
or check mailed to the Certificateholder of record in the Certificate Register
without the presentation or surrender of this Certificate or the making of any
notation hereon. Except as otherwise provided in the Trust Agreement and
notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Owner Trustee of the pendency of such distribution
and only upon presentation and surrender of this Certificate at the office or
agency maintained for the purpose by the Owner Trustee in Wilmington, Delaware.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Owner Trustee, by manual signature, this
Certificate shall not
A-5
<PAGE> 61
entitle the Certificateholder hereof to any benefit under the Trust Agreement
or the Sale and Servicing Agreement or be valid for any purpose.
This Certificate shall be construed in accordance with the laws of the
State of Delaware and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
A-6
<PAGE> 62
In WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in
its individual capacity, has caused this Certificate to be duly executed.
FORD CREDIT AUTO OWNER
TRUST 1996-A
By: PNC BANK, DELAWARE,
not in its individual capacity but solely as Owner
Trustee
By:
----------------------------------------
Authorized Officer
A-7
<PAGE> 63
[REVERSE OF CERTIFICATE]
The Certificates do not represent an obligation of, or an
interest in, the Depositor, the General Partner, the Servicer, the
Administrator, the Owner Trustee or any Affiliates of any of them and no
recourse may be had against such parties or their assets, except as may be
expressly set forth or contemplated herein, in the Trust Agreement or in the
other Basic Documents. In addition, this Certificate is not guaranteed by any
governmental agency or instrumentality and is limited in right of payment to
certain collections with respect to the Receivables (and certain other
amounts), all as more specifically set forth herein and in the Sale and
Servicing Agreement. A registration statement, which includes the Trust
Agreement as an exhibit thereto, has been filed with the Securities and
Exchange Commission with respect to the Notes and the Certificates.
The Trust Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor and the rights of the Certificateholders under the
Trust Agreement at any time by the Depositor and the Owner Trustee with the
consent of the Noteholders and the Certificateholders evidencing not less than
a majority of the principal amount of the Notes Outstanding and the Certificate
Balance, respectively. Any such consent by the Certificateholder of this
Certificate shall be conclusive and binding on such Certificateholder and on
all future Certificateholders of this Certificate and of any Certificate issued
upon the registration of Transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Trust Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of any of the Certificateholders.
[CERTIFICATE ISSUED TO PERSONS OTHER THAN THE DEPOSITOR: As
provided in the Trust Agreement and subject to certain limitations therein set
forth, the Transfer of the Certificates are registerable in the Certificate
Register upon surrender of this Certificate for registration of Transfer at the
offices or agencies maintained by PNC Bank, Delaware in its capacity as
Certificate Registrar, or by any successor Certificate Regis-
A-8
<PAGE> 64
trar, in Wilmington, Delaware, accompanied by a written instrument of transfer
in form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the holder hereof or such holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee.
Except for Certificates issued to the Depositor, the
Certificates are issuable as registered Certificates without coupons in
denominations of at least $20,000 and in integral multiples of $1,000 in excess
thereof. Certificates are exchangeable for new Certificates of authorized
denominations evidencing the same aggregate denomination, as requested by the
Certificateholder surrendering the same. No service charge will be made for
any such registration of Transfer or exchange, but the Owner Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or governmental charge payable in connection therewith.]
[CERTIFICATE ISSUED TO THE DEPOSITOR: As provided in the
Trust Agreement, the Transfer of this Certificate is prohibited.]
The Owner Trustee, the Certificate Registrar and any agent of
the Owner Trustee or the Certificate Registrar may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Owner Trustee, the Certificate Registrar or any such agent shall be
affected by any notice to the contrary.
The Certificates may not be acquired by (A) an employee
benefit plan, as defined in Section 3(3) of ERISA, that is subject to Title I
of ERISA, (B) a plan described in Section 4975(e)(1) of the Code, (C) a
governmental plan, as defined in Section 3(32) of ERISA, subject to any
federal, state or local law which is, to a material extent, similar to the
provisions of Section 406 of ERISA or Section 4975 of the Code, (D) an entity
whose underlying assets include plan assets by reason of a plan's investment in
the entity (within the meaning of Department of Labor Regulation 29 C.F.R.
Section 2510.3-101) or (E) a person investing "plan assets" of any such plan
(including without limitation, for purposes of this
A-9
<PAGE> 65
clause (E), any insurance company general account, but excluding any entity
registered under the Investment Company Act of 1940, as amended).
In addition, the Certificates may not be acquired by a Person
other than either (A)(1) a citizen or resident of the United States; (2) a
corporation, partnership or other entity organized in or under the laws of the
United States or any political subdivision thereof or (3) a Person not
described in (1) or (2) whose ownership of the Certificates is effectively
connected with such Person's conduct of a trade or business within the United
States (within the meaning of the Code) and who provides the Depositor and the
Owner Trustee an IRS Form 4224 (and such other certifications, representations
or opinions of counsel as may be requested by the Depositor or the Owner
Trustee) or (B) an estate or trust the income of which is includible in gross
income for United States federal income tax purposes, regardless of source.
The obligations and responsibilities created by the Trust
Agreement and the Trust created thereby shall terminate (i) upon the maturity
or other liquidation of the last remaining Receivable and the disposition of
any amounts received upon such maturity or liquidation or (ii) upon the payment
to the Noteholders and the Certificateholders of all amounts required to be
paid to them pursuant to the Indenture, the Trust Agreement and the Sale and
Servicing Agreement, and upon such termination any remaining assets of the
Trust shall be distributed to the Depositor. The Servicer of the Receivables
may at its option purchase the assets of the Trust at a price specified in the
Sale and Servicing Agreement, and such purchase of the Receivables and other
property of the Trust will effect early retirement of the Notes and the
Certificates; however, such right of purchase is exercisable only as of the
last day of any Collection Period as of which the Pool Balance is less than or
equal to 10% of the Initial Pool Balance.
A-10
<PAGE> 66
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
________________________________________________________________________________
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
________________________________________________________________________________
Attorney to transfer said Certificate on the books of the Certificate
Registrar, with full power of substitution in the premises.
Dated:
*/
--------------------------------------------
Signature Guaranteed:
*/
--------------------------------------------
- -------------------
*/ NOTICE: The signature to this assignment must correspond with the name as
it appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
A-11
<PAGE> 67
EXHIBIT B
[FORM OF CERTIFICATE OF TRUST]
CERTIFICATE OF TRUST OF
FORD CREDIT AUTO OWNER TRUST 1996-A
This Certificate of Trust of FORD CREDIT AUTO OWNER TRUST
1996-A (the "Trust"), dated as of June 1, 1996, is being duly executed and
filed by PNC Bank, Delaware, a Delaware banking corporation, as trustee, to
form a business trust under the Delaware Business Trust Act (12 Del. Code,
Section 3801 et seq.).
1. Name. The name of the business trust formed hereby
is FORD CREDIT AUTO OWNER TRUST 1996-A.
2. Delaware Trustee. The name and business address of
the trustee of the Trust in the State of Delaware is PNC Bank, Delaware, 222
Delaware Avenue, Wilmington, Delaware 19801.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of
the Trust, has executed this Certificate of Trust as of the date first above
written.
PNC BANK, DELAWARE,
not in its individual capacity but solely as owner
trustee under a Trust Agreement dated as of June
1, 1996
By:
------------------------------------------
Name:
Title:
B-1
<PAGE> 68
EXHIBIT C
[FORM OF INVESTMENT LETTER]
[Date]
Ford Credit Auto Owner Trust 1996-A,
as Issuer
PNC Bank, Delaware
as Owner Trustee and
as Certificate Registrar
222 Delaware Avenue
Wilmington, Delaware 19801
Ladies and Gentlemen:
In connection with our proposed purchase of the 7.00% Asset Backed
Certificates (the "Certificates") of Ford Credit Auto Owner Trust 1996-A (the
"Issuer"), a trust formed by Ford Credit Auto Receivables Two L.P. (the
"Depositor" or "Seller"), we confirm that:
1. We are not (A) an employee benefit plan (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) that is subject to Title I of ERISA, (B) a plan described in Section
4975(e)(1) of the Internal Revenue Code of 1986, as amended (the "Code"), (C) a
governmental plan, as defined in Section 3(32) of ERISA, subject to any
federal, state or local law which is, to a material extent, similar to the
provisions of Section 406 of ERISA or Section 4975 of the Code, (D) an entity
whose underlying assets include plan assets by reason of a plan's investment in
the entity (within the meaning of Department of Labor Regulation 29 C.F.R.
Section 2510.3-101) or (E) a person investing "plan assets" of any such plan
(including without limitation, for purposes of this clause (E), any insurance
company general account, but excluding any entity registered under the
Investment Company Act of 1940, as amended).
2. We are a person who is either (A) (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
organized in or under the laws of the United States or any political
subdivision thereof or (iii) a person not described in (i) or (ii) whose
ownership of the Certificates is effectively connected with such person's
conduct of a trade or business within the United States (within the meaning of
the Code) and who provides the Depositor and the Issuer an IRS Form 4224 (and
such other certifications, representations or opinions of counsel as may be
requested by the
C-1
<PAGE> 69
Depositor or the Issuer) or (B) an estate or trust the income of which is
includible in gross income for United States federal income tax purposes,
regardless of source.
3. We understand that any purported resale, transfer,
assignment, participation, pledge, or other disposal of (any such act, a
"Transfer") of any Certificate (or any interest therein) to any person who does
not meet the conditions of paragraphs 1 and 2 above shall be null and void
(each, a "Void Transfer"), and the purported transferee in a Void Transfer
shall not be recognized by the Issuer or any other person as a
Certificateholder for any purpose.
4. We agree that if we determine to Transfer any of the
Certificates we will cause our proposed transferee to provide to the Issuer and
the Certificate Registrar a letter substantially in the form of this letter.
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
Very truly yours,
By:
-----------------------
Name:
Title:
Securities To Be Purchased:
$ principal balance of Certificates
C-2
<PAGE> 70
APPENDIX A
Definitions and Usage
AA-i
<PAGE> 1
EXHIBIT 8.1
June 20, 1996
Ford Credit Auto Receivables Two L.P.
The American Road
Dearborn, Michigan 48121
Re: Ford Credit Auto Owner Trust 1996-A
Ladies and Gentlemen:
We have acted as special tax counsel to Ford Credit Auto
Receivables Two L.P., as Seller (the "Seller"), in connection with the
issuance of the Class A-1 5.67% Money Market Asset Backed Notes (the "Class
A-1 Notes"), the Class A-2 6.30% Asset Backed Notes (the "Class A-2
Notes"), the Class A-3 6.50% Asset Backed Notes (the "Class A-3 Notes"),
the Class A-4 6.75% Asset Backed Notes (the "Class A-4 Notes" and, together
with the Class A-1 Notes, the Class A-2 Notes, and the Class A-3 Notes, the
Notes"), and the 7.00% Asset Backed Certificates (the "Certificates") by
Ford Credit Auto Owner Trust 1996-A (the "Trust") pursuant to the terms of,
(a) with respect to the Notes, an Indenture dated as of June 1, 1996 (the
"Indenture") between the Trust and Chemical Bank, as Indenture Trustee, and
(b) with respect to the Certificates, an Amended and Restated Trust
Agreement dated as of June 1, 1996 (the "Trust Agreement") between Ford
Credit Auto Receivables Two L.P., as Depositor (the "Depositor") and PNC
Bank, Delaware, as Owner Trustee (the "Owner Trustee"). The Notes will be
sold to the underwriters (the "Note Underwriters") who are parties to an
underwriting agreement (the "Note Underwriting Agreement") between the
Depositor and CS First Boston Corporation ("First Boston"), as
representative of the Note Underwriters. The Certificates will be sold to
First Boston as Certificate Underwriter (the "Certificate Underwriter")
pursuant to an underwriting agreement (the "Certificate Underwriting
Agreement") between the Depositor and First Boston.
<PAGE> 2
Ford Credit Auto Receivables Two L.P.
June 20, 1996
Page 2
In this connection, we have examined and relied upon the
Registration Statement on Form S-3, Registration No. 333-1245, filed with
the Securities and Exchange Commission (the "SEC") on February 28, 1996 and
Amendment No. 1 and No. 2 thereto (collectively, the "Registration
Statement"), including the prospectus dated June 11, 1996 as supplemented
by the prospectus supplement dated June 13, 1996 included therein (the
"Prospectus"), the Indenture, the Trust Agreement, the Purchase Agreement,
the Sale and Servicing Agreement, the Administration Agreement, and such
other documents as we have deemed necessary or appropriate as a basis for
the opinion set forth below, and we have assumed that such documents will
not be amended and that the parties to such documents will comply with the
terms thereof.
In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals,
the conformity to original documents of all documents submitted to us as
certified or photostatic copies and the authenticity of the originals of
such latter documents. As to any facts material to the opinions expressed
herein which were not independently established or verified, we have relied
upon statements, representations, and certifications of officers and other
representatives of the Seller, the Servicer, the Underwriters, and others,
including, in particular, (i) certain calculations performed by CS First
Boston Corporation and (ii) a representation of the Servicer regarding the
reasonableness of certain fees payable to it.
In rendering our opinion, we have also considered and relied upon
the Internal Revenue Code of 1986, as amended, and administrative rulings,
judicial decisions, regulations, and such other authorities as we have
deemed appropriate, all as in effect as of the date hereof. The statutory
provisions, regulations, interpretations, and other authorities upon which
our opinion is based are subject to change, and such changes could apply
retroactively. In addition, there can be no assurance that positions
contrary to those stated in our opinion will not be taken by the Internal
Revenue Service.
<PAGE> 3
Ford Credit Auto Receivables Two L.P.
June 20, 1996
Page 3
We express no opinions as to the laws of any jurisdiction other
than the federal laws of the United States of America to the extent
specifically referred to herein.
Based upon and subject to the foregoing, we are of the opinion
that the statements in the Prospectus under the heading "Summary--Tax
Status" to the extent they relate to federal income tax matters and under
the heading "Certain Federal Income Tax Consequences," subject to the
qualifications set forth therein, accurately describe the material federal
income tax consequences to holders of Notes and Certificates, under
existing law and the assumptions stated therein.
We consent to the reference to Skadden, Arps, Slate, Meagher &
Flom under the captions "Certain Federal Income Tax Consequences" and
"Legal Opinions" in the Prospectus.
Very truly yours,
/s/ Skadden, Arps, Slate
Meagher & Flom
<PAGE> 1
EXHIBIT 8.2
June 20, 1996
Ford Credit Auto Receivables Two L.P.
The American Road
Dearborn, Michigan 48121
Re: Ford Credit Auto Owner Trust 1996-A
Ladies and Gentlemen:
The undersigned, J. D. Bringard, Vice President--General Counsel of
Ford Motor Credit Company (the "Company") has acted as counsel to Ford Credit
Auto Receivables Two L.P. (the "Limited Partnership") in connection with (i)
the proposed sale by the Company to the Limited Partnership of the property
described in Section 2.1(a) of the Purchase Agreement dated as of June 1, 1996
between the Company and the Limited Partnership, (ii) the establishment by the
Limited Partnership of the Ford Credit Auto Owner Trust 1996-A (the "Trust")
pursuant to the terms of the Amended and Restated Trust Agreement dated as of
June 1, 1996 (the "Trust Agreement") between the Limited Partnership and PNC
Bank, Delaware, (iii) the proposed assignment by the Limited Partnership to the
Trust of the property described in Section 2.1 of the Sale and Servicing
Agreement dated as of June 1, 1996 among the Trust, the Limited Partnership and
the Company, (iv) the registration by the Limited Partnership under the
Securities Act of 1933, as amended, of $5,000,000,000 aggregate principal
amount Asset Backed Securities to be issued by the Trust, (v) the proposed sale
by the Trust of a portion of the Asset Backed Securities designated as
$320,031,000 Class A-1 5.67% Money Market Asset Backed Notes, $283,049,000
Class A-2 6.30% Asset Backed Notes, $219,119,000 Class A-3 6.50% Asset Backed
Notes, and $184,607,000 Class A-4 6.75% Asset Backed Notes, to be issued under
an Indenture dated as of June 1, 1996 between the Trust and Chemical Bank, to
the Note Underwrit-
<PAGE> 2
Ford Credit Auto Receivables Two L.P.
June 20, 1996
Page 2
ers pursuant to the Note Underwriting Agreement dated June 13, 1996 between the
Limited Partnership and CS First Boston Corporation, as Representative of the
Note Underwriters named therein, and (vi) the proposed sale by the Trust of a
portion of the Asset Backed Securities designated as $36,516,567 7.00% Asset
Backed Certificates to be issued under the Trust Agreement, to the Certificate
Underwriter pursuant to the Certificate Underwriting Agreement dated June 13,
1996 between the Limited Partnership and CS First Boston as Certificate
Underwriter.
In this connection I have examined, or cause to be examined, the
following:
(a) Signed copies of Registration Statement No. 333-1245 on Form S-3
filed by the Company with the Securities and Exchange Commission (the
"Commission") on February 28, 1996 and Amendment Nos. 1 and 2 thereto filed
with the Commission on April 29, 1996 and May 16, 1996, respectively; and
(b) Copies of the prospectus included in such Registration
Statement and Amendment Nos. 1 and 2 thereto and the Prospectus dated June 11,
1996 as supplemented by the Prospectus Supplement dated June 13, 1996 as filed
with the Commission pursuant to Rule 424(b)(2) issued under the Act.
I am admitted to the State Bar of Michigan and I express no opinion as
to the laws of any other jurisdiction except the laws of the United States of
America and the State of Michigan to the extent specifically referred to
herein.
I hereby confirm that the statements set forth in the Prospectus and
the Prospectus Supplement forming a part of the Registration Statement under
the caption "Summary--Tax Status" as they relate to Michigan state tax matters
and in the Prospectus Supplement under the caption "Certain State Tax
Consequences," to the extent they constitute matters of law or legal
conclusions with respect thereto, have been prepared, reviewed or caused
<PAGE> 3
Ford Credit Auto Receivables Two L.P.
June 20, 1996
Page 3
to be reviewed by me and are correct in all material respects.
I consent to the reference to me under the captions "Certain State Tax
Consequences" in the Prospectus Supplement and "Legal Opinions" in the
Prospectus and the Prospectus Supplement.
Very truly yours,
\s\ J.D. Bringard
<PAGE> 1
EXHIBIT 99.1
===========================================================
SALE AND SERVICING AGREEMENT
by and among
FORD CREDIT AUTO OWNER TRUST 1996-A,
as Issuer,
FORD CREDIT AUTO RECEIVABLES TWO L.P.,
as Seller
and
FORD MOTOR CREDIT COMPANY,
as Servicer
Dated as of June 1, 1996
===========================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS AND USAGE . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
TRUST PROPERTY . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.1. Conveyance of Trust Property . . . . . . 2
SECTION 2.2. Representations and Warranties of the
Seller as to the Receivables . . . . . 2
SECTION 2.3. Repurchase upon Breach . . . . . . . . . 7
SECTION 2.4. Custody of Receivable Files . . . . . . . 7
SECTION 2.5. Duties of Servicer as Custodian . . . . . 8
SECTION 2.6. Instructions; Authority to Act . . . . . 10
SECTION 2.7. Custodian's Indemnification . . . . . . . 10
SECTION 2.8. Effective Period and Termination . . . . 10
ARTICLE III
ADMINISTRATION AND SERVICING OF
RECEIVABLES AND TRUST PROPERTY . . . . . . . . . . . . . . . 12
SECTION 3.1. Duties of Servicer . . . . . . . . . . . 12
SECTION 3.2. Collection of Receivable Payments . . . . 13
SECTION 3.3. Realization Upon Receivables . . . . . . 13
SECTION 3.4. [Reserved] . . . . . . . . . . . . . . . 13
SECTION 3.5. Maintenance of Security Interests in
Financed Vehicles . . . . . . . . . . . . 14
SECTION 3.6. Covenants of Servicer . . . . . . . . . . 14
SECTION 3.7. Purchase of Receivables Upon Breach . . . 14
SECTION 3.8. Servicer Fee . . . . . . . . . . . . . . 15
SECTION 3.9. Servicer's Certificate . . . . . . . . . 15
SECTION 3.10. Annual Statement as to Compliance; No-
tice of Event of Servicing Termina-
tion . . . . . . . . . . . . . . . . . 16
SECTION 3.11. Annual Independent Certified Public
Accountant's Report . . . . . . . . . 17
SECTION 3.12. Access to Certain Documentation and
Information Regarding Receivables . . 17
SECTION 3.13. Servicer Expenses . . . . . . . . . . . . 18
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO NOTEHOLDERS AND CERTIFICATEHOLDERS . . . . . . 19
SECTION 4.1. Accounts . . . . . . . . . . . . . . . . 19
SECTION 4.2. Collections . . . . . . . . . . . . . . . 23
SECTION 4.3. Application of Collections . . . . . . . 24
SECTION 4.4. Advances . . . . . . . . . . . . . . . . 25
SECTION 4.5. Additional Deposits . . . . . . . . . . . 26
SECTION 4.6. Distributions . . . . . . . . . . . . . . 27
SECTION 4.7. Reserve Account . . . . . . . . . . . . . 29
SECTION 4.8. Net Deposits . . . . . . . . . . . . . . 33
SECTION 4.9. Statements to Noteholders and Certifica-
teholders . . . . . . . . . . . . . . . 33
ARTICLE V
[Intentionally Omitted]
ARTICLE VI
THE SELLER . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.1. Representations and Warranties of Sell-
er . . . . . . . . . . . . . . . . . . 36
SECTION 6.2. Liability of Seller; Indemnities . . . . 38
SECTION 6.3. Merger or Consolidation of, or Assump-
tion of the Obligations of, Seller . . 39
SECTION 6.4. Limitation on Liability of Seller and
Others . . . . . . . . . . . . . . . . 40
SECTION 6.5. Seller May Own Notes or Certificates . . 40
ARTICLE VII
THE SERVICER . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.1. Representations of Servicer . . . . . . . 42
SECTION 7.2. Indemnities of Servicer . . . . . . . . . 43
SECTION 7.3. Merger or Consolidation of, or Assump-
tion of the Obligations of, Servicer . 46
SECTION 7.4. Limitation on Liability of Servicer and
Others . . . . . . . . . . . . . . . . 46
SECTION 7.5. Delegation of Duties . . . . . . . . . . 47
SECTION 7.6. Ford Credit Not to Resign as Servicer . . 47
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 7.7. Servicer May Own Notes or Certificates . 48
ARTICLE VIII
SERVICING TERMINATION . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.1. Events of Servicing Termination . . . . . 49
SECTION 8.2. Appointment of Successor Servicer . . . . 51
SECTION 8.3. Repayment of Advances . . . . . . . . . . 52
SECTION 8.4. Notification to Noteholders and Certifi-
cateholders . . . . . . . . . . . . . 52
SECTION 8.5. Waiver of Past Events of Servicing Ter-
mination . . . . . . . . . . . . . . . 52
ARTICLE IX
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 9.1. Optional Purchase of All Receivables . . 54
SECTION 9.2. Succession Upon Satisfaction and Dis-
charge of Indenture . . . . . . . . . 54
ARTICLE X
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . 55
SECTION 10.1. Amendment . . . . . . . . . . . . . . . . 55
SECTION 10.2. Protection of Title to Trust . . . . . . 57
SECTION 10.3. Governing Law . . . . . . . . . . . . . . 60
SECTION 10.4. Notices . . . . . . . . . . . . . . . . . 60
SECTION 10.5. Severability of Provisions . . . . . . . 61
SECTION 10.6. Assignment . . . . . . . . . . . . . . . 61
SECTION 10.7. Further Assurances . . . . . . . . . . . 61
SECTION 10.8. No Waiver; Cumulative Remedies . . . . . 61
SECTION 10.9. Third-Party Beneficiaries . . . . . . . . 62
SECTION 10.10. Actions by Noteholders or Certificateho-
lders . . . . . . . . . . . . . . . . 62
SECTION 10.11. Agent for Service . . . . . . . . . . . . 62
SECTION 10.12. No Bankruptcy Petition. . . . . . . . . . 62
SECTION 10.13. Limitation of Liability of Owner Trustee
and Indenture Trustee . . . . . . . . 63
SECTION 10.14. Third-Party Beneficiary . . . . . . . . . 63
SECTION 10.15. Savings Clause . . . . . . . . . . . . . 64
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SCHEDULE A Schedule of Receivables . . . . . . . . SA-1
SCHEDULE B Location of Receivable Files . . . . . SB-1
APPENDIX A Definitions and Usage . . . . . . . . . AA-1
</TABLE>
iv
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SALE AND SERVICING AGREEMENT, dated as of June 1, 1996 (as
from time to time amended, supplemented or otherwise modified and in effect,
this "Agreement"), by and among FORD CREDIT AUTO OWNER TRUST 1996-A (the
"Issuer"), a Delaware business trust, FORD CREDIT AUTO RECEIVABLES TWO L.P., a
Delaware limited partnership, as seller (the "Seller"), and FORD MOTOR CREDIT
COMPANY, a Delaware corporation, as servicer (the "Servicer").
WHEREAS, the Issuer desires to acquire a portfolio of
receivables arising in connection with motor vehicle retail installment sale
contracts generated by Ford Motor Credit Company in the ordinary course of its
business and conveyed to the Seller;
WHEREAS, the Seller is willing to convey such receivables to
the Issuer; and
WHEREAS, Ford Motor Credit Company is willing to service such
receivables on behalf of the Issuer;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS AND USAGE
Except as otherwise specified herein or as the context may
otherwise require, capitalized terms used but not otherwise defined herein are
defined in Appendix A hereto, which also contains rules as to usage that shall
be applicable herein.
<PAGE> 7
ARTICLE II
TRUST PROPERTY
SECTION 2.1. Conveyance of Trust Property. In consideration
of the Issuer's delivery to, or upon the order of, the Seller of the Notes and
the Certificates in an aggregate principal amount equal to the Initial Pool
Balance, the Seller does hereby irrevocably transfer, assign and otherwise
convey to the Issuer without recourse (subject to the obligations herein) all
right, title and interest of the Seller, whether now owned or hereafter
acquired, in and to the Trust Property. The transfer, assignment and
conveyance made hereunder shall not constitute and is not intended to result in
an assumption by the Issuer of any obligation of the Seller to the Obligors,
the Dealers or any other Person in connection with the Receivables and the
other Trust Property or any agreement, document or instrument related thereto.
SECTION 2.2. Representations and Warranties of the Seller as
to the Receivables. The Seller makes the following representations and
warranties as to the Receivables on which the Issuer shall be deemed to have
relied in accepting the Receivables. Such representations and warranties speak
as of the execution and delivery of this Agreement, but shall survive the
transfer, assignment and conveyance of the Receivables to the Issuer and the
pledge thereof to the Indenture Trustee pursuant to the Indenture.
(i) Characteristics of Receivables. Each Receivable (a)
shall have been originated in the United States of America by a Dealer for the
retail sale of a Financed Vehicle in the ordinary course of such Dealer's
business, shall have been fully and properly executed by the parties thereto,
shall have been purchased by the Seller from Ford Credit, which in turn shall
have purchased such Receivable from such Dealer under an existing dealer
agreement with Ford Credit, and shall have been validly assigned by such Dealer
to Ford Credit, which in turn shall have been validly assigned by Ford Credit
to the Seller in accordance with its terms, (b) shall have created or shall
create a valid, subsisting, and enforceable first priority security interest in
favor of Ford Credit in the Financed Vehicle, which security interest
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has been assigned by Ford Credit to the Seller, which in turn shall be
assignable by the Seller to the Issuer, (c) shall contain customary and
enforceable provisions such that the rights and remedies of the holder thereof
shall be adequate for realization against the collateral of the benefits of the
security, (d) shall provide for level monthly payments (provided that the
payment in the first or last month in the life of the Receivable may be
minimally different from the level payment) that fully amortize the Amount
Financed by maturity and yield interest at the Annual Percentage Rate, (e)
shall provide for, in the event that such contract is prepaid, a prepayment
that fully pays the Principal Balance, and (f) is a Precomputed Receivable or a
Simple Interest Receivable.
(ii) Schedule of Receivables. The information set forth in
the Schedule of Receivables shall be true and correct in all material respects
as of the opening of business on the Cutoff Date, and no selection procedures
believed to be adverse to the Noteholders or the Certificateholders shall have
been utilized in selecting the Receivables from those receivables which meet
the criteria contained herein. The computer tape or other listing regarding
the Receivables made available to the Issuer and its assigns (which computer
tape or other listing is required to be delivered as specified herein) is true
and correct in all respects.
(iii) Compliance with Law. Each Receivable and the sale of
the Financed Vehicle shall have complied at the time it was originated or made
and at the execution of this Agreement shall comply in all material respects
with all requirements of applicable federal, State, and local laws, and
regulations thereunder, including, without limitation, usury laws, the Federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the Magnuson Moss Warranty Act, the Federal Reserve Board's
Regulations B and Z, and State adaptations of the National Consumer Act and of
the Uniform Consumer Credit Code, and other consumer credit laws and equal
credit opportunity and disclosure laws.
(iv) Binding Obligation. Each Receivable shall represent the
genuine, legal, valid, and binding payment obligation in writing of the
Obligor, enforceable
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by the holder thereof in accordance with its terms subject to the effect of
bankruptcy, insolvency, reorganization, or other similar laws affecting the
enforcement of creditors' rights generally.
(v) No Government Obligor. None of the Receivables shall be
due from the United States of America or any State or from any agency,
department, or instrumentality of the United States of America or any State.
(vi) Security Interest in Financed Vehicle. Immediately
prior to the transfer, assignment and conveyance thereof, each Receivable shall
be secured by a validly perfected first security interest in the Financed
Vehicle in favor of Ford Credit as secured party or all necessary and
appropriate actions shall have been commenced that would result in the valid
perfection of a first security interest in the Financed Vehicle in favor of
Ford Credit as secured party.
(vii) Receivables in Force. No Receivable shall have been
satisfied, subordinated, or rescinded, nor shall any Financed Vehicle have been
released from the lien granted by the related Receivable in whole or in part.
(viii) No Waiver. No provision of a Receivable shall have
been waived.
(ix) No Defenses. No right of rescission, setoff,
counterclaim, or defense shall have been asserted or threatened with respect to
any Receivable.
(x) No Liens. To the best of the Seller's knowledge, no
liens or claims shall have been filed for work, labor, or materials relating to
a Financed Vehicle that shall be liens prior to, or equal or coordinate with,
the security interest in the Financed Vehicle granted by the Receivable.
(xi) No Default. Except for payment defaults continuing for
a period of not more than thirty (30) days as of the Cutoff Date, no default,
breach, violation, or event permitting acceleration under the terms of any
Receivable shall have occurred; and no continuing condition that with notice or
the lapse of time would constitute a default, breach, violation, or event
permitting
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acceleration under the terms of any Receivable shall have arisen; and Ford
Credit shall not waive any of the foregoing.
(xii) Insurance. Ford Credit, in accordance with its
customary procedures, shall have determined that the Obligor has obtained or
agreed to obtain physical damage insurance covering the Financed Vehicle.
(xiii) Title. It is the intention of the Seller that the
transfer and assignment herein contemplated constitute an absolute transfer of
the Receivables from the Seller to the Issuer and that the beneficial interest
in and title to the Receivables not be part of the Seller's estate in the event
of the filing of a bankruptcy petition by or against the Seller under any
bankruptcy law. No Receivable has been conveyed, transferred, assigned, or
pledged by the Seller to any Person other than the Issuer. Immediately prior
to the transfer and assignment herein contemplated, the Seller had good and
marketable title to each Receivable free and clear of all Liens, encumbrances,
security interests, and rights of others and, immediately upon the transfer
thereof, the Issuer shall have good and marketable title to each Receivable,
free and clear of all Liens, encumbrances, security interests, and rights of
others; and the transfer has been perfected under the UCC.
(xiv) Valid Assignment. No Receivable shall have been
originated in, or shall be subject to the laws of, any jurisdiction under which
the transfer, assignment and conveyance of such Receivable under this Agreement
or pursuant to transfers of the Notes or the Certificates shall be unlawful,
void, or voidable. The Seller has not entered into any agreement with any
account debtor that prohibits, restricts or conditions the assignment of any
portion of the Receivables.
(xv) All Filings Made. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give the Issuer a
first perfected ownership interest in the Receivables, and to give the
Indenture Trustee a first perfected security interest therein, shall have been
made.
(xvi) Chattel Paper. Each Receivable constitutes "chattel
paper" as defined in the UCC.
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(xvii) One Original. There shall be only one original
executed copy of each Receivable.
(xviii) New and Used Vehicles. Approximately 70.0% of the
aggregate Principal Balance of the Receivables, constituting 61.4% of the
number of Receivables, as of the Cutoff Date, represent vehicles financed at
new vehicle rates, and the remainder of the Receivables represent vehicles
financed at used vehicle rates.
(xix) Amortization Type. By aggregate Principal Balance as
of the Cutoff Date, approximately 34.2% of the Receivables constitute
Precomputed Receivables and 65.8% of the Receivables constitute Simple Interest
Receivables.
(xx) Origination. Each Receivable shall have an origination
date on or after June 1, 1994.
(xxi) Maturity of Receivables. Each Receivable shall have an
original maturity of not greater than sixty (60) months.
(xxii) Minimum Annual Percentage Rate. Each Receivable shall
have an Annual Percentage Rate equal to or greater than 7.75%.
(xxiii) Scheduled Payments. Each Receivable shall have a
first Scheduled Payment due, in the case of Precomputed Receivables, or a first
scheduled due date, in the case of Simple Interest Receivables, on or prior to
June 30, 1996 and no Receivable shall have a payment that is more than thirty
(30) days overdue as of the Cutoff Date.
(xxiv) Location of Receivable Files. The Receivable Files
shall be kept at one or more of the locations listed in Schedule B hereto.
(xxv) No Extensions. The number of Scheduled Payments, in
the case of Precomputed Receivables, and the number of scheduled due dates, in
the case of Simple Interest Receivables, shall not have been extended on any
Receivable on or before the Cutoff Date.
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(xxvi) Rating Agencies. The rating agencies rating the Notes
and the Certificates are Moody's and Standard & Poor's.
(xxvii) Agreement. The representations and warranties of the
Seller in Section 6.1 are true and correct.
(xxviii) No Receivables Originated in Alabama or
Pennsylvania. No Receivable shall have been originated in Alabama or
Pennsylvania.
SECTION 2.3. Repurchase upon Breach. The Seller, the
Servicer, the Issuer or the Owner Trustee, as the case may be, shall inform the
other parties to this Agreement, the Indenture Trustee and Ford Credit
promptly, in writing, upon the discovery of any breach of the Seller's
representations and warranties made by the Seller pursuant to Section 2.2.
Unless the breach shall have been cured by the last day of the second
Collection Period following the discovery, the Indenture Trustee shall enforce
the obligation of the Seller under this Section 2.3, and, if necessary, the
Seller or the Indenture Trustee shall enforce the obligation of Ford Credit
under the Purchase Agreement, to repurchase any Receivable materially and
adversely affected by the breach as of such last day (or, at the Seller's
option, the last day of the first Collection Period following the discovery).
In consideration of the purchase of the Receivable, the Seller shall remit the
Purchase Amount, in the manner specified in Section 4.5. The sole remedy of
the Issuer, the Owner Trustee, the Indenture Trustee, the Noteholders or the
Certificateholders with respect to a breach of the Seller's representations and
warranties pursuant to Section 2.2 shall be to require the Seller to repurchase
Receivables pursuant to this Section 2.3 or to enforce the obligation of Ford
Credit to the Seller to repurchase such Receivables pursuant to the Purchase
Agreement. Neither the Owner Trustee nor the Indenture Trustee shall have any
duty to conduct an affirmative investigation as to the occurrence of any
condition requiring the repurchase of any Receivable pursuant to this Section
2.3 or the eligibility of any Receivable for purposes of this Agreement.
SECTION 2.4. Custody of Receivable Files. To assure uniform
quality in servicing the Receivables and
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to reduce administrative costs, the Issuer, upon the execution and delivery of
this Agreement, hereby revocably appoints the Servicer, and the Servicer hereby
accepts such appointment, to act as the agent of the Issuer and the Indenture
Trustee as custodian of the following documents or instruments, which are
hereby constructively delivered to the Indenture Trustee, as pledgee of the
Issuer pursuant to the Indenture, with respect to each Receivable:
(i) The original of the Receivable.
(ii) The original credit application fully
executed by the Obligor or a photocopy thereof or a record thereof on
a computer file or disc or on microfiche.
(iii) The original certificate of title or such
documents that the Servicer or Ford Credit shall keep on file, in
accordance with its customary procedures, evidencing the security
interest of Ford Credit in the Financed Vehicle.
(iv) Any and all other documents (including any
computer file or disc or microfiche) that the Servicer or the Seller
shall keep on file, in accordance with its customary procedures,
relating to a Receivable, an Obligor, or a Financed Vehicle.
The Servicer shall provide an Officer's Certificate to the
Issuer and the Indenture Trustee confirming that the Servicer has received on
behalf of the Issuer and the Indenture Trustee all the documents and
instruments necessary for the Servicer to act as the agent of the Issuer and
the Indenture Trustee for the purposes set forth in this Section 2.4, including
the documents referred to herein, and the Issuer and the Indenture Trustee are
hereby authorized to rely on such Officer's Certificate.
SECTION 2.5. Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer shall hold the
Receivable Files for the benefit of the Issuer and the Indenture Trustee and
maintain such accurate and complete accounts, records, and computer systems
pertaining to each Receivable File as shall enable the Servicer and the
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Issuer to comply with the terms and conditions of this Agreement, and the
Indenture Trustee to comply with the terms and conditions of the Indenture. In
performing its duties as custodian the Servicer shall act with reasonable care,
using that degree of skill and attention that the Servicer exercises with
respect to the receivable files relating to all comparable automotive
receivables that the Servicer services for itself or others. In accordance
with its customary practices with respect to its retail installment sale
contracts, the Servicer shall conduct, or cause to be conducted, periodic
audits of the Receivable Files held by it under this Agreement, and of the
related accounts, records, and computer systems, in such a manner as shall
enable the Issuer or the Indenture Trustee to verify the accuracy of the
Servicer's record keeping. The Servicer shall promptly report to the Issuer
and the Indenture Trustee any failure on its part to hold the Receivable Files
and maintain its accounts, records, and computer systems as herein provided and
promptly take appropriate action to remedy any such failure. Nothing herein
shall be deemed to require an initial review or any periodic review by the
Issuer, the Owner Trustee or the Indenture Trustee of the Receivable Files.
(b) Maintenance of and Access to Records. The Servicer shall
maintain each Receivable File at one of its offices specified in Schedule B to
this Agreement, or at such other office as shall be specified to the Issuer and
the Indenture Trustee by written notice not later than ninety (90) days after
any change in location. The Servicer shall make available to the Issuer and
the Indenture Trustee or their duly authorized representatives, attorneys, or
auditors a list of locations of the Receivable Files, the Receivable Files, and
the related accounts, records, and computer systems maintained by the Servicer
at such times as the Issuer or the Indenture Trustee shall instruct.
(c) Release of Documents. Upon written instructions from the
Indenture Trustee, the Servicer shall release any document in the Receivable
Files to the Indenture Trustee, the Indenture Trustee's agent or the Indenture
Trustee's designee, as the case may be, at such place or places as the
Indenture Trustee may designate, as soon thereafter as is practicable. Any
document so released shall be handled by the Indenture Trustee with
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due care and returned to the Servicer for safekeeping as soon as the Indenture
Trustee or its agent or designee, as the case may be, shall have no further
need therefor.
SECTION 2.6. Instructions; Authority to Act. All instructions
from the Indenture Trustee shall be in writing and signed by an Authorized
Officer of the Indenture Trustee, and the Servicer shall be deemed to have
received proper instructions with respect to the Receivable Files upon its
receipt of such written instructions.
SECTION 2.7. Custodian's Indemnification. The Servicer as
custodian shall indemnify the Issuer, the Owner Trustee and the Indenture
Trustee for any and all liabilities, obligations, losses, compensatory damages,
payments, costs, or expenses of any kind whatsoever that may be imposed on,
incurred, or asserted against the Issuer, the Owner Trustee or the Indenture
Trustee as the result of any improper act or omission in any way relating to
the maintenance and custody by the Servicer as custodian of the Receivable
Files; provided, however, that the Servicer shall not be liable (i) to the
Issuer for any portion of any such amount resulting from the willful
misfeasance, bad faith, or negligence of the Indenture Trustee, the Owner
Trustee or the Issuer, (ii) to the Owner Trustee for any portion of any such
amount resulting from the willful misfeasance, bad faith, or negligence of the
Indenture Trustee, the Owner Trustee or the Issuer and (iii) to the Indenture
Trustee for any portion of any such amount resulting from the willful
misfeasance, bad faith, or negligence of the Indenture Trustee, the Owner
Trustee or the Issuer.
SECTION 2.8. Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and shall
continue in full force and effect until terminated pursuant to this Section
2.8. If Ford Credit shall resign as Servicer in accordance with the provisions
of this Agreement or if all of the rights and obligations of the Servicer shall
have been terminated under Section 8.1, the appointment of the Servicer as
custodian hereunder may be terminated by the Indenture Trustee, or by the
Noteholders of Notes evidencing not less than 25% of the principal amount of
the Notes Outstanding or, with the consent of Noteholders of Notes evidencing
not less than 25% of the principal amount of the Notes Outstanding, by the
Owner Trustee or
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by Certificateholders of Certificates evidencing not less than 25% of the
Certificate Balance, in the same manner as the Indenture Trustee or such
Securityholders may terminate the rights and obligations of the Servicer under
Section 8.1. As soon as practicable after any termination of such appointment,
the Servicer shall deliver the Receivable Files and the related accounts and
records maintained by the Servicer to the Indenture Trustee or the Indenture
Trustee's agent at such place or places as the Indenture Trustee may reasonably
designate.
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ARTICLE III
ADMINISTRATION AND SERVICING OF
RECEIVABLES AND TRUST PROPERTY
SECTION 3.1. Duties of Servicer. The Servicer shall manage,
service, administer, and make collections on the Receivables with reasonable
care, using that degree of skill and attention that the Servicer exercises with
respect to all comparable receivables that it services for itself or others.
The Servicer's duties shall include collection and posting of all payments,
responding to inquiries of Obligors on such Receivables, investigating
delinquencies, sending payment coupons to Obligors, reporting tax information
to Obligors, accounting for collections, furnishing monthly and annual
statements to the Owner Trustee and the Indenture Trustee with respect to
distributions, and making Advances pursuant to Section 4.4. The Servicer shall
follow its customary standards, policies, and procedures in performing its
duties as Servicer. Without limiting the generality of the foregoing, the
Servicer is hereby authorized and empowered to execute and deliver, on behalf
of itself, the Issuer, the Owner Trustee, the Indenture Trustee, the
Noteholders, the Certificateholders, or any of them, any and all instru- ments
of satisfaction or cancellation, or partial or full release or discharge, and
all other comparable instruments, with respect to such Receivables or to the
Financed Vehicles securing such Receivables. If the Servicer shall commence a
legal proceeding to enforce a Receivable, the Owner Trustee (in the case of a
Receivable other than a Purchased Receivable) shall thereupon be deemed to have
automatically assigned, solely for the purpose of collection, such Receivable
to the Servicer. If in any enforcement suit or legal proceeding it shall be
held that the Servicer may not enforce a Receivable on the ground that it shall
not be a real party in interest or a holder entitled to enforce the Receivable,
the Owner Trustee shall, at the Servicer's expense and direction, take steps to
enforce the Receivable, including bringing suit in its name or the names of the
Indenture Trustee, the Noteholders, the Certificateholders, or any of them.
The Owner Trustee shall furnish the Servicer with any powers of attorney and
other documents reasonably necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder. The Servicer, at
its
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expense, shall obtain on behalf of the Issuer or the Owner Trustee all
licenses, if any, required by the laws of any jurisdiction to be held by the
Issuer or the Owner Trustee in connection with ownership of the Receivables,
and shall make all filings and pay all fees as may be required in connection
therewith during the term hereof.
SECTION 3.2. Collection of Receivable Payments. The Servicer
shall make reasonable efforts to collect all payments called for under the
terms and provisions of the Receivables as and when the same shall become due
and shall follow such collection procedures as it follows with respect to all
comparable receivables that it services for itself or others. Subject to
Sections 3.6(iii) and (iv), the Servicer may grant extensions, rebates, or
adjustments on a Receivable; provided, however, that if the Servicer extends
the date for final payment by the Obligor of any Receivable beyond the Final
Scheduled Maturity Date, it shall promptly purchase the Receivable in the
manner provided in Section 3.7. The Servicer may in its discretion waive any
late payment charge or any other fees that may be collected in the ordinary
course of servicing a Receivable.
SECTION 3.3. Realization Upon Receivables. On behalf of the
Issuer, the Servicer shall use reasonable efforts, consistent with its
customary servicing procedures, to repossess or otherwise convert the ownership
of the Financed Vehicle securing any Receivable as to which the Servicer shall
have determined eventual payment in full is unlikely. The Servicer shall
follow such customary and usual practices and procedures as it shall deem
necessary or advisable in its servicing of comparable receivables, which may
include reasonable efforts to realize upon any Dealer Recourse and selling the
Financed Vehicle at public or private sale. The foregoing shall be subject to
the provision that, in any case in which the Financed Vehicle shall have
suffered damage, the Servicer shall not expend funds in connection with the
repair or the repossession of such Financed Vehicle unless it shall determine
in its discretion that such repair and/or repossession will increase the
Liquidation Proceeds by an amount greater than the amount of such expenses.
SECTION 3.4. [Reserved].
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SECTION 3.5. Maintenance of Security Interests in Financed
Vehicles. The Servicer shall, in accordance with its customary servicing
procedures, take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed Vehicle.
The Issuer hereby authorizes the Servicer to take such steps as are necessary
to re-perfect such security interest on behalf of the Issuer and the Indenture
Trustee in the event of the relocation of a Financed Vehicle or for any other
reason.
SECTION 3.6. Covenants of Servicer. The Servicer shall not
(i) release the Financed Vehicle securing each such Receivable from the
security interest granted by such Receivable in whole or in part except in the
event of payment in full by or on behalf of the Obligor thereunder or
repossession, (ii) impair the rights of the Noteholders or the
Certificateholders in the Receivables, (iii) change the Annual Percentage Rate
with respect to any Receivable, or (iv) modify the Amount Financed or the total
number of Scheduled Payments (in the case of a Precomputed Receivable) or the
total number of originally scheduled due dates (in the case of a Simple
Interest Receivable).
SECTION 3.7. Purchase of Receivables Upon Breach. The
Seller, the Servicer or the Owner Trustee, as the case may be, shall inform the
other parties to this Agreement promptly, in writing, upon the discovery of any
breach pursuant to Section 3.2, 3.5 or 3.6. Unless the breach shall have been
cured by the last day of the second Collection Period following such discovery
(or, at the Servicer's election, the last day of the first following Collection
Period), the Servicer shall purchase any Receivable materially and adversely
affected by such breach as determined by the Indenture Trustee (which shall
include any Receivable as to which a breach of Section 3.6 has occurred). In
consideration of the purchase of such Receivable, the Servicer shall remit the
Purchase Amount in the manner specified in Section 4.5. For purposes of this
Section 3.7, the Purchase Amount shall consist in part of a release by the
Servicer of all rights of reimbursement with respect to Outstanding Advances on
the Receivable. The sole remedy of the Issuer, the Owner Trustee, the
Indenture Trustee, the Noteholders or the Certificateholders with respect to a
breach pursuant to Section 3.2, 3.5 or 3.6 shall be to
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require the Servicer to purchase Receivables pursuant to this Section 3.7.
SECTION 3.8. Servicer Fee. The Servicer shall be entitled to
any interest earned on the amounts deposited in the Collection Account and the
Payahead Account during each Collection Period plus all late fees, prepayment
charges (including, in the case of a Receivable that provides for payments
according to the "Rule of 78's" and that is prepaid in full, the difference
between the Principal Balance of such Receivable (plus accrued interest to the
date of prepayment) and the principal balance of such Receivable computed
according to the "Rule of 78's"), and other administrative fees and expenses or
similar charges allowed by applicable law with respect to Receivables during
each Collec- tion Period (the "Supplemental Servicing Fee"). The Servicer also
shall be entitled to the Servicing Fee, as provided herein.
SECTION 3.9. Servicer's Certificate. (a) On or about the
tenth day of each calendar month, the Servicer shall deliver to the Owner
Trustee, each Note Paying Agent and Certificate Paying Agent, the Indenture
Trustee and the Seller, with a copy to the Rating Agencies, a Servicer's
Certificate containing all information (including all specific dollar amounts)
necessary to make the transfers and distributions pursuant to Sections 4.3,
4.4, 4.5, 4.6 and 4.7 for the Collection Period preceding the date of such
Servicer's Certificate, together with the written statements to be furnished by
the Owner Trustee to Certificateholders pursuant to Section 4.9 and by the
Indenture Trustee to the Noteholders pursuant to Section 4.9 hereof and Section
6.6 of the Indenture. Receivables purchased or to be purchased by the Servicer
or the Seller shall be identified by the Servicer by the Seller's account
number with respect to such Receivable (as specified in the Schedule of
Receivables).
(b) On or about the fifth (but in no event later than
the tenth) calendar day of each calendar month, the Servicer shall deliver to
the respective underwriters of the Notes and the Certificates the Note Pool
Factor for each Class of Notes and the Certificate Pool Factor as of the close
of business on the Distribution Date occurring in that month.
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SECTION 3.10. Annual Statement as to Compliance; Notice of
Event of Servicing Termination. (a) The Servicer shall deliver to the Owner
Trustee, the Indenture Trustee and each Rating Agency on or before April 30 of
each year beginning April 30, 1997, an Officer's Certificate, dated as of
December 31 of the preceding calendar year, stating that (i) a review of the
activities of the Servicer during the preceding 12-month (or shorter) period
and of its performance under the Agreement has been made under such officer's
supervision and (ii) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof. A copy of such Officer's Certificate and the report
referred to in Section 3.11 may be obtained by any Certificateholder by a
request in writing to the Owner Trustee, or by any Noteholder or Person
certifying that it is a Note Owner by a request in writing to the Indenture
Trustee, in either case addressed to the applicable Corporate Trust Office.
Upon the telephone request of the Owner Trustee, the Indenture Trustee shall
promptly furnish the Owner Trustee a list of Noteholders as of the date
specified by the Owner Trustee.
(b) The Servicer shall deliver to the Owner Trustee, the
Indenture Trustee and each Rating Agency promptly after having obtained
knowledge thereof, but in no event later than five (5) Business Days
thereafter, written notice in an Officer's Certificate of any event which with
the giving of notice or lapse of time, or both, would become an Event of
Servicing Termination under Section 8.1. The Seller shall deliver to the Owner
Trustee, the Indenture Trustee and each Rating Agency promptly after having
obtained knowledge thereof, but in no event later than five (5) Business Days
thereafter, written notice in an Officer's Certificate of any event which with
the giving of notice or lapse of time, or both, would become an Event of
Servicing Termination under clause (ii) of Section 8.1
SECTION 3.11. Annual Independent Certified Public
Accountant's Report. The Servicer shall cause a firm of independent certified
public accountants, who may also render other services to the Servicer or to
the
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Seller or to Ford Credit, to deliver to the Owner Trustee and the Indenture
Trustee on or before April 30 of each year beginning April 30, 1997 with
respect to the prior calendar year a report addressed to the Board of Directors
of the Servicer and to the Owner Trustee and the Indenture Trustee, to the
effect that such firm has audited the financial statements of the Servicer and
issued its report thereon and that such audit (1) was made in accordance with
generally accepted auditing standards, (2) included tests relating to
automotive loans serviced for others in accordance with the requirements of the
Uniform Single Audit Program for Mortgage Bankers (the "Program"), to the
extent the procedures in such Program are applicable to the servicing
obligations set forth in this Agreement, and (3) except as described in the
report, disclosed no exceptions or errors in the records relating to automobile
and light truck loans serviced for others that, in the firm's opinion,
paragraph four of such Program requires such firm to report.
The report will also indicate that the firm is independent of
the Servicer within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants.
SECTION 3.12. Access to Certain Documentation and Information
Regarding Receivables. The Servicer shall provide to the Certificateholders,
the Indenture Trustee and the Noteholders access to the Receivable Files in
such cases where the Certificateholders, the Indenture Trustee or the
Noteholders shall be required by applicable statutes or regulations to review
such documentation. Access shall be afforded without charge, but only upon
reasonable request and during the normal business hours at the respective
offices of the Servicer. Nothing in this Section 3.12 shall affect the
obligation of the Servicer to observe any applicable law prohibiting disclosure
of information regarding the Obligors, and the failure of the Servicer to
provide access to information as a result of such obligation shall not
constitute a breach of this Section 3.12. The Servicer shall provide such
information with respect to the Receivables as the Rating Agencies may
reasonably request, including as soon as practicable a periodic report of the
aggregate principal balance of Receivables which become Liquidated Receivables
during each Collection Period.
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SECTION 3.13. Servicer Expenses. The Servicer shall be
required to pay all expenses incurred by it in connection with its activities
hereunder, including fees and disbursements of the Owner Trustee and the
Indenture Trustee, independent accountants, taxes imposed on the Servicer and
expenses incurred in connection with distributions and reports to Noteholders
and Certificateholders.
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ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO NOTEHOLDERS AND CERTIFICATEHOLDERS
SECTION 4.1. Accounts. (a) The Servicer shall, prior to the
Closing Date, establish and maintain a segregated trust account in the name
"Chemical Bank as Indenture Trustee, as secured party from Ford Credit Auto
Owner Trust 1996-A", at a Qualified Institution or Qualified Trust Institution
(which shall initially be the corporate trust department of Chemical Bank),
which shall be designated as the "Collection Account". The Collection Account
shall be under the sole dominion and control of the Indenture Trustee;
provided, that the Servicer may make deposits to and direct the Indenture
Trustee in writing to make withdrawals from the Collection Account in
accordance with the terms of the Basic Documents. The Collection Account will
be established and maintained pursuant to an account agreement which specifies
New York law as the governing law. In addition, the account shall be
established and maintained at a Qualified Institution or Qualified Trust
Institution which agrees in writing that for so long as the Notes are
outstanding it will comply with entitlement orders (as defined in the 1994
version of the Official Text of Article 8 of the UCC) originated by the
Indenture Trustee without further consent of the Issuer. All monies deposited
from time to time in the Collection Account shall be held by the Indenture
Trustee as secured party for the benefit of the Noteholders and, after payment
in full of the Notes, as agent of the Owner Trustee and as part of the Trust
Property. All deposits to and withdrawals from the Collection Account shall be
made only upon the terms and conditions of the Basic Documents.
If the Servicer is required to remit collections pursuant to
the first sentence of Section 4.2, all amounts held in the Collection Account
shall, to the extent permitted by applicable law, rules and regulations, be
invested, as directed in writing by the Servicer, by the bank or trust company
then maintaining the Collection Account in Permitted Investments that mature
not later than the Business Day immediately prior to the Distribution Date for
the Collection Period to which such amounts relate and such Permitted
Investments shall be held to maturity. All interest and other income
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(net of losses and investment expenses) on funds on deposit in the Collection
Account shall be withdrawn from the Collection Account at the written direction
of the Servicer and shall be paid to the Servicer. In the event that the
Collection Account is no longer to be maintained at the corporate trust
department of Chemical Bank, the Servicer shall, with the Indenture Trustee's
or Owner Trustee's assistance as necessary, cause the Collection Account to be
moved to a Qualified Institution or a Qualified Trust Institution within ten
(10) Business Days (or such longer period not to exceed thirty (30) calendar
days as to which each Rating Agency may consent).
(b) The Servicer shall, prior to the Closing Date, establish
and maintain a segregated trust account in the name "Chemical Bank as Indenture
Trustee, as secured party from Ford Credit Auto Owner Trust 1996-A" at a
Qualified Institution or Qualified Trust Institution (which shall initially be
the corporate trust department of Chemical Bank), which shall be designated as
the "Note Payment Account". The Note Payment Account shall be under the sole
dominion and control of the Indenture Trustee. All monies deposited from time
to time in the Note Payment Account pursuant to this Agreement and the
Indenture shall be held by the Indenture Trustee as secured party for the
benefit of the Noteholders and, after payment in full of the Notes, as agent of
the Owner Trustee and as part of the Trust Property and shall be applied as
provided in the Basic Documents. In the event that the Note Payment Account is
no longer to be maintained at the corporate trust department of Chemical Bank,
the Servicer shall, with the Indenture Trustee's assistance as necessary, cause
the Note Payment Account to be moved to a Qualified Institution or a Qualified
Trust Institution within ten (10) Business Days (or such longer period not to
exceed thirty (30) calendar days as to which each Rating Agency may consent).
The Note Payment Account will be established and maintained pursuant to an
account agreement which specifies New York law as the governing law. In
addition, the account shall be established and maintained at a Qualified
Institution or Qualified Trust Institution which agrees in writing that for so
long as the Notes are outstanding it will comply with entitlement orders (as
defined in the 1994 version of the Official Text of Article 8 of the UCC)
originated by the Indenture Trustee without further consent of the Issuer.
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(c) The Servicer shall, prior to the Closing Date, establish
and maintain a segregated trust account in the name "PNC Bank, Delaware as
Owner Trustee" at a Qualified Institution or Qualified Trust Institution (which
shall initially be the corporate trust department of PNC Bank, Delaware), which
shall be designated as the "Certificate Distribution Account". The Certificate
Distribution Account shall be under the sole dominion and control of the Owner
Trustee. All monies deposited from time to time in the Certificate
Distribution Account pursuant to this Agreement and the Indenture shall be held
by the Owner Trustee as part of the Trust Property and shall be applied as
provided in the Basic Documents. In the event that the Certificate
Distribution Account is no longer to be maintained at the corporate trust
department of PNC Bank, Delaware, the Servicer shall, with the Owner Trustee's
assistance as necessary, cause the Certificate Distribution Account to be moved
to a Qualified Institution or a Qualified Trust Institution within ten (10)
Business Days (or such longer period not to exceed thirty (30) calendar days as
to which each Rating Agency may consent). The Certificate Distribution Account
will be established and maintained pursuant to an account agreement which
specifies New York law as the governing law.
(d) The Servicer shall, prior to the Closing Date, establish
and maintain a segregated trust account in the name of "Chemical Bank as
Indenture Trustee" at a Qualified Institution or Qualified Trust Institution
(which shall initially be the corporate trust department of Chemical Bank),
which shall be designated as the "Payahead Account". The Payahead Account
shall be held in trust for the benefit of the Obligors. The Payahead Account
shall be under the sole dominion and control of the Indenture Trustee; provided
that the Servicer may make deposits to and direct the Indenture Trustee in
writing to make withdrawals from the Payahead Account in accordance with the
Basic Documents. The Payahead Account shall not be a part of the Trust
Property. All deposits to and withdrawals from the Payahead Account shall be
made only upon the terms and conditions of the Basic Documents.
If the Servicer is required to remit collections pursuant to
the first sentence of Section 4.2, all amounts held in the Payahead Account
shall, to the extent
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permitted by applicable law, rules and regulations, be invested, as directed in
writing by the Servicer, by the bank or trust company then maintaining the
Payahead Account in Permitted Investments that mature not later than the
Business Day immediately prior to the Distribution Date for the Collection
Period to which such amounts relate and such Permitted Investments shall be
held to maturity. All interest and other income (net of losses and investment
expenses) on funds on deposit in the Payahead Account shall be withdrawn from
the Payahead Account at the direction of the Servicer and shall be paid to the
Servicer. In the event that the Payahead Account is no longer to be maintained
at the corporate trust department of Chemical Bank, the Servicer shall, with
the Indenture Trustee's or Owner Trustee's assistance as necessary, cause the
Payahead Account to be moved to a Qualified Institution or a Qualified Trust
Institution within ten (10) Business Days (or such longer period not to exceed
thirty (30) calendar days as to which each Rating Agency may consent).
(e) Notwithstanding the provisions of clause (d) above and of
Section 4.6(a)(ii), for so long as (i) Ford Credit is the Servicer, (ii) the
rating of Ford Credit's short-term unsecured debt is at least P-1 by Moody's
and is at least A-1 by Standard & Poor's and (iii) no Event of Servicing
Termination shall have occurred (each, a "Monthly Remittance Condition"),
Payaheads need not be remitted to and deposited in the Payahead Account but
instead may be remitted to and held by the Servicer. So long as each Monthly
Remittance Condition is satisfied, the Servicer shall not be required to
segregate or otherwise hold separate any Payaheads remitted to the Servicer as
aforesaid but shall be required to remit Payaheads to the Collection Account in
accordance with Section 4.6(a)(i). At any time as any Monthly Remittance
Condition is not satisfied, the Servicer shall deposit in the Payahead Account
the amount of any Payaheads then held or received by it (which amount shall be
at least equal to the Payahead Balance as of the close of business on the last
day of the immediately preceding Collection Period). Notwithstanding the
foregoing, if a Monthly Remittance Condition is not satisfied the Servicer may
utilize, with respect to Payaheads, an alternative remittance schedule (which
may include the remittance schedule utilized by the Servicer before the Monthly
Remittance Condition became unsatis-
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fied), if the Servicer provides to the Owner Trustee and the Indenture Trustee
written confirmation from each Rating Agency that such alternative remittance
schedule will not result in the downgrading or withdrawal by such Rating Agency
of the ratings then assigned to the Notes and the Certificates. The Owner
Trustee and the Indenture Trustee shall not be deemed to have knowledge of any
event or circumstance under clause (iii) of the first sentence of this Section
4.1(e) that would require remittance of the Payaheads to the Payahead Account
unless the Owner Trustee or the Indenture Trustee has received notice of such
event or circumstance from the Seller or the Servicer in an Officer's
Certificate or from the Noteholders of Notes evidencing not less than 25% of
the principal amount of the Notes Outstanding or from the Certificateholders of
Certificates evidencing not less than 25% of the Certificate Balance or unless
a Trustee Officer in the Corporate Trust Office with knowledge hereof and
familiarity herewith has actual knowledge of such event or circumstance.
SECTION 4.2. Collections. The Servicer shall remit to the
Collection Account within two (2) Business Days of the receipt thereof (i) all
payments by or on behalf of the Obligors (including Payaheads on the
Receivables and Rule of 78's Payments, but excluding Purchased Receivables) and
(ii) all Liquidation Proceeds, both as collected during the Collection Period.
Ford Credit, so long as it is acting as the Servicer, may make remittances of
collections on a less frequent basis than that specified in the immediately
preceding sentence. It is understood that such less frequent remittances may
be made only on the specific terms and conditions set forth below in this
Section 4.2 and only for so long as such terms and conditions are fulfilled.
Accordingly, notwithstanding the provisions of the first sentence of this
Section 4.2, the Servicer shall remit collections received during a Collection
Period to the Collection Account in immediately available funds on the Business
Day preceding the related Distribution Date (or, with the prior consent of the
Rating Agencies, on the related Distribution Date) but only for so long as each
Monthly Remittance Condition is satisfied. Notwithstanding the foregoing, if a
Monthly Remittance Condition is not satisfied the Servicer may utilize an
alternative remittance schedule (which may include the remittance schedule
utilized by the Servicer before the Monthly Remittance
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Condition became unsatisfied), if the Servicer provides to the Owner Trustee
and the Indenture Trustee written confirmation from each Rating Agency that
such alternative remittance schedule will not result in the downgrading or
withdrawal by such Rating Agency of the ratings then assigned to the Notes and
the Certificates. The Owner Trustee or the Indenture Trustee shall not be
deemed to have knowledge of any event or circumstance under clause (iii) of the
definition of Monthly Remittance Condition that would require remittance by the
Servicer to the Collection Account within two Business Days of receipt as
aforesaid unless the Owner Trustee or the Indenture Trustee has received notice
of such event or circumstance from the Seller or the Servicer in an Officer's
Certificate or from the Noteholders of Notes evidencing not less than 25% of
the principal amount of the Notes Outstanding or from the Certificateholders of
Certificates evidencing not less than 25% of the Certificate Balance or a
Trustee Officer in the Corporate Trust Office with knowledge hereof or
familiarity herewith has actual knowledge of such event or circumstance. For
purposes of this Article IV the phrase "payments by or on behalf of Obligors"
shall mean payments made by Persons other than the Servicer or by other means.
SECTION 4.3. Application of Collections. For the purposes of
this Agreement, as of the close of business on the last day of each Collection
Period, all collections for the Collection Period with respect to each
Receivable (other than a Purchased Receivable) shall be applied by the Servicer
as follows:
Payments by or on behalf of the Obligor which are not late fees,
prepayment charges, or other administrative fees and expenses, or
similar charges which constitute the Supplemental Servicing Fee shall
be applied first to reduce Outstanding Advances made with respect to
such Receivable, as described in Sections 4.4(a) and (b) below. Next,
any excess shall be applied (i) in the case of Simple Interest
Receivables, to interest and principal on the Receivable in accordance
with the Simple Interest Method and (ii) in the case of Precomputed
Receivables, to the Scheduled Payment with respect to such Receivable
and any remaining excess (except for partial prepayments which cause a
reduction in
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the Obligor's periodic payment to below the Scheduled Payment as of
the Cutoff Date) shall be added to the Payahead Balance, and shall be
applied to prepay the Precomputed Receivable but only if the sum of
such excess and the previous Payahead Balance shall be sufficient to
prepay the Precomputed Receivable in full, otherwise such excess shall
constitute a Payahead, and shall increase the Payahead Balance.
SECTION 4.4. Advances. (a) As of the close of business on
the last day of each Collection Period, if the payments by or on behalf of the
Obligor on a Precomputed Receivable (other than a Purchased Receivable) after
application under Section 4.3 shall be less than the Scheduled Payment, whether
as a result of any extension granted to the Obligor or otherwise, the Payahead
Balance, if any, with respect to such Receivables shall be applied by the
Indenture Trustee to the extent of the shortfall, and such Payahead Balance
shall be reduced accordingly. Next, subject to the following sentence, the
Servicer shall make an advance of any remaining shortfall (such amount, a
"Precomputed Advance"). The Servicer will be obligated to make a Precomputed
Advance in respect of a Precomputed Receivable only to the extent that the
Servicer, in its sole discretion, shall determine that the Precomputed Advance
shall be recoverable from subsequent collections or recoveries on any
Precomputed Receivable. With respect to each Precomputed Receivable, the
Precomputed Advance shall increase Outstanding Precomputed Advances.
Outstanding Precomputed Advances shall be reduced by subsequent payments by or
on behalf of the Obligor, collections of Liquidation Proceeds and payments of
the Purchase Amount.
If the Servicer shall determine that an Outstanding
Precomputed Advance with respect to any Precomputed Receivable shall not be
recoverable, the Servicer shall be reimbursed from any collections made on
other Receivables in the Trust, and Outstanding Precomputed Advances with
respect to such Precomputed Receivable shall be reduced accordingly.
(b) As of the close of business on the last day of each
Collection Period, the Servicer shall advance an amount equal to the amount of
interest due on the
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Simple Interest Receivables at their respective APRs for the related Collection
Period (assuming the Simple Interest Receivables pay on their respective due
dates) minus the amount of interest actually received on the Simple Interest
Receivables during the related Collection Period (such amount, a "Simple
Interest Advance"). With respect to each Simple Interest Receivable, the
Simple Interest Advance shall increase Outstanding Simple Interest Advances.
If such calculation results in a negative number, an amount equal to such
negative number shall be paid to the Servicer and the amount of Outstanding
Simple Interest Advances shall be reduced by such amount. In addition, in the
event that a Simple Interest Receivable becomes a Liquidated Receivable,
Liquidation Proceeds with respect to a Simple Interest Receivable attributable
to accrued and unpaid interest thereon (but not including interest for the then
current Collection Period) shall be paid to the Servicer to reduce Outstanding
Simple Interest Advances, but only to the extent of any Outstanding Simple
Interest Advances. The Servicer shall not make any advance in respect of
principal of Simple Interest Receivables.
(c) In the event that an Obligor shall prepay a Receivable in
full, if the related contract did not require such Obligor to pay a full
month's interest, for the month of prepayment, at the APR, the Servicer shall
make an unreimbursable advance of the amount of such interest.
SECTION 4.5. Additional Deposits. (a) The Servicer shall
deposit in the Collection Account the aggregate Advances pursuant to Sections
4.4(a) and (b) and the aggregate advances pursuant to Section 4.4(c). The
Servicer and the Seller shall deposit in the Collection Account the aggregate
Purchase Amounts with respect to Purchased Receivables and the Servicer shall
deposit therein all amounts to be paid under Section 9.1. All such deposits
with respect to a Collection Period shall be made, in immediately available
funds, on the Business Day preceding the Distribution Date (or, with the prior
consent of the Rating Agencies, on the Distribution Date) related to such
Collection Period.
(b) The Indenture Trustee shall on the Distribution Date
relating to each Collection Period make a withdrawal from the Reserve Account
in an amount equal to
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the amount (if positive) calculated by the Servicer pursuant to the second
sentence of Section 4.6(b) and shall deposit such funds into the Collection
Account.
SECTION 4.6. Distributions. (a) On each Distribution Date,
the Indenture Trustee shall cause to be made the following transfers and
distributions in the amounts set forth in the Servicer's Certificate for such
Distribution Date:
(i) From the Payahead Account, or from the
Servicer in the event the provisions of Section 4.1(e) above are
applicable, to the Collection Account, in immediately available funds,
(x) the portion of Payaheads constituting Scheduled Payments or
prepayments in full, required by Sections 4.3 and 4.4(a), and (y) the
Payahead Balance, if any, relating to any Purchased Receivable.
(ii) From the Collection Account to the Payahead
Account, or to the Servicer in the event the provisions of Section
4.1(e) above are applicable, in immediately available funds, the
aggregate Payaheads required by Section 4.3 for the Collection Period
related to such Distribution Date.
(iii) From the Collection Account to the
Servicer, in immediately available funds, repayment of Outstanding
Advances pursuant to Sections 4.4(a) and (b).
(b) Prior to each Distribution Date, the Servicer shall on or
before each Determination Date calculate the Available Funds, the Available
Interest, the Available Principal, the Regular Principal, the Servicing Fee and
all unpaid Servicing Fees from prior Collection Periods, if any, the Accrued
Note Interest, the Noteholders' Regular Principal, the Noteholders' Accelerated
Principal, the Noteholders' Principal Payment Amount, the Accrued Certificate
Interest and the Certificateholders' Regular Principal. In addition, the
Servicer shall calculate on or before each Determination Date the difference,
if any, between the Total Required Payment and the Available Funds and,
pursuant to Section 4.5(b), the Indenture Trustee shall withdraw funds from the
Reserve Account in the amount of such difference (if positive).
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(c) On each Distribution Date, the Servicer shall instruct
the Indenture Trustee (based on the information contained in the Servicer's
Certificate delivered on or before the related Determination Date pursuant to
Section 3.9), to make the following withdrawals from the Collection Account and
make deposits, distributions and payments, to the extent of funds on deposit in
the Collection Account (including funds, if any, deposited therein from the
Reserve Account pursuant to Section 4.5(b) and from the Payahead Account
pursuant to this Section 4.6), in the following order of priority:
(i) first, to the Servicer, the Servicing Fee
and all unpaid Servicing Fees from prior Collection Periods;
(ii) second, to the Note Payment Account, the
Accrued Note Interest;
(iii) third, on each Distribution Date with
respect to which the Equity Percentage as of such Distribution Date
(after giving effect to payment of the Noteholders' Principal Payment
Amount on such Distribution Date) will equal or exceed 5.00%, to the
Certificate Distribution Account, the Accrued Certificate Interest;
(iv) fourth, to the Note Payment Account, the
Noteholders' Regular Principal;
(v) fifth, on each Distribution Date with
respect to which the Equity Percentage as of such Distribution Date
(after giving effect to payment of the Noteholders' Principal Payment
Amount on such Distribution Date) will be less than 5.00%, to the
Certificate Distribution Account, the Accrued Certificate Interest;
(vi) sixth, on or after the Distribution Date on
which the outstanding principal amount of all the Notes is paid in
full, to the Certificate Distribution Account, the Certificateholders'
Regular Principal;
(vii) seventh, to the Reserve Account, the
amount, if any, required to reinstate the amount
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in the Reserve Account up to the Minimum Specified Reserve Balance;
(viii) eighth, to the Note Payment Account, the
Noteholders' Accelerated Principal; and
(ix) ninth, to the Seller, any remaining portion
of funds on deposit in the Collection Account.
Notwithstanding the foregoing, following the occurrence and during the
continuation of an Event of Default which has resulted in an acceleration of
the Notes or following an Insolvency Event or a dissolution with respect to the
Seller or the General Partner, the funds on deposit in the Collection Account
remaining after the application of clauses (i) and (ii) above will be deposited
in the Note Payment Account to the extent necessary to reduce the principal
amount of all the Notes to zero, and the Certificateholders will not receive
any distributions of principal or interest until the principal amount and
accrued interest on all the Notes has been paid in full.
SECTION 4.7. Reserve Account. (a) (i) The Seller shall,
prior to the Closing Date, establish and maintain an account in the name
"Chemical Bank as Indenture Trustee, as secured party from Ford Credit Auto
Owner Trust 1996-A" at a Qualified Institution or Qualified Trust Institution
(which shall initially be the corporate trust department of Chemical Bank),
which shall be designated as the "Reserve Account" (the Reserve Account,
together with the Collection Account and the Note Payment Account, the "Trust
Accounts"). The Reserve Account shall be under the sole dominion and control
of the Indenture Trustee; provided, that the Servicer may make deposits to the
Reserve Account in accordance with the Basic Documents. The Reserve Account
will be established and maintained pursuant to an account agreement which
specifies New York law as the governing law. In addition, the account shall be
established and maintained at a Qualified Institution or Qualified Trust
Institution which agrees in writing that for so long as the Notes are
outstanding it will comply with entitlement orders (as defined in the 1994
version of the Official Text of Article 8 of the UCC) originated by the
Indenture Trustee without further consent of the Issuer. On the Closing
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Date, the Seller shall deposit the Reserve Initial Deposit into the Reserve
Account from the net proceeds of the sale of the Notes and the Certificates.
All amounts on deposit in and credited to the Reserve Account, including the
Reserve Initial Deposit and any Permitted Investments (whether in the form of
deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), and all proceeds thereof (such amounts, the "Reserve
Account Property") shall be held by the Indenture Trustee as secured party for
the benefit of the Noteholders and, after payment in full of the Notes, as
agent of the Owner Trustee and as part of the Trust Property, and all deposits
to and withdrawals from therefrom shall be made only upon the terms and
conditions of the Basic Documents.
The Reserve Account Property shall, to the extent permitted by
applicable law, rules and regulations, be invested, as directed in writing by
the Seller, by the bank or trust company then maintaining the Reserve Account
in Permitted Investments that mature not later than the Business Day preceding
the next Distribution Date, and such Permitted Investments shall be held to
maturity. All interest and other income (net of losses and investment
expenses) on funds on deposit in the Reserve Account shall be deposited
therein. In the event the Reserve Account is no longer to be maintained at the
corporate trust department of Chemical Bank, the Servicer shall, with the
Indenture Trustee's or Owner Trustee's assistance as necessary, cause the
Reserve Account to be moved to a Qualified Institution or a Qualified Trust
Institution within ten (10) Business Days (or such longer period not to exceed
thirty (30) calendar days as to which each Rating Agency may consent).
(ii) With respect to Reserve Account Property:
(A) any Reserve Account Property that is
held in deposit accounts shall be held solely in
the name of the Indenture Trustee at one or more
depository institutions having the Required
Rating. Each such deposit account shall be
subject to the exclusive custody and control of
the Indenture Trustee, and the Indenture Trustee
shall have sole signature authority with respect
thereto.
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(B) any Reserve Account Property that
constitutes Physical Property shall be delivered
to the Indenture Trustee in accordance with
paragraph (a) of the definition of "Delivery" and
shall be held, pending maturity or disposition,
solely by the Indenture Trustee or a financial
intermediary (as such term is defined in Section
8- 313(4) of the UCC) acting solely for the
Indenture Trustee.
(C) any Reserve Account Property that is a
book-entry security held through the Federal
Reserve System pursuant to federal book-entry
regulations shall be delivered in accordance with
paragraph (b) of the definition of "Delivery" and
shall be maintained by the Indenture Trustee,
pending maturity or disposition, through
continued book-entry registration of such Reserve
Account Property as described in such paragraph.
(D) any Reserve Account Property that is an
"uncertificated security" under Article 8 of the
UCC shall be delivered to the Indenture Trustee
in accordance with paragraph (c) of the
definition of "Delivery" and shall be maintained
by the Indenture Trustee, pending maturity or
disposition, through continued registration of
the Indenture Trustee's (or its nominee's)
ownership of such security.
(E) Property of a type which is not capable
of being delivered to the Indenture Trustee in
accordance with the definition of "Delivery"
shall not constitute Reserve Account Property.
(F) Notwithstanding the foregoing, in the
event that the 1994 Official Text of Article 8 of
the Uniform Commercial Code ("Revised Article 8")
becomes law in the State of New York, from and
after the effective date of the adoption of
Revised Article 8 in New York any Reserve Account
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Property which is a "securities entitlement" (as defined in Section
8-102(a)(17) of Revised Article 8) shall be transferred to the
Indenture Trustee in a manner sufficient to give the Indenture Trustee
"control" (as defined in Section 8-106(d) of Revised Article 8) of
such securities entitlement.
Effective upon Delivery of any Reserve Account Property in the
form of Physical Property, uncertified securities or book-entry securities, the
Indenture Trustee shall be deemed to have represented that it has purchased
such Reserve Account Property for value, in good faith, and without notice of
any adverse claim thereto.
(b) If the Servicer pursuant to Section 4.4 determines on or
before any Determination Date that it is required to make an Advance and does
not do so from its own funds, the Servicer shall promptly instruct the
Indenture Trustee in writing to withdraw funds, in an amount specified by the
Servicer, from the Reserve Account and deposit them in the Collection Account
to cover any shortfall. Such payment shall be deemed to have been made by the
Servicer pursuant to Section 4.4 for purposes of making distributions pursuant
to this Agreement, but shall not otherwise satisfy the Servicer's obligation to
deliver the amount of the Advances to the Indenture Trustee, and the Servicer
shall within two Business Days replace any funds in the Reserve Account so
used.
(c) On any Distribution Date on or after the first
Distribution Date on which the Credit Enhancement Percentage equals or exceeds
5.00%, after giving effect to all payments required to be made on such day and
to the extent that the amount on deposit in the Reserve Account (including
amounts attributable to investment income, net of losses and investment
expenses) is in excess of the Specified Reserve Balance for such Distribution
Date, the Servicer shall instruct the Indenture Trustee to distribute the
amount of such excess to the Seller; provided that the Indenture Trustee and
the Owner Trustee hereby release, on each Distribution Date, their security
interest in, to and under Reserve Account Property distributed to the Seller.
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(d) Following the payment in full of the aggregate
principal amount of the Notes and the Certificate Balance and of all other
amounts owing or to be distributed hereunder or under the Indenture or the
Trust Agreement to Noteholders and Certificateholders and the termination of
the Trust, any remaining Reserve Account Property shall be distributed to the
Seller.
SECTION 4.8. Net Deposits. For so long as (i) Ford Credit
shall be the Servicer, (ii) the Servicer shall be entitled pursuant to Section
4.2 to remit collections on a monthly basis rather than within two Business
Days of receipt, and (iii) the Servicer shall be entitled pursuant to Section
4.1(e) to retain Payaheads rather than deposit them in the Payahead Account,
Ford Credit may make the remittances pursuant to Sections 4.2 and 4.5 above,
net of amounts to be distributed to Ford Credit pursuant to Section 4.6(c).
Nonetheless, the Servicer shall account for all of the above described
remittances and distributions except for the Supplemental Servicing Fee in the
Servicer's Certificate as if the amounts were deposited and/or transferred
separately.
SECTION 4.9. Statements to Noteholders and
Certificateholders. On each Distribution Date, the Servicer shall provide to
the Indenture Trustee (with copies to the Rating Agencies and each Note Paying
Agent) for the Indenture Trustee to forward to each Noteholder of record as of
the most recent Record Date and to the Owner Trustee (with copies to the Rating
Agencies and to each Certificate Paying Agent) for the Owner Trustee to forward
to each Certificateholder of record as of the most recent Record Date a
statement based on information in the Servicer's Certificate furnished pursuant
to Section 3.9, setting forth for the Collection Period relating to such
Distribution Date the following information as to the Notes and the
Certificates to the extent applicable:
(i) the amount of such distribution allocable to
principal allocable to the Notes and to the Certificates;
(ii) the amount of such distribution allocable
to interest allocable to the Notes and the Certificates;
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(iii) the amount of such distribution allocable
to draws from the Reserve Account, if any;
(iv) the Pool Balance as of the close of
business on the last day of the preceding Collection Period;
(v) the Equity Percentage and the
Overcollateralization Amount as of such Distribution Date;
(vi) the amount of the Servicing Fee paid to the
Servicer with respect to the related Collection Period and the amount
of any unpaid Servicing Fees and the change in such amount from that
of the prior Distribution Date;
(vii) the amounts of the Noteholders' Interest
Carryover Shortfall, the Noteholders' Principal Carryover Shortfall,
the Certificateholders' Interest Carryover Shortfall and the
Certificateholders' Principal Carryover Shortfall, if any, on such
Distribution Date and the change in such amounts from the preceding
Distribution Date;
(viii) the aggregate outstanding principal
amount of each Class of Notes, the Note Pool Factor for each Class of
Notes, the Certificate Balance and the Certificate Pool Factor as of
such Distribution Date;
(ix) the balance of the Reserve Account on such
Distribution Date, after giving effect to distributions made on such
Distribution Date and the change in such balance from the preceding
Distribution Date;
(x) the amount of the aggregate Realized Losses,
if any, with respect to the related Collection Period;
(xi) the aggregate Purchase Amount of
Receivables repurchased by the Seller or purchased by the Servicer, if
any, with respect to the related Collection Period; and
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(xii) the amount of Advances, if any, on such
Distribution Date.
Each amount set forth on the Distribution Date statement
pursuant to clauses (i), (ii), (vi) or (vii) above shall be expressed as a
dollar amount per $1,000 of original principal amount or original Certificate
Balance of a Note or a Certificate, as applicable.
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ARTICLE V
[Intentionally Omitted]
ARTICLE VI
THE SELLER
SECTION 6.1. Representations and Warranties of Seller. The
Seller makes the following representations and warranties on which the Issuer
is deemed to have relied in acquiring the Trust Property. The representations
and warranties speak as of the execution and delivery of this Agreement and
shall survive the conveyance of the Trust Property to the Issuer and the pledge
thereof by the Issuer to the Indenture Trustee pursuant to the Indenture:
(a) Organization and Good Standing. The Seller shall have
been duly organized and shall be validly existing as a limited partnership in
good standing under the laws of the State of Delaware, with power and authority
to own its properties and to conduct its business as such properties shall be
currently owned and such business is presently conducted, and had at all
relevant times, and shall have, power, authority, and legal right to acquire
and own the Receivables.
(b) Due Qualification. The Seller shall be duly qualified to
do business as a foreign limited partnership in good standing, and shall have
obtained all necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall require
such qualifications.
(c) Power and Authority. The Seller shall have the power and
authority to execute and deliver this Agreement and the other Basic Documents
to which it is a party and to carry out their terms. The Seller shall have
full power and authority to convey and assign the property to be conveyed and
assigned to and deposited with the Issuer and has duly authorized such
conveyance and assignment to the Issuer by all necessary action; and the
execution, delivery, and performance of this Agreement and the other Basic
Documents to which it is a party
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shall have been duly authorized by the Seller by all necessary action.
(d) Valid Conveyance; Binding Obligation. This Agreement
shall evidence a valid transfer, assignment and conveyance of the Receivables
and the other Trust Property conveyed by the Seller to the Issuer hereunder,
enforceable against creditors of and purchasers from the Seller; and this
Agreement and the other Basic Documents to which the Seller is a party
constitute legal, valid, and binding obligations of the Seller, enforceable
against the Seller in accordance with their terms, subject, as to
enforceability, to applicable bankruptcy, insolvency, reorganization,
conservatorship, receivership, liquidation and other similar laws and to
general equitable principles.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the other Basic Documents to which the
Seller is a party and the fulfillment of the terms hereof and thereof will not
conflict with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time or both) a default under,
the Certificate of Limited Partnership or Limited Partnership Agreement, any
indenture, agreement, or other instrument to which the Seller is a party or by
which the Seller is bound; nor result in the creation or imposition of any lien
upon any of its properties pursuant to the terms of any such indenture,
agreement, or other instrument; nor violate any law or, to the best of the
Seller's knowledge, any order, rule, or regulation applicable to the Seller of
any federal or State regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over the Seller or its
properties.
(f) No Proceedings. To the Seller's best knowledge, there
are no proceedings or investigations pending, or threatened, before any court,
regulatory body, administrative agency, or other governmental instrumentality
having jurisdiction over the Seller or its properties: (i) asserting the
invalidity of this Agreement, the Indenture, any of the other Basic Docu-
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ments, the Notes or the Certificates, (ii) seeking to prevent the issuance of
the Notes or the Certificates or the consummation of any of the transactions
contemplated by this Agreement, the Indenture or any of the other Basic
Documents, (iii) seeking any determination or ruling that might materially and
adversely affect the performance by the Seller of its obligations under, or the
validity or enforceability of, this Agreement, the Indenture, any of the other
Basic Documents, the Notes or the Certificates, or (iv) relating to the Seller
and which might adversely affect the federal or Applicable Tax State income,
excise, franchise or similar tax attributes of the Notes or the Certificates.
SECTION 6.2. Liability of Seller; Indemnities. The Seller
shall be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Seller under this Agreement, and hereby agrees
to the following:
(a) The Seller shall indemnify, defend, and hold harmless the
Issuer, the Owner Trustee and the Indenture Trustee from and against any taxes
that may at any time be asserted against any such Person with respect to, and
as of the date of, the conveyance of the Receivables to the Issuer or the
issuance and original sale of the Notes and the Certificates, including any
sales, gross receipts, general corporation, tangible personal property,
privilege, or license taxes (but, in the case of the Issuer, not including any
taxes asserted with respect to ownership of the Receivables or federal or other
Applicable Tax State income taxes arising out of the transactions contemplated
by this Agreement and the other Basic Documents) and costs and expenses in
defending against the same.
(b) The Seller shall indemnify, defend, and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders from and against any loss, liability or expense incurred by
reason of (i) the Seller's willful misfeasance, bad faith, or negligence (other
than errors in judgment) in the performance of its duties under this Agreement,
or by reason of reckless disregard of its obligations and duties under this
Agreement and (ii) the Seller's violation of federal or State securities laws
in connection with the registration or the sale of the Notes or the
Certificates.
(c) The Seller shall indemnify, defend and hold harmless the
Owner Trustee and the Indenture Trustee
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and their respective officers, directors, employees and agents from and against
all costs, expenses, losses, claims, damages and liabilities arising out of or
incurred in connection with the acceptance or performance of the trusts and
duties contained herein and in the Trust Agreement, in the case of the Owner
Trustee, and in the Indenture, in the case of the Indenture Trustee, except to
the extent that such cost, expense, loss, claim, damage or liability: (i) in
the case of the Owner Trustee, shall be due to the willful misfeasance, bad
faith or negli- gence (except for errors in judgment) of the Owner Trustee or,
in the case of the Indenture Trustee, shall be due to the willful misfeasance,
bad faith or negligence (except for errors in judgment) of the Indenture
Trustee; or (ii) in the case of the Owner Trustee shall arise from the breach
by the Owner Trustee of any of its representations or warranties set forth in
Section 7.3 of the Trust Agreement or (iii) in the case of the Indenture
Trustee shall arise from the breach by the Indenture Trustee of any of its
representations and warranties set forth in the Indenture.
(d) The Seller shall pay any and all taxes levied or assessed
upon all or any part of the Owner Trust Estate.
(e) Indemnification under this Section 6.2 shall survive the
resignation or removal of the Owner Trustee or the Indenture Trustee and the
termination of this Agreement and shall include, without limitation, reasonable
fees and expenses of counsel and expenses of litigation. If the Seller shall
have made any indemnity payments pursuant to this Section 6.2 and the Person to
or on behalf of whom such payments are made thereafter shall collect any of
such amounts from others, such Person shall repay such amounts to the Seller,
without interest.
SECTION 6.3. Merger or Consolidation of, or Assumption of the
Obligations of, Seller. Any Person (i) into which the Seller may be merged or
consolidated, (ii) resulting from any merger, conversion, or consolidation to
which the Seller shall be a party, (iii) succeeding to the business of the
Seller, or (iv) more than 50% of the voting stock of which is owned directly or
indirectly by Ford Motor Company, which Person in any of the foregoing cases
executes an agreement of assumption to perform
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every obligation of the Seller under this Agreement, will be the successor to
the Seller 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;
provided, however, that (x) the Seller shall have delivered to the Owner
Trustee and the Indenture Trustee an Officer's Certificate and an Opinion of
Counsel each stating that such merger, conversion, consolidation or succession
and such agreement of assumption comply with this Section 6.3 and that all
conditions precedent, if any, provided for in this Agreement relating to such
transaction have been complied with and (y) the Seller shall have delivered to
the Owner Trustee and the Indenture Trustee an Opinion of Counsel either (A)
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 Issuer and
the Indenture Trustee, respectively, in the Receivables and the other Trust
Property, and reciting the details of such filings, or (B) stating that, in the
opinion of such counsel, no such action shall be necessary to preserve and
protect such interest. The Seller shall provide notice of any merger,
conversion, consolidation, or succession pursuant to this Section 6.3 to the
Rating Agencies. Notwithstanding anything herein to the contrary, the
execution of the foregoing agreement of assumption and compliance with clauses
(x) or (y) above shall be conditions to the consummation of the transactions
referred to in clauses (i), (ii) or (iii) above.
SECTION 6.4. Limitation on Liability of Seller and Others.
The Seller and any officer or employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Seller shall not be under any obligation to appear in,
prosecute, or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
SECTION 6.5. Seller May Own Notes or Certificates. The
Seller, and any Affiliate of the Seller, may in its individual or any other
capacity become the owner or pledgee of Notes or Certificates with the same
rights as it would have if it were not the Seller or an Affili-
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ate thereof, except as otherwise expressly provided herein or in the other
Basic Documents. Except as set forth herein or in the other Basic Documents,
Notes and Certificates so owned by or pledged to the Seller or any such
Affiliate shall have an equal and proportionate benefit under the provisions of
this Agreement and the other Basic Documents, without preference, priority, or
distinction as among all of the Notes and Certificates.
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ARTICLE VII
THE SERVICER
SECTION 7.1. Representations of Servicer. The Servicer makes
the following representations on which the Issuer is deemed to have relied in
acquiring the Trust Property. The representations speak as of the execution
and delivery of this Agreement and shall survive the conveyance of the Trust
Property to the Issuer and the pledge thereof by the Issuer pursuant to the
Indenture:
(a) Organization and Good Standing. The Servicer shall have
been duly organized and shall be validly existing as a corporation in good
standing under the laws of the State of its incorporation, with power and
authority to own its properties and to conduct its business as such properties
shall be currently owned and such business is presently conducted, and had at
all relevant times, and shall have, power, authority, and legal right to
acquire, own, sell, and service the Receivables and to hold the Receivable
Files as custodian on behalf of the Issuer and the Indenture Trustee.
(b) Due Qualification. The Servicer shall be duly qualified
to do business as a foreign corporation in good standing, and shall have
obtained all necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business (including the
servicing of the Receivables as required by this Agreement) shall require such
qualifications.
(c) Power and Authority. The Servicer shall have the power
and authority to execute and deliver this Agreement and the other Basic
Documents to which it is a party and to carry out their terms, and the
execution, delivery and performance of this Agreement and the other Basic
Documents to which it is a party shall have been duly authorized by the
Servicer by all necessary corporate action.
(d) Binding Obligation. This Agreement and the other Basic
Documents to which the Servicer is a party constitute legal, valid, and binding
obligations of the Servicer, enforceable against the Servicer in accordance
with their terms, subject, as to enforceability, to
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applicable bankruptcy, insolvency, reorganization, conservatorship,
receivership, liquidation and other similar laws and to general equitable
principles.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the other Basic Documents to which the
Servicer is a party and the fulfillment of the terms hereof and thereof shall
not conflict with, result in any breach of any of the terms and provisions of,
nor constitute (with or without notice or lapse of time or both) a default
under, the articles of incorporation or by-laws of the Servicer, or any
indenture, agreement, or other instrument to which the Servicer is a party or
by which it shall be bound, nor result in the creation or imposition of any
lien upon any of its properties pursuant to the terms of any such indenture,
agreement, or other instrument (other than this Agreement); nor violate any law
or, to the best of the Servicer's knowledge, any order, rule, or regulation
applicable to the Servicer of any court or any federal or State regulatory
body, administrative agency, or other governmental instrumentality having
jurisdiction over the Servicer or its properties.
(f) No Proceedings. There are no proceedings or
investigations pending, or, to the Servicer's best knowledge, threatened,
before any court, regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Servicer or its properties: (i)
asserting the invalidity of this Agreement, the Indenture, any of the other
Basic Documents, the Notes or the Certificates, (ii) seeking to prevent the
issuance of the Notes or the Certificates or the consummation of any of the
transactions contemplated by this Agreement, the Indenture or any of the other
Basic Documents, (iii) seeking any determination or ruling that might
materially and adversely affect the performance by the Servicer of its
obligations under, or the validity or enforceability of, this Agreement, the
Indenture, any of the other Basic Documents, the Notes or the Certificates, or
(iv) relating to the Servicer and which might adversely affect the federal or
Applicable Tax State income, excise, franchise or similar tax attributes of the
Notes or the Certificates.
SECTION 7.2. Indemnities of Servicer. The Servicer shall be
liable in accordance herewith only to
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the extent of the obligations specifically undertaken by the Servicer under
this Agreement, and hereby agrees to the following:
(a) The Servicer shall defend, indemnify and hold harmless
the Issuer, the Owner Trustee, the Indenture Trustee, the Noteholders, the
Certificateholders and the Seller from and against any and all costs, expenses,
losses, damages, claims and liabilities, arising out of or resulting from the
use, ownership or operation by the Servicer or any Affiliate thereof of a
Financed Vehicle.
(b) The Servicer shall indemnify, defend and hold harmless
the Issuer, the Owner Trustee and the Indenture Trustee from and against any
taxes that may at any time be asserted against any such Person with respect to
the transactions contemplated herein or in the other Basic Documents, if
any, including, without limitation, any sales, gross receipts, general
corporation, tangible personal property, privilege, or license taxes (but, in
the case of the Issuer, not including any taxes asserted with respect to, and
as of the date of, the conveyance of the Receivables to the Issuer or the
issuance and original sale of the Notes and the Certificates, or asserted with
respect to ownership of the Receivables, or federal or other Applicable Tax
State income taxes arising out of the transactions contemplated by this
Agreement and the other Basic Documents) and costs and expenses in defending
against the same.
(c) The Servicer shall indemnify, defend and hold harmless
the Issuer, the Owner Trustee, the Indenture Trustee, the Noteholders, the
Certificateholders and the Seller from and against any and all costs, expenses,
losses, claims, damages, and liabilities to the extent that such cost, expense,
loss, claim, damage, or liability arose out of, or was imposed upon any such
Person through, the negligence, willful misfeasance, or bad faith (other than
errors in judgment) of the Servicer in the performance of its duties under this
Agreement or any other Basic Document to which it is a party, or by reason of
reckless disregard of its obligations and duties under this Agreement or any
other Basic Document to which it is a party.
(d) The Servicer shall indemnify, defend, and hold harmless
the Owner Trustee and the Indenture Trust-
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ee, as applicable, from and against all costs, expenses, losses, claims,
damages, and liabilities arising out of or incurred in connection with the
acceptance or performance of the trusts and duties contained herein and in
the other Basic Documents, if any, except to the extent that such cost,
expense, loss, claim, damage, or liability: (i) shall be due to the willful
misfeasance, bad faith, or negligence (except for errors in judgment) of the
Owner Trustee or the Indenture Trustee, as applicable; (ii) relates to any tax
other than the taxes with respect to which either the Seller or the Servicer
shall be required to indemnify the Owner Trustee or the Indenture Trustee, as
applicable; (iii) in the case of the Owner Trustee, shall arise from the Owner
Trustee's breach of any of its representations or warranties set forth in
Section 7.3 of the Trust Agreement or, in the case of the Indenture Trustee,
from the Indenture Trustee's breach of any of its representations or warranties
set forth in the Indenture; or (iv) in the case of the Indenture Trustee, shall
arise out of or be incurred in connection with the performance by the Indenture
Trustee of the duties of a successor Servicer hereunder.
For purposes of this Section 7.2, in the event of the
termination of the rights and obligations of Ford Credit (or any successor
thereto pursuant to Section 8.2) as Servicer pursuant to Section 8.1, or a
resignation by such Servicer pursuant to this Agreement, such Servicer shall be
deemed to be the Servicer pending appointment of a successor Servicer (other
than the Indenture Trustee) pursuant to Section 8.2.
Indemnification under this Section 7.2 by Ford Credit (or any
successor thereto pursuant to Section 8.2) as Servicer, with respect to the
period such Person was (or was deemed to be) the Servicer, shall survive the
termination of such Person as Servicer or a resignation by such Person as
Servicer as well as the termination of this Agreement or the resignation or
removal of the Owner Trustee or the Indenture Trustee and shall include
reasonable fees and expenses of counsel and expenses of litigation. If the
Servicer shall have made any indemnity payments pursuant to this Section 7.2
and the recipient thereafter collects any of such amounts from others, the
recipient shall promptly repay such amounts to the Servicer, without interest.
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SECTION 7.3. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer. Any Person (i) into which the Servicer may be merged
or consolidated, (ii) resulting from any merger, conversion, or consolidation
to which the Servicer shall be a party, (iii) succeeding to the business of the
Servicer, or (iv) so long as Ford Credit acts as Servicer, any corporation more
than 50% of the voting stock of which is owned directly or indirectly by Ford
Motor Company, which Person in any of the foregoing cases executes an agreement
of assumption to perform every obligation of the Servicer under this Agreement,
will be the successor to the Servicer under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties to this Agreement; provided, however, that (x) the Servicer shall have
delivered to the Owner Trustee and the Indenture Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such merger,
conversion, consolidation, or succession and such agreement of assumption
comply with this Section 7.3 and that all conditions precedent provided for in
this Agreement relating to such transaction have been complied with and (y) the
Servicer shall have delivered to the Owner Trustee and the Indenture Trustee an
Opinion of Counsel either (A) 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 Issuer and the Indenture Trustee, respectively, in the
Receivables, and reciting the details of such filings, or (B) stating that, in
the opinion of such counsel, no such action shall be necessary to preserve and
protect such interests. The Servicer shall provide notice of any merger,
conversion, consolidation or succession pursuant to this Section 7.3 to the
Rating Agencies. Notwithstanding anything herein to the contrary, the
execution of the foregoing agreement or assumption and compliance with clauses
(x) and (y) above shall be conditions to the consummation of the transactions
referred to in clauses (i), (ii), or (iii) above.
SECTION 7.4. Limitation on Liability of Servicer and Others.
(a) Neither the Servicer nor any of the directors or officers or employees or
agents of the Servicer shall be under any liability to the Issuer, the
Noteholders or the Certificateholders, except as provided under this Agreement,
for any action taken or for
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refraining from the taking of any action pursuant to this Agreement or for
errors in judgment; provided, however, that this provision shall not protect
the Servicer or any such Person against any liability that would otherwise be
imposed by reason of willful misfeasance or bad faith in the performance of
duties or by reason of reckless disregard of obligations and duties under this
Agreement, or by reason of negligence in the performance of its duties under
this Agreement (except for errors in judgment). The Servicer and any director,
officer or employee or agent of the Servicer may rely in good faith on any
Opinion of Counsel or on any Officer's Certificate or certificate of auditors
believed to be genuine and to have been signed by the proper party in respect
of any matters arising under this Agreement.
(b) Except as provided in this Agreement, the Servicer shall
not be under any obligation to appear in, prosecute, or defend any legal action
that shall not be incidental to its duties to service the Receivables in
accordance with this Agreement, and that in its opinion may involve it in any
expense or liability; provided, however, that the Servicer may undertake any
reasonable action that it may deem necessary or desirable in respect of this
Agreement and the rights and duties of the parties to this Agreement and the
interests of the Noteholders and Certificateholders under this Agreement. In
such event, the legal expenses and costs of such action and any liability
result- ing therefrom shall be expenses, costs and liabilities of the Servicer.
SECTION 7.5. Delegation of Duties. So long as Ford Credit
acts as Servicer, the Servicer may at any time without notice or consent
delegate substantially all its duties under this Agreement to any corporation
more than 50% of the voting stock of which is owned, directly or indirectly, by
Ford Motor Company. The Servicer may at any time perform specific duties as
servicer under the Agreement through sub-contractors; provided that no such
delegation or subcontracting shall relieve the Servicer of its responsibilities
with respect to such duties as to which the Servicer shall remain primarily
responsible with respect thereto.
SECTION 7.6. Ford Credit Not to Resign as Servicer. Subject
to the provisions of Section 7.3, Ford Credit shall not resign from the
obligations and duties
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hereby imposed on it as Servicer under this Agreement except upon determination
that the performance of its duties under this Agreement shall no longer be
permissible under applicable law. Notice of any such determination permitting
the resignation of Ford Credit shall be communicated to the Owner Trustee and
the Indenture Trustee at the earliest practicable time (and, if such
communication is not in writing, shall be confirmed in writing at the earliest
practicable time) and any such determination shall be evidenced by an Opinion
of Counsel to such effect delivered to the Owner Trustee and the Indenture
Trustee concurrently with or promptly after such notice. No such resignation
shall become effective until the Indenture Trustee or a successor Servicer
shall have (i) taken the actions required by the last paragraph of Section 8.1,
(ii) assumed the responsibilities and obligations of Ford Credit in accordance
with Section 8.2 and (iii) become the Administrator under the Administration
Agreement pursuant to Section 9 thereof.
SECTION 7.7. Servicer May Own Notes or Certificates. The
Servicer, and any Affiliate of the Servicer, may, in its individual or any
other capacity, become the owner or pledgee of Notes or Certificates with the
same rights as it would have if it were not the Servicer or an Affiliate
thereof, except as otherwise expressly provided herein or in the other Basic
Documents. Except as set forth herein or in the other Basic Documents, Notes
and Certificates so owned by or pledged to the Servicer or such Affiliate shall
have an equal and proportionate benefit under the provisions of this Agreement,
without preference, priority or distinction as among all of the Notes and
Certificates.
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ARTICLE VIII
SERVICING TERMINATION
SECTION 8.1. Events of Servicing Termination. (a) If any
one of the following events ("Events of Servicing Termination") occur and be
continuing:
(i) Any failure by the Servicer or the Seller to deliver to
the Owner Trustee or the Indenture any proceeds or payment required to
be so delivered under the terms of the Notes and the Certificates and
this Agreement that shall continue unremedied for a period of three
(3) Business Days after written notice of such failure is received by
the Servicer or the Seller, as the case may be, from the Owner Trustee
or the Indenture Trustee or after discovery of such failure by an
officer of the Servicer or the Seller, as the case may be; or
(ii) Failure on the part of the Servicer or the Seller duly
to observe or to perform in any material respect any other covenants
or agreements of the Servicer or the Seller, as the case may be, set
forth in the Notes, the Certificates or in this Agreement, which
failure shall (a) materially and adversely affect the rights of
Noteholders or Certificateholders and (b) continue unremedied for a
period of ninety (90) days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given
(1) to the Servicer by the Owner Trustee or the Indenture Trustee, or
(2) to the Owner Trustee, the Indenture Trustee, the Seller and the
Servicer by the Noteholders of Notes evidencing not less than 25% of
the principal amount of the Notes Outstanding or by the
Certificateholders of Certificates evidencing not less than 25% of the
Certificate Balance; or
(iii) The entry of a decree or order by a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver, or liquidator for the Servicer
or the Seller in any insolvency, readjustment of debt, marshalling of
assets and liabilities, or similar proceedings, or for the winding up
or liquidation of its respective affairs, and the
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<PAGE> 55
continuance of any such decree or order unstayed and in effect for a
period of sixty (60) consecutive days; or
(iv) The consent by the Servicer or the Seller to the
appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings of or relating to the Servicer of
or relating to substantially all of its property; or the Servicer
shall admit in writing its inability to pay its debts generally as
they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntary suspend payment of its
obligations;
then, and in each and every case, so long as an Event of Servicing Termination
shall not have been remedied, either the Indenture Trustee, or the Noteholders
of Notes evidencing not less than a majority of the principal amount of the
Notes Outstanding, by notice then given in writing to the Servicer (and to the
Indenture Trustee and the Owner Trustee if given by the Noteholders) (with a
copy to the Rating Agencies) may terminate all of the rights and obligations of
the Servicer under this Agreement. On or after the receipt by the Servicer of
such written notice, all authority and power of the Servicer under this
Agreement, whether with respect to the Notes, the Certificates or the Trust
Property or otherwise, shall pass to and be vested in the Indenture Trustee or
such successor Servicer as may be appointed under Section 8.2; and, without
limitation, the Indenture Trustee and the Owner Trustee are hereby authorized
and empowered to execute and deliver, on behalf of the predecessor Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer
and endorsement of the Receivables and related documents, or otherwise.
The predecessor Servicer shall cooperate with the Indenture
Trustee, the Owner Trustee and such successor Servicer in effecting the
termination of the responsibilities and rights of the predecessor Servicer
under this Agreement, including the transfer to the Indenture
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<PAGE> 56
Trustee or such successor Servicer for administration of all cash amounts that
shall at the time be held by the predecessor Servicer for deposit, or shall
thereafter be received with respect to a Receivable and the delivery of the
Receivable Files and the related accounts and records maintained by the
Servicer. All reasonable costs and expenses (including attorneys' fees)
incurred in connection with transferring the Receivable Files to the successor
Servicer and amending this Agreement to reflect such succession as Servicer
pursuant to this Section 8.1 shall be paid by the predecessor Servicer upon
presentation of reasonable documentation of such costs and expenses.
SECTION 8.2. Appointment of Successor Servicer.
(a) Upon the Servicer's receipt of notice of termination pursuant to Section
8.1 or the Servicer's resignation in accordance with the terms of this
Agreement, the predecessor Servicer shall continue to perform its functions as
Servicer under this Agreement, in the case of termination, only until the date
specified in such termination notice or, if no such date is specified in a
notice of termination, until receipt of such notice and, in the case of
resignation, until the later of (x) the date 45 days from the delivery to the
Trustee of written notice of such resignation (or written confirmation of such
notice) in accordance with the terms of this Agreement and (y) the date upon
which the predecessor Servicer shall become unable to act as Servicer, as
specified in the notice of resignation and accompanying Opinion of Counsel. In
the event of the Servicer's resignation or termination hereunder, the Trustee
shall appoint a successor Servicer, and the successor Servicer shall accept its
appointment by a written assumption in form acceptable to the Owner Trustee and
the Indenture Trustee. In the event that a successor Servicer has not been
appointed at the time when the predecessor Servicer has ceased to act as
Servicer in accordance with this Section 8.2, the Indenture Trustee without
further action shall automatically be appointed the successor Servicer.
Notwithstanding the above, the Indenture Trustee shall, if it shall be legally
unable so to act, appoint, or petition a court of competent jurisdiction to
appoint, any established institution, having a net worth of not less than
$100,000,000 and whose regular business shall include the servicing of
automotive receivables, as the successor to the Servicer under this Agreement.
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<PAGE> 57
(b) Upon appointment, the successor Servicer shall be the
successor in all respects to the predecessor Servicer and shall be subject to
all the responsibilities, duties, and liabilities arising thereafter relating
thereto placed on the predecessor Servicer, by the terms and provisions of this
Agreement.
(c) In connection with such appointment, the Indenture Trustee
may make such arrangements for the compensation of such successor Servicer out
of payments on Receivables as it and such successor Servicer shall agree;
provided, however, that no such compensation shall be in excess of that
permitted the predecessor Servicer under this Agreement. The Indenture Trustee
and such successor Servicer shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
SECTION 8.3. Repayment of Advances. If the identity of the
Servicer shall change, the predecessor Servicer shall be entitled to receive to
the extent of available funds reimbursement for Outstanding Advances pursuant
to Section 4.3 and 4.4, in the manner specified in Section 4.6, with respect to
all Advances made by the predecessor Servicer.
SECTION 8.4. Notification to Noteholders and
Certificateholders. Upon any termination of, or appointment of a successor to,
the Servicer pursuant to this Article VIII, the Indenture Trustee shall give
prompt written notice thereof to Noteholders, and the Owner Trustee shall give
prompt written notice thereof to Certificateholders at their respective
addresses of record and to each Rating Agency.
SECTION 8.5. Waiver of Past Events of Servicing Termination.
The Noteholders of Notes evidencing not less than a majority of the principal
amount of the Notes Outstanding or the Certificateholders of Certificates
evidencing not less than a majority of the Certificate Balance (in the case of
an Event of Servicing Termination which does not adversely affect the Indenture
Trustee or the Noteholders) may, on behalf of all Noteholders and
Certificateholders, waive any Event of Servicing Termination hereunder and its
consequences, except an event resulting from the failure to make any required
deposits to or payments from any of the Trust Accounts, the Cer-
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<PAGE> 58
tificate Distribution Account or the Payahead Account in accordance with this
Agreement. Upon any such waiver of a past Event of Servicing Termination, such
Event of Servicing Termination shall cease to exist, and shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other event or impair any right consequent thereon.
The Issuer shall provide written notice of any such waiver to the Rating
Agencies.
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ARTICLE IX
TERMINATION
SECTION 9.1. Optional Purchase of All Receivables. On the
last day of any Collection Period as of which the Pool Factor shall be less
than the Optional Purchase Percentage, the Servicer shall have the option to
purchase the corpus of the Trust. To exercise such option, the Servicer shall
deposit pursuant to Section 4.5 in the Collection Account an amount equal to
the aggregate Purchase Amount for the Receivables, plus the appraised value of
any other property held by the Trust, such value to be determined by an
appraiser mutually agreed upon by the Servicer, the Owner Trustee and the
Indenture Trustee, and shall succeed to all interests in and to the Trust.
Notwithstanding the foregoing, the Servicer shall not be permitted to exercise
such option unless the amount to be deposited in the Collection Account
pursuant to the preceding sentence is greater than or equal to the sum of the
outstanding principal amount of the Notes and the Certificate Balance and all
accrued but unpaid interest (including any overdue interest) thereon. The
amount deposited in the Collection Account pursuant to this Section 9.1 shall
be used on the next Distribution Date to make payments in full to Noteholders
and Certificateholders in the manner set forth in Article IV.
SECTION 9.2. Succession Upon Satisfaction and Discharge of
Indenture. Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, to the extent
permitted by applicable law, the Indenture Trustee will continue to carry out
its obligations hereunder as agent for the Owner Trustee, including without
limitation making distributions from the Payahead Account and the Collection
Account in accordance with Section 4.6 and making withdrawals from the Reserve
Account in accordance with Section 4.5(b) and Section 4.7.
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ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Amendment. (a) This Agreement may be amended
by the Seller, the Servicer and the Issuer, with the consent of the Indenture
Trustee and the Owner Trustee to the extent that their respective rights or
obligations may be affected thereby (which consent may not be unreasonably
withheld), but without the consent of any of the Noteholders or the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement, or to add any other provisions with respect to
matters or questions arising under this Agreement that shall not be
inconsistent with the provisions of this Agreement; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel delivered to the
Owner Trustee and the Indenture Trustee, adversely affect in any material
respect the interests of any Noteholder or Certificateholder; and provided
further that such action shall not, as evidenced by an Opinion of Counsel,
cause the Issuer to be characterized for federal or any then Applicable Tax
State income tax purposes as an association taxable as a corporation.
(b) This Agreement may also be amended from time to time by
the Seller, the Servicer and the Issuer, with the consent of the Indenture
Trustee and the Owner Trustee to the extent that their respective rights or
obligations may be affected thereby (which consent may not be unreasonably
withheld) and with the consent of (i) the Noteholders of Notes evidencing not
less than a majority of the principal amount of the Notes Outstanding and (ii)
the Certificateholders of Certificates evidencing not less than a majority of
the Certificate Balance (which consent of any Noteholder of a Note or
Certificateholder of a Certificate given pursuant to this Section 10.1 or
pursuant to any other provision of this Agreement shall be conclusive and
binding on such Note or Certificate, as the case may be, and on all future
Noteholders of such Note or Certificateholders of such Certificate, as the case
may be, and of any Note or Certificate, as applicable, issued upon the transfer
thereof or in exchange thereof or in lieu thereof whether or not notation of
such consent is made upon such Note or the Certificate), for the purpose of
adding any provisions to or changing in any manner or eliminating any of
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<PAGE> 61
the provisions of this Agreement, or of modifying in any manner the rights of
the Noteholders or the Certificateholders; provided, however, that no such
amendment shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, or change the allocation or priority of,
collections of payments on Receivables or distributions that shall be required
to be made on any Note or Certificate or change any Note Interest Rate or the
Certificate Rate or, without the prior consent of the Rating Agencies, the
Specified Reserve Balance or the Minimum Specified Reserve Balance, without the
consent of all adversely affected Noteholders or Certificateholders or (b)
reduce the aforesaid percentage required to consent to any such amendment,
without the consent of the Noteholders of all Notes and Certificateholders of
all Certificates affected thereby; and provided further that such action shall
not, as evidenced by an Opinion of Counsel, cause the Issuer to be
characterized for federal or any then Applicable Tax State income tax purposes
as an association taxable as a corporation.
(c) Prior to the execution of any such amendment or consent
the Servicer will provide, and the Owner Trustee shall distribute, written
notification of the substance of such amendment or consent to each Rating
Agency.
(d) Promptly after the execution of any such amendment or
consent, the Owner Trustee shall furnish written notification of the substance
of such amendment or consent to each Certificateholder, the Indenture Trustee
and each Rating Agency. It shall not be necessary for the consent of
Noteholders or the Certificateholders pursuant to this Section 10.1 to approve
the particular form of any proposed amendment or consent, but it shall be
sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents (and any other consents of Noteholders and
Certificateholders provided for in this Agreement) and of evidencing the
authorization of the execution thereof by Noteholders and Certificateholders
shall be subject to such reasonable requirements as the Owner Trustee and the
Indenture Trustee may prescribe, including the establishment of record dates
pursuant to paragraph number 2 of the Note Depository Agreement.
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(e) Prior to the execution of any amendment to this
Agreement, the Owner Trustee and the Indenture Trustee shall be entitled to
receive and rely upon an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement and the Opinion of
Counsel referred to in Section 10.2(i)(1). The Owner Trustee or the Indenture
Trustee may, but shall not be obligated to, enter into any such amendment which
affects such Owner Trustee's or Indenture Trustee's own rights, duties or
immunities under this Agreement or otherwise.
SECTION 10.2. Protection of Title to Trust. (a) The Seller
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 interest of
the Issuer and the Indenture Trustee for the benefit of the Noteholders in the
Receivables and in the proceeds thereof. The Seller shall deliver (or cause to
be delivered) to the Owner Trustee and the Indenture Trustee file-stamped
copies of, or filing receipts for, any document filed as provided above, as
soon as available following such filing.
(b) Neither the Seller nor the Servicer shall change its
name, identity, or corporate structure in any manner that would, could, or
might make any financing statement or continuation statement filed by the
Seller in accordance with paragraph (a) above seriously misleading within the
meaning of Section 9-402(7) of the UCC, unless it shall have given the Owner
Trustee and the Indenture Trustee at least five (5) days' prior written notice
thereof, with a copy to the Rating Agencies, and shall have promptly filed
appropriate amendments to all previously filed financing statements or
continuation statements.
(c) The Seller and the Servicer shall give the Owner Trustee
and the Indenture Trustee at least sixty (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 and shall promptly file any such amendment or new
financing statement. The Servicer shall at all
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times maintain each office from which it shall service Receivables, and its
principal executive office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to
each Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including payments
and recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection
Account, the Payahead Account and the Reserve Account in respect of such
Receivable.
(e) The Servicer shall maintain its computer systems so that,
from and after the time of conveyance under this Agreement of the Receivables
to the Issuer, the Servicer's master computer records (including any back-up
archives) that refer to a Receivable shall indicate clearly the interest of the
Issuer and the Indenture Trustee in such Receivable and that such Receivable is
owned by the Issuer and has been pledged to the Indenture Trustee pursuant to
the Indenture. Indication of the Issuer's and the Indenture Trustee's interest
in a Receivable shall be deleted from or modified on the Servicer's computer
systems when, and only when, the Receivable shall have been paid in full or
repurchased.
(f) If at any time the Seller or the Servicer shall propose
to sell, grant a security interest in, or otherwise transfer any interest in
automotive receivables to any prospective purchaser, lender, or other
transferee, the Servicer shall give to such prospective purchaser, lender, or
other transferee computer tapes, records, or print-outs (including any restored
from back-up archives) that, if they shall refer in any manner whatsoever to
any Receivable, shall indicate clearly that such Receivable has been conveyed
to and is owned by the Issuer and has been pledged to the Indenture Trustee.
(g) The Servicer shall permit the Owner Trustee, the
Indenture Trustee and their respective agents at any time during normal
business hours to inspect, audit, and make copies of and abstracts from the
Servicer's records regarding any Receivable.
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(h) Upon request, the Servicer shall furnish to the Owner
Trustee and the Indenture Trustee, within twenty (20) Business Days, a list of
all Receivables (by contract number and name of Obligor) then held as part of
the Trust, together with a reconciliation of such list to the Schedule of
Receivables and to each of the Servicer's Certificates furnished before such
request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee and the
Indenture Trustee:
(1) promptly after the execution and delivery of
this Agreement and of each amendment thereto, an Opinion of Counsel
either (A) stating that, in the opinion of such Counsel, all financing
statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the
Issuer and the Indenture Trustee in the Receivables, and reciting the
details of such filings or referring to prior Opinions of Counsel in
which such details are given, or (B) stating that, in the opinion of
such Counsel, no such action shall be necessary to preserve and
protect such interest; and
(2) within 120 days after the beginning of each
calendar year beginning with the first calendar year beginning more
than three months after the Cutoff Date, an Opinion of Counsel, dated
as of a date during such 120-day period, either (A) stating that, in
the opinion of such counsel, all financing statements and continuation
statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Issuer and the Indenture
Trustee in the Receivables, and reciting the details of such filings
or referring to prior Opinions of Counsel in which such details are
given, or (B) stating that, in the opinion of such Counsel, no such
action shall be necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (i)(1) or (i)(2)
above shall specify any action necessary
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(as of the date of such opinion) to be taken in the following year to preserve
and protect such interest.
(j) The Seller shall, to the extent required by applicable
law, cause the Notes and the Certificates to be registered with the Securities
and Exchange Commission pursuant to Section 12(b) or Section 12(g) of the
Securities Exchange Act of 1934 within the time periods specified in such
sections.
(k) For the purpose of facilitating the execution of this
Agreement and for other purposes, this Agreement may be executed in any number
of counterparts, each of which counterparts shall be deemed to be an original,
and all of which counterparts shall constitute but one and the same instrument.
SECTION 10.3. Governing Law. This Agreement shall be
construed in accordance with the laws of the State of New York and the
obligations, rights, and remedies of the parties under this Agreement shall be
determined in accordance with such laws.
SECTION 10.4. Notices. All demands, notices, and
communications under this Agreement shall be in writing, personally delivered,
sent by telecopier, overnight courier or mailed by certified mail, return
receipt requested, and shall be deemed to have been duly given upon receipt (a)
in the case of the Seller or the Servicer, to the agent for service as
specified in Section 10.11 hereof, or at such other address as shall be
designated by the Seller or the Servicer in a written notice to the Owner
Trustee and the Indenture Trustee, (b) in the case of the Owner Trustee, at the
Corporate Trust Office of the Owner Trustee, (c) in the case of the Indenture
Trustee, at the Corporate Trust Office of the Indenture Trustee, (d) in the
case of Moody's Investors Service, Inc., at the following address: Moody's
Investors Service, Inc., ABS Monitoring Department, 99 Church Street, New York,
New York 10007, and (e) in the case of Standard & Poor's Ratings Group, at the
following address: Standard & Poor's Ratings Group, 25 Broadway, 20th Floor,
New York, New York 10004, Attention: Asset Backed Surveillance Department.
Any notice required or permitted to be mailed to a Noteholder or
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Person as shown in the Note Register or the
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Certificate Register, as applicable. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Noteholder or Certificateholder shall receive such
notice.
SECTION 10.5. 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 or of
the Notes, the Certificates or the rights of the holders thereof.
SECTION 10.6. Assignment. Notwithstanding anything to the
contrary contained herein, except as provided in Sections 7.3 and 8.2 and as
provided in the provisions of this Agreement concerning the resignation of the
Servicer, this Agreement may not be assigned by the Seller or the Servicer
without the prior written consent of the Owner Trustee, the Indenture Trustee,
the Noteholders of Notes evidencing not less than 66-2/3% of the principal
amount of the Notes Outstanding and the Certificateholders of Certificates
evidencing not less than 66-2/3% of the Certificate Balance.
SECTION 10.7. Further Assurances. The Seller and the
Servicer agree to do and perform, from time to time, any and all acts and to
execute any and all further instruments required or reasonably requested by the
Owner Trustee or the Indenture Trustee more fully to effect the purposes of
this Agreement, including, without limitation, the execution of any financing
statements or continuation statements relating to the Receivables for filing
under the provisions of the UCC of any applicable jurisdiction.
SECTION 10.8. No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Owner Trustee, the
Indenture Trustee, the Noteholders or the Certificateholders, 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
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other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges therein
provided are cumulative and not exhaustive of any rights, remedies, powers and
privileges provided by law.
SECTION 10.9. Third-Party Beneficiaries. This Agreement will
inure to the benefit of and be binding upon the parties hereto, the
Noteholders, the Certificateholders, and their respective successors and
permitted assigns. Except as otherwise provided in this Article X, no other
Person will have any right or obligation hereunder. The parties hereto hereby
acknowledge and consent to the pledge of this Agreement by the Issuer to the
Indenture Trustee for the benefit of the Noteholders pursuant to the Indenture.
SECTION 10.10. Actions by Noteholders or Certificateholders.
(a) Wherever in this Agreement a provision is made that an action may be taken
or a notice, demand, or instruction given by Noteholders or Certificateholders,
such action, notice, or instruction may be taken or given by any Noteholder or
Certificateholder, as applicable, unless such provision requires a specific
percentage of Noteholders or Certificateholders.
(b) Any request, demand, authorization, direction, notice,
consent, waiver, or other act by a Noteholder or Certificateholder shall bind
such Noteholder or Certificateholder and every subsequent holder of such Note
or Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done or omitted to be done
by the Owner Trustee, the Indenture Trustee or the Servicer in reliance
thereon, whether or not notation of such action is made upon such Note or
Certificate.
SECTION 10.11. Agent for Service. The agent for service of
the Seller and the Servicer in respect of this Agreement shall be J.D.
Bringard, Esq., Ford Motor Credit Company, The American Road, Dearborn,
Michigan 48121.
SECTION 10.12. No Bankruptcy Petition. The Owner Trustee,
the Indenture Trustee, the Issuer and the Servicer each covenants and agrees
that, prior to the date which is one year and one day after the payment in
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full of all securities issued by the Seller or by a trust for which the Seller
was the depositor which securities were rated by any nationally recognized
statistical rating organization it will not institute against, or join any
other Person in instituting against, the Seller or the General Partner any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any federal or State bankruptcy or similar law.
This Section 10.12 shall survive the resignation or removal of the Owner
Trustee under the Trust Agreement or the Indenture Trustee under the Indenture
or the termination of this Agreement.
SECTION 10.13. Limitation of Liability of Owner Trustee and
Indenture Trustee. (a) Notwithstanding anything contained herein to the
contrary, this Agreement has been countersigned by PNC Bank, Delaware not in
its individual capacity but solely in its capacity as Owner Trustee of the
Issuer and in no event shall PNC Bank, Delaware in its individual capacity or,
except as expressly provided in the Trust Agreement, as Owner Trustee of the
Issuer have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer. For all
purposes of this Agreement, in the performance of its duties or obligations
hereunder or in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles VI, VII and VIII of the Trust
Agreement.
(b) Notwithstanding anything contained herein to the
contrary, this Agreement has been accepted by Chemical Bank, not in its
individual capacity but solely as Indenture Trustee, and in no event shall
Chemical Bank have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any of
the certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
SECTION 10.14. Third-Party Beneficiary. The Indenture
Trustee is a third-party beneficiary to this Agreement and is entitled to the
rights and benefits
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hereunder and may enforce the provisions hereof as if it were a party hereto.
SECTION 10.15. Savings Clause. It is the intention of the
Seller and the Issuer that the transfer of the Trust Property contemplated
herein constitute an absolute transfer of the Trust Property, conveying good
title to the Trust Property from the Seller to the Issuer. However, in the
event that such transfer is deemed to be a pledge, the Seller hereby grants to
the Issuer a first priority security interest in all of the Seller's right,
title and interest in, to and under the Trust Property, and all proceeds
thereof, to secure a loan in an amount equal to all amounts payable under the
Notes and the Certificates, and in such event, this Agreement shall constitute
a security agreement under applicable law.
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IN WITNESS WHEREOF, the parties have caused this Sale and
Servicing Agreement to be duly executed by their respective officers thereunto
duly authorized as of the day and year first above written.
FORD CREDIT AUTO RECEIVABLES
TWO L.P.,
as Seller
By: FORD CREDIT AUTO
RECEIVABLES TWO, INC.,
as General Partner
By: /s/ Katherine Kjolhede
------------------------------
Name:
Title:
FORD CREDIT AUTO OWNER TRUST
1996-A,
as Issuer
By: PNC BANK, DELAWARE,
not in its individual
capacity but solely as Owner
Trustee
By: /s/ M.B. McCarthy
---------------------------------
Name: Michael B. McCarthy
Title: Vice President
FORD MOTOR CREDIT COMPANY,
as Servicer
By: /s/ R.P. Conrad
---------------------------------
Name:
Title:
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Accepted and agreed:
CHEMICAL BANK,
not in its individual capacity
but solely as Indenture Trustee
By: /s/ Michael A. Smith
--------------------------
Name: Michael A. Smith
Title: Vice President
PNC BANK, DELAWARE,
not in its individual capacity
but solely as Owner Trustee
By: /s/ M.B. McCarthy
--------------------------
Name: Michael B. McCarthy
Title: Vice President
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SCHEDULE A
[SCHEDULE OF RECEIVABLES]
Delivered to Indenture Trustee at Closing
<PAGE> 73
SCHEDULE B
LOCATION OF RECEIVABLE FILES
Akron
175 Montrose West Avenue
Suite 300 Crown Pointe
Copley, OH 44321
Albany
5 Pine West Plaza
Albany, NY 12205
Albuquerque
6100 Uptown Blvd., NE
Suite 300
Albuquerque, NM 87110
Amarillo
1616 S. Kentucky
Suite 130 Bldg. D
Amarillo, TX 79102
Anchorage
3201 C Street
Suite 203
Anchorage, AK 99503
Appleton
54 Park Place
Appleton, WI 54915-8861
Athens
3708 Atlanta Highway
Athens, GA 30604
Atlanta-North
North Park Town Center
1000 Abernathy Rd. N.E.
Bldg. 400, Suite 180
Atlanta, GA 30328
Atlanta-South
1691 Phoenix Blvd.
Suite 300
Atlanta, GA 30349
<PAGE> 74
Austin
1701 Directors Blvd.
Suite 320
Austin, TX 78744
Baltimore-East
Campbell Corporate Center One
4940 Campell Blvd., Suite 140
Whitemarsh Business Community
Baltimore, MD 21236
Baltimore-West
1829 Reistertown Road
Baltimore, MD 21208
Beaumont
2615 Calder
Suite 715
Beaumont, TX 77704
Billings
1643 Lewis Avenue
Suite 201
Billings, MT 59102
Birmingham
3535 Grandview Parkway
Suite 340
Birmingham, AL 35243
Boston-North
One Tech Drive, 3rd Floor
Andover, MA 01810-2497
Boston-South
Southboro Place, 2nd Floor
352 Turnpike Road
Southboro, MA 01772
Bristol
Landmark Center - Suite A
113 Landmark Lane
Bristol, TN 37620
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Buffalo
95 John Muir Drive
Suite 102
Amherst, NY 14228
Cape Girardeau
1401-C N. Mt. Auburn Rd.
Cape Girardeau, MO 63701
Charleston
4975 LaCross Road
Suite 150, Rivergate Center
North Charleston, SC 29418
Charlotte
6302 Fairview Road
Suite 500
Charlotte, NC 28210
Chattanooga
6025 Lee Highway
Suite 443
Chattanooga, TN 37421
Cheyenne
6234 Yellowstone
Cheyenne, WY 82009
Chicago-East
One River Place, Suite A
Lansing, IL 60438
Chicago-North
9700 Higgins Road
Suite 720
Rosemont, IL 60018
Chicago-South
The Office of Waterfall Glen I
Suite 310
900 South Frontage Road
Woodridge, IL 60517
Chicago-West
2500 W. Higgins Rd.
Suite 280
Hoffman Estates, IL 60195
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Cleveland
5700 Lombardo Centre
Suite 101
Seven Hills, OH 44131-2581
Colorado Springs
5575 Tech Center Dr.
Suite 220
Colorado Springs, CO 80919
Columbia
250 Berryhill Road
Suite 201
Columbia, SC 29210
Columbus
655 Metro Place South
Suite 470, Metro V
Dublin, OH 43017
Corpus Christi
5350 South Staples
Suite 225
Corpus Christi, TX 78411
Dallas
801 E. Campbell Road
Suite 600, Campbell Forum
Richardson, TX 75801
Davenport
2535 Tech Drive
Suite 300, Commerce Exch. Bldg.
Bettendorf, IA 52722
Decatur
401 Lee Street
Suite 500
Decatur, AL 35602
Denver
6300 S. Syracuse Way
Suite 195
Englewood, CO 80111
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Des Moines
4200 Corporate Drive
Suite 107
West Des Moines, IA 50266
Detroit-North
580 Kirts Boulevard
Suite 300
Troy, MI 48084
Detroit-West
One ParkLane Blvd.
Suite 405E
Dearborn, MI 48126
Dothan
3160 West Main Street
Suite 1
Dothan, AL 36301
El Paso
1200 Golden Key Circle
Suite 104
El Paso, TX 79925
Eugene
1600 Valley River Drive
Suite 190
Eugene, OR 97401
Falls Church
1420 Springhill Road
Suite 550
McLean, VA 22102
Fargo
3100 13th Ave. South
Suite 304
Fargo, ND 58103
Fayetteville
4317 Ramsey Street
Suite 300
Fayetteville, NC 28311
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Findlay
3500 North Main Street
Findlay, OH 45840-1447
Ford Credit
The American Road
Dearborn, MI 48121
Fort Worth
2350 W. Airport Frwy.
Suite 40o, Center Park Tower
Bedford, TX 76022
Grand Junction
744 Horizon Ct.
Suite 330
Grand Junction, CO 81506
Grand Rapids
2851 Charlevoix Drive SE
Suite 300
Grand Rapids, MI 49546
Greensboro
1500 Pinecroft Rd.
Suite 220
Greensboro, NC 27407
Harlingen
1916 East Harrison
Harlingen, TX 78550
Harrisburg
4900 Ritter Road
Mechanicsburg, PA 17055
Henderson
618 North Green Street
Henderson, KY 42420
Honolulu
1585 Kapiolani Blvd.
Suite 922, Ala Moano Pacific Center
Honolulu, HI 96814
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Houston-North
363 N. Sam Houston Pkwy. E.
Suite 700
Houston, TX 77060
Houston-West
820 Gessner
Suite 700
Houston, TX 77024
Huntington
3425 U.S. Route 60 East
Barboursville, WV 25504
Indianapolis
5875 Castle Creek Pkwy. North Drive
Suite 240
Indianapolis, IN 46250-4308
Jackson
Highland Village Center
4500 I-55 North
Suite 292
Jackson, MS 39211
Jacksonville
9485 Regency Square Boulevard
Jacksonville, FL 32225
Jefferson City
210 Prodo Drive
Jefferson City, MO 65109
Kansas City
8717 West 110th Street
Bldg. #14, Suite 550
Overland Park, KS 66210
Knoxville
5500 Lonas Drive
Suite 260
Knoxville, TN 37909
Lafayette
Saloom Office Park
Suite 350
100 Asma Boulevard
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Lafayette, LA 70508
Lansing
2140 University Park Drive
Okemos, MI 48864
Las Vegas
3900 Paradise Road
Suite 239
Las Vegas, NV 89109
Little Rock
1701 Centerview Dr.
Suite 301
Little Rock, AR 72211
Long Island
972 Brush Hollow Road
5th Floor
Westbury, NY 11590-1740
Louisville
502 Executive Park
Louisville, KY 40207
Lubbock
Suite 200
4010 82nd Street
Lubbock, TX 79424
Macon
5400 Riverside Drive
Suite 201
Macon, GA 31210
Manchester
4 Bedford Farms
Bedford, NH 03110
Marshall
1408 North Michigan
Marshall, IL 62441
Memphis
6555 Quince Road
Suite 300
Memphis, TN 38119
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Miami
6303 Blue Lagoon Drive
Suite 200
Miami, FL 33126
Milwaukee
10850 W. Park Place
Suite 110
Milwaukee, WI 53224
Minneapolis
11095 Viking Drive
Suite 308, One Southwest Crossing
Eden Prairie, MN 55344-7290
Mobile
1201 Montlimar Dr.
Suite 700
Mobile, AL 36609
Nashville
565 Marriott Drive
Suite 190, Highland Ridge
Nashville, TN 37210
New Haven
116 Washington Ave.
Floor #4
North Haven, CT 06473
New Jersey-Central
101 Interchange Plaza
Cranbury, NJ 08512
New Jersey-North
103 Eisenhower Parkway
4th Floor
Roseland, NJ 07068
New Jersey-South
10000 MidAtlantic Dr.
Suite 401 West
Mt. Laurel, NJ 08054
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New Orleans
3838 N. Causeway Blvd.
Suite 3200
Metairie, LA 70002
Norfolk
Greenbrier Pointe
1401 Greenbrier Pkwy.
Suite 350
Chesapeake, VA 23320
Odessa
Ashford Park Office Center
Suite 201A
2626 John Ben Sheppard Parkway
Odessa, TX 79762
Oklahoma City
4101 Perimeter Ctr Dr.
Suite 300, Perimeter Center
Oklahoma City, OK 73112
Omaha
10040 Regency Circle
Suite 100
Omaha, NE 68114-3786
Orange
765 The City Drive
Suite 200
Orange, CA 92668
Orlando
2600 Lake Lucien Drive
Suite 306, The Forum Bldg.
Maitland, FL 32751
Pasadena
800 East Colorado Blvd.
Suite 400
Pasadena, CA 91109
Pensacola
25 W. Cedar Street
Suite 316
Pensacola, Fl 32501
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Philadelphia
Bay Colony Executive Park
575 E. Swedesford
Suite 100
Wayne, PA 19087
Phoenix
4742 North 24th Street
Suite 215
Phoenix, AZ 85016
Pittsburgh
Foster Plaza 9
750 Holiday Drive
4th Floor, Suite 420
Pittsburgh, PA 15220
Portland
2401 Congress Street
Portland, ME 04102
Portland
10220 S.W. Greenburg Rd.
Suite 415
Portland, OR 97223
Raleigh
3651 Trust Drive
Raleigh, NC 27604
Richmond
300 Arboretum Place
Suite 320
Richmond, VA 23236
Roanoke
5238 Valley Pointe Pkwy.
Roanoke, VA 24019
Sacramento
2720 Gateway Oaks Dr.
Suite 200
Sacramento, CA 95833
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Saginaw
4901 Towne Centre Rd.
Suite 200
Saginaw, MI 48605
St. Louis
4227 Earth City Expressway
Suite 100
Earth City, MO 63045
Salt Lake City
310 E. 4500 South
Suite 340
Murray, UT 84107
San Antonio
1600 N.E. Loop 410
Suite 200
San Antonio, TX 78209
San Bernadino
1615 Orange Tree Lane
Suite 215
Redlands, CA 92374
San Diego
3111 Camino Del Rio N.
Suite 1333
San Diego, CA 92108
San Francisco
4301 Hacienda Dr.
Suite 400
Pleasanton, CA 94588
San Jose
1900 McCarthy Blvd.
Suite 400
Milpitas, CA 95035
Savannah
6600 Abercorn Street
Suite 206
Savannah, GA 31405
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Seattle
13555 S.E. 36th Street
Suite 350
Bellevue, WA 98006
Shreveport
South Pointe Centre, Suite 200
3007 Knight Street
Shreveport, LA 71105
South Bay
301 E. Ocean Boulevard
Suite 1900
Long Beach, CA 90802
South Bend
4215 Edison Lakes Parkway
Suite 140
Mishawaka, IN 46545
Spokane
901 North Monroe
Suite 350
Spokane, WA 99210-2148
Springfield
3275 E. Ridgeview
Springfield, MO 65804
Syracuse
5788 Widewaters Pkwy.
DeWitt, NY 13214
Tampa
Lincoln Pointe, Suite 800
2502 Rocky Point Drive
Tampa, FL 33607
Tulsa
9820 East 41st St.
Suite 300
Tulsa, OK 74145
Tupelo
One Mississippi Plaza
Tupelo, MS 38801
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Tyler
821 East SE Loop 323
Suite 300
Tyler, TX 75701
Ventura
260 Maple court
Suite 210
Ventura, CA 93003
Washington, D.C.
2440 Research Blvd.
Suite 150
Rockville, MD 20850
Waterloo
211 E. San Marnan Dr.
Waterloo, IA 50702
Westchester
660 White Plains Road
Tarrytown, NY 10591-0010
Western Carolina
215 Thompson Street
Hendersonville, NC 28739
Wichita
7570 West 21st Street
Wichita, KS 67212
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APPENDIX A
Definitions and Usage
AA-1
<PAGE> 1
EXHIBIT 99.2
ADMINISTRATION AGREEMENT
This ADMINISTRATION AGREEMENT, dated as of June 1, 1996 (as from time
to time amended, supplemented or otherwise modified and in effect, this
"Agreement"), is by and among FORD CREDIT AUTO OWNER TRUST 1996-A, a Delaware
business trust (the "Issuer"), FORD MOTOR CREDIT COMPANY, a Delaware
corporation, as administrator (the "Administrator"), and Chemical Bank, a New
York corporation, not in its individual capacity but solely as Indenture
Trustee (the "Indenture Trustee").
WHEREAS, the Issuer is issuing the Notes pursuant to the Indenture and
the Certificates pursuant to the Trust Agreement and has entered into certain
agreements in connection therewith, including (i) the Sale and Servicing
Agreement, (ii) the Note Depository Agreement and (iii) the Indenture (the Sale
and Servicing Agreement, the Note Depository Agreement and the Indenture being
referred to hereinafter collectively as the "Related Agreements");
WHEREAS, the Issuer and the Owner Trustee desire to have the
Administrator perform certain duties of the Issuer and the Owner Trustee under
the Related Agreements and to provide such additional services consistent with
the terms of this Agreement and the Related Agreements as the Issuer and the
Owner Trustee may from time to time request; and
WHEREAS, the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and the
Owner Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
1. Definitions and Usage. Except as otherwise specified herein
or as the context may otherwise require, capitalized terms used but not
otherwise defined herein are defined in Appendix A hereto, which also contains
rules as to usage that shall be applicable herein.
<PAGE> 2
2. Duties of the Administrator. (a) Duties with Respect to the
Indenture and the Note Depository Agreement. (i) The Administrator agrees to
perform all its duties as Administrator and the duties of the Issuer under the
Note Depository Agreement. In addition, the Administrator shall consult with
the Owner Trustee regarding the duties of the Issuer under the Indenture and
the Note Depository Agreement. The Administrator shall monitor the performance
of the Issuer and shall advise the Owner Trustee when action is necessary to
comply with the Issuer's duties under the Indenture and the Note Depository
Agreement. The Administrator shall prepare for execution by the Issuer, or
shall cause the preparation by other appropriate persons of, all such
documents, reports, filings, instruments, certificates and opinions that it
shall be the duty of the Issuer to prepare, file or deliver pursuant to the
Indenture and the Note Depository Agreement. In furtherance of the foregoing,
the Administrator shall take all appropriate action that is the duty of the
Issuer to take pursuant to the Indenture including, without limitation, such of
the foregoing as are required with respect to the following matters under the
Indenture (references are to sections of the Indenture):
(A) the duty to cause the Note Register to be kept and to
give the Indenture Trustee notice of any appointment of a new Note
Registrar and the location, or change in location, of the Note
Register (Section 2.5);
(B) the preparation of an Issuer Request requesting the
Indenture Trustee to authenticate and deliver replacement Notes in
lieu of mutilated, destroyed, lost or stolen Notes (Section 2.6);
(C) the notification of Noteholders of the final
principal payment on their Notes (Section 2.8(b));
(D) the preparation of or obtaining of the documents and
instruments required for authentication of the Notes and delivery of
the same to the Indenture Trustee (Section 2.2);
(E) the preparation, obtaining or filing of the
instruments, opinions and certificates and other documents required
for the release of property from the lien of the Indenture (Section
2.10);
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<PAGE> 3
(F) the preparation of Definitive Notes in accordance
with the instructions of the Clearing Agency (Section 2.13);
(G) the maintenance of an office in the Borough of
Manhattan, The City of New York, for registration of transfer or
exchange of Notes if the Indenture Trustee ceases to maintain such an
office (Section 3.2);
(H) the duty to cause newly appointed Note Paying Agents,
if any, to deliver to the Indenture Trustee the instrument specified
in the Indenture regarding funds held in trust (Section 3.3);
(I) the direction to the Indenture Trustee to deposit
monies with Note Paying Agents, if any, other than the Indenture
Trustee (Section 3.3);
(J) the obtaining and preservation of the Issuer's
qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of the Indenture, the Notes, the Collateral and each
other instrument or agreement included in the Indenture Trust Estate
(Section 3.4);
(K) the preparation of all supplements and amendments to
the Indenture and all financing statements, continuation statements,
instruments of further assurance and other instruments and the taking
of such other action as is necessary or advisable to protect the
Indenture Trust Estate (Sections 3.5 and 3.7(c));
(L) the delivery of the Opinion of Counsel on the Closing
Date and the annual delivery of Opinions of Counsel as to the
Indenture Trust Estate, and the annual delivery of the Officer's
Certificate and certain other statements as to compliance with the
Indenture (Sections 3.6 and 3.9);
(M) the identification to the Indenture Trustee in an
Officer's Certificate of any Person with whom the Issuer has
contracted to perform its duties under the Indenture (Section 3.7(b));
(N) the notification of the Indenture Trustee and the
Rating Agencies of an Event of Servicing
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<PAGE> 4
Termination under the Sale and Servicing Agreement and, if such Event
of Servicing Termination arises from the failure of the Servicer to
perform any of its duties under the Sale and Servicing Agreement with
respect to the Receivables, the taking of all reasonable steps
available to remedy such failure (Section 3.7(d));
(O) the preparation and obtaining of documents and
instruments required for the consolidation or merger of the Issuer
with another entity or the transfer by the Issuer of its properties or
assets (Section 3.10);
(P) the duty to cause the Servicer to comply with
Sections 3.9, 3.10, 3.11, 3.12, 3.13 and 4.9 and Article VII of the
Sale and Servicing Agreement (Section 3.14);
(Q) the delivery of written notice to the Indenture
Trustee and the Rating Agencies of each Event of Default under the
Indenture and each default by the Servicer or the Seller under the
Sale and Servicing Agreement and by Ford Credit or the Seller under
the Purchase Agreement (Section 3.19);
(R) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation of an
Officer's Certificate and the obtaining of the Opinions of Counsel and
the Independent Certificate relating thereto (Section 4.1);
(S) the monitoring of the Issuer's obligations as to the
satisfaction, discharge and defeasance of the Notes and the
preparation of an Officer's Certificate and the obtaining of an
opinion of a nationally recognized firm of independent certified
public accountants, a written certification thereof and the Opinions
of Counsel relating thereto (Section 4.2);
(T) the preparation of an Officer's Certificate to the
Indenture Trustee after the occurrence of any event which with the
giving of notice and the lapse of time would become an Event of
Default under Section 5.1(iii) of the Indenture, its status and what
action the Issuer is taking or proposes to take with respect thereto
(Section 5.1);
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<PAGE> 5
(U) the compliance with any written directive of the
Indenture Trustee with respect to the sale of the Indenture Trust
Estate at one or more public or private sales called and conducted in
any manner permitted by law if an Event of Default shall have occurred
and be continuing (Section 5.4);
(V) the preparation and delivery of notice to Noteholders
of the removal of the Indenture Trustee and the appointment of a
successor Indenture Trustee (Section 6.8);
(W) the preparation of any written instruments required
to confirm more fully the authority of any co-trustee or separate
trustee and any written instruments necessary in connection with the
resignation or removal of any co-trustee or separate trustee (Sections
6.8 and 6.10);
(X) the furnishing of the Indenture Trustee with the
names and addresses of Noteholders during any period when the
Indenture Trustee is not the Note Registrar (Section 7.1);
(Y) the preparation and, after execution by the Issuer,
the filing with the Commission, any applicable state agencies and the
Indenture Trustee of documents required to be filed on a periodic
basis with, and summaries thereof as may be required by rules and
regulations prescribed by, the Commission and any applicable state
agencies and the transmission of such summaries, as necessary, to the
Noteholders (Section 7.3);
(Z) the opening of one or more accounts in the Issuer's
name, the preparation and delivery of Issuer Orders, Officer's
Certificates and Opinions of Counsel and all other actions necessary
with respect to investment and reinvestment, to the extent permitted,
of funds in such accounts (Sections 8.2 and 8.3);
(AA) the preparation of an Issuer Request and Officer's
Certificate and the obtaining of an Opinion of Counsel and Independent
Certificates, if necessary, for the release of the Indenture Trust
Estate (Sections 8.4 and 8.5);
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<PAGE> 6
(BB) the preparation of Issuer Orders and the obtaining of
Opinions of Counsel with respect to the execution of supplemental
indentures and the mailing to the Noteholders of notices with respect
to such supplemental indentures (Sections 9.1, 9.2 and 9.3);
(CC) the execution and delivery of new Notes conforming to
any supplemental indenture (Section 9.6);
(DD) the notification of Noteholders of redemption of the
Notes or duty to cause the Indenture Trustee to provide such
notification (Section 10.2);
(EE) the preparation of all Officer's Certificates, Issuer
Requests and Issuer Orders and the obtaining of Opinions of Counsel
and Independent Certificates with respect to any requests by the
Issuer to the Indenture Trustee to take any action under the Indenture
(Section 11.1 (a));
(FF) the preparation of Officer's Certificates and the
obtaining of Independent Certificates, if necessary, for the release
of property from the lien of the Indenture (Section 11.1(b));
(GG) the notification of the Rating Agencies, upon the
failure of the Indenture Trustee to give such notification, of the
information required pursuant to Section 11.4 of the Indenture
(Section 11.4);
(HH) the preparation and delivery to Noteholders and the
Indenture Trustee of any agreements with respect to alternate payment
and notice provisions (Section 11.6); and
(II) the recording of the Indenture, if applicable
(Section 11.15).
(ii) The Administrator will:
(A) pay the Indenture Trustee from time to time
reasonable compensation for all services rendered by the Indenture
Trustee under the Indenture (which compensation shall not be limited
by any
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<PAGE> 7
provision of law in regard to the compensation of a trustee of an
express trust);
(B) except as otherwise expressly provided in the
Indenture, reimburse the Indenture Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by
the Indenture Trustee in accordance with any provision of the
Indenture (including the reasonable compensation, expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or
bad faith;
(C) indemnify the Indenture Trustee and its agents for,
and hold them harmless against, any losses, liability or expense
incurred without negligence or bad faith on their part, arising out of
or in connection with the acceptance or administration of the
transactions contemplated by the Indenture, including the reasonable
costs and expenses (including reasonable attorneys' fees) of defending
themselves against any claim or liability in connection with the
exercise or performance of any of their powers or duties under the
Indenture; and
(D) indemnify the Owner Trustee and its agents for, and
hold them harmless against, any losses, liability or expense incurred
without negligence or bad faith on their part, arising out of or in
connection with the acceptance or administration of the transactions
contemplated by the Trust Agreement, including the reasonable costs
and expenses (including reasonable attorneys' fees) of defending
themselves against any claim or liability in connection with the
exercise or performance of any of their powers or duties under the
Trust Agreement.
(b) Additional Duties. (i) In addition to the duties of the
Administrator set forth above, the Administrator shall perform such
calculations and shall prepare or shall cause the preparation by other
appropriate persons of, and shall execute on behalf of the Issuer or the Owner
Trustee, all such documents, reports, filings, instruments, certificates and
opinions that it shall be the duty of the Issuer or the Owner Trustee to
prepare, file or deliver pursuant to the Related Agreements, and at the request
of the Owner
7
<PAGE> 8
Trustee shall take all appropriate action that it is the duty of the Issuer or
the Owner Trustee to take pursuant to the Related Agreements. Subject to
Section 6 of this Agreement, and in accordance with the directions of the Owner
Trustee, the Administrator shall administer, perform or supervise the
performance of such other activities in connection with the Collateral
(including the Related Agreements) as are not covered by any of the foregoing
provisions and as are expressly requested by the Owner Trustee and are
reasonably within the capability of the Administrator.
(ii) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible for
performance of the duties of the Owner Trustee set forth in Section 3.2 of the
Trust Agreement with respect to establishing and maintaining a Capital Account
for each Certificateholder.
(iii) Notwithstanding anything in this Agreement or the
Related Agreements to the contrary, the Administrator shall be responsible for
promptly notifying the Owner Trustee in the event that any withholding tax is
imposed on the Trust's payments (or allocations of income) to a
Certificateholder as contemplated in Section 5.2(c) of the Trust Agreement.
Any such notice shall specify the amount of any withholding tax required to be
withheld by the Owner Trustee pursuant to such provision.
(iv) Notwithstanding anything in this Agreement or the Related
Agreements to the contrary, the Administrator shall be responsible for
performance of the duties of the Trust or the Owner Trustee set forth in
Section 5.5(a), (b), (c) and (d), the penultimate sentence of Section 5.5 and
Section 5.6(a) of the Trust Agreement with respect to, among other things,
accounting and reports to Certificateholders.
(v) The Administrator will provide prior to July 15, 1996
a certificate of an Authorized Officer in form and substance satisfactory to
the Owner Trustee as to whether any tax withholding is then required and, if
required, the procedures to be followed with respect thereto to comply with the
requirements of the Code. The Administrator shall be required to update the
letter in each instance that any additional tax withholding is
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<PAGE> 9
subsequently required or any previously required tax withholding shall no
longer be required.
(vi) The Administrator shall perform the duties of the
Administrator specified in Section 10.2 of the Trust Agreement required to be
performed in connection with the resignation or removal of the Owner Trustee,
and any other duties expressly required to be performed by the Administrator
pursuant to the Trust Agreement.
(vii) In carrying out the foregoing duties or any of its
other obligations under this Agreement, the Administrator may enter into
transactions or otherwise deal with any of its Affiliates; provided, however,
that the terms of any such transactions or dealings shall be in accordance with
any directions received from the Issuer and shall be, in the Administrator's
opinion, no less favorable to the Issuer than would be available from
unaffiliated parties.
(c) Non-Ministerial Matters. (i) With respect to matters that in
the reasonable judgment of the Administrator are non- ministerial, the
Administrator shall not take any action unless within a reasonable time before
the taking of such action, the Administrator shall have notified the Owner
Trustee of the proposed action and the Owner Trustee shall not have withheld
consent or provided an alternative direction. For the purpose of the preceding
sentence, "non-ministerial matters" shall include, without limitation:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer
and the compromise of any action, claim or lawsuit brought by or
against the Issuer (other than in connection with the collection of
the Receivables or Permitted Investments);
(C) the amendment, change or modification of the Related
Agreements;
(D) the appointment of successor Note Registrars,
successor Note Paying Agents and successor Indenture Trustees pursuant
to the Indenture or the appointment of successor Administrators or
Successor Servicers, or the consent to the assignment by
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<PAGE> 10
the Note Registrar, Note Paying Agent or Indenture Trustee of its
obligations under the Indenture; and
(E) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this
Agreement, the Administrator shall not be obligated to, and shall not, (x) make
any payments to the Noteholders under the Related Agreements, (y) sell the
Indenture Trust Estate pursuant to Section 5.4 of the Indenture or (z) take any
other action that the Issuer directs the Administrator not to take on its
behalf.
3. Records. The Administrator shall maintain appropriate books
of account and records relating to services performed hereunder, which books of
account and records shall be accessible for inspection by the Issuer and the
Seller at any time during normal business hours.
4. Compensation. As compensation for the performance of the
Administrator's obligations under this Agreement and, as reimbursement for its
expenses related thereto, the Administrator shall be entitled to $2,500
annually which shall be solely an obligation of the Seller.
5. Additional Information To Be Furnished to the Issuer. The
Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
6. Independence of the Administrator. For all purposes of this
Agreement, the Administrator shall be an independent contractor and shall not
be subject to the supervision of the Issuer or the Owner Trustee with respect
to the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by the Issuer, the Administrator shall
have no authority to act for or represent the Issuer or the Owner Trustee in
any way and shall not otherwise be deemed an agent of the Issuer or the Owner
Trustee.
7. No Joint Venture. Nothing contained in this Agreement (i)
shall constitute the Administrator and either of the Issuer or the Owner
Trustee as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on
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any of them or (iii) shall be deemed to confer on any of them any express,
implied or apparent authority to incur any obligation or liability on behalf of
the others.
8. Other Activities of Administrator. Nothing herein shall
prevent the Administrator or its Affiliates from engaging in other businesses
or, in its sole discretion, from acting in a similar capacity as an
administrator for any other person or entity even though such person or entity
may engage in business activities similar to those of the Issuer, the Owner
Trustee or the Indenture Trustee.
9. Term of Agreement; Resignation and Removal of Administrator.
(a) This Agreement shall continue in force until the termination of the Issuer
in accordance with Section 9.1 of the Trust Agreement, upon which event this
Agreement shall automatically terminate.
(b) Subject to Sections 9(e) and 9(f), the Administrator may
resign its duties hereunder by providing the Issuer with at least sixty (60)
days' prior written notice.
(c) Subject to Sections 9(e) and 9(f), at the sole option of the
Issuer, the Administrator may be removed immediately upon written notice of
termination from the Issuer to the Administrator if any of the following events
shall occur:
(i) the Administrator shall default in the performance of
any of its duties under this Agreement and, after notice of such
default, shall not cure such default within ten (10) days (or, if such
default cannot be cured in such time, shall not give within ten (10)
days such assurance of cure as shall be reasonably satisfactory to the
Issuer);
(ii) a court having jurisdiction in the premises shall
enter a decree or order for relief, and such decree or order shall not
have been vacated within sixty (60) days, in respect of the
Administrator in any involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect or appoint
a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official for the Administrator or any substantial part of its
property or order the winding-up or liquidation of its affairs; or
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(iii) the Administrator shall commence a voluntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, shall consent to the entry of an order for relief
in an involuntary case under any such law, shall consent to the
appointment of a receiver, liquidator, assignee, trustee, custodian,
sequestrator or similar official for the Administrator or any
substantial part of its property, shall consent to the taking of
possession by any such official of any substantial part of its
property, shall make any general assignment for the benefit of
creditors or shall fail generally to pay its debts as they become due.
The Administrator agrees that if any of the events specified in
clauses (ii) or (iii) of this Section 9(d) shall occur, it shall give written
notice thereof to the Issuer and the Indenture Trustee within seven (7) days
after the happening of such event.
(d) No resignation or removal of the Administrator pursuant to
this Section 9 shall be effective until (i) a successor Administrator shall
have been appointed by the Issuer and (ii) such successor Administrator shall
have agreed in writing to be bound by the terms of this Agreement in the same
manner as the Administrator is bound hereunder. The Issuer shall provide
written notice of any such resignation or removal to the Indenture Trustee,
with a copy to the Rating Agencies.
(e) The appointment of any successor Administrator shall be
effective only after satisfaction of the Rating Agency Condition with respect
to the proposed appointment.
(f) Subject to Sections 9(e) and 9(f), the Administrator
acknowledges that upon the appointment of a successor Servicer pursuant to the
Sale and Servicing Agreement, the Administrator shall immediately resign and
such successor Servicer shall automatically become the Administrator under this
Agreement.
10. Action upon Termination, Resignation or Removal. Promptly
upon the effective date of termination of this Agreement pursuant to Section
9(a) or the resignation or removal of the Administrator pursuant to Section
9(b) or (c), respectively, the Administrator shall be entitled to be paid all
fees and reimbursable expenses
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accruing to it to the date of such termination, resignation or removal. The
Administrator shall forthwith upon such termination pursuant to Section 9(a)
deliver to the Issuer all property and documents of or relating to the
Collateral then in the custody of the Administrator. In the event of the
resignation or removal of the Administrator pursuant to Section 9(b) or (c),
respectively, the Administrator shall cooperate with the Issuer and take all
reasonable steps requested to assist the Issuer in making an orderly transfer
of the duties of the Administrator.
11. Notices. Any notice, report or other communication given
hereunder shall be in writing and addressed of follows:
(a) if to the Issuer or the Owner Trustee, to:
Ford Credit Auto Owner Trust 1996-A
c/o PNC Bank, Delaware
222 Delaware Avenue
Wilmington, Delaware 19801
Attention: Michael B. McCarthy
Telephone: (302) 429-1546
Facsimile: (302) 429-7118
(b) if to the Administrator, to:
Ford Motor Credit Company
The American Road
Dearborn, Michigan 48121
Attention: Richard P. Conrad
Telephone: (313) 594-7765
Facsimile: (313) 248-7613
(c) If to the Indenture Trustee, to:
Chemical Bank
Corporate Trust Administration
450 West 33rd Street, 15th floor
New York, New York 10001
Attention: Michael A. Smith
Telephone: (212) 946-3346
Facsimile: (212) 946-7682
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<PAGE> 14
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed
given if such notice is mailed by certified mail, postage prepaid, or
hand-delivered to the address of such party as provided above.
12. Amendments. This Agreement may be amended from time to time
by a written amendment duly executed and delivered by the Issuer, the
Administrator and the Indenture Trustee, with the written consent of the Owner
Trustee, without the consent of the Noteholders and the Certificateholders, for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders or Certificateholders; provided that such
amendment will not, as set forth in an Opinion of Counsel satisfactory to the
Indenture Trustee and the Owner Trustee, materially and adversely affect the
interest of any Noteholder or Certificateholder. This Agreement may also be
amended by the Issuer, the Administrator and the Indenture Trustee with the
written consent of the Owner Trustee and the Noteholders of Notes evidencing
not less than a majority of the Notes Outstanding and the Certificateholders of
Certificates evidencing not less than a majority of the Certificate Balance for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of Noteholders or the Certificateholders; provided, however,
that no such amendment may (i) increase or reduce in any manner the amount of,
or accelerate or delay the timing of, collections of payments on Receivables or
distributions that are required to be made for the benefit of the Noteholders
or Certificateholders or (ii) reduce the aforesaid percentage of the
Noteholders and Certificateholders which are required to consent to any such
amendment, without the consent of the Noteholders of all the Notes Outstanding
and Certificateholders of Certificates evidencing all the Certificate Balance.
13. Successors and Assigns. This Agreement may not be assigned by
the Administrator unless such assignment is previously consented to in writing
by the Issuer and the Owner Trustee and subject to the satisfaction of the
Rating Agency Condition in respect thereof. An assignment with such consent
and satisfaction, if accepted by the assignee, shall bind the assignee hereun-
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<PAGE> 15
der in the same manner as the Administrator is bound hereunder.
Notwithstanding the foregoing, this Agreement may be assigned by the
Administrator without the consent of the Issuer or the Owner Trustee to a
corporation or other organization that is a successor (by merger, consolidation
or purchase of assets) to the Administrator; provided that such successor
organization executes and delivers to the Issuer, the Owner Trustee and the
Indenture Trustee an agreement in which such corporation or other organization
agrees to be bound hereunder by the terms of said assignment in the same manner
as the Administrator is bound hereunder. Subject to the foregoing, this
Agreement shall bind any successors or assigns of the parties hereto.
14. Governing Law. This agreement shall be construed in
accordance with the laws of the State of New York, and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.
15. Headings. The Section headings hereof have been inserted for
convenience of reference only and shall not be construed to affect the meaning,
construction or effect of this Agreement.
16. Counterparts. This Agreement may be executed in counterparts,
each of which when so executed shall be an original, but all of which together
shall constitute but one and the same agreement.
17. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
18. Not Applicable to Ford Credit in Other Capacities. Nothing in
this Agreement shall affect any right or obligation Ford Credit may have in any
other capacity.
19. Limitation of Liability of Owner Trustee and Indenture
Trustee. (a) Notwithstanding anything contained herein to the contrary, this
instrument has been countersigned by PNC Bank, Delaware not in its individual
capacity but solely in its capacity as Owner Trustee of the Issuer and in no
event shall PNC Bank, Delaware in its individu-
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<PAGE> 16
al capacity or any beneficial owner of the Issuer have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder, as to all of which recourse shall be had solely to the assets
of the Issuer. For all purposes of this Agreement, in the performance of any
duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary,
this Agreement has been countersigned by Chemical Bank not in its individual
capacity but solely as Indenture Trustee and in no event shall Chemical Bank
have any liability for the representations, warranties, covenants, agreements
or other obligations of the Issuer hereunder or in any of the certificates,
notices or agreements delivered pursuant hereto, as to all of which recourse
shall be had solely to the assets of the Issuer.
20. Third-Party Beneficiary. The Owner Trustee is a third-party
beneficiary to this Agreement and is entitled to the rights and benefits
hereunder and may enforce the provisions hereof as if it were a party hereto.
21. Nonpetition Covenants. (a) Notwithstanding any prior
termination of this Agreement, the Seller, the Administrator, the Owner Trustee
and the Indenture Trustee shall not, prior to the date which is one year and
one day after the termination of this Agreement with respect to the Issuer,
acquiesce, petition or otherwise invoke or cause the Issuer to invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Issuer under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Issuer.
(b) Notwithstanding any prior termination of this
Agreement, the Issuer, the Administrator, the Owner Trustee and the Indenture
Trustee shall not, prior to
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the date which is one year and one day after the termination of this Agreement
with respect to the Seller, acquiesce, petition or otherwise invoke or cause
the Seller or the General Partner to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
the Seller or the General Partner under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Seller or the
General Partner or any substantial part of their respective property, or
ordering the winding up or liquidation of the affairs of the Seller or the
General Partner.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
FORD CREDIT AUTO OWNER TRUST 1996-A
By: PNC BANK, DELAWARE, not in its
individual capacity but solely as Owner
Trustee
By: /s/ M.B. McCarthy
Name: Michael B. McCarthy
----------------------
Title: Vice President
CHEMICAL BANK, not in its individual
capacity but solely as Indenture Trustee
By: /s/ Michael A. Smith
-----------------------------
Name: Michael A. Smith
Title: Vice President
FORD MOTOR CREDIT COMPANY, as Administrator
By: /s/ R.P. Conrad
-----------------------------
Name:
Title:
<PAGE> 19
APPENDIX A
Definitions and Usage
AA1
<PAGE> 1
EXHIBIT 99.3
PURCHASE AGREEMENT
This PURCHASE AGREEMENT (as from time to time amended,
supplemented or otherwise modified and in effect, this "Agreement") is made as
of this 1st day of June 1996, by and between FORD MOTOR CREDIT COMPANY, a
Delaware corporation (the "Seller"), having its principal executive office at
The American Road, Dearborn, Michigan 48121, and FORD CREDIT AUTO RECEIVABLES
TWO L.P., a Delaware limited partnership (the "Purchaser"), having its
principal executive office at The American Road, Dearborn, Michigan 48121.
WHEREAS, in the regular course of its business, the Seller
purchases certain motor vehicle retail installment sale contracts secured by
new and used automobiles and light trucks from motor vehicle dealers.
WHEREAS, the Seller and the Purchaser wish to set forth the
terms pursuant to which the Receivables (as hereinafter defined) are to be
conveyed by the Seller to the Purchaser, which Receivables will be transferred
by the Purchaser pursuant to the Sale and Servicing Agreement (as hereinafter
defined) to the Ford Credit Auto Owner Trust 1996-A to be created pursuant to
the Trust Agreement (as hereinafter defined), which Trust will issue notes
secured by such Receivables and certain other property of the Trust, pursuant
to the Indenture (as hereinafter defined), and will issue certificates
representing beneficial interests in such Receivables and certain other
property of the Trust, pursuant to the Trust Agreement.
NOW, THEREFORE, in consideration of the foregoing, other good
and valuable consideration, and the mutual terms and covenants contained
herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND USAGE
Except as otherwise specified herein or as the context may
otherwise require, capitalized terms used but not otherwise defined herein are
defined in Appendix A hereto, which also contains rules as to usage that shall
be applicable herein. The term "Seller" herein shall mean Ford Motor Credit
Company.
<PAGE> 2
ARTICLE II
CONVEYANCE AND ACQUISITION OF RECEIVABLES
2.1 Conveyance and Acquisition of Receivables
On the Closing Date, subject to the terms and conditions of
this Agreement, the Seller agrees to convey to the Purchaser, and the Purchaser
agrees to acquire from the Seller, the Receivables and the other property
relating thereto (as defined below).
(a) Conveyance of Receivables. Effective as of
the Closing Date and simultaneously with the transactions pursu- ant to the
Indenture, the Sale and Servicing Agreement and the Trust Agreement, the Seller
hereby transfers, assigns and otherwise conveys to the Purchaser, without
recourse, all right, title and interest of the Seller, whether now owned or
hereafter acquired, in and to the following: (i) the Receivables; (ii) with
respect to Precomputed Receivables, monies due thereunder on or after the
Cutoff Date (including Payaheads) and, with respect to Simple Interest
Receivables, monies due or received thereunder on or after the Cutoff Date
(including in each case any monies received prior to the Cutoff Date that are
due on or after the Cutoff Date and were not used to reduce the principal
balance of the Receivable); (iii) the security interests in the Financed
Vehicles granted by Obligors pursuant to the Receivables and any other interest
of the Seller in the Financed Vehicles; (iv) rights to receive proceeds with
respect to the Receivables from claims on any physical damage, credit life,
credit disability, or other insurance policies covering Financed Vehicles or
Obligors; (v) Dealer Recourse; (vi) all of the Seller's rights to the
Receivable Files; (vii) payments and proceeds with respect to the Receivables
held by the Seller; (viii) all property (including the right to receive
Liquidation Proceeds) securing a Receivable (other than a Receivable
repurchased by the Seller); (ix) rebates of premiums and other amounts relating
to insurance policies and other items financed under the Receivables in effect
as of the Cutoff Date; and (x) all present and future claims, demands, causes
of action and choses in action in respect of any or all of the foregoing and
all payments on or under and all proceeds of every kind and nature whatsoever
in
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<PAGE> 3
respect of any or all of the foregoing, including all proceeds of the
conversion thereof, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, insurance proceeds,
condemnation awards, rights to payment of any and every kind and other forms of
obligations and receivables, instruments and other property which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing.
(b) Receivables Purchase Price. In consideration
for the Receivables and other properties described in Section 2.1(a), the
Purchaser shall, on the Closing Date, pay to the Seller the Receivables
Purchase Price. An amount equal to $1,011,913,300 (representing the proceeds
from the sale of the Notes and Certificates offered to the public, plus the
amount of the cash capital contribution by the General Partner to the Purchaser
on the Closing Date, minus the Reserve Initial Deposit) of the Receivables
Purchase Price shall be paid to the Seller in cash. The remaining portion of
the Receivables Purchase Price shall be deemed paid and returned to the
Purchaser and be considered a contribution to capital. The portion of the
Receivables Purchase Price to be paid in cash shall be by federal wire transfer
(same day) funds.
2.2 The Closing. The conveyance and acquisition of the
Receivables shall take place at a closing (the "Closing") at the offices of
Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue, New York, New York
10022 on the Closing Date, simultaneously with the closings under: (a) the
Sale and Servicing Agreement pursuant to which the Purchaser will assign all of
its right, title and interest in, to and under the Receivables and certain
other property to the Trust in exchange for the Notes and the Certificates; (b)
the Indenture, pursuant to which the Trust will issue the Notes and pledge all
of its right, title and interest in, to and under the Receivables and certain
other property to secure the Notes; (c) the Trust Agreement, pursuant to which
the Trust will issue the Certificates; (d) the Note Underwriting Agreement,
pursuant to which the Purchaser will sell to the Note Underwriters the Notes;
and (e) the Certificate Underwriting Agreement, pursuant to which the
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Purchaser will sell to the Certificate Underwriter the Certificates.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Seller as of the date hereof and as of the
Closing Date:
(a) Organization, etc. The Purchaser has been
duly organized and is validly existing as a limited partnership in good
standing under the laws of the State of Delaware, and has full power and
authority to execute and deliver this Agreement and to perform the terms and
provisions hereof and thereof.
(b) Due Authorization and No Violation. This
Agreement has been duly authorized, executed and delivered by the Purchaser,
and is the valid, binding and enforceable obligation of the Purchaser except as
the same may be limited by insolvency, bankruptcy, reorganization or other laws
relating to or affecting the enforcement of creditors' rights or by general
equity principles. The consummation of the transactions contemplated by this
Agreement, and the fulfillment of the terms hereof, will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a
default under (in each case material to the Purchaser), or result in the
creation or imposi- tion of any lien, charge or encumbrance (in each case
material to the Purchaser) upon any of the property or assets of the Purchaser
pursuant to the terms of, any indenture, mortgage, deed of trust, loan
agreement, guarantee, lease financing agreement or similar agreement or
instrument under which the Purchaser is a debtor or guarantor, nor will such
action result in any violation of the provisions of the Certificate of Limited
Partnership or the Limited Partnership Agreement of the Purchaser.
(c) No Litigation. No legal or governmental
proceedings are pending to which the Purchaser is a party or of which any
property of the Purchaser is the subject, and no such proceedings are
threatened or contemplated by governmental authorities or threatened by
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<PAGE> 5
others, other than such proceedings which will not have a material adverse
effect upon the general affairs, financial position, net worth or results of
operations (on an annual basis) of the Purchaser and will not materially and
adversely affect the performance by the Purchaser of its obligations under, or
the validity and enforceability of, this Agreement.
3.2 Representations and Warranties of the Seller.
(a) The Seller hereby represents and warrants to
the Purchaser as of the date hereof and as of the Closing Date:
(i) Organization, etc. The Seller has
been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Delaware, and is duly
qualified to transact business and is in good standing in each
jurisdiction in the United States of America in which the conduct of
its business or the ownership of its property requires such
qualification.
(ii) Power and Authority. The Seller has
full power and authority to convey and assign the property conveyed
and assigned to the Purchaser hereunder and has duly authorized such
sale and assignment to the Purchaser by all necessary corporate
action. This Agreement has been duly authorized, executed and
delivered by the Seller and shall constitute the legal, valid and
binding obligation of the Seller except as the same may be limited by
insolvency, bankruptcy, reorganization or other laws relating to or
affecting the enforcement of creditors' rights or by general equity
principles.
(iii) No Violation. The consummation of the
transactions contemplated by this Agreement, and the fulfillment of
the terms hereof, will not conflict with or result in a breach of any
of the terms or provisions of, or constitute a default under (in each
case material to the Seller and its subsidiaries considered as a
whole), or result in the creation or imposition of any lien, charge or
encumbrance (in each case material to the Seller and
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<PAGE> 6
its subsidiaries considered as a whole) upon any of the property or
assets of the Seller pursuant to the terms of, any indenture,
mortgage, deed of trust, loan agreement, guarantee, lease financing
agreement or similar agreement or instrument under which the Seller is
a debtor or guarantor, nor will such action result in any violation of
the provisions of the Certificate of Incorporation or the By-Laws of
the Seller.
(iv) No Proceedings. No legal or
governmental proceedings are pending to which the Seller is a party or
of which any property of the Seller is the subject, and no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others, other than such proceedings which will not
have a material adverse effect upon the general affairs, financial
position, net worth or results of operations (on an annual basis) of
the Seller and its subsidiaries considered as a whole and will not
materially and adversely affect the performance by the Seller of its
obligations under, or the validity and enforceability of, this
Agreement.
(b) The Seller makes the following
representations and warranties as to the Receivables on which the Purchaser
relies in accepting the Receivables. Such representations and warranties speak
as of the execution and delivery of this Agreement, but shall survive the
transfer, assignment and conveyance of the Receivables to the Purchaser and the
subsequent assignment and transfer to the Trust pursuant to the Sale and
Servicing Agreement and the pledge thereof to the Indenture Trustee pursuant to
the Indenture:
(i) Characteristics of Receivables.
Each Receivable (a) shall have been originated in the United States of
America by a Dealer for the retail sale of a Financed Vehicle in the
ordinary course of such Dealer's business, shall have been fully and
properly executed by the parties thereto, shall have been purchased by
the Seller from such Dealer under an existing dealer agreement with
the Seller, shall have been validly assigned by such Dealer to the
Seller, (b) shall have created or shall create a valid, subsisting,
and enforceable
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<PAGE> 7
first priority security interest in favor of the Seller in the
Financed Vehicle, which security interest shall be assignable by the
Seller to the Purchaser, (c) shall contain customary and enforceable
provisions such that the rights and remedies of the holder thereof
shall be adequate for realization against the collateral of the
benefits of the security, (d) shall provide for level monthly payments
(provided that the payment in the first or last month in the life of
the Receivable may be minimally different from the level payment) that
fully amortize the Amount Financed by maturity and yield interest at
the Annual Percentage Rate, (e) shall provide for, in the event that
such contract is prepaid, a prepayment that fully pays the Principal
Balance, and (f) is a Precomputed Receivable or a Simple Interest
Receivable.
(ii) Schedule of Receivables. The
information set forth in the Schedule of Receivables shall be true and
correct in all material respects as of the opening of business on the
Cutoff Date, and no selection procedures believed to be adverse to the
Noteholders or the Certificateholders shall have been utilized in
selecting the Receivables from those receivables which meet the
criteria contained herein. The computer tape or other listing
regarding the Receivables made available to the Purchaser and its
assigns is true and correct in all respects.
(iii) Compliance with Law. Each Receivable
and the sale of the Financed Vehicle shall have complied at the time
it was originated or made and at the execution of this Agreement shall
comply in all material respects with all requirements of applicable
federal, State, and local laws, and regulations thereunder, including,
without limitation, usury laws, the Federal Truth-in-Lending Act, the
Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Fair
Debt Collection Practices Act, the Federal Trade Commission Act, the
Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B
and Z, and State adaptations of the National Consumer Act and of the
Uniform Consumer Credit Code, and other consumer credit laws and equal
credit opportunity and disclosure laws.
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<PAGE> 8
(iv) Binding Obligation. Each Receivable
shall represent the genuine, legal, valid, and binding payment
obligation in writing of the Obligor, enforceable by the holder
thereof in accordance with its terms subject to the effect of
bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditors' rights generally.
(v) No Government Obligor. None of the
Receivables shall be due from the United States of America or any
State or from any agency, department, or instrumentality of the United
States of America or any State.
(vi) Security Interest in Financed
Vehicle. Immediately prior to the transfer, assignment and conveyance
thereof, each Receivable shall be secured by a validly perfected first
security interest in the Financed Vehicle in favor of the Seller as
secured party or all necessary and appropriate actions shall have been
commenced that would result in the valid perfection of a first
security interest in the Financed Vehicle in favor of the Seller as
secured party.
(vii) Receivables in Force. No Receivable
shall have been satisfied, subordinated, or rescinded, nor shall any
Financed Vehicle have been released from the lien granted by the
related Receivable in whole or in part.
(viii) No Waiver. No provision of a
Receivable shall have been waived.
(ix) No Defenses. No right of
rescission, setoff, counterclaim, or defense shall have been asserted
or threatened with respect to any Receivable.
(x) No Liens. To the best of the
Seller's knowledge, no liens or claims shall have been filed for work,
labor, or materials relating to a Financed Vehicle that shall be liens
prior to, or equal or coordinate with, the security interest in the
Financed Vehicle granted by the Receivable.
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<PAGE> 9
(xi) No Default. Except for payment
defaults continuing for a period of not more than thirty (30) days as
of the Cutoff Date, no default, breach, violation, or event permitting
acceleration under the terms of any Receivable shall have occurred;
and no continuing condition that with notice or the lapse of time
would constitute a default, breach, violation, or event permitting
acceleration under the terms of any Receivable shall have arisen; and
the Seller shall not waive any of the foregoing.
(xii) Insurance. The Seller, in accordance
with its customary procedures, shall have determined that the Obligor
has obtained or agreed to obtain physical damage insurance covering
the Financed Vehicle.
(xiii) Title. It is the intention of the
Seller that the transfer and assignment herein contemplated constitute
an absolute transfer of the Receivables from the Seller to the
Purchaser and that the beneficial interest in and title to the
Receivables not be part of the Seller's estate in the event of the
filing of a bankruptcy petition by or against the Seller under any
bankruptcy law. No Receivable has been transferred, assigned, or
pledged by the Seller to any Person other than the Purchaser.
Immediately prior to the transfer and assignment herein contemplated,
the Seller had good and marketable title to each Receivable free and
clear of all Liens, encumbrances, security interests, and rights of
others and, immediately upon the transfer thereof, the Purchaser shall
have good and marketable title to each Receivable, free and clear of
all Liens, encumbrances, security interests, and rights of others; and
the transfer has been perfected under the UCC.
(xiv) Valid Assignment. No Receivable shall
have been originated in, or shall be subject to the laws of, any
jurisdiction under which the transfer, assignment and conveyance of
such Receivable under this Agreement or pursuant to transfers of the
Notes or the Certificates shall be unlawful, void, or voidable. The
Seller has not entered into any agreement with any account debtor
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<PAGE> 10
that prohibits, restricts or conditions the assignment of any portion
of the Receivables.
(xv) All Filings Made. All filings
(including, without limitation, UCC filings) necessary in any
jurisdiction to give the Purchaser a first perfected ownership
interest in the Receivables shall have been made.
(xvi) Chattel Paper. Each Receivable
constitutes "chattel paper" as defined in the UCC.
(xvii) One Original. There shall be only
one original executed copy of each Receivable.
(xviii) New and Used Vehicles.
Approximately 70.0% of the aggregate Principal Balance of the
Receivables, constituting 61.4% of the number of Receivables, as of
the Cutoff Date, represent vehicles financed at new vehicle rates, and
the remainder of the Receivables represent vehicles financed at used
vehicle rates.
(xix) Amortization Type. By aggregate
Principal Balance as of the Cutoff Date, approximately 34.2% of the
Receivables constitute Precomputed Receivables and 65.8% of the
Receivables constitute Simple Interest Receivables.
(xx) Origination. Each Receivable shall
have an origination date on or after June 1, 1994.
(xxi) Maturity of Receivables. Each
Receivable shall have an original maturity of not greater than sixty
(60) months.
(xxii) Minimum Annual Percentage Rate.
Each Receivable shall have an Annual Percentage Rate equal to or
greater than 7.75%.
(xxiii) Scheduled Payments. Each Receivable
shall have a first Scheduled Payment due, in the case of Precomputed
Receivables, or a first scheduled due date, in the case of Simple
Interest Receivables, on or prior to June 30, 1996 and no Re-
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<PAGE> 11
ceivable shall have a payment that is more than thirty (30) days
overdue as of the Cutoff Date.
(xxiv) Location of Receivable Files. The
Receivable Files shall be kept at one or more of the locations listed
in Schedule A hereto.
(xxv) No Extensions. The number of
Scheduled Payments, in the case of Precomputed Receivables, and the
number of scheduled due dates, in the case of Simple Interest
Receivables, shall not have been extended on any Receivable on or
before the Cutoff Date.
(xxvi) Other Data. The numerical data
relating to the characteristics of the Receivables contained in the
Prospectus are true and correct in all material respects.
(xxvii) Agreement. The representations and
warranties in this Agreement shall be true.
(xxviii) No Receivables Originated in
Alabama or Pennsylvania. No Receivable shall have been originated in
Alabama or Pennsylvania.
11
<PAGE> 12
ARTICLE IV
CONDITIONS
4.1 Conditions to Obligation of the Purchaser. The
obligation of the Purchaser to acquire the Receivables is subject to the
satisfaction of the following conditions:
(a) Representations and Warranties True. The
representations and warranties of the Seller hereunder shall be true and
correct on the Closing Date with the same effect as if then made, and the
Seller shall have performed all obligations to be performed by it hereunder on
or prior to the Closing Date.
(b) Computer Files Marked. The Seller shall, at
its own expense, on or prior to the Closing Date, indicate in its computer
files that the Receivables have been conveyed to the Purchaser pursuant to this
Agreement and deliver to the Purchaser the Schedule of Receivables certified by
an officer of the Seller to be true, correct and complete.
(c) Documents to be Delivered by the Seller at
the Closing.
(i) The Assignment. At the Closing, the
Seller will execute and deliver the Assignment. The Assignment shall
be substantially in the form of Exhibit A hereto.
(ii) Evidence of UCC Filing. On or prior
to the Closing Date, the Seller shall record and file, at its own
expense, a UCC-1 financing statement in each jurisdiction in which
required by applicable law, executed by the Seller, as seller or
debtor, and naming the Purchaser, as purchaser or secured party,
naming the Receivables and the other property conveyed hereunder as
collateral, meeting the requirements of the laws of each such
jurisdiction and in such manner as is necessary to perfect the
transfer, assignment and conveyance of such Receivables to the
Purchaser. The Seller shall deliver a file-stamped copy, or other
evidence satisfactory to the Purchaser of such filing, to the
Purchaser on or prior to the Closing Date.
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<PAGE> 13
(iii) Other Documents. Such other documents
as the Purchaser may reasonably request.
(d) Other Transactions. The transactions
contemplated by the Sale and Servicing Agreement, the Indenture and the Trust
Agreement shall be consummated on the Closing Date.
4.2 Conditions to Obligation of the Seller. The
obligation of the Seller to convey the Receivables to the Purchaser is subject
to the satisfaction of the following conditions:
(a) Representations and Warranties True. The
representations and warranties of the Purchaser hereunder shall be true and
correct on the Closing Date with the same effect as if then made, and the
Purchaser shall have performed all obligations to be performed by it hereunder
on or prior to the Closing Date.
(b) Receivables Purchase Price. At the Closing
Date, the Purchaser will deliver to the Seller the Receivables Purchase Price,
as provided in Section 2.1(b).
13
<PAGE> 14
ARTICLE V
COVENANTS OF THE SELLER
The Seller covenants and agrees with the Purchaser as follows,
provided, however, that to the extent that any provision of this ARTICLE V
conflicts with any provision of the Sale and Servicing Agreement, the Sale and
Servicing Agreement shall govern:
5.1 Protection of Right, Title and Interest.
(a) The Seller 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 interest of the Purchaser in the
Receivables and in the proceeds thereof. The Seller shall deliver (or cause to
be delivered) to the Purchaser file-stamped copies of, or filing receipts for,
any document filed as provided above, as soon as available following such
filing.
(b) The Seller shall 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 the Seller in
accordance with paragraph (a) above seriously misleading within the meaning of
Section 9-402(7) of the UCC, unless it shall have given the Purchaser at least
five (5) days' prior written notice thereof and shall have promptly filed
appropriate amendments to all previously filed financing statements or
continuation statements.
(c) The Seller shall give the Purchaser at least
sixty (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 and shall
promptly file any such amendment or new financing statement. The Seller shall
at all times maintain each office from which it shall service Receivables, and
its principal executive office, within the United States of America.
14
<PAGE> 15
(d) The Seller shall maintain accounts and
records as to each Receivable accurately and in sufficient detail to permit the
reader thereof to know at any time the status of such Receivable, including
payments and recoveries made and payments owing (and the nature of each).
(e) The Seller shall maintain its computer
systems so that, from and after the time of conveyance hereunder of the
Receivables to the Purchaser, the Seller's master computer records (including
any back-up archives) that refer to a Receivable shall indicate clearly the
interest of the Purchaser in such Receivable and that such Receivable is owned
by the Purchaser. Indication of the Purchaser's ownership of a Receivable
shall be deleted from or modified on the Seller's computer systems when, and
only when, the Receivable shall have been paid in full or repurchased.
(f) If at any time the Seller shall propose to
sell, grant a security interest in, or otherwise transfer any interest in
automotive receivables to any prospective purchaser, lender, or other
transferee, the Seller shall give to such prospective purchaser, lender, or
other transferee computer tapes, records, or print-outs (including any restored
from back-up archives) that, if they shall refer in any manner whatsoever to
any Receivable, shall indicate clearly that such Receivable has been conveyed
to and is owned by the Purchaser.
(g) The Seller shall permit the Purchaser and its
agents at any time during normal business hours to inspect, audit, and make
copies of and abstracts from the Seller's records regarding any Receivable.
(h) Upon request, the Seller shall furnish to the
Purchaser, within twenty (20) Business Days, a list of all Receivables (by
contract number and name of Obligor) then owned by the Purchaser, together with
a reconciliation of such list to the Schedule of Receivables.
5.2 Other Liens or Interests. Except for the conveyances
hereunder and pursuant to the other Basic Documents, the Seller will not sell,
pledge, assign or transfer any Receivable to any other Person, or grant,
create, incur, assume or suffer to exist any Lien on any
15
<PAGE> 16
interest therein, and the Seller shall defend the right, title, and interest of
the Purchaser in, to and under such Receivables against all claims of third
parties claiming through or under the Seller; provided, however, that the
Seller's obligations under this Section 5.2 shall terminate upon the
termination of the Trust pursuant to the Trust Agreement.
5.3 Costs and Expenses. The Seller agrees to pay all
reasonable costs and disbursements in connection with the perfection, as
against all third parties, of the Purchaser's right, title and interest in and
to the Receivables.
5.4 Indemnification.
(a) The Seller shall defend, indemnify, and hold
harmless the Purchaser from and against any and all costs, expenses, losses,
damages, claims, and liabilities, arising out of or resulting from the failure
of a Receivable to be originated in compliance with all requirements of law and
for any breach of any of the Seller's representations and warranties contained
herein.
(b) The Seller shall defend, indemnify, and hold
harmless the Purchaser from and against any and all costs, expenses, losses,
damages, claims, and liabilities, arising out of or resulting from the use,
ownership, or operation by the Seller or any Affiliate thereof of a Financed
Vehicle.
(c) The Seller shall defend, indemnify, and hold
harmless the Purchaser from and against any and all taxes that may at any time
be asserted against the Purchaser with respect to the transactions contemplated
herein, including, without limitation, any sales, gross receipts, general
corporation, tangible personal property, privilege, or license taxes and costs
and expenses in defending against the same.
(d) The Seller shall defend, indemnify, and hold
harmless the Purchaser from and against any and all costs, expenses, losses,
claims, damages, and liabilities to the extent that such cost, expense, loss,
claim, damage, or liability arose out of, or was imposed upon the Purchaser
through, the negligence, willful misfeasance, or bad faith of the Seller in the
performance of
16
<PAGE> 17
its duties under this Agreement or by reason of reckless disregard of the
Seller's obligations and duties under this Agreement.
(e) The Seller shall defend, indemnify, and hold
harmless the Purchaser from and against all costs, expenses, losses, claims,
damages, and liabilities arising out of or incurred in connection with the
acceptance or performance of the Seller's trusts and duties as Servicer under
the Sale and Servicing Agreement, except to the extent that such cost, expense,
loss, claim, damage, or liability shall be due to the willful misfeasance, bad
faith, or negligence (except for errors in judgment) of the Purchaser.
These indemnity obligations shall be in addition to any
obligation that the Seller may otherwise have.
5.5 Treatment. Seller agrees to treat this conveyance as
(i) an absolute transfer for tax purposes and (ii) an sale for all other
purposes (including without limitation financial accounting purposes), in each
case on all relevant books, records, tax returns, financial statements and
other applicable documents.
17
<PAGE> 18
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.1 Obligations of Seller. The obligations of the Seller
under this Agreement shall not be affected by reason of any invalidity,
illegality or irregularity of any Receivable.
6.2 Repurchase Events. The Seller hereby covenants and
agrees with the Purchaser for the benefit of the Purchaser, the Trust, the
Owner Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders, that the occurrence of a breach of any of the Seller's
representations and warranties contained in Section 3.2(b) hereof shall
constitute events obligating the Seller to repurchase Receivables hereunder
("Repurchase Events"), at the Purchase Amount from the Purchaser or from the
Trust. The repurchase obligation of the Seller shall constitute the sole
remedy to the Purchaser, the Trust, the Owner Trustee, the Indenture Trustee,
the Noteholders or the Certificateholders against the Seller with respect to
any Repurchase Event.
6.3 Seller's Assignment of Purchased Receivables. With
respect to all Receivables repurchased by the Seller pursuant to this
Agreement, the Purchaser shall assign, without recourse, representation or
warranty, to the Seller all the Purchaser's right, title and interest in and to
such Receivables, and all security and documents relating thereto.
6.4 Trust. The Seller acknowledges that:
(a) The Purchaser will, pursuant to the Sale and Servicing
Agreement, convey the Receivables to the Trust and assign its rights under this
Agreement to the Owner Trustee for the benefit of the Noteholders and the
Certificateholders, and that the representations and warranties contained in
this Agreement and the rights of the Purchaser under Sections 6.2 and 6.3
hereof are intended to benefit the Trust, the Owner Trustee, the Noteholders
and the Certificateholders. The Seller hereby consents to such conveyance and
assignment.
(b) The Trust will, pursuant to the Indenture, pledge the
Receivables and its rights under this Agree-
18
<PAGE> 19
ment to the Indenture Trustee for the benefit of the Noteholders, and that the
representations and warranties contained in this Agreement and the rights of
the Purchaser under this Agreement, including under Sections 6.2 and 6.3 are
intended to benefit the Indenture Trustee and the Noteholders. The Seller
hereby consents to such pledge.
6.5 Amendment. This Agreement may be amended from time
to time by a written amendment duly executed and delivered by the Seller and
the Purchaser; provided, however, that any such amendment that materially
adversely affects the rights of the Noteholders or the Certificateholders under
the Indenture, Sale and Servicing Agreement or Trust Agreement shall be
consented to by the Noteholders of Notes evidencing not less than a majority of
the Notes Outstanding and the Certificateholders of Certificates evidencing not
less than a majority of the Certificate Balance.
6.6 Accountants' Letters.
(a) Coopers & Lybrand L.L.P. will review the
characteristics of the Receivables described in the Schedule of Receivables and
will compare those characteristics to the information with respect to the
Receivables contained in the Prospectus.
(b) Seller will cooperate with the Purchaser and
Coopers & Lybrand L.L.P. in making available all information and taking all
steps reasonably necessary to permit such accountants to complete the review
set forth in Section 6.6(a) above and to deliver the letters required of them
under the Note Underwriting Agreement and the Certificate Underwriting
Agreement.
(c) Coopers & Lybrand L.L.P. will deliver to the
Purchaser a letter, dated the Closing Date, in the form previously agreed to by
the Seller and the Purchaser, with respect to the financial and statistical
information contained in the Prospectus under the caption "Delinquencies,
Repossessions and Net Losses" and with respect to such other information as may
be agreed in the form of letter.
6.7 Waivers. No failure or delay on the part of the
Purchaser in exercising any power, right or remedy
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<PAGE> 20
under this Agreement or the Assignment shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power, right or remedy
preclude any other or further exercise thereof or the exercise of any other
power, right or remedy.
6.8 Notices. All communications and notices pursuant
hereto to either party shall be in writing or by telegraph or telex and
addressed or delivered to it at its address (or in case of telex, at its telex
number at such address) shown in the opening portion of this Agreement or at
such other address as may be designated by it by notice to the other party and,
if mailed or sent by telegraph or telex, shall be deemed given when mailed,
communicated to the telegraph office or transmitted by telex.
6.9 Costs and Expenses. The Seller will pay all expenses
incident to the performance of its obligations under this Agreement and the
Seller agrees to pay all reasonable out-of-pocket costs and expenses of the
Purchaser, excluding fees and expenses of counsel, in connection with the
perfection as against third parties of the Purchaser's right, title and
interest in and to the Receivables and the enforcement of any obligation of the
Seller hereunder.
6.10 Representations to the Seller. The respective
agreements, representations, warranties and other statements by the Seller and
the Purchaser set forth in or made pursuant to this Agreement shall remain in
full force and effect and will survive the closing under Section 2.2 hereof.
6.11 Confidential Information. The Purchaser agrees that
it will neither use nor disclose to any Person the names and addresses of the
Obligors, except in connection with the enforcement of the Purchaser's rights
hereunder, under the Receivables, under any Sale and Servicing Agreement or as
required by law.
6.12 Headings and Cross-References. The various headings
in this Agreement are included for convenience only and shall not affect the
meaning or interpretation of any provision of this Agreement. References in
this Agreement to Section names or numbers are to such Sections of this
Agreement.
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<PAGE> 21
6.13 GOVERNING LAW. THIS AGREEMENT AND THE ASSIGNMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF NEW YORK.
6.14 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 together shall constitute one
and the same instrument.
21
<PAGE> 22
6.13 GOVERNING LAW. THIS AGREEMENT AND THE ASSIGNMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK.
6.14 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 together shall constitute one and
the same instrument.
21
<PAGE> 23
IN WITNESS WHEREOF, the parties hereby have caused this
Purchase Agreement to be executed by their respective officers thereunto duly
authorized as of the date and year first above written.
FORD MOTOR CREDIT COMPANY
By: \s\ R.P. Conrad
-------------------------
Name:
Title:
FORD CREDIT AUTO RECEIVABLES
TWO L.P.
By: FORD CREDIT AUTO RECEIVABLES
TWO, INC.,
as General Partner
By: \s\ Katherine Kjolhede
-------------------------
Name:
Title:
<PAGE> 24
Exhibit A
ASSIGNMENT
For value received, in accordance with the Purchase Agreement
dated as of June 1, 1996 (the "Purchase Agreement"), between the undersigned
and FORD CREDIT AUTO RECEIVABLES TWO L.P. (the "Purchaser"), the undersigned
does hereby assign, transfer and otherwise convey unto the Purchaser, without
recourse, all right, title and interest of the undersigned, whether now owned
or hereafter acquired, in and to the following: (i) the Receivables; (ii) with
respect to Precomputed Receivables, monies due thereunder on or after the
Cutoff Date (including Payaheads) and, with respect to Simple Interest
Receivables, monies due or received thereunder on or after the Cutoff Date
(including in each case any monies received prior to the Cutoff Date that are
due on or after the Cutoff Date and were not used to reduce the principal
balance of the Receivable); (iii) the security interests in the Financed
Vehicles granted by Obligors pursuant to the Receivables and any other interest
of the Seller in the Financed Vehicles; (iv) rights to receive proceeds with
respect to the Receivables from claims on any physical damage, credit life,
credit disability, or other insurance policies covering Financed Vehicles or
Obligors; (v) Dealer Recourse; (vi) all of the Seller's rights to the
Receivable Files; (vii) payments and proceeds with respect to the Receivables
held by the Seller; (viii) all property (including the right to receive
Liquidation Proceeds) securing a Receivable (other than a Receivable
repurchased by the Seller); (ix) rebates of premiums and other amounts relating
to insurance policies and other items financed under the Receivables in effect
as of the Cutoff Date; and (x) all present and future claims, demands, causes
of action and choses in action in respect of any or all of the foregoing and
all payments on or under and all proceeds of every kind and nature whatsoever
in respect of any or all of the foregoing, including all proceeds of the
conversion thereof, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, insurance proceeds,
condemnation awards, rights to payment of any and every kind and other forms of
obligations and receivables, instruments and other property which
<PAGE> 25
at any time constitute all or part of or are included in the proceeds of any of
the foregoing. The foregoing conveyance does not constitute and is not
intended to result in any assumption by the Purchaser of any obligation of the
undersigned to the Obligors, insurers or any other person in connection with
the Receivables, Receivable Files, any insurance policies or any agreement or
instrument relating to any of them.
This Assignment is made pursuant to and upon the
representations, warranties and agreements on the part of the undersigned
contained in the Purchase Agreement and is to be governed by the Purchase
Agreement.
2
<PAGE> 26
Capitalized terms used herein and not otherwise defined shall
have the meaning assigned to them in the Purchase Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment
to be duly executed as of June 1, 1996.
FORD MOTOR CREDIT COMPANY
By:
--------------------------
Name:
Title:
3
<PAGE> 27
Exhibit B
Schedule of Receivables
DELIVERED TO PURCHASER
AT CLOSING
<PAGE> 28
Schedule A
Location of Receivable Files
Akron
175 Montrose West Avenue
Suite 300 Crown Pointe
Copley, OH 44321
Albany
5 Pine West Plaza
Albany, NY 12205
Albuquerque
6100 Uptown Blvd., NE
Suite 300
Albuquerque, NM 87110
Amarillo
1616 S. Kentucky
Suite 130 Bldg. D
Amarillo, TX 79102
Anchorage
3201 C Street
Suite 203
Anchorage, AK 99503
Appleton
54 Park Place
Appleton, WI 54915-8861
Athens
3708 Atlanta Highway
Athens, GA 30604
Atlanta-North
North Park Town Center
1000 Abernathy Rd. N.E.
Bldg. 400, Suite 180
Atlanta, GA 30328
Atlanta-South
1691 Phoenix Blvd.
Suite 300
Atlanta, GA 30349
<PAGE> 29
Austin
1701 Directors Blvd.
Suite 320
Austin, TX 78744
Baltimore-East
Campbell Corporate Center One
4940 Campell Blvd., Suite 140
Whitemarsh Business Community
Baltimore, MD 21236
Baltimore-West
1829 Reistertown Road
Baltimore, MD 21208
Beaumont
2615 Calder
Suite 715
Beaumont, TX 77704
Billings
1643 Lewis Avenue
Suite 201
Billings, MT 59102
Birmingham
3535 Grandview Parkway
Suite 340
Birmingham, AL 35243
Boston-North
One Tech Drive, 3rd Floor
Andover, MA 01810-2497
Boston-South
Southboro Place, 2nd Floor
352 Turnpike Road
Southboro, MA 01772
Bristol
Landmark Center - Suite A
113 Landmark Lane
Bristol, TN 37620
A-2
<PAGE> 30
Buffalo
95 John Muir Drive
Suite 102
Amherst, NY 14228
Cape Girardeau
1401-C N. Mt. Auburn Rd.
Cape Girardeau, MO 63701
Charleston
4975 LaCross Road
Suite 150, Rivergate Center
North Charleston, SC 29418
Charlotte
6302 Fairview Road
Suite 500
Charlotte, NC 28210
Chattanooga
6025 Lee Highway
Suite 443
Chattanooga, TN 37421
Cheyenne
6234 Yellowstone
Cheyenne, WY 82009
Chicago-East
One River Place, Suite A
Lansing, IL 60438
Chicago-North
9700 Higgins Road
Suite 720
Rosemont, IL 60018
Chicago-South
The Office of Waterfall Glen I
Suite 310
900 South Frontage Road
Woodridge, IL 60517
Chicago-West
2500 W. Higgins Rd.
Suite 280
Hoffman Estates, IL 60195
A-3
<PAGE> 31
Cleveland
5700 Lombardo Centre
Suite 101
Seven Hills, OH 44131-2581
Colorado Springs
5575 Tech Center Dr.
Suite 220
Colorado Springs, CO 80919
Columbia
250 Berryhill Road
Suite 201
Columbia, SC 29210
Columbus
655 Metro Place South
Suite 470, Metro V
Dublin, OH 43017
Corpus Christi
5350 South Staples
Suite 225
Corpus Christi, TX 78411
Dallas
801 E. Campbell Road
Suite 600, Campbell Forum
Richardson, TX 75801
Davenport
2535 Tech Drive
Suite 300, Commerce Exch. Bldg.
Bettendorf, IA 52722
Decatur
401 Lee Street
Suite 500
Decatur, AL 35602
Denver
6300 S. Syracuse Way
Suite 195
Englewood, CO 80111
A-4
<PAGE> 32
Des Moines
4200 Corporate Drive
Suite 107
West Des Moines, IA 50266
Detroit-North
580 Kirts Boulevard
Suite 300
Troy, MI 48084
Detroit-West
One Park Lane Blvd.
Suite 405E
Dearborn, MI 48126
Dothan
3160 West Main Street
Suite 1
Dothan, AL 36301
El Paso
1200 Golden Key Circle
Suite 104
El Paso, TX 79925
Eugene
1600 Valley River Drive
Suite 190
Eugene, OR 97401
Falls Church
1420 Springhill Road
Suite 550
McLean, VA 22102
Fargo
3100 13th Ave. South
Suite 304
Fargo, ND 58103
Fayetteville
4317 Ramsey Street
Suite 300
Fayetteville, NC 28311
A-5
<PAGE> 33
Findlay
3500 North Main Street
Findlay, OH 45840-1447
Ford Credit
The American Road
Dearborn, MI 48121
Fort Worth
2350 W. Airport Frwy.
Suite 400, Center Park Tower
Bedford, TX 76022
Grand Junction
744 Horizon Ct.
Suite 330
Grand Junction, CO 81506
Grand Rapids
2851 Charlevoix Drive SE
Suite 300
Grand Rapids, MI 49546
Greensboro
1500 Pinecroft Rd.
Suite 220
Greensboro, NC 27407
Harlingen
1916 East Harrison
Harlingen, TX 78550
Harrisburg
4900 Ritter Road
Mechanicsburg, PA 17055
Henderson
618 North Green Street
Henderson, KY 42420
Honolulu
1585 Kapiolani Blvd.
Suite 922, Ala Moano Pacific Center
Honolulu, HI 96814
A-6
<PAGE> 34
Houston-North
363 N. Sam Houston Pkwy. E.
Suite 700
Houston, TX 77060
Houston-West
820 Gessner
Suite 700
Houston, TX 77024
Huntington
3425 U.S. Route 60 East
Barboursville, WV 25504
Indianapolis
5875 Castle Creek Pkwy. North Drive
Suite 240
Indianapolis, IN 46250-4308
Jackson
Highland Village Center
4500 I-55 North
Suite 292
Jackson, MS 39211
Jacksonville
9485 Regency Square Boulevard
Jacksonville, FL 32225
Jefferson City
210 Prodo Drive
Jefferson City, MO 65109
Kansas City
8717 West 110th Street
Bldg. #14, Suite 550
Overland Park, KS 66210
Knoxville
5500 Lonas Drive
Suite 260
Knoxville, TN 37909
A-7
<PAGE> 35
Lafayette
Saloom Office Park
Suite 350
100 Asma Boulevard
Lafayette, LA 70508
Lansing
2140 University Park Drive
Okemos, MI 48864
Las Vegas
3900 Paradise Road
Suite 239
Las Vegas, NV 89109
Little Rock
1701 Centerview Dr.
Suite 301
Little Rock, AR 72211
Long Island
972 Brush Hollow Road
5th Floor
Westbury, NY 11590-1740
Louisville
502 Executive Park
Louisville, KY 40207
Lubbock
Suite 200
4010 82nd Street
Lubbock, TX 79424
Macon
5400 Riverside Drive
Suite 201
Macon, GA 31210
Manchester
4 Bedford Farms
Bedford, NH 03110
Marshall
1408 North Michigan
Marshall, IL 62441
A-8
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Memphis
6555 Quince Road
Suite 300
Memphis, TN 38119
Miami
6303 Blue Lagoon Drive
Suite 200
Miami, FL 33126
Milwaukee
10850 W. Park Place
Suite 110
Milwaukee, WI 53224
Minneapolis
11095 Viking Drive
Suite 308, One Southwest Crossing
Eden Prairie, MN 55344-7290
Mobile
1201 Montlimar Dr.
Suite 700
Mobile, AL 36609
Nashville
565 Marriott Drive
Suite 190, Highland Ridge
Nashville, TN 37210
New Haven
116 Washington Ave.
Floor #4
North Haven, CT 06473
New Jersey-Central
101 Interchange Plaza
Cranbury, NJ 08512
New Jersey-North
103 Eisenhower Parkway
4th Floor
Roseland, NJ 07068
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New Jersey-South
10000 MidAtlantic Dr.
Suite 401 West
Mt. Laurel, NJ 08054
New Orleans
3838 N. Causeway Blvd.
Suite 3200
Metairie, LA 70002
Norfolk
Greenbrier Pointe
1401 Greenbrier Pkwy.
Suite 350
Chesapeake, VA 23320
Odessa
Ashford Park Office Center
Suite 201A
2626 John Ben Sheppard Parkway
Odessa, TX 79762
Oklahoma City
4101 Perimeter Ctr Dr.
Suite 300, Perimeter Center
Oklahoma City, OK 73112
Omaha
10040 Regency Circle
Suite 100
Omaha, NE 68114-3786
Orange
765 The City Drive
Suite 200
Orange, CA 92668
Orlando
2600 Lake Lucien Drive
Suite 306, The Forum Bldg.
Maitland, FL 32751
Pasadena
800 East Colorado Blvd.
Suite 400
Pasadena, CA 91109
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Pensacola
25 W. Cedar Street
Suite 316
Pensacola, Fl 32501
Philadelphia
Bay Colony Executive Park
575 E. Swedesford
Suite 100
Wayne, PA 19087
Phoenix
4742 North 24th Street
Suite 215
Phoenix, AZ 85016
Pittsburgh
Foster Plaza 9
750 Holiday Drive
4th Floor, Suite 420
Pittsburgh, PA 15220
Portland
2401 Congress Street
Portland, ME 04102
Portland
10220 S.W. Greenburg Rd.
Suite 415
Portland, OR 97223
Raleigh
3651 Trust Drive
Raleigh, NC 27604
Richmond
300 Arboretum Place
Suite 320
Richmond, VA 23236
Roanoke
5238 Valley Pointe Pkwy.
Roanoke, VA 24019
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Sacramento
2720 Gateway Oaks Dr.
Suite 200
Sacramento, CA 95833
Saginaw
4901 Towne Centre Rd.
Suite 200
Saginaw, MI 48605
St. Louis
4227 Earth City Expressway
Suite 100
Earth City, MO 63045
Salt Lake City
310 E. 4500 South
Suite 340
Murray, UT 84107
San Antonio
1600 N.E. Loop 410
Suite 200
San Antonio, TX 78209
San Bernadino
1615 Orange Tree Lane
Suite 215
Redlands, CA 92374
San Diego
3111 Camino Del Rio N.
Suite 1333
San Diego, CA 92108
San Francisco
4301 Hacienda Dr.
Suite 400
Pleasanton, CA 94588
San Jose
1900 McCarthy Blvd.
Suite 400
Milpitas, CA 95035
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Savannah
6600 Abercorn Street
Suite 206
Savannah, GA 31405
Seattle
13555 S.E. 36th Street
Suite 350
Bellevue, WA 98006
Shreveport
South Pointe Centre, Suite 200
3007 Knight Street
Shreveport, LA 71105
South Bay
301 E. Ocean Boulevard
Suite 1900
Long Beach, CA 90802
South Bend
4215 Edison Lakes Parkway
Suite 140
Mishawaka, IN 46545
Spokane
901 North Monroe
Suite 350
Spokane, WA 99210-2148
Springfield
3275 E. Ridgeview
Springfield, MO 65804
Syracuse
5788 Widewaters Pkwy.
DeWitt, NY 13214
Tampa
Lincoln Pointe, Suite 800
2502 Rocky Point Drive
Tampa, FL 33607
Tulsa
9820 East 41st St.
Suite 300
Tulsa, OK 74145
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Tupelo
One Mississippi Plaza
Tupelo, MS 38801
Tyler
821 East SE Loop 323
Suite 300
Tyler, TX 75701
Ventura
260 Maple court
Suite 210
Ventura, CA 93003
Washington, D.C.
2440 Research Blvd.
Suite 150
Rockville, MD 20850
Waterloo
211 E. San Marnan Dr.
Waterloo, IA 50702
Westchester
660 White Plains Road
Tarrytown, NY 10591-0010
Western Carolina
215 Thompson Street
Hendersonville, NC 28739
Wichita
7570 West 21st Street
Wichita, KS 67212
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EXHIBIT 99.4
APPENDIX A
DEFINITIONS AND USAGE
Usage
The following rules of construction and usage shall be applicable to
any agreement or instrument that is governed by this Appendix:
(a) All terms defined in this Appendix shall have the defined
meanings when used in any agreement or instrument governed hereby and in any
certificate or other document made or delivered pursuant thereto unless
otherwise defined therein.
(b) As used herein, in any agreement or instrument governed hereby
and in any certificate or other document made or delivered pursuant thereto,
accounting terms not defined in this Appendix or in any such agreement,
instrument, certificate or other document, and accounting terms partly defined
in this Appendix or in any such agreement, instrument, certificate or other
document, to the extent not defined, shall have the respective meanings given
to them under generally accepted accounting principles as in effect on the date
of such agreement or instrument. To the extent that the definitions of
accounting terms in this Appendix or in any such agreement, instrument,
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Appendix or in any such instrument, certificate or other document shall
control.
(c) The words "hereof," "herein," "hereunder" and words of similar
import when used in an agreement or instrument refer to such agreement or
instrument as a whole and not to any particular provision or subdivision
thereof; references in an agreement or instrument to "Article," "Section" or
another subdivision or to an attachment are, unless the context otherwise
requires, to an article, section or subdivision of or an attachment to such
agreement or instrument; and the term "including" means "including without
limitation."
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(d) The definitions contained in this Appendix are equally
applicable to both the singular and plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to
below or in any agreement or instrument that is governed by this Appendix means
such agreement or instrument or statute as from time to time amended, modified
or supplemented, including (in the case of agreements or instruments) by waiver
or consent and (in the case of statutes) by succession of comparable successor
statutes and includes (in the case of agreements or instruments) references to
all attachments thereto and instruments incorporated therein. References to
a Person are also to its permitted successors and assigns.
Definitions
"Accrued Certificate Interest" shall mean, with respect to any
Distribution Date, the sum of the Certificateholders' Monthly Accrued Interest
for such Distribution Date and the Certificateholders' Interest Carryover
Shortfall for such Distribution Date.
"Accrued Note Interest" shall mean, with respect to any Distribution
Date, the sum of the Noteholders' Monthly Accrued Interest for such
Distribution Date and the Noteholders' Interest Carryover Shortfall for such
Distribution Date.
"Act" shall have the meaning specified in Section 11.3(a) of the
Indenture.
"Actuarial Method" shall mean the method of allocating a fixed level
payment on a Receivable between principal and interest, pursuant to which the
portion of such payment that is allocated to interest is the product of
one-twelfth (1/12) of the APR on the Receivable multiplied by the scheduled
principal balance of the Receivable.
"Actuarial Receivable" shall mean any Receivable under which the
portion of a payment with respect thereto allocable to interest and the portion
of a pay-
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ment with respect thereto allocable to principal is determined in accordance
with the Actuarial Method.
"Administration Agreement" shall mean the Administration Agreement,
dated as of June 1, 1996, by and among the Administrator, the Issuer and the
Indenture Trustee.
"Administrator" shall mean Ford Credit, in its capacity as
administrator under the Administration Agreement, or any successor
Administrator thereunder.
"Advance" shall mean either a Precomputed Advance or a Simple
Interest Advance or both, as applicable.
"Affiliate" shall mean, with respect to any specified Person, any
other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used
with respect to any Person shall mean the power to direct the management and
policies of such Person, directly or indirectly, whether through the owner-
ship of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" shall have meanings correlative to the
foregoing.
"Amount Financed" shall mean, with respect to a Receivable, the
amount advanced under the Receivable toward the purchase price of the
Financed Vehicle and any related costs.
"Annual Percentage Rate" or "APR" of a Receivable shall mean the
annual rate of finance charges stated in the Receivable.
"Applicable Tax State" shall mean, as of any date of determination,
each State as to which any of the following is then applicable: (a) a State in
which the Owner Trustee maintains its Corporate Trust Office, (b) a State in
which the Owner Trustee maintains its principal executive offices, and (c) the
State of Michigan.
"Assignment" shall mean the document of assignment attached as
Exhibit A to the Purchase Agreement.
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"Authenticating Agent" shall have the meaning specified in Section
2.14 of the Indenture.
"Authorized Officer" shall mean, (i) with respect to the Issuer, any
officer within the Corporate Trust Office of the Owner Trustee, including any
vice president, assistant vice president, secretary, assistant secretary or any
other officer of the Owner Trustee customarily performing functions similar to
those performed by any of the above designated officers and, for so long as the
Administration Agreement is in full force and effect, any officer of the
Administrator who is authorized to act for the Administrator in matters
relating to the Issuer and to be acted upon by the Administrator pursuant to
the Administration Agreement; and (ii) with respect to the Indenture Trustee or
the Owner Trustee, any officer within the Corporate Trust Office of the
Indenture Trustee or the Owner Trustee, as the case may be, including any vice
president, assistant vice president, secretary, assistant secretary or any
other officer of the Indenture Trustee or the Owner Trustee, as the case may
be, customarily performing functions similar to those performed by any of the
above designated officers and also, with respect to a particular matter, any
other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject and shall also mean,
with respect to the Owner Trustee, any officer of the Administrator.
"Available Funds" shall mean, for any Distribution Date, the sum of
the Available Interest and the Available Principal.
"Available Interest" shall mean, for any Distribution Date, the sum
of the following amounts with respect to the preceding Collection Period: (i)
all scheduled payments of interest and the interest portion of all prepayments
in full (and certain partial prepayments) collected with respect to Precomput-
ed Receivables (including amounts withdrawn from the Payahead Account but
excluding amounts deposited into the Payahead Account) and the interest
portion of all payments collected with respect to Simple Interest Receivables;
(ii) Liquidation Proceeds, to the extent attributable to interest due thereon
in accordance with the Servicer's customary servicing procedures, and all
recoveries in respect of Liquidated Receivables which were written off in prior
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Collection Periods; (iii) all Advances made by the Servicer of interest due on
the Receivables and all amounts advanced by the Servicer pursuant to Section
4.4(c) of the Sale and Servicing Agreement; and (v) the Purchase Amount of each
Receivable that became Purchased Receivable during the related Collection
Period to the extent attributable to accrued interest thereon; provided
however, that in calculating the Available Interest the following will be
excluded: (i) amounts of interest received on any Receivable to the extent
that the Servicer has previously made an unreimbursed Advance of interest on
such Receivable; (ii) amounts of interest received on any Receivable to the
extent that the Servicer has previously made an unreimbursed Advance of
interest on a Receivable which is not recoverable from collections on the
particular Receivable; (iii) Liquidation Proceeds with respect to a particular
Precomputed Receivable to the extent of any unreimbursed Precomputed Advances
thereon; (iv) all payments and proceeds (including Liquidation Proceeds) of
any Receivables the Purchase Amount of which has been included in the Available
Funds in a prior Collection Period; (v) Liquidation Proceeds with respect to a
Simple Interest Receivable attributable to accrued and unpaid interest thereon
(but not including interest for the then current Collection Period) but only to
the extent of any unreimbursed Simple Interest Advances; and (vi) amounts
constituting the Supplemental Servicing Fee.
"Available Principal" shall mean, for any Distribution Date, the sum
of the following amounts with respect to the preceding Collection Period: (i)
all scheduled payments of principal and the principal portion of all
prepayments in full (and certain partial prepayments) collected with respect to
Precomputed Receivables (including amounts withdrawn from the Payahead Account
but excluding amounts deposited into the Payahead Account) and the principal
portion of all payments collected with respect to Simple Interest Receivables;
(ii) all Liquidation Proceeds attributable to the principal balance of
Receivables which became Liquidated Receivables during such Collection Period
in accordance with the Servicer's customary servicing procedures; (iii) all
Precomputed Advances made by the Servicer of principal due on the Precomputed
Receivables; (iv) to the extent attributable to principal, the Purchase
Amount received with respect to each Receivable that became a Purchased
Receivable
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during the related Collection Period; and (v) partial prepayments of any
refunded item included in the principal balance of a Receivable, such as
extended warranty protection plan costs, or physical damage, credit life,
disability insurance premiums, or any partial prepayment which causes a
reduction in the Obligor's periodic payment to an amount below the scheduled
payment as of the Cutoff Date; provided however, that in calculating the
Available Principal the following will be excluded: (i) amounts of principal
received on any Receivable to the extent that the Servicer has previously made
an unreimbursed Advance of principal on such Receivable; (ii) amounts of
principal received on any Receivable to the extent that the Servicer has
previously made an unreimbursed Advance of principal on a Receivable which is
not recoverable from collections on the particular Receivable; (iii)
Liquidation Proceeds with respect to a particular Precomputed Receivable to the
extent of any unreimbursed Precomputed Advances thereon; (iv) all payments and
proceeds (including Liquidation Proceeds) of any Receivables the Purchase
Amount of which has been included in the Available Funds in a prior Collection
Period; (v) Liquidation Proceeds with respect to a Simple Interest Receivable
attributable to accrued and unpaid interest thereon (but not including interest
for the then current Collection Period) but only to the extent of any
unreimbursed Simple Interest Advances; and (vi) amounts constituting the
Supplemental Servicing Fee.
"Bankruptcy Code" shall mean the United States Bankruptcy Code, 11
U.S.C. 101 et seq., as amended.
"Basic Documents" shall mean the Certificate of Limited Partnership,
the Limited Partnership Agreement, the Certificate of Trust, the Trust
Agreement, the Purchase Agreement, the Sale and Servicing Agreement, the
Indenture, the Administration Agreement, the Note Depository Agreement and the
other documents and certificates delivered in connection therewith.
"Book-Entry Notes" shall mean a beneficial interest in the Notes,
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.11 of the Indenture.
"Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which banking institutions
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or trust companies in New York, New York or the State of Delaware are
authorized or obligated by law, regulation or executive order to remain closed.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Delaware Code Section 3801 et seq., as amended.
"Capital Account" shall mean the account established pursuant to
Section 3.2 of the Trust Agreement and the amount of any Certificateholder's
Capital Account shall be the amount determined in accordance with such Section
3.2 of the Trust Agreement.
"Certificate" shall mean a physical certificate evidencing the
beneficial interest of a Certificateholder in the property of the Trust,
substantially in the form of Exhibit A to the Trust Agreement. Such
certificate shall entitle the Certificateholder thereof to distributions of
principal and interest pursuant to the Trust Agreement from collections and
other proceeds in respect of the Owner Trust Estate; provided, however, that
the Owner Trust Estate has been pledged to the Indenture Trustee to secure
payment of the Notes and that the rights of Certificateholders to receive
distributions on the Certificates are subordinated to the rights of the
Noteholders as described in the Sale and Servicing Agreement, the Indenture and
the Trust Agreement.
"Certificate Balance" shall mean, as the context so requires, (i)
with respect to all of the Certificates, an amount equal to, initially, the
Initial Certificate Balance and, thereafter, an amount equal to the Initial
Certificate Balance, reduced by all amounts distributed to the
Certificateholders and allocable to principal or (ii) with respect to any
Certificate, an amount equal to, initially, the initial denomination of such
Certificate and, thereafter, an amount equal to such initial denomination,
reduced by all amounts distributed in respect of such Certificate and allocable
to principal; provided, that in determining whether the Certificateholders of
Certificates evidencing the requisite portion or percentage of the aggregate
Certificate Balance have given any request, demand, authorization, direction,
notice, consent, or waiver hereunder or under any Basic Document, Certificates
owned by the Issuer, any other
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obligor upon the Certificates, the Seller, the Servicer or any Affiliate of any
of the foregoing Persons shall be disregarded and deemed to be excluded from
the Certificate Balance, except that, in determining whether the Indenture
Trustee and Owner Trustee shall be protected in relying on any such request,
demand, authorization, direction, notice, consent, or waiver, only Certificates
that a Trustee Officer of the Indenture Trustee, if applicable, and an
Authorized Officer of the Owner Trustee with direct responsibility for the
administration of the Trust Agreement, if applicable, knows to be so owned
shall be so disregarded. Certificates so owned that have been pledged in good
faith may be regarded as included in the Certificate Balance if the pledgee
establishes to the satisfaction of the Indenture Trustee or the Owner Trustee,
as applicable, the pledgee's right so to act with respect to such Certificates
and that the pledgee is not the Issuer, any other obligor upon the
Certificates, the Seller, the Servicer or any Affiliate of any of the foregoing
Persons.
"Certificate Distribution Account" shall mean the account established
and maintained as such pursuant to Section 4.1(c) of the Sale and Servicing
Agreement.
"Certificateholder" shall mean a Person in whose name a Certificate
is registered in the Certificate Register.
"Certificateholders' Interest Carryover Shortfall" shall mean, with
respect to any Distribution Date, the excess of the sum of the
Certificateholders' Monthly Accrued Interest for the preceding Distribution
Date and any outstanding Certificateholders' Interest Carryover Shortfall
from the close of business on such preceding Distribution Date, over the amount
in respect of interest that is actually deposited in the Certificate Distri-
bution Account on such preceding Distribution Date, plus thirty (30) days'
interest on such excess, to the extent permitted by law, at the Certificate
Rate.
"Certificateholders' Monthly Accrued Interest" shall mean, with
respect to any Distribution Date, thirty (30) days of interest (or, in the case
of the first Distribution Date, interest accrued from and including the
Closing Date to but excluding such Distribution Date) at the Certificate Rate
on the Certificate Balance on the
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immediately preceding Distribution Date, after giving effect to all
distributions allocable to the reduction of the Certificate Balance made on or
prior to such Distribution Date (or, in the case of the first Distribution
Date, on the Closing Date).
"Certificateholders' Principal Carryover Shortfall" shall mean, as of
the close of business on any Distribution Date, the excess of the
Certificateholders' Regular Principal and any outstanding Certificateholders'
Principal Carryover Shortfall from the preceding Distribution Date over the
amount in respect of principal that is actually deposited in the Certificate
Distribution Account.
"Certificateholders' Regular Principal" shall mean, with respect to
any Distribution Date prior to the Distribution Date on which the Notes are
paid in full, zero; and with respect to any Distribution Date on or after the
Distribution Date on which the outstanding principal amount of all the Notes is
paid in full, the sum of (i) the Regular Principal for such Distribution Date
(less, on the Distribution Date on which the outstanding principal amount of
all the Notes is paid in full, the portion thereof payable on the Notes) and
(ii) any outstanding Certificateholders' Principal Carryover Shortfall as of
the close of business of the preceding Distribution Date; provided, however,
that the Certificateholders' Regular Principal shall not exceed the Certificate
Balance; provided further that on the Final Scheduled Distribution Date, the
principal required to be included in the Certificateholders' Regular Principal
will include the lesser of (a) (i) any scheduled payments of principal due and
remaining unpaid on each Precomputed Receivable and (ii) any principal due and
remaining unpaid on each Simple Interest Receivable, in each case, in the Trust
as of the Final Scheduled Maturity Date or (b) the portion of the amount
required to be advanced under clause (a) above that is necessary (after giving
effect to the other amounts to be deposited in the Certificate Distribution
Account on such Distribution Date and allocable to principal) to reduce the
Certificate Balance to zero, and, in the case of clauses (a) and (b),
remaining after any required distribution in respect of the Notes.
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"Certificate Indemnification Agreement" shall mean the Certificate
Indemnification Agreement, dated as of June 13, 1996, by and between Ford
Credit and the Certificate Underwriter.
"Certificate of Limited Partnership" shall mean the Certificate of
Limited Partnership of the Depositor filed for the Depositor pursuant to
Section 17-201(a) of the Limited Partnership Act.
"Certificate of Trust" shall mean the Certificate of Trust in the
form of Exhibit B to the Trust Agreement filed for the Trust pursuant to
Section 3810(a) of the Business Trust Statute.
"Certificate Paying Agent" shall mean any paying agent or co-paying
agent appointed pursuant to Section 3.10 of the Trust Agreement and shall
initially be the Owner Trustee.
"Certificate Pool Factor" shall mean, as of the close of business on
the last day of a Collection Period, a seven-digit decimal figure equal to the
Certificate Balance (after giving effect to any reductions therein to be made
on the immediately following Distribution Date) divided by the Initial
Certificate Balance. The Certificate Pool Factor will be 1.0000000 as of the
Closing Date; thereafter, the Certificate Pool Factor will decline to reflect
reductions in the Certificate Balance.
"Certificate Rate" shall mean 7.00% per annum. Interest with
respect to the Certificates shall be computed on the basis of a 360-day year
consisting of twelve 30-day months for all purposes of the Basic Documents.
"Certificate Register" and "Certificate Registrar" shall have the
respective meanings specified in Section 3.5 of the Trust Agreement.
"Certificate Underwriter" shall mean CS First Boston Corporation, as
underwriter of the Certificates pursuant to the Certificate Underwriting
Agreement.
"Certificate Underwriting Agreement" shall mean the Certificate
Underwriting Agreement between the Seller and CS First Boston Corporation, as
Certificate Underwriter.
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"Class" means a class of Notes, which may be the Class A-1 Notes, the
Class A-2 Notes, the Class A-3 Notes or the Class A-4 Notes.
"Class A-1 Final Scheduled Distribution Date" shall mean the July
1997 Distribution Date.
"Class A-1 Noteholder" shall mean the Person in whose name a Class
A-1 Note is registered on the Note Register.
"Class A-1 Notes" shall mean the $320,031,000 aggregate initial
principal amount Class A-1 5.67% Money Market Asset Backed Notes issued by the
Trust pursuant to the Indenture, substantially in the form of Exhibit A-1 to
the Indenture.
"Class A-1 Rate" shall mean 5.67% per annum. Interest with respect
to the Class A-1 Notes shall be computed on the basis of actual days elapsed
and a 360-day year for all purposes of the Basic Documents.
"Class A-2 Final Scheduled Distribution Date" shall mean the December
1998 Distribution Date.
"Class A-2 Noteholder" shall mean the Person in whose name a Class
A-2 Note is registered on the Note Register.
"Class A-2 Notes" shall mean the $283,049,000 aggregate initial
principal amount Class A-2 6.30% Asset Backed Notes issued by the Trust
pursuant to the Indenture, substantially in the form of Exhibit A-2 to the
Indenture.
"Class A-2 Rate" shall mean 6.30% per annum. Interest with respect
to the Class A-2 Notes shall be computed on the basis of a 360-day year
consisting of twelve 30-day months for all purposes of the Basic Documents.
"Class A-3 Final Scheduled Distribution Date" shall mean the November
1999 Distribution Date.
"Class A-3 Noteholder" shall mean the Person in whose name a Class
A-3 Note is registered on the Note Register.
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"Class A-3 Notes" shall mean the $219,119,000 aggregate initial
principal amount Class A-3 6.50% Asset Backed Notes issued by the Trust
pursuant to the Indenture, substantially in the form of Exhibit A-3 to the
Indenture.
"Class A-3 Rate" shall mean 6.50% per annum. Interest with respect
to the Class A-3 Notes shall be computed on the basis of a 360-day year
consisting of twelve 30-day months for all purposes of the Basic Documents.
"Class A-4 Final Scheduled Distribution Date" shall mean the
September 2000 Distribution Date.
"Class A-4 Noteholder" shall mean the Person in whose name a Class
A-4 Note is registered on the Note Register.
"Class A-4 Notes" shall mean the $184,607,000 aggregate initial
principal amount Class A-4 6.75% Asset Backed Notes issued by the Trust
pursuant to the Indenture, substantially in the form of Exhibit A-4 to the
Indenture.
"Class A-4 Rate" shall mean 6.75% per annum. Interest with respect
to the Class A-4 Notes shall be computed on the basis of a 360-day year
consisting of twelve 30-day months for all purposes of the Basic Documents.
"Clearing Agency" shall mean an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" shall mean a broker, dealer, bank,
other financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of securities
deposited with the Clearing Agency.
"Closing Date" shall mean June 20, 1996.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
Treasury Regulations promulgated thereunder.
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"Collateral" shall have the meaning specified in the Granting Clause
of the Indenture.
"Collection Account" shall mean the account or accounts established
and maintained as such pursuant to Section 4.1(a) of the Sale and Servicing
Agreement.
"Collection Period" shall mean each calendar month during the term of
this Agreement or, in the case of the initial Collection Period, the period
from the Cutoff Date to and including the last day of the month in which the
Cutoff Date occurred. Any amount stated "as of the close of business of the
last day of a Collection Period" shall give effect to the following calcula-
tions as determined as of the end of the day on such last day: 1) all
applications of collections, 2) all current and previous Payaheads, 3) all
applications of Payahead Balances, 4) all Advances and reductions of
Outstanding Advances and 5) all distributions.
"Collections" shall mean all amounts collected by the Servicer (from
whatever source) on or with respect to the Receivables.
"Commission" shall mean the Securities and Exchange Commission.
"Computer Tape" shall mean the computer tape generated by the Seller
which provides information relating to the Receivables and which was used by
the Seller in selecting the Receivables conveyed to the Trust hereunder.
"Corporate Trust Office" shall mean, (i) with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located at
222 Delaware Avenue, Wilmington, Delaware 19801 or at such other address as
the Owner Trustee may designate from time to time by notice to the
Certificateholders and the Depositor, or the principal corporate trust office
of any successor Owner Trustee (the address of which the successor Owner
Trustee will notify the Certificateholders and the Depositor); and (ii) with
respect to the Indenture Trustee, the principal corporate trust office of the
Indenture Trustee located at 450 West 33rd Street, New York, New York 10001, or
at such other address as the Indenture Trustee may designate from time to time
by
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notice to the Noteholders and the Issuer, or the principal corporate trust
office of any successor Indenture Trustee (the address of which the successor
Indenture Trustee will notify the Noteholders and the Issuer).
"Credit Enhancement Percentage" shall mean, with respect to any
Distribution Date, the sum of the Overcollateralization Percentage and the
Reserve Percentage with respect to such Distribution Date.
"Cutoff Date" shall mean June 1, 1996.
"Dealer" shall mean the dealer who sold a Financed Vehicle and who
originated and assigned the respective Receivable to Ford Credit under an
existing agreement between such dealer and Ford Credit.
"Dealer Recourse" shall mean, with respect to a Receivable (i) any
amount paid by a Dealer or credited against a reserve established for, or held
on behalf of, a Dealer in excess of that portion of finance charges rebated to
the Obligor which is attributable to the Dealer's participation, if any, in the
Receivable, and (ii) all recourse rights against the Dealer which originated
the Receivable and any successor Dealer.
"Default" shall mean any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
"Definitive Notes" shall have the meaning specified in Section 2.11
of the Indenture.
"Delivery", when used with respect to Reserve Account Property, shall
mean:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9-105(1)(i) of the UCC and are
susceptible of physical delivery, transfer thereof to the Indenture
Trustee or its nominee or custodian by physical delivery to the Indenture
Trustee or its nominee or custodian endorsed to, or registered in the name
of, the Indenture Trustee or its nominee or custodian or endorsed in
blank, and, with respect to a certificated security (as defined
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in Section 8-102 of the UCC) transfer thereof (i) by delivery of such
certificated security endorsed to, or registered in the name of, the
Indenture Trustee or its nominee or custodian or endorsed in blank to a
financial intermediary (as defined in Section 8-313 of the UCC) and the
making by such financial intermediary of entries on its books and records
identifying such certificated securities as belonging to the Indenture
Trustee or its nominee or custodian and the sending by such financial
intermediary of a confirmation of the purchase of such certificated
security by the Indenture Trustee or its nominee or custodian, or (ii)
by delivery thereof to a "clearing corporation" (as defined in Section
8-102(3) of the UCC) and the making by such clearing corporation of
appropriate entries on its books reducing the appropriate securities
account of the transferor and increasing the appropriate securities
account of a financial intermediary by the amount of such certificated
security, the identification by the clearing corporation of the cer-
tificated securities for the sole and exclusive account of the financial
intermediary, the maintenance of such certificated securities by such
clearing corporation or a "custodian bank" (as defined in Section
8-102(4) of the UCC) or the nominee of either subject to the clearing
corporation's exclusive control, the sending of a confirmation by the
financial intermediary of the purchase by the Indenture Trustee or its
nominee or custodian of such securities and the making by such financial
intermediary of entries on its books and records identifying such
certificated securities as belonging to the Indenture Trustee or its
nominee or custodian (all of the foregoing, "Physical Property"), and, in
any event, any such Physical Property in registered form shall be in the
name of the Indenture Trustee or its nominee or custodian; and such
additional or alternative procedures as may hereafter become appropriate
to effect the complete transfer of ownership of any such Reserve Account
Property to the Indenture Trustee or its nominee or custodian, con-
sistent with changes in applicable law or regulations or the
interpretation thereof;
(b) with respect to any securities issued by the U.S. Treasury, the
Federal Home Loan Mortgage
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Corporation or by the Federal National Mortgage Association that is a
book-entry security held through the Federal Reserve System pursuant to
federal book-entry regulations, the following procedures, all in
accordance with applicable law, including applicable federal regulations
and Articles 8 and 9 of the UCC: book-entry registration of such Reserve
Account Property to an appropriate book-entry account maintained with a
Federal Reserve Bank by a financial intermediary that is also a
"depository" pursuant to applicable federal regulations and issuance by
such financial intermediary of a deposit advice or other written
confirmation of such book-entry registration to the Indenture Trustee or
its nominee or custodian of the purchase by the Indenture Trustee or its
nominee or custodian of such book-entry securities; the making by such
financial intermediary of entries in its books and records identifying
such book-entry security held through the Federal Reserve System
pursuant to federal book-entry regulations as belonging to the Indenture
Trustee or its nominee or custodian and indicating that such custodian
holds such Reserve Account Property as agent for the Indenture Trustee or
its nominee or custodian; and such additional or alternative procedures as
may hereafter become appropriate to effect complete transfer of ownership
of any such Reserve Account Property to the Indenture Trustee or its
nominee or custodian, consistent with changes in applicable law or
regulations or the interpretation thereof; and
(c) with respect to any item of Reserve Account Property that is
an uncertificated security under Article 8 of the UCC and that is not
governed by clause (b) above, registration on the books and records of
the issuer thereof in the name of the financial intermediary, the sending
of a confirmation by the financial intermediary of the purchase by the
Indenture Trustee or its nominee or custodian of such uncertificated
security, the making by such financial intermediary of entries on its
books and records identifying such uncertificated certificates as
belonging to the Indenture Trustee or its nominee or custodian.
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"Depositor" shall mean the Seller in its capacity as Depositor under
the Trust Agreement.
"Determination Date" shall mean, with respect to any Collection
Period, the Business Day immediately preceding the following Distribution Date.
"Distribution Date" shall mean the fifteenth (15th) day of each
calendar month or, if such day is not a Business Day, the next succeeding
Business Day.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Equity Percentage" shall mean, with respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is equal
to the excess, if any, of the Pool Balance at the end of the preceding
Collection Period over the aggregate outstanding principal amount of the Notes
on such Distribution Date (after giving effect to payment of the Noteholders'
Principal Payment Amount on such Distribution Date) and the denominator of
which is equal to the Pool Balance at the end of the preceding Collection
Period.
"Event of Default" shall have the meaning specified in Section 5.1 of
the Indenture.
"Event of Servicing Termination" shall mean an event specified in
Section 8.1 of the Sale and Servicing Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Executive Officer" shall mean, with respect to any corporation, the
Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary or the
Treasurer of such corporation and, with respect to any partnership, any general
partner thereof.
"Expenses" shall have the meaning assigned to such term in Section
8.2 of the Trust Agreement.
"Final Scheduled Distribution Date" shall mean the December 2001
Distribution Date.
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"Final Scheduled Maturity Date" shall mean June 30, 2001.
"Financed Vehicle" shall mean a new or used automobile or light
truck, together with all accessions thereto, securing an Obligor's indebtedness
under the respective Receivable.
"Ford Credit" shall mean Ford Motor Credit Company, a Delaware
corporation.
"General Partner" shall mean Ford Credit Auto Receivables two,
inc., a delaware corporation, or any substitute General Partner under the
Limited Partnership Agreement.
"Grant" shall mean to mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create, and to grant a
lien upon and a security interest in and right of set-off against, and to
deposit, set over and confirm pursuant to the Indenture. A Grant of the
Collateral or of any other agreement or instrument shall include all rights,
powers and options (but none of the obligations) of the granting party
thereunder, including the immediate and continuing right to claim for, collect,
receive and give receipt for principal and interest payments in respect of the
Collateral and all other monies payable thereunder, to give and receive notices
and other communications, to make waivers or other agreements, to exercise
all rights and options, to bring Proceedings in the name of the granting party
or otherwise, and generally to do and receive anything that the granting party
is or may be entitled to do or receive thereunder or with respect thereto.
"Indemnified Parties" shall have the meaning assigned to such term in
Section 8.2 of the Trust Agreement.
"Indenture" shall mean the Indenture, dated as of June 1, 1996, by
and between the Trust and the Indenture Trustee.
"Indenture Trustee" shall mean Chemical Bank, a New York corporation,
not in its individual capacity but solely as Indenture Trustee under the
Indenture, or any successor Indenture Trustee under the Indenture.
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"Indenture Trust Estate" shall mean all money, instruments, rights
and other property that are subject or intended to be subject to the lien and
security interest of Indenture for the benefit of the Noteholders (including,
without limitation, all property and interests Granted to the Indenture
Trustee), including all proceeds thereof.
"Independent" shall mean, when used with respect to any specified
Person, that such Person (a) is in fact independent of the Issuer, any other
obligor on the Notes, the Seller and any Affiliate of any of the foregoing
Persons, (b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor, the Seller
or any Affiliate of any of the foregoing Persons and (c) is not connected
with the Issuer, any such other obligor, the Seller or any Affiliate of any of
the foregoing Persons as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions.
"Independent Certificate" shall mean a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1 of the
Indenture, made by an Independent appraiser or other expert appointed by an
Issuer Order and approved by the Indenture Trustee in the exercise of
reasonable care, and such opinion or certificate shall state that the signer
has read the definition of "Independent" in this Indenture and that the signer
is Independent within the meaning thereof.
"Initial Certificate Balance" shall mean, as the context so requires,
(i) with respect to all of the Certificates, $36,516,567 or (ii) with respect
to any Certificate, an amount equal to the initial denomination of such
Certificate.
"Initial Pool Balance" shall mean $1,043,322,567.00.
"Insolvency Event" shall mean, with respect to any Person, (i) the
making of a general assignment for the benefit of creditors, (ii) the filing of
a voluntary petition in bankruptcy, (iii) being adjudged a bankrupt or
insolvent, or having had entered against such Person
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an order for relief in any bankruptcy or insolvency proceeding, (iv) the filing
by such Person of a petition or answer seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under
any statute, law or regulation, (v) the filing by such Person of an answer or
other pleading admitting or failing to contest the material allegations of a
petition filed against such Person in any proceeding specified in (vii)
below, (vi) seeking, consent to or acquiescing in the appointment of a trustee,
receiver or liquidator of such Person or of all or any substantial part of the
assets of such Person or (vii) the failure to obtain dismissal within 60 days
of the commencement of any proceeding against such Person seeking
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation, or the
entry of any order appointing a trustee, liquidator or receiver of such Person
or of such Person's assets or any substantial portion thereof.
"Interest Period" shall mean, with respect to any Distribution Date
(i) with respect to the Class A-1 Notes, from and including the Closing Date
(in the case of the first Distribution Date) or from and including the most
recent Distribution Date on which interest has been paid to but excluding the
following Distribution Date and (ii) with respect to each Class of Notes
other than the Class A-1 Notes, from and including the Closing Date (in the
case of the first Distribution Date) or from and including the fifteenth day of
the calendar month preceding each Distribution Date to but excluding the
fifteenth day of the following calendar month.
"IRS" shall mean the Internal Revenue Service.
"Issuer" shall mean the Trust unless a successor replaces it and,
thereafter, means the successor and for purposes of any provision contained in
the Indenture and required by the TIA, each other obligor on the Notes.
"Issuer Order" and "Issuer Request" shall mean a written order or
request signed in the name of the Issuer by any one of its Authorized Officers
and delivered to the Indenture Trustee.
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"Lien" shall mean a security interest, lien, charge, pledge, equity,
or encumbrance of any kind other than tax liens, mechanics' liens, and any
liens which attach to the respective Receivable by operation of law.
"Limited Partnership Act" shall mean the Delaware Revised Uniform
Limited Partnership Act, Chapter 17 of Title 6 of the Delaware Code, 17
Delaware Code Section 101 et seq., as amended.
"Limited Partnership Agreement" shall mean the Amended and Restated
Agreement of Limited Partnership of Ford Credit Auto Receivables Two L.P.,
dated as of June 1, 1996, by and between Ford Credit Auto Receivables Two,
Inc., as general partner, and Ford Credit, as limited partner.
"Liquidated Receivable" shall mean a Receivable which, by its terms,
is in default and as to which the Servicer has determined, in accordance with
its customary servicing procedures, that eventual payment in full is unlikely
or has repossessed and disposed of the Financed Vehicle.
"Liquidation Proceeds" shall mean the monies collected from whatever
source, during the respective Collection Period, on a Liquidated Receivable,
net of the sum of any amounts expended by the Servicer for the account of the
Obligor plus any amounts required by law to be remitted to the Obligor.
"Minimum Specified Reserve Balance" shall mean, with respect to any
Distribution Date, the lesser of (i) $7,824,919.25 and (ii) the aggregate
outstanding principal amount of the Notes and Certificate Balance (after giving
effect to any distributions on the Securities on such Distribution Date).
"Monthly Remittance Condition" shall have the meaning specified in
Section 4.1(e) of the Sale and Servicing Agreement.
"Moody's" shall mean Moody's Investors Service, Inc.
"Note Depository Agreement" shall mean the agreement dated June 20,
1996, by and among the Trust,
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the Indenture Trustee and The Depository Trust Company, as the initial Clearing
Agency, relating to the Notes, substantially in the form of Exhibit B to the
Indenture.
"Noteholder" shall mean the Person in whose name a Note is registered
on the Note Register.
"Noteholders' Accelerated Principal" shall mean, with respect to any
Distribution Date, the portion, if any, of Available Funds remaining for such
Distribution Date after giving effect to the payment of (i) the Servicing Fee
and all unpaid Servicing Fees from prior Collection Periods, (ii) the Accrued
Note Interest, (iii) the Noteholders' Regular Principal, (iv) the Accrued
Certificate Interest and (v) the amount, if any, required to be deposited in
the Reserve Account on such Distribution Date; provided, however, that on each
Distribution Date after the Distribution Date on which the Class A-1 Notes are
paid in full, the Noteholders' Accelerated Principal shall not exceed the
amount, if any, that when applied as a payment of principal on the Notes (after
giving effect to payments of Noteholders' Regular Principal on such
Distribution Date) would cause the Overcollateralization Amount (after giving
effect to any distributions on the Securities on such Distribution Date) to
exceed the excess, if any, of (i) 5.00% of the Pool Balance at the end of the
preceding Collection Period over (ii) the Minimum Specified Reserve Balance;
and provided further that the Noteholders' Accelerated Principal with respect
to any Distribution Date shall not exceed the outstanding principal amount of
all the Notes (after giving effect to payments of Noteholders' Regular Princi-
pal on such Distribution Date).
"Noteholders' Interest Carryover Shortfall" shall mean, with respect
to any Distribution Date, the excess of the Noteholders' Monthly Accrued
Interest for the preceding Distribution Date and any outstanding Noteholders'
Interest Carryover Shortfall on such preceding Distribution Date, over the
amount in respect of interest that is actually deposited in the Note Payment
Account on such preceding Distribution Date, plus interest on the amount of
interest due but not paid to Noteholders on the preceding Distribution Date, to
the extent permitted by law, at the respective Note Interest Rates borne by
each Class of the Notes for the related Interest Period plus 2.00% per annum.
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"Noteholders' Monthly Accrued Interest" shall mean, with respect to
any Distribution Date, the aggregate interest accrued for the related Interest
Period on all Classes of Notes at the respective Note Interest Rate for each
Class and for the applicable number of days on the outstanding principal amount
of the Notes of each such Class on the immediately preceding Distribution
Date after giving effect to all payments of principal to the Noteholders on or
prior to such Distribution Date (or, in the case of the first Distribution
Date, on the Closing Date).
"Noteholders' Principal Carryover Shortfall" shall mean, as of the
close of business on any Distribution Date, the excess of the Noteholders'
Principal Payment Amount and any outstanding Noteholders' Principal Carryover
Shortfall from the preceding Distribution Date over the amount in respect of
principal that is actually deposited in the Note Payment Account.
"Noteholders' Principal Payment Amount" shall mean, with respect to
any Distribution Date, the sum of (i) the Noteholders' Regular Principal for
such Distribution Date and (ii) the Noteholders' Accelerated Principal for such
Distribution Date.
"Noteholders' Regular Principal" shall mean, with respect to any
Distribution Date, the sum of the Regular Principal for such Distribution
Date and the Noteholders' Principal Carryover Shortfall as of the close of the
preceding Distribution Date; provided, however, that the Noteholders' Regular
Principal shall not exceed the outstanding principal amount of all the Notes;
and provided, further, that (i) the Noteholders' Regular Principal on the Class
A-1 Final Scheduled Distribution Date shall not be less than the amount that is
necessary to reduce the outstanding principal amount of the Class A-1 Notes to
zero; (ii) the Noteholders' Regular Principal on the Class A-2 Final Sched-
uled Distribution Date shall not be less than the amount that is necessary to
reduce the outstanding principal amount of the Class A-2 Notes to zero; (iii)
the Noteholders' Regular Principal on the Class A-3 Final Scheduled
Distribution Date shall not be less than the amount that is necessary to reduce
the outstanding principal amount of the Class A-3 Notes to zero; and (iv) the
Noteholders' Regular Principal on the Class A-4 Final Scheduled Dis-
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tribution Date shall not be less than the amount that is necessary to reduce
the outstanding principal amount of the Class A-4 Notes to zero.
"Note Indemnification Agreement" shall mean the Note Indemnification
Agreement, dated as June 13, 1996, by and between Ford Credit and the Note
Underwriters.
"Note Interest Rate" shall mean the Class A-1 Rate, the Class A-2
Rate, the Class A-3 Rate or the Class A-4 Rate, as applicable.
"Note Owner" shall mean, with respect to any Book-Entry Note, the
Person who is the beneficial owner of such Book-Entry Note, as reflected on the
books of the Clearing Agency or on the books of a Person maintaining an account
with such Clearing Agency (directly as a Clearing Agency Participant or as an
indirect participant, in each case in accordance with the rules of such
Clearing Agency).
"Note Paying Agent" shall mean the Indenture Trustee or any other
Person that meets the eligibility standards for the Indenture Trustee specified
in Section 6.11 of the Indenture and is authorized by the Issuer to make
payments to and distributions from the Collection Account and the Note Payment
Account, including payment of principal of or interest on the Notes on behalf
of the Issuer.
"Note Payment Account" shall mean the account established and
maintained as such pursuant to Section 4.1(b) of the Sale and Servicing
Agreement.
"Note Pool Factor" shall mean, with respect to each Class of Notes as
of the close of business on the last day of a Collection Period, a seven-digit
decimal figure equal to the outstanding principal balance of such Class of
Notes (after giving effect to any reductions thereof to be made on the immedi-
ately following Distribution Date) divided by the original outstanding
principal balance of such Class of Notes. The Note Pool Factor will be
1.0000000 as of the Closing Date; thereafter, the Note Pool Factor will decline
to reflect reductions in the outstanding principal amount of such Class of
Notes.
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"Note Register" and "Note Registrar" shall have the respective
meanings specified in Section 2.5 of the Indenture.
"Note Underwriters" shall mean the underwriters named in Schedule I
to the Note Underwriting Agreement.
"Note Underwriting Agreement" shall mean the Note Underwriting
Agreement between the Seller and CS First Boston Corporation, as representative
of the several Note Underwriters.
"Notes" shall mean the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes and the Class A-4 Notes, collectively.
"Obligor" on a Receivable shall mean the purchaser or co-purchasers
of the Financed Vehicle or any other Person who owes payments under the
Receivable (not including any Dealer in respect of Dealer Recourse).
"Officer's Certificate" shall mean (i) with respect to the Trust, a
certificate signed by any Authorized Officer of the Trust and (ii) with respect
to the Seller or the Servicer, a certificate signed by the chairman of the
board, the president, any executive vice president, any vice president, the
treasurer, any assistant treasurer, or the controller of the Seller or the
Servicer, as applicable.
"Opinion of Counsel" shall mean a written opinion of counsel which
counsel shall be acceptable to the Indenture Trustee, the Owner Trustee or the
Rating Agencies, as applicable.
"Optional Purchase Percentage" shall mean 10%.
"Outstanding" shall mean with respect to the Notes, as of the date of
determination, all Notes theretofore authenticated and delivered under the
Indenture except:
Notes theretofore cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation;
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Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Indenture
Trustee or any Note Paying Agent in trust for the Noteholders of such
Notes (provided, however, that if such Notes are to be redeemed,
notice of such redemption has been duly given pursuant to this
Indenture or provision for such notice has been made, satisfactory to
the Indenture Trustee); and
Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Indenture Trustee is presented that any
such Notes are held by a bona fide purchaser;
provided, that in determining whether the Noteholders of Notes evidencing the
requisite principal amount of the Notes Outstanding have given any request,
demand, authorization, direction, notice, consent, or waiver under any Basic
Document, Notes owned by the Issuer, any other obligor upon the Notes, the
Seller, the Servicer or any Affiliate of any of the foregoing Persons shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Indenture Trustee shall be protected in relying on any such
request, demand, authorization, direction, notice, consent, or waiver, only
Notes that a Responsible Officer of the Indenture Trustee knows to be so owned
shall be so disregarded. Notes so owned that have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction
of the Indenture Trustee the pledgee's right so to act with respect to such
Notes and that the pledgee is not the Issuer, any other obligor upon the Notes,
the Seller, the Servicer or any Affiliate of any of the foregoing Persons.
"Outstanding Advances" shall mean either Outstanding Precomputed
Advances or Outstanding Simple Interest Advances or both, as applicable.
"Outstanding Precomputed Advances" on the Precomputed Receivables
shall mean the sum, as of the close of business on the last day of a Collection
Period,
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of all Precomputed Advances as reduced as provided in Section 4.4(a) of the
Sale and Servicing Agreement.
"Outstanding Simple Interest Advances" on the Simple Interest
Receivables shall mean the sum, as of the close of business on the last day of
a Collection Period, of all Simple Interest Advances as reduced as provided in
Section 4.4(b) of the Sale and Servicing Agreement.
"Overcollateralization Amount" shall mean, with respect to any
Distribution Date, the excess, if any, of the Pool Balance at the end of the
preceding Collection Period over the sum of the aggregate outstanding principal
amount of the Notes and the Certificate Balance on such Distribution Date
(after giving effect to any distributions made on such Distribution Date).
"Overcollateralization Percentage" shall mean, with respect to any
Distribution Date, the percentage equivalent of a fraction, the numerator of
which is equal to the Overcollateralization Amount with respect to such
Distribution Date and the denominator of which is equal to the Pool Balance at
the end of the preceding Collection Period.
"Owner Trustee" shall mean PNC Bank, Delaware, a Delaware banking
corporation, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement, or any successor Owner Trustee under the Trust
Agreement.
"Owner Trust Estate" shall mean all right, title and interest of the
Trust in, to and under the property and rights assigned to the Trust pursuant
to Article II of the Sale and Servicing Agreement.
"Payahead" on a Receivable shall mean the amount, as of the close of
business on the last day of a Collection Period, specified in Section 4.3 of
the Sale and Servicing Agreement with respect to such Receivable.
"Payahead Account" shall mean the account established and maintained
as such pursuant to Section 4.1(d) of the Sale and Servicing Agreement.
"Payahead Balance" on a Receivable shall mean the sum, as of the
close of business on the last day of a
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Collection Period, of all Payaheads made by or on behalf of the Obligor with
respect to such Receivable (including any amount paid by or on behalf of the
Obligor prior to the Cutoff Date that is due on or after the Cutoff Date and
was not used to reduce the principal balance of such Receivable), as reduced by
applications of previous Payaheads with respect to such Receivable, pursuant to
Sections 4.3 and 4.4 of the Sale and Servicing Agreement.
"Permitted Investments" shall mean, on any date of determination,
book-entry securities, negotiable instruments or securities represented by
instruments in bearer or registered form with maturities not exceeding the
Business Day preceding the next Distribution Date which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any state thereof (or any domestic branch of a
foreign bank) and subject to supervision and examination by Federal or
State banking or depository institution authorities; provided, however,
that at the time of the investment or contractual commitment to invest
therein, the commercial paper or other short-term unsecured debt
obligations (other than such obligations the rating of which is based on
the credit of a Person other than such depository institution or trust
company) thereof shall have a credit rating from each of the Rating
Agencies in the highest investment category granted thereby;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each of the Rating
Agencies in the highest investment category granted thereby;
(d) investments in money market funds having a rating from each of
the Rating Agencies in the highest investment category granted thereby
(including funds for which the Indenture Trustee or the Owner
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Trustee or any of their respective Affiliates is investment manager or
advisor);
(e) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of America
or any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States of America, in
either case entered into with a depository institution or trust company
(acting as principal) described in clause (b); and
(g) any other investment with respect to which the Issuer or the
Servicer has received written notification from the Rating Agencies that
the acquisition of such investment as a Permitted Investment will not
result in a withdrawal or downgrading of the ratings on the Notes or the
Certificates.
"Person" shall mean any individual, corporation, estate, partnership,
joint venture, association, joint stock company, trust, unincorporated
organization, or government or any agency or political subdivision thereof.
"Physical Property" shall have the meaning assigned to such term in
the definition of "Delivery" above.
"Pool Balance" as of the close of business of the last day of a
Collection Period shall mean the aggregate Principal Balance of the Receivables
(excluding Purchased Receivables and Liquidated Receivables).
"Pool Factor" as of the last day of a Collection Period shall mean a
seven-digit decimal figure equal to the Pool Balance divided by the Initial
Pool Balance.
"Precomputed Advance" shall mean the amount, as of the last day of a
Collection Period, which the Servicer is required to advance on the respective
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Precomputed Receivable pursuant to Section 4.4(a) of the Sale and Servicing
Agreement.
"Precomputed Receivable" shall mean any Receivable under which the
portion of a payment allocable to earned interest (which may be referred to in
the related contract as an add-on finance charge) and the portion allocable to
the Amount Financed are determined according to the sum of periodic balances or
the sum of monthly balances or any equivalent method, or which is an Actuarial
Receivable.
"Predecessor Note" shall mean, with respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note and, for purposes of this definition, any
Note authenticated and delivered under Section 2.6 of the Indenture in lieu of
a mutilated, lost, destroyed or stolen Note shall be deemed to evidence the
same debt as the mutilated, lost, destroyed or stolen Note.
"Prepayment Date" shall mean, with respect to a prepayment of the
Certificates pursuant to Section 9.3(a) of the Trust Agreement or a
distribution to Certificateholders pursuant to Section 9.1(c) of the Trust
Agreement, the Distribution Date specified by the Owner Trustee pursuant to
said Section 9.3(a) or 9.1(c), as applicable.
"Prepayment Price" shall mean an amount equal to the Certificate
Balance plus accrued and unpaid interest thereon at the Certificate Rate plus
interest on any overdue interest at the Certificate Rate (to the extent lawful)
to but excluding the Redemption Date.
"Principal Balance" of a Receivable, as of the close of business on
the last day of a Collection Period, shall mean the Amount Financed minus the
sum of (a) in the case of a Precomputed Receivable, that portion of all
Scheduled Payments due on or prior to such day allocable to principal using the
actuarial or constant yield method, (b) in the case of a Simple Interest
Receivable, that portion of all Scheduled Payments actually received on or
prior to such date allocable to principal using the Simple Interest Method, (c)
any refunded portion of extended warranty protection plan costs, or of physical
damage, credit life, or disability insurance premiums
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included in the Amount Financed, (d) any payment of the Purchase Amount with
respect to the Receivable allocable to principal and (e) any prepayment in full
or any partial prepayments applied to reduce the principal balance of the
Receivable.
"Proceeding" shall mean any suit in equity, action at law or other
judicial or administrative proceeding.
"Program" shall have the meaning specified in Section 3.11 of the
Sale and Servicing Agreement.
"Prospectus" shall have the meaning specified in the Note
Underwriting Agreement.
"Purchase Agreement" shall mean the Purchase Agreement, dated as of
June 1, 1996, by and between the Seller and Ford Credit.
"Purchase Amount" shall mean the amount, as of the close business on
the last day of a Collection Period, required to be paid by an Obligor to
prepay in full the respective Receivable under the terms thereof (which
amount shall include a full month's interest, in the month of payment, at the
Annual Percentage Rate).
"Purchased Receivable" shall mean a Receivable purchased as of the
close of business on the last day of the respective Collection Period by the
Servicer pursuant to Section 3.7 of the Sale and Servicing Agreement or by the
Seller pursuant to Section 2.2 of the Purchase Agreement.
"Purchaser" shall mean the Seller in its capacity as Purchaser under
the Purchase Agreement.
"Qualified Institution" shall mean any depository institution
organized under the laws of the United States of America or any one of the
states thereof or incorporated under the laws of a foreign jurisdiction with a
branch or agency located in the United States of America or one of the states
thereof and subject to supervision and examination by federal or state banking
authorities which at all times has a short-term deposit rating of P-1 by
Moody's and A-1+ by Standard & Poor's and, in the case of any such institution
organized under
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the laws of the United States of America, whose deposits are insured by the
Federal Deposit Insurance Corporation or any successor thereto.
"Qualified Trust Institution" shall mean the corporate trust
department of PNC Bank, Delaware, Chemical Bank, or any institution organized
under the laws of the United States of America or any one of the states thereof
or incorporated under the laws of a foreign jurisdiction with a branch or
agency located in the United States of America or one of the states thereof and
subject to supervision and examination by federal or state banking authorities
which at all times (i) is authorized under such laws to act as a trustee or in
any other fiduciary capacity, (ii) holds not less than one billion dollars in
assets in its fiduciary capacity, and (iii) has a long-term deposit rating of
not less than Baa3 from Moody's.
"Rating Agency" shall mean each of the nationally recognized
statistical rating organizations designated by the Seller or an Affiliate to
provide a rating on the Notes or the Certificates which is then rating such
Notes or Certificates. If no such organization or successor is any longer in
existence, "Rating Agency" shall be a nationally recognized statistical rating
organization or other comparable Person designated by the Seller or an
Affiliate, notice of which designation shall be given to the Indenture Trustee,
the Owner Trustee and the Servicer.
"Rating Agency Condition" shall mean, with respect to any action,
that each Rating Agency shall have been given prior notice thereof and that
each of the Rating Agencies shall have notified the Seller, the Servicer, the
Owner Trustee and the Indenture Trustee in writing that such action will not
result in a reduction or withdrawal of the then current rating of the Notes or
the Certificates.
"Realized Losses" shall mean, the excess of the Principal Balance
of any Liquidated Receivable over Liquidation Proceeds to the extent
allocable to principal received in the Collection Period.
"Receivable" shall mean any retail installment sale contract which
shall appear on the Schedule of Re-
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ceivables and any amendments, modifications or supplements to such retail
installment sale contract which has not been released by the Indenture Trustee
and the Owner Trustee from the Trust.
"Receivable Files" shall mean the documents specified in Section 2.4
of the Sale and Servicing Agreement.
"Receivables Purchase Price" shall mean the fair market value of the
Receivables on the Closing Date, as mutually agreed by the Seller and Ford
Credit.
"Record Date" shall mean, (i) with respect to any Distribution Date
or Redemption Date and any Note, the close of business on the day prior to such
Distribution Date or Redemption Date or, with respect to any Definitive Note
the last day of the month preceding the month in which such Distribution Date
or Redemption Date occurs and (ii) with respect to any Distribution Date or
Prepayment Date and any Certificate, the close of business on the last day of
the month preceding the month in which such Distribution Date or Prepayment
Date occurs.
"Redemption Date" shall mean with respect to a redemption of the
Notes pursuant to Section 10.1(a) of the Indenture or a payment to Noteholders
pursuant to Section 10.1(b) of the Indenture, the Distribution Date specified
by the Servicer pursuant to said Section 10.1(a) or (b), as applicable.
"Redemption Price" shall mean an amount equal to the unpaid principal
amount of each Class of Notes plus accrued and unpaid interest thereon at the
applicable Note Interest Rate plus interest on any overdue interest at the
applicable Note Interest Rate plus 2.00% per annum (to the extent lawful) to
but excluding the Redemption Date.
"Registered Noteholder" shall mean the Person in whose name a Note is
registered on the Note Register on the applicable Record Date.
"Regular Principal" shall mean, with respect to any Distribution
Date, the sum of (a) all scheduled payments of principal and the principal
portion of all prepayments in full (and certain partial prepayments)
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collected with respect to Precomputed Receivables (including amounts withdrawn
from the Payahead Account but excluding amounts deposited into the Payahead
Account), (b) the principal portion of all payments collected with respect to
Simple Interest Receivables, and (c) the principal balance of each Receivable
that became a Purchased Receivable or a Liquidated Receivable, each with
respect to the preceding Collection Period.
"Related Agreements" shall have the meaning specified in the recitals
to the Administration Agreement.
"Required Rating" shall mean a rating on (i) short-term unsecured
debt obligations of P-1 by Moody's and (ii) short-term unsecured debt
obligations of A-1+ by Standard & Poor's; and any requirement that short-term
unsecured debt obligations have the "Required Rating" shall mean that such
short-term unsecured debt obligations have the foregoing required ratings from
each of such Rating Agencies.
"Reserve Account" shall mean the account established and maintained
as such pursuant to Section 4.7(a) of the Sale and Servicing Agreement.
"Reserve Account Property" shall have the meaning specified in
Section 4.7(a) of the Sale and Servicing Agreement.
"Reserve Balance" shall mean, with respect to any Distribution Date,
the amount on deposit in the Reserve Account (after giving effect to any
deposits thereto and withdrawals and releases therefrom on such Distribution
Date).
"Reserve Initial Deposit" shall mean, with respect to the Closing
Date, $30,256,354.44.
"Reserve Percentage" shall mean, with respect to any Distribution
Date, the percentage equivalent of a fraction, the numerator of which is the
Reserve Balance on such Distribution Date and the denominator of which is the
Pool Balance at the end of the preceding Collection Period.
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"Revised Article 8" shall have the meaning specified in Section
4.7(a) of the Sale and Servicing Agreement.
"Rule of 78's Payment" shall mean, with respect to any Precomputed
Receivable which provides that, if such Receivable is prepaid in full, the
amount payable will be determined according to the Rule of 78's method, an
amount (if positive) equal to (i) the amount due allocating payments between
principal and interest based upon the Rule of 78's minus (ii) the amount that
would be due allocating payments between principal and interest from the date
of origination of the Receivable using the Actuarial Method.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement, dated as of June 1, 1996, by and among the Trust, as issuer, the
Depositor, as seller, and Ford Credit, as servicer.
"Scheduled Payment" shall mean, for any Collection Period for any
Receivable, the amount indicated in such Receivable as required to be paid by
the Obligor in such Collection Period (without giving effect to deferments of
payments pursuant to Section 3.2 of the Sale and Servicing Agreement or any re-
scheduling in any insolvency or similar proceedings).
"Schedule of Receivables" shall mean the list identifying the
Receivables attached as Schedule A to the Purchase Agreement, the Sale and
Servicing Agreement and the Indenture (which list may be in the form of
microfiche).
"Secretary of State" shall mean the Secretary of State of the State
of Delaware.
"Securities" shall mean the Notes and the Certificates, collectively.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securityholders" shall mean the Noteholders and the
Certificateholders, collectively.
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"Seller" shall mean Ford Credit Auto Receivables Two L.P. as the
seller of the Receivables under the Sale and Servicing Agreement, and each
successor to Ford Credit Auto Receivables Two L.P. (in the same capacity)
pursuant to Section 6.3 of the Sale and Servicing Agreement.
"Servicer" shall mean Ford Credit as the servicer of the Receivables,
and each successor to Ford Credit (in the same capacity) pursuant to Section
7.3 of the Sale and Servicing Agreement.
"Servicer's Certificate" shall mean a certificate completed and
executed by the Servicer by any executive vice president, any vice president,
the treasurer, any assistant treasurer, the controller, or any assistant
controller of the Servicer pursuant to Section 3.9 of the Sale and Servicing
Agreement.
"Servicing Fee" shall mean, with respect to a Collection Period,
the fee payable to the Servicer for services rendered during such Collection
Period, which shall be equal to one-twelfth of the Servicing Fee Rate
multiplied by the Pool Balance as of the first day of the Collection Period.
"Servicing Fee Rate" shall mean 1.0% per annum.
"Simple Interest Advance" means the amount of interest, as of the
close of business on the last day of a Collection Period, which the Servicer is
required to advance on the Simple Interest Receivables pursuant to Section
4.4(b) of the Sale and Servicing Agreement.
"Simple Interest Method" shall mean the method of allocating a fixed
level payment to principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the fixed rate
of interest multiplied by the unpaid principal balance multiplied by the period
of time elapsed since the preceding payment of interest was made.
"Simple Interest Receivable" shall mean any Receivable under which
the portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
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"Specified Reserve Balance" shall mean, subject to reduction as
described below, the greater of (i) the excess, if any, of (A) 5.00% of the
Pool Balance at the end of the preceding Collection Period over (B) the
Overcollateralization Amount (after giving effect to any distributions on the
Securities on such Distribution Date), and (ii) the Minimum Specified Reserve
Balance; provided that the Specified Reserve Balance may be reduced from time
to time if the Rating Agencies have delivered prior written notice to the
Seller, the Servicer, the Indenture Trustee and the Owner Trustee that such
reduction will not result in a reduction, withdrawal or qualification of each
Rating Agency's then current ratings of each Class of the Notes and the
Certificates.
"Standard & Poor's" shall mean Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc.
"State" means any state or commonwealth of the United State of
America, or the District of Columbia.
"Successor Servicer" shall have the meaning specified in Section
3.7(e) of the Indenture.
"Supplemental Servicing Fee" shall mean, the fee payable to the
Servicer for certain services rendered during the respective Collection Period,
determined pursuant to and defined in Section 3.8 of the Sale and Servicing
Agreement.
"Total Required Payment" shall mean, with respect to any Distribution
Date, the sum of the Servicing Fee and all unpaid Servicing Fees from prior
Collection Periods, the Accrued Note Interest, the Noteholders' Regular
Principal, the Accrued Certificate Interest and, after all the Notes have been
paid in full, the Certificateholders' Regular Principal; provided, however,
that following the occurrence and during the continuation of an Event of
Default which has resulted in an acceleration of the Notes or following an
Insolvency Event or a dissolution with respect to the Seller or the General
Partner, on any Distribution Date until the Distribution Date on which the
outstanding principal amount of all the Notes has been paid in full, the Total
Required Payment shall mean the sum of the Servicing Fee and all unpaid
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Servicing Fees from prior Collection Periods, the Accrued Note Interest and the
amount necessary to reduce the outstanding principal amount of all the Notes to
zero.
"Transfer" shall have the meaning specified in Section 3.3 of the
Trust Agreement.
"Treasury Regulations" shall mean regulations, including proposed
or temporary regulations, promulgated under the Code. References to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean Ford Credit Auto Owner Trust 1996-A, a Delaware
business trust established pursuant to the Trust Agreement.
"Trust Accounts" shall have the meaning specified in Section 4.7(a)
of the Sale and Servicing Agreement.
"Trust Agreement" shall mean the Amended and Restated Trust Agreement
dated as of June 1, 1996, by and between the Seller, as depositor, and the
Owner Trustee.
"Trust Indenture Act" or "TIA" shall mean the Trust Indenture Act of
1939, as amended, unless otherwise specifically provided.
"Trustee Officer" shall mean, with respect to the Indenture Trustee,
any officer within the Corporate Trust Office of the Indenture Trustee with
direct responsibility for the administration of the Indenture and the other
Basic Documents on behalf of the Indenture Trustee and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject and,
with respect to the Owner Trustee, any officer within the Corporate Trust
Office of the Owner Trustee with direct responsibility for the administration
of the Trust Agreement and the other Basic Documents on behalf of the Owner
Trustee.
"Trust Property" shall mean, collectively, (i) the Receivables; (ii)
with respect to Precomputed Receivables, monies due thereunder on or after the
Cutoff Date
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(including Payaheads) and, with respect to Simple Interest Receivables, monies
due or received thereunder on or after the Cutoff Date; (iii) the security
interests in the Financed Vehicles granted by Obligors pursuant to the
Receivables and any other interest of the Issuer in the Financed Vehicles; (iv)
rights to receive proceeds with respect to the Receivables from claims on any
physical damage, credit life, credit disability, or other insurance policies
covering Financed Vehicles or Obligors; (v) Dealer Recourse; (vi) all of the
Seller's rights to the Receivable Files; (vii) the Trust Accounts and the
Certificate Distribution Account and all amounts, securities, investments and
other property deposited in or credited to any of the foregoing and all
proceeds thereof; (viii) all of the Seller's rights under the Sale and
Servicing Agreement; (ix) all of the Seller's rights under the Purchase
Agreement, including the right of the Seller to cause Ford Credit to repurchase
Receivables from the Seller; (x) payments and proceeds with respect to the
Receivables held by the Servicer; (xi) all property (including the right to
receive Liquidation Proceeds) securing a Receivable (other than a Receivable
repurchased by the Servicer or purchased by the Seller); (xii) rebates of
premiums and other amounts relating to insurance policies and other items
financed under the Receivables in effect as of the Cutoff Date; and (xiii) all
present and future claims, demands, causes of action and choses in action in
respect of any or all of the foregoing and all payments on or under and all
proceeds of every kind and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion thereof, voluntary or
involuntary, into cash or other liquid property, all cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of any and
every kind and other forms of obligations and receivables, instruments and
other property which at any time constitute all or part of or are included in
the proceeds of any of the foregoing.
"UCC" shall mean the Uniform Commercial Code as in effect in any
relevant jurisdiction.
"Void Transfer" shall have the meaning specified in Section 3.3 of
the Trust Agreement.
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