<PAGE> 1
REGISTRATION NO. 333-1245
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FORD CREDIT AUTO RECEIVABLES TWO L.P.
(Originator of the Trusts described herein)
(Exact Name of Registrant as Specified in Its Charter)
A Delaware Limited Partnership
IRS Employer No. 38-
The American Road
Dearborn, Michigan 48121
(313) 322-3000
J. D. BRINGARD, ESQ.
Ford Motor Credit Company
The American Road
Dearborn, Michigan 48121
(313) 594-7742
(Name and Address of Agent for Service)
Copy to:
SUSAN M. CURTIS, ESQ.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
(212) 735-3000
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement as
determined by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act of 1933, please check
the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, please check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum
Title of Securities Amount to be Aggregate Price Aggregate Amount of
to be Registered Registered Per Unit (1) Offering Price (1) Registration Fee(2)
==============================================================================================================================
<S> <C> <C> <C> <C>
Asset Backed Securities . . . . . . . $5,000,000,000.00 100% $5,000,000,000.00 $1,724,137.93
==============================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) $344.83 of which was previously paid.
____________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
INTRODUCTORY NOTE
This Registration Statement contains (i) a form of Prospectus relating to
the offering of series of Asset Backed Notes and/or Asset Backed Certificates
by various Ford Credit Auto Trusts created from time to time by Ford Credit
Auto Receivables Two L.P. and (ii) two forms of Prospectus Supplement relating
to the offering by Ford Credit Auto Trust 199 - of the particular series of
Asset Backed Certificates or of Asset Backed Notes and Asset Backed
Certificates described therein. Each form of Prospectus Supplement relates
only to the securities described therein and is a form which may be used,
among others, by Ford Credit Auto Receivables Two L.P. to offer Asset Backed
Notes and/or Asset Backed Certificates under this Registration Statement.
<PAGE> 3
THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SHALL
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR
SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED _____ __, 1996
PROSPECTUS SUPPLEMENT
(To Prospectus dated , 1996)
$
FORD CREDIT AUTO OWNER TRUST 199 -
$ % [CLASS A-1] ASSET BACKED NOTES
[$ FLOATING RATE CLASS A-2 ASSET BACKED NOTES]
[$ % CLASS A-3 ASSET BACKED NOTES]
[$ % ASSET BACKED CERTIFICATES]
[Ford Logo]
FORD CREDIT AUTO RECEIVABLES TWO L.P.
SELLER
FORD MOTOR CREDIT COMPANY
SERVICER
The Ford Credit Auto Owner Trust 199 - (the "Trust") will be governed by
an Amended and Restated Trust Agreement, to be dated as of , 199 , between Ford
Credit Auto Receivables Two L.P. (the "Seller") and , as Owner Trustee.
The Trust will issue $ aggregate initial principal amount of [Class A-1]
% Asset Backed Notes (the "[Class A-1] Notes")[, $ aggregate initial
principal amount of Class A-2 Floating Rate Asset Backed Notes (the "Class A-2
Notes") and $ aggregate initial principal amount of Class A-3 % Asset
Backed Notes (the "Class A-3 Notes" and, together with the Class A-1 Notes and
the Class A-2 Notes, the "Notes")] pursuant to an Indenture to be dated as of
, 199 , between the Trust and , as Indenture Trustee. The Trust will
also issue $ aggregate initial principal balance of % Asset Backed
Certificates (the "Certificates" and, together with the Notes, the
"Securities"). The assets of the Trust will include a pool of motor vehicle
retail installment sale contracts (the "Receivables") secured by security
interests
(continued on following page)
PROSPECTIVE INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE INFORMATION SET
FORTH IN "RISK FACTORS" ON PAGE S- 19 HEREIN AND ON PAGE 12 OF THE ACCOMPANYING
PROSPECTUS.
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT BENE-
FICIAL INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT OBLIGATIONS
OF OR INTERESTS IN, AND ARE NOT GUARANTEED OR INSURED BY, FORD
CREDIT AUTO RECEIVABLES TWO L.P., FORD CREDIT AUTO RECEIVA-
BLES TWO, INC., FORD MOTOR CREDIT COMPANY, FORD MOTOR
COMPANY OR ANY OF THEIR RESPECTIVE AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRE-
SENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=================================================================================================================
UNDERWRITING PROCEEDS TO
PRICE TO PUBLIC (1) DISCOUNT THE SELLER (1)(2)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per [Class A-1] Note . . . . . . . . . % % %
- -----------------------------------------------------------------------------------------------------------------
[Per Class A-2 Note . . . . . . . . . . % % %]
- -----------------------------------------------------------------------------------------------------------------
[Per Class A-3 Note . . . . . . . . . . % % %]
- -----------------------------------------------------------------------------------------------------------------
[Per Certificate . . . . . . . . . . . % % %]
- -----------------------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . . . $ $ $
=================================================================================================================
</TABLE>
(1) Plus accrued interest, if any, from , 199 .
(2) Before deducting expenses, estimated to be $ .
The Notes and the Certificates are offered by the Underwriters when, as
and if issued and accepted by the Underwriters and subject to their right to
reject orders in whole or in part. It is expected that delivery of the Notes
and the Certificates will be made in book-entry form only through the Same Day
Funds Settlement System of The Depository Trust Company, or through Cedel Bank,
societe anonyme or the Euroclear System, on or about the Closing Date.
The date of this Prospectus Supplement is , 199 .
<PAGE> 4
(continued from previous page)
in the motor vehicles financed thereby, including certain monies due or
received thereunder on or after the related Cutoff Date (as defined herein),
which will be purchased by the Trust from the Seller on or prior to the
Closing Date, [monies on deposit in a trust account (the "Pre-Funding Account")
to be established with the Indenture Trustee] and certain other property, as
more fully described herein. See "Summary--The Trust Property" herein.
[Additional motor vehicle retail installment sale contracts (the "Subsequent
Receivables") will be purchased by the Trust from the Seller from time to time
on or before , 199 , from funds on deposit in the Pre-Funding Account.]
The Notes will be secured by the assets of the Trust pursuant to the Indenture.
Interest on [the] [all classes of] Notes [other than the Class A-2 Notes]
will accrue at the fixed per annum interest rates specified above. [The Class
A-2 Notes will accrue interest at a rate of % per annum for the period from
the Closing Date through 199 . Thereafter, the Class A-2 Notes will
accrue interest at a per annum rate equal to LIBOR plus %.] Interest on the
Notes will generally be payable [quarterly] on the day of each [month] [
, , and ] (each, a "[Distribution] [Payment] Date"), commencing
, 199 . Principal of the Notes will be payable on each [Distribution]
[Payment] Date to the extent described herein[; however, no principal will be
paid on the Class A-2 Notes until the Class A-1 Notes have been paid in full
and no principal will be paid on the Class A-3 Notes until the Class A-2 Notes
have been paid in full].
The Certificates will represent [fractional undivided] interests in the
Trust. Interest, to the extent of the Certificate Rate specified above, will
be distributed to the Certificateholders on [each Distribution Date] [the
day of each month (each, a "Distribution Date"), commencing ,
199 ]. Principal, to the extent described herein, will be distributed to the
Certificateholders on each Distribution Date commencing with the later of (i)
the Distribution Date next succeeding the Distribution Date on which the [Class
A-1] Notes are paid in full and (ii) the , 199 Distribution Date.
Distributions of principal and interest on the Certificates will be
subordinated in priority to payments due on the Notes [to the extent] [as]
described herein. In addition, upon 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 Ford Credit Auto Receivables Two, Inc., the general partner of the
Seller (the "General Partner"), distributions of any amounts on the
Certificates will be subordinated in priority of payment to payment in full of
principal of the Notes. [Moreover, upon any downgrading or withdrawal by any
Rating Agency of its rating of any class of Notes, no distributions of
principal on the Certificates will be made until all the Notes have been paid
in full, unless such rating has been restored.]
[The] [ Class A-1] Notes will be payable in full on the [Payment]
[Distribution] Date[, the Class A-2 Notes will be payable in full on the
[Payment] [Distribution] Date and the Class A-3 Notes will be payable in full
on the [Payment] [Distribution] Date. The final scheduled
Distribution Date with respect to the Certificates will be the Distri
bution Date. However, payment in full of [the] [a class of] Notes or of the
Certificates could occur earlier or later than such dates as described herein.
In addition, the [Class A-3] Notes will be subject to redemption in whole, but
not in part, and the Certificates will be subject to prepayment in whole, but
not in part, on any Distribution Date on which the Servicer exercises its
option to purchase the Receivables. The Servicer may purchase the Receivables
when the aggregate principal balance of the Receivables shall have declined to
10% or less of the initial aggregate principal balance of the Receivables
purchased by the Trust. [One or more classes of the Notes will be subject to
partial mandatory redemption and the Certificates may be subject to partial
mandatory prepayment, at a premium described herein, in the event that funds
remain in the Pre-Funding Account at the end of the Funding Period (as defined
herein).]
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT
THE OFFERING OF THE NOTES AND THE CERTIFICATES. ADDITIONAL INFORMATION IS
CONTAINED IN THE PROSPECTUS AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE NOTES OR
THE CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE NOTES
AND THE CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
REPORTS TO SECURITYHOLDERS
Unless and until Definitive Notes or Definitive Certificates are issued,
monthly and annual unaudited reports containing information concerning the
Receivables will be prepared by the Servicer and sent on behalf of the Trust
only to Cede & Co. ("Cede"), as nominee of The Depository Trust Company
("DTC") and registered holder of the Notes and the Certificates. See "Certain
Information Regarding the Securities--Book-Entry Registration" and "--Reports
to Securityholders" in the accompanying Prospectus (the "Prospectus"). Such
reports will not constitute financial statements prepared in accordance with
generally accepted accounting principles. The Seller, as originator of the
Trust, will file with the Securities and Exchange Commission (the "Commission")
such periodic reports as are required under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations of the
Commission thereunder.
S-2
<PAGE> 5
SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere herein and in the Prospectus. Certain
capitalized terms used herein are defined elsewhere in this Prospectus
Supplement on the pages indicated in the "Index of Terms" or, to the extent not
defined herein, have the meanings assigned to such terms in the Prospectus.
ISSUER . . . . . . . . . . . Ford Credit Auto Owner Trust 199 - (the
"Trust" or the "Issuer"), a Delaware
business trust established pursuant to a
trust agreement (as amended and restated on
the Closing Date and as amended and
supplemented thereafter, the "Trust
Agreement") dated as of , 199 ,
among the Seller and the Owner Trustee.
SELLER . . . . . . . . . . . Ford Credit Auto Receivables Two L.P., a
Delaware limited partnership (the
"Seller").
SERVICER . . . . . . . . . . Ford Motor Credit Company, a Delaware
corporation (the "Servicer" or "Ford
Credit").
INDENTURE TRUSTEE . . . . . . , as trustee under the Indenture
(the "Indenture Trustee").
OWNER TRUSTEE . . . . . . . . , as trustee under the Trust
Agreement (the "Owner Trustee").
THE NOTES . . . . . . . . . . The Trust will issue [ %] Asset Backed
Notes (the "Notes") pursuant to an
Indenture to be dated as of , 199 (as
amended and supplemented from time to time,
the "Indenture"), between the Issuer and the
Indenture Trustee[, as follows: (1) Class
A-1 % Asset-Backed Notes (the "Class A-1
Notes") in the aggregate initial principal
amount of $ ; (2) Class A-2
Floating Rate Asset Backed Notes (the
"Class A-2 Notes") in the aggregate initial
principal amount of $ ; and (3)
Class A-3 % Asset Backed Notes (the
"Class A-3 Notes") in the aggregate
initial principal amount of $ ].
The Notes will be secured by the assets of
the Trust pursuant to the Indenture.
The Notes will be available for purchase in
book entry form only in minimum
denominations of $1,000 and integral
multiples thereof. Note Owners will not
be entitled to receive Definitive Notes
except in the limited circumstances
described herein. See "Certain Information
Regarding the Securities--Definitive
Securities" in the Prospectus.
THE CERTIFICATES . . . . . . The Trust will issue % Asset-
Backed Certificates (the "Certificates"
and, together with the Notes, the
"Securities") with an aggregate initial
Certificate Balance of $ . The
Certificates will represent [fractional
undivided] interests in the Trust and will
be issued pursuant to the Trust Agreement.
S-3
<PAGE> 6
The Certificates will be available for
purchase in book entry form only in
minimum denominations of $1,000 and integral
multiples thereof. Certificate Owners will
not be entitled to receive Definitive
Certificates except in the limited
circumstances described herein. See
"Certain Information Regarding the
Securities--Definitive Securities" in the
Prospectus. The rights of the
Certificateholders to receive distributions
with respect to the Certificates will be
subordinated to the rights of the
Noteholders to receive principal and
interest on the Notes [to the extent] [as]
described herein.
THE TRUST PROPERTY . . . . . The property of the Trust includes (i) the
Receivables; (ii) with respect to
Precomputed Receivables, all monies due
thereunder on or after the related Cutoff
Date and with respect to Simple Interest
Receivables, all monies due or received
thereunder on or after the related Cutoff
Date; (iii) security interests in the
Financed Vehicles and any accessions
thereto; (iv) the rights to proceeds from
claims on certain physical damage, credit
life, credit disability or other insurance
policies, if any, covering the Financed
Vehicles or the Obligors; (v) any Dealer
Recourse; (vi) the Seller's rights to
certain documents and instruments relating
to the Receivables; (vii) such amounts as
from time to time may be held in one or
more accounts maintained pursuant to the
Sale and Servicing Agreement, as described
herein, including the Reserve Account[, the
Yield Supplement Account] [and the
Pre-Funding Account]; (viii) certain rights
under the Sale and Servicing Agreement [and
the Yield Supplement Agreement]; (ix)
certain rights under the Purchase Agreement,
including the right of the Seller to cause
Ford Credit to repurchase Receivables from
the Seller; (x) certain payments and
proceeds with respect to the Receivables
held by the Servicer; (xi) certain rebates
of premiums and other amounts relating to
certain insurance policies and other items
financed under the Receivables; [(xii) the
Interest Rate Cap;] [(xiii) the Interest
Rate Swap;] [(xiv) the Guaranteed Rate
Agreement;] and (xv) any and all proceeds of
the foregoing. The rights and benefits with
respect to such property will be assigned by
the Seller and the Owner Trustee to the
Indenture Trustee for the benefit of the
Securityholders. The property of the Trust
does not include the Payahead Account.
THE RECEIVABLES . . . . . . . On , 199 (the "Closing Date"),
the Trust will purchase Receivables (the
"[Initial] Receivables") having an aggregate
principal balance of approximately $
as of , 199 (the "[Initial] Cutoff
Date") from the Seller pursuant to a Sale
and Servicing Agreement to be dated as of
, 199 (as amended and supplemented from time
to time, the "Sale and Servicing
Agreement"), among the Trust, the Seller and
the Servicer. As of the [Initial] Cutoff
Date, the weighted average annual percentage
rate ("APR") of the [Initial] Receivables
was approximately %, the weighted average
remaining maturity of the [Initial]
Receivables was approximately months and
the weighted average original maturity of
the [Initial] Receivables was approximately
months.
[On and following the Closing Date, pursuant
to the Sale and Servicing Agreement, the
Seller will be obligated, subject only to
the availability thereof, to sell, and the
Trust will be obligated to purchase, subject
to the satisfaction of
S-4
<PAGE> 7
certain conditions set forth therein,
additional Receivables (the "Subsequent
Receivables") from time to time during the
Funding Period having an aggregate principal
balance equal to approximately $
(such amount being equal to an amount on
deposit in the Pre-Funding Account (the
"Pre-Funded Amount") on the Closing Date).
The Seller will designate as a cutoff date
(each a "Subsequent Cutoff Date") each date
as of which payments in respect of
particular Subsequent Receivables are
conveyed to the Trust. It is expected that
certain of the Subsequent Receivables
arising between the Initial Cutoff Date and
the Closing Date will be conveyed to the
Trust on the Closing Date and that other
Subsequent Receivables will be conveyed to
the Trust as frequently as daily thereafter
on dates specified by the Seller (each date
on which Subsequent Receivables are conveyed
to the Trust being referred to as a
"Subsequent Transfer Date") occurring during
the Funding Period. See "Description of
the Transfer and Servicing Agreements--Sale
and Assignment of Receivables; Subsequent
Receivables" herein.] [Coincident with each
such transfer of Subsequent Receivables,
the Yield Supplement Agreement will require
Ford Credit to deposit into the Yield
Supplement Account an amount equal to the
Additional Yield Supplement Amount, if any,
in respect of such Subsequent Receivables.
See "Description of the Transfer and
Servicing Agreements--Yield Supplement
Account; Yield Supplement Agreement"
herein.]
The [Initial] Receivables [and the
Subsequent Receivables] will be
purchased by the Seller from Ford Credit
pursuant to a Purchase Agreement between the
Seller and Ford Credit (as amended and
supplemented from time to time, the
"Purchase Agreement"). The [Initial]
Receivables have been selected[, and the
Subsequent Receivables will be selected,]
from the contracts owned by Ford Credit
based on the criteria specified in the
Sale and Servicing Agreement and
described herein and in the Prospectus. No
[Initial] Receivable has[, and no Subsequent
Receivable will have,] a scheduled maturity
later than (the "Final Scheduled
Maturity Date").
[Subsequent Receivables may be originated by
Ford Credit at a later date using credit
criteria different from those which were
applied to the Initial Receivables and may
be of a different credit quality and
seasoning. In addition, following the
transfer of Subsequent Receivables to the
Trust, the characteristics of the entire
pool of Receivables included in the Trust
may vary significantly from those of the
Initial Receivables. See "Risk Factors--The
Subsequent Receivables and the Pre-Funding
Account" and "The Receivables Pool" herein.]
The "Pool[/Pre-Funding] Balance" at any time
[will represent] [is the sum of (i)] the
aggregate principal balance of the
Receivables at the end of the preceding
Collection Period, after giving effect to
all payments (other than Payaheads) received
from Obligors, Liquidation Proceeds,
Advances and Purchase Amounts to be remitted
by the Servicer or the Seller, as the case
may be, all for such Collection Period and
all Realized Losses during such Collection
Period [(such amount, the "Pool Balance")
and (ii) the amount on deposit in the
Pre-Funding Account (excluding any
Investment Earnings)]. "Realized
S-5
<PAGE> 8
Losses" means the excess of the principal
balance of any Liquidated Receivable
over Liquidation Proceeds to the extent
allocable to principal.
TERMS OF THE NOTES . . . . . The principal terms of the Notes will be as
described below:
A. [DISTRIBUTION] [PAYMENT]
DATES . . . . . . . . . . . . Payments of interest and principal on the
Notes will be made [quarterly] on the
day of each [month] [ , , and
] or, if any such day is not a Business Day,
on the next succeeding Business Day (each, a
"[Distribution] [Payment] Date"),
commencing , 199 . [Under
certain limited circumstances, such
payments will be made monthly rather than
quarterly.] Payments will be made to
holders of record of the Notes (the
"Noteholders") as of the day immediately
preceding such [Distribution] [Payment] Date
or, if Definitive Notes are issued, as of
the day of the preceding month [(a
"Record Date")]. A "Business Day" is a day
other than a Saturday, a Sunday or a day on
which banking institutions or trust
companies in The City of New York are
authorized by law, regulation or executive
order to be closed.
B. NOTE INTEREST RATES . . . The [Class A-1] Notes will bear interest at
the rate of % per annum (the ["Note
Interest Rate"] ["Class A- 1 Rate"]) [and
the Class A-3 Notes will bear interest at
the rate of % per annum (the "Class A-3
Rate"). The rate of interest with respect to
the Class A-2 Notes (the "Class A-2 Rate"
and, together with the Class A-1 Rate and
the Class A-3 Rate, the "Note Interest
Rates") will be % per annum for the
period from the Closing Date to but
excluding the first [Distribution]
[Payment] Date, and will be equal to LIBOR
for the applicable Interest Reset Period
plus % for each [Distribution] [Payment]
Date thereafter[; provided that the Class
A-2 Rate shall not exceed % per annum]].
C. INTEREST . . . . . . . . On each [Distribution] [Payment] Date, the
Indenture Trustee will distribute pro
rata to Noteholders [of each class of Notes]
accrued interest at the [applicable] Note
Interest Rate generally to the extent of
funds available following payment of the
Servicing Fee from the Available Funds and
the Reserve Account. Interest on the
outstanding principal amount of the Notes
[of each class] will accrue at the
[applicable] Note Interest Rate from and
including the Closing Date (in the case of
the first [Distribution] [Payment] Date) or
from and including the most recent
[Distribution] [Payment] Date on which
interest has been paid to but excluding the
following [Distribution] [Payment] Date
(each an "Interest Period"). [Interest on
the Class A-1 Notes will be calculated on
the basis of actual days elapsed and a 365-
or 366-day year, as applicable.] Interest
on the [[Class A-1 Notes and the] Class A-3]
Notes will be calculated on the basis of a
360-day year of twelve 30-day months.
[Interest on the Class A-2 Notes will be
calculated on the basis of actual days
elapsed and a 360-day year.] See
"Description of the Notes--Payments of
Interest" herein.
D. PRINCIPAL . . . . . . . . Principal of the Notes will be payable
[quarterly] on each [Distribution]
[Payment] Date in an amount equal to [the
sum of] the Noteholders' Principal Payment
Amount for [each of] the [three] calendar
month[s] ([the] [each, a] "Collection
Period") preceding such [Distribution]
[Payment] Date (in the case
S-6
<PAGE> 9
of the first [Distribution] [Payment] Date,
including the period from ,
199 to and including , 199 ) to the extent
of funds available therefor. The
"Noteholders' Principal Payment Amount"
[with respect to a Collection Period] will
generally be the sum of (i) the
Noteholders' Percentage of the Regular
Principal (such "Regular Principal" being
the sum of (a) 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), (b) the principal portion
of all payments collected with respect to
Simple Interest Receivables, and (c) the
principal balance of each Receivable
purchased by the Servicer, repurchased by
the Seller or liquidated by the Servicer,
each with respect to [the preceding] [such]
Collection Period) plus (ii) % of the
portion, if any, of the Available Funds for
such Collection Period that remains after
payment of (a) the Servicing Fee, (b) the
interest [due] [accrued] on the Notes, (c)
the portion of the Regular Principal
allocated to the Noteholders pursuant to
clause (i), (d) the interest due on the
Certificates, (e) the portion of the Regular
Principal distributed to the
Certificateholders as described below under
"Description of the
Certificates--Distributions of Principal
Payments" herein, and (f) the amount, if
any, required to be deposited in the
Reserve Account on [such] [the
related] Distribution Date [plus the excess
of the amount on deposit in the Reserve
Account on such Distribution Date (after
giving effect to all deposits or
withdrawals therefrom on such Distribution
Date) over the Specified Reserve Balance]
(such percentage of the remaining portion
of Available Funds [plus such excess], the
"Noteholders' Accelerated Principal").
[Or, state other method for determining the
amount of principal to be paid on the
Notes.]
On the Business Day immediately preceding
each Distribution Date (a "Determination
Date") the Indenture Trustee will determine
the amount in the Collection Account
allocable to interest and the amount
allocable to principal on the basis
described under "Description of the Transfer
and Servicing Agreements-
--Distributions--Allocation of Collections
on Receivables" in the Prospectus, and
payments to Secu- rityholders on the
following Distribution Date will be based on
such allocation.
Payments of principal on the Notes will be
made on each [Distribution] [Payment]
Date in the amounts and subject to the
priorities described in "Description of the
Notes--Payments of Principal" herein.
The outstanding principal amount of the
[Class A-1] Notes, to the extent not
previously paid, will be payable on
(the "[Class A-1] Final Scheduled
[Distribution] [Payment] Date")[, the
outstanding principal amount of the Class
A-2 Notes, to the extent not previously
paid, will be payable on (the "Class A-2
Final Scheduled [Distribution] [Payment]
Date") and the outstanding principal amount
of the Class A-3 Notes, to the extent not
previously paid, will be payable on (the
"Class A-3 Final Scheduled [Distribution]
[Payment] Date")].
S-7
<PAGE> 10
E. OPTIONAL REDEMPTION . . . The [Class A-3] Notes will be redeemed in
whole, but not in part, on any
Distribution Date [after all the other
classes of Notes have been paid in full] on
which the Servicer exercises its option to
purchase the Receivables, which can occur
after the Pool Balance declines to 10% or
less of the Initial Pool Balance, at a
redemption price equal to the unpaid
principal amount of the [Class A-3] Notes
plus accrued and unpaid interest thereon.
See "Description of the Notes--Optional
Redemption" herein. The "Initial Pool
Balance" will equal [the sum of (i)] the
aggregate principal balance of the [Initial]
Receiv ables as of the [Initial] Cutoff Date
[plus (ii) the aggregate principal balances
of all Subsequent Receivables added to the
Trust on or prior to such date as of their
respective Subsequent Cutoff Dates].
[F. MANDATORY REDEMPTION
FROM PRE-FUNDING ACCOUNT . . [The] [A class or classes of] Notes then
outstanding will be redeemed in part on
the Distribution Date on or immediately
following the last day of the Funding Period
in the event that amounts remain on deposit
in the Pre-Funding Account after giving
effect to the purchase of all Receivables,
including any such purchase on such date (a
"Mandatory Redemption"). If the amount on
deposit in the Pre-Funding Account on such
date is equal to $ or less, then
such amount will be used to redeem the
[Class A-1] Notes [up to an amount not to
exceed their outstanding amount, with any
remaining amount used to redeem the Class
A-2 Notes]. Otherwise the amount on deposit
in the Pre-Funding Account on such date will
be used to redeem [each class of] the Notes
and the Certificates. The aggregate
principal amount of [each class of] the
Notes to be redeemed will be an amount equal
to [the Notes'] [such class'] Pre-Funded
Percentage of the amount then on deposit in
the Pre-Funding Account. The "Pre-Funded
Percentage" with respect to [the] [a class
of] Notes or the Certificates is the
percentage derived from the fraction, the
numerator of which is the initial principal
amount of [the] [such class of] Notes or the
initial Certificate Balance, as the case may
be, and the denomina tor of which is the sum
of the initial principal amount of the
Notes and the initial Certificate Balance.]
[A limited recourse mandatory prepayment
premium (the "Note Prepayment Premium")
will be payable by the Trust to the
Noteholders pursuant to a Mandatory
Redemption if the amount on deposit in the
Pre-Funding Account exceeds $ .
The Note Prepayment Premium [for each class
of Notes] will equal the excess, if any,
discounted as described below, of (i) the
amount of interest that would accrue on [the
Notes'] [such class'] portion of any
remaining Pre-Funded Amount (the "Note
Prepayment Amount") at the Note Interest
Rate borne by [the] [such class of] Notes
during the period commencing on and
including the Distribution Date on which
such Note prepayment amount is required to
be distributed to Noteholders [of such
class] to but excluding [, in the
case of the Class A-1 Notes, , in
the case of the Class A-2 Notes and
, in the case of the Class A-3 Notes], over
(ii) the amount of interest that would have
accrued on such Note Prepayment Amount over
the same period at a per annum rate of
interest equal to the bond equivalent yield
to maturity on the Determination Date
preceding such Distribution Date on the [,
in the case of the Class A-1 Notes, the
S-8
<PAGE> 11
, in the case of the Class A-2
Notes, and the , in the case of
the Class A-3 Notes]. Such excess shall be
discounted to present value to such
Distribution Date at the applicable yield
described in clause (ii) above. Pursuant
to the Sale and Servicing Agreement, the
Seller will be obligated to pay the sum of
the Note Prepayment Premium [for each class
of Notes] and the Certificate Prepayment
Premium to the Trust as liquidated damages
for the failure to deliver Subsequent
Receivables having an aggregate principal
balance equal to the Pre-Funded Amount. The
Trust's obligation to pay the Note
Prepayment Premium [for each class of Notes]
and the Certificate Prepayment Premium will
be limited to funds received from the Seller
pursuant to the preceding sentence. In the
event that such funds are insufficient to
pay the Note Prepayment Premium [for each
class of Notes] and the Certificate
Prepayment Premium in full, Noteholders [of
each class of Notes] will receive their
ratable share (based upon the aggregate Note
Prepayment Premium [for such class]) of the
aggregate amount available to be distributed
in respect of the Note Prepayment Premium
and the Certificate Prepayment Premium. No
other assets of the Trust will be available
for the purpose of making such payment.]]
TERMS OF THE CERTIFICATES . . The principal terms of the Certificates will
be as described below:
A. DISTRIBUTION DATES . . . Distributions with respect to the
Certificates will be made on [each
Distribution Date] [the day of each month
or, if any such day is not a Business Day,
on the next succeeding Business Day (each, a
"Distribution Date")], commencing
, 199 . Distributions will be made to
holders of record of the Certificates (the
"Certificateholders," and, together with the
Noteholders, the "Securityholders") as of
the [related Record Date (which will be the
day of the month if Definitive Certificates
are issued)] [as of the day immediately
preceding such Distribution Date or, if
Definitive Certificates are issued, as of
the day of the preceding month].
B. CERTIFICATE RATE . . . .
% per annum (the "Certificate Rate").
C. INTEREST . . . . . . . . On each Distribution Date, the Owner Trustee
will distribute pro rata to
Certificateholders accrued interest at the
Certificate Rate on the outstanding
Certificate Balance generally to the extent
of funds available following payment of the
Servicing Fee and distributions in respect
of the Notes from the Available Funds and
the Reserve Account; provided, however,
that upon 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, distributions of any
amounts on the Certificates will be
subordinated in priority of payment to
payment in full of principal of the Notes.
Interest in respect of a Distribution Date
will accrue 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. Interest will be
calculated on the basis of a 360-day year
consisting of twelve 30-day months.
S-9
<PAGE> 12
D. PRINCIPAL . . . . . . . . On each Distribution Date commencing on the
later of (i) the 199 Distribution
Date and (ii) the Distribution Date next
succeeding the Distribution Date on which
the [Class A-1] Notes are paid in full,
principal of the Certificates will be
payable in an amount generally equal to the
Certificateholders' Principal Distribution
Amount for the Collection Period preceding
such Distribution Date, to the extent of
funds available therefor following payment
of the Servicing Fee and payments of
interest and principal in respect of the
Notes and the distribution of interest in
respect of the Certificates; provided,
however, that upon 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, distributions of any
amounts on the Certificates will be
subordinated in priority of payment to
payment in full of principal of the Notes[;
and provided further that upon any reduction
or withdrawal by any Rating Agency of its
rating of [the] [any class of] Notes, no
distributions of principal on the
Certificates will be made until all the
Notes have been paid in full or until such
rating has been restored]. The
Certificateholders' Principal Distribution
Amount will be based on the
Certificateholders' Percentage of the
Regular Principal, and will be calculated by
the Servicer in the manner described under
"Description of the Transfer and Servicing
Agreements--Distributions" herein. The
outstanding principal balance, if any, of
the Certificates will be payable in full
on , 199 (the "Final Scheduled
Distribution Date").
E. OPTIONAL PREPAYMENT . . . If the Servicer exercises its option to
purchase the Receivables, which can
occur after the Pool Balance declines to 10%
or less of the Initial Pool Balance, the
Certificateholders will receive an amount in
respect of the Certificates equal to the
Certificate Balance together with accrued
interest at the Certificate Rate, and the
Certificates will be retired. See
"Description of the Certificates--Optional
Prepayment" herein.
[F. MANDATORY REPURCHASE FROM
PRE-FUNDING ACCOUNT . . . . . The Certificates will be prepaid, in part,
pro rata on the basis of their initial
principal balances, on the Distribution
Date on or immediately following the last
day of the Funding Period in the event that
the amount on deposit in the Pre-Funding
Account after giving effect to the purchase
of all Receivables, including any such
purchase on such date exceeds $ (a
"Mandatory Repurchase"). The aggregate
principal balance of Certificates to be
prepaid will be an amount equal to the
Certificates' Pre-Funded Percentage of the
amount then on deposit in the Pre-Funding
Account.
[A limited recourse mandatory prepayment
premium (the "Certificate Prepayment
Premium") will be payable by the Trust to
the Certificateholders at the time of any
prepayment of the Certificates pursuant to a
Mandatory Repurchase. The Certificate
Prepayment Premium will equal the excess, if
any, discounted as described below, of (i)
the amount of interest that would accrue on
the Certificates' portion of any remaining
Pre-Funded Amount (the "Certificate
Prepayment Amount") at the Certificate Rate
during the period commencing on and
including the Distribution Date on which
such Certificate Prepayment Amount is
required to be distributed to
Certificateholders to but
S-10
<PAGE> 13
excluding , over (ii) the
amount of interest that would have accrued
on such Certificate Prepayment Amount over
the same period at a per annum rate of
interest equal to the bond equivalent yield
to maturity on the Determi nation Date
preceding such Distribution Date on
the . Such excess will be discounted
to present value to such Distribution Date
at the yield described in clause (ii)
above. Pursuant to the Sale and
Servicing Agreement, the Seller will be
obligated to pay the sum of the Note
Prepayment Premium [for each class of
Notes] and the Certificate Prepayment
Premium to the Trust as liquidated damages
for the failure to deliver Subsequent
Receivables having an aggregate principal
balance equal to the Pre-Funded Amount.
The Trust's obligation to pay the Note
Prepayment Premium [for each class of
Notes] and the Certificate Prepayment
Premium will be limited to funds received
from the Seller pursuant to the preceding
sentence. In the event that such funds are
insufficient to pay the Note Prepayment
Premium [for each class of Notes] and the
Certificate Prepayment Premium in full,
Certificateholders will receive their
ratable share (based upon the aggregate
Certificate Prepayment Premium) of the
aggregate amount available to be
distributed in respect of the Note
Prepayment Premium and the Certificate
Prepayment Premium. No other assets of the
Trust will be available for the purpose of
making such payment.]]
[INTEREST RATE CAP . . . . . On the Closing Date, the Seller will enter
into an Interest Rate Cap in respect of
the Class A-2 Notes with (the "Interest
Rate Cap Provider"). Pursuant to the
Interest Rate Cap, the Interest Rate Cap
Provider will make a payment to the Trust
on each [Distribution] [Payment] Date on
which [the Class A-2 Rate] [LIBOR] for the
preceding [Distribution] [Payment] Date ex
ceeds the Cap Rate in an amount equal to
the product of (i) the difference between
[such Class A-2 Rate] [LIBOR] and the Cap
Rate, (ii) the Cap Notional Amount and
(iii) the actual number of days from and
including the preceding [Distribution]
[Payment] Date to but excluding such
[Distribution] [Payment] Date divided by
360. The Cap Notional Amount on any
[Distribution] [Payment] Date will equal at
least the principal amount of the Class A-2
Notes as of the close of the
preceding [Distribution] [Payment] Date.
See "The Transfer and Servicing Agree
ments--Interest Rate Cap" herein. Payments
received by the Indenture Trustee pursuant
to the Interest Rate Cap will be deposited
in the Collection Account for the benefit
of all Securityholders.]
[INTEREST RATE SWAP . . . . . On the Closing Date, the Indenture Trustee,
on behalf of the Trust, will enter into
one or more Interest Rate Swap Agreements
(collectively, the "Interest Rate Swap")
with (the "Swap Counterparty").
Pursuant to the Interest Rate Swap, the
Swap Counterparty will pay to the Trust, on
each [Distribution] [Payment] Date,
interest at a per annum rate equal to [the
Class A-2 Rate] [LIBOR] on the Swap
Notional Amount. The Swap Notional Amount
on any [Distribution] [Payment] Date will
equal the principal amount of the Class A-2
Notes as of the close of the preceding
[Distribution] [Payment] Date. In exchange
for such payments, the Trust will pay to
the Swap Counterparty, on each
[Distribution] [Payment] Date, interest at
a per annum rate equal to [the lesser of]
[ %] [and] [the Prime Rate less %],
on the outstanding principal amount of the
Class A-2 Notes as of the close of the
S-11
<PAGE> 14
preceding [Distribution] [Payment]
Date [, which rate will be reset [on various
dates in] each [month] [Interest Period]].
With respect to each [Distribution]
[Payment] Date, any difference between the
[monthly] [quarterly] payment by the Swap
Counterparty to the Trust and the [monthly]
[quarterly] payment by the Trust to the Swap
Counterparty will be referred to herein as
the "Net Trust Swap Receipt," if such
difference is a positive number, and the
"Net Trust Swap Payment," if such difference
is a negative number. Net Trust Swap
Receipts, if any, will be deposited in the
Collection Account for the benefit of all
Securityholders and Net Trust Swap Payments,
if any, will be paid from the Collection
Account in the same manner and priority as
accrued and unpaid interest on the Notes on
each [Distribution] [Payment] Date. See
"The Transfer and Servicing Agree
ments--Interest Rate Swap."]
[PRE-FUNDING ACCOUNT . . . . During the period (the "Funding Period")
from and including the Closing Date
until the earliest of (a) the Determination
Date on which the amount on deposit in the
Pre-Funding Account is equal to $
or less, (b) the occurrence of an Event of
Default under the Indenture or an Event of
Servicing Termination under the Sale and
Servicing Agreement, (c) the occurrence of
certain events of insolvency or dissolution
with respect to the Seller, the General
Partner or the Servicer and (d) the
Determination Date with respect to the
, 199 Distribution Date, the Pre-Funded
Amount will be maintained as an account in
the name of the Indenture Trustee (the
"Pre-Funding Account"). The Pre-Funded
Amount will initially equal approximately
$ , and, during the Funding Period,
will be reduced by the amount thereof
used to purchase Subsequent Receivables in
accordance with the Sale and Servicing
Agreement and the amount thereof deposited
in the Reserve Account in connection with
the purchase of such Subsequent
Receivables. The Seller expects that the
Pre-Funded Amount will be reduced to $
or less by the Distribution Date.
Any Pre-Funded Amount remaining at the end
of the Funding Period will be payable to the
Noteholders and Certificateholders as
described above.]
RESERVE ACCOUNT . . . . . . . The Reserve Account will be created with an
initial deposit by the Seller on the
Closing Date of cash or Permitted
Investments having a value at least equal
to % of the [Initial Pool Balance]
[Pool Balance as of the Initial Cutoff Date]
[plus an amount attributable to the
difference between the anticipated
investment earnings on the Pre-Funded Amount
and the weighted average interest expense
on the portion of the Notes and Certificates
represented by the Pre-Funded Amount]. [On
each Subsequent Transfer Date, cash or
Permitted Investments having a value
approximately equal to % of the aggregate
principal balance of the Subsequent
Receivables conveyed to the Trust on such
Subsequent Transfer Date will be withdrawn
from the Pre-Funding Account from amounts
otherwise distributable to the Seller in
connection with the sale of Subsequent
Receivables and deposited in the Reserve
Account.] The amount initially deposited in
the Reserve Account by the Seller [together
with the aggregate amount transferred from
the Pre-Funding Account to the Reserve
Account on each Subsequent Transfer Date] is
referred to as the "Reserve Initial
Deposit." The Reserve Account
S-12
<PAGE> 15
will be maintained as an account in the
name of the Indenture Trustee for the
benefit of Securityholders.
Funds will be withdrawn from the Reserve
Account up to the Available Reserve
Amount to the extent that the Available
Funds with respect to any Collection Period
remaining after the Servicing Fee is paid is
less than the Noteholders' Payment Amount
and will be deposited in the Note Payment
Account for distribution to the Noteholders
on the related [Distribution] [Payment]
Date. In addition, funds will be withdrawn
from the Reserve Account up to the Available
Reserve Amount (as reduced by any withdrawal
pursuant to the preceding sentence) to the
extent that the Available Funds remaining
after payment of the Servicing Fee and the
deposit of the Noteholders' Payment Amount
in the Note Payment Account is less than the
Certificateholders' Distribution Amount and
will be deposited in the Certificate
Distribution Account for distribution to the
Certificateholders. [If funds applied in
accordance with the preceding sentence are
insufficient to distribute the interest due
on the Certificates, subject to certain
limitations, funds will be withdrawn from
the Reserve Account and applied to
distribute interest on the Certificates to
the extent of the Certificate Interest
Reserve Amount.]
On each Distribution Date, the Reserve
Account will be reinstated up to the
Specified Reserve Balance to the extent, if
any, of the Available Funds remaining after
payment of the Servicing Fee, the deposit of
the Noteholders' Payment Amount into the
Note Payment Account and the deposit of the
Certificateholders' Distribution Amount into
the Certificate Distribution Account.
Certain amounts in the Reserve Account on
any Distribution Date (after giving
effect to all distributions to be made on
such Distribution Date) in excess of the
Specified Reserve Balance for such
Distribution Date will be released to the
Seller (except to the extent described under
"Description of the Transfer and Servicing
Agreements--Reserve Account" herein).
Subject to reduction as described below, the
"Specified Reserve Balance" with respect to
any Distribution Date generally will be
equal to the sum of (i) % of the
[Initial Pool Balance] [Pool Balance as of
the Initial Cutoff Date] [, plus an amount
related to the difference between
anticipated investment earnings on the
remaining Pre-Funded Amount and the weighted
average interest expense on the portion of
the Notes and Certificates represented by
the remaining Pre-Funded Amount] and (ii)
% of the Pool Balance on the first day of
the related Collection Period. [However, so
long as on any Distribution Date (except the
first Distribution
S-13
<PAGE> 16
Date) the sum of (x) the outstanding
principal amount of the Securities (after
giving effect to distributions made on the
prior Distribution Date) and (y) the
aggregate amount of Payaheads that have been
collected but not yet applied as payments
under the related Receivables as of the
first day of the related Collection Period
is less than or equal to [the sum of] %
of [(a)] the Pool Balance on the first day
of the related Collection Period [and (b)
the Pre-Funded Amount on such date], then
the portion of the Specified Reserve Balance
set forth in clause (i) above will be
reduced to % of the [Initial Pool
Balance] [Pool Balance as of the Initial
Cutoff Date].] [In addition, so long as on
any Distribution Date (except the first
Distribution Date) the sum of (x) the
outstanding principal amount of the
Securities (after giving effect to
distributions made on the prior Distribution
Date) and (y) the aggregate amount of
Payaheads that have been collected but not
yet applied as payments under the related
Receivables as of the first day of the
related Collection Period is less than or
equal to [the sum of] % of [(a)] the
Pool Balance on the first day of the related
Collection Period [and (b) the Pre-Funded
Amount on such day], then such portion of
the Specified Reserve Balance set forth in
clause (i) above will be reduced to %
of the [Initial Pool Balance] [Pool Balance
as of the Initial Cutoff Date].] [With
respect to the portion of the Specified
Reserve Balance set forth in clause (ii)
above, so long as on any Distribution Date
(except the first Distribution Date) the sum
of (x) the outstanding principal amount of
the Securities (after giving effect to
distributions made on the prior Distribution
Date) and (y) the aggregate amount of
Payaheads that have been collected but not
yet applied as payments under the related
Receivables as of the first day of the
related Collection Period is less than or
equal to [the sum of] % of [(a)] the Pool
Balance on the first day of the related
Collection Period [and (b) the Pre-Funded
Amount on such day], then such portion will
be reduced to an amount equal to the product
of (I) the Pool Balance on the first day of
the related Collection Period and (II) the
percentage (which shall not be greater than
% or less than zero) equal to (X) the
percentage derived from the fraction, the
numerator of which is the outstanding
principal amount of the Securities (after
giving effect to distributions made on the
prior Distribution Date) and the denominator
of which is such Pool Balance less (Y)
%.] [The Specified Reserve Balance is
further subject to adjustment in certain
circumstances described herein.]
[YIELD SUPPLEMENT ACCOUNT;
YIELD SUPPLEMENT AGREEMENT . Ford Credit will establish a yield
supplement account with the Indenture
Trustee for the benefit of the
Securityholders (the "Yield Supplement
Account"). The Yield Supplement Account is
designed solely to hold funds to be applied
to provide payments to the Securityholders
in respect of Receivables the APR of which
is less than the sum of (i) the weighted
average of the Note Interest Rates and
Certificate Rate and (ii) the Servicing Fee
Rate (the "Required Rate"). The Yield
Supplement Account will be created with an
initial deposit by Ford Credit (the "Yield
Supplement Initial Deposit") in an amount
(which amount may be discounted at a rate
to be specified in the Sale and Servicing
Agreement) equal to the aggregate amount by
which (i) interest on the principal balance
of each [Initial] Receivable for the period
commencing on the [Initial] Cutoff Date and
ending with the scheduled maturity of such
Receivable, assuming that payments on such
Receivables are made as scheduled and no
prepayments are made, at a rate equal to the
Required Rate, exceeds (ii) interest on such
principal balances at the APR of such
Receivable (the "Yield Supplement Amount"
and, with respect to all of the [Initial ]
Receivables, the "Maximum [ Initial] Yield
Supplement Amount").
[Ford Credit, the Seller and the Indenture
Trustee will enter into a Yield
Supplement Agreement (as amended and
supplemented from time to time, the "Yield
Supplement Agreement") pursuant to which, on
each Subsequent
S-14
<PAGE> 17
Transfer Date, Ford Credit will deposit
an amount (which amount may be discounted
at a rate to be specified in the Sale and
Servicing Agreement), if any, into the Yield
Supplement Account (the "Additional Yield
Supplement Amount") equal to the aggregate
Yield Supplement Amounts in respect of the
related Subsequent Receivables for the
period commencing with the related
Subsequent Cutoff Date and ending with the
scheduled maturity of each such Subsequent
Receivable, assuming that payments on such
Receivables are made as scheduled and no
prepayments are made. The aggregate of the
Additional Yield Supplement Amounts in
respect of the Subsequent Receivables is
referred to herein as the "Maximum
Subsequent Yield Supplement Amount" and,
together with the Maximum Initial Yield
Supplement Amount, the "Maximum Yield
Supplement Amount." See "Description of the
Transfer and Servicing Agreements--Yield
Supplement Account; Yield Supplement
Agreement" herein.]]
COLLECTION ACCOUNT . . . . . Except under certain conditions described
herein, the Servicer will be required to
remit collections received with respect to
the Receivables not later than the [ ]
Business Day after receipt to one or more
accounts in the name of the Indenture
Trustee (the "Collection Account").
Pursuant to the Sale and Servicing Agree-
ment, the Servicer will have the power,
revocable at the discretion of the Indenture
Trustee or at the discretion of the Owner
Trustee with the consent of the Indenture
Trustee, to instruct the Indenture Trustee
to withdraw funds on deposit in the
Collection Account and to apply such funds
on each Distribution Date to the following
(in the priority indicated): (i) the
Servicing Fee for the prior Collection
Period and any overdue Servicing Fees to the
Servicer, (ii) the Accrued Note Interest and
the Noteholders' Principal Payment Amount
into the Note Payment Account, (iii) the
Accrued Certificate Interest and, commencing
on the later of (a) the 199
Distribution Date and (b) the Distribution
Date next succeeding the Distribution Date
on which the [Class A-1] Notes are paid in
full, the Certificateholders' Principal
Distribution Amount into the Certificate
Distribution Account and (iv) the remaining
balance, if any, to the Reserve Account;
provided, however, that on each Distribution
Date following the occurrence of an Event of
Default which has resulted in acceleration
of the Notes or following an Insolvency
Event with respect to the Seller or the
General Partner, the principal amount of the
Notes must be paid in full prior to the
distribution of any amounts on the
Certificates.
[GUARANTEED RATE AGREEMENT . Amounts on deposit in the [Collection]
[Note Payment] Account will be invested
from the date of deposit to the related
[Distribution] [Payment] Date by the
Indenture Trustee at the direction of
(the "In- vestment Provider") in certain
eligible investments pursuant to a
Guaranteed Rate Agreement, which provides
that the Investment Provider will guarantee
a rate of return on such amounts equal to
the weighted average of the Note Interest
Rates [and the Certificate Rate] and will
be entitled to receive any Investment
Earnings in excess of such guaranteed
return. See "Description of the Transfer
and Servicing Agreements--Guaranteed Rate
Agreement."]
S-15
<PAGE> 18
SERVICER FEE . . . . . . . . The Servicer will receive each month a fee
for servicing the Receivables equal to
(a) the product of one- twelfth of 1.00%
(the "Servicing Fee Rate") and the Pool
Balance outstanding at the beginning of the
previous month, plus (b) any late,
prepayment, and other administrative fees
and expenses collected during such month
[plus (c) reinvestment proceeds on any
payments received in respect of the
Receivables].
MATURITY AND PREPAYMENT
CONSIDERATIONS . . . . . . . The [Class A-2 Notes, the Class A-3 Notes and
the] Certificates will not receive any
principal payments until the [Class A-1]
Notes have been paid in full[, and the Class
A-3 Notes will not receive any principal
payments until the Class A-2 Notes have been
paid in full]. In addition, no principal
payments on the Certificates will be made
until the later of (i) the 199
Distribution Date and (ii) the Distribution
Date next succeeding the Distribution Date
on which the [Class A-1] Notes are paid in
full. As the rate of payment of principal
of [the] [each class of] Notes and the
Certificates depends on the rate of payment
(including prepayments) of the principal
balance of the Receivables, final payment of
[the] [any class of] Notes and the final
distribution in respect of the Certificates
could occur significantly earlier than the
respective [Final Scheduled Distribution
Dates] [final scheduled Payment Dates or
Distribution Date]. In addition, the rate
of payment of principal of [the] [each Class
of] Notes and the Certificates will be
affected by the application of the
Noteholders' Accelerated Principal to pay
the principal of the Notes. Reinvestment
risk associated with early payment of the
Notes and the Certificates will be borne
exclusively by the Noteholders and the
Certificateholders, respectively.
It is expected that final payment of [the]
[each class of] Notes and the final
distribution in respect of the Certificates
will occur on or prior to the respective
[Final Scheduled Distribution Dates] [final
scheduled Payment Dates or Distribution
Date]. However, if sufficient funds are not
available to pay [the] [any class of] Notes
or the Certificates in full on or prior to
the respective [Final Scheduled Distribution
Dates] [final scheduled Payment Dates or
Distribution Date], final payment of [the]
[such class of] Notes and the final
distribution in respect of the Certificates
could occur later than such dates.
All of the Receivables are prepayable at any
time. Prepayments that do not
constitute Payaheads will shorten the
weighted average remaining term of the
Receivables and the weighted average life of
the Securities. Such prepay ments, to the
extent allocable to principal, will be
included in the Noteholders' Principal
Payment Amount or the Certificateholders'
Principal Distribution Amount and will be
payable to the Securityholders as set forth
in the priority of distributions herein.
See "Description of the Transfer and
Servicing Agreements--Distributions" herein.
CLEARANCE AND SETTLEMENT . . Securityholders may elect to hold their
Notes or Certificates through any of DTC
(in the United States) or Cedel or Euroclear
(in Europe). Transfers within DTC, Cedel or
Euroclear, as the case may be, will be in
accordance
S-16
<PAGE> 19
with the usual rules and operation
procedures of the relevant system.
Cross-market transfers between persons
holding directly or indirectly through DTC,
on the one hand, and counterparties holding
directly or indirectly through Cedel or
Euroclear, on the other, will be effected in
DTC through the relevant Depositaries of
Cedel or Euroclear. See "Certain
Information Regarding the
Securities--Book-Entry Registration" in the
Prospectus.
TAX STATUS . . . . . . . . . In the opinion of ("Special Tax
Counsel"), for federal income tax
purposes, the Notes will be characterized
as debt, and the Trust will not be
characterized as an association (or publicly
traded partnership) taxable as a
corporation. In the opinion of
("Michigan Tax Counsel"), the same
characterization will apply for Michigan
income and Single Business Tax purposes.
Each Noteholder, by the acceptance of a
Note, will agree to treat the Notes as
indebtedness, and each Certificateholder, by
the acceptance of a Certificate, will agree
to treat the Trust as a partnership in which
the Certificateholders are partners for
federal income and Michigan income and
Single Business Tax purposes. Alternative
characterizations of the Trust and the
Certificates are possible, but would not
result in materially adverse tax
consequences to Certificateholders.
Certificateholders may be allocated income
equal to the amount of interest accruing on
the Certificates at the Certificate Rate
even though the Trust may not have
sufficient cash to make current cash
distributions of such amount. See "Certain
Federal Income Tax Consequences" herein and
in the Prospectus and "Certain State Tax
Consequences " herein for additional
information concerning the application of
federal income and Michigan tax laws,
respectively, to the Trust and the
Securities.
ERISA CONSIDERATIONS . . . . Subject to the considerations discussed
under "ERISA Considerations" herein and
in the Prospectus, the Notes may, in
general, be purchased by or on behalf of
employee benefit plans subject to the
Employee Retirement Income Security Act of
1974, as amended ("ERISA"). Any employee
benefit plan fiduciary considering a
purchase of Notes should, among other
things, consult with legal counsel regarding
the availability of a statutory or
administrative exemption from the prohibited
transaction rules of ERISA and the Internal
Revenue Code of 1986, as amended (the
"Code").
The Certificates may not be acquired by an
employee benefit plan subject to ERISA
or Section 4975 of the Code, or by an
individual retirement account. Any investor
considering the purchase of Certificates
should be aware that such purchase and
subsequent holding could, under certain
circumstances, be deemed to involve an
indirect prohibited transaction if a plan
with respect to which the investor is a
"party in interest" or "disqualified person"
purchases the Certificates without the
benefit of an exemption from the prohibited
transaction rules. See "ERISA
Considerations" herein and in the
Prospectus.
[LEGAL INVESTMENT . . . . . . The [Class A-1] Notes will be eligible
securities for purchase by money market
funds under paragraph (a)(5) of Rule 2a-7
under the Investment Company Act of 1940, as
amended.]
S-17
<PAGE> 20
RATING[S] OF THE NOTES....... It is a condition to the issuance of the
[Class A-1,] [Class A-2] [and Class
A-3] Notes that they be rated in the highest
investment rating category by at least two
nationally recognized rating agencies.
[However, the rating agencies do not
evaluate, and the rating does not address,
the likelihood that the Note Prepayment
Premium will be paid.] There can be no
assurance that a rating will not be
lowered or withdrawn by a rating agency if
circumstances so warrant.
RATING OF THE CERTIFICATES... It is condition of the issuance of the
Certificates that they be rated [at
least] " " or its equivalent by at least
two nationally recognized rating agencies.
[However, the rating agencies do not
evaluate, and the rating does not address,
the likelihood that the Certificate
Prepayment Premium will be paid.] There can
be no assurance that a rating will not be
lowered or withdrawn by a rating
agency if circumstances so warrant.
S-18
<PAGE> 21
RISK FACTORS
LIMITED LIQUIDITY
There is currently no secondary market for the Securities. Each
Underwriter currently intends to make a market in the Securities for which it
is an Underwriter, but it is under no obligation to do so. There can be no
assurance that a secondary market will develop or, if a secondary market does
develop, that it will provide the Securityholders with liquidity of investment
or that it will continue for the life of the Securities.
[THE SUBSEQUENT RECEIVABLES AND THE PRE-FUNDING ACCOUNT
On the Closing Date, the Seller will transfer to the Trust the
approximately $ of Initial Receivables and the approximately $
Pre-Funded Amount on deposit in the Pre-Funding Account. If the principal
amount of eligible Receivables originated by Ford Credit during the Funding
Period is less than the Pre-Funded Amount, the Seller will have insufficient
Receivables to sell to the Trust on the Subsequent Transfer Dates, thereby
resulting in a prepayment of principal to the Noteholders and the
Certificateholders as described in the following paragraph. See "--Trust's
Relationship to Ford and Ford Credit" below. In addition, any conveyance of
Subsequent Receivables is subject to the satisfaction, on or before the
related Subsequent Transfer Date, of the following conditions precedent, among
others: (i) each such Subsequent Receivable must satisfy the eligibility
criteria specified in the Sale and Servicing Agreement; (ii) the Seller will
not select such Subsequent Receivables in a manner that it believes is adverse
to the interests of the Noteholders or the Certificateholders; (iii) as of the
related Subsequent Cutoff Date, the Receivables in the Trust at that time,
including the Subsequent Receivables to be conveyed by the Seller as of such
Subsequent Cutoff Date, will satisfy the parameters described under "The
Receivables Pool" herein and under "The Receivables Pools" in the Prospectus;
(iv) the applicable Reserve Initial Deposit for such Subsequent Transfer Date
shall have been made; and (v) the Seller shall have executed and delivered to
the Trust (with a copy to the Indenture Trustee) a written assignment conveying
such Subsequent Receivables to the Trust (including a schedule identifying such
Subsequent Receivables). Moreover, any such conveyance of Subsequent
Receivables made during any given Collection Period will also be subject to the
satisfaction, on or about the fifteenth day of the month following such
Collection Period, of the following conditions subsequent, among others: (a)
the Seller will deliver certain opinions of counsel to the Owner Trustee,
Indenture Trustee and the Rating Agencies with respect to the validity of the
conveyance of all such Subsequent Receivables conveyed during such Collection
Period; (b) the Trust and the Indenture Trustee shall have received written
confirmation from a firm of independent certified public accountants that, as
of the end of the preceding Collection Period, the Receivables in the Trust at
that time, including the Subsequent Receivables conveyed by the Seller during
such Collection Period, satisfied the parameters described under "The
Receivables Pool" herein and under "The Receivables Pools" in the Prospectus;
and (c) the Rating Agencies shall have each notified the Seller in writing
that, following the addition of all such Subsequent Receivables, [each class
of] the Notes and the Certificates will be rated in the same rating category as
they were rated by the Rating Agencies on the Closing Date. The Seller will
immediately repurchase any Subsequent Receivable, at a price equal to the
Purchase Amount thereof, upon the failure of the Seller to satisfy any of the
foregoing conditions subsequent with respect thereto. Such confirmation of the
ratings of the Notes and the Certificates may depend on factors other than the
characteristics of the Subsequent Receivables, including the delinquency,
repossession and net loss experience on the automobile and light truck
receivables in the portfolio serviced by Ford Credit.
To the extent that amounts on deposit in the Pre-Funding Account have
not been fully applied to the conveyance of Subsequent Receivables to the Trust
by the end of the Funding Period and such amount exceeds $ , the
Noteholders and the Certificateholders will receive, on the Distribution Date
on or immediately following the last day of the Funding Period, a prepayment of
principal in an amount equal to the applicable Pre-Funded Percentage, in
respect of [a class of] the Notes or the Certificates, of the Pre-Funded Amount
remaining in the Pre-Funding Account following the purchase of any Subsequent
Receivables on such Distribution Date. Otherwise such remaining Pre-Funded
Amount will be paid as principal of the [Class A-1] Notes [up to an amount
S-19
<PAGE> 22
not to exceed their outstanding principal amount, with any remaining amount
used to redeem the Class A-2 Notes]. It is anticipated that the principal
balance of Subsequent Receivables sold to the Trust will not be exactly equal
to the amount on deposit in the Pre-Funding Account and that therefore there
will be at least a nominal amount of principal prepaid to the [Class A-1]
Noteholders.
Each Subsequent Receivable must satisfy the eligibility criteria
specified in the Sale and Servicing Agreement and any additional criteria
specified by the Rating Agencies at the time of its addition. However,
Subsequent Receivables may have been originated by Ford Credit at a later date
using credit criteria different from those which were applied to the Initial
Receivables and may be of a different credit quality and seasoning. In
addition, an increasing percentage of the Subsequent Receivables may be Final
Payment Receivables . Therefore, following the transfer of Subsequent
Receivables to the Trust, the characteristics of the entire Receivables Pool
included in the Trust may vary significantly from those of the Initial
Receivables. See "The Receivables Pool" herein and "The Receivables Pools" in
the Prospectus. The ability of Ford Credit to generate Subsequent Receivables
is largely dependent upon the level of retail sales of automobiles and light
trucks. The level of retail sales of automobiles and light trucks may change
as a result of a variety of social and economic factors. Economic factors
include interest rates, unemployment levels, the rate of inflation and consumer
perceptions of economic conditions generally. However, the Seller is unable to
determine and has no basis to predict whether or to what extent economic or
social factors will affect the level of vehicle sales.]
[TRUST'S RELATIONSHIP TO FORD AND FORD CREDIT
Neither the Seller nor Ford Credit is obligated to make any payments
in respect of the Notes, the Certificates or the Receivables. However, the
ability of the Seller to convey Subsequent Receivables on Subsequent Transfer
Dates is completely dependent upon the generation of additional receivables by
Ford Credit. The ability of Ford Credit to generate receivables is, in turn,
dependent to a large extent on the sales of automobiles and light trucks
manufactured or distributed by Ford Motor Company and its consolidated
subsidiaries ("Ford"). If, during the Funding Period, Ford were temporarily
or permanently no longer manufacturing or distributing vehicles, the rate of
sales of automobiles and light trucks manufactured by Ford would decrease,
adversely affecting the ability of the Seller to sell Subsequent Receivables to
the Trust. The use of incentive programs (e.g., manufacturers' rebate
programs) also may affect retail sales. There can be no assurance, therefore,
that Ford Credit will continue to generate receivables at the same rate as in
prior years. In addition, if Ford Credit were to cease acting as Servicer,
delays in processing payments on the Receivables and information in respect
thereof could occur and result in delays in payments to the Securityholders.
Ford and Ford Credit are subject to the informational requirements of
the Exchange Act and in accordance therewith file reports and other information
with the Commission. For further information regarding Ford and Ford Credit,
reference is made to such reports and other information which are available as
described under "Available Information" in the Prospectus.]
LIMITED ASSETS
The Trust will not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the Receivables [, the
Pre-Funding Account] [, the Yield Supplement Account] and the Reserve Account
[and the payments, if any, received pursuant to the [Interest Rate Cap,] [the
Interest Rate Swap] [and the] [Guaranteed Rate Agreement]]. Holders of the
Notes and the Certificates must rely for repayment upon payments on the
Receivables and, if and to the extent available, amounts on deposit in the
[Pre-Funding Account][, the Yield Supplement Account] [and the] Reserve Account
[and the payments, if any, received pursuant to the [Interest Rate Cap,] [the
Interest Rate Swap] [and the] [Guaranteed Rate Agreement]]. [The Pre-Funding
Account will be available only during the Funding Period and is designed solely
to cover obligations of the Trust relating to a portion of its funds not
invested in Receivables and is not designed to cover losses on the
Receivables.] [The Yield Supplement Account is designed solely to hold funds
to be applied to provide payments to the Securityholders in
S-20
<PAGE> 23
respect of Receivables the APR of which is less than the Required Rate.] Funds
in the Reserve Account will be available on each Distribution Date to cover
shortfalls in distributions of interest and principal on the Notes and the
Certificates. However, amounts to be deposited in the [Pre-Funding Account [,
the Yield Supplement Account] and the] Reserve Account are limited in amount.
If the [Pre-Funding Account [, the Yield Supplement Account] and the] Reserve
Account is [are] exhausted, the Trust will depend solely on current
distributions on the Receivables [and the payments, if any, received pursuant
to the [Interest Rate Cap,] [the Interest Rate Swap] [and the] [Guaranteed Rate
Agreement]] to make payments on the Notes and the Certificates. [Payments
under [the Interest Rate Cap,] [the Interest Rate Swap] [and the Guaranteed
Rate Agreement] will be received only under certain circumstances. See
"Description of the Transfer and Servicing Agreements [--Interest Rate Cap,"]
["--Interest Rate Swap"] [and "--Guaranteed Rate Agreement."]]
DEFICIENCIES FROM SALE UPON INSOLVENCY OR DISSOLUTION OF SELLER OR GENERAL
PARTNER
If an Insolvency Event or a dissolution occurs with respect to the
Seller or the General Partner while the Notes are outstanding, the Indenture
Trustee is required to promptly sell, dispose of or otherwise liquidate the
Receivables [and [the Interest Rate Cap,] [the Interest Rate Swap] [and the
Guaranteed Rate Agreement]] in a commercially reasonable manner on commercially
reasonable terms, unless (i) the Noteholders (other than the Seller, the
Servicer or their affiliates) of Notes representing not less than a majority of
the aggregate unpaid principal amount of the Notes and the right to receive
interest thereon, (ii) the Certificateholders (other than the Seller, the
Servicer or their affiliates) of Certificates representing not less than a
majority of the aggregate Certificate Balance and the right to receive
interest thereon, and (iii) not less than a majority of the holders (other than
the Seller, the Servicer or their affiliates) of certain interests, if any,
in the Reserve Account disapprove of such sale and in connection therewith, the
Indenture Trustee (x) appoints an entity acceptable to Ford Credit to acquire
an interest in such Trust and to act as a substitute "general partner" for
federal income tax purposes and (y) an opinion of counsel as to certain tax
matters is delivered. The proceeds from any such sale, disposition or
liquidation of the Receivables will be treated as collections on the
Receivables and deposited in the Collection Account. The proceeds from the
liquidation of the Receivables [and [the Interest Rate Cap,] [the Interest
Rate Swap] [and the Guaranteed Rate Agreement]] and any amounts on deposit in
the Reserve Account, [the Pre-Funding Account,] [the Yield Supplement Account,]
the Note Payment Account and the Certificate Distribution Account will be
distributed first to Noteholders and then to Certificateholders in the priority
set forth in the Indenture. If such proceeds and amounts are not sufficient to
pay all the Notes in full, the amount of principal returned to Noteholders will
be reduced, no such proceeds or amounts will be distributed to the
Certificateholders, and the Noteholders and Certificateholders will incur a
loss on their investment. If such proceeds and amounts are sufficient to pay
all the Notes in full but are not sufficient to pay both the Notes and
Certificates in full, the amount of principal returned to Certificateholders
will be reduced, and the Certificateholders will incur a loss on their
investment. See "Description of the Transfer and Servicing
Agreements--Insolvency Event or Dissolution" in the Prospectus.
SUBORDINATION
Distributions of interest and principal on the Certificates will be
subordinated in priority of payment to interest and principal due on the Notes.
Consequently, the Certificateholders will not receive any distributions with
respect to a Collection Period until the full amount of interest on and
principal of the Notes on such Distribution Date has been deposited in the Note
Payment Account. The Certificateholders will not receive any distributions of
principal until after the later to occur of (i) the Distribution
Date next succeeding the Distribution Date on which the [Class A-1] Notes were
paid in full and (ii) the Distribution Date. However, upon 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, distributions of
any amounts on the Certificates will be subordinated in priority of payment to
payment in full of principal of principal of the Notes. [In addition, upon any
reduction or withdrawal by any Rating Agency of its rating of [the] [any class
of] Notes (see "--Ratings of the Securities" below), the Certificateholders
will not receive any distributions of principal until after all the Notes have
been paid in full or until such rating has been restored].
S-21
<PAGE> 24
If an Event of Default occurs, the Indenture Trustee or the holders of
a majority of the aggregate principal amount of all the Notes may declare the
principal of the Notes to be immediately due and payable, and the Indenture
Trustee may institute or be required to institute proceedings to collect
amounts due or exercise its remedies as a secured party (including foreclosure
or sale of the Receivables). In the event of a sale of Receivables by the
Indenture Trustee following an Event of Default or following an Insolvency
Event or a dissolution with respect to the Seller or the General Partner, there
is no assurance that the proceeds of such sale will be equal to or greater than
the aggregate outstanding principal amount of the Notes and the Certificates
plus accrued interest. Because neither interest nor principal is distributed
to Certificateholders upon sale of the Receivables following an Event of
Default and acceleration of the Notes under the Indenture or following an
Insolvency Event or a dissolution with respect to the Seller or the General
Partner until all the Notes have been paid in full, the interests of
Noteholders and the Certificateholders may conflict, and the exercise by the
Indenture Trustee of its right to sell the Receivables or exercise other
remedies under the Indenture and applicable law may cause the
Certificateholders to suffer a loss of all or part of their investment. See
"Description of the Notes--The Indenture--Events of Default; Rights upon Event
of Default" and "Description of the Transfer and Servicing
Agreements--Insolvency Event or Dissolution" in the Prospectus.
In general, the Seller may, and in certain circumstances the
Certificateholders may, direct the Owner Trustee in the administration of the
Trust. However, because the Trust has pledged the property of the Trust to the
Indenture Trustee to secure the payment of the Notes, including in such pledge
certain rights of the Trust under the Sale and Servicing Agreement, the
Indenture Trustee and not the Seller or the Certificateholders has the power to
direct the Trust to take certain actions in connection with the administration
of the Trust Property until the Notes have been paid in full and the lien of
the Indenture has been released. In addition, the Seller and
Certificateholders are not allowed to direct the Owner Trustee to take any
action which conflicts with the provisions of any of the Basic Documents. The
Indenture specifically prohibits the Owner Trustee from taking any action which
would impair the Indenture Trustee's security interest in the Trust and
requires the Owner Trustee to obtain the consent of the Indenture Trustee or
the holders of a majority of the aggregate principal amount of the Notes before
modifying, amending, supplementing, waiving or terminating any Basic Document
or any provision of any Basic Document. Therefore, until the Notes have been
paid in full, the ability to direct the Trust with respect to certain actions
permitted to be taken by it under the Basic Documents rests with the Indenture
Trustee and the Noteholders instead of the Seller or the Certificateholders.
If an Event of Servicing Termination were to occur, the holders of a
majority of the outstanding principal amount of the Notes, or the Indenture
Trustee acting on behalf of the Noteholders, and not the Seller or the
Certificateholders, would have the right to terminate the Servicer as the
servicer of the Receivables without consideration of the effect such
termination would have on Certificateholders. In addition, the holders of not
less than a majority of the outstanding principal amount of the Notes would
have the right to waive certain Events of Servicing Termination, without
consideration of the effect such waiver would have on Certificateholders.
After all the Notes have been paid in full and the lien of the Indenture has
been released, upon the occurrence of an Event of Servicing Termination, the
holders of a majority of the outstanding Certificate Balance, or the Owner
Trustee acting on behalf of the Certificateholders, may terminate the Servicer.
See "Description of the Transfer and Servicing Agreements--Events of Servicing
Termination" and "--Rights upon an Event of Servicing Termination" in the
Prospectus.
MATURITY AND PREPAYMENT CONSIDERATIONS
The [Class A-2 Notes, the Class A-3 Notes and the] Certificates will
not receive any principal payments until the [Class A-1] Notes have been paid
in full[, and the Class A-3 Notes will not receive any principal payments until
the Class A-2 Notes have been paid in full]. In addition, no principal
payments on the Certificates will be made until the later of (i) the
199 Distribution Date and (ii) the Distribution Date next succeeding the
Distribution Date on which the [Class A-1] Notes are paid in full. As the
rate of payment of principal of [the] [each class of] Notes and the
Certificates depends on the rate of payment (including prepayments) of the
principal balance of the Receivables, final payment of [the] [any class of]
Notes and the final distribution in respect of the
S-22
<PAGE> 25
Certificates could occur significantly earlier than the respective [Final
Scheduled Distribution Dates] [final scheduled Payment Dates or Distribution
Date]. In addition, the rate of payment of principal of [the] [each Class of]
Notes and the Certificates will be affected by the application of the
Noteholders' Accelerated Principal to pay the principal of the Notes. It is
expected that final payment of [the] [each class of] Notes and the final
distribution in respect of the Certificates will occur on or prior to the
respective [Final Scheduled Distribution Dates] [final scheduled Payment Dates
or Distribution Date]. However, if sufficient funds are not available to pay
[the] [any class of] Notes or the Certificates in full on or prior to the
respective [Final Scheduled Distribution Dates] [final scheduled Payment Dates
or Distribution Date], final payment of [the] [such class of] Notes and the
final distribution in respect of the Certificates could occur later than such
dates. See "Maturity and Prepayment Considerations" herein and in the
Prospectus.
RATINGS OF THE SECURITIES
It is a condition to the issuance of [each class of] the Notes and of
the Certificates that [each class of] the Notes be rated in the highest rating
category, and the Certificates be rated [at least] " " or its equivalent, by
at least two nationally recognized rating agencies (the "Rating Agencies"). A
rating is not a recommendation to purchase, hold or sell Securities, inasmuch
as such rating does not comment as to market price or suitability for a
particular investor. The ratings of the Securities address the likelihood of
the payment of principal and interest on the Securities pursuant to their
terms. [ However, the Rating Agencies do not evaluate, and the ratings of the
Securities do not address, the likelihood that the Note Prepayment Premium or
the Certificate Prepayment Premium will be paid.] There can be no assurance
that a rating will remain for any given period of time or that a rating will
not be lowered or withdrawn entirely by a Rating Agency if in its judgment
circumstances in the future so warrant.
THE TRUST
GENERAL
The Issuer, Ford Credit Auto Trust 199 - , is a business trust formed
under the laws of the State of Delaware pursuant to the Trust Agreement for the
transactions described in this Prospectus Supplement. After its formation, the
Trust will not engage in any activity other than (i) acquiring, holding and
managing the Receivables and the other assets of the Trust and proceeds
therefrom, (ii) issuing the Notes and the Certificates, (iii) making payments
on the Notes and the Certificates and (iv) engaging in other activities that
are necessary, suitable or convenient to accomplish the foregoing or are
incidental thereto or connected therewith.
The Trust will initially be capitalized with the Notes and the
Certificates. Certificates with an original principal balance of $ will
be retained by the Seller and the remaining Certificates will be sold to third
party investors that are expected to be unaffiliated with the Seller, the
Servicer or their affiliates or the Trust. The proceeds from the issuance of
the Notes and the Certificates will be used by the Trust to purchase the
[Initial] Receivables from the Seller pursuant to the Sale and Servicing
Agreement [, to fund the deposit of the Pre-Funded Amount] and to fund
the initial deposit into the Reserve Account.
If the protection provided to the investment of the Securityholders by
the [Yield Supplement Account and the] Reserve Account is insufficient, the
Trust would have to look principally to the Obligors on the Receivables, the
proceeds from the repossession and sale of Financed Vehicles which secure
defaulted Receivables and the proceeds from any recourse against Dealers with
respect to the Receivables [and from the Pre-Funding Account]. In such event,
certain factors, such as the Trust's not having perfected security interests in
the Financed Vehicles in all states, may affect the Servicer's ability to
repossess and sell the collateral securing the Receivables, and thus may reduce
the proceeds to be distributed to the Securityholders. See "Description of
the Transfer and Servicing Agreements--Distributions" [, "--Yield Supplement
Account; Yield Supplement Agreement"] and "--Reserve Account" herein and
"Certain Legal Aspects of the Receivables" in the Prospectus.
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<PAGE> 26
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the Trust as of
the Closing Date, as if the issuance and sale of the Notes and the
Certificates had taken place on such date:
<TABLE>
<S> <C>
[Class A-1] Notes . . . . . . . . . . . . . $
[Class A-2 Notes] . . . . . . . . . . . . . [ ]
[Class A-3 Notes] . . . . . . . . . . . . . [ ]
Certificates . . . . . . . . . . . . . . . .
-------------
Total . . . . . . . . . . . . . . . . . . . $
=============
</TABLE>
THE OWNER TRUSTEE
is the Owner Trustee under the Trust Agreement.
is a Delaware and its principal offices are located at ,
Delaware. The Seller and its affiliates may maintain normal commercial banking
relations with the Owner Trustee and its affiliates.
THE RECEIVABLES POOL
The pool of Receivables (the "Receivables Pool") will include the
[Initial] Receivables purchased as of the [Initial] Cutoff Date [and will
include any Subsequent Receivables purchased as of the applicable Subsequent
Cutoff Date (the Initial Cutoff Date or any Subsequent Cutoff Date being
individually referred to herein as a "Cutoff Date")].
The [Initial] Receivables were purchased[, and the Subsequent
Receivables were or will be purchased,] by Ford Credit from Dealers in the
ordinary course of business in accordance with Ford Credit's underwriting
standards, and were [or will be] selected from Ford Credit's portfolio for
inclusion in the Receivables Pool by several criteria, some of which are set
forth in the Prospectus under "The Receivables Pools," as well as the
following: each Receivable (i) provides for level monthly payments which
provide interest at the APR and fully amortize the amount financed over an
original term no greater than months, (ii) is not more than days past
due as of the [applicable] Cutoff Date and has never been extended and (iii)
was originated on or after . As of the [applicable] Cutoff Date, no
Obligor on any Receivable was [or will have been] noted in the related records
of the Servicer as being the subject of a bankruptcy proceeding. No selection
procedures believed by the Seller to be adverse to the Noteholders or the
Certificateholders were [or will be used] in selecting the Receivables.
[The obligation of the Trust to purchase the Subsequent
Receivables on a Subsequent Transfer Date will be subject to the
Receivables in the Trust, including the Subsequent Receivables to be
conveyed to the Trust on such Subsequent Transfer Date, meeting the
following criteria: (i) not more than % of the principal balances
of the Receivables in the Trust will represent vehicles financed at
Ford Credit's used vehicle rates; and (ii) the weighted average APR of
the Receivables in the Trust will not be less than %, unless the
Seller increases the Reserve Initial Deposit by the amounts, if any,
specified by the Rating Agencies to maintain the ratings of the Notes
and the Certificates. In addition, such obligation will be subject to
the Receivables, including the Subsequent Receivables to be
transferred to the Trust on such Subsequent Transfer Date, having a
weighted average remaining term not greater than months.
Such criteria will be based on the characteristics of the Initial
Receivables on the Initial Cutoff Date and any Subsequent Receivables on
the related Subsequent Cutoff Dates.]
S-24
<PAGE> 27
[The Initial Receivables will represent approximately % of the
aggregate initial principal amount of the Securities. However, except for the
criteria described in the preceding paragraphs and the criteria, if any,
specified by the Rating Agencies to maintain the ratings of the Notes and the
Certificates, there will be no required characteristics of the Subsequent
Receivables. Therefore, following the transfer of Subsequent Receivables to
the Trust, the aggregate characteristics of the entire Receivables Pool,
including the composition of the Receivables, the distribution by APR and the
geographic distribution described in the following tables, may vary
significantly from those of the Initial Receivables.]
Neither Ford Credit nor any of its affiliates maintains records
adequate to provide quantitative data regarding its prepayment experience on
its portfolio of U.S. retail installment sale contracts for either new or
used vehicles. However, Ford Credit (i) believes that the actual rate of
prepayments will result in a substantially shorter weighted average life than
the scheduled weighted average life and (ii) estimates that the actual weighted
average life of its portfolio of U.S. retail installment contracts for new and
used automobiles and light trucks ranges between 60% and 70% of their scheduled
weighted average life. See "Maturity and Prepayment Considerations" herein and
in the Prospectus.
The composition, geographical distribution, and distribution by annual
percentage rate of the [Initial] Receivables as of the [Initial] Cutoff Date
are set forth in the following tables.
COMPOSITION OF THE [INITIAL] RECEIVABLES POOL
AS OF THE [INITIAL] CUTOFF DATE
<TABLE>
<S> <C>
Aggregate Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . $
Number of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . $
(Range) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ to $
Average Original Amount Financed . . . . . . . . . . . . . . . . . . . . . $
(Range) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ to $
Weighted Average APR . . . . . . . . . . . . . . . . . . . . . . . . . . . %
(Range) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . % to %
Weighted Average Original Term . . . . . . . . . . . . . . . . . . . . . . months
(Range) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . to months
Weighted Average Remaining Term . . . . . . . . . . . . . . . . . . . . . . months
(Range) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . to months
Scheduled Weighted Average Life(1) . . . . . . . . . . . . . . . . . . . . months
- ------------
</TABLE>
(1) Based on payments due on or after the [Initial] Cutoff Date, assuming
that no prepayments on the [Initial] Receivables are made after the
[Initial] Cutoff Date and that all payments on Simple Interest
Receivables are received on their respective due dates.
S-25
<PAGE> 28
GEOGRAPHIC DISTRIBUTION OF THE [INITIAL] RECEIVABLES POOL
AS OF THE [INITIAL] CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF OF
AGGREGATE AGGREGATE
PRINCIPAL PRINCIPAL
STATE(1) BALANCE(2) STATE(1) BALANCE(2)
-------- ---------- -------- ----------
<S> <C> <C> <C>
Alabama[(3)] . . . . . . . . % Montana . . . . . . . . . . . %
Alaska . . . . . . . . . . . Nebraska . . . . . . . . . .
Arizona . . . . . . . . . . . Nevada . . . . . . . . . . .
Arkansas . . . . . . . . . . New Hampshire . . . . . . . .
California . . . . . . . . . New Jersey . . . . . . . . .
Colorado . . . . . . . . . . New Mexico . . . . . . . . .
Connecticut . . . . . . . . . New York . . . . . . . . . .
Delaware . . . . . . . . . . North Carolina . . . . . . .
District of Columbia . . . . North Dakota . . . . . . . .
Florida . . . . . . . . . . . Ohio . . . . . . . . . . . .
Georgia . . . . . . . . . . . Oklahoma . . . . . . . . . .
Hawaii . . . . . . . . . . . Oregon . . . . . . . . . . .
Idaho . . . . . . . . . . . . Pennsylvania[(3)] . . . . . .
Illinois . . . . . . . . . . Rhode Island . . . . . . . .
Indiana . . . . . . . . . . . South Carolina . . . . . . .
Iowa . . . . . . . . . . . . South Dakota . . . . . . . .
Kansas . . . . . . . . . . . Tennessee . . . . . . . . . .
Kentucky . . . . . . . . . . Texas . . . . . . . . . . . .
Louisiana . . . . . . . . . . Utah . . . . . . . . . . . .
Maine . . . . . . . . . . . . Vermont . . . . . . . . . . .
Maryland . . . . . . . . . . Washington . . . . . . . . .
Massachusetts . . . . . . . . West Virginia . . . . . . . .
Michigan . . . . . . . . . . Wisconsin . . . . . . . . . .
Minnesota . . . . . . . . . . Wyoming . . . . . . . . . . .
Mississippi . . . . . . . . .
Missouri . . . . . . . . . .
- ---------------
</TABLE>
(1) Based on the billing addresses of the Obligors on the [Initial]
Receivables as of the [Initial] Cutoff Date.
(2) Percentages may not add to 100.00% due to rounding. States showing 0.0%
each represent less than 0.05%.
[(3) Alabama and Pennsylvania were excluded for administrative reasons.]
S-26
<PAGE> 29
DISTRIBUTION BY APR OF THE [INITIAL] RECEIVABLES POOL
AS OF THE [INITIAL] CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
APR RANGE RECEIVABLES BALANCE BALANCE(1)
---------- ----------- ------- ----------
<S> <C> <C> <C>
0.00% to 1.00% $ %
1.01 to 2.00
2.01 to 3.00
3.01 to 4.00
4.01 to 5.00
5.01 to 6.00
6.01 to 7.00
7.01 to 8.00
8.01 to 9.00
9.01 to 10.00
10.01 to 11.00
11.01 to 12.00
12.01 to 13.00
13.01 to 14.00
14.01 to 15.00
15.01 to 16.00
16.01 to 17.00
17.01 to 18.00
18.01 to 19.00
19.01 to 20.00
Totals $ 100 .00%
======= ========== =======
</TABLE>
(1) Percentages may not add to 100.00% due to rounding.
Approximately % of the aggregate principal balance of the [Initial]
Receivables, constituting % of the number of [Initial] Receivables, as of
the [Initial] Cutoff Date, represent vehicles financed at new vehicle rates,
and the remainder of the [Initial] Receivables represent vehicles financed at
used vehicle rates.
By aggregate principal balance, approximately % of the [Initial]
Receivables constitute Precomputed Receivables, % of the [Initial]
Receivables constitute Simple Interest Receivables and % constitute Final
Payment Receivables. In addition, % of the [Initial] Receivables that are
Precomputed Receivables and % that are Simple Interest Receivables constitute
Final Payment Receivables. See "The Receivables Pools" in the Prospectus for a
further description of the characteristics of Precomputed Receivables, Simple
Interest Receivables and Final Payment Receivables.
Based on principal balance, less than % of the [Initial]
Receivables provide recourse to the Dealer which originated the Receivable.
See "The Receivables Pools" in the Prospectus for a further description of such
recourse provisions.
WEIGHTED AVERAGE LIFE OF THE SECURITIES
Prepayments on automotive receivables can be measured relative to a
prepayment standard or model. The model used in this Prospectus, the Absolute
Prepayment Model ("ABS"), represents an assumed rate of prepayment
S-27
<PAGE> 30
each month relative to the original number of receivables in a pool of
receivables. ABS further assumes that all the receivables are the same size
and amortize at the same rate and that each receivable in each month of its
life will either be paid as scheduled or be prepaid in full. For example, in a
pool of receivables originally containing 10,000 receivables, a 1% ABS rate
means that 100 receivables prepay each month. ABS does not purport to be an
historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any pool of receivables, including the
Receivables.
As the rate of payment of principal of each class of Notes and the
Certificates will depend on the rate of payment (including prepayments) of the
principal balance of the Receivables, final payment of any class of Notes and
the final distribution in respect of the Certificates could occur significantly
earlier than the respective [Final Scheduled Distribution Dates] [final
scheduled Payment Dates or Distribution Date]. Reinvestment risk associated
with early payment of the Notes and the Certificates will be borne exclusively
by the Noteholders and the Certificateholders, respectively.
The table captioned "Percent of Initial Note Principal Amount or
Initial Certificate Balance at Various ABS Percentages" (the "ABS Table") has
been prepared on the basis of the characteristics of the [Initial] Receivables
[and certain assumed characteristics with respect to the Subsequent
Receivables]. The ABS Table assumes that (i) the Receivables prepay in full at
the specified constant percentage of ABS monthly, with no defaults, losses or
repurchases, (ii) each scheduled monthly payment on the Receivables is made on
the last day of each month and each month has 30 days, (iii) payments on the
Notes [are made on each Payment Date] and distributions on the Certificates are
made on each Distribution Date (and each such date is assumed to be the day
of [the month in which such Payment Date or Distribution Date occurs] [each
applicable month]), (iv) the balance in the Reserve Account on each [Payment
Date and] Distribution Date is equal to the Specified Reserve Balance, and (v)
the Seller exercises its option to purchase the Receivables on the first
Distribution Date on which it is permitted to do so, as described herein.
[State assumed characteristics with respect to the Subsequent Receivables.]
[And/or, state other assumptions on which the ABS Table is based.] The pools
have an assumed cutoff date of , 199 . The ABS Table indicates the
projected weighted average life of each class of Notes and the Certificates and
sets forth the percent of the initial principal amount of each class of Notes
and the percent of the initial Certificate Balance that is projected to be
outstanding after each of the [Payment Dates or] Distribution Dates shown at
various constant ABS percentages.
The ABS Table also assumes that the [Initial] Receivables have been
aggregated into hypothetical pools with all of the [Initial] Receivables
within each such pool having the following characteristics and that the level
scheduled monthly payment for each of the pools (which is based on its
aggregate principal balance, APR, original term to maturity and remaining term
to maturity as of the [Initial] Cutoff Date) will be such that each pool will
be fully amortized by the end of its remaining term to maturity. [State
assumed characteristics with respect to hypothetical pools of Subsequent
Receivables.]
<TABLE>
<CAPTION>
ORIGINAL TERM REMAINING TERM
AGGREGATE TO MATURITY TO MATURITY
POOL PRINCIPAL BALANCE APR (IN MONTHS) (IN MONTHS)
- ---- ----------------- --- ----------- -----------
<S> <C> <C> <C> <C>
1 . . . . . . . . . . . $ %
2 . . . . . . . . . . .
3 . . . . . . . . . . .
4 . . . . . . . . . . .
=====================
=====================
</TABLE>
The actual characteristics and performance of the Receivables will
differ from the assumptions used in constructing the ABS Table. The
assumptions used are hypothetical and have been provided only to give a general
S-28
<PAGE> 31
sense of how the principal cash flows might behave under varying prepayment
scenarios. For example, it is very unlikely that the Receivables will prepay
at a constant level of ABS until maturity or that all of the Receivables will
prepay at the same level of ABS. Moreover, the diverse terms of Receivables
within each of the hypothetical pools could produce slower or faster principal
distributions than indicated in the ABS Table at the various constant
percentages of ABS specified, even if the original and remaining terms to
maturity of the Receivables are as assumed. Any difference between such
assumptions and the actual characteristics and performance of the Receivables,
or actual prepayment experience, will affect the percentages of initial
balances outstanding over time and the weighted average lives of each class of
Notes and the Certificates.
S-29
<PAGE> 32
PERCENT OF INITIAL NOTE PRINCIPAL AMOUNT OR
INITIAL CERTIFICATE BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
Class A-1 Notes Class A-2 Notes Class A-3 Notes
----------------------------- ----------------------------- ------------------------------
[Payment] [Distribution] 0.5% 1.0% 1.5% 1.8% 0.5% 1.0% 1.5% 1.8% 0.5% 1.0% 1.5% 1.8%
- ------------------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Date
06/15/96 . . . . . . . . 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
07/15/96 . . . . . . . .
08/15/96 . . . . . . . .
09/15/96 . . . . . . . .
10/15/96 . . . . . . . .
11/15/96 . . . . . . . .
12/15/96 . . . . . . . .
01/15/97 . . . . . . . .
02/15/97 . . . . . . . .
03/15/97 . . . . . . . .
04/15/97 . . . . . . . .
05/15/97 . . . . . . . .
06/15/97 . . . . . . . .
07/15/97 . . . . . . . .
08/15/97 . . . . . . . .
09/15/97 . . . . . . . .
10/15/97 . . . . . . . .
11/15/97 . . . . . . . .
12/15/97 . . . . . . . .
01/15/98 . . . . . . . .
02/15/98 . . . . . . . .
03/15/98 . . . . . . . .
04/15/98 . . . . . . . .
05/15/98 . . . . . . . .
06/15/98 . . . . . . . .
07/15/98 . . . . . . . .
08/15/98 . . . . . . . .
09/15/98 . . . . . . . .
10/15/98 . . . . . . . .
11/15/98 . . . . . . . .
12/15/98 . . . . . . . .
01/15/99 . . . . . . . .
02/15/99 . . . . . . . .
03/15/99 . . . . . . . .
04/15/99 . . . . . . . .
05/15/99 . . . . . . . .
06/15/99 . . . . . . . .
07/15/99 . . . . . . . .
Weighted Average
Life (years)(1) . . . .
</TABLE>
- ------------------------------------
(1) The weighted average life of a Class A-1 Note, Class A-2 Note, or
Class A-3 Note is determined by (i) multiplying the amount of each
principal payment on a Note by the number of years from the date of
the issuance of the Note to the related [Payment] [Distribution] Date,
(ii) adding the results and (iii) dividing the sum by the related
initial principal amount of the Note.
THE ABS TABLE HAS BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
[INITIAL] RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND
PERFORMANCE THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
S-30
<PAGE> 33
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE OR
INITIAL CERTIFICATE BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
Certificates
-----------------------------
Distribution Date 0.5% 1.0% 1.5% 1.8%
- ----------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
06/15/96 . . . . . . . . 100.000 100.000 100.000 100.000
07/15/96 . . . . . . . .
08/15/96 . . . . . . . .
09/15/96 . . . . . . . .
10/15/96 . . . . . . . .
11/15/96 . . . . . . . .
12/15/96 . . . . . . . .
01/15/97 . . . . . . . .
02/15/97 . . . . . . . .
03/15/97 . . . . . . . .
04/15/97 . . . . . . . .
05/15/97 . . . . . . . .
06/15/97 . . . . . . . .
07/15/97 . . . . . . . .
08/15/97 . . . . . . . .
09/15/97 . . . . . . . .
10/15/97 . . . . . . . .
11/15/97 . . . . . . . .
12/15/97 . . . . . . . .
01/15/98 . . . . . . . .
02/15/98 . . . . . . . .
03/15/98 . . . . . . . .
04/15/98 . . . . . . . .
05/15/98 . . . . . . . .
06/15/98 . . . . . . . .
07/15/98 . . . . . . . .
08/15/98 . . . . . . . .
09/15/98 . . . . . . . .
10/15/98 . . . . . . . .
11/15/98 . . . . . . . .
12/15/98 . . . . . . . .
01/15/99 . . . . . . . .
02/15/99 . . . . . . . .
03/15/99 . . . . . . . .
04/15/99 . . . . . . . .
05/15/99 . . . . . . . .
06/15/99 . . . . . . . .
07/15/99 . . . . . . . .
Weighted Average
Life (years)(1) . . . .
</TABLE>
- ------------------------------------
(1) The weighted average life of a Certificate is determined by (i)
multiplying the amount of each distribution in respect of the
Certificate Balance of a Certificate by the number of years from the
date of the issuance of the Certificate to the related Distribution
Date, (ii) adding the results and (iii) dividing the sum by the
original Certificate Balance of the Certificate.
THE ABS TABLE HAS BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
[INITIAL] RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND
PERFORMANCE THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
S-31
<PAGE> 34
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Set forth below is certain information concerning Ford Credit's
experience with respect to its portfolio of U.S. retail installment sale
contracts for new and used automobiles and light trucks (including previously
sold contracts which Ford Credit continues to service, but not including retail
installment sale contracts purchased by Ford Credit under certain special
financing programs). [Ford Credit began originating Final Payment Receivables
in 19 .] There is no assurance that the behavior of the Receivables will be
comparable to Ford Credit's experience shown in the following tables or that
the trend in losses and delinquencies will continue into the future.
DELINQUENCY EXPERIENCE(1)
<TABLE>
<CAPTION>
Three Months Ended
March 31, Year Ended December 31,
-------------------- ----------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Average Number of Contracts
Outstanding During the
Period . . . . . . . . . . . . 3,549,204 3,409,392 3,438,699 3,430,145 3,398,797 3,388,214 3,398,048
Average Daily Delinquencies as
a Percent of Average Contracts
Outstanding
31-60 Days(2) . . . . . . . . 2.46% 2.18% 2.21% 2.03% 2.02% 2.35% 2.72%
61-90 Days(2) . . . . . . . . 0.24% 0.17% 0.17% 0.15% 0.15% 0.20% 0.29%
Over 90 Days(3) . . . . . . . 0.05% 0.03% 0.04% 0.03% 0.03% 0.04% 0.07%
</TABLE>
- ----------------
(1) The information in the table includes U.S. retail installment sale
contracts for new and used automobiles and light trucks and includes
previously sold contracts which Ford Credit continues to service; it
does not include retail installment sale contracts purchased by Ford
Credit under certain special financing programs.
(2) Delinquencies represent the daily average number of contracts
delinquent.
(3) Delinquencies represent the average monthly end-of-period number of
contracts delinquent.
S-32
<PAGE> 35
CREDIT LOSS AND REPOSSESSION EXPERIENCE(1)
<TABLE>
<CAPTION>
Three Months Ended
March 31, Year Ended December 31,
------------------ ----------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Average Portfolio
Outstanding During the
Period (Millions) . . . $38,679.8 $34,382.5 $35,698.6 $33,703.3 $31,204.9 $29,505.1 $28,977.1
Percent of Average
Receivables Outstanding
During the Period
without Recourse to
Dealer . . . . . . . . 99.3% 98.9% 99.1% 98.6% 97.7% 96.4% 94.4%
Repossessions as a
Percent of Average
Number of Contracts
Outstanding . . . . . 2.78%(2) 2.29%(2) 2.38% 2.15% 2.27% 2.74% 3.27%
Net Losses as a Percent
of Gross Liquida-
tions(3) . . . . . . 1.86% 1.19% 1.43% 1.06% 1.16% 1.52% 2.29%
Net Losses as a Percent
of Average Portfolio
Outstanding(3) . . . 1.09%(2) 0.69%(2) 0.82% 0.62% 0.69% 0.90% 1.29%
</TABLE>
- -------------------
(1) Except as indicated, all amounts and percentages are based on the
gross amount scheduled to be paid on each contract including
unearned finance and other charges. The information in the table
includes U.S. retail installment sale contracts for new and used
automobiles and light trucks and includes previously sold contracts
which Ford Credit continues to service; it does not include retail
installment sale contracts purchased by Ford Credit under certain
special financing programs.
(2) Annualized rate.
(3) "Net Losses" are equal to the aggregate balance of all contracts which
are determined to be uncollectible in the period less any recoveries
on contracts charged-off in the period or any prior periods.
Effective January 1, 1993 net losses include expenses associated with
outside collection agencies. Other expenses associated with
collection, repossession, and disposition of the vehicle continue to
be excluded. These other expenses are not material to the data
presented.
As shown above, credit losses have increased since the beginning of
1995 reversing a general trend of improvement that had begun in 1989. The
increase reflects an increase in losses per repossession and an increase in
repossession rates. See "Description of the Transfer and Servicing
Agreements--Servicing Procedures" in the Prospectus.
POOL FACTORS
The "Note Pool Factor" for [the] [each class of] Notes will be a
seven-digit decimal which the Servicer will compute prior to each distribution
with respect to such [class of] Notes indicating the remaining outstanding
principal amount of such [class of] Notes, as of the applicable [Distribution]
[Payment] Date (after giving effect to payments to be made on such
[Distribution] [Payment] Date), as a fraction of the initial outstanding
principal amount of such [class of] Notes. The "Certificate Pool Factor" for
the Certificates will be a seven-digit decimal which the Servicer will compute
prior to each distribution with respect to the Certificates indicating the
remaining Certificate Balance, as of the applicable Distribution Date (after
giving effect to distributions to be made on such Distribution Date), as a
fraction of the initial Certificate Balance. [The] [Each] Note Pool Factor and
the Certificate Pool Factor will
S-33
<PAGE> 36
initially be 1.0000000 and thereafter will decline to reflect reductions in the
outstanding principal amount of the [applicable class of] Notes, or the
reduction of the Certificate Balance, as the case may be, as a result of
scheduled payments, prepayments and liquidations of the Receivables [(and also
as a result of a prepayment arising from application of the Pre-Funding
Account)]. [[The] [Each] Note Pool Factor and the Certificate Pool Factor
will not change as a result of the addition of Subsequent Receivables.] A
Noteholder's portion of the aggregate outstanding principal amount of the
[related class of] Notes is the product of (i) the original denomination of
such Noteholder's Note and (ii) the [applicable] Note Pool Factor. A
Certificateholder's portion of the aggregate outstanding Certificate Balance
for the Certificates is the product of (a) the original denomination of such
Certificateholder's Certificate and (b) the Certificate Pool Factor.
MATURITY AND PREPAYMENT CONSIDERATIONS
Information regarding certain maturity and prepayment considerations
with respect to the Securities is set forth under "Maturity and Prepayment
Considerations" in the Prospectus. In addition, the [Class A-2 Notes, the
Class A-3 Notes and the] Certificates will not receive any principal payments
until the [Class A-1] Notes have been paid in full[, and the Class A-3 Notes
will not receive any principal payments until the Class A-2 Notes have been
paid in full]. In addition, no principal payments on the Certificates will be
made until the later of (i) the 199 Distribution Date and (ii) the
Distribution Date next succeeding the Distribution Date on which the [Class
A-1] Notes are paid in full. See "Description of the Notes--Payments of
Principal" and "Description of the Certificates--Distributions of Principal
Payments" herein. As the rate of payment of principal of [the] [each class of]
Notes and the Certificates depends on the rate of payment (including
prepayments) of the principal balance of the Receivables, final payment of
[the] [any class of] Notes and the final distribution in respect of the
Certificates could occur significantly earlier than the respective [Final
Scheduled Distribution Dates] [final scheduled Payment Dates or Distribution
Date]. In addition, the rate of payment of principal of [the] [each Class of]
Notes and the Certificates will be affected by the application of the
Noteholders' Accelerated Principal to pay principal of the Notes.
It is expected that final payment of [the] [each class of] Notes and
the final distribution in respect of the Certificates will occur on or prior to
the respective [Final Scheduled Distribution Dates] [final scheduled Payment
Dates or Distribution Date]. Failure to make final payment of [the] [any class
of] Notes on or prior to the respective Final Scheduled [Payment]
[Distribution] Dates would constitute an Event of Default under the Indenture.
See "Description of the Notes--The Indenture--Events of Default; Rights upon
Event of Default". In addition, the Sale and Servicing Agreement requires that
any remaining Certificate Balance be paid in full on the Final Scheduled
Distribution Date. However, no assurance can be given that sufficient funds
will be available to pay [the] [each class of] Notes and the Certificates in
full on or prior to the respective [Final Scheduled Distribution Dates] [final
scheduled Payment Dates or Distribution Date]. If sufficient funds are not
available, final payment of [the] [any class of] Notes and the final
distribution in respect of the Certificates could occur later than such dates.
The rate of prepayments of the Receivables may be influenced by a
variety of economic, social and other factors, and under certain circumstances
relating to breaches of representations, warranties or covenants, the Seller
and/or the Servicer will be obligated to repurchase Receivables from the Trust.
See "The Receivables Pool" herein and "Description of the Transfer and
Servicing Agreements--Sale and Assignment of Receivables" in the Prospectus. A
higher than anticipated rate of prepayments will reduce the aggregate principal
balance of the Receivables more quickly than expected and thereby reduce
anticipated aggregate interest payments on the Securities. Any reinvestment
risks resulting from a faster or slower incidence of prepayment of Receivables
will be borne entirely by the Noteholders and the Certificateholders as
set forth in the priority of distributions herein. Such reinvestment risks
include the risk that interest rates may be lower at the time such holders
received payments from the Trust than interest rates would otherwise have been
had such prepayments not been made or had such prepayments been made at a
different time.
Holders of Securities should consider, in the case of Securities
purchased at a discount, the risk that a slower than anticipated rate of
principal payments on the Receivables could result in an actual yield that is
less than the
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anticipated yield and, in the case of Securities purchased at a premium, the
risk that a faster than anticipated rate of principal payments on the
Receivables could result in an actual yield that is less than the anticipated
yield.
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to the terms of the Indenture, a
form of which has been filed as an exhibit to the Registration Statement. A
copy of the Indenture will be filed with the Commission following the issuance
of the Securities. The following summary describes certain terms of the Notes
and the Indenture. The summary does not purport to be complete and is subject
to, and is qualified in its entirety by reference to, all the provisions of the
Notes and the Indenture, which are hereby incorporated by reference. The
following summary supplements the description of the general terms and
provisions of the Notes of any given series and the related Indenture set forth
under the headings "Description of the Notes" and "Certain Information
Regarding the Securities" in the Prospectus, to which description reference is
hereby made. , a , will be the Indenture Trustee under the
Indenture.
PAYMENTS OF INTEREST
[The] [Each class of] Notes [other than the Class A-2 Notes] will
constitute Fixed Rate Securities, as such term is defined under "Certain
Information Regarding the Securities--Fixed Rate Securities" in the Prospectus.
[The Class A-2 Notes will constitute Floating Rate Securities which are LIBOR
Securities, as such terms are defined under "Certain Information Regarding the
Securities--Floating Rate Securities" in the Prospectus.] Interest on the
principal amount[s] of the [classes of the] Notes will accrue at the
[respective] per annum Note Interest Rate[s] and will be payable to the
Noteholders [monthly] [quarterly] on each [Distribution] [Payment] Date
commencing , 199 . [However, if on any two consecutive Distribution
Dates any amount is withdrawn from the Reserve Account to cover shortfalls on
the Notes or the Certificates, then each following Distribution Date will
constitute a Payment Date, until the quarterly Payment Date following the first
Distribution Date on which (i) no amount is withdrawn from the Reserve Account
to cover shortfalls and (ii) the amount on deposit in the Reserve Account is
equal to the Specified Reserve Balance.] [However, if the commercial paper
rating or certificate of deposit rating of the Investment Provider is at any
time reduced below A-1+ or P1 by the applicable Rating Agency and the Servicer
is unable to obtain a Replacement Guaranteed Rate Agreement or a pledge of
securities or otherwise satisfy the applicable Rating Agency within 60 days of
receiving notice of such decline, then each following Distribution Date will
constitute a Payment Date. See "Description of the Transfer and Servicing
Agreements--Guaranteed Rate Agreement" herein.] Interest will accrue from and
including the Closing Date (in the case of the first [Distribution] [Payment]
Date), or from the most recent [Distribution] [Payment] Date on which interest
has been paid to but excluding the following [Distribution] [Payment] Date
(each an "Interest Period"). [Interest on the Class A-1 Notes will be
calculated on the basis of actual days elapsed and a 365- or 366-day year, as
applicable.] Interest on the [Class A-1 Notes and] Class A-3] Notes will be
calculated on the basis of a 360-day year of twelve 30-day months. [Interest on
the Class A-2 Notes will be calculated on the basis of actual days elapsed and
a 360-day year.] Interest accrued as of any [Distribution] [Payment] Date but
not paid on such [Distribution] [Payment] Date will be due on the next
[Distribution] [Payment] Date, together with interest on such amount at the
[applicable] Note Interest Rate [plus 2.00%] (to the extent lawful). [With
respect to the Class A-2 Rate, the "Index Maturity" for LIBOR will be [one]
[three] month[s] [(in the case of quarterly Payment Dates) and one month (in
the case of monthly Payment Dates)] and the "Interest Reset Period" for such
calculation will be the Interest Period. See "Certain Information Regarding
the Securities--Floating Rate Securities" in the Prospectus.] Interest
payments on the Notes will generally be derived from the Available Funds
remaining after the payment of the Servicing Fee and from the Reserve Account.
See "Description of the Transfer and Servicing Agreements--Distributions" and
"--Reserve Account" herein. [Interest payments to all classes of Noteholders
will have the same priority. Under certain circumstances, the amount available
for interest payments could be less than the amount of interest payable on the
Notes on any [Distribution] [Payment] Date, in which case each class of
Noteholders will receive their ratable share (based upon the aggregate amount
of
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interest due to such class of Noteholders) of the aggregate amount available to
be distributed in respect of interest on the Notes.]
PAYMENTS OF PRINCIPAL
Principal payments will be made [quarterly] to the Noteholders on each
[Distribution] [Payment] Date in an amount generally equal to the sum[, for
each of the three Collection Periods preceding such Payment Date,] of (i) the
Noteholders' Percentage of the amount (such amount, the "Regular Principal")
equal to the sum of (a) 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),
(b) the principal portion of all payments collected with respect to Simple
Interest Receivables, and (c) the principal balance of each Receivable
purchased by the Servicer, repurchased by the Seller or liquidated by the
Servicer, each with respect to the preceding Collection Period, plus (ii) %
of the portion, if any, of the Available Funds for such Collection Period that
remains after payment of (a) the Servicing Fee, (b) the Accrued Note Interest,
(c) the portion of the Regular Principal allocated to the Noteholders pursuant
to clause (i), (d) the Accrued Certificate Interest, (e) the portion of the
Regular Principal distributed to Certificateholders as described under
"Description of the Certificates--Distributions of Principal Payments" herein,
and (f) the amount, if any, required to be deposited in the Reserve Account on
[such] [the related] Distribution Date [plus the excess of the amount on
deposit in the Reserve Account on such Distribution Date (after giving effect
to all deposits or withdrawals therefrom on such Distribution Date) over the
Specified Reserve Balance)] (such percentage of the remaining portion of
Available Funds [plus such excess], the "Noteholders' Accelerated Principal").
[Principal] [Amounts deposited in the Note Payment Account on each
Distribution Date in respect of principal] payments on the Notes generally will
be derived from the Available Funds and the amount, if any, in the Reserve
Account up to the Available Reserve Amount remaining after the payment of the
Servicing Fee and the Accrued Note Interest and, in the case of the
Noteholders' Accelerated Principal, the Certificateholders' Distribution Amount
and the amount, if any, required to be deposited into the Reserve Account. See
"Description of the Transfer and Servicing Agreements--Distributions" and
"--Reserve Account" herein.
On the Business Day immediately preceding each Distribution Date (a
"Determination Date") the Indenture Trustee will determine the amount in the
Collection Account allocable to interest and the amount allocable to principal
on the basis described under "Description of the Transfer and Servicing
Agreements--Distributions" in the Prospectus, and payments to Securityholders
on the following Distribution Date will be based on such allocation.
[On each Distribution Date, the Indenture Trustee will deposit into
the Note Payment Account amounts set aside for the payment of principal and
interest on the Notes on the related Payment Date, as described under
"Description of the Transfer and Servicing Agreements--Distributions" herein.
Such amounts will be invested from the date of deposit to the related Payment
Date by the Indenture Trustee in [Permitted Investments] [certain eligible
investments pursuant to the Guaranteed Rate Agreement]. [See "Description of
the Transfer and Servicing Agreements--Guaranteed Rate Agreement" herein.]]
Principal payments on the Notes will be applied on each [Distribution]
[Payment] Date [, first,] to the principal amount of the [Class A-1] Notes
until such principal amount is reduced to zero[, then second, to the principal
amount of the Class A-2 Notes until such principal amount is reduced to zero
and then third, to the principal amount of the Class A-3 Notes until such
principal amount is reduced to zero]. The principal amount of the [Class
A-1] Notes, to the extent not previously paid, will be due on the [Class A-1]
Final Scheduled [Distribution] [Payment] Date[, the principal amount of the
Class A-2 Notes, to the extent not previously paid, will be due on the Class
A-2 Final Scheduled [Distribution] [Payment] Date, and the principal amount
of the Class A-3 Notes, to the extent not previously paid, will be due on the
Class A-3 Final Scheduled [Distribution] [Payment] Date]. The actual date on
which the aggregate outstanding principal amount of [the] [any class of] Notes
is paid may be earlier or later than the [respective] Final Scheduled
[Distribution] [Payment] Date[s] set forth above based on a variety of factors,
including those described under "Maturity and Prepayment Considerations" herein
and in the Prospectus.
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<PAGE> 39
[MANDATORY REDEMPTION
[The] [A class or classes of] Notes will be redeemed in part on the
Distribution Date on or immediately following the last day of the Funding
Period in the event that amounts remain on deposit in the Pre-Funding Account
after giving effect to the purchase of all Subsequent Receivables, including
any such purchase on such date (a "Mandatory Redemption"). If the amount on
deposit in the Pre-Funding Account is less than or equal to $ , then
such amount will be used to redeem the [Class A-1] Notes [up to an amount not
to exceed their outstanding principal amount and then to redeem the Class A-2
Notes]. Otherwise the amount on deposit in the Pre-Funding Account on such
date will be used to redeem [each class of] the Notes and the Certificates, and
the aggregate principal amount of [each class of] the Notes to be redeemed will
be an amount equal to [the Notes'] [such class'] Pre-Funded Percentage of the
amount then on deposit in the Pre-Funding Account.
[The Note Prepayment Premium will be payable by the Trust to the
Noteholders pursuant to a Mandatory Redemption if the amount on deposit in the
Pre-Funding Account exceeds $ . The Note Prepayment Premium [for each
class of Notes] will equal the excess, if any, discounted as described below,
of (i) the amount of interest that would accrue on [the Notes'] [such class']
Pre-Funded Percentage of any remaining Pre-Funded Amount (the "Note Prepayment
Amount") at the Note Interest Rate borne by [the] [such class of] Notes during
the period commencing on and including the Distribution Date on which such Note
Prepayment Amount is required to be distributed to the Noteholders [of such
class] to but excluding [, in the case of the Class A-1 Notes, ,
in the case of the Class A-2 Notes and , in the case of the Class
A-3 Notes], over (ii) the amount of interest that would have accrued on such
Note Prepayment Amount over the same period at a per annum rate of interest
equal to the bond equivalent yield to maturity on the Determination Date
preceding such Distribution Date on the [, in the case of the Class
A-1 Notes, the , in the case of the Class A-2 Notes and the
, in the case of the Class A-3 Notes]. Such excess shall be discounted to
present value to such Distribution Date at the applicable yield described in
clause (ii) above. Pursuant to the Sale and Servicing Agreement, the Seller
will be obligated to pay the sum of the Note Prepayment Premium [for each class
of Notes] and the Certificate Prepayment Premium to the Trust as liquidated
damages for the failure to deliver Subsequent Receivables having an aggregate
principal balance equal to the Pre-Funded Amount. The Trust's obligation to
pay the Note Prepayment Premium [for each class of Notes] and the Certificate
Prepayment Premium will be limited to funds received from the Seller pursuant
to the preceding sentence. In the event that such funds are insufficient to
pay the Note Prepayment Premium [for each class of Notes] and the Certificate
Prepayment Premium in full, Noteholders [of each class of Notes] will receive
their ratable share (based upon the aggregate Note Prepayment Premium [for such
class]) of the aggregate amount available to be distributed in respect of the
Note Prepayment Premium and the Certificate Prepayment Premium. No other
assets of the Seller or the Trust will be available for the purpose of making
such payment.]]
OPTIONAL REDEMPTION
The [Class A-3] Notes will be redeemed in whole, but not in part, on
any Distribution Date [after all the other classes of Notes have been paid in
full] on which the Servicer exercises its option to purchase the Receivables.
The Servicer may purchase the Receivables when the Pool Balance shall have
declined to 10% or less of the Initial Pool Balance, as described in the
Prospectus under "Description of the Transfer and Servicing
Agreements--Termination." The redemption price will be equal to the unpaid
principal amount of the [Class A-3] Notes plus accrued and unpaid interest
thereon (the "Redemption Price").
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the terms of the Trust
Agreement, a form of which has been filed as an exhibit to the Registration
Statement. A copy of the Trust Agreement will be filed with the Commission
follow-
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<PAGE> 40
ing the issuance of the Securities. The following summary describes certain
terms of the Certificates and the Trust Agreement. The summary does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, all the provisions of the Certificates and the Trust Agreement.
The following summary supplements the description of the general terms and
provisions of the Certificates of any given series and the related Trust
Agreement set forth under the headings "Description of the Certificates,"
"Certain Information Regarding the Securities" and "Description of the Transfer
and Servicing Agreements" in the Prospectus, to which description reference is
hereby made.
DISTRIBUTIONS OF INTEREST INCOME
On each Distribution Date, commencing , 199 , the
Certificateholders will be entitled to distributions in an amount equal to the
amount of interest that would accrue on the Certificate Balance at the
Certificate Rate. The Certificates will constitute Fixed Rate Securities, as
such term is defined under "Certain Information Regarding the Securities--Fixed
Rate Securities" in the Prospectus. Interest in respect of a Distribution Date
will accrue 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 will be calculated on the basis of a 360-day year of twelve 30-day months.
Interest distributions due for any Distribution Date but not distributed on
such Distribution Date will be due on the next Distribution Date increased by
an amount equal to interest on such amount at the Certificate Rate (to the
extent lawful). Interest distributions with respect to the Certificates will
generally be funded from the portion of the Available Funds and the funds in
the Reserve Account remaining after the distribution of the Servicing Fee and
the Noteholders' Payment Amount. Following the occurrence of an Event of
Default resulting in an acceleration of the Notes or following an Insolvency
Event or a dissolution with respect to the Seller or the General Partner, the
Noteholders will be entitled to be paid in full before any distributions may be
made on the Certificates. See "Description of the Transfer and Servicing
Agreements--Distributions" and "--Reserve Account" herein.
DISTRIBUTIONS OF PRINCIPAL PAYMENTS
Certificateholders will be entitled to distributions on each
Distribution Date, commencing with the later of (i) the Distribution
Date and (ii) the Distribution Date next succeeding the Distribution
Date on which the [Class A-1] Notes are paid in full, in an amount generally
equal to the Certificateholders' Percentage of the Regular Principal.
Distributions with respect to principal payments will generally be funded from
the portion of the Available Funds and funds in the Reserve Account remaining
after the distribution of the Servicing Fee, the Noteholders' Payment Amount
and the Accrued Certificate Interest. See "Description of the Transfer and
Servicing Agreements--Distributions" and "--Reserve Account" herein. However,
following the occurrence of an Event of Default resulting in an acceleration of
the Notes or following an Insolvency Event or a dissolution with respect to the
Seller or the General Partner, the Noteholders will be entitled to be paid in
full before any distributions may be made on the Certificates. [In addition,
upon any reduction or withdrawal by any Rating Agency of its rating of [any
class of] the Notes, then, with respect to each Distribution Date thereafter,
the Certificateholders will not receive any distributions of principal until
all the Notes have been paid in full or such rating has been restored. There
can be no assurance that a rating will remain for a given period of time or
that a rating will not be lowered or withdrawn entirely by a Rating Agency if
in its judgment circumstances in the future so warrant.]
[MANDATORY REPURCHASE
Cash distributions to Certificateholders will be made, on a pro rata
basis, on the Distribution Date on or immediately following the last day of the
Funding Period in the event that the amount on deposit in the Pre-Funding
Account after giving effect to the purchase of all Subsequent Receivables,
including any such purchase on such date, exceeds $ (a "Mandatory
Repurchase"). The aggregate principal balance of the Certificates to be
repurchased will be an amount equal to the Certificates' Pre-Funded Percentage
of the amount then on deposit in the Pre-Funding Account.
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<PAGE> 41
[The Certificate Prepayment Premium will be payable by the Trust to
the Certificateholders at the time of any prepayment of the Certificates
pursuant to a Mandatory Repurchase. The Certificate Prepayment Premium for the
Certificates will equal the excess, if any, discounted as described below, of
(i) the amount of interest that would accrue on the Certificates' share of any
remaining Pre-Funded Amount (the "Certificate Prepayment Amount") at the
Certificate Rate during the period commencing on and including the Distribution
Date on which such Certificate Prepayment Amount is required to be distributed
to Certificateholders to but excluding , over (ii) the amount of
interest that would have accrued on such Certificate Prepayment Amount over the
same period at a per annum rate of interest equal to the bond equivalent yield
to maturity on the Determination Date preceding such Distribution Date on the
. Such excess shall be discounted to present value to such
Distribution Date at the yield described in clause (ii) above. Pursuant to
the Sale and Servicing Agreement, the Seller will be obligated to pay the sum
of the Note Prepayment Premium [for each class of Notes] and the Certificate
Prepayment Premium to the Trust as liquidated damages for the failure to deliver
Subsequent Receivables having an aggregate principal balance equal to the
Pre-Funded Amount. The Trust's obligation to pay the Note Prepayment Premium
[for each class of Notes] and the Certificate Prepayment Premium will be
limited to funds received from the Seller pursuant to the preceding sentence.
In the event that such funds are insufficient to pay the Note Prepayment
Premium [for each class of Notes] and the Certificate Prepayment Premium in
full, Certificateholders will receive their ratable share (based upon the
aggregate Certificate Prepayment Premium) of the aggregate amount available to
be distributed in respect of the Note Prepayment Premium and the Certificate
Prepayment Premium. No other assets of the Trust will be available for the
purpose of making such payment.]]
OPTIONAL PREPAYMENT
If the Servicer exercises its option to purchase the Receivables when
the Pool Balance declines to 10% or less of the Initial Pool Balance,
Certificateholders will receive an amount in respect of the Certificates equal
to the outstanding Certificate Balance together with accrued interest at the
Certificate Rate, which distribution shall effect the early retirement of the
Certificates. See "Description of the Transfer and Servicing
Agreements--Termination" in the Prospectus.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of the Sale and
Servicing Agreement, the Administration Agreement and the Trust Agreement
(collectively, the "Transfer and Servicing Agreements"). Forms of the Transfer
and Servicing Agreements have been filed as exhibits to the Registration
Statement. A copy of the Transfer and Servicing Agreements will be filed with
the Commission following the issuance of the Securities. The summary does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, all the provisions of the Transfer and Servicing Agreements. The
following summary supplements the description of the general terms and
provisions of the Transfer and Servicing Agreements set forth under the
headings "Description of the Transfer and Servicing Agreements" in the
Prospectus, to which description reference is hereby made.
[SALE AND ASSIGNMENT OF RECEIVABLES; SUBSEQUENT RECEIVABLES
Certain information with respect to the conveyance of the Initial
Receivables from the Seller to the Trust on the Closing Date pursuant to the
Sale and Servicing Agreement is set forth under "Description of the Transfer
and Servicing Agreements--Sale and Assignment of Receivables" in the
Prospectus. In addition, during the Funding Period, pursuant to the Sale and
Servicing Agreement, the Seller will be obligated to sell to the Trust
Subsequent Receivables having an aggregate principal balance equal to
approximately $ (such amount being equal to the initial Pre-Funded
Amount) to the extent that such Subsequent Receivables are available.
During the Funding Period on each Subsequent Transfer Date, subject to
the conditions described below, the Seller will sell and assign to the Trust,
without recourse, the Seller's entire interest in the Subsequent Receivables
designated by the Seller as of the related Subsequent Cutoff Date and
identified in a schedule attached to a subsequent
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<PAGE> 42
transfer assignment relating to such Subsequent Receivables executed on such
date by the Seller. It is expected that on the Closing Date, subject to the
conditions described below, certain of the Subsequent Receivables designated by
the Seller and arising between the Initial Cutoff Dates and the Closing Date
will be conveyed to the Trust. Upon the conveyance of Subsequent Receivables
to the Trust on a Subsequent Transfer Date, (i) the Pool Balance will increase
in an amount equal to the aggregate principal balances of the Subsequent
Receivables, (ii) an amount equal to [the sum of (a)] % of the aggregate
principal balances of such Subsequent Receivables will be withdrawn from the
Pre-Funding Account and will be deposited in the Reserve Account and (iii) an
amount equal to the excess of the aggregate principal balances of such
Subsequent Receivables over the amount described in clause (ii) will be
withdrawn from the Pre-Funding Account and paid to the Seller.] [Coincident
with each such transfer of Subsequent Receivables, the Yield Supplement
Agreement will require Ford Credit to deposit into the Yield Supplement Account
an amount equal to the Additional Yield Supplement Amount, if any, in respect
of such Subsequent Receivables. See "--Yield Supplement Account; Yield
Supplement Agreement" herein.]
[Any conveyance of Subsequent Receivables is subject to the
satisfaction, on or before the related Subsequent Transfer Date, of the
following conditions precedent, among others: (i) each such Subsequent
Receivable must satisfy the eligibility criteria specified in the Sale and
Servicing Agreement; (ii) the Seller will not have selected such Subsequent
Receivables in a manner that it believes is adverse to the interests of the
Noteholders or the Certificateholders; (iii) as of the related Subsequent
Cutoff Date, the Receivables, including any Subsequent Receivables conveyed by
the Seller as of such Subsequent Cutoff Date, satisfy the criteria described
under "The Receivables Pool" herein and "The Receivables Pools" in the
Prospectus; (iv) the applicable Reserve Initial Deposit for such Subsequent
Transfer Date shall have been made; and (v) the Seller shall have executed and
delivered to the Trust (with a copy to the Indenture Trustee) a written
assignment conveying such Subsequent Receivables to the Trust (including a
schedule identifying such Subsequent Receivables). Moreover, any such
conveyance of Subsequent Receivables made during any given Collection Period
will also be subject to the satisfaction, on or before the fifteenth day of the
month following the end of such Collection Period, of the following conditions
subsequent, among others: (i) the Seller will have delivered certain opinions
of counsel to the Owner Trustee, the Indenture Trustee and the Rating Agencies
with respect to the validity of the conveyance of all such Subsequent
Receivables conveyed during such Collection Period; (ii) the Trust and the
Indenture Trustee shall have received written confirmation from a firm of
independent certified public accountants that, as of the end of the preceding
Collection Period, the Receivables in the Trust at that time, including the
Subsequent Receivables conveyed by the Seller during each Collection Period,
satisfied the parameters described under "The Receivables Pool" herein and
under "The Receivables Pools" in the Prospectus; and (iii) each of the Rating
Agencies shall have notified the Seller in writing that, following the addition
of all such Subsequent Receivables, each class of the Notes and the
Certificates will be rated by the Rating Agencies in the same rating category
as they were rated by the Rating Agencies on the Closing Date. The Seller will
immediately repurchase any Subsequent Receivable, at a price equal to the
Purchase Amount thereof, upon the failure of the Seller to satisfy any of the
foregoing conditions subsequent with respect thereto.]
[Subsequent Receivables may have been originated by Ford Credit at a
later date using credit criteria different from those which were applied to the
Initial Receivables. See "Risk Factors--The Subsequent Receivables and the
Pre-Funding Account" and "The Receivables Pool" herein.]]
ACCOUNTS
In addition to the Accounts referred to under "Description of the
Transfer and Servicing Agreements--Accounts" in the Prospectus, the Servicer
will also establish and will maintain with the Indenture Trustee [the
Pre-Funding Account] [the Yield Supplement Account] [and] the Reserve Account,
in the name of the Indenture Trustee on behalf of the Noteholders and the
Certificateholders. The Servicer will also establish and will maintain with
the Indenture Trustee the Payahead Account, in the name of the Indenture
Trustee. The Payahead Account will not be included in the property of the
Trust.
SERVICING COMPENSATION AND EXPENSES
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The Servicing Fee Rate with respect to the Servicing Fee for the
Servicer will be 1.00% per annum of the Pool Balance as of the first day of the
related Collection Period. The Servicing Fee (together with any portion of the
Servicing Fee that remains unpaid from prior Distribution Dates) will be paid
on each Distribution Date solely to the extent of the Available Interest. The
Servicer is also entitled to receive a supplemental servicing fee (the
"Supplemental Servicing Fee") for each Collection Period equal to any late,
prepayment, and other administrative fees and expenses collected during the
Collection Period[, plus any interest earned during the Collection Period on
deposits made with respect to the Receivables]. See "Description of the
Transfer and Servicing Agreements--Servicing Compensation and Expenses" in the
Prospectus.
DISTRIBUTIONS
Deposits to Collection Account. On or before each Distribution Date,
the Servicer will cause all collections and other amounts constituting the
Available Funds to be deposited into the Collection Account. The "Available
Funds" for a Distribution Date shall be the sum of the Available Interest and
the Available Principal.
The "Available Interest" for a Distribution Date will generally be 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
Precomputed 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) all proceeds of the liquidation of defaulted Receivables ("Liquidated
Receivables"), net of expenses incurred by the Servicer in connection with such
liquidation and any amounts required by law to be remitted to the Obligor on
such Liquidated Receivables ("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 Collection Periods; (iii) all
Advances made by the Servicer of interest due on the Receivables; [(iv) all
advances, if any, of interest made by the Servicer in respect of Receivables
which were prepaid in full]; [and] (v) the Purchase Amount of each Receivable
that was repurchased by the Seller or purchased by the Servicer under an
obligation which arose during the related Collection Period, to the extent
attributable to accrued interest thereon[; (vi) Investment Earnings for such
Distribution Date][; (vii) the Yield Supplement Deposit Amount for such
Distribution Date] [(viii) the payments, if any, received under the Interest
Rate Cap for such Distribution Date;] [and (ix) the Net Trust Swap Receipt, if
any, for such Distribution Date]. The Available Interest shall be determined
on the related Determination Date based on the methodology described under
"Description of the Notes--Payments of Principal" herein and "Description of
the Transfer and Servicing Agreements--Distributions--Allocations of
Collections on Receivables" in the Prospectus.
The "Available Principal" for a Distribution Date will generally be
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 amount
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 repurchased by the
Seller or purchased by the Servicer under an obligation which arose during the
related Collection Period; (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; and (vi) on the Final Scheduled Distribution Date, any amounts advanced
by the Servicer with respect to principal on the Receivables. The Available
Principal shall be determined on the related Determination Date based on the
methodology described under
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<PAGE> 44
"Description of the Notes--Payments of Principal" and "Description of the
Transfer and Servicing Agreements--Distributions--Allocations of Collections
on Receivables" in the Prospectus.
The Available Interest and the Available Principal on any Distribution
Date shall exclude the following: (i) amounts received on Precomputed
Receivables to the extent that the Servicer has previously made an unreimbursed
Precomputed Advance; (ii) Liquidation Proceeds with respect to a particular
Precomputed Receivable to the extent of any unreimbursed Precomputed Advances
thereon; (iii) 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; (iv) amounts received in respect of
interest on Simple Interest Receivables during the preceding Collection Period
in excess of the amount of interest that would have been due during the
Collection Period on Simple Interest Receivables at their respective APRs
(assuming that a payment is received on each Simple Interest Receivable on the
due date thereof); [and] (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
released from the Pre-Funding Account.]
Monthly Withdrawals from Collection Account. On each Distribution
Date, the Servicer will allocate amounts on deposit in the Collection Account
as described under "Description of the Transfer and Servicing
Agreements--Distributions--Allocation of Collections on Receivables" in the
Prospectus and will instruct the Indenture Trustee to make the following
deposits and distributions, to the extent of the amount then on deposit in the
Collection Account, in the following order of priority:
(i) to the Servicer, from the Available Interest (as so
allocated), the Servicing Fee and all unpaid Servicing Fees from prior
Collection Periods;
(ii) to the Note Payment Account, from the Available Funds
remaining after the application of clause (i), the Accrued Note
Interest [and the Net Trust Swap Payment, if any];
(iii) to the Note Payment Account, from the Available Funds
remaining after the application of clauses (i) and (ii), the
Noteholders' Principal Payment Amount;
(iv) to the Certificate Distribution Account, from the
Available Funds remaining after the application of clauses (i) through
(iii), the Accrued Certificate Interest;
(v) to the Certificate Distribution Account, from the
Available Funds remaining after the application of clauses (i) through
(iv), the Certificateholders' Principal Distribution Amount; and
(vi) to the Reserve Account, the Available Funds remaining
after the application of clauses (i) through (v).
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 with respect to the Seller or the
General Partner, the Available Funds 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 until the principal
amount and accrued interest on the Notes has been paid in full.
On each Determination Date (other than the first Determination Date),
the Servicer will provide the Indenture Trustee with certain information with
respect to the Collection Period related to the prior Distribution Date,
including the amount of aggregate collections on the Receivables, the aggregate
amount of Receivables which were written off, the aggregate Advances to be made
by the Servicer and the aggregate Purchase Amount of Receivables to be
repurchased by the Seller or to be purchased by the Servicer.
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For purposes hereof, the following terms shall have the following
meanings:
"Accrued Note Interest" means, 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.
"Noteholders' Interest Carryover Shortfall" means, 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] [Payment] Date, to
the extent permitted by law, at the [respective] Note Interest Rate[s] borne
by [each class of] the Notes for the [related Interest Period] [period from and
including the prior Distribution Date to but excluding such Distribution Date]
[plus 2.00% per annum].
"Noteholders' Monthly Accrued Interest" means, with respect to any
Distribution Date, interest accrued for the [related Interest Period] [period
from and including the Closing Date (in the case of the first Distribution
Date) or from and including the prior Distribution Date to but excluding such
Distribution Date] on [the] [each class of] Notes at the [respective] Note
Interest Rate [for such class] on the outstanding principal amount of the
Notes [of such class] on the immediately preceding [Distribution] [Payment]
Date after giving effect to all payments of principal to the Noteholders [of
such class] on or prior to such [Distribution] [Payment] Date (or, in the case
of the first [Distribution] [Payment] Date, on the Closing Date).
"Noteholders' Monthly Principal" means, with respect to any
Distribution Date, the sum of (i) the Noteholders' Percentage of the Regular
Principal and (ii) the Noteholders' Accelerated Principal. [Or, state other
formula for determining the Noteholders' Monthly Principal.]
"Noteholders' Payment Amount" means, with respect to any Distribution
Date, the sum of the Noteholders' Principal Payment Amount and the Accrued Note
Interest.
"Noteholders' Percentage" means (i) 100% for each Distribution Date to
and including the later to occur of (x) the Distribution Date next succeeding
the Distribution Date, on which the principal amount of the [Class A-1] Notes
is reduced to zero [and (y) the 199 Distribution Date], (ii) for each
Distribution Date thereafter to and including the Distribution Date on which
the principal amount of the [Class A-3] Notes is reduced to zero, the
percentage equivalent of a fraction, the numerator of which is the outstanding
principal amount of the Notes on the Distribution Date immediately preceding
the Distribution Date for which the Noteholders' Percentage is being calculated
(after giving effect to all distributions made on such immediately preceding
Distribution Date) and the denominator of which is the Pool[/Pre-Funding]
Balance on the last day of the Collection Period second preceding the
Distribution Date for which the Noteholders' Percentage is being calculated,
[unless the Reserve Account balance is less than [ % of] the Specified
Reserve Balance, then the Noteholders' Percentage shall be %,] and (iii)
zero for each Distribution Date thereafter [; provided, however, upon any
reduction or withdrawal by any Rating Agency of its rating of [the] [any class
of] Notes, then, with respect to each Distribution Date thereafter until the
principal amount of all the Notes is paid in full or such rating is restored,
the Noteholders' Percentage shall mean 100%]. [Or, state other methods for
determining the Noteholders' Percentage.]
"Noteholders' Principal Carryover Shortfall" means, as of the close of
any Distribution Date, the excess of the Noteholders' Monthly Principal 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" means, with respect to any
Distribution Date, the sum of the Noteholders' Monthly 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' Principal Payment Amount shall not exceed the outstanding
principal amount of the Notes; and provided, further, that (i) the
Noteholders'
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<PAGE> 46
Principal Payment Amount on the [Class A-1] Final Scheduled [Distribution]
[Payment] Date shall not be less than the Amount that is necessary (after
giving effect to other amounts [on deposit and] to be deposited in the Note
Payment Account on such Distribution Date and allocable to principal) to reduce
the outstanding principal amount of the [Class A-1] Notes to zero[; (ii) the
Noteholders' Principal Payment Amount on the Class A-2 Final Scheduled
[Distribution] [Payment] Date shall not be less than the amount that is
necessary (after giving effect to other amounts [on deposit and] to be
deposited in the Note Payment Account on such Distribution Date and allocable
to principal) to reduce the outstanding principal amount of the Class A-2
Notes to zero; and (iii) on the Class A-3 Final Scheduled [Distribution]
[Payment] Date the Noteholders' Principal Payment Amount shall not be less than
the amount that is necessary (after giving effect to other amounts [on deposit
and] to be deposited in the Note Payment Account on such Distribution Date and
allocable to principal) to reduce the outstanding principal amount of the Class
A-3 Notes to zero].
"Accrued Certificate Interest" means, 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.
"Certificate Balance" equals, initially, $ and, thereafter,
equals the initial Certificate Balance, reduced by all amounts allocable to
principal previously distributed to Certificateholders.
"Certificateholders' Distribution Amount" means, with respect to any
Distribution Date, the sum of the Certificateholders' Principal Distribution
Amount and the Accrued Certificate Interest.
"Certificateholders' Interest Carryover Shortfall" means, with respect
to any Distribution Date, the excess of the Certificateholders' Monthly Accrued
Interest for the preceding Distribution Date and any outstanding
Certificateholders' Interest Carryover Shortfall on such preceding Distribution
Date, over the amount in respect of interest that is actually deposited in the
Certificate Distribution Account on such preceding Distribution Date, plus
interest on such excess, to the extent permitted by law, at the Certificate
Rate for the related Interest Period.
"Certificateholders' Monthly Accrued Interest" means, with respect to
any Distribution Date, 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 immediately preceding Distribution Date, after giving effect to
all payments 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' Monthly Principal" means, with respect to any
Distribution Date, the Certificateholders' Percentage of the Regular Principal.
[Or, state other method for determining the Certificateholders' Monthly
Principal.]
"Certificateholders' Percentage" means (i) for each Distribution Date
to and including the later to occur of (x) the Distribution Date next
succeeding the Distribution Date on which the principal amount of [all classes
of] the [Class A-1] Notes is reduced to zero [and (y) the
199 Distribution Date], zero, and (ii) for each Distribution Date
thereafter to and including the Distribution Date on which the Certificate
Balance is reduced to zero, the percentage equivalent of a fraction, the
numerator of which is the outstanding Certificate Balance on the Distribution
Date immediately preceding the Distribution Date for which the
Certificateholders' Percentage is being calculated (after giving effect to all
distributions made on such immediately preceding Distribution Date) and the
denominator of which is the Pool[/Pre-Funding] Balance on the last day of the
Collection Period second preceding the Distribution Date for which the
Certificateholders' Percentage is being calculated, [unless the Reserve Account
balance is less than [ % of] the Specified Reserve Balance, then the
Certificateholders' Percentage shall be %] [; provided, however, upon any
reduction or withdrawal by any Rating Agency of its rating of [the] [any class
of] Notes, then, with respect to each Distribution Date thereafter until the
principal amount of all the Notes is paid in full or such rating is restored,
the Certificateholders' Percentage shall mean zero]. [Or, state other methods
for determining the Certificateholders' Percentage.]
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<PAGE> 47
"Certificateholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Certificateholders' Monthly
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' Principal Distribution Amount" means, with
respect to any Distribution Date, the sum of the Certificateholders' Monthly
Principal for such Distribution Date and the Certificateholders' Principal
Carryover Shortfall as of the close of the preceding Distribution Date;
provided, however, that the Certificateholders' Principal Distribution Amount
shall not exceed the Certificate Balance. In addition, on the Final Scheduled
Distribution Date, the principal required to be distributed to
Certificateholders 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.
On each [Distribution] [Payment] Date, all amounts on deposit in the
Note Payment Account [(other than [any] Investment Earnings [in excess of the
weighted average of the Note Interest Rates] [and the Certificate Rate])] will
be paid in the following order of priority:
(i) to the [applicable] Noteholders, accrued and unpaid
interest on the outstanding principal amount of the [applicable class
of] Notes at the [applicable] Note Interest Rate [and to the Swap
Counterparty, the Net Trust Swap Payment, if any, for such
[Distribution] [Payment] Date, on a pro rata basis with the amount[s]
payable to the Noteholders pursuant to this clause (i)]; [and]
(ii) to the Noteholders [of the Class A-1 Notes] in
reduction of principal until the principal amount of the [Class A-1]
Notes has been reduced to zero[;
(iii) to the Noteholders of the Class A-2 Notes in reduction
of principal until the principal amount of the Class A-2 Notes has
been reduced to zero; and
(iv) to the Noteholders of the Class A-3 Notes in reduction
of principal until the principal amount of the Class A-3 Notes has
been reduced to zero].
On each Distribution Date, all amounts on deposit in the Certificate
Distribution Account will be distributed to the Certificateholders.
RESERVE ACCOUNT
The rights of the Certificateholders to receive distributions with
respect to the Receivables generally will be subordinated to the rights of the
Noteholders in the event of defaults and delinquencies on the Receivables as
provided in the Sale and Servicing Agreement. The protection afforded to the
Noteholders through subordination will be effected both by the preferential
right of the Noteholders to receive current distributions with respect to the
Receivables and by the establishment of the Reserve Account. The Reserve
Account will be created with a deposit initially by the Seller on the Closing
Date [and thereafter with deposits from funds in the Pre-Funding Account that
would otherwise be payable to the Seller on each Subsequent Transfer Date]
(such deposit[s, collectively], the "Reserve Initial Deposit"). The initial
deposit by the Seller on the Closing Date will also include the amount
specified in clause (b) of the following paragraph.
Subject to reduction as hereafter described, the "Specified Reserve
Balance" with respect to any Distribution Date means the sum of (i) [the sum of
(a)] % of the [Initial Pool Balance] [Pool Balance as of the Initial Cutoff
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<PAGE> 48
Date] [, plus (b) an amount related to the difference between anticipated
investment earnings on the remaining Pre-Funded Amount and the weighted average
interest expense on the portion of the Notes and Certificates represented by
the remaining Pre-Funded Amount] and (ii) % of the Pool Balance on the first
day of the related Collection Period. [However, so long as on any
Distribution Date (except the first Distribution Date) the sum of (x) the
outstanding principal amount of the Securities (after giving effect to
distributions made on the prior Distribution Date) and (y) the aggregate amount
of Payaheads that have been collected but not yet applied as payments under the
related Receivables as of the first day of the related Collection Period is
less than or equal to [the sum of] % of (a) the Pool Balance on the first
day of the related Collection Period [and (b) the Pre-Funded Amount on such
date], then the portion of the Specified Reserve Balance set forth in clause
(i) above will be reduced to % of the [Initial Pool Balance] [Pool Balance
as of the Initial Cutoff Date].] [In addition, so long as on any Distribution
Date (except the first Distribution Date) the sum of (x) the outstanding
principal amount of the Securities (after giving effect to distributions made
on the prior Distribution Date) and (y) the aggregate amount of Payaheads that
have been collected but not yet applied as payments under the related
Receivables as of the first day of the related Collection Period is less than
or equal to [the sum of] % of [(a)] the Pool Balance on the first day of the
related Collection Period [and (b) the Pre-Funded Amount on such day], then
such portion of the Specified Reserve Balance set forth in clause (i) above
will be reduced to % of the [Initial Pool Balance] [Pool Balance as of the
Initial Cutoff Date].] [With respect to the portion of the Specified Reserve
Balance set forth in clause (ii) above, so long as on any Distribution Date
(except the first Distribution Date) the sum of (x) the outstanding principal
amount of the Securities (after giving effect to distributions made on the
prior Distribution Date) and (y) the aggregate amount of Payaheads that have
been collected but not yet applied as payments under the related Receivables as
of the first day of the related Collection Period is less than or equal to [the
sum of] % of [(a)] the Pool Balance on the first day of the related Collection
Period [and (b) the Pre-Funded Amount on such day], then such portion will be
reduced to an amount equal to the product of (I) the Pool Balance on the first
day of the related Collection Period and (II) the percentage (which shall not
be greater than % or less than zero) equal to (X) the percentage derived
from the fraction, the numerator of which is the outstanding principal amount
of the Securities (after giving effect to distributions made on the prior
Distribution Date) and the denominator of which is such Pool Balance less (Y)
%.] The portion of the Specified Reserve Balance specified in clause (ii)
above may be invested in motor vehicle sale contracts originated by Ford Credit
and secured by motor vehicles financed thereby that are not included in the
Pool Balance. [The Specified Reserve Balance is further subject to adjustment
in certain circumstances described herein.]
[The Specified Reserve Balance would also be increased to the extent
that the Receivables in the Trust on a Subsequent Transfer Date, including the
Subsequent Receivables to be conveyed to the Trust on such Subsequent Transfer
Date, have a weighted average APR of less than %. See "The Receivables Pool"
herein. In addition, subject to certain limitations, the Seller has the option
to increase the Specified Reserve Balance in connection with the addition of
Subsequent Receivables.]
If the amount on deposit in the Reserve Account on any Distribution
Date (after giving effect to all deposits or withdrawals therefrom on such
Distribution Date) is greater than the Specified Reserve Balance for such
Distribution Date, except as described below and subject to certain
limitations, the Servicer will instruct the Indenture Trustee to [distribute
such excess to the Seller] [apply such excess as Noteholders' Accelerated
Principal]. Upon any distribution to the Seller of amounts from the Reserve
Account, neither the Noteholders nor the Certificateholders will have any
rights in, or claims to, such amounts. [Subsequent to any reduction or
withdrawal by any Rating Agency of its rating of [the] [any class of] Notes,
unless such rating has been restored, any such excess released from the Reserve
Account on a Distribution Date will be deposited in the Note Payment Account
for payment to Noteholders as an accelerated payment of principal on [such
Distribution] [the related Payment] Date.] [Or, state other methods for
determining the Specified Reserve Balance and applying such excess amounts.]
Amounts held from time to time in the Reserve Account will continue to
be held for the benefit of Noteholders and Certificateholders. On each
Distribution Date, funds will be withdrawn from the Reserve Account up to the
Available Reserve Amount to the extent that the [part of the] Available Funds
(after the payment of the Servicing Fee) with respect to any Collection Period
is less than the Noteholders' Payment Amount and will be deposited in the Note
Payment Account. In addition, funds will be withdrawn from the Reserve Account
up to the
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<PAGE> 49
Available Reserve Amount (as reduced by any withdrawal pursuant to the
preceding sentence) to the extent that the Available Funds remaining after
the payment of the Servicing Fee and the deposit of the Noteholders' Payment
G33 mount in the Note Payment Account is less than the Certificateholders'
Distribution Amount and will be deposited in the Certificate Distribution
Account. [If funds applied in accordance with the preceding sentence are
insufficient to distribute interest due on the Certificates, subject to certain
limitations, funds will be withdrawn from the Reserve Account and applied to
distribute interest due on the Certificates to the extent of the Certificate
Interest Reserve Amount.] On each Distribution Date, the Reserve Account will
be reinstated up to the Specified Reserve Balance to the extent, if any, of the
Available Funds remaining after payment of the Servicing Fee, the deposit of
the Noteholders' Payment Amount into the Note Payment Account and the deposit
of the Certificateholders' Distribution Amount into the Certificate
Distribution Account.
"Available Reserve Amount" means, with respect to any Distribution
Date, the amount of funds on deposit in the Reserve Account on such
Distribution Date [(other than Investment Earnings)] [ less the Certificate
Interest Reserve Amount with respect to such Distribution Date, in each case,]
before giving effect to any reduction thereto on such Distribution Date.
["Certificate Interest Reserve Amount" means the lesser of (i) $
less the amount of any application of the Certificate Interest Reserve Amount
to pay interest on the Certificates on any prior Distribution Date and (ii) %
of the Certificate Balance on such Distribution Date (before giving effect to
any reduction thereof on such Distribution Date)[; provided, however, that the
Certificate Interest Reserve Amount shall be zero subsequent to any reduction
by any Rating Agency to less than " " or its equivalent, or withdrawal by any
Rating Agency, of its rating of [the] [any class of] Notes, unless such rating
has been restored] .]
If on any Distribution Date the entire Noteholders' Payment Amount for
such Distribution Date (after giving effect to any amounts withdrawn from the
Reserve Account) is not deposited in the Note Payment Account, the
Certificateholders generally will not receive any distributions.
After the payment in full, or the provision for such payment, of (i)
all accrued and unpaid interest on the Securities and (ii) the outstanding
principal amount of the Securities, any funds remaining on deposit in the
Reserve Account, subject to certain limitations, will be paid to the Seller.
The Reserve Account is intended to enhance the likelihood of receipt
by the Noteholders and the Certificateholders of the full amount of principal
and interest due them and to decrease the likelihood that the Noteholders and
the Certificateholders will experience losses. In addition, the subordination
of the Certificates to the Notes is intended to enhance further the likelihood
of receipt by Noteholders of the full amount of principal and interest due them
and to decrease the likelihood that the Noteholders will experience losses.
However, in certain circumstances, the Reserve Account could be depleted. If
the amount required to be withdrawn from the Reserve Account to cover
shortfalls in collections on the Receivables exceeds the amount of available
cash in the Reserve Account, Noteholders or Certificateholders could incur
losses or a shortfall in the amounts distributed to the Noteholders or the
Certificateholders could result, which could, in turn, increase the average
life of the Notes or the Certificates.
[YIELD SUPPLEMENT ACCOUNT; YIELD SUPPLEMENT AGREEMENT
The Yield Supplement Account will be created with an initial deposit
by Ford Credit of the Yield Supplement Initial Deposit. The Yield Supplement
Initial Deposit will equal an amount (which amount may be discounted at a rate
to be specified in the Sale and Servicing Agreement) equal to the aggregate
amount by which (i) interest on the principal balance of each [Initial]
Receivable for the period commencing on the [Initial] Cutoff Date and ending
with the scheduled maturity of such Receivable, assuming that payments on such
Receivables are made as scheduled and no prepayments are made) at a rate equal
to the Required Rate, exceeds (ii) interest on such principal balances at the
APR of such Receivable (the "Yield Supplement Amount" and, with respect to all
of the [Initial ] Receivables, the "Maximum [Initial] Yield Supplement
Amount").
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<PAGE> 50
On each Distribution Date, the Indenture Trustee will transfer to the
Collection Account from monies on deposit in the Yield Supplement Account an
amount equal to the Yield Supplement Deposit Amount in respect of the
Receivables for such Distribution Date. The "Yield Supplement Deposit Amount"
with respect to a Distribution Date is the aggregate Yield Supplement Amount,
if any, in respect of the Receivables for the related Collection Period.
Amounts on deposit on any Distribution Date in the Yield Supplement Account in
excess of the Maximum Yield Supplement Amount, after giving effect to all
distributions to be made on such Distribution Date, will be paid to the Seller.
Monies on deposit in the Yield Supplement Account may be invested in Permitted
Investments under the circumstances and in the manner described in the Sale and
Servicing Agreement. Any monies remaining on deposit in the Yield Supplement
Account upon the termination of the Trust will be paid to the Seller.
[Pursuant to the Yield Supplement Agreement, on each Subsequent
Transfer Date, Ford Credit will deposit into the Yield Supplement Account an
amount equal to the Additional Yield Supplement Amount. The aggregate of the
Additional Yield Supplement Amounts in respect of Subsequent Receivables, if
any, is referred to herein as the "Maximum Subsequent Yield Supplement Amount"
and, together with the Maximum Initial Yield Supplement Amount, the "Maximum
Yield Supplement Amount."]]
[INTEREST RATE CAP
With respect to the Class A-2 Notes, the Seller will enter into an
Interest Rate Cap, dated as of the Closing Date (the "Interest Rate Cap") with
the Interest Rate Cap Provider. The notional amount of the Interest Rate Cap
on any [Distribution] [Payment] Date (the "Cap Notional Amount") will be at
least equal to the outstanding principal amount of the Class A-2 Notes as of
the close of the preceding [Distribution] [Payment] Date. Pursuant to the
Interest Rate Cap, on each [Distribution] [Payment] Date on which [the Class
A-2 Rate] [LIBOR] for the preceding [Distribution] [Payment] Date exceeds %
(the "Cap Rate"), the Interest Rate Cap Provider will make a payment to the
Indenture Trustee, on behalf of the Trust, in an amount equal to the product of
(i) the difference between [such Class A-2 Rate] [LIBOR] and the Cap Rate, (ii)
the Cap Notional Amount and (iii) the actual number of days from and including
the preceding [Distribution] [Payment] Date to but excluding such
[Distribution] [Payment] Date divided by 360. The Interest Rate Cap will
terminate on the Class A-2 Scheduled Final [Distribution] [Payment] Date.
Payments received by the Indenture Trustee pursuant to the Interest Rate Cap
will be deposited in the Collection Account for the benefit of all
Securityholders.
The payment obligations of the Interest Rate Cap Provider under the
Interest Rate Cap constitute general unsecured obligations of the
Interest Rate Cap Provider. No assurance can be given that the Trust will
receive the payments due to be received under the Interest Rate Cap when due.
A failure by the Interest Rate Cap Provider to make such payments or to make
such payments on a timely basis would reduce amounts available for
distributions to Securityholders, and in such event Securityholders could incur
a loss on their investment.
The Interest Rate Cap will be provided by (the "Interest Rate
Cap Provider"). The Interest Rate Cap Provider was incorporated in .
The Interest Rate Cap Provider is engaged in the business of . As of
, 199 , the Interest Rate Cap Provider had total consolidated assets of
$ , total consolidated liabilities of $ and total consolidated
stockholders' equity of $ .
THE INFORMATION SET FORTH IN THE PRECEDING PARAGRAPH HAS BEEN PROVIDED
BY THE INTEREST RATE CAP PROVIDER. THE SELLER MAKES NO REPRESENTATIONS AS TO
THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION.]
[INTEREST RATE SWAP
With respect to the Class A-2 Notes, the Indenture Trustee, on behalf
of the Trust, will enter into one or more Interest Rate Swap Agreements, dated
as of the Closing Date (collectively, the "Interest Rate Swap") with the Swap
Counterparty. The notional amount of the Interest Rate Swap on any
[Distribution] [Payment] Date (the "Swap Notional Amount") will equal the
outstanding principal amount of the Class A-2 Notes as of the close of the
preceding
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<PAGE> 51
[Distribution] [Payment] Date. Pursuant to the terms of the Interest Rate
Swap, the Swap Counterparty will pay to the Trust, on each [Distribution]
[Payment] Date, interest at a per annum rate equal to [the Class A-2 Rate]
[LIBOR] on the Swap Notional Amount. In exchange for such payments, the Trust
will pay to the Swap Counterparty, on each [Distribution] [Payment] Date,
interest at a per annum rate equal to [the lesser of] [ %] [and] [the Prime
Rate less %], on the Swap Notional Amount[, which rate will be reset [on
various dates in] each [month] [Interest Period]]. With respect to each
[Distribution] [Payment] Date, any difference between the [monthly] [quarterly]
payment by the Swap Counterparty to the Trust and the [monthly] [quarterly]
payment by the Trust to the Swap Counterparty will be referred to herein as the
"Net Trust Swap Receipt," if such difference is a positive number, and the "Net
Trust Swap Payment," if such difference is a negative number. Net Trust Swap
Receipts, if any, will be deposited in the Collection Account for the benefit
of all Securityholders and Net Trust Swap Payments, if any, will be paid from
the Collection Account in the same manner and priority as accrued and unpaid
interest on the Notes on each [Distribution] [Payment] Date.
The payment obligations of the Swap Counterparty under the Interest
Rate Swap constitute general unsecured obligations of the Swap Counterparty.
No assurance can be given that the Trust will receive the payments due to be
received under the Interest Rate Swap when due. A failure by the Swap
Counterparty to make such payments or to make such payments on a timely basis
would reduce amounts available for distributions to Securityholders, and in
such event Securityholders could incur a loss on their investment.
The Interest Rate Swap will be provided by (the "Swap
Counterparty"). The Swap Counterparty was incorporated in . The Swap
Counterparty is engaged in the business of . As of , 199 , the
Swap Counterparty had total consolidated assets of $ , total consolidated
liabilities of $ and total consolidated stockholders' equity of $ .
THE INFORMATION SET FORTH IN THE PRECEDING PARAGRAPH HAS BEEN PROVIDED
BY THE SWAP COUNTERPARTY. THE SELLER MAKES NO REPRESENTATIONS AS TO THE
ACCURACY OR COMPLETENESS OF SUCH INFORMATION.]
[GUARANTEED RATE AGREEMENT
The Seller will enter into an Guaranteed Rate Agreement, dated as of
the Closing Date (the "Guaranteed Rate Agreement") with the Investment
Provider. Pursuant to the Guaranteed Rate Agreement, amounts on deposit in the
[Collection] [Note Payment] Account will be invested from the date of deposit
to the related [Distribution] [Payment] Date by the Indenture Trustee at the
direction of the Investment Provider in certain eligible investments (which are
substantially similar to Permitted Investments). Amounts invested pursuant to
the Guaranteed Rate Agreement will continue to be held in the name of the
Indenture Trustee for the benefit of Securityholders and will remain assets of
the Trust for purposes of bankruptcy, tax and other applicable laws. The
Guaranteed Rate Agreement provides that the Investment Provider will guarantee
a rate of return on such amounts equal to the weighted average of the Note
Interest Rates [and the Certificate Rate] and will be entitled to receive any
Investment Earnings in excess of such guaranteed return.
If the commercial paper rating or certificate of deposit rating of
the Investment Provider is at any time reduced below A-1+ or P1 by the
applicable Rating Agency, within 60 days of receiving notice of such decline,
the Servicer will either (i) with the prior written assurance of each Rating
Agency that such action will not result in a reduction of the rating of any of
the Notes or the Certificates, cause the Investment Provider to pledge
securities, in a manner conferring on the Indenture Trustee a perfected first
lien in such securities, securing the Investment Provider's performance of its
obligations under the Guaranteed Rate Agreement, (ii) direct the Indenture
Trustee to terminate the Guaranteed Rate Agreement and to obtain a Replacement
Guaranteed Rate Agreement or (iii) establish any other arrangement satisfactory
to each Rating Agency such that such Rating Agency will not reduce the rating
of any of the Notes or the Certificates. A "Replacement Guaranteed Rate
Agreement" means an agreement (i) which is substantially similar to the
original Guaranteed Rate Agreement, (ii) the obligor of which is an insGurance
company, trust company, commercial bank or other entity which has a commercial
paper or certificate of deposit
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rating of no less than A-1+ or P1 by the applicable Rating Agency and (iii)
which provides for either the payment of interest on funds invested pursuant
thereto at a rate per annum at least equal to the weighted average of the Note
Interest Rates [and the Certificate Rate]. If the Servicer is unable to obtain
a Replacement Guaranteed Rate Agreement or a pledge of securities or otherwise
satisfy the applicable Rating Agency within such 60-day period, then each
following Distribution Date will constitute a Payment Date and distributions in
respect of the Notes and the Certificates will be made monthly. See
"Description of the Notes--Payments of Interest" herein.
The payment obligations of the Investment Provider under the
Guaranteed Rate Agreement constitute general unsecured obligations of the
Investment Provider. No assurance can be given that the Trust will receive the
payments due to be received under the Guaranteed Rate Agreement when due. A
failure by the Investment Provider to make such payments or to make such
payments on a timely basis would reduce amounts available for distributions to
Securityholders, and in such event Securityholders could incur a loss on their
investment.
The Guaranteed Rate Agreement will be provided by (the
"Investment Provider"). The Investment Provider was incorporated in . The
Investment Provider is engaged in the business of . As of , 199
, the Investment Provider had total consolidated assets of $ ,
total consolidated liabilities of $ and total consolidated stockholders'
equity of $ . The Investment Provider is currently rated / .
THE INFORMATION SET FORTH IN THE PRECEDING PARAGRAPH HAS BEEN PROVIDED
BY THE INVESTMENT PROVIDER. THE SELLER MAKES NO REPRESENTATIONS AS TO THE
ACCURACY OR COMPLETENESS OF SUCH INFORMATION.]
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain federal income tax
consequences of the purchase, ownership and disposition of the Notes and the
Certificates. The summary does not purport to deal with federal income tax
consequences applicable to all categories of holders, some of which may be
subject to special rules. For example, it does not discuss the tax treatment
of Noteholders or Certificateholders that are insurance companies, regulated
investment companies or dealers in securities. Moreover, there are no cases or
Internal Revenue Service ("IRS") rulings on similar transactions involving both
debt instruments and equity interests issued by a trust with terms similar to
those of the Notes and the Certificates. As a result, the IRS may disagree
with all or a part of the discussion below. Prospective investors are urged to
consult their own tax advisors in determining the federal, state, local,
foreign and any other tax consequences to them of the purchase, ownership and
disposition of the Notes and the Certificates.
The following summary is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
promulgated thereunder and judicial or ruling authority, all of which are
subject to change, which change may be retroactive. The Trust will be provided
with an opinion of Special Tax Counsel regarding certain federal income tax
matters discussed below. An opinion of Special Tax Counsel, however, is not
binding on the IRS or the courts. No ruling on any of the issues discussed
below will be sought from the IRS.
SCOPE OF THE TAX OPINIONS
It is expected that Special Tax Counsel, will, upon issuance of the
Notes and Certificates deliver its opinion that the Trust will not be
classified as an association (or publicly traded partnership) taxable as a
corporation for federal income tax purposes. Further, with respect to the
Notes, Special Tax Counsel will advise the Trust that the Notes will be
classified as debt for federal income tax purposes.
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In addition, Special Tax Counsel has prepared or reviewed the
statements under the heading "Summary--Tax Status" relating to federal income
tax matters and under the heading "Certain Federal Income Tax Consequences"
herein and in the Prospectus and is of the opinion that such statements are
correct in all material respects. Such statements are intended as an
explanatory discussion of the possible effects of the classification of the
Trust as a partnership for federal income tax purposes on investors generally
and of related tax matters affecting investors generally, but do not purport to
furnish information in the level of detail or with the attention to the
investor's specific tax circumstances that would be provided by an investor's
own tax adviser. Accordingly, each investor is advised to consult its own tax
advisers with regard to the tax consequences to it of investing in the
certificates.
TAX CHARACTERIZATION OF THE TRUST
As set forth above, it is the opinion of Special Tax Counsel that the
Trust will not be classified as an association (or publicly traded partnership)
taxable as a corporation for federal income tax purposes. This opinion is
based on the assumption that the terms of the Trust Agreement and related
documents will be complied with, and on counsel's conclusions that (1) the
Trust does not have certain characteristics necessary for a business trust to
be classified as an association taxable as a corporation and (2) either the
nature of the income of the Trust will exempt it from the provisions of the
Code requiring certain publicly traded partnerships to be taxed as corporations
or the Trust will otherwise qualify for an exemption from the rules governing
publicly traded partnerships.
If the Trust were taxable as a corporation for federal income tax
purposes, the Trust would be subject to corporate income tax on its taxable
income. The Trust's taxable income would include all of its income on the
Receivables, possibly reduced by its interest expense on the Notes. Any such
corporate income tax could materially reduce the amount of cash available to
make payments on the Notes and distributions on the Certificates, and
Certificateholders could be liable for any such tax that is unpaid by the
Trust.
TAX CONSEQUENCES TO HOLDERS OF THE NOTES
Treatment of the Notes as Indebtedness. The Noteholders will agree by
their purchase of the Notes, to treat the Notes as debt for federal income tax
purposes. The discussion below assumes that this characterization of the Notes
is correct.
OID, Indexed Securities, etc.
Original Issue Discount, Indexed Securities, etc. A Note will be
treated as issued with Original Issue Discount ("OID") if the excess of the
Note's "stated redemption price at maturity" over the issue price equals or
exceeds a de minimis amount equal to 1/4 of 1 percent of the Note's stated
redemption price at maturity multiplied by the number of complete years (based
on the anticipated weighted average life of a Note) to its maturity.
In general, OID, if any, will equal the difference between the stated
redemption price at maturity of a Note and its issue price. A holder of a Note
must include such OID in gross income as ordinary interest income as it accrues
under a method taking into account an economic accrual of the discount. In
general, OID must be included in income in advance of the receipt of the cash
representing that income. The amount of OID on a Note will be considered to be
zero if it is less than a de minimis amount determined as described above.
However, the amount of any de minimis OID must be included in income
as principal payments are received on a Note, in the proportion that each such
payment bears to the original principal amount of the Note. The issue price of
a Note will generally be the initial offering price at which a substantial
amount of the Notes are sold. The Trust intends to treat the issue price as
including, in addition, the amount paid by the Noteholder for accrued interest
that relates to a period prior to the Closing Date. Under applicable Treasury
regulations
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governing the accrual of OID (the "OID Regulations"), the stated redemption
price at maturity is the sum of all payments on the Note other than any
"qualified stated interest" payments. Qualified stated interest is defined as
any one of a series of payments equal to the product of the outstanding
principal amount of the Note and a single fixed rate, or certain variable rates
of interest that is unconditionally payable at least annually.
The holder of a Note issued with OID must include in gross income, for
all days during its taxable year on which it holds such Note, the sum of the
"daily portions" of such OID. Such daily portions are computed by allocating
to each day during a taxable year a pro rata portion of the OID that accrued
during the relevant accrual period. In the case of an obligation the principal
on which is subject to prepayment as a result of prepayments on the underlying
collateral (a "Prepayable Obligation"), such as the Notes, OID is computed by
taking into account the anticipated rate of prepayments assumed in pricing the
debt instrument (the "Prepayment Assumption"). The Prepayment Assumption that
will be used in determining the rate of accrual of original issue discount,
premium and market discount, if any, is % ABS. The amount of OID that will
accrue during an accrual period (generally the period between interest payments
or compounding dates) is the excess (if any) of the sum of (a) the present
value of all payments remaining to be made on the Note as of the close of the
accrual period and (b) the payments during the accrual period of amounts
included in the stated redemption price of the Note, over the "adjusted issue
price" of the Note at the beginning of the accrual period. An "accrual period"
is the period over which OID accrues, and may be of any length, provided that
each accrual period is no longer than one year and each scheduled payment of
interest or principal occurs on either the last day or the first day of an
accrual period. The Issuer intends to report OID on the basis of an accrual
period that corresponds to the interval between [Payment] [Distribution] Dates.
The adjusted issue price of a Note is the sum of its issue price plus prior
accruals of OID, reduced by the total payments made with respect to such Note
in all prior periods, other than qualified stated interest payments. The
present value of the remaining payments is determined on the basis of three
factors: (i) the original yield to maturity of the Note (determined on the
basis of compounding at the end of each accrual period and properly adjusted
for the length of the accrual period), (ii) events which have occurred before
the end of the accrual period and (iii) the assumption that the remaining
payments will be made in accordance with the original Prepayment Assumption.
The effect of this method is to increase the portions of OID required
to be included in income by a Noteholder to take into account prepayments on
the Receivables at a rate that exceeds the Prepayment Assumption, and to
decrease (but not below zero for any period) the portions of OID required to be
included in income by a Noteholder to take into account prepayments with
respect to the Receivables at a rate that is slower than the Prepayment
Assumption. Although OID will be reported to Noteholders based on the
Prepayment Assumption, no representation is made to Noteholders that
Receivables will be prepaid at that rate or at any other rate.
A holder of a Note that acquires the Note for an amount that exceeds
its stated redemption price will not include any OID in gross income. A
subsequent holder of a Note which acquires the Notes for an amount that is less
than its stated redemption price will be required to include OID in gross
income, but such a holder who purchases such Note for an amount that exceeds
its adjusted issue price will be entitled (as will an initial holder who pays
more than a Note's issue price) to reduce the amount of OID included in income
in each period by the amount of OID multiplied by a fraction, the numerator of
which is the excess of (w) the purchaser's adjusted basis in the Note
immediately after purchase thereof over (x) the adjusted issue price of the
Note, and the denominator of which is the excess of (y) all amounts remaining
to be paid on the Note after the purchase date, other than qualified stated
interest, over (z) the adjusted issue price of the Note.
Total Accrual Election. As an alternative to separately accruing
stated interest, OID, de minimis OID, market discount, de minimis market
discount, unstated interest, premium, and acquisition premium, a holder of a
Note may elect to include all income that accrues on the Note using the
constant yield method. If a Noteholder makes this election, income on a Note
will be calculated as though (i) the issue price of the Note were equal to the
Noteholder's adjusted basis in the Note immediately after its acquisition by
the Noteholder; (ii) the Note were issued on the Noteholder's acquisition date;
and (iii) none of the interest payments on the Note were "qualified
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stated interest." A Noteholder may make such an election for a Note that has
premium or market discount, respectively, only if the Noteholder makes, or has
previously made, an election to amortize bond premium or to include market
discount in income currently. See "--Market Discount" and "--Amortizable Bond
Premium" below.
Market Discount. The Notes, whether or not issued with original issue
discount, will be subject to the "market discount rules" of section 1276 of the
Code. In general, these rules provide that if the Note Owner purchases a Note
at a market discount (that is, a discount from its stated redemption price at
maturity or, if the Notes were issued with OID, its original issue price plus
any accrued OID that exceeds a de minimis amount specified in the Code) and
thereafter (a) recognizes gain upon a disposition, or (b) receives payments of
principal, the lesser of (i) such gain or principal payment or (ii) the accrued
market discount will be taxed as ordinary interest income. Generally, the
accrued market discount will be the total market discount on the Note
multiplied by a fraction, the numerator of which is the number of days the Note
Owner held the Note and the denominator of which is the number of days from the
date the Note Owner acquired the Note until its maturity date. The Note Owner
may elect, however, to determine accrued market discount under the
constant-yield method.
Limitations imposed by the Code which are intended to match deductions
with the taxation of income may defer deductions for interest on indebtedness
incurred or continued, or short-sale expenses incurred, to purchase or carry a
Note with accrued market discount. A Note Owner may elect to include market
discount in gross income as it accrues and, if the Note Owner makes such an
election, is exempt from this rule. Any such election will apply to all debt
instruments acquired by the taxpayer on or after the first day of the first
taxable year to which such election applies. The adjusted basis of a Note
subject to such election will be increased to reflect market discount included
in gross income, thereby reducing any gain or increasing any loss on a sale or
taxable disposition.
Amortizable Bond Premium. In general, if a Note Owner purchases a
Note at a premium (that is, an amount in excess of the amount payable upon the
maturity thereof), such Note Owner will be considered to have purchased such
Note with "amortizable bond premium" equal to the amount of such excess. Such
Note Owner may elect to amortize such bond premium as an offset to interest
income and not as a separate deduction item as it accrues under a
constant-yield method over the remaining term of the Note. Such Note Owner's
tax basis in the Note will be reduced by the amount of the amortized bond
premium. Any such election shall apply to all debt instruments (other than
instruments the interest on which is excludible from gross income) held by the
Note Owner at the beginning of the first taxable year for which the election
applies or thereafter acquired and is irrevocable without the consent of the
IRS. Bond premium on a Note held by a Note Owner who does not elect to
amortize the premium will decrease the gain or increase the loss otherwise
recognized on the disposition of the Note.
Short-Term Obligations. Under the Code, special rules apply to Notes
that have a maturity of one year or less from their date of original issuance
("Short-Term Notes"). Such Notes are treated as issued with "acquisition
discount" which is calculated and included in income under principles similar
to those governing OID except that "acquisition discount" is equal to the
excess of all payments of principal and interest on the Short-Term Notes over
their issue price. In general, an individual or other cash basis holder of a
short-term obligation is not required to accrue acquisition discount for
federal income tax purposes unless it elects to do so. Accrual basis
Noteholders and certain other Noteholders, including banks, regulated
investment companies, dealers in securities and cash basis Noteholders who so
elect, are required to accrue acquisition discount on Short-Term Notes on
either a straight-line basis or under a constant yield method (based on daily
compounding), at the election of the Noteholder. In the case of a Noteholder
not required and not electing to include acquisition discount in income
currently, any gain realized on the sale or retirement of the Short-Term Notes
will be ordinary income to the extent of the acquisition discount accrued on a
straight-line basis (unless an election is made to accrue the acquisition
discount under the constant yield method) through the date of sale or
retirement. Noteholders who are not required and do not elect to accrue
acquisition discount on Short-Term Notes will be required to defer
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deductions for interest on borrowings allocable to short term obligations in an
amount not exceeding the deferred income until the deferred income is realized.
Sale or Other Disposition. If a Noteholder sells a Note, the holder
will recognize gain or loss in an amount equal to the difference between the
amount realized on the sale and the holder's adjusted tax basis in the Note.
The adjusted tax basis of a Note to a particular Noteholder generally will
equal the holder's cost for the Note, increased by any market discount,
acquisition discount, OID and gain previously included by such Noteholder in
income with respect to the Note and decreased by any bond premium previously
amortized and principal payments previously received by such Noteholder with
respect to such Note. Any such gain or loss will be capital gain or loss if
the Note was held as a capital asset, except for gain representing accrued
interest, accrued market discount or OID that has not previously accrued, in
each case to the extent not previously included in income. Capital losses
incurred on sale or disposition of a Note generally may be used only to offset
capital gains.
Non-U.S. Note Owners. In general, a non-U.S. Note Owner will not be
subject to U.S. federal income tax on interest (including OID) on a beneficial
interest in a Note unless (i) the non-U.S. Note Owner actually or
constructively owns 10 percent or more of the total combined voting power of
all classes of stock of the Seller (or affiliate of the Seller) entitled to
vote (or of a profits or capital interest of the Trust), (ii) the non-U.S. Note
Owner is a controlled foreign corporation that is related to the Seller (or the
Trust) through stock ownership, (iii) the non-U.S. Note Owner is a bank
receiving interest described in Code Section 881(c)(3)(A), (iv) such interest
is contingent interest described in Code Section 871(h)(4), or (v) the non-U.S.
Note Owner bears certain relationships to any Certificate Owner. To qualify
for the exemption from taxation, the Note Owner must comply with applicable
certification requirements.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from United
States federal income tax and withholding tax, provided that (i) such gain is
not effectively connected with the conduct of a trade or business in the United
States by the foreign person and (ii) in the case of an individual foreign
person, the foreign person is not present in the United States for 183 days or
more in the taxable year.
Backup Withholding. Each holder of a Note (other than an exempt
holder such as a corporation, tax-exempt organization, qualified pension and
profit-sharing trust, individual retirement account or nonresident alien who
provides certification as to status as a nonresident) will be required to
provide, under penalties of perjury, a certificate containing the holder's
name, address, correct taxpayer identification number and a statement that the
holder is not subject to backup withholding. Should a nonexempt Noteholder
fail to provide the required certification, the Trust will be required to
withhold 31 percent of the amount otherwise payable to the holder, and remit
the withheld amount to the IRS as a credit against the holder's federal income
tax liability.
Possible Alternative Treatments of the Notes. If, contrary to the
opinion of Special Tax Counsel, the IRS successfully asserted that one or more
of the Notes did not represent debt for federal income tax purposes, the Notes
might be treated as equity interests in the Trust. If so treated, the Trust
might be taxable as a corporation with the adverse consequences described above
(and the taxable corporation would not be able to reduce its taxable income by
deductions for interest expense on Notes recharacterized as equity).
Alternatively, the Trust might be treated as a publicly traded partnership that
would not be taxable as a corporation because it would meet certain qualifying
income tests. Nonetheless, treatment of the Notes as equity interests in such
a publicly traded partnership could have adverse tax consequences to certain
holders. For example, income to certain tax-exempt entities (including pension
funds) would be "unrelated business taxable income," income to foreign holders
generally would be subject to U.S. federal tax and U.S. federal tax return
filing and withholding requirements, and individual holders might be subject to
certain limitations on their ability to deduct their share of Trust expenses.
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TAX CONSEQUENCES TO HOLDERS OF OFFERED CERTIFICATES
Treatment of the Trust as a Partnership. The Seller and the Servicer
will agree, and the Certificateholders will agree by their purchase of
Certificates, to treat the Trust as a partnership for purposes of federal and
state income tax, franchise tax and any other tax measured in whole or in part
by income, with the assets of the partnership being the assets held by the
Trust, the partners of the partnership being the Certificateholders (including
the Seller), and the Notes being debt of the partnership. However, the proper
characterization of the arrangement involving the Trust, the Certificates, the
Notes, the Seller and the Servicer is not clear because there is no authority
on transactions closely comparable to those contemplated herein.
A variety of alternative characterizations of the Certificates are
possible. For example, because the Certificates generally will have certain
features characteristic of debt, the Certificates might be considered debt of
the Seller or the Trust. Any such characterization would not result in
materially adverse tax consequences to Certificateholders as compared to the
consequences from treatment of the Certificates as equity in a partnership,
described below. The following discussion assumes that the Certificates
represent equity interests in a partnership.
Partnership Taxation. Assuming that the Trust is classified as a
partnership, the Trust will not be subject to federal income tax, but each
Certificateholder will be required to take into account separately such
holder's allocated share of income, gains, losses, deductions and credits of
the Trust. The Trust's income will consist primarily of interest accrued on
the Receivables (including appropriate adjustments for market discount (as
discussed below), and any OID and bond premium), investment income from
investments of collections held between Distribution Dates, any gain upon, or
with respect to, collection or disposition of the Receivables and any income
earned on any notional principal contracts. The Trust's deductions will
consist primarily of interest accruing on the Notes, servicing and other fees
and losses or deductions upon, or with respect to, collection or the
disposition of the Receivables.
The tax items of a partnership are allocable to the partners in
accordance with the Code, Treasury regulations and the partnership agreement.
In the Trust Agreement, the Certificateholders will agree that the yield on a
Certificate is intended to qualify as a "guaranteed payment" and not as a
distributive share of partnership income. A guaranteed payment would be
treated by a Certificateholder as ordinary income, but may well not be treated
as interest income. The Trust Agreement will provide that, to the extent that
such treatment is not respected, the Certificateholders will be allocated
ordinary gross income of the Trust for each interest period equal to the sum of
(i) the amount of interest that accrues on the Certificates for such interest
period based on the Certificate Rate; (ii) an amount equivalent to interest
that accrues during such interest period on amounts previously due on the
Certificates but not yet distributed; and (iii) any Trust income attributable
to discount on the Receivables that corresponds to any excess of the principal
balance of the Certificates over their initial issue price. All remaining
taxable income of the Trust generally will be allocated to the Seller, as
"general partner" of the Trust.
Except as set forth below, losses and deductions generally will not be
allocated to the Certificateholders except to the extent the Certificateholders
are reasonably expected to bear the economic burden of such losses or
deductions. Any such losses could be characterized as capital losses, and the
Certificateholder generally would only be able to deduct such losses against
capital gain income. Accordingly, a Certificateholder's taxable income from
the Trust could exceed the cash it receives from the Trust.
Although the allocation of gross income to Certificateholders
described above is intended to comply with applicable Treasury regulations and
other authorities, no assurance can be given that the IRS would not instead
require that Certificateholders be allocated a distributive share of
partnership net income or loss. Moreover, if losses or deductions were
allocated to Certificateholders, such losses or deductions would, to the extent
that funds were available therefor, later be reimbursed through allocations of
ordinary income.
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It is believed that allocating partnership income on the foregoing
basis should comport with the partners' economic interests in the partnership,
although no assurance can be given that the IRS would not require a greater
amount of income to be allocated to Certificateholders. Moreover, under the
foregoing method of allocation, Certificateholders may be allocated income
equal to the amount of interest accruing on the Certificates based on the
Certificate Rate even though the Trust might not have sufficient cash to make
current cash distributions of such amount. Thus, cash basis Certificateholders
will in effect be required to report income from the Certificates on the
accrual basis and Certificateholders may become liable for taxes on Trust
income even if they have not received cash from the Trust to pay such taxes.
In addition, because tax allocation and tax reporting will be done on a uniform
basis for all Certificateholders of the Trust but Certificateholders of the
Trust may be purchasing Certificates at different times and at different
prices, Certificateholders may be required to report on their tax returns
taxable income that is greater or less than the amount reported to them by the
Trust.
Certificateholders will be required to report items of income, loss
and deduction allocated to them by the Trust in the taxable year in which or
with which the taxable year of the Trust to which such allocations relate ends.
The Code prescribes certain rules for determining the taxable year of the
Trust. It is likely that, under these rules, the taxable year of the Trust
will be the calendar year. However, in the event that all of the
Certificateholders possessing a 5 percent or greater interest in the equity or
the profits of the Trust share a taxable year that is other than the calendar
year, the Trust would be required to use that year as its taxable year.
All of the taxable income allocated to a Certificateholder that is a
pension, profit sharing or employee benefit plan or other tax-exempt entity
(including an individual retirement account) will constitute "unrelated
business taxable income" generally taxable to such a holder under the Code. The
characterization under the Trust Agreement of yield on the Certificates as a
guaranteed payment could adversely affect taxpayers, such as Regulated
Investment Companies and Real Estate Investment Trusts, that expect to earn
"interest" income.
Limitations on Losses. Under the "passive activity" rules of the
Code, any loss allocated to a Certificateholder who is a natural person,
estate, trust, closely held "C" corporation or personal service corporation
would be a passive activity loss while, for purposes of those rules, income
allocated to such a Certificateholder would be "portfolio income."
In addition a taxpayer that is an individual, trust or estate may
generally deduct miscellaneous itemized deductions (which do not include
interest expense) only to the extent they exceed two percent of the
individual's adjusted gross income. Those limitations would apply to an
individual Certificateholder's share of expenses of the Trust (including fees
paid to the Servicer) and might result in such holder having net taxable income
that exceeds the amount of cash actually distributed to such holder over the
life of the Trust.
The Trust intends to make all tax calculations relating to income and
allocations to Certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each Receivable, the
Trust might be required to incur additional expense but it is believed that
there would not be a material adverse effect on Certificateholders.
Discount and Premium. It is believed that the Receivables were not
issued with OID or imputed interest, and, therefore, the Trust should not have
OID or imputed interest income. However, the purchase price paid by the Trust
for the Receivables may be greater or less than the remaining principal balance
of the Receivables at the time of purchase. If so, the Receivables will have
been acquired at a premium or discount, as the case may be. (As indicated
above, the Trust will make this calculation on an aggregate basis, but might be
required to recompute it on a Receivable-by-Receivable basis.)
If the Trust acquires the Receivables at a market discount or premium,
the Trust will elect to include any such discount in income currently as it
accrues over the life of the Receivables or to offset any such premium
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against interest income on the Receivables. As indicated above, a portion of
such market discount income or premium deduction may be allocated to
Certificateholders.
Section 708 Termination. Under Section 708 of the Code, the Trust
will be deemed to terminate for federal income tax purposes if 50% or more of
the capital and profits interests in the Trust are sold or exchanged within a
12-month period. If such a termination occurs, the Trust will be considered to
distribute its assets to the partners, who would then be treated as
recontributing those assets to the Trust, as a new partnership. The Trust will
not comply with certain technical requirements that might apply when such a
constructive termination occurs. As a result, the Trust may be subject to
certain tax penalties and may incur additional expenses if it is required to
comply with those requirements. Furthermore, the Trust might not be able to
comply due to lack of data.
Distributions to Certificateholders. Certificateholders generally
will not recognize gain or loss with respect to distributions from the Trust.
A Certificateholder will, however, recognize gain to the extent any money
distributed exceeds the Certificateholder's adjusted basis in the Certificates
(as described below under "--Disposition of Certificates") immediately before
distribution, and a Certificateholder will recognize loss upon termination of
the Trust or termination of the Certificateholder's interest in the Trust if
the Trust only distributes money to the Certificateholder and the amount
distributed is less than the Certificateholder's adjusted basis in the
Certificates. Any such gain or loss would be long-term capital gain or loss if
the holding period of the Certificates were more than one year, assuming that
the Certificates are held as capital assets.
Disposition of Certificates. Generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates
sold. A Certificateholder's tax basis in a Certificate will generally equal
the holder's cost increased by the holder's share of Trust income (includible
in income) and decreased by any distributions received with respect to such
Certificate. In addition, both the tax basis in the Certificates and the
amount realized on a sale of a Certificate would include the holder's share of
the Notes and other liabilities of the Trust. A holder acquiring Certificates
at different prices may be required to maintain a single aggregate adjusted tax
basis in such Certificates, and, upon sale or other disposition of some of the
Certificates, allocate a portion of such aggregate tax basis to the
Certificates sold (rather than maintaining a separate tax basis in each
Certificate for purposes of computing gain or loss on a sale of that
Certificate).
Any gain on the sale of a Certificate attributable to the holder's
share of unrecognized accrued market discount on the Receivables would
generally be treated as ordinary income to the holder and would give rise to
special federal income tax reporting requirements. The Trust does not expect
to have any other assets that would give rise to such special reporting
requirements. Thus, to avoid those special reporting requirements, the Trust
will elect to include market discount in income as it accrues.
If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed miscellaneous itemized
deductions described above) over the life of the Certificates that exceeds the
aggregate cash distributions with respect thereto, such excess will generally
give rise to a capital loss upon the retirement of the Certificates.
Allocations Between Transferors and Transferees. In general, the
Trust's taxable income and losses will be determined monthly and the tax items
for a particular calendar month will be apportioned among the
Certificateholders in proportion to the principal amount of Certificates owned
by them as of the close of the last day of such month. As a result, a holder
purchasing Certificates may be allocated tax items (which will affect its tax
liability and tax basis) attributable to periods before the actual transaction.
The use of such a monthly convention may not be permitted by existing
Treasury regulations. If a monthly convention is not allowed (or only applies
to transfers of less than all of the partner's interest), taxable income or
losses of the Trust might be reallocated among the Certificateholders. The
Seller is authorized to
S-57
<PAGE> 60
revise the Trust's method of allocation between transferors and transferees to
conform to a method permitted by future Treasury regulations.
Section 754 Election. In the event that a Certificateholder sells its
Certificates at a profit (loss), the purchasing Certificateholder will have a
higher (lower) basis in the Certificates than the selling Certificateholder
had. The tax basis of the Trust's assets will not be adjusted to reflect that
higher (or lower) basis unless the Trust were to file an election under Section
754 of the Code. In order to avoid the administrative complexities that would
be involved in keeping accurate accounting records, as well as potentially
onerous information reporting requirements, the Trust will not make such
election. As a result, Certificateholders might be allocated a greater or
lesser amount of Trust income than would be appropriate based on their own
purchase price for Certificates.
Administrative Matters. The Owner Trustee is required to keep or have
kept complete and accurate books of the Trust. Such books will be maintained
for financial reporting and federal income tax purposes on an accrual basis and
the fiscal year of the Trust will be the calendar year. The Trustee will file
a partnership information return (Form 1065) with the IRS for each taxable year
of the Trust and will report each Certificateholder's allocable share of items
of Trust income and expense to holders and the IRS on Schedule K-1. The Trust
will provide the Schedule K-1 information to nominees that fail to provide the
Trust with the information statement described below and such nominees will be
required to forward such information to the beneficial owners of the
Certificates. Generally, holders must file federal income tax returns that are
consistent with the information return filed by the Trust or be subject to
penalties unless the holder notifies the IRS of all such inconsistencies.
Under Section 6031 of the Code, any person that holds Certificates as
a nominee at any time during a calendar year is required to furnish the Trust
with a statement containing certain information on the nominee, the beneficial
owners and the Certificates so held. Such information includes (i) the name,
address and federal taxpayer identification number of the nominee and (ii) as
to each beneficial owner (x) the name, address and federal taxpayer
identification number of such person, (y) whether such person is a United
States person, a tax-exempt entity or a foreign government, an international
organization, or any wholly owned agency or instrumentality of either of the
foregoing, and (z) certain information on Certificates that were held, bought
or sold on behalf of such person throughout the year. In addition, brokers and
financial institutions that hold Certificates through a nominee are required to
furnish directly to the Trust information as to themselves and their ownership
of Certificates. A clearing agency registered under Section 17A of the
Exchange Act is not required to furnish any such information statement to the
Trust. The information referred to above for any calendar year must be
furnished to the Trust on or before the following January 31. Nominees,
brokers and financial institutions that fail to provide the Trust with the
information described above may be subject to penalties.
The Seller will be designated as the "tax matters partner" in the
Trust Agreement and, as such, will be responsible for representing the
Certificateholders in any dispute with the IRS. The Code provides for
administrative examination of a partnership as if the partnership were a
separate and distinct taxpayer. Generally, the statute of limitations for
partnership items does not expire before three years after the date on which
the partnership information return is filed. Any adverse determination
following an audit of the return of the Trust by the appropriate taxing
authorities could result in an adjustment of the returns of the
Certificateholders, and, while a Certificateholder may participate in any
adjudicative process that is undergone in arriving at such a determination, in
most cases such Certificateholders will be precluded from separately litigating
a proposed adjustment to the items of the Trust. An adjustment could also
result in an audit of a Certificateholder's returns and adjustments of items
not related to the income and losses of the Trust.
Backup Withholding. Distributions made on the Certificates and
proceeds from the sale of the Certificates will not be subject to a "backup"
withholding tax of 31% unless, in general, the Certificateholder fails to
comply with certain identification procedure and is not an exempt recipient
under applicable provisions of the Code.
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<PAGE> 61
TAX CONSEQUENCES TO NON-U.S. CERTIFICATEHOLDERS
The Certificates may not be purchased by persons other than U.S.
persons and non-U.S. persons who will satisfy the Seller and the Trustee of the
Trust that such non-U.S. person will be taxed with respect to its ownership of
Certificates as if it were a U.S. person. However, in the case of such a
non-U.S. person, the Trust will withhold U.S. income tax at the highest
marginal rate.
CERTAIN STATE TAX CONSEQUENCES
The activities to be undertaken by the Servicer in servicing and
collecting the Receivables will take place in Michigan. The State of Michigan
imposes a state individual income tax and a Single Business Tax which is based
partially upon the net income of corporations, partnerships and other entities
doing business in the State of Michigan. This discussion is based upon present
provisions of Michigan statutes and the regulations promulgated thereunder, and
applicable judicial or ruling authority, all of which are subject to change,
which change may be retroactive. No ruling on any of the issues discussed
below will be sought from the Michigan Department of Treasury.
Because of the variation in each state's and locality's tax laws based
in whole or in part upon income, it is impossible to predict tax consequences
to holders of Notes and Certificates in all of the state and local taxing
jurisdictions in which they may be subject to tax. Noteholders and
Certificateholders are urged to consult their own tax advisors with respect to
state and local tax consequences arising out of the purchase, ownership and
disposition of Notes and Certificates.
TAX CONSEQUENCES WITH RESPECT TO THE NOTES
It is expected that Michigan Tax Counsel will advise the Trust that,
assuming the Notes will be treated as debt for federal income tax purposes, the
Notes will be treated as debt for Michigan income and Single Business Tax
purposes. Accordingly, Noteholders not otherwise subject to taxation in
Michigan should not become subject to taxation in Michigan solely because of a
holder's ownership of Notes. However, a Noteholder already subject to
Michigan's income tax or Single Business Tax could be required to pay
additional Michigan tax as a result of the holder's ownership or disposition of
Notes.
TAX CONSEQUENCES WITH RESPECT TO THE CERTIFICATES
If the arrangement created by the Trust Agreement is treated as a
partnership (not taxable as a corporation) for federal income tax purposes,
Michigan Tax Counsel will deliver his opinion that the same treatment should
also apply for Michigan tax purposes. In such case, the resulting constructive
partnership should not be treated as doing business in Michigan but rather
should be viewed as a passive holder of investments and, as a result, should
not be subject to the Michigan Single Business Tax (which, if applicable, could
possibly result in reduced distributions to Certificateholders). The
Certificateholders also should not be subject to the Michigan Single Business
Tax on income received through the partnership.
Under current law, Certificateholders that are nonresidents of
Michigan and are not otherwise subject to Michigan income tax should not be
subject to Michigan income tax on the income from the constructive partnership.
In any event, classification of the arrangement as a "partnership" would not
cause a Certificateholder not otherwise subject to taxation in Michigan to pay
Michigan tax on income beyond that derived from the Certificates.
If the Certificates are instead treated as ownership interests in an
association taxable as a corporation or a "publicly traded partnership" taxable
as a corporation, then the hypothetical entity should not be subject to the
Michigan Single Business Tax (which, if applicable, could result in reduced
distributions to Certificateholders).
S-59
<PAGE> 62
A Certificateholder not otherwise subject to tax in Michigan would not become
subject to Michigan tax as a result of its mere ownership of such an interest.
THE FEDERAL AND STATE TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
NOTEHOLDER'S OR CERTIFICATEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE
PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES AND
CERTIFICATES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND
OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX
LAWS.
ERISA CONSIDERATIONS
THE NOTES
The Notes may, in general, be purchased by or on behalf of (i)
"employee benefit plans" (as defined in Section 3(3) of ERISA), (ii) "plans"
described in Section 4975(e)(1) of the Code, including individual retirement
accounts and Keogh Plans, or (iii) entities whose underlying assets include
plan assets by reason of a plan's investment in such entity (each, a "Plan").
However, the acquisition and holding of Notes by or on behalf of a Plan could
be considered to give rise to a prohibited transaction under ERISA and the Code
if the Trust, the Owner Trustee, the Indenture Trustee, any holder of the
Certificates or any of their respective affiliates, is or becomes a "party in
interest" or a "disqualified person" (as defined in ERISA and the Code,
respectively) with respect to such Plan. In such case, certain exemptions from
the prohibited transaction rules could be applicable to such acquisition
and holding by a Plan depending on the type and circumstances of the Plan
fiduciary making the decision to acquire a Note. For additional information
regarding treatment of the Notes under ERISA, see "ERISA Considerations" in the
Prospectus.
THE CERTIFICATES
The Certificates may not be acquired by a Plan or a person investing
"plan assets" of a Plan (excluding, for this purpose, any entity registered
under the Investment Company Act of 1940, as amended) (each, a "Plan
Investor"). In addition, investors other than Plan Investors should be aware
that a prohibited transaction under ERISA and the Code could be deemed to occur
if any holder of the Certificates or any of their respective affiliates, is or
becomes a party in interest or a disqualified person with respect to any Plan
that acquires and holds the Notes without such Plan being covered by one or
more exemptions from the prohibited transaction rules. For additional
information regarding treatment of the Certificates under ERISA, see "ERISA
Considerations" in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in an Underwriting
Agreement (the "Note Underwriting Agreement"), the Seller has agreed to cause
the Trust to sell to each of the Note Underwriters named below (collectively,
the "Note Underwriters"), and each of the Note Underwriters has severally
agreed to purchase, the initial principal amount of Notes set forth opposite
its name below:
<TABLE>
<CAPTION>
PRINCIPAL [PRINCIPAL [PRINCIPAL
AMOUNT OF AMOUNT OF AMOUNT OF
[CLASS A-1] CLASS A-2 CLASS A-3
NOTE UNDERWRITERS NOTES NOTES] NOTES]
<S> <C> <C> <C>
. . . . . . . . . . . . . . . . . . . . . . . . . . $ $[ ] $[ ]
</TABLE>
S-60
<PAGE> 63
<TABLE>
<S> <C> <C> <C>
. . . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]
. . . . . . . . . . . . . . . . . . . . . . . . . . [ ] [ ]
[ ] [ ]
Total . . . . . . . . . . . . . . . . . . . . . . . . $ $[ ] $[ ]
</TABLE>
The Seller has been advised by the Note Underwriters that they propose
initially to offer the Notes to the public at the prices set forth herein, and
to certain dealers at such prices less the initial concession not in excess of
% per [Class A-1] Note[, % per Class A-2 Note and % per Class A-3 Note].
The Note Underwriters may allow, and such dealers may reallow, a concession not
in excess of % per [Class A-1] Note[, % per Class A-2 Note and % per
Class A-3 Note] to certain other dealers. After the initial public offering of
the Notes, the public offering price and such concessions may be changed.
Subject to the terms and conditions set forth in an Underwriting
Agreement (the "Certificate Underwriting Agreement"), the Seller has agreed to
cause the Trust to sell to each of the Certificate Underwriters named below
(the "Certificate Underwriters"g and, together with the Note Underwriters,
the "Underwriters"), and each of the Certificate Underwriters has severally
agreed to purchase, the initial Certificate Balance of Certificates set forth
opposite its name below:
<TABLE>
<CAPTION>
CERTIFICATE
BALANCE OF
CERTIFICATE UNDERWRITERS CERTIFICATES
<S> <C>
. . . . . . . . . . . . . . . . . . . . . . . . . . $
. . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . $
</TABLE>
The Seller has been advised by the Certificate Underwriters that they
propose initially to offer the Certificates to the public at the price set
forth herein, and to certain dealers at such price less the initial concession
not in excess of % per Certificate. The Certificate Underwriters may allow,
and such dealers may reallow, a concession not in excess of % per
Certificate to certain other dealers. After the initial public offering of the
Certificates, the public offering price and such concessions may be changed.
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus, certain
legal matters relating to the Notes and the Certificates will be passed upon
for the Underwriters and certain federal income tax and other matters will be
passed upon for the Trust by [ ] [ may from time to time render
legal services to Ford and its affiliates.]
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<PAGE> 64
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Ford
Credit Auto Owner Trust % [Class A-1] Asset Backed Notes[, Floating Rate
Class A-2 Asset Backed Notes and % Class A-3 Asset Backed Notes]
(collectively, [the "Global Notes") and % Asset Backed Certificates (the
"Global Certificates" and together with the Global Notes,] the "Global
Securities") will be available only in book-entry form. Investors in the
Global Securities may hold such Global Securities through any of The Depository
Trust Company ("DTC"), Cedel Bank, societe anonyme ("Cedel") or the Euroclear
System ("Euroclear"). The Global Securities will be tradeable as home market
instruments in both the European and U.S. domestic markets. Initial settlement
and all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through Cedel and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Global Securities will be effected on a
delivery-against-payment basis through the respective Depositaries of Cedel and
Euroclear (in such capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless such holders meet certain requirements
and deliver appropriate U.S. tax documents to the securities clearing
organizations or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the
name of Cede & Co. as nominee of DTC. Investors' interests in the Global
Securities will be represented through financial institutions acting on their
behalf as direct and indirect Participants in DTC. As a result, Cedel and
Euroclear will hold positions on behalf of their participants through their
respective Depositaries, which in turn will hold such positions in accounts as
DTC Participants.
Investors electing to hold their Global Securities through DTC will
follow the settlement practices applicable to U.S. corporate debt obligations.
Investor securities custody accounts will be credited with their holdings
against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to
the securities custody accounts on the settlement date against payment in
same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important
to establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
<PAGE> 65
Trading between DTC Participants. Secondary market trading between
DTC Participants will be settled using the procedures applicable to U.S.
corporate debt obligations in same-day funds.
Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC seller and Cedel or Euroclear purchaser. When
Global Securities are to be transferred from the account of a DTC Participant
to the account of a Cedel Participant or a Euroclear Participant, the purchaser
will send instructions to Cedel or Euroclear through a Cedel Participant or
Euroclear Participant at least one business day prior to settlement. Cedel or
Euroclear will instruct the respective Depositary, as the case may be, to
receive the Global Securities against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment
date to and excluding the settlement date. Payment will then be made by the
respective Depositary to the DTC Participant's account against delivery of the
Global Securities. After settlement has been completed, the Global Securities
will be credited to the respective clearing system and by the clearing system,
in accordance with its usual procedures, to the Cedel Participant's or
Euroclear Participant's account. The securities credit will appear the next
day (European time) and the cash debit will be back-valued to, and the interest
on the Global Securities will accrue from, the value date (which would be the
preceding day when settlement occurred in New York). If settlement is not
completed on the intended value date (i.e., the trade fails), the Cedel or
Euroclear cash debit will be valued instead as of the actual settlement date.
Cedel Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to
pre-position funds for settlement, either from cash on hand or existing lines
of credit, as they would for any settlement occurring within Cedel or
Euroclear. Under this approach, they may take on credit exposure to Cedel or
Euroclear until the Global Securities are credited to their accounts one day
later.
As an alternative, if Cedel or Euroclear has extended a line of credit
to them, Cedel Participants or Euroclear Participants can elect not to
pre-position funds and allow that credit line to be drawn upon to finance
settlement. Under this procedure, Cedel Participants or Euroclear Participants
purchasing Global Securities would incur overdraft charges for one day,
assuming they cleared the overdraft when the Global Securities were credited to
their accounts. However, interest on the Global Securities would accrue from
the value date. Therefore, in many cases the investment income on the Global
Securities earned during that one-day period may substantially reduce or offset
the amount of such overdraft charges, although this result will depend on each
Cedel Participant's or Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours,
DTC Participants can employ their usual procedures for sending Global
Securities to the respective Depositary for the benefit of Cedel Participants
or Euroclear Participants. The sale proceeds will be available to the DTC
seller on the settlement date. Thus, to the DTC Participant a cross-market
transaction will settle no differently than a trade between two DTC
Participants.
Trading between Cedel or Euroclear seller and DTC purchaser. Due to
time zone differences in their favor, Cedel Participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective Depositary, to a DTC Participant. The seller will send
instructions to Cedel or Euroclear through a Cedel Participant or Euroclear
Participant at least one business day prior to settlement. In these cases,
Cedel or Euroclear will instruct the respective Depositary, as appropriate, to
deliver the bonds to the DTC Participant's account against payment. Payment
will include interest accrued on the Global Securities from and including the
last coupon payment date to and excluding the settlement date. The payment
will then be reflected in the account of the Cedel Participant or Euroclear
Participant the following day, and receipt of the cash proceeds in the Cedel
Participant's or Euroclear Participant's account would be back-valued to the
value date (which would be the preceding day, when settlement occurred in New
York). Should the Cedel Participant or Euroclear Participant have a line of
credit with its respective clearing system and elect
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<PAGE> 66
to be in debit in anticipation of receipt of the sale proceeds in its account,
the back-valuation will extinguish any overdraft charges incurred over that
one-day period. If settlement is not completed on the intended value date
(i.e., the trade fails), receipt of the cash proceeds in the Cedel
Participant's or Euroclear Participant's account would instead be valued as of
the actual settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase
Global Securities from DTC Participants for delivery to Cedel Participants or
Euroclear Participants should note that these trades would automatically fail
on the sale side unless affirmative action were taken. At least three
techniques should be readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until
the purchase side of the day trade is reflected in their Cedel or
Euroclear accounts) in accordance with the clearing system's customary
procedures;
(b) borrowing the Global Securities in the U.S. from a DTC
Participant no later than one day prior to settlement, which would
give the Global Securities sufficient time to be reflected in their
Cedel or Euroclear account in order to settle the sale side of the
trade; or
(c) staggering the value dates for the buy and sell sides of
the trade so that the value date for the purchase from the DTC
Participant is at least one day prior to the value date for the sale
to the Cedel Participant or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
[Global Notes]
A beneficial owner of Global [Securities] [Notes] holding securities
through Cedel or Euroclear (or through DTC if the holder has an address outside
the U.S.) will be subject to the 30% U.S. withholding tax that generally
applies to payments of interest (including original issue discount) on
registered debt issued by U.S. Persons, unless (i) each clearing system, bank
or other financial institution that holds customers' securities in the ordinary
course of its trade or business in the chain of intermediaries between such
beneficial owner and the U.S. entity required to withhold tax complies with
applicable certification requirements and (ii) such beneficial owner takes one
of the following steps to obtain an exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of
Global [Securities] [Notes] that are non-U.S. Persons can obtain a complete
exemption from the withholding tax by filing a signed Form W-8 (Certificate of
Foreign Status). If the information shown on Form W-8 changes, a new Form W-8
must be filed within 30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on
Income Effectively Connected with the Conduct of a Trade or Business in the
United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are beneficial owners of Global
[Securities] [Notes] residing in a country that has a tax treaty with the
United States can obtain an exemption or reduced tax rate (depending on the
treaty terms) by filing Form 1001 (Ownership, Exemption or Reduced Rate
Certificate). If the treaty provides only for a reduced rate, withholding tax
will be imposed at that rate unless the filer alternatively files Form W-8.
Form 1001 may be filed by the beneficial owner of Global [Securities] [Notes]
or his agent.
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<PAGE> 67
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's Request
for Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The beneficial owner of
a Global [Security] [Note] or in the case of a Form 1001 or a Form 4224 filer,
his agent, files by submitting the appropriate form to the person through whom
it holds (the clearing agency, in the case of persons holding directly on the
books of the clearing agency). Form W-8 and Form 1001 are effective for three
calendar years and Form 4224 is effective for one calendar year.
[Global Certificates
The Global Certificates may not be purchased by persons other than
U.S. Persons and non-U.S. Persons who will have satisfied the Seller and the
Owner Trustee that such non-U.S. Person will be taxed with respect to its
beneficial ownership of Global Certificates as if it were a U.S. Person.]
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof or (iii) an estate or trust
the income of which is includible in gross income for United States tax
purposes, regardless of its source. This summary does not deal with all
aspects of U.S. federal income tax withholding that may be relevant to foreign
holders of the Global [Securities] [Notes]. Investors are advised to consult
their own tax advisers for specific tax advice concerning their holding and
disposing of the Global Securities.
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<PAGE> 68
INDEX OF TERMS
Set forth below is a list of the defined terms used in this Prospectus
Supplement and defined herein and the pages on which the definitions of such
terms may be found herein. Certain defined terms used in this Prospectus
Supplement are defined in the Prospectus. See "Index of Terms" in the
Prospectus.
<TABLE>
<S> <C>
ABS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-27
ABS Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-28
Accrued Certificate Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-44
Accrued Note Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-43
[Additional Yield Supplement Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-15]
APR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-14
Available Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-41
Available Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-41
Available Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-41
Available Reserve Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-47
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
[Cap Notional Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-48]
[Cap Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-48]
Cede . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-44
Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-9
Certificateholders' Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-44
Certificateholders' Interest Carryover Shortfall . . . . . . . . . . . . . . . . . . . . . . . . S-44
Certificateholders' Monthly Accrued Interest . . . . . . . . . . . . . . . . . . . . . . . . . . S-44
Certificateholders' Monthly Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-44
Certificateholders' Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-44
Certificateholders' Principal Carryover Shortfall . . . . . . . . . . . . . . . . . . . . . . . . S-45
Certificateholders' Principal Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . . S-45
[Certificate Interest Reserve Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-47]
Certificate Pool Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-33
[Certificate Prepayment Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-10, S-39]
[Certificate Prepayment Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-10]
Certificate Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-9
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Certificate Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-61
Certificate Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-61
[Class A-1] Final Scheduled [Distribution] [Payment] Date . . . . . . . . . . . . . . . . . . . . S-7
[Class A-1] Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
[Class A-1 Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6]
[Class A-2 Final Scheduled [Distribution] [Payment] Date . . . . . . . . . . . . . . . . . . . . S-7]
[Class A-2 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3]
[Class A-2 Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6]
[Class A-3 Final Scheduled [Distribution] [Payment] Date . . . . . . . . . . . . . . . . . . . . S-7]
[Class A-3 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3]
[Class A-3 Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6]
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-17, S-50
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-15
Collection Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-24
</TABLE>
<PAGE> 69
<TABLE>
<S> <C>
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7, S-36
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2, [S-6,] S-9
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-17
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Final Scheduled Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-10
Final Scheduled Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Ford . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-20
Ford Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
[Funding Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-12]
General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
[Guaranteed Rate Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-49]
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
[Index Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-35]
[Initial] Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Initial Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8
[Initial] Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Interest Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6, S-35
[Interest Rate Cap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-48]
[Interest Rate Cap Provider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-11, S-48]
[Interest Rate Swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-11, S-48]
Interest Reset Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-35
[Investment Provider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-15, S-50]
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-50
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Liquidated Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-41
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-41
[Mandatory Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8, S-37]
[Mandatory Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-10, S-38]
[Maximum Initial Yield Supplement Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-14, S-47]
[Maximum Subsequent Yield Supplement Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . S-15, S-48]
[Maximum Yield Supplement Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-15, S-48]
Michigan Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-17, S-59
Net Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-33
[Net Trust Swap Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-10, S-49]
[Net Trust Swap Receipt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-12, S-49]
Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Noteholders' Accelerated Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7, S-36
Noteholders' Interest Carryover Shortfall . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-43
Noteholders' Monthly Accrued Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-43
Noteholders' Monthly Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-43
Noteholders' Payment Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-43
Noteholders' Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-43
Noteholders' Principal Carryover Shortfall . . . . . . . . . . . . . . . . . . . . . . . . . . . S-43
Noteholders' Principal Payment Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7, S-43
Note Interest Rate[s] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Note Pool Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-33
[Note Prepayment Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8, S-37]
[Note Prepayment Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8]
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Note Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-61
</TABLE>
<PAGE> 70
<TABLE>
<S> <C>
Note Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-61
OID . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-51
OID Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-52
Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
[Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2, S-6]
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-60
Plan Investor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-60
Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
[Pool/Pre-Funding Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5]
[Pre-Funded Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5]
[Pre-Funded Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8]
[Pre-Funding Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2, S-12]
Prepayable Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-52
Prepayment Assumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-52
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Rating Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-23
Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
Receivables Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-24
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-37
Regular Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7, S-36
Replacement Guaranteed Rate Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-49
[Required Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-14]
Reserve Initial Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-13, S-45
Sale and Servicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-9
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-16
Short Term Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-53
Special Tax Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-17
Specified Reserve Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-13, S-45
[Subsequent Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5]
[Subsequent Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2, S-5]
[Subsequent Transfer Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5]
Supplemental Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-41
[Swap Counterparty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-11, S-49]
[Swap Notional Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-48]
Transfer and Servicing Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-39
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-61
[Yield Supplement Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-14]
[Yield Supplement Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-15]
[Yield Supplement Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-14, S-47]
[Yield Supplement Deposit Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-48]
[Yield Supplement Initial Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-14]
</TABLE>
<PAGE> 71
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED
OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES OFFERED HEREBY,
NOR AN OFFER OF THE SECURITIES IN ANY STATE OR JURISDICTION IN WHICH,
OR TO ANY PERSON TO WHOM, SUCH OFFER WOULD BE UNLAWFUL. THE DELIVERY
OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AT ANY TIME DOES NOT
IMPLY THAT INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
--------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Reports to Securityholders . . . . . . . . . . . . . . . . . . . S-2
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . S-19
The Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . S-23
The Receivables Pool . . . . . . . . . . . . . . . . . . . . . S-24
Pool Factors . . . . . . . . . . . . . . . . . . . . . . . . . S-33
Maturity and Prepayment Considerations . . . . . . . . . . . . S-34
Description of the Notes . . . . . . . . . . . . . . . . . . . S-35
Description of the Certificates . . . . . . . . . . . . . . . . S-37
Description of the Transfer and Servicing Agreements . . . . . S-39
Certain Federal Income Tax Consequences . . . . . . . . . . . . . S-50
Certain State Tax Consequences . . . . . . . . . . . . . . . . . S-59
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . S-60
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . S-60
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . S-61
Annex I--Global Clearance, Settlement and Tax
Documentation Procedures . . . . . . . . . . . . . . . . . . . I-1
Index of Terms
PROSPECTUS
Available Information . . . . . . . . . . . . . . . . . . . . . . . 3
Incorporation of Certain Documents by Reference . . . . . . . . . . 3
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
The Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
The Receivables Pools . . . . . . . . . . . . . . . . . . . . . . . 17
Maturity and Prepayment Considerations . . . . . . . . . . . . . . 19
Pool Factors and Trading Information . . . . . . . . . . . . . . . 20
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . 21
The Seller and the General Partner . . . . . . . . . . . . . . . . 21
The Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Description of the Notes . . . . . . . . . . . . . . . . . . . . . 23
Description of the Certificates . . . . . . . . . . . . . . . . . . 27
Certain Information Regarding the Securities . . . . . . . . . . . 29
Description of the Transfer and Servicing Agreements . . . . . . . 39
Certain Legal Aspects of the Receivables . . . . . . . . . . . . . 51
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . 54
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . 55
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . 59
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . 60
Index of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
UNTIL , 1996 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS
SUPPLEMENT), ALL DEALERS EFFECTING TRANSACTIONS IN THE NOTES OR THE
CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY
BE REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND A PROSPECTUS. THIS
IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS
SUPPLEMENT AND A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
$
Ford Credit 199 -
Auto Owner Trust
$
% Asset Backed
Notes[, Class A-1]
[$
Floating Rate Asset Backed
Notes, Class A-2]
[$
% Asset Backed
Notes, Class A-3]
$
% Asset Backed
Certificates
Ford Credit Auto
Receivables Two L.P.
Seller
Ford Motor Credit Company
Servicer
PROSPECTUS
SUPPLEMENT
<PAGE> 72
THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED _____ __, 1996
PROSPECTUS SUPPLEMENT
(To Prospectus dated , 1996)
$
FORD CREDIT AUTO GRANTOR TRUST 199_
$ % ASSET BACKED CERTIFICATES, CLASS A
[$ % ASSET BACKED CERTIFICATES, CLASS B]
[Ford Logo]
[FORD LOGO]
FORD CREDIT AUTO RECEIVABLES TWO L.P.
SELLER
FORD MOTOR CREDIT COMPANY
SERVICER
The Ford Credit Auto Grantor Trust 199 - (the "Trust") will be formed
pursuant to a Pooling and Servicing Agreement, to be dated as of ,
199 , among Ford Credit Auto Receivables Two L.P. (the "Seller"), Ford
Motor Credit Company (the "Servicer") and , as Trustee, and will
issue $ aggregate initial principal balance of % Asset
Backed Certificates, Class A (the "Class A Certificates") and $
aggregate initial principal balance of % Asset Backed Certificates,
Class B (the "Class B Certificates" and, together with the Class A
Certificates, the "Certificates"). [Only the Class A Certificates are
being offered hereby.] The Class A Certificates will evidence in the
aggregate an undivided ownership interest of approximately % in the
Trust. The Class B Certificates[, which initially will be retained by the
Seller,] will evidence in the aggregate an undivided ownership interest of
approximately % in the Trust. The rights of the Class B
Certificateholders to receive distributions with respect to the
Receivables are subordinated to the rights of the Class A
Certificateholders to the extent described herein. The Trust property
will include a pool of motor vehicle retail installment sale contracts
(the "Receivables") secured by security interests in the motor vehicles
financed thereby, including certain monies due or received thereunder on
or after , 199 , and certain other property, as more fully
described herein. See "Summary--The Trust Property" herein. [The Trustee
also will hold monies on deposit in a trust account (the "Pre-Funding
Account"). Additional motor vehicle retail installment sale contracts
(the "Subsequent Receivables") will be purchased by the Trust from the
Seller from time to time on or before , 199 out of funds on
deposit in the Pre-Funding Account.]
Principal and interest to the extent of the [applicable] Certificate
Rate generally will be distributed on the day of each month (the
"Distribution Date"), commencing , 199 . The final scheduled
Distribution Date on the [Class A] Certificates will be , 199
(the "Final Scheduled Distribution Date").
PROSPECTIVE INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE INFORMATION
SET FORTH IN "RISK FACTORS" ON PAGE S-13 HEREIN AND ON PAGE 12 OF THE
ACCOMPANYING PROSPECTUS.
THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND
DO NOT REPRESENT OBLIGATIONS OF OR INTERESTS IN, AND ARE NOT GUARANTEED OR
INSURED BY, FORD CREDIT AUTO RECEIVABLES TWO L.P., FORD CREDIT AUTO
RECEIVABLES TWO, INC., FORD MOTOR CREDIT COMPANY, FORD
MOTOR COMPANY OR ANY OF THEIR RESPECTIVE AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRE-
SENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO PUBLIC (1) UNDERWRITING PROCEEDS TO
DISCOUNT THE SELLER (1)(2)
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Class A Certificate % % %
[Per Class B Certificate % % %
Total $ $ $]
</TABLE>
(1) Plus accrued interest, if any, from , 199 .
(2) Before deducting expenses, estimated to be $ .
The [Class A] Certificates are offered by the Underwriters when, as
and if issued and accepted by the Underwriters and subject to their right
to reject orders in whole or in part. It is expected that delivery of the
[Class A] Certificates will be made in book-entry form only through the
Same Day Funds Settlement System of The Depository Trust Company, or
through Cedel Bank, societe anonyme or the Euroclear System, on or about
the Closing Date.
The date of this Prospectus Supplement is , 199 .
<PAGE> 73
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE
INFORMATION ABOUT THE OFFERING OF THE [CLASS A] CERTIFICATES.
ADDITIONAL INFORMATION IS CONTAINED IN THE PROSPECTUS AND
PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE [CLASS A]
CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS
RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY
OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE
MARKET PRICES OF THE [CLASS A] CERTIFICATES AT LEVELS ABOVE THOSE
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued, monthly
and annual unaudited reports containing information concerning the
Receivables will be prepared by the Servicer and sent on behalf of
the Trust only to Cede & Co. ("Cede"), as nominee of The
Depository Trust Company ("DTC") and registered holder of the [Class
A] Certificates. See "Certain Information Regarding the
Securities--Book-Entry Registration" and "--Reports to
Securityholders" in the accompanying Prospectus (the "Prospectus").
Such reports will not constitute financial statements prepared in
accordance with generally accepted accounting principles. The
Seller, as originator of the Trust, will file with the Securities
and Exchange Commission (the "Commission") such periodic reports as
are required under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the rules and regulations of the
Commission thereunder.
S-2
<PAGE> 74
SUMMARY
The following summary is qualified in its entirety by reference
to the detailed information appearing elsewhere herein and in the
Prospectus. Certain capitalized terms used herein are defined
elsewhere in this Prospectus Supplement on the pages indicated in
the "Index of Terms" or, to the extent not defined herein, have the
meanings assigned to such terms in the Prospectus.
ISSUER ................ Ford Credit Auto Grantor Trust 199 -
(the "Trust" or the "Issuer"), a trust to
be formed by the Seller and the Trustee
pursuant to the Agreement.
SELLER ................ Ford Credit Auto Receivables Two L.P., a
Delaware limited partnership (the
"Seller").
SERVICER .............. Ford Motor Credit Company, a Delaware
corporation (the "Servicer" or "Ford
Credit").
TRUSTEE ............... , as trustee under the Agreement (the
"Trustee").
THE CERTIFICATES ..... The Trust will issue Asset Backed
Certificates (the "Certificates") in an
aggregate initial balance of $ .
The Certificates represent fractional
undivided interests in the Trust and will
be issued pursuant to a Pooling and
Servicing Agreement to be dated as of ,
199 (as amended and supplemented from time to
time, the "Agreement"), among the Seller,
the Servicer and the Trustee.
The Certificates will consist of $
aggregate initial balance of % Asset
Backed Certificates, Class A (the "Class A
Certificates") and $
aggregate initial balance of % Asset
Backed Certificates, Class B (the "Class B
Certificates"). [Only the Class A
Certificates are being offered hereby.]
Each Certificate will represent a
fractional undivided ownership interest in
the Trust.
The [Class A] Certificates will be available for
purchase in book entry form only in
minimum denominations of $1,000 and
integral multiples thereof. The [Class A]
Certificateholders will not be entitled to
receive Definitive Certificates except in
the limited circumstances described
herein. See "Certain Information
Regarding the Securities--Definitive
Securities" in the Prospectus.
The Class A Certificates will evidence in the
aggregate an undivided ownership interest
(the "Class A Percentage") of
approximately % in the Trust
(initially representing $ )
and the Class B Certificates will evidence
in the aggregate an undivided ownership
interest (the "Class B Percentage") of
approximately % in the Trust
(initially representing $ ).
The Class B Certificates are subordinated
to the Class A Certificates to the extent
described herein. [The Class B
Certificates are not being offered hereby
and initially will be retained by the
Seller.]
S-3
<PAGE> 75
THE TRUST PROPERTY ... The property of the Trust includes (i) the
Receivables; (ii) with respect to
Precomputed Receivables, all monies due
thereunder on or after the related Cutoff
Date and with respect to Simple Interest
Receivables, all monies due or received
thereunder on or after the related Cutoff
Date; (iii) security interests in the
Financed Vehicles and any accessions
thereto; (iv) the rights to proceeds from
claims on certain physical damage, credit
life, credit disability or other insurance
policies, if any, covering the Financed
Vehicles or the Obligors; (v) any Dealer
Recourse; (vi) the Seller's rights to
certain documents and instruments relating
to the Receivables; (vii) such amounts as
from time to time may be held in one or
more accounts maintained pursuant to
the Agreement, as described herein[,
including the Yield Supplement Account]
[and the Pre-Funding Account]; (viii)
certain rights under the Agreement [and
the Yield Supplement Agreement]; (ix)
certain rights under the Purchase
Agreement, including the right of the
Seller to cause Ford Credit to repurchase
Receivables from the Seller; (x) certain
payments and proceeds with respect to the
Receivables held by the Servicer; (xi)
certain rebates of premiums and other
amounts relating to certain insurance
policies and other items financed under
the Receivables; and (xii) any and all
proceeds of the foregoing. The property
of the Trust does not include the Payahead
Account and the Subordination Spread
Account.
THE RECEIVABLES ...... On , 199 (the "Closing Date"), the
Trust will purchase Receivables (the
"[Initial] Receivables") having an
aggregate principal balance of
approximately $ as of ,
199 (the "[Initial] Cutoff Date"), from
the Seller pursuant to the Agreement. As
of the [Initial] Cutoff Date, the weighted
average annual percentage rate ("APR") of
the [Initial] Receivables was
approximately %, the weighted average
remaining maturity of the [Initial]
Receivables was approximately months
and the weighted average original maturity
of the [Initial] Receivables was
approximately months.
[On and following the Closing Date, pursuant to
the Agreement, the Seller will be obligated,
subject only to the availability thereof,
to sell, and the Trust will be obligated
to purchase, subject to the satisfaction
of certain conditions set forth therein,
additional Receivables (the "Subsequent
Receivables") from time to time during the
Funding Period having an aggregate
principal balance equal to approximately $
(such amount being equal to an
amount on deposit in the Pre-Funding
Account (the "Pre-Funded Amount") on the
Closing Date). The Seller will designate
as a Cutoff Date (each a "Subsequent
Cutoff Date") the date as of which
particular Subsequent Receivables are
conveyed to the Trust. It is expected
that certain of the Subsequent Receivables
arising between the Initial Cutoff Date
and the Closing Date will be conveyed to
the Trust on the Closing Date and that
other Subsequent Receivables will be
conveyed to the Trust as frequently as
daily thereafter on dates specified by the
Seller (each date on which Subsequent
Receivables are conveyed to the Trust
being referred to as a "Subsequent
Transfer Date") occurring during the
Funding Period. See "Description of the
Certificates--Sale and Assignment of
Receivables; Subsequent Receivables"
herein.]
S-4
<PAGE> 76
The [Initial] Receivables [and the Subsequent
Receivables] will be purchased by the
Seller from Ford Credit pursuant to a
Purchase Agreement between the Seller and
Ford Credit (as amended and supplemented
from time to time, the "Purchase
Agreement"). The [Initial] Receivables
have been selected[, and the Subsequent
Receivables will be selected,] from the
contracts owned by Ford Credit based on
the criteria specified in the Agreement
and described herein and in the
Prospectus. No Initial Receivable has[,
and no Subsequent Receivable will have,]
a scheduled maturity later than
(the "Final Scheduled Maturity Date").
[Subsequent Receivables may be originated by
Ford Credit at a later date using credit
criteria different from those which were
applied to the Initial Receivables and may
be of a different credit quality and
seasoning. In addition, following the
transfer of Subsequent Receivables to the
Trust, the characteristics of the entire
pool of Receivables included in the Trust
may vary significantly from those of the
Initial Receivables. See "Risk
Factors--The Subsequent Receivables and
the Pre-Funding Account" and "The
Receivables Pool" herein.]
The "Pool[/Pre-Funding] Balance" at any time
[will represent] [is the sum of (i)] the
aggregate principal balance of the
Receivables at the end of the preceding
Collection Period, after giving effect to
all payments (other than Payaheads)
received from Obligors, Liquidation
Proceeds, Advances and Purchase Amounts to
be remitted by the Servicer or the Seller,
as the case may be, all for such
Collection Period and all Realized Losses
during such Collection Period [(such
amount, the "Pool Balance") and (ii) the
amount on deposit in the Pre-Funding
Account (excluding any Investment
Earnings)]. "Realized Losses" means the
excess of the principal balance of any
Liquidated Receivable over Liquidation
Proceeds to the extent allocable to
principal.
DISTRIBUTION DATES .... Distributions with respect to the Certificates
will be made on the day of each month or, if
any such day is not a Business Day, on the next
succeeding Business Day (each, a "Distribution
Date") commencing , 199 .
Distributions will be made to holders of
the [Class A] Certificates (the "[Class A]
Certificateholders") of record as of the
day immediately preceding such
Distribution Date or, if Definitive
Certificates are issued, as of the
day of the preceding month (a "Record
Date"). A "Business Day" is a day that in
The City of New York or in the city in
which the corporate trust office of the
Trustee is located is neither a legal
holiday nor a day on which banking
institutions are authorized by law,
regulation or executive order to be
closed.
[CLASS A] CERTIFICATE
RATE .................. % per annum (the "[Class A] Certificate
Rate").
[CLASS B CERTIFICATE
RATE .................. % per annum (the "Class B Certificate
Rate").]
[CLASS A] INTEREST .... On each Distribution Date,
the Trustee shall pass through and
distribute pro rata to the [Class A
Certificateholders] [holders of record of
Class A Certificates (the "Class A
Certificateholders")] interest at
one-twelfth of the [Class A] Certificate
Rate, calculated on the basis of a 360-day
year consisting of twelve
S-5
<PAGE> 77
30-day months, on the Class A Certificate
Balance as of the last day of the preceding
calendar month to the extent of funds available,
after giving effect to amounts required to
pay the Servicing Fee for the prior
Collection Period and any overdue
Servicing Fees to the Servicer, from (i)
the Class A Percentage of the Available
Interest, (ii) the Subordination Spread
Account, and (iii) the Class B Percentage
of the Total Available Amount. The "Class
A Certificate Balance" shall equal,
initially, the Class A Percentage of the
Pool[/Pre-Funding] Balance as of the
[Initial] Cutoff Date and thereafter shall
equal the initial Class A Certificate
Balance reduced by all principal
distributions on the Class A Certificates.
[CLASS A] PRINCIPAL ... On each Distribution Date,
the Trustee shall pass through and
distribute pro rata to [Class A]
Certificateholders principal to the extent
of funds available from (i) the Class A
Percentage of the Available Principal,
(ii) the Subordination Spread Account, and
(iii) the Class B Percentage of the Total
Available Amount. Such principal shall
consist of the Class A Percentage of: (a)
the principal portion of all scheduled
payments due with respect to Precomputed
Receivables during the preceding
Collection Period (including amounts
withdrawn from the Payahead Account but
excluding amounts deposited into the
Payahead Account); (b) the principal
portion of all prepayments in full
received with respect to Precomputed
Receivables during the preceding
Collection Period (and certain partial
prepayments) (including amounts withdrawn
from the Payahead Account but excluding
amounts deposited into the Payahead
Account); (c) the principal portion of all
payments received with respect to Simple
Interest Receivables during the preceding
Collection Period; (d) the principal
balance of each Receivable that was
purchased by the Servicer or repurchased
by the Seller, in each case, under an
obligation that arose during the
preceding Collection Period; and (e) the
principal balance of each Receivable
liquidated by the Servicer, during the
preceding Collection Period. A
"Collection Period" with respect to a
Distribution Date will be the calendar
month preceding the month in which such
Distribution Date occurs, or, in the case
of the initial Distribution Date, the
period from the [Initial] Cutoff Date
through the last day of the calendar month
preceding the month in which the initial
Distribution Date occurs.
[CLASS B INTEREST ..... On each Distribution Date,
the Trustee shall pass through and
distribute pro rata to the holders of
record of Class B Certificates (the "Class
B Certificateholders") interest at
one-twelfth of the Class B Certificate
Rate, calculated on the basis of a 360-day
year consisting of twelve 30-day months,
on the Class B Certificate Balance as of
the last day of the preceding calendar
month to the extent of funds available,
after giving effect to (A) any amounts
required to be distributed to the Class A
Certificateholders pursuant to the
subordination of the rights of the Class B
Certificateholders, and (B) amounts
required to pay the Servicing Fee for the
prior Collection Period and any overdue
Servicing Fees to the Servicer, from (i)
the Class B Percentage of the Available
Interest and (ii) the Subordination Spread
Account. The "Class B Certificate
Balance" shall equal, initially, the Class
B Percentage of the Pool[/Pre-Funding]
Balance as of the [Initial] Cutoff Date
and thereafter shall
S-6
<PAGE> 78
equal the initial Class B Certificate Balance
reduced by all principal distributions on the
Class B Certificates.
CLASS B PRINCIPAL ..... On each Distribution Date, the Trustee shall
pass through and distribute pro rata to
Class B Certificateholders principal to
the extent of funds available, after
giving effect to (A) any amounts required
to be distributed to the Class A
Certificateholders pursuant to the
subordination of the rights of the Class B
Certificateholders, (B) amounts required
to pay the Servicing Fee for the prior
Collection Period and any overdue
Servicing Fees to the Servicer, and (C)
the interest due to the Class B
Certificateholders, from (i) the Class B
Percentage of the Available Principal and
(ii) the Subordination Spread Account.
Such principal shall consist of the Class
B Percentage of: (a) the principal
portion of all scheduled payments due with
respect to Precomputed Receivables during
the preceding Collection Period (including
amounts withdrawn from the Payahead
Account but excluding amounts deposited
into the Payahead Account); (b) the
principal portion of all prepayments in
full received with respect to Precomputed
Receivables during the preceding
Collection Period (and certain partial
prepayments) (including amounts withdrawn
from the Payahead Account but excluding
amounts deposited into the Payahead
Account); (c) the principal portion of all
payments received with respect to Simple
Interest Receivables during the preceding
Collection Period; (d) the principal
balance of each Receivable that was
purchased by the Servicer or repurchased
by the Seller, in each case, under an
obligation that arose during the preceding
Collection Period; and (e) the principal
balance of each Receivable liquidated by
the Servicer, during the preceding
Collection Period.]
OPTIONAL PREPAYMENT ... If the Servicer exercises
its option to purchase the Receivables,
which can occur after the Pool Balance
declines to 10% or less of the Initial
Pool Balance, the Class A
Certificateholders will receive an amount
equal to the Class A Certificate Balance
together with accrued interest at the
[Class A] Certificate Rate, [the Class B
Certificateholders will receive and amount
equal to the Class B Certificate Balance
together with accrued interest at the
Class B Certificate Rate] and the [Class
A] Certificates will be retired. The
"Initial Pool Balance" will equal [the
sum of (i)] the Pool Balance as of the
[Initial] Cutoff Date [plus (ii) the
aggregate principal balances of all
Subsequent Receivables added to the Trust
as of their respective Subsequent Cutoff
Dates]. See "Description of the
Certificates--Optional Prepayment" herein.
[MANDATORY REPURCHASE
FROM PRE-FUNDING
ACCOUNT ............... The [Class A] Certificates
will be prepaid, in part, on the
Distribution Date on or immediately
following the last day of the Funding
Period in the event that any amount
remains on deposit in the Pre-Funding
Account after giving effect to the
purchase of all Subsequent Receivables,
including any such purchase on such date
(a "Mandatory Repurchase"). The aggregate
principal balance of [Class A]
Certificates to be prepaid will be an
amount equal to the amount then on deposit
in the Pre-Funding Account.
A limited recourse mandatory prepayment
premium (the "Certificate Prepayment
Premium") will be payable by the Trust to the
[Class A] Certificateholders if
S-7
<PAGE> 79
the aggregate principal balance of [Class A]
Certificates to be prepaid pursuant to a
Mandatory Repurchase exceeds $ . The
Certificate Prepayment Premium will equal the
excess, if any, discounted as described below,
of (i) the amount of interest that would accrue
on the remaining Pre-Funded Amount (the
"Certificate Prepayment Amount") at the related
Certificate Rate during the period commencing on
and including the Distribution Date on which
such Certificate Prepayment Amount is required
to be distributed to Certificateholders to but
excluding , over (ii) the amount of
interest that would have accrued on such
Certificate Prepayment Amount over the same
period at a per annum rate of interest equal to
the bond equivalent yield to maturity on the
Determination Date preceding such Distribution
Date on the , in the case of a Class A
Certificate, and on the , in the case
of a Class B Certificate. Such excess shall be
discounted to present value to such Distribution
Date at the applicable yield described in clause
(ii) above. Pursuant to the Agreement, the
Seller will be obligated to pay the Certificate
Prepayment Premium to the Trust as liquidated
damages for the failure to deliver Subsequent
Receivables having an aggregate principal
balance equal to the Pre-Funded Amount. The
Trust's obligation to pay the Certificate
Prepayment Premium will be limited to funds
received from the Seller pursuant to the
preceding sentence. In the event that such
funds are insufficient to pay the aggregate
Certificate Prepayment Premium in full, [Class
A] Certificateholders [of each class of
Certificates] will receive their ratable share
[(based upon the Certificate Prepayment Premium
for each class of Certificates)] of the
aggregate amount available to be distributed in
respect of the Certificate Prepayment Premium.
No other assets of the Trust will be available
for the purpose of making such payment.]
[PRE-FUNDING ACCOUNT .. During the period (the "Funding Period") from and
including the Closing Date until the earliest
of (i) the date on which (a) the amount on
deposit in the Pre-Funding Account is
less than $ , (b) an Event of
Default occurs under the Agreement or (c)
certain events of insolvency occur with
respect to the Seller or the Servicer or
(ii) the close of business on the
Distribution Date, the Pre-Funded
Amount will be maintained as an account
in the name of the Trustee (the
"Pre-Funding Account"). The Pre-Funded
Amount will initially equal approximately
$ , and, during the Funding
Period, will be reduced by the amount
thereof used to purchase Subsequent
Receivables in accordance with the
Agreement and the amount thereof deposited
in the Subordination Spread Account in
connection with the purchase of such
Subsequent Receivables. The Seller
expects that the Pre-Funded Amount will be
reduced to less than $ by the
Distribution Date. Any Pre-Funded
Amount remaining at the end of the Funding
Period will be payable to the
Certificateholders pro rata in proportion
to their initial principal balances.]
SUBORDINATION ......... The rights of the Class B
Certificateholders to receive
distributions to which they would
otherwise be entitled with respect to the
Receivables are subordinated to the rights
of the Class A Certificateholders, as
described more fully herein.
S-8
<PAGE> 80
SUBORDINATION SPREAD
ACCOUNT ............... An account (the "Subordination Spread
Account") will be created with an initial
deposit by the Seller of cash or
Permitted Investments maturing on or prior
to the initial Distribution Date and
having a value of [$ (the
"Subordination Initial Deposit").] [at
least $ plus an amount
attributable to the difference between the
anticipated investment earnings on the
Pre-Funded Amount and the weighted average
interest expense on the portion of the
Certificates represented by the Pre-Funded
Amount. On each Subsequent Transfer Date,
cash or Permitted Investments having a
value approximately equal to % of the
aggregate principal balance of the
Subsequent Receivables conveyed to the
Trust on such Subsequent Transfer Date
will be withdrawn from the Pre-Funding
Account from amounts otherwise
distributable to the Seller in connection
with the sale of Subsequent Receivables
and deposited in the Subordination Spread
Account. The amount initially deposited
in the Subordination Spread Account by the
Seller together with the aggregate amount
transferred from the Pre-Funding Account
to the Subordination Spread Account on
each Subsequent Transfer Date is referred
to as the "Subordination Initial
Deposit."] The Subordination Initial
Deposit will be augmented by the deposit
in the Subordination Spread Account of
amounts otherwise distributable to Class B
Certificateholders until the amount in the
Subordination Spread Account reaches an
amount equal to the Specified
Subordination Spread Account Balance.
Thereafter, amounts otherwise
distributable to the Class B
Certificateholders will be deposited in
the Subordination Spread Account to the
extent necessary to maintain the amount in
the Subordination Spread Account at an
amount equal to the Specified
Subordination Spread Account Balance.
Amounts in the Subordination Spread
Account on any Distribution Date (after
giving effect to all distributions made on
such Distribution Date) in excess of the
Specified Subordination Spread Account
Balance for such Distribution Date
generally will be released to the Class B
Certificateholders. The "Specified
Subordination Spread Account Balance" with
respect to any Distribution Date will be
equal to $ , except that in the event
that on any Distribution Date (i) the
annualized average for the preceding three
Collection Periods (or such shorter number
of Collection Periods as have elapsed
since the Cutoff Date) of the ratios of
net losses (i.e., the balances of all
Receivables which are determined to be
uncollectible in the Collection Period,
less any Liquidation Proceeds) to the Pool
Balance as of the first day of each such
Collection Period exceeds % or (ii) the
average for the preceding three Collection
Periods (or such shorter number of
Collection Periods as have elapsed since
the Cutoff Date) of the ratios of the
number of Financed Vehicles that have
been repossessed but not yet sold or are
delinquent 60 days or more to the
outstanding number of Receivables exceeds
%, then the Specified Subordination
Spread Account Balance for such
Distribution Date shall be an amount equal
to the percentage of the Pool Balance as
of the first day of such Collection Period
determined by deducting from eleven
percent the following fraction, expressed
as a percentage: (x) 1 minus (y) a
fraction, the numerator of which is the
Class A Certificate Balance and the
denominator of which is the Pool Balance
both as of the first day of such
Collection Period, but in no event shall
the Specified Subordination Spread Account
Balance be more than $ , or less than
$ . On
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<PAGE> 81
any Distribution Date on which the aggregate
balance of the Class A Certificates is $
or less after giving effect to distributions on
such Distribution Date, the Specified
Subordination Spread Account Balance shall be
the greater of the balance described above or
$ . The Subordination Spread Account will be
maintained with , as agent for the Class A
Certificateholders as a segregated trust
account, and will not be part of the Trust.
[YIELD SUPPLEMENT ACCOUNT;
YIELD SUPPLEMENT
AGREEMENT ............. Ford Credit will establish a yield supplement
account with the Trustee for the benefit of the
Certificateholders (the "Yield Supplement
Account"). The Yield Supplement Account is
designed solely to hold funds to be applied by
the Trustee to provide payments to the
Certificateholders in respect of Receivables
the APR of which is less than the sum of (i) the
weighted average of the Class A Certificate Rate
and the Class B Certificate Rate and (ii) the
Servicing Fee Rate (the "Required Rate"). The
Yield Supplement Account will be created with an
initial deposit by Ford Credit (the "Yield
Supplement Initial Deposit") in an amount (which
amount may be discounted at a rate to be
specified in the Agreement) equal to the
aggregate amount by which (i) interest on the
principal balance of each [Initial] Receivable
for the period commencing on the [Initial]
Cutoff Date and ending with the scheduled
maturity of such Receivable, assuming that
payments on such Receivables are made as
scheduled and no prepayments are made, at a rate
equal to the Required Rate, exceeds (ii)
interest on such principal balances at the APR
of such Receivable (the "Yield Supplement
Amount" [and, with respect to all of the
[Initial] Receivables, the "Maximum [Initial]
Yield Supplement Amount")].
[Ford Credit, the Seller and the Trustee will
enter into a Yield Supplement Agreement (as
amended and supplemented from time to time, the
"Yield Supplement Agreement") pursuant to which,
on each Subsequent Transfer Date, Ford
Credit will deposit an amount (which
amount may be discounted at a rate to be
specified in the Agreement), if any, into
the Yield Supplement Account (the
"Additional Yield Supplement Amount")
equal to the aggregate Yield Supplement
Amounts in respect of the related
Subsequent Receivables for the period
commencing with the related Subsequent
Cutoff Date and ending with the scheduled
maturity of each such Subsequent
Receivable, assuming that payments on such
Receivables are made as scheduled and no
prepayments are made. The aggregate of
the Additional Yield Supplement Amounts in
respect of the Subsequent Receivables is
referred to herein as the "Maximum
Subsequent Yield Supplement Amount" and,
together with the Maximum Initial Yield
Supplement Amount, the "Maximum Yield
Supplement Amount."] See "Description of
the Certificates--Yield Supplement
Account; Yield Supplement Agreement"
herein.]
COLLECTION ACCOUNT .... Except under certain
conditions described herein, the Servicer
will be required to remit collections
received with respect to the Receivables
not later than the [ ] Business Day
after receipt to one or more accounts in
the name of the Trustee (the "Collection
Account"). Pursuant to the Agreement, the
Servicer
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<PAGE> 82
will have the power, revocable
at the discretion of the Trustee, to
instruct the Trustee to withdraw funds on
deposit in the Collection Account and to
apply such funds on each Distribution Date
to the following (in the priority
indicated): (i) the Servicing Fee for the
prior Collection Period and any overdue
Servicing Fees to the Servicer, (ii) the
Class A Distributable Amount to the Class
A Certificateholders (iii) the Class B
Distributable Amount to the Class B
Certificateholders, and (iv) the remaining
balance, if any, to the Subordination
Spread Account.
SERVICER FEE .......... The Servicer will receive each
month a fee for servicing the Receivables
equal to (a) the product of one-twelfth of
1.00% (the "Servicing Fee Rate") and the
Pool Balance outstanding at the beginning
of the previous month, plus (b) any late,
prepayment, and other administrative fees
and expenses collected during such month
[plus (c) reinvestment proceeds on any
payments received in respect of the
Receivables].
MATURITY AND PREPAYMENT
CONSIDERATIONS ........ As the rate of payment of principal of the
Certificates depends on the rate of payment
(including prepayments) of the principal
balance of the Receivables, the final
distribution in respect of the Certificates
could occur significantly earlier than the
Final Scheduled Distribution Date. It is
expected that the final distribution in respect
of the Certificates will occur on or prior to
the Final Scheduled Distribution Date. However,
if sufficient funds are not available to reduce
the aggregate Certificate Balance of either
class of Certificates to zero on or prior to the
Final Scheduled Distribution Date, the final
distribution in respect of such class of
Certificates could occur later than such date.
All of the Receivables are prepayable at any time.
Prepayments that do not constitute
Payaheads will shorten the weighted
average remaining term of the Receivables
and the weighted average life of the
Certificates. Such prepayments, to the
extent allocable to principal, will be
included in the Available Principal and
will be distributable to the
Certificateholders as set forth in the
priority of distributions herein. See
"Description of the Certificates--Distributions"
herein.
CLEARANCE AND
SETTLEMENT ............ [Class A] Certificateholders may elect to hold
their [Class A] Certificates through any of DTC
(in the United States) or Cedel or
Euroclear (in Europe). Transfers within
DTC, Cedel or Euroclear, as the case may
be, will be in accordance with the usual
rules and operation procedures of the
relevant system. Cross-market transfers
between persons holding directly or
indirectly through DTC, on the one hand,
and counterparties holding directly or
indirectly through Cedel or Euroclear, on
the other, will be effected in DTC
through the relevant Depositaries of Cedel
or Euroclear. See "Certain Information
Regarding the Securities--Book-Entry
Registration" in the Prospectus.
TAX STATUS ............ In the opinion of ("Special Tax Counsel"),
the Trust will be treated as a grantor
trust for federal income tax purposes and
will not be subject to federal
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<PAGE> 83
income tax. In the opinion of ("Michigan
Tax Counsel"), the same treatment will apply
for Michigan income and Single Business
Tax purposes. Certificate Owners will
report their pro rata share of all income
earned on the Receivables (other than
amounts, if any, treated as "stripped
coupons") and, subject to certain
limitations in the case of Certificate
Owners who are individuals, trusts, or
estates, may deduct their pro rata share
of reasonable servicing and other fees
paid or incurred by the Trust. See
"Certain Federal Income Tax Consequences"
herein and in the Prospectus.
ERISA CONSIDERATIONS .. The Class A Certificates may, in general,
be purchased by employee benefit plans
that are subject to the Employee
Retirement Income Security Act of 1974, as
amended ("ERISA"), upon satisfaction of
certain conditions de scribed under "ERISA
Considerations" herein and in the
Prospectus with respect to the
Underwriters' Exemption. [However, as set
forth in "ERISA Considerations" in the
Prospectus, certain special considerations
may apply with respect to the Pre-Funding
Account.]
[The Underwriters' Exemption does not apply to
the Class B Certificates, which may be purchased
by employee benefit plans subject to ERISA
only if some other statutory or
administrative exemption from the
prohibited transaction rules of ERISA and
the Internal Revenue Code of 1986, as
amended (the "Code") applies to such
purchases. These exemptions may apply
with respect to, inter alia, purchases by
certain insurance company general
accounts, insurance company pooled
separate accounts, and bank collective
investment funds, and on behalf of
employee benefit plans by certain
qualified professional asset managers.]
Any benefit plan fiduciary considering a purchase
of [Class A] Certificates should, among other
things, consult with legal counsel in
determining whether all required
conditions with respect to the various
exemptions have been satisfied. See
"ERISA Considerations" herein and in the
Prospectus.
RATINGS OF THE
CERTIFICATES .......... It is a condition to the issuance of the Class A
Certificates that they be rated in the
highest investment rating category by at
least two nationally recognized rating
agencies[, and it is a condition to the
issuance of the Class B Certificates that
they be rated by at least two nationally
recognized rating agencies [at least] "
" or its equivalent]. [However, the
rating agencies do not evaluate, and the
ratings do not address, the likelihood
that the Certificate Prepayment Premium
will be paid.] There can be no assurance
that a rating will not be lowered or
withdrawn by a rating agency if
circumstances so warrant.
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<PAGE> 84
RISK FACTORS
LIMITED LIQUIDITY
There is currently no secondary market for the [Class A]
Certificates. The Underwriters currently intend to make a market
in the [Class A] Certificates, but they are under no obligation to
do so. There can be no assurance that a secondary market will
develop or, if a secondary market does develop, that it will provide
the [Class A] Certificateholders with liquidity of investment or
that it will continue for the life of the [Class A] Certificates.
[THE SUBSEQUENT RECEIVABLES AND THE PRE-FUNDING ACCOUNT
On the Closing Date, the Seller will transfer to the Trust the
approximately $ of Initial Receivables and the
approximately $ Pre-Funded Amount on deposit in the
Pre-Funding Account. If the principal balance of eligible
Receivables originated by Ford Credit during the Funding Period is
less than the Pre-Funded Amount, the Seller will have insufficient
Receivables to sell to the Trust on the Subsequent Transfer Dates,
thereby resulting in a prepayment of principal to the
Certificateholders as described in the following paragraph. See
"--Trust's Relationship to Ford and Ford Credit" below. In
addition, any conveyance of Subsequent Receivables is subject to the
satisfaction, on or before the related Subsequent Transfer Date, of
the following conditions precedent, among others: (i) each such
Subsequent Receivable must satisfy the eligibility criteria
specified in the Agreement; (ii) the Seller will not select such
Subsequent Receivables in a manner that it believes is adverse to
the interests of the Certificateholders; (iii) as of the related
Subsequent Cutoff Date, the Receivables in the Trust at that time,
including the Subsequent Receivables to be conveyed by the Seller as
of such Subsequent Cutoff Date, will satisfy the parameters
described under "The Receivables Pool" herein and under "The
Receivables Pools" in the Prospectus; (iv) the applicable
Subordination Initial Deposit for such Subsequent Transfer Date
shall have been made; and (v) the Seller shall have executed and
delivered to the Trustee a written assignment conveying such
Subsequent Receivables to the Trustee (including a schedule
identifying such Subsequent Receivables). Moreover, any such
conveyance of Subsequent Receivables made during any given
Collection Period will also be subject to the satisfaction, on or
about the fifteenth day of the month following the end of such
Collection Period, of the following conditions subsequent, among
others: (a) the Seller will deliver certain opinions of counsel to
the Trustee and the Rating Agencies with respect to the validity of
the conveyance of all such Subsequent Receivables conveyed during
such Collection Period; (b) the Trustee shall have received written
confirmation from a firm of independent certified public
accountants that, as of the end of the preceding Collection Period,
the Receivables in the Trust at that time, including the Subsequent
Receivables conveyed by the Seller during such Collection Period,
satisfied the parameters described under "The Receivables Pool"
herein and under "The Receivables Pools" in the Prospectus; and (c)
the Rating Agencies shall have each notified the Seller in writing
that, following the addition of all such Subsequent Receivables, the
Certificates will be rated by the Rating Agencies in the same
respective rating categories in which they were rated on the Closing
Date. The Seller will immediately repurchase any Subsequent
Receivable, at a price equal to the Purchase Amount thereof, upon
the failure of the Seller to satisfy any of the foregoing conditions
subsequent with respect thereto. Such confirmation of the ratings
of the Certificates may depend on factors other than the
characteristics of the Subsequent Receivables, including the
delinquency, repossession and net loss experience on the automobile
and light truck receivables in the portfolio serviced by Ford
Credit.
To the extent that amounts on deposit in the Pre-Funding
Account have not been fully applied to the conveyance of Subsequent
Receivables to the Trust by the end of the Funding Period, the
Certificateholders will receive, on the Distribution Date on or
immediately following the last day of the Funding Period, a
prepayment of principal in an amount equal to the Pre-Funded Amount
remaining in the Pre-Funding Account following the purchase of any
Subsequent Receivables on such Distribution Date. It is anticipated
that the principal balance of Subsequent Receivables sold to the
Trust will not be exactly equal to the amount on deposit in the
Pre-Funding Account and that therefore there will be at least a
nominal amount of principal prepaid to the Certificateholders.
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<PAGE> 85
Each Subsequent Receivable must satisfy the eligibility
criteria specified in the Agreement and any additional criteria
specified by the Rating Agencies at the time of its addition.
However, Subsequent Receivables may have been originated by Ford
Credit at a later date using credit criteria different from those
which were applied to the Initial Receivables and may be of a
different credit quality and seasoning. In addition, an increasing
percentage of the Subsequent Receivables may be Final Payment
Receivables . Therefore, following the transfer of Subsequent
Receivables to the Trust, the characteristics of the entire
Receivables Pool included in the Trust may vary significantly from
those of the Initial Receivables. See "The Receivables Pool" herein
and "The Receivables Pools" in the Prospectus. The ability of Ford
Credit to generate Subsequent Receivables is largely dependent upon
the level of retail sales of automobiles and light trucks. The
level of retail sales of automobiles and light trucks may change
as a result of a variety of social and economic factors. Economic
factors include interest rates, unemployment levels, the rate of
inflation and consumer perceptions of economic conditions generally.
However, the Seller is unable to determine and has no basis to
predict whether or to what extent economic or social factors will
affect the level of vehicle sales.]
[TRUST'S RELATIONSHIP TO FORD AND FORD CREDIT
Neither the Seller nor Ford Credit is obligated to make any
payments in respect of the Certificates or the Receivables.
However, the ability of the Seller to convey Subsequent Receivables
on Subsequent Transfer Dates is completely dependent upon the
generation of additional receivables by Ford Credit. The ability of
Ford Credit to generate receivables is, in turn, dependent to a
large extent on the sales of automobiles and light trucks
manufactured or distributed by Ford Motor Company and its
consolidated subsidiaries ("Ford"). If, during the Funding Period,
Ford were temporarily or permanently no longer manufacturing or
distributing vehicles, the rate of sales of automobiles and light
trucks manufactured by Ford would decrease, adversely affecting the
ability of the Seller to sell Subsequent Receivables to the Trust.
The use of incentive programs (e.g., manufacturers' rebate programs)
also may affect retail sales. There can be no assurance, therefore,
that Ford Credit will continue to generate receivables at the same
rate as in prior years. In addition, if Ford Credit were to cease
acting as Servicer, delays in processing payments on the Receivables
and information in respect thereof could occur and result in delays
in payments to the Certificateholders.
Ford and Ford Credit are subject to the informational
requirements of the Exchange Act and in accordance therewith file
reports and other information with the Commission. For further
information regarding Ford and Ford Credit, reference is made to
such reports and other information which are available as described
under "Available Information" in the Prospectus.]
LIMITED ASSETS
The Trust will not have, nor is it permitted or expected to
have, any significant assets or sources of funds other than the
Receivables[, the Pre-Funding Account] [, the Yield Supplement
Account] and the Subordination Spread Account. Holders of the
Certificates must rely for repayment upon payments on the
Receivables and, if and to the extent available, amounts on deposit
in the [Pre-Funding Account[, the Yield Supplement Account] and the]
Subordination Spread Account. [The Pre-Funding Account will be
available only during the Funding Period and is designed solely to
cover obligations of the Trust relating to a portion of its funds
not invested in Receivables and is not designed to cover losses on
the Receivables.] [The Yield Supplement Account is designed solely
to hold funds to be applied to provide payments to the
Securityholders in respect of Receivables the APR of which is less
than the Required Rate.] Funds in the Subordination Spread Account
will be available on each Distribution Date to cover shortfalls in
distributions of interest and principal on the Certificates.
However, amounts to be deposited in the [Pre-Funding Account[, the
Yield Supplement Account] and the] Subordination Spread Account are
limited in amount. If the [Pre-Funding Account[, the Yield
Supplement Account] and the] Subordination Spread Account is [are]
exhausted, the Trust will depend solely on current distributions on
the Receivables to make distributions on the Certificates.
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<PAGE> 86
SUBORDINATION OF THE CLASS B CERTIFICATES
Distributions of interest and principal on the Class B
Certificates will be subordinated in priority of payment to interest
and principal due on the Class A Certificates. No distributions
with respect to a Collection Period will be made on the Class B
Certificates until the full amount of interest on and principal of
the Class A Certificates on the related Distribution Date has been
distributed to the Class A Certificateholders. Any amounts released
from the Subordination Spread Account to the Seller will not be
available to the Certificateholders.
MATURITY AND PREPAYMENT CONSIDERATIONS
As the rate of payment of principal of [each class of] the
Certificates depends on the rate of payment (including prepayments)
of the principal balance of the Receivables, the final distribution
in respect of [each class of] the Certificates could occur
significantly earlier than the Final Scheduled Distribution Date.
It is expected that the final distribution in respect of the
Certificates will occur on or prior to the Final Scheduled
Distribution Date. However, if sufficient funds are not available
to reduce the aggregate Certificate Balance of either class of
Certificates to zero on or prior to the Final Scheduled Distribution
Date, the final distribution in respect of such class of
Certificates could occur later than such date. See "Maturity and
Prepayment Considerations" herein and in the Prospectus.
RATINGS
It is a condition to the issuance of the [Class A] Certificates
that the Class A Certificates be rated in the highest rating
category [and the Class B Certificates be rated [at least]" "or
its equivalent] by at least two nationally recognized rating
agencies (the "Rating Agencies"). A rating is not a recommendation
to purchase, hold or sell Certificates, inasmuch as such rating does
not comment as to market price or suitability for a particular
investor. The ratings of the Certificates address the likelihood of
the payment of principal and interest on the Certificates pursuant
to their terms. [However, the Rating Agencies do not evaluate, and
the ratings of the Certificates do not address, the likelihood that
the Certificate Prepayment Premium will be paid.] There can be no
assurance that a rating will remain for any given period of time or
that a rating will not be lowered or withdrawn entirely by a Rating
Agency if in its judgment circumstances in the future so warrant.
THE TRUST
GENERAL
The Seller will establish the Trust by selling and assigning
the Trust property, as described below, to the Trustee in exchange
for the Certificates. The Servicer will service the Receivables
pursuant to the Agreement and will be compensated for acting as the
Servicer. See "Description of the Certificates--Servicing
Compensation and Expenses" herein. To facilitate servicing and to
minimize administrative burden and expense the Servicer will retain
physical possession of the Receivables held by the Trust and
documents relating thereto as custodian for the Trust. Due to the
administrative burden and expense, the certificates of title to the
Financed Vehicles will not be amended to reflect the assignment of
the security interest in the Financed Vehicles to the Trust. In the
absence of such amendment, the Trust may not have a perfected
security interest in the Financed Vehicles in all states. See
"Certain Legal Aspects of the Receivables" in the Prospectus.
If the protection provided to the [Class A] Certificateholders
by the [Yield Supplement Account and the] Subordination Spread
Account and [, in the case of the Class A Certificateholders,] the
subordination of the Class B Certificates is insufficient, the Trust
would have to look to the Obligors on the Receivables, the proceeds
from the repossession and sale of Financed Vehicles which secure
defaulted Receivables and the proceeds from any recourse against
Dealers with respect to the Receivables [and from the Pre-Funding
Account]. In such event, certain factors, such as the Trust's not
having perfected security interests in the Financed Vehicles in all
states, may affect
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<PAGE> 87
the Servicer's ability to repossess and sell the
collateral securing the Receivables, and thus may reduce the
proceeds to be distributed to the Certificateholders. See
"Description of the Certificates--Distributions" [, "--Yield
Supplement Account; Yield Supplement Agreement"] and "
--Subordination of the Class B Certificates; Subordination Spread
Account" herein and "Certain Legal Aspects of the Receivables" in
the Prospectus.
Each [Class A] Certificate represents a fractional undivided
ownership interest in the Trust. The Trust property includes retail
installment sale contracts between Dealers and Obligors, all
payments due thereunder on or after the related Cutoff Date with
respect to the Precomputed Receivables and all payments due or
received thereunder on or after the related Cutoff Date with respect
to the Simple Interest Receivables. The Trust property also
includes (i) security interests in the Financed Vehicles and any
accessions thereto; (ii) the rights to proceeds from claims on
certain physical damage, credit life, credit disability or other
insurance policies, if any, covering the Financed Vehicles or the
Obligors; (iii) any Dealer Recourse; (iv) the Seller's rights to
certain documents and instruments relating to the Receivables; (v)
such amounts as from time to time may be held in one or more
accounts maintained pursuant to the Agreement, as described
herein [, including the Yield Supplement Account] [and the
Pre-Funding Account]; (vi) certain rights under the Agreement [and
the Yield Supplement Agreement]; (vii) certain rights under the
Purchase Agreement, including the right of the Seller to cause Ford
Credit to repurchase Receivables from the Seller; (viii) certain
payments and proceeds with respect to the Receivables held by the
Servicer; (ix) certain rebates of premiums and other amounts
relating to certain insurance policies and other items financed
under the Receivables; and (x) any and all proceeds of the
foregoing. The property of the Trust does not include the Payahead
Account and the Subordination Spread Account.
THE RECEIVABLES POOL
The pool of Receivables (the "Receivables Pool") will include
the [Initial] Receivables purchased as of the [Initial] Cutoff Date
[and will include any Subsequent Receivables purchased as of any
Subsequent Cutoff Date (the Initial Cutoff Date or any Subsequent
Cutoff Date being individually referred to herein as a "Cutoff
Date")].
The [Initial] Receivables were purchased [, and the Subsequent
Receivables were or will be purchased,] by Ford Credit from Dealers
in the ordinary course of business in accordance with Ford Credit's
underwriting standards, and were [or will be] selected from Ford
Credit's portfolio for inclusion in the Receivables Pool by several
criteria, some of which are set forth in the Prospectus under "The
Receivables Pools," as well as the following: each Receivable (i)
provides for level monthly payments which provide interest at the
APR and fully amortize the amount financed over an original term no
greater than months, (ii) is not more than days past due as
of the [applicable] Cutoff Date and has never been extended and
(iii) was originated on or after . As of the [applicable]
Cutoff Date, no Obligor on any Receivable was [or will have been]
noted in the related records of the Servicer as being the subject of
a bankruptcy proceeding. No selection procedures believed by the
Seller to be adverse to the Certificateholders were [or will be]
used in selecting the Receivables.
[The obligation of the Trust to purchase the Subsequent
Receivables on a Subsequent Transfer Date will be subject to the
Receivables in the Trust, including the Subsequent Receivables to be
conveyed to the Trust on such Subsequent Transfer Date, meeting the
following criteria: (i) not more than % of the principal balances
of the Receivables in the Trust will represent vehicles financed at
Ford Credit's used vehicle rates; and (ii) the weighted average APR
of the Receivables in the Trust will not be less than %, unless
the Seller increases the Subordination Initial Deposit by the
amounts, if any, specified by the Rating Agencies to maintain the
ratings of the Certificates. In addition, such obligation will be
subject to the Receivables, including the Subsequent Receivables to
be transferred to the Trust on such Subsequent Transfer Date, having
a weighted average remaining term not greater than months.
Such criteria will be based on the characteristics of the Initial
Receivables on the Initial Cutoff Date and any Subsequent
Receivables on the related Subsequent Cutoff Dates.]
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<PAGE> 88
[The Initial Receivables will represent approximately % of
the aggregate initial principal balance of the Certificates.
However, except for the criteria described in the preceding
paragraphs and the criteria, if any, specified by the Rating
Agencies to maintain the ratings of the Certificates, there will be
no required characteristics of the Subsequent Receivables.
Therefore, following the transfer of Subsequent Receivables to the
Trust, the aggregate characteristics of the entire Receivables Pool,
including the composition of the Receivables, the distribution by
APR and the geographic distribution described in the following
tables, may vary significantly from those of the Initial
Receivables.]
Neither Ford Credit nor any of its affiliates maintains
records adequate to provide quantitative data regarding its
prepayment experience on its portfolio of U.S. retail installment
sale contracts for either new or used vehicles. However, Ford
Credit (i) believes that the actual rate of prepayments will result
in a substantially shorter weighted average life than the scheduled
weighted average life and (ii) estimates that the actual weighted
average life of its portfolio of U.S. retail installment contracts
for new and used automobiles and light trucks ranges between 60% and
70% of their scheduled weighted average life. See "Maturity and
Prepayment Considerations" herein and in the Prospectus.
The composition, geographical distribution, and distribution by
annual percentage rate of the [Initial] Receivables as of the
[Initial] Cutoff Date are set forth in the following tables.
COMPOSITION OF THE [INITIAL] RECEIVABLES
AS OF THE [INITIAL] CUTOFF DATE
<TABLE>
<S> <C>
Aggregate Principal Balance ....................... $
Number of Receivables..............................
Average Principal Balance ......................... $
(Range) ........................................ $ to $
Average Original Amount Financed .................. $
(Range) ........................................ $ to $
Weighted Average APR .............................. %
(Range) ........................................ % to %
Weighted Average Original Term .................... months
(Range) ........................................ to months
Weighted Average Remaining Term ................... months
(Range) ........................................ to months
Scheduled Weighted Average Life(1) ................ months
</TABLE>
- -----------------
(1) Based on payments due on or after the [Initial] Cutoff
Date, assuming that no prepayments on the [Initial]
Receivables are made after the [Initial] Cutoff Date and that
all payments on Simple Interest Receivables are received on
their respective due dates.
S-17
<PAGE> 89
GEOGRAPHIC DISTRIBUTION OF THE [INITIAL] RECEIVABLES
AS OF THE [INITIAL] CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE
OF
AGGREGATE
PRINCIPAL
STATE(1) BALANCE(2) STATE(1)
-------------------- ---------- --------
<S> <C> <C>
Alabama[(3)] ............ %
Alaska ..................
Arizona .................
Arkansas ................
California ..............
Colorado ................
Connecticut .............
Delaware ................
District of Columbia ....
Florida .................
Georgia .................
Hawaii ..................
Idaho ...................
Illinois ................
Indiana .................
Iowa ....................
Kansas ..................
Kentucky ................
Louisiana ...............
Maine ...................
Maryland ................
Massachusetts ...........
Michigan ................
Minnesota ...............
Mississippi .............
Missouri ................
Montana .................
Nebraska ................
Nevada ..................
New Hampshire ...........
New Jersey ..............
New Mexico ..............
New York ................
North Carolina ..........
North Dakota ............
Ohio ....................
Oklahoma ................
Oregon ..................
Pennsylvania[(3)] .......
Rhode Island ............
South Carolina ..........
South Dakota ............
Tennessee ...............
Texas ...................
Utah ....................
Vermont .................
Washington ..............
West Virginia ...........
Wisconsin ...............
Wyoming .................
</TABLE>
- --------------
(1) Based on the billing addresses of the Obligors on the
[Initial] Receivables as of the [Initial] Cutoff Date.
(2) Percentages may not add to 100.00% due to rounding.
[(3) Alabama and Pennsylvania were excluded for administrative
reasons.]
S-18
<PAGE> 90
DISTRIBUTION BY APR OF THE [INITIAL] RECEIVABLES
AS OF THE [INITIAL] CUTOFF DATE
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
APR RANGE RECEIVABLES BALANCE BALANCE(1)
-------------------- ----------- --------- -------------
<S> <C> <C> <C> <C> <C>
0.00% to 1.00% $ %
1.01 to 2.00
2.01 to 3.00
3.01 to 4.00
4.01 to 5.00
5.01 to 6.00
6.01 to 7.00
7.01 to 8.00
8.01 to 9.00
9.01 to 10.00
10.01 to 11.00
11.01 to 12.00
12.01 to 13.00
13.01 to 14.00
14.01 to 15.00
15.01 to 16.00
16.01 to 17.00
17.01 to 18.00
18.01 to 19.00
19.01 to 20.00
Totals $ 100.00%
=========== ========= ======
</TABLE>
(1) Percentages may not add to 100.00% due to rounding.
Approximately % of the aggregate principal balance of the
[Initial] Receivables, constituting % of the number of [Initial]
Receivables, as of the [Initial] Cutoff Date, represent vehicles
financed at new vehicle rates, and the remainder of the Receivables
represent vehicles financed at used vehicle rates.
By aggregate principal balance, approximately % of the
[Initial] Receivables constitute Precomputed Receivables, % of
the [Initial] Receivables constitute Simple Interest Receivables and
% constitute Final Payment Receivables. In addition, % of the
[Initial] Receivables that are Precomputed Receivables and % that
are Simple Interest Receivables constitute Final Payment
Receivables. See "The Receivables Pools" in the Prospectus for a
further description of the characteristics of Precomputed
Receivables, Simple Interest Receivables and Final Payment
Receivables.
Based on principal balance, less than % of the [Initial]
Receivables provide recourse to the Dealer which originated the
Receivable. See "The Receivables Pools" in the Prospectus for a
further description of such recourse provisions.
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
S-19
<PAGE> 91
Set forth below is certain information concerning Ford Credit's
experience with respect to its portfolio of U.S. retail installment
sale contracts for new and used automobiles and light trucks
(including previously sold contracts which Ford Credit continues to
service, but not including retail installment sale contracts
purchased by Ford Credit under certain special financing programs).
[Ford Credit began originating Final Payment Receivables in 19 .]
There is no assurance that the behavior of the Receivables will be
comparable to Ford Credit's experience shown in the following tables
or that the trend in losses and delinquencies will continue into the
future.
DELINQUENCY EXPERIENCE(1)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------------------- --------------------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------- --------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Average Number of Contracts
Outstanding During the Period.. 3,549,204 3,409,392 3,438,699 3,430,145 3,398,797 3,388,214 3,398,048
Average Daily Delinquencies
as a Percent of Average
Contracts Outstanding
31-60 Days(2) 2.46% 2.18% 2.21% 2.03% 2.02% 2.35% 2.72%
61-90 Days(2) 0.24% 0.17% 0.17% 0.15% 0.15% 0.20% 0.29%
Over 90 Days(3) 0.05% 0.03% 0.04% 0.03% 0.03% 0.04% 0.07%
</TABLE>
- --------------
(1) The information in the table includes U.S. retail
installment sale contracts for new and used automobiles and
light trucks and includes previously sold contracts which Ford
Credit continues to service; it does not include retail
installment sale contracts purchased by Ford Credit under
certain special financing programs.
(2) Delinquencies represent the daily average number of
contracts delinquent.
(3) Delinquencies represent the average monthly end-of-period
number of contracts delinquent.
S-20
<PAGE> 92
CREDIT LOSS AND REPOSSESSION EXPERIENCE(1)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------------------- -------------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------- --------- --------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Average Portfolio Outstanding
During the Period (Millions) $38,679.8 $34,382.5 $35,698.6 $33,703.3 $31,204.9 $29,505.1 $28,977.1
Percent of Average Receivables
Outstanding During the Period
without Recourse to Dealer........ 99.3% 98.9% 99.1% 98.6% 97.7% 96.4% 94.4%
Repossessions as a Percent of
Average Number of Contracts
Outstanding ..................... 2.78%(2) 2.29%(2) 2.38% 2.15% 2.27% 2.74% 3.27%
Net Losses as a Percent of
Gross Liquidations(3)............ 1.86% 1.19% 1.43% 1.06% 1.16% 1.52% 2.29%
Net Losses as a Percent of
Average Portfolio
Outstanding(3) 1.09%(2) 0.69%(2) 0.82% 0.62% 0.69% 0.90% 1.29%
</TABLE>
- -----------------
(1) Except as indicated, all amounts and percentages are based
on the gross amount scheduled to be paid on each contract
including unearned finance and other charges. The information
in the table includes U.S. retail installment sale contracts for
new and used automobiles and light trucks and includes
previously sold contracts which Ford Credit continues to
service; it does not include retail installment sale contracts
purchased by Ford Credit under certain special financing
programs.
(2) Annualized rate.
(3) "Net Losses" are equal to the aggregate balance of all
contracts which are determined to be uncollectible in the period
less any recoveries on contracts charged-off in the period or
any prior periods. Effective January 1, 1993 net losses include
expenses associated with outside collection agencies. Other
expenses associated with collection, repossession, and
disposition of the vehicle continue to be excluded. These
other expenses are not material to the data presented.
As shown above, credit losses have increased since the beginning of
1995 reversing a general trend of improvement that had begun in 1989. The
increase reflects an increase in losses per repossession and an increase in
repossession rates. See "Description of the Transfer and Servicing
Agreements--Servicing Procedures" in the Prospectus.
POOL FACTORS
The "Certificate Pool Factor" for [the Class A] [each class of]
Certificates will be a seven-digit decimal which the Servicer will
compute prior to each distribution with respect to such [class of]
Certificates indicating the remaining Certificate Balance of such
[class of] Certificates, as of the applicable Distribution Date
(after giving effect to distributions to be made on such Distribution
Date), as a fraction of the initial Certificate Balance of such
[class of] Certificates. [The] [Each] Certificate Pool Factor will
initially be 1.0000000 and thereafter will decline to reflect
reductions of the Certificate Balance of the [Class A] [applicable
class of] Certificates as a result of scheduled payments, prepayments
and liquidations of the Receivables [(and also as a result of a
prepayment arising from application of the Pre-Funding Account)].
[[The] [Each] Certificate Pool Factor will not change as a result of
the
S-21
<PAGE> 93
addition of Subsequent Receivables.] A Certificateholder's
portion of the aggregate outstanding Certificate Balance for the
[Class A] [related class of] Certificates is the product of (a) the
original denomination of such Certificateholder's Certificate and (b)
the [applicable] Certificate Pool Factor.
MATURITY AND PREPAYMENT CONSIDERATIONS
Information regarding certain maturity and prepayment
considerations with respect to the Certificates is set forth under
"Maturity and Prepayment Considerations" in the Prospectus. As the
rate of payment of principal of [the] [each class of] Certificates
depends on the rate of payment (including prepayments and
liquidations due to default) of the principal balance of the
Receivables, the final distribution in respect of the Certificates
could occur significantly earlier than the Final Scheduled
Distribution Date. It is expected that the final distribution in
respect of the Certificates will occur on or prior to the Final
Scheduled Distribution Date. However, if sufficient funds are not
available to reduce the aggregate Certificate Balance of either class
of Certificates to zero on or prior to the Final Scheduled
Distribution Date, the final distribution in respect of such class of
Certificates could occur later than such date.
The rate of prepayments of the Receivables may be influenced by
a variety of economic, social and other factors, and under certain
circumstances relating to breaches of representations, warranties or
covenants, the Seller and/or the Servicer will be obligated to
repurchase Receivables from the Trust. See "The Receivables Pool"
herein and "Description of the Transfer and Servicing
Agreements--Sale and Assignment of Receivables" in the Prospectus. A
higher than anticipated rate of prepayments will reduce the aggregate
principal balance of the Receivables more quickly than expected and
thereby reduce anticipated aggregate distributions of interest on the
Certificates. Any reinvestment risks resulting from a faster or
slower incidence of prepayment of Receivables will be borne entirely
by the Certificateholders as set forth in the priority of
distributions herein. Such reinvestment risks include the risk that
interest rates may be lower at the time such holders received
payments from the Trust than interest rates would otherwise have been
had such prepayments not been made or had such prepayments been made
at a different time.
Holders of Certificates should consider, in the case of
Certificates purchased at a discount, the risk that a slower than
anticipated rate of principal payments on the Receivables could
result in an actual yield that is less than the anticipated yield
and, in the case of Certificates purchased at a premium, the risk
that a faster than anticipated rate of principal payments on the
Receivables could result in an actual yield that is less than the
anticipated yield.
DESCRIPTION OF THE CERTIFICATES
The [Class A] Certificates will be issued pursuant to the terms
of the Agreement, a form of which has been filed as an exhibit to the
Registration Statement. A copy of the Agreement will be filed with
the Commission following the issuance of the [Class A] Certificates.
The following summary describes certain terms of the [Class A]
Certificates and the Agreement. The summary does not purport to be
complete and is subject to, and qualified in its entirety by
reference to, all the provisions of the [Class A] Certificates and
the Agreement. The following summary supplements the description of
the general terms and provisions of the [Class A] Certificates of any
given series and the related Agreement set forth in the Prospectus,
to which description reference is hereby made.
GENERAL
The Certificates will evidence interests in the Trust created
pursuant to the Agreement. The Class A Certificates will evidence in
the aggregate an undivided ownership interest (the "Class A
Percentage") of approximately % in the Trust and the Class B
Certificates will evidence in the aggregate an undivided ownership
interest (the "Class B Percentage") of approximately % in the
Trust. [The Class B Certificates, which are not being offered
hereby, initially will be retained by the Seller.]
S-22
<PAGE> 94
In general, it is intended that Class A Certificateholders
receive, on each Distribution Date, the Class A Percentage of the
Available Principal plus interest at the [Class A] Certificate Rate
on the Class A Certificate Balance. [Subject to the prior rights of
the Class A Certificateholders, it is intended that the Class B
Certificateholders receive, on each Distribution Date, the Class B
Percentage of the Available Principal plus interest at the Class B
Certificate Rate on the Class B Certificate Balance.]
[MANDATORY REPURCHASE
Cash distributions to Certificateholders will be made, on a pro
rata basis, on the Distribution Date on or immediately following the
last day of the Funding Period in the event that the amount on
deposit in the Pre-Funding Account after giving effect to the
purchase of all Subsequent Receivables, including any such purchase
on such date, exceeds $ (a "Mandatory Repurchase").
[The Certificate Prepayment Premium will be payable by the Trust
to the Certificateholders pursuant to a Mandatory Repurchase if the
amount on deposit in the Pre-Funding Account exceeds $ . The
Certificate Prepayment Premium will equal the excess, if any,
discounted as described below, of (i) the amount of interest that
would accrue on the remaining Pre-Funded Amount (the "Certificate
Prepayment Amount") at the Class A Certificate Rate or Class B
Certificate Rate, as applicable, during the period commencing on and
including the Distribution Date on which such Certificate Prepayment
Amount is required to be distributed to Certificateholders to but
excluding over (ii) the amount of interest that would
have accrued on such Certificate Prepayment Amount over the same
period at a per annum rate of interest equal to the bond equivalent
yield to maturity on the Determination Date preceding such
Distribution Date on the , in the case of a Class A
Certificate, and on the , in the case of a Class B
Certificate. Such excess shall be discounted to present value to
such Distribution Date at the applicable yield described in clause
(ii) above. Pursuant to the Agreement, the Seller will be
obligated to pay the Certificate Prepayment Premium to the Trust as
liquidated damages for the failure to deliver Subsequent Receivables
having an aggregate principal balance equal to the Pre-Funded
Amount. The Trust's obligation to pay the Certificate Prepayment
Premium will be limited to funds received from the Seller pursuant to
the preceding sentence. In the event that such funds are
insufficient to pay the aggregate Certificate Prepayment Premium in
full, [Class A] Certificateholders [of each class of Certificates]
will receive their ratable share [(based upon the Certificate
Prepayment Premium for each class of Certificates)] of the aggregate
amount available to be distributed in respect of the Certificate
Prepayment Premium. No other assets of the Trust will be available
for the purpose of making such payment.]]
OPTIONAL PREPAYMENT
If the Servicer exercises its option to purchase the Receivables
when the Pool Balance declines to 10% or less of the Initial Pool
Balance, the Class A Certificateholders will receive an amount in
respect of the Class A Certificates equal to the outstanding Class A
Certificate Balance together with accrued interest at the [Class A]
Certificate Rate, [the Class B Certificateholders will receive an
amount in respect of the Class B Certificates equal to the
outstanding Class B Certificate Balance together with accrued
interest at the Class B Certificate Rate,] which distributions shall
effect early retirement of the Certificates. See "Description of the
Transfer and Servicing Agreements--Termination" in the Prospectus.
[SALE AND ASSIGNMENT OF RECEIVABLES; SUBSEQUENT RECEIVABLES
Certain information with respect to the conveyance of the
Initial Receivables from the Seller to the Trust on the Closing Date
pursuant to the Agreement is set forth under "Description of the
Transfer and Servicing Agreements--Sale and Assignment of
Receivables" in the Prospectus. In addition, during the Funding
Period, pursuant to the Agreement, the Seller will be obligated to
sell to the Trust Subsequent Receivables having an aggregate
principal balance equal to approximately $ (such amount
being equal to the initial Pre-Funded Amount) to the extent that such
Subsequent Receivables are available.
S-23
<PAGE> 95
During the Funding Period on each Subsequent Transfer Date,
subject to the conditions described below, the Seller will sell and
assign to the Trust, without recourse, the Seller's entire interest
in the Subsequent Receivables designated by the Seller as of the
related Subsequent Cutoff Date and identified in a schedule attached
to a subsequent transfer assignment relating to such Subsequent
Receivables executed on such date by the Seller. It is expected that
on the Closing Date, subject to the conditions described below,
certain of the Subsequent Receivables designated by the Seller and
arising between the Initial Cutoff Date and the Closing Date will be
conveyed to the Trust. Upon the conveyance of Subsequent Receivables
to the Trust on a Subsequent Transfer Date, (i) the Pool Balance will
increase in an amount equal to the aggregate principal balance of the
Subsequent Receivables, (ii) an amount equal to % of the aggregate
principal balance of such Subsequent Receivables will be withdrawn
from the Pre-Funding Account and will be deposited in the
Subordination Spread Account and (iii) an amount equal to the excess
of the aggregate principal balance of such Subsequent Receivables
over the amount described in clause (ii) will be withdrawn from the
Pre-Funding Account and paid to the Seller. [Coincident with each
such transfer of Subsequent Receivables, the Yield Supplement
Agreement will require Ford Credit to deposit into the Yield
Supplement Account an amount equal to the Additional Yield Supplement
Amount, if any, in respect of such Subsequent Receivables. See
"--Yield Supplement Account; Yield Supplement Agreement" herein.]
[Any conveyance of Subsequent Receivables is subject to the
satisfaction, on or before the related Subsequent Transfer Date, of
the following conditions precedent, among others: (i) each such
Subsequent Receivable must satisfy the eligibility criteria specified
in the Agreement; (ii) the Seller will not have selected such
Subsequent Receivables in a manner that it believes is adverse to the
interests of the Certificateholders; (iii) as of the related
Subsequent Cutoff Date, the Receivables, including any Subsequent
Receivables conveyed by the Seller as of such Subsequent Cutoff Date,
satisfy the criteria described under "The Receivables Pool" herein
and "The Receivables Pools" in the Prospectus; (iv) the applicable
Subordination Initial Deposit for such Subsequent Transfer Date shall
have been made; and (v) the Seller shall have executed and delivered
to the Trustee a written assignment conveying such Subsequent
Receivables to the Trust (including a schedule identifying such
Subsequent Receivables). Moreover, any such conveyance of Subsequent
Receivables made during any Collection Period will also be subject to
the satisfaction, on or about the fifteenth day of the month
following the end of such Collection Period, of the following
conditions subsequent, among others: (i) the Seller will have
delivered certain opinions of counsel to the Trustee and the Rating
Agencies with respect to the validity of the conveyance of all such
Subsequent Receivables conveyed during such Collection Period; (ii)
the Trustee shall have received written confirmation from a firm of
independent certified public accountants that, as of each applicable
Subsequent Cutoff Date, the Receivables in the Trust at that time,
including the Subsequent Receivables conveyed by the Seller as of
such Subsequent Cutoff Date, satisfied the parameters described under
"The Receivables Pool" herein and under "The Receivables Pools" in
the Prospectus; and (iii) the Rating Agencies shall have each
notified the Seller in writing that, following the addition of all
such Subsequent Receivables, the [ Class A] Certificates are rated in
the same rating categories in which they were rated at the Closing
Date. The Seller will immediately repurchase any Subsequent
Receivable, at a price equal to the Purchase Amount thereof, upon the
failure of the Seller to satisfy any of the foregoing conditions
subsequent with respect thereto.
[Subsequent Receivables may have been originated by Ford Credit
at a later date using credit criteria different from those which were
applied to the Initial Receivables. See "Risk Factors--The
Subsequent Receivables and the Pre-Funding Account" and "The
Receivables Pool" herein.]]
ACCOUNTS
In addition to the Accounts referred to under "Description of
the Transfer and Servicing Agreements--Accounts" in the Prospectus,
the Servicer will also establish and will maintain with the Trustee
[the Pre-Funding Account] [the Yield Supplement Account] [and] the
Subordination Spread Account, in the name of the Trustee on behalf of
the Certificateholders, and the Payahead Account, in the name of the
Trustee on behalf of the Obligors. The Subordination Spread Account
and the Payahead Account will not be part of the Trust.
SERVICING COMPENSATION AND EXPENSES
S-24
<PAGE> 96
The Servicing Fee Rate with respect to the Servicing Fee for the
Servicer will be 1.00% per annum of the Pool Balance as of the first
day of the Collection Period (after giving effect to distributions to
be made on the following Distribution Date). The Servicing Fee
(together with any portion of the Servicing Fee that remains unpaid
from prior Distribution Dates) will be paid on each Distribution Date
solely to the extent of the Available Interest. The Servicer is also
entitled to receive a supplemental servicing fee (the "Supplemental
Servicing Fee") for each Collection Period equal to any late,
prepayment, and other administrative fees and expenses collected
during the Collection Period[, plus any interest earned during the
Collection Period on deposits made with respect to the Receivables].
See "Description of the Transfer and Servicing Agreements--Servicing
Compensation and Expenses" in the Prospectus.
DISTRIBUTIONS
On or about the calendar day of each month (the
"Determination Date"), the Servicer will inform the Trustee of the
amount of aggregate collections on the Receivables; the aggregate
Advances to be made by the Servicer, the aggregate Purchase Amount of
Receivables to be purchased by the Seller or the Servicer, all with
respect to the preceding Collection Period.
On each Distribution Date, the Servicer, or the Trustee, as the
case may be, shall transfer the portion of Payaheads constituting all
or a portion of scheduled payments for that Collection Period or,
which together with that month's payment by an Obligor constitute
prepayments in full on the Receivables to the Collection Account.
On the Distribution Date, the Trustee shall cause collections made
during the Collection Period which constitute Payaheads to be
transferred from the Collection Account to the Servicer, or to the
Payahead Account if required.
The Servicer shall determine prior to each Distribution Date the
Total Available Amount, the Available Interest, the Available
Principal, the Class A Distributable Amount and the Class B
Distributable Amount and, based on the Total Available Amount and the
other distributions to be made on such Distribution Date, as
described below, determine the amount to be distributed to
Certificateholders of each class.
Determination of Available Amounts. The "Total Available
Amount" for a Distribution Date (being the funds available for
distribution to Certificateholders of each Class with respect to such
Distribution Date in accordance with the priorities described below)
shall be the sum of the Available Interest and the Available
Principal.
The "Available Interest" for a Distribution Date shall be 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 Precomputed 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) all
proceeds of the liquidation of defaulted Receivables ("Liquidated
Receivables"), net of expenses incurred by the Servicer, received in
connection with such liquidation and any amounts required by law to
be remitted to the Obligor on such Liquidated Receivable
("Liquidation Proceeds") to the extent attributable to interest due
thereon in accordance with the Servicer's customary servicing
procedures; (iii) all Advances made by the Servicer, of interest due
on Receivables; (iv) all advances, if any, of interest made by the
Servicer in respect of Receivables which were prepaid in full; [and]
(v) the Purchase Amount of each Receivable that was purchased by the
Seller or Servicer under an obligation which arose during the related
Collection Period, to the extent attributable to accrued interest
thereon[; and (vi) the Yield Supplement Deposit Amount for such
Distribution Date]. The Available Interest shall be determined on
the related Determination Date based on the methodology described
under "Description of the Transfer and Servicing Agree
ments--Distributions--Allocations of Collections on Receivables" in
the Prospectus.
The "Available Principal" for a Distribution Date shall be 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
S-25
<PAGE> 97
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 principal in accordance with
the Servicer's customary servicing procedures; (iii) all Advances
made by the Servicer, of principal due on the Receivables; (iv) to
the extent attributable to principal, the Purchase Amount received
with respect to each Receivable purchased by the Seller or the
Servicer under an obligation which arose during such 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. The Available Principal
shall be determined on the related Determination Date based on the
methodology described under "Description of the Transfer and
Servicing Agreements--Distributions--Allocations of Collections on
Receivables" in the Prospectus.
The Available Interest and the Available Principal on any
Distribution Date shall exclude the following: (i) amounts received
on Precomputed Receivables to the extent that the Servicer has
previously made an unreimbursed Precomputed Advance; (ii)
Liquidation Proceeds with respect to a particular Precomputed
Receivable to the extent of any unreimbursed Precomputed Advances
thereon; (iii) all payments and proceeds (including Liquidation
Proceeds) of any Receivables the Purchase Amount of which has been
included in the Total Available Amount in a prior Collection
Period; (iv) amounts received in respect of interest on Simple
Interest Receivables during the preceding Collection Period in
excess of the amount of interest that would have been due during the
Collection Period on Simple Interest Receivables at their respective
APRs (assuming that a payment is received on each Simple Interest
Receivable on the due date thereof); [and] (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 released from the
Pre-Funding Account.]
Calculation of Distributable Amounts. The "Class A
Distributable Amount" with respect to a Distribution Date shall be an
amount equal to the sum of:
(i) the "Class A Principal Distributable Amount,"
consisting of the Class A Percentage of:
(a) the principal portion of all scheduled payments
due with respect to Precomputed Receivables during the
preceding Collection Period;
(b) the principal portion of all prepayments in full
received during the preceding Collection Period (and
certain partial prepayments) (except to the extent
included in (a) above);
(c) the principal portion of all payments received
with respect to Simple Interest Receivables during the
preceding Collection Period;
(d) the principal balance of each Receivable that
was purchased by the Seller or the Servicer under an
obligation that arose during the preceding Collection
Period (except to the extent included in (a) through (c)
above); and
(e) the principal balance of each Receivable
liquidated by the Servicer during the preceding Collection
Period; plus
(ii) the "Class A Interest Distributable Amount,"
consisting of thirty (30) days' interest at the [Class A]
Certificate Rate on the Class A Certificate Balance as of the
last day of the preceding Collection Period.
The "Class A Certificate Balance" shall equal, initially, the
Class A Percentage of the Pool[/Pre-Funding] Balance as of the Cutoff
Date and, thereafter shall equal the initial Class A Certificate
Balance, reduced by all amounts previously distributed to Class A
Certificateholders and allocable to principal.
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The "Class B Distributable Amount" with respect to a
Distribution Date shall be an amount equal to the sum of:
(i) the "Class B Principal Distributable Amount,"
consisting of the Class B Percentage of the amounts set
forth under (i) (a) through (i) (e) above with respect to the
Class A Principal Distributable Amount; plus
(ii) the "Class B Interest Distributable Amount,"
consisting of thirty (30) days' interest at the Class B
Certificate Rate on the Class B Certificate Balance as of the
last day of the preceding Collection Period [plus the excess,
for each Receivable having an APR greater than the sum of the
weighted average of the Class A Certificate Rate and the Class B
Certificate Rate and the Servicing Fee Rate, of the interest
portion of the scheduled payment over the portion of such
interest equal to interest at the sum of the weighted average of
the Class A Certificate Rate and the Class B Certificate Rate
and the Servicing Fee Rate].
The "Class B Certificate Balance" shall equal, initially, the
Class B Percentage of the Pool Balance as of the [Initial] Cutoff
Date and, thereafter shall equal the initial Class B Certificate
Balance, reduced by all amounts previously distributed to Class B
Certificateholders (or deposited in the Subordination Spread Account
not including the Subordination Initial Deposit) and allocable to
principal and by the Class A Principal Carryover Shortfall and the Class
B Principal Carryover Shortfall.
Calculation of Amounts to be Distributed. Prior to each
Distribution Date, the Servicer will calculate the amount to be
distributed to the Certificateholders.
The holders of the Class A Certificates will receive on any
Distribution Date, to the extent of available funds, an amount equal
to the sum of the Class A Distributable Amount and any outstanding
Class A Interest Carryover Shortfall and Class A Principal Carryover
Shortfall (as defined below). On each Distribution Date on which the
sum of the Class A Interest Distributable Amount and any outstanding
Class A Interest Carryover Shortfall (plus interest on such Class A
Interest Carryover Shortfall at the Class A Certificate Rate from
such preceding Distribution Date to the current Distribution Date, to
the extent permitted by law) exceeds the Class A Percentage of the
Available Interest (after payment of the Servicing Fee including any
unpaid Servicing Fees with respect to prior Collection Periods) on
such Distribution Date, the Class A Certificateholders shall be
entitled to receive such shortfall first, from the Class B Percentage
of the Available Interest (after payment of the Servicing Fee
including any unpaid Servicing Fees with respect to prior Collection
Periods); second, if such amounts are insufficient, from amounts
available in the Subordination Spread Account; and third, if such
amounts are insufficient, from the Class B Percentage of the
Available Principal; provided, however, that if the Servicer shall
fail to make an advance of interest in respect of a Receivable
prepaid in full, the portion of such shortfall attributable thereto
shall be paid only from amounts available in the Subordination Spread
Account. The "Class A Interest Carryover Shortfall" as of the close
of any Distribution Date means the excess of the Class A Interest
Distributable Amount for such Distribution Date plus any outstanding
Class A Interest Carryover Shortfall from the preceding Distribution
Date, plus interest on such outstanding Class A Interest Carryover
Shortfall, to the extent permitted by law, at the Class A Certificate
Rate from such preceding Distribution Date through the current
Distribution Date, over the amount of interest that the holders of
the Class A Certificates actually received on such current
Distribution Date.
On each Distribution Date on which the sum of the Class A
Principal Distributable Amount and any outstanding Class A Principal
Carryover Shortfall from the preceding Distribution Date exceeds the
Class A Percentage of the Available Principal on such Distribution
Date, the Class A Certificateholders shall be entitled to receive
such shortfall first, from the Class B Percentage of the Available
Principal; second, if such amounts are insufficient, from amounts
available in the Subordination Spread Account and third, if such
amounts are insufficient, from the Class B Percentage of the
Available Interest. The "Class A Principal Carryover Shortfall" as
of the close of any Distribution Date means the excess of the Class A
Principal Distributable Amount plus any outstanding Class
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A Principal Carryover Shortfall from the preceding Distribution Date
over the amount of principal that the holders of the Class A Certificates
actually received on such current Distribution Date.
[The holders of the Class B Certificates will receive on any
Distribution Date, to the extent of available funds, an amount equal
to the sum of the Class B Distributable Amount and any outstanding
Class B Interest Carryover Shortfall and Class B Principal Carryover
Shortfall (as defined below). On each Distribution Date on which the
sum of the Class B Interest Distributable Amount and any outstanding
Class B Interest Carryover Shortfall (plus interest on such Class B
Interest Carryover Shortfall at the Class B Certificate Rate from
such preceding Distribution Date to the current Distribution Date, to
the extent permitted by law) exceeds the Class B Percentage of the
Available Interest (after giving effect to (A) any amounts required
to be distributed to the holders of Class A Certificates pursuant to
the subordination of the rights of the holders of Class B
Certificates, and (B) amounts required to pay the Servicing Fee
(including any unpaid Servicing Fees with respect to prior Collection
Periods) payable to the Servicer) on such Distribution Date, the
Class B Certificateholders shall be entitled to receive such
shortfall from amounts available in the Subordination Spread Account.
The "Class B Interest Carryover Shortfall" as of the close of any
Distribution Date means the excess of the Class B Interest
Distributable Amount for such Distribution Date plus any outstanding
Class B Interest Carryover Shortfall from the preceding Distribution
Date, plus interest on such outstanding Class B Interest Carryover
Shortfall, to the extent permitted by law, at the Class B Certificate
Rate from such preceding Distribution Date through the current
Distribution Date, over the amount of interest that the holders of
the Class B Certificates actually received on such current
Distribution Date.
On each Distribution Date on which the sum of the Class B
Principal Distributable Amount and any outstanding Class B Principal
Carryover Shortfall from the preceding Distribution Date exceeds the
Class B Percentage of the Available Principal (after giving effect to
(A) any amounts required to be distributed to the holders of Class A
Certificates pursuant to the subordination of the rights of the
holders of Class B Certificates, (B) amounts required to pay the
Servicing Fee (including any unpaid Servicing Fees with respect to
prior Collection Periods) payable to the Servicer and (C) the
interest due to the Class B Certificateholders) on such Distribution
Date, the Class B Certificateholders shall be entitled to receive
such shortfall from amounts available in the Subordination Spread
Account. The "Class B Principal Carryover Shortfall" as of the close
of any Distribution Date means the excess of the Class B Principal
Distributable Amount plus any outstanding Class B Principal Carryover
Shortfall from the preceding Distribution Date over the amount of
principal that the holders of the Class B Certificates actually
received on such current Distribution Date.]
[The holders of the Class B Certificates are entitled to receive
on any Distribution Date an amount equal to the sum of the Class B
Interest Distributable Amount, the Class B Principal Distributable
Amount (and any shortfalls from prior Distribution Dates in payments
to the Class B Certificateholders), after giving effect to (A) any
amounts required to be distributed to the holders of Class A
Certificates pursuant to the subordination of the rights of the
holders of Class B Certificates, and (B) amounts required to pay the
Servicing Fee (including any unpaid Servicing Fees with respect to
prior Collection Periods) payable to the Servicer on such
Distribution Date.]
SUBORDINATION OF THE CLASS B CERTIFICATES; SUBORDINATION SPREAD
ACCOUNT
The rights of the Class B Certificateholders to receive
distributions with respect to the Receivables will be subordinated to
the rights of the Class A Certificateholders in the event of defaults
and delinquencies on the Receivables as provided in the Agreement.
The protection afforded to the Class A Certificateholders will be
effected both by the preferential right of the Class A
Certificateholders to receive current distributions with respect to
the Receivables and by the establishment of the Subordination Spread
Account. The Subordination Spread Account will be created with an
initial deposit by the Seller of the Subordination Initial Deposit
and will be augmented by deposit therein of amounts otherwise
distributable to Class B Certificateholders until the amount in the
Subordination Spread Account reaches an amount equal to the
Specified Subordination Spread Account Balance. Thereafter, amounts
otherwise distributable to the Class B Certificateholders or the
Servicer will be deposited in the Subordination Spread Account to the
extent necessary to maintain the amount in the Subordination Spread
Account at the Specified Subordination Spread Account Balance.
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The Subordination Spread Account will not be a part of or
otherwise includible in the Trust and will be a segregated trust
account held by as agent for the [Class A] Certificateholders
(the "[Class A] Agent"). On each Distribution Date, (i) if the
amounts on deposit in the Subordination Spread Account are less than
the Specified Subordination Spread Account Balance, the Trustee will,
after payment of any amounts required to be distributed to holders of
the Class A Certificates and the payment of the Servicing Fee due
with respect to the related Collection Period (including any unpaid
Servicing Fees with respect to prior Collection Periods), withdraw
from the Collection Account and deposit in the Subordination Spread
Account the amount remaining in the Collection Account that would
otherwise be distributed to the holders of the Class B Certificates,
or such lesser portion thereof as is sufficient to restore the amount
in the Subordination Spread Account to such Specified Subordination
Spread Account Balance and (ii) if the amount on deposit in the
Subordination Spread Account on such Distribution Date (after giving
effect to all deposits or withdrawals therefrom on such Distribution
Date) is greater than the Specified Subordination Spread Account
Balance for such Distribution Date, the [Class A] Agent will release
and distribute any such excess to the [Servicer] [holders of the
Class B Certificates]. Upon any such distribution, the [Class A]
Certificateholders will have no rights in, or claims to, such
amounts.
Amounts held from time to time in the Subordination Spread
Account will continue to be held for the benefit of holders of the
Class A Certificates, holders of the Class B Certificates and the
Seller, as their respective interests may appear. Funds in the
Subordination Spread Account shall be invested as provided in the
Agreement in Permitted Investments. The [Servicer] [holders of the
Class B Certificates] shall be entitled to receive all investment
earnings on amounts in the Subordination Spread Account. Investment
income on amounts in the Subordination Spread Account will not be
available for distribution to the holders of the [Class A]
Certificates or otherwise subject to any claims or rights of the
holders of the [Class A] Certificates.
The time necessary for the Subordination Spread Account to reach
and maintain the Specified Subordination Spread Account Balance at
any time after the date of issuance of the Certificates will be
affected by the delinquency, credit loss and repossession and
prepayment experience of the Receivables and, therefore, cannot be
accurately predicted.
If on any Distribution Date the holders of the Class A
Certificates do not receive the sum of the Class A Distributable
Amount, the Class A Interest Carryover Shortfall and the Class A
Principal Carryover Shortfall for such Distribution Date (after
giving effect to any amounts withdrawn from the Subordination Spread
Account and the Class B Distributable Amount and applied to such
deficiency, as described above), the holders of the Class B
Certificates will not receive any portion of the Total Available
Amount.
The subordination of the Class B Certificates and the
Subordination Spread Account described above are intended to enhance
the likelihood of receipt by Class A Certificateholders of the full
amount of principal and interest on the Receivables due them and to
decrease the likelihood that the Class A Certificateholders will
experience losses. However, in certain circumstances, the
Subordination Spread Account could be depleted and shortfalls could
result.
[YIELD SUPPLEMENT ACCOUNT; YIELD SUPPLEMENT AGREEMENT
The Yield Supplement Account will be created with an initial
deposit by Ford Credit of the Yield Supplement Initial Deposit. The
Yield Supplement Initial Deposit will equal an amount (which amount
may be discounted at a rate to be specified in the Agreement) equal
to the aggregate amount by which (i) interest on the principal
balance of each [Initial] Receivable for the period commencing on the
[Initial] Cutoff Date and ending with the scheduled maturity of such
Receivable, assuming that payments on such Receivables are made as
scheduled and no prepayments are made) at a rate equal to the
Required Rate, exceeds (ii) interest on such principal balances at
the APR of such Receivable (the "Yield Supplement Amount" [and, with
respect to all of the [ Initial] Receivables, the "Maximum [Initial]
Yield Supplement Amount"]).
On each Distribution Date, the Trustee will transfer to the
Collection Account from monies on deposit in the Yield Supplement
Account an amount equal to the Yield Supplement Deposit Amount in
respect of the Receivables
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for such Distribution Date. The "Yield Supplement Deposit Amount" with
respect to a Distribution Date is the aggregate Yield Supplement Amount,
if any, in respect of the Receivables for the related Collection Period.
Amounts on deposit on any Distribution Date in the Yield Supplement
Account in excess of the Maximum Yield Supplement Amount, after giving
effect to all distributions to be made on such Distribution Date, will be
paid to the Seller. Monies on deposit in the Yield Supplement Account may
be invested in Permitted Investments under the circumstances and in the
manner described in the Agreement. Any monies remaining on deposit in the
Yield Supplement Account upon the termination of the Trust will be paid to
the Seller.
[Pursuant to the Yield Supplement Agreement, on each Subsequent
Transfer Date, Ford Credit will deposit into the Yield Supplement
Account an amount equal to the Additional Yield Supplement Amount.
The aggregate of the Additional Yield Supplement Amounts in respect
of Subsequent Receivables, if any, is referred to herein as the
"Maximum Subsequent Yield Supplement Amount" and, together with the
Maximum Initial Yield Supplement Amount, the "Maximum Yield
Supplement Amount."]]
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain federal income tax
consequences of the purchase, ownership and disposition of the
Certificates. The summary does not purport to deal with federal
income tax consequences applicable to all categories of holders, some
of which may be subject to special rules. For example, it does not
discuss the tax treatment of Certificateholders that are insurance
companies, regulated investment companies or dealers in securities.
Moreover, there are no cases or Internal Revenue Service ("IRS")
rulings on similar transactions involving both debt instruments and
equity interests issued by a trust with terms similar to those of the
Offered Certificates (as defined below). As a result, the IRS may
disagree with all or a part of the discussion below. Prospective
investors are urged to consult their own tax advisors in determining
the federal, state, local, foreign and any other tax consequences to
them of the purchase, ownership and disposition of the Certificates.
The following summary is based upon current provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), the Treasury
regulations promulgated thereunder and judicial or ruling authority,
all of which are subject to change, which change may be retroactive.
The Trust will be provided with an opinion of Special Tax Counsel
regarding certain federal income tax matters discussed below. An
opinion of Special Tax Counsel, however, is not binding on the IRS or
the courts. No ruling on any of the issues discussed below will be
sought from the IRS.
SCOPE OF THE TAX OPINIONS
It is expected that Special Tax Counsel will, upon issuance of
the Offered Certificates deliver its opinion that the Trust will not
be classified as an association (or publicly traded partnership)
taxable as a corporation for federal income tax purposes.
In addition, Special Tax Counsel has prepared or reviewed the
statements herein and in the Prospectus under the heading
"Summary--Tax Status" relating to federal income tax matters and
under the heading "Certain Federal Income Tax Consequences," and is
of the opinion that such statements are correct in all material
respects. Such statements are intended as an explanatory discussion
of the possible effects of the classification of the Trust as a
partnership for federal income tax purposes on investors generally
and of related tax matters affecting investors generally, but do not
purport to furnish information in the level of detail or with the
attention to the investor's specific tax circumstances that would be
provided by an investor's own tax adviser. Accordingly, each
investor is advised to consult its own tax advisers with regard to
the tax consequences to it of investing in the Certificates.
TAX CHARACTERIZATION OF THE TRUST AS A GRANTOR TRUST
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<PAGE> 102
As set forth above, in the opinion of Special Tax Counsel, the
Trust will not be classified as an association taxable as a
corporation. Owners of Certificates (referred to herein as "Offered
Certificateholders"), subject to the discussion of stripped coupons
below under "Tax Consequences to Holders of Offered
Certificates--Characterization of Fees," will be treated for federal
income tax purposes as owners of a portion of the Trust's assets as
described below. The Certificates issued by the Trust and offered
pursuant to this Prospectus Supplement and the Prospectus are
referred to herein as "Offered Certificates."
TAX CONSEQUENCES TO HOLDERS OF OFFERED CERTIFICATES
Income on the Receivables. If the Receivables are not
characterized as "stripped bonds" or otherwise recharacterized, each
Offered Certificateholder will be required to report on its federal
income tax return its pro rata share of the entire income of the
Trust for the period during which it owns an Offered Certificate,
including interest or finance charges earned on the Receivables, and
any gain or loss upon collection or disposition of the Receivables.
Because the Receivables, when originally issued by the Obligors to
the Dealers from whom Ford Credit acquired the Receivables, are
believed to have had adequate stated interest, the original issue
discount (the "OID") and imputed interest rules should not apply to
the Receivables except to the extent that a Receivable is treated as
a "stripped bond," as discussed below. The portion of each monthly
payment to an Offered Certificateholder that is allocable to
principal on the Receivables will represent a recovery of capital,
which will reduce the tax basis of such Offered Certificateholder's
undivided interest in the Receivables. In computing its federal
income tax liability, an Offered Certificateholder will be entitled
to deduct, consistent with its method of accounting, its pro rata
share of reasonable servicing fees, and other fees paid or incurred
by the Trust as provided in Section 162 or 212 of the Code. If an
Offered Certificateholder is an individual, estate or trust the
deduction for his pro rata share of such fees will be allowed only to
the extent that all of his miscellaneous itemized deductions,
including his share of such fees, exceed 2% of his adjusted gross
income. In addition, in the case of Offered Certificateholders who
are individuals, otherwise allowable itemized deductions will be
reduced, but not more than 80%, by an amount equal to 3% of the
Offered Certificateholder's adjusted gross income in excess of
statutorily defined threshold ($117,950 in the case of a married
couple filing jointly for taxable years beginning in 1996, which
amount will be adjusted for inflation). Because the Servicer will
not report to Offered Certificateholders the amount of income or
deductions attributable to the Supple mental Servicing Fee, such an
Offered Certificateholder may effectively underreport his net taxable
income. To the extent that the Receivables are characterized as
"stripped bonds," as discussed below, the portion of interest treated
as retained by the Seller or the Servicer would not be included in
the income of Offered Certificateholders. See "--Characterization of
Fees" below.
To the extent that the purchase price of an Offered Certificate
allocated to an Offered Certificateholder's undivided interest in a
Receivable is greater than or less than the portion of the principal
balance of the Receivable allocable to the Offered Certificate, such
interest in the Receivable will have been acquired at a premium or
discount, as the case may be. In determining whether an Offered
Certificateholder has purchased its interest in the Receivables (or
any Receivable) at a discount, a portion of the purchase price for an
Offered Certificate may be allocated to accrued interest on each
Receivable and to amounts held in the Collection Account pending
distribution to Certif icateholders at the time of purchase as though
such accrued interest and collections on the Receivables were
separate assets purchased by the Offered Certificateholder, thus
reducing the portion of the purchase price allocable to an Offered
Certificateholder's undivided interest in each Receivable (the
"Purchase Price") and increasing the potential discount on the
Receivables.
Characterization of Fees. The Servicer intends to report income
to Offered Certificateholders on the assumption that the Offered
Certificateholders own an interest (equal to the applicable Class
Percentage) in all of the principal and interest derived from the
Receivables. However, to the extent that the amounts paid to the
Servicer or the Seller exceed reasonable fees for services rendered,
by reason of the extent to which either the weighted average APR of
the Receivables, or the individual stated APRs of some of the
Receivables, exceed the Certificate Rate, such amounts will be
treated as an interest in the Receivables retained by the Seller or
the Servicer. There are no authoritative pronouncements for federal
income tax purposes as to either the maximum amount of compensation
that
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may be considered reasonable for servicing Receivables or
performing other services in the context of transactions involving
receivables such as the Receivables, although the IRS has issued such
guidelines in the context of mortgage loans. To the extent that
amounts paid to the Servicer or the Seller exceed reasonable
compensation for services provided, they would be viewed as having
retained for federal income tax purposes an ownership interest in a
portion of each interest payment with respect to certain Receivables
(each such payment, a "stripped coupon"). As a result, such
Receivables would be treated as "stripped bonds" within the meaning
of the Code.
To the extent that the Receivables are characterized as
"stripped bonds," the income and deductions of the Trust allocable to
Offered Certificateholders will not include the portion of the
interest on the Receivables treated as having been retained by the
Seller (or other Offered Certificateholder) and the Trust's
deductions will be limited to reasonable servicing and other fees.
In addition, an Offered Certificateholder will not be subject to the
market discount rules discussed below with respect to the stripped
Receivables, but instead will be subject to the OID rules. However,
if the price at which such a Certificateholder were deemed to have
acquired a stripped Receivable is less than the remaining principal
balance of such Receivable by an amount which is less than a
statutorily defined de minimis amount, such Receivable would not be
treated as having OID. In general, the amount of OID on a Receivable
treated as a "stripped bond" will be de minimis if it is less than
1/4 of one percent for each remaining full year of weighted average
life of the Receivable (probably based on a prepayment assumption)
remaining after the purchase date until the final maturity of the
Receivable. If the amount of OID is de minimis under this rule, the
actual amount of OID on such a Receivable would be includible in
income proportionately as principal payments are received on the
Receivable in the proportion that the amount of the principal payment
made bears to the total principal amount of the Receivable.
If the OID on a Receivable, which may differ for each
Receivable, based on the Purchase Price paid by an Offered
Certificateholder, is not treated as being de minimis, such a
Certificateholder will be required to include any OID on a Receivable
in income as it accrues, regardless of when cash payments are
received, using a method reflecting a constant yield to maturity on
the Receivable. It is possible that the IRS could require use of a
prepayment assumption in computing the yield of a stripped
Receivable. If a stripped Receivable is deemed to be acquired by an
Offered Certificateholder at a greater than de minimis OID, such
treatment would accelerate the accrual of income by such holder.
Prospective investors are advised to consult their own tax advisors
regarding the extent to which a portion of the amounts paid to the
Servicer (or other Offered Certificateholder) could be characterized
other than as compensation for services rendered for federal income
tax purposes and the calculation of OID on the Receivables.
It is also possible that any fees deemed to be excessive could
be characterized as deferred purchase price payable to the Seller by
Offered Certificateholders in exchange for the Receivables. The
likely effect of such recharacterization would be to accelerate
realization of taxable income by such a holder.
Rule of 78s Receivables. The annual statement regularly
furnished to Certificateholders for federal income tax purposes will
include information based on the actuarial method of accounting for
interest and principal on the Receivables, and the amount of the fees
paid to the Servicer and others. Offered Certificateholders should
generally be permitted to account for interest on the Receivables
using the actuarial method (the method used to compute the
Certificate Pool Factor and the Certificate Rate). However, the Rule
of 78s Receivables provide that, upon a prepayment in full, the
amount payable by the Obligor will be determined under the Rule of
78s. Prospective investors should consult their tax advisors as to
whether they may be required or permitted to use the Rule of 78s
method to account for interest on the Rule of 78s Receivables. An
Offered Certificateholder will be furnished information for federal
income tax purposes enabling him to report interest on the
Receivables under the Rule of 78s method of accounting only upon
written request to the Trustee, and payment of the actual costs of
producing the same.
If a Rule of 78s Receivable is prepaid, any amount received by
the Trust upon prepayment in excess of the account balance using the
actuarial method would constitute income to an Offered
Certificateholder who had reported income with respect to such Rule
of 78s Receivable on the actuarial method, and an amount equal to
such excess
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<PAGE> 104
would be paid to the Servicer as part of its Supplemental
Servicing Fee and be deductible to the extent described above.
Market Discount. If the Receivables are not treated as
"stripped bonds," the interest of an Offered Certificateholder in
each Receivable whose Purchase Price is less than the original issue
price (plus OID, if any, previously includible in the income of any
holder) of the Receivable will be treated as having been purchased at
a "market discount". The market discount on a Receivable will be
considered to be zero if it is less than a statutorily defined de
minimis amount.
In general, under the market discount provisions of the Code,
principal payments received by the Trust, and all or a portion of the
gain recognized upon a sale or other disposition of a Receivable or
upon the sale or other disposition of an Offered Certificate by a
holder thereof, will be taxable as ordinary income to the extent of
accrued market discount, and a portion of the interest deductions
attributable to indebtedness treated as incurred or continued to
purchase or carry a Receivable or an Offered Certificate must be
deferred. The ordinary income treatment on dispositions and deferral
of interest deductions described in the preceding sentence will not
apply if an Offered Certificateholder elects to include market
discount in income currently as it accrues for each taxable year
during which it holds the Offered Certificate. Market discount will
accrue in the manner to be provided in Treasury regulations, but the
Conference Report accompanying the Tax Reform Act of 1986 states
that, until such regulations are issued, it is intended that
taxpayers may elect to accrue market discount either (i) under a
constant yield (economic accrual) method or (ii) at the election of
the taxpayer, in the proportion that the stated interest paid on the
obligation for the current period bears to total remaining interest
on the obligation. As described above, if the Offered Certificates
are characterized as "stripped bonds," any discount would be treated
as OID, the amount and timing of which should be comparable to the
amount and timing of market discount if an election is made to
include market discount in income currently on the constant yield
method. See "--Characterization of Fees" above. Due to the
complexity of the market discount rules, the Offered
Certificateholders are urged to consult their tax advisors as to
whether market discount will result from the acquisition of Offered
Certificates, and as to the tax treatment of any such discount.
Premium. In the event that a Receivable is treated as purchased
at a premium (i.e., the Purchase Price exceeds the sum of principal
payments to be made thereon), such premium will be amortizable by an
Offered Certificateholder as an offset to interest income (with a
corresponding reduction in such holder's basis) under a constant
yield method over the term of the Receivable if an election under
Section 171 of the Code is made (or previously in effect in
accordance with the provisions of the Tax Reform Act of 1986) with
respect to the Offered Certificates. Any such election will also
apply to debt instruments held by the taxpayer during the year in
which the election is made and all debt instruments acquired
thereafter.
Sale of an Offered Certificate or a Receivable. If an Offered
Certificate is sold, gain or loss will be recognized equal to the
difference between the amount realized on the sale and the adjusted
basis of the Offered Certificateholder in the Receivables and any
other assets held by the Trust. An Offered Certificateholder's
adjusted basis will equal such holder's cost for the Offered
Certificate, increased by any discount previously included in income,
and decreased by any deduction previously allowed for accrued premium
and by the amount of principal pay ments previously received on the
Receivables. Any gain or loss will be capital gain or loss if the
Offered Certificate was held as a capital asset, except that gain
will be treated in whole or in part as ordinary interest income to
the extent of the seller's interest in accrued market discount not
previously taken into income on Receivables having a fixed maturity
date of more than one year from the date of origination.
Under proposed Treasury regulations, the grant of an extension
of the maturity of a Receivable to the Obligor thereon could be
treated as an exchange if it changes the yield on the Receivable by
more than a de minimis amount, potentially resulting in taxable gain
or loss to Certificateholders. Reports to Certificateholders will
not include information sufficient to calculate any such gain or loss
and accordingly, in the event that an extension were to result in a
deemed exchange, a Certificateholder could underreport its taxable
income. No assurance can be given as to
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whether the proposed regulations will be adopted as final regulations in
their present form or whether, if adopted, they will apply to the
Receivables.
Foreign Offered Certificateholders. Interest attributable to
Receivables which is received by a foreign Offered Certificateholder
will generally not be subject to the 30% withholding tax imposed with
respect to payments of interest, provided that such foreign holder is
not engaged in a trade or business in the United States and that such
foreign holder fulfills certain certification requirements. Under
such requirements, the holder must certify, under penalties of
perjury, that it is not a "United States person" and provide its name
and address. For this purpose, "United States person" means a
citizen or resident of the U.S., a corporation, partnership, or other
entity created or organized in or under the laws of the U.S. or any
political subdivision thereof, or an estate or trust the income of
which is includible in gross income for U.S. federal income tax
purposes, regardless of its source.
Backup Withholding. Payments made on the Offered Certificates
and proceeds from the sale of the Offered Certificates will not be
subject to a "backup" withholding tax of 31% unless, in general, an
Offered Certificateholder fails to comply with certain reporting
procedures and is not an exempt recipient under applicable provisions
of the Code.
THE FEDERAL TAX DISCUSSIONS SET FORTH ABOVE IS INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
CERTIFICATEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS
SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF
CERTIFICATES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN
FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
[THE CLASS A CERTIFICATES]
The Class A Certificates may, in general, be purchased by or on
behalf of (i) "employee benefit plans" (as defined in Section 3(3)
of ERISA), (ii) "plans" described in Section 4975(e)(1) of the
Code, including individual retirement accounts and Keogh Plans, or
(iii) entities whose underlying assets include plan assets by
reason of a plan's investment in such entity (each, a "Plan"),
provided that certain conditions are met with respect to an
individual administrative exemption issued by the United States
Department of Labor to , , (the "Underwriters'
Exemption"). The Seller believes that the Underwriters' Exemption
will apply to the acquisition and holding of the Class A Certificates
by a Plan and that all conditions of the Underwriters' Exemption
other than those within the control of the investors have been or
will be met. Any Plan fiduciary considering whether to purchase a
Class A Certificate on behalf of a Plan should consult with its
counsel regarding the applicability of the Underwriters' Exemption
and other relevant issues. For additional information regarding
treatment of the Class A Certificates under ERISA, [including certain
special considerations that apply with respect to the Pre-Funding
Account,] see "ERISA Considerations" in the Prospectus.
[THE CLASS B CERTIFICATES
Because the Class B Certificates are subordinated to the Class A
Certificates in certain respects, the Underwriters' Exemption will
not apply to the purchase of Class B Certificates by or on behalf of
a Plan. However, other prohibited transaction exemptions may be
applicable. These exemptions may apply with respect to, inter alia,
purchases by certain insurance company general accounts, insurance
company pooled separate accounts and bank collective investment
funds, and on behalf of employee benefit plans by certain qualified
professional asset managers. Any Plan fiduciary considering whether
to purchase a Class B Certificate on behalf of a Plan should consult
with
S-34
<PAGE> 106
its counsel regarding the applicability of one or more of such
exemptions to such purchase. For additional information regarding
treatment of the Class B Certificates under ERISA, see "ERISA
Considerations" in the Prospectus.]
UNDERWRITING
Subject to the terms and conditions set forth in an Underwriting
Agreement (the "Underwriting Agreement"), the Seller has agreed to
cause the Trust to sell to each of the Underwriters named below (the
"Underwriters"), and each of the Underwriters has severally agreed to
purchase, the principal balance of the Class A Certificates [and
Class B Certificates] set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL
BALANCE OF
CLASS A
UNDERWRITERS CERTIFICATES
------------ ------------------------
<S> <C>
............... $
Total ...............
------------------------
............... $
------------------------
<CAPTION>
PRINCIPAL
BALANCE OF
CLASS B
[UNDERWRITERS CERTIFICATES]
------------ ------------------------
<S> <C>
............... $
Total ...............
------------------------
............... $
------------------------
</TABLE>
The Seller has been advised by the Underwriters that they
propose initially to offer the Class A Certificates to the public at
the prices set forth herein, and to certain dealers at such price
less the initial concession not in excess of % per Class A
Certificate. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of % per Class A Certificate
to certain other dealers. After the initial public offering of the
Class A Certificates, the public offering prices and such concessions
may be changed.
[The Seller has been advised by the Underwriters that they
propose initially to offer the Class B Certificates to the public at
the prices set forth herein, and to certain dealers at such price
less the initial concession not in excess of % per Class B
Certificate. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of % per Class B Certificate
to certain other dealers. After the initial public offering of the
Class B Certificates, the public offering prices and such concessions
may be changed.]
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus,
certain legal matters relating to the Certificates will be passed
upon for the Underwriters and certain federal income tax and other
matters will be passed upon for the Trust by [ ].
[ may from time to time render legal services to Ford
and its affiliates.]
S-35
<PAGE> 107
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered
Ford Credit Auto Grantor Trust % Asset Backed Certificates, Class A
[and % Asset Backed Certificates, Class B] ([collectively,] the
"Global Securities") will be available only in book-entry form.
Investors in the Global Securities may hold such Global Securities
through any of The Depository Trust Company ("DTC"), Cedel Bank,
societe anonyme ("Cedel") or the Euroclear System ("Euroclear"). The
Global Securities will be tradeable as home market instruments in
both the European and U.S. domestic markets. Initial settlement and
all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global
Securities through Cedel and Euroclear will be conducted in the
ordinary way in accordance with their normal rules and operating
procedures and in accordance with conventional eurobond practice
(i.e., seven calendar day settlement).
Secondary market trading between investors holding Global
Securities through DTC will be conducted according to the rules and
procedures applicable to U.S. corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and
DTC Participants holding Global Securities will be effected on a
delivery-against-payment basis through the respective Depositaries of
Cedel and Euroclear (in such capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will
be subject to U.S. withholding taxes unless such holders meet certain
requirements and deliver appropriate U.S. tax documents to the
securities clearing organizations or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in
the name of Cede & Co. as nominee of DTC. Investors' interests in
the Global Securities will be represented through financial
institutions acting on their behalf as direct and indirect
Participants in DTC. As a result, Cedel and Euroclear will hold
positions on behalf of their participants through their respective
Depositaries, which in turn will hold such positions in accounts as
DTC Participants.
Investors electing to hold their Global Securities through DTC
will follow the settlement practices applicable to U.S. corporate
debt obligations. Investor securities custody accounts will be
credited with their holdings against payment in same-day funds on the
settlement date.
Investors electing to hold their Global Securities through Cedel
or Euroclear accounts will follow the settlement procedures
applicable to conventional eurobonds, except that there will be no
temporary global security and no "lock-up" or restricted period.
Global Securities will be credited to the securities custody accounts
on the settlement date against payment in same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is
important to establish at the time of the trade where both the
purchaser's and seller's accounts are located to ensure that
settlement can be made on the desired value date.
Trading between DTC Participants. Secondary market trading
between DTC Participants will be settled using the procedures
applicable to U.S. corporate debt obligations in same-day funds.
<PAGE> 108
Trading between Cedel and/or Euroclear Participants. Secondary
market trading between Cedel Participants or Euroclear Participants
will be settled using the procedures applicable to conventional
eurobonds in same-day funds.
Trading between DTC seller and Cedel or Euroclear purchaser.
When Global Securities are to be transferred from the account of a
DTC Participant to the account of a Cedel Participant or a Euroclear
Participant, the purchaser will send instructions to Cedel or
Euroclear through a Cedel Participant or Euroclear Participant at
least one business day prior to settlement. Cedel or Euroclear will
instruct the respective Depositary, as the case may be, to receive
the Global Securities against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon
payment date to and excluding the settlement date. Payment will then
be made by the respective Depositary to the DTC Participant's account
against delivery of the Global Securities. After settlement has been
completed, the Global Securities will be credited to the respective
clearing system and by the clearing system, in accordance with its
usual procedures, to the Cedel Participant's or Euroclear
Participant's account. The securities credit will appear the next
day (European time) and the cash debit will be back-valued to, and
the interest on the Global Securities will accrue from, the value
date (which would be the preceding day when settlement occurred in
New York). If settlement is not completed on the intended value date
(i.e., the trade fails), the Cedel or Euroclear cash debit will be
valued instead as of the actual settlement date.
Cedel Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to
process same-day funds settlement. The most direct means of doing so
is to pre-position funds for settlement, either from cash on hand or
existing lines of credit, as they would for any settlement occurring
within Cedel or Euroclear. Under this approach, they may take on
credit exposure to Cedel or Euroclear until the Global Securities are
credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of
credit to them, Cedel Participants or Euroclear Participants can
elect not to pre-position funds and allow that credit line to be
drawn upon to finance settlement. Under this procedure, Cedel
Participants or Euroclear Participants purchasing Global Securities
would incur overdraft charges for one day, assuming they cleared the
overdraft when the Global Securities were credited to their accounts.
However, interest on the Global Securities would accrue from the
value date. Therefore, in many cases the investment income on the
Global Securities earned during that one-day period may substantially
reduce or offset the amount of such overdraft charges, although this
result will depend on each Cedel Participant's or Euroclear
Participant's particular cost of funds.
Since the settlement is taking place during New York business
hours, DTC Participants can employ their usual procedures for sending
Global Securities to the respective Depositary for the benefit of
Cedel Participants or Euroclear Participants. The sale proceeds will
be available to the DTC seller on the settlement date. Thus, to the
DTC Participant a cross-market transaction will settle no differently
than a trade between two DTC Participants.
Trading between Cedel or Euroclear seller and DTC purchaser.
Due to time zone differences in their favor, Cedel Participants and
Euroclear Participants may employ their customary procedures for
transactions in which Global Securities are to be transferred by the
respective clearing system, through the respective Depositary, to a
DTC Participant. The seller will send instructions to Cedel or
Euroclear through a Cedel Participant or Euroclear Participant at
least one business day prior to settlement. In these cases, Cedel or
Euroclear will instruct the respective Depositary, as appropriate, to
deliver the bonds to the DTC Participant's account against payment.
Payment will include interest accrued on the Global Securities from
and including the last coupon payment date to and excluding the
settlement date. The payment will then be reflected in the account
of the Cedel Participant or Euroclear Participant the following day,
and receipt of the cash proceeds in the Cedel Participant's or
Euroclear Participant's account would be back-valued to the value
date (which would be the preceding day, when settlement occurred in
New York). Should the Cedel Participant or Euroclear Participant
have a line of credit with its respective clearing system and elect
to be in debit in anticipation of receipt of the sale proceeds in its
account, the back-valuation will extinguish any overdraft charges
incurred over that one-day period. If settlement is not completed on
the intended value date (i.e.,
I-2
<PAGE> 109
the trade fails), receipt of the cash proceeds in the Cedel Participant's
or Euroclear Participant's account would instead be valued as of the
actual settlement date.
Finally, day traders that use Cedel or Euroclear and that
purchase Global Securities from DTC Participants for delivery to
Cedel Participants or Euroclear Participants should note that these
trades would automatically fail on the sale side unless affirmative
action were taken. At least three techniques should be readily
available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day
(until the purchase side of the day trade is reflected in their
Cedel or Euroclear accounts) in accordance with the clearing
system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC
Participant no later than one day prior to settlement, which
would give the Global Securities sufficient time to be reflected
in their Cedel or Euroclear account in order to settle the sale
side of the trade; or
(c) staggering the value dates for the buy and sell sides
of the trade so that the value date for the purchase from the
DTC Participant is at least one day prior to the value date for
the sale to the Cedel Participant or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities
through Cedel or Euroclear (or through DTC if the holder has an
address outside the U.S.) will be subject to the 30% U.S. withholding
tax that generally applies to payments of interest (including
original issue discount) on registered debt issued by U.S. Persons,
unless (i) each clearing system, bank or other financial institution
that holds customers' securities in the ordinary course of its trade
or business in the chain of intermediaries between such beneficial
owner and the U.S. entity required to withhold tax complies with
applicable certification requirements and (ii) such beneficial owner
takes one of the following steps to obtain an exemption or reduced
tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of
Global Securities that are non-U.S. Persons can obtain a complete
exemption from the withholding tax by filing a signed Form W-8
(Certificate of Foreign Status). If the information shown on Form
W-8 changes, a new Form W-8 must be filed within 30 days of such
change.
Exemption for non-U.S. Persons with effectively connected income
(Form 4224). A non-U.S. Person, including a non-U.S. corporation or
bank with a U.S. branch, for which the interest income is effectively
connected with its conduct of a trade or business in the United
States, can obtain an exemption from the withholding tax by filing
Form 4224 (Exemption from Withholding of Tax on Income Effectively
Connected with the Conduct of a Trade or Business in the United
States).
Exemption or reduced rate for non-U.S. Persons resident in
treaty countries (Form 1001). Non-U.S. Persons that are beneficial
owners of Global Securities residing in a country that has a tax
treaty with the United States can obtain an exemption or reduced tax
rate (depending on the treaty terms) by filing Form 1001 (Ownership,
Exemption or Reduced Rate Certificate). If the treaty provides only
for a reduced rate, withholding tax will be imposed at that rate
unless the filer alternatively files Form W-8. Form 1001 may be
filed by the beneficial owner of Global Securities or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain
a complete exemption from the withholding tax by filing Form W-9
(Payer's Request for Taxpayer Identification Number and
Certification).
I-3
<PAGE> 110
U.S. Federal Income Tax Reporting Procedure. The beneficial
owner of a Global Security or in the case of a Form 1001 or a Form
4224 filer, his agent, files by submitting the appropriate form to
the person through whom it holds (the clearing agency, in the case of
persons holding directly on the books of the clearing agency). Form
W-8 and Form 1001 are effective for three calendar years and Form
4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the
United States, (ii) a corporation or partnership organized in or
under the laws of the United States or any political subdivision
thereof or (iii) an estate or trust the income of which is includible
in gross income for United States tax purposes, regardless of its
source. This summary does not deal with all aspects of U.S. federal
income tax withholding that may be relevant to foreign holders of the
Global Securities. Investors are advised to consult their own tax
advisers for specific tax advice concerning their holding and
disposing of the Global Securities.
I-4
<PAGE> 111
INDEX OF TERMS
Set forth below is a list of the defined terms used in this
Prospectus Supplement and defined herein and the pages on which the
definitions of such terms may be found herein. Certain defined terms
used in this Prospectus Supplement are defined in the Prospectus.
See "Index of Terms" in the Prospectus.
<TABLE>
<S> <C>
[Additional Yield Supplement Amount ..... S-10]
Agreement ............................... S-3
[APR .................................... S- 4]
Available Interest ...................... S-25
Available Principal ..................... S-25
Business Day ............................ S-5
Cede .................................. S-2
Certificate Pool Factor ................. S-21]
[Certificate Prepayment Amount .......... S-8, S-23]
[Certificate Prepayment Premium ......... S- 7
[Certificateholders ..................... S-5]
Certificates ............................ S-1, S-3
[Class A] Agent ......................... S-28
Class A Certificate Balance ............. S-6, S-26
Class A Certificateholders .............. S- 5
[Class A] Certificate Rate .............. S-5
Class A Certificates .................... S-1, S-3
Class A Distributable Amount ............ S-26
Class A Interest Carryover Shortfall .... S-27
Class A Interest Distributable Amount ... S-26
Class A Percentage ...................... S-3, S-22
Class A Principal Carryover Shortfall ... S-27
Class A Principal Distributable Amount .. S-26
Class B Certificate Balance ............. S- 6, S-27
Class B Certificateholders .............. S-6
Class B Certificate Rate ................ S- 5
Class B Certificates .................... S-1, S-3
Class B Distributable Amount ............ S-26
[Class B Interest Carryover Shortfall ... S-28]
Class B Interest Distributable Amount ... S-27
Class B Percentage ...................... S- 3, S-22
[Class B Principal Carryover Shortfall .. S-28]
Class B Principal Distributable Amount .. S-27
Closing Date ............................ S-4
Code .................................... [S-12,] S-30
Collection Account ...................... S-10
Collection Period ....................... S-6
Commission .............................. S-2
Cutoff Date ............................. S- 4, S-16
Determination Date ...................... S-25
Distribution Date ....................... S-1, S-5
DTC ..................................... S-2
ERISA ................................... S-12
Exchange Act ............................ S-2
Final Scheduled Distribution Date ....... S-1
Final Scheduled Maturity Date ........... S-5
</TABLE>
<PAGE> 112
<TABLE>
<S> <C>
[Ford ........................................... S-14]
Ford Credit ..................................... S-3
[Funding Period ................................. S-8]
[Initial] Cutoff Date ........................... S-4
Initial Pool Balance ............................ S-7
[Initial] Receivables ........................... S-4
Issuer .......................................... S-3
IRS ............................................. S-30
Liquidated Receivables .......................... S-25
Liquidation Proceeds ............................ S-25
[Mandatory Repurchase ........................... S-7, S-23]
[Maximum Initial Yield Supplement Amount ........S-10, S-29]
[Maximum Subsequent Yield Supplement Amount .....S-10, S-30]
[Maximum Yield Supplement Amount ................S-10, S-30]
Michigan Tax Counsel ............................ S-11
Net Losses ...................................... S-21
Offered Certificateholders ...................... S-30
Offered Certificates ............................ S-31
OID ............................................. S-31
Plan ............................................ S-34
Pool Balance .................................... S-5
[Pool/Pre-Funding Balance ....................... S-5]
[Pre-Funded Amount .............................. S-4]
[Pre-Funding Account ............................ S-1, S-8]
Prospectus ...................................... S-2
Purchase Agreement .............................. S-5
Purchase Price .................................. S-31
Rating Agencies ................................. S-15
Realized Losses ................................. S-5
Receivables ..................................... S-1
Receivables Pool ................................ S-16
Record Date ..................................... S-5
[Required Rate .................................. S-10]
Seller ......................................... S-1, S-3
Servicer ........................................ S-1, S-3
Servicing Fee Rate .............................. S-11
Special Tax Counsel ............................. S-11
Specified Subordination Spread Account Balance .. S-9
Subordination Initial Deposit ................... S-9
Subordination Spread Account .................... S-9
[Subsequent Cutoff Date ......................... S-4]
[Subsequent Receivables ......................... S-1, S-4]
[Subsequent Transfer Date ....................... S- 4]
Supplemental Servicing Fee ...................... S- 25
Total Available Amount .......................... S-25
Trust ........................................... S-1, S-3
Trustee ......................................... S-3
Underwriters .................................... S- 35
Underwriters' Exemption ......................... S- 34
Underwriting Agreement .......................... S- 35
[Yield Supplement Account ....................... S-10]
[Yield Supplement Agreement ..................... S-10]
</TABLE>
<PAGE> 113
<TABLE>
<S> <C>
[Yield Supplement Amount ........................ S-10, S-29]
[Yield Supplement Deposit Amount ................ S-29]
[Yield Supplement Initial Deposit ............... S-10]
</TABLE>
<PAGE> 114
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SECURITIES OFFERED HEREBY, NOR AN OFFER OF THE SECURITIES IN ANY STATE OR
JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER WOULD BE UNLAWFUL.
THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AT ANY TIME DOES
NOT IMPLY THAT INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
____________________
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
Reports to Certificateholders ...................................... S-2
Summary ............................................................ S-3
Risk Factors ....................................................... S-13
The Trust .......................................................... S-15
The Receivables Pool ............................................... S-16
Pool Factors ....................................................... S-21
Maturity and Prepayment Considerations ............................. S-22
Description of the Certificates .................................... S-22
Certain Federal Income Tax Consequences ............................ S-30
ERISA Considerations ............................................... S-34
Underwriting ....................................................... S-35
Legal Opinions ..................................................... S-35
Annex I--Global Clearance, Settlement and Tax
Documentation Procedures ......................................... I-1
Index of Terms
PROSPECTUS
Available Information .............................................. 3
Incorporation of Certain Documents by
Reference ......................................................... 3
Summary ............................................................ 4
Risk Factors ....................................................... 12
The Trusts ......................................................... 16
The Receivables Pools .............................................. 17
Maturity and Prepayment Considerations ............................. 19
Pool Factors and Trading Information ............................... 20
Use of Proceeds .................................................... 21
The Seller and the General Partner ................................. 21
The Servicer ....................................................... 22
Description of the Notes ........................................... 23
Description of the Certificates .................................... 27
Certain Information Regarding the Securities ....................... 29
Description of the Transfer and Servicing
Agreements ....................................................... 39
Certain Legal Aspects of the Receivables ........................... 50
Certain Federal Income Tax Consequences ............................ 54
ERISA Considerations ............................................... 55
Plan of Distribution ............................................... 59
Legal Opinions ..................................................... 60
Index of Terms ...................................................... 61
UNTIL , 1996 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS
SUPPLEMENT), ALL DEALERS EFFECTING TRANSACTIONS IN THE CERTIFICATES, WHETHER
OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS SUPPLEMENT AND A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION
OF DEALERS TO DELIVER A PROSPECTUS SUPPLEMENT AND A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
$
Ford Credit 199 -
Auto Grantor Trust
$
% Asset Backed
Certificates, Class A
[$
% Asset Backed
Notes, Class B]
Ford Credit Auto
Receivables Two L.P.
Seller
Ford Motor Credit Company
Servicer
PROSPECTUS
SUPPLEMENT
<PAGE> 115
THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED _____ __, 1996
PROSPECTUS
FORD CREDIT AUTO TRUSTS
ASSET BACKED NOTES
ASSET BACKED CERTIFICATES
[Ford Logo]
FORD CREDIT AUTO RECEIVABLES TWO L.P.
SELLER
__________________
FORD MOTOR CREDIT COMPANY
SERVICER
__________________
The Asset Backed Notes (the "Notes") and the Asset Backed Certificates
(the "Certificates" and, together with the Notes, the "Securities") described
herein may be sold from time to time in one or more series, in amounts, at
prices and on terms to be determined at the time of sale and to be set forth in
a supplement to this Prospectus (a "Prospectus Supplement"). Each series of
Securities, which may include one or more classes of Notes and/or one or more
classes of Certificates, will be issued by a trust to be formed with respect to
such series (each, a "Trust"). Each Trust will be formed pursuant to either a
Trust Agreement to be entered into between Ford Credit Auto Receivables Two
L.P., as Seller (the "Seller"), and the Trustee specified in the related
Prospectus Supplement (the "Trustee") or a Pooling and Servicing Agreement to
be entered into among the Trustee, the Seller and Ford Motor Credit Company, as
Servicer (the "Servicer"). If a series of Securities includes Notes, such Notes
of a series will be issued and secured pursuant to an Indenture between the
Trust and the Indenture Trustee specified in the related Prospectus Supplement
(the "Indenture Trustee") and will represent indebtedness of the related Trust.
The Certificates of a series will represent fractional undivided interests in
the related Trust. The related Prospectus Supplement will specify which class
or classes of Notes, if any, and which class or classes of Certificates, if
any, of the related series are being offered thereby. The property of each
Trust will include a pool of motor vehicle retail installment sale contracts
secured by new or used automobiles and light trucks (the "Receivables"),
certain monies due or received thereunder on or after the applicable Cutoff
Date set forth in the related Prospectus Supplement, security interests in the
vehicles financed thereby and certain other property, all as described herein
and in the related Prospectus Supplement. In addition, if so specified in the
related Prospectus Supplement, the property of the Trust will include monies on
deposit in a trust account (the "Pre-Funding Account") to be established with
the Indenture Trustee or the applicable Trustee, as the case may be, which will
be used to purchase additional motor vehicle retail installment sale contracts
(the "Subsequent Receivables") from the Seller from time to time during the
Funding Period specified in the related Prospectus Supplement.
Each class of Securities of any series will represent the right to
receive a specified amount of payments of principal and interest on the related
Receivables, at the rates, on the dates and in the manner described herein and
in the related Prospectus Supplement. If a series includes multiple classes of
Securities, the rights of one or more classes of Securities to receive payments
may be senior or subordinate to the rights of one or more of the other classes
of such series. Distributions on Certificates of a series may be subordinated
in priority to payments due on any related Notes to the extent described herein
and in the related Prospectus Supplement. A series may include one or more
classes of Notes and/or Certificates which differ as to the timing and priority
of payment, interest rate or amount of distributions in respect of principal or
interest or both. A series may include one or more classes of Notes or
Certificates entitled to distributions in respect of principal with
disproportionate, nominal or no
interest
<PAGE> 116
distributions, or to interest distributions, with disproportionate, nominal or
no distributions in respect of principal. The rate of payment in respect of
principal of any class of Notes and distributions in respect of the Certificate
Balance of the Certificates of any class will depend on the priority of payment
of such class and the rate and timing of payments (including prepayments,
defaults, liquidations and repurchases of Receivables) on the related
Receivables. A rate of payment lower or higher than that anticipated may affect
the weighted average life of each class of Securities in the manner described
herein and in the related Prospectus Supplement.
PROSPECTIVE INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE INFORMATION
SET FORTH IN "RISK FACTORS" ON PAGE 12 HEREIN.
______________________
ANY NOTES OF A SERIES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES OF
A SERIES REPRESENT BENEFICIAL INTERESTS IN, THE RELATED TRUST ONLY AND DO NOT
REPRESENT OBLIGATIONS OF OR INTERESTS IN, AND ARE NOT GUARANTEED OR INSURED BY,
FORD CREDIT AUTO RECEIVABLES TWO L.P., FORD CREDIT AUTO RECEIVABLES TWO, INC.,
FORD MOTOR CREDIT COMPANY, FORD MOTOR COMPANY OR ANY OF THEIR RESPECTIVE
AFFILIATES.
______________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Retain this Prospectus for future reference. This Prospectus may not be
used to consummate sales of Securities offered hereby unless accompanied by a
Prospectus Supplement.
______________________
The date of this Prospectus is _____ __, 1996.
<PAGE> 117
AVAILABLE INFORMATION
The Seller, as originator of each Trust, has filed with the Securities
and Exchange Commission (the "Commission") a Registration Statement (together
with all amendments and exhibits thereto, referred to herein as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Notes and the Certificates offered
pursuant to this Prospectus. For further information, reference is made to the
Registration Statement which may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; and at the Commission's regional offices at
Northwestern Atrium Center, 500 West Madison Street, 14th Floor, Chicago,
Illinois 60661 and Seven World Trade Center, New York, New York 10048. Copies
of the Registration Statement may be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by each Trust pursuant to Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended, subsequent to the
date of this Prospectus and prior to the termination of the offering of the
Securities shall be deemed to be incorporated by reference in this Prospectus.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Seller will provide without charge to each person, including any
beneficial owner of Securities, to whom a copy of this Prospectus is delivered,
on the written or oral request of any such person, a copy of any or all of the
documents incorporated herein or in any related Prospectus Supplement by
reference, except the exhibits to such documents (unless such exhibits are
specifically incorporated by reference in such docu ments). Requests for such
copies should be directed to Ford Credit Auto Receivables Two L.P., c/o
Secretary, Ford Credit Auto Receivables Two, Inc., The American Road, Dearborn,
Michigan 48121 (Telephone: 313-322-1989).
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<PAGE> 118
SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and by reference to
the information with respect to the Securities of any series contained in the
related Prospectus Supplement to be prepared and delivered in connection with
the offering of such Securities. Certain capitalized terms used in this summary
are defined elsewhere in this Prospectus on the pages indicated in the "Index
of Terms."
ISSUER .................... With respect to each series of Securities, the
Trust to be formed pursuant to either a Trust
Agreement (as amended and supplemented from time
to time, a "Trust Agreement") between the Seller
and the Trustee for such Trust (the "Trust" or the
"Issuer") or a Pooling and Servicing Agreement (as
amended and supplemented from time to time, the
"Pooling and Servicing Agreement") among the
Trustee, the Seller and Ford Motor Credit Company,
as Servicer.
SELLER ................... Ford Credit Auto Receivables Two L.P., a
Delaware limited partnership (the "Seller").
SERVICER ................. Ford Motor Credit Company, a Delaware
corporation (the "Servicer" or "Ford Credit").
TRUSTEE .................. With respect to each series of Securities, the
Trustee specified in the related Prospectus
Supplement.
INDENTURE TRUSTEE ........ With respect to any applicable series
of Securities, the Indenture Trustee specified in
the related Prospectus Supplement.
THE NOTES ................ A series of Securities may include one or more
classes of Notes, which will be issued pursuant to
an Indenture between the Trust and the Indenture
Trustee (as amended and supplemented from time to
time, an "Indenture"). The related Prospectus
Supplement will specify which class or classes, if
any, of Notes of the related series are being
offered thereby.
Notes will be available for purchase in the
denominations specified in the related Prospectus
Supplement and will be available in book-entry
form only. No person acquiring a beneficial
ownership interest an Notes (a "Note Owner") will
be entitled to receive Definitive Notes , except
in the limited circumstances described herein or
in the related Prospectus Supplement. See "Certain
Information Regarding the Securities--Definitive
Securities."
Each class of Notes may have a stated principal
amount and may bear interest at a specified rate
or rates (with respect to each class of Notes,
the "Note Interest Rate"). Each class of Notes may
have a different Note Interest Rate, which may be
a fixed, variable or adjustable Note Interest
Rate, or any combination of the foregoing. The
related Prospectus Supplement will specify the
stated principal amount and the Note Interest Rate
for each class of Notes or the method for
determining such Note Interest Rate.
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<PAGE> 119
With respect to a series that includes two or more
classes of Notes, each class may differ as to
the timing and priority of payments, seniority,
allocations of losses, Note Interest Rate or
amount of payments of principal or interest, or
payments of principal or interest in respect of
any such class or classes may or may not be made
upon the occurrence of specified events or on the
basis of collections from designated portions of
the Receivables Pool. In addition, a series may
include one or more classes of Notes ("Strip
Notes") entitled to (i) principal payments with
disproportionate, nominal or no interest payments
or (ii) interest payments with disproportionate,
nominal or no principal payments.
If the Servicer exercises its option to purchase
the Receivables of a Trust (or, if not, and
if and to the extent provided in the related
Prospectus Supplement, if satisfactory bids for
the purchase of such Receivables are received), in
the manner and on the respective terms and
conditions described under "Description of the
Transfer and Servicing Agreements--Termination,"
the outstanding Notes will be redeemed as set
forth in the related Prospectus Supplement.
In addition, if the related Prospectus Supplement
provides that the property of a Trust will
include a Pre-Funding Account (as such term is
defined in the related Prospectus Supplement,
the "Pre-Funding Account"), one or more classes of
the outstanding Notes will be subject to partial
redemption on or immediately following the end of
the Funding Period (as such term is defined in the
related Prospectus Supplement, the "Funding
Period") in an amount and manner specified in the
related Prospectus Supplement. In the event of
such partial redemption, the Noteholders may be
entitled to receive a prepayment premium from the
Trust, in the amount and to the extent provided in
the related Prospectus Supplement.
THE CERTIFICATES..........A series of Securities will include one or more
classes of Certificates and may or may not include
any Notes. The related Prospectus Supplement
will specify which class or classes, if any, of the
Certificates are being offered thereby.
Certificates will be available for purchase in
the denominations specified in the related
Prospectus Supplement and may be available in
book-entry form. If Certificates are issued in
book-entry form, no person acquiring a beneficial
ownership interest in Certificates (a "Certificate
Owner") will be entitled to receive Definitive
Certificates, except in the limited circumstances
described herein or in the related Prospectus
Supplement. See "Certain Information Regarding the
Securities--Definitive Securities."
Each class of Certificates may have a stated
Certificate Balance (with respect to each class of
Certificates, the "Certificate Balance") and may
accrue interest on such Certificate Balance at a
specified rate (with respect to each class of
Certificates, the "Certificate Rate"). Each class
of Certificates may have a different Certificate
Rate, which may be a fixed, variable or adjustable
Certificate Rate, or any combination of the
foregoing. The related Prospectus Supplement will
specify the Certificate Balance and the
Certificate
5
<PAGE> 120
Rate for each class of Certificates or
the method for determining the Certificate Rate.
With respect to a series that includes two or more
classes of Certificates, each class may differ
as to timing and priority of distributions,
seniority, allocations of losses, Certificate Rate
or amount of distributions in respect of principal
or interest, or distributions in respect of
principal or interest in respect of any such class
or classes may or may not be made upon the
occurrence of specified events or on the basis of
collections from designated portions of the
Receivables Pool. In addition, a series may
include one or more classes of Certificates
("Strip Certificates") entitled to (i)
distributions in respect of principal with
disproportionate, nominal or no interest
distributions or (ii) interest distributions with
disproportionate, nominal or no distributions in
respect of principal.
If a series of Securities includes classes of
Notes, distributions in respect of the
Certificates may be subordinated in priority of
payment to payments on the Notes to the extent
specified in the related Prospectus Supplement.
If the Servicer exercises its option to purchase the
Receivables of a Trust (or, if not, and if and to
the extent provided in the related Prospectus
Supplement, satisfactory bids for the purchase of
such Receivables are received), in the manner and
on the respective terms and conditions described
under "Description of the Transfer and Servicing
Agreements--Termination," Certificateholders will
receive as a prepayment an amount in respect of
the Certificates as specified in the related
Prospectus Supplement.
In addition, if the related Prospectus Supplement
provides that the property of a Trust will include
a Pre-Funding Account, Certificateholders may
receive a partial prepayment of principal on or
immediately following the end of the Funding
Period in an amount and manner specified in
the related Prospectus Supplement. In the event
of such partial prepayment, the Certificateholders
may be entitled to receive a prepayment premium
from the Trust, in the amount and to the extent
provided in the related Prospectus Supplement.
THE TRUST PROPERTY........The property of each Trust will include a pool of
motor vehicle retail installment sale contracts
secured by new or used automobiles or light trucks
(the "Receivables"), including rights to receive
certain payments made with respect to such
Receivables, security interests in the vehicles
financed thereby (the "Financed Vehicles"),
certain accounts and the proceeds thereof and any
proceeds from claims on certain related insurance
policies. On the Closing Date specified in the
related Prospectus Supplement with respect to a
Trust (the "Closing Date" Receivables") having an
aggregate principal balance specified in the
related Prospectus Supplement as of the date
specified therein (the "Initial Cutoff Date") to
such Trust pursuant to either a Sale and Servicing
Agreement among the Seller, the Servicer and the
Trust (as amended and supplemented from time to
time, a "Sale and Servicing Agreement") or, if the
Trust is to be treated as a grantor trust for
federal income tax purposes, the related Pooling
and Servicing Agreement among the Seller, the
Servicer and
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<PAGE> 121
the Trustee. The property of each
Trust will also include amounts on deposit in
certain trust accounts, including the related
Collection Account, any Pre-Funding Account, any
Yield Supplement Account, any Reserve Account and
any other account identified in the applicable
Prospectus Supplement.
To the extent provided in
the related Prospectus Supplement, the Seller will
be obligated (subject only to the availability
thereof) to sell, and the related Trust will be
obligated to purchase (subject to the satisfaction
of certain conditions described in the applicable
Sale and Servicing Agreement or Pooling and
Servicing Agreement), additional Receivables (the
"Subsequent Receivables") from time to time (as
frequently as daily) during the Funding Period
specified in the related Prospectus Supplement
having an aggregate principal balance
approximately equal to the amount on deposit in
the Pre-Funding Account (the "Pre-Funded Amount")
on the Closing Date.
The Receivables arise or will
arise from loans originated by motor vehicle
dealers (the "Dealers") and purchased by Ford
Credit pursuant to agreements with the Dealers for
subsequent sale to the Seller. The Receivables
for any given Receivables Pool will be purchased
by the Seller from Ford Credit pursuant to a
Purchase Agreement between the Seller and Ford
Credit (as amended and supplemented from time to
time, a "Purchase Agreement") and will be selected
from the contracts owned by Ford Credit based on
the criteria specified in the Sale and Servicing
Agreement or Pooling and Servicing Agreement, as
applicable, and described herein and in the
related Prospectus Supplement. The purchase
price for the Receivables purchased by the Trust
from the Seller and by the Seller from Ford Credit
may be more or less than the aggregate principal
balance thereof.
CREDIT AND CASH FLOW
ENHANCEMENT............ If and to the extent specified in the
related Prospectus Supplement, credit enhancement
with respect to a Trust or any class or classes
of Securities may include any one or more of the
following: subordination of one or more other
classes of Securities, a Reserve Account,
over-collateralization, letters of credit, credit
or liquidity facilities, surety bonds, guaranteed
investment contracts, guaranteed rate agreements,
swaps or other interest rate protection
agreements, repurchase obligations, yield
supplement agreements, other agreements with
respect to third party payments or other support,
cash deposits or other arrangements. Any form of
credit enhancement may have certain limitations
and exclusions from coverage thereunder, which
will be described in the related Prospectus
Supplement.
RESERVE ACCOUNT.......... If so specified in the related
Prospectus Supplement, a Reserve Account will be
created for the related Trust with an initial
deposit by the Seller of cash or certain
investments having a value equal to the amount
specified in the related Prospectus Supplement.
To the extent specified in the related Prospectus
Supplement, funds in the Reserve Account will
thereafter be supplemented by the deposit of
amounts remaining on any Distribution Date after
making all other distributions required on such
date and any amounts deposited from time to time
from the Pre-Funding Account in connection with a
purchase of
7
<PAGE> 122
Subsequent Receivables. Amounts in the Reserve
Account will be available to cover shortfalls in
amounts due to the holders of those classes of
Securities specified in the related Prospectus
Supplement in the manner and under the
circumstances specified therein. The related
Prospectus Supplement will also specify to whom
and the manner and circumstances under which
amounts on deposit in the Reserve Account (after
giving effect to all other required distributions
to be made by the applicable Trust) in excess of
the Specified Reserve Balance (as defined in the
related Prospectus Supplement) will be
distributed.
PRE-FUNDING ACCOUNT...... If so specified in the related Prospectus Supplement,
the property of each Trust may include monies
on deposit in a Pre-Funding Account, which monies
will be used to purchase Subsequent Receivables
from the Seller from time to time during the
Funding Period specified in the related Prospectus
Supplement. The amount that may be initially
deposited into a Pre-Funding Account may be up to
100% of the net proceeds from the sale of the
Securities issued by a Trust and the length of the
Funding Period may be up to one year. The amount
that may be initially deposited into a Pre-Funding
Account, and the length of a Funding Period, will
be specified in the related Prospectus Supplement.
YIELD SUPPLEMENT ACCOUNT;
YIELD SUPPLEMENT
AGREEMENT.............. If so specified in the related Prospectus
Supplement, Ford Credit will establish a yield
supplement account with the related Indenture
Trustee or applicable Trustee for the benefit of
the holders of the related Securities (as such
term is defined in the related Prospectus
Supplement, the "Yield Supplement Account").
Each Yield Supplement Account will be designed
solely to hold funds to be applied by the
Indenture Trustee or applicable Trustee, as the
case may be, to provide payments to the
Securityholders in respect of Receivables the
annual percentage rate ("APR") of which is less
than the Required Rate (as such term is defined
in the related Prospectus Supplement, the
"Required Rate").
If so specified in the related Prospectus
Supplement, the Yield Supplement Account will
be created with an initial deposit by Ford Credit
(the "Yield Supplement Initial Deposit") in an
amount equal to the net present value (discounted
at a per annum rate specified in the related Sale
and Servicing Agreement or Pooling and Servicing
Agreement) of the aggregate amount by which
interest on the principal balance of each Initial
Receivable for the period commencing on the
Initial Cutoff Date and ending with the scheduled
maturity of each Receivable, assuming that
payments on such Receivables are made as scheduled
and no prepayments are made, at the Required Rate
exceeds interest on such principal balances at the
APR of each such Receivable (the "Yield Supplement
Amount" and, with respect to the Initial
Receivables, the "Maximum Initial Yield Supplement
Amount").
If a Yield Supplement Account and a Pre-Funding
Account are established with respect to any
Trust, Ford Credit, the Seller and the related
Indenture Trustee or applicable Trustee, as the
case may be, will enter into a Yield Supplement
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<PAGE> 123
Agreement (as amended and supplemented from
time to time, a "Yield Supplement Agreement")
pursuant to which, on each Subsequent Transfer
Date, Ford Credit will deposit into the Yield
Supplement Account an amount (the "Additional
Yield Supplement Amount") equal to the net
present value (discounted at a per annum rate
specified in the related Sale and Servicing
Agreement or Pooling and Servicing Agreement) of
the aggregate Yield Supplement Amounts, if any,
in respect of Subsequent Receivables for the
periods commencing with the related subsequent
cutoff date and ending with the scheduled
maturities of the related Subsequent Receivables,
assuming that payments on such Receivables are
made as scheduled and no prepayments are made.
The aggregate of the Additional Yield Supplement
Amounts in respect of the Subsequent Receivables
is referred to herein as the "Maximum Subsequent
Yield Supplement Amount" and, together with the
Maximum Initial Yield Supplement Amount, the
"Maximum Yield Supplement Amount." See
"Description of the Transfer and Servicing
Agreements--Credit and Cash Flow
Enhancement--Yield Supplement Account; Yield
Supplement Agreement."
TRANSFER AND SERVICING
AGREEMENTS.................With respect to each Trust, the Seller will
sell the related Receivables to such Trust
pursuant to a Sale and Servicing Agreement or a
Pooling and Servicing Agreement. The rights and
benefits of any Trust under a Sale and Servicing
Agreement will be assigned to the Indenture
Trustee as collateral for the Notes of the
related series. The Servicer will agree with such
Trust to be responsible for servicing, managing,
maintaining custody of and making collections on
the Receivables. Ford Credit will undertake
certain administrative duties under an
Administration Agreement with respect to any
Trust that has issued Notes.
To the extent provided in the related
Prospectus Supplement, the Servicer will advance
scheduled payments under each Precomputed
Receivable which shall not have been timely made
(a "Precomputed Advance"), to the extent that the
Servicer, in its sole discretion, expects to
recoup the Precomputed Advance from subsequent
payments on or with respect to such Receivable.
With respect to Simple Interest Receivables, the
Servicer shall advance any interest shortfall (a
"Simple Interest Advance" and, together with a
Precomputed Advance, an "Advance"). The Servicer
shall be entitled to reimbursement of Advances
from subsequent payments on or with respect to
the Receivables to the extent described herein
and in the related Prospectus Supplement.
The Seller will be obligated to repurchase any
Receivable if the interest of the applicable
Trust in such Receivable is materially adversely
affected by a breach of any representation or
warranty made by the Seller with respect to the
Receivable, if the breach has not been cured
following the discovery by or notice to the
Seller of the breach.
The Servicer will be obligated to purchase or
make Advances with respect to any Receivable if,
among other things, it extends the date for final
payment by the Obligor of such Receivable beyond
the applicable Final Scheduled Maturity Date (as
defined in the related Prospectus Supplement, the
"Final
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<PAGE> 124
Scheduled Maturity Date"), changes the
APR or the total amount or number of
scheduled payments of such Receivable or fails
to maintain a perfected security interest in
the related Financed Vehicle.
To the extent provided in the related
Prospectus Supplement, the Servicer will be
entitled to receive a fee for servicing the
Receivables of each Trust equal to a specified
percentage of the aggregate principal balance
of the related Receivables Pool, as set forth
in the related Prospectus Supplement, plus
certain late fees, prepayment charges and other
administrative fees or similar charges, plus
reinvestment proceeds on any payments received
in respect of the Receivables. See
"Description of the Transfer and Servicing
Agreements--Servicing Compensation and
Expenses" herein and in the related Prospectus
Supplement.
CERTAIN LEGAL ASPECTS
OF THE RECEIVABLES;
REPURCHASE OBLIGATIONS..... In connection with the sale of Receivables to a
Trust, security interests in the Financed
Vehicles securing such Receivables will be
assigned by the Seller to such Trust.
Due to administrative burden and expense, the
certificates of title to the Financed Vehicles
will not be amended to reflect the assignment
to such Trust. In the absence of such an
amendment, such Trust may not have a perfected
security interest in the Financed Vehicles
securing the Receivables in some states. The
Seller will be obligated to repurchase any
Receivable sold to a Trust as to which a first
perfected security interest in the name of the
Seller in the Financed Vehicle securing such
Receivable shall not exist as of the date such
Receivable is purchased by such Trust, if such
breach shall materially adversely affect the
interest of such Trust in such Receivable and
if such failure or breach shall not have been
cured by the last day of the second (or, if the
Seller elects, the first) month following the
discovery by or notice to the Seller of such
breach. If such Trust does not have a perfected
security interest in a Financed Vehicle, its
ability to realize on such Financed Vehicle in
the event of a default may be adversely
affected. To the extent the security interest
is perfected, such Trust will have a prior
claim over subsequent purchasers of such
Financed Vehicles and holders of subsequently
perfected security interests. However, as
against subsequent purchasers who were to
obtain physical possession of the Receivables
without knowledge of their assignment to the
Trust or holders of liens for repairs of
Financed Vehicles or for taxes unpaid by an
Obligor under a Receivable, or because of fraud
or negligence, such Trust could lose the
priority of its security interest or its
security interest in Financed Vehicles. Neither
the Seller nor the Servicer will have any
obligation to repurchase a Receivable as to
which any of the aforementioned occurrences
result in a Trust's losing the priority of its
security interest or its security interest in
such Financed Vehicle after the Closing Date
with respect to an Initial Receivable or after
the applicable Subsequent Transfer Date with
respect to a Subsequent Receivable.
Federal and state consumer protection laws impose
requirements upon creditors in
connection with extensions of credit and
collections of retail installment loans, and
certain of these laws make an assignee of such
a loan liable to the
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<PAGE> 125
obligor thereon for any violation by
the lender. The Seller will be obligated to
repurchase any Receivable which fails to comply
with such requirements.
TAX STATUS................. Unless the Prospectus Supplement specifies that
the related Trust will be treated as a
grantor trust , upon the issuance of the
related series of Securities (a) Special Tax
Counsel to such Trust expects to deliver an
opinion to the effect that, for federal income
tax purposes: (i) any Notes of such series will
be characterized as debt and (ii) such Trust
will not be characterized as an association
(or a publicly traded partnership) taxable as a
corporation and (b) Michigan Tax Counsel to
such Trust expects to deliver an opinion to
the effect that the same characterizations
would apply for Michigan income and Single
Business Tax purposes as for federal income tax
purposes. In respect of any such series, each
Noteholder, if any, by the acceptance of a Note
of such series, will agree to treat such Note
as indebtedness, and each Certificateholder, by
the acceptance of a Certificate of such series,
will agree to treat such Trust as a partnership
in which such Certificateholder is a partner
for federal income and Michigan income and
Single Business Tax purposes. Alternative
characterizations of such Trust and such
Certificates are possible, but would not result
in materially adverse tax consequences to
Certificateholders.
If the Prospectus Supplement specifies that the
related Trust will be treated as a
grantor trust , upon the issuance of the
related series of Certificates (a) Special Tax
Counsel to such Trust expects to deliver an
opinion to the effect that such Trust will be
treated as a grantor trust for federal income
tax purposes and will not be subject to federal
income tax and (b) Michigan Tax Counsel to such
Trust expects to deliver an opinion to the
effect that the same treatment would apply for
Michigan income and Single Business Tax
purposes as for federal income tax purposes.
See "Certain Federal Income Tax Consequences"
herein and in the related Prospectus
Supplement and "Certain State Tax
Consequences" in the related Prospectus
Supplement. Special Tax Counsel and Michigan
Tax Counsel will each be identified by name
in the related Prospectus Supplement.
ERISA CONSIDERATIONS....... A fiduciary of any employee benefit plan or
other retirement arrangement subject to
the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975 of
the Internal Revenue Code of 1986, as amended
(the "Code"), should carefully review with its
legal advisors whether the purchase or holding
of Notes or Certificates of any series could
give rise to a transaction prohibited or not
otherwise permissible under ERISA or Section
4975 of the Code. See "ERISA Considerations"
herein and in the related Prospectus
Supplement.
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<PAGE> 126
RISK FACTORS
CERTAIN LEGAL ASPECTS--THE RECEIVABLES
Pursuant to each Sale and Servicing Agreement or Pooling and Servicing
Agreement, the Servicer will service and administer the Receivables held by
each Trust and, as custodian on behalf of such Trust, will maintain possession
of the retail installment sale contracts and any other documents relating to
such Receivables. To assure uniform quality in servicing both the Receivables
and the Servicer's own portfolio of receivables, as well as to facilitate
servicing and save administrative costs, the installment sale contracts and
other documents relating thereto will not be physically segregated from other
similar documents that are in the Servicer's possession or otherwise stamped
or marked to reflect the transfer to a given Trust so long as Ford Credit is
servicing the related Receivables. However, Uniform Commercial Code financing
statements reflecting the sale and assignment of such Receivables by Ford
Credit to the Seller and by the Seller to such Trust will be filed, and the
Servicer's accounting records and computer systems will be marked to reflect
such sale and assignment. Because such Receivables will remain in the
Servicer's possession and will not be stamped or otherwise marked to reflect
the assignment to such Trust, if a subsequent purchaser were to obtain physical
possession of such Receivables without knowledge of the assignment, the Trust's
interest in the Receivables could be defeated.
In most states, assignments such as those under the Purchase Agreement and
the Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, relating to each Trust, together with a perfected security interest
in the chattel paper are an effective conveyance of a security interest in the
vehicles subject to the chattel paper without amendment of any lien noted on a
vehicle's certificate of title, and the assignee succeeds thereby to the
assignor's rights as secured party. In the absence of fraud or forgery by the
vehicle owner or the Servicer or administrative error by state or local
agencies, the notation of Ford Credit's lien on the certificates of title will
be sufficient to protect such Trust against the rights of subsequent purchasers
of a Financed Vehicle or subsequent lenders who take a security interest in a
Financed Vehicle. If there are any Financed Vehicles as to which Ford Credit
failed to obtain a perfected security interest, its security interest would be
subordinate to, among others, subsequent purchasers of the Financed Vehicles
and holders of perfected security interests. Such a failure would constitute
a breach of Ford Credit's warranties under the related Purchase Agreement and
of the Seller's warranties under the related Sale and Servicing Agreement or
Pooling and Servicing Agreement, as applicable, and would create an obligation
of Ford Credit under such Purchase Agreement and of the Seller under such Sale
and Servicing Agreement or Pooling and Servicing Agreement to purchase the
related Receivable unless the breach is cured. See "Description of the
Transfer and Servicing Agreements--Sale and Assignment of Receivables." By not
identifying the Trust as the secured party on the certificate of title, the
Trust's interest in the chattel paper may not have the benefit of the security
interest in the Financed Vehicle in all states or such security interest could
be defeated through fraud or negligence. The Seller will assign its rights
under each Purchase Agreement to the related Trust. See "Certain Legal Aspects
of the Receivables--Security Interests in Vehicles."
CERTAIN LEGAL ASPECTS--BANKRUPTCY CONSIDERATIONS
The Seller has taken steps in structuring the transactions contemplated
herein and in the related Prospectus Supplement that are intended to ensure
that the voluntary or involuntary application for relief by Ford Credit under
the United States Bankruptcy Code or similar applicable state laws ("Insolvency
Laws") will not result in consolidation of the assets and liabilities of either
of the Seller or Ford Credit Auto Receivables Two, Inc., the general partner of
the Seller (the "General Partner"), with those of Ford Credit. These steps
include the creation of the Seller as a separate, limited-purpose limited
partnership pursuant to a limited partnership agreement containing certain
limitations (including restrictions on the nature of the Seller's business and
a restriction on the Seller's ability to commence a voluntary case or
proceeding under any Insolvency Law without the consent of the General
Partner). The General Partner's Certificate of Incorporation contains similar
limitations, including a restriction on the General Partner's ability to
commence a voluntary case or proceeding with respect to itself or the Seller
under any Insolvency Law without the unanimous affirmative vote of all of the
General Partner's directors. However, there
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can be no assurance that the
activities of the Seller or the General Partner would not result in a court
concluding that the assets and liabilities of such entity should be
consolidated with those of Ford Credit in a proceeding under any Insolvency
Law. See "The Seller and the General Partner."
It is intended by Ford Credit and the Seller that each transfer of
Receivables by Ford Credit to the Seller under a Purchase Agreement constitute
a "true sale" of such Receivables to the Seller. If the transfer constitutes
such a "true sale," the Receivables and the proceeds thereof would not be part
of Ford Credit's bankruptcy estate under Section 541 of the United States
Bankruptcy Code should Ford Credit become the subject of a bankruptcy case
subsequent to the transfer of the Receivables to the Seller.
In Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir. 1993),
cert. denied 114 S.Ct 554 (1993), the United States Court of Appeals for the
10th Circuit suggested that even where a transfer of accounts from a seller to
a buyer constitutes a "true sale," the accounts would nevertheless constitute
property of the seller's bankruptcy estate in a bankruptcy of the seller. If
Ford Credit or the Seller were to become subject to a bankruptcy proceeding
and a court were to follow the Octagon court's reasoning, Securityholders might
experience delays in payment or possibly losses on their investment in the
Securities. Counsel to the Seller has advised the Seller that the reasoning of
the Octagon case appears to be inconsistent with other precedent. In addition,
the Permanent Editorial Board of the UCC has issued an official commentary (PEB
Commentary No. 14) which characterizes the Octagon court's interpretation of
Article 9 of the UCC as erroneous. Such commentary states that nothing in
Article 9 is intended to prevent the transfer of ownership of accounts or
chattel paper. However, such commentary is not legally binding on any court.
See "The Seller and the General Partner."
DEFICIENCIES FROM SALE UPON INSOLVENCY OR DISSOLUTION OF SELLER OR GENERAL
PARTNER
With respect to each Trust that is not a grantor trust, if an Insolvency
Event or a dissolution occurs with respect to the Seller or the General Partner
while the Notes of the related series are outstanding, if so specified in the
related Prospectus Supplement the Indenture Trustee or Trustee for such Trust
will be required to promptly sell, dispose of or otherwise liquidate the
related Receivables in a commercially reasonable manner on commercially
reasonable terms, unless the related Trustee shall have received written
instructions from (i) the Noteholders (other than the Seller, the Servicer or
their affiliates) of Notes of such series representing not less than a majority
of the aggregate unpaid principal amount of all such Notes and the right to
receive interest thereon, (ii) the Certificateholders (other than the Seller,
the Servicer or their affiliates) of Certificates of such series representing
not less than a majority of the aggregate Certificate Balance of all such
Certificates and the right to receive interest thereon, (iii) not less than a
majority of the holders (other than the Seller, the Servicer or their
affiliates) of certain interests, if any, in the Reserve Account with respect
to such Trust and (iv) not less than a majority of the holders (other than
the Seller, the Servicer or their affiliates) of Final Payment Securities, if
any, of such series and the right to receive interest thereon, to the effect
that each such party disapproves of the liquidation of such Receivables and
termination of such Trust and in connection therewith, the related Trustee (x)
appoints an entity acceptable to Ford Credit to acquire an interest in such
Trust and to act as a substitute "general partner" for federal income tax
purposes and (y) obtains an opinion of counsel as to certain tax matters. The
proceeds from any such sale, disposition or liquidation of Receivables will be
treated as collections on the Receivables and deposited in the Collection
Account of such Trust. If the proceeds from the liquidation of the Receivables
and any amounts on deposit in the Reserve Account, the Note Payment Account, if
any, and the Certificate Distribution Account with respect to any such Trust
and any amounts available from any credit enhancement are not sufficient to pay
any Notes and the Certificates of the related series in full, the amount of
principal returned to any Noteholders or the Certificateholders will be reduced
and such Noteholders and Certificateholders will incur a loss. See
"Description of the Transfer and Servicing Agreements--Insolvency Event or
Dissolution."
TRUST'S RELATIONSHIP TO THE SELLER, THE GENERAL PARTNER, FORD CREDIT, FORD AND
THEIR AFFILIATES
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None of the Seller, the General Partner, Ford Credit or Ford Motor Company
("Ford") or their affiliates is generally obligated to make any payments in
respect of any Notes, the Certificates or the Receivables of a given Trust.
However, in connection with the sale of Receivables by the Seller to a
given Trust, the Seller will make representations and warranties with respect
to the characteristics of such Receivables and, in certain circumstances, the
Seller may be required to repurchase Receivables with respect to which such
representations and warranties have been breached. See "Description of the
Transfer and Servicing Agreements--Sale and Assignment of Receivables." In
addition, under certain circumstances, the Servicer may be required to purchase
Receivables. See "Description of the Transfer and Servicing
Agreements--Servicing Procedures." Moreover, if Ford Credit were to cease
acting as Servicer, delays in processing payments on the Receivables and
information in respect thereof could occur and result in delays in payments to
the Securityholders.
The related Prospectus Supplement may set forth certain additional
information regarding the Seller, the General Partner, Ford Credit and Ford.
In addition, Ford Credit and Ford are subject to the information requirements
of the Exchange Act and in accordance therewith file reports and other
information with the Commission. For further information regarding Ford Credit
and Ford, reference is made to such reports and other information, which are
available as described under "Available Information."
SUBORDINATION; LIMITED ASSETS
To the extent specified in the related Prospectus Supplement,
distributions of interest and principal on one or more classes of Certificates
of a series may be subordinated in priority of payment to interest and
principal due on the Notes, if any, of such series or one or more other classes
of Certificates of such series. Moreover, each Trust will not have, nor is it
permitted or expected to have, any significant assets or sources of funds other
than the Receivables and, to the extent provided in the related Prospectus
Supplement, a Pre-Funding Account, a Yield Supplement Account, a Reserve
Account and any other credit or cash flow enhancement. The Notes of any series
will represent obligations solely of, and the Certificates of any series will
represent interests solely in, the related Trust and neither the Notes nor the
Certificates of any series will be insured or guaranteed by the Seller, the
Servicer, the applicable Trustee, any Indenture Trustee or any other person or
entity. Consequently, holders of the Securities of any series must rely for
repayment upon payments on the related Receivables and, if and to the extent
available, amounts on deposit in the Pre-Funding Account (if any), the Yield
Supplement Account (if any), the Reserve Account (if any) and any other credit
or cash flow enhancement, all as specified in the related Prospectus
Supplement. Amounts to be deposited in any such Reserve Account with respect
to any Trust will be limited in amount, and the amount required to be on
deposit in such Reserve Account will be reduced as the Pool Balance is reduced.
In addition, funds in any such Reserve Account will be available on each
Distribution Date to cover shortfalls in distributions of interest and
principal on the related Securities. If any such Reserve Account is depleted,
the related Trust will depend solely on current payments on its Receivables to
make payments on the related Securities.
If so directed by the holders of the requisite percentage of outstanding
Notes of a series, following an acceleration of the Notes upon an Event of
Default the applicable Indenture Trustee may sell the related Receivables in
certain limited circumstances as specified in the related Indenture. See
"Description of the Notes--The Indenture--Events of Default; Rights upon Event
of Default" herein. However, there is no assurance that the market value of
such Receivables will at any time be equal to or greater than the aggregate
principal amount of such outstanding Notes. Therefore, upon an Event of
Default with respect to the Notes of any series, there can be no assurance that
sufficient funds will be available to repay the related Noteholders in full.
In addition, the amount of principal required to be paid to Noteholders of such
series under the related Indenture will generally be limited to amounts
available to be deposited in the applicable Note Payment Account. Therefore,
the failure to pay principal on a class of Notes generally will not result in
the occurrence of an Event of Default until the Final Scheduled Distribution
Date for such class of Notes.
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MATURITY AND PREPAYMENT CONSIDERATIONS
All the Receivables are prepayable at any time. (For this purpose the
term "prepayments" includes prepayments in full, partial prepayments (including
those related to rebates of extended warranty contract costs and insurance
premiums) and liquidations due to default, as well as receipts of proceeds from
physical damage, credit life and disability insurance policies and certain
other Receivables repurchased for administrative reasons.) The rate of
prepayments on the Receivables may be influenced by a variety of economic,
social and other factors, including the fact that an Obligor generally may not
sell or transfer the Financed Vehicle securing a Receivable without the
consent of the Seller. The rate of prepayment on the Receivables may also be
influenced by the structure of the loan. In addition, under certain
circumstances, the Seller will be obligated to repurchase Receivables pursuant
to a Sale and Servicing Agreement or Pooling and Servicing Agreement as a
result of breaches of representations and warranties and, under certain
circumstances, the Servicer will be obligated to purchase Receivables pursuant
to such Sale and Servicing Agreement or Pooling and Servicing Agreement as a
result of breaches of certain covenants. See "Description of the Transfer and
Servicing Agreements--Sale and Assignment of Receivables." Consistent with
its normal servicing practices and procedures, the Servicer may, in its
discretion and on a case-by-case basis, arrange with Obligors to extend or
modify the terms of the related Receivables. Some of such arrangements
(including any extension beyond the Final Scheduled Maturity Date set forth in
the related Prospectus Supplement) will cause the Servicer to be obligated to
repurchase such Receivables, as described above. Any reinvestment risks
resulting from a faster or slower incidence of prepayment of Receivables held
by a given Trust will be borne entirely by the Securityholders of the related
series of Securities. See also "Description of the Transfer and Servicing
Agreements--Termination" regarding the Servicer's option to purchase the
Receivables of a given Receivables Pool and "--Insolvency Event or Dissolution"
regarding the sale of the Receivables owned by a Trust that is not a grantor
trust if an Insolvency Event or a dissolution with respect to the Seller or the
General Partner occurs.
RISK OF COMMINGLING
With respect to each Trust, the Servicer will deposit all payments on the
related Receivables received from Obligors and all proceeds of the related
Receivables collected during each Collection Period into the related Collection
Account not later than the business day after receipt. However, so long as
Ford Credit is the servicer and provided that (i) there exists no Event of
Servicing Termination and (ii) each other condition to making monthly deposits
as may be required by the related Sale and Servicing Agreement or Pooling and
Servicing Agreement is satisfied, the Servicer may retain such amounts until
the applicable Distribution Date. The Servicer or the Seller, as the case may
be, will remit the aggregate Purchase Amount of any Receivables to be purchased
from a Trust to the related Collection Account on the applicable Distribution
Date. Pending deposit into the Collection Account, collections may be employed
by the Servicer at its own risk and for its own benefit and will not be
segregated from its own funds. If the Servicer were unable to remit such
funds, the applicable Securityholders might incur a loss. To the extent set
forth in the related Prospectus Supplement, the Servicer may, in order to
satisfy the requirements described above, obtain a letter of credit or other
security for the benefit of the related Trust to secure timely remittances of
collections on the related Receivables and payment of the aggregate Purchase
Amount with respect to Receivables purchased by the Servicer.
EVENT OF SERVICING TERMINATION
With respect to a series of Securities that includes Notes, in the event
an Event of Servicing Termination occurs, the Indenture Trustee or the
Noteholders with respect to such series, as described under "Description of the
Transfer and Servicing Agreements--Rights upon Event of Servicing
Termination," may remove the Servicer without the consent of the Trustee or any
of the Certificateholders with respect to such series. The Trustee or the
Certificateholders with respect to such series will not have the ability to
remove the Servicer if an Event of Servicing Termination occurs. In
addition, the Noteholders of such series have the ability, with certain
specified exceptions, to waive Events of Servicing Termination, including
Events of Servicing Termination
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that could materially adversely affect the Certificateholders of such series.
See "Description of the Transfer and Servicing Agreements--Waiver of Past
Events of Servicing Termination."
BOOK-ENTRY REGISTRATION
If so specified in the related Prospectus Supplement, each class of
Securities of a given series will be initially represented by one or more
certificates registered in the name of Cede & Co. ("Cede"), or any other
nominee for The Depository Trust Company ("DTC") set forth in the related
Prospectus Supplement (Cede, or such other nominee, "DTC's Nominee"), and will
not be registered in the names of the holders of the Securities of such series
or their nominees. Because of this, unless and until Definitive Securities for
such series are issued, holders of such Securities will not be recognized by
the Trustee or any Indenture Trustee as "Certificateholders," "Noteholders" or
"Securityholders," as the case may be (as such terms are used herein or in the
related Pooling and Servicing Agreement or the related Indenture and Trust
Agreement, as applicable). Hence, until Definitive Securities are issued,
holders of such Securities will be able to exercise the rights of
Securityholders only indirectly through DTC and its participating
organizations. See "Certain Information Regarding the Securities--Book-Entry
Registration" and "--Definitive Securities."
THE TRUSTS
With respect to each series of Securities, the Seller will establish a
separate Trust pursuant to the respective Trust Agreement or Pooling and
Servicing Agreement, as applicable, for the transactions described herein and
in the related Prospectus Supplement. The property of each Trust will include
a pool (a "Receivables Pool") of motor vehicle retail installment sale
contracts (and, with respect to Final Payment Receivables (as defined below),
if any, the right to certain payments on retail installment sale contracts)
between dealers (the "Dealers") and purchasers (the "Obligors") of new and used
automobiles or light trucks and all payments due thereunder on or after the
applicable Cutoff Date (as such term is defined in the related Prospectus
Supplement, a "Cutoff Date") in the case of Precomputed Receivables and all
payments received thereunder on or after the applicable Cutoff Date in the
case of Simple Interest Receivables. The Receivables of each Receivables Pool
were or will be originated by the Dealers in accordance with Ford Credit's
requirements and purchased by Ford Credit pursuant to agreements with Dealers
("Dealer Agreements") for subsequent sale to the Seller. Pursuant to the
Dealer Agreements, the Dealers are obligated to repurchase from Ford Credit
Receivables which do not meet certain representations made by the Dealers, as
well as those covered by recourse plans ("Dealer Recourse"). The Receivables
of each Receivables Pool will continue to be serviced by the Servicer and
evidence indirect financing made available by the Seller to the Obligors.
On the applicable Closing Date, after the issuance of the Certificates and
any Notes of a given series, the Seller will sell the Initial Receivables of
the applicable Receivables Pool to the Trust to the extent, if any, specified
in the related Prospectus Supplement. To the extent so provided in the related
Prospectus Supplement, Subsequent Receivables will be conveyed to the Trust as
frequently as daily during the Funding Period. Any Subsequent Receivables so
conveyed will also be assets of the applicable Trust, subject to the prior
rights of the related Indenture Trustee and the Noteholders, if any, therein.
The property of each Trust will also include (i) security interests in the
Financed Vehicles and any accessions thereto; (ii) the rights to proceeds from
claims on certain physical damage, credit life, credit disability or other
insurance policies, if any, covering the Financed Vehicles or the Obligors;
(iii) any Dealer Recourse; (iv) the Seller's rights to certain documents and
instruments relating to the Receivables; (v) such amounts as from time to time
may be held in one or more accounts maintained pursuant to the related Sale
and Servicing Agreement or Pooling and Servicing Agreement, as described
herein and in the related Prospectus Supplement; (vi) certain rights under the
related Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable; (vii) certain rights under the related Purchase Agreement and Yield
Supplement Agreement, if any; (viii) certain rebates of premiums and other
amounts relating to certain insurance policies and other items financed under
the Receivables; and (ix) any and all proceeds of the foregoing; provided
that, with
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respect to any series of Notes, the relevant rights and benefits
with respect to such property will be assigned by the Seller and the applicable
Trustee to the related Indenture Trustee for the benefit of the related
Securityholders. Any Yield Supplement Account will be maintained with the
related Indenture Trustee or applicable Trustee, as the case may be, for the
benefit of the related Securityholders. If so specified in the related
Prospectus Supplement, a Yield Supplement Account may not be part of the
property of the related Trust. To the extent specified in the related
Prospectus Supplement, a Pre-Funding Account, a Reserve Account or other form
of credit enhancement may be a part of the property of any given Trust or may
be held by the Trustee or an Indenture Trustee for the benefit of holders of
the related Securities. Additionally, pursuant to contracts between the
Servicer and the Dealers, the Dealers have an obligation after origination to
repurchase Receivables as to which Dealers have made certain
misrepresentations.
The Servicer will continue to service the Receivables held by each Trust
and will receive fees for such services. See "Description of the Transfer and
Servicing Agreements--Servicing Compensation and Expenses" herein and in the
related Prospectus Supplement. To facilitate servicing and to minimize
administrative burden and expense the Servicer will retain physical possession
of the Receivables held by each Trust and documents relating thereto as
custodian for each such Trust. Due to the administrative burden and expense,
the certificates of title to the Financed Vehicles will not be amended to
reflect the assignment of the security interest in the Financed Vehicles to
each Trust. In the absence of such amendment, any Trust may not have a
perfected security interest in the Financed Vehicles in all states. See
"Certain Legal Aspects of the Receivables--Security Interests in Vehicles."
Neither the Trustee nor any Indenture Trustee will be responsible for the
legality, validity, or enforceability of any security interest in any Financed
Vehicle. See "Certain Legal Aspects of the Receivables" and "Description of
the Transfer and Servicing Agreements--Sale and Assignment of Receivables."
If the protection provided to any Noteholders of a given series by the
subordination of the related Certificates and by the Reserve Account, if any,
or other credit enhancement for such series or the protection provided to
Certificateholders by any such Reserve Account or other credit enhancement is
insufficient, such Noteholders or Certificateholders, as the case may be, would
have to look principally to the Obligors on the related Receivables, the
proceeds from the repossession and sale of Financed Vehicles which secure
defaulted Receivables and the proceeds from any recourse against Dealers with
respect to such Receivables. In such event, certain factors, such as the
applicable Trust's not having perfected security interests in the Financed
Vehicles in all states, may affect the Servicer's ability to repossess and sell
the collateral securing the Receivables, and thus may reduce the proceeds to be
distributed to the holders of the Securities of such series. See "Description
of the Transfer and Servicing Agreements--Distributions," "--Credit and Cash
Flow Enhancement" and "Certain Legal Aspects of the Receivables."
The principal offices of each Trust and the related Trustee will be
specified in the applicable Prospectus Supplement.
THE TRUSTEE
The Trustee for each Trust will be specified in the related Prospectus
Supplement. The Trustee's liability in connection with the issuance and sale
of the related Securities is limited solely to the express obligations of such
Trustee set forth in the related Trust Agreement and the Sale and Servicing
Agreement or the related Pooling and Servicing Agreement, as applicable. A
Trustee may resign at any time, in which event the Servicer, or its successor,
will be obligated to appoint a successor trustee. The Administrator in respect
of a Trust that is not a grantor trust and the Servicer in respect of a Trust
that is a grantor trust may also remove the Trustee if the Trustee ceases to be
eligible to continue as Trustee under the related Trust Agreement or Pooling
and Servicing Agreement, as applicable, or if the Trustee becomes insolvent.
In such circumstances, the Administrator will be obligated to appoint a
successor trustee. Any resignation or removal of a Trustee and appointment of
a successor trustee will not become effective until acceptance of the
appointment by the successor trustee.
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THE RECEIVABLES POOLS
GENERAL
The Receivables in each Receivables Pool have been or will be purchased by
Ford Credit in the ordinary course of business in accordance with Ford Credit's
underwriting standards, which emphasize the Obligor's ability to pay and
creditworthiness, as well as the asset value of the Financed Vehicle.
Generally, Ford Credit does not finance more than 100% of the manufacturers
suggested retail value of a new vehicle or more than 100% of published prices
for used vehicles. However, under limited circumstances which Ford Credit
determines to be appropriate, it will advance more than 100% of these values.
The Receivables to be held by each Trust will be selected from the
Seller's portfolio for inclusion in a Receivables Pool by several criteria,
including that each Receivable (i) is secured by a new or used vehicle, (ii)
was originated in the United States, (iii) provides for level monthly payments
(except for the last payment, which may be minimally different from the level
payments or which, in the case of Final Payment Receivables, may be a larger
final scheduled payment) that fully amortize the amount financed over its
original term to maturity, (iv) is a Precomputed Receivable or a Simple
Interest Receivable (either of which may be a Final Payment Receivable) and (v)
satisfies the other criteria, if any, set forth in the related Prospectus
Supplement. No selection procedures believed by the Seller to be adverse to
the Noteholders or the Certificateholders of any series were or will be used
in selecting the related Receivables. All terms of the retail installment sale
contracts constituting such Receivables which are material to investors are
described herein and in the related Prospectus Supplement.
"Precomputed Receivables" consist of either (i) monthly actuarial
receivables ("Actuarial Receivables") or (ii) receivables that provide for
allocation of payments according to the "Rule of 78's" ("Rule of 78's
Receivables"). An Actuarial Receivable provides for amortization of the loan
over a series of fixed level payment monthly installments. Each monthly
installment, including the monthly installment representing the final payment
on the Receivable, consists of an amount of interest equal to 1/12 of the APR
of the loan multiplied by the unpaid principal balance of the loan, and an
amount of principal equal to the remainder of the monthly installment. A Rule
of 78's Receivable provides for the payment by the obligor of a specified total
amount of payments, payable in equal monthly installments on each due date,
which total represents the principal amount financed and add-on interest in an
amount calculated on the stated APR for the term of the receivable. The rate
at which such amount of add-on interest is earned and, correspondingly, the
amount of each fixed monthly installment allocated to reduction of the
outstanding principal are calculated in accordance with the "Rule of 78's."
"Simple Interest Receivables" are receivables that provide for the
amortization of the amount financed under each receivable over a series of
fixed level payment monthly installments. However, unlike the monthly
installment under an Actuarial Receivable, each monthly installment consists of
an amount of interest which is calculated on the basis of the outstanding
principal balance of the receivable multiplied by the stated APR and further
multiplied by the period elapsed (as a fraction of a calendar year) since the
preceding payment of interest was made. As payments are received under a
Simple Interest Receivable, the amount received is applied first to interest
accrued to the date of payment and the balance is applied to reduce the unpaid
principal balance. Accordingly, if an obligor pays a fixed monthly installment
before its scheduled due date, the portion of the payment allocable to interest
for the period since the preceding payment was made will be less than it would
have been had the payment been made as scheduled, and the portion of the
payment applied to reduce the unpaid principal balance will be correspondingly
greater. Conversely, if an obligor pays a fixed monthly installment after its
scheduled due date, the portion of the payment allocable to interest for the
period since the preceding payment was made will be greater than it would have
been had the payment been made as scheduled, and the portion of the payment
applied to reduce the unpaid principal balance will be correspondingly less.
In either case, the obligor pays a fixed monthly installment until the final
scheduled payment date, at which time the amount of the final installment is
increased or decreased as necessary to repay the then outstanding principal
balance.
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"Final Payment Receivables" are monthly payment receivables secured by new
or used automobiles or light trucks with a final scheduled payment which is
greater than the scheduled monthly payments. A Final Payment Receivable
provides for amortization of the loan over a series of fixed level payment
monthly installments like an Actuarial Receivable or a Simple Interest
Receivable, but also requires a final scheduled payment due after payment of
such monthly installments which may be satisfied by (i) payment in full in cash
of such amount, (ii) transfer of the vehicle to Ford Credit provided certain
conditions are satisfied or (iii) refinancing the final scheduled payment in
accordance with certain conditions. With respect to Final Payment Receivables,
if so provided in the related Prospectus Supplement, only the principal and
interest payments due prior to the final scheduled payment and not the final
scheduled payment will be included in such Trust; the final scheduled payment
will be retained by the Seller. However, in the case of a Trust that is not a
grantor trust, the Seller will have the option to transfer the final scheduled
payments with respect to the related Final Payment Receivables retained by the
Seller to such Trust and to cause such Trust to issue certificates
representing interests in such final scheduled payments or indebtedness secured
by such final scheduled payments.
If so specified in the related Prospectus Supplement, some of the
Receivables to be included in a Receivables Pool may provide for recourse to
the Dealer which originated the Receivable. Dealers are generally obligated
under these recourse plans for payment of the unpaid principal balance of a
defaulted contract, unless Ford Credit fails to repossess the vehicle and
deliver it to the Dealer within 90 days after default. The Dealer's obligation
generally terminates after the first 24 monthly payments are made under the
related contract.
In the event of the prepayment in full (voluntarily or by acceleration) of
a Rule of 78's Receivable, under the terms of the contract, a "refund" or
"rebate" will be made to the obligor of the portion of the total amount of
payments then due and payable under the contract allocable to "unearned" add-on
interest, calculated in accordance with a method equivalent to the Rule of
78's. If an Actuarial Receivable is prepaid in full, with minor variations
based upon state law, the Actuarial Receivable requires that the rebate be
calculated on the basis of a constant interest rate. If a Simple Interest
Receivable is prepaid, rather than receive a rebate, the obligor is required to
pay interest only to the date of prepayment. The amount of a rebate under a
Rule of 78's Receivable generally will be less than the amount of a rebate on
an Actuarial Receivable and generally will be less than the remaining scheduled
payments of interest that would have been due under a Simple Interest
Receivable for which all payments were made on schedule.
Each Trust will account for the Rule of 78's Receivables as if such
Receivables were Actuarial Receivables. Amounts received upon prepayment in
full of a Rule of 78's Receivable in excess of the then outstanding principal
balance of such Receivable and accrued interest thereon (calculated pursuant to
the actuarial method) will not be paid to the Noteholders or passed through to
the Certificateholders of the applicable series but will be paid to the
Servicer as additional servicing compensation.
Information with respect to each Receivables Pool will be set forth in the
related Prospectus Supplement, including, to the extent appropriate, the
composition, the distribution by APR and by the states of origination, the
portion of such Receivables Pool consisting of Precomputed Receivables and of
Simple Interest Receivables, the portion of such Receivables Pool secured by
new vehicles and by used vehicles and the portion of such Receivables Pool
consisting of Receivables that provide for recourse to the related Dealer.
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Certain information concerning Ford Credit's experience with respect to
its portfolio of U.S. retail installment sale contracts for new and used
automobiles and light trucks (including previously sold contracts which Ford
Credit continues to service, but not including retail installment sale
contracts purchased by Ford Credit under certain special financing programs)
will be set forth in each Prospectus Supplement. There can be no assurance
that the delinquency, repossession and net loss experience on any Receivables
Pool will be comparable to prior experience or to such information.
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MATURITY AND PREPAYMENT CONSIDERATIONS
The weighted average life of the Notes, if any, and the Certificates of
any series will generally be influenced by the rate at which the principal
balances of the related Receivables are paid, which payment may be in the form
of scheduled amortization or prepayments. (For this purpose, the term
"prepayments" includes prepayments in full, partial prepayments (including
those related to rebates of extended warranty contract costs and insurance
premiums), liquidations due to default, as well as receipts of proceeds from
physical damage, credit life and disability insurance policies and certain
other Receivables repurchased by the Seller or the Servicer for administrative
reasons.) All of the Receivables are prepayable at any time without penalty to
the Obligor. The rate of prepayment of automotive receivables is influenced by
a variety of economic, social and other factors, including the fact that an
Obligor generally may not sell or transfer the Financed Vehicle securing a
Receivable without the consent of the Seller. The rate of prepayment on the
Receivables may also be influenced by the structure of the loan. In addition,
under certain circumstances, the Seller will be obligated to repurchase
Receivables from a given Trust pursuant to the related Sale and Servicing
Agreement or Pooling and Servicing Agreement as a result of breaches of
representations and warranties and the Servicer will be obligated to purchase
Receivables from such Trust pursuant to such Sale and Servicing Agreement or
Pooling and Servicing Agreement as a result of breaches of certain covenants.
Consistent with its normal servicing practices and procedures, the Servicer
may, in its discretion and on a case-by-case basis, arrange with Obligors to
extend or modify the terms of the related Receivables. Some of such
arrangements (including any extension beyond the Final Scheduled Maturity Date
set forth in the related Prospectus Supplement) will cause the Servicer to be
obligated to repurchase such Receivables, as described above. See "Description
of the Transfer and Servicing Agreements--Sale and Assignment of Receivables"
and "--Servicing Procedures." See also "Description of the Transfer and
Servicing Agreements--Termination" regarding the Servicer's option to purchase
the Receivables from a given Trust and "--Insolvency Event or Dissolution"
regarding the sale of the Receivables owned by a Trust that is not a grantor
trust if an Insolvency Event or a dissolution with respect to the Seller or the
General Partner occurs.
In light of the above considerations, there can be no assurance as to the
amount of principal payments to be made on the Notes, if any, or the
Certificates of a given series on each Distribution Date, as applicable, since
such amount will depend, in part, on the amount of principal collected on the
related Receivables Pool during the applicable Collection Period. Any
reinvestment risks resulting from a faster or slower incidence of prepayment of
Receivables will be borne entirely by the Noteholders, if any, and the
Certificateholders of a given series. The related Prospectus Supplement may
set forth certain additional information with respect to the maturity and
prepayment considerations applicable to the particular Receivables Pool and the
related series of Securities.
POOL FACTORS AND TRADING INFORMATION
The "Note Pool Factor" for each class of Notes will be a seven-digit
decimal which the Servicer will compute prior to each distribution with respect
to such class of Notes indicating the remaining outstanding principal amount
of such class of Notes, as of the applicable Distribution Date (after giving
effect to payments to be made on such Distribution Date), as a fraction of the
initial outstanding principal amount of such class of Notes. The
"Certificate Pool Factor" for each class of Certificates will be a seven-digit
decimal which the Servicer will compute prior to each distribution with respect
to such class of Certificates indicating the remaining Certificate Balance of
such class of Certificates, as of the applicable Distribution Date (after
giving effect to distributions to be made on such Distribution Date), as a
fraction of the initial Certificate Balance of such class of Certificates.
Each Note Pool Factor and each Certificate Pool Factor will initially be
1.0000000 and thereafter will decline to reflect reductions in the outstanding
principal amount of the applicable class of Notes, or the reduction of the
Certificate Balance of the applicable class of Certificates, as the case may
be, as a result of scheduled payments, prepayments and liquidations of the
Receivables (and also as a result of a prepayment arising from application of
the Pre-Funding Account, if any). The Note Pool Factor and the Certificate
Pool Factor will not change as a result of the addition of Subsequent
Receivables, if any. A Noteholder's portion of the aggregate outstanding
principal amount of the related class of Notes is the product of (i) the
original denomination of such Noteholder's Note and (ii) the
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applicable Note Pool Factor. A Certificateholder's portion of the
aggregate outstanding Certificate Balance for the related class of Certificates
is the product of (i) the original denomination of such Certificateholder's
Certificate and (ii) the applicable Certificate Pool Factor.
With respect to each Trust, the Noteholders, if any, and the
Certificateholders will receive reports on or about each Distribution Date
concerning payments received on the Receivables during the Collection Period
immediately preceding such Distribution Date, the Pool Balance (as such term is
defined in the related Prospectus Supplement, the "Pool Balance"), each
Certificate Pool Factor or Note Pool Factor, as applicable, and various other
items of information. In addition, Securityholders of record during any
calendar year will be furnished information for tax reporting purposes not
later than the latest date permitted by law. See "Certain Information
Regarding the Securities--Reports to Securityholders."
USE OF PROCEEDS
The net proceeds from the sale of the Securities of a given series will
be applied by the applicable Trust (i) to the purchase of the Receivables from
the Seller , (ii) to the deposit of the Pre-Funded Amount into the Pre-Funding
Account, if any, and (iii) to make the initial deposit into the Reserve
Account, if any. The Seller will use that portion of such net proceeds paid
to it with respect to any such Trust to purchase the related Receivables from
Ford Credit.
THE SELLER AND THE GENERAL PARTNER
The Seller was organized as a Delaware limited partnership on February 23,
1996. The general partner of the Seller is Ford Credit Auto Receivables Two,
Inc., a Delaware corporation and a wholly owned, limited-purpose subsidiary of
Ford Credit. The limited partnership interests in the Seller are owned by Ford
Credit. The Seller was organized for limited purposes, which include
purchasing receivables from Ford Credit and transferring such receivables to
third parties and any activities incidental to and necessary or convenient for
the accomplishment of such purposes. The principal executive offices of the
Seller are located at The American Road, Dearborn, Michigan 48121. The
telephone number of such offices is (313) 322-3000. The General Partner is
located at The American Road, Dearborn, Michigan 48121.
The Seller has taken steps in structuring the transactions contemplated
herein and in the related Prospectus Supplement that are intended to ensure
that the voluntary or involuntary application for relief by Ford Credit under
any Insolvency Law will not result in consolidation of the assets and
liabilities of either of the Seller or the General Partner with those of Ford
Credit. These steps include the creation of the Seller as a separate,
limited-purpose limited partnership pursuant to a limited partnership agreement
containing certain limitations (including restrictions on the nature of the
Seller's business and a restriction on the Seller's ability to commence a
voluntary case or proceeding under any Insolvency Law without the consent of
the General Partner). In addition, the General Partner is a separate,
limited-purpose corporation whose Certificate of Incorporation contains certain
limitations (including restrictions on the nature of the General Partner's
business and a restriction on the General Partner's ability to commence a
voluntary case or proceeding with respect to itself or the Seller under any
Insolvency Law without the unanimous affirmative vote of all of its directors).
Such Certificate of Incorporation includes a provision that, under certain
circumstances relating to the credit ratings of Ford Credit, requires the
General Partner to have two directors who qualify under the Certificate of
Incorporation as "Independent Directors." However, there can be no assurance
that the activities of the Seller or the General Partner would not result in a
court concluding that the assets and liabilities of such entity should be
consolidated with those of Ford Credit in a proceeding under any Insolvency
Law.
The Seller has received the advice of counsel to the effect that, subject
to certain facts, assumptions and qualifications, it would not be a proper
exercise by a court of its equitable discretion to disregard the separate
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existence of each of the Seller and the General Partner and to require the
consolidation of the assets and liabilities of either such entity with the
assets and liabilities of Ford Credit in the event of the application of the
federal bankruptcy laws to Ford Credit. Among other things, it is assumed by
counsel that each of the Seller and the General Partner will follow certain
procedures in the conduct of its affairs, including maintaining records and
books of account separate from those of Ford Credit, refraining from
commingling its assets with those of Ford Credit, doing business from an office
separate from that of Ford Credit and refraining from holding itself out as
having agreed to pay, or being liable for, the debts of Ford Credit. Each of
the Seller and the General Partner intends to follow and has represented to
such counsel that it will follow these and other procedures related to
maintaining its separate identity. However, in the event that either the
Seller or the General Partner did not follow these procedures, there can be no
assurance that a court would not conclude that the assets and liabilities of
such entity should be consolidated with those of Ford Credit. If a court were
to reach such a conclusion, or a filing were made under any Insolvency Law by
or against the Seller or the General Partner, or if an attempt were made to
litigate any of the foregoing issues, delays in distributions on the
Securities (and possible reductions in the amount of such distributions which
may be substantial) could occur.
It is intended by Ford Credit and the Seller that each transfer of
Receivables by Ford Credit to the Seller under a Purchase Agreement constitute
a "true sale" of such Receivables to the Seller. If the transfer constitutes
such a "true sale," the Receivables and the proceeds thereof would not be part
of Ford Credit's bankruptcy estate under Section 541 of the United States
Bankruptcy Code should Ford Credit become the subject of a bankruptcy case
subsequent to the transfer of the Receivables to the Seller. The Seller has
received the advice of counsel to the effect that, subject to certain facts,
assumptions and qualifications, in the event Ford Credit were to become the
subject of a voluntary or involuntary case under the United States Bankruptcy
Code subsequent to the transfer of Receivables to the Seller, the transfer of
such Receivables by Ford Credit to the Seller pursuant to the related Purchase
Agreement would be characterized as a "true sale" of such Receivables from Ford
Credit to the Seller and such Receivables and the proceeds thereof would not
form part of Ford Credit's bankruptcy estate pursuant to Section 541 of the
United States Bankruptcy Code.
In Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir. 1993),
cert. denied 114 S.Ct 554 (1993), the United States Court of Appeals for the
10th Circuit suggested that even where a transfer of accounts from a seller to
a buyer constitutes a "true sale," the accounts would nevertheless constitute
property of the seller's bankruptcy estate in a bankruptcy of the seller. If
Ford Credit or the Seller were to become subject to a bankruptcy proceeding
and a court were to follow the Octagon court's reasoning, Securityholders might
experience delays in payment or possibly losses on their investment in the
Securities. As part of the advice of counsel described above, counsel has
advised the Seller that the reasoning of the Octagon case appears to be
inconsistent with other precedent. In addition, the Permanent Editorial Board
of the UCC has issued an official commentary (PEB Commentary No. 14) which
characterizes the Octagon court's interpretation of Article 9 of the UCC as
erroneous. Such commentary states that nothing in Article 9 is intended to
prevent the transfer of ownership of accounts or chattel paper. However, such
commentary is not legally binding on any court.
THE SERVICER
Ford Credit was incorporated in Delaware in 1959 and is a wholly owned
subsidiary of Ford.
Ford Credit provides wholesale financing and capital loans to franchised
Ford vehicle dealers and other dealers associated with such dealers and
purchases retail installment sale contracts and retail leases from them. Ford
Credit also makes loans to vehicle leasing companies, the majority of which are
affiliated with such dealers. In addition, a wholly-owned subsidiary of Ford
Credit provides these financing services in the U.S. to other vehicle dealers.
Ford Credit also provides retail financing for used vehicles built by Ford and
other manufacturers. In addition to vehicle financing, Ford Credit makes loans
to affiliates of Ford, finances certain receivables of Ford and its
subsidiaries, and offers diversified financing services which are managed by
USL Capital Corporation, a wholly
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owned subsidiary of Ford Holdings, Inc. ("Ford Holdings"). Ford Credit
also manages the insurance businesses of The American Road Insurance Company, a
wholly owned subsidiary of Ford Holdings. Ford Credit also is a significant
equity participant in Ford Holdings whose primary activities are consumer and
commercial financing operations, insurance underwriting and equipment leasing.
The mailing address of Ford Credit's executive offices is The American
Road, Dearborn, Michigan 48121. The telephone number of such offices is (313)
322-3000.
DESCRIPTION OF THE NOTES
GENERAL
With respect to each Trust that issues Notes, one or more classes of Notes
of the related series will be issued pursuant to the terms of an Indenture, a
form of which has been filed as an exhibit to the Registration Statement of
which this Prospectus forms a part. The following summary does not purport to
be complete and is subject to, and is qualified in its entirety by reference
to, all the provisions of the Notes and the Indenture.
Each class of Notes will initially be represented by one or more Notes,
in each case registered in the name of the nominee of DTC (together with any
successor depository selected by the Trust, the "Depository") except as set
forth below. The Notes will be available for purchase in the denominations
specified in the related Prospectus Supplement and in book-entry form only.
The Seller has been informed by DTC that DTC's nominee will be Cede, unless
another nominee is specified in the related Prospectus Supplement.
Accordingly, such nominee is expected to be the holder of record of the Notes
of each class. Unless and until Definitive Notes are issued under the limited
circumstances described herein or in the related Prospectus Supplement, no
Noteholder will be entitled to receive a physical certificate representing a
Note. All references herein and in the related Prospectus Supplement to
actions by Noteholders refer to actions taken by DTC upon instructions from its
participating organizations (the "Participants") and all references herein and
in the related Prospectus Supplement to distributions, notices, reports and
statements to Noteholders refer to distributions, notices, reports and
statements to DTC or its nominee, as the registered holder of the Notes, for
distribution to Noteholders in accordance with DTC's procedures with respect
thereto. See "Certain Information Regarding the Securities--Book-Entry
Registration" and "--Definitive Securities."
PRINCIPAL AND INTEREST ON THE NOTES
The timing and priority of payment, seniority, allocations of losses, Note
Interest Rate and amount of or method of determining payments of principal and
interest on each class of Notes of a given series will be described in the
related Prospectus Supplement. The right of holders of any class of Notes to
receive payments of principal and interest may be senior or subordinate to the
rights of holders of any other class or classes of Notes of such series, as
described in the related Prospectus Supplement. Payments of interest on the
Notes of such series may be made prior to payments of principal thereon. The
dates for payments of interest and principal on the Notes of such series may
be different from the Distribution Dates for the Certificates of such
series. To the extent provided in the related Prospectus Supplement, a series
may include one or more classes of Notes designated as money market classes,
planned amortization classes, targeted amortization classes or companion
classes, each as described in the related Prospectus Supplement. To the extent
provided in the related Prospectus Supplement, a series may include one or more
classes of Strip Notes entitled to (i) principal payments with
disproportionate, nominal or no interest payments or (ii) interest payments
with disproportionate, nominal or no principal payments. Each class of Notes
may have a different Note Interest Rate, which may be a fixed, variable or
adjustable Note Interest Rate (and which may be zero for certain classes of
Strip Notes), or any combination of the foregoing. The related Prospectus
Supplement will specify the Note Interest Rate for each class of Notes of a
given series or the method for determining such Note Interest Rate. See also
"Certain Information Regarding the Securities--Fixed Rate Secu rities" and
"--Floating Rate Securities." One or more classes of Notes of a series may be
redeemable in whole or in part under the circumstances specified in the related
Prospectus Supplement, including at the end of
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the Funding Period (if any) or as a result of the Servicer's exercising its
option to purchase the related Receivables Pool. See "Description of the
Transfer and Servicing Agreements--Termination."
To the extent specified in any Prospectus Supplement, one or more classes
of Notes of a given series may have fixed principal payment schedules;
Noteholders of such Notes would be entitled to receive as payments of principal
on any given Distribution Date the applicable amounts set forth on such
schedule with respect to such Notes, in the manner and to the extent set forth
in the related Prospectus Supplement.
If so specified in the related Prospectus Supplement, payments to
Noteholders of all classes within a series in respect of interest will have the
same priority. Under certain circumstances, the amount available for such
payments could be less than the amount of interest payable on the Notes on any
of the dates specified for payments in the related Prospectus Supplement, in
which case each class of Noteholders will receive its ratable share (based upon
the aggregate amount of interest due to such class of Noteholders) of the
aggregate amount available to be distributed in respect of interest on the
Notes of such series. See "Description of the Transfer and Servicing
Agreements--Distributions" and "--Credit and Cash Flow Enhancement."
In the case of a series of Notes which includes two or more classes of
Notes, the sequential order and priority of payment in respect of principal and
interest, and any schedule or formula or other provisions applicable to the
determination thereof, of each such class will be set forth in the related
Prospectus Supplement. Payments in respect of principal and interest of any
class of Notes will be made on a pro rata basis among all the Noteholders of
such class.
THE INDENTURE
Modification of Indenture. With respect to each Trust that has issued
Notes pursuant to an Indenture, the Trust and the Indenture Trustee may,
without the consent of the Noteholders of the related series, execute a
supplemental indenture for the purpose of adding to the covenants of the
Trust, curing any ambiguity, correcting or supplementing any provision which
may be inconsistent with any other provision or making any other provision with
respect to matters arising under the related Indenture which will not be
inconsistent with other provisions of the related Indenture.
With respect to a series of Notes, without the consent of the holder of
each such outstanding Note affected thereby, however, no supplemental indenture
will: (i) change the due date of any installment of principal of or interest on
any such Note or reduce the principal amount thereof, the interest rate
thereon or the redemption price with respect thereto or change any place of
payment where or the coin or currency in which any such Note or any interest
thereon is payable; (ii) impair the right to institute suit for the enforcement
of certain provisions of the related Indenture regarding payment; (iii) reduce
the percentage of the aggregate amount of the outstanding Notes of such series,
the consent of the holders of which is required for any such supplemental
indenture or the consent of the holders of which is required for any waiver of
compliance with certain provisions of the related Indenture or of certain
defaults thereunder and their consequences as provided for in such Indenture;
(iv) modify or alter the provisions of the related Indenture regarding the
voting of Notes held by the applicable Trust, any other obligor on such Notes,
the Seller or an affiliate of any of them; (v) reduce the percentage of the
aggregate outstanding amount of such Notes, the consent of the holders of which
is required to direct the related Indenture Trustee to sell or liquidate the
Receivables if the proceeds of such sale would be insufficient to pay the
principal amount and accrued but unpaid interest on the outstanding Notes of
such series; (vi) decrease the percentage of the aggregate principal amount of
such Notes required to amend the sections of the related Indenture which
specify the applicable percentage of aggregate principal amount of the Notes of
such series necessary to amend such Indenture or certain other related
agreements; or (vii) permit the creation of any lien ranking prior to or on a
parity with the lien of the related Indenture with respect to any of the
collateral for such Notes or, except as otherwise permitted or contemplated in
such Indenture, terminate the lien of such Indenture on any such collateral or
deprive the holder of any such Note of the security afforded by the lien of
such Indenture.
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The Trust and the applicable Indenture Trustee may also enter into
supplemental indentures, without obtaining the consent of the Noteholders of
the related series, for the purpose of, among other things, adding any
provisions to or changing in any manner or eliminating any of the provisions of
the related Indenture or of modifying in any manner the rights of such
Noteholders; provided that (x) such action will not, (i) as evidenced by an
opinion of counsel, materially adversely affect the interest of any such
Noteholder and (ii) as confirmed by the Rating Agencies (as such term is
defined in the related Prospectus Supplement, the "Rating Agencies") rating the
Notes of the related series, cause the then current rating assigned to any
class of such Notes to be withdrawn or reduced and (y) an opinion of counsel as
to certain tax matters is delivered.
Events of Default; Rights upon Event of Default. With respect to the
Notes of a given series, "Events of Default" under the related Indenture will
consist of: (i) a default for five days or more in the payment of any interest
on any such Note; (ii) a default in the payment of the principal of or any
installment of the principal of any such Note when the same becomes due and
payable; (iii) a default in the observance or performance of any material
covenant or agreement of the applicable Trust made in the related Indenture and
the continuation of any such default for a period of 60 days after notice
thereof is given to such Trust by the applicable Indenture Trustee or to such
Trust and such Indenture Trustee by the holders of at least 25% in principal
amount of such Notes then outstanding; (iv) any representation or warranty made
by such Trust in the related Indenture or in any certificate delivered
pursuant thereto or in connection therewith having been incorrect in a material
respect as of the time made, and such breach not having been cured within 30
days after notice thereof is given to such Trust by the applicable Indenture
Trustee or to such Trust and such Indenture Trustee by the holders of at least
25% in principal amount of such Notes then outstanding; (v) certain events of
bankruptcy, insolvency, receivership or liquidation of the applicable Trust; or
(vi) such other events, if any, set forth in the related Prospectus Supplement.
However, the amount of principal required to be paid to Noteholders of such
series under the related Indenture will generally be limited to amounts
available to be deposited in the applicable Note Payment Account. Therefore,
the failure to pay principal on a class of Notes generally will not result in
the occurrence of an Event of Default until the final scheduled Distribution
Date for such class of Notes.
If an Event of Default should occur and be continuing with respect to the
Notes of any series, the related Indenture Trustee or holders of a majority in
principal amount of such Notes then outstanding may declare the principal of
such Notes to be immediately due and payable. Such declaration may, under
certain circumstances, be rescinded by the holders of a majority in principal
amount of such Notes then outstanding. Any such rescission could be treated,
for federal income tax purposes, as a constructive exchange of such Notes by
the related Noteholders for deemed new Notes upon which gain or loss would be
recognized.
If the Notes of any series have been declared due and payable following an
Event of Default with respect thereto, the related Indenture Trustee may
institute proceedings to collect amounts due or foreclose on Trust property,
exercise remedies as a secured party, sell the related Receivables or elect to
have the applicable Trust maintain possession of such Receivables and continue
to apply collections on such Receivables as if there had been no declaration of
acceleration. However, such Indenture Trustee is prohibited from selling the
related Receivables following an Event of Default, other than a default in the
payment of any principal of or a default for five days or more in the payment
of any interest on any Note of such series, unless (i) the holders of all
outstanding Notes of such series consent to such sale, (ii) the proceeds of
such sale are sufficient to pay in full the principal of and the accrued
interest on the outstanding Notes and Certificates of such series at the date
of such sale or (iii) such Indenture Trustee determines that the proceeds of
Receivables would not be sufficient on an ongoing basis to make all payments on
the Notes of such series as such payments would have become due if such
obligations had not been declared due and payable, and such Indenture Trustee
obtains the consent of the holders of 66 2/3% of the aggregate outstanding
amount of the Notes of such series.
Subject to the provisions of the applicable Indenture relating to the
duties of the related Indenture Trustee, if an Event of Default occurs and is
continuing with respect to a series of Notes, such Indenture Trustee will be
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under no obligation to exercise any of the rights or powers under such
Indenture at the request or direction of any of the holders of such Notes, if
such Indenture Trustee reasonably believes it will not be adequately
indemnified against the costs, expenses and liabilities which might be incurred
by it in complying with such request. Subject to the provisions for
indemnification and certain limitations contained in the related Indenture, the
holders of a majority in principal amount of the outstanding Notes of a given
series will have the right to direct the time, method and place of conducting
any proceeding or any remedy available to the applicable Indenture Trustee, and
the holders of a majority in principal amount of such Notes then outstanding
may, in certain cases, waive any default with respect thereto, except a default
in the payment of principal or interest or a default in respect of a covenant
or provision of such Indenture that cannot be modified without the waiver or
consent of all the holders of such outstanding Notes. Any such waiver could be
treated, for federal income tax purposes, as a constructive exchange of such
Notes by the related Noteholders for deemed new Notes upon which gain or loss
would be recognized.
No holder of a Note of any series will have the right to institute any
proceeding with respect to the related Indenture, unless (i) such holder
previously has given to the applicable Indenture Trustee written notice of a
continuing Event of Default, (ii) the holders of not less than 25% in principal
amount of the outstanding Notes of such series have made written request to
such Indenture Trustee to institute such proceeding in its own name as
Indenture Trustee, (iii) such holder or holders have offered such Indenture
Trustee reasonable indemnity, (iv) such Indenture Trustee has for 60 days
failed to institute such proceeding and (v) no direction inconsistent with such
written request has been given to such Indenture Trustee during such 60-day
period by the holders of a majority in principal amount of such outstanding
Notes.
In addition, each Indenture Trustee and the related Noteholders, by
accepting the related Notes, will covenant that they will not at any time
institute against the applicable Trust any bankruptcy, reorganization or other
proceeding under any federal or state bankruptcy or similar law.
With respect to any Trust, neither the related Indenture Trustee nor the
related Trustee in its individual capacity, nor any holder of a Certificate
representing an ownership interest in such Trust nor any of their respective
owners, beneficiaries, agents, officers, directors, employees, affiliates,
successors or assigns will, in the absence of an express agreement to the
contrary, be personally liable for the payment of the principal of or interest
on the related Notes or for the agreements of such Trust contained in the
applicable Indenture.
Certain Covenants. Each Indenture will provide that the related Trust may
not consolidate with or merge into any other entity, unless (i) the entity
formed by or surviving such consolidation or merger is organized under the laws
of the United States, any state or the District of Columbia, (ii) such entity
expressly assumes such Trust's obligation to make due and punctual payments
upon the Notes of the related series and the performance or observance of every
agreement and covenant of such Trust under the Indenture, (iii) no Event of
Default shall have occurred and be continuing immediately after such merger or
consolidation, (iv) such Trust has been advised that the rating of the Notes or
the Certificates of such series then in effect would not be reduced or
withdrawn by the Rating Agencies as a result of such merger or consolidation,
(v) such Trust has received an opinion of counsel to the effect that such ,
consolidation or merger would have no material adverse tax consequence to the
Trust or to any related Noteholder or Certificateholder, (vi) any action as is
necessary to maintain the lien and security interest created by the related
Indenture shall have been taken and (vii) such Trust has received an opinion of
counsel and officer's certificate each stating that such consolidation or
merger satisfies all requirements under the related Indenture.
Each Trust will not, among other things, (i) except as expressly permitted
by the applicable Indenture, the applicable Transfer and Servicing Agreements
or certain related documents with respect to such Trust (collectively, the
"Basic Documents"), sell, transfer, exchange or otherwise dispose of any of the
assets of such Trust, (ii) claim any credit on or make any deduction from the
principal and interest payable in respect of the Notes of the related series
(other than amounts withheld under the Code or applicable state law) or assert
any claim against any present or former holder of such Notes because of the
payment of taxes levied or assessed upon such Trust, (iii) dissolve
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or liquidate in whole or in part, (iv) permit the validity or effectiveness of
the related Indenture to be impaired or permit any person to be released from
any covenants or obligations with respect to such Notes under such Indenture
except as may be expressly permitted thereby or (v) permit any lien, charge,
excise, claim, security interest, mortgage or other encumbrance to be created
on or extend to or otherwise arise upon or burden the assets of such Trust or
any part thereof, or any interest therein or the proceeds thereof, except as
may be created by the terms of the related Indenture.
No Trust may engage in any activity other than as specified under the
section of the related Prospectus Supplement entitled "The Trust." No Trust
will incur, assume or guarantee any indebtedness other than indebtedness
incurred pursuant to the related Notes and the related Indenture, pursuant to
any Advances made to it by the Servicer or otherwise in accordance with the
Basic Documents.
List of Noteholders. With respect to the Notes of any series, three or
more holders of the Notes of such series or one or more holders of such Notes
evidencing not less than 25% of the aggregate outstanding principal amount of
such Notes may, by written request to the related Indenture Trustee, obtain
access to the list of all Noteholders maintained by such Indenture Trustee for
the purpose of communicating with other Noteholders with respect to their
rights under the related Indenture or under such Notes. Such Indenture Trustee
may elect not to afford the requesting Noteholders access to the list of
Noteholders if it agrees to mail the desired communication or proxy, on behalf
of and at the expense of the requesting Noteholders, to all Noteholders of such
series.
Annual Compliance Statement. Each Trust will be required to file annually
with the related Indenture Trustee a written statement as to the fulfillment of
its obligations under the Indenture.
Indenture Trustee's Annual Report. The Indenture Trustee for each Trust
will be required to mail each year to all related Noteholders a brief report
relating to its eligibility and qualification to continue as Indenture Trustee
under the related Indenture, any amounts advanced by it under the Indenture,
the amount, interest rate and maturity date of certain indebtedness owing by
such Trust to the applicable Indenture Trustee in its individual capacity, the
property and funds physically held by such Indenture Trustee as such and any
action taken by it that materially affects the related Notes and that has not
been previously reported.
Satisfaction and Discharge of Indenture. An Indenture will be discharged
with respect to the collateral securing the related Notes upon the delivery to
the related Indenture Trustee for cancellation of all such Notes or, with
certain limitations, upon deposit with such Indenture Trustee of funds
sufficient for the payment in full of all such Notes.
THE INDENTURE TRUSTEE
The Indenture Trustee for a series of Notes will be specified in the
related Prospectus Supplement. The Indenture Trustee for any series may resign
at any time, in which event the Issuer will be obligated to appoint a successor
trustee for such series. The Issuer may also remove any such Indenture Trustee
if such Indenture Trustee ceases to be eligible to continue as such under the
related Indenture or if such Indenture Trustee becomes insolvent. In such
circumstances, the Issuer will be obligated to appoint a successor trustee for
the applicable series of Notes. Any resignation or removal of the Indenture
Trustee and appointment of a successor trustee for any series of Notes does not
become effective until acceptance of the appointment by the successor trustee
for such series.
DESCRIPTION OF THE CERTIFICATES
GENERAL
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With respect to each Trust, one or more classes of Certificates of the
related series will be issued pursuant to the terms of a Trust Agreement or a
Pooling and Servicing Agreement, a form of each of which has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
The following summary does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the
Certificates and the Trust Agreement or Pooling and Servicing Agreement, as
applicable.
Except for the Certificates, if any, of a given series retained by the
Seller, each class of Certificates may initially be represented by one or
more Certificates registered in the name of the Depository, except as set forth
below. Except for the Certificates, if any, of a given series retained by
the Seller, the Certificates will be available for purchase in the
denominations specified in the related Prospectus Supplement and may be
available in book-entry form only. The Seller has been informed by DTC that
DTC's nominee will be Cede, unless another nominee is specified in the related
Prospectus Supplement. Accordingly, such nominee is expected to be the holder
of record of the Certificates of any series issued in book-entry form that are
not retained by the Seller. If the Certificates of a series are issued in
book-entry form, unless and until Definitive Certificates are issued under the
limited circumstances described herein or in the related Prospectus
Supplement, no Certificateholder (other than the Seller) will be entitled to
receive a physical certificate representing a Certificate. If the
Certificates of a series are issued in book-entry form, all references herein
and in the related Prospectus Supplement to actions by Certificateholders refer
to actions taken by DTC upon instructions from the Participants and all
references herein and in the related Prospectus Supplement to distributions,
notices, reports and statements to Certificateholders refer to distributions,
notices, reports and statements to DTC or its nominee, as the case may be, as
the registered holder of the Certificates, for distribution to
Certificateholders in accordance with DTC's procedures with respect thereto.
See "Certain Information Regarding the Securities--Book-Entry Registration" and
"--Definitive Securities." Any Certificates of a given series owned by the
Seller or its affiliates will be entitled to equal and proportionate benefits
under the applicable Trust Agreement, except that such Certificates will be
deemed not to be outstanding for the purpose of determining whether the
requisite percentage of Certificateholders have given any request, demand,
authorization, direction, notice, consent or other action under the Basic
Documents (other than the commencement by the related Trust of a voluntary
proceeding in bankruptcy as described under "Description of the Transfer and
Servicing Agreements--Insolvency Event or Dissolution").
DISTRIBUTIONS OF PRINCIPAL AND INTEREST
The timing and priority of distributions, seniority, allocations of
losses, Certificate Rate and amount of or method of determining distributions
with respect to principal and interest of each class of Certificates will be
described in the related Prospectus Supplement. Distributions of interest on
such Certificates will be made on the dates specified in the related Prospectus
Supplement (each, a "Distribution Date") and will be made prior to
distributions with respect to principal of such Certificates. To the extent
provided in the related Prospectus Supplement, a series may include one or
more classes of Strip Certificates entitled to (i) distributions in respect of
principal with disproportionate, nominal or no interest distributions or (ii)
interest distributions with disproportionate, nominal or no distributions in
respect of principal. Each class of Certificates may have a different
Certificate Rate, which may be a fixed, variable or adjustable Certificate Rate
(and which may be zero for certain classes of Strip Certificates) or any
combination of the foregoing. The related Prospectus Supplement will specify
the Certificate Rate for each class of Certificates of a given series or the
method for determining such Certificate Rate. See also "Certain Information
Regarding the Securities--Fixed Rate Securities" and "--Floating Rate
Securities." Distributions in respect of the Certificates of a given series
that includes Notes may be subordinate to payments in respect of the Notes of
such series as more fully described in the related Prospectus Supplement.
Distributions in respect of interest on and principal of any class of
Certificates will be made on a pro rata basis among all the Certificateholders
of such class.
In the case of a series of Certificates which includes two or more classes
of Certificates, the timing, sequential order, priority of payment or amount of
distributions in respect of interest and principal, and any schedule or formula
or other provisions applicable to the determination thereof, of each such class
shall be as set forth in the related Prospectus Supplement.
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LIST OF CERTIFICATEHOLDERS
With respect to the Certificates of any series, three or more holders of
the Certificates of such series or one or more holders of such Certificates
evidencing not less than 25% of the Certificate Balance of such Certificates
may, by written request to the related Trustee, obtain access to the list of
all Certificateholders maintained by such Trustee for the purpose of
communicating with other Certificateholders with respect to their rights under
the related Trust Agreement or Pooling and Servicing Agreement or under such
Certificates.
CERTAIN INFORMATION REGARDING THE SECURITIES
FIXED RATE SECURITIES
Each class of Securities (other than certain classes of Strip Notes or
Strip Certificates) may bear interest at a fixed rate per annum ("Fixed Rate
Securities") or at a variable or adjustable rate per annum ("Floating Rate
Securities"), as more fully described below and in the applicable Prospectus
Supplement. Each class of Fixed Rate Securities will bear interest at the
applicable per annum Note Interest Rate or Certificate Rate, as the case may
be, specified in the applicable Prospectus Supplement. Interest on each
class of Fixed Rate Securities will be computed on the basis of a 360-day year
of twelve 30-day months or on such other day count basis as is specified in the
applicable Prospectus Supplement. See "Description of the Notes--Principal and
Interest on the Notes" and "Description of the Certificates--Distributions of
Principal and Interest."
FLOATING RATE SECURITIES
Each class of Floating Rate Securities will bear interest for each
applicable Interest Reset Period (as such term is defined in the related
Prospectus Supplement with respect to a class of Floating Rate Securities, the
"Interest Reset Period") at a rate per annum determined by reference to an
interest rate basis (the "Base Rate"), plus or minus the Spread, if any, or
multiplied by the Spread Multiplier, if any, in each case as specified in the
related Prospectus Supplement. The "Spread" is the number of basis points (one
basis point equals one one-hundredth of a percentage point) that may be
specified in the applicable Prospectus Supplement as being applicable to such
class, and the "Spread Multiplier" is the percentage that may be specified in
the applicable Prospectus Supplement as being applicable to such class.
The applicable Prospectus Supplement will designate one of the following
Base Rates as applicable to a given Floating Rate Security: (i) the CD Rate (a
"CD Rate Security"), (ii) the Commercial Paper Rate (a "Commercial Paper Rate
Security"), (iii) the Federal Funds Rate (a "Federal Funds Rate Security"),
(iv) LIBOR (a "LIBOR Security"), (v) the Treasury Rate (a "Treasury Rate
Security") or (vi) such other Base Rate as is set forth in such Prospectus
Supplement. The "Index Maturity" for any class of Floating Rate Securities is
the period of maturity of the instrument or obligation from which the Base Rate
is calculated. "H.15(519)" means the publication entitled "Statistical Release
H.15(519), Selected Interest Rates," or any successor publication, published by
the Board of Governors of the Federal Reserve System. "Composite Quotations"
means the daily statistical release entitled "Composite 3:30 p.m. Quotations
for U.S. Government Securities" published by the Federal Reserve Bank of New
York. "Interest Reset Date" will be the first day of the applicable Interest
Reset Period, or such other day as may be specified in the related Prospectus
Supplement with respect to a class of Floating Rate Securities.
As specified in the applicable Prospectus Supplement, Floating Rate
Securities of a given class may also have either or both of the following (in
each case expressed as a rate per annum): (i) a maximum limitation, or ceiling,
on the rate at which interest may accrue during any interest period and (ii) a
minimum limitation, or floor, on the rate at which interest may accrue during
any interest period. In addition to any maximum interest rate that may be
applicable to any class of Floating Rate Securities, the interest rate
applicable to any class of Floating Rate
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Securities will in no event be higher
than the maximum rate permitted by applicable law, as the same may be modified
by United States law of general application.
Each Trust with respect to which a class of Floating Rate Securities will
be issued will appoint, and enter into agreements with, a calculation agent
(each, a "Calculation Agent") to calculate interest rates on each such class of
Floating Rate Securities issued with respect thereto. The applicable
Prospectus Supplement will set forth the identity of the Calculation Agent for
each such class of Floating Rate Securities of a given series, which may be
either the related Trustee or Indenture Trustee with respect to such series.
All determinations of interest by the Calculation Agent shall, in the absence
of manifest error, be conclusive for all purposes and binding on the holders of
Floating Rate Securities of a given class. All percentages resulting from
any calculation of the rate of interest on a Floating Rate Security will be
rounded, if necessary, to the nearest 1/100,000 of 1% (.0000001), with five
one-millionths of a percentage point rounded upward.
CD Rate Securities. Each CD Rate Security will bear interest for each
Interest Reset Period at the interest rate calculated with reference to the CD
Rate and the Spread or Spread Multiplier, if any, specified in such Security
and in the applicable Prospectus Supplement.
The "CD Rate" for each Interest Reset Period shall be the rate as of the
second business day prior to the Interest Reset Date for such Interest Reset
Period (a "CD Rate Determination Date") for negotiable certificates of deposit
having the Index Maturity designated in the applicable Prospectus Supplement as
published in H.15(519) under the heading "CDs (Secondary Market)." In the
event that such rate is not published prior to 3:00 p.m., New York City time,
on the Calculation Date (as defined below) pertaining to such CD Rate
Determination Date, then the "CD Rate" for such Interest Reset Period will be
the rate on such CD Rate Determination Date for negotiable certificates of
deposit of the Index Maturity designated in the applicable Prospectus
Supplement as published in Composite Quotations under the heading "Certificates
of Deposit." If by 3:00 p.m., New York City time, on such Calculation Date
such rate is not yet published in either H.15(519) or Composite Quotations,
then the "CD Rate" for such Interest Reset Period will be calculated by the
Calculation Agent for such CD Rate Security and will be the arithmetic mean of
the secondary market offered rates as of 10:00 a.m., New York City time, on
such CD Rate Determination Date, of three leading nonbank dealers in
negotiable U.S. dollar certificates of deposit in The City of New York selected
by the Calculation Agent for such CD Rate Security for negotiable certificates
of deposit of major United States money center banks of the highest credit
standing (in the market for negotiable certificates of deposit) with a
remaining maturity closest to the Index Maturity designated in the related
Prospectus Supplement in a denomination of $5,000,000; provided, however, that
if the dealers selected as aforesaid by such Calculation Agent are not quoting
offered rates as mentioned in this sentence, the "CD Rate" for such Interest
Reset Period will be the same as the CD Rate for the immediately preceding
Interest Reset Period.
The "Calculation Date" pertaining to any CD Rate Determination Date shall
be the first to occur of (a) the tenth calendar day after such CD Rate
Determination Date or, if such day is not a business day, the next succeeding
business day or (b) the second business day preceding the date any payment is
required to be made for any period following the applicable Interest Reset
Date.
Commercial Paper Rate Securities. Each Commercial Paper Rate Security
will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the Commercial Paper Rate and the Spread or Spread
Multiplier, if any, specified in such security and in the applicable Prospectus
Supplement.
The "Commercial Paper Rate" for each Interest Reset Period will be
determined by the Calculation Agent for such Commercial Paper Rate Security as
of the second business day prior to the Interest Reset Date for such Interest
Reset Period (a "Commercial Paper Rate Determination Date") and shall be the
Money Market Yield (as defined below) on such Commercial Paper Rate
Determination Date of the rate for commercial paper have the Index Maturity
specified in the applicable Prospectus Supplement, as such rate shall be
published in H.15(519) under the heading "Commercial Paper." In the event that
such rate is not published prior to 3:00 p.m., New York City time,
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on the Calculation Date (as defined below) pertaining to such Commercial Paper
Rate Determination Date, then the "Commercial Paper Rate" for such Interest
Reset Period shall be the Money Market Yield on such Commercial Paper Rate
Determination Date of the rate for commercial paper of the specified Index
Maturity as published in Composite Quotations under the heading "Commercial
Paper." If by 3:00 p.m., New York City time, on such Calculation Date such
rate is not yet published in either H.15(519) or Composite Quotations, then the
"Commercial Paper Rate" for such Interest Reset Period shall be the Money
Market Yield of the arithmetic mean of the offered rates, as of 11:00 a.m., New
York City time, on such Commercial Paper Rate Determination date of three
leading dealers of commercial paper Rate Security for commercial paper of the
specified Index Maturity placed for an industrial issue whose bonds are rated
"AA" or the equivalent by a nationally recognized rating agency; provided,
however, that if the dealers selected as aforesaid by such Calculation Agent
are not quoting offered rates as mentioned in this sentence, the "Commercial
Paper Rate" for such Interest Reset Period will be the same as the Commercial
Paper Rate for the immediately preceding Interest Reset Period.
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
D X 360
Money Market Yield = -------------- X 100
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the specified Index Maturity.
The "Calculation Date" pertaining to any Commercial Paper Rate
Determination Date shall be the first to occur of (a) the tenth calendar day
after such Commercial Paper Rate Determination Date or, if such day is not a
business day, the next succeeding business day or (b) the second business day
preceding the date any payment is required to be made for any period following
the applicable Interest Reset Date.
Federal Funds Rate Securities. Each Federal Funds Rate Security will bear
interest for each Interest Reset Period at the interest rate calculated with
reference to the Federal Funds Rate and the Spread or Spread Multiplier, if
any, specified in such Security and in the applicable Prospectus Supplement.
The "Federal Funds Rate" for each Interest Reset Period shall be the
effective rate on the Interest Reset Date for such Interest Reset Period (a
"Federal Funds Rate Determination Date") for Federal Funds as published in
H.15(519) under the heading "Federal Funds (Effective)." In the event that
such rate is not published prior to 3:00 p.m., New York City time, on the
Calculation Date (as defined below) pertaining to such Federal Funds Rate
Determination Date, the "Federal Funds Rate" for such Interest Reset Period
shall be the rate on such Federal Funds Rate Determination Date as published
in Composite Quotations under the heading "Federal Funds/Effective Rate." If
by 3:00 p.m., New York City time, on such Calculation Date such rate is not yet
published in either H.15(519) or Composite Quotations, then the "Federal Funds
Rate" for such Interest Reset Period shall be the rate on such Federal Funds
Rate Determination Date made publicly available by the Federal Reserve Bank of
New York which is equivalent to the rate which appears in H.15(519) under the
heading "Federal Funds (Effective)"; provided, however, that if such rate is
not made publicly available by the Federal Reserve Bank of New York by 3:00
p.m., New York City time, on such Calculation Date, the "Federal Funds Rate"
for such Interest Reset Period will be the same as the Federal Funds Rate in
effect for the immediately preceding Interest Reset Period. In the case of a
Federal Funds Rate Security that resets daily, the interest rate on such
Security for the period from and including a Monday to but excluding the
succeeding Monday will be reset by the Calculation Agent for such Security on
such second Monday (or, if not a business day, on the next succeeding business
day) to a rate equal to the average of the Federal Funds Rates in effect with
respect to each such day in such week.
The "Calculation Date" pertaining to any Federal Funds Rate Determination
Date shall be the next succeeding business day.
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LIBOR Securities. Each LIBOR Security will bear interest for each
Interest Reset Period at the interest rate calculated with reference to LIBOR
and the Spread or Spread Multiplier, if any, specified in such Security and in
the applicable Prospectus Supplement.
With respect to LIBOR indexed to the offered rates for U.S. dollar
deposits, "LIBOR" for each Interest Reset Period will be determined by the
Calculation Agent for any LIBOR Security as follows:
(i) On the second London Banking Day prior to the Interest Reset
Date for such Interest Reset Period (a "LIBOR Determination Date"), the
Calculation Agent for such LIBOR Security will determine the arithmetic
mean of the offered rates for deposits in U.S. dollars for the period of
the Index Maturity specified in the applicable Prospectus Supplement,
commencing on such Interest Reset Date, which appear on the Reuters
Screen LIBO Page at approximately 11:00 a.m., London time, on such LIBOR
Determination Date. For purposes of calculating LIBOR, "London Banking
Day" means any business day on which dealings in deposits in United
States dollars are transacted in the London interbank market and "Reuters
Screen LIBO Page" means the display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace
the LIBO page on that service for the purpose of displaying London
interbank offered rates of major banks). If at least two such offered
rates appear on the Reuters Screen LIBO Page, "LIBOR" for such Interest
Reset Period will be the arithmetic mean of such offered rates as
determined by the Calculation Agent for such LIBOR Security.
(ii) If fewer than two offered rates appear on the Reuters Screen
LIBO Page on such LIBOR Determination Date, the Calculation Agent for
such LIBOR Security will request the principal London offices of each of
four major banks in the London interbank market selected by such
Calculation Agent to provide such Calculation Agent with its offered
quotations for deposits in U.S. dollars for the period of the specified
Index Maturity, commencing on such Interest Reset Date, to prime banks in
the London interbank market at approximately 11:00 a.m., London time, on
such LIBOR Determination Date and in a principal amount equal to an
amount of not less than $1,000,000 that is representative of a single
transaction in such market at such time. If at least two such quotations
are provided, "LIBOR" for such Interest Reset Period will be the
arithmetic mean of such quotations. If fewer than two such quotations
are provided, "LIBOR" for such Interest Reset Period will be the
arithmetic mean of rates quoted by three major banks in The City of New
York selected by the Calculation Agent for such LIBOR Security at
approximately 11:00 a.m., New York City time, on such LIBOR Determination
Date for loans in U.S. dollars to leading European banks, for the period
of the specified Index Maturity, commencing on such Interest Reset Date,
and in a principal amount equal to an amount of not less than $1,000,000
that is representative of a single transaction in such market at such
time; provided, however, that if the banks selected as aforesaid by such
Calculation Agent are not quoting rates as mentioned in this sentence,
"LIBOR" for such Interest Reset Period will be the same as LIBOR for the
immediately preceding Interest Reset Period.
Treasury Rate Securities. Each Treasury Rate Security will bear interest
for each Interest Reset Period at the interest rate calculated with reference
to the Treasury Rate and the Spread or Spread Multiplier, if any, specified in
such Security and in the applicable Prospectus Supplement.
The "Treasury Rate" for each Interest Period will be the rate for the
auction held on the Treasury Rate Determination Date (as defined below) for
such Interest Reset Period of direct obligations of the United States
("Treasury bills") having the Index Maturity specified in the applicable
Prospectus Supplement, as such rate shall be published in H.15(519) under the
heading "U.S. Government Securities--Treasury bills--auction average
(investment)" or, in the event that such rate is not published prior to 3:00
p.m., New York City time, on the Calculation Date (as defined below) pertaining
to such Treasury Rate Determination Date, the auction average rate (expressed
as a bond equivalent on the basis of a year of 365 or 366 days, as applicable,
and applied on a daily basis) on such Treasury Rate Determination Date as
otherwise announced by the United States Department of the Treasury. In
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the event that the results of the auction of Treasury bills having the
specified Index Maturity are not published or reported as provided above by
3:00 p.m., New York City time, on such Calculation Date, or if no such auction
is held on such Treasury Rate Determination Date, then the "Treasury Rate" for
such Interest Reset Period shall be calculated by the Calculation Agent for
such Treasury Rate Security and shall be the yield to maturity (expressed as a
bond equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 p.m., New York City time, on such Treasury Rate
Determination Date, of three leading primary United States government
securities dealers selected by such Calculation Agent for the issue of Treasury
bills with a remaining maturity closest to the specified Index Maturity;
provided, however, that if the dealers selected as aforesaid by such
Calculation Agent are not quoting bid rates as mentioned in this sentence, then
the "Treasury Rate" for such Interest Reset Period will be the same as the
Treasury Rate for the immediately preceding Interest Reset Period.
The "Treasury Rate Determination Date" for each Interest Reset Period will
be the day of the week in which the Interest Reset Date for such Interest Reset
Period falls on which Treasury bills would normally be auctioned. Treasury
bills are normally sold at auction on Monday of each week, unless that day is a
legal holiday, in which case the auction is normally held on the following
Tuesday, except that such auction may be held on the preceding Friday. If, as
the result of a legal holiday, an auction is so held on the preceding Friday,
such Friday will be the Treasury Rate Determination Date pertaining to the
Interest Reset Period commencing in the next succeeding week. If an auction
date shall fall on any day that would otherwise be an Interest Reset Date for a
Treasury Rate Security, then such Interest Reset Date shall instead be the
business day immediately following such auction date.
The "Calculation Date" pertaining to any Treasury Rate Determination Date
shall be the first to occur of (a) the tenth calendar day after such Treasury
Rate Determination Date or, if such a day is not a business day, the next
succeeding business day or (b) the second business day preceding the date any
payment is required to be made for any period following the applicable Interest
Reset Date.
INDEXED SECURITIES
To the extent so specified in any Prospectus Supplement, any class of
Securities of a given series may consist of Securities ("Indexed Securities")
in which the principal amount payable at the final scheduled Distribution Date
for such class (the "Indexed Principal Amount") is determined by reference to a
measure (the "Index") which will be related to (i) the difference in the rate
of exchange between United States dollars and a currency or composite currency
(the "Indexed Currency") specified in the applicable Prospectus Supplement
(such Indexed Securities, "Currency Indexed Securities"); (ii) the difference
in the price of a specified commodity (the "Indexed Commodity") on specified
dates (such Indexed Securities, "Commodity Indexed Securities"); or (iii) the
difference in the level of a specified stock index (the "Stock Index"), which
may be based on U.S. or foreign stocks, on specified dates (such Indexed
Securities, "Stock Indexed Securities"); or (iv) such other
publicly-disseminated, objective price or economic measures, such as the
Consumer Price Index, the Gross National Product, or the volume of motor
vehicle retail sales as reported by the Motor Vehicle Manufacturers Association
of the United States, Inc., as are described in the applicable Prospectus
Supplement. The manner of determining the Indexed Principal Amount of an
Indexed Security and historical and other information concerning the Indexed
Currency, the Indexed Commodity, the Stock Index or other price or economic
measures used in such determination will be set forth in the applicable
Prospectus Supplement, together with information concerning federal income tax
consequences to the holders of such Indexed Securities.
If the determination of the Indexed Principal Amount of an Indexed
Security is based on an Index calculated or announced by a third party and such
third party either suspends the calculation or announcement of such Index or
changes the basis upon which such Index is calculated (other than changes
consistent with policies in effect at the time such Indexed Security was issued
and permitted changes described in the applicable Prospectus Supplement), then
such Index shall be calculated for purposes of such Indexed Security by an
independent calculation agent named in the applicable Prospectus Supplement on
the same basis, and subject to the same
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conditions and controls, as applied to the original third party. If for any
reason such Index cannot be calculated on the same basis and subject to the
same conditions and controls as applied to the original third party, then the
Indexed Principal Amount of such Indexed Security shall be calculated in the
manner set forth in the applicable Prospectus Supplement. Any determination of
such independent calculation agent shall in the absence of
manifest error be binding on all parties.
If so specified in the applicable Prospectus Supplement, interest on an
Indexed Security will be payable based on the amount designated in the
applicable Prospectus Supplement as the "Face Amount" of such Indexed Security.
The applicable Prospectus Supplement will describe whether the principal
amount of the related Indexed Security, if any, that would be payable upon
redemption or repayment prior to the applicable final scheduled Distribution
Date will be the Face Amount of such Indexed Security, the Indexed Principal
Amount of such Indexed Security at the time of redemption or repayment or
another amount described in such Prospectus Supplement.
BOOK-ENTRY REGISTRATION
The Prospectus Supplement related to a given series will specify whether
the holders of the Notes or Certificates of such series may hold their
respective Securities through DTC (in the United States)Eor Cedel Bank, societe
anonyme ("Cedel") or Euroclear (as defined below) (in Europe) if they are
participants of such systems, or indirectly through organizations that are
participants in such systems ("Book-Entry Notes" or "Book-Entry Certificates,"
respectively, and collectively referred to herein as "Book-Entry Securities").
The Seller has been informed by DTC that DTC's nominee will be Cede,
unless another nominee is specified in the related Prospectus Supplement.
Accordingly, such nominee ("DTC's Nominee") is expected to be the holder of
record of the Securities of any series held through DTC. DTC's Nominee will
hold the global Securities. Cedel and Euroclear will hold omnibus positions on
behalf of the Cedel Participants and the Euroclear Participants, respectively,
through customers' securities accounts in Cedel's and Euroclear's names on the
books of their respective depositaries (collectively, the "Depositaries") which
in turn will hold such positions in customers' securities accounts in the
Depositaries' names on the books of DTC.
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of SectionE17A of the
Exchange Act. DTC was created to hold securities for its participating
organizations ("Participants") and facilitate the clearance and settlement of
securities transactions between Participants through electronic book-entries,
thereby eliminating the need for physical movement of certificates.
Participants include securities brokers and dealers (who may include any of the
underwriters of a series of Securities), banks, trust companies and clearing
corporations and may include certain other organizations. Indirect access to
the DTC system also is available to others such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly (the "Indirect Participants").
Transfers between DTC Participants will occur in accordance with DTC
rules. Transfers between Cedel Participants and Euroclear Participants will
occur in the ordinary way in accordance with their applicable rules and
operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected in DTC
in accordance with DTC rules on behalf of the relevant European international
clearing system by its Depositary; however, such cross-market transactions will
require delivery of instructions to the relevant European international
clearing system by the counterparty in such system in accordance with its rules
and procedures and within its established deadlines (European time). The
relevant European international clearing system will, if the transaction meets
its settlement requirements, deliver instructions to its Depositary to take
action to effect final settlement on its behalf by delivering or receiving
securities in DTC, and making or receiving payment in accordance with normal
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procedures for same-day funds settlement applicable to DTC. Cedel Participants
and Euroclear Participants may not deliver instructions directly to the
Depositaries.
Because of time-zone differences, credits of securities in Cedel or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant
Cedel Participant or Euroclear Participant on such business day. Cash received
by Cedel or Euroclear as a result of sales of securities by or through a Cedel
Participant or a Euroclear Participant to a DTC Participant will be received
with value on the DTC settlement date but will be available in the relevant
Cedel or Euroclear cash account only as of the business day following
settlement in DTC.
The Securityholders who are not Participants or Indirect Participants but
who desire to purchase, sell or otherwise transfer ownership of, or other
interest in, Securities may do so only through Participants and Indirect
Participants. In addition, Securityholders will receive all distributions of
principal and interest from the Indenture Trustee or the applicable Trustee, as
the case may be (the "Applicable Trustee"), through the Participants who in
turn will receive them from DTC. Under a book-entry format, Securityholders
may experience some delay in their receipt of payments, since such payments
will be forwarded by the Applicable Trustee to DTC's Nominee. DTC will forward
such payments to its Participants which thereafter will forward them to
Indirect Participants or Securityholders. To the extent the related Prospectus
Supplement provides that Book-Entry Securities will be issued, the only
"Noteholder" or "Certificateholder," as applicable, will be DTC's Nominee.
Securityholders will not be recognized by the Applicable Trustee as
"Noteholders" or "Certificateholders," as such terms are used in the Indenture
or Trust Agreement, as applicable, and Securityholders will be permitted to
exercise the rights of Securityholders only indirectly through DTC and its
Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
Securities among Participants on whose behalf it acts with respect to the
Securities and is required to receive and transmit distributions of principal
and interest on the Securities. Participants and Indirect Participants with
which Securityholders have accounts with respect to their respective Securities
similarly are required to make book-entry transfers and receive and transmit
such payments on behalf of their respective Securityholders. Accordingly,
although Securityholders will not possess their respective Securities, the
Rules provide a mechanism by which Participants will receive payments and will
be able to transfer their interests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a
Securityholder to pledge Securities to persons or entities that do not
participate in the DTC system, or otherwise take actions with respect to such
Securities, may be limited due to the lack of a physical certificate for such
Securities.
DTC will advise the Administrator in respect of each Trust that it will
take any action permitted to be taken by a Securityholder under the related
Indenture or Trust Agreement, as applicable, only at the direction of one or
more Participants to whose accounts with DTC such Securities are credited. DTC
may take conflicting actions with respect to other undivided interests to the
extent that such actions are taken on behalf of Participants whose holdings
include such undivided interests.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for its participating organizations ("Cedel
Participants") and facilitates the clearance and settlement of securities
transactions between Cedel Participants through electronic book-entry changes
in accounts of Cedel Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled by Cedel in any of 28
currencies, including United States dollars. Cedel provides to its Cedel
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Cedel interfaces with domestic markets in several
countries. As a professional depository, Cedel is subject to regulations by
the Luxembourg Monetary Institute. Cedel Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clear-
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ing corporations and certain other organizations and may include any of the
underwriters of any series of Securities. Indirect access to Cedel is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Cedel Participant,
either directly or indirectly.
The Euroclear System ("Euroclear" or the "Euroclear System") was created
in 1968 to hold securities for its participants ("Euroclear Participants") and
to clear and settle transactions between Euroclear Participants through
simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and the risk from
transfers of securities and cash that are not simultaneous.
The Euroclear System has subsequently been extended to clear and settle
transactions between Euroclear Participants and counterparties both in Cedel
and in many domestic securities markets. Transactions may be settled in any
of 32 currencies. In addition to safekeeping (custody) and securities
clearance and settlement, the Euroclear System includes securities lending and
borrowing and money transfer services. The Euroclear System is operated by the
Brussels, Belgium office of Morgan Guaranty Trust Company of New York (the
"Euroclear Operator"), under contract with Euroclear Clearance System, S.C., a
Belgian cooperative corporation that establishes policy on behalf of Euroclear
Participants. The Euroclear Operator is the Belgian branch of a New York
banking corporation which is a member bank of the Federal Reserve System. As
such, it is regulated and examined by the Board of Governors of the Federal
Reserve System and the New York State Banking Department, as well as the
Belgian Banking Commission.
All operations are conducted by the Euroclear Operator and all Euroclear
securities clearance accounts and cash accounts are accounts with the Euroclear
Operator. They are governed by the Terms and Conditions Governing Use of
Euroclear and the related Operating Procedures of the Euroclear System and
applicable Belgian law (collectively, the "Terms and Conditions"). The Terms
and Conditions govern all transfers of securities and cash, both within the
Euroclear System, and receipts and withdrawals of securities and cash. All
securities in the Euroclear System are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
Euroclear Participants include banks (including central banks), securities
brokers and dealers and other professional financial intermediaries and may
include any of the underwriters of any series of Securities. Indirect access
to the Euroclear System is also available to other firms that clear through or
maintain a custodial relationship with a Euroclear Participant, either directly
or indirectly. The Euroclear Operator acts under the Terms and Conditions only
on behalf of Euroclear Participants and has no record of or relationship with
persons holding through Euroclear Participants.
Unless and until Definitive Securities are issued under the limited
circumstances described herein or in the related Prospectus Supplement, no
Securityholder will be entitled to receive a physical certificate representing
a Book-Entry Security. All references herein and in the related Prospectus
Supplement to actions by Securityholders shall refer to actions taken by DTC
upon instructions from its Participants, and all references herein and in the
related Prospectus Supplement to distributions, notices, reports and statements
to Securityholders shall refer to distributions, notices, reports and
statements to DTC or its nominee as the registered holder of the Book-Entry
Securities, as the case may be, for distribution to Book-Entry Securityholders
in accordance with DTC's procedures with respect thereto.
In the event that any of DTC, Cedel or Euroclear should discontinue its
services, the Administrator would seek an alternative depository (if available)
or cause the issuance of Definitive Securities to Securityholders or their
nominees in the manner described under "--Definitive Securities."
Except as required by law, none of the Administrator, if any, the
applicable Trustee or the applicable Indenture Trustee, if any, will have any
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests of the Securities of any series held by DTC's
Nominee, or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
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DEFINITIVE SECURITIES
With respect to any series of Notes and any series of Certificates
issued in book-entry form, such Notes or Certificates will be issued in fully
registered, certificated form ("Definitive Notes" and "Definitive
Certificates," respectively, and collectively referred to herein as
"Definitive Securities") to Noteholders or Certificateholders or their
respective nominees, rather than to DTC or its nominee, only if (i) the related
Administrator determines that DTC is no longer willing or able to discharge
properly its responsibilities as depository with respect to such Securities and
such Administrator is unable to locate a qualified successor and so
notifies the Applicable Trustee in writing, (ii) the Administrator , at its
option, elects to terminate the book-entry system through DTC or (iii) after
the occurrence of an Event of Default or an Event of Servicing Termination
with respect to such Securities, holders representing at least a majority of
the outstanding principal amount of the Notes or the Certificates, as the case
may be, of such series advise the Applicable Trustee through DTC in writing
that the continuation of a book-entry system through DTC (or a successor
thereto) with respect to such Notes or Certificates is no longer in the best
interest of the holders of such Securities.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Applicable Trustee will be required to notify all applicable
Securityholders of a given series through Participants of the availability of
Definitive Securities. Upon surrender by DTC of the definitive certificates
representing the corresponding Securities and receipt of instructions for
re-registration, the Applicable Trustee will reissue such Securities as
Definitive Securities to such Securityholders.
Distributions of principal of, and interest on, such Definitive Securities
will thereafter be made by the Applicable Trustee in accordance with the
procedures set forth in the related Indenture or the related Trust Agreement or
Pooling and Servicing Agreement, as applicable, directly to holders of
Definitive Securities in whose names the Definitive Securities were registered
at the close of business on the applicable Record Date specified for such
Securities in the related Prospectus Supplement. Such distributions will be
made by check mailed to the address of such holder as it appears on the
register maintained by the Applicable Trustee. The final payment on any such
Definitive Security, however, will be made only upon presentation and surrender
of such Definitive Security at the office or agency specified in the notice of
final distribution to the applicable Securityholders.
Definitive Securities will be transferable and exchangeable at the offices
of the Applicable Trustee or of a registrar named in a notice delivered to
holders of Definitive Securities. No service charge will be imposed for any
registration of transfer or exchange, but the Applicable Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
imposed in connection therewith.
REPORTS TO SECURITYHOLDERS
With respect to each series of Securities that includes Notes, on or prior
to each Distribution Date, the Servicer will prepare and provide to the related
Indenture Trustee a statement to be delivered to the related Noteholders on
such Distribution Date. With respect to each series of Securities, on or prior
to each Distribution Date, the Servicer will prepare and provide to the related
Trustee a statement to be delivered to the related Certificateholders on such
Distribution Date. With respect to each series of Securities, each such
statement to be delivered to Noteholders will include (to the extent
applicable) the following information (and any other information so specified
in the related Prospectus Supplement) as to the Notes of such series with
respect to such Distribution Date or the period since the previous Distribution
Date, as applicable, and each such statement to be delivered to
Certificateholders will include (to the extent applicable) the following
information (and any other information so specified in the related Prospectus
Supplement) as to the Certificates of such series with respect to such
Distribution Date or the period since the previous Distribution Date, as
applicable:
(i) the amount of the distribution allocable to principal of each
class of such Notes and to the Certificate Balance of each class of such
Certificates;
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(ii) the amount of the distribution allocable to interest on or
with respect to each class of Securities of such series;
(iii) the amount of the distribution allocable to draws from the
Reserve Account (if any), the Yield Supplement Deposit Amount (if any)
or payments in respect of any other credit or cash flow enhancement
arrangement;
(iv) the Pool Balance as of the close of business on the last day
of the preceding Collection Period;
(v) the aggregate outstanding principal amount and the Note Pool
Factor for each class of such Notes, and the Certificate Balance and the
Certificate Pool Factor for each class of such Certificates, each after
giving effect to all payments reported under clause (i) above on such
date;
(vi) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period or Collection Periods, as the
case may be;
(vii) the amount of the aggregate Realized Losses (as defined in
the related Prospectus Supplement), if any, for such Collection Period;
(viii) the Noteholders' Interest Carryover Shortfall, the
Noteholders' Principal Carryover Shortfall, the Certificateholders'
Interest Carryover Shortfall and the Certificateholders' Principal
Carryover Shortfall (each as defined in the related Prospectus
Supplement), if any, in each case as applicable to each class of
Securities, and the change in such amounts from the preceding statement;
(ix) the aggregate Purchase Amounts for Receivables, if any, that
were repurchased in such Collection Period;
(x) the balance of the Reserve Account (if any) on such date,
after giving effect to changes therein on such date;
(xi) the balance of the Yield Supplement Account (if any) on such
date, after giving effect to changes therein on such date;
(xii) the amount of Advances on such date;
(xiii) for each such date during the Funding Period (if any), the
remaining Pre-Funded Amount; and
(xiv) for the first such date that is on or immediately following
the end of the Funding Period (if any), the amount of any remaining
Pre-Funded Amount that has not been used to fund the purchase of
Subsequent Receivables and is being passed through as payments of
principal on the Securities of such series.
Each amount set forth pursuant to subclauses (i), (ii), (vi) and (viii)
with respect to the Notes or the Certificates of any series will be expressed
as a dollar amount per $1,000 of the initial principal amount of such Notes
or the initial Certificate Balance of such Certificates, as applicable.
Within the prescribed period of time for federal income tax reporting
purposes after the end of each calendar year during the term of each Trust, the
Applicable Trustee will mail to each person who at any time during such
calendar year has been a Securityholder with respect to such Trust and received
any payment thereon a
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statement containing certain information for the purposes of such
Securityholder's preparation of federal income tax returns. See "Certain
Federal Income Tax Consequences."
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of each Sale and Servicing
Agreement or Pooling and Servicing Agreement pursuant to which a Trust will
purchase Receivables from the Seller and the Servicer will agree to service
such Receivables, each Trust Agreement (in the case of a grantor trust, the
Pooling and Servicing Agreement) pursuant to which a Trust will be created and
Certificates will be issued and each Administration Agreement pursuant to
which Ford Credit will undertake certain administrative duties with respect to
a Trust that issues Notes (collectively, the "Transfer and Servicing
Agreements"). Forms of the Transfer and Servicing Agreements have been filed
as exhibits to the Registration Statement of which this Prospectus forms a
part. This summary does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all the provisions of the Transfer
and Servicing Agreements.
SALE AND ASSIGNMENT OF RECEIVABLES
Prior to the time of issuance of the Securities of a given Trust, pursuant
to a related Purchase Agreement (the "Purchase Agreement"), Ford Credit will
sell and assign to the Seller, without recourse, its entire interest in the
Initial Receivables, if any, of the related Receivables Pool, including its
security interests in the related Financed Vehicles. At the time of issuance
of the Securities of such Trust, the Seller will sell and assign to the
applicable Trustee, without recourse, the Seller's entire interest in the
Initial Receivables, including its security interests in the related Financed
Vehicles. Each such Receivable will be identified in a schedule to the
relating Sale and Servicing Agreement or Pooling and Servicing Agreement. The
applicable Trustee will not independently verify the existence and
qualification of any Receivables. The Trustee will, concurrently with such
sale and assignment, execute, authenticate, and deliver the related Notes
and/or Certificates to the Seller in exchange for the Receivables. The net
proceeds received by the Seller from the sale of the Certificates and the Notes
of a given series will be applied to the purchase of the related Receivables
from Ford Credit , to the deposit of the Pre-Funded Amount into the
Pre-Funding Account, if any, and to make the initial deposit into the Reserve
Account, if any. The related Prospectus Supplement for a given Trust will
specify whether, and the terms, conditions and manner under which, Subsequent
Receivables will be sold by the Seller to the applicable Trust from time to
time during any Funding Period on each date specified as a transfer date in the
related Prospectus Supplement (each, a "Subsequent Transfer Date").
The purchase price for the Receivables purchased by the Trust from the
Seller and by the Seller from Ford Credit may be more or less than the
aggregate principal balance thereof. If any Receivables are purchased for a
purchase price less than their respective principal balances, a portion of the
collections or proceeds in respect of principal from such Receivables may be
deemed collections or proceeds in respect of interest on such Receivables for
the purposes of allocating distributions on the Securities.
In each Purchase Agreement, Ford Credit will represent and warrant to the
Seller, and in each Sale and Servicing Agreement or Pooling and Servicing
Agreement the Seller will represent and warrant to the applicable Trust, among
other things, that (i) the information provided with respect to the related
Receivables is correct in all material respects; (ii) the Obligor on each
related Receivable has obtained or agreed to obtain physical damage insurance
in accordance with Ford Credit's normal requirements; (iii) at the date of
issuance of the related Notes and/or Certificates or at the applicable
Subsequent Transfer Date, if any, the related Receivables are free and clear of
all security interests, liens, charges, and encumbrances (such representation
and warranty will be made to the best of its knowledge with respect to
mechanic's liens and the like relating to each Financed Vehicle) and no
setoffs, defenses, or counterclaims against it have been asserted or
threatened; (iv) at the date of issuance of the related Notes and/or
Certificates or at the applicable Subsequent Transfer Date, if any, each of the
related Receivables is or will be secured by a first perfected security
interest in the Financed Vehicle in favor of Ford Credit; and (v) each
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related Receivable, at the time it was originated, complied, and at the date of
issuance of the related Notes and/or Certificates or at the applicable
Subsequent Transfer Date, if any, complies in all material respects with
applicable federal and state laws, including consumer credit, truth in lending,
equal credit opportunity, and disclosure laws.
As of the last day of the second (or, if the Seller elects, the first)
month following the discovery by or notice to the Seller of a breach of any
representation or warranty of the Seller which materially and adversely affects
the interests of the related Trust in any Receivable, the Seller, unless it
cures the breach, will purchase such Receivable from such Trust, and Ford
Credit will purchase such Receivable from the Seller, at a price equal to the
amount required to be paid by the related Obligor to prepay such Receivable
(including one month's interest thereon, in the month of payment, at the APR),
after giving effect to the receipt of any moneys collected (from whatever
source) on such Receivable, if any (such price, the "Purchase Amount"). The
purchase obligation will constitute the sole remedy available to the
Certificateholders or the Trustee and any Noteholders or Indenture Trustee in
respect of such Trust for any such uncured breach.
Pursuant to each Sale and Servicing Agreement or Pooling and Servicing
Agreement, the Servicer will service and administer the Receivables held by
each Trust and, as custodian on behalf of such Trust, will maintain possession
as the Trustee's agent of the retail installment sale contracts and any other
documents relating to such Receivables. To assure uniform quality in servicing
both the Receivables and the Servicer's own portfolio of receivables, as well
as to facilitate servicing and save administrative costs, the installment sale
contracts and other documents relating thereto will not be physically
segregated from other similar documents that are in the Servicer's possession
or otherwise stamped or marked to reflect the transfer to a given Trust so long
as Ford Credit is servicing the related Receivables. However, Uniform
Commercial Code financing statements reflecting the sale and assignment of such
Receivables by Ford Credit to the Seller and by the Seller to such Trust will
be filed, and the Servicer's accounting records and computer systems will be
marked to reflect such sale and assignment. Because such Receivables will
remain in the Servicer's possession and will not be stamped or otherwise marked
to reflect the assignment to such Trust, if a subsequent purchaser were to
obtain physical possession of such Receivables without knowledge of the
assignment, the Trust's interest in the Receivables could be defeated. See
"Certain Legal Aspects of the Receivables--Security Interests in Vehicles."
ACCOUNTS
With respect to each Trust that issues Notes, the Servicer will establish
and maintain with the related Indenture Trustee one or more accounts, in the
name of the Indenture Trustee on behalf of the related Noteholders and
Certificateholders, into which all payments made on or with respect to the
related Receivables will be deposited (the "Collection Account"). The Servicer
will establish and maintain with such Indenture Trustee an account, in the name
of such Indenture Trustee on behalf of such Noteholders, into which amounts
released from the Collection Account and any Pre-Funding Account, Reserve
Account or other credit enhancement for payment to such Noteholders will be
deposited and from which all distributions to such Noteholders will be made
(the "Note Payment Account"). The Servicer will establish and maintain with
the related Trustee an account, in the name of such Trustee on behalf of such
Certificateholders, into which amounts released from the Collection Account and
any Pre-Funding Account, Yield Supplement Account, Reserve Account or other
credit or cash flow enhancement for distribution to such Certificateholders
will be deposited and from which all distributions to such Certificateholders
will be made (the "Certificate Distribution Account"). With respect to each
Trust that does not issue Notes, the Servicer will also establish and maintain
the Collection Account and any other Trust Account in the name of the related
Trustee on behalf of the related Certificateholders.
If so provided in the related Prospectus Supplement, the Servicer will
establish for each Trust that issues Notes an additional account (the "Payahead
Account"), in the name of the related Indenture Trustee, into which, to the
extent required by the Sale and Servicing Agreement, early payments by or on
behalf of Obligors on Precomputed Receivables which do not constitute scheduled
payments, full prepayments, nor certain partial prepay ments that result in a
reduction of the Obligor's periodic payment below the scheduled payment as of
the applicable Cutoff Date ("Payaheads") will be deposited until such time as
the payment falls due. Until such time as payments
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are transferred from the Payahead Account to the Collection Account, they will
not constitute collected interest or collected principal and will not be
available for distribution to the applicable Noteholders or Certificateholders.
The Payahead Account will initially be maintained with the applicable Indenture
Trustee. With respect to each Trust that does not issue Notes, the Servicer
will also establish and maintain with the related Trustee the Payahead Account
in the name of such Trustee. So long as Ford Credit is the servicer and
provided that (i) there exists no Event of Servicing Termination and (ii) each
other condition to holding Payaheads as may be required by the applicable Sale
and Servicing Agreement or Pooling and Servicing Agreement is satisfied,
Payaheads may be retained by the Servicer until the applicable Distribution
Date.
Any other accounts to be established with respect to a Trust, including
any Pre-Funding Account, Yield Supplement Account or Reserve Account, will be
described in the related Prospectus Supplement.
For any series of Securities, funds in the Collection Account, the Note
Payment Account and any Pre-Funding Account, Yield Supplement Account, Reserve
Account and other accounts identified as such in the related Prospectus
Supplement (collectively, the "Trust Accounts") will be invested as provided in
the related Sale and Servicing Agreement or Pooling and Servicing Agreement in
Permitted Investments. "Permitted Investments" means (i) direct obligations
of, and obligations fully guaranteed as to timely payment by, the United States
of America or its agencies; (ii) demand deposits, time deposits, certificates
of deposit or bankers' acceptances of certain depository institutions or trust
companies having the highest rating from the applicable Rating Agency; (iii)
commercial paper having, at the time of the Trust's investment, a rating in the
highest rating category from the applicable Rating Agency; (iv) investments in
money market funds having the highest rating from the applicable Rating Agency;
(v) repurchase obligations with respect to any security that is a direct
obligation of, or fully guaranteed by, the United States of America or its
agencies, in either case entered into with a depository institution or trust
company described in clause (ii) above; and (vi) any other investment (which
may include motor vehicle retail sale contracts ) acceptable to the Rating
Agencies rating the Securities of the related Trust as being consistent with
the rating of such Securities. Permitted Investments are generally limited to
obligations or securities that mature on or before the date of the next
distribution for such series. However, to the extent permitted by the Rating
Agencies, funds in any Reserve Account may be invested in securities that will
not mature prior to the date of the next distribution with respect to such
Certificates or Notes and will not be sold to meet any shortfalls. Thus, the
amount of cash in any Reserve Account at any time may be less than the balance
of the Reserve Account. If the amount required to be withdrawn from any
Reserve Account to cover shortfalls in collections on the related Receivables
(as provided in the related Prospectus Supplement) exceeds the amount of cash
in the Reserve Account, a temporary shortfall in the amounts distributed to the
related Noteholders or Certificateholders could result, which could, in turn,
increase the average life of the Notes or the Certificates of such series.
Investment earnings on funds deposited in the Trust Accounts, net of losses
and investment expenses (collectively, "Investment Earnings"), shall be
deposited in the applicable Collection Account or distributed as provided in
the related Prospectus Supplement.
The Trust Accounts will be maintained as Eligible Deposit Accounts.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution have a credit rating from each Rating
Agency in one of its generic rating categories which signifies investment
grade. "Eligible Institution" means, with respect to a Trust, (a) the
corporate trust department of the related Indenture Trustee or the related
Trustee, as applicable, or (b) a depository institution organized under the
laws of the United States of America or any one of the states thereof or the
District of Columbia (or any domestic branch of a foreign bank), (i) which has
either (A) a long-term unsecured debt rating acceptable to the Rating Agencies
or (B) a short-term unsecured debt rating or certificate of deposit rating
acceptable to the Rating Agencies and (ii) whose deposits are insured by the
Federal Deposit Insurance Corporation.
SERVICING PROCEDURES
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The Servicer will make reasonable efforts to collect all payments due with
respect to the Receivables held by each Trust and will continue such collection
procedures as it follows with respect to its own automotive retail installment
sale contracts, in a manner consistent with the related Sale and Servicing
Agreement or Pooling and Servicing Agreement. Consistent with its normal
procedures, the Servicer may, in its discretion, arrange with the Obligor on a
Receivable to defer or modify the payment schedule. Some of such arrangements
may cause the Servicer to purchase the Receivable while others may result in
the Servicer making Advances with respect to the Receivable. If the Servicer
determines that eventual payment in full of a Receivable is unlikely, the
Servicer will follow its normal practices and procedures to realize upon the
Receivable, including the repossession and disposition of the Financed Vehicle
securing the Receivable at a public or private sale, or the taking of any
other action permitted by applicable law.
COLLECTIONS
With respect to each Trust, the Servicer will deposit all payments on the
related Receivables received from Obligors and all proceeds of the related
Receivables collected during each collection period specified in the related
Prospectus Supplement (each, a "Collection Period") into the related Collection
Account not later than the business day after receipt. However, so long as
Ford Credit is the servicer and provided that (i) there exists no Event of
Servicing Termination and (ii) each other condition to making monthly deposits
as may be required by the related Sale and Servicing Agreement or Pooling and
Servicing Agreement is satisfied, the Servicer may retain such amounts until
the applicable Distribution Date. The Servicer or the Seller, as the case may
be, will remit the aggregate Purchase Amount of any Receivables to be purchased
from a Trust to the related Collection Account on the applicable Distribution
Date. Pending deposit into the Collection Account, collections may be employed
by the Servicer at its own risk and for its own benefit and will not be
segregated from its own funds. To the extent set forth in the related
Prospectus Supplement, the Servicer may, in order to satisfy the requirements
described above, obtain a letter of credit or other security for the benefit of
the related Trust to secure timely remittances of collections on the related
Receivables and payment of the aggregate Purchase Amount with respect to
Receivables purchased by the Servicer.
Collections on a Receivable made during a Collection Period which are
not late fees, prepayment charges, or certain other similar fees or charges
shall, be applied first to any outstanding Advances made by the Servicer,
with respect to such Receivable and then to the scheduled payment. To the
extent that such collections on a Precomputed Receivable during a Collection
Period exceed the outstanding Precomputed Advances and the scheduled payment on
such Precomputed Receivable, the collections shall be applied to prepay the
Precomputed Receivable in full. If the collections are insufficient to prepay
the Precomputed Receivable in full, they generally shall be treated as
Payaheads until such later Collection Period as such Payaheads may be
transferred to the Collection Account and applied either to the scheduled
payment or to prepay the Precomputed Receivable in full.
ADVANCES
If so provided in the related Prospectus Supplement, to the extent the
collections on a Precomputed Receivable for a Collection Period are less than
the scheduled payment, the amount of Payaheads made on such Precomputed
Receivable not previously applied (the "Payahead Balance"), if any, with
respect to such Precomputed Receivable shall be applied by the Servicer to the
extent of the shortfall. To, the extent of any remaining shortfall, the
Servicer will make a Precomputed Advance of the deficiency. 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,
expects to recoup the Precomputed Advance from the Obligor, the Purchase
Amount, Liquidation Proceeds or collections from other Receivables in the
related Receivables Pool. The Servicer will deposit Precomputed Advances in
the related Collection Account on the applicable Distribution Date. The
Servicer will be entitled. to recoup its Precomputed Advances from subsequent
payments by or on behalf of the Obligor, collections of Liquidation Proceeds
and payment of the Purchase Amount; or, upon the determination that
reimbursement from the preceding sources is unlikely, will be entitled to
recoup its Precomputed Advances from collections from other Receivables in the
related Receivables Pool.
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If so provided in the related Prospectus Supplement, on or before the
business day prior to each applicable Distribution Date, the Servicer shall
deposit into the related Collection Account as a Simple Interest Advance an
amount equal to the amount of interest that would have been due on the related
Simple Interest Receivables at their respective APRs for the related Collection
Period (assuming that such Simple Interest Receivables are paid on their
respective due dates) minus the amount of interest actually received on such
Simple Interest Receivables during the related Collection Period. If such
calculation results in a negative number, an amount equal to such amount shall
be paid to the Servicer in reimbursement of outstanding Simple Interest
Advances. In addition, in the event that a Simple Interest Receivable becomes
a Liquidated Receivable (as such term is defined in the related Prospectus
Supplement), the amount of accrued and unpaid interest thereon (but not
including interest for the then current Collection Period) shall be withdrawn
from the Collection Account and paid to the Servicer in reimbursement of
outstanding Simple Interest Advances. No advances of principal will be made
with respect to Simple Interest Receivables. As used herein, "Advances" means
both Precomputed Advances and Simple Interest Advances.
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, generally the Servicer will advance
the amount of such interest . The Servicer will not be entitled to recoup any
such advance.
SERVICING COMPENSATION AND EXPENSES
The Servicer will be entitled to receive a servicing fee (the "Servicing
Fee") for each Collection Period equal to a specified percentage (the
"Servicing Fee Rate") of the Pool Balance as of the first day of the such
Collection Period. The Servicer also will be entitled to receive a
supplemental servicing fee (the "Supplemental Servicing Fee") for each
Collection Period equal to any late, prepayment, and other administrative fees
and expenses collected during such Collection Period. If so specified in the
related Prospectus Supplement, the Supplemental Servicing Fee will include
Investment Earnings on funds deposited in the Trust Accounts and other accounts
with respect to a Trust. The Servicer will be paid the Servicing Fee and the
Supplemental Servicing Fee for each Collection Period on the applicable
Distribution Date.
The Servicing Fee and the Supplemental Servicing Fee (collectively, the
"Servicer Fee") are intended to compensate the Servicer for performing the
functions of a third party servicer of the Receivables as an agent for their
beneficial owner, including collecting and posting all payments, responding to
inquiries of Obligors on the Receivables, investigating delinquencies, sending
payment coupons to Obligors, reporting federal income tax information to
Obligors, paying costs of collections, and policing the collateral. The
Servicer Fee will also compensate the Servicer for administering the particular
Receivables Pool, including making Advances, accounting for collections,
furnishing monthly and annual statements to the related Trustee and Indenture
Trustee with respect to distributions, and generating federal income tax
information for the Trust. The Servicer Fee also will reimburse the Servicer
for certain taxes, the fees of the related Trustee and Indenture Trustee,
accounting fees, outside auditor fees, data processing costs, and other costs
incurred in connection with administering the applicable Receivables.
DISTRIBUTIONS
With respect to each series of Securities, beginning on the Distribution
Date specified in the related Prospectus Supplement, distributions of principal
and interest (or, where applicable, of principal or interest only) on each
class of such Securities entitled thereto will be made by the Applicable
Trustee to the Noteholders and the Certificateholders of such series. The
timing, calculation, allocation, order, source, priorities of and requirements
for all payments to each class of Noteholders and all distributions to each
class of Certificateholders of such series will be set forth in the related
Prospectus Supplement.
With respect to each Trust, on each Distribution Date, collections on the
related Receivables will be transferred from the Collection Account to the Note
Payment Account, if any, and the Certificate Distribution Account for
distribution to Noteholders, if any, and Certificateholders to the extent
provided in the related
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Prospectus Supplement. Credit enhancement, such as a
Reserve Account, will be available to cover any shortfalls in the amount
available for distribution on such date to the extent specified in the related
Prospectus Supplement. As more fully described in the related Prospectus
Supplement, and unless otherwise specified therein, distributions in respect of
principal of a class of Securities of a given series will be subordinate to
distributions in respect of inter est on such class, and distributions in
respect of one or more classes of Certificates of such series may be
subordinate to payments in respect of Notes, if any, of such series or other
classes of Certificates of such series.
Allocation of Collections on Receivables. Distributions of principal on
the Securities of a series may be based on the amount of principal collected or
due, or the amount of Realized Losses incurred, in a Collection Period. On the
Business Day immediately preceding each Distribution Date (a "Determination
Date"), the Indenture Trustee, if any, or, otherwise, the Trustee shall
determine the amount in the Collection Account available for distribution on
the related Distribution Date. Such amount shall be allocated as described
under "--Collections" and to the interest and principal portion of scheduled
payments in accordance with the Servicer's customary servicing procedures.
Payments to Securityholders shall be made on each Distribution Date in
accordance with such allocations, together with the statement described under
"Certain Information Regarding the Securities--Reports to Securityholders."
CREDIT AND CASH FLOW ENHANCEMENT
The amounts and types of credit and cash flow enhancement arrangements and
the provider thereof, if applicable, with respect to each class of Securities
of a given series, if any, will be set forth in the related Prospectus
Supplement. If and to the extent provided in the related Prospectus
Supplement, credit and cash flow enhancement may be in the form of
subordination of one or more classes of Securities, Reserve Accounts,
over-collateralization, letters of credit, credit or liquidity facilities,
surety bonds, guaranteed investment contracts, guaranteed rate agreements,
swaps or other interest rate protection agreements, repurchase obligations,
yield supplement agreements, other agreements with respect to third party
payments or other support, cash deposits or such other arrangements as may be
described in the related Prospectus Supplement or any combination of two or
more of the foregoing. If specified in the applicable Prospectus Supplement,
credit or cash flow enhancement for a class of Securities may cover one or more
other classes of Securities of the same series, and credit or cash flow
enhancement for a series of Securities may cover one or more other series of
Securities.
The presence of a Reserve Account and other forms of credit enhancement
for the benefit of any class or series of Securities is intended to enhance the
likelihood of receipt by the Securityholders of such class or series of the
full amount of principal and interest due thereon and to decrease the
likelihood that such Securityholders will experience losses. The credit
enhancement for a class or series of Securities may not provide protection
against all risks of loss and may not guarantee repayment of the entire
principal amount and interest thereon. If losses occur which exceed the
amount covered by any credit enhancement or which are not covered by any credit
enhancement, Securityholders of any class or series will bear their allocable
share of deficiencies, as described in the related Prospectus Supplement. In
addition, if a form of credit enhancement covers more than one series of
Securities, Securityholders of any such series will be subject to the risk that
such credit enhancement will be exhausted by the claims of Securityholders of
other series.
The Seller may replace the credit enhancement for any class of
Securities with another form of credit enhancement without the consent of
Securityholders, provided the applicable Rating Agencies confirm in writing
that substitution will not result in the reduction or withdrawal of the rating
of such class of Securities or any other class of Securities of the related
series.
Reserve Account. If so provided in the related Prospectus Supplement,
pursuant to the related Sale and Servicing Agreement or Pooling and Servicing
Agreement, the Seller will establish for a series or class of Securities an
account, as specified in the related Prospectus Supplement (the "Reserve
Account"), which will be maintained with the related Trustee or Indenture
Trustee, as applicable. If so provided in the related Prospectus Supplement,
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the Reserve Account will be funded by an initial deposit by the Seller on the
Closing Date in the amount set forth in the related Prospectus Supplement and,
if the related series has a Funding Period, will also be funded on each
Subsequent Transfer Date to the extent described in the related Prospectus
Supplement. As further described in the related Prospectus Supplement, the
amount on deposit in the Reserve Account will be increased on each Distribution
Date thereafter up to the Specified Reserve Balance (as defined in the
related Prospectus Supplement) by the deposit therein of the amount of
collections on the related Receivables remaining on each such Distribution Date
after the payment of all other required payments and distributions on such
date. The related Prospectus Supplement will describe the circumstances and
manner under which distributions may be made out of the Reserve Account, either
to holders of the Securities covered thereby or to the Seller.
The Seller may at any time, without consent of the Securityholders, sell,
transfer, convey or assign in any manner its rights to and interests in
distributions from the Reserve Account provided that (i) the Rating Agencies
confirm in writing that such action will not result in a reduction or
withdrawal of the rating of any class of Securities, (ii) the Seller provides
to the applicable Trustee and any Indenture Trustee an opinion of counsel from
independent counsel that such action will not cause the related Trust to be
classified as an association (or publicly traded partnership) taxable as a
corporation for federal income tax purposes and (iii) such transferee or
assignee agrees in writing to take positions for federal income tax purposes
consistent with the federal income tax positions agreed to be taken by the
Seller.
Yield Supplement Account; Yield Supplement Agreement. If so provided in
the related Prospectus Supplement, pursuant to the related Sale and Servicing
Agreement or Pooling and Servicing Agreement, the Seller will establish for a
series an account, as specified in the related Prospectus Supplement (the
"Yield Supplement Account"), which will be maintained with the same entity at
which the related Collection Account is maintained and, if so specified in
the related Prospectus Supplement, will be created with an initial deposit by
Ford Credit of the Yield Supplement Initial Deposit. Each Yield Supplement
Account will be designed solely to hold funds to be applied by the Indenture
Trustee or applicable Trustee to provide payments to Securityholders in respect
of Receivables the APR of which is less than the Required Rate.
On each Distribution Date, the related Indenture Trustee or applicable
Trustee, as the case may be, will transfer to the related Collection Account
from monies on deposit in the Yield Supplement Account an amount equal to the
Yield Supplement Deposit Amount (as such term is defined in the related
Prospectus Supplement, the "Yield Supplement Deposit Amount") in respect of the
Receivables for such Distribution Date. If so specified in the related
Prospectus Supplement, amounts on deposit on any Distribution Date in the Yield
Supplement Account in excess of the Maximum Yield Supplement Amount, after
giving effect to all distributions to be made on such Distribution Date, will
be released to the Seller. Monies on deposit in the Yield Supplement Account
may be invested in Permitted Investments under the circumstances and in the
manner described in the related Sale and Servicing Agreement or Pooling and
Servicing Agreement, as applicable. If so specified in the related
Prospectus Supplement, Investment Earnings on investment of funds in a Yield
Supplement Account will be deposited into such Yield Supplement Account. If
so specified in the related Prospectus Supplement, any monies remaining on
deposit in a Yield Supplement Account upon the termination of the related Trust
pursuant to its terms shall be released to the Seller.
If a Yield Supplement Account is established with respect to any Trust as
to which a Pre-Funding Account has been established, Ford Credit, the Seller
and the related Indenture Trustee or applicable Trustee, will enter into a
Yield Supplement Agreement pursuant to which, on each Subsequent Transfer Date,
Ford Credit will deposit into the Yield Supplement Account the Additional Yield
Supplement Amount in respect of the related Subsequent Receivables. Each
Yield Supplement Agreement will affect only Receivables having APRs less than
the related Required Rate.
NET DEPOSITS
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As an administrative convenience and for so long as certain conditions are
satisfied (see "--Collections" above), the Servicer will be permitted to make
the deposit of collections, aggregate Advances and Purchase Amounts for any
Trust for or with respect to the related Collection Period, net of
distributions to the Servicer as reimbursement of Advances or payment of the
Servicer Fee with respect to such Collection Period. Similarly, the Servicer
may cause to be made a single, net transfer from the Collection Account to
the related Payahead Account, if any, or vice versa. The Servicer, however,
will account to the Trustee, any Indenture Trust, the Noteholders, if any, and
the Certificateholders with respect to each Trust as if all deposits,
distributions, and transfers were made individually.
STATEMENTS TO TRUSTEES AND TRUST
Prior to each Distribution Date with respect to each series of Securities,
the Servicer will provide to the applicable Indenture Trustee, if any, and the
applicable Trustee as of the close of business on the last day of the preceding
Collection Period a statement setting forth substantially the same information
as is required to be provided in the periodic reports provided to
Securityholders of such series described under "Certain Information Regarding
the Securities--Reports to Securityholders."
EVIDENCE AS TO COMPLIANCE
Each Sale and Servicing Agreement and Pooling and Servicing Agreement will
provide that a firm of independent certified public accountants will furnish to
the related Trust and Indenture Trustee or Trustee, as applicable, annually a
statement as to compliance by the Servicer during the preceding twelve months
(or, in the case of the first such certificate, from the applicable Closing
Date) with certain standards relating to the servicing of the applicable
Receivables, the Servicer's accounting records and computer files with respect
thereto and certain other matters.
Each Sale and Servicing Agreement and Pooling and Servicing Agreement will
also provide for delivery to the related Trust and Indenture Trustee or
Trustee, as applicable, substantially simultaneously with the delivery of such
accountants' statement referred to above, of a certificate signed by an officer
of the Servicer stating that the Servicer has fulfilled its obligations under
the Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, throughout the preceding twelve months (or, in the case of the
first such certificate, from the Closing Date) or, if there has been a default
in the fulfillment of any such obligation, describing each such default. The
Servicer has agreed to give each Indenture Trustee and each Trustee notice of
certain Events of Servicing Termination under the related Sale and Servicing
Agreement or Pooling and Servicing Agreement, as applicable.
Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the Applicable Trustee.
CERTAIN MATTERS REGARDING THE SERVICER
Each Sale and Servicing Agreement and Pooling and Servicing Agreement will
provide that Ford Credit may not resign from its obligations and duties as
Servicer thereunder, except upon determination that Ford Credit's performance
of such duties is no longer permissible under applicable law. No such
resignation will become effective until the related Indenture Trustee or
Trustee, as applicable, or a successor servicer has assumed Ford Credit's
servicing obligations and duties under such Sale and Servicing Agreement or
Pooling and Servicing Agreement.
Each Sale and Servicing Agreement and Pooling and Servicing Agreement will
further provide that neither the Servicer nor any of its directors, officers,
employees and agents will be under any liability to the related Trust or the
related Noteholders or Certificateholders for taking any action or for
refraining from taking any action pursuant to such Sale and Servicing Agreement
or Pooling and Servicing Agreement or for errors in judgment;
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except that neither the Servicer nor any such person will be protected against
any liability that would otherwise be imposed by reason of willful misfeasance,
bad faith or negligence in the performance of the Servicer's duties thereunder
or by reason of reckless disregard of its obligations and duties thereunder.
In addition, each Sale and Servicing Agreement and Pooling and Servicing
Agreement will provide that the Servicer is under no obligation to appear in,
prosecute or defend any legal action that is not incidental to the
Servicer's servicing responsibilities under such Sale and Servicing Agreement
or Pooling and Servicing Agreement and that, in its opinion, may cause it to
incur any expense or liability. The Servicer may, however, undertake any
reasonable action that it may deem necessary or desirable in respect of a
particular Sale and Servicing Agreement or Pooling and Servicing Agreement, the
rights and duties of the parties thereto, and the interests of the related
Securityholders thereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom will be expenses, costs, and
liabilities of the Servicer, and the Servicer will not be entitled to be
reimbursed therefor.
Under the circumstances specified in each Sale and Servicing Agreement and
Pooling and Servicing Agreement, any entity into which the Servicer may be
merged or consolidated, or any entity resulting from any merger or
consolidation to which the Servicer is a party, or any entity succeeding to the
business of the Servicer or, with respect to its obligations as Servicer, any
corporation 50% or more of the voting stock of which is owned, directly or
indirectly, by Ford, which corporation or other entity in each of the foregoing
cases assumes the obligations of the Servicer, will be the successor of the
Servicer under such Sale and Servicing Agreement or Pooling and Servicing
Agreement. For as long as Ford Credit is the Servicer, it may at any time
subcontract substantially all of its duties as servicer under a particular Sale
and Servicing Agreement or Pooling and Servicing Agreement to any corporation
more than 50% of the voting stock of which is owned, directly or indirectly, by
Ford and the Servicer may at any time perform certain specific duties as
servicer through other subcontractors.
EVENTS OF SERVICING TERMINATION
"Events of Servicing Termination" under each Sale and Servicing Agreement
and Pooling and Servicing Agreement will consist of (i) any failure by the
Servicer or the Seller, as the case may be, to deliver to the Applicable
Trustee for distribution to the Securityholders of the related series or for
deposit in any of the Trust Accounts or the Certificate Distribution Account
any required payment, which failure continues unremedied for three business
days after written notice from the Applicable Trustee is received by the
Servicer or the Seller, as the case may be, or after discovery by an officer of
the Servicer or the Seller, as the case may be; (ii) any failure by the
Servicer or the Seller, as the case may be, duly to observe or perform in any
material respect any other covenant or agreement in such Sale and Servicing
Agreement or Pooling and Servicing Agreement, which failure materially and
adversely affects the rights of the Noteholders or the Certificateholders of
the related series and which continues unremedied for 90 days after the giving
of written notice of such failure (A) to the Servicer or the Seller, as the
case may be, by the Applicable Trustee or (B) to the Servicer or the Seller, as
the case may be, and to the Applicable Trustee by holders of Notes or
Certificates of such series, as applicable, evidencing not less than 25% in
principal amount of such outstanding Notes or of such Certificate Balance;
(iii) the occurrence of an Insolvency Event with respect to the Servicer or
the Seller; and (iv) such other events, if any, set forth in the related
Prospectus Supplement. "Insolvency Event" means, with respect to any entity,
any of the following events or actions: certain events of insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings with respect to such entity and certain actions by such entity
indicating its insolvency, reorganization pursuant to bankruptcy proceedings or
inability to pay its obligations.
RIGHTS UPON EVENT OF SERVICING TERMINATION
In the case of any Trust that has issued Notes, as long as an Event of
Servicing Termination under a Sale and Servicing Agreement remains unremedied,
the related Indenture Trustee or holders of Notes of the related series
evidencing not less than a majority of the principal amount of such Notes
then outstanding may terminate all the rights and obligations of the Servicer
under such Sale and Servicing Agreement, whereupon such Indenture Trustee or a
successor servicer appointed by such Indenture Trustee will succeed to all the
responsibilities, duties and liabilities of the Servicer under such Sale and
Servicing Agreement and will be entitled to similar compensation
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arrangements. In the case of any Trust that has not issued Notes, as long as
an Event of Servicing Termination under the related Sale and Servicing
Agreement or Pooling and Servicing Agreement remains unremedied, the related
Trustee or holders of Certificates of the related series evidencing not less
than a majority of the principal amount of such Certificates then outstanding
may terminate all the rights and obligations of the Servicer under such Sale
and Servicing Agreement or Pooling and Servicing Agreement, whereupon such
Trustee or a successor servicer appointed by such Trustee will succeed to all
the responsibilities, duties and liabilities of the Servicer under such Sale
and Servicing Agreement or Pooling and Servicing Agreement and will be entitled
to similar compensation arrangements. If, however, a bankruptcy trustee or
similar official has been appointed for the Servicer, and no Event of
Servicing Termination other than such appointment has occurred, such trustee or
official may have the power to prevent such Indenture Trustee, such
Noteholders, such Trustee or such Certificateholders from effecting a transfer
of servicing. In the event that such Indenture Trustee or Trustee is unwilling
or unable to so act, it may appoint, or petition a court of competent
jurisdiction for the appointment of, a successor with a net worth of at least
$100,000,000 and whose regular business includes the servicing of motor vehicle
receivables. Such Indenture Trustee or Trustee may make such arrangements for
compensation to be paid, which in no event may be greater than the servicing
compensation to the Servicer under such Sale and Servicing Agreement or Pooling
and Servicing Agreement.
WAIVER OF PAST EVENTS OF SERVICING TERMINATION
With respect to each Trust that has issued Notes, the holders of Notes
evidencing not less than a majority of the principal amount of the then
outstanding Notes of the related series (or the holders of the Certificates of
such series evidencing not less than a majority of the outstanding Certificate
Balance, in the case of any Event of Servicing Termination which does not
adversely affect the related Indenture Trustee or such Noteholders) may, on
behalf of all such Noteholders and Certificateholders, waive any Event of
Servicing Termination under the related Sale and Servicing Agreement and its
consequences, except an Event of Servicing Termination consisting of a
failure to make any required deposits to or payments from any of the Trust
Accounts or to the Certificate Distribution Account in accordance with such
Sale and Servicing Agreement. With respect to each Trust that has not issued
Notes, holders of Certificates of such series evidencing not less than a
majority of the Certificate Balance of such Certificates then outstanding
may, on behalf of all such Certificateholders, waive any Event of Servicing
Termination under the related Sale and Servicing Agreement or Pooling and
Servicing Agreement, except an Event of Servicing Termination consisting of a
failure to make any required deposits to or payments from the Certificate
Distribution Account or the related Trust Accounts in accordance with such Sale
and Servicing Agreement or Pooling and Servicing Agreement. No such waiver
will impair such Noteholders' or Certificateholders' rights with respect to
subsequent defaults.
AMENDMENT
Each of the Transfer and Servicing Agreements may be amended by the
parties thereto, without the consent of the related Noteholders or
Certificateholders, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of such Transfer and Servicing
Agreements or of modifying in any manner the rights of such Noteholders or
Certificateholders; provided that such action will not, in the opinion of
counsel satisfactory to the related Trustee or Indenture Trustee, as
applicable, materially and adversely affect the interest of any such Noteholder
or Certificateholder and provided that an opinion of counsel as to certain tax
matters is delivered if required. The Transfer and Servicing Agreements may
also be amended by the Seller, the Servicer, the related Trustee and any
related Indenture Trustee with the consent of the holders of Notes evidencing
not less than a majority in principal amount of then outstanding Notes, if any,
of the related series and the holders of the Certificates of such series
evidencing not less than a majority of the Certificate Balance of such
Certificates then outstanding, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of such Transfer
and Servicing Agreements or of modifying in any manner the rights of such
Noteholders or 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 the related Receivables or
distributions that are required to be made for the benefit of such Noteholders
or Certificateholders or change any
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Note Interest Rate or Certificate Rate or the amount required to be on deposit
in the Reserve Account, if any, or (ii) reduce the aforesaid percentage of the
Notes or Certificates of such series which are required to consent to any such
amendment, without the consent of the holders of all the outstanding Notes or
Certificates, as the case may be, of such series; and provided that an opinion
of counsel as to certain tax matters is delivered if required.
INSOLVENCY EVENT OR DISSOLUTION
With respect to a Trust that is not a grantor trust, if an Insolvency
Event or a dissolution occurs with respect to the Seller or the General
Partner, the related Receivables of such Trust will be liquidated and the Trust
will be terminated 90 days after the date of such Insolvency Event or
dissolution, unless, before the end of such 90-day period, the related Trustee
shall have received written instructions from (i) the Noteholders (other than
the Seller, the Servicer or their affiliates) of Notes of such series
representing not less than a majority of the aggregate unpaid principal amount
of all such Notes and the right to receive interest thereon, (ii) the
Certificateholders (other than the Seller, the Servicer or their affiliates) of
Certificates of such series representing not less than a majority of the
aggregate Certificate Balance of all such Certificates and the right to
receive interest thereon, (iii) not less than a majority of the holders (other
than the Seller, the Servicer or their affiliates) of certain interests, if
any, in the Reserve Account with respect to such Trust and (iv) not less than
a majority of the holders (other than the Seller, the Servicer or their
affiliates) of certificates representing interests in, or indebtedness secured
by, final scheduled payments with respect to the Final Payment Receivables, if
any, initially retained by the Seller and subsequently added to such Trust
(such certificates or indebtedness being referred to herein as "Final Payment
Securities") and the right to receive interest thereon, to the effect that each
such party disapproves of the liquidation of such Receivables and termination
of such Trust and in connection therewith, the related Trustee (x) appoints an
entity acceptable to Ford Credit to acquire an interest in such Trust and to
act as a substitute "general partner" for federal income tax purposes and (y)
obtains an opinion of counsel that such Trust will thereafter not be classified
as an association taxable as a corporation for federal income tax and
applicable state tax purposes. Promptly after the occurrence of an Insolvency
Event or a dissolution with respect to the Seller or the General Partner,
notice thereof is required to be given to such Noteholders, Certificateholders,
holders of interests in the Reserve Account and holders of Final Payment
Securities; provided that any failure to give such required notice will not
prevent or delay termination of such Trust. Upon termination of any Trust, the
related Trustee shall, or shall direct the related Indenture Trustee to,
promptly sell the assets of such Trust (other than the Trust Accounts and the
Certificate Distribution Account) in a commercially reasonable manner and on
commercially reasonable terms. The proceeds from any such sale, disposition or
liquidation of the Receivables of such Trust will be treated as collections on
such Receivables and deposited in the related Collection Account. With respect
to any Trust, if the proceeds from the liquidation of the related Receivables
and any amounts on deposit in the Reserve Account (if any), the Payahead
Account (if any), the Note Payment Account (if any) and the Certificate
Distribution Account are not sufficient to pay the Notes, if any, and the
Certificates of the related series in full, the amount of principal returned to
Noteholders and Certificateholders thereof will be reduced and some or all of
such Noteholders and Certificateholders will incur a loss.
Each Trust Agreement will provide that the applicable Trustee does not
have the power to commence a voluntary proceeding in bankruptcy with respect to
the related Trust without the unanimous prior approval of all
Certificateholders (including the Seller, the Servicer or their affiliates) of
such Trust and the delivery to such Trustee by each such Certificateholder
(including the Seller, the Servicer or their affiliates) of a certificate
certifying that such Certificateholder reasonably believes that such Trust is
insolvent.
PAYMENT OF NOTES
Upon the payment in full of all outstanding Notes of a given series and
the satisfaction and discharge of the related Indenture, the related Trustee
will succeed to all the rights of the Indenture Trustee, and the
Certificateholders of such series will succeed to all the rights of the
Noteholders of such series, under the related Sale and Servicing Agreement,
except as otherwise provided therein.
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SELLER LIABILITY
Under each Trust Agreement, the Seller will agree to be liable directly to
an injured party for the entire amount of any losses, claims, damages or
liabilities (other than those incurred by a Noteholder or a Certificateholder
in the capacity of an investor with respect to such Trust) arising out of or
based on the arrangement created by such Trust Agreement as though such
arrangement created a partnership under the Delaware Revised Uniform Limited
Partnership Act in which the Seller was a general partner.
TERMINATION
With respect to each Trust, the obligations of the Servicer, the Seller,
the related Trustee and the related Indenture Trustee, if any, pursuant to the
Transfer and Servicing Agreements will terminate upon the earlier of (i) the
maturity or other liquidation of the last related Receivable and the
disposition of any amounts received upon liquidation of any such remaining
Receivables, (ii) the payment to Noteholders, if any, and Certificateholders of
the related series of all amounts required to be paid to them pursuant to the
Transfer and Servicing Agreements and (iii) the occurrence of either event
described below.
In order to avoid excessive administrative expense, the Servicer will be
permitted at its option to purchase from each Trust, as of the end of any
applicable Collection Period, if the then outstanding Pool Balance with respect
to the Receivables held by such Trust is 10% or less of the Initial Pool
Balance (as defined in the related Prospectus Supplement, the "Initial Pool
Balance"), all remaining related Receivables at a price equal to the aggregate
of the Purchase Amounts thereof as of the end of such Collection Period.
If and to the extent provided in the related Prospectus Supplement with
respect to a Trust, the Applicable Trustee will, within ten days following a
Distribution Date as of which the Pool Balance is equal to or less than the
percentage of the Initial Pool Balance specified in the related Prospectus
Supplement, solicit bids for the purchase of the Receivables remaining in such
Trust, in the manner and subject to the terms and conditions set forth in such
Prospectus Supplement. If the Applicable Trustee receives satisfactory bids as
described in such Prospectus Supplement, then the Receivables remaining in such
Trust will be sold to the highest bidder.
As more fully described in the related Prospectus Supplement, any
outstanding Notes of the related series will be redeemed concurrently with
either of the events specified above and the subsequent distribution to the
related Certificateholders of all amounts required to be distributed to them
pursuant to the applicable Trust Agreement or Pooling and Servicing Agreement
will effect early retirement of the Certificates of such series.
ADMINISTRATION AGREEMENT
Ford Credit, in its capacity as administrator (the "Administrator"), will
enter into an agreement (as amended and supplemented from time to time, an
"Administration Agreement") with each Trust that issues Notes and the related
Indenture Trustee pursuant to which the Administrator will agree, to the extent
provided in such Administration Agreement, to provide the notices and to
perform other administrative obligations required by the related Indenture.
With respect to any such Trust, as compensation for the performance of the
Administrator's obligations under the applicable Administration Agreement and
as reimbursement for its expenses related thereto, the Administrator will be
entitled to a monthly administration fee in an amount equal to such amount as
may be set forth in the related Prospectus Supplement (the "Administration
Fee"), which fee will be paid by the Seller.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
SECURITY INTERESTS IN VEHICLES
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In all states in which the Receivables have been originated, retail
installment sale contracts such as the Receivables evidence the credit sale of
automobiles and light trucks by dealers to obligors; the contracts also
constitute personal property security agreements and include grants of security
interests in the vehicles under the Uniform Commercial Code (the "UCC").
Perfection of security interests in the vehicles is generally governed by the
motor vehicle registration laws of the state in which the vehicle is located.
In most states in which the Receivables have been originated, a security
interest in a vehicle is perfected by notation of the secured party's lien on
the vehicle's certificate of title. Each Receivable prohibits the sale or
transfer of the Financed Vehicle without Ford Credit's consent.
With respect to each Trust, pursuant to the related Purchase Agreement,
Ford Credit will assign its security interests in the Financed Vehicles
securing the related Receivables to the Seller and, pursuant to the related
Sale and Servicing Agreement or Pooling and Servicing Agreement, the Seller
will assign its security interests in the Financed Vehicles securing such
Receivables to the Trust. However, because of the administrative burden and
expense, the Servicer, the Seller and the Trust will not amend any certificate
of title to identify the Trust as the new secured party on the certificates of
title relating to the Financed Vehicles. Also, the Servicer will continue to
hold any certificates of title relating to the Financed Vehicles in its
possession as custodian for the Trust pursuant to the related Sale and
Servicing Agreement or Pooling and Servicing Agreement. See "Description of
the Transfer and Servicing Agreements--Sale and Assignment of Receivables."
In most states, assignments such as those under the Purchase Agreement and
the Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, relating to each Trust, together with a perfected security interest
in the chattel paper are an effective conveyance of a security interest in the
vehicles subject to the chattel paper without amendment of any lien noted on a
vehicle's certificate of title, and the assignee succeeds thereby to the
assignor's rights as secured party. In the absence of fraud or forgery by the
vehicle owner or the Servicer or administrative error by state or local
agencies, the notation of Ford Credit's lien on the certificates of title will
be sufficient to protect such Trust against the rights of subsequent purchasers
of a Financed Vehicle or subsequent lenders who take a security interest in a
Financed Vehicle. If there are any Financed Vehicles as to which Ford Credit
failed to obtain a perfected security interest, its security interest would be
subordinate to, among others, subsequent purchasers of the Financed Vehicles
and holders of perfected security interests. Such a failure would constitute
a breach of Ford Credit's warranties under the related Purchase Agreement and
of the Seller's warranties under the related Sale and Servicing Agreement or
Pooling and Servicing Agreement, as applicable, and would create an obligation
of Ford Credit under such Purchase Agreement and of the Seller under such Sale
and Servicing Agreement or Pooling and Servicing Agreement to purchase the
related Receivable unless the breach is cured. See "Description of the
Transfer and Servicing Agreements--Sale and Assignment of Receivables." By not
identifying the Trust as the secured party on the certificate of title, the
Trust's interest in the chattel paper may not have the benefit of the security
interest in the Financed Vehicle in all states or such security interest could
be defeated through fraud or negligence. The Seller will assign its rights
under each Purchase Agreement to the related Trust.
Under the laws of most states, the perfected security interest in a
vehicle would continue for four months after a vehicle is moved to a state
other than the state in which it is initially registered and thereafter until
the vehicle owner re-registers the vehicle in the new state. A majority of
states generally require surrender of a certificate of title to re-register a
vehicle; accordingly, a secured party must surrender possession if it holds the
certificate of title to the vehicle, or, in the case of vehicles registered in
states providing for the notation of a lien on the, certificate of title but
not possession by the secured party, the secured party would receive notice of
surrender if the security interest is noted on the certificate of title. Thus,
the secured party would have the opportunity to re-perfect its security
interest in the vehicle in the state of relocation. In states that do not
require a certificate of title for registration of a motor vehicle,
re-registration could defeat perfection In the ordinary course of servicing
receivables, Ford Credit takes steps to effect re-perfection upon receipt of
notice of re-registration or information from the obligor as to relocation.
Similarly, when an obligor sells a vehicle, Ford Credit must surrender
possession of the certificate of title or will receive notice as a result of
its lien noted thereon and accordingly will have an opportunity to require
satisfaction of the related Receivable before release of the lien.
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Under each Sale and Servicing Agreement or Pooling and Servicing Agreement, the
Servicer will be obligated to take appropriate steps, at the Servicer's
expense, to maintain perfection of security interests in the Financed Vehicles.
Under the laws of most states, liens for repairs performed on a motor
vehicle and liens for certain unpaid taxes take priority over even a perfected
security interest in a Financed Vehicle. The Internal Revenue Code of 1986, as
amended, also grants priority to certain federal tax liens over the lien of a
secured party. Federal law and the laws of certain states permit the
confiscation of motor vehicles under certain circumstances if used in unlawful
activities, which may result in the loss of a secured party's perfected
security interest in the confiscated motor vehicle. With respect to each
Trust, Ford Credit will represent to the Seller and the Seller will represent
to the Trust that each security interest in a Financed Vehicle is or will be
prior to all other present liens (other than tax liens and liens that arise by
operation of law) upon and security interests in such Financed Vehicle.
However, liens for repairs or taxes, or the confiscation of a Financed Vehicle,
could arise or occur at any time during the term of a Receivable. No notice
will be given to the applicable Trustee or Certificateholders and any Indenture
Trustee or Noteholders, if any, in the event such a lien arises or confiscation
occurs.
REPOSSESSION
In the event of default by vehicle purchasers, the holder of the retail
installment sale contract has all the remedies of a secured party under the
UCC, except where specifically limited by other state laws. The UCC remedies
of a secured party include the right to repossession by self-help means, unless
such means would constitute a breach of the peace. Unless a vehicle is
voluntarily surrendered, self-help repossession is the method employed by Ford
Credit in the majority of instances in which a default occurs and is
accomplished simply by retaking possession of the financed vehicle. In cases
where the obligor objects or raises a defense to repossession, or if otherwise
required by applicable state law, a court order must be obtained from the
appropriate state court, and the vehicle must then be repossessed in accordance
with that order.
NOTICE OF SALE; REDEMPTION RIGHTS
In the event of default by the obligor, some jurisdictions require that
the obligor be notified of the default and be given a time period within which
the obligor may cure the default prior to repossession. Generally, this right
of reinstatement may be exercised on a limited number of occasions in any
one-year period.
The UCC and other state laws require the secured party to provide the
obligor with reasonable notice of the date, time, and place of any public sale
and/or the date after which any private sale of the collateral may be held.
The obligor has the right to redeem the collateral prior to actual sale by
paying the secured party the unpaid principal balance of the obligation plus
reasonable expenses for repossessing, holding, and preparing the collateral for
disposition and arranging for this sale, plus, in some jurisdictions,
reasonable attorneys' fees, or, in some states, by payment of delinquent
installments or the unpaid balance. Repossessed vehicles are generally resold
by Ford Credit through automobile auctions which are attended principally by
dealers.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of the repossessed vehicles generally will be
applied to the expenses of resale and repossession and then to the satisfaction
of the indebtedness of the obligor on the receivable. While some states impose
prohibitions or limitations on deficiency judgments if the net proceeds from
resale do not cover the full amount of the indebtedness, a deficiency judgment
can be sought in those states that do not prohibit or limit such judgments.
However, the deficiency judgment would be a personal judgment against the
obligor for the shortfall, and a defaulting obligor can be expected to have
very little capital or sources of income available following repossession.
Therefore, in many cases, it may not be useful to seek a deficiency judgment
or, if one is obtained, it may be settled at a significant discount.
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Occasionally, after resale of a vehicle and payment of all expenses and
indebtedness, there is a surplus of funds. In that case, the UCC requires the
lender to remit the surplus to any holder of any lien with respect to the
vehicle or if no such lienholder exists or there are remaining funds, the UCC
requires the lender to remit the surplus to the former obligor.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and related
regulations impose substantial requirements upon lenders and servicers involved
in consumer finance. These laws include the Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Federal Trade Commission Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Magnuson-Moss
Warranty Act, the Federal Reserve Board's Regulations B and Z, state
adaptations of the National Consumer Act and of the Uniform Consumer Credit
Code, and state motor vehicle retail installment sales acts, retail installment
sales acts, and other similar laws. Also, state laws impose finance charge
ceilings and other restrictions on consumer transactions and require contract
disclosures in addition to those required under federal law. The requirements
impose specific statutory liabilities upon creditors who fail to comply with
their provisions. In some cases, this liability could affect an assignee's
ability to enforce consumer finance contracts such as the Receivables.
The so-called "Holder-in-Due-Course" Rule of the Federal Trade Commission
(the "FTC Rule"), the provisions of which are generally duplicated by the
Uniform Consumer Credit Code, other state statutes, or the common law in
certain states, has the effect of subjecting a seller (and certain related
lenders and their assignees) in a consumer credit transaction and any assignee
of the seller to all claims and defenses which the obligor in the transaction
could assert against the seller of the goods. Liability under the FTC Rule is
limited to the amounts paid by the obligor under the contract, and the holder
of the contract may also be unable to collect any balance remaining due
thereunder from the obligor.
Most of the Receivables will be subject to the requirements of the FTC
Rule. Accordingly, each Trust, as holder of the related Receivables, will be
subject to any claims or defenses that the purchaser of the Financed Vehicle
may assert against the seller of the Financed Vehicle. Such claims are limited
to a maximum liability equal to the amounts paid by the obligor on the
Receivable. Under most state motor vehicle dealer licensing laws, sellers of
motor vehicles are required to be licensed to sell motor vehicles at retail
sale. Furthermore, Federal Odometer Regulations promulgated under the Motor
Vehicle Information and Cost Savings Act require that all sellers of new and
used vehicles furnish a written statement signed by the seller certifying the
accuracy of the odometer reading. If a seller is not properly licensed or if
an Odometer Disclosure Statement was not provided to the purchaser of the
related financed vehicle, the obligor may be able to assert a defense against
the seller of the vehicle. If an obligor were successful in asserting any such
claim or defense, such claim or defense would constitute a breach of Ford
Credit's and the Seller's representations and warranties under the related
Purchase Agreement and the related Sale and Servicing Agreement or Pooling and
Servicing Agreement, respectively, and would create an obligation of Ford
Credit and the Seller to repurchase the Receivable unless the breach is cured.
See "Description of the Transfer and Servicing Agreements--Sale and Assignment
of the Receivables."
Courts have imposed general equitable principles on secured parties
pursuing repossession of collateral or litigation involving deficiency
balances. These equitable principles may have the effect of relieving an
obligor from some or all of the legal consequences of a default.
In several cases, obligors have asserted that the self-help remedies of
secured parties under the UCC and related laws violate the due process
protections provided under the 14th Amendment to the Constitution of the United
States. Courts have generally upheld the notice provisions of the UCC and
related laws as reasonable or have found that the repossession and resale by
the creditor do not involve sufficient state action to afford constitutional
protection to consumers.
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Ford Credit and the Seller will warrant under each Purchase Agreement and
the applicable Sale and Servicing Agreement or Pooling and Servicing Agreement,
respectively, that each Receivable complies with all requirements of law in all
material respects. Accordingly, if an obligor has a claim against a Trust for
violation of any law and such claim materially and adversely affects such
Trust's interest in a Receivable, such violation would constitute a breach of
warranty under the related Purchase Agreement and the related Sale and
Servicing Agreement or Pooling and Servicing Agreement and would create an
obligation of Ford Credit and the Seller to repurchase the Receivable unless
the breach is cured. See "Description of the Transfer and Servicing
Agreements--Sale and Assignment of the Receivables."
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a lender to
realize upon collateral or enforce a deficiency judgment. For example, in a
Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a
lender from repossessing a motor vehicle, and, as part of the rehabilitation
plan, reduce the amount of the secured indebtedness to the market value of the
motor vehicle at the time of bankruptcy (as determined by the court), leaving
the party providing financing as a general unsecured creditor for the remainder
of the indebtedness. A bankruptcy court may also reduce the monthly payments
due under a contract or change the rate of interest and time of repayment of
the indebtedness.
TRANSFERS OF VEHICLES
The Receivables prohibit the sale or transfer of the vehicle securing a
Receivable without Ford Credit's consent and, except those originated in Ohio
and Wisconsin, permit Ford Credit to accelerate the maturity of the Receivable
upon a sale or transfer without its consent. The Servicer does not intend to
consent to any sale or transfer and intends to require prepayment of the
Receivable. The Servicer may enter into a transfer of equity agreement with
the secondary purchaser for the purpose of effecting the transfer of the
Financed Vehicle.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain federal income tax
consequences of the purchase, ownership and disposition of the Notes and the
Certificates of a series. The summary does not purport to deal with federal
income tax consequences applicable to all categories of holders, some of which
may be subject to special rules. For example, it does not discuss the tax
treatment of Noteholders or Certificateholders that are insurance companies,
regulated investment companies or dealers in securities. Moreover, there are
no cases or Internal Revenue Service ("IRS") rulings on similar transactions
involving both debt instruments and equity interests issued by a trust with
terms similar to those of the Notes and the Certificates. As a result, the IRS
may disagree with all or a part of the discussion below. Prospective investors
are urged to consult their own tax advisors in determining the federal, state,
local, foreign and any other tax consequences to them of the purchase,
ownership and disposition of the Notes and the Certificates of any series.
The following summary is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
promulgated thereunder and judicial or ruling authority, all of which are
subject to change, which change may be retroactive. Each Trust will be
provided with an opinion of special federal tax counsel to each Trust specified
in the related Prospectus Supplement ("Special Tax Counsel"), regarding
certain federal income tax matters discussed below. An opinion of Special Tax
Counsel, however, is not binding on the IRS or the courts. No ruling on any of
the issues discussed below will be sought from the IRS. For purposes of the
following summary, references to the Trust, the Notes, the Certificates and
related terms, parties and documents shall be deemed to refer, unless otherwise
specified herein, to each Trust and the Notes, Certificates and related terms,
parties and documents applicable to such Trust.
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The federal income tax consequences to Certificateholders will vary
depending on whether the Trust is intended to be treated as a partnership
under the Code or whether the Trust will be treated as a grantor trust. The
Prospectus Supplement for each series of Certificates will specify whether
the Trust is intended to be treated as a partnership or the Trust will be
treated as a grantor trust.
SCOPE OF THE TAX OPINIONS
It is expected that Special Tax Counsel will, upon issuance of a series of
Notes and/or Certificates deliver its opinion that the applicable Trust will
not be classified as an association (or publicly traded partnership) taxable as
a corporation for federal income tax purposes. Further, with respect to each
series of Notes, Special Tax Counsel expects to advise the Trust that the Notes
will be classified as debt for federal income tax purposes.
In addition, Special Tax Counsel will render its opinion that it has
prepared or reviewed the statements herein and in the related Prospectus
Supplement under the heading "Summary--Tax Status" relating to federal income
tax matters and under the heading "Certain Federal Income Tax Consequences,"
and is of the opinion that such statements are correct in all material re
spects. Such statements are intended as an explanatory discussion of the
possible effects of the classification of the Trust as a partnership for
federal income tax purposes on investors generally and of related tax matters
affecting investors generally, but do not purport to furnish information in the
level of detail or with the attention to the investor's specific tax
circumstances that would be provided by an investor's own tax adviser.
Accordingly, each investor is advised to consult its own tax advisers with
regard to the tax consequences to it of investing in the Notes and/or
Certificates.
ERISA CONSIDERATIONS
ERISA and Section 4975 of the Code impose certain restrictions on (a)
employee benefit plans (as defined in Section 3(3) of ERISA), (b) plans
described in section 4975(e)(1) of the Code, including individual retirement
accounts or Keogh plans, (c) any entities whose underlying assets include plan
assets by reason of a plan's investment in such entities (each of (a), (b) and
(c), a "Plan") and (d) persons who have certain specified relationships to
such Plans ("Parties in Interest" under ERISA and "Disqualified Persons" under
the Code). Moreover, based on the reasoning of the United States Supreme Court
in John Hancock Life Ins. Co. v. Harris Trust and Sav. Bank, 114 S. Ct. 517
(1993), an insurance company's general account may be deemed to include assets
of the Plans investing in the general account (e.g., through the purchase of an
annuity contract), and the insurance company might be treated as a Party in
Interest with respect to a Plan by virtue of such investment. ERISA also
imposes certain duties on persons who are fiduciaries of Plans subject to ERISA
and prohibits certain transactions between a Plan and Parties in Interest or
Disqualified Persons with respect to such Plans. Violation of these rules may
result in the imposition of an excise tax or penalty.
A fiduciary of any Plan should carefully review with its legal and other
advisors whether the purchase or holding of any Securities of a series could
give rise to a transaction prohibited or otherwise impermissible under ERISA or
the Code, and should refer to "ERISA Considerations" in the related Prospectus
Supplement regarding any restrictions on the purchase and/or holding of the
Securities offered thereby.
Certain employee benefit plans, such as governmental plans (as defined in
Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33)
of ERISA) are not subject to the prohibited transaction provisions of ERISA and
Section 4975 of the Code. Accordingly, assets of such plans may, subject to the
provisions of any other applicable federal and state law, be invested in
Securities of any series without regard to the factors described herein and
under "ERISA Considerations" in the related Prospectus Supplement. It should
be noted, however, that any such plan that is qualified and exempt from
taxation under Sections 401(a) and 501(a) of the Code is subject to the
prohibited transaction rules set forth in Section 503 of the Code.
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Certain transactions involving a Trust might be deemed to constitute
prohibited transactions under ERISA and the Code if assets of the Trust were
deemed to be assets of a Plan investing in Securities issued by the Trust.
Under a regulation (the "Plan Assets Regulation") issued by the United States
Department of Labor ("DOL"), 29 C.F.R. Section E2510.3-101, the assets of the
Trust would be treated as plan assets of a Plan for purposes of ERISA and the
Code if the Plan acquires an "Equity Interest" in the Trust and none of the
exceptions contained in the Plan Assets Regulation is applicable. An Equity
Interest is defined under the Plan Assets Regulation as an interest other than
an instrument which is treated as indebtedness under applicable local law and
which has no substantial equity features. The Certificates will most likely be
deemed Equity Interests for purposes of ERISA. It should be noted, however, as
discussed below, that the purchase of Notes by a Plan may also give rise to
potential prohibited transactions, and all prospective investors should review
the discussion herein with their legal advisors.
CERTIFICATES ISSUED BY TRUSTS THAT ISSUE ONLY CERTIFICATES
The ERISA considerations that apply with respect to Securities issued by
a Trust differ depending on whether the Trust issuing the Securities (i) issues
both Note and Certificates or (ii) issues only Certificates. The discussion in
this section "--Certificates Issued by Trusts That Issue Only Certificates"
applies only with respect to Certificates issued by a Trust that issues only
Certificates.
Senior Certificates. The following discussion applies only to
nonsubordinated Certificates (referred to herein as "Senior Certificates")
issued by a Trust that does not issue Notes.
If so specified in the related Prospectus Supplement, the DOL will have
issued an individual exemption to one or more of the underwriters of the Senior
Certificates (the "Underwriters' Exemption"). The Underwriters' Exemption
generally exempts from the application of the prohibited transaction provisions
of Section 406 of ERISA and the excise taxes imposed on such prohibited
transactions pursuant to Section 4975(a) and (b) of the Code and Section 502(i)
of ERISA certain transactions relating to the initial purchase, holding and
subsequent resale by Plans of certificates in pass-through trusts that consist
of certain receivables, loans and other obligations that meet the conditions
and requirements set forth in the Underwriters' Exemption. The receivables
covered by the Underwriters' Exemption include motor vehicle installment
obligations such as the Receivables. The Underwriters' Exemption will apply
to the acquisition, holding and resale of the Senior Certificates by a Plan
from the applicable underwriters, provided that specified conditions (certain
of which are described below) are met. The Seller believes that the
Underwriters' Exemption will apply to the acquisition and holding of the Senior
Certificates by a Plan and that all conditions of the Underwriters' Exemption
other than those within the control of the investors have been or will be met.
The Underwriters' Exemption sets forth six general conditions that must
be satisfied for a transaction involving the acquisition of the Senior
Certificates by a Plan to be eligible for the exemptive relief thereunder:
(1) The acquisition of the Senior Certificates by a Plan is on
terms (including the price for the Senior Certificates) that are at
least as favorable to the Plan as they would be in an arm's-length
transaction with an unrelated party;
(2) The rights and interests evidenced by the Senior Certificates
acquired by a Plan are not subordinated to the rights and interests
evidenced by other certificates of the Trust;
(3) The Senior Certificates acquired by the Plan have received a
rating at the time of such acquisition that is in one of the three
highest generic rating categories from any one of four Rating
Agencies;
(4) The Trustee is not an affiliate of any other member of the
"Restricted Group," which consists of the applicable underwriters,
the Seller, the Servicer, the applicable Trustee and any Obligor
with respect to the Receivables included in the Trust constituting
more than 5% of the aggregate
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unamortized principal balance of the assets of the Trust as of the
date of initial issuance of the Senior Certificates, and any
affiliate of such parties;
(5) The sum of all payments made to and retained by the
applicable underwriters in connection with the distribution or
placement of the Senior Certificates represents not more than
reasonable compensation for underwriting or placing the Senior
Certificates. The sum of all payments made to and retained by the
Seller pursuant to the sale of the Receivables to the Trust
represents not more than the fair market value of such Receivables.
The sum of all payments made to and retained by the Servicer
represents not more than reasonable compensation for the Servicer's
services under the Agreement and reimbursement of the Servicer's
reasonable expenses in connection therewith; and
(6) The Plan investing in the Senior Certificates must be an
"accredited investor" as defined in Rule 501(a)(1) of Regulation D
of the Commission under the Securities Act.
Because the rights and interests evidenced by the Senior Certificates
acquired by a Plan are not subordinated to the rights and interests evidenced
by other certificates of the Trust, the second general condition set forth
above is satisfied. It is a condition of the issuance of the Senior
Certificates that they be rated in the highest rating category by at least two
Rating Agencies. A fiduciary of a Plan contemplating purchasing a Senior
Certificate (other than pursuant to the original issuance of the Senior
Certificates) must make its own determination that at the time of such
acquisition, the Senior Certificates continue to satisfy the third general
condition set forth above. The Seller and the Servicer expect that the fourth
general condition set forth above will be satisfied with respect to the Senior
Certificates. A fiduciary of a Plan contemplating purchasing a Senior
Certificate must make its own determination that the first, fifth and sixth
general conditions set forth above will be satisfied with respect to the Senior
Certificates.
In addition, the Trust must satisfy the following requirements:
(a) The corpus of the Trust must consist solely of assets of the
type which have been included in other investment pools;
(b) Certificates evidencing interests in such other investment
pools must have been rated in one of the three highest generic
rating categories of one of the Rating Agencies for at least one
year prior to the Plan's acquisition of Senior Certificates; and
(c) Certificates evidencing interests in such other investments
pools must have been purchased by investors other than Plans for at
least one year prior to any Plan's acquisition of Senior
Certificates.
If the general conditions of the Underwriters' Exemption are satisfied,
the Underwriters' Exemption should provide relief from the restrictions
imposed by Sections 406(a) and 407(a) of ERISA as well as the excise taxes
imposed by Sections 4975(a) and (b) of the Code by reason of Section
4975(c)(1)(A) through (D) of the Code, in connection with the direct or
indirect purchase, exchange, transfer or holding of the Senior Certificates by
a Plan. However, no exemption is provided from the restrictions of Sections
406(a)(1)(E), 406(a)(2) and 407 of ERISA for the acquisition or holding of a
Senior Certificate on behalf of an "Excluded Plan" by any person who has
discretionary authority or renders investment advice with respect to the assets
of such Excluded Plan. For purposes of the Senior Certificates, an Excluded
Plan is a Plan sponsored by any member of the Restricted Group.
If certain other specific conditions of the Underwriters' Exemption are
also satisfied, the Underwriters' Exemption should provide relief from the
restrictions imposed by Sections 406(b)(1) and (b)(2) of ERISA and the taxes
imposed by Section 4975(a) and (b) of the Code by reason of Section
4975(c)(1)(E) of the Code in connection with the direct or indirect sale,
exchange, transfer or holding of Senior Certificates in the initial issuance of
Senior
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Certificates between the Seller or Underwriters and a Plan other than an
Excluded Plan when the person who has discretionary authority or renders
investment advice with respect to the investment of Plan assets in the Senior
Certificates is (a) an Obligor with respect to 5% or less of the fair market
value of the Receivables or (b) an affiliate of such person. The Seller
expects such specific conditions to be satisfied with respect to the issuance
of the Senior Certificates.
The Underwriters' Exemption also applies to transactions in connection
with the servicing, management and operation of the Trust, provided that, in
addition to the general requirements described above, (a) such transactions are
carried out in accordance with the terms of a binding pooling and servicing
agreement and (b) the pooling and servicing agreement is provided to, or
described in all material respects in the prospectus provided to, investing
Plans before their purchase of Senior Certificates issued by the Trust. The
related Pooling and Servicing Agreement is a pooling and servicing agreement as
defined in the Underwriters' Exemption. All transactions relating to the
servicing, management and operations of the Trust will be carried out in
accordance with the related Pooling and Servicing Agreement. See "Description
of the Transfer and Servicing Agreements" herein and in the related Prospectus
Supplement.
Any Plan fiduciary considering whether to purchase a Senior Certificate on
behalf of a Plan should consult with its counsel regarding the applicability of
the Underwriters' Exemption and other relevant issues.
Pre-Funding Accounts. The Underwriters' Exemption in its current form
does not apply with respect to Pre-Funding Accounts. However, the DOL has
under consideration a proposal to amend the Underwriters' Exemption to extend
its application to Pre-Funding Accounts. If the Underwriters' Exemption does
not apply to Pre-Funding Accounts, assets held in any Pre-Funding Account
maintained in connection with a Trust that issues only Certificates could be
deemed to be Plan assets, which could give rise to prohibited transaction
liability. Investors considering the purchase of Senior Certificates issued by
a Trust that maintains a Pre-Funding Account should consult with their legal
advisors concerning this issue.
Subordinated Certificates. The following discussion applies only to
subordinated Certificates (referred to herein as "Subordinated Certificates")
issued by a Trust that does not issue Notes.
Because the Subordinated Certificates are subordinated to the Senior
Certificates in certain respects, the Underwriters' Exemption will not apply
to the purchase of Subordinated Certificates by or on behalf of a Plan.
However, other exemptions may be applicable, such as Prohibited Transaction
Class Exemption ("PTCE") 90-1, which exempts certain transactions involving
insurance company pooled separate accounts; PTCE 95-60, which exempts certain
transactions involving insurance company general accounts; PTCE 91-38, which
exempts certain transactions involving bank collective investment funds; or
PTCE 84-14, which exempts certain transactions effected on behalf of a Plan by
a "qualified professional asset manager." It should be noted, however, that
even if the conditions specified in one or more of these exemptions are met,
the scope of relief provided by these exemptions may not necessarily cover all
acts that might be construed as prohibited transactions.
Any Plan fiduciary considering whether to purchase a Subordinated
Certificate on behalf of a Plan should consult with its counsel regarding the
applicability of one or more of such exemptions to such purchase. Prior to
making an investment in the Subordinated Certificates, a Plan investor must
determine whether, and each fiduciary causing the Subordinated Certificates to
be purchased by, on behalf of or using the assets of a Plan shall be deemed to
have represented that either (i) no part of the funds to be used to purchase
the Subordinated Certificates constitutes assets allocable to any trust that
contains the assets of any Plan or (ii) such purchase is covered by one or more
of the exemptions described above.
SECURITIES ISSUED BY TRUSTS THAT ISSUE BOTH NOTES AND CERTIFICATES
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The discussion in this section "--Securities Issued by Trusts That Issue
Both Notes and Certificates" applies only to Securities issued by a Trust that
issues both Notes and Certificates.
The Notes. The Seller believes that the Notes of any series should be
treated as indebtedness without substantial equity features for purposes of the
Plan Assets Regulation. However, without regard to whether the Notes of a
series are treated as an Equity Interest for such purposes, the acquisition or
holding of such Notes by or on behalf of a Plan could be considered to give
rise to a prohibited transaction if the applicable Trust, Trustee, Indenture
Trustee, any holder of the Certificates of such series or any of their
respective affiliates, is or becomes a Party in Interest or a Disqualified
Person with respect to such Plan. In such case, certain exemptions from the
prohibited transaction rules could be applicable depending on the type and
circumstances of the Plan fiduciary making the decision to acquire a Note.
Included among these exemptions are PTCE 90-1, which exempts certain
transactions involving insurance company pooled separate accounts; PTCE 95-60,
which exempts certain transactions involving insurance company general
accounts; PTCE 91-38, which exempts certain transactions involving bank
collective investment funds; and PTCE 84-14, which exempts certain transactions
effected on behalf of a Plan by a "qualified professional asset manager." It
should be noted, however, that even if the conditions specified in one or more
of these exemptions are met, the scope of relief provided by these exemptions
may not necessarily cover all acts that might be construed as prohibited
transactions.
The Certificates. Because the Certificates issued by a Trust that also
issues Notes will most likely be treated as Equity Interests under the Plan
Assets Regulation, such Certificates may not be acquired by (i) an employee
benefit plan (as defined in Section 3(3) of ERISA) that is subject to Title I
of ERISA, (ii) a plan described in Section 4975(e)(1) of the Code, (iii) 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, (iv) an entity
whose underlying assets include plan assets by reason of a plan's investment in
the entity (within the meaning of the Plan Assets Regulation), or (v) a
person investing "plan assets" of any such plan (excluding, for purposes of
this clause (v), any entity registered under the Investment Company Act of
1940, as amended) (each, a "Plan Investor").
In addition, investors other than Plan Investors should be aware that a
prohibited transaction could be deemed to occur if any holder of the
Certificates or any of their respective affiliates, is or becomes a Party in
Interest or a Disqualified Person with respect to any Plan that purchases and
holds the related Notes without being covered by one or more of the exemptions
described above in "The Notes."
GENERAL INVESTMENT CONSIDERATIONS
Prospective investors who are Plan Investors should consult with their
legal advisors concerning the impact of ERISA and the Code and the potential
consequences of making an investment in any Securities of a series with respect
to such investors' specific circumstances. Moreover, each Plan fiduciary
should take into account, among other considerations, whether the fiduciary has
the authority to make the investment; the composition of the Plan's portfolio
with respect to diversification by type of asset; the Plan's funding
objectives; the tax effects of the investment; and whether under the general
fiduciary standards of investment procedure and diversification an investment
in any Securities of a series is appropriate for the Plan, taking into account
the overall investment policy of the Plan and the composition of the Plan's
investment portfolio.
PLAN OF DISTRIBUTION
On the terms and conditions set forth in an underwriting agreement with
respect to the Notes, if any, of a given series and an underwriting agreement
with respect to the Certificates of such series (collectively, the
"Underwriting Agreements"), the Seller will agree to cause the related Trust to
sell to the underwriters named therein and in the related Prospectus
Supplement, and each of such underwriters will severally agree to purchase,
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the principal amount of each class of Notes and Certificates, as the case may
be, of the related series set forth therein and in the related Prospectus
Supplement.
In each of the Underwriting Agreements with respect to any given series of
Securities, the several underwriters will agree, subject to the terms and
conditions set forth therein, to purchase all the Notes and Certificates, as
the case may be, described therein which are offered hereby and by the related
Prospectus Supplement if any of such Notes and Certificates, as the case may
be, are purchased.
Each Prospectus Supplement will either (i) set forth the price at which
each class of Notes and Certificates, as the case may be, being offered thereby
will be offered to the public and any concessions that may be offered to
certain dealers participating in the offering of such Notes and Certificates or
(ii) specify that the related Notes and Certificates, as the case may be, are
to be resold by the underwriters in negotiated transactions at varying prices
to be determined at the time of such sale. After the initial public offering
of any such Notes and Certificates, such public offering prices and such
concessions may be changed.
The Seller and Ford Credit will indemnify the underwriters against certain
civil liabilities, including liabilities under the Securities Act, or
contribute to payments the several underwriters may be required to make in
respect thereof.
Each Trust may, from time to time, invest the funds in its Trust Accounts
in Permitted Investments acquired from such underwriters or from the Seller.
Pursuant to each Underwriting Agreement with respect to a given series of
Securities, the closing of the sale of any class of Securities subject to such
Underwriting Agreement will be conditioned on the closing of the sale of all
other such classes of Securities of that series.
The place and time of delivery for the Securities in respect of which this
Prospectus is delivered will be set forth in the related Prospectus Supplement.
LEGAL OPINIONS
Certain legal matters relating to the Securities of any series will be
passed upon for the related Trust, the Seller and the Servicer by J. D.
Bringard, Esq., Vice President--General Counsel of the Servicer. Certain
Michigan state tax and other matters will be passed upon for the Trust by J. D.
Bringard, Esq., Vice President--General Counsel of the Servicer. Mr. Bringard
is a full-time employee of Ford Credit and owns and holds options to purchase
shares of Common Stock of Ford.
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<PAGE> 175
INDEX OF TERMS
Set forth below is a list of the defined terms used in this Prospectus and
the pages on which the definitions of such terms may be found herein:
<TABLE>
<S> <C>
Actuarial Receivables ....................... 18
Additional Yield Supplement Amount .......... 9
Administration Agreement .................... 50
Administration Fee .......................... 50
Administrator ............................... 50
Advance ..................................... 9, 43
Applicable Trustee .......................... 35
APR ......................................... 8
Base Rate ................................... 29
Basic Documents ............................. 26
Book-Entry Certificates ..................... 34
Book-Entry Notes ............................ 34
Book-Entry Securities ....................... 34
Calculation Agent ........................... 30
Calculation Date ............................ 30, 31, 33
CD Rate ..................................... 30
CD Rate Determination Date .................. 30
CD Rate Security ............................ 29
Cede ........................................ 16
Cedel ....................................... 34
Cedel Participants .......................... 35
Certificate Balance ......................... 5
Certificate Distribution Account ............ 40
Certificate Owner ........................... 5
Certificate Pool Factor ..................... 20
Certificate Rate ............................ 5
Certificateholders .......................... 16, 35
Certificates ................................ 1
Closing Date ................................ 6
Code ........................................ 11, 54
Collection Account .......................... 40
Collection Period ........................... 42
Commercial Paper Rate ....................... 30, 31
Commercial Paper Rate Determination Date .... 30
Commercial Paper Rate Security .............. 29
Commission .................................. 3
Commodity Indexed Securities ................ 33
Composite Quotations ........................ 29
Currency Indexed Securities ................. 33
Cutoff Date ................................. 16
Dealer Agreements ........................... 16
Dealer Recourse ............................. 16
Dealers ..................................... 7, 16
Definitive Certificates ..................... 37
Definitive Notes ............................ 37
Definitive Securities ....................... 37
Depositaries ................................ 34
</TABLE>
61
<PAGE> 176
<TABLE>
<S> <C>
Depository .................................. 23
Determination Date .......................... 44
Disqualified Persons ........................ 55
Distribution Date ........................... 28
DOL ......................................... 56
DTC ......................................... 16
DTC's Nominee ............................... 16, 34
Eligible Deposit Account .................... 41
Eligible Institution ........................ 41
Equity Interest ............................. 56
ERISA ....................................... 11
Euroclear ................................... 36
Euroclear Operator .......................... 36
Euroclear Participants ...................... 36
Euroclear System ............................ 36
Events of Default ........................... 25
Events of Servicing Termination ............. 47
Excluded Plan ............................... 57
Face Amount ................................. 34
Federal Funds Rate .......................... 31
Federal Funds Rate Determination Date ....... 31
Federal Funds Rate Security ................. 29
Final Payment Receivables ................... 18
Final Payment Securities .................... 49
Final Scheduled Maturity Date ............... 9
Financed Vehicles ........................... 6
Fixed Rate Securities ....................... 29
Floating Rate Securities. ................... 29
Ford ........................................ 14
Ford Credit ................................. 4
Ford Holdings ............................... 22
FTC Rule .................................... 53
Funding Period .............................. 5
General Partner ............................. 12
H.15(519) ................................... 29
Indenture ................................... 4
Indenture Trustee. .......................... 1
Index ....................................... 33
Index Maturity .............................. 29
Indexed Commodity ........................... 33
Indexed Currency ............................ 33
Indexed Principal Amount .................... 33
Indexed Securities .......................... 33
Indirect Participants ....................... 34
Initial Cutoff Date ......................... 6
Initial Pool Balance ........................ 50
Initial Receivables ......................... 6
Insolvency Event ............................ 47
Insolvency Laws ............................. 12
Interest Reset Date ......................... 29
Interest Reset Period ....................... 29
Investment Earnings ......................... 41
</TABLE>
62
<PAGE> 177
<TABLE>
<S> <C>
IRS ......................................... 54
Issuer ...................................... 4
LIBOR ....................................... 32
LIBOR Determination Date .................... 32
LIBOR Security .............................. 29
London Banking Day .......................... 32
Maximum Initial Yield Supplement Amount ..... 8
Maximum Subsequent Yield Supplement Amount .. 9
Maximum Yield Supplement Amount ............. 9
Money Market Yield .......................... 31
Note Interest Rate .......................... 4
Note Owner .................................. 4
Note Payment Account ........................ 40
Note Pool Factor ............................ 20
Noteholders ................................. 16, 35
Notes ....................................... 1
Obligors .................................... 16
Participants ................................ 23, 34
Parties in Interest ......................... 55
Payahead Account ............................ 40
Payahead Balance ............................ 42
Payaheads ................................... 40
Permitted Investments ....................... 41
Plan ........................................ 55
Plan Assets Regulation ...................... 56
Plan Investor ............................... 59
Pool Balance ................................ 21
Pooling and Servicing Agreement ............. 4
Pre-Funded Amount ........................... 7
Pre-Funding Account ......................... 1, 5
Precomputed Advance ......................... 9
Precomputed Receivables ..................... 18
Prospectus Supplement ....................... 1
PTCE ........................................ 58
Purchase Agreement .......................... 7, 39
Purchase Amount ............................. 40
Rating Agencies ............................. 25
Receivables ................................. 1, 6
Receivables Pool ............................ 16
Registration Statement ...................... 3
Required Rate ............................... 8
Reserve Account ............................. 44
Restricted Group ............................ 56
Reuters Screen LIBO Page .................... 32
Rule of 78's Receivables .................... 18
Rules ....................................... 35
Sale and Servicing Agreement ................ 6
Securities .................................. 1
Securities Act .............................. 3
Securityholders ............................. 16
Seller ...................................... 1, 4
Senior Certificates ......................... 56
</TABLE>
63
<PAGE> 178
<TABLE>
<S> <C>
Servicer .................................... 1, 4
Servicer Fee ................................ 43
Servicing Fee ............................... 43
Servicing Fee Rate .......................... 43
Simple Interest Advance ..................... 9
Simple Interest Receivables ................. 18
Special Tax Counsel ......................... 54
Spread ...................................... 29
Spread Multiplier ........................... 29
Stock Index ................................. 33
Stock Indexed Securities .................... 33
Strip Certificates .......................... 6
Strip Notes ................................. 5
Subordinated Certificates ................... 58
Subsequent Receivables ...................... 1, 7
Subsequent Transfer Date .................... 39
Supplemental Servicing Fee .................. 43
Terms and Conditions ........................ 36
Transfer and Servicing Agreements ........... 39
Treasury bills .............................. 32
Treasury Rate ............................... 32, 33
Treasury Rate Determination Date ............ 33
Treasury Rate Security ...................... 29
Trust ....................................... 1, 4
Trustee ..................................... 1, 4
Trust Accounts .............................. 41
Trust Agreement ............................. 4
UCC ......................................... 51
Underwriter's Exemption ..................... 56
Underwriting Agreements ..................... 59
Yield Supplement Account .................... 8, 45
Yield Supplement Agreement .................. 8
Yield Supplement Amount ..................... 8
Yield Supplement Deposit Amount ............. 45
Yield Supplement Initial Deposit ............ 8
</TABLE>
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PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection with
the offering described in this Registration Statement.
Securities and Exchange Commission................ $1,724,138
Rating agency fees................................ $ 685,000
Printing.......................................... $ 280,000
Legal fees and expenses........................... $ 60,000
Accountants' fees................................. $ 160,000
Fees and expenses of Indenture Trustee............ $ 40,000
Fees and expenses of applicable Trustee........... $ 70,000
Miscellaneous expenses............................ $ 5,862
----------
Total............................................. $3,025,000
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 17-108 of the Delaware Revised Uniform Limited Partnership Act
provides as follows:
Section E17-108. Indemnification.
Subject to such standards and restrictions, if any, as are set forth in
its partnership agreement, a limited partnership may, and shall have the power
to, indemnify and hold harmless any partner or other person from and against
any and all claims and demands whatsoever.
Section 4.2 of the Agreement of Limited Partnership of Ford Credit Auto
Receivables Two L.P. provides as follows:
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.
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(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 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 145 of the General Corporation Law of Delaware provides as
follows:
145. Indemnification of officers, directors, employees and agents; insurance --
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (2) if there are no such directors, or if such directors
so direct, by independent legal counsel in a written opinion, or (3) by the
stockholders.
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(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending a civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this section. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so
that any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under this section with respect to the resulting or
surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee, or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee,
or agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction to
hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees).
Article Five of the Certificate of Incorporation of Ford Credit Auto
Receivables Two, Inc. provides as follows:
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(a) A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the
corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law or
(iv) for any transaction from which the director derived an
improper personal benefit.
If the Delaware General Corporation Law is amended after approval by the
stockholders of this Article FIFTH to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director of the corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so amended.
(b) Any repeal or modification of paragraph (a) of this Article FIFTH by
the stockholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.
(c) (i) Each person who was or is made a party or is threatened to be
made a party to or is involved in any action, suit or proceeding, whether
civil, criminal, administrative, investigative or otherwise (hereinafter a
"proceeding"), by reason of the fact that he or she, or a person of whom he or
she is the legal representative, is or was a director, officer or employee of
the corporation or is or was serving at the request of the corporation as a
director, officer or employee of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to employee
benefit plans, whether the basis of such proceeding is alleged action in an
official capacity as a director, officer or employee or in any other capacity
while serving as a director, officer or employee, shall be indemnified and held
harmless by the corporation to the fullest extent authorized by the Delaware
General Corporation Law, as the same exists or may hereafter be amended (but,
in the case of any such amendment, only to the extent that such amendment
permits the corporation to provide broader indemnification rights than said
law permitted the corporation to provide prior to such amendment), against all
expense, liability and loss (including penalties, fines, judgments, attorneys'
fees, amounts paid or to he paid in settlement and excise taxes imposed on
fiduciaries with respect to (i) employee benefit plans, (ii) charitable
organizations or (iii) similar matters) reasonably incurred or suffered by such
person in connection therewith and such indemnification shall continue as to a
person who has ceased to be a director, officer or employee and shall inure to
the benefit of his or her heirs, executors and administrators; provided,
however, that the corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person (other than pursuant to subparagraph (c)(ii) of this Article FIFTH)
only if such proceeding (or part thereof) was authorized by the Board of
Directors of the corporation. The right to indemnification conferred in this
subparagraph (c)(i) of Article FIFTH shall be a contract right and shall
include the right to be paid by the corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that, if the Delaware General Corporation Law so requires, the payment
of such expenses incurred by a director or officer in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding shall be made only upon delivery to the corporation
of an undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director or
officer is not entitled to be indemnified under this subparagraph (c)(i) of
Article FIFTH or otherwise.
(ii) If a claim which the corporation is obligated to pay under
subparagraph (c)(i) of this Article FIFTH is not paid in full by the
corporation within 60 days after a written claim has been received by the
II-4
<PAGE> 183
corporation, the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than
an action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the corporation) that the claimant has
not met the standards of conduct which make it permissible under the Delaware
General Corporation Law for the corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense shall be on the
corporation. Neither the failure of the corporation (including its Board of
Directors, independent legal counsel or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the corporation (including its Board of
Directors, independent legal counsel or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action
or create a presumption that the Claimant has not met the applicable standard
of conduct.
(iii) The provisions of this paragraph (c) of Article FIFTH shall cover
claims, actions, suits and proceedings, civil or criminal, whether now pending
or hereafter commenced, and shall be retroactive to cover acts or omissions or
alleged acts or omissions which heretofore have taken place. If any part of
this paragraph (c) of Article FIFTH should be found to be invalid or
ineffective in any proceeding, the validity and effect of the remaining
provisions shall not be affected.
(iv) The right to indemnification and the payment of expenses incurred
in defending a proceeding in advance of its final disposition conferred in this
paragraph (c) of Article FIFTH shall not be exclusive of any other right which
any person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, By-Law, agreement, vote of stockholders or
disinterested directors or otherwise.
(v) The corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the corporation
would have the power to indemnify such person against such expense, liability
or loss under the Delaware General Corporation Law.
(vi) The corporation may, to the extent authorized from time to time by
the Board of Directors, grant rights to indemnification, and rights to be paid
by the corporation the expenses incurred in defending any proceeding in advance
of its final disposition, to any agent of the corporation to the fullest extent
of the provisions of this paragraph (c) of Article FIFTH with respect to the
indemnification and advancement of expenses of director, officers and employees
of the corporation.
Similar indemnification provisions in Section 5 of Article NINTH of the
Certificate of Incorporation of both Ford Motor Company and Ford Motor Credit
Company are applicable to directors, officers and employees of Ford Credit Auto
Receivables Two, Inc. who serve as such at the request of Ford Motor Company or
Ford Motor Credit Company.
Ford Credit Auto Receivables Two, Inc. is insured for liabilities it may
incur pursuant to Article FIFTH of its Certificate of Incorporation relating to
the indemnification of its directors, officers and employees. In addition,
directors, officers and certain key employees are insured against certain
losses which may arise out of their employment and which are not recoverable
under the indemnification provisions of Ford Credit Auto Receivables Two,
Inc.'s Certificate of Incorporation. The premium for both insurance coverages
is paid by Ford Motor Company.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS.
(a) EXHIBITS:
II-5
<PAGE> 184
<TABLE>
<S> <C> <C>
1.1 - Form of Underwriting Agreement for the Notes.
1.2 - Form of Underwriting Agreement for the Certificates.
3.1 - Certificate of Limited Partnership of the Seller.*
3.2 - Limited Partnership Agreement between the General Partner and Ford Credit.
3.3 - Certificate of Incorporation of the General Partner. *
3.4 - By-Laws of the General Partner.*
4.1 - Form of Indenture between the Trust and the Indenture Trustee (including forms of Notes).
4.2 - Form of Trust Agreement between the Seller and the Owner Trustee (including forms of Certificates).
4.3 - Form of Pooling and Servicing Agreement among the Seller, the Servicer and the Trustee (including forms of
Certificates).
4.4 - Form of Standard Terms and Conditions of Agreement among the Seller, the Servicer and the Trustee.
5.1 - Opinion of H.D. Smith, Esq., Secretary and Corporate Counsel of Ford Credit Auto Receivables Two, Inc. with
respect to legality.
8.1 - Opinion of Skadden, Arps, Slate, Meagher & Flom with respect to tax matters.
10.1 - Form of Interest Rate Cap between the Trust and the Interest Rate Cap Provider.
10.2 - Form of Interest Rate Swap between the Trust and the Swap Counterparty.
10.3 - Form of Guaranteed Rate Agreement between the Trust and the Investment Provider.
23.1 - Consent of H.D. Smith Esq., Secretary and Corporate Counsel of Ford Credit Auto Receivables Two, Inc.
(included as part of Exhibit 5.1).
23.2 - Consent of Skadden, Arps, Slate, Meagher & Flom (included as part of Exhibit 8.1).
24.1 - Powers of Attorney.*
25.1 - Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Chemical Bank.
99.1 - Form of Sale and Servicing Agreement among the Seller, the Servicer and the Trust.
99.2 - Form of Administration Agreement among the Trust, the Administrator and the Indenture Trustee.
99.3 - Form of Purchase Agreement between Ford Credit and the Seller.
99.4 - Form of Appendix A - Defined Terms.
</TABLE>
- ---------------
* Previously filed
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement; (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental
change in the information set forth in the registration statement; (iii) to
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement; provided, however, that (a)(i)
and (a)(ii) will not apply if the information required to be included in a
post-effective amendment thereby is contained in periodic reports filed
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in this registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-6
<PAGE> 185
(c) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(d) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(e) To provide to the underwriters at the closing specified in the
underwriting agreements certificates in such denominations and registered in
such names as required by the underwriters to permit prompt delivery to each
purchaser.
(f) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 15
above, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
(g) That, for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(i) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(h) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-7
<PAGE> 186
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3, and has duly caused this Amendment No. 1
to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Detroit and the State of Michigan on
the 29th day of April, 1996.
FORD CREDIT AUTO RECEIVABLES TWO L.P.
By FORD CREDIT AUTO RECEIVABLES
TWO, INC.,
General Partner of the Registrant
By KENNETH J. COATES *
-------------------------------
(Kenneth J. Coates, Chairman
of the Board of Directors of
Ford Credit Auto Receivables Two, Inc.)
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed below by the following
directors of FORD CREDIT AUTO RECEIVABLES TWO, INC. in the capacities and on
the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ------------------------------ ------------------------------ ---------------------
<S> <C> <C>
KENNETH J. COATES * Chairman of the April 29, 1996
- ----------------------------- Board of Directors
(Kenneth J. Coates) and Director (princi-
pal executive officer)
TERRENCE F. MARRS * Director and April 29, 1996
- ---------------------------- Vice President-Controller
(Terrence F. Marrs) (principal accounting
officer)
JOHN P. BURKHARD * Director and April 29, 1996
- ----------------------------- Vice President and
(John P. Burkhard) Treasurer (principal
financial officer)
</TABLE>
* By /s/ R. P. CONRAD
---------------------------------
(R. P. Conrad, Attorney in Fact)
II-8
<PAGE> 187
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION PAGE
- -------- ----------- -----
<S> <C> <C>
1.1 - Form of Underwriting Agreement for the Notes.
1.2 - Form of Underwriting Agreement for the Certificates.
3.1 - Certificate of Limited Partnership of the Seller.*
3.2 - Limited Partnership Agreement between the Seller and Ford Credit.
3.3 - Certificate of Incorporation of the General Partner.*
3.4 - By-Laws of the General Partner.*
4.1 - Form of Indenture between the Trust and the Indenture Trustee (including forms of Notes).
4.2 - Form of Trust Agreement between the Seller and the Owner Trustee (including forms of
Certificates).
4.3 - Form of Pooling and Servicing Agreement among the Seller, the Servicer and the Trustee
(including forms of Certificates).
4.4 - Form of Standard Terms and Conditions of Agreement among the Seller, the Servicer
and the Trustee.
5.1 - Opinion of H.D. Smith, Esq., Secretary and Corporate Counsel of Ford Credit Auto
Receivables Two, Inc. with respect to legality.
8.1 - Opinion of Skadden, Arps, Slate, Meagher & Flom with respect to tax matters.
10.1 - Form of Interest Rate Cap between the Trust and the Interest Rate Cap Provider.
10.2 - Form of Interest Rate Swap between the Trust and the Swap Counterparty.
10.3 - Form of Guaranteed Rate Agreement between the Trust and the Investment Provider.
23.1 - Consent of H.D. Smith Esq., Secretary and Corporate Counsel of Ford Credit Auto
Receivables Two, Inc. (included as part of Exhibit 5.1).
23.2 - Consent of Skadden, Arps, Slate, Meagher & Flom (included as part of Exhibit 8.1).
24.1 - Powers of Attorney.*
25.1 - Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Chemical Bank.
99.1 - Form of Sale and Servicing Agreement among the Seller, the Servicer and the Trust.
99.2 - Form of Administration Agreement among the Trust, the Administrator and the Indenture
Trustee.
99.3 - Form of Purchase Agreement between Ford Credit and the Seller.
99.4 - Form of Appendix A - Defined Terms.
</TABLE>
- ---------------
* Previously filed
II-9
<PAGE> 1
EXHIBIT 1.1
FORD CREDIT AUTO OWNER TRUST ____-_
___% CLASS A-1 ASSET BACKED NOTES
___% CLASS A-2 ASSET BACKED NOTES
___% CLASS A-3 ASSET BACKED NOTES
FORD CREDIT AUTO RECEIVABLES TWO L.P.
(SELLER)
_____ __, ____
NOTE UNDERWRITING AGREEMENT
______,
As Representative
(the "Representative") of the
Several Underwriters,
______
Ladies and Gentlemen:
1. Introductory. Ford Credit Auto Receivables Two L.P.,
a Delaware limited partnership (the "Seller"), proposes to sell
$________________ principal amount of ____% Class A-1 Asset Backed Notes,
$________________ principal amount of ____% Class A-2 Asset Backed Notes and
$________________ principal amount of ____% Class A-3 Asset Backed Notes
(collectively, the "Notes"), issued by Ford Credit Auto Owner Trust ____-_ (the
"Trust"). Each Note will be secured by the Receivables (as hereinafter
defined) and certain other property of the Trust. The Notes will be issued
pursuant to the Indenture to be dated as of ______ __, ____ (the "Indenture")
by and between the Trust and ______ (the "Indenture Trustee"). Simultaneously
with the issuance and sale of the Notes as contemplated herein, the Trust will
issue $______ principal balance of ____% Asset Backed Certificates (the
"Certificates"), payments in respect of which are, to the extent specified in
the Indenture, the Sale and Servicing Agreement (as hereinafter defined) and
the Trust Agreement (as hereinafter defined), subordinated to the rights of the
holders of the Notes. The
<PAGE> 2
Certificates will be issued pursuant to the Amended and Restated Trust
Agreement (the "Trust Agreement") to be dated as of ________ __, ____, by and
between the Seller, as depositor, and ______ (the "Owner Trustee").
The property of the Trust will include, among other things, a
pool of retail installment sale contracts for new and used automobiles and
light trucks (the "Receivables") and certain monies due or in some cases
received thereunder on or after ______ __, ____ (the "Cutoff Date"), such
Receivables to be sold to the Trust by the Seller and to be serviced for the
Trust by Ford Motor Credit Company, a Delaware corporation (the "Servicer" or
"Ford Credit"), pursuant to the Sale and Servicing Agreement (the "Sale and
Servicing Agreement") to be dated as of ______ __, ____ by and among the
Seller, the Servicer and the Trust.
Capitalized terms used herein and not otherwise defined shall
have the meanings given them in the Sale and Servicing Agreement.
2. Representations and Warranties of the Seller. The
Seller represents and warrants to and agrees with the several underwriters
named in Schedule I hereto (the "Underwriters") that:
(a) A registration statement on Form S-3 (No.
333-01245), including a form of prospectus and such amendments thereto as may
have been required to the date hereof, relating to the Notes and the offering
thereof from time to time in accordance with Rule 415 under the Securities Act
of 1933, as amended (the "Act"), has been filed with the Securities and
Exchange Commission (the "Commission") and such registration statement, as
amended, has become effective. Such registration statement in such form,
including the exhibits thereto (but excluding Form T-1) and any material
incorporated by reference therein, is hereinafter referred to as the
"Registration Statement," and the prospectus (including the base prospectus and
any prospectus supplement) relating to the Notes, as first filed, or mailed for
filing, with the Commission pursuant to Rule 424(b) ("Rule 424(b)") under the
Act is hereinafter referred to as the "Prospectus." For purposes of this
Agreement, "Effective Time" means the date and time as of which such
Registration Statement, or the most recent post-effective amendment there-
2
<PAGE> 3
to, is declared effective by the Commission, and "Effective Date" means the
date of the Effective Time.
(b) On the Effective Date, the Registration
Statement did conform, in all material respects to the requirements of the Act,
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), where
applicable, and the rules and regulations of the Commission under the Act or
the Exchange Act, as applicable, and did not, as of the Effective Date, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty shall not
apply to any statement or omission made in reliance upon and in conformity with
information furnished in writing to the Seller or Ford Credit Auto Receivables
Two, Inc. (the "General Partner") by the Underwriters expressly for use in the
Registration Statement; when the Registration Statement became effective the
Indenture was, and at all times thereafter the Indenture has been and will be,
duly qualified under the Trust Indenture Act, and when the Registration
Statement became effective the Indenture conformed, and at all times thereafter
the Indenture has conformed and will conform, in all material respects to the
requirements of the Trust Indenture Act. On the date of this Agreement, the
Registration Statement conforms, and at the time of filing of the Prospectus
pursuant to Rule 424(b), the Registration Statement and the Prospectus will
conform, in all material respects to the requirements of the Act and the rules
and regulations of the Commission thereunder (the "Rules and Regulations"),
and, except as aforesaid, neither of such documents includes, or will include,
any untrue statement of a material fact or omits, or will omit, to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading.
(c) The Seller has been duly formed and is
validly existing as a limited partnership 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.
3
<PAGE> 4
(d) The consummation by the Seller of the
transactions contemplated by this Agreement and the Basic Documents, and the
fulfillment of the terms hereof and thereof, will not conflict with or result
in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation of any lien, charge, or encumbrance 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.
(e) This Agreement has been duly authorized,
executed and delivered by the Seller; on the Closing Date, the Notes will have
been duly executed, authenticated, issued and delivered; on the Closing Date,
the Basic Documents to which the Seller is a party will have been duly
authorized, executed and delivered by and will constitute valid and binding
obligations of the Seller in accordance with their terms except as the same may
be limited by bankruptcy, insolvency, reorganization or other similar laws
relating to or affecting the enforcement of creditors' rights generally and by
general equitable principles, regardless of whether such enforceability is
considered in a proceeding in equity or at law; and the Basic Documents will
conform to the description thereof in the Prospectus in all material respects.
(f) The computer tape with respect to the
Receivables (the "Computer Tape") to be delivered by Ford Credit as seller
under the Purchase Agreement to each of the Owner Trustee, the Indenture
Trustee and the Representative, will be complete and accurate in all material
respects as of the date thereof.
3. Purchase, Sale, and Delivery of Notes. On the basis
of the representations, warranties, and agreements herein contained, but
subject to the terms and conditions herein set forth, the Seller agrees to sell
to the Underwriters, and the Underwriters agree, severally and not jointly, to
purchase from the Seller, the aggregate principal amounts of each Class of
Notes set forth opposite the names of the Underwriters in Schedule I hereto.
The Class A-1 Notes are to be purchased at the purchase price of ________% of
the aggregate principal amount thereof, the Class A-2 Notes are to be purchased
at the purchase price of ________% of the aggregate prin-
4
<PAGE> 5
cipal amount thereof and the Class A-3 Notes are to be purchased at the
purchase price of ________% of the aggregate principal amount thereof, in each
case plus accrued interest, if any, at the applicable Note Interest Rate
calculated from (and including) ______ __, ____ to (but excluding) the Closing
Date.
Against payment of the purchase price in immediately available
funds drawn to the order of the Seller, the Seller will deliver the Notes to
the Representative, for the account of the Underwriters, at the office of
Skadden, Arps, Slate, Meagher & Flom on _____ __, ____, at 10:00 a.m., New York
time, or at such other time not later than seven full business days thereafter
as the Representative and the Seller determine, such time being herein referred
to as the "Closing Date." The Notes to be so delivered will be initially
represented by one or more Notes registered in the name of Cede & Co., the
nominee of The Depository Trust Company ("DTC"). The interests of beneficial
owners of the Notes will be represented by book entries on the records of DTC
and participating members thereof. Definitive Notes will be available only
under limited circumstances.
4. Offering by Underwriters. It is understood that,
after the Registration Statement becomes effective and a current prospectus is
filed with the Commission, the Underwriters propose to offer the Notes for sale
to the public (which may include selected dealers), as set forth in the
Prospectus.
5. Covenants of the Seller. The Seller covenants and
agrees with the Underwriters:
(a) If required, to file the Prospectus with the
Commission pursuant to and in accordance with subparagraph (2) of the Rule
424(b) not later than the time specified therein. The Seller will advise the
Underwriters promptly of any such filing pursuant to Rule 424(b).
(b) To make no amendment or any supplement to the
Registration Statement or the Prospectus as amended or supplemented prior to
the Closing Date, without furnishing the Representative with a copy of the
proposed form thereof and providing the Representative with a reasonable
opportunity to review the same; and
5
<PAGE> 6
during such same period to advise the Representative, promptly after it
receives notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to the
Prospectus as amended or supplemented or any amended Prospectus has been filed
or mailed for filing, of the issuance of any stop order by the Commission, of
the suspension of the qualification of the Notes for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or supplementing
of the Registration Statement or the Prospectus as amended or supplemented or
for additional information; and, in the event of the issuance of any such stop
order or of any order preventing or suspending the use of any prospectus
relating to the Notes or suspending any such qualification, to use promptly its
best efforts to obtain its withdrawal.
(c) Promptly from time to time to take such
action as the Representative may reasonably request in order to qualify the
Notes for offering and sale under the securities laws of such states as the
Representative may request and to continue such qualifications in effect so
long as necessary under such laws for the distribution of such Notes, provided
that in connection therewith the Seller shall not be required to qualify as a
foreign limited partnership to do business, or to file a general consent to
service of process in any jurisdiction, and provided further that the expense
of maintaining any such qualification more than one year from the Closing Date
with respect to such Notes shall be at the Representative's expense.
(d) To furnish the Underwriters with copies of
the Registration Statement (including exhibits) and copies of the Prospectus as
amended or supplemented in such quantities as the Representative may from time
to time reasonably request; and if, before a period of six months shall have
elapsed after the Closing Date and the delivery of a prospectus shall be at the
time required by law in connection with sales of any such Notes, either (i) any
event shall have occurred as a result of which the Prospectus would include any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made,
6
<PAGE> 7
not misleading, or (ii) for any other reason it shall be necessary during such
same period to amend or supplement the Prospectus as amended or supplemented,
to notify the Representative and to prepare and furnish to the Representative
as the Representative may from time to time reasonably request an amendment or
a supplement to the Prospectus which will correct such statement or omission or
effect such compliance; and in case any Underwriter is required by law to
deliver a prospectus in connection with sales of any of such Notes at any time
six months or more after the Closing Date, upon the Representative's request,
but at the expense of such Underwriter, to prepare and deliver to such
Underwriter as many copies as the Representative may request of an amended or
supplemented prospectus complying with Section 10(a)(3) of the Act.
(e) To make generally available to Noteholders of
the Trust as soon as practicable after the Effective Date of the Registration
Statement (as such date is defined in Rule 158(c) under the Act), an earnings
statement of the Seller complying with Rule 158 under the Act and covering a
period of at least twelve consecutive months beginning after such Effective
Date.
(f) To furnish to the Representative copies of
the Registration Statement (one of which will be signed and will include all
exhibits), each related preliminary prospectus, the Prospectus and all
amendments and supplements to such documents, in each case as soon as available
and in such quantities as the Representative reasonably requests.
(g) So long as any of the Notes are outstanding,
to furnish the Representative copies of all reports or other communications
(financial or other) furnished to Noteholders of the Trust, and to deliver to
the Representative during such same period, (i) as soon as they are available,
copies of any reports and financial statements furnished to or filed with the
Commission and (ii) such additional information concerning the business and
financial condition of the Seller as the Representative may from time to time
reasonably request.
(h) To pay or cause to be paid all costs and
expenses incident to the performance of its obligations hereunder, including
any fees charged by the rating
7
<PAGE> 8
agency or rating agencies that initially rate the Notes, and the reasonable
expenses incurred in distributing preliminary prospectuses and the Prospectus
(including any amendments and supplements thereto required within six months
from the Closing Date pursuant to Section 5(d) hereof) it being understood
that, except as provided in this subsection (h) and Section 9 hereof, the
Underwriters will pay all their own costs and expenses, including, without
limitation, the cost of printing any agreement among underwriters, the fees of
the Underwriters' counsel, transfer taxes on resale of the Notes by the
Underwriters, and any advertising expenses connected with any offers that the
Underwriters may make.
(i) For a period from the date of this Agreement
until the retirement of the Notes, or until such time as the Underwriters shall
cease to maintain a secondary market in the Notes, whichever occurs first, to
deliver to the Representative (i) copies of each certificate, the annual
statements of compliance and the annual independent certified public
accountants' servicing reports furnished to the Owner Trustee and the Indenture
Trustee pursuant to Article III of the Sale and Servicing Agreement, by
first-class mail as soon as practicable after such statements and reports are
furnished to the Owner Trustee and the Indenture Trustee, (ii) copies of each
certificate and the annual statements of compliance delivered to the Indenture
Trustee pursuant to Article III of the Indenture, by first-class mail as soon
as practicable after such statements and reports are furnished to the Indenture
Trustee, (iii) copies of each amendment to any Basic Document and (iv) on or
about each Distribution Date, a copy of the statement furnished by the
Indenture Trustee to the Noteholders pursuant to Section 4.9 of the Sale and
Servicing Agreement, by telex or telecopy.
(j) On or before the Closing Date, the Seller
shall cause Ford Credit's computer records relating to the Receivables to be
marked to show the Trust's absolute ownership of the Receivables, and from and
after the Closing Date neither the Seller nor the Servicer shall take any
action inconsistent with the Trust's ownership of such Receivables, other than
as permitted by the Basic Documents.
8
<PAGE> 9
(k) To the extent, if any, that the rating
provided with respect to the Notes by the rating agency or agencies that
initially rate the Notes is conditional upon the furnishing of documents or the
taking of any other actions by the Seller or the General Partner, the Seller or
the General Partner shall furnish such documents and take any such other
actions.
6. Conditions of the Obligations of the Underwriters.
The obligation of the Underwriters to purchase and pay for the Notes will be
subject to the accuracy of the representations and warranties on the part of
the Seller herein, to the accuracy of the statements of officers of the Seller,
Ford Credit and the General Partner made pursuant to the provisions hereof, to
the performance by the Seller and the General Partner of their respective
obligations hereunder and to the following additional conditions precedent:
(a) On or prior to the Closing Date, Coopers &
Lybrand L.L.P. shall have furnished to the Representative a letter dated as of
the Closing Date substantially in the form and substance of the draft to which
the Representative previously agreed.
(b) The Registration Statement shall have become
effective not later than __:__ [a.m.][p.m.], New York time, on ______ __, ____,
or such later date as shall have been consented to by the Representative; and
prior to the Closing Date no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or, to the knowledge of the Seller, shall be
contemplated by the Commission.
(c) The Representative shall have received as of
the Closing Date an officer's certificate signed by the Chairman of the Board,
the President, the Executive Vice President - Finance or the Treasurer of the
General Partner on behalf of the Seller representing and warranting that, as of
the Closing Date, except to the extent that they relate expressly to another
date in which case they will be true and correct as of such date on the Closing
Date, the representations and warranties of the Seller in this Agreement, the
Purchase Agreement, the Trust Agreement and the Sale and Servicing Agreement
will be true and correct in all material respects, that
9
<PAGE> 10
the Seller has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder at or prior to the Closing Date in
all material respects, that no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are contemplated by the Commission.
(d) Since the respective dates as of which
information is given in the Prospectus as amended or supplemented, there shall
not have occurred any material adverse change, or any development involving a
prospective material adverse change, in or affecting particularly the business
or assets of the Seller or the General Partner, or any material adverse change
in the financial position or results or operations of the Seller or the General
Partner, otherwise than as set forth or contemplated in the Prospectus, which
in any such case makes it impracticable or inadvisable in the Representative's
reasonable judgment to proceed with the public offering or the delivery of the
Notes on the terms and in the manner contemplated in the Prospectus as amended
or supplemented.
(e) Subsequent to the execution and delivery of
this Agreement, the United States shall not have become engaged in hostilities
which have resulted in the declaration of a national emergency or a declaration
of war, which makes it impracticable or inadvisable in the Representative's
reasonable judgment to proceed with the public offering or the delivery of the
Notes on the terms and in the manner contemplated in the Prospectus as amended
or supplemented.
(f) J.D. Bringard, Esq., Vice President-General
Counsel of Ford Credit and the Seller, or other counsel satisfac- tory to the
Representative in its reasonable judgment, shall have furnished to the
Representative, his written opinion, dated the Closing Date, in form reasonably
satisfactory to the Representative in its reasonable judgment, to the effect
that:
(i) The Seller has been duly organized
and is validly existing as a limited partnership in good standing
under the laws of the State of Delaware, and is duly qualified to
transact business and is in good standing in
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<PAGE> 11
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) This Agreement has been duly
authorized, executed and delivered by the Seller.
(iii) The Purchase Agreement, the Trust
Agreement and the Sale and Servicing Agreement have been duly
authorized, executed and delivered by, and each constitutes a valid
and binding obligation of, the Seller.
(iv) The consummation of the transactions
contemplated by this Agreement and the Basic Documents, and the
fulfillment of the terms hereof and thereof, will not conflict with or
result in a material breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of
any material lien, charge or encumbrance 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 known to such counsel
under which the Seller 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
Seller.
(v) The Notes have been duly authorized; when
executed by the Owner Trustee and authenticated by the Indenture
Trustee in accordance with the Indenture and delivered and paid for
pursuant to this Agreement, the Notes will constitute valid and
binding obligations of the Trust enforceable in accordance with their
terms.
(vi) The Registration Statement has become
effective under the Act and, to the best knowledge of such counsel, no
stop order suspending the effectiveness of the Registra-
11
<PAGE> 12
tion Statement has been issued and no proceeding for that purpose has
been instituted or threatened by the Commission; the Registration
Statement and the Prospectus as amended or supplemented and any
further amendments and supplements thereto made by the Seller prior to
the Closing Date (other than the financial statements and other
accounting information contained in the Registration Statement or the
Prospectus as amended or supplemented or any further amendments or
supplements thereto, or omitted therefrom, as to which such counsel
need express no opinion) comply as to form in all material respects
with the requirements of the Act and the rules and regulations
thereunder and the Trust Indenture Act.
(vii) Such counsel believes that neither the
Registration Statement (other than the financial statements and other
accounting information contained therein or omitted therefrom, as to
which such counsel need express no opinion) nor any amendment thereto,
at the time the same became effective, contained any untrue statement
of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading.
(viii) Such counsel believes that at the
Closing Date the Prospectus as amended or supplemented (other than the
financial statements and the other accounting information contained
therein or omitted therefrom, as to which such counsel need express no
opinion) does not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(ix) Such counsel does not know of any
contract or other document of a character required to be filed as an
exhibit to the Registration Statement or required to be incorporated
by reference into the Prospectus as
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<PAGE> 13
amended or supplemented or required to be described in the
Registration Statement or the Prospectus as amended or supplemented
which is not filed or incorporated by reference or described as
required.
(x) Such counsel does not know of any
legal or governmental proceedings pending to which the Seller is a
party or of which any property of the Seller is the subject, and no
such proceedings are known by such counsel to be threatened or
contemplated by governmental authorities or threatened by others,
other than as set forth or contemplated in the Prospectus as amended
or supplemented and other than such proceedings which, in his opinion,
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 will not materially and adversely affect the
performance by the Seller of its obligations under, or the validity
and enforceability of, this Agreement, the Basic Documents or the
Notes.
(xi) The Notes, the Basic Documents and this
Agreement each conform in all material respects with the descriptions
thereof contained in the Registration Statement and the Prospectus.
(xii) The Seller is not required to be
registered under the Investment Company Act of 1940, as amended.
(xiii) No consent, approval, authorization or
order of any court or governmental agency or body is required for the
consummation of the transactions contemplated herein or in the Basic
Documents, except such as may be required under the Act, the Trust
Indenture Act and other federal and state securities laws; filings
with respect to the transfer of the Receivables to the Seller pursuant
to the Purchase Agreement and to the Trust pursuant to the Sale and
Servicing Agreement and the grant of a security interest in the
Receivables to
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<PAGE> 14
the Indenture Trustee pursuant to the Indenture; and such other
approvals as have been obtained.
Such opinion may be made subject to the qualifications that
the enforceability of the terms of the Indenture, the Purchase
Agreement, the Trust Agreement, the Sale and Servicing Agreement and
the Notes may be limited by bankruptcy, insolvency, reorganizations or
other similar laws relating to or affecting the enforcement of
creditors' rights generally and by general equitable principles,
regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(g) J.D. Bringard, Esq., Vice President-General Counsel
of Ford Credit and the Seller, or other counsel satisfactory to the
Representative in its reasonable judgment, shall have furnished to the
Representative his written opinion, dated as of the Closing Date, in form
satisfactory to the Representative in its reasonable judgment, to the effect
that:
(i) Ford Credit 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, with only such
exceptions as are not material to the business of Ford Credit and its
subsidiaries considered as a whole.
(ii) The indemnification agreement
relating to the Notes (the "Note Indemnification Agreement") dated as
of _____ __, ____, between Ford Credit and the Underwriters, has been
duly authorized, executed and delivered by Ford Credit.
(iii) The Limited Partnership Agreement, the
Purchase Agreement, the Sale and Servicing Agreement, the Yield
Supplement Agreement and the Administration Agreement have
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<PAGE> 15
been duly authorized, executed and delivered by, and each constitutes
a valid and binding obligation of, Ford Credit.
(iv) The consummation of the transactions
contemplated by this Agreement, the Note Indemnification Agreement
and the Basic Documents, and the fulfillment of the terms hereof and
thereof, 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 Ford Credit 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 Ford Credit and its subsidiaries
considered as a whole) upon any of the property or assets of Ford
Credit pursuant to the terms of, any indenture, mortgage, deed of
trust, loan agreement, guarantee, lease financing agreement or similar
agreement or instrument known to such counsel under which Ford Credit
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 Ford Credit.
(v) Such counsel does not know of any legal
or governmental proceedings pending to which Ford Credit is a party or
of which any property of Ford Credit is the subject, and no such
proceedings are known by such counsel to be threatened or contemplated
by governmental authorities or threatened by others, other than as set
forth or contemplated in the Prospectus as amended or supplemented and
other than such proceedings which, in his opinion, will not have a
material adverse effect upon the general affairs, financial position,
net worth or results of operations (on an annual basis) of Ford Credit
and its subsidiaries considered as a whole and will not materially and
adversely affect the performance by Ford Credit of its obligations
under, or the validity and enforceability of, the Basic Documents or
the Note Indemnification Agreement.
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<PAGE> 16
(vi) Ford Credit has full power and
authority to sell and assign the property to be sold and assigned to
the Seller pursuant to the Purchase Agreement and has duly authorized
such sale and assignment to the Seller by all necessary corporate
action.
(vii) The Seller has full power and authority
to sell and assign the property to be sold and assigned to the Trust
and has duly authorized such sale and assignment to the Trust by all
necessary limited partnership action.
(viii) The Trust has full power and authority
to grant a security interest in the property to be pledged to the
Indenture Trustee pursuant to the Indenture and has duly authorized
such grant by all necessary trustee action.
(ix) The statements in the Prospectus under
the caption "Certain Legal Aspects of the Receivables," to the extent
they constitute matters of law or legal conclusions, are correct in
all material respects.
(x) Immediately prior to the sale of the
Receivables to the Seller, Ford Credit owned the Receivables free and
clear of any lien, security interest or charge; immediately prior to
the assignment of the Receivables to the Trust, the Seller owned the
Receivables free and clear of any lien, security interest or charge;
and immediately prior to the grant of a security interest in the
Receivables to the Indenture Trustee, the Trust owned the Receivables
free and clear of any lien, security interest or charge. With respect
to each Receivable constituting part of the Trust, such Receivable is
secured by a validly perfected first priority security interest in the
vehicle financed thereby in favor of Ford Credit as a secured party or
Ford Credit has instituted appropriate procedures that if followed
(and such counsel has no reason to believe that they will not be so
followed) will result in
16
<PAGE> 17
the perfection of a first priority security interest in the vehicle
financed thereby in favor of Ford Credit as a secured party. Each
such Receivable has been duly and validly assigned to the Seller by
Ford Credit and to the Trust by the Seller, and a security interest in
each such Receivable has been duly and validly granted to the
Indenture Trustee by the Trust.
(xi) All filings necessary under
applicable law to perfect the sale of the Receivables by Ford Credit
to the Seller pursuant to the Purchase Agreement, the sale of the
Receivables by the Seller to the Trust pursuant to the Sale and
Servicing Agreement and the grant of a security interest in the
Receivables to the Indenture Trustee pursuant to the Indenture have
been made and, provided that neither Ford Credit nor the Seller
relocates its principal place of business in a state other than
Michigan [and that the Indenture Trustee maintains the list of
Receivables for inspection by interested parties as described above],
no other filings (other than the filing of continuation statements)
need be made to maintain the perfection of the sale of the Receivables
either to the Seller pursuant to the Purchase Agreement or to the
Trust pursuant to the Sale and Servicing Agreement and of the grant of
a security interest in the Receivables to the Indenture Trustee
pursuant to the Indenture.
(xii) The Trust Agreement is not required to
be qualified under the Trust Indenture Act, the Indenture has been
duly qualified under the Trust Indenture Act, and neither the Trust
nor Ford Credit is required to be registered under the Investment
Company Act of 1940, as amended.
(xiii) No consent, approval, authorization or
order of any court or governmental agency or body is required for the
consummation of the transactions contemplated herein or in the Basic
Documents or the Note Indemnification Agreement, except such as may be
required under the Act, the Trust Indenture Act
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<PAGE> 18
and other federal and state securities laws; filings with respect to
the transfer of the Receivables to the Seller pursuant to the Purchase
Agreement and to the Trust pursuant to the Sale and Servicing
Agreement and the grant of a security interest in the Receivables to
the Indenture Trustee pursuant to the Indenture; and such other
approvals as have been obtained.
(xiv) Such counsel does not know of any legal
or governmental proceedings pending to which either Ford Credit or the
Seller is a party or of which any property of either Ford Credit or
the Seller is the subject, and no such proceedings are known by such
counsel to be threatened or contemplated by governmental authorities
or threatened by others (1) seeking to prevent the issuance of the
Notes or the consummation of any of the transactions contemplated by
this Agreement, the Note Indemnification Agreement or the Basic
Documents, or (2) seeking adversely to affect the federal income tax
attributes of the Notes as described in the Prospectus under the
heading "Certain Federal Income Tax Consequences."
(xv) Neither the issuance or sale of the
Notes, nor the execution and delivery of the Notes, this Agreement,
the Note Indemnification Agreement or the Basic Documents, nor the
consummation of any of the other transactions contemplated herein or
in the Note Indemnification Agreement or the Basic Documents by Ford
Credit or the Seller, as the case may be, will contravene the terms of
any material provision of any statute, order, or regulation applicable
to Ford Credit or the Seller, as the case may be, the failure with
which to comply could have a material adverse effect on Ford Credit
and its subsidiaries considered as a whole or the Seller, as the case
may be.
(h) J.D. Bringard, Esq., Vice President-General
Counsel of the General Partner, or other counsel satisfactory to the
Representative in its reasonable judgment, shall have furnished to the
Representative his
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<PAGE> 19
written opinion, dated as of the Closing Date, in form satisfactory to the
Representative in its reasonable judgment, to the effect that:
(i) The General Partner 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) This Agreement has been duly
authorized, executed and delivered by the General Partner.
(iii) The Limited Partnership Agreement has
been duly authorized, executed and delivered by, and constitutes a
valid and binding obligation of, the General Partner.
(iv) The Limited Partnership Agreement
authorizes the General Partner to execute and deliver on behalf of the
Seller this Agreement, the Purchase Agreement, the Trust Agreement and
the Sale and Servicing Agreement.
(v) The execution and delivery on behalf of
the Seller of this Agreement, the Purchase Agreement, the Trust
Agreement and the Sale and Servicing Agreement and the performance by
the General Partner of its obligations under this Agreement, the
Purchase Agreement, the Trust Agreement and the Sale and Servicing
Agreement have been duly authorized by all necessary corporate action
of the General Partner and each has been duly executed and delivered
by the General Partner.
(vi) The consummation of the transactions
contemplated by this Agreement and the Basic Documents, and the
fulfillment of the terms hereof and thereof, will not conflict with or
result in a material breach of any of
19
<PAGE> 20
the terms or provisions of, or constitute a default under, or result
in the creation or imposition of any material lien, charge or
encumbrance upon any of the property or assets of the General Partner
pursuant to the terms of, any indenture, mortgage, deed of trust, loan
agreement, guarantee, lease financing agreement or similar agreement
or instrument known to such counsel under which the General Partner 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 General Partner.
(vii) Such counsel does not know of any legal
or governmental proceedings pending to which the General Partner is a
party or of which any property of the General Partner is the subject,
and no such proceedings are known by such counsel to be threatened or
contemplated by governmental authorities or threatened by others,
other than as set forth or contemplated in the Prospectus as amended
or supplemented and other than such proceedings which, in his opinion,
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 General Partner and will not materially and adversely
affect the performance by the General Partner of its obligations
under, or the validity and enforceability of, this Agreement, the
Basic Documents or the Notes.
(viii) The General Partner is not required to
be registered under the Investment Company Act of 1940, as amended.
(ix) No consent, approval, authorization or
order of any court or governmental agency or body is required for the
consummation of the transactions contemplated herein or in the Basic
Documents, except such as may be required under the Act, the Trust
Indenture Act and other federal and state securities laws; filings
with respect to the transfer of the Receivables to the Seller pursuant
to the
20
<PAGE> 21
Purchase Agreement and to the Trust pursuant to the Sale and Servicing
Agreement and the grant of a security interest in the Receivables to
the Indenture Trustee pursuant to the Indenture; and such other
approvals as have been obtained.
(x) Such counsel does not know of any legal
or governmental proceedings pending to which the General Partner is a
party or of which any property of the General Partner is the subject,
and no such proceedings are known by such counsel to be threatened or
contemplated by governmental authorities or threatened by others (1)
seeking to prevent the issuance of the Notes or the consummation of
any of the transactions contemplated by this Agreement or the Basic
Documents, or (2) seeking adversely to affect the federal income tax
attributes of the Notes as described in the Prospectus under the
heading "Certain Federal Income Tax Consequences."
(xi) Neither the issuance or sale of the
Notes, nor the execution and delivery of the Notes, this Agreement or
the Basic Documents, nor the consummation of any of the other
transactions contemplated herein or in the Basic Documents by the
General Partner, will contravene the terms of any material provision
of any statute, order, or regulation applicable to the General
Partner, the failure with which to comply could have a material
adverse effect on the General Partner.
(i) Skadden, Arps, Slate, Meagher & Flom (or such
other counsel satisfactory to the Representative) shall have furnished their
written opinion, dated the Closing Date, with respect to the characterization
of the transfer of the Receivables by Ford Credit to the Seller as a sale, and
with respect to the characterization of the transfer of the Receivables from
the Seller to the Trust, (which opinion shall state that it may be relied upon
by the Indenture Trustee) to the Representative and to Ford Credit, and such
opinion shall be in substantially the form previously discussed with the
Representative and its counsel and in any event satisfac-
21
<PAGE> 22
tory in form and in substance to the Representative and its counsel and to Ford
Credit.
(j) Skadden, Arps, Slate, Meagher & Flom (or such
other counsel satisfactory to the Representative), special counsel to Ford
Credit, shall have furnished their written opinion, dated the Closing Date,
with respect to the nonconsolidation under the Bankruptcy Code of the assets
and liabilities of either of the Seller or the General Partner with the assets
and liabilities of Ford Credit in the event that Ford Credit were to become the
subject of a case under the Bankruptcy Code to the Representative and to Ford
Credit, and such opinion shall be in substantially the form previously
discussed with the Representative and its counsel and in any event satisfactory
in form and in substance to the Representative and its counsel and to Ford
Credit.
(k) Skadden, Arps, Slate, Meagher & Flom, special
tax counsel to the Seller, shall have furnished to the Representative their
written opinion, dated as of the Closing Date, in form and in substance
satisfactory to the Representative in its reasonable judgment, to the effect
that:
(i) The Trust will not be classified as
an association taxable as a corporation for federal income tax
purposes and the Notes will be characterized as debt for federal
income tax purposes.
(ii) The statements in the Registration
Statement and Prospectus under the heading "Certain Federal Income Tax
Consequences," to the extent that they constitute matters of law or
legal conclusions with respect thereto, have been prepared or reviewed
by such counsel and are correct in all material respects.
(l) J.D. Bringard, Esq., Vice President-General
Counsel of Ford Credit and the Seller, shall have furnished to the
Representative his written opinion, dated as of the Closing Date, in form
satisfactory to the Representative in its reasonable judgment, to the effect
that, assuming the Seller and the Trust will each not be classified as an
association taxable as a corporation for
22
<PAGE> 23
federal income tax purposes and the Notes will be characterized as debt for
federal income tax purposes:
(i) The Trust will not have a liability
for the Michigan single business tax and will not be subject to
Michigan income tax.
(ii) The Notes will be characterized as
debt for Michigan income and single business tax purposes.
(iii) Note Owners who would not otherwise be
subject to tax in Michigan will not be subject to tax in Michigan
solely because of a Note Owner's ownership of the Notes.
(iv) The statements in the Registration
Statement and Prospectus under the headings "Certain State Tax
Consequences with respect to Trusts for Which a Partnership Election
Is Made," to the extent that they constitute matters of law or legal
conclusions with respect thereto, have been prepared or reviewed by
such counsel and are correct in all material respects.
(m) The Representative shall have received an
opinion addressed to the Representative of Skadden, Arps, Slate, Meagher &
Flom, dated the Closing Date, with respect to the validity of the Notes and
such other related matters as the Representative shall require and the Seller
shall have furnished or caused to be furnished to such counsel such documents
as they may reasonably request for the purpose of enabling them to pass upon
such matters.
(n) The Representative shall have received an
opinion addressed to the Representative, the Seller and Ford Credit of
______________, counsel to the Owner Trustee, dated the Closing Date and
satisfactory in form and substance to the Representative and to counsel to the
Representative, to the effect that:
(i) The Owner Trustee has been duly
incorporated and is validly existing as a banking corporation in good
standing under the laws of the State of Delaware with full corpo-
23
<PAGE> 24
rate trust power and authority to enter into and perform its
obligations under the Trust Agreement, and, on behalf of the Trust,
under the Indenture, the Sale and Servicing Agreement and the
Administration Agreement.
(ii) The Trust Agreement duly creates for
the benefit of the Seller and the Certificateholders the interests in
the Owner Trust Estate which the Trust Agreement purports to create,
and the trust purported to be created by the Trust Agreement is
validly formed and is validly existing as a business trust in good
standing under the laws of the State of Delaware.
(iii) The Trust Agreement authorizes the
Trust to execute and deliver the Indenture, the Sale and Servicing
Agreement and the Administration Agreement, to issue the Notes and to
grant the Indenture Trust Estate to the Indenture Trustee as security
for the Notes.
(iv) The execution and delivery of the
Trust Agreement and, on behalf of the Trust, the Indenture, the Sale
and Servicing Agreement and the Administration Agreement and the
performance by the Owner Trustee of its obligations under the Trust
Agreement, the Indenture, the Sale and Servicing Agreement and the
Administration Agreement have been duly authorized by all necessary
corporate action of the Owner Trustee and each has been duly executed
and delivered by the Owner Trustee.
(v) Assuming due authorization, execution and
delivery thereof by the parties thereto, the Trust Agreement, the
Indenture, the Sale and Servicing Agreement and the Administration
Agreement each constitutes a legal, valid and binding obligation of
the Owner Trustee, enforceable against the Owner Trustee in accordance
with its terms, except (1) the enforceability thereof may be subject
to bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in ef-
24
<PAGE> 25
fect relating to creditors' rights, and (2) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(vi) Neither the execution nor delivery by
the Owner Trustee of the Trust Agreement and, on behalf of the Trust,
the Indenture, the Sale and Servicing Agreement and the Administration
Agreement, nor the consummation of any of the transactions by the
Owner Trustee contemplated thereby required the consent or approval
of, the giving of notice to, the registration with, or the taking of
any other action with respect to, any governmental authority or agency
under any existing federal or Delaware State law governing the trust
powers of the Owner Trustee, except such as have been obtained, made
or taken.
(vii) The Owner Trustee has duly authorized,
issued, executed and delivered each of the Notes pursuant to the terms
and provisions of the Indenture; each of such Notes is a legal, valid
and binding obligation of the Owner Trustee, enforceable against the
Owner Trustee in accordance with its terms and the terms of the
Indenture; and each of such Notes is entitled to the benefits and
security afforded by the Indenture in accordance with the terms of the
Indenture.
(viii) The execution and delivery by the
Owner Trustee of the Trust Agreement and, on behalf of the Trust, the
Indenture, the Sale and Servicing Agreement and the Administration
Agreement, and the performance by the Owner Trustee of its obligations
thereunder do not conflict with or result in a breach or violation of
any of the terms, conditions or provisions of any law, governmental
rule or regulation of the United States or the State of Delaware
governing the banking or trust powers of the Owner Trustee or the
Certificate of Incorporation or By-Laws of the Owner Trustee or,
25
<PAGE> 26
to such counsel's knowledge, any order writ, injunction or decree of
any court or governmental authority against the Owner Trustee or by
which it or any of its properties is bound or, to such counsel's
knowledge, any indenture, mortgage or contract or other agreement or
instrument to which the Owner Trustee is a party or by which it or any
of its properties is bound, or constitute a default thereunder.
(ix) The Owner Trustee has acquired such
title to the Receivables as has been conveyed to the Owner Trustee on
the date hereof, subject to the security interest created pursuant to
the Indenture; and, to such counsel's knowledge, there exist no liens,
security interests or charges affecting the title of the Owner Trustee
to the Receivables resulting from acts of or claims against the Owner
Trustee except liens, security interests or charges contemplated by
the Basic Documents.
(o) The Representative shall have received an
opinion addressed to the Representative, the Seller and Ford Credit of
______________, counsel to the Indenture Trustee, dated the Closing Date and
satisfactory in form and substance to the Representative and to counsel to the
Representative, to the effect that:
(i) The Indenture Trustee has been duly
incorporated and is validly existing as a banking corporation in good
standing under the laws of the State of ______ with full corporate
trust power and authority to enter into and perform its obligations
under the Indenture.
(ii) The Indenture has been duly executed
and delivered by the Indenture Trustee, and, insofar as the laws
governing the trust powers of the Indenture Trustee are concerned and
assuming due authorization, execution and delivery thereof by the
Owner Trustee, the Indenture constitutes a legal, valid and binding
obligation of the Indenture Trustee, enforceable against the Indenture
Trustee in accordance with its terms, except (1) the en-
26
<PAGE> 27
forceability thereof may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights, and (2) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(iii) The Notes have been duly authenticated
and delivered by the Indenture Trustee.
(iv) Neither the execution nor delivery
by the Indenture Trustee of the Indenture nor the consummation of any
of the transactions by the Indenture Trustee contemplated thereby
required the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with respect to,
any governmental authority or agency under any existing federal or
______ State law governing the trust powers of the Indenture Trustee,
except such as have been obtained, made or taken.
(v) The execution and delivery by the
Indenture Trustee of the Indenture and the performance by the
Indenture Trustee of its obligations thereunder do not conflict with
or result in a breach or violation of any of the terms, conditions or
provisions of any law, governmental rule or regulation of the United
States or the State of ______ governing the banking or trust powers of
the Indenture Trustee or the Certificate of Incorporation or By-Laws
of the Indenture Trustee or, to such counsel's knowledge, any order
writ, injunction or decree of any court or governmental authority
against the Indenture Trustee or by which it or any of its properties
is bound or, to such counsel's knowledge, any indenture, mortgage or
contract or other agreement or instrument to which the Indenture
Trustee is a party or by which it or any of its properties is bound,
or constitute a default thereunder.
27
<PAGE> 28
(p) The Representative shall have received an
officer's certificate dated the Closing Date of the Chairman of the Board, the
President, the Executive Vice President-Finance or the Treasurer of:
(i) Ford Credit, in which such officers
shall state that, to the best of their knowledge after reasonable
investigation, the representations and warranties of the Servicer
contained in the Sale and Servicing Agreement and of Ford Credit
contained in the Purchase Agreement are true and correct in all
material respects, that Ford Credit has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied
under such agreements at or prior to the Closing Date in all material
respects.
(ii) The General Partner on behalf of the
Seller, in which such officers shall state that, to the best of their
knowledge after reasonable investigation, the representations and
warranties of the Seller contained in the Trust Agreement, the Sale
and Servicing Agreement and the Purchase Agreement are true and
correct in all material respects, that the Seller has complied with
all agreements and satisfied all conditions on its part to be
performed or satisfied under such agreements at or prior to the
Closing Date in all material respects.
(iii) The General Partner, in which such
officers shall state that, to the best of their knowledge after
reasonable investigation, the representations and warranties of the
General Partner contained in the Limited Partnership Agreement are
true and correct in all material respects, that the General Partner
has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied under such agreement at or prior to
the Closing Date in all material respects.
(q) The Notes shall have been rated in the
highest rating category by each of Moody's and Standard & Poor's.
28
<PAGE> 29
(r) At the Closing Date, the Certificates shall
have been purchased and paid for by the Certificate Underwriters in accordance
with the Certificate Underwriting Agreement of even date herewith.
7. Indemnification and Contribution. (a) The Seller and
the General Partner will indemnify and hold each Underwriter harmless against
any losses, claims, damages, or liabilities, joint or several, to which such
Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement, the Prospectus, or
any amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Underwriter for any
legal or other expenses reasonably incurred by such Underwriter in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Seller and the General Partner will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with written information furnished to the
Seller or the General Partner by any Underwriter through the Representative
specifically for use therein; and provided further, that the Seller and the
General Partner shall not be liable to any Underwriter or any person
controlling any Underwriter under the indemnity agreement in this subsection
(a) with respect to any of such documents to the extent that any such loss,
claim, damage or liability of the Underwriters or such controlling person
results from the fact that such Underwriter sold the Notes to a person to whom
there was not sent or given, at or prior to the written confirmation of such
sale, a copy of the Prospectus or of the Prospectus as then amended or
supplemented (excluding documents incorporated by reference), whichever is most
recent, if the Seller has previously furnished copies thereof to such
Underwriter.
29
<PAGE> 30
The indemnity agreement in this subsection (a) shall be in
addition to any liability which the Seller or the General Partner may otherwise
have and shall extend, upon the same terms and conditions, to each person, if
any, who controls any Underwriter within the meaning of the Act.
(b) Each Underwriter will indemnify and hold
harmless the Seller against any losses, claims, damages or liabilities to which
the Seller may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement, the Prospectus or
any amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Seller by such Underwriter through the
Representative specifically for use therein, and will reimburse any legal or
other expenses reasonably incurred by the Seller in connection with
investigating or defending any such action or claim.
The indemnity agreement in this subsection (b) shall be in
addition to any liability which each Underwriter may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls the Seller or the General Partner within the meaning of the Act.
(c) Promptly after receipt by an indemnified
party under subsection (a) or (b) of written notice of the commencement of any
action, such indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under subsection (a) or (b) above, notify
the indemnifying party of the commencement thereof, and in the event that such
indemnified party shall not so notify the indemnifying party within 30 days
following receipt of any such notice by such indemnified party, the
indemnifying party shall have no further
30
<PAGE> 31
liability under such subsection to such indemnified party unless the
indemnifying party shall have received other notice addressed and delivered in
the manner provided in Section 10 hereof of the commencement of such action;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
such subsection. In case any such action is brought against any indemnified
party and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to such indemnified
party in its reasonable judgment, and after notice from the indemnifying party
to such indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under such
subsection for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
(d) If the indemnification provided for in this
Section is unavailable or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Seller and the General Partner on the one
hand and the Underwriters on the other from the offering of the Notes. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Seller and the General Partner on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages, or liabilities (or actions in respect
thereof) as well as any other relevant equitable considerations. The relative
benefits received by the Seller and the
31
<PAGE> 32
General Partner on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Seller and the General Partner bear
to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus as amended or supplemented with respect to the Notes. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Seller or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission, including, with respect to any Underwriter, the extent
to which such losses, claims, damages or liabilities (or actions in respect
thereof) result from the fact that such Underwriter sold such Notes to a person
to whom there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the Prospectus or the Prospectus as then supplemented or
amended (excluding documents incorporated by reference), whichever is more
recent, if the Seller has previously furnished copies thereof to such
Underwriter. The Seller and the General Partner and the Underwriters,
severally and not jointly, agree that it would not be just and equitable if
contribution pursuant to this subsection (d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this subsection (d). The
amount paid by an indemnified party as a result of the losses, claims, damages,
or liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim. Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Notes underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section
32
<PAGE> 33
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
8. Survival of Certain Representations and Obligations.
The respective indemnities, agreements, representations, warranties and other
statements (including, without limitation, Section 5(k)) of the Seller and the
General Partner or their respective officers and of the Underwriters set forth
in or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation or statement as to the results thereof, made by
or on behalf of any Underwriter, the Seller or the General Partner or any of
their respective representatives, officers or directors of any controlling
person, and will survive delivery of and payment for the Notes.
9. Failure to Purchase the Notes. If the purchase of
the Notes shall not be consummated because the circumstances described in
Section 6(e) shall have occurred, then neither the Seller nor the General
Partner shall have any liability to the Underwriters with respect to the Notes
except as provided in Section 5(h) and Section 7 hereof; but if for any other
reason the Notes are not delivered to the Underwriters as provided herein, the
Seller and the General Partner will be liable to reimburse the Underwriters,
through the Representative, for all out-of-pocket expenses, including counsel
fees and disbursements reasonably incurred by the Underwriters in making
preparations for the offering of the Notes, but neither the Seller nor the
General Partner shall then have any further liability to any Underwriter with
respect to the Notes except as provided in Section 5(h) and Section 7 hereof.
If any Underwriter or Underwriters default on their obligations to purchase
Notes hereunder and the aggregate principal amount of Notes that such
defaulting Underwriter or Underwriters agreed but failed to purchase does not
exceed 10% of the total principal amount of the Notes, the Representative may
make arrangements satisfactory to the Seller and the General Partner for the
purchase of such Notes by other persons, including the non-defaulting
Underwriter or Underwriters, but if no such arrangements are made by the
Closing Date, the non-defaulting Underwriter or Underwriters shall be
obligated, in proportion to their commitments hereunder, to purchase the Notes
that such defaulting Underwriter or
33
<PAGE> 34
Underwriters agreed but failed to purchase. If any Underwriter or Underwriters
so default and the aggregate principal amount of Notes with respect to which
such default or defaults occur exceeds 10% of the total principal amount of the
Notes and arrangements satisfactory to the non-defaulting Underwriter or
Underwriters, the Seller and the General Partner for the purchase of such Notes
by other persons are not made within 36 hours after such default, this
Agreement will terminate without liability on the part of any non-defaulting
Underwriter, the Seller and the General Partner, except as provided in Section
5(h) and Section 7 hereof. As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section. Nothing
herein will relieve a defaulting Underwriter or Underwriters from liability for
its default.
10. Notices. All communications hereunder will be in
writing and will be mailed, delivered or sent by facsimile transmission and
confirmed. Communications to the Representative or the Underwriters shall be
given to the Representative at ______ - facsimile number (___) ___-____.
Communications to the Seller shall be given to it in care of the General
Partner at The American Road, Dearborn, Michigan 48121, attention of the
Secretary - facsimile number (313) 594-7742. Communications to the General
Partner shall be given to it at The American Road, Dearborn, Michigan 48121,
attention of the Secretary - facsimile number (313) 594-7742.
11. Successors. This Agreement will inure to the benefit
of and be binding upon the Underwriters, the Seller and the General Partner and
their respective successors and the officers and directors and controlling
persons referred to in Section 7, and no other person will have any right or
obligations hereunder.
12. Applicable Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York.
13. Counterparts. This Agreement may be executed by each
of the parties hereto in any number of counterparts, and by each of the parties
hereto on separate counterparts, each of which counterparts, when so executed
and delivered, shall be deemed to be an origi-
34
<PAGE> 35
nal, but all such counterparts shall together constitute but one and the same
instrument.
35
<PAGE> 36
If the foregoing is in accordance with your understanding,
please sign and return to us a counterpart hereof, whereupon this letter and
your acceptance hereof shall constitute a binding agreement.
Very truly yours,
FORD CREDIT AUTO RECEIVABLES
TWO L.P.
By: FORD CREDIT AUTO RECEIVABLES
TWO, INC.,
as General Partner
By:_________________________
Name:
Title:
FORD CREDIT AUTO RECEIVABLES
TWO, INC.
By:_________________________
Name:
Title:
Accepted in New York, New York,
as of the date hereof:
______
By:______________________________
Name:
Title:
Acting on behalf of itself and
as the Representative of the
several Underwriters.
<PAGE> 37
ADDENDUM TO NOTE UNDERWRITING AGREEMENT
DATED ________ __, ____ RELATING TO
FORD CREDIT AUTO OWNER TRUST ____-_
In order to clarify the provisions of Section 5(h) of the Note
Underwriting Agreement, dated ________ __, ____, among Ford Credit Auto
Receivables Two L.P., Ford Credit Auto Receivables Two, Inc. and ______, as
Representative of the several Underwriters, the parties hereto agree as
follows:
1. The Underwriters shall pay directly (i) all Blue Sky
fees and expenses as well as reasonable fees and expenses of counsel in
connection with state securities law qualifications and any legal investment
surveys; and (ii) the reasonable fees and expenses of Skadden, Arps, Slate,
Meagher & Flom.
2. Ford Credit Auto Receivables Two L.P. shall pay (i)
the Securities and Exchange Commission the filing fee with respect to the
Notes; (ii) all fees of any rating agencies rating the Notes; (iii) all fees
and expenses of the Indenture Trustee and the Owner Trustee; (iv) all
reasonable fees and expenses of _____________, counsel to the Indenture
Trustee; (v) all reasonable fees and expenses of _____________, counsel to the
Owner Trustee; (vi) all fees and expenses of Coopers & Lybrand L.L.P. relating
to the letter referred to in Section 6(a) of the Note Underwriting Agreement;
(vii) all fees and expenses of accountants incurred in connection with the
delivery of any accountant's or auditor's reports required pursuant to the
Indenture or the Sale and Servicing Agreement; (viii) the cost of printing any
preliminary and final prospectus relating to the Notes, and the Registration
Statement; and (ix) any other fees and expenses incurred in connection with the
performance of its obligations under the Note Underwriting Agreement.
37
<PAGE> 38
3. The provisions hereof are subject to the provisions
of Section 9 of the Note Underwriting Agreement.
Dated: ________ __, ____
FORD CREDIT AUTO RECEIVABLES
TWO L.P.
By: FORD CREDIT AUTO RECEIVABLES
TWO, INC.,
as General Partner
By:______________________________
Name:
Title:
FORD CREDIT AUTO RECEIVABLES
TWO, INC.
By:______________________________
Name:
Title:
______
By:______________________________
Name:
Title:
Acting on behalf of itself and as
the Representative of the several
Underwriters.
<PAGE> 39
SCHEDULE I
<TABLE>
<CAPTION>
Initial Initial Initial
Principal Principal Principal
Amount of Amount of Amount of
Class A-1 Notes Class A-2 Notes Class A-3 Notes
--------------- --------------- ---------------
<S> <C> <C> <C>
______ . . . . . . . $ $ $
______ . . . . . . .
______ . . . . . . .
______ . . . . . . .
______ . . . . . . .
---------- ---------- ----------
Total . . . . . $ $ $
========== ========== ==========
</TABLE>
<PAGE> 1
EXHIBIT 1.2
FORD CREDIT AUTO [GRANTOR] [OWNER] TRUST ____-_
___% ASSET BACKED CERTIFICATES
FORD CREDIT AUTO RECEIVABLES TWO L.P.
(SELLER)
_____ __, ____
[CERTIFICATE] UNDERWRITING AGREEMENT
______,
As Representative
(the "Representative") of the
Several Underwriters,
______
Ladies and Gentlemen:
[1. Introductory. Ford Credit Auto Receivables Two L.P.,
a Delaware limited partnership (the "Seller"), proposes to sell $______
principal balance of ____% Asset Backed Certificates (the "Certificates"),
issued by Ford Credit Auto Owner Trust ____-_ (the "Trust"). Each Certificate
will represent a beneficial interest in the Trust, the assets of which will
include the Receivables (as hereinafter defined) and certain other property.
The Certificates will be issued pursuant to the Amended and Restated Trust
Agreement (the "Trust Agreement") to be dated as of ________ __, ____, by and
between the Seller, as depositor, and ______ (the "Owner Trustee").
Simultaneously with the issuance and sale of the Certificates as contemplated
herein, the Trust will issue $________________ principal amount of ____% Class
A-1 Asset Backed Notes, $________________ principal amount of ____% Class A-2
Asset Backed Notes and $________________ principal amount of ____% Class A-3
Asset Backed Notes (collectively, the "Notes"). The Notes will be issued
pursuant to the Indenture to be dated as of ______ __, ____ (the "Indenture")
by and between the Trust and ______ (the "Indenture Trustee"). Payments in
respect of the Certificates are, to the
<PAGE> 2
extent specified in the Indenture, the Sale and Servicing Agreement (as
hereinafter defined) and the Trust Agreement, subordinated to the rights of the
holders of the Notes.
The property of the Trust will include, among other things, a
pool of retail installment sale contracts for new and used automobiles and
light trucks (the "Receivables") and certain monies due or in some cases
received thereunder on or after ______ __, ____ (the "Cutoff Date"), such
Receivables to be sold to the Trust by the Seller and to be serviced for the
Trust by Ford Motor Credit Company, a Delaware corporation (the "Servicer" or
"Ford Credit"), pursuant to the Sale and Servicing Agreement (the "Sale and
Servicing Agreement") to be dated as of ______ __, ____ by and among the
Seller, the Servicer and the Trust.]
[1. Introductory. Ford Credit Auto Receivables Two L.P.,
a Delaware limited partnership (the "Seller"), proposes to sell $______
principal balance of its ____% Asset Backed Certificates, Class A (the "Class A
Certificates") of the Ford Credit Auto Grantor Trust ____-_ (the "Trust").
Each Class A Certificate will represent a fractional undivided interest in the
Trust. The assets of the Trust will include, among other things, a pool of
retail installment sale contracts for new and used automobiles and light trucks
(the "Receivables") and certain monies due or in some cases received thereunder
on or after ______ __, ____ (the "Cutoff Date"), such Receivables to be sold to
the Trust and to be serviced for the Trust by Ford Motor Credit Company, a
Delaware corporation (the "Servicer" or "Ford Credit"). The Class A
Certificates will be issued in an aggregate principal balance of $______ which
is equal to ___% of the aggregate principal balance of the Receivables, as of
the Cutoff Date. Simultaneously with the issuance and sale of the Class A
Certificates as contemplated herein, the Trust will also issue certificates
entitled "___% Asset Backed Certificates, Class B" (the "Class B Certificates,"
and together with the Class A Certificates, the "Certificates") evidencing an
undivided ownership interest of ___% in the Trust, payments in respect of which
are, to the extent specified in the Pooling and Servicing Agreement (defined
below), subordinated to the rights of the holders of the Class A Certificates.
The Certificates will be issued pursuant to a pooling and servicing agree-
2
<PAGE> 3
ment (the "Pooling and Servicing Agreement") to be dated as of ______ __, ____
among the Seller, the Servicer and ______, as trustee (the "Trustee") and as
Class A Agent.]
Capitalized terms used herein and not otherwise defined shall
have the meanings given them in the [Pooling] [Sale] and Servicing Agreement.
2. Representations and Warranties of the Seller. The
Seller represents and warrants to and agrees with the several underwriters
named in Schedule I hereto (the "Underwriters") that:
(a) A registration statement on Form S-3 (No.
333-01245), including a form of prospectus and such amendments thereto as may
have been required to the date hereof, relating to the [Class A] Certificates
and the offering thereof from time to time in accordance with Rule 415 under
the Securities Act of 1933, as amended (the "Act"), has been filed with the
Securities and Exchange Commission (the "Commission") and such registration
statement, as amended, has become effective. Such registration statement in
such form, including the exhibits thereto [(but excluding Form T-1)] and any
material incorporated by reference therein, is hereinafter referred to as the
"Registration Statement," and the prospectus (including the base prospectus and
any prospectus supplement) relating to the [Class A] Certificates, as first
filed, or mailed for filing, with the Commission pursuant to Rule 424(b) ("Rule
424(b)") under the Act is hereinafter referred to as the "Prospectus." For
purposes of this Agreement, "Effective Time" means the date and time as of
which such Registration Statement, or the most recent post-effective amendment
thereto, is declared effective by the Commission, and "Effective Date" means
the date of the Effective Time.
(b) On the Effective Date, the Registration
Statement did conform, in all material respects to the requirements of the Act,
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), where
applicable, and the rules and regulations of the Commission under the Act or
the Exchange Act, as applicable, and did not, as of the Effective Date, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however,
3
<PAGE> 4
that this representation and warranty shall not apply to any statement or
omission made in reliance upon and in conformity with information furnished in
writing to the Seller or Ford Credit Auto Receivables Two, Inc. (the "General
Partner") by the Underwriters expressly for use in the Registration Statement.
On the date of this Agreement, the Registration Statement conforms, and at the
time of filing of the Prospectus pursuant to Rule 424(b), the Registration
Statement and the Prospectus will conform, in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder (the "Rules and Regulations"), and, except as aforesaid, neither of
such documents includes, or will include, any untrue statement of a material
fact or omits, or will omit, to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
(c) The Seller has been duly formed and is
validly existing as a limited partnership 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.
(d) The consummation by the Seller of the
transactions contemplated by this Agreement and the [Pooling and Servicing
Agreement] [Basic Documents], and the fulfillment of the terms hereof and
thereof, will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, or result in the creation of any
lien, charge, or encumbrance 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.
(e) This Agreement has been duly authorized,
executed and delivered by the Seller; on the Closing Date (as hereafter
defined), the [Class A] Certificates will have been duly executed,
authenticated, issued and delivered; on the Closing Date, the [Pooling and
Servicing Agreement and the Purchase Agreement] [Basic Documents to which the
Seller is a party] will have been duly authorized, executed and delivered by
and
4
<PAGE> 5
will constitute valid and binding obligations of the Seller in accordance with
their terms except as the same may be limited by bankruptcy, insolvency,
reorganization or other similar laws relating to or affecting the enforcement
of creditors' rights generally and by general equitable principles, regardless
of whether such enforceability is considered in a proceeding in equity or at
law; and the [Pooling and Servicing Agreement and the Purchase Agreement]
[Basic Documents] will conform to the description thereof in the Prospectus in
all material respects.
(f) The computer tape with respect to the
Receivables (the "Computer Tape") to be delivered by Ford Credit as seller
under the Purchase Agreement to each of the [Owner] Trustee [, the Indenture
Trustee] and the Representative, will be complete and accurate in all material
respects as of the date thereof.
3. Purchase, Sale, and Delivery of [Class A]
Certificates. On the basis of the representations, warranties, and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Seller agrees to sell to the Underwriters, and the Underwriters agree,
severally and not jointly, to purchase from the Seller, the aggregate principal
balances of the Class A Certificates set forth opposite the names of the
Underwriters in Schedule I hereto. The [Class A] Certificates are to be
purchased at the purchase price of ________% of the aggregate principal
balances thereof, plus accrued interest, if any, at the applicable
[Pass-Through] Rate [Certificate] Rate calculated from (and including) ______
__, ____ to (but excluding) the Closing Date.
Against payment of the purchase price in immediately available
funds drawn to the order of the Seller, the Seller will deliver the [Class A]
Certificates to the Representative, for the account of the Underwriters, at the
office of Skadden, Arps, Slate, Meagher & Flom on _____ __, ____, at 10:00
a.m., New York time, or at such other time not later than seven full business
days thereafter as the Representative and the Seller determine, such time being
herein referred to as the "Closing Date." The [Class A] Certificates to be so
delivered will be initially represented by one or more [Class A] Certificates
registered in the name of Cede & Co., the nominee of The Depository Trust
Company ("DTC"). The interests
5
<PAGE> 6
of beneficial owners of the [Class A] Certificates will be represented by book
entries on the records of DTC and participating members thereof. Definitive
Certificates will be available only under limited circumstances.
4. Offering by Underwriters. It is understood that,
after the Registration Statement becomes effective and a current prospectus is
filed with the Commission, the Underwriters propose to offer the [Class A]
Certificates for sale to the public (which may include selected dealers), as
set forth in the Prospectus.
5. Covenants of the Seller. The Seller covenants and
agrees with the Underwriters:
(a) If required, to file the Prospectus with the
Commission pursuant to and in accordance with subparagraph (2) of the Rule
424(b) not later than the time specified therein. The Seller will advise the
Underwriters promptly of any such filing pursuant to Rule 424(b).
(b) To make no amendment or any supplement to the
Registration Statement or the Prospectus as amended or supplemented prior to
the Closing Date, without furnishing the Representative with a copy of the
proposed form thereof and providing the Representative with a reasonable
opportunity to review the same; and during such same period to advise the
Representative, promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or becomes effective or
any supplement to the Prospectus as amended or supplemented or any amended
Prospectus has been filed or mailed for filing, of the issuance of any stop
order by the Commission, of the suspension of the qualification of the [Class
A] Certificates for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration Statement or
the Prospectus as amended or supplemented or for additional information; and,
in the event of the issuance of any such stop order or of any order preventing
or suspending the use of any prospectus relating to the [Class A] Certificates
or suspending any such qualification, to use promptly its best efforts to
obtain its withdrawal.
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<PAGE> 7
(c) Promptly from time to time to take such
action as the Representative may reasonably request in order to qualify the
[Class A] Certificates for offering and sale under the securities laws of such
states as the Representative may request and to continue such qualifications in
effect so long as necessary under such laws for the distribution of such [Class
A] Certificates, provided that in connection therewith the Seller shall not be
required to qualify as a foreign limited partnership to do business, or to file
a general consent to service of process in any jurisdiction, and provided
further that the expense of maintaining any such qualification more than one
year from the Closing Date with respect to such [Class A] Certificates shall be
at the Representative's expense.
(d) To furnish the Underwriters with copies of
the Registration Statement (including exhibits) and copies of the Prospectus as
amended or supplemented in such quantities as the Representative may from time
to time reasonably request; and if, before a period of six months shall have
elapsed after the Closing Date and the delivery of a prospectus shall be at the
time required by law in connection with sales of any such [Class A]
Certificates, either (i) any event shall have occurred as a result of which the
Prospectus would include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or
(ii) for any other reason it shall be necessary during such same period to
amend or supplement the Prospectus as amended or supplemented, to notify the
Representative and to prepare and furnish to the Representative as the
Representative may from time to time reasonably request an amendment or a
supplement to the Prospectus which will correct such statement or omission or
effect such compliance; and in case any Underwriter is required by law to
deliver a prospectus in connection with sales of any of such [Class A]
Certificates at any time six months or more after the Closing Date, upon the
Representative's request, but at the expense of such Underwriter, to prepare
and deliver to such Underwriter as many copies as the Representative may
request of an amended or supplemented prospectus complying with Section
10(a)(3) of the Act.
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<PAGE> 8
(e) To make generally available to [Class A]
Certificateholders of the Trust as soon as practicable after the Effective Date
of the Registration Statement (as such date is defined in Rule 158(c) under the
Act), an earnings statement of the Seller complying with Rule 158 under the Act
and covering a period of at least twelve consecutive months beginning after
such Effective Date.
(f) To furnish to the Representative copies of
the Registration Statement (one of which will be signed and will include all
exhibits), each related preliminary prospectus, the Prospectus and all
amendments and supplements to such documents, in each case as soon as available
and in such quantities as the Representative reasonably requests.
(g) So long as any of the [Class A] Certificates
are outstanding, to furnish the Representative copies of all reports or other
communications (financial or other) furnished to [Class A] Certificateholders
of the Trust, and to deliver to the Representative during such same period, (i)
as soon as they are available, copies of any reports and financial statements
furnished to or filed with the Commission and (ii) such additional information
concerning the business and financial condition of the Seller as the
Representative may from time to time reasonably request.
(h) To pay or cause to be paid all costs and
expenses incident to the performance of its obligations hereunder, including
any fees charged by the rating agency or rating agencies that initially rate
the [Class A] Certificates, and the reasonable expenses incurred in
distributing preliminary prospectuses and the Prospectus (including any
amendments and supplements thereto required within six months from the Closing
Date pursuant to Section 5(d) hereof) it being understood that, except as
provided in this subsection (h) and Section 9 hereof, the Underwriters will pay
all their own costs and expenses, including, without limitation, the cost of
printing any agreement among underwriters, the fees of the Underwriters'
counsel, transfer taxes on resale of the [Class A] Certificates by the
Underwriters, and any advertising expenses connected with any offers that the
Underwriters may make.
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<PAGE> 9
(i) For a period from the date of this Agreement
until the retirement of the [Class A] Certificates, or until such time as the
Underwriters shall cease to maintain a secondary market in the [Class A]
Certificates, whichever occurs first, to deliver to the Representative [the
annual statements of compliance and the annual independent certified public
accountants' reports furnished to the Trustee pursuant to Article XIII of the
Pooling and Servicing Agreement, by first-class mail as soon as practicable
after such statements and reports are furnished to the Trustee] [(i) copies of
each certificate, the annual statements of compliance and the annual
independent certified public accountants' servicing reports furnished to the
Owner Trustee and the Indenture Trustee pursuant to Article III of the Sale and
Servicing Agreement, by first-class mail as soon as practicable after such
statements and reports are furnished to the Owner Trustee and the Indenture
Trustee, (ii) copies of each amendment to any Basic Document and (iii) on or
about each Distribution Date, a copy of the statement furnished by the Owner
Trustee to the Certificateholders pursuant to Section 4.9 of the Sale and
Servicing Agreement, by telex or telecopy].
(j) On or before the Closing Date, the Seller
shall cause Ford Credit's computer records relating to the Receivables to be
marked to show the Trust's absolute ownership of the Receivables, and from and
after the Closing Date neither the Seller nor the Servicer shall take any
action inconsistent with the Trust's ownership of such Receivables, other than
as permitted by the [Pooling and Servicing Agreement] [Basic Documents].
(k) To the extent, if any, that the rating
provided with respect to the [Class A] Certificates by the rating agency or
agencies that initially rate the [Class A] Certificates is conditional upon the
furnishing of documents or the taking of any other actions by the Seller or the
General Partner, the Seller or the General Partner shall furnish such documents
and take any such other actions.
6. Conditions of the Obligations of the Underwriters.
The obligation of the Underwriters to purchase and pay for the [Class A]
Certificates will be subject to the accuracy of the representations and
warranties on the part of the Seller herein, to the accuracy
9
<PAGE> 10
of the statements of officers of the Seller, Ford Credit and the General
Partner made pursuant to the provisions hereof, to the performance by the
Seller and the General Partner of their respective obligations hereunder and to
the following additional conditions precedent:
(a) On or prior to the Closing Date, Coopers &
Lybrand L.L.P. shall have furnished to the Representative a letter dated as of
the Closing Date substantially in the form and substance of the draft to which
the Representative previously agreed.
(b) The Registration Statement shall have become
effective not later than __:__ [a.m.][p.m.], New York time, on ______ __, ____,
or such later date as shall have been consented to by the Representative; and
prior to the Closing Date no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or, to the knowledge of the Seller, shall be
contemplated by the Commission.
(c) The Representative shall have received as of
the Closing Date an officer's certificate signed by the Chairman of the Board,
the President, the Executive Vice President - Finance or the Treasurer of the
General Partner on behalf of the Seller representing and warranting that, as of
the Closing Date, except to the extent that they relate expressly to another
date in which case they will be true and correct as of such date on the Closing
Date, the representations and warranties of the Seller in this Agreement [, the
Purchase Agreement, the Trust Agreement and the Sale and Servicing Agreement]
will be true and correct in all material respects, that the Seller has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date in all material respects,
that no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been instituted or are
contemplated by the Commission.
(d) Since the respective dates as of which
information is given in the Prospectus as amended or supplemented, there shall
not have occurred any material adverse change, or any development involving a
prospective material adverse change, in or affecting
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<PAGE> 11
particularly the business or assets of the Seller or the General Partner, or
any material adverse change in the financial position or results or operations
of the Seller or the General Partner, otherwise than as set forth or
contemplated in the Prospectus, which in any such case makes it impracticable
or inadvisable in the Representative's reasonable judgment to proceed with the
public offering or the delivery of the [Class A] Certificates on the terms and
in the manner contemplated in the Prospectus as amended or supplemented.
(e) Subsequent to the execution and delivery of
this Agreement, the United States shall not have become engaged in hostilities
which have resulted in the declaration of a national emergency or a declaration
of war, which makes it impracticable or inadvisable in the Representative's
reasonable judgment to proceed with the public offering or the delivery of the
[Class A] Certificates on the terms and in the manner contemplated in the
Prospectus as amended or supplemented.
(f) J.D. Bringard, Esq., Vice President-General
Counsel of Ford Credit and the Seller, or other counsel satisfactory to the
Representative in its reasonable judgment, shall have furnished to the
Representative, his written opinion, dated the Closing Date, in form reasonably
satisfactory to the Representative in its reasonable judgment, to the effect
that:
(i) The Seller has been duly organized
and is validly existing as a limited partnership 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) This Agreement has been duly
authorized, executed and delivered by the Seller.
(iii) The [Pooling and Servicing Agreement
and the] Purchase Agreement[, the Trust Agreement and the Sale and
Servicing Agreement] have been duly authorized, executed
11
<PAGE> 12
and delivered by, and each constitutes a valid and binding obligation
of, the Seller.
(iv) The consummation of the transactions
contemplated by this Agreement [, the Pooling and Servicing Agreement
and the Purchase Agreement] [and the Basic Documents], and the
fulfillment of the terms hereof and thereof, will not conflict with or
result in a material breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of
any material lien, charge or encumbrance 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 known to such counsel
under which the Seller 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
Seller.
(v) The [Class A] Certificates have been duly
authorized; when executed [by the Owner Trustee] and authenticated by
the [Owner] Trustee [or its authenticating agent] in accordance with
the [Pooling and Servicing] [Trust] Agreement and delivered and paid
for pursuant to this Agreement, the [Class A] Certificates will
constitute valid and binding obligations [entitled to the benefits
provided by the Pooling and Servicing Agreement] [of the Trust
enforceable in accordance with their terms].
(vi) The Registration Statement has become
effective under the Act and, to the best knowledge of such counsel, no
stop order suspending the effectiveness of the Registration Statement
has been issued and no proceeding for that purpose has been instituted
or threatened by the Commission; the Registration Statement and the
Prospectus as amended or supplemented and any further amendments and
supplements thereto made by the Seller prior to
12
<PAGE> 13
the Closing Date (other than the financial statements and other
accounting information contained in the Registration Statement or the
Prospectus as amended or supplemented or any further amendments or
supplements thereto, or omitted therefrom, as to which such counsel
need express no opinion) comply as to form in all material respects
with the requirements of the Act and the rules and regulations
thereunder [and the Trust Indenture Act].
(vii) Such counsel believes that neither the
Registration Statement (other than the financial statements and other
accounting information contained therein or omitted therefrom, as to
which such counsel need express no opinion) nor any amendment thereto,
at the time the same became effective, contained any untrue statement
of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading.
(viii) Such counsel believes that at the
Closing Date the Prospectus as amended or supplemented (other than the
financial statements and the other accounting information contained
therein or omitted therefrom, as to which such counsel need express no
opinion) does not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(ix) Such counsel does not know of any
contract or other document of a character required to be filed as an
exhibit to the Registration Statement or required to be incorporated
by reference into the Prospectus as amended or supplemented or
required to be described in the Registration Statement or the
Prospectus as amended or supplemented which is not filed or
incorporated by reference or described as required.
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<PAGE> 14
(x) Such counsel does not know of any
legal or governmental proceedings pending to which the Seller is a
party or of which any property of the Seller is the subject, and no
such proceedings are known by such counsel to be threatened or
contemplated by governmental authorities or threatened by others,
other than as set forth or contemplated in the Prospectus as amended
or supplemented and other than such proceedings which, in his opinion,
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 will not materially and adversely affect the
performance by the Seller of its obligations under, or the validity
and enforceability of, [the Pooling and Servicing Agreement, the
Purchase Agreement] [this Agreement, the Basic Documents] or the
[Class A] Certificates.
(xi) The [Class A] Certificates, [the Pooling
and Servicing Agreement, the Purchase Agreement] [the Basic Documents]
and this Agreement each conform in all material respects with the
descriptions thereof contained in the Registration Statement and the
Prospectus.
(xii) The Seller is not required to be
registered under the Investment Company Act of 1940, as amended.
(xiii) No consent, approval, authorization or
order of any court or governmental agency or body is required for the
consummation of the transactions contemplated herein or in the
[Pooling and Servicing Agreement or the Purchase Agreement] [Basic
Documents], except such as may be required under the Act [, the Trust
Indenture Act] and other federal and state securities laws; filings
with respect to the transfer of the Receivables to the Seller pursuant
to the Purchase Agreement and to the [Trustee] [Trust] pursuant to the
[Pooling] [Sale] and Servicing Agreement [and the grant of a security
interest in the Receivables to the Indenture Trustee pursuant to the
Inden-
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<PAGE> 15
ture;] and such other approvals as have been obtained.
Such opinion may be made subject to the qualifications that
the enforceability of the terms of [the Pooling and Servicing
Agreement, the Purchase Agreement] [the Indenture, the Purchase
Agreement, the Trust Agreement, the Sale and Servicing Agreement] and
the [Class A] Certificates may be limited by bankruptcy, insolvency,
reorganizations or other similar laws relating to or affecting the
enforcement of creditors' rights generally and by general equitable
principles, regardless of whether such enforceability is considered in
a proceeding in equity or at law.
(g) J.D. Bringard, Esq., Vice President-General Counsel
of Ford Credit and the Seller, or other counsel satisfactory to the
Representative in its reasonable judgment, shall have furnished to the
Representative his written opinion, dated as of the Closing Date, in form
satisfactory to the Representative in its reasonable judgment, to the effect
that:
(i) Ford Credit 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, with only such
exceptions as are not material to the business of Ford Credit and its
subsidiaries considered as a whole.
(ii) The indemnification agreement [(the
"Indemnification Agreement")] [relating to the Certificates (the
"Certificate Indemnification Agreement")] dated as of _____ __, ____,
between Ford Credit and the Underwriters, has been duly authorized,
executed and delivered by Ford Credit.
(iii) The [Pooling and Servicing Agreement
and the Purchase Agreement] [Limited
15
<PAGE> 16
Partnership Agreement, the Purchase Agreement, the Sale and Servicing
Agreement, the Yield Supplement Agreement and the Administration
Agreement] have been duly authorized, executed and delivered by, and
each constitutes a valid and binding obligation of, Ford Credit.
(iv) The consummation of the transactions
contemplated by [the Pooling and Servicing Agreement, the Purchase
Agreement and the Indemnification Agreement] [this Agreement, the
Certificate Indemnification Agreement and the Basic Documents], and
the fulfillment of the terms hereof and thereof, 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 Ford Credit 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 Ford Credit and its subsidiaries considered as a whole) upon any of
the property or assets of Ford Credit pursuant to the terms of, any
indenture, mortgage, deed of trust, loan agreement, guarantee, lease
financing agreement or similar agreement or instrument known to such
counsel under which Ford Credit 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 Ford Credit.
(v) Such counsel does not know of any legal
or governmental proceedings pending to which Ford Credit is a party or
of which any property of Ford Credit is the subject, and no such
proceedings are known by such counsel to be threatened or contemplated
by governmental authorities or threatened by others, other than as set
forth or contemplated in the Prospectus as amended or supplemented and
other than such proceedings which, in his opinion, will not have a
material adverse effect upon the general affairs, financial position,
net worth or results of operations (on an annual basis) of Ford Credit
and its subsidiaries considered as a whole and will not materially and
adversely affect the performance by Ford
16
<PAGE> 17
Credit of its obligations under, or the validity and enforceability
of, [the Pooling and Servicing Agreement, the Purchase Agreement or
the Indemnification Agreement] [the Basic Documents or the Certificate
Indemnification Agreement].
(vi) Ford Credit has full power and
authority to sell and assign the property to be sold and assigned to
the Seller pursuant to the Purchase Agreement and has duly authorized
such sale and assignment to the Seller by all necessary corporate
action.
(vii) The Seller has full power and
authority to sell and assign the property to be sold and assigned to
[and deposited with the Trustee as part of] the Trust and has duly
authorized such sale and assignment to the [Trustee] [Trust] by all
necessary limited partnership action.
[(viii) The Trust has full power and
authority to grant a security interest in the property to be pledged
to the Indenture Trustee pursuant to the Indenture and has duly
authorized such grant by all necessary trustee action.]
(ix) The statements in the Prospectus under
the caption "Certain Legal Aspects of the Receivables," to the extent
they constitute matters of law or legal conclusions, are correct in
all material respects.
(x) Immediately prior to the sale of the
Receivables to the Seller, Ford Credit owned the Receivables free and
clear of any lien, security interest or charge; [and] immediately
prior to the assignment of the Receivables to the [Trustee] [Trust],
the Seller owned the Receivables free and clear of any lien, security
interest or charge[; and immediately prior to the grant of a security
interest in the Receivables to the Indenture Trustee, the Trust owned
the Receivables free and clear of any lien, security interest or
charge]. With respect to each Receivable constituting
17
<PAGE> 18
part of the Trust, such Receivable is secured by a validly perfected
first priority security interest in the vehicle financed thereby in
favor of Ford Credit as a secured party or Ford Credit has instituted
appropriate procedures that if followed (and such counsel has no
reason to believe that they will not be so followed) will result in
the perfection of a first priority security interest in the vehicle
financed thereby in favor of Ford Credit as a secured party. Each
such Receivable has been duly and validly assigned to the Seller by
Ford Credit and to the [Trustee as Trustee of the Trust by the Seller]
[Trust by the Seller, and a security interest in each such Receivable
has been duly and validly granted to the Indenture Trustee by the
Trust].
(xi) All filings necessary under
applicable law to perfect [both] the sale of the Receivables by Ford
Credit to the Seller pursuant to the Purchase Agreement, [and] the
sale of the Receivables by the Seller to the [Trustee as Trustee of
the] Trust pursuant to the [Pooling] [Sale] and Servicing Agreement
[and the grant of a security interest in the Receivables to the
Indenture Trustee pursuant to the Indenture] have been made and,
provided that neither Ford Credit nor the Seller relocates its
principal place of business in a state other than Michigan [and that
the [Indenture] Trustee maintains the list of Receivables for
inspection by interested parties as described above], no other filings
(other than the filing of continuation statements) need be made to
maintain the perfection of the sale of the Receivables either to the
Seller pursuant to the Purchase Agreement or to the [Trustee as
Trustee of the] Trust pursuant to the [Pooling] [Sale] and Servicing
Agreement [and of the grant of a security interest in the Receivables
to the Indenture Trustee pursuant to the Indenture].
(xii) The [Trust] [Pooling and Servicing
Agreement] is not required to be qualified under the Trust Indenture
Act, [the
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<PAGE> 19
Indenture has been duly qualified under the Trust Indenture Act,] and
neither the Trust nor Ford Credit is required to be registered under
the Investment Company Act of 1940, as amended.
(xiii) No consent, approval, authorization or
order of any court or governmental agency or body is required for the
consummation of the transactions contemplated herein or in the
[Pooling and Servicing Agreement, the Purchase Agreement or the
Indemnification Agreement] [the Basic Documents or the Certificate
Indemnification Agreement], except such as may be required under the
Act [, the Trust Indenture Act] and other federal and state securities
laws; filings with respect to the transfer of the Receivables to the
Seller pursuant to the Purchase Agreement and to the [Trustee] [Trust]
pursuant to the [Pooling] [Sale] and Servicing Agreement [and the
grant of a security interest in the Receivables to the Indenture
Trustee pursuant to the Indenture;] and such other approvals as have
been obtained.
(xiv) Such counsel does not know of any legal
or governmental proceedings pending to which either Ford Credit or the
Seller is a party or of which any property of either Ford Credit or
the Seller is the subject, and no such proceedings are known by such
counsel to be threatened or contemplated by governmental authorities
or threatened by others (1) seeking to prevent the issuance of the
[Class A] Certificates or the consummation of any of the transactions
contemplated by this Agreement, [the Pooling and Servicing Agreement,
the Purchase Agreement or the Indemnification Agreement] [the
Certificate Indemnification Agreement or the Basic Documents], or (2)
seeking adversely to affect the federal income tax attributes of the
[Class A] Certificates as described in the Prospectus under the
heading "Certain Federal Income Tax Consequences."
(xv) Neither the issuance or sale of the
[Class A] Certificates, nor the execution and delivery of the [Class A
Certifi-
19
<PAGE> 20
cates, this Agreement, the Pooling and Servicing Agreement, the
Purchase Agreement or the Indemnification Agreement, [Certificates,
this Agreement, the Certificate Indemnification Agreement or the Basic
Documents], nor the consummation of any of the other transactions
contemplated herein or in the [Pooling and Servicing Agreement, the
Purchase Agreement or Indemnification Agreement] [Certificate
Indemnification Agreement or the Basic Documents] by Ford Credit or
the Seller, as the case may be, will contravene the terms of any
material provision of any statute, order, or regulation applicable to
Ford Credit or the Seller, as the case may be, the failure with which
to comply could have a material adverse effect on Ford Credit and its
subsidiaries considered as a whole or the Seller, as the case may be.
(h) J.D. Bringard, Esq., Vice President-General
Counsel of the General Partner, or other counsel satisfactory to the
Representative in its reasonable judgment, shall have furnished to the
Representative his written opinion, dated as of the Closing Date, in form
satisfactory to the Representative in its reasonable judgment, to the effect
that:
(i) The General Partner 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) This Agreement has been duly
authorized, executed and delivered by the General Partner.
(iii) The Limited Partnership Agreement has
been duly authorized, executed and delivered by, and constitutes a
valid and binding obligation of, the General Partner.
20
<PAGE> 21
(iv) The Limited Partnership Agreement
authorizes the General Partner to execute and deliver on behalf of the
Seller this Agreement, the Purchase Agreement [, the Trust Agreement]
and the [Pooling] [Sale] and Servicing Agreement.
(v) The execution and delivery on behalf of
the Seller of this Agreement, the Purchase Agreement [, the Trust
Agreement] and the [Pooling] [Sale] and Servicing Agreement and the
performance by the General Partner of its obligations under this
Agreement, the Purchase Agreement [, the Trust Agreement] and the
[Pooling] [Sale] and Servicing Agreement have been duly authorized by
all necessary corporate action of the General Partner and each has
been duly executed and delivered by the General Partner.
(vi) The consummation of the transactions
contemplated by this Agreement [, the Pooling and Servicing Agreement
and the Purchase Agreement] [and the Basic Documents], and the
fulfillment of the terms hereof and thereof, will not conflict with or
result in a material breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of
any material lien, charge or encumbrance upon any of the property or
assets of the General Partner pursuant to the terms of, any indenture,
mortgage, deed of trust, loan agreement, guarantee, lease financing
agreement or similar agreement or instrument known to such counsel
under which the General Partner 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 General Partner.
(vii) Such counsel does not know of any legal
or governmental proceedings pending to which the General Partner is a
party or of which any property of the General Partner is the subject,
and no such proceedings are known by such counsel to be threatened or
contemplat-
21
<PAGE> 22
ed by governmental authorities or threatened by others, other than as
set forth or contemplated in the Prospectus as amended or supplemented
and other than such proceedings which, in his opinion, 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 General
Partner and will not materially and adversely affect the performance
by the General Partner of its obligations under, or the validity and
enforceability of, this Agreement, [the Pooling and Servicing
Agreement, the Purchase Agreement] [the Basic Documents] or the [Class
A] Certificates.
(viii) The General Partner is not required to
be registered under the Investment Company Act of 1940, as amended.
(ix) No consent, approval, authorization or
order of any court or governmental agency or body is required for the
consummation of the transactions contemplated herein or in [the
Pooling and Servicing Agreement or the Purchase Agreement] [the Basic
Documents], except such as may be required under the Act [, the Trust
Indenture Act] and other federal and state securities laws; filings
with respect to the transfer of the Receivables to the Seller pursuant
to the Purchase Agreement and to the [Trustee] [Trust] pursuant to
the [Pooling] [Sale] and Servicing Agreement [and the grant of a
security interest in the Receivables to the Indenture Trustee pursuant
to the Indenture;] and such other approvals as have been obtained.
(x) Such counsel does not know of any legal
or governmental proceedings pending to which the General Partner is a
party or of which any property of the General Partner is the subject,
and no such proceedings are known by such counsel to be threatened or
contemplated by governmental authorities or threatened by others (1)
seeking to prevent the issuance of the [Class A] Certificates or the
consummation of any of the transactions contemplated by this
22
<PAGE> 23
Agreement [, the Pooling and Servicing Agreement or the Purchase
Agreement] [or the Basic Documents], or (2) seeking adversely to
affect the federal income tax attributes of the [Class A] Certificates
as described in the Prospectus under the heading "Certain Federal
Income Tax Consequences."
(xi) Neither the issuance or sale of the
[Class A] Certificates, nor the execution and delivery of the [Class
A] Certificates, this Agreement [, the Pooling and Servicing Agreement
or the Purchase Agreement] [or the Basic Documents], nor the
consummation of any of the other transactions contemplated herein or
in the [Pooling and Servicing Agreement or the Purchase Agreement]
[Basic Documents] by the General Partner, will contravene the terms of
any material provision of any statute, order, or regulation applicable
to the General Partner, the failure with which to comply could have a
material adverse effect on the General Partner.
(i) Skadden, Arps, Slate, Meagher & Flom (or such
other counsel satisfactory to the Representative) shall have furnished their
written opinion, dated the Closing Date, with respect to the characterization
of the transfer of the Receivables by Ford Credit to the Seller as a sale, and
with respect to the characterization of the transfer of the Receivables from
the Seller to the [Trustee] [Trust], (which opinion shall state that it may be
relied upon by the [Indenture] Trustee) to the Representative and to Ford
Credit, and such opinion shall be in substantially the form previously
discussed with the Representative and its counsel and in any event satisfactory
in form and in substance to the Representative and its counsel and to Ford
Credit.
(j) Skadden, Arps, Slate, Meagher & Flom (or such
other counsel satisfactory to the Representative), special counsel to Ford
Credit, shall have furnished their written opinion, dated the Closing Date,
with respect to the nonconsolidation under the Bankruptcy Code of the assets
and liabilities of either of the Seller or the General Partner with the assets
and liabilities of Ford Credit in the event that Ford Credit were
23
<PAGE> 24
to become the subject of a case under the Bankruptcy Code to the Representative
and to Ford Credit, and such opinion shall be in substantially the form
previously discussed with the Representative and its counsel and in any event
satisfactory in form and in substance to the Representative and its counsel and
to Ford Credit.
(k) Skadden, Arps, Slate, Meagher & Flom, special
tax counsel to the Seller, shall have furnished to the Representative their
written opinion, dated as of the Closing Date, in form and in substance
satisfactory to the Representative in its reasonable judgment, to the effect
that:
[(i) For New York franchise tax purposes,
the trust fund created by the Pooling and Servicing Agreement will not
be classified as a corporation and, accordingly, will not be subject
to New York franchise taxes, and Class A Certificateholders who are
not residents or otherwise subject to tax in New York will not be
subject to New York income or franchise taxes with respect to interest
from the Class A Certificates or with respect to any of the
Receivables.]
(ii) [The Trust will not be classified as an
association taxable as a corporation for federal income tax purposes.]
[The Trust created by the Pooling and Servicing Agreement will not be
classified as an association taxable as a corporation for federal
income tax purposes and, instead, under subpart E, part I of
subchapter J of the Internal Revenue Code of 1986, as amended, the
Trust will be treated as a grantor trust and, subject to
recharacterization of certain fees paid by the Trust, each Class A
Certificateholder will be treated as the owner of an undivided
interest in the income and corpus attributable to the trust fund.]
(iii) The statements in the Registration
Statement and Prospectus under the heading "Certain Federal Income Tax
Consequences," to the extent that they constitute matters of law or
legal conclusions with respect there-
24
<PAGE> 25
to, have been prepared or reviewed by such counsel and are correct in
all material respects.
[(l) J.D. Bringard, Esq., Vice President-General
Counsel of Ford Credit and the Seller, shall have furnished to the
Representative his written opinion, dated as of the Closing Date, in form
satisfactory to the Representative in its reasonable judgment, to the effect
that, assuming the Seller and the Trust will each not be classified as an
association taxable as a corporation for federal income tax purposes:
(i) The Trust will not have a liability
for the Michigan single business tax and will not be subject to
Michigan income tax.
(ii) The statements in the Registration
Statement and Prospectus under the headings "Certain State Tax
Consequences with respect to Trusts for Which a Partnership Election
Is Made," to the extent that they constitute matters of law or legal
conclusions with respect thereto, have been prepared or reviewed by
such counsel and are correct in all material respects.]
(m) The Representative shall have received an
opinion addressed to the Representative of Skadden, Arps, Slate, Meagher &
Flom, dated the Closing Date, with respect to the validity of the [Class A]
Certificates and such other related matters as the Representative shall require
and the Seller shall have furnished or caused to be furnished to such counsel
such documents as they may reasonably request for the purpose of enabling them
to pass upon such matters.
[(n) The Representative shall have received an
opinion addressed to the Representative, the Seller and Ford Credit of
______________, counsel to the Trustee, dated the Closing Date and satisfactory
in form and substance to the Representative and to counsel to the
Representative, to the effect that:
(i) The Trustee has been duly
incorporated and is validly existing as a banking corporation in good
standing under the laws
25
<PAGE> 26
of the State of ______ with full corporate trust power and authority
to enter into and perform its obligations under the Pooling and
Servicing Agreement.
(ii) The Pooling and Servicing Agreement
has been duly executed and delivered by the Trustee, and, insofar as
the laws governing the trust powers of the Trustee are concerned and
assuming due authorization, execution and delivery thereof by the
Seller and the Servicer, the Pooling and Servicing Agreement
constitutes a legal, valid and binding obligation of the Trustee,
enforceable against the Trustee in accordance with its terms, except
(1) the enforceability thereof may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights, and (2) the remedy
of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(iii) The Class A Certificates have been duly
executed, authenticated and delivered by the Trustee.
(iv) Neither the execution nor delivery by
the Trustee of the Pooling and Servicing Agreement nor the
consummation of any of the transactions by the Trustee contemplated
thereby required the consent or approval of, the giving of notice to,
the registration with, or the taking of any other action with respect
to, any governmental authority or agency under any existing federal or
______ State law governing the trust powers of the Trustee, except
such as have been obtained, made or taken.]
[(n) The Representative shall have received an
opinion addressed to the Representative, the Seller and Ford Credit of
______________, counsel to the Owner Trustee, dated the Closing Date and
satisfactory in form and substance to the Representative and to counsel to the
Representative, to the effect that:
26
<PAGE> 27
(i) The Owner Trustee has been duly
incorporated and is validly existing as a banking corporation in good
standing under the laws of the State of Delaware with full corporate
trust power and authority to enter into and perform its obligations
under the Trust Agreement, and, on behalf of the Trust, under the
Indenture, the Sale and Servicing Agreement and the Administration
Agreement.
(ii) The Trust Agreement duly creates for
the benefit of the Seller and the Certificateholders the interests in
the Owner Trust Estate which the Trust Agreement purports to create,
and the trust purported to be created by the Trust Agreement is
validly formed and is validly existing as a business trust in good
standing under the laws of the State of Delaware.
(iii) The Trust Agreement authorizes the
Trust to execute and deliver the Indenture, the Sale and Servicing
Agreement and the Administration Agreement, to issue the Certificates
and to grant the Indenture Trust Estate to the Indenture Trustee as
security for the Notes.
(iv) The execution and delivery of the
Trust Agreement and, on behalf of the Trust, the Indenture, the Sale
and Servicing Agreement and the Administration Agreement and the
performance by the Owner Trustee of its obligations under the Trust
Agreement, the Indenture, the Sale and Servicing Agreement and the
Administration Agreement have been duly authorized by all necessary
corporate action of the Owner Trustee and each has been duly executed
and delivered by the Owner Trustee.
(v) Assuming due authorization, execution and
delivery thereof by the parties thereto, the Trust Agreement, the
Indenture, the Sale and Servicing Agreement and the Administration
Agreement each constitutes a legal, valid and binding obligation of
the Owner Trustee, enforceable against the Owner Trustee
27
<PAGE> 28
in accordance with its terms, except (1) the enforceability thereof
may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to
creditors' rights, and (2) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(vi) Neither the execution nor delivery by
the Owner Trustee of the Trust Agreement and, on behalf of the Trust,
the Indenture, the Sale and Servicing Agreement and the Administration
Agreement, nor the consummation of any of the transactions by the
Owner Trustee contemplated thereby required the consent or approval
of, the giving of notice to, the registration with, or the taking of
any other action with respect to, any governmental authority or agency
under any existing federal or Delaware State law governing the trust
powers of the Owner Trustee, except such as have been obtained, made
or taken.
(vii) The Owner Trustee has duly authorized,
issued, executed and delivered, and the Owner Trustee or its
authenticating agent has duly authenticated, each of the Certificates
pursuant to the terms and provisions of the Trust Agreement; each of
such Certificates is a legal, valid and binding obligation of the
Owner Trustee, enforceable against the Owner Trustee in accordance
with its terms and the terms of the Trust Agreement; and each of such
Certificates is entitled to the benefits afforded by the Trust
Agreement in accordance with the terms of the Trust Agreement.
(viii) The execution and delivery by the
Owner Trustee of the Trust Agreement and, on behalf of the Trust, the
Indenture, the Sale and Servicing Agreement and the Administration
Agreement, and the performance by the Owner Trustee of its obligations
thereunder do not conflict with or result in a breach or
28
<PAGE> 29
violation of any of the terms, conditions or provisions of any law,
governmental rule or regulation of the United States or the State of
Delaware governing the banking or trust powers of the Owner Trustee or
the Certificate of Incorporation or By- Laws of the Owner Trustee or,
to such counsel's knowledge, any order writ, injunction or decree of
any court or governmental authority against the Owner Trustee or by
which it or any of its properties is bound or, to such counsel's
knowledge, any indenture, mortgage or contract or other agreement or
instrument to which the Owner Trustee is a party or by which it or any
of its properties is bound, or constitute a default thereunder.
(ix) The Owner Trustee has acquired such
title to the Receivables as has been conveyed to the Owner Trustee on
the date hereof, subject to the security interest created pursuant to
the Indenture; and, to such counsel's knowledge, there exist no liens,
security interests or charges affecting the title of the Owner Trustee
to the Receivables resulting from acts of or claims against the Owner
Trustee except liens, security interests or charges contemplated by
the Basic Documents.
(o) The Representative shall have received an
officer's certificate dated the Closing Date of the Chairman of the Board, the
President, the Executive Vice President-Finance or the Treasurer of each of:
[(i)] Ford Credit, [the General Partner on
behalf of the Seller, and the Servicer] in which such officers shall
state that, to the best of their knowledge after reasonable
investigation, the representations and warranties of the [Seller and
the] Servicer contained in the [Pooling] [Sale] and Servicing
Agreement and of Ford Credit [and the Seller] contained in the
Purchase Agreement are true and correct in all material respects, that
Ford Credit[, the Seller or the Servicer, as the case may be,] has
complied with all agreements and satisfied all conditions on its part
to be performed or satisfied under such agreements at
29
<PAGE> 30
or prior to the Closing Date in all material respects.
[(ii) The General Partner on behalf of the
Seller, in which such officers shall state that, to the best of their
knowledge after reasonable investigation, the representations and
warranties of the Seller contained in the Trust Agreement, the Sale
and Servicing Agreement and the Purchase Agreement are true and
correct in all material respects, that the Seller has complied with
all agreements and satisfied all conditions on its part to be
performed or satisfied under such agreements at or prior to the
Closing Date in all material respects.]
(iii) The General Partner, in which such
officers shall state that, to the best of their knowledge after
reasonable investigation, the representations and warranties of the
General Partner contained in the Limited Partnership Agreement are
true and correct in all material respects, that the General Partner
has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied under such agreement at or prior to
the Closing Date in all material respects.
(p) [The Class A Certificates shall have been rated
in the highest rating category by each of Moody's and Standard & Poor's.] [The
Certificates shall have been rated at least "___" by Moody's and at least "___"
by Standard & Poor's.]
[(q) At the Closing Date, the Notes shall have
been purchased and paid for by the Note Underwriters in accordance with the
Note Underwriting Agreement of even date herewith.]
7. Indemnification and Contribution. (a) The
Seller and the General Partner will indemnify and hold each Underwriter
harmless against any losses, claims, damages, or liabilities, joint or several,
to which such Underwriter may become subject, under the Act or otherwise,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of
30
<PAGE> 31
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Underwriter for any
legal or other expenses reasonably incurred by such Underwriter in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Seller and the General Partner will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with written information furnished to the
Seller or the General Partner by any Underwriter through the Representative
specifically for use therein; and provided further, that the Seller and the
General Partner shall not be liable to any Underwriter or any person
controlling any Underwriter under the indemnity agreement in this subsection
(a) with respect to any of such documents to the extent that any such loss,
claim, damage or liability of the Underwriters or such controlling person
results from the fact that such Underwriter sold the [Class A] Certificates to
a person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus or of the Prospectus as
then amended or supplemented (excluding documents incorporated by reference),
whichever is most recent, if the Seller has previously furnished copies thereof
to such Underwriter.
The indemnity agreement in this subsection (a) shall be in
addition to any liability which the Seller or the General Partner may otherwise
have and shall extend, upon the same terms and conditions, to each person, if
any, who controls any Underwriter within the meaning of the Act.
(b) Each Underwriter will indemnify and hold
harmless the Seller against any losses, claims, damages or liabilities to which
the Seller may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in
31
<PAGE> 32
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
the Prospectus or any amendment or supplement thereto, or any related
preliminary prospectus, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Seller by such Underwriter
through the Representative specifically for use therein, and will reimburse any
legal or other expenses reasonably incurred by the Seller in connection with
investigating or defending any such action or claim.
The indemnity agreement in this subsection (b) shall be in
addition to any liability which each Underwriter may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls the Seller or the General Partner within the meaning of the Act.
(c) Promptly after receipt by an indemnified
party under subsection (a) or (b) of written notice of the commencement of any
action, such indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under subsection (a) or (b) above, notify
the indemnifying party of the commencement thereof, and in the event that such
indemnified party shall not so notify the indemnifying party within 30 days
following receipt of any such notice by such indemnified party, the
indemnifying party shall have no further liability under such subsection to
such indemnified party unless the indemnifying party shall have received other
notice addressed and delivered in the manner provided in Section 10 hereof of
the commencement of such action; but the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party otherwise than under such subsection. In case any such
action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party
32
<PAGE> 33
similarly notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party in its reasonable judgment, and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under such subsection for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation.
(d) If the indemnification provided for in this
Section is unavailable or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Seller and the General Partner on the one
hand and the Underwriters on the other from the offering of the [Class A]
Certificates. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Seller and the General Partner on the one
hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, or liabilities (or
actions in respect thereof) as well as any other relevant equitable
considerations. The relative benefits received by the Seller and the General
Partner on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Seller and the General Partner bear to the
total underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover page of the Prospectus as
amended or supplemented with respect to the [Class A] Certificates. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to
33
<PAGE> 34
state a material fact relates to information supplied by the Seller or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission,
including, with respect to any Underwriter, the extent to which such losses,
claims, damages or liabilities (or actions in respect thereof) result from the
fact that such Underwriter sold such [Class A] Certificates to a person to whom
there was not sent or given, at or prior to the written confirmation of such
sale, a copy of the Prospectus or the Prospectus as then supplemented or
amended (excluding documents incorporated by reference), whichever is more
recent, if the Seller has previously furnished copies thereof to such
Underwriter. The Seller and the General Partner and the Underwriters,
severally and not jointly, agree that it would not be just and equitable if
contribution pursuant to this subsection (d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this subsection (d). The
amount paid by an indemnified party as a result of the losses, claims, damages,
or liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim. Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the [Class A]
Certificates underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
8. Survival of Certain Representations and
Obligations. The respective indemnities, agreements, representa- tions,
warranties and other statements (including, without limitation, Section 5(k))
of the Seller and the General Partner or their respective officers and of the
Underwriters set forth in or made pursuant to this Agreement will remain in
full force and effect, regard-
34
<PAGE> 35
less of any investigation or statement as to the results thereof, made by or on
behalf of any Underwriter, the Seller or the General Partner or any of their
respective representatives, officers or directors of any controlling person,
and will survive delivery of and payment for the [Class A] Certificates.
9. Failure to Purchase the Class A Certificates.
If the purchase of the [Class A] Certificates shall not be consummated because
the circumstances described in Section 6(e) shall have occurred, then neither
the Seller nor the General Partner shall have any liability to the Underwriters
with respect to the [Class A] Certificates except as provided in Section 5(h)
and Section 7 hereof; but if for any other reason the [Class A] Certificates
are not delivered to the Underwriters as provided herein, the Seller and the
General Partner will be liable to reimburse the Underwriters, through the
Representative, for all out-of-pocket expenses, including counsel fees and
disbursements reasonably incurred by the Underwriters in making preparations
for the offering of the [Class A] Certificates, but neither the Seller nor the
General Partner shall then have any further liability to any Underwriter with
respect to the [Class A] Certificates except as provided in Section 5(h) and
Section 7 hereof. If any Underwriter or Underwriters default on their
obligations to purchase [Class A] Certificates hereunder and the aggregate
principal amount of [Class A] Certificates that such defaulting Underwriter or
Underwriters agreed but failed to purchase does not exceed 10% of the total
principal amount of [Class A] Certificates, the Representative may make
arrangements satisfactory to the Seller and the General Partner for the
purchase of such [Class A] Certificates by other persons, including the non-
defaulting Underwriter or Underwriters, but if no such arrangements are made by
the Closing Date, the non-defaulting Underwriter or Underwriters shall be
obligated, in proportion to their commitments hereunder, to purchase the [Class
A] Certificates that such defaulting Underwriter or Underwriters agreed but
failed to purchase. If any Underwriter or Underwriters so default and the
aggregate principal amount of [Class A] Certificates with respect to which such
default or defaults occur exceeds 10% of the total principal amount of the
[Class A] Certificates and arrangements satisfactory to the non-defaulting
Underwriter or Underwriters, the Seller and the General Partner for the
purchase of such [Class A]
35
<PAGE> 36
Certificates by other persons are not made within 36 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter, the Seller and the General Partner, except as
provided in Section 5(h) and Section 7 hereof. As used in this Agreement, the
term "Underwriter" includes any person substituted for an Underwriter under
this Section. Nothing herein will relieve a defaulting Underwriter or
Underwriters from liability for its default.
10. Notices. All communications hereunder will
be in writing and will be mailed, delivered or sent by facsimile transmission
and confirmed . Communications to the Representative or the Underwriters shall
be given to the Representative at ______ - facsimile number (___) ___-____.
Communications to the Seller shall be given to it in care of the General
Partner at The American Road, Dearborn, Michigan 48121, attention of the
Secretary -facsimile number (313) 594-7742. Communications to the General
Partner shall be given to it at The American Road, Dearborn, Michigan 48121,
attention of the Secretary - facsimile number (313) 594-7742.
11. Successors. This Agreement will inure to the
benefit of and be binding upon the Underwriters, the Seller and the General
Partner and their respective successors and the officers and directors and
controlling persons referred to in Section 7, and no other person will have any
right or obligations hereunder.
12. Applicable Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York.
13. Counterparts. This Agreement may be executed
by each of the parties hereto in any number of counterparts, and by each of the
parties hereto on separate counterparts, each of which counterparts, when so
executed and delivered, shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
36
<PAGE> 37
If the foregoing is in accordance with your understanding,
please sign and return to us a counterpart hereof, whereupon this letter and
your acceptance hereof shall constitute a binding agreement.
Very truly yours,
FORD CREDIT AUTO RECEIVABLES
TWO L.P.
By: FORD CREDIT AUTO RECEIVABLES
TWO, INC.,
as General Partner
By:_________________________
Name:
Title:
FORD CREDIT AUTO RECEIVABLES
TWO, INC.
By:_________________________
Name:
Title:
Accepted in New York, New York,
as of the date hereof:
______
By:______________________________
Name:
Title:
Acting on behalf of itself and
as the Representative of the
several Underwriters.
<PAGE> 38
ADDENDUM TO [CERTIFICATE] UNDERWRITING AGREEMENT
DATED ________ __, ____ RELATING TO
FORD CREDIT AUTO [GRANTOR] [OWNER] TRUST ____-_
In order to clarify the provisions of Section 5(h) of the
[Certificate] Underwriting Agreement, dated ________ __, ____, among Ford
Credit Auto Receivables Two L.P., Ford Credit Auto Receivables Two, Inc. and
______, as Representative of the Several Underwriters, the parties hereto agree
as follows:
1. The Underwriters shall pay directly (i) all Blue Sky
fees and expenses as well as reasonable fees and expenses of counsel in
connection with state securities law qualifications and any legal investment
surveys; and (ii) the reasonable fees and expenses of Skadden, Arps, Slate,
Meagher & Flom.
2. Ford Credit Auto Receivables Corporation Two L.P.
shall pay (i) the Securities and Exchange Commission the filing fee with
respect to the Class A Certificates; (ii) all fees of any rating agencies
rating the [Class A] Certificates; (iii) all fees and expenses of the
[Indenture Trustee and the Owner] Trustee; (iv) all reasonable fees and
expenses of _____________, counsel to the [Indenture] Trustee; [(v) all
reasonable fees and expenses of _____________, counsel to the Owner Trustee;]
(vi) all fees and expenses of Coopers & Lybrand L.L.P. relating to the letter
referred to in Section 6(a) of the [Certificate] Underwriting Agreement; (vii)
all fees and expenses of accountants incurred in connection with the delivery
of any accountant's or auditor's reports required pursuant to the [Indenture or
the Sale] [Pooling] and Servicing Agreement; (viii) the cost of printing any
preliminary and final prospectus relating to the [Class A] Certificates, and
the Registration Statement; and (ix) any other fees and expenses incurred in
connection with the performance of its obligations under the [Certificate]
Underwriting Agreement.
38
<PAGE> 39
3. The provisions hereof are subject to the provisions
of Section 9 of the [Certificate] Underwriting Agreement.
Dated: ________ __, ____
FORD CREDIT AUTO RECEIVABLES
TWO L.P.
By: FORD CREDIT AUTO RECEIVABLES
TWO, INC.,
as General Partner CORPORATION
By:______________________________
Name:
Title:
FORD CREDIT AUTO RECEIVABLES
TWO, INC.
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
Acting on behalf of itself and as
the Representative of the several
Underwriters.
<PAGE> 40
SCHEDULE I
<TABLE>
<CAPTION>
Initial
Principal
Balance of [Class A]
Certificates
------------
<S> <C>
______ . . . . . . . . . . . . . . . . . . . $
______ . . . . . . . . . . . . . . . . . . .
______ . . . . . . . . . . . . . . . . . . .
______ . . . . . . . . . . . . . . . . . . .
______ . . . . . . . . . . . . . . . . . . .
----------
Total . . . . . . . . . . . . . . . . . $
==========
</TABLE>
<PAGE> 1
EXHIBIT 3.2
================================================================================
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 February 23, 1996
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TABLE OF CONTENTS
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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
SECTION 2.4. Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.6. No Partition or Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.7. Rights to Call Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.8. Execution of Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.9. No Other Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.10. 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
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SECTION 5.4. No Right to Property; No Priority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 5.5. Voting Rights of Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VI
CAPITAL CONTRIBUTIONS
SECTION 6.1. 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
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ARTICLE X
TRANSFER OF LIMITED PARTNERSHIP INTERESTS;
WITHDRAWAL OF LIMITED PARTNERS
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. Continuation of the Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 11.3. Status of Departing General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 11.4. Death, Insanity, etc., of
Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 11.5. Distribution upon Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 11.6. No Recourse Against the Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 11.7. General Partner's Discretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 11.8. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE XII
POWER OF ATTORNEY
SECTION 12.1. Grant of Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 12.2. Powers of Attorney Irrevocable and
Coupled With an Interest; Copies to be
Retained . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 12.3. Survival of Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 12.4. Limitation on Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE XII
AMENDMENTS
SECTION 13.1. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE XIV
MISCELLANEOUS PROVISIONS
SECTION 14.1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 14.2. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 14.3. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 14.4. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 14.5. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 14.6. Non-Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 14.7. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 14.8. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
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SECTION 14.9. Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 14.10. Survivability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
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THIS AGREEMENT, made and entered into as of February 23, 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 form a limited
partnership in accordance with the Delaware Revised Uniform Limited Partnership
Act, as amended;
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.
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"Agreement" shall mean this 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 Requisite Portion or
at least such stated percentage of the total Partnership Interests of the
Partners.
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"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 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
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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
11.5(a).
"major creditor" shall have the meaning set forth in the
definition of the term "Independent Director" above.
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"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 trustees 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
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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 Sections 4.5 and 11.2.
"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.
"Tax Matters Partner" shall have the meaning set forth in
Section 8.4.
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"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 term "including" shall mean "including without
limitation".
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(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.
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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.
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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-
12
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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,
exclusive of its interest in the Partnership, at least equal to 10% (or such
lesser percentage as permitted by the Code or Treasury Regulations) of (i) the
aggregate amount of Receivables subject to a Transfer and Servicing Agreement
and (ii) the aggregate remaining principal balance of certificates issued by
Trusts established by Ford Credit or Ford Credit Auto Receivables Corporation
or any Affiliate thereof which secure or collateralize Notes, less the amount
of outstanding Notes held by investors not affiliated with the Partnership or
Ford;
(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 part-
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nership agreement of a limited partnership of which it is the
general partner; and
(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. Upon the
occurrence of an event described in Section ll.l(c), the business of the
Partnership shall be continued if a successor General
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Partner is appointed or elected in the manner provided in Section 11.2.
SECTION 4.5. Transfer of a General Partnership Interest. The
General Partner shall not transfer, sell, 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 and (ii) 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. 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
11.5(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 11.6, 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> 35
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> 36
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> 37
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> 38
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> 39
(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> 40
ARTICLE XI
DISSOLUTION AND TERMINATION OF PARTNERSHIP
SECTION 11.1. Dissolution Events. The Partnership shall be
dissolved, the Liquidation Period shall commence and, except as provided in
Section 11.2, 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. Continuation of the Partnership.
Notwithstanding Section 11.1, the business of the Partnership shall be
continued after the occurrence of any event set forth in Section ll.l(c) if (i)
within ninety (90) days after such event, holders of 100% of the Part-
35
<PAGE> 41
nership Interests of the Limited Partners (excluding a departing general
partner treated as a Limited Partner under Section 11.3) give their Consent to
continue the business of the Partnership and elect one or more Substitute
General Partners and (ii) the Rating Agency Condition shall have been satisfied
in connection therewith. Upon satisfaction of the foregoing conditions, such
Substitute General Partner(s) shall succeed to all of the powers, privileges
and obligations of the original General Partner.
SECTION 11.3. Status of Departing General Partner. In the
event of bankruptcy, insolvency, withdrawal, resignation or dissolution of the
sole remaining General Partner and the continuation of the business of the
Partnership pursuant to Section 11.2 hereof, the status of the interest in the
Partnership of the departing General Partner shall be changed to that of a
Limited Partner.
SECTION 11.4. Death, Insanity, etc., of Limited Partners.
The death, insanity, insolvency, incompetency, bankruptcy or dissolution of any
Limited Partner shall not dissolve the Partnership.
SECTION 11.5. Distribution upon Dissolution.
(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 11.5(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;
36
<PAGE> 42
(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.
(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 11.6. 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 11.7. 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
37
<PAGE> 43
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 11.8. 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.
38
<PAGE> 44
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.
39
<PAGE> 45
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 provi- sion.
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.
40
<PAGE> 46
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.
41
<PAGE> 47
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:
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:
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.
42
<PAGE> 48
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.
43
<PAGE> 49
IN WITNESS WHEREOF, the undersigned have duly executed this
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/ H.D. Smith
-----------------------------
Name: H.D. Smith
Title: Secretary
<PAGE> 1
EXHIBIT 4.1
=======================================================
INDENTURE
between
FORD CREDIT AUTO OWNER TRUST _____-__,
as Issuer
and
_________________________________________ ,
as Indenture Trustee
Dated as of ________ __, ____
=======================================================
<PAGE> 2
CROSS REFERENCE TABLE(1)
---------------------
<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
-----------------
Page
----
ARTICLE I
DEFINITIONS, USAGE AND INCORPORATION BY REFERENCE 3
SECTION 1.1. Definitions and Usage . . . . . . . 3
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 . . . . . . . . . . . . 10
SECTION 2.10. Release of Collateral . . . . . . . . 11
SECTION 2.11. Book-Entry Notes . . . . . . . . . . 11
SECTION 2.12. Notices to Clearing Agency . . . . . 13
SECTION 2.13. Definitive Notes . . . . . . . . . . 13
SECTION 2.14. Authenticating Agents . . . . . . . . 13
ARTICLE III
COVENANTS . . . . . . . . . . 15
SECTION 3.1. Payment of Principal and Interest . 15
SECTION 3.2. Maintenance of Office or Agency . . 15
SECTION 3.3. Money for Payments To Be Held
in Trust . . . . . . . . . . . . . . 15
SECTION 3.4. Existence . . . . . . . . . . . . . . 18
SECTION 3.5. Protection of Indenture Trust Estate 18
SECTION 3.6. Opinions as to Indenture Trust Estate 19
SECTION 3.7. Performance of Obligations;
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<PAGE> 4
<TABLE>
<S> <C> <C>
Servicing of Receivables . . . . . . 19
SECTION 3.8. Negative Covenants . . . . . . . . . 22
SECTION 3.9. Annual Statement as to Compliance . 23
SECTION 3.10. Issuer May Consolidate, etc.,
Only on Certain Terms . . . . . . . 24
SECTION 3.11. Successor of Transferee . . . . . . . 26
SECTION 3.12. No Other Business . . . . . . . . . 27
SECTION 3.13. No Borrowing . . . . . . . . . . . . 27
SECTION 3.14. Servicer's Obligations . . . . . . . 27
SECTION 3.15. Guarantees, Loans, Advances and
Other Liabilities . . . . . . . . . 27
SECTION 3.16. Capital Expenditures . . . . . . . . 27
SECTION 3.17. Further Instruments and Acts . . . . 27
SECTION 3.18. Restricted Payments . . . . . . . . 28
SECTION 3.19. Notice of Events of Default . . . . . 28
SECTION 3.20. Removal of Administrator . . . . . . 28
ARTICLE IV
SATISFACTION AND DISCHARGE . . . . . . 29
SECTION 4.1. Satisfaction and Discharge
of Indenture . . . . . . . . . . . . 29
SECTION 4.2. Satisfaction, Discharge and
Defeasance of Notes . . . . . . . . . 30
SECTION 4.3. Application of Trust Money . . . . . 32
SECTION 4.4. Repayment of Monies Held by
Note Paying Agent . . . . . . . . . 32
ARTICLE V
REMEDIES . . . . . . . . . . 33
SECTION 5.1. Events of Default . . . . . . . . . . 33
SECTION 5.2. Acceleration of Maturity;
Rescission and Annulment . . . . . . 35
SECTION 5.3. Collection of Indebtedness
and Suits for Enforcement by
Indenture Trustee . . . . . . . . . . 36
SECTION 5.4. Remedies; Priorities . . . . . . . . 39
SECTION 5.5. Optional Preservation of the
Receivables . . . . . . . . . . . . . 41
SECTION 5.6. Limitation of Suits . . . . . . . . . 41
SECTION 5.7. Unconditional Rights of
Noteholders To Receive Principal
and Interest . . . . . . . . . . . . 42
SECTION 5.8. Restoration of Rights and
Remedies . . . . . . . . . . . . . . 43
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 5.9. Rights and Remedies Cumulative . . . 43
SECTION 5.10. Delay or Omission Not a Waiver . . . 43
SECTION 5.11. Control by Noteholders . . . . . . 43
SECTION 5.12. Waiver of Past Defaults . . . . . . 44
SECTION 5.13. Undertaking for Costs . . . . . . . 45
SECTION 5.14. Waiver of Stay or Extension
Laws . . . . . . . . . . . . . . . 45
SECTION 5.15. Action on Notes . . . . . . . . . . 46
SECTION 5.16. Performance and Enforcement
of Certain Obligations . . . . . . . 46
ARTICLE VI
THE INDENTURE TRUSTEE . . . . . . 48
SECTION 6.1. Duties of Indenture Trustee . . . . . 48
SECTION 6.2. Rights of Indenture Trustee . . . . . 49
SECTION 6.3. Individual Rights of Indenture
Trustee . . . . . . . . . . . . . . . 50
SECTION 6.4. Indenture Trustee's Disclaimer . . . 50
SECTION 6.5. Notice of Defaults; Insolvency or
Dissolution of Depositor or General
Partner . . . . . . . . . . . . . . . 51
SECTION 6.6. Reports by Indenture Trustee to
Noteholders . . . . . . . . . . . . . 52
SECTION 6.7. Compensation and Indemnity . . . . . 52
SECTION 6.8. Replacement of Indenture Trustee . . 53
SECTION 6.9. Successor Indenture Trustee
by Merger . . . . . . . . . . . . . 54
SECTION 6.10. Appointment of Co-Indenture
Trustee or Separate Indenture
Trustee . . . . . . . . . . . . . . . 55
SECTION 6.11. Eligibility; Disqualification . . . . 57
SECTION 6.12. Preferential Collection of
Claims Against Issuer . . . . . . . . 57
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS . . . . 58
SECTION 7.1. Issuer To Furnish Indenture
Trustee Names and Addresses
of Noteholders . . . 58
SECTION 7.2. Preservation of Information;
Communications to Noteholders . . 58
SECTION 7.3. Reports by Issuer . . . . . . . 59
SECTION 7.4. Reports by Indenture Trustee . . 59
</TABLE>
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ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES . . . 61
SECTION 8.1. Collection of Money . . . . . . . . 61
SECTION 8.2. Trust Accounts, the Reserve
Account and the Yield Supplement
Account . . . . . . . . . . . . . . 61
SECTION 8.3. General Provisions Regarding
Accounts . . . . . . . . . . . . . . 63
SECTION 8.4. Release of Indenture Trust Estate . 64
SECTION 8.5. Opinion of Counsel . . . . . . . . . 65
ARTICLE IX
SUPPLEMENTAL INDENTURES . . . . . . 66
SECTION 9.1. Supplemental Indentures Without
Consent of Noteholders . . . . . . 66
SECTION 9.2. Supplemental Indentures with
Consent of Noteholders . . . . . . 68
SECTION 9.3. Execution of Supplemental
Indentures . . . . . . . . . . . . 70
SECTION 9.4. Effect of Supplemental Indenture . 71
SECTION 9.5. Conformity with Trust Indenture
Act . . . . . . . . . . . . . . . . 71
SECTION 9.6. Reference in Notes to
Supplemental Indentures . . . . . . 71
ARTICLE X
REDEMPTION OF NOTES . . . . . . . 72
SECTION 10.1. Redemption . . . . . . . . . . . . 72
SECTION 10.2. Form of Redemption Notice . . . . . 72
SECTION 10.3. Notes Payable on Redemption Date . 73
ARTICLE XI
MISCELLANEOUS . . . . . . 74
SECTION 11.1. Compliance Certificates and
Opinions, etc. . . . . . . . . . . 74
SECTION 11.2. Form of Documents Delivered
to Indenture Trustee . . . . . . . . 76
SECTION 11.3. Acts of Noteholders . . . . . . . . 77
SECTION 11.4. Notices, etc., to Indenture
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<PAGE> 7
Trustee, Issuer and Rating
Agencies . . . . . . . . . . . . . . 78
SECTION 11.5. Notices to Noteholders; Waiver . . . 79
SECTION 11.6. Alternate Payment and Notice
Provisions . . . . . . . . . . . . 80
SECTION 11.7. Conflict with Trust Indenture
Act . . . . . . . . . . . . . . . 80
SECTION 11.8. Effect of Headings and Table
of Contents . . . . . . . . . . . . 81
SECTION 11.9. Successors and Assigns . . . . . . 81
SECTION 11.10. Separability . . . . . . . . . . . 81
SECTION 11.11. Benefits of Indenture . . . . . . . 81
SECTION 11.12. Legal Holiday . . . . . . . . . . . 81
SECTION 11.13. Governing Law . . . . . . . . . . . 81
SECTION 11.14. Counterparts . . . . . . . . . . . 82
SECTION 11.15. Recording of Indenture . . . . . . 82
SECTION 11.16. Trust Obligation . . . . . . . . . 82
SECTION 11.17. No Petition . . . . . . . . . . . . 83
SECTION 11.18. Inspection . . . . . . . . . . . . 83
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 B Form of Note Depository Agreement B-1
SCHEDULE A Schedule of Receivables . . . . . . SA-1
APPENDIX A Definitions and Usage . . . . . . AA-1
v
<PAGE> 8
INDENTURE, dated as of _________ __, ____, (as from time to time amended,
supplemented or otherwise modified and in effect, this "Indenture") between
FORD CREDIT AUTO OWNER TRUST ____-_, a Delaware business trust (the "Issuer"),
and _________________________________________, a ________ banking 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 ____%
Asset Backed Notes (the "Class A-1 Notes"), Class A-2 _____% Asset Backed Notes
(the "Class A-2 Notes") and Class A-3 ___% Asset Backed Notes (the "Class A-3
Notes" and, together with the Class A-1 Notes and the Class A-2 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) any
Dealer Recourse; (f) all of the Seller's rights to the Receivable Files; (g)
the Trust Accounts, the Reserve Account and the Yield Supplement Account 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 and the Yield Supplement Agreement; (i)
<PAGE> 9
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; (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.
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<PAGE> 10
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 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.
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<PAGE> 11
ARTICLE II
THE NOTES
SECTION 2.1. Form. (a) The Class A-1 Notes, the Class A-2 Notes and the
Class A-3 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 and Exhibit A-3, 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 and Exhibit A-3 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.
4
<PAGE> 12
(c) The Indenture Trustee shall, upon Issuer Order, authenticate and
deliver Class A-1 Notes for original issue in an aggregate principal amount of
$___________, Class A-2 Notes for original issue in an aggregate principal
amount of $______ and Class A-3 Notes for original issue in an aggregate
principal amount of $___________. The aggregate principal amount of Class A-1
Notes, Class A-2 Notes and Class A-3 Notes outstanding at any time may not
exceed that amount except as provided in Section 2.6.
(d) Each Note shall be dated the date of its authentication. The Notes
of the same Class 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, 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
5
<PAGE> 13
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.
6
<PAGE> 14
(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 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.
(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
7
<PAGE> 15
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 its 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
8
<PAGE> 16
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 and the Class A-3 Notes shall accrue
interest at the Class A-1 Rate, the Class A-2 Rate and the Class A-3 Rate,
respectively, as set forth in Exhibit A-1, Exhibit A-2 and Exhibit A-3,
respectively, and such interest shall be payable on each Distribution Date as
specified therein, subject to Section 3.1. Any install-
9
<PAGE> 17
ment 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 and Exhibit A-3 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
connection with redemption
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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 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 Indenture Trustee or 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 repre-
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senting the Book-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
and 2.6, 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, and (iii) for the benefit of the Class A-3 Notes, to the
Class A-3 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 Section 8.2, all payments of amounts due and payable with respect to any
Notes that are to be made from amounts withdrawn from the Collection Account,
the Reserve Ac-
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count and the Note Payment Account shall be made on behalf of the Issuer by the
Indenture Trustee or by another Note Paying Agent, and no amounts so withdrawn
from the Collection Account, the Reserve Account and the Note Payment 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.
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 ____, 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 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 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
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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 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.
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(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. 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 limitations 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
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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:
(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;
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(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;
(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 Trust 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.
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 ____), 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
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(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;
(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
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(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 supplemental 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;
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<PAGE> 34
(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 of Transferee. (a) Upon any
consolidation or merger of the Issuer in accordance 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.
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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.
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
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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 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 to pay and
discharge the entire indebtedness on
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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;
(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 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
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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 defeasance
of the Notes pursuant to this Section 4.2 will not cause any Noteholder
to be treated as having
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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, 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 not less than 25% of the
principal amount of
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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) above, its status and what action the
Issuer is taking or proposes to take with respect thereto.
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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 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.
No such rescission shall affect any subsequent default or impair any right
consequent thereto.
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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 more, 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 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.
(d) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any
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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 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 with respect to the claims of the Noteholders and of the
Indenture Trustee on their behalf; and
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(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 made, by the Indenture Trustee and each
predecessor Indenture Trustee, except as a result of negligence or bad faith.
(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 compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Noteholders.
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(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 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)
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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 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, 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
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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 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
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 Available Funds 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
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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;
(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
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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, 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,
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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 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
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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, expenses and liabilities for which it
will not be adequately indemnified or might materially adversely affect 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 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,
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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.
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
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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 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 on any document believed by it to be genuine and to have been signed or
presented by the proper Person. The Indenture Trustee need not investigate any
fact or matters stated in any such document.
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(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 unless it
is proved that the Indenture Trustee was negligent in such reliance.
(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.
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
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in this Indenture or in any document issued in connection with the sale of the
Notes or in the Notes 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, 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, the Reserve Account, the Yield
Supplement
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Account 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. The Indenture
Trustee shall deliver to each Noteholder such information prepared by the
Servicer pursuant to Section 3.9 of the Sale and Servicing Agreement as may be
required to enable such Noteholder to prepare its federal and State income tax
returns.
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, indemnify the Indenture Trustee 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. 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
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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. 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 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.
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(b) Any successor Indenture Trustee shall deliver a written acceptance of
its appointment to the retiring Indenture Trustee and to the Issuer.
Thereupon, 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. 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 comply with Section 6.11,
any Noteholder 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
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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 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 hereof.
(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
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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
(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,
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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
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 SectionE312(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 March 31, beginning with
March 31, ____, 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, the Reserve Account and the Yield Supplement
Account. (a) On or prior to the Closing Date, the Issuer shall cause the
Servicer to establish and maintain the Trust Accounts, the Reserve Account and
the Yield Supplement Account as provided in Sections 4.1, 4.7 and 5.1,
respectively, 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 Sections 4.6 and 4.7 of the Sale and Servicing Agreement
shall be withdrawn by the Indenture Trustee from the Collection Account and/or
the Reserve Account and deposited to the Note Payment Account for payment to
Noteholders on such Distribution Date.
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(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 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 Principal Distribution Amount, to the Noteholders of the
Class A-1 Notes until the principal amount of the outstanding Class A-1
Notes is reduced to zero; provided that if there are not sufficient funds
received to pay the principal amount of the outstanding Class A-1 Notes,
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 Principal Distribution Amount, to the Noteholders of the
Class A-2 Notes until the principal amount of the outstanding Class A-2
Notes is reduced to zero; provided that if there are not sufficient funds
received to pay the principal amount of the outstanding Class A-2 Notes,
the amounts so received shall be applied to the payment of principal on
the Class A-2 Notes on a pro rata basis; and
(iv) the Principal Distribution Amount, to the Noteholders of the
Class A-3 Notes until the principal amount of the outstanding Class A-3
Notes is reduced to zero; provided that if there are not sufficient funds
received to pay the principal amount of the outstanding Class A-3 Notes,
the amounts so received shall be applied to the payment of principal on
the Class A-3 Notes on a pro rata basis.
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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, the
Reserve Account and the Yield Supplement Account shall be invested by the
Indenture Trustee at the direction of the Servicer in Permitted Investments as
provided in Sections 4.1, 4.7 and 5.1 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, the
Reserve Account and the Yield Supplement 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 the Yield Supplement Account) and distributed as provided in Sections 4.1,
4.7 and 5.1 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 or in the Reserve Account or the
Yield Supplement Account 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 Reserve Account or the Yield Supplement Account resulting from any loss
on any Eligible 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 the Collection Account, the Payahead Account, the
Reserve Account or the Yield Supplement Account to the Indenture Trustee by
11:00 a.m. New York Time (or such other time
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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, the Reserve
Account or the Yield Supplement 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 accordance with TIA
Sections 314(c) and 314(d)(1) meeting the applicable requirements of Section
11.1.
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(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; 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 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 Applicable Tax State income taxation of any Notes Outstanding or
outstanding Certificates or any Noteholder or Certificateholder.
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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 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);
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(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
hereunder and their consequences 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;
(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 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
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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 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 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,
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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(a) 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(a), 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 twenty
(20) 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 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 twenty (20) 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 ten (10) days prior to the applicable Redemption Date, to each
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Noteholder as of the close of business on the Record 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; and
(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).
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, the Reserve Account and the Yield Supplement 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
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<PAGE> 85
some matters and one or more other such Persons as to 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
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<PAGE> 86
to be given or taken by Noteholders may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such
Noteholders in person or by 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
pur-
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<PAGE> 87
pose hereunder if made, given, furnished or 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 ____-_, in care of
_________________, __________________________________, Delaware
_____, Attention: Corporate Trust Department, with a copy to the
Administrator at The American Road, Dearborn, Michigan 48121,
Attention: ___________________, 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 Group, 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
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<PAGE> 88
manner herein provided shall conclusively be presumed to have been duly given.
(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
to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
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<PAGE> 89
The provisions of TIA Sections 310 through 317 that impose duties on any
Person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.8. 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
accrued 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.
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<PAGE> 90
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 its individual capacity, (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 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 in
its individual capacity, 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 capacity), 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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<PAGE> 91
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.
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<PAGE> 92
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 -
-- ---
By: ,
-------------------------- ------------------
not in its individual
capacity but solely as Owner
Trustee
By:
--------------------------
Name:
Title:
,
--------------------------
not in its individual
capacity but solely as
Indenture Trustee
By:
--------------------------
Name:
Title:
85
<PAGE> 93
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared _____________, known to me to
be the person and officer whose name is subscribed to the foregoing instrument
and acknowledged to me that the same was the act of the said FORD CREDIT AUTO
OWNER TRUST ____-_, a Delaware business trust, for the purpose and
consideration therein expressed, and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ______ day of ________, ____.
------------------------------
Notary Public in and for
the State of New York.
[Seal]
My commission expires:
- -------------------------
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<PAGE> 94
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared _____________, known to me to
be the person and officer whose name is subscribed to the foregoing instrument
and acknowledged to me that the same was the act of ________________, a
_________ banking corporation, and that such person executed the same as the
act of said corporation for the purpose and consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this _______ day of __________,
_____.
-----------------------------
Notary Public in and for
the State of New York.
[Seal]
My commission expires:
- -----------------------
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 $_____
No. CUSIP NO.__________
FORD CREDIT AUTO OWNER TRUST _____-__
____% CLASS A-1 ASSET BACKED NOTES
Ford Credit Auto Owner Trust _____-__, 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 _____________________ DOLLARS payable
on each Distribution Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is $[INSERT INITIAL PRINCIPAL
AMOUNT OF NOTE] and the denominator of which is $_______________ by (ii) the
aggregate amount, if any, payable to Class A-1 Noteholders 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 _______ __, ____, (as from
A-1-1
<PAGE> 96
time to time amended, supplemented or otherwise modified and in effect, the
"Indenture") between the Issuer and __________, a ___________ banking
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 ____________ 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 (or, in the case of the initial Distribution Date, from the
Closing Date) to but excluding such Distribution Date (each, an "Accrual
Period"). 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-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:
FORD CREDIT AUTO OWNER TRUST ____-_,
By: ,
------------------------------
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 Notes designated above and referred to in the
within-mentioned Indenture.
Date:
,
----------------------------------
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 Asset Backed Notes (the "Class A-1E Notes")
which, together with the Issuer's _____% Class A-2 Asset Backed Notes (the
"Class A-2 Notes") and _____% Class A-3 Asset Backed Notes (the "Class A-3
Notes" and, together with the Class A-1 Notes and the Class A-2 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 and the
Class A-3 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
_________ day of each month, or, if any such day is not a Business Day, the
next succeeding Business Day, commencing _________ __, _____.
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 to the extent lawful.
As provided in the Indenture, the Notes may be redeemed, in whole or 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 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), agrees 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.
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 ________________, in its individual
capacity, ______________________ 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
no claim against any of the foregoing for any
A-1-9
<PAGE> 104
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 $_____
No. CUSIP NO.__________
FORD CREDIT AUTO OWNER TRUST _____-__
____% CLASS A-2 ASSET BACKED NOTES
Ford Credit Auto Owner Trust _____-__, 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 _____________________ DOLLARS payable
on each Distribution Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is $[INSERT INITIAL PRINCIPAL
AMOUNT OF NOTE] and the denominator of which is $_______________ by (ii) the
aggregate amount, if any, payable to Class A-2 Noteholders 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 _______ __, ____, (as from
A-2-1
<PAGE> 107
time to time amended, supplemented or otherwise modified and in effect, the
"Indenture") between the Issuer and __________, a ___________ banking
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 ____________ 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 previous
Distribution Date (or, in the case of the initial Distribution Date, from the
Closing Date) to but excluding such Distribution Date (each, an "Accrual
Period"). 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:
FORD CREDIT AUTO OWNER TRUST ___-_,
By: ,
---------------------------------------
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 Notes designated above and referred to in the
within-mentioned Indenture.
Date: ,
--------------------------------------
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 Asset Backed Notes (the "Class A-2 Notes")
which, together with the Issuer's _____% Class A-1 Asset Backed Notes (the
"Class A-1 Notes") and _____% Class A-3 Asset Backed Notes (the "Class A-3
Notes" and, together with the Class A-1 Notes and the Class A-2 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, 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
_________ day of each month, or, if any such day is not a Business Day, the
next succeeding Business Day, commencing _________ __, _____.
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 to the extent lawful.
As provided in the Indenture, the Notes may be redeemed, in whole or 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 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-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), agrees 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.
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 ________________, in its individual
capacity, ______________________ 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
no claim against any of the foregoing for any
A-2-9
<PAGE> 115
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 $_____
No. CUSIP NO.__________
FORD CREDIT AUTO OWNER TRUST _____-__
____% CLASS A-3 ASSET BACKED NOTES
Ford Credit Auto Owner Trust _____-__, 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 _____________________ DOLLARS payable
on each Distribution Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is $[INSERT INITIAL PRINCIPAL
AMOUNT OF NOTE] and the denominator of which is $_______________ by (ii) the
aggregate amount, if any, payable to Class A-3 Noteholders 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 _______ __, ____, (as from
A-3-1
<PAGE> 118
time to time amended, supplemented or otherwise modified and in effect, the
"Indenture") between the Issuer and __________, a ___________ banking
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 ____________ 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 previous
Distribution Date (or, in the case of the initial Distribution Date, from the
Closing Date) to but excluding such Distribution Date (each, an "Accrual
Period"). 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:
FORD CREDIT AUTO OWNER TRUST ___-_,
By: ,
---------------------------------------
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 Notes designated above and referred to in the
within-mentioned Indenture.
Date:
,
--------------------------------------
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 Asset Backed Notes (the "Class A-3 Notes")
which, together with the Issuer's _____% Class A-1 Asset Backed Notes (the
"Class A-1 Notes") and _____% Class A-2 Asset Backed Notes (the "Class A-2
Notes" and, together with the Class A-1 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 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
_________ day of each month, or, if any such day is not a Business Day, the
next succeeding Business Day, commencing _________ __, _____.
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 to the extent lawful.
As provided in the Indenture, the Notes may be redeemed, in whole or 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 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-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), agrees 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.
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 ________________, in its individual
capacity, ______________________ 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
no claim against any of the foregoing for any
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<PAGE> 126
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 B
[FORM OF NOTE DEPOSITORY AGREEMENT]
B-1
<PAGE> 129
SCHEDULE A
Schedule of Receivables
[Provided to the Indenture Trustee at the Closing]
SA-1
<PAGE> 130
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
__________________,
as Owner Trustee
Dated as of _________ __, ____
--------- -- -----
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND USAGE
Definitions and Usage . . . . . . . . . . . . 1
ARTICLE II
ORGANIZATION OF THE TRUST
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. Initial 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. The Certificates . . . . . . . . . . . . . . 10
SECTION 3.3. Authentication of Certificates . . . . . . . . 10
SECTION 3.4. Registration of Certificates; Transfer
and Exchange of Certificates . . . . . . . . . 11
SECTION 3.5. Mutilated, Destroyed, Lost or
Stolen Certificates . . . . . . . . . . . . . 13
SECTION 3.6. Persons Deemed Owners of Certificates 13
SECTION 3.7. Access to List of
Certificateholders' Names and Addresses . . . 13
SECTION 3.8. Maintenance of Office or Agency . . . . . . . 14
SECTION 3.9. Appointment of Certificate Paying Agent 14
SECTION 3.10. Ownership by Depositor of
Certificates . . . . . . . . . . . . . . . . . 15
SECTION 3.11. Book-Entry Certificates . . . . . . . . . . . 16
SECTION 3.12. Notices to Clearing Agency . . . . . . . . . 17
SECTION 3.13. Definitive Certificates . . . . . . . . . . . 18
i
<PAGE> 3
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1. Prior Notice to Certificateholders
with Respect to Certain Matters . . . . . . . 19
SECTION 4.2. Action by Certificateholders
with Respect to Certain Matters . . . . . . . 20
SECTION 4.3. Action by Certificateholders
with Respect to Bankruptcy . . . . . . . . . . 20
SECTION 4.4. Restrictions on
Certificateholders' Power . . . . . . . . . . 20
SECTION 4.5. Majority Control . . . . . . . . . . . . . . 20
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1. Establishment of Certificate
Distribution Trust Account . . . . . . . . . . 22
SECTION 5.2. Application of Trust Funds . . . . . . . . . . 22
SECTION 5.3. Method of Payment . . . . . . . . . . . . . . 24
SECTION 5.4. No Segregation of Monies;
No Interest . . . . . . . . . . . . . . . . . 24
SECTION 5.5. Accounting and Reports to the
Noteholders, Certificateholders,
the Internal Revenue Service and Others . . . 25
SECTION 5.6. Signature on Returns;
Tax Matters Partner . . . . . . . . . . . . . 25
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1. General Authority . . . . . . . . . . . . . . 26
SECTION 6.2. General Duties . . . . . . . . . . . . . . 26
SECTION 6.3. Action upon Instruction . . . . . . . . . . . 27
SECTION 6.4. No Duties Except as Specified
in this Agreement or in Instructions . . . . . 28
SECTION 6.5. No Action Except Under
Specified Documents or Instructions . . . . . 29
SECTION 6.6. Restrictions . . . . . . . . . . . . . . . . . 29
ARTICLE VII
REGARDING THE OWNER TRUSTEE
SECTION 7.1. Acceptance of Trusts and Duties . . . . . . . 30
SECTION 7.2. Furnishing of Documents . . . . . . . . . . . 32
SECTION 7.3. Representations and Warranties . . . . . . . . 32
SECTION 7.4. Reliance; Advice of Counsel . . . . . . . . . 32
ii
<PAGE> 4
SECTION 7.5. Not Acting in Individual Capacity . . . . . . 33
SECTION 7.6. Owner Trustee Not Liable for . . . . . . . .
Certificates or Receivables . . . . . . . . . 34
SECTION 7.7. Owner Trustee May Own
Certificates and Notes . . . . . . . . . . . 34
ARTICLE VIII
COMPENSATION AND INDEMNITY OF OWNER TRUSTEE
SECTION 8.1. Owner Trustee's Fees and Expenses . . . . . . 35
SECTION 8.2. Indemnification . . . . . . . . . . . . . . . 35
SECTION 8.3. Payments to the 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 . . . . . . 38
SECTION 9.3. Redemption of the Certificates. . . . . . . 39
ARTICLE X
SUCCESSOR OWNER TRUSTEES
AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1. Eligibility Requirements
for Owner Trustee . . . . . . . . . . . . . . 42
SECTION 10.2. Resignation or Removal
of Owner Trustee . . . . . . . . . . . . . . 42
SECTION 10.3. Successor Owner Trustee . . . . . . . . . . . 43
SECTION 10.4. Merger or Consolidation
of Owner Trustee . . . . . . . . . . . . . . 44
SECTION 10.5. Appointment of Co-Trustee
or Separate Trustee . . . . . . . . . . . . . 44
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Supplements and Amendments . . . . . . . . . 47
SECTION 11.2. No Legal Title to Owner Trust
Estate in Certificateholders . . . . . . . . 49
SECTION 11.3. Limitation on Rights of Others . . . . . . . 49
SECTION 11.4. Notices . . . . . . . . . . . . . . . . . . . 49
SECTION 11.5. Severability . . . . . . . . . . . . . . . . 50
SECTION 11.6. Separate Counterparts . . . . . . . . . . . 50
SECTION 11.7. Successors and Assigns . . . . . . . . . . . 50
SECTION 11.8. Covenants of Depositor and General Partner . . 51
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<PAGE> 5
SECTION 11.9. No Petition . . . . . . . . . . . . . . . . 51
SECTION 11.10. No Recourse. . . . . . . . . . . . . . . . . 52
SECTION 11.11. Headings . . . . . . . . . . . . . . . . . 52
SECTION 11.12. Governing Law . . . . . . . . . . . . . . . 52
SECTION 11.13. Maintenance of Net Worth . . . . . . . . . . 52
EXHIBIT A Form of Certificate
EXHIBIT B Form of Certificate of Trust
EXHIBIT C Form of Certificate Depository Agreement
APPENDIX A Definitions and Usage
iv
<PAGE> 6
AMENDED AND RESTATED TRUST AGREEMENT, dated as of _________ __, ____ (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 _______________, a Delaware
banking corporation, not in its individual capacity but solely as Owner Trustee
under this Agreement, having its principal corporate trust office at
_________________.
WHEREAS, the parties hereto intend to amend and restate that certain Trust
Agreement, dated as of _________ __, ____ 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> 7
ARTICLE II
ORGANIZATION OF THE TRUST
SECTION 2.1. Name. The Trust created hereby shall be known as "Ford
Credit Auto Owner Trust ____-__", 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 and the Yield Supplement 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;
(vi) to engage in those activities, including entering into
agreements, that are necessary, suit-
2
<PAGE> 8
able 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. Initial Capital Contribution of Owner Trust Estate. As
of ____________ __, ____, 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.
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 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
3
<PAGE> 9
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 of Delaware.
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 or
the arrangement between the Depositor and 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 or Certificate Owners for any losses incurred by
the Certificateholders or Certificate Owners 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 paragraph. The obligations of the Depositor under this paragraph shall
be evidenced by the Certificates described in Section 3.10,
4
<PAGE> 10
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 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.
(b) The Depositor is duly qualified to do business as a foreign limited
partnership in good standing, and has obtained all necessary licenses and
approv-
5
<PAGE> 11
als 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
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,
6
<PAGE> 12
(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
and the Certificate Owners 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 (and the Certificate Owners by acceptance of a beneficial
interest in 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 first Record Date
following the end of 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 Interest for such month, (ii) the portion of
the
7
<PAGE> 13
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 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
Depositor, 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 first Record Date following the end of 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 appropriate, in its sole discretion, for the
allocations
8
<PAGE> 14
to fairly reflect the economic income, gain or loss to the Depositor or
the Certificateholders or as otherwise required by the Code.
9
<PAGE> 15
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. The Certificates. The Certificates shall be issued in
denominations of at least $1,000 and in integral multiples of $1,000 in excess
thereof; provided, however, that Certificates may be issued to the Depositor
pursuant to Section 3.10(i) in such denominations as to represent at least 2%
of the Initial Certificate Balance. 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.
SECTION 3.3. 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 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 or ____________, as
the
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Owner Trustee's authenticating agent, 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 3.4. 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 3.8, 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. _____________ 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) Upon surrender for registration of transfer of any Certificate at the
office or agency maintained pursuant to Section 3.8, the Owner Trustee shall
execute, authenticate and deliver (or shall cause ___________, as its
authenticating agent, to 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 issued to the
Depositor pursuant to Section 3.10(i)) 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 3.8.
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.
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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 3.4 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.
The Certificates and any beneficial interest in such Certificates may not
be acquired by (a) employee benefit plans (as defined in section 3(3) of ERISA)
that are subject to the provisions of Title I of ERISA, (b) plans described in
section 4975(e)(1) of the Code, including individual retirement accounts
described in Section 408(a) of the Code or Keogh plans, or (c) entities whose
underlying assets include plan assets by reason of a plan's investment in such
entities (each, a "Benefit Plan"). By accepting and holding a Certificate or
an interest therein, the Certificateholder thereof or the Certificate Owner
thereof shall be deemed to have represented and warranted that it is not a
Benefit Plan and is not purchasing Certificates on behalf of a Benefit Plan.
The Certificates and any beneficial interest in such Certificates may not
be purchased by Persons other than U.S. Persons and non-U.S. Persons who shall
have satisfied the Depositor and the Owner Trustee that such non-U.S. Person
will be taxed with respect to its beneficial ownership of Certificates as if it
were a U.S. Person. By accepting and holding a Certificate or an interest
therein, the Certificateholder thereof or the Certificate Owner thereof shall
be deemed to have represented and warranted that it is not a non-U.S. Person
and is not purchasing Certificates on behalf of a non-U.s. Person, unless such
Certificateholder or Certificate Owner is a non-U.S. Person who shall have
satisfied the Depositor and the Owner Trustee with respect to its taxation as a
U.S. Person.
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SECTION 3.5. 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, or ___________, as the Owner Trustee's authenticating agent, 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 with the issuance of any new Certificate under
this Section 3.5, 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 3.5 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 3.6. 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 3.7. 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
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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 reason of the disclosure of its name and
address, regardless of the source from which such information was derived.
SECTION 3.8. Maintenance of Office or Agency. The Owner Trustee shall
maintain in The Borough of Manhattan, The City of New York, 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 ____________, ____________, New
York, New York _______ 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 3.9. Appointment of Certificate Paying Agent. The Certificate
Paying Agent shall make distributions to Certificateholders 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
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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 _____________ 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, 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 3.10. 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
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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".
SECTION 3.11. Book-Entry Certificates. The Certificates, upon original
issuance, will be issued in the form of a typewritten Certificate or
Certificates representing Book-Entry Certificates, to be delivered to The
Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the
Trust; provided, however, that one Definitive Certificate (as defined below)
may be issued to the Depositor pursuant to Section 3.10. Such Certificate or
Certificates shall initially be registered on the Certificate Register in the
name of Cede & Co., the nominee of the initial Clearing Agency, and no
Certificate Owner will receive a Definitive Certificate representing such
Certificate Owner's interest in such Certificate, except as provided in Section
3.13. Unless and until definitive, fully registered Certificates (the
"Definitive Certificates") have been issued to Certificate Owners pursuant to
Section 3.13:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Certificate Registrar and the Owner Trustee shall be
entitled to deal with the Clearing Agency for all purposes of this
Agreement (including the distribution of principal of and interest on the
Certificates and the giving of instructions or directions hereunder) as
the sole Certificateholder of the Certificates and shall have no
obligation to the Certificate Owners;
(iii) to the extent that the provisions of this Section 3.11
conflict with any other provisions of this Agreement, the provisions of
this Section 3.11 shall control;
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(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency and shall be limited to those established by
law and agreements between such Certificate Owners and the Clearing
Agency and/or the Clearing Agency Participants. Pursuant to the
Certificate Depository Agreement, unless and until Definitive
Certificates are issued pursuant to Section 3.13, the initial Clearing
Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit distributions in respect of
principal of and interest on the Certificates to such Clearing Agency
Participants; and
(v) whenever this Agreement requires or permits actions to be taken
based upon instructions or directions of Certificateholders of
Certificates evidencing a specified percentage of the Certificate
Balance, the Clearing Agency shall be deemed to represent such percentage
only to the extent that it has received instructions to such effect from
Certificate Owners and/or Clearing Agency Participants owning or
representing, respectively, such required percentage of the beneficial
interest in the Certificates and has delivered such instructions to
the Owner Trustee.
SECTION 3.12. Notices to Clearing Agency. Whenever a notice or other
communication to the Certificateholders is required under this Agreement,
unless and until Definitive Certificates shall have been issued to Certificate
Owners pursuant to Section 3.13, the Owner Trustee shall give all such notices
and communications specified herein to be given to Certificateholders to the
Clearing Agency, and shall have no obligations to the Certificate Owners.
SECTION 3.13. Definitive Certificates. If (i) the Administrator
advises the Owner Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities with respect to the
Certificates, and the Administrator is unable to locate a qualified successor,
(ii) the Administrator at its option advises the Owner 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, Certifi-
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cate Owners evidencing beneficial interests aggregating not less than a
majority of the Certificate Balance advise the Clearing Agency in writing that
the continuation of a book-entry system through the Clearing Agency is no
longer in the best interest of the Certificate Owners, then the Clearing Agency
shall notify all Certificate Owners and the Owner Trustee of the occurrence of
any such event and of the availability of the Definitive Certificates to
Certificate Owners requesting the same. Upon surrender to the Owner Trustee of
the typewritten Certificate or Certificates representing the Book-Entry
Certificates by the Clearing Agency, accompanied by registration instructions,
the Owner Trustee shall execute and authenticate the Definitive Certificates in
accordance with the instructions of the Clearing Agency. Neither the
Certificate Registrar nor the Owner 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
Certificates, the Owner Trustee shall recognize the registered holders of the
Definitive Certificates as Certificateholders. The Definitive Certificates
shall be printed, lithographed or engraved or may be produced in any other
manner as is reasonably acceptable to the Owner Trustee, as evidenced by its
execution thereof.
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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 the Owner Trustee at a Qualified Institution or Qualified Trust
Institution (which shall initially be _____________), which shall be designated
as the "Certificate Distribution Account." The Certificate Distribution
Account shall be held in trust in the name of the Owner Trustee for the benefit
of the Certificateholders. Except as expressly provided in Section 3.9, 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 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).
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 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 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 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 Certificateholder, 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 Date either by
wire transfer, in immediately available
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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; provided,
however, that, unless Definitive Certificates have been issued pursuant to
Section 3.13, with respect to Certificates registered on the Record Date in the
name of the nominee of the Clearing Agency (initially, such nominee to be Cede
& Co.), distributions will be made by wire transfer in immediately available
funds to the account designated by such nominee. 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 3.8.
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 the Noteholders,
Certificateholders, the 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 elec-
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tions 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 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(d) 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 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 Notes in the aggregate principal amount of
$__________. 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. 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,
moni-
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tor 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 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
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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 to the ownership or the administration of the Owner Trust Estate.
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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.
SECTION 7.2. Furnishing of Documents. The Owner Trustee shall furnish to
the Certificateholders,
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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 certified copy of a
resolution of the board of directors or other governing body of any corporate
party as conclu-
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sive 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, _______________ 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 correctness thereof. The Owner Trustee makes no repre-
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sentations 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 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. Owner Trustee May Own Certificates and Notes. The Owner
Trustee, 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.
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 of the Depositor, which approval
shall not be unreasonably withheld.
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SECTION 8.3. Payments to the 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 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 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
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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 dissolution, unless, before the end of such 90-day period,
the Owner Trustee shall have received written instructions from (a)
Certificateholders (other than the Depositor, the Servicer or their Affiliates)
of Certificates evidencing not less than a majority of the Certificate Balance
and a majority of the right to receive distributions in respect of
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return on the Certificate Balance, (b) the Noteholders (other than the
Depositor, the Servicer or their Affiliates) of Notes evidencing not less than
a majority of the principal amount of the Notes Outstanding and a majority of
the right to receive interest on the Notes Outstanding, 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, the Servicer or their Affiliates) having interests with a
value not less than a majority of the value of all interests in the Reserve
Account, 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 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, the Reserve Account, the Yield Supplement
Account
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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. Redemption of Certificates. (a) The Certificates shall be
redeemed in whole, but not in part, at the direction of the Servicer pursuant
to Section 9.1(a) 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(a), 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 Certificates plus accrued and unpaid interest
thereon. The Servicer shall furnish the Rating Agencies and the
Certificateholders notice of such redemption. If the Certificates are to be
redeemed 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
Redemption Date and the Trust shall deposit by 10:00 A.M. (New York City time)
on the Redemption Date in the Certificate Distribution Account the Redemption
Price of the Certificates to be redeemed, whereupon all such Certificates shall
be due and payable on the Redemption Date.
(b) Notice of redemption 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 Redemption Date, to each Certificateholder as of the close of
business on the Record Date preceding the applicable Redemption Date, at such
Certificateholder's address or facsimile number appearing in the Certificate
Register.
All notices of Redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
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(iii) the place where such Certificates are to be
surrendered for payment of the Redemption Price (which shall be
the office or agency of the Owner Trustee to be maintained as
provided in Section 3.8).
Notice of redemption 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
redemption, or any defect therein, to any Certificateholder shall not impair or
affect the validity of the redemption of any other Certificate.
(c) Following notice of redemption as required by Section
9.3(b), the Certificates shall on the Redemption Date be paid by the Trust at
the Redemption Price and (unless the Trust 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. Following payment in full of the Redemption
Price, this Agreement and the Trust shall terminate.
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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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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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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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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.
45
<PAGE> 51
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.
46
<PAGE> 52
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-
47
<PAGE> 53
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.
(g) In connection with the execution of any amendment to this Agreement
or any amendment to any other
48
<PAGE> 54
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 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 Ford Credit Auto Receivables Two L.P.
at the address of its principal executive office first above written; or, as to
49
<PAGE> 55
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 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.
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 or Certificate Owner, by accepting a Certificate or, in
the case of a Certificate Owner, a beneficial interest in a Certificate, hereby
covenant and agree that they 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
50
<PAGE> 56
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 or Certificate Owner,
by accepting a Certificate or, in the case of a Certificate Owner, a beneficial
interest in a Certificate, acknowledges that such Certificateholder's
Certificates or such Certificate Owner's beneficial interest in a Certificate
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 maintain
partnership assets net of partnership liabilities, exclusive of its partnership
interest or interests in the Trust (or any similar entity), at least equal to
___________________________.
51
<PAGE> 57
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:_______________________
Name:
Title:
______________________________,
not in its individual capacity
but solely as Owner Trustee
By:______________________
Name:
Title:
52
<PAGE> 58
EXHIBIT A
---------
[FORM OF CERTIFICATE]
NUMBER $
---------
R- CUSIP NO.
-----
[CERTIFICATE ISSUED TO CEDE CO.: UNLESS THIS CERTIFICATE 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 CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME 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.]
[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.
A-1
<PAGE> 59
FORD CREDIT AUTO OWNER TRUST -
----- ---
% 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, sold to Ford Credit Auto Receivables Two L.P. by Ford Motor Credit
Company and sold by Ford Credit Auto Receivables Two L.P. to the Trust. The
property of the Trust (other than the Certificate Distribution Account and the
proceeds thereof) 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 CEDE & CO. is the registered owner of __________
DOLLARS nonassessable, fully-paid, beneficial interest in Certificates of Ford
Credit Auto Owner Trust - (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 $
and bear interest at a rate of % per annum (the "Certificate Rate").
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Trust
Agreement.
Dated:
_________________________, __________________________________
as Owner Trustee or as Owner Trustee
By:______________________ By:___________________________, as
Authorized Officer Authenticating Agent
By:___________________________
Authorized Officer
A-2
<PAGE> 60
The Trust was created pursuant to an Amended and Restated Trust Agreement,
dated as of __________ __ ,_____ (as from time to time amended, supplemented or
otherwise modified and in effect, the "Trust Agreement"), by and among the
Depositor and __________________, 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
" % Asset Backed Certificates" (herein called the "Certificates"). Also
issued under the Indenture, dated as of _____________ __,____ (as from time to
time amended, supplemented or otherwise modified and in effect, the
"Indenture"), between the Trust and _________________, as indenture trustee (in
such capacity, the "Indenture Trustee"), are the Notes designated as ____%
Class A-1 Asset Backed Notes, the ______% Class A-2 Asset Backed Notes and the
% Class A-3 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 sales 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 dur or received thereunder on or after the Cutoff Date;
(iii) security interests in the Financed Vehicles and any accessions thereto;
(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) any Dealer Recourse; (vi) 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 __________________ (as from time to time amended, supplemented or otherwise
modified and in effect, the "Sale and Servicing Agreement"), by and among the
Trust, the Depositor, as seller (in such capacity, the "Seller"), and Ford
Motor Credit Company, as
A-3
<PAGE> 61
servicer (the "Servicer"), including the Reserve Account and the Yield
Supplement Account; (viii) the Seller's rights under the Sale and Servicing
Agreement; (ix) Seller's rights under the Purchase Agreement and the Yield
Supplement Agreement; (x) payments and proceeds with respect to the Receivables
held by the Servicer; (xi) all property securing a Receivable; (xii) rebates of
premiums and other amounts relating to insurance policies and other items
financed under the Receivables; and (xiii) any and all proceeds of the
foregoing. THE RIGHTS OF THE OWNER TRUSTEE IN THE FOREGOING PROPERTY OF THE
TRUST (OTHER THAN THE CERTIFICATE DISTRIBUTION ACCOUNT AND THE
PROCEEDS THEREOF) HAVE BEEN PLEDGED TO THE INDENTURE TRUSTEE TO SECURE THE
PAYMENT OF THE NOTES.
Under the Trust Agreement, there will be distributed on the
day of each month or, if such _______________ day is not a Business Day, the
next Business Day (each, a "Distribution Date"), commencing _____________ __ ,
,____ to the Person in whose name this Certificate is registered at the close of
business on the day prior to such Distribution Date or, if Definitive
Certificates have been issued pursuant to Section 3.13 of the Trust Agreement,
the __ 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 the Notes have 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> 62
It is the intent of the Depositor, the Servicer, the Certificateholders
and the Certificate Owners that, for purposes of federal income, state and
local 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 (and the Certificate Owners
by acceptance of a beneficial interest in 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 or Certificate Owner, by its acceptance of a
Certificate or, in the case of a Certificate Owner, a beneficial interest in a
Certificate, covenants and agrees that such Certificateholder or Certificate
Owner will not at any time 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 The Borough of
Manhattan, The City of New York.
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.
A-5
<PAGE> 63
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 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.
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____-_
By:__________________________, not in its
individual capacity but solely as Owner
Trustee
By:___________________________
Authorized Officer
A-6
<PAGE> 64
[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 CEDE & CO: 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 __________ in its capacity as Certificate Registrar, or by any
successor Certificate Registrar, in The Borough of Manhattan, The City of
A-7
<PAGE> 65
New York, 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 $1,000 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 Certificate (including any beneficial interests therein) may not be
acquired by or for the account of (i) an employee benefit plan (as defined in
Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA,
(ii) a plan described in section 4975(e)(1)j of the Internal Revenue Code of
1986, as amended (the "Code"), including an individual retirement account
described in Section 408(a) of the Code or a Keogh plan or (iii) any entity
whose underlying assets include plan assets by reason of a plan's investment in
the entity (each, a "Benefit Plan"). By accepting and holding this Certificate
or any beneficial interest herein, the Certificateholder hereof (or the
Certificate Owner of any beneficial
A-8
<PAGE> 66
interest hereof) shall be deemed to have represented and warranted that it is
not a Benefit Plan.
The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby shall terminate 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
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-9
<PAGE> 67
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-10
<PAGE> 68
EXHIBIT B
---------
[FORM OF CERTIFICATE OF TRUST]
CERTIFICATE OF TRUST OF
FORD CREDIT AUTO OWNER TRUST -
-------------------------------------
This Certificate of Trust of FORD CREDIT AUTO OWNER TRUST ____-__ (the
"Trust"), dated as of __________ __, ____, is being duly executed and filed by
________________________, 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 ____-__.
2. Delaware Trustee. The name and business address of the trustee of the
Trust in the State of Delaware is __________________, ________________,
Delaware _____.
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.
______________________,
not in its individual capacity but solely
as owner trustee under a Trust Agreement
dated as of ________ __, ____
By: _______________________________
Name:
Title:
B-1
<PAGE> 69
EXHIBIT C
----------
[FORM OF CERTIFICATE DEPOSITORY AGREEMENT]
C-1
<PAGE> 70
APPENDIX A
----------
Definitions and Usage
---------------------
C-2
<PAGE> 1
EXHIBIT 4.3
_________________________________________
FORD CREDIT AUTO GRANTOR TRUST ____-_
ASSET BACKED CERTIFICATES
_____________________________________
FORD CREDIT AUTO RECEIVABLES TWO L.P.
Seller
FORD MOTOR CREDIT COMPANY
Servicer
______
Trustee and Class A Agent
_________________
POOLING AND SERVICING AGREEMENT
Dated as of ______ __, ____
_________________
<PAGE> 2
TABLE OF CONTENTS
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----
<S> <C>
ARTICLE I Creation of Trust . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II Conveyance of Receivables. . . . . . . . . . . . . . . . . . . 2
ARTICLE III Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE IV Acceptance by Trustee. . . . . . . . . . . . . . . . . . . . . 3
ARTICLE V Incorporation of Standard Terms
and Conditions of Agreement. . . . . . . . . . . . . . . . . 4
ARTICLE VI Special Definitions and Terms. . . . . . . . . . . . . . . . . 4
ARTICLE VII Additional Representations
and Warranties of the Seller. . . . . . . . . . . . . . . . . 7
ARTICLE VIII Ford Motor Credit Company Not
to Resign as Servicer . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IX Agent for Service . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE X Additional Covenants of the Seller. . . . . . . . . . . . . . . 9
Schedule A -- List of Receivables
Schedule B -- Location of Receivables
</TABLE>
i
<PAGE> 3
This Pooling and Servicing Agreement, dated as of ______ __,____, is made
with respect to the formation of the Ford Credit Auto Grantor Trust ____-_,
among FORD CREDIT AUTO RECEIVABLES TWO L.P., a Delaware limited partnership, as
Seller ("Seller"), FORD MOTOR CREDIT COMPANY, a Delaware corporation, as
Servicer ("Servicer"), and ______, a ______ corporation, as trustee (in such
capacity, the "Trustee") and as agent (the "Class A Agent").
WITNESSETH THAT: In consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
Section 1.1 Creation of Trust. Upon the execution of this Agreement by
the parties hereto, there is hereby created the Ford Credit Auto Grantor Trust
____-_.
ARTICLE II
Section 2.1 Conveyance of Receivables. In consideration of the Trustee's
delivery to, or upon the order of, the Seller of Certificates ("Certificates")
in an aggregate amount equal to the Original Pool Balance, the Seller does
hereby irrevocably sell, transfer, assign, and otherwise convey to the Trustee,
in trust for the benefit of the Certificateholders, 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 following: (i) the Receivables
listed in Schedule A hereto and all monies paid thereon and due thereon on or
after the Cutoff Date (including 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 balances of the Receivables); (ii) 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; (iii) 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; (iv) Dealer Recourse; (v) all of the Seller's rights to
the Receivable Files; (vi) the
2
<PAGE> 4
Certificate Distribution Account and the Collection Account and all amounts,
securities, investments and other property deposited in or credited to either
of the foregoing and all proceeds thereof; (vii) all of the Seller's rights
under the Pooling and Servicing Agreement; (viii) 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; (ix) payments and proceeds
with respect to the Receivables held by the Servicer; (x) 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); (xi) 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 (xii) 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.
ARTICLE III
Reserved
ARTICLE IV
Section 4.1 Acceptance by Trustee. The Trustee does hereby accept all
consideration conveyed by the Seller pursuant to Section 2.1, and declares that
the Trustee shall hold such consideration upon the trusts herein set forth for
the benefit of all present and future Certificateholders, subject to the terms
and provisions of this Agreement.
3
<PAGE> 5
ARTICLE V
Section 5.1 Incorporation of Standard Terms and Conditions of Agreement.
This Pooling and Servicing Agreement does hereby incorporate by reference the
Standard Terms and Conditions of Agreement for Ford Credit Auto Grantor Trusts
dated as of ______ __, ____ ("Standard Terms and Conditions of Agreement"), in
the form attached hereto.
ARTICLE VI
Section 6.1 Special Definitions and Terms. Whenever used in the Standard
Terms and Conditions of Agreement and in this Pooling and Servicing Agreement,
the following words and phrases shall have the following meanings:
The "Class A Percentage" means ___%.
The "Class B Percentage" means ___%.
The "Corporate Trust Office" at the date hereof is located at
______
______
______
The "Cutoff Date" shall be ______ __, ____.
The first "Distribution Date" shall be ______ __, ____.
The "Optional Purchase Percentage" shall be 10%.
The "Original Pool Balance" is $______.
The "Pass-Through Rate" is ___% per annum.
The "Purchase Agreement" is the agreement dated as of ______ __, ____,
relating to the purchase by the Seller from Ford Motor Credit Company of the
Receivables.
4
<PAGE> 6
The "Required Deposit Rating" shall be a rating on (i) short-term
unsecured debt obligations of P-1 by Moody's Investors Service, Inc. and (ii)
short-term unsecured debt obligations of A-1+ by Standard & Poor's Corporation;
and any requirement that short-term unsecured debt obligations have the
"Required Deposit Rating" shall mean that such short-term unsecured debt
obligations have the foregoing required ratings from each of such rating
agencies.
The "Servicing Fee Rate" is 1.00% per annum.
The "Specified Subordination Spread Account Balance" with respect to
any Distribution Date shall be $______; except that in the event that on
any Distribution Date (i) the annualized average for the preceding three
Collection Periods (or such shorter number of Collection Periods as have
elapsed since the Cutoff Date) of the ratios of net losses (i.e., the net
balances of all Receivables which are determined to be uncollectible in the
Collection Period, less any recoveries on Receivables charged off in the period
or prior periods) to the Pool Balance as of the first day of each such
Collection Period exceeds ___% or (ii) the average for the preceding three
Collection Periods (or such shorter number of Collection Periods as have
elapsed since the Cutoff Date) of the ratios of the number of Receivables that
have been repossessed but not yet sold or are delinquent 60 days or more to the
outstanding number of Receivables exceeds ___%, then the Specified
Subordination Spread Account Balance for such Distribution Date shall be an
amount equal to such percentage of the Pool Balance as of the opening of
business of the first day of such Collection Period as is determined by
deducting from ____ percent the following fraction, expressed as a percentage:
(x) 1 minus (y) a fraction, the numerator of which is the Class A Certificate
Balance and the denominator of which is the Pool Balance both as of the opening
of business of the first day of such Collection Period, but in no event shall
the Specified Subordination Spread Account Balance be more than $______ or less
than $______. On any Distribution Date on which the aggregate balance of the
Class A Certificates is $______ or less after giving effect to distributions on
such Distribution Date, the Specified Subordination Spread Account Balance
shall be the greater of the balance described above or $______.
5
<PAGE> 7
The "Subordination Initial Deposit" is $______.
6
<PAGE> 8
ARTICLE VII
Section 7.1 Additional Representations and Warranties of the Seller. The
Seller does hereby make the following representations and warranties on which
the Trustee shall be deemed to have relied in accepting the Receivables in
trust and executing and authenticating the Certificates:
(i) New and Used Vehicles. Approximately ___% of the
aggregate Principal Balance of the Receivables, constituting ___%
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;
(ii) Origination. Each Receivable shall have an origination
date on or after ______ __, ____;
(iii) Maturity of Receivables. Each Receivable shall have an
original maturity of not greater than [sixty (60) months];
(iv) Minimum Annual Percentage Rate. Each Receivable shall
have an Annual Percentage Rate equal to or greater than ___%;
(v) Scheduled Payments. Each Receivable shall have a first
Scheduled Payment due on or prior to ______ __, ____ and no
Receivable shall have a payment that is more than [thirty (30)]
days overdue as of the Cutoff Date;
(vi) Location of Receivable Files. The Receivable Files
shall be kept at one or more of the locations listed in Schedule B
hereto;
(vii) No Extensions. The number of Scheduled Payments shall
not have been extended on any Receivable on or before the Cutoff
Date;
7
<PAGE> 9
[(viii) No Receivables Originated in Alabama or Pennsylvania.
No Receivable shall have been originated in Alabama or
Pennsylvania;] and
(ix) Rating Agencies. The rating agencies rating the
Certificates are Moody's Investors Service, Inc. and Standard &
Poor's Ratings Group.
ARTICLE VIII
Section 8.1 Ford Motor Credit Company Not to Resign as Servicer. Subject
to the provisions of Section 18.3 of the Standard Terms and Conditions of
Agreement, Ford Motor Credit Company shall not resign from the obligations and
duties 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 Motor Credit Company shall be communicated
to the 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 Trustee concurrently with or promptly after such
notice. No such resignation shall become effective until the Trustee or a
successor Servicer shall have taken the actions required by the last paragraph
of Section 19.1 of the Standard Terms and Conditions of Agreement and shall
have assumed the responsibilities and obligations of Ford Motor Credit Company
in accordance with Section 19.2 of the Standard Terms and Conditions of
Agreement.
ARTICLE IX
Section 9.1 Agent for Service. The agent for service for the Seller and
the Servicer shall be J.D. Bringard, Esq., Ford Motor Credit Company, The
American Road, Dearborn, Michigan 48121.
8
<PAGE> 10
ARTICLE X
Section 10.1 Additional Covenants of the Seller.
(a) The Seller agrees with each nationally recognized rating agency
which has been requested by the Seller or an affiliate to rate the
Class A Certificates issued pursuant to this Agreement and which is then rating
such Certificates that it shall not issue any additional securities that could
reasonably be expected to affect materially and adversely the Certificates
issued pursuant to this Agreement unless it shall have first obtained written
confirmation from such rating agency that such issuance will not result in the
qualification, downgrading or withdrawal of the then current rating assigned to
the Class A Certificates. The Seller shall provide a copy of any such written
confirmation to the Trustee.
(b) The Seller shall not, without first receiving written confirmation
from each nationally recognized rating agency which has been requested by the
Seller or an affiliate to rate the Class A Certificates and which is then
rating such Certificates that the then current rating assigned to the Class A
Certificates will not result in the qualification, downgrading or withdrawal of
such rating, and, upon the Seller's receipt of such written confirmation from
each such rating agency, the Trustee shall, without any exercise of its own
discretion, provide its written consent to the Seller, do any of the following:
(i) engage in any business or activity other than those set
forth in Section 2.3 of the Seller's Limited Partnership Agreement;
(ii) incur any indebtedness, or assume or guaranty any
indebtedness of any other entity, other than (A) any indebtedness
incurred in connection with Notes (as defined in the Seller's
Limited Partnership Agreement) and (B) any indebtedness to Ford
Motor Credit Company or any affiliate thereof incurred in
connection with the acquisition of receivables or certificates
issued by trusts established by Ford Motor
9
<PAGE> 11
Credit Company or Ford Credit Auto Receivables Corporation or any
affiliate thereof;
(iii) dissolve or liquidate, in whole or in part; consolidate
or merge with or into any other entity or convey or transfer its
properties and assets substantially as an entirety to any entity,
unless:
(A) the entity (if other than the Seller) formed or surviving the
consolidation or merger of which acquires the properties and assets of
the Seller is organized and existing under the laws of the State of
Delaware, expressly assumes the due and punctual payment of, and all
obligations of the Seller, including those obligations of the Seller
under this Agreement, and has a Certificate of Incorporation containing
provisions identical to the provisions of Article Third, Article Fourth
and Article Fifteen of the General Partner's Certificate of
Incorporation; and
(B) immediately after giving effect to the transaction, no default
or event of default has occurred and is continuing under any indebtedness
of the Seller or any agreements relating to such indebtedness; or
(iv) without the affirmative vote of 100% of the members of
the Board of Directors of the General Partner, institute proceedings
to be adjudicated bankrupt or insolvent, or consent to the institution
of bankruptcy or insolvency proceedings against it, or file a petition
seeking or consent to reorganization or relief under any applicable
federal or state law relating to bankruptcy, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator
(or other similar official) of the limited partnership or a substantial
part of its property, or make any assignment for the benefit of
creditors, or admit in writing its inability to pay its debts generally
as they become due, or take limited partnership action in furtherance of
any such action.
10
<PAGE> 12
IN WITNESS WHEREOF, the Seller, the Servicer, and the Trustee have caused
this Pooling and Servicing Agreement to be duly executed by their respective
officers as of the day and year first above written.
FORD CREDIT AUTO
RECEIVABLES TWO L.P.
By: FORD CREDIT AUTO
RECEIVABLES TWO, INC.,
as General Partner
[SEAL]
ATTEST: By:
_______________________
TITLE:
___________________________
TITLE:
FORD MOTOR CREDIT COMPANY
[SEAL]
ATTEST: By: ________________________
TITLE:
___________________________
TITLE:
______, as Trustee
ATTEST: By: ________________________
TITLE:
___________________________
TITLE: Trust Officer
11
<PAGE> 13
______, as Class A Agent
Pursuant to Section 14.7
hereof
ATTEST: By: _________________________
TITLE:
___________________________
TITLE: Trust Officer
<PAGE> 14
SCHEDULE A
LIST OF RECEIVABLES
DELIVERED TO TRUSTEE
AT CLOSING
<PAGE> 15
SCHEDULE B
LOCATION OF RECEIVABLES
Indianapolis
5875 Castle Creek Pkwy. North Drive
Suite 240
Indianapolis, IN 46250-4308
Detroit-North
580 Kirts Boulevard
Suite 300
Troy, MI 48084
Chicago-North
9700 Higgins Road
Suite 720
Rosemont, IL 60018
Ohio South
9797 Springboro Pike
Suite 302
Miamisburg, OH 45343
Detroit/West
One ParkLane Blvd.
Suite 405E
Dearborn, MI 48126
Chicago South
The Office of Waterfall Glen I
Suite 310
900 South Frontage Road
Woodridge, IL 60517
Grand Rapids
2851 Charlevoix Drive SE
Suite 300
Grand Rapids, MI 49546
Chicago - East
One River Place, Suite A
Lansing, IL 60438
<PAGE> 16
Akron
175 Montroes West Avenue
Suite 300 Crown Pointe
Copley, OH 44321
Louisville
502 Executive Park
Louisville, KY 40207
Milwaukee
10850 W. Park Place
Suite 110
Milwaukee, WI 53224
Chicago West
2500 W. Higgins Rd.
Suite 280
Hoffman Estates, IL 60195-2008
Saginaw
4901 Towne Centre Rd.
Suite 200
Saginaw, MI 48605
Findlay
3500 North Main Street
Findlay, OH 45840-1447
Cleveland
5700 Lombardo Centre
Suite 101
Seven Hills, OH 44131-2581
Philadelphia
Bay Colony Executive Park
575 E. Swedesford
Suite 100
Wayne, PA 19087
New Jersey South
5000 Dearborn Circle
Suite 200
Mt. Laurel, NJ 08054
Baltimore-West
1829 Reistertown Road
Baltimore, MD 21208-8861
B-2
<PAGE> 17
Long Island
972 Brush Hollow Road
5th Floor
Westbury, NY 11590-1740
Washington, D.C.
2440 Research Blvd.
Suite 150
Rockville, MD 20850-3293
New Haven
116 Washington Ave.
Floor #4
North Haven, CT 06473
Norfolk
Greenbrier Pointe
1401 Greenbrier Pkwy.
Suite 350
Chesapeake, VA 23320
New Jersey North
103 Eisenhower Parkway
4th Floor
Roseland, NJ 07068-1069
Pittsburgh
Foster Plaza 9
750 Holiday Drive
4th Floor, Suite 420
Pittsburgh, PA 15220-2783
Richmond
300 Arboretum Place
Suite 320
Richmond, VA 23236
Syracuse
5788 Widewaters Pkwy.
DeWitt, NY 13214
Westchester
660 White Plains Road
Tarrytown, NY 10591-0010
B-3
<PAGE> 18
Mobile
1201 Montlimar Dr.
Suite 700
Mobile, AL 36609
Birmingham
3535 Grandview Parkway
Suite 340
Birmingham, AL 35243
Orlando
2600 Lake Lucien Drive
Suite 306, The Forum Bldg.
Maitland, FL 32751
Memphis
6555 Quince Road
Suite 300
Memphis, TN 38119
Atlanta - North
North Park Town Center
1000 Abernathy Rd. N.E.
Bldg. 400, Suite 180
Atlanta, GA 30328
Greensboro
1500 Pinecroft Rd.
Suite 220
Greensboro, NC 27407
Charlotte
5832 Farm Pond Lane
Suite 200
Charlotte, NC 28212
Jacksonville
9485 Regency Square Boulevard
Jacksonville, FL 32225
Jackson
Highland Village Center
4500 I-55 North
Suite 292
Jackson, MS 39211
B-4
<PAGE> 19
Columbia
250 Berryhill Road
Suite 201
Columbia, SC 29210
Miami
6303 Blue Lagoon Drive
Suite 200
Miami, FL 33126
Dothan
3160 West Main Street
Suite 1
Dothan, AL 36301-1180
Nashville
565 Marriott Drive
Suite 190, Highland Ridge
Nashville, TN 37210
Raleigh
3651 Trust Drive
Raleigh, NC 27604
Tampa
Lincoln Pointe, Suite 800
2502 Rocky Point Drive
Tampa, FL 33607
Odessa
Ashford Park Office Center
Suite 201A
2626 John Ben Sheppard Parkway
Odessa, TX 79762
Lubbock
Suite 200
4010 82nd Street
Lubbock, TX 79424
Dallas
801 E. Campbell Road
Suite 600, Campbell Forum
Richardson, TX 75081
B-5
<PAGE> 20
Austin
1701 Directors Blvd.
Suite 320
Austin, TX 78744
Fort Worth
2350 W. Airport Hwy.
Suite 400, Center Park Tower
Bedford, TX 76022
Beaumont
2615 Calder
Suite 715
Beaumont, TX 77704
Houston-West
820 Gessner
Suite 700
Houston, TX 77024
Harlingen
1916 East Harrison
Harlingen, TX 78550
Corpus Christi
5350 South Staples
Suite 225
Corpus Christi, TX 78411
Little Rock
1701 Centerview Dr.
Suite 301
Little Rock, AR 72211
Amarillo
1616 S. Kentucky
Suite 130 Bldg. D
Amarillo, TX 79102
El Paso
1200 Golden Key Circle
Suite 104
El Paso, TX 79925
B-6
<PAGE> 21
Albuquerque
6100 Uptown Blvd., NE
Suite 300
Albuquerque, NM 87110
Houston-North
363 N. Sam Houston Pkwy. E.
Suite 700
Houston, TX 77060
San Antonio
1600 N.E. Loop 410
Suite 200
San Antonio, TX 78209
Tulsa
9820 East 41st St.
Suite 300
Tulsa, OK 74145
Minneapolis
11095 Viking Drive
Suite 308, One Southwest Crossing
Eden Prairie, MN 55344-7290
Wichita
7570 West 21st Street
Wichita, KS 67212
St. Louis
4227 Earth City Exp.
Suite 100
Earth City, MO 63045
Jefferson City
210 Prodo Drive
Jefferson City, MO 65109
Kansas City
8717 West 110th Street
Bldg. #14, Suite 550
Overland Park, KS 66210
B-7
<PAGE> 22
Des Moines
4200 Corporate Drive
Suite 107
West Des Moines, IA 50266
Omaha
10040 Regency Circle
Suite 100
Omaha, NE 68114-3786
Davenport
2535 Tech Drive
Suite 300, Commerce Exch. Bldg.
Bettendorf, IA 52722
Denver
6300 S. Syracuse Way
Suite 195
Englewood, CO 80111
Fargo
3100 13th Ave. South
Suite 304
Fargo, ND 58103
Springfield
3275 E. Ridgeview
Springfield, MO 65804-1816
Waterloo
211 E. San Marnan Dr.
Waterloo, IA 50702
San Bernadino
1615 Orange Tree Lane
Suite 215
Redlands, CA 92374
Salt Lake City
310 E. 4500 South
Suite 340
Murray, UT 84017
B-8
<PAGE> 23
Honolulu
1585 Kapiolani Blvd.
Suite 922, Ala Moano Pacific Center
Honolulu, HI 96814
Spokane
North 901 Monroe
Suite 350
Spokane, WA 99210-2148
Grand Junction
744 Horizon Ct.
Suite 330
Grand Junction, CO 81506
San Francisco
4301 Hacienda Dr.
Suite 400
Pleasanton, CA 94588
Portland
10220 S.W. Greenburg Rd.
Suite 415
Portland, OR 97223-5506
Sacramento
2720 Gateway Oaks Dr.
Suite 200
Sacramento, CA 95833
San Diego
3111 Camino Del Rio N.
Suite 1333
San Diego, CA 92108
Phoenix
4742 North 24th Street
Suite 215
Phoenix, AZ 85016
San Jose
1900 McCarthy Blvd.
Suite 400
Milpitas, CA 95035
B-9
<PAGE> 24
Seattle
13555 S.E. 36th Street
Suite 350
Bellevue, WA 98006
Orange
765 The City Drive
Suite 200
Orange, CA 92668
Anchorage
3201 C Street
Suite 203
Anchorage, AK 99503
Appleton
54 Park Place
Appleton, WI 54915-8861
South Bend
4215 Edison Lakes Parkway
Suite 140
Mishawaka, IN 46545
Columbus
655 Metro Place South
Suite 470, Metro V
Dublin, OH 43017-0792
Henderson
618 North Green Street
Henderson, KY 42420
Lansing
2140 University Park Drive
Okemos, MI 48864
Marshall
1408 North Michigan
Marshall, IL 62441
New Jersey-Central
101 Interchange Plaza
Cranbury, NJ 08512
B-10
<PAGE> 25
Huntington
3425 U.S. Route 60 East
Barboursville, WV 25504
Buffalo
95 John Muir Drive
Suite 102
Amherst, NY 14228
Manchester
4 Bedford Farms
Bedford, NH 03110
Harrisburg
4900 Ritter Road
Mechanicsburg, PA 17055
Boston South
Southboro Place, 2nd Floor
352 Turnpike Road
Southboro, MA 01772
Boston North
One Tech Drive, 3rd Floor
Andover, MA 01810-2497
Portland
2401 Congress Street
Portland, ME 04102
Albany
5 Pine West Plaza
Albany, NY 12205
Roanoke
5238 Valley Pointe Pkwy.
Roanoke, VA 24019
Falls Church
1420 Springhill Road
Suite 550
McLean, VA 22102
B-11
<PAGE> 26
Bristol
Landmark Center - Suite A
113 Landmark Lane
Bristol, TN 37620
Chattanooga
6025 Lee Highway
Suite 443
Chattanooga, TN 37421
Decatur
401 Lee Street
Suite 500
Decatur, AL 35602
Fayetteville
4317 Ramsey Street
Suite 300
Fayetteville, NC 28311
Athens
3708 Atlanta Highway
Athens, GA 30604
Knoxville
5500 Lonas Drive
Suite 260
Knoxville, TN 37909
Macon
5400 Riverside Drive
Suite 201
Macon, GA 31210
Pensacola
25 W. Cedar Street
Suite 316
Pensacola, Fl 32501
Savannah
6600 Abercorn Street
Suite 206
Savannah, GA 31405
B-12
<PAGE> 27
Tyler
821 East SE Loop 323
Suite 300
Tyler, TX 75701
Oklahoma City
4101 Perimeter Ctr Dr.
Suite 300, Perimeter Center
Oklahoma City, OK 73112-2304
Baltimore-East
Campbell Corporate Center One
4940 Campell Blvd., Suite 140
Whitemarsh Business Community
Baltimore, MD 21236
Billings
1643 Lewis Avenue
Suite 201
Billings, MT 59102
Cheyenne
6234 Yellowstone
Cheyenne, WY 82009
Cape Girardeau
2851 Independence
Cape Girardeau, MO 63701
Atlanta -South
1691 Phoenix Blvd.
Suite 300
Atlanta, GA 30349
Pasadena
800 East Colorado Blvd.
Suite 400
Pasadena, CA 91109
Colorado Springs
5575 Tech Center Dr.
Suite 220
Colorado Springs, CO 80919
B-13
<PAGE> 28
South Bay
301 E. Ocean Boulevard
Suite 1900
Long Beach, CA 90802
Ventura
260 Maple court
Suite 210
Ventura, CA 93003
Las Vegas
3900 Paradise Road
Suite 239
Las Vegas, NV 89109
Eugene
1600 Valley River Drive
Suite 190
Eugene, OR 97401
Tupelo
One Mississippi Plaza
Tupelo, MS 38801
Charleston
4975 Lacross Road
Suite 150, Rivergate Center
North Charleston, SC 29418-6518
Western Carolina
215 Thompson Street
Hendersonville, NC 28739-2828
B-14
<PAGE> 29
New Orleans
3838 N. Causeway Blvd.
Suite 3000
Metairie, LA 70002
Lafayette
Saloom Office Park
Suite 350
100 Asma Boulevard
Lafayette, LA 70508
Shreveport
South Pointe Centre, Suite 200
3007 Knight Street
Shreveport, LA 71105
B-15
<PAGE> 1
EXHIBIT 4.4
FORD CREDIT AUTO RECEIVABLES TWO L.P.
SELLER
FORD MOTOR CREDIT COMPANY
SERVICER
Standard Terms and Conditions of Agreement
Dated as of ______ __, ____
<PAGE> 2
TABLE OF CONTENTS
ARTICLES I-X
RESERVED
ARTICLE XI
INTRODUCTION
Definitions
Section 11.1 Definitions ............................................ XI-1
Section 11.2 Usage of Terms ......................................... XI-17
Section 11.3 Cutoff Date and Record Date ............................ XI-18
Section 11.4 Section References ..................................... XI-18
Section 11.5 Compliance Certificates and Opinions ................... XI-18
ARTICLE XII
The Receivables
Section 12.1 Representations and Warranties of Seller ............... XII-1
Section 12.2 Repurchase Upon Breach ................................. XII-5
Section 12.3 Custody of Receivable Files ............................ XII-6
Section 12.4 Duties of Servicer as Custodian ........................ XII-6
Section 12.5 Instructions; Authority to Act ......................... XII-7
Section 12.6 Custodian's Indemnification ............................ XII-7
Section 12.7 Effective Period and Termination ....................... XII-8
ARTICLE XIII
Administration and Servicing of Receivables
Section 13.1 Duties of Servicer ..................................... XIII-1
Section 13.2 Collection of Receivable Payments ...................... XIII-2
Section 13.3 Realization Upon Receivables ........................... XIII-2
Section 13.4 [Reserved] ............................................. XIII-2
Section 13.5 Maintenance of Security Interests in Financed
Vehicles ............................................... XIII-2
Section 13.6 Covenants of Servicer .................................. XIII-3
Section 13.7 Purchase of Receivables Upon Breach .................... XIII-3
Section 13.8 Servicer Fee ........................................... XIII-4
Section 13.9 Servicer's Certificate ................................. XIII-4
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<PAGE> 3
Section 13.10 Annual Statement as to Compliance; Notice of
Default .............................................. XIII-5
Section 13.11 Annual Independent Certified Public Accountant's
Report ............................................... XIII-5
Section 13.12 Access to Certain Documentation and Information
Regarding Receivables ................................ XIII-6
Section 13.13 Servicer Expenses .................................... XIII-6
ARTICLE XIV
Distributions; Subordination Spread Account;
Statements to Certificateholders
Section 14.1 Accounts ............................................. XIV-1
Section 14.2 Collections .......................................... XIV-3
Section 14.3 Application of Collections ........................... XIV-4
Section 14.4 Advances ............................................. XIV-4
Section 14.5 Additional Deposits .................................. XIV-5
Section 14.6 Distributions ........................................ XIV-5
Section 14.7 Subordination; Subordination Spread Account; Priority
of Distributions ..................................... XIV-10
Section 14.8 Net Deposits ......................................... XIV-15
Section 14.9 Statements to Class A Certificateholders ............. XIV-15
ARTICLE XV
[Intentionally Omitted]
ARTICLE XVI
The Certificates
Section 16.1 The Certificates .................................... XVI-1
Section 16.2 Authentication of Certificates ...................... XVI-1
Section 16.3 Registration of Transfer and Exchange of
Certificates ........................................ XVI-2
Section 16.4 Mutilated, Destroyed, Lost, or Stolen Certificates .. XVI-4
Section 16.5 Persons Deemed Owners ............................... XVI-4
Section 16.6 Access to List of Certificateholders' Names
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<PAGE> 4
and Addresses ....................................... XVI-4
Section 16.7 Maintenance of Office or Agency ..................... XVI-5
Section 16.8 Book-Entry Certificates ............................. XVI-5
Section 16.9 Notices to Clearing Agency .......................... XVI-7
Section 16.10 Definitive Certificates ............................. XVI-7
ARTICLE XVII
The Seller
Section 17.1 Representations of Seller ........................... XVII-1
Section 17.2 Liability of Seller; Indemnities .................... XVII-3
Section 17.3 Merger or Consolidation of, or Assumption of the
Obligations of, Seller .............................. XVII-4
Section 17.4 Limitation on Liability of Seller and Others ........ XVII-4
Section 17.5 Seller May Own Certificates ......................... XVII-5
ARTICLE XVIII
The Servicer
Section 18.1 Representations of Servicer ......................... XVIII-1
Section 18.2 Indemnities of Servicer ............................. XVIII-3
Section 18.3 Merger or Consolidation of, or Assumption of the
Obligations of, Servicer ............................ XVIII-5
Section 18.4 Limitation on Liability of Servicer and Others ...... XVIII-5
Section 18.5 Delegation of Duties ................................ XVIII-6
ARTICLE XIX
Default
Section 19.1 Events of Default ................................... XIX-1
Section 19.2 Appointment of Successor ............................ XIX-3
Section 19.3 Repayment of Advances ............................... XIX-4
Section 19.4 Notification to Certificateholders .................. XIX-4
Section 19.5 Waiver of Past Defaults ............................. XIX-4
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<PAGE> 5
ARTICLE XX
The Trustee
Section 20.1 Duties of Trustee ...................................... XX-1
Section 20.2 Trustee's Certificate .................................. XX-4
Section 20.3 Trustee's Assignment of Purchased Receivables .......... XX-4
Section 20.4 Certain Matters Affecting Trustee ...................... XX-4
Section 20.5 Trustee Not Liable for Certificates or Receivables ..... XX-7
Section 20.6 Trustee May Own Certificates ........................... XX-8
Section 20.7 Trustee's Fees and Expenses ............................ XX-8
Section 20.8 Indemnity of Trustee and Class A Agent ................. XX-9
Section 20.9 Eligibility Requirements for Trustee ................... XX-10
Section 20.10 Resignation or Removal of Trustee ...................... XX-10
Section 20.11 Successor Trustee ...................................... XX-11
Section 20.12 Merger or Consolidation of Trustee ..................... XX-12
Section 20.13 Appointment of Co-Trustee or Separate Trustee .......... XX-12
Section 20.14 Representations and Warranties of Trustee .............. XX-14
Section 20.15 Tax Returns ............................................ XX-15
Section 20.16 Trustee May Enforce Claims Without Possession of
Certificates ........................................... XX-15
Section 20.17 Suits for Enforcement .................................. XX-15
Section 20.18 Rights of Certificateholders to Direct Trustee ......... XX-15
ARTICLE XXI
Termination
Section 21.1 Termination of the Trust ............................... XXI-1
Section 21.2 Optional Purchase of All Receivables ................... XXI-2
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<PAGE> 6
ARTICLE XXII
Miscellaneous Provisions
Section 22.1 Amendment ............................................. XXII-1
Section 22.2 Protection of Title to Trust .......................... XXII-2
Section 22.3 Limitation on Rights of Certificateholders ............ XXII-5
Section 22.4 Governing Law ......................................... XXII-7
Section 22.5 Notices ............................................... XXII-7
Section 22.6 Severability of Provisions ............................ XXII-7
Section 22.7 Assignment ............................................ XXII-8
Section 22.8 Certificates Nonassessable and Fully Paid ............. XXII-8
Section 22.9 Further Assurances .................................... XXII-8
Section 22.10 No Waiver; Cumulative Remedies ........................ XXII-8
Section 22.11 Third-Party Beneficiaries ............................. XXII-8
Section 22.12 Actions by Certificateholders.......................... XXII-9
EXHIBITS
Exhibit A - Form of Class A Certificate
Exhibit B - Form of Class B Certificate
Exhibit C - Form of Depository Agreement
Exhibit D-1 - Form of Trustee's Certificate (assignment to Seller)
Exhibit D-2 - Form of Trustee's Certificate (assignment To Servicer)
v
<PAGE> 7
FORD CREDIT AUTO GRANTOR TRUSTS
STANDARD TERMS AND CONDITIONS OF AGREEMENT
DATED AS OF ______ __, ____
INTRODUCTION
These Standard Terms and Conditions of Agreement shall be applicable to
Ford Credit Auto Grantor Trusts formed on or after the date hereof, with
respect to which a Pooling and Servicing Agreement incorporating by reference
these Standard Terms and Conditions of Agreement shall have been executed.
ARTICLE I THROUGH X RESERVED
ARTICLE XI
INTRODUCTION
Definitions
Section 11.1 Definitions. Whenever used in the Agreement (including
these Standard Terms and Conditions of Agreement), the following words and
phrases, unless the context otherwise requires, shall have the following
meanings:
"Advance" means the amount, as of the last day of a Collection Period,
which the Servicer is required to advance on the respective Receivable pursuant
to Section 14.4(a).
"Agreement" means the Pooling and Servicing Agreement executed by the
Seller, the Servicer and the Trustee as of the Cutoff Date, into which these
Standard Terms and Conditions of Agreement shall be incorporated by reference,
and all amendments and supplements thereto.
"Amount Financed" with respect to a Receivable means the amount advanced
under the Receivable toward the purchase price of the Financed Vehicle and any
related costs.
XI-1
<PAGE> 8
"Annual Percentage Rate" or "APR" of a Receivable means the annual rate of
finance charges stated in the Receivable.
"Available Interest" means, for any Distribution Date, the sum of the
following amounts with respect to the preceding Collection Period: (i) that
portion of all collections on Receivables allocable to interest (including
amounts withdrawn from the Payahead Account but excluding amounts deposited
into the Payahead Account, in each case to the extent allocable to interest),
(ii) Liquidation Proceeds to the extent allocable to interest due thereon in
accordance with the Servicer's customary servicing procedures, (iii) all
Advances made by the Servicer of interest due on Receivables and all amounts
advanced by the Servicer pursuant to Section 14.4(b), and (iv) the Purchase
Amount of each Receivable that became a 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 received on Receivables to the extent that the
Servicer has previously made an unreimbursed Advance of interest; and (ii)
Liquidation Proceeds with respect to a particular Receivable to the extent of
any unreimbursed Advances of interest.
"Available Principal" means, for any Distribution Date, the sum of the
following amounts with respect to the preceding Collection Period: (i) that
portion of all collections on Receivables allocable to principal (including
amounts withdrawn from the Payahead Account but excluding amounts deposited
into the Payahead Account, in each case to the extent allocable to principal),
(ii) Liquidation Proceeds attributable to principal in accordance with the
Servicer's customary servicing procedures, (iii) all Advances made by the
Servicer of principal due on the Receivables, (iv) to the extent attributable
to principal, the Purchase Amount of each Receivable that became a Purchased
Receivable during such Collection Period, and (v) partial prepayments
attributable to any refunded item included in the Amount Financed, 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 below the
XI-2
<PAGE> 9
Scheduled Payment as of the Cutoff Date; provided, however, that in calculating
the Available Principal the following will be excluded: (i) amounts received
on Receivables to the extent that the Servicer has previously made an
unreimbursed Advance of principal; and (ii) Liquidation Proceeds with respect
to a particular Receivable to the extent of any unreimbursed Advances of
principal.
"Book-Entry Certificates" shall mean a beneficial interest in the Class A
Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 16.8.
"Business Day" means any day other than a Saturday, a Sunday, or a day on
which banking institutions or trust companies in New York, New York shall be
authorized or obligated by law, executive order, or governmental decree to
remain closed.
"Certificate" means the Class A Certificate and the Class B Certificate.
"Certificate Account" means the account designated as such, established
and maintained pursuant to Section 14.1.
"Certificateholder" or "Holder" means the Person in whose name the
respective Certificate shall be registered in the Certificate Register, except
that, solely for the purposes of giving any consent, waiver, request, or demand
pursuant to the Agreement, the interest evidenced by any Class A Certificate
registered in the name of the Seller, the Servicer, or any Person controlling,
controlled by, or under common control with the Seller or the Servicer, shall
not be taken into account in determining whether the requisite percentage
necessary to effect any such consent, waiver, request, or demand shall have
been obtained; provided, that the Trustee shall not be liable for the inclusion
in any such determination of any interest evidenced by any Class A Certificate
registered in the name of any Person controlling, controlled by, or under
common control with the Seller or the Servicer unless a Trust Officer in the
Corporate Trust Office with knowledge hereof and familiarity herewith had
actual knowledge that such Person so controlled, was controlled by, or was
under common con-
XI-3
<PAGE> 10
trol with, the Seller or the Servicer, as the case may be.
"Certificate Owner" shall mean, with respect to a Book-Entry Certificate,
the Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an
account with such Clearing Agency (directly or as an indirect participant, in
accordance with the rules of such Clearing Agency) and shall mean, with respect
to a Definitive Certificate, the Certificateholder.
"Certificate Register" and "Certificate Registrar" mean the register
maintained and the registrar appointed pursuant to Section 16.3.
"Class A Agent" shall have the meaning specified in Section 14.7.
"Class A Certificate" means any one of the Certificates executed by the
Trust and authenticated by the Trustee in substantially the form set forth in
Exhibit A hereto.
"Class A Certificate Balance" shall equal, initially, the Class A
Percentage of the Original Pool Balance and, thereafter, shall equal the
initial Class A Certificate Balance, reduced by all amounts distributed to the
Class A Certificateholders and allocable to principal.
"Class A Certificate Factor" means, as of a Distribution Date, a
seven-digit decimal figure equal to the Class A Certificate Balance as of the
close of business on such Distribution Date divided by the Class A Certificate
Balance as of the Cutoff Date.
"Class A Distributable Amount" means on any Distribution Date, the sum of
the Class A Principal Distributable Amount and the Class A Interest
Distributable Amount.
"Class A Interest Carryover Shortfall" means, as of the close of any
Distribution Date, the excess of the Class A Interest Distributable Amount for
such Distribution Date plus any outstanding Class A Interest Carryover
Shortfall from the preceding Distribution Date
XI-4
<PAGE> 11
plus interest on such outstanding Class A Interest Carryover Shortfall, to the
extent permitted by law, at the Pass-Through Rate from such preceding
Distribution Date through the current Distribution Date, over the amount of
interest that the holders of the Class A Certificates actually received on such
current Distribution Date.
"Class A Interest Distributable Amount" means, for any Distribution Date,
thirty (30) days of interest at the Pass-Through Rate on the Class A
Certificate Balance as of the close of business on the last day of the
preceding Collection Period.
"Class A Principal Carryover Shortfall" means, as of the close of any
Distribution Date, the excess of the Class A Principal Distributable Amount
plus any outstanding Class A Principal Carryover Shortfall from the preceding
Distribution Date over the amount of principal that the holders of the Class A
Certificates actually received on such current Distribution Date.
"Class A Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A Percentage of: (i) the principal
portion of all Scheduled Payments due during the preceding Collection Period;
(ii) the principal portion of all prepayments in full received during the
preceding Collection Period (and certain partial prepayments relating to
rebates of extended warranty contract costs and insurance premiums or which
cause a reduction in the Obligor's periodic payment to below the Scheduled
Payment as of the Cutoff Date) (without duplication of amounts included in
clause (i) above); (iii) the Principal Balance of each Receivable that became a
Purchased Receivable under an obligation that arose during the preceding
Collection Period (without duplication of amounts referred to in clauses (i)
and (ii) above) and (iv) the Principal Balance of each Receivable liquidated by
the Servicer during the preceding Collection Period.
"Class B Certificate" means any one of the Certificates executed by the
Trust and authenticated by the Trustee in substantially the form set forth in
Exhibit B hereto.
"Class B Certificate Balance" shall equal, initially, the Class B
Percentage of the Original Pool
XI-5
<PAGE> 12
Balance and, thereafter, shall equal the initial Class B Certificate Balance,
reduced by all amounts distributed to Class B Certificateholders (or deposited
in the Subordination Spread Account not including the Subordination Initial
Deposit) and allocable to principal and by the Class A Principal Carryover
Shortfall and the Class B Principal Carryover Shortfall.
"Class B Distributable Amount" means, with respect to any Distribution
Date, the sum of the Class B Principal Distributable Amount and the Class B
Interest Distributable Amount.
"Class B Interest Carryover Shortfall" means, as of the close of any
Distribution Date, the excess of the Class B Interest Distributable Amount plus
any outstanding Class B Interest Carryover Shortfall on the preceding
Distribution Date over the amount of interest that the holders of the Class B
Certificates received (including amounts deposited in the Subordination Spread
Account) on such current Distribution Date.
"Class B Interest Distributable Amount" means, with respect to any
Distribution Date, thirty (30) days of interest at the Pass-Through Rate on the
Class B Certificate Balance as of the close of business on the last day of the
preceding Collection Period plus the excess, for each Receivable having an APR
greater than the sum of the Pass-Through Rate and the Servicing Fee Rate, of
the interest portion of the Scheduled Payment over the portion of such interest
equal to interest at the sum of the Pass-Through Rate and the Servicing Fee
Rate.
"Class B Principal Carryover Shortfall" means, as of the close of any
Distribution Date, the excess of the Class B Principal Distributable Amount and
any outstanding Class B Principal Carryover Shortfall on the preceding
Distribution Date over the amount of principal that the holders of the Class B
Certificates received (including amounts deposited in the Subordination Spread
Amount) on such current Distribution Date.
"Class B Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class B Percentage of: (i) the principal
portion of all Scheduled Payments due during the preceding Collection
XI-6
<PAGE> 13
Period, (ii) the principal portion of all prepayments in full received during
the preceding Collection Period (and certain partial prepayments relating to
rebates of extended warranty contract costs and insurance premiums or which
cause a reduction in the Obligor's periodic payment to below the Scheduled
Payment as of the Cutoff Date) (without duplication of amounts included in
clause (i) above), (iii) the Principal Balance of each Receivable that became a
Purchased Receivable under an obligation that arose during the preceding
Collection Period (without duplication of amounts included in clauses (i) and
(ii) above) and (iv) the Principal Balance of each Receivable liquidated by the
Servicer during the preceding Collection Period.
"Clearing Agency" shall mean an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended.
"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.
"Collection Account" means the account designated as such, established and
maintained pursuant to Section 14.1.
"Collection Period" means a calendar month. Any amount stated "as of the
close of business of the last day of a Collection Period" shall give effect to
the following calculations 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.
"Corporate Trust Office" means the office of the Trustee at which its
corporate trust business shall be administered, which office at the date of the
Agreement shall be specified therein.
"Cutoff Date" means the date specified as such in the Agreement.
XI-7
<PAGE> 14
"Dealer" means the dealer who sold a Financed Vehicle and who originated
and assigned the respective Receivable to Ford Motor Credit Company under an
existing agreement between such dealer and Ford Motor Credit Company.
"Dealer Recourse" means, 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.
"Definitive Certificates" shall have the meaning specified in Section
16.8.
"Delivery" when used with respect to Subordination Spread Account Property
means:
(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 Class A Agent by physical delivery
to the Class A Agent in the State of New York indorsed to, or registered in the
name of, the Class A Agent or indorsed in blank, and, with respect to "money"
as defined in Section 1-201(24) of the UCC, delivery thereof to the Class A
Agent in the State of New York, and with respect to a "certificated security"
(as defined in Section 8-102(1)(a) of the UCC) transfer thereof (i) by
delivery of such certificated security indorsed to, or registered in the name
of, the Class A Agent or indorsed in blank to a financial intermediary (as
defined in Section 8-313(4) of the UCC) and the making by such financial
intermediary of entries on its books and records identifying such certificated
securities as belonging solely and exclusively to the Class A Agent (acting in
its capacity under Section 14.7) and the sending by such financial intermediary
of a confirmation to the Class A Agent of the purchase of such certificated
security by the Class A Agent, or (ii) by delivery thereof to a "clearing
corporation" (as defined in section 8-102(3) of the UCC) either in bearer form,
in registered form registered to the clearing corporation or
XI-8
<PAGE> 15
to a "custodian bank" (as defined in Section 8-102(4) of the UCC) or a nominee
of either of them subject to the clearing corporations exclusive control 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 certificated securities for the sole and exclusive account of the financial
intermediary, the maintenance in the State of New York 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 indorsement thereof to the clearing
corporation or such custodian bank or a nominee of either of them subject to
the clearing corporation's exclusive control, the sending of a confirmation to
the Class A Agent by the financial intermediary of the purchase by the Class A
Agent of such securities and the making by such financial intermediary of
entries on its books and records identifying such certificated securities as
belonging solely and exclusively to the Class A Agent (acting in its capacity
under Section 14.7) (all of the foregoing, "Physical Property"), and, in any
event, any such Physical Property in registered form shall be in the name of
the Class A Agent or its nominee; and such additional or alternative procedures
as may hereafter become appropriate to effect the complete transfer of
ownership of any such Subordination Spread Account Property to the Class A
Agent (as defined herein), consistent with changes in applicable law or
regulations or the interpretation thereof; and
(b) with respect to any securities issued by the U.S. Treasury, the
Federal Home Loan Mortgage 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 property to
an appropriate book-entry account maintained with a Federal Reserve Bank by a
financial intermediary which is also a "depositary" pursuant to applicable
federal regulations and issuance by such financial intermediary of a deposit
advice or
XI-9
<PAGE> 16
other written confirmation of such book-entry registration to the Class A Agent
of the purchase by the Class A Agent 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 solely and exclusively to the Class
A Agent acting in its capacity under Section 14.7 and indicating that such
custodian holds such Subordination Spread Account Property solely as agent for
the Class A Agent; and such additional or alternative procedures as may
hereafter become appropriate to effect complete transfer of ownership of any
such Subordination Spread Account Property to the Class A Agent, consistent
with changes in applicable law or regulations or the interpretation thereof.
"Depository Agreement" means the agreement among the Seller, the Trustee,
and the initial Clearing Agency, dated as of the date of the Agreement,
substantially in the form attached hereto as Exhibit C.
"Determination Date" means the ___ Business Day but not later than the ___
day of each calendar month.
"Distribution Date" means, for each Collection Period, the ___ day of the
following month, or if the ___ day is not a Business Day, the next following
Business Day, commencing with the date specified in the Agreement.
"Event of Default" means an event specified in Section 19.1.
"Financed Vehicle" means a new or used automobile or light truck, together
with all accessions thereto, securing an Obligor's indebtedness under the
respective Receivable.
"General Partner" means Ford Credit Auto Receivables Two, Inc., a Delaware
corporation, or any substitute General Partner under the Limited Partnership
Agreement.
"Lien" means 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.
XI-10
<PAGE> 17
"Limited Partnership Agreement" means the Agreement of Limited
Partnership of Ford Credit Auto Receivables Two L.P., dated as of February 23,
1996, by and between Ford Credit Auto Receivables Two, Inc., as general
partner, and Ford Motor Credit Company, as limited partner.
"Liquidated Receivable" means 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" means 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.
"Monthly Remittance Condition" has the meaning assigned to such term in
Section 14.1(b) hereof.
"Obligor" on a Receivable means 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" means 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 appropriate.
"Opinion of Counsel" means a written opinion of counsel who may but need
not be counsel to the Seller or Servicer, which counsel shall be acceptable to
the Trustee.
"Optional Purchase Percentage" means the percentage specified in the
Agreement.
"Original Pool Balance" means the Pool Balance as of the Cutoff Date, as
specified in the Agreement.
XI-11
<PAGE> 18
"Outstanding Advances" on a Receivable means the sum, as of the close of
business on the last day of a Collection Period, of all Advances as reduced by
payments as specified in Section 14.4(a) with respect to such Receivable.
"Pass-Through Rate" means the interest rate payable to Certificateholders,
as specified in the Agreement.
"Payahead" on a Receivable means the amount, as of the close of business
on the last day of a Collection Period, specified in Section 14.3 with respect
to such Receivable.
"Payahead Account" means the account designated as such, established and
maintained pursuant to Section 14.1.
"Payahead Balance" on a Receivable means the sum, as of the close of
business on the last day of a 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 14.3 and 14.4.
"Person" means 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" has the meaning assigned to such term in the
definition of the term "Delivery" in this Section 11.1.
"Pool Balance" as of the close of business of the last day of a Collection
Period means the aggregate Principal Balance of the Receivables (excluding
Purchased Receivables and Liquidated Receivables); provided, that where the
Pool Balance is relevant in determining whether the requisite percentage of
Class A Certificateholders necessary to effect any consent, waiver, request, or
XI-12
<PAGE> 19
demand shall have been obtained, the Pool Balance shall be deemed to be reduced
by the amount equal to the Pool Balance (without giving effect to this
provision) represented by the interests evidenced by any Class A Certificate
registered in the name of the Seller, the Servicer, or any Person controlling,
controlled by, or under common control with the Seller or the Servicer.
"Pool Factor" as of the last day of a Collection Period means a
seven-digit decimal figure equal to the Pool Balance divided by the Original
Pool Balance.
"Principal Balance" of a Receivable, as of the close of business on the
last day of a Collection Period, means the Amount Financed minus the sum of (a)
that portion of all Scheduled Payments due on or prior to such day allocable to
principal using the actuarial or constant yield method, (b) any refunded
portion of extended warranty protection plan costs, or of physical damage,
credit life, or disability insurance premiums included in the Amount Financed,
(c) any payment of the Purchase Amount with respect to the Receivable allocable
to principal and (d) any prepayment in full or any partial prepayments applied
to reduce the principal balance of the Receivable.
"Program" has the meaning assigned to such term in Section 13.11 hereof.
"Purchase Amount" means the amount, as of the close of 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" means a Receivable purchased as of the close of
business on the last day of respective Collection Period by the Servicer
pursuant to Section 13.7 or by the Seller pursuant to Section 12.2.
"Realized Losses" means, the excess of the Principal Balance of any
Liquidated Receivable (as reduced by any Payaheads) over Liquidation Proceeds
to the extent allocable to principal received in the Collection Period.
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"Receivable" means any retail installment sale contract which shall appear
on Schedule A to the Agreement (which Schedule A may be in the form of
microfiche) and any amendments, modifications or supplements to such retail
installment sale contract which has not been released by the Trustee from the
Trust.
"Receivable Files" means the documents specified in Section 12.3.
"Record Date" means the ___ day of the current calendar month; provided,
however, that if Definitive Certificates are issued pursuant to Section 16.10
hereof, subsequent to the issuance of such Definitive Certificates the Record
Date for any Distribution Date shall be the last day of the Collection Period
immediately preceding the month in which such Distribution Date occurs.
"Required Deposit Rating" means the rating specified in the Agreement.
"Residual Certificate" has the meaning assigned to such term in Section
16.1 hereof.
"Scheduled Payment" on a Receivable means that portion of the payment
required to be made by the Obligor during the respective Collection Period
sufficient to amortize the Principal Balance under the actuarial method over
the term of the Receivable and to provide interest at the APR.
"Seller" means Ford Credit Auto Receivables Two L.P. as the seller of the
Receivables under the Agreement, and each successor to Ford Credit Auto
Receivables Two L.P. (in the same capacity) pursuant to Section 17.3.
"Servicer" means Ford Motor Credit Company as the servicer of the
Receivables, and each successor to Ford Motor Credit Company (in the same
capacity) pursuant to Section 18.3 or 19.2.
"Servicer Fees" means the sum of the Servicing Fee and the Supplemental
Servicing Fee.
"Servicer's Certificate" means a certificate completed and executed by the
Servicer by any executive vice president, any vice president, the treasurer,
any
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assistant treasurer, the controller, or any assistant controller of the
Servicer pursuant to Section 13.9.
"Servicing Fee" means, with respect to a Collection Period, the fee
payable to the Servicer for services rendered during the respective 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" means the percentage set forth in the Agreement.
"Simple Interest Method" means 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" means 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.
"State" means any state or commonwealth of the United States of America,
or the District of Columbia.
"Subordination Initial Deposit" means the amounts, if any, deposited into
the Subordination Spread Account on the date of initial issuance of the
Certificates pursuant to Section 14.7 and specified in the Agreement.
"Subordination Spread Account" means the account established and
maintained pursuant to Section 14.7.
"Subordination Spread Account Property" has the meaning specified in
Section 14.7(a)(ii).
"Supplemental Servicing Fee" means the fee payable to the Servicer for
certain services rendered during the respective Collection Period, determined
pursuant to and defined in Section 13.8.
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"Total Available Amount" shall mean, for each Distribution Date, the sum
of the Available Interest and the Available Principal.
"Trust" means the trust created by the Agreement, the estate of which
shall consist of the Receivables and all monies paid thereon and due thereon on
or after the Cutoff Date (including 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 balances of the Receivables); 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; 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;
Dealer Recourse; all of the Seller's rights to the Receivable Files; the
Certificate Distribution Account and the Collection Account and all amounts,
securities, investments and other property deposited in or credited to either
of the foregoing and all proceeds thereof; all of the Seller's rights under the
Pooling and Servicing Agreement; 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; payments and proceeds with respect to the
Receivables held by the Servicer; 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); 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 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.
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<PAGE> 23
"Trustee" means the Person acting as Trustee under the Agreement, its
successor in interest, and any successor trustee pursuant to Section 20.11.
"Trustee Officer" means the chairman or vice-chairman of the board of
directors, the chairman or vice-chairman of the executive committee of the
board of directors, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer or assistant trust officer, the controller
and any assistant controller, or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Trustee's Certificate" means a certificate completed and executed by the
Trustee by a Trustee Officer pursuant to Section 20.2, substantially in the
form of, in the case of assignment to the Seller, Exhibit D-1 and in the case
of an assignment to the Servicer, Exhibit D-2.
"UCC" means the Uniform Commercial Code as in effect in the respective
jurisdiction.
Section 11.2 Usage of Terms. With respect to all terms in the Agreement,
the singular includes the plural and the plural the singular; words importing
any gender include the other genders; references to "writing" include printing,
typing, lithography, and other means of reproducing words in a visible form;
references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance
with their respective terms and not prohibited by the Agreement; references to
Persons include their permitted successors and assigns; and the term
"including" means "including without limitation."
Section 11.3 Cutoff Date and Record Date. All references to the Record
Date prior to the first Record Date in the life of the Trust shall be to the
Cutoff Date.
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Section 11.4 Section References. All section references shall be to
Sections in these Standard Terms and Conditions of Agreement.
Section 11.5 Compliance Certificates and Opinions. Upon any application
or request by the Seller or the Servicer to the Trustee to take any action
under any provision herein, the Seller or the Servicer (as the case may be)
shall furnish to the Trustee an Officer's Certificate stating that all
conditions precedent, if any, provided for herein relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with, 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 Agreement relating to such particular application or request,
no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided herein shall include:
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(2) 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;
(3) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of each
such individual, such condition or covenant has been complied with.
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ARTICLE XII
The Receivables
Section 12.1 Representations and Warranties of Seller. The Seller makes
the following representations and warranties as to the Receivables on which the
Trustee relies in accepting the Receivables in trust and executing and
authenticating the Certificates. Such representations and warranties speak as
of the execution and delivery of the Agreement, but shall survive the sale,
transfer, and assignment of the Receivables to the Trustee and, if applicable,
any subsequent assignment or transfer pursuant to Article XV:
(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
Motor Credit Company, which in turn shall have purchased such
Receivable from such Dealer under an existing dealer agreement with
Ford Motor Credit Company, and shall have been validly assigned by
such Dealer to Ford Motor Credit Company, which in turn shall have
been validly assigned by Ford Motor Credit Company 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 Motor Credit Company in the Financed Vehicle, which
security interest has been assigned by Ford Motor Credit Company to
the Seller, which in turn shall be assignable by the Seller to the
Trustee, (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
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level payment) that fully amortize the Amount Financed by maturity and
yield interest at the Annual Percentage Rate, and (e) shall provide
for, in the event that such contract is prepaid, a prepayment that fully
pays the Principal Balance.
(ii) Schedule of Receivables. The information set forth in
Schedule A to the Agreement 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 Certificateholders
shall have been utilized in selecting the Receivables.
(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 the 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 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
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<PAGE> 27
any agency, department, or instrumentality of the United States of
America or any State.
(vi) Security Interest in Financed Vehicle. Immediately prior
to the sale, assignment, and transfer thereof, each Receivable shall
be secured by a validly perfected first security interest in the
Financed Vehicle in favor of Ford Motor Credit Company 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 Motor
Credit Company 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 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
XII-3
<PAGE> 28
terms of any Receivable shall have arisen; and the Seller shall not
waive any of the foregoing.
(xii) Insurance. Ford Motor Credit Company, 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 a sale of the
Receivables from the Seller to the Trust 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
sold, transferred, assigned, or pledged by the Seller to any Person
other than the Trustee. 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 Trustee for the benefit of the
Certificateholders 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 sale, transfer, and assignment of such Receivable
under the Agreement or pursuant to transfers of 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.
XII-4
<PAGE> 29
(xv) All Filings Made. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give the
Trustee 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) No Simple Interest Receivables. None of the Receivables
are Simple Interest Receivables.
(xviii) One Original. There shall be only one original
executed copy of each Receivable.
(xix) Agreement. The representations and warranties in the
Agreement shall be true.
Section 12.2 Repurchase Upon Breach. The Seller, the Servicer, or the
Trustee, as the case may be, shall inform the other parties to the Agreement
and Ford Motor Credit Company promptly, in writing, upon the discovery of any
breach of the Seller's representations and warranties pursuant to Section 12.1.
Unless the breach shall have been cured by the last day of the second
Collection Period following the discovery, the Trustee shall enforce the
obligation of the Seller under the Purchase Agreement, and, if necessary, the
Seller shall enforce the obligation of Ford Motor Credit Company 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 14.5. The sole remedy of
the Trustee, the Trust, or the Certificateholders with respect to a breach of
the Seller's representations and warranties pursuant to Section 12.1 shall be
to require the Seller to repurchase Receivables pursuant to this Section 12.2
or to enforce the obligation of Ford Motor Credit Company to the Seller to
repurchase such Receivables pursuant to the Purchase Agreement.
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<PAGE> 30
Section 12.3 Custody of Receivable Files. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Trustee, upon
the execution and delivery of the Agreement, hereby revocably appoints the
Servicer, and the Servicer hereby accepts such appointment, to act as the agent
of the Trustee as custodian of the following documents or instruments which
are hereby constructively delivered to the Trustee 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.
(iii) The original certificate of title or such documents that
the Servicer or Ford Motor Credit Company shall keep on file, in
accordance with its customary procedures, evidencing the security
interest of Ford Motor Credit Company in the Financed Vehicle.
(iv) Any and all other documents 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 Trustee
confirming that the Servicer has received on behalf of the Trustee all the
documents and instruments necessary for the Servicer to act as the agent of the
Trustee for the purposes set forth in this Section, including the documents
referred to herein, and the Trustee is hereby authorized to rely on such
Officer's Certificate.
Section 12.4 Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer shall hold the Receivable Files on
behalf of the Trustee for the use and benefit of all present and future
Certificateholders, and maintain such accurate and complete accounts, re-
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<PAGE> 31
cords, and computer systems pertaining to each Receivable File as shall enable
the Trustee to comply with these Standard Terms and Conditions of Agreement.
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 the Agreement, and of the
related accounts, records, and computer systems, in such a manner as shall
enable the Trustee to verify the accuracy of the Servicer's record keeping. The
Servicer shall promptly report to the 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 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 the
Agreement, or at such other office as shall be specified to the Trustee by
written notice not later than 90 days after any change in location. The
Servicer shall make available to the Trustee or its 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 Trustee shall instruct.
Section 12.5 Instructions; Authority to Act. All instructions from the
Trustee shall be in writing and signed by a Trust Officer, 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 12.6 Custodian's Indemnification. The Servicer as custodian
shall indemnify the 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
XII-7
<PAGE> 32
against the 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 for
any portion of any such amount resulting from the willful misfeasance, bad
faith, or negligence of the Trustee.
Section 12.7 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
12.7. If Ford Motor Credit Company shall resign as Servicer in accordance with
the provisions of the Agreement or if all of the rights and obligations of the
Servicer shall have been terminated under Section 19.1, the appointment of the
Servicer as custodian shall be terminated by the Trustee, or by the Holders of
Class A Certificates evidencing not less than 25% of the Class A Certificate
Balance, in the same manner as the Trustee or such Holders may terminate the
rights and obligations of the Servicer under Section 19.1. 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 Trustee or the Trustee's agent at such place or places as
the Trustee may reasonably designate.
XII-8
<PAGE> 33
ARTICLE XIII
Administration and Servicing of Receivables
Section 13.1 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 Trustee with respect to distributions, and making Advances
pursuant to Section 14.4. 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 authorized and
empowered by the Trustee to execute and deliver, on behalf of itself, the
Trust, the Certificateholders, or the Trustee or any of them, any and all
instruments 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 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 Trustee shall, at the Servicer's expense and
direction, take steps to enforce the Receivable, including bringing suit in its
name or the name of the Certificateholders. The 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 expense, shall obtain on
behalf of the Trust all licenses, if any, required by the laws of any
jurisdiction to be held by the Trust in connection with
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<PAGE> 34
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 13.2 Collection of Receivable Payments. The Servicer shall make
reasonable efforts to collect all payments called for under the terms and
provisions of such 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. The Servicer may grant
extensions, rebates, or adjustments on a Receivable, which shall not, for the
purposes of the Agreement (other than Section 13.6 hereof), modify the original
due dates and amounts of the Scheduled Payments. 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 13.3 Realization Upon Receivables. On behalf of the Trust, 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 13.4 [Reserved]
Section 13.5 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 Fi-
XIII-2
<PAGE> 35
nanced Vehicle. The Trustee hereby authorizes the Servicer to take such steps
as are necessary to reperfect such security interest on behalf of the Trust in
the event of the relocation of a Financed Vehicle or for any other reason.
Section 13.6 Covenants of Servicer. The Servicer shall not 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, nor shall
the Servicer impair the rights of the Certificateholders in the Receivables,
nor shall the Servicer change the Annual Percentage Rate with respect to any
Receivable, nor shall the Servicer modify the number or amount of Scheduled
Payments under a Receivable.
Section 13.7 Purchase of Receivables Upon Breach. (a) The Servicer or
the Trustee shall inform the other party promptly, in writing, upon the
discovery of any breach pursuant to Section 13.2, 13.5 or 13.6. 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 Trustee
(which shall include any Receivable as to which a breach of Section 13.6 has
occurred). In consideration of the purchase of such Receivable, the Servicer
shall remit the Purchase Amount in the manner specified in Section 14.5. For
purposes of this Section 13.7, 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 Trustee, the
Trust, or the Certificateholders with respect to a breach pursuant to Section
13.2, 13.5 or 13.6 shall be to require the Servicer to purchase Receivables
pursuant to this Section 13.7.
(b) In the event that the Obligor with respect to a Receivable shall have
been declared bankrupt and at such time or thereafter the Servicer's records
relating to such Receivable shall record that the periodic payment thereon has
been reduced at or since such declaration and that such Receivable has been
extended
XIII-3
<PAGE> 36
beyond ______ __, ____, the Servicer shall pay an amount equal to the
amount of a prepayment which would cause such a reduction in the amount of the
new periodic payment over the remainder of the original scheduled life of the
Receivable.
Section 13.8 Servicer Fee. The Servicer shall be entitled to any
interest earned on the amounts deposited in the Collection Account and the
Payahead Account during such 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
such Collection Period (the "Supplemental Servicing Fee"). The Servicer also
shall be entitled to the Servicing Fee, as provided herein.
Section 13.9 Servicer's Certificate. (a) On or about the tenth day of
each calendar month, the Servicer shall deliver to the Trustee (with a copy to
each of the rating agencies requested to provide a rating on the Class A
Certificates) a Servicer's Certificate containing all information necessary to
make the distributions pursuant to Section 14.6 (including, if required,
withdrawals from or deposits to the Payahead Account and Advances by the
Servicer pursuant to Section 14.4) for the Collection Period preceding the date
of such Servicer's Certificate, and all information necessary for the Trustee
to send statements to Certificateholders pursuant to Section 14.9. 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 Schedule A of the Agreement).
(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
underwriter(s) of the Class A Certificates the Class A Certificate Factor as of
the close of business on the Distribution Date occurring in that month.
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Section 13.10 Annual Statement as to Compliance; Notice of Default. (a)
The Servicer shall deliver to the Trustee and to each of the rating agencies
requested by the Seller or an affiliate to provide a rating on the Class A
Certificates which is then rating the Class A Certificates, on or before April
30 of each year beginning April 30, ____, 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 the 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 certificate and the report referred
to in Section 13.11 may be obtained by any Certificateholder by a request in
writing to the Trustee addressed to the Corporate Trust Office.
(b) The Servicer shall deliver to the Trustee and to each of the rating
agencies requested by the Seller or an affiliate to provide a rating on the
Class A Certificates which is then rating the Class A Certificates, promptly
after having obtained knowledge thereof, but in no event later than 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
Default under Section 19.1. The Seller shall deliver to the Trustee and to
each of such rating agencies then rating the Class A Certificates, promptly
after having obtained knowledge thereof, but in no event later than 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
Default under clause (ii) of Section 19.1.
Section 13.11 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 Seller or to Ford
Motor Credit Company, to deliver to the Trustee and each of the rating agencies
then rating the Class A Certificates on or before April 30 of each year
XIII-5
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beginning April 30, ____ with respect to the prior calendar year a report
addressed to the Board of Directors of the Servicer and to the 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 the 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 13.12 Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to the Certificateholders access to
the Receivables Files in such cases where the Certificateholder 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 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 13.12.
Section 13.13 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 independent accountants, taxes imposed on
the Servicer and expenses incurred in connection with distributions and reports
to Certificateholders.
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ARTICLE XIV
Distributions; Subordination Spread Account;
Statements to Certificateholders
Section 14.1 Accounts. (a) The Servicer shall establish the Collection
Account and the Certificate Account in the name of the Trustee for the benefit
of the Certificateholders, and shall establish the Payahead Account in the name
of the Trustee on behalf of the Obligors. The Collection Account and the
Payahead Account shall be segregated trust accounts initially established with
the Trustee and maintained with the Trustee so long as (i) the deposits of the
Trustee have the Required Deposit Rating or (ii) the Collection Account and the
Payahead Account are maintained in the Corporate Trust Department of the
Trustee; provided, however, that all amounts held in the Collection Account and
the Payahead Account shall, to the extent permitted by applicable laws, rules,
and regulations, be invested as directed in writing by the Servicer, by the
bank or trust company then maintaining the accounts in interest-bearing time
deposits of such bank or trust company (provided that such investments shall
have the Required Deposit Rating) that mature not later than the Distribution
Date for the Collection Period to which such amounts relate and any such time
deposits so acquired shall be held until maturity and provided, further that if
the Servicer is required to remit collections daily to the Collection Account
pursuant to Section 14.2 then such remittances, and any remittances to the
Payahead Account, shall be invested at the written direction of the Servicer as
to specific investments in investments rated A-1+ by Standard & Poor's Ratings
Group and P-1 by Moody's Investors Service, Inc. or in other investments as may
be permitted by each of such rating agencies, in each case maturing in
immediately available funds on the Distribution Date next succeeding the date
of investment. Such written direction shall certify that any such investment
is authorized by this Section. The Certificate Account shall be a segregated
trust account established and maintained with the Trustee, and the amounts in
such account shall not be invested. Should the short-term unsecured debt
obligations of the Trustee no longer have the Required Deposit Rating then,
unless the Collection Account and the Payahead Account are maintained in the
Corporate Trust Department of the Trustee, the Servicer
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shall as soon as is reasonably practical, with the Trustee's assistance as
necessary, cause the Collection Account and the Payahead Account (i) to be
moved to a bank or trust company, the short-term unsecured debt
obligations of which shall have the Required Deposit Rating or (ii) to be moved
to the Corporate Trust Department of the Trustee. In no event shall the
Payahead Account be property of the Trust or security for the Certificates.
(b) Notwithstanding the provisions of clause (a) above and of the third
paragraph of Section 14.6(a), for so long as (i) Ford Motor Credit Company is
the Servicer, (ii) the rating of Ford Motor Credit Company's short-term
unsecured debt is at least P-1 by Moody's Investors Service, Inc. and is at
least A-1 by Standard & Poor's Ratings Group and (iii) no Event of Default
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 Certificate Account in accordance
with Section 14.6(a)(ii). 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 unsatisfied), if the Servicer provides to the Trustee written
confirmation from each rating agency which has an outstanding rating on the
Class A Certificates and was requested by the Seller or an affiliate to rate
the Class A Certificates that such alternative remittance schedule will not
result in the downgrading or withdrawal by such rating agencies of the ratings
then assigned to the Class A Certificates. The Trustee shall not be deemed to
have knowledge of any event or circumstance under clause (iii) of the first
sentence of this Section 14.1(b) that would
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<PAGE> 41
require remittance of the Payaheads to the Payahead Account unless the Trustee
has received notice of such event or circumstance from the Seller or the
Servicer in an Officer's Certificate or from the Holders of Class A
Certificates evidencing not less than 25% of the Class A 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 14.2 Collections. The Servicer shall remit daily to the
Collection Account (i) all payments by or on behalf of the Obligors (including
Payaheads on the Receivables but excluding Purchased Receivables) and (ii) all
Liquidation Proceeds, both as collected during the Collection Period. Ford
Motor Credit Company, 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 14.2 and only for so long as such terms and conditions
are fulfilled. Accordingly, notwithstanding the provisions of the first
sentence of this Section 14.2, the Servicer shall remit collections received
during a Collection Period to the Collection Account in immediately available
funds 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 Condition became unsatisfied), if the
Servicer provides to the Trustee written confirmation from each rating agency
which has an outstanding rating on the Class A Certificates and was requested
by the Seller or an affiliate to rate the Class A Certificates that such
alternative remittance schedule will not result in the downgrading or
withdrawal by such rating agencies of the ratings then assigned to the Class A
Certificates. The 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 daily remittance by the Servicer to the Collection
Account unless the Trustee has received notice of such event or circumstance
from the Seller or the Servicer in an Officer's Certifi-
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<PAGE> 42
cate or from the Holders of Class A Certificates evidencing not less than 25%
of the Class A 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 XIV the phrase
"payments by or on behalf of Obligors" shall mean payments made by Persons
other than the Servicer or by other means.
Section 14.3 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, applied in accordance with Section 13.8 shall be
applied first to reduce Outstanding Advances made with respect to
such Receivable, as described in Section 14.4(a) below. Next, any
excess shall be applied to the Scheduled Payment with respect to such
Receivable. Finally, any remaining excess (except partial
prepayments which cause a reduction in 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
Receivable, but only if the sum of such excess and the previous
Payahead Balance shall be sufficient to prepay the Receivable in
full. Otherwise, any remaining excess payments shall constitute a
Payahead, and shall increase the Payahead Balance.
Section 14.4 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
Receivable (other than a Purchased Receivable) after application under Section
14.3 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 Servicer to the extent
of the shortfall, and such
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<PAGE> 43
Payahead Balance shall be reduced accordingly. Next, subject to the following
sentence, the Servicer shall make an Advance of any remaining shortfall. The
Servicer will be obligated to make an Advance in respect of a Receivable only
to the extent that the Servicer, in its sole discretion, shall determine that
the Advance shall be recoverable from subsequent collections or recoveries on
any Receivable. With respect to each Receivable, the Advance shall increase
Outstanding Advances. Outstanding 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 Advance with
respect to any Receivable shall not be recoverable, the Servicer shall be
reimbursed from any collections made on other Receivables in the Trust, and
Outstanding Advances with respect to such Receivable shall be reduced
accordingly.
(b) 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 Annual Percentage Rate, the
Servicer shall make an unreimbursable advance of the amount of such interest.
Section 14.5 Additional Deposits. The Servicer shall deposit in the
Collection Account the aggregate Advances pursuant to Section 14.4(a) and the
aggregate advances pursuant to Section 14.4(b). To the extent that the
Servicer fails to make an advance pursuant to Section 14.4(b) on the date
required, the Class A Agent shall withdraw such amount from the Subordination
Spread Account and deposit such amount in the Collection Account. The Servicer
and the Seller shall deposit in the Collection Account the aggregate Purchase
Amount with respect to Purchased Receivables and the Servicer shall deposit
therein all amounts to be paid under Sections 21.2 and 13.7(b). All such
deposits with respect to a Collection Period shall be made, in immediately
available funds, on the Distribution Date related to such Collection Period.
Section 14.6 Distributions.
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(a) On each Distribution Date, the 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 Collection Account to the Certificate Account, in
immediately available funds, the entire amount then on deposit in the
Collection Account; provided, however, that in the event that the
Servicer is required to make deposits to the Collection Account on a
daily basis pursuant to Section 14.2, the amount of the funds
transferred from the Collection Account to the Certificate Account
will include only those funds that were deposited in the Collection
Account for the Collection Period related to such Distribution Date.
(ii) From the Payahead Account, or from the Servicer in the
event the provisions of Section 14.1(b) above are applicable, to the
Certificate Account, in immediately available funds, (x) the portion
of Payaheads constituting Scheduled Payments or prepayments in full,
required by Sections 14.3 and 14.4(a), and (y) the Payahead Balance,
if any, relating to any Purchased Receivable.
(iii) From the Certificate Account to the Payahead Account, or
to the Servicer in the event the provisions of Sections 14.1(b) above
are applicable, in immediately available funds, the aggregate
Payaheads required by Section 14.3 for the Collection Period related
to such Distribution Date.
(iv) From the Certificate Account to the Servicer, in
immediately available funds, repayment of Outstanding Advances
pursuant to Section 14.4(a).
(b) Prior to each Distribution Date, the Servicer shall on each
Determination Date calculate the Total Available Amount, the Available
Interest, the Available Principal, the Class A Distributable Amount and the
Class B Distributable Amount and, based on the Total
XIV-6
<PAGE> 45
Available Amount and the other distributions to be made on such Distribution
Date, determine the amount distributable to Certificateholders of each Class.
(c) On each Distribution Date, the Trustee (based on the information
contained in the Servicer's Certificate delivered on the related Determination
Date pursuant to Section 13.9) shall, subject to subsection (d) hereof, make
the following distributions in the following order of priority:
(i) first, to the Servicer, from the Available Interest, the
Servicing Fee and all unpaid Servicing Fees from prior Collection
Periods;
(ii) second, to the Class A Certificateholders:
(A) from the Class A Percentage of the Available Interest
(except as provided in the proviso to subsection (d)(i) below) (as
such Available Interest has been reduced by Servicing Fee payments),
an amount equal to the sum of the Class A Interest Distributable
Amount and any outstanding Class A Interest Carryover Shortfall as of
the close of the preceding Distribution Date (plus, to the extent not
otherwise provided for, interest on such Class A Interest Carryover
Shortfall at the Pass-Through Rate from such preceding Distribution
Date through the current Distribution Date, to the extent permitted
by law);
(B) from the Class A Percentage of the Available Principal,
an amount equal to the sum of the Class A Principal Distributable Amount
and any outstanding Class A Principal Carryover Shortfall as of the
close of the preceding Distribution Date;
(iii) third, to the Class B Certificateholders subject to
Section 14.7(d) below:
(A) from the Available Interest (as such Available Interest
has been
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<PAGE> 46
reduced by payments pursuant to clauses (i) and (ii) above), an
amount equal to the sum of the Class B Interest Distributable Amount
and any outstanding Class B Interest Carryover Shortfall as of the
close of the preceding Distribution Date; and
(B) from the Class B Percentage of the Available Principal, an
amount equal to the sum of the Class B Principal Distributable Amount
and any outstanding Class B Principal Carryover Shortfall as of the
close of the preceding Distribution Date;
provided, however, that amounts otherwise distributable to the Class B
Certificateholders shall instead be deposited by the Trustee in the
Subordination Spread Account to the extent provided in Section 14.7(c) hereof
to cover any Subordination Spread Account deficiency resulting from payments on
such Distribution Date from the Subordination Spread Account pursuant to
Section 14.6(d) or otherwise.
(d) The rights of the Class B Certificateholders to receive distributions
in respect of the Class B Certificates shall be and hereby are subordinated to
the rights of the Class A Certificateholders to receive distributions in
respect of the Class A Certificates and the rights of the Servicer to receive
the Servicing Fee (and any accrued and unpaid Servicing Fees from prior
Collection Periods) in the event of delinquency or defaults on the Receivables.
Such subordination shall be effected as follows, and all payments shall be
effected pursuant to clause (i) below prior to any payments pursuant to clause
(ii):
(i) If the Class A Percentage of the Available Interest (as
such Available Interest has been reduced by Servicing Fee payments)
is less than the sum of the Class A Interest Distributable Amount and
any Class A Interest Carryover Shortfall (including interest on such
Shortfall as provided in paragraph (c)(ii)(A) above) from the
preceding Distribution Date, the Class A Certificateholders shall be
entitled to receive distributions in respect of such deficiency
first, from the Class B
XIV-8
<PAGE> 47
Percentage of the Available Interest; second, if such amounts are
insufficient, from amounts on deposit in the Subordination Spread
Account; and third, if such amounts are insufficient, from the Class
B Percentage of the Available Principal; provided, however, that if the
amount required to be advanced by the Servicer pursuant to Section
14.4(b) for the Collection Period shall not have been advanced by the
Servicer, the resulting shortfall shall be allocated pro rata among the
Class A Certificates and the Class B Certificates and any such shortfall
with respect of the Class A Certificates (and any Class A Carryover
Shortfalls attributable thereto) shall be paid only from amounts that
are or become available in the Subordination Spread Account after giving
effect to any deposit thereto on such day. Upon either the written
instructions of the Servicer or the written instructions of the Trustee
(based solely on the information contained in the Servicer's Certificate
delivered on the related Determination Date pursuant to Section 13.9),
the Class A Agent shall release from the amounts available in the
Subordination Spread Account the amounts required pursuant to Section
14.6(c)(ii) above and distribute such amounts to the Trustee.
(ii) If the Class A Percentage of the Available Principal is
less than the sum of the Class A Principal Distributable Amount and
any Class A Principal Carryover Shortfall from the preceding
Distribution Date, the Class A Certificateholders shall be entitled
to receive distributions in respect of such deficiency first, from
the Class B Percentage of the Available Principal; second, if such
amounts are insufficient, from amounts on deposit in the
Subordination Spread Account; and third, if such amounts are
insufficient, from the Class B Percentage of the Available Interest.
Upon either the written instructions of the Servicer or the written
instructions of the Trustee (based solely on the information
contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to
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<PAGE> 48
Section 13.9), the Class A Agent shall release from the amounts
available in the Subordination Spread Account the amounts required
pursuant to Section 14.6(c)(ii) above and distribute such amounts to the
Trustee.
(e) Subject to Section 21.1 respecting the final payment upon
retirement of each Certificate, the Servicer shall on each Distribution Date
instruct the Trustee to distribute to each Certificateholder of any Class of
record on the preceding Record Date either by wire transfer, in immediately
available funds to the account of such holder at a bank or other entity having
appropriate facilities therefor, if such Certificateholder is the Seller or a
Clearing Agency and shall have provided to the Servicer appropriate
instructions prior to such Distribution Date, or, if not, by check mailed to
such Certificateholder (such check to be mailed as soon as reasonably
practicable on or after such Distribution Date) at the address of such holder
appearing in the Certificate Register, the amounts to be distributed to such
Certificateholder pursuant to such holder's Certificates.
Section 14.7 Subordination; Subordination Spread Account; Priority of
Distributions.
(a) (i) In order to effectuate the subordination provided for herein,
there shall be established and maintained with the Class A Agent a separate
trust account (the "Subordination Spread Account") to include the money and
other property deposited and held therein pursuant to this subsection
14.7(a)(i) and subsection 14.7(a)(ii). The Subordination Spread Account shall
be maintained in the name "______, as Class A Agent." On the date of issuance
of the Certificates, the Seller shall deposit the Subordination Initial
Deposit, if any, into the Subordination Spread Account. The Subordination
Spread Account shall not be part of the Trust. Each of the Class A
Certificateholders, on behalf of itself and its successors and assigns
(including, but not limited to, any future Holder of a Class A Certificate)
hereby appoints ______, acting in its capacity as agent for the purposes of
this Section 14.7 and not as Trustee, with respect to the Subordination Spread
Account and the Subordination Spread Account Property (the "Class
XIV-10
<PAGE> 49
A Agent"), and the Class A Agent hereby accepts such appointment.
(ii) In order to provide for the prompt payment to the Class A
Certificateholders and the Servicer, in accordance with subsections
14.6(c) and 14.6(d), to give effect to the subordination provided for
herein, and to assure availability of the amounts maintained in the
Subordination Spread Account:
(A) The Seller, as initial holder of the Class B Certificates,
hereby sells, conveys, and transfers to the Class A Agent and its
successors and assigns, the Subordination Initial Deposit and all
proceeds thereof, subject, however, to the limitations set forth
below, and solely for the purpose of providing for payment of the
Class A Distributable Amount provided for in Section 14.6 and this
Section; and
(B) The Seller, as initial holder of the Class B Certificates,
on behalf of itself and its successors and assigns hereby sells,
conveys, and transfers to the Class A Agent, all its right, title,
and interest in and to the Subordination Spread Account, subject,
however, to the limitations set forth below, and all proceeds of the
foregoing, including, without limitation, all other amounts and
investments held from time to time in the Subordination Spread
Account (whether in the form of deposit accounts, Physical Property,
book-entry securities, or otherwise) subject, however, to the
limitations set forth below, and solely for the purpose of providing for
payment of the Class A Distributable Amount provided for in Section 14.6
and this Section;
(all of the foregoing, subject to the limitations set forth below, the
"Subordination Spread Account Property"), to have and to hold all the aforesaid
property, rights and privileges unto the Class A Agent, its successors and
assigns, in trust for the uses and purposes, and subject to the terms and
provisions, set forth in this Section 14.7. The Class A Agent hereby
acknowledges such
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transfer and accepts the trust hereunder and shall hold and distribute the
Subordination Spread Account Property in accordance with the terms and
provisions of this Section 14.7.
(i) The trust established pursuant to this Section 14.7 shall
not under any circumstances be deemed to be part of or otherwise
includable in the Trust.
(b) On each Distribution Date, if the amount of the Subordination Spread
Account (after giving effect to all payments to be made from such Account
pursuant to Section 14.6(d) on such Date) is less than the Specified
Subordination Spread Account Balance for such Distribution Date, the Servicer
shall instruct the Trustee, after payment of any amounts required to be
distributed to Class A Certificateholders and the Servicer, to withhold from
amounts otherwise distributable to the Class B Certificateholders and not
otherwise distributed to Class A Certificateholders or the Servicer and deposit
in the Subordination Spread Account all such amounts, or such lesser amounts as
are sufficient to restore the amount in the Subordination Spread Account to the
Specified Subordination Spread Account Balance. For purposes of calculating
the Class B Certificate Balance, any amounts so deposited will be deemed to
have been paid to the Class B Certificateholders. Subject to Section 14.7(d),
if the amount of the Subordination Spread Account (after taking into account
any withdrawals therefrom pursuant to Section 14.7(e)) is greater than the
Specified Subordination Spread Account Balance for such Distribution Date, the
Class A Agent shall upon the written instruction of the Servicer release to the
Trustee and, the Trustee at the instruction of the Servicer, shall distribute
the amount of the excess to the Class B Certificateholders on a pro rata basis
in accordance with their ownership of the Class B Certificates. Amounts
properly distributed to the Class B Certificateholders pursuant to this Section
14.7(c), either directly from the Certificate Account without deposit in the
Subordination Spread Account or from the Subordination Spread Account, shall be
deemed released from the trust established by this Section 14.7, and Class B
Certificateholders shall in no event thereafter be required to refund any such
distributed amounts.
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<PAGE> 51
(c) (i) Amounts held in the Subordination Spread Account shall be
invested in the manner specified in Section 14.1(a), in accordance with written
instructions from the holders of Class B Certificates evidencing not less than
51% of the Class B Certificate Balance or their designee, and such investments
shall not be sold or disposed of prior to their maturity. All such investments
shall be made in the name of the Class A Agent or its nominee and all income
and gain realized thereon shall be solely for the benefit of the Class B
Certificateholders and shall be payable by the Class A Agent to the Class B
Certificateholders on each Distribution Date.
(ii) With respect to the Subordination Spread Account Property,
the Class B Certificateholders and the Class A Agent agree that:
(A) Any Subordination Spread Account Property that is held in
deposit accounts shall be held solely in the name of the Class A
Agent at one or more depository institutions having the Required
Deposit Rating. Each such Deposit Account shall be subject to the
exclusive custody and control of the Class A Agent, and the Class A
Agent shall have sole signature authority with respect thereto.
(B) Any Subordination Spread Account Property that constitutes
Physical Property shall be delivered to the Class A Agent in
accordance with paragraph (a) of the definition of "Delivery" and
shall be held, pending maturity or disposition, solely by the Class A
Agent or a financial intermediary (as such term is defined in Section
8-313(4) of the UCC) acting solely for the Class A Agent.
(C) Any Subordination Spread 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 Class A Agent, pending
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<PAGE> 52
maturity or disposition, through continued book-entry registration of
such Subordination Spread Account Property as described in such
paragraph.
(D) Property of a type which is not capable of being delivered
to the Class A Agent in accordance with the definition of "Delivery"
shall not constitute Subordination Spread Account Property.
Effective upon Delivery of any Subordination Spread Account Property in
the form of Physical Property or book-entry securities, the Class A Agent shall
be deemed to have represented that it has purchased such Subordination Spread
Account Property for value, in good faith, and without notice of any adverse
claim thereto.
(iii) Investment earnings attributable to the Subordination
Spread Account Property and proceeds therefrom shall be held by the
Class A Agent for the benefit of the Class B Certificateholders.
Investment earnings attributable to the Subordination Spread Account
Property shall not be available to satisfy the subordination
provisions of this Agreement and shall not otherwise be subject to
any claims or rights of the Class A Certificateholders or the
Servicer. The Class A Agent shall cause all investment earnings
attributable to the Subordination Spread Account to be distributed on
each Distribution Date to the Class B Certificateholders.
Notwithstanding the foregoing, the Subordination Spread Account may
contain at any time uninvested cash in an amount not to exceed the
maximum amount insured by the FDIC without giving rise to any
obligation to withdraw such cash from the Subordination Spread
Account. Realized losses, if any, on investment of the Subordination
Spread Account Property shall be charged first against undistributed
investment earnings attributable to the Subordination Spread Account
Property and then against the Subordination Spread Account Property.
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(iv) The Class A Agent shall not enter into any subordination or
intercreditor agreement with respect to the Subordination Spread
Account Property.
(d) If the Servicer pursuant to Section 14.4 determines on 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 Class A Agent in
writing to withdraw funds, in an amount specified by the Servicer, from the
Subordination Spread Account and deposit them in the Certificate Account to
cover any shortfall. Such payment shall be deemed to have been made by the
Servicer pursuant to Section 14.4 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 Class A Agent, and the Servicer shall
within two Business Days replace any funds in the Subordination Spread Account
so used.
(e) Upon termination of this Agreement in accordance with Section 21.2,
any amounts on deposit in the Subordination Spread Account shall be paid to the
then holders of the Class B Certificates.
Section 14.8 Net Deposits. For so long as (i) Ford Motor Credit Company
shall be the Servicer, (ii) the Servicer shall be entitled pursuant to Section
14.2 to remit collections on a monthly rather than daily basis, and (iii) the
Servicer shall be entitled pursuant to Section 14.1(b) to retain Payaheads
rather than deposit them in the Payahead Account, Ford Motor Credit Company (in
whatever capacity) may make the remittances pursuant to Sections 14.2 and 14.5
above, net of amounts to be distributed to Ford Motor Credit Company (in
whatever capacity) pursuant to Section 14.6(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 14.9 Statements to Class A Certificateholders. On each
Distribution Date, the Trustee shall include with each distribution to each
Class A Certificateholder, a statement (which statement shall also be provided
to each rating agency then rating the
XIV-15
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Class A Certificates) based on information in the Servicer's Certificate
furnished pursuant to Section 13.9, setting forth for the Collection Period
relating to such Distribution Date the following information:
(i) the amount of such distribution allocable to principal;
(ii) the amount of such distribution allocable to interest;
(iii) the Pool Balance as of the close of business on the last
day of the preceding Collection Period;
(iv) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period and the Class A
Certificateholder's Class A Percentage of the Servicing Fee and the
amount of any unpaid Servicing Fees and the change in such amount
from that of the prior Distribution Date;
(v) the amount of the Class A Principal and Interest Carryover
Shortfalls, if any, on such Distribution Date and the change in the
Class A Principal and Interest Carryover Shortfalls from the
preceding Distribution Date;
(vi) the Class A Certificate Factor and Class B Certificate
Balance as of such Distribution Date;
(vii) the amount otherwise distributable to the Class B
Certificateholders that is distributed to Class A Certificateholders
on such Distribution Date;
(viii) the balance of the Subordination Spread 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;
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(ix) the aggregate Payahead Balance and the change in such
balance from the preceding Distribution Date; and
(x) the amount of Advances, if any, on such Distribution Date.
Each amount set forth pursuant to subclauses (i), (ii), (iv) or (v) above shall
be expressed as a dollar amount per $1,000 of original principal balance of a
Class A Certificate.
Within the prescribed period of time for tax reporting purposes after the
end of each calendar year during the term of the Agreement, the Trustee shall
mail, to each Person who at any time during such calendar year shall have been
a holder of a Class A Certificate, a statement containing the sum of the
amounts set forth in clauses (i), (ii), (iv) and (v) and such other
information, if any, as the Servicer determines is necessary to ascertain the
Class A Certificateholder's share of the gross income and deductions of the
Trust (exclusive of the Supplemental Servicing Fee), for such calendar year or,
in the event such Person shall have been a holder of a Class A Certificate
during a portion of such calendar year, for the applicable portion of such
year, for the purposes of such Certificateholder's preparation of federal
income tax returns.
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ARTICLE XV
[Intentionally Omitted]
ARTICLE XVI
The Certificates
Section 16.1 The Certificates. The Class A Certificates shall be issued
in denominations of $1,000; the Class B Certificates shall be issued in
denominations of $100,000 or in any amount in excess thereof each in fully
registered form and integral multiples thereof; provided, however, that one
Class A Certificate and one Class B Certificate may be issued in a denomination
equal to or including the residual amount (the "Residual Certificate"). The
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of the chairman of the board, vice chairman of the board, any vice
president, or any authorized Trust Officer of the Trustee under the Trustee's
seal imprinted thereon and attested on behalf of the Trust by the manual or
facsimile signature of the Secretary, any Assistant Secretary or any Trust
Officer of the 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 valid and
binding obligations of the Trust, 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 such
Certificates.
Section 16.2 Authentication of Certificates. The Trustee shall cause the
Certificates to be executed on behalf of the Trust, authenticated, and
delivered to or upon the written order of the Seller, signed by its chairman of
the board, its president, or any vice president, without further corporate
action by the Seller, in authorized denominations, pursuant to the Agreement.
No Certificate shall entitle its holder to any benefit under the 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
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Exhibit A or Exhibit B hereto executed by the 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 16.3 Registration of Transfer and Exchange of Certificates. The
Certificate Registrar shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 16.7, a Certificate Register in which, subject
to such reasonable regulations as it may prescribe, the Trustee shall provide
for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Trustee shall be the initial
Certificate Registrar.
The Class B Certificates shall initially be retained by the Seller. No
transfer of a Class B Certificate shall be made unless the registration
requirements of the Securities Act of 1933, as amended, and any applicable
State securities laws are complied with, or such transfer is exempt from the
registration requirements under said Act and laws. In the event that a
transfer is to be made in reliance upon an exemption from said Act or laws, the
Class B Certificateholder desiring to effect such transfer and such
Certificateholder's prospective transferee must each certify in writing to the
Seller and the Trustee the facts surrounding such transfer and provide both the
Seller and the Trustee with a written Opinion of Counsel in form and substance
satisfactory to the Seller and the Trustee that such transfer may be made
pursuant to an exemption from said Act or laws, which Opinion of Counsel shall
not be an expense of the Seller or the Trustee. Neither the Seller nor the
Trustee is under an obligation to register the Class B Certificates under said
Act or any other securities law.
No transfer of a Class B Certificate shall be made unless the Class B
Certificateholder desiring to effect such transfer shall have given each rating
agency requested by the Seller or an affiliate to rate the Class A Certificates
and which then has an outstanding rating thereon, the Seller and the Trustee
prior written notice of such proposed transfer, and such rating agencies shall
have notified such Class B Certificateholder, the Seller and the Trustee, in
writing, that such proposed transfer will not result in the qualification,
downgrading or
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withdrawal of the rating then assigned to the Class A Certificates by such
rating agencies.
In addition to the restrictions on transfer of Class B Certificates set
forth in the two immediately preceding paragraphs, no transfer of a Class B
Certificate shall be made unless prior to such transfer the Holder of such
Class B Certificate delivers to the Seller and the Trustee either a ruling of
the Internal Revenue Service or an Opinion of Counsel, which shall be
independent outside counsel, satisfactory to the Trustee and each rating agency
requested by the Seller or an affiliate to rate the Class A Certificates and
which has an outstanding rating thereon in either case to the effect that the
proposed transfer (x) will not result in the arrangement contemplated by this
Agreement being treated as an association (or publicly traded partnership)
taxable as a corporation under either (I) the Code, as from time to time in
force or (II) the tax laws of the State of New York and (y) will not have any
adverse effect on the Federal income taxation of the Trust or the Class A
Certificateholders. The Class B Certificate shall not be transferred
separately from the right to receive all amounts in the Subordination Spread
Account, unless the ruling of the Internal Revenue Service or the Opinion of
Counsel referred to in the preceding sentence would permit such transfer.
Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office, the 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 Trustee. At the option of a Holder, Certificates
may be exchanged for other Certificates of authorized denominations of a like
aggregate amount upon surrender of the Certificates to be exchanged at the
Corporate Trust Office.
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 Trustee and the Certificate Registrar duly executed by the
holder or his attorney duly authorized in writing. Each Certificate
surrendered for registration
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<PAGE> 59
of transfer and exchange shall be cancelled and subsequently disposed of by the
Trustee.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Trustee 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.
Section 16.4 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 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 Trustee on behalf of the Trust shall execute and the 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 with the issuance of any new Certificate under
this Section 16.4, the Trustee and 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 16.4 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 16.5 Persons Deemed Owners. The Trustee or the Certificate
Registrar may treat the Person in whose name any Certificate shall be
registered as the owner of such Certificate for the purpose of receiving
distributions pursuant to Section 14.6 and for all other purposes whatsoever,
and neither the Trustee nor the Certificate Registrar shall be bound by any
notice to the contrary.
Section 16.6 Access to List of Certificate-holders' Names and Addresses.
The Trustee shall furnish or cause to be furnished to the Servicer, within 15
days
XVI-4
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after receipt by the Trustee of a request therefor from the Servicer in
writing, a list, in such form as the Servicer 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 Holders of Class A
Certificates aggregating not less than 25% of the Class A Certificate Balance,
apply in writing to the Trustee, and such application states that the
applicants desire to communicate with other Certificateholders of such Class
with respect to their rights under the Agreement or under the Certificates and
such application shall be accompanied by a copy of the communication that such
applicants propose to transmit, then the Trustee shall, within five Business
Days after the receipt for such application, request from the Clearing Agency
and make available to such Certificateholders access during normal business
hours to the current list of Certificateholders. Each Holder, by receiving and
holding a Certificate, shall be deemed to have agreed to hold neither the
Servicer nor the Trustee accountable by reason of the disclosure of its name
and address, regardless of the source from which such information was derived.
Section 16.7 Maintenance of Office or Agency. The Trustee shall maintain
in the Borough of Manhattan, The City of New York, 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 Trustee in
respect of the Certificates and the Agreement may be served. The Trustee
initially designates the Corporate Trust Office as specified in the Agreement
as its office for such purposes. The Trustee shall give prompt written notice
to the Servicer and to Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
Section 16.8 Book-Entry Certificates. The Class A Certificates, upon
original issuance, (except for the Residual Certificate) will be issued in the
form of typewritten Certificates representing the Book-Entry Certificates, to
be delivered to The Depository Trust Company, the initial Clearing Agency, by,
or on behalf of, the Seller. The Class A Certificates delivered to The
Depository Trust Company shall initially be registered on the Certificate
Register in the name of CEDE &
XVI-5
<PAGE> 61
Co., the nominee of the initial Clearing Agency, and no Certificate Owner will
receive a definitive certificate representing such Certificate Owner's interest
in the Class A Certificates, except as provided in Section 16.10. Unless and
until definitive, fully registered Class A Certificates (the "Definitive
Certificates") have been issued to Certificate Owners pursuant to Section
16.10:
(i) the provisions of this Section 16.8 shall be in full force
and effect;
(ii) the Seller, the Servicer, the Certificate Registrar, and
the Trustee may deal with the Clearing Agency for all purposes
(including the making of distributions on the Class A Certificates)
as the authorized representative of the Certificate Owners;
(iii) to the extent that the provisions of this Section 16.8
conflict with any other provisions of this Agreement, the provisions
of this Section 16.8 shall control;
(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency and shall be limited to those established
by law and agreements between such Certificate Owners and the
Clearing Agency and/or the Clearing Agency Participants. Pursuant to
the Depository Agreement, unless and until Definitive Certificates
are issued pursuant to Section 16.10, the initial Clearing Agency
will make book-entry transfers among the Clearing Agency Participants
and receive and transmit distributions of principal and interest on
the Class A Certificates to such Clearing Agency Participants; and
(v) whenever this Agreement requires or permits actions to be
taken based upon instructions or directions of Holders of Class A
Certificates evidencing a specified percentage of the Class A
Certificate Balance the Clearing Agency shall be deemed to represent
such percentage only to the extent that it has received instructions
to such effect from
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Certificate Owners and/or Clearing Agency Participants owning or
representing, respectively, such required percentage of the beneficial
interest in Class A Certificates and has delivered such instructions to
the Trustee.
Section 16.9 Notices to Clearing Agency. Whenever notice or other
communication to the Class A Certificateholders is required under this
Agreement, other than to the Holder of the Residual Certificate, unless and
until Definitive Certificates shall have been issued to Certificate Owners
pursuant to Section 16.10, the Trustee and the Servicer shall give all such
notices and communications specified herein to be given to Holders of the Class
A Certificates to the Clearing Agency.
Section 16.10 Definitive Certificates. If (i)(A) the Seller advises the
Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities under the Depository Agreement, and (B)
the Trustee or the Seller is unable to locate a qualified successor, (ii) the
Seller at its option, advises the 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, Certificate Owners representing beneficial
interests aggregating not less than 51% of the Class A Certificate Balance
advise the Trustee and the Clearing Agency through the Clearing Agency
Participants in writing that the continuation of a book-entry system through
the Clearing Agency is no longer in the best interests of the Certificate
Owners, then the Trustee shall notify the Clearing Agency and request that the
Clearing Agency notify all Certificate Owners of the occurrence of any such
event and of the availability of Definitive Certificates to Certificate Owners
requesting the same and that the Record Date for any Distribution Date
subsequent to the issuance of Definitive Certificates will be the last day of
the Collection Period immediately preceding the month in which such
Distribution Date occurs. Prior to the issuance of Definitive Certificates,
the Trustee shall provide written notice to Goldman, Sachs & Co., CS First
Boston Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P.
Morgan Securities Inc. and Salomon Brothers Inc that, upon the issuance of
Definitive Certificates, the Record Date for any Distribution Date will be the
last day of the Collection Period imme-
XVI-7
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diately preceding the month in which such Distribution Date occurs. Upon
surrender to the Trustee of the Class A Certificates by the Clearing Agency,
accompanied by registration instructions from the Clearing Agency for
registration, the Trustee shall issue the Definitive Certificates and deliver
such Definitive Certificates in accordance with the instructions of the
Clearing Agency. Neither the Seller, the Certificate Registrar nor the 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 Certificates, the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder. The
Trustee shall not be liable if the Trustee or the Seller is unable to locate a
qualified successor Clearing Agency.
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<PAGE> 64
ARTICLE XVII
The Seller
Section 17.1 Representations of Seller. The Seller makes the following
representations on which the Trustee relied in accepting the Receivables in
trust and executing and authenticating the Certificates. The representations
speak as of the execution and delivery of the Agreement and shall survive the
sale of the Receivables to the Trustee and, if applicable, any subsequent
assignment or transfer pursuant to Article XV:
(i) 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.
(ii) 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.
(iii) Power and Authority. The Seller shall have the power and
authority to execute and deliver the Agreement and to carry out its
terms. The Seller shall have full power and authority to sell and
assign the property to be sold and assigned to and deposited with the
Trustee as part of the Trust and shall have duly authorized such sale
and assignment to the Trustee by all necessary action; and the
execution, delivery, and performance of the Agreement shall have been
duly
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authorized by the Seller by all necessary action.
(iv) Valid Sale; Binding Obligations. The Agreement shall
evidence a valid sale, transfer, and assignment of the Receivables,
enforceable against creditors of and purchasers from the Seller; and
a legal, valid and binding obligation of the Seller enforceable in
accordance with its terms.
(v) No Violation. The consummation of the transactions
contemplated by the Agreement and the fulfillment of the terms hereof
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) a default under, the Certificate of Limited Partnership or
Limited Partnership Agreement of the Seller, or any indenture,
agreement, or other instrument to which the Seller 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; nor violate any law or, to
the best of the Seller's knowledge, any order, rule, or regulation
applicable to the Seller of any court or of any federal or state
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Seller or its
properties.
(vi) 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: A) asserting the invalidity of the Agreement or the
Certificates; B) seeking to prevent the issuance of the Certificates
or the consummation of any of the transactions contemplated by the
Agreement; C) seeking any determination or ruling that might
materially and adversely affect the performance by the Seller of its
obligations under, or the validi-
XVII-2
<PAGE> 66
ty or enforceability of, the Agreement or the Certificates; or D)
relating to the Seller and which might adversely affect the federal
income tax attributes of the Certificates.
Section 17.2 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 the Agreement.
(i) The Seller shall indemnify, defend, and hold harmless the
Trustee and the Trust from and against any taxes that may at any time
be asserted against the Trustee or the Trust with respect to, and as
of the date of, the sale of the Receivables to the Trust or the
issuance and original sale of the Certificates, including any sales,
gross receipts, general corporation, tangible personal property,
privilege, or license taxes (but, in the case of the Trust, not
including any taxes asserted with respect to ownership of the
Receivables or federal or other income taxes arising out of the
transactions contemplated by the Agreement) and costs and expenses in
defending against the same.
(ii) The Seller shall indemnify, defend, and hold harmless the
Trustee from and against any loss, liability, or expense incurred by
reason of (a) the Seller's willful misfeasance, bad faith, or
negligence (other than errors in judgment) in the performance of its
duties under the Agreement, or by reason of reckless disregard of its
obligations and duties under the Agreement and (b) the Seller's
violation of federal or state securities laws in connection with the
registration or the sale of the Certificates.
Indemnification under this Section 17.2 shall survive 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 payment to the Trustee pursuant to this Section and the Trustee
thereafter shall
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collect any of such amounts from others, the Trustee shall repay such amounts
to the Seller, without interest.
Section 17.3 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 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 Trustee an Officer's Certificate and an Opinion of
Counsel each stating that such consolidation, merger, or succession and such
agreement or assumption comply with this Section 17.3 and that all conditions
precedent, if any, provided for in the Agreement relating to such transaction
have been complied with and (y) the Seller shall have delivered to the 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 Trustee 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 interest. The Seller
shall provide notice of any merger, consolidation, or succession pursuant to
this Section 17.3 to each rating agency then providing a rating for the
Certificates. Notwithstanding anything herein to the contrary, the execution
of the foregoing agreement or 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 17.4 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
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under any obligation to appear in, prosecute, or defend any legal action that
shall not be incidental to its obligations under the Agreement, and that
in its opinion may involve it in any expense or liability.
Section 17.5 Seller May Own Certificates. The Seller and any Person
controlling, controlled by, or under common control with the Seller may in its
individual or any other capacity become the owner or pledgee of Certificates
with the same rights as it would have if it were not the Seller or an affiliate
thereof, except as otherwise provided in the definition of "Certificateholder"
specified in Section 11.1 and except as otherwise specifically provided herein.
Certificates so owned by or pledged to the Seller or such controlling or
commonly controlled Person shall have an equal and proportionate benefit under
the provisions of the Agreement, without preference, priority, or distinction
as among all of the Certificates.
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<PAGE> 69
ARTICLE XVIII
The Servicer
Section 18.1 Representations of Servicer. The Servicer makes the
following representations on which the Trustee relies in accepting the
Receivables in trust and executing and authenticating the Certificates. The
representations speak as of the execution and delivery of the Agreement and
shall survive the sale of the Receivables to the Trustee and, if applicable,
any subsequent assignment or transfer pursuant to Article XV:
(i) 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 Trustee;
(ii) 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 the Agreement) shall require such qualifications;
(iii) Power and Authority. The Servicer shall have the power
and authority to execute and deliver the Agreement and to carry out
its terms; and the execution, delivery, and performance of the
Agreement shall have been duly authorized by the Servicer by all
necessary corporate action;
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(iv) Binding Obligation. The Agreement shall constitute a
legal, valid, and binding obligation of the Servicer enforceable in
accordance with its terms;
(v) No Violation. The consummation of the transactions
contemplated by the Agreement and the fulfillment of the terms hereof
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) 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 the 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 of any federal or state regulatory body,
administrative agency, or other governmental instrumentality having
jurisdiction over the Servicer or its properties; and
(vi) 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: A) asserting the invalidity of the
Agreement or the Certificates, B) seeking to prevent the issuance of
the Certificates or the consummation of any of the transactions
contemplated by the Agreement, C) 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, the Agreement or the Certificates, or D) relating to the Servicer
and which might adversely affect the federal income tax attributes of
the Certificates.
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Section 18.2 Indemnities of Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under the Agreement.
(i) The Servicer shall defend, indemnify, and hold harmless the
Trustee, the Trust, and the Certificateholders 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.
(ii) The Servicer shall indemnify, defend, and hold harmless
the Trustee and the Trust from and against any taxes that may at any
time be asserted against the Trustee or the Trust with respect to the
transactions contemplated herein, including, without limitation, any
sales, gross receipts, general corporation, tangible personal
property, privilege, or license taxes (but, in the case of the Trust,
not including any taxes asserted with respect to, and as of the date
of, the sale of the Receivables to the Trust or the issuance and
original sale of the Certificates, or asserted with respect to
ownership of the Receivables, or federal or other income taxes arising
out of the transactions contemplated by the Agreement) and costs and
expenses in defending against the same.
(iii) The Servicer shall indemnify, defend, and hold harmless
the Trustee, the Trust, and the Certificateholders 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 Trustee, the Trust,
or the Certificateholders through, the negligence, willful
misfeasance, or bad faith of the Servicer in the performance of its
duties under the Agreement or by reason of reckless disregard of its
obligations and duties under the Agreement.
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(iv) The Servicer shall indemnify, defend, and hold harmless
the Trustee 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 herein
contained, except to the extent that such cost, expense, loss, claim,
damage, or liability: (a) shall be due to the willful misfeasance,
bad faith, or negligence (except for errors in judgment) of the
Trustee; (b) relates to any tax other than the taxes with respect to
which either the Seller or the Servicer shall be required to
indemnify the Trustee; (c) shall arise from Trustee's breach of any
of its representations or warranties set forth in Section 20.14; (d)
shall be one as to which the Seller is required to indemnify the
Trustee; or (e) shall arise out of or be incurred in connection with
the performance by the Trustee of the duties of successor Servicer
hereunder.
In addition to the foregoing indemnities, if the Trustee is entitled to
indemnification by the Seller pursuant to Section 17.2 and the Seller is unable
for any reason to provide such indemnification to the Trustee, then the
Servicer shall be liable for any indemnification that the Trustee is entitled
to under Section 17.2.
For purposes of this Section, in the event of the termination of the
rights and obligations of Ford Motor Credit Company (or any successor thereto
pursuant to Section 18.3) as Servicer pursuant to Section 19.1, 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 Trustee) pursuant to Section 19.2.
Indemnification under this Section 18.2 by Ford Motor Credit Company (or
any successor thereto pursuant to Section 18.3) 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 and shall include
reasonable fees and expenses of counsel and expenses of litigation. If the
Servicer shall have made any indemnity
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payments pursuant to this Section and the recipient thereafter collects any of
such amounts from others, the recipient shall promptly repay such amounts to
the Servicer, without interest.
Section 18.3 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, or (iii) succeeding to the business of the
Servicer, or so long as Ford Motor Credit Company acts as Servicer, any
corporation more than 50% of the voting stock of which is owned directly or
indirectly by Ford Motor Company, which corporation 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 Trustee an Officer's Certificate and
an Opinion of Counsel each stating that such consolidation, merger or
succession and such agreement of assumption comply with this Section 18.3 and
that all conditions precedent provided for in the Agreement relating to such
transaction have been complied with and (y) the Servicer shall have delivered
to the 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 Trustee 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
interest. The Servicer shall provide notice of any merger, consolidation or
succession pursuant to this Section 18.3 to each rating agency then providing a
rating for the Certificates. Notwithstanding anything herein to the contrary,
the execution of the foregoing agreement or 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 18.4 Limitation on Liability of Servicer and Others. Neither the
Servicer nor any of the
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directors or officers or employees or agents of the Servicer shall be under any
liability to the Trust or the Certificateholders, except as provided under the
Agreement, for any action taken or for refraining from the taking of any action
pursuant to the 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 the Agreement, or by reason of negligence in the
performance of its duties under the 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.
Except as provided in the 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 the
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 the Agreement and the rights
and duties of the parties to the Agreement and the interests of the
Certificateholders under the Agreement. In such event, the legal expenses and
costs of such action and any liability resulting therefrom shall be expenses,
costs, and liabilities of the Servicer.
Section 18.5 Delegation of Duties. So long as Ford Motor Credit Company
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.
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ARTICLE XIX
Default
Section 19.1 Events of Default. If any one of the following events
("Events of Default") shall occur and be continuing:
(i) Any failure by the Servicer to deliver to the Trustee for
distribution to Certificateholders or deposit in the Subordination
Spread Account any proceeds or payment required to be so delivered
under the terms of the Certificates and the Agreement that shall
continue unremedied for a period of three Business Days after written
notice of such failure is received by the Servicer from the Trustee
or after discovery of such failure by an officer of the Servicer; 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 Certificates or in the Agreement, which failure shall
(a) materially and adversely affect the rights of Certificateholders
and (b) continue unremedied for a period of 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 or the Seller (as
the case may be), by the Trustee, or (2) to the Servicer or the
Seller (as the case may be), and to the Trustee by the Holders of
Class A Certificates evidencing not less than 25% of the Class A
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 in any insolvency, readjustment of debt, marshalling of
assets and liabilities, or similar proceedings, or for the winding up
or liquidation of its respective as
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affairs, and the continuance of any such decree or order unstayed
and in effect for a period of 90 consecutive days; or
(iv) The consent by the Servicer 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 voluntarily suspend payment of its obligations;
then, and in each and every case, so long as an Event of Default shall not have
been remedied, either the Trustee, or the Holders of the Class A Certificates
evidencing not less than 51% of the Class A Certificate Balance, by notice then
given in writing to the Servicer (and to the Trustee if given by the
Certificateholders) (with a copy to each rating agency requested to provide a
rating on the Certificates) may terminate all of the rights and obligations of
the Servicer under the Agreement. On or after the receipt by the Servicer of
such written notice, all authority and power of the Servicer under the
Agreement, whether with respect to the Certificates or the Receivables or
otherwise, shall, without further action, pass to and be vested in the Trustee
or such successor Servicer as may be appointed under Section 19.2; and, without
limitation, the Trustee is 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 successor Servicer and
the Trustee in effecting the termination of the responsibilities and rights of
the predecessor Servicer under the Agreement, including the transfer to the
successor Servicer for administration by
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it 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 the Agreement to
reflect such succession as Servicer pursuant to this Section 19.1 shall be paid
by the predecessor Servicer upon presentation of reasonable documentation of
such costs and expenses.
Section 19.2 Appointment of Successor. (a) Upon the Servicer's receipt
of notice of termination pursuant to Section 19.1 or the Servicer's resignation
in accordance with the terms of the Agreement, the predecessor Servicer shall
continue to perform its functions as Servicer under the 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 the
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 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 19.2, the Trustee without further
action shall automatically be appointed the successor Servicer. Notwithstanding
the above, the 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 the Agreement.
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(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, and shall be entitled to the Servicer Fees
and all of the rights granted to the predecessor Servicer, by the terms and
provisions of the Agreement.
(c) In connection with such appointment, the 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 the Agreement. The Trustee and such successor Servicer shall
take such action, consistent with the Agreement, as shall be necessary to
effectuate any such succession.
Section 19.3 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 14.3 and 14.4, in the manner specified in Section 14.6, with respect to
all Advances made by the predecessor Servicer.
Section 19.4 Notification to Certificateholders. Upon any termination
of, or appointment of a successor to, the Servicer pursuant to this Article
XIX, the Trustee shall give prompt written notice thereof to Certificateholders
at their respective addresses appearing in the Certificate Register and to each
of the rating agencies then rating the Certificates.
Section 19.5 Waiver of Past Defaults. The Holders of Class A
Certificates evidencing not less than 51% of the Class A Certificate Balance
may, on behalf of all Holders of Certificates, waive any default by the
Servicer in the performance of its obligations hereunder and its consequences,
except a default in making any required deposits to or payments from the
Collection Account or the Certificate Account in accordance with the Agreement.
Upon any such waiver of a past default, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been remedied
for every purpose of the Agreement. No such waiver shall
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extend to any subsequent or other default or impair any right consequent
thereon.
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ARTICLE XX
The Trustee
Section 20.1 Duties of Trustee. The Trustee, both prior to the
occurrence of an Event of Default and after an Event of Default shall have been
cured or waived, shall undertake to perform such duties as are specifically set
forth in the Agreement. If an Event of Default shall have occurred and shall
not have been cured or waived and, in the case of an Event of Default described
in Section 19.1, the Trustee has received notice of such Event of Default
pursuant to Section 13.10(b), the Trustee shall exercise such of the rights and
powers vested in it by the Agreement, and shall 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 his own affairs; provided, however, that if the
Trustee shall assume the duties of the Servicer pursuant to Section 19.2, the
Trustee in performing such duties shall use the degree of skill and attention
customarily exercised by a servicer with respect to automobile receivables that
it services for itself or others.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders, or other instruments furnished to the
Trustee that shall be specifically required to be furnished pursuant to any
provision of the Agreement, shall examine them to determine whether they
conform to the requirements of the Agreement.
The Trustee shall take and maintain custody of the Schedule of Receivables
included as an exhibit to the Agreement and shall retain all Servicer's
Certificates identifying Receivables that become Purchased Receivables.
No provision of the Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act
(other than errors in judgment), or its own bad faith; provided, however, that:
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(i) Prior to the occurrence of an Event of Default, and after
the curing or waiving of all such Events of Default that may have
occurred, the duties and obligations of the Trustee shall be
determined solely by the express provisions of the Agreement, the
Trustee shall not be liable except for the performance of such duties
and obligations as shall be specifically set forth in the Agreement,
no implied covenants or obligations shall be read into the Agreement
against the Trustee and, in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively rely on the truth of the
statements and the correctness of the opinions expressed upon any
certificates or opinions furnished to the Trustee and conforming to
the requirements of the Agreement;
(ii) The Trustee shall not be liable for an error of judgment
made in good faith by a Trustee Officer, unless it shall be proved
that the Trustee shall have been negligent in ascertaining the
pertinent facts;
(iii) The Trustee shall not be liable with respect to any
action taken, suffered, or omitted to be taken in good faith in
accordance with the Agreement or at the direction of the Holders of
Class A Certificates evidencing not less than 25% of the Class A
Certificate Balance relating to the time, method, and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under the
Agreement;
(iv) The Trustee shall not be charged with knowledge of any
failure by the Servicer to comply with the obligations of the
Servicer referred to in Section 19.1, or of any failure by the Seller
to comply with the obligations of the Seller referred to in Section
19.1, unless a Trustee Officer assigned to the Trustee's Corporate
Trust Department obtains actual knowledge of such failure (it being
understood that knowledge of the Servicer or the Servicer as
custodian, in its capacity as
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agent for the Trustee, is not attributable to the Trustee) or the
Trustee receives written notice of such failure from the Servicer or
the Seller, as the case may be, or the Holders of Class A Certificates
evidencing not less than 25% of the Class A Certificate Balance; and
(v) Without limiting the generality of this Section or Section
20.4, the Trustee shall have no duty (i) to see to any recording,
filing, or depositing of the Agreement, any agreement referred to
therein, or any financing statement or continuation statement
evidencing a security interest in the Receivables or the Financed
Vehicles, or to see to the maintenance of any such recording, filing,
or depositing or to any rerecording, refiling or redepositing of any
thereof, (ii) to see to any insurance of the Financed Vehicles or
Obligors or to effect or maintain any such insurance, (iii) to see to
the payment or discharge of any tax, assessment, or other
governmental charge or any Lien or encumbrance of any kind owing with
respect to, assessed or levied against, any part of the Trust, (iv)
to confirm or verify the contents of any reports or certificates of
the Servicer delivered to the Trustee pursuant to the Agreement
believed by the Trustee to be genuine and to have been signed or
presented by the proper party or parties, or (v) to inspect the
Financed Vehicles at any time or ascertain or inquire as to the
performance or observance of any of the Seller's or the Servicer's
representations, warranties, or covenants or the Servicer's duties and
obligations as Servicer and as custodian of the Receivable Files under
the Agreement.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there shall be
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability shall not be reasonably assured to it,
and none of the provisions contained in the Agreement
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shall in any event require the Trustee to perform, or be responsible for the
manner of performance of, any of the obligations of the Servicer under the
Agreement except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers, and privileges of,
the Servicer in accordance with the terms of the Agreement.
Section 20.2 Trustee's Certificate. Upon request of the Seller or
Servicer, on or as soon as practicable after each Distribution Date on which
Receivables shall be assigned to the Seller or the Servicer, as applicable,
pursuant to Section 20.3, the Trustee shall execute a Trustee's Certificate (in
the form of Exhibit D-1 or D-2, as applicable), based on the information
contained in the Servicer's Certificate for the related Collection Period,
amounts deposited to the Certificate Account and notices received pursuant to
the Agreement, identifying the Receivables repurchased by the Seller pursuant
to Section 12.2 or purchased by the Servicer pursuant to Section 13.7 or 21.2
during such Collection Period, and shall deliver such Trustee's Certificate,
accompanied by a copy of the Servicer's Certificate for such Collection Period
to the Seller or the Servicer, as the case may be. The Trustee's Certificate
submitted with respect to such Distribution Date shall operate, as of such
Distribution Date, as an assignment, without recourse, representation, or
warranty, to the Seller or the Servicer, as the case may be, of all the
Trustee's right, title, and interest in and to such repurchased Receivable, and
all security and documents relating thereto, such assignment being an
assignment outright and not for security.
Section 20.3 Trustee's Assignment of Purchased Receivables. With respect
to all Receivables repurchased by the Seller pursuant to Section 12.2 or
purchased by the Servicer pursuant to Section 13.7 or 21.2, the Trustee shall
by a Trustee's Certificate (in the form of Exhibit D-1 or D-2, as applicable)
assign, without recourse, representation, or warranty, to the Seller or the
Servicer (as the case may be) all the Trustee's right, title, and interest in
and to such Receivables, and all security and documents relating thereto.
Section 20.4 Certain Matters Affecting Trustee. Except as otherwise
provided in Section 20.1:
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(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
Servicer's Certificate, certificate of auditors, or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond, or other paper or document believed by
it to be genuine and to have been signed or presented by the proper
party or parties.
(ii) The Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it under the
Agreement in good faith and in accordance with such Opinion of
Counsel.
(iii) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by the Agreement, or to
institute, conduct, or defend any litigation under the Agreement or
in relation to the Agreement, at the request, order, or direction of
any of the Certificateholders pursuant to the provisions of the
Agreement, unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses,
and liabilities that may be incurred therein or thereby; nothing
contained in the Agreement, however, shall relieve the Trustee of the
obligations, upon the occurrence of an Event of Default (that shall
not have been cured or waived), to exercise such of the rights and
powers vested in it by the Agreement, and to use the same degree of
care and skill in their exercise as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.
(iv) The Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and reasonably believed by it
to be authorized or within the discretion or rights or powers
conferred upon it by the Agreement.
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(v) Prior to the occurrence of an Event of Default and after
the curing or waiving of all Events of Default that may have
occurred, the Trustee shall not be bound to make any investigation
into the facts of matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond, or other paper or document, unless requested
in writing so to do by Holders of Class A Certificates evidencing not
less than 25% of the Class A Certificate Balance; provided, however,
that if the payment within a reasonable time to the Trustee of the
costs, expenses, or liabilities likely to be incurred by it in the
making of such investigation shall be, in the opinion of the Trustee,
not reasonably assured to the Trustee by the security afforded to it
by the terms of the Agreement, the Trustee may require reasonable
indemnity against such cost, expense, or liability as a condition to
so proceeding. The reasonable expense of every such examination shall
be paid by the Servicer or, if paid by the Trustee, shall be
reimbursed by the Servicer upon demand. Nothing in this clause (v)
shall affect the obligation of the Servicer to observe any applicable
law prohibiting disclosure of information regarding the Obligors.
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties under the Agreement either directly
or by or through agents or attorneys or a custodian. The Trustee
shall not be responsible for any misconduct or negligence of any such
agent or custodian appointed with due care by it hereunder or of the
Servicer in its capacity as Servicer or custodian.
(vii) Subsequent to the sale of the Receivables by the Seller
to the Trustee, the Trustee shall have no duty of independent
inquiry, except as may be required by Section 20.1, and the Trustee
may rely upon the representations and warranties and covenants of the
Seller and the Servicer contained in the Agree-
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ment with respect to the Receivables and the Receivable Files.
Section 20.5 Trustee Not Liable for Certificates or Receivables. The
recitals contained herein and in the Certificates (other than the certificate
of authentication on the Certificates) shall be taken as the statements of the
Seller or the Servicer, as the case may be, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee shall make no
representations as to the validity or sufficiency of the Agreement or of the
Certificates (other than the certificate of authentication on the
Certificates), or of any Receivable or related document. The Trustee shall at
no time have any responsibility or liability for or with respect to the
legality, validity, and enforceability of any security interest in any Financed
Vehicle or any Receivable, or the perfection and priority of such a security
interest or the maintenance of any such perfection and priority, or for or with
respect to the efficacy of the Trust or its ability to generate the payments to
be distributed to Certificateholders under the Agreement, including, without
limitation: the existence, condition, location, and ownership of any Financed
Vehicle; the review of any Receivable File therefor; the existence and
enforceability of any physical damage insurance thereon; the existence and
contents of any Receivable or any Receivable File or any computer or other
record thereof; the validity of the assignment of any Receivable to the Trust
or of any intervening assignment; the completeness of any Receivable or any
Receivable File; the performance or enforcement of any Receivable; the
compliance by the Seller or the Servicer with any warranty or representation
made under the Agreement or in any related document and the accuracy of any
such warranty or representation prior to the Trustee's receipt of notice or
other discovery of any noncompliance therewith or any breach thereof; any
investment of monies by the Servicer or any loss resulting therefrom (it being
understood that the Trustee shall remain responsible for any Trust property
that it may hold); the acts or omissions of the Seller, the Servicer, or any
Obligor; an action of the Servicer taken in the name of the Trustee; or any
action by the Trustee taken at the instruction of the Servicer; provided,
however, that the foregoing shall not relieve the Trustee of its obligation to
perform its duties under the Agreement. Except with respect to a claim based
on the fail-
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ure of the Trustee to perform its duties under the Agreement or based on the
Trustee's negligence or willful misconduct, no recourse shall be had for any
claim based on any provision of the Agreement, the Certificates, or any
Receivable or assignment thereof against the Trustee in its individual
capacity, the Trustee shall not have any personal obligation, liability, or
duty whatsoever to any Certificateholder or any other Person with respect to
any such claim, and any such claim shall be asserted solely against the Trust
or any indemnitor who shall furnish indemnity as provided in the Agreement.
The Trustee shall not be accountable for the use or application by the Seller
of any of the Certificates or of the proceeds of such Certificates, or for the
use or application of any funds paid to the Servicer in respect of the
Receivables. Any obligation of the Trustee to give any notice or statement to
any rating agency hereunder shall constitute only a best efforts obligation and
such notice or statement shall be so provided only as a matter of courtesy and
accommodation, the Trustee having no liability to any rating agency or any
other Person for any failure to so provide such notice or statement. The
Trustee may rely on the accuracy of such certification until it receives from
the Seller an Officer's Certificate superseding such certification.
Section 20.6 Trustee May Own Certificates. The Trustee in its individual
or any other capacity may become the owner or pledgee of Certificates and may
deal with the Seller and the Servicer in banking transactions with the same
rights as it would have if it were not Trustee.
Section 20.7 Trustee's Fees and Expenses. The Servicer shall pay to the
Trustee, and the Trustee shall be entitled to, reasonable compensation (which
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) for all services rendered by it in the execution
of the trusts created by the Agreement and in the exercise and performance of
any of the Trustee's powers and duties under the Agreement, and the Servicer,
shall pay or reimburse the Trustee upon its request for all reasonable
expenses, disbursements, and advances (including the reasonable compensation
and the expenses and disbursements of its counsel and of all persons not
regularly in its employ) incurred or made by the Trustee in accordance with any
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provisions of the Agreement except any such expense, disbursement, or advance
as may be attributable to its willful misfeasance, negligence, or bad faith,
and the Servicer shall indemnify the Trustee for, and hold it harmless against
any loss, liability, or expense incurred without willful misfeasance,
negligence, or bad faith on its part, arising out of or in connection with the
acceptance or administration of the Trust, 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 under the Agreement.
Additionally, the Seller, pursuant to Section 17.2, and the Servicer, pursuant
to Section 18.2, respectively, shall indemnify the Trustee with respect to
certain matters, and Certificateholders, pursuant to Section 20.4 shall, upon
the circumstances therein set forth, indemnify the Trustee under certain
circumstances. The provisions of this Section 20.7 shall survive the
termination of this Agreement.
Section 20.8 Indemnity of Trustee and Class A Agent. The Trustee shall
be indemnified by the Servicer and held harmless against any loss, liability,
fee, disbursement, or expense (including any compensation or expense referred
to in Section 20.7) arising out of or incurred in connection with the
acceptance or performance of the trusts and duties contained in the Agreement
to the extent that (i) the Trustee shall not be entitled to indemnity for such
loss, liability, fee, disbursement, or expense by the Seller pursuant to
Section 17.2 or Section 20.7, the Servicer pursuant to Section 18.2, or the
Certificateholders pursuant to Section 20.4; (ii) such loss, liability, fee,
disbursement, or expense shall not have been incurred by reason of the
Trustee's willful misfeasance, bad faith, or negligence (except for errors in
judgment); and (iii) such loss, liability, fee, disbursement, or expense shall
not have been incurred by reason of the Trustee's breach of its representations
and warranties pursuant to Section 20.14. The Class A Agent shall be
indemnified by the Servicer and held harmless against any loss, liability, fee,
disbursement, or expense arising out of or incurred in connection with the
acceptance or performance of its duties contained in the Agreement except to
the extent that such loss, liability, fee, disbursement, or expense shall have
been incurred by reason of the Class A Agent's willful misfeasance or gross
negligence; provided, however, that notwithstanding
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the foregoing, the Class A Agent shall be entitled to indemnification pursuant
to this Section 20.8 with respect to any actions of the Class A Agent taken in
accordance with the written instructions of the Servicer or of the Trustee
pursuant to Sections 14.7(d)(i) or 14.7(d)(ii).
Section 20.9 Eligibility Requirements for Trustee. The Trustee under the
Agreement shall at all times be a corporation having an office in the same
state as the location of the Corporate Trust Office as specified in the
Agreement; organized and doing business under the laws of such state or the
United States of America; authorized under such laws to exercise corporate
trust powers; and having a combined capital and surplus of at least $50,000,000
and subject to supervision or examination by federal or state authorities. 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 20.9, 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 Trustee shall cease to be eligible in accordance with the
provisions of this Section 20.9, the Trustee shall resign immediately in the
manner and with the effect specified in Section 20.10.
Section 20.10 Resignation or Removal of Trustee. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving written
notice thereof to the Servicer. Upon receiving such notice of resignation, the
Servicer shall promptly appoint a successor Trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor Trustee. If no successor Trustee
shall have been so appointed and have accepted appointment within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition
any court of competent jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 20.9 and shall fail to resign after written request
therefor by the Servicer, or if at any time the Trustee
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shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or
a receiver of the trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation, or liquidation, then
the Servicer may remove the Trustee. If it shall remove the Trustee under the
authority of the immediately preceding sentence, the Servicer shall promptly
appoint a successor Trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Trustee so removed and one copy to
the successor Trustee and shall promptly pay all fees owed to the outgoing
Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 20.10 shall not
become effective until acceptance of appointment by the successor Trustee
pursuant to Section 20.11 and payment of all fees and expenses owed and any
other amounts due hereunder to the outgoing Trustee. The Servicer shall
provide notice of such resignation or removal of the Trustee to each of the
rating agencies then rating the Certificates.
Section 20.11 Successor Trustee. Any successor Trustee appointed
pursuant to Section 20.10 shall execute, acknowledge, and deliver to the
Servicer and to its predecessor Trustee an instrument accepting such
appointment under the Agreement, and thereupon the resignation or removal of
the predecessor Trustee shall become effective and such successor Trustee,
without any further act, deed, or conveyance, shall become fully vested with
all the rights, powers, duties, and obligations of its predecessor under the
Agreement, with like effect as if originally named as Trustee. The predecessor
Trustee shall upon payment of its fees and expenses and any other amounts due
it hereunder deliver to the successor Trustee all documents and statements and
monies held by it under the Agreement; and the Servicer and the predecessor
Trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for fully and certainly vesting and confirming in
the successor Trustee all such rights, powers, duties, and obligations.
No successor Trustee shall accept appointment as provided in this Section
20.11 unless at the time of
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such acceptance such successor Trustee shall be eligible pursuant to
Section 20.9.
Upon acceptance of appointment by a successor Trustee pursuant to this
Section 20.11, the Servicer shall mail notice of the successor of such Trustee
under the Agreement to all Holders of Certificates at their addresses as shown
in the Certificate Register. If the Servicer shall fail to mail such notice
within 10 days after acceptance of appointment by the successor Trustee, the
successor Trustee shall cause such notice to be mailed at the expense of the
Servicer.
Section 20.12 Merger or Consolidation of Trustee. Any corporation into
which the 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 Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be eligible pursuant to Section 20.9, 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.
Section 20.13 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of the Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or any Financed Vehicle may at the time be located, the Servicer
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
to act as co-trustee, jointly with the Trustee, or separate trustee or separate
trustees, of all or any part of the Trust, and to vest in such Person, in such
capacity and for the benefit of the Certificateholders, such title to the
Trust, or any part thereof, and, subject to the other provisions of this
Section 20.13, such powers, duties, obligations, rights, and trusts as the
Servicer and the Trustee may consider necessary or desirable. If the Servicer
shall not have joined in such appointment within 15 days after the receipt by
it of a request so to do, or in the case an Event of Default shall have
occurred and be continuing, the Trustee alone shall have the power to make such
appointment. No co-
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trustee or separate trustee under the Agreement shall be required to meet the
terms of eligibility as a successor trustee pursuant to Section 20.9 and no
notice of a successor trustee pursuant to Section 20.11 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required pursuant to Section 20.11.
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 Trustee shall be conferred upon and exercised or
performed by the 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 Trustee joining in
such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee under the Agreement or as successor to the Servicer
under the Agreement), the 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 Trustee;
(ii) No trustee under the Agreement shall be personally liable
by reason of any act or omission of any other trustee under the
Agreement;
(iii) The Servicer and the Trustee acting jointly may at any
time accept the resignation of or remove any separate trustee or
co-trustee; and
(iv) All duties owed hereunder to the Trustee by the Servicer
shall be deemed to be owed to each separate trustee and co-trustee.
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Any notice, request, or other writing given to the 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 the Agreement and the conditions
of this Article XX. 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 Trustee or
separately, as may be provided therein, subject to all the provisions of the
Agreement, specifically including every provision of the Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Trustee. Each such instrument shall be filed with the Trustee and a copy
thereof given to the Servicer.
Any separate trustee or co-trustee may at any time appoint the 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 the 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
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 20.14 Representations and Warranties of Trustee. The Trustee
shall make the following representations and warranties on which the Seller and
Certificateholders shall rely:
(i) The Trustee is a __________ corporation duly organized,
validly existing, and in good standing under the laws of the State of
_______________.
(ii) The Trustee has full corporate power, authority, and legal
right to execute, deliver, and perform the Agreement, and shall have
taken all necessary action to authorize the execution, delivery, and
performance by it of the Agreement.
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(iii) The Agreement shall have been duly executed and delivered
by the Trustee.
Section 20.15 Tax Returns. The Servicer shall prepare or shall cause to
be prepared any tax returns required to be filed by the Trust and shall remit
such returns to the Trustee for signature at least five days before such
returns are due to be filed. The Trustee, upon request, will furnish the
Servicer with all such information known to the Trustee as may be reasonably
required in connection with the preparation of all tax returns of the Trust,
and shall, upon request, execute such returns.
Section 20.16 Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements, and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders in respect of which such judgment has
been obtained.
Section 20.17 Suits for Enforcement. If an Event of Default shall occur
and be continuing, the Trustee, in its discretion may, subject to the
provisions of Section 20.1, proceed to protect and enforce its rights and the
rights of the Certificateholders under this Agreement by a suit, action, or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or in aid
of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable, or other remedy as the Trustee, being advised by
counsel, shall deem most effectual to protect and enforce any of the rights of
the Trustee or the Certificateholders.
Section 20.18 Rights of Certificateholders to Direct Trustee. Holders of
Class A Certificates evidencing not less than 51% of the Class A Certificate
Balance
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shall have the right to direct the time, method, and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee; provided, however, that, subject to Section
20.1, the Trustee shall have the right to decline to follow any such direction
if the Trustee being advised by counsel determines that the action so directed
may not lawfully be taken, or if the Trustee in good faith shall, by a Trustee
Officer, determine that the proceedings so directed would be illegal or subject
it to personal liability or be unduly prejudicial to the rights of
Certificateholders not parties to such direction; and provided further that
nothing in this Agreement shall impair the right of the Trustee to take any
action deemed proper by the Trustee and which is not inconsistent with such
direction by the Certificateholders.
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ARTICLE XXI
Termination
Section 21.1 Termination of the Trust. The respective obligations and
responsibilities of the Seller, the Servicer, and the Trustee created hereby
and the Trust created by the Agreement shall terminate upon (i) the purchase as
of the last day of any Collection Period by the Servicer at its option,
pursuant to Section 21.2, of the corpus of the Trust and the subsequent
distribution to Certificateholders pursuant to Section 14.6 of the amount
required to be deposited pursuant to Section 21.2 or (ii) the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Agreement and the disposition of all property held as part of the Trust;
provided, however, that in no event shall the trust created by the Agreement
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants of Hurley David Smith, currently residing in Clarkston,
Michigan, living on the date of the Agreement. The Servicer shall promptly
notify the Trustee of any prospective termination pursuant to this Section
21.1.
Notice of any termination, specifying the Distribution Date upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee by letter to Certificateholders mailed not earlier than the 15th day
and not later than the 25th day of the month next preceding the specified
Distribution Date stating (A) the Distribution Date upon which final payment of
the Certificates shall be made upon presentation and surrender of the
Certificates at the office of the Trustee therein designated, (B) the amount of
any such final payment, and (C) if applicable, 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
Trustee therein specified. The Trustee shall give such notice to the
Certificate Registrar (if other than the Trustee) at the time such notice is
given to Certificateholders. Upon presentation and surrender of the
Certificates, the Trustee shall cause to be distributed to Certificateholders
amounts
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distributable on such Distribution Date pursuant to Section 14.6.
In the event that all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the date specified in the
above-mentioned written notice, the 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 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 the Agreement. Any funds remaining in the Trust after exhaustion of
such remedies shall be distributed by the Trustee to the Edison Institute,
Dearborn, Michigan.
Section 21.2 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 14.5 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 and the Trustee, and shall succeed to all
interests in and to the Trust.
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ARTICLE XXII
Miscellaneous Provisions
Section 22.1 Amendment. The Agreement may be amended by the Seller, the
Servicer, the Trustee and the Class A Agent, without the consent of any of the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in the Agreement, or to add any other provisions with respect to
matters or questions arising under the Agreement that shall not be inconsistent
with the provisions of the Agreement; provided, however, that such action shall
not, as evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of any Certificateholder. The Agreement also may be
amended by the Seller, the Servicer, the Trustee and the Class A Agent, without
the consent of any of the Certificateholders, to provide for the transfer of
the Class B Certificates; provided, however, that the conditions specified in
the third and fourth paragraphs of Section 16.3 shall be satisfied prior to
such transfer; provided, further, that such amendment shall not change the
timing of or the amount of any distributions that the Class A
Certificateholders are entitled to receive hereunder.
The Agreement may also be amended from time to time by the Seller, the
Servicer, the Trustee and the Class A Agent with the consent of the Holders of
Class A Certificates and Class B Certificates, each voting as a Class (which
consent of any Holder of a Certificate given pursuant to this Section or
pursuant to any other provision of this Agreement shall be conclusive and
binding on such Holder and on all future Holders of such Certificate and of any
Certificate issued upon the transfer thereof or in exchange thereof or in lieu
thereof whether or not notation of such consent is made upon the Certificate),
evidencing not less than 51% of the Class A Certificate Balance and Class B
Certificate Balance, respectively, for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of the
Agreement, or of modifying in any manner the rights of the Holders of
Certificates; provided, however, that no such amendment shall (a) increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables or distributions
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that shall be required to be made on any Certificate or change the Pass Through
Rate or the Specified Subordinated Spread Account Balance or (b) reduce the
aforesaid percentage required to consent to any such amendment, without the
consent of the Holders of all Certificates then outstanding.
Prior to the execution of any such amendment or consent, the Servicer will
provide and the Trustee shall distribute written notification of the substance
of such amendment or consent to each of the rating agencies then rating the
Certificates.
Promptly after the execution of any such amendment or consent, the Trustee
shall furnish written notification of the substance of such amendment or
consent to each Certificateholder.
It shall not be necessary for the consent of Certificateholders pursuant
to this Section 22.1 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) and of
evidencing the authorization of the execution thereof by Certificateholders
shall be subject to such reasonable requirements as the Trustee may prescribe,
including the establishment of record dates pursuant to paragraph number 2 of
the Depository Agreement.
Prior to the execution of any amendment to the Agreement, the 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 the Agreement and
the Opinion of Counsel referred to in Section 22.2(i)(1). The Trustee may, but
shall not be obligated to, enter into any such amendment which affects the
Trustee's own rights, duties or immunities under the Agreement or otherwise.
Section 22.2 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
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and in such places as may be required by law fully to preserve, maintain, and
protect the interest of the Certificateholders and the Trustee in the
Receivables and in the proceeds thereof. The Seller shall deliver (or cause to
be delivered) to the 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 Trustee at least five days'
prior written notice thereof 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 Trustee at least 60 days'
prior written notice of any relocation of its principal executive office if, as
a result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall promptly file any such
amendment. The Servicer shall at all 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 Certificate
Account and Payahead Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under the Agreement of the Receivables to the Trust, the
Servicer's master computer records (including any back-up archives) that refer
to a Receivable shall indicate
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clearly the interest of the particular grantor trust in such Receivable and
that such Receivable is owned by the Trust. Indication of the Trust's
ownership of 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 sold and is owned by the
Trust.
(g) The Servicer shall permit the Trustee and its 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.
(h) Upon request, the Servicer shall furnish to the Trustee, within
twenty 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 Trustee:
(1) promptly after the execution and delivery of the 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
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
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that, in the opinion of such Counsel, no such action shall be
necessary to preserve and protect such interest; and
(2) within 90 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 90-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 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 (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
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 the Agreement and
for other purposes, the 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 22.3 Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate the
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Trust, nor otherwise
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affect the rights, obligations, and liabilities of the parties to the
Agreement or any of them.
No Certificateholder shall have any right to vote (except as provided in
Section 22.1 or 19.5) or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties to the Agreement,
nor shall anything in the Agreement set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken pursuant to any provision of the Agreement.
No Certificateholder shall have any right by virtue or by availing itself
of any provisions of the Agreement to institute any suit, action, or proceeding
in equity or at law upon or under or with respect to the Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, and unless also (i) the default arises from the
Seller's or the Servicer's failure to remit payments when due hereunder, or
(ii) the Holders of Class A Certificates evidencing not less than 25% of the
Class A Certificate Balance shall have made written request upon the Trustee to
institute such action, suit or proceeding in its own name as Trustee under the
Agreement and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses, and liabilities to be incurred therein
or thereby, and the Trustee, for 30 days after its receipt of such notice,
request, and offer of indemnity, shall have neglected or refused to institute
any such action, suit or proceeding and during such 30-day period no request or
waiver inconsistent with such written request has been given to the Trustee
pursuant to this Section or Section 19.5; no one or more Holders of
Certificates shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of the Agreement to affect,
disturb, or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right, under the Agreement except in the
manner provided in the Agreement and for the equal, ratable, and common benefit
of all Certificateholders. For the protection and enforcement
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of the provisions of this Section 22.3, each Certificateholder and the Trustee
shall be entitled to such relief as can be given either at law or in equity.
Section 22.4 GOVERNING LAW. THE 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 THE AGREEMENT SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Section 22.5 Notices. All demands, notices, and communications upon or
to the Seller, the Servicer, the Trustee, or any rating agency under the
Agreement shall be in writing, personally delivered 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 the Agreement, or at such other address as shall be
designated by the Seller or the Servicer in a written notice to the Trustee,
(b) in the case of the Trustee, at the Corporate Trust Office, (c) 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 (d) 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 Certificateholder shall be
given by first class mail, postage prepaid, at the address of such Holder as
shown in the Certificate Register. Any notice so mailed within the time
prescribed in the Agreement shall be conclusively presumed to have been duly
given, whether or not the Certificateholder shall receive such notice.
Section 22.6 Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of the 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 the Agreement and shall in no way affect the validity
or enforceability of the other provisions of the Agreement or of the
Certificates or the rights of the Holders thereof.
XXII-7
<PAGE> 105
Section 22.7 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 17.3 and 18.3 and as provided
in the provisions of the Agreement concerning the resignation of the Servicer,
the Agreement may not be assigned by the Seller or the Servicer without the
prior written consent of the Trustee and the Holders of Class A Certificates
evidencing not less than 66-2/3% of the Class A Certificate Balance.
Section 22.8 Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of the Trust.
The interests represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever, and, upon
authentication thereof by the Trustee pursuant to Section 16.2 or Section 16.3,
Certificates shall be deemed fully paid.
Section 22.9 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 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 Uniform Commercial Code
of any applicable jurisdiction.
Section 22.10 No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of the Trustee 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 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 22.11 Third-Party Beneficiaries. This Agreement will inure to
the benefit of and be binding upon the parties hereto, the Certificateholders,
and their respective successors and permitted assigns. Except as otherwise
provided in this Article XXII, no other person will have any right or
obligation hereunder.
XXII-8
<PAGE> 106
Section 22.12 Actions by Certificateholders. (a) Wherever in this
Agreement a provision is made that an action may be taken or a notice, demand,
or instruction given by Certificateholders, such action, notice, or instruction
may be taken or given by any Certificateholder, unless such provision requires
a specific percentage of Certificateholders.
(b) Any request, demand, authorization, direction, notice, consent,
waiver, or other act by a Certificateholder shall bind such Certificateholder
and every subsequent holder of such 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 Trustee or the Servicer in reliance
thereon, whether or not notation of such action is made upon such Certificate.
* * * *
XXII-9
<PAGE> 107
EXHIBIT A
[FORM OF CLASS A CERTIFICATE -- SEE REVERSE FOR CERTAIN DEFINITIONS]
[The following legend to be inserted if this Certificate is issued to CEDE &
Co.:]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), 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.
FORD CREDIT AUTO GRANTOR TRUST ____-_
___% ASSET BACKED CERTIFICATE, CLASS A
evidencing a fractional undivided interest in the Trust, as defined below, the
property of which includes a pool of retail installment sale contracts secured
by new and used automobiles and light trucks and sold to the Trust by Ford
Credit Auto Receivables Two L.P.
(This Certificate does not represent an interest in or obligation of Ford
Credit Auto Receivables Two L.P. or Ford Motor Credit Company or any of their
respective affiliates, except to the extent described below.)
NUMBER [R-] CUSIP _________
$_____________
THIS CERTIFIES THAT ____________ is the registered owner of a
___________________________ dollars nonassessable, fully-paid, fractional
undivided interest in the Ford Credit Auto Grantor Trust ____-_ (the "Trust")
formed by Ford Credit Auto Receivables Two L.P., a Delaware limited partnership
<PAGE> 108
(the "Seller"). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as of ______ __, ____ (the "Agreement"), among the Seller, Ford
Motor Credit Company, as Servicer (the "Servicer"), and ______, as Trustee (the
"Trustee") and as Class A Agent, 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 Agreement. This Certificate is one of the duly authorized Certificates
designated as "___% Asset Backed Certificates, Class A" (herein called the
"Class A Certificates"). Also issued under the Agreement are Certificates
designated as "___% Asset Backed Certificates, Class B" (the "Class B
Certificates"). The Class B Certificates and the Class A Certificates are
hereinafter collectively called the "Certificates." The aggregate undivided
interest in the Trust evidenced by all Class A Certificates is ___%. This
Class A Certificate is issued under and is subject to the terms, provisions,
and conditions of the Agreement, to which Agreement the holder of this Class A
Certificate by virtue of the acceptance hereof assents and by which such holder
is bound. The property of the Trust includes (as more fully described in the
Agreement) a pool of retail installment sale contracts for new and used
automobiles and light trucks (the "Receivables"), certain monies due thereunder
on or after ______ __, ____, security interests in the vehicles financed
thereby, certain bank accounts and the proceeds thereof, property (including
the right to receive Liquidation Proceeds) securing the Receivables and held by
the Trustee, proceeds from claims on physical damage, credit life and
disability insurance policies covering vehicles financed thereby and the
obligors thereunder, certain other items financed by the obligors, certain
interests of the Seller in Dealer Recourse, all right, title and interest of
the Seller in and to the Purchase Agreement and any and all proceeds of the
foregoing.
Under the Agreement, there will be distributed on the ___ day of each
month or, if such ___ day is not a Business Day, the next Business Day (the
"Distribution Date"), commencing on ______ __, ____ to the person in whose name
this Class A Certificate is registered at either the close of business on the
___ day of the current calendar month or, after the issuance of Definitive
Certificates pursuant to the Agreement, the last day of the Collection Period
immediately preceding the month in which such Distribution Date occurs (the
"Record Date"), such Class A Certificateholder's fractional undivided interest
in the lesser of (a) the sum of the
A-2
<PAGE> 109
Class A Distributable Amount and any outstanding Class A Interest
Carryover Shortfall from the preceding Distribution Date (plus, to the extent
not otherwise provided for, interest on such Class A Interest Carryover
Shortfall at the Pass-Through Rate from such preceding Distribution Date
through the current Distribution Date, to the extent permitted by law and, with
respect to the Class A Interest Distributable Amount, only to the extent
provided in the Agreement) and any Class A Principal Carryover Shortfall and
(b) the sum of (i) the Total Available Amount (but with respect to the Class A
Interest Distributable Amount, only to the extent provided in the Agreement)
and (ii) amounts available in the Subordination Spread Account.
The holder of this Class A Certificate by virtue of the acceptance hereof
assents to the appointment, pursuant to Section 14.7 of the Agreement, of
______ acting solely as agent, and not as Trustee, for such holder with respect
to the Subordination Spread Account and the Subordination Spread Account
Property.
Distributions on this Class A Certificate will be made by the Trustee by
check or money order mailed to the Class A Certificateholder of record in the
Certificate Register without the presentation or surrender of this Class A
Certificate or the making of any notation hereon except that with respect to
Class A Certificates registered in the name of Cede & Co., the nominee for the
Clearing Agency, distributions will be made in the form of immediately
available funds. Except as otherwise provided in the Agreement and
notwithstanding the above, the final distribution on this Class A Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Class A
Certificate at the office or agency maintained for that purpose by the Trustee
in the Borough of Manhattan, The City of New York. The Record Date otherwise
applicable to such distribution shall not be applicable.
Reference is hereby made to the further provisions of this Class A
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 Trustee, by manual signature, this Class A
Certificate shall not
A-3
<PAGE> 110
entitle the holder hereof to any benefit under the Agreement or be valid
for any purpose.
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class A Certificate to be duly executed.
FORD CREDIT AUTO GRANTOR
TRUST ____-_
By: ______, as Trustee
By: ____________________________________
Name:
Title:
DATED:
[SEAL]
ATTEST:
_________________________
TRUST OFFICER
This is one of the Class A Certificates referred to
in the within-mentioned Agreement.
______, as Trustee
By: ____________________
Authorized Officer
A-4
<PAGE> 111
[Reverse of Certificate]
The Certificates do not represent an obligation of, or an interest in, the
Seller, the Servicer, the Trustee or any affiliate of any of them. The
Certificates are limited in right of payment to certain collections and
recoveries respecting the Receivables, all as more specifically set forth in
the Agreement. A copy of the Agreement may be examined during normal business
hours at the principal office of the Seller, and at such other places, if any,
designated by the Seller, by any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller and the rights of the Certificateholders under the Agreement at any time
by the Seller and the Trustee with the consent of the Holders of Class A
Certificates and Class B Certificates, each voting as a Class, evidencing not
less than 51% of the Class A Certificate Balance and Class B Certificate
Balance, respectively. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and on all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee in its capacity as Certificate
Registrar, or by any successor Certificate Registrar, in the Borough of
Manhattan, The City of New York, accompanied by a written instrument of
transfer in form satisfactory to the 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.
A-5
<PAGE> 112
The Class A Certificates are issuable only as registered Certificates
without coupons in denominations of $1,000 and integral multiples thereof;
however, one Certificate may be issued in a denomination equal to or including
the residual amount. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
denomination, as requested by the holder surrendering the same. No service
charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or governmental charges payable in connection therewith.
The Trustee, the Certificate Registrar, and any agent of the Trustee or
the Certificate Registrar may treat the person in whose name this Class A
Certificate is registered as the owner hereof for all purposes, and neither the
Trustee, the Certificate Registrar, nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts required to be paid to them pursuant to the Agreement and the
disposition of all property held as part of the Trust. The Servicer of the
Receivables may at its option purchase the corpus of the Trust at a price
specified in the Agreement, and such purchase of the Receivables and other
property of the Trust will effect early retirement of 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 10% of the original
aggregate principal balance of the Receivables.
The recitals contained herein (other than the certificate of
authentication herein) shall be taken as the statements of the Seller or the
Servicer, as the case may be, and the Trustee assumes no responsibility for the
correctness thereof. The Trustee makes no representations as to the validity
or sufficiency of this Certificate (other than the certificate of
authentication herein), or of any Receivable or related document.
A-6
<PAGE> 113
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 typewrite 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-7
<PAGE> 114
EXHIBIT B
[FORM OF CLASS B CERTIFICATE -- SEE REVERSE FOR CERTAIN DEFINITIONS]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
PURSUANT TO THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED OR SOLD
UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN OPINION OF COUNSEL
THAT SUCH REGISTRATION IS NOT REQUIRED AND THE SATISFACTION OF CERTAIN OTHER
REQUIREMENTS SPECIFIED IN THE AGREEMENT. EACH HOLDER OF THIS CERTIFICATE
ACKNOWLEDGES AND AGREES THAT IT HAS ASSIGNED, SOLD, CONVEYED AND TRANSFERRED
ALL ITS RIGHT, TITLE AND INTEREST IN AND TO THE SUBORDINATION SPREAD ACCOUNT
AND THE SUBORDINATION SPREAD ACCOUNT PROPERTY IN ACCORDANCE WITH SECTION 14.7
OF THE AGREEMENT.
FORD CREDIT AUTO GRANTOR TRUST ____-_
___% ASSET BACKED CERTIFICATE, CLASS B
evidencing a fractional undivided interest in the Trust, as defined
below, the property of which includes a pool of retail installment sale
contracts secured by new and used automobiles and light trucks and sold
to the Trust by Ford Credit Auto Receivables Two L.P.
(This Certificate does not represent an interest in or obligation of Ford
Credit Auto Receivables Two L.P. or Ford Motor Credit Company or any of
their respective affiliates, except to the extent described below.)
NUMBER
R-1
$_________
THIS CERTIFIES THAT Ford Credit Auto Receivables Two L.P. is the registered
owner of a ______________________________ dollars and ________ cents
nonassessable, fully-paid, fractional undivided interest
<PAGE> 115
in the Ford Credit Auto Grantor Trust ____-_ (the "Trust") formed by
Ford Credit Auto Receivables Two L.P., a Delaware limited partnership (the
"Seller"). The Trust was created pursuant to a Pooling and Servicing Agreement
dated as of ______ __, ____ (the "Agreement"), among the Seller, Ford Motor
Credit Company, as Servicer (the "Servicer"), and ______, as Trustee (the
"Trustee") and as Class A Agent, 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 Agreement. This Certificate is one of the duly authorized Certificates
designated as "___% Asset Backed Certificates, Class B" (herein called the
"Class B Certificates"). Also issued under the Agreement are Certificates
designated as "___% Asset Backed Certificates, Class A" (the "Class A
Certificates"). The Class B Certificates and the Class A Certificates are
hereinafter collectively called the "Certificates." The aggregate undivided
interest in the Trust evidenced by all Class B Certificates is ___%. This Class
B Certificate is issued under and is subject to the terms, provisions, and
conditions of the Agreement, to which Agreement the holder of this Class B
Certificate by virtue of the acceptance hereof assents and by which such holder
is bound. The property of the Trust includes (as more fully described in the
Agreement) a pool of retail installment sale contracts for new and used
automobiles and light trucks (the "Receivables"), certain monies due thereunder
on or after ______ __, ____, security interests in the vehicles financed
thereby, certain bank accounts and the proceeds thereof, property (including
the right to receive Liquidation Proceeds) securing the Receivables, proceeds
from claims on physical damage, credit life and disability insurance policies
covering vehicles financed thereby and the obligors thereunder, certain other
items financed by the obligors, certain interests of the Seller in Dealer
Recourse, all right, title and interest of the Seller in and to the Purchase
Agreement and any and all proceeds of the foregoing. The rights of the holders
of the Class B Certificates are subordinated to the rights of the holders of
the Class A Certificates, as set forth in the Agreement.
Under the Agreement, there will be distributed on the ___ day of each
month or, if such ___ day is not a Business Day, the next Business Day (the
"Distribution
B-2
<PAGE> 116
Date"), commencing on ______ __, ____, to the person in whose name this Class
B Certificate is registered at either the close of business on the ___ day of
the current calendar month or, after the issuance of Definitive Certificates
pursuant to the Agreement, the last day of the Collection Period immediately
preceding the month in which such Distribution Date occurs (the "Record Date"),
such Class B Certificateholder's fractional undivided interest in the lesser of
(a) the sum of the Class B Distributable Amount and any outstanding Class B
Interest Carryover Shortfall and any Class B Principal Carryover Shortfall and
(b) the sum of (i) the Total Available Amount and (ii) amounts available in the
Subordination Spread Account in excess of the Specified Subordinated Spread
Account Balance for the next succeeding Distribution Date, in each case after
giving effect to (A) the amounts required to be distributed to the holders of
Class A Certificates pursuant to the subordination of the rights of the holders
of Class B Certificates and (B) the amounts required to be deposited in the
Subordination Spread Account and to pay the Servicing Fee (including any unpaid
Servicing Fees with respect to prior Collection Periods) payable to the
Servicer on such Distribution Date.
Each holder of this Class B Certificate acknowledges and agrees that its
rights to receive distributions in respect of this Class B Certificate are
subordinated to the rights of the Class A Certificateholders to receive
distributions in respect of the Class A Certificates and the rights of the
Servicer to receive the Servicing Fee (and any unpaid Servicing Fees from prior
Collection Periods) in the event of delinquency or defaults on the Receivables.
Each holder of this Class B Certificate acknowledges and agrees that, in order
to give effect to the subordination provisions provided in the Agreement, it
has assigned, sold, conveyed and transferred all its right, title and interest
in and to the Subordination Spread Account on the terms and conditions set
forth in the Agreement.
Distributions on this Class B Certificate will be made by the Trustee by
wire transfer, check or money order mailed to the Class B Certificateholder of
record in the Certificate Register without the presentation or surrender of
this Class B Certificate or the making of any notation hereon. Except as
otherwise provided in the
B-3
<PAGE> 117
Agreement and notwithstanding the above, the final distribution on this
Class B Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Class B Certificate at the office or agency maintained for that purpose by the
Trustee in the Borough of Manhattan, The City of New York.
Reference is hereby made to the further provisions of this Class B
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 Trustee, by manual signature, this
Class B Certificate shall not entitle the holder hereof to any benefit under
the Agreement or be valid for any purpose.
B-4
<PAGE> 118
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class B Certificate to be duly executed.
FORD CREDIT AUTO GRANTOR
TRUST ____-_
______, as Trustee
DATED:__________ By: ______________________________
Name:
Title:
[SEAL]
ATTEST:
__________________
Trust Officer
This is one of the Class B Certificates referred to
in the within-mentioned Agreement.
______, as Trustee
By: ___________________________
Authorized Officer
B-5
<PAGE> 119
[Reverse of Certificate]
The Certificates do not represent an obligation of, or an interest in, the
Seller, the Servicer, the Trustee or any affiliate of any of them. The
Certificates are limited in right of payment to certain collections and
recoveries respecting the Receivables, all as more specifically set forth in
the Agreement. A copy of the Agreement may be examined during normal business
hours at the principal office of the Seller, and at such other places, if any,
designated by the Seller, by any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller and the rights of the Certificateholders under the Agreement at any time
by the Seller and the Trustee with the consent of the Holders of Class A
Certificates and Class B Certificates, each voting as a Class, evidencing not
less than 51% of the Class A Certificate Balance and Class B Certificate
Balance, respectively. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and on all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee in its capacity as Certificate
Registrar, or by any successor Certificate Registrar, in the Borough of
Manhattan, The City of New York, accompanied by a written instrument of
transfer in form satisfactory to the 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.
B-6
<PAGE> 120
The Class B Certificates are issuable only as registered Certificates
without coupons in denominations of $100,000 and integral multiples thereof;
however, one Certificate may be issued in a denomination equal to or including
the residual amount. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
denomination, as requested by the holder surrendering the same. No service
charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or governmental charges payable in connection therewith.
The Trustee, the Certificate Registrar, and any agent of the Trustee or
the Certificate Registrar may treat the person in whose name this Class B
Certificate is registered as the owner hereof for all purposes, and neither the
Trustee, the Certificate Registrar, nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts required to be paid to them pursuant to the Agreement and the
disposition of all property held as part of the Trust. The Servicer of the
Receivables may at its option purchase the corpus of the Trust at a price
specified in the Agreement, and such purchase of the Receivables and other
property of the Trust will effect early retirement of 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 10% of the original
aggregate principal balance of the Receivables.
The recitals contained herein (other than the certificate of
authentication herein) shall be taken as the statements of the Seller or the
Servicer, as the case may be, and the Trustee assumes no responsibility for the
correctness thereof. The Trustee makes no representations as to the validity
or sufficiency of this Certificate (other than the certificate of
authentication herein), or of any Receivable or related document.
B-7
<PAGE> 121
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 typewrite 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.
B-8
<PAGE> 122
EXHIBIT C
[DTC LOGO]
BOOK-ENTRY-ONLY COLLATERALIZED MORTGAGE OBLIGATIONS (CMOs)
(WITHOUT OWNER OPTION TO REDEEM)/
OTHER ASSET-BACKED SECURITIES/AND PASS-THROUGH CERTIFICATES
Letter of Representations
[To be Completed by Issuer and Trustee]
___________________________
[Name of Issuer]
_______________________________
[Name of Trustee]
____ __, 199_
Attention: General Counsel's Office
THE DEPOSITORY TRUST COMPANY
55 Water Street; 49th Floor
New York, NY 10041-0099
Re: ______________________________________________
______________________________________________
______________________________________________
Ladies and Gentlemen:
This letter sets forth our understanding with respect to certain matters
relating to the above-referenced issue (the "Securities"). Trustee will act as
trustee with respect to the Securities pursuant to a trust indenture dated ____
__, 199_ (the "Document"). _______________________ ("Underwriter") is
distributing the Securities through The Depository Trust Company ("DTC").
To induce DTC to accept the Securities as eligible for deposit at DTC, and
to act in accordance with its Rules with respect to the Securities, Issuer and
Trustee make the following representations to DTC:
1. Prior to closing on the Securities on ____ __, ____, there shall be
deposited with DTC one Security certificate registered in the name of DTC's
nominee, Cede & Co., for each stated maturity of the Securities in the face
amounts set forth on Schedule A hereto, the total of which represents
<PAGE> 123
The Depository Trust Company
____ __, 199_
Page 2
100% of the principal amount of such Securities. If, however, the
aggregate principal amount of any maturity exceeds $150 million, one
certificate will be issued with respect to each $150 million of principal
amount and an additional certificate will be issued with respect to any
remaining principal amount. Each $150 million certificate shall bear the
following legend:
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to Issuer or its agent for registration of
transfer, exchange, or payment, and any certificate 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.
2. In the event of any solicitation of consents from or voting by holders
of the Securities, Issuer or Trustee shall establish a record date for such
purposes (with no provision for revocation of consents or votes by subsequent
holders) and shall, to the extent possible, send notice of such record date to
DTC not less than 15 calendar days in advance of such record date. Notices to
DTC pursuant to this Paragraph by telecopy shall be sent to DTC's
Reorganization Department at (212) 709-6896 or (212) 709-6897, and receipt of
such notices shall be confirmed by telephoning (212) 709-6870. Notices to DTC
pursuant to this Paragraph by mail or by any other means shall be sent to DTC's
Reorganization Department as indicated in Paragraph 4.
3. In the event of a full or partial redemption, Issuer or Trustee shall
send a notice to DTC specifying: (a) the amount of the redemption or refunding;
(b) in the case of a refunding, the maturity date(s) established under the
refunding; and (c) the date such notice is to be mailed to Security holders or
published (the "Publication Date"). Such notice shall be sent to DTC by a
secure means (e.g., legible telecopy, registered or certified mail, overnight
delivery) in a timely manner designed to assure that such notice is in DTC's
possession no later than the close of business on the business day before or,
if possible, two business days before the Publication Date. Issuer or Trustee
shall forward such notice either in a separate secure transmission for each
CUSIP number or in a secure transmission for multiple CUSIP numbers (if
applicable) which includes a manifest or list of each CUSIP number submitted in
that transmission. (The party sending such notice shall have a method to
verify subsequently the use of such means and the timeliness of such notice.)
The Publication Date shall be not less than 30 days nor more than 60 days prior
to the redemption date or, in the case of an advance refunding, the date that
the proceeds are deposited in escrow. Notices to DTC pursuant to this
Paragraph by telecopy shall be sent to DTC's Call Notification Department at
(516) 227-4039 or (516) 227-4190. If the party sending the notice does not
receive a telecopy receipt from DTC confirming that the notice has been
received, such party shall telephone (516) 227-4070. Notices to DTC pursuant to
this Paragraph by mail or by any other means shall be sent to:
2
<PAGE> 124
The Depository Trust Company
____ __, 199_
Page 3
Manager: Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, NY 11530-4719
4. In the event of an invitation to tender the Securities, notice by
Issuer or Trustee to Security holders specifying the terms of the tender and
the Publication Date of such notice shall be sent to DTC by a secure means in
the manner set forth in the preceding Paragraph. Notices to DTC pursuant to
this Paragraph and notices of other corporate actions (including mandatory
tenders, exchanges and capital changes) by telecopy shall be sent to DTC's
Reorganization Department at (212) 709-1093 or (212) 709-1094, and receipt of
such notices shall be confirmed by telephoning (212) 709-6884. Notices to DTC
pursuant to the above by mail or by any other means shall be sent to:
Manager, Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, NY 10004-2695
5. All notices and payment advices sent to DTC shall contain the CUSIP
number of the Securities.
6. Trustee shall send DTC written notice with respect to the dollar
amount per $1,000 original face value (or other minimum authorized denomination
if less than $1,000 face value) payable on each payment date allocated as to
the interest and principal portions thereof preferably 5, but not less than 2,
business days prior to such payment date. Such notices, which shall also
contain the current pool factor and Trustee contact's name and telephone
number, shall be sent by telecopy to DTC's Dividend Department at (212)
709-1723, or if by mail or by any other means to:
Manager: Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square; 22nd Floor
New York, NY 10004-2695
7. [NOTE: ISSUER MUST REPRESENT ONE OF THE FOLLOWING, AND CROSS OUT THE
OTHER:] [The interest accrual period is record date to record date.] [The
interest accrual period is payment date to payment date.]
8. Interest payments and principal payments that are part of periodic
principal-and-interest payments shall be received by Cede & Co., as nominee of
DTC, or its registered assigns in same-day funds on each payment date (or the
equivalent in accordance with existing arrangements between Issuer or trustee
and DTC). Such payments shall be made payable to the order of Cede & Co.
Absent any other existing arrangements, such payments shall be addressed as
follows:
C-3
<PAGE> 125
The Depository Trust Company
____ __, 199_
Page 4
Manager; Cash Receipts
Dividend Department
The Depository Trust Company
7 Hanover Square; 24th Floor
New York, NY 10004-2695
9. [NOTE: ISSUER MUST REPRESENT ONE OF THE FOLLOWING, AND CROSS OUT THE
OTHER:]
Securities Eligible for DTC's Same-Day Funds Settlement ("SDFS") System.
Other principal payments (redemption payments) shall be made in same-day funds
by Trustee in the manner set forth in the SDFS Paying Agent Operating
Procedures, a copy of which previously has been furnished to Trustee.
Securities Eligible for DTC's Next-Day Funds Settlement ("NDFS") System.
Other principal payments (redemption payments) shall be made in next-day funds
by Trustee to Cede & Co., as nominee of DTC, or its registered assigns, on each
payment date. Such payments shall be made payable to the order of Cede & Co.,
and shall be addressed as follows:
NDFS Redemptions Manager
Reorganization/Redemptions Department
The Depository Trust Company
7 Hanover Square; 23rd Floor
New York, NY 10004-2695
10. DTC may direct Issuer or Trustee to use any other number or address as
the number or address to which notices or payments of interest or principal may
be sent.
11. In the event of a redemption, acceleration, or any other similar
transaction (e.g., tender made and accepted in response to Issuer's or
Trustee's invitation) necessitating a reduction in the aggregate principal
amount of Securities outstanding or an advance refunding of part of the
Securities outstanding, DTC, in its discretion: (a) may request Issuer or
Trustee to issue and authenticate a new Security certificate; or (b) may make
an appropriate notation on the Security certificate indicating the date and
amount of such reduction in principal except in the case of final maturity, in
which case the certificate will be presented to Issuer or Trustee prior to
payment, if required.
12. In the event that Issuer determines that beneficial owners of
Securities shall be able to obtain certificated Securities, Issuer or Trustee
shall notify DTC of the availability of certificates. In such event, Issuer or
Trustee shall issue, transfer, and exchange certificates in appropriate
amounts, as required by DTC and others.
13. DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to
Issuer or Trustee (at which time DTC will confirm with Issuer or Trustee the
aggregate principal amount of Securities outstanding). Under such
circumstances, at DTC's request Issuer and Trustee shall cooperate fully with
DTC by taking appropriate
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<PAGE> 126
The Depository Trust Company
____ __, 199_
Page 5
action to make available one or more separate certificates evidencing
Securities to any DTC Participant having Securities credited to its DTC
accounts.
14. Issuer: (a) understands that DTC has no obligation to, and will not,
communicate to its Participants or to any person having an interest in the
Securities any information contained in the security certificate(s); and (b)
acknowledges that neither DTC's Participants nor any person having an interest
in the Securities shall be deemed to have notice of the provisions of the
Security certificates by virtue of submission of such certificate(s) to DTC.
15. Nothing herein shall be deemed to require Trustee to advance funds on
behalf of Issuer.
Notes:
- ------
A. If there is a Trustee (as defined Very truly yours,
in this Letter of Representations),
Trustee as well as Issuer must sign ____________________________________
this Letter. If there is no (Issuer)
Trustee, in signing this Letter Issuer
itself undertakes to perform all of By: ________________________________
the obligations set forth herein. (Authorized Officer's Signature)
B. Schedule B contains statements ____________________________________
that DTC believes accurately describe (Trustee)
DTC, the method of effecting
book-entry transfers of By: ________________________________
securities distributed through (Authorized Officer's Signature)
DTC, and certain related matters.
Received and Accepted:
THE DEPOSITORY TRUST COMPANY
By: __________________________
cc: Underwriter
Underwriter's Counsel
C-5
<PAGE> 127
SCHEDULE A
(Describe Issue)
CUSIP Principal Amount Maturity Date Interest Rate
- ----- ---------------- ------------- -------------
C-6
<PAGE> 128
SCHEDULE B
----------
SAMPLE OFFERING DOCUMENT LANGUAGE
DESCRIBING BOOK-ENTRY-ONLY ISSUANCE
(PREPARED BY DTC--BRACKETED MATERIAL MAY BE
APPLICABLE ONLY TO CERTAIN ISSUES)
1. The Depositary Trust Company ("DTC"), New York, NY, will act as
securities depository for the securities (the "Securities"). The Securities
will be issued as fully-registered securities registered in the name of Cede &
Co. (DTC's partnership nominee). One fully-registered Security certificate
will be issued for [each issue of] the Securities, [each] in the aggregate
principal amount of such issue, and will be deposited with DTC. [If, however,
the aggregate principal amount of [any] issue exceeds $150 million, one
certificate will be issued with respect to each $150 million of principal
amount and an additional certificate will be issued with respect to any
remaining principal amount of such issue.]
2. DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other
organizations. DTC is owned by a number of its Direct Participants and by the
New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks, and
trust companies that clear through or maintain a custodial relationship with a
Direct Participant, either directly or indirectly ("Indirect Participants").
The Rules applicable to DTC and its Participants are on file with the
Securities and Exchange Commission.
3. Purchases of Securities under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Securities on DTC's
records. The ownership interest of each actual purchaser of each Security
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchase, but Beneficial Owners are expected to receive
written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect
Participant through which the Beneficial Owner entered into the transaction.
Transfers of ownership interests in the Securities are to be accomplished by
entries made on the books of Participants acting on behalf of Beneficial
Owners. Beneficial Owners will not receive certificates representing their
ownership interests in Securities, except in the event that use of the
book-entry system for the securities is discontinued.
4. To facilitate subsequent transfers, all Securities deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Securities with DTC and their registration in the
name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Securities; DTC's records
reflect only the identity of the Direct Participants to whose accounts such
Securities are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
C-7
<PAGE> 129
5. Conveyances of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
[6. Redemption notices shall be sent to Cede & Co. If less than all of
the Securities within an issue are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each Direct Participant in such
issue to be redeemed.]
7. Neither DTC nor Cede & Co. will consent or vote with respect to
Securities. Under its usual procedures, DTC mails an Omnibus Proxy to the
Issuer as soon as possible after the record date. The Omnibus Proxy assigns
Cede & Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Securities are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
8. Principal and interest payments on the Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on payable date in
accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payment on payable date. Payments
by Participants to Beneficial Owners will be governed by standing instructions
and customary practices, as is the case with securities held for the accounts
of customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC, the Agent, or the Issuer,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of principal and interest to DTC is the responsibility
of the Issuer or the Agent, disbursement of such payments to Direct
Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants.
[9. A Beneficial Owner shall give notice to elect to have its Securities
purchased or tendered, through its Participant, to the [Tender/Remarketing]
Agent, and shall effect delivery of such Securities by causing the Direct
Participant to transfer the Participant's interest in the Securities, on DTC's
records, to the [Tender/Remarketing] Agent. The requirement for physical
delivery of Securities in connection with a demand for purchase or a mandatory
purchase will be deemed satisfied when the ownership rights in the Securities
are transferred by Direct Participants on DTC's records.]
10. DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to the
Issuer or the Agent. Under such circumstances, in the event that a successor
securities depository is not obtained, Security certificates are required to be
printed and delivered.
11. The Issuer may decide to discontinue use of the system of book-entry
transfer through DTC (or a successor securities depository). In that event,
Security certificates will be printed and delivered.
12. The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Issuer believes to be reliable,
but the Issuer takes no responsibility for the accuracy thereof.
C-8
<PAGE> 130
EXHIBIT D-1
Trustee's Certificate
pursuant to Section 20.3
of the Pooling and Servicing
Agreement
______, as trustee (the "Trustee") of the Ford Credit Auto Grantor Trust
____-_ created pursuant to the Pooling and Servicing Agreement (including the
Standard Terms and Conditions of Agreement incorporated by reference therein,
the "Pooling and Servicing Agreement") dated as of ______ __, ____, among Ford
Credit Auto Receivables Two L.P., as Seller (the "Seller"), Ford Motor Credit
Company, as Servicer and the Trustee, does hereby sell, transfer, assign, and
otherwise convey to the Seller, without recourse, representation, or warranty,
all of the Trustee's right, title, and interest in and to all of the
Receivables (as defined in the Pooling and Servicing Agreement) identified in
the attached Servicer's Certificate as "Purchased Receivables," which are to be
repurchased by the Seller pursuant to Section 12.2 and all security and
documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this ____ day of
__________, 19__.
___________________________
<PAGE> 131
EXHIBIT D-2
Trustee's Certificate
pursuant to Section 20.3
of the Pooling and Servicing
Agreement
______, as trustee (the "Trustee") of the Ford Credit Grantor Trust ____-_
created pursuant to the Pooling and Servicing Agreement (including the Standard
Terms and Conditions of Agreement incorporated by reference therein, the
"Pooling and Servicing Agreement") dated as of ______ __, ____, among Ford
Credit Auto Receivables Two L.P., as Seller, Ford Motor Credit Company, as
Servicer (the "Servicer") and the Trustee, does hereby sell, transfer, assign,
and otherwise convey to the Servicer, without recourse, representation, or
warranty, all of the Trustee's right, title, and interest in and to all of the
Receivables (as defined in the Pooling and Servicing Agreement) identified in
the attached Servicer's Certificate as "Purchased Receivables," which are to be
purchased by the Servicer pursuant to Section 13.7 or 21.2, and all security
and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this ____ day of
__________, 19__.
___________________________
<PAGE> 1
EXHIBIT 5.1
(FORD LOGO)
FORD MOTOR CREDIT COMPANY
Hurley D. Smith
Secretary and Corporate Counsel The American Road
Dearborn, Michigan 48121-6044
April 26, 1996
Ford Credit Auto Receivables Two, Inc.
The American Road
Dearborn, Michigan 48121
Ford Motor Credit Company
The American Road
Dearborn, Michigan 48121
Ford Credit Auto Receivables Two L.P.
The American Road
Dearborn, Michigan 48121
Dear Sirs:
The undersigned, Hurley D. Smith, Corporate Counsel of Ford Credit Auto
Receivables Two, Inc. ("FCAR"), Ford Credit Auto Receivables Two L.P.
("Seller") and Ford Motor Credit Company ("Ford Credit") has acted as counsel
for FCAR, Seller and Ford Credit in connection with Registration Statement No.
333-1245, as amended (the "Registration Statement"), filed with the Securities
and Exchange Commission under the Securities Act of 1933, as amended,
respecting the issuance by various trusts (each a "Trust") to be formed
pursuant to either an Owner Trust Agreement ("Owner Trust Agreement") to be
entered into between the Seller and the Owner Trustee (the "Owner Trustee")
designated therein or a Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement") to be entered into among the Seller, Ford Credit and the
Trustee designated therein (the "Trustee") of Asset Backed Securities
consisting of either Notes and/or Certificates. Any Asset Backed Securities
consisting of Notes are to be issued pursuant to a Trust Indenture (the "Trust
Indenture") to be entered into between the Trust and the Indenture Trustee
designated therein (the "Indenture Trustee") and any Asset Backed Securities
consisting of Certificates are to be issued pursuant to either the Owner Trust
Agreement or the Pooling and Servicing Agreement.
In that connection, I have examined, or caused to be examined, originals,
or copies certified to my satisfaction, of such documents, corporate and
partnership records and other instruments as I have deemed necessary or
appropriate for the purposes of this opinion. Based upon the foregoing, I am
of the opinion that the Asset Backed Securities, when duly executed and
authenticated by the Indenture Trustee, Owner Trustee or Trustee, as the case
may be, in accordance with the terms of the applicable Trust Indenture, Owner
Trust Agreement or Pooling and Servicing Agreement, and issued and delivered
against payment thereof, will be legally issued, fully paid and nonassessable.
I hereby consent to the use of this opinion as Exhibit 5 to the
Registration Statement. In giving this consent, I do not admit that I am in
the category of persons whose consent is required under Section 7 of the
Securities Act or the Rules and Regulations of the Commission issued
thereunder.
Very truly yours,
/s/ Hurley D. Smith
<PAGE> 1
EXHIBIT 8.1
April 29, 1996
Ford Credit Auto Receivables Two L.P.
The American Road
Dearborn, Michigan 48121
Re: Ford Credit Auto Receivables Two L.P.
Registration Statement on Form S-3 No. 333-1245
-----------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Ford Credit Auto Receivables Two L.P.,
as Seller (the "Seller"), in connection with Registration Statement on Form S-3
No. 333-1245, as amended (the "Registration Statement"), filed with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, respecting the issuance by various trusts (each, a "Trust") to be
formed pursuant to either an Amended and Restated Trust Agreement (the "Trust
Agreement") to be entered into by the Seller and the Owner Trustee (the "Owner
Trustee") designated therein or a Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement") to be entered into by the Seller, Ford Credit Motor
Company ("Ford Credit") and the Trustee designated therein (the "Trustee") of
Asset Backed Securities consisting of either Notes and/or Certificates. Any
Asset Backed Securities consisting of Notes are to be issued pursuant to an
Indenture (the "Indenture") to be entered into by the Trust and the Indenture
Trustee designated therein (the "Indenture Trustee") and any Asset Backed
Securities consisting of Certificates are to be issued pursuant to either the
Trust Agreement or the Pooling and Servicing Agreement. Capitalized terms used
herein and not otherwise defined herein have the meanings assigned to them in
the Registration Statement.
In this connection, we have examined and relied upon the Registration
Statement filed with the Securities
<PAGE> 2
Ford Credit Auto Receivables Two L.P.
April 29, 1996
Page 2
and Exchange Commission (the "SEC") on February 28, 1996 and Amendment No. 1
thereto, filed with the SEC on April 29, 1996, including (i) the form of
prospectus included therein (the "Prospectus"); (ii) the forms of prospectus
supplements included therein (the "Prospectus Supplements"); (iii) the form of
Indenture; (iv) the form of Trust Agreement; (v) the form of Purchase
Agreement; (vi) the form of Sale and Servicing Agreement; (vii) the form of
Administration Agreement; (viii) the form of Pooling and Servicing Agreement;
and (ix) such other documents as we have deemed necessary or appropriate as a
basis for the opinion set forth below, and we have assumed (i) that such
documents will not be amended and (ii) 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.
April 29, 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/or Certificates, under existing law and the assumptions
stated therein.
We also note that the Prospectus and the Basic Documents do not relate to
a specific transaction. Accordingly, the above-referenced description of
federal income tax consequences may require modification in the context of an
actual transaction.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher & Flom
<PAGE> 1
EXHIBIT 10.1
(MULTICURRENCY--CROSS BORDER)
ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of ______________________
[INTEREST RATE CAP PROVIDER] Ford Credit Auto Owner Trust 199_
("Party A") and ("Party B") have entered and/or anticipate entering into one or
more transactions (each a "Transaction") that are or will be governed by this
Master Agreement, which includes the schedule (the "Schedule"), and the
documents and other confirming evidence (each a "Confirmation") exchanged
between the parties confirming those Transactions.
Accordingly, the parties agree as follows:
1. INTERPRETATION
(A) DEFINITIONS. The terms defined in Section 14 and in the Schedule will have
the meanings therein specified for the purpose of this Master Agreement.
(B) INCONSISTENCY. In the event of any inconsistency between the provisions of
the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.
(C) SINGLE AGREEMENT. All Transactions are entered into in reliance on the
fact that this Master Agreement and all Confirmations form a single agreement
between the parties (collectively referred to as this ("Agreement"), and the
parties would not otherwise enter into any Transactions.
2. OBLIGATIONS
(A) GENERAL CONDITIONS.
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of this
Agreement.
(ii) Payments under this Agreement will be made on the due date for
value on that date in the place of the account specified in the relevant
Confirmation or otherwise pursuant to this Agreement, in freely
transferable funds and in the manner customary for payments in the
required currency. Where settlement is by delivery (that is, other than
by payment), such delivery will
<PAGE> 2
be made for receipt on the due date in the manner customary for the
relevant obligation unless otherwise specified in the relevant
Confirmation or elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject to
(1) the condition precedent that no Event of Default or Potential Event
of Default with respect to the other party has occurred and is
continuing, (2) the condition precedent that no Early Termination Date in
respect of the relevant Transaction has occurred or been effectively
designated and (3) each other applicable condition precedent specified in
this Agreement.
(B) CHANGE OF ACCOUNT. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(C) NETTING. If on any date amounts would otherwise be payable:
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the
other party, replaced by an obligation upon the party by whom the larger
aggregate amount would have been payable to pay to the other party the excess
of the larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be
made in the Schedule or a Confirmation by specifying that subparagraph (ii)
above will not apply to the Transactions identified as being subject to the
election, together with the starting date (in which case subparagraph (ii)
above will not, or will cease to, apply to such Transactions from such date).
This election may be made separately for different groups of Transactions and
will apply separately to each pairing of Offices through which the parties make
and receive payments or deliveries.
(D) DEDUCTION OR WITHHOLDING FOR TAX.
(i) GROSS-UP. All payments under this Agreement will be made without any
deduction or withholding for or on account of any Tax unless such
deduction or withholding is required by any applicable law, as modified
by the practice of any relevant governmental revenue authority, then in
effect. If a party is so required to deduct or withhold, then that party
("X") will:
(1) promptly notify the other party ('Y") of such requirement;
(2) pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be
deducted or withheld from any additional amount paid by X to Y
under this Section 2(d)) promptly upon the earlier of determining
2
<PAGE> 3
that such deduction or withholding is required or receiving notice
that such amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a certified
copy), or other documentation reasonably acceptable to Y,
evidencing such payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to
the payment to which Y is otherwise entitled under this Agreement,
such additional amount as is necessary to ensure that the net
amount actually received by Y (free and clear of Indemnifiable
Taxes, whether assessed against X or Y) will equal the full amount
Y would have received had no such deduction or withholding been
required. However, X will not be required to pay any additional
amount to Y to the extent that it would not be required to be paid
but for:
(A) the failure by Y to comply with or perform any agreement
contained in Section 4(a)(i), 4(a)(iii) or 4(d); or
(B) the failure of a representation made by Y pursuant to
Section 3(f) to be accurate and true unless such failure
would not have occurred but for (1) any action taken by a
taxing authority, or brought in a court of competent
jurisdiction, on or after the date on which a Transaction is
entered into (regardless of whether such action is taken or
brought with respect to a party to this Agreement) or (11) a
Change in Tax Law.
(ii) LIABILITY. If:
(1) X is required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, to make
any deduction or withholding in respect of which X would not be
required to pay an additional amount to Y under Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly
against X,
then, except to the extent Y has satisfied or then satisfies the
liability resulting from such Tax, Y will promptly pay to X the amount of
such liability (including any related liability for interest, but
including any related liability for penalties only if Y has failed to
comply with or perform any agreement contained in Section 4(a)(i),
4(a)(iii) or 4(d)).
(e) DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant
Transaction, a party that defaults in the performance of any payment obligation
will, to the extent permitted by law and subject to Section 6(c), be required
to pay interest (before as well as after judgment) on the overdue amount to the
other party on demand in the same currency as such overdue amount, for the
period from (and including) the original due date for payment to (but
excluding) the date of actual payment, at the Default Rate. Such interest will
be calculated on the basis of daily compounding and the actual number of days
elapsed. If, prior to the occurrence or effective designation of an Early
Termination Date in respect of the relevant Transaction, a party defaults in
the performance of any obligation required to be settled by delivery, it will
compensate
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the other party on demand if and to the extent provided for in the relevant
Confirmation or elsewhere in this Agreement.
3. REPRESENTATIONS
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered
into and, in the case of the representations in Section 3(f), at all times
until the termination of this Agreement) that:
(a) BASIC REPRESENTATIONS.
(i) STATUS. It is duly organized and validly existing under the laws of
the jurisdiction of its organization or incorporation and, if relevant
under such laws, in good standing;
(ii) POWERS. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to
deliver this Agreement and any other documentation relating to this
Agreement that it is required by this Agreement to deliver and to perform
its obligations under this Agreement and any obligations it has under any
Credit Support Document to which it is a party and has taken all
necessary action to authorize such execution, delivery and performance;
(iii) NO VIOLATION OR CONFLICT. Such execution, delivery and
performance do not violate or conflict with any law applicable to it, any
provision of its constitutional documents, any order or judgment of any
court or other agency of government applicable to it or any of its assets
or any contractual restriction binding on or affecting it or any of its
assets;
(iv) CONSENTS. All governmental and other consents that are required to
have been obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party have been obtained and are in
full force and effect and all conditions of any such consents have been
complied with; and
(v) OBLIGATIONS BINDING. Its obligations under this Agreement and any
Credit Support Document to which it is a party constitute its legal,
valid and binding obligations, enforceable in accordance with their
respective terms (subject to applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors' rights
generally and subject, as to enforceability, to equitable principles of
general application (regardless of whether enforcement is sought in a
proceeding in equity or at law)).
(b) ABSENCE OF CERTAIN EVENTS. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has occurred
and is continuing and no such event or circumstance would occur as a result of
its entering into or performing its obligations under this Agreement or any
Credit Support Document to which it is a party.
(c) ABSENCE OF LITIGATION. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding
at law or in equity or before any court, tribunal, governmental body, agency or
official or any arbitrator that is likely to affect the legality, validity or
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enforceability against it of this Agreement or any Credit Support Document to
which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.
(d) ACCURACY OF SPECIFIED INFORMATION. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.
(e) PAYER TAX REPRESENTATION. Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(e) is accurate and true.
(f) PAYEE TAX REPRESENTATIONS. Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(f) is accurate and true.
4. AGREEMENTS
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:
(a) FURNISH SPECIFIED INFORMATION. It will deliver to the other party or, in
certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:
(i) any forms, documents or certificates relating to taxation specified
in the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any Confirmation;
and
(iii) upon reasonable demand by such other party, any form or document
that may be required or reasonably requested in writing in order to allow
such other party or its Credit Support Provider to make a payment under
this Agreement or any applicable Credit Support Document without any
deduction or withholding for or on account of any Tax or with such
deduction or withholding at a reduced rate (so long as the completion,
execution or submission of such form or document would not materially
prejudice the legal or commercial position of the party in receipt of
such demand), with any such form or document to be accurate and completed
in a manner reasonably satisfactory to such other party and to be
executed and to be delivered with any reasonably required certification,
in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.
(b) MAINTAIN AUTHORIZATIONS. It will use all reasonable efforts to maintain in
full force and effect all consents of any governmental or other authority that
are required to be obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party and will use all reasonable efforts to
obtain any that may become necessary in the future.
(c) COMPLY WITH LAWS. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.
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(d) TAX AGREEMENT. It will give notice of any failure of a representation made
by it under Section 3(f) to be accurate and true promptly upon learning of such
failure.
(e) PAYMENT OF STAMP TAX. Subject to Section I 1, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of this
Agreement by a jurisdiction in which it is incorporated, organized, managed and
controlled, or considered to have its seat, or in which a branch or office
through which it is acting for the purpose of this Agreement is located ("Stamp
Tax Jurisdiction") and will indemnify the other party against any Stamp Tax
levied or imposed upon the other party or in respect of the other party's
execution or performance of this Agreement by any such Stamp Tax Jurisdiction
which is not also a Stamp Tax Jurisdiction with respect to the other party.
5. EVENTS OF DEFAULT AND TERMINATION EVENTS
(a) EVENTS OF DEFAULT. The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any of the following events constitutes an event of
default (an "Event of Default") with respect to such party:
(i) FAILURE TO PAY OR DELIVER. Failure by the party to make, when due,
any payment under this Agreement or delivery under Section 2(a)(i) or
2(e) required to be made by it if such failure is not remedied on or
before the third Local Business Day after notice of such failure is given
to the party;
(ii) BREACH OF AGREEMENT. Failure by the party to comply with or
perform any agreement or obligation (other than an obligation to make any
payment under this Agreement or delivery under Section 2(a)(i) or 2(e) or
to give notice of a Termination Event or any agreement or obligation
under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with or
performed by the party in accordance with this Agreement if such failure
is not remedied on or before the thirtieth day after notice of such
failure is given to the party;
(iii) CREDIT SUPPORT DEFAULT.
(1) Failure by the party or any Credit Support Provider of such
party to comply with or perform any agreement or obligation to be
complied with or performed by it in accordance with any Credit
Support Document if such failure is continuing after any applicable
grace period has elapsed;
(2) the expiration or termination of such Credit Support Document
or the failing or ceasing of such Credit Support Document to be in
full force and effect for the purpose of this Agreement (in either
case other than in accordance with its terms) prior to the
satisfaction of all obligations of such party under each
Transaction to which such Credit Support Document relates without
the written consent of the other party; or
(3) the party or such Credit Support Provider disaffirms,
disclaims, repudiates or rejects, in whole or in part, or
challenges the validity of, such Credit Support Document;
(iv) MISREPRESENTATION. A representation (other than a representation
under Section 3(e) or (f)) made or repeated or deemed to have been made
or repeated by the party or any Credit Support
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Provider of such party in this Agreement or any Credit Support Document
proves to have been incorrect or misleading in any material respect when
made or repeated or deemed to have been made or repeated;
(v) DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit Support
Provider of such party or any applicable Specified Entity of such party
(1) defaults under a Specified Transaction and, after giving effect to
any applicable notice requirement or grace period, there occurs a
liquidation of, an acceleration of obligations under, or an early
termination of, that Specified Transaction, (2) defaults, after giving
effect to any applicable notice requirement or grace period, in making
any payment or delivery due on the last payment. delivery or exchange
date of, or any payment on early termination of, a Specified Transaction
(or such default continues for at least three Local Business Days if
there is no applicable notice requirement or grace period) or (3)
disaffirms, disclaims, repudiates or rejects, in whole or in part, a
Specified Transaction (or such action is taken by any person or entity
appointed or empowered to operate it or act on its behalf);
(vi) CROSS DEFAULT. If "Cross Default" is specified in the Schedule as
applying to the party, the occurrence or existence of (1) a default,
event of default or other similar condition or event (however described)
in respect of such party, any Credit Support Provider of such party or
any applicable Specified Entity of such party under one or more
agreements or instruments relating to Specified Indebtedness of any of
them (individually or collectively) in an aggregate amount of not less
than the applicable Threshold Amount (as specified in the Schedule) which
has resulted in such Specified Indebtedness becoming, or becoming capable
at such time of being declared, due and payable under such agreements or
instruments, before it would otherwise have been due and payable or (2) a
default by such party, such Credit Support Provider or such Specified
Entity (individually or collectively) in making one or more payments on
the due date thereof in an aggregate amount of not less than the
applicable Threshold Amount under such agreements or instruments (after
giving effect to any applicable notice requirement or grace period);
(vii) BANKRUPTCY. The party, any Credit Support Provider of such party
or any applicable Specified Entity of such party:
(1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2) becomes insolvent or is unable to pay
its debts or fails or admits in writing its inability generally to
pay its debts as they become due; (3) makes a general assignment,
arrangement or composition with or for the benefit of its
creditors; (4) institutes or has instituted against it a proceeding
seeking a judgment of insolvency or bankruptcy or any other relief
under any bankruptcy or insolvency law or other similar law
affecting creditors' rights, or a petition is presented for its
winding-up or liquidation, and, in the case of any such proceeding
or petition instituted or presented against it, such proceeding or
petition (A) results in a judgment of insolvency or bankruptcy or
the entry of an order for relief or the making of an order for its
winding-up or liquidation or (B) is not dismissed, discharged,
stayed or restrained in each case within 30 days of the institution
or presentation thereof; (5) has a resolution passed for its
winding-up, official management or liquidation (other than pursuant
to a consolidation, amalgamation or merger); (6) seeks or becomes
subject to the appointment of an administrator, provisional
liquidator, conservator, receiver, trustee, custodian or other
similar official for it or for all or substantially all its assets;
(7) has a secured party take possession of all or substantially all
its assets or has a distress, execution, attachment, sequestration
or other
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legal process levied, enforced or sued on or against all
or substantially all its assets and such secured party maintains
possession, or any such process is not dismissed, discharged,
stayed or restrained, in each case within 30 days thereafter; (8)
causes or is subject to any event with respect to it which, under
the applicable laws of any jurisdiction, has an analogous effect to
any of the events specified in clauses (1) to (7) (inclusive); or
(9) takes any action in furtherance of, or indicating its consent
to, approval of, or acquiescence in, any of the foregoing acts; or
(viii) MERGER WITHOUT ASSUMPTION. The party or any Credit Support
Provider of such party consolidates or amalgamates with, or merges with
or into, or transfers all or substantially all its assets to, another
entity and, at the time of such consolidation, amalgamation, merger or
transfer-
(1) the resulting, surviving or transferee entity fails to assume
all the obligations of such party or such Credit Support Provider
under this Agreement or any Credit Support Document to which it or
its predecessor was a party by operation of law or pursuant to an
agreement reasonably satisfactory to the other party to this
Agreement; or
(2) the benefits of any Credit Support Document fail to extend
(without the consent of the other party) to the performance by such
resulting, surviving or transferee entity of its obligations under
this Agreement.
(b) TERMINATION EVENTS. The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any event specified below constitutes an Illegality if
the event is specified in (i) below, a Tax Event if the event is specified in
(ii) below or a Tax Event Upon Merger if the event is specified in (iii) below,
and, if specified to be applicable, a Credit Event
Upon Merger if the event is specified pursuant to (iv) below or an Additional
Termination Event if the event is specified pursuant to (v) below:
(i) ILLEGALITY. Due to the adoption of, or any change in, any
applicable law after the date on which a Transaction is entered into, or
due to the promulgation of, or any change in, the interpretation by any
court, tribunal or regulatory authority with competent jurisdiction of
any applicable law after such date, it becomes unlawful (other than as a
result of a breach by the party of Section 4(b)) for such party (which
will be the Affected Party):
(1) to perform any absolute or contingent obligation to make a
payment or delivery or to receive a payment or delivery in respect
of such Transaction or to comply with any other material provision
of this Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such party
to perform, any contingent or other obligation which the party (or
such Credit Support Provider) has under any Credit Support Document
relating to such Transaction;
(ii) TAX EVENT. Due to (x) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the date on
which a Transaction is entered into (regardless of whether such action is
taken or brought with respect to a party to this Agreement) or (y) a
Change in Tax Law, the party (which will be the Affected Party) will, or
there is a substantial
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likelihood that it will, on the next succeeding Scheduled Payment Date
(1) be required to pay to the other party an additional amount in
respect of an lndemnifiable Tax under Section 2(d)(i)(4) (except in
respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive
a payment from which an amount is required to be deducted or withheld for
or on account of a Tax (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) and no additional amount is required to be paid in
respect of such Tax under Section 2(d)(i)(4) (other than by reason of
Section 2(d)(i)(4)(A) or (B));
(iii) TAX EVENT UPON MERGER. The party (the "Burdened Party") on the
next succeeding Scheduled Payment Date will either (1) be required to pay
an additional amount in respect of an Indemnifiable Tax under Section
2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or
6(e)) or (2) receive a payment from which an amount has been deducted or
withheld for or on account of any Indemnifiable Tax in respect of which
the other party is not required to pay an additional amount (other than
by reason of Section 2(d)(i)(4)(A) or (B)), in either case as a result of
a party consolidating or amalgamating with, or merging with or into, or
transferring all or substantially all its assets to, another entity
(which will be the Affected Party) where such action does not constitute
an event described in Section 5(a)(viii);
(iv) CREDIT EVENT UPON MERGER. If Credit Event Upon Merge is specified
in the Schedule as applying to the party, such party ("X"), any Credit
Support Provider of X or any applicable Specified Entity of X
consolidates or amalgamates with, or merges with or into, or transfers
all or substantially all its assets to, another entity and such action
does not constitute an event described in Section 5(a)(viii) but the
creditworthiness of the resulting, surviving or transferee entity is
materially weaker than that of X, such Credit Support Provider or such
Specified Entity, as the case may be, immediately prior to such action
(and, in such event, X or its successor or transferee, as appropriate,
will be the Affected Party); or
(v) ADDITIONAL TERMINATION EVENT. If any "Additional Termination
Event"' is specified in the Schedule or any Confirmation as applying, the
occurrence of such event (and, in such event, the Affected Party or
Affected Parties shall be as specified for such Additional Termination
Event in the Schedule or such Confirmation).
(c) EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance which would
otherwise constitute or give rise to an Event of Default also constitutes an
Illegality, it will be treated as an Illegality and will not constitute an
Event-of Default.
6. EARLY TERMINATION
(a) RIGHT TO TERMINATE FOLLOWING EVENT OF DEFAULT. If at any time an Event of
Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as
an Early Termination Date in respect of all outstanding Transactions. If,
however, "Automatic Early Termination" is specified in the Schedule as applying
to a party, then an Early Termination Date in respect of all outstanding
Transactions will occur immediately upon the occurrence with respect to such
party of an Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6)
or, to the extent analogous thereto, (8), and as of the time immediately
preceding the institution of the relevant proceeding or the presentation of the
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relevant petition upon the occurrence with respect to such party of an Event of
Default specified in Section 5(a)(vii)(4) or, to the extent analogous thereto,
(8).
(b) RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT.
(i) NOTICE. If a Termination Event occurs, an Affected Party will,
promptly upon becoming aware of it, notify the other party, specifying
the nature of that Termination Event and each Affected Transaction and
will also give such other information about that Termination Event as the
other party may reasonably require.
(ii) TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality under
Section 5(b)(i)(1) or a Tax Event occurs and there is only one Affected
Party, or if a Tax Event Upon Merger occurs and the Burdened Party is the
Affected Party, the Affected Party will, as a condition to its right to
designate an Early Termination Date under Section 6(b)(iv), use all
reasonable efforts (which will not require such party to incur a loss,
excluding immaterial, incidental expenses) to transfer within 20 days
after it gives notice under Section 6(b)(i) all its rights and
obligations under this Agreement in respect of the Affected Transactions
to another of its Offices or Affiliates so that such Termination Event
ceases to exist.
If the Affected Party is not able to make such a transfer it will give
notice to the other party to that effect within such 20 day period,
whereupon the other party may effect such a transfer within 30 days after
the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be subject
to and conditional upon the prior written consent of the other party,
which consent will not be withheld if such other party's policies in
effect at such time would permit it to enter into transactions with the
transferee on the terms proposed.
(iii) TWO AFFECTED PARTIES. If an Illegality under Section 5(b)(i)(1)
or a Tax Event occurs and there are two Affected Parties, each party will
use all reasonable efforts to reach agreement within 30 days after notice
thereof is given under Section 6(b)(i) on action to avoid that
Termination Event.
(iv) RIGHT TO TERMINATE. If:
(1) a transfer under Section 6(b)(ii) or an agreement under
Section 6(b)(iii), as the case may be, has not been effected with
respect to all Affected Transactions within 30 days after an
Affected Party gives notice under Section 6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon
Merger or an Additional Termination Event occurs, or a Tax Event
Upon Merger occurs and the Burdened Party is not the Affected
Party,
either party in the case of an Illegality, the Burdened Party in the case
of a Tax Event Upon Merger, any Affected Party in the case of a Tax Event
or an Additional Termination Event if there is more than one Affected
Party, or the party which is not the Affected Party in the case of a
Credit Event Upon Merger or an Additional Termination Event if there is
only one Affected
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Party may, by not more than 20 days notice to the other party
and-provided that the relevant Termination Event is then continuing,
designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all Affected Transactions.
(c) EFFECT OF DESIGNATION.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or (b), the Early Termination Date will occur on the date so
designated, whether or not the relevant Event of Default or Termination
Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section 2(a)(i)
or 2(e) in respect of the Terminated Transactions will be required to be
made, but without prejudice to the other provisions of this Agreement.
The amount, if any, payable in respect of an Early Termination Date
shall be determined pursuant to Section 6(e).
(d) CALCULATIONS.
(i) STATEMENT. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and will
provide to the other party a statement (1) showing, in reasonable detail,
such calculations (including all relevant quotations and specifying any
amount payable under Section 6(e)) and (2) giving details of the relevant
account to which any amount payable to it is to be paid. In the absence
of written confirmation from the source of a quotation obtained in
determining a Market Quotation, the records of the party obtaining such
quotation will be conclusive evidence of the existence and accuracy of
such quotation.
(ii) PAYMENT DATE. An amount calculated as being due in respect of any
Early Termination Date under Section 6(e) will be payable on the day that
notice of the amount payable is effective (in the case of an Early
Termination Date which is designated or occurs as a result of an Event of
Default) and on the day which is two Local Business Days after the day on
which notice of the amount payable is effective (in the case of an Early
Termination Date which is designated as a result of a Termination Event).
Such amount will be paid together with (to the extent permitted under
applicable law) interest thereon (before as well as after judgment) in
the Termination Currency, from (and including) the relevant Early
Termination Date to (but excluding) the date such amount is paid, at the
Applicable Rate. Such interest will be calculated on the basis of daily
compounding and the actual number of days elapsed.
(e) PAYMENTS ON EARLY TERMINATION. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either 'Market Quotation" or "Loss", and a payment
method, either the 'First Method" or the "Second Method". If the parties fail
to designate a payment measure or payment method in the Schedule, it will be
deemed that "Market Quotation" or the "Second Method", as the case may be,
shall apply. The amount, if any, payable in respect of an Early Termination
Date and determined pursuant to this Section will be subject to any Set-off.
(i) EVENTS OF DEFAULT. If the Early Termination Date results from an
Event of Default:
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(1) First Method and Market Quotation. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the
Non-defaulting Party the excess, if a positive number, of (A) the
sum of the Settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and the
Termination Currency Equivalent of the Unpaid Amounts owing to the
Non-defaulting Party over (B) the Termination Currency Equivalent
of the Unpaid Amounts owing to the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss apply,
the Defaulting Party will pay to the Non-defaulting Party, if a
positive number, the Non-defaulting Party's Loss in respect of this
Agreement.
(3) Second Method and Market Quotation. If the Second Method and
Market Quotation apply, an amount will be payable equal to (A) the
sum of the Settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and
the Termination Currency Equivalent of the Unpaid Amounts owing to
the Non-defaulting Party less (B) the Termination Currency
Equivalent of the Unpaid Amounts owing to the Defaulting Party. If
that amount is a positive number, the Defaulting Party will pay it
to the Non-defaulting Party; if it is a negative number, the
Non-defaulting Party will pay the absolute value of that amount to
the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss
apply,an amount will be payable equal to the Non-defaulting Party's
Loss in respect of this Agreement. If that amount is a positive
number, the Defaulting Party will pay it to the Non-defaulting
Party; if it is a negative number, the Non-defaulting Party will
pay the absolute value of that amount to the Defaulting Party.
(ii) TERMINATION EVENTS. If the Early Termination Date results from a
Termination Event:
(1) One Affected Party. If there is one Affected Party, the
amount payable will be determined in accordance with Section
6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4), if
Loss applies, except that, in either case, references to the
Defaulting Party and to the Non-defaulting Party will be deemed to
be references to the Affected Party and the party which is not the
Affected Party, respectively, and, if Loss applies and fewer than
all the Transactions are being terminated, Loss shall be calculated
in respect of all Terminated Transactions.
(2) Two Affected Parties. If there are two Affected Parties:
(A) if Market Quotation applies, each party will determine a
Settlement Amount in respect of the Terminated Transactions,
and an amount will be payable equal to (1) the sum of (a)
one-half of the difference between the Settlement Amount of
the party with the higher Settlement Amount ("X") and the
Settlement Amount of the party with the lower Settlement
Amount ("Y") and (b) the Termination Currency Equivalent of
the Unpaid Amounts owing to X less (11) the Termination
Currency Equivalent of the Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine its Loss in
respect of this Agreement (or, if fewer than all the
Transactions are being terminated, in respect
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of all Terminated Transactions) and an amount will be
payable equal to one-half of the difference between the Loss
of the party with the higher Loss ("X") and the Loss of the
party with the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X; if
it is a negative number, X will pay the absolute value of that
amount to Y.
(iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies in
respect of a party, the amount determined under this Section 6(e) will be
subject to such adjustments as are appropriate and permitted by law to
reflect any payments or deliveries made by one party to the other under
this Agreement (and retained by such other party) during the period from
the relevant Early Termination Date to the date for payment determined
under Section 6(d)(ii).
(iv) PRE-ESTIMATE. The parties agree that if Market Quotation applies
an amount recoverable under this Section 6(e) is a reasonable
pre-estimate of loss and not a penalty. Such amount is payable for the
loss of bargain and the loss of protection against future risks and
except as otherwise provided in this Agreement neither party will be
entitled to recover any additional damages as a consequence of such
losses.
7. TRANSFER
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that:
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to
any other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in any
amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be
void.
8. CONTRACTUAL CURRENCY
(a) PAYMENT IN THE CONTRACTUAL CURRENCY. Each payment under this Agreement
will be made in the relevant currency specified in this Agreement for that
payment (the "Contractual Currency"). To the extent permitted by applicable
law, any obligation to make payments under this Agreement in the Contractual
Currency will not be discharged or satisfied by any tender in any currency
other than the Contractual Currency, except to the extent such tender results
in the actual receipt by the party to which payment is owed, acting in a
reasonable manner and in good faith in converting the currency so tendered into
the Contractual Currency, of the full amount in the Contractual Currency of all
amounts payable in respect of this Agreement. If for any reason the amount in
the Contractual Currency so received falls short of the amount in the
Contractual Currency payable in respect of this Agreement, the party required
to make the payment will, to the extent permitted by applicable law,
immediately pay such additional amount in the Contractual Currency as may be
necessary to compensate for the shortfall. If for any
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<PAGE> 14
reason the amount in the Contractual Currency so received exceeds the
amount in the Contractual Currency payable in respect of this Agreement, the
party receiving the payment will refund promptly the amount of such excess.
(b) JUDGMENTS. To the extent permitted by applicable law, if any judgment or
order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such
party. The term "rate of exchange" includes, without Limitation, any premiums
and costs of exchange payable in connection with the purchase of or conversion
into the Contractual Currency.
(c) SEPARATE INDEMNITIES. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the
party to which any payment is owed and will not be affected by judgment being
obtained or claim or proof being made for any other sums payable in respect of
this Agreement.
(d) EVIDENCE OF LOSS. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a loss
had an actual exchange or purchase been made.
9. MISCELLANEOUS
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) AMENDMENTS. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by
an exchange of telexes or electronic messages on an electronic messaging
system.
(c) SURVIVAL OF OBLIGATIONS. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
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(d) REMEDIES CUMULATIVE. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
(e) COUNTERPARTS AND CONFIRMATIONS.
(i) This Agreement (and each amendment, modification and waiver in
respect of it) may be executed and delivered in counterparts (including
by facsimile transmission), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the terms of each
Transaction from the moment they agree to those terms (whether orally or
otherwise). A Confirmation shall be entered into as soon as practicable
and may be executed and delivered in counterparts (including by facsimile
transmission) or be created by an exchange of telexes or by an exchange
of electronic messages on an electronic messaging system, which in each
case will be sufficient for all purposes to evidence a binding supplement
to this Agreement. The parties will specify therein or through another
effective means that any such counterpart, telex or electronic message
constitutes a Confirmation.
(f) NO WAIVER OF RIGHTS. A failure or delay in exercising any right, power or
privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.
(g) HEADINGS. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
10. OFFICES; MULTIBRANCH PARTIES
(a) If Section 10(a) is specified in the Schedule as applying, each party that
enters into a Transaction through an Office other than its head or home office
represents to the other party that, notwithstanding the place of booking office
or jurisdiction of incorporation or Organization of such party, the obligations
of such party are the same as if it had entered into the Transaction through
its head or home office. This representation will be deemed to be repeated by
such party on each date on which a Transaction is entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a
Transaction will be specified in the relevant Confirmation.
11. EXPENSES
A Defaulting Party will, on demand, indemnify and hold harmless the other
party for and against all reasonable out-of-pocket expenses, including legal
fees and Stamp Tax, incurred by such other party by
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<PAGE> 16
reason of the enforcement and protection of its rights under this Agreement or
any Credit Support Document to which the Defaulting Party is a party or by
reason of the early termination of any Transaction, including, but not limited
to, costs of collection.
12. NOTICES
(a) EFFECTIVENESS. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:
(i) if in writing and delivered in person or by courier, on the date it
is delivered;
(ii) if sent by telex, on the date the recipient's answerback is
received;
(iii) if sent by facsimile transmission, on the date that transmission
is received by a responsible employee of the recipient in legible form
(it being agreed that the burden of proving receipt will be on the sender
and will not be met by a transmission report generated by the sender's
facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or
the equivalent (return receipt requested), on the date that mail is
delivered or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that electronic
message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) CHANGE OF ADDRESSES. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.
13. GOVERNING LAW AND JURISDICTION
(a) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) JURISDICTION. With respect to any suit, action or proceedings relating to
this Agreement ("Proceedings"), each party irrevocably:
(i) submits to the jurisdiction of the English courts, if this Agreement
is expressed to be governed by English law, or to the non-exclusive
jurisdiction of the courts of the State of New York and the United States
District Court located in the Borough of Manhattan in New York City, if
this Agreement is expressed to be governed by the laws of the State of
New York; and
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<PAGE> 17
(ii) waives any objection which it may have at any time to the laying of
venue of any Proceedings brought in any such court, waives any claim that
such Proceedings have been brought in an inconvenient forum and further
waives the right to object, with respect to such Proceedings, that such
court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) SERVICE OF PROCESS. Each party irrevocably appoints the Process Agent
(if any) specified opposite its name in the Schedule to receive, for it and
on its behalf, service of process in any Proceedings. If for any reason any
party's Process Agent is unable to act as such, such party will promptly notify
the other party and within 30 days appoint a substitute process agent
acceptable to the other party. The parties irrevocably consent to service of
process given in the manner provided for notices in Section 12. Nothing in
this Agreement will affect the right of either party to serve process in any
other manner permitted by law.
(d) WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues
and assets (irrespective of their use or intended use), all immunity on the
grounds of sovereignty or other similar grounds from (i) suit, (ii)
jurisdiction of any court, (iii) relief by way of injunction, order for
specific performance or for recovery of property, (iv) attachment of its assets
(whether before or after judgment) and (v) execution or enforcement of any
judgment to which it or its revenues or assets might otherwise be entitled in
any Proceedings in the courts of any jurisdiction and irrevocably agrees, to
the extent permitted by applicable law, that it will not claim any such
immunity in any Proceedings.
14. DEFINITIONS
As used in this Agreement:
"ADDITIONAL TERMINATION EVENT" has the meaning specified in Section 5(b).
"AFFECTED PARTY" has the meaning specified in Section 5(b).
"AFFECTED TRANSITIONS" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.
"AFFILIATE" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control"
of any entity or person means ownership of a majority of the voting power of
the entity or person.
"APPLICABLE RATE" means:
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(a) in respect of obligations payable or deliverable (or which would have been
but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of either
party from and after the date (determined in accordance with Section 6(d)(ii))
on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default
Rate; and
(d) in all other cases, the Termination Rate.
"BURDENED PARTY" has the meaning specified in Section 5(b).
"CHANGE IN TAX LAW" means the enactment, promulgation, execution or
ratification of, or any change in or amendment to, any law (or in the
application or official interpretation of any law) that occurs on or after the
date on which the relevant Transaction is entered into.
"CONSENT" includes a consent, approval, action, authorization, exemption,
notice, filing, registration or exchange control consent.
"CREDIT EVENT UPON MERGER" has the meaning specified in Section 5(b).
"CREDIT SUPPORT DOCUMENT" means any agreement or instrument that is
specified as such in this Agreement.
"CREDIT SUPPORT PROVIDER" has the meaning specified in the Schedule.
"DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1 % per annum.
"DEFAULTING PARTY" has the meaning specified in Section 6(a).
"EARLY TERMINATION DATE" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if
applicable, in the Schedule.
"ILLEGALITY" has the meaning specified in Section 5(b).
"INDEMNIFIABLE TAX" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former
connection between the jurisdiction of the government or taxation authority
imposing such Tax and the recipient of such payment or a person related to such
recipient (including, without limitation, a connection arising from such
recipient or related person being or having been a citizen or resident of such
jurisdiction, or being or having been organized, present or engaged in a trade
or business in such jurisdiction or having or having had a permanent
establishment or fixed place of business in such jurisdiction, but excluding a
connection arising solely from such
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recipient or related person having executed, delivered, performed its
obligations or received a payment under, or enforced, this Agreement or a
Credit Support Document).
"LAW" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority)
and "lawful" and "unlawful" will be construed accordingly.
"LOCAL BUSINESS DAY" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial center, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for
performance with respect to such Specified Transaction.
"LOSS" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be
its total losses and costs (or gain, in which case expressed as a negative
number) in connection with this Agreement or that Terminated Transaction or
group of Terminated Transactions, as the case may be, including any loss of
bargain, cost of funding or, at the election of such party but without
duplication, loss or cost incurred as a result of its terminating, liquidating,
obtaining or reestablishing any hedge or related trading position (or any gain
resulting from any of them). Loss includes losses and costs (or gains)
in respect of any payment or delivery required to have been made (assuming
satisfaction of each applicable condition precedent) on or before the relevant
Early Termination Date and not made, except, so as to avoid duplication, if
Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does not include a
party's legal fees and out-of-pocket expenses referred to under Section 11. A
party will determine its Loss as of the relevant Early Termination Date, or, if
that is not reasonably practicable, as of the earliest date thereafter as is
reasonably practicable. A party may (but need not) determine its Loss by
reference to quotations of relevant rates or prices from one or more leading
dealers in the relevant markets.
"MARKET QUOTATION" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition
precedent) by the parties under Section 2(a)(i) in respect of such Terminated
Transaction or group of Terminated Transactions that would, but for the
occurrence of the relevant Early Termination Date, have been required after
that date. For this purpose, Unpaid Amounts in respect of the Terminated
Transaction or group of Terminated Transactions are to be excluded but,
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without limitation, any payment or delivery that would, but for the relevant
Early Termination Date, have been required (assuming satisfaction of each
applicable condition precedent) after that Early Termination Date is to be
included. The Replacement Transaction would be subject to such documentation
as such party and the Reference Market-maker may, in good faith, agree. The
party making the determination (or its agent) will request each Reference
Market-maker to provide its quotation to the extent reasonably practicable as
of the same day and time (without regard to different time zones) on or as soon
as reasonably practicable after the relevant Early Termination Date. The day
and time as of which those quotations are to be obtained will be selected in
good faith by the party obliged to make a determination under Section 6(e),
and, if each party is so obliged, after consultation with the other. If more
than three quotations are provided, the Market Quotation will be the arithmetic
mean of the quotations, without regard to the quotations having the highest and
lowest values. If exactly three such quotations are provided, the Market
Quotation will be the quotation remaining after disregarding the highest and
lowest quotations. For this purpose, if more than one quotation has the same
highest value or lowest value, then one of such quotations shall be
disregarded. If fewer than three quotations are provided, it will be deemed
that the Market Quotation in respect of such Terminated Transaction or group of
Terminated Transactions cannot be determined.
"NON-DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it)
if it were to fund the relevant amount.
"NON-DEFAULTING PARTY" has the meaning specified in Section 6(a).
"OFFICE" means a branch or office of a party, which may be such party's bead or
home office.
"POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of notice
or the lapse of time or both, would constitute an Event of Default.
"REFERENCE MARKET-MAKERS" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria
that such party applies generally at the time in deciding whether to offer or
to make an extension of credit and (b) to the extent practicable, from among
such dealers having an office in the same city.
"RELEVANT JURISDICTION" means, with respect to a party, the jurisdictions (a)
in which the party is incorporated, organized, managed and controlled or
considered to have its seat, (b) where an Office through which the party is
acting for purposes of this Agreement is located, (c) in which the party
executes this Agreement and (d) in relation to any payment, from or through
which such payment is made.
"SCHEDULED PAYMENT DATE" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"SET-OFF" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.
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"SETTLEMENT AMOUNT" means, with respect to a party and any Early Termination
Date, the sum of:
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference to
any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"SPECIFIED ENTITY" has the meaning specified in the Schedule.
"SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any obligation
(whether present or future, contingent or otherwise, as principal or surety or
otherwise) in respect of borrowed money.
"SPECIFIED TRANSACTION" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of
such party or any applicable Specified Entity of such party) and the other
party to this Agreement (or any Credit Support Provider of such other party or
any applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond
option, interest rate option, foreign exchange transaction, cap transaction,
floor transaction, collar transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any other similar
transaction (including any option with respect to any of these transactions),
(b) any combination of these transactions and (c) any other transaction
identified as a Specified Transaction in this Agreement or the relevant
confirmation.
"STAMP TAX" means any stamp, registration, documentation or similar tax.
"TAX" means any present or future tax, levy, impost, duty, charge, assessment
or fee of any nature (including interest, penalties and additions thereto) that
is imposed by any government or other taxing authority in respect of any
payment under this Agreement other than a stamp, registration, documentation or
similar tax.
"TAX EVENT" has the meaning specified in Section 5(b).
"TAX EVENT UPON MERGER" has the meaning specified in Section 5(b).
"TERMINATED TRANSACTIONS" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"TERMINATION CURRENCY" has the meaning specified in the Schedule.
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"TERMINATION CURRENCY EQUIVALENT" means, in respect of any amount denominated
in the Termination Currency, such Termination Currency amount and, in respect
of any amount denominated in a currency other than the Termination Currency
(the "Other Currency"), the amount in the Termination Currency determined by
the party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case may be), is determined as of
a later date, that later date, with the Termination Currency at the rate equal
to the spot exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination Currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a
rate for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.
"TERMINATION EVENT" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.
"TERMINATION RATE" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.
"UNPAID AMOUNTS" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under
Section 2(a)(i) which was (or would have been but for Section 2(a)(iii))
required to be settled by delivery to such party on or prior to such Early
Termination Date and which has not been so settled as at such Early Termination
Date, an amount equal to the fair market value of that which was (or would have
been) required to be delivered as of the originally scheduled date for
delivery, in each case together with (to the extent permitted under applicable
law) interest, in the currency of such amounts, from (and including) the date
such amounts or obligations were or would have been required to have been paid
or performed to (but excluding) such Early Termination Date, at the Applicable
Rate. Such amounts of interest will be calculated on the basis of daily
compounding and the actual number of days elapsed. The fair market value of
any obligation referred to in clause (b) above shall be reasonably determined
by the party obliged to make the determination under Section 6(e) or, if each
party is so obliged, it shall be the average of the Termination Currency
Equivalents of the fair market values reasonably determined by both parties.
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IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
[INTEREST RATE CAP PROVIDER] Ford Credit Auto Owner Trust 199_
- ---------------------------- ---------------------------------
(Name of Party) (Name of Party)
By: By:
---------------------------- ---------------------------------
Name: Name:
Title: Title:
Date: Date:
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(MULTICURRENCY--CROSS BORDER)
ISDA(R)
International Swap Dealers Association, Inc.
SCHEDULE
TO THE
MASTER AGREEMENT
dated as of
-----------------
between [INTEREST RATE CAP PROVIDER] and Ford Credit Auto Owner Trust 199_
- --------------------------------------- -----------------------------------
("Party A") ("Party B")
Part 1. Termination Provisions.
(a) "SPECIFIED ENTITY" means in relation to Party A for the purpose of:
Section 5(a)(v),
--------------------------------------------------------
Section 5(a)(vi),
-------------------------------------------------------
Section 5(a)(vii),
------------------------------------------------------
Section 5(b)(iv),
-------------------------------------------------------
and in relation to Party B for the purpose of:
Section 5(a)(v),
--------------------------------------------------------
Section 5(a)(vi),
-------------------------------------------------------
Section 5(a)(vii),
------------------------------------------------------
Section 5(b)(iv),
-------------------------------------------------------
(b) "SPECIFIED TRANSACTION" will have the meaning specified in Section 14 of
this Agreement unless another meaning is specified here
-----------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
24
<PAGE> 25
<TABLE>
<S><C>
(c) The "CROSS DEFAULT" provisions of Section 5(a)(vi) will/will not * apply to Party A
will/will not * apply to Party B
</TABLE>
If such provisions apply:
"SPECIFIED INDEBTEDNESS" will have the meaning specified in Section 14 of this
Agreement unless another meaning is specified here __________________________
______________________________________________________________________________
"THRESHOLD AMOUNT" means _____________________________________________________
______________________________________________________________________________
<TABLE>
<S><C>
(d) The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv) will/will not* apply to Party A
will/will not* apply to Party B
(e) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a) will/will not* apply to Party A
will/will not* apply to Party B
</TABLE>
(f) PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6(e) of this
Agreement:
(i) Market Quotation/Loss* will apply.
(ii) The First Method/The Second Method* will apply.
(g) "TERMINATION CURRENCY" means _______________________, if such currency is
specified and freely available, and otherwise United States Dollars.
(h) ADDITIONAL TERMINATION EVENT will/will not* apply. The following shall
constitute an Additional Termination Event:________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
For the purpose of the foregoing Termination Event, the Affected Party or
Affected Parties shall be:_________________________________________________
___________________________________________________________________________
* Delete as applicable
25
<PAGE> 26
Part 2. TAX REPRESENTATIONS.
(a) PAYER REPRESENTATIONS. For the purpose of Section 3(e) of this
Agreement Party A will/will not* make the following representation and
Party B will/will not* make the following representation:
It is not required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, of any
Relevant Jurisdiction to make any deduction or withholding for or on
account of any Tax from any payment (other than interest under Section
2(e), 6(d)(ii) or 6(e) of this Agreement) to be made by it to the other
party under this Agreement. In making this representation, it may rely
on (i) the accuracy of any representations made by the other party
pursuant to Section 3(f) of this Agreement, (ii) the
satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii)
of this Agreement and the accuracy and effectiveness of any document
provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii) of
this Agreement and (iii) the satisfaction of the agreement of the other
party contained in Section 4(d) of this Agreement, provided that it
shall not be a breach of this representation where reliance is placed
on clause (ii) and the other party does not deliver a form or document
under Section 4(a)(iii) by reason of material prejudice to its legal or
commercial position.
(b) PAYEE REPRESENTATIONS. For the purpose of Section 3(f) of this
Agreement, Party A and Party B make the representations specified below,
if any:
(i) The following representation will/will not* apply to Party A and
will/will not* apply to Party B:
It is fully eligible for the benefits of the "Business Profits"
or "Industrial and Commercial Profits" provision, as the case may be,
the "Interest" provision or the "Other Income" provision (if any) of
the Specified Treaty with respect to any payment described in such
provisions and received or to be received by it in connection with this
Agreement and no such payment is attributable to a trade or business
carried on by it through a permanent establishment in the Specified
Jurisdiction.
If such representation applies, then:
"SPECIFIED TREATY" means with respect to Party A______________________________
"SPECIFIED JURISDICTION" means with respect to Party A________________________
"SPECIFIED TREATY" means with respect to Party B______________________________
"SPECIFIED JURISDICTION" means with respect to Party B________________________
(ii) The following representation will/will not* apply to Party A and
will/will not* apply to Party B:
Each payment received or to be received by it in connection with this
Agreement will be effectively connected with its conduct of a trade or
business in the Specified Jurisdiction.
_______________________
* Delete as applicable.
26
<PAGE> 27
If such representation applies, then:
"SPECIFIED JURISDICTION" means with respect to Party A________________________
"SPECIFIED JURISDICTION" means with respect to Party B________________________
(iii) The following representation will/will not* apply to Party A and
will/will not* apply to Party B:
(A) It is entering into each Transaction in the ordinary course of its
trade as, and is, either (l) a recognized U.K. bank or (2) a recognized
U.K. swaps dealer (in either case (1) or (2), for purposes of the United
Kingdom Inland Revenue extra statutory concession C 17 on interest and
currency swaps dated March 14, 1989), and (B) it will bring into account
payments made and received in respect of each Transaction in computing
its income for United Kingdom tax purposes.
(iv) Other Payee Representations: ___________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
N.B. The above representations may need modification if either party is a
Multibranch Party.
27
<PAGE> 28
Part 3. AGREEMENT TO DELIVER DOCUMENTS.
For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each party
agrees to deliver the following documents, as applicable:
(a) Tax forms, documents or certificates to be delivered are:
<TABLE>
<CAPTION>
PARTY REQUIRED TO FORM/DOCUMENT/ DATE BY WHICH
DELIVER DOCUMENT CERTIFICATE TO BE DELIVERED
<S> <C> <C>
___________________ _________________ ____________________
___________________ _________________ ____________________
___________________ _________________ ____________________
___________________ _________________ ____________________
___________________ _________________ ____________________
</TABLE>
(b) Other documents to be delivered are:
<TABLE>
<CAPTION>
PARTY REQUIRED TO FORM/DOCUMENT/ DATE BY WHICH COVERED BY SECTION
DELIVER DOCUMENT CERTIFICATE TO BE DELIVERED 3(D) REPRESENTATION
<S> <C> <C> <C>
________________ _______________ __________________ Yes/No*
________________ _______________ __________________ Yes/No*
________________ _______________ __________________ Yes/No*
________________ _______________ __________________ Yes/No*
________________ _______________ __________________ Yes/No*
</TABLE>
Part 4. MISCELLANEOUS.
(a) ADDRESSES FOR NOTICES. For the purpose of Section 12(a) of this Agreement:
Address for notices or communications to Party A:
Address: ____________________________________________________________
Attention: __________________________________________________________
Telex No.: _______________________________ Answerback: _____________
Facsimile No.: ___________________________ Telephone No.: __________
________________________
* Delete as applicable.
28
<PAGE> 29
Electronic Messaging System Details: __________________________________
Address for notices or communications to Party B:
Address: _____________________________________________________________
Attention: ____________________________________________________________
Telex No.: ____________________________ Answerback: ___________________
Facsimile No: ________________________ Telephone No.: ________________
Electronic Messaging System Details: __________________________________
(b) PROCESS AGENT. For the purpose of Section 13(c) of this Agreement:
Party A appoints as its Process Agent _________________________________
Party B appoints as its Process Agent _________________________________
(c) OFFICES. The provisions of Section 10(a) will/will not* apply to this
Agreement.
(d) MULTIBRANCH PARTY. For the purpose of Section 10(c) of this Agreement:
Party A is/is not* a Multibranch Party and, if so, may act through the
following Offices:
_____________________________ _____________________ _________________________
_____________________________ _____________________ _________________________
_____________________________ _____________________ _________________________
Party B is/is not* a Multibranch Party and, if so, may act through the
following Offices:
_____________________________ _____________________ _________________________
_____________________________ _____________________ _________________________
_____________________________ _____________________ _________________________
(e) CALCULATION AGENT. The Calculation Agent is _______, unless otherwise
specified in a Confirmation in relation to the relevant Transaction.
(f) CREDIT SUPPORT DOCUMENT. Details of any Credit Support Document: _______
_________________________________________________________________________
_________________________________________________________________________
________________________
* Delete as applicable.
29
<PAGE> 30
(g) CREDIT SUPPORT PROVIDER. Credit Support Provider means in relation to
Party A, _____________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Credit Support Provider means in relation to Party B, _________________
_______________________________________________________________________
_______________________________________________________________________
(h) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with English law/the laws of the State of New York (without
reference to choice of law doctrine).*
(i) NETTING OF PAYMENTS. Subparagraph (ii) of Section 2(c) of this Agreement
will not apply to the following Transactions or groups of Transactions
(in each case starting from the date of this Agreement in each case
starting from _______________*) _______________________________________
_______________________________________________________________________
_______________________________________________________________________
(j) "AFFILIATE" will have the meaning specified in Section 14 of this Agreement
unless another meaning is specified here ________________________________
_______________________________________________________________________
Part 5. OTHER PROVISIONS.
________________________
* Delete as applicable.
30
<PAGE> 31
________ __, 199_
Ford Credit Auto Owner Trust 199_
c/o Ford Motor Credit Company
The American Road
Dearborn, MI 48121
_______________________________________________________________________________
Ladies and Gentlemen:
The purpose of this letter agreement is to set forth the terms and conditions
of the Interest Rate Cap Transaction entered into between us on the Trade Date
referred to below (the "Rate Cap Transaction"). This letter agreement
constitutes a "Confirmation" as referred to in the Agreement specified below.
1. The definitions and provisions contained in the 199_ ISDA Definitions
(the "Definitions"), as published by the International Swap Dealers
Association, Inc. ("ISDA"), are incorporated into this Confirmation.
In the event of any inconsistency between the Definitions and this
Confirmation, this Confirmation will prevail.
This Confirmation supplements, forms part of, and is subject to the
Master Agreement dated as of ________ __, 199_, as amended and
supplemented from time to time (the "Agreement"), between you and us.
All provisions contained in the Agreement govern this Confirmation except
as expressly modified below.
Party A and Party B acknowledge that this Rate Cap Transaction relates to
the Floating Rate Class A-2 Asset Backed Notes (the "Notes") issued by
Ford Credit Auto Owner Trust 199_ (the "Trust") for value pursuant to the
Indenture as described in the Prospectus Supplement in relation thereto
dated ________ __, 199_.
Capitalized terms used herein and not otherwise defined herein, in the
Agreement or in the Definitions shall have the meanings assigned to them
in Exhibit A hereto.
IN THIS CONFIRMATION, "PARTY A" MEANS [INTEREST RATE CAP PROVIDER] AND
"PARTY B" MEANS FORD CREDIT AUTO OWNER TRUST 199_.
Party A and Party B expressly acknowledge that, in reliance upon the
other party's entering into the Rate Cap Transaction evidenced by this
Confirmation, each party has made (or refrained from making) substantial
financial commitments and has taken (or refrained from taking) other
material actions.
<PAGE> 32
2. The terms of the particular Rate Cap Transaction to which this
Confirmation relates are as follows:
Transaction Type: Rate Cap Transaction
Notional Amount: USD ____________, with respect to the
initial Calculation Period. The Notional
Amount with respect to each Calculation
Period thereafter shall be equal to the
Outstanding Amount (as defined in Exhibit
A) in respect of the Class A-2 Notes as
of the close of business on such
Distribution Date (as set forth in the
Calculation Statement (defined below)
delivered by Party B to Party A on or
prior to the Determination Date relating
to such Calculation Period pursuant to
Section 3 below).
Trade Date: _________ __, 199_
Effective Date: _________ __, 199_
Termination Date: The earlier of the close of business on
(i) _______ __, 199_, and (ii) the
Floating Rate Payer Payment Date on which
the Notional Amount is reduced to zero.
Fixed Amounts:
Fixed Rate Payer: Party B
Fixed Rate Payer
Payment Date: __________ __, 199_
Fixed Amount: USD _________
Floating Amounts:
Floating Rate Payer: Party A
Floating Rate Payer
Payment Dates: Each Distribution Date, commencing on
________ __, 1996, and ending on the
Termination Date, inclusive, subject to
adjustment
<PAGE> 33
in accordance with the
Following Business Day Convention.
Cap Rate: __%
Floating Rate Option: Interest Rate (as defined in Exhibit A);
provided, however, that the Floating
Rate in respect of any Calculation Period
shall equal the difference, if positive,
between the Floating Rate and the Cap Rate
specified above. In the event such
difference shall be zero or negative, the
Floating Rate in respect of such
Calculation Period shall be deemed to be
zero and no Floating Amount shall be
payable in respect of such Calculation
Period.
Period End Dates: Each Distribution Date
Floating Rate
Day Count Fraction: Actual/360
Compounding: Inapplicable
Default Rate: Notwithstanding anything to the contrary
in the Agreement, "Default Rate" shall
mean the rate determined by reference to
the Rate Option "USD Federal Funds - H.
15" plus one percent (1%) using daily
Reset Dates. The Default Rate will be
applied on the basis of Compounding as if
the overdue amount were a Notional Amount
and using daily Compounding Dates.
Interest shall accrue and be payable
before as well as after judgement.
Business Days: New York (New York), Detroit (Michigan)
and Chicago (Illinois)
Calculation Agent: Party B, or Ford Motor Credit Company, as
agent for and on behalf of Party B.
3. Calculations and Notifications: On or before each Determination Date, the
Calculation Agent shall determine the
Floating Amount, if any, due to Party B
on the next succeeding Floating Rate
Payer Payment Date and the Calculation
Agent shall notify Party A and
3
<PAGE> 34
Party B in writing of both (i) the
Floating Rate, and (ii) the amount, if any,
of such payment.
In addition, on each Determination Date
Party B shall deliver to Party A (by
facsimile with hard copy
to follow) a statement (the "Calculation
Statement") setting forth with respect to
the close of business on the immediately
preceding Distribution Date the Outstanding
Amount of the Notes as of such Distribution
Date.
4. Credit Downgrade: In the event that either (i) the commercial
paper or certificate of deposit rating
of Party A is reduced below A- 1 + by
Standard & Poor's Corporation (or the
equivalent rating by Moody's Investors
Services, Inc. ("Moody's") or Fitch's
Investors Services, Inc. ("Fitch")) or (ii)
if Party A does not have such a rating by
the relevant rating agency, the long-term
unsecured debt or certificate of deposit
rating of Party A is withdrawn or reduced
below AA- by Standard & Poor's Corporation
or Aa3 by Moody's (or the equivalent rating
by Fitch), Party A shall promptly notify
Party B (and any permitted assignee or
transferee of Party B) of such event (a
"Downgrade") and shall within sixty (60)
days of the date of such Downgrade, with
the prior written confirmation of the
relevant rating agency that such
arrangement will not result in the
reduction or withdrawal of the then-current
rating of the Notes as a direct result of
the Downgrade, either (i) obtain a
substitute cap provider ("X") acceptable to
Party B (such acceptance not to be
unreasonably withheld) and replace this
Swap Transaction with a swap transaction on
identical terms except that X shall be
"Party A", or (ii) enter into a "Qualifying
Substitute Arrangement" (as defined below)
to assure performance by Party A of its
obligations under this Swap Transaction.
"Qualifying Substitute Arrangement" shall
include, without limitation, any
arrangement satisfactory to the relevant
rating agency,
4
<PAGE> 35
including collateral,
guarantees or letters of credit.
In the event that Party A fails to satisfy
its obligations under either (i) or (ii)
above, Party B shall have the option,
exercisable in its discretion, within ten
(10) Business Days following the date of
expiry of the sixty (60) day period after
the date of the Downgrade, to designate (in
writing) an Early Termination Date on the
basis that such failure shall be treated as
a Termination Event with Party A as the
Affected Party. For the avoidance of doubt,
Party B acknowledges and agrees that any
such failure shall not constitute an Event
of Default.
5. Novation: Subject to payment by Party B of the Fixed
Amount, Party A consents to the
novation of all rights and obligations in
this Swap Transaction immediately after
execution hereof such that identical rights
and obligations shall exist thereafter
between Party A and the Trust. Party A
agrees to do all things reasonably
necessary to give full force and effect to
such novation, including the execution of a
novation agreement.
6. Account Details:
Payments to Party A: __________________________
__________________________
__________________________
A/c No: __________
Payments to Party B: __________________________
__________________________
__________________________
A/c No: ___________
_______________________ is a member of The Securities and Futures Authority and
has entered into this transaction as principal. The time at which the above
transaction was executed will be notified to Party B on request.
5
<PAGE> 36
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us.
Yours sincerely,
______________________________
By: __________________________________
Name:
Title:
Confirmed as of the date first written above:
FORD CREDIT AUTO OWNER TRUST 199_,
By: _________________________________
Name:
Title:
6
<PAGE> 37
EXHIBIT A
The following terms shall have the following meanings in this Confirmation:
"DETERMINATION DATE": the tenth (10th) day of each calendar month occurring
during each Calculation Period, or, if such tenth (10th) day is not a Business
Day, the next succeeding Business Day;
"DISTRIBUTION DATE": the fifteenth (15th) day of each succeeding calendar
month following the Effective Date or, if such fifteenth (15th) day is not a
Business Day, the next such succeeding Business Day, commencing __________ __,
199_;
"FLOATING RATE NOTES": the Notes issued pursuant to the Indenture;
"INDENTURE": the Indenture, dated as of ________ __, 199_, between the Trust
and the Indenture Trustee, as amended and supplemented from time to time;
"INDENTURE TRUSTEE": ______________________, not in its individual capacity
but solely as trustee under the Indenture, or any successor trustee under the
Indenture;
"INTEREST RATE": the Interest Rate shall be _____% per annum for each
Calculation Period from the Effective Date to and including the Calculation
Period ending on the Distribution Date occurring in ______ 199_, and shall be
equal to LIBOR plus ____% for each Calculation Period thereafter.
"LIBOR": with respect to each Calculation Period, the rate for deposits in
U.S. Dollars for a period of three (3) months (in the case of quarterly Note
Payment Dates) or one (1) month (in the case of monthly Note Payment Dates)
which appears on the Dow Jones Telerate Service Page 3750 as of 11:00 am,
London time, on the day that is two (2) LIBOR Business Days prior to the Note
Payment Date occurring on or immediately preceding the start of such
Calculation Period. If such rate does not appear on such page (or if such
other page as may replace that page on that service), or if such service is no
longer offered, such other service for displaying LIBOR or comparable rates as
may be selected by the Indenture Trustee (after consultation with Party B), the
rate will be the Reference Bank Rate;
"LIBOR BUSINESS DAY": any day other than a Saturday, Sunday or any other day
on which banking institutions in the City of London, England are required or
authorized by law to be closed;
"NOTE PAYMENT DATE": The fifteenth (15th) day of each February, May, August
and November or, if such fifteenth (15th) day is not a Business Day, the next
succeeding Business Day, commencing ________ __, 199_; provided, however, that
if on any two (2)
7
<PAGE> 38
consecutive Distribution Dates any amount is withdrawn from the Reserve Account
(as defined in Appendix A to the Sale and Servicing Agreement) pursuant to
subsection ______ of the Sale and Servicing Agreement, then each subsequent
Distribution Date shall constitute a Note Payment Date, until the quarterly
Note Payment Date following the first Distribution Date on which (i) no amount
is withdrawn from the Reserve Account pursuant to subsection _____ of the Sale
and Servicing Agreement and (ii) the amount on deposit in the Reserve Account
is equal to the Specified Reserve Account Balance (as defined in Appendix A to
the Sale and Servicing Agreement);
"OUTSTANDING AMOUNT": as of any Distribution Date, the aggregate outstanding
principal balance of the Notes as of the close of business on such Distribution
Date;
"REFERENCE BANK RATE": the interest rate equal to the arithmetic mean, rounded
upwards to the nearest one-sixteenth of one percent, of all quotations received
from four major banks selected by the Indenture Trustee (after consultation
with the Seller), that engage in transactions in the London interbank market,
for United Stated dollar deposits for a period of three (3) months (in the case
of quarterly Note Payment Dates) or one (1) month (in the case of monthly Note
Payment Dates) in amounts approximately equal to the principal amount of the
Notes then outstanding offered to prime banks in the London interbank market as
of 11:00 am London time on the day that is two (2) LIBOR Business Days prior to
the immediately preceding Note Payment Date; provided, however that if fewer
than two (2) such quotations are received by the Indenture Trustee, the rate
shall be the arithmetic mean, rounded upwards to the nearest one-sixteenth of
one percent, of the offered per annum rates which one or more major banks in
the City of New York selected by the Indenture Trustee (after consultation with
the Seller) are quoting as of 11:00 am, New York City time, on such date to
leading European banks for United States dollar deposits for a period of three
(3) months (in the case of quarterly Note Payment Dates) or one (1) month (in
the case of monthly Note Payment Dates) in amounts approximately equal to the
principal amount of the Notes then outstanding; provided, however that if such
banks are not quoting as described herein, the Reference Bank Rate shall be
LIBOR for the preceding Note Payment Date;
"SELLER": Ford Credit Auto Receivables Two L.P., which has executed the Sale
and Servicing Agreement as the Seller, or its successor in interest pursuant to
Section ___ of the Sale and Servicing Agreement;
"SERVICER": Ford Motor Credit Company;
"TRUST": Ford Credit Auto Owner Trust 199_, a Delaware business trust created
by the Trust Agreement;
"TRUST AGREEMENT": the trust agreement, dated as of _________ __, 199_,
between the Seller and ________________, as the Owner Trustee, as amended and
supplemented from time to time;
8
<PAGE> 39
"SALE AND SERVICING AGREEMENT": the Sale and Servicing Agreement, dated as of
______ __ 199_, between the Seller, the Servicer, and the Trust, as amended and
supplemented from time to time.
9
<PAGE> 1
EXHIBIT 10.2
(MULTICURRENCY--CROSS BORDER)
ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of _________________
[SWAP COUNTERPARTY] Ford Credit Auto Owner Trust 199_
("Party A") and ("Party B") have entered and/or anticipate entering into one or
more transactions (each a "Transaction") that are or will be governed by this
Master Agreement, which includes the schedule (the "Schedule"), and the
documents and other confirming evidence (each a "Confirmation") exchanged
between the parties confirming those Transactions.
Accordingly, the parties agree as follows:
1. INTERPRETATION
(A) DEFINITIONS. The terms defined in Section 14 and in the Schedule will have
the meanings therein specified for the purpose of this Master Agreement.
(B) INCONSISTENCY. In the event of any inconsistency between the provisions of
the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.
(C) SINGLE AGREEMENT. All Transactions are entered into in reliance on the
fact that this Master Agreement and all Confirmations form a single agreement
between the parties (collectively referred to as this ("Agreement"), and the
parties would not otherwise enter into any Transactions.
2. OBLIGATIONS
(A) GENERAL CONDITIONS.
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of this
Agreement.
(ii) Payments under this Agreement will be made on the due date for
value on that date in the place of the account specified in the relevant
Confirmation or otherwise pursuant to this Agreement, in freely
transferable funds and in the manner customary for payments in the
required currency. Where settlement is by delivery (that is, other than
by payment), such delivery will
<PAGE> 2
be made for receipt on the due date in the manner customary for the
relevant obligation unless otherwise specified in the relevant
Confirmation or elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject to
(1) the condition precedent that no Event of Default or Potential Event
of Default with respect to the other party has occurred and is
continuing, (2) the condition precedent that no Early Termination Date in
respect of the relevant Transaction has occurred or been effectively
designated and (3) each other applicable condition precedent specified in
this Agreement.
(B) CHANGE OF ACCOUNT. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(C) NETTING. If on any date amounts would otherwise be payable:
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the
other party, replaced by an obligation upon the party by whom the larger
aggregate amount would have been payable to pay to the other party the excess
of the larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be
made in the Schedule or a Confirmation by specifying that subparagraph (ii)
above will not apply to the Transactions identified as being subject to the
election, together with the starting date (in which case subparagraph (ii)
above will not, or will cease to, apply to such Transactions from such date).
This election may be made separately for different groups of Transactions and
will apply separately to each pairing of Offices through which the parties make
and receive payments or deliveries.
(D) DEDUCTION OR WITHHOLDING FOR TAX.
(i) GROSS-UP. All payments under this Agreement will be made without any
deduction or withholding for or on account of any Tax unless such
deduction or withholding is required by any applicable law, as modified
by the practice of any relevant governmental revenue authority, then in
effect. If a party is so required to deduct or withhold, then that party
("X") will:
(1) promptly notify the other party ('Y") of such requirement;
(2) pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be
deducted or withheld from any additional amount paid by X to Y
under this Section 2(d)) promptly upon the earlier of determining
2
<PAGE> 3
that such deduction or withholding is required or receiving notice
that such amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a certified
copy), or other documentation reasonably acceptable to Y,
evidencing such payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to
the payment to which Y is otherwise entitled under this Agreement,
such additional amount as is necessary to ensure that the net
amount actually received by Y (free and clear of Indemnifiable
Taxes, whether assessed against X or Y) will equal the full amount
Y would have received had no such deduction or withholding been
required. However, X will not be required to pay any additional
amount to Y to the extent that it would not be required to be paid
but for:
(A) the failure by Y to comply with or perform any agreement
contained in Section 4(a)(i), 4(a)(iii) or 4(d); or
(B) the failure of a representation made by Y pursuant to
Section 3(f) to be accurate and true unless such failure
would not have occurred but for (1) any action taken by a
taxing authority, or brought in a court of competent
jurisdiction, on or after the date on which a Transaction is
entered into (regardless of whether such action is taken or
brought with respect to a party to this Agreement) or (11) a
Change in Tax Law.
(ii) LIABILITY. If:
(1) X is required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, to make
any deduction or withholding in respect of which X would not be
required to pay an additional amount to Y under Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly
against X,
then, except to the extent Y has satisfied or then satisfies the
liability resulting from such Tax, Y will promptly pay to X the amount of
such liability (including any related liability for interest, but
including any related liability for penalties only if Y has failed to
comply with or perform any agreement contained in Section 4(a)(i),
4(a)(iii) or 4(d)).
(e) DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant
Transaction, a party that defaults in the performance of any payment obligation
will, to the extent permitted by law and subject to Section 6(c), be required
to pay interest (before as well as after judgment) on the overdue amount to the
other party on demand in the same currency as such overdue amount, for the
period from (and including) the original due date for payment to (but
excluding) the date of actual payment, at the Default Rate. Such interest will
be calculated on the basis of daily compounding and the actual number of days
elapsed. If, prior to the occurrence or effective designation of an Early
Termination Date in respect of the relevant Transaction, a party defaults in
the performance of any obligation required to be settled by delivery, it will
compensate
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the other party on demand if and to the extent provided for in the relevant
Confirmation or elsewhere in this Agreement.
3. REPRESENTATIONS
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered
into and, in the case of the representations in Section 3(f), at all times
until the termination of this Agreement) that:
(a) BASIC REPRESENTATIONS.
(i) STATUS. It is duly organized and validly existing under the laws of
the jurisdiction of its organization or incorporation and, if relevant
under such laws, in good standing;
(ii) POWERS. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to
deliver this Agreement and any other documentation relating to this
Agreement that it is required by this Agreement to deliver and to perform
its obligations under this Agreement and any obligations it has under any
Credit Support Document to which it is a party and has taken all
necessary action to authorize such execution, delivery and performance;
(iii) NO VIOLATION OR CONFLICT. Such execution, delivery and
performance do not violate or conflict with any law applicable to it, any
provision of its constitutional documents, any order or judgment of any
court or other agency of government applicable to it or any of its assets
or any contractual restriction binding on or affecting it or any of its
assets;
(iv) CONSENTS. All governmental and other consents that are required to
have been obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party have been obtained and are in
full force and effect and all conditions of any such consents have been
complied with; and
(v) OBLIGATIONS BINDING. Its obligations under this Agreement and any
Credit Support Document to which it is a party constitute its legal,
valid and binding obligations, enforceable in accordance with their
respective terms (subject to applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors' rights
generally and subject, as to enforceability, to equitable principles of
general application (regardless of whether enforcement is sought in a
proceeding in equity or at law)).
(b) ABSENCE OF CERTAIN EVENTS. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has occurred
and is continuing and no such event or circumstance would occur as a result of
its entering into or performing its obligations under this Agreement or any
Credit Support Document to which it is a party.
(c) ABSENCE OF LITIGATION. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding
at law or in equity or before any court, tribunal, governmental body, agency or
official or any arbitrator that is likely to affect the legality, validity or
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enforceability against it of this Agreement or any Credit Support Document to
which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.
(d) ACCURACY OF SPECIFIED INFORMATION. All applicable information that is
furnished in writing by or on behalf of it to the other party and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.
(e) PAYER TAX REPRESENTATION. Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(e) is accurate and true.
(f) PAYEE TAX REPRESENTATIONS. Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(f) is accurate and true.
4. AGREEMENTS
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:
(a) FURNISH SPECIFIED INFORMATION. It will deliver to the other party or, in
certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:
(i) any forms, documents or certificates relating to taxation specified
in the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any Confirmation;
and
(iii) upon reasonable demand by such other party, any form or document
that may be required or reasonably requested in writing in order to allow
such other party or its Credit Support Provider to make a payment under
this Agreement or any applicable Credit Support Document without any
deduction or withholding for or on account of any Tax or with such
deduction or withholding at a reduced rate (so long as the completion,
execution or submission of such form or document would not materially
prejudice the legal or commercial position of the party in receipt of
such demand), with any such form or document to be accurate and completed
in a manner reasonably satisfactory to such other party and to be
executed and to be delivered with any reasonably required certification,
in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.
(b) MAINTAIN AUTHORIZATIONS. It will use all reasonable efforts to maintain in
full force and effect all consents of any governmental or other authority that
are required to be obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party and will use all reasonable efforts to
obtain any that may become necessary in the future.
(c) COMPLY WITH LAWS. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.
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(d) TAX AGREEMENT. It will give notice of any failure of a representation made
by it under Section 3(f) to be accurate and true promptly upon learning of such
failure.
(e) PAYMENT OF STAMP TAX. Subject to Section I 1, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of this
Agreement by a jurisdiction in which it is incorporated, organized, managed and
controlled, or considered to have its seat, or in which a branch or office
through which it is acting for the purpose of this Agreement is located ("Stamp
Tax Jurisdiction") and will indemnify the other party against any Stamp Tax
levied or imposed upon the other party or in respect of the other party's
execution or performance of this Agreement by any such Stamp Tax Jurisdiction
which is not also a Stamp Tax Jurisdiction with respect to the other party.
5. EVENTS OF DEFAULT AND TERMINATION EVENTS
(a) EVENTS OF DEFAULT. The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any of the following events constitutes an event of
default (an "Event of Default") with respect to such party:
(i) FAILURE TO PAY OR DELIVER. Failure by the party to make, when due,
any payment under this Agreement or delivery under Section 2(a)(i) or
2(e) required to be made by it if such failure is not remedied on or
before the third Local Business Day after notice of such failure is given
to the party;
(ii) BREACH OF AGREEMENT. Failure by the party to comply with or
perform any agreement or obligation (other than an obligation to make any
payment under this Agreement or delivery under Section 2(a)(i) or 2(e) or
to give notice of a Termination Event or any agreement or obligation
under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with or
performed by the party in accordance with this Agreement if such failure
is not remedied on or before the thirtieth day after notice of such
failure is given to the party;
(iii) CREDIT SUPPORT DEFAULT.
(1) Failure by the party or any Credit Support Provider of such
party to comply with or perform any agreement or obligation to be
complied with or performed by it in accordance with any Credit
Support Document if such failure is continuing after any applicable
grace period has elapsed;
(2) the expiration or termination of such Credit Support Document
or the failing or ceasing of such Credit Support Document to be in
full force and effect for the purpose of this Agreement (in either
case other than in accordance with its terms) prior to the
satisfaction of all obligations of such party under each
Transaction to which such Credit Support Document relates without
the written consent of the other party; or
(3) the party or such Credit Support Provider disaffirms,
disclaims, repudiates or rejects, in whole or in part, or
challenges the validity of, such Credit Support Document;
(iv) MISREPRESENTATION. A representation (other than a representation
under Section 3(e) or (f)) made or repeated or deemed to have been made
or repeated by the party or any Credit Support
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Provider of such party in this Agreement or any Credit Support Document
proves to have been incorrect or misleading in any material respect
when made or repeated or deemed to have been made or repeated;
(v) DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit Support
Provider of such party or any applicable Specified Entity of such party
(1) defaults under a Specified Transaction and, after giving effect to
any applicable notice requirement or grace period, there occurs a
liquidation of, an acceleration of obligations under, or an early
termination of, that Specified Transaction, (2) defaults, after giving
effect to any applicable notice requirement or grace period, in making
any payment or delivery due on the last payment. delivery or exchange
date of, or any payment on early termination of, a Specified Transaction
(or such default continues for at least three Local Business Days if
there is no applicable notice requirement or grace period) or (3)
disaffirms, disclaims, repudiates or rejects, in whole or in part, a
Specified Transaction (or such action is taken by any person or entity
appointed or empowered to operate it or act on its behalf);
(vi) CROSS DEFAULT. If "Cross Default" is specified in the Schedule as
applying to the party, the occurrence or existence of (1) a default,
event of default or other similar condition or event (however described)
in respect of such party, any Credit Support Provider of such party or
any applicable Specified Entity of such party under one or more
agreements or instruments relating to Specified Indebtedness of any of
them (individually or collectively) in an aggregate amount of not less
than the applicable Threshold Amount (as specified in the Schedule) which
has resulted in such Specified Indebtedness becoming, or becoming capable
at such time of being declared, due and payable under such agreements or
instruments, before it would otherwise have been due and payable or (2) a
default by such party, such Credit Support Provider or such Specified
Entity (individually or collectively) in making one or more payments on
the due date thereof in an aggregate amount of not less than the
applicable Threshold Amount under such agreements or instruments (after
giving effect to any applicable notice requirement or grace period);
(vii) BANKRUPTCY. The party, any Credit Support Provider of such party
or any applicable Specified Entity of such party:
(1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2) becomes insolvent or is unable to pay
its debts or fails or admits in writing its inability generally to
pay its debts as they become due; (3) makes a general assignment,
arrangement or composition with or for the benefit of its
creditors; (4) institutes or has instituted against it a proceeding
seeking a judgment of insolvency or bankruptcy or any other relief
under any bankruptcy or insolvency law or other similar law
affecting creditors' rights, or a petition is presented for its
winding-up or liquidation, and, in the case of any such proceeding
or petition instituted or presented against it, such proceeding or
petition (A) results in a judgment of insolvency or bankruptcy or
the entry of an order for relief or the making of an order for its
winding-up or liquidation or (B) is not dismissed, discharged,
stayed or restrained in each case within 30 days of the institution
or presentation thereof; (5) has a resolution passed for its
winding-up, official management or liquidation (other than pursuant
to a consolidation, amalgamation or merger); (6) seeks or becomes
subject to the appointment of an administrator, provisional
liquidator, conservator, receiver, trustee, custodian or other
similar official for it or for all or substantially all its assets;
(7) has a secured party take possession of all or substantially all
its assets or has a distress, execution, attachment, sequestration
or other
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legal process levied, enforced or sued on or against all or
substantially all its assets and such secured party maintains
possession, or any such process is not dismissed, discharged,
stayed or restrained, in each case within 30 days thereafter; (8)
causes or is subject to any event with respect to it which, under
the applicable laws of any jurisdiction, has an analogous effect to
any of the events specified in clauses (1) to (7) (inclusive);
or (9) takes any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the foregoing
acts; or
(viii) MERGER WITHOUT ASSUMPTION. The party or any Credit Support
Provider of such party consolidates or amalgamates with, or merges with
or into, or transfers all or substantially all its assets to, another
entity and, at the time of such consolidation, amalgamation, merger or
transfer-
(1) the resulting, surviving or transferee entity fails to assume
all the obligations of such party or such Credit Support Provider
under this Agreement or any Credit Support Document to which it or
its predecessor was a party by operation of law or pursuant to an
agreement reasonably satisfactory to the other party to this
Agreement; or
(2) the benefits of any Credit Support Document fail to extend
(without the consent of the other party) to the performance by such
resulting, surviving or transferee entity of its obligations under
this Agreement.
(b) TERMINATION EVENTS. The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any event specified below constitutes an Illegality if
the event is specified in (i) below, a Tax Event if the event is specified in
(ii) below or a Tax Event Upon Merger if the event is specified in (iii) below,
and, if specified to be applicable, a Credit Event
Upon Merger if the event is specified pursuant to (iv) below or an Additional
Termination Event if the event is specified pursuant to (v) below:
(i) ILLEGALITY. Due to the adoption of, or any change in, any
applicable law after the date on which a Transaction is entered into, or
due to the promulgation of, or any change in, the interpretation by any
court, tribunal or regulatory authority with competent jurisdiction of
any applicable law after such date, it becomes unlawful (other than as a
result of a breach by the party of Section 4(b)) for such party (which
will be the Affected Party):
(1) to perform any absolute or contingent obligation to make a
payment or delivery or to receive a payment or delivery in respect
of such Transaction or to comply with any other material provision
of this Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such party
to perform, any contingent or other obligation which the party (or
such Credit Support Provider) has under any Credit Support Document
relating to such Transaction;
(ii) TAX EVENT. Due to (x) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the date on
which a Transaction is entered into (regardless of whether such action is
taken or brought with respect to a party to this Agreement) or (y) a
Change in Tax Law, the party (which will be the Affected Party) will, or
there is a substantial
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likelihood that it will, on the next succeeding Scheduled Payment Date
(1) be required to pay to the other party an additional amount in respect
of an lndemnifiable Tax under Section 2(d)(i)(4) (except in respect
of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a
payment from which an amount is required to be deducted or withheld for
or on account of a Tax (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) and no additional amount is required to be paid in
respect of such Tax under Section 2(d)(i)(4) (other than by reason of
Section 2(d)(i)(4)(A) or (B));
(iii) TAX EVENT UPON MERGER. The party (the "Burdened Party") on the
next succeeding Scheduled Payment Date will either (1) be required to pay
an additional amount in respect of an Indemnifiable Tax under Section
2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii) or
6(e)) or (2) receive a payment from which an amount has been deducted or
withheld for or on account of any Indemnifiable Tax in respect of which
the other party is not required to pay an additional amount (other than
by reason of Section 2(d)(i)(4)(A) or (B)), in either case as a result of
a party consolidating or amalgamating with, or merging with or into, or
transferring all or substantially all its assets to, another entity
(which will be the Affected Party) where such action does not constitute
an event described in Section 5(a)(viii);
(iv) CREDIT EVENT UPON MERGER. If Credit Event Upon Merge is specified
in the Schedule as applying to the party, such party ("X"), any Credit
Support Provider of X or any applicable Specified Entity of X
consolidates or amalgamates with, or merges with or into, or transfers
all or substantially all its assets to, another entity and such action
does not constitute an event described in Section 5(a)(viii) but the
creditworthiness of the resulting, surviving or transferee entity is
materially weaker than that of X, such Credit Support Provider or such
Specified Entity, as the case may be, immediately prior to such action
(and, in such event, X or its successor or transferee, as appropriate,
will be the Affected Party); or
(v) ADDITIONAL TERMINATION EVENT. If any "Additional Termination
Event"' is specified in the Schedule or any Confirmation as applying, the
occurrence of such event (and, in such event, the Affected Party or
Affected Parties shall be as specified for such Additional Termination
Event in the Schedule or such Confirmation).
(c) EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance which would
otherwise constitute or give rise to an Event of Default also constitutes an
Illegality, it will be treated as an Illegality and will not constitute an
Event-of Default.
6. EARLY TERMINATION
(a) RIGHT TO TERMINATE FOLLOWING EVENT OF DEFAULT. If at any time an Event of
Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as
an Early Termination Date in respect of all outstanding Transactions. If,
however, "Automatic Early Termination" is specified in the Schedule as applying
to a party, then an Early Termination Date in respect of all outstanding
Transactions will occur immediately upon the occurrence with respect to such
party of an Event of Default specified in Section 5(a)(vii)(1), (3), (5), (6)
or, to the extent analogous thereto, (8), and as of the time immediately
preceding the institution of the relevant proceeding or the presentation of the
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relevant petition upon the occurrence with respect to such party of an Event of
Default specified in Section 5(a)(vii)(4) or, to the extent analogous thereto,
(8).
(b) RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT.
(i) NOTICE. If a Termination Event occurs, an Affected Party will,
promptly upon becoming aware of it, notify the other party, specifying
the nature of that Termination Event and each Affected Transaction and
will also give such other information about that Termination Event as the
other party may reasonably require.
(ii) TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality under
Section 5(b)(i)(1) or a Tax Event occurs and there is only one Affected
Party, or if a Tax Event Upon Merger occurs and the Burdened Party is the
Affected Party, the Affected Party will, as a condition to its right to
designate an Early Termination Date under Section 6(b)(iv), use all
reasonable efforts (which will not require such party to incur a loss,
excluding immaterial, incidental expenses) to transfer within 20 days
after it gives notice under Section 6(b)(i) all its rights and
obligations under this Agreement in respect of the Affected Transactions
to another of its Offices or Affiliates so that such Termination Event
ceases to exist.
If the Affected Party is not able to make such a transfer it will give
notice to the other party to that effect within such 20 day period,
whereupon the other party may effect such a transfer within 30 days after
the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be subject
to and conditional upon the prior written consent of the other party,
which consent will not be withheld if such other party's policies in
effect at such time would permit it to enter into transactions with the
transferee on the terms proposed.
(iii) TWO AFFECTED PARTIES. If an Illegality under Section 5(b)(i)(1)
or a Tax Event occurs and there are two Affected Parties, each party will
use all reasonable efforts to reach agreement within 30 days after notice
thereof is given under Section 6(b)(i) on action to avoid that
Termination Event.
(iv) RIGHT TO TERMINATE. If:
(1) a transfer under Section 6(b)(ii) or an agreement under
Section 6(b)(iii), as the case may be, has not been effected with
respect to all Affected Transactions within 30 days after an
Affected Party gives notice under Section 6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon
Merger or an Additional Termination Event occurs, or a Tax Event
Upon Merger occurs and the Burdened Party is not the Affected
Party,
either party in the case of an Illegality, the Burdened Party in the case
of a Tax Event Upon Merger, any Affected Party in the case of a Tax Event
or an Additional Termination Event if there is more than one Affected
Party, or the party which is not the Affected Party in the case of a
Credit Event Upon Merger or an Additional Termination Event if there is
only one Affected
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Party may, by not more than 20 days notice to the other
party and-provided that the relevant Termination Event is then
continuing, designate a day not earlier than the day such notice is
effective as an Early Termination Date in respect of all Affected
Transactions.
(c) EFFECT OF DESIGNATION.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or (b), the Early Termination Date will occur on the date so
designated, whether or not the relevant Event of Default or Termination
Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section 2(a)(i)
or 2(e) in respect of the Terminated Transactions
will be required to be made, but without prejudice to the other
provisions of this Agreement. The amount, if any, payable in respect of
an Early Termination Date shall be determined pursuant to Section 6(e).
(d) CALCULATIONS.
(i) STATEMENT. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and will
provide to the other party a statement (1) showing, in reasonable detail,
such calculations (including all relevant quotations and specifying any
amount payable under Section 6(e)) and (2) giving details of the relevant
account to which any amount payable to it is to be paid. In the absence
of written confirmation from the source of a quotation obtained in
determining a Market Quotation, the records of the party obtaining such
quotation will be conclusive evidence of the existence and accuracy of
such quotation.
(ii) PAYMENT DATE. An amount calculated as being due in respect of any
Early Termination Date under Section 6(e) will be payable on the day that
notice of the amount payable is effective (in the case of an Early
Termination Date which is designated or occurs as a result of an Event of
Default) and on the day which is two Local Business Days after the day on
which notice of the amount payable is effective (in the case of an Early
Termination Date which is designated as a result of a Termination Event).
Such amount will be paid together with (to the extent permitted under
applicable law) interest thereon (before as well as after judgment) in
the Termination Currency, from (and including) the relevant Early
Termination Date to (but excluding) the date such amount is paid, at the
Applicable Rate. Such interest will be calculated on the basis of daily
compounding and the actual number of days elapsed.
(e) PAYMENTS ON EARLY TERMINATION. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either 'Market Quotation" or "Loss", and a payment
method, either the 'First Method" or the "Second Method". If the parties fail
to designate a payment measure or payment method in the Schedule, it will be
deemed that "Market Quotation" or the "Second Method", as the case may be,
shall apply. The amount, if any, payable in respect of an Early Termination
Date and determined pursuant to this Section will be subject to any Set-off.
(i) EVENTS OF DEFAULT. If the Early Termination Date results from an
Event of Default:
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(1) First Method and Market Quotation. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the
Non-defaulting Party the excess, if a positive number, of (A) the
sum of the Settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and the
Termination Currency Equivalent of the Unpaid Amounts owing to the
Non-defaulting Party over (B) the Termination Currency Equivalent
of the Unpaid Amounts owing to the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss apply,
the Defaulting Party will pay to the Non-defaulting Party, if a
positive number, the Non-defaulting Party's Loss in respect of this
Agreement.
(3) Second Method and Market Quotation. If the Second Method and
Market Quotation apply, an amount will be payable equal to (A) the
sum of the Settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and
the Termination Currency Equivalent of the Unpaid Amounts owing to
the Non-defaulting Party less (B) the Termination Currency
Equivalent of the Unpaid Amounts owing to the Defaulting Party. If
that amount is a positive number, the Defaulting Party will pay it
to the Non-defaulting Party; if it is a negative number, the
Non-defaulting Party will pay the absolute value of that amount to
the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss
apply,an amount will be payable equal to the Non-defaulting Party's
Loss in respect of this Agreement. If that amount is a positive
number, the Defaulting Party will pay it to the Non-defaulting
Party; if it is a negative number, the Non-defaulting Party will
pay the absolute value of that amount to the Defaulting Party.
(ii) TERMINATION EVENTS. If the Early Termination Date results from a
Termination Event:
(1) One Affected Party. If there is one Affected Party, the
amount payable will be determined in accordance with Section
6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4), if
Loss applies, except that, in either case, references to the
Defaulting Party and to the Non-defaulting Party will be deemed to
be references to the Affected Party and the party which is not the
Affected Party, respectively, and, if Loss applies and fewer than
all the Transactions are being terminated, Loss shall be calculated
in respect of all Terminated Transactions.
(2) Two Affected Parties. If there are two Affected Parties:
(A) if Market Quotation applies, each party will determine a
Settlement Amount in respect of the Terminated Transactions,
and an amount will be payable equal to (1) the sum of (a)
one-half of the difference between the Settlement Amount of
the party with the higher Settlement Amount ("X") and the
Settlement Amount of the party with the lower Settlement
Amount ("Y") and (b) the Termination Currency Equivalent of
the Unpaid Amounts owing to X less (11) the Termination
Currency Equivalent of the Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine its Loss in
respect of this Agreement (or, if fewer than all the
Transactions are being terminated, in respect
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of all Terminated Transactions) and an amount will be payable
equal to one-half of the difference between the Loss of the
party with the higher Loss ("X") and the Loss of the party
with the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X; if
it is a negative number, X will pay the absolute value of that
amount to Y.
(iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies in
respect of a party, the amount determined under this Section 6(e) will be
subject to such adjustments as are appropriate and permitted by law to
reflect any payments or deliveries made by one party to the other under
this Agreement (and retained by such other party) during the period from
the relevant Early Termination Date to the date for payment determined
under Section 6(d)(ii).
(iv) PRE-ESTIMATE. The parties agree that if Market Quotation applies
an amount recoverable under this Section 6(e) is a reasonable
pre-estimate of loss and not a penalty. Such amount is payable for the
loss of bargain and the loss of protection against future risks and
except as otherwise provided in this Agreement neither party will be
entitled to recover any additional damages as a consequence of such
losses.
7. TRANSFER
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that:
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to
any other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in any
amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be
void.
8. CONTRACTUAL CURRENCY
(a) PAYMENT IN THE CONTRACTUAL CURRENCY. Each payment under this Agreement
will be made in the relevant currency specified in this Agreement for that
payment (the "Contractual Currency"). To the extent permitted by applicable
law, any obligation to make payments under this Agreement in the Contractual
Currency will not be discharged or satisfied by any tender in any currency
other than the Contractual Currency, except to the extent such tender results
in the actual receipt by the party to which payment is owed, acting in a
reasonable manner and in good faith in converting the currency so tendered into
the Contractual Currency, of the full amount in the Contractual Currency of all
amounts payable in respect of this Agreement. If for any reason the amount in
the Contractual Currency so received falls short of the amount in the
Contractual Currency payable in respect of this Agreement, the party required
to make the payment will, to the extent permitted by applicable law,
immediately pay such additional amount in the Contractual Currency as may be
necessary to compensate for the shortfall. If for any
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<PAGE> 14
reason the amount in the Contractual Currency so received exceeds the amount in
the Contractual Currency payable in respect of this Agreement, the party
receiving the payment will refund promptly the amount of such excess.
(b) JUDGMENTS. To the extent permitted by applicable law, if any judgment or
order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such
party. The term "rate of exchange" includes, without Limitation, any premiums
and costs of exchange payable in connection with the purchase of or conversion
into the Contractual Currency.
(c) SEPARATE INDEMNITIES. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the
party to which any payment is owed and will not be affected by judgment being
obtained or claim or proof being made for any other sums payable in respect of
this Agreement.
(d) EVIDENCE OF LOSS. For the purpose of this Section 8, it will be sufficient
for a party to demonstrate that it would have suffered a loss had an actual
exchange or purchase been made.
9. MISCELLANEOUS
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) AMENDMENTS. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by
an exchange of telexes or electronic messages on an electronic messaging
system.
(c) SURVIVAL OF OBLIGATIONS. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
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<PAGE> 15
(d) REMEDIES CUMULATIVE. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by
law.
(e) COUNTERPARTS AND CONFIRMATIONS.
(i) This Agreement (and each amendment, modification and waiver in
respect of it) may be executed and delivered in counterparts (including
by facsimile transmission), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the terms of each
Transaction from the moment they agree to those terms (whether orally or
otherwise). A Confirmation shall be entered into as soon as practicable
and may be executed and delivered in counterparts (including by facsimile
transmission) or be created by an exchange of telexes or by an exchange
of electronic messages on an electronic messaging system, which in each
case will be sufficient for all purposes to evidence a binding supplement
to this Agreement. The parties will specify therein or through another
effective means that any such counterpart, telex or electronic message
constitutes a Confirmation.
(f) NO WAIVER OF RIGHTS. A failure or delay in exercising any right, power or
privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.
(g) HEADINGS. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
10. OFFICES; MULTIBRANCH PARTIES
(a) If Section 10(a) is specified in the Schedule as applying, each party that
enters into a Transaction through an Office other than its head or home office
represents to the other party that, notwithstanding the place of booking office
or jurisdiction of incorporation or Organization of such party, the obligations
of such party are the same as if it had entered into the Transaction through
its head or home office. This representation will be deemed to be repeated by
such party on each date on which a Transaction is entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a
Transaction will be specified in the relevant Confirmation.
11. EXPENSES
A Defaulting Party will, on demand, indemnify and hold harmless the other
party for and against all reasonable out-of-pocket expenses, including legal
fees and Stamp Tax, incurred by such other party by
15
<PAGE> 16
reason of the enforcement and protection of its rights under this Agreement or
any Credit Support Document to which the Defaulting Party is a party or by
reason of the early termination of any Transaction, including, but not limited
to, costs of collection.
12. NOTICES
(a) EFFECTIVENESS. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:
(i) if in writing and delivered in person or by courier, on the date it
is delivered;
(ii) if sent by telex, on the date the recipient's answerback is
received;
(iii) if sent by facsimile transmission, on the date that transmission
is received by a responsible employee of the recipient in legible form
(it being agreed that the burden of proving receipt will be on the sender
and will not be met by a transmission report generated by the sender's
facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or
the equivalent (return receipt requested), on the date that mail is
delivered or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that electronic
message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) CHANGE OF ADDRESSES. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.
13. GOVERNING LAW AND JURISDICTION
(a) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) JURISDICTION. With respect to any suit, action or proceedings relating to
this Agreement ("Proceedings"), each party irrevocably:
(i) submits to the jurisdiction of the English courts, if this Agreement
is expressed to be governed by English law, or to the non-exclusive
jurisdiction of the courts of the State of New York and the United States
District Court located in the Borough of Manhattan in New York City, if
this Agreement is expressed to be governed by the laws of the State of
New York; and
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<PAGE> 17
(ii) waives any objection which it may have at any time to the laying of
venue of any Proceedings brought in any such court, waives any claim that
such Proceedings have been brought in an inconvenient forum and further
waives the right to object, with respect to such Proceedings, that such
court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) SERVICE OF PROCESS. Each party irrevocably appoints the Process Agent (if
any) specified opposite its name in the Schedule to receive, for it and on its
behalf, service of process in any Proceedings. If for any reason any party's
Process Agent is unable to act as such, such party will promptly notify the
other party and within 30 days appoint a substitute process agent acceptable to
the other party. The parties irrevocably consent to service of process given
in the manner provided for notices in Section 12. Nothing in this Agreement
will affect the right of either party to serve process in any other manner
permitted by law.
(d) WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest extent
permitted by applicable law, with respect to itself and its revenues and assets
(irrespective of their use or intended use), all immunity on the grounds of
sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of
any court, (iii) relief by way of injunction, order for specific performance or
for recovery of property, (iv) attachment of its assets (whether before or
after judgment) and (v) execution or enforcement of any judgment to which it or
its revenues or assets might otherwise be entitled in any Proceedings in the
courts of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.
14. DEFINITIONS
As used in this Agreement:
"ADDITIONAL TERMINATION EVENT" has the meaning specified in Section 5(b).
"AFFECTED PARTY" has the meaning specified in Section 5(b).
"AFFECTED TRANSITIONS" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.
"AFFILIATE" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control"
of any entity or person means ownership of a majority of the voting power of
the entity or person.
"APPLICABLE RATE" means:
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<PAGE> 18
(a) in respect of obligations payable or deliverable (or which would have been
but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of either
party from and after the date (determined in accordance with Section 6(d)(ii))
on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default
Rate; and
(d) in all other cases, the Termination Rate.
"BURDENED PARTY" has the meaning specified in Section 5(b).
"CHANGE IN TAX LAW" means the enactment, promulgation, execution or
ratification of, or any change in or amendment to, any law (or in the
application or official interpretation of any law) that occurs on or after the
date on which the relevant Transaction is entered into.
"CONSENT" includes a consent, approval, action, authorization, exemption,
notice, filing, registration or exchange control consent.
"CREDIT EVENT UPON MERGER" has the meaning specified in Section 5(b).
"CREDIT SUPPORT DOCUMENT" means any agreement or instrument that is
specified as such in this Agreement.
"CREDIT SUPPORT PROVIDER" has the meaning specified in the Schedule.
"DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1 % per annum.
"DEFAULTING PARTY" has the meaning specified in Section 6(a).
"EARLY TERMINATION DATE" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if
applicable, in the Schedule.
"ILLEGALITY" has the meaning specified in Section 5(b).
"INDEMNIFIABLE TAX" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former
connection between the jurisdiction of the government or taxation authority
imposing such Tax and the recipient of such payment or a person related to such
recipient (including, without limitation, a connection arising from such
recipient or related person being or having been a citizen or resident of such
jurisdiction, or being or having been organized, present or engaged in a trade
or business in such jurisdiction or having or having had a permanent
establishment or fixed place of business in such jurisdiction, but excluding a
connection arising solely from such
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<PAGE> 19
recipient or related person having executed, delivered, performed its
obligations or received a payment under, or enforced, this Agreement or a
Credit Support Document).
"LAW" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority)
and "lawful" and "unlawful" will be construed accordingly.
"LOCAL BUSINESS DAY" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and, if
different, in the principal financial center, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for
performance with respect to such Specified Transaction.
"LOSS" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be
its total losses and costs (or gain, in which case expressed as a negative
number) in connection with this Agreement or that Terminated Transaction or
group of Terminated Transactions, as the case may be, including any loss of
bargain, cost of funding or, at the election of such party but without
duplication, loss or cost incurred as a result of its terminating, liquidating,
obtaining or reestablishing any hedge or related trading position (or any gain
resulting from any of them). Loss includes losses and costs (or gains) in
respect of any payment or delivery required to have been made (assuming
satisfaction of each applicable condition precedent) on or before the relevant
Early Termination Date and not made, except, so as to avoid duplication, if
Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does not include a
party's legal fees and out-of-pocket expenses referred to under Section 11. A
party will determine its Loss as of the relevant Early Termination Date, or, if
that is not reasonably practicable, as of the earliest date thereafter as is
reasonably practicable. A party may (but need not) determine its Loss by
reference to quotations of relevant rates or prices from one or more leading
dealers in the relevant markets.
"MARKET QUOTATION" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or by
such party (expressed as a positive number) in consideration of an agreement
between such party (taking into account any existing Credit Support Document
with respect to the obligations of such party) and the quoting Reference
Market-maker to enter into a transaction (the "Replacement Transaction") that
would have the effect of preserving for such party the economic equivalent of
any payment or delivery (whether the underlying obligation was absolute or
contingent and assuming the satisfaction of each applicable condition
precedent) by the parties under Section 2(a)(i) in respect of such Terminated
Transaction or group of Terminated Transactions that would, but for the
occurrence of the relevant Early Termination Date, have been required after
that date. For this purpose, Unpaid Amounts in respect of the Terminated
Transaction or group of Terminated Transactions are to be excluded but,
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<PAGE> 20
without limitation, any payment or delivery that would, but for the relevant
Early Termination Date, have been required (assuming satisfaction of each
applicable condition precedent) after that Early Termination Date is to be
included. The Replacement Transaction would be subject to such documentation
as such party and the Reference Market-maker may, in good faith, agree. The
party making the determination (or its agent) will request each Reference
Market-maker to provide its quotation to the extent reasonably practicable as
of the same day and time (without regard to different time zones) on or as soon
as reasonably practicable after the relevant Early Termination Date. The day
and time as of which those quotations are to be obtained will be selected in
good faith by the party obliged to make a determination under Section 6(e),
and, if each party is so obliged, after consultation with the other. If more
than three quotations are provided, the Market Quotation will be the arithmetic
mean of the quotations, without regard to the quotations having the highest and
lowest values. If exactly three such quotations are provided, the Market
Quotation will be the quotation remaining after disregarding the highest and
lowest quotations. For this purpose, if more than one quotation has the same
highest value or lowest value, then one of such quotations shall be
disregarded. If fewer than three quotations are provided, it will be deemed
that the Market Quotation in respect of such Terminated Transaction or group of
Terminated Transactions cannot be determined.
"NON-DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it)
if it were to fund the relevant amount.
"NON-DEFAULTING PARTY" has the meaning specified in Section 6(a).
"OFFICE" means a branch or office of a party, which may be such party's bead or
home office.
"POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of notice
or the lapse of time or both, would constitute an Event of Default.
"REFERENCE MARKET-MAKERS" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria
that such party applies generally at the time in deciding whether to offer or
to make an extension of credit and (b) to the extent practicable, from among
such dealers having an office in the same city.
"RELEVANT JURISDICTION" means, with respect to a party, the jurisdictions (a)
in which the party is incorporated, organized, managed and controlled or
considered to have its seat, (b) where an Office through which the party is
acting for purposes of this Agreement is located, (c) in which the party
executes this Agreement and (d) in relation to any payment, from or through
which such payment is made.
"SCHEDULED PAYMENT DATE" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"SET-OFF" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.
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"SETTLEMENT AMOUNT" means, with respect to a party and any Early Termination
Date, the sum of:
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference to
any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"SPECIFIED ENTITY" has the meaning specified in the Schedule.
"SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any obligation
(whether present or future, contingent or otherwise, as principal or surety or
otherwise) in respect of borrowed money.
"SPECIFIED TRANSACTION" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of
such party or any applicable Specified Entity of such party) and the other
party to this Agreement (or any Credit Support Provider of such other party or
any applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond
option, interest rate option, foreign exchange transaction, cap transaction,
floor transaction, collar transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any other similar
transaction (including any option with respect to any of these transactions),
(b) any combination of these transactions and (c) any other transaction
identified as a Specified Transaction in this Agreement or the relevant
confirmation.
"STAMP TAX" means any stamp, registration, documentation or similar tax.
"TAX" means any present or future tax, levy, impost, duty, charge, assessment
or fee of any nature (including interest, penalties and additions thereto) that
is imposed by any government or other taxing authority in respect of any
payment under this Agreement other than a stamp, registration, documentation or
similar tax.
"TAX EVENT" has the meaning specified in Section 5(b).
"TAX EVENT UPON MERGER" has the meaning specified in Section 5(b).
"TERMINATED TRANSACTIONS" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"TERMINATION CURRENCY" has the meaning specified in the Schedule.
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<PAGE> 22
"TERMINATION CURRENCY EQUIVALENT" means, in respect of any amount denominated
in the Termination Currency, such Termination Currency amount and, in respect
of any amount denominated in a currency other than the Termination Currency
(the "Other Currency"), the amount in the Termination Currency determined by
the party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case may be), is determined as of
a later date, that later date, with the Termination Currency at the rate equal
to the spot exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination Currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a
rate for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.
"TERMINATION EVENT" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.
"TERMINATION RATE" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.
"UNPAID AMOUNTS" owing to any party means, with respect to an Early Termination
Date, the aggregate of (a) in respect of all Terminated Transactions, the
amounts that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under
Section 2(a)(i) which was (or would have been but for Section 2(a)(iii))
required to be settled by delivery to such party on or prior to such Early
Termination Date and which has not been so settled as at such Early Termination
Date, an amount equal to the fair market value of that which was (or would have
been) required to be delivered as of the originally scheduled date for
delivery, in each case together with (to the extent permitted under applicable
law) interest, in the currency of such amounts, from (and including) the date
such amounts or obligations were or would have been required to have been paid
or performed to (but excluding) such Early Termination
Date, at the Applicable Rate. Such amounts of interest will be calculated on
the basis of daily compounding and the actual number of days elapsed. The fair
market value of any obligation referred to in clause (b) above shall be
reasonably determined by the party obliged to make the determination under
Section 6(e) or, if each party is so obliged, it shall be the average of the
Termination Currency Equivalents of the fair market values reasonably
determined by both parties.
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IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
[SWAP COUNTERPARTY] Ford Credit Auto Owner Trust 199_
- --------------------- ---------------------------------
(Name of Party) (Name of Party)
By: By:
- --------------------- ---------------------------------
Name: Name:
Title: Title:
Date: Date:
23
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(MULTICURRENCY--CROSS BORDER)
ISDA(R)
International Swap Dealers Association, Inc.
SCHEDULE
TO THE
MASTER AGREEMENT
dated as of
---------------
between [SWAP COUNTERPARTY] and Ford Credit Auto Owner Trust 199_
- --------------------------- ---------------------------------------
("Party A") ("Party B")
Part 1. Termination Provisions.
(a) "SPECIFIED ENTITY" means in relation to Party A for the purpose of:
Section 5(a)(v),
-----------------------------------------------
Section 5(a)(vi),
----------------------------------------------
Section 5(a)(vii),
---------------------------------------------
Section 5(b)(iv),
----------------------------------------------
and in relation to Party B for the purpose of:
Section 5(a)(v),
-----------------------------------------------
Section 5(a)(vi),
----------------------------------------------
Section 5(a)(vii),
---------------------------------------------
Section 5(b)(iv),
----------------------------------------------
(b) "SPECIFIED TRANSACTION" will have the meaning specified in Section 14 of
this Agreement unless another meaning is specified here
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<PAGE> 25
(c) The "CROSS DEFAULT" provisions of Section 5(a)(vi)
will/will not * apply to Party A
will/will not * apply to Party B
If such provisions apply:
"SPECIFIED INDEBTEDNESS" will have the meaning specified in Section 14 of this
Agreement unless another meaning is specified here
----------------------------
- ------------------------------------------------------------------------------
"THRESHOLD AMOUNT" means
------------------------------------------------------
- ------------------------------------------------------------------------------
(d) The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv)
will/will not* apply to Party A
will/will not* apply to Party B
(e) The "AUTOMATIC EARLY TERMINATION" provision of Section 6(a)
will/will not* apply to Party A
will/will not* apply to Party B
(f) PAYMENTS ON EARLY TERMINATION. For the purpose of Section 6(e) of this
Agreement:
(i) Market Quotation/Loss* will apply.
(ii) The First Method/The Second Method* will apply.
(g) "TERMINATION CURRENCY" means , if
--------------------------------------
such currency is specified and freely available, and otherwise United States
Dollars.
(h) ADDITIONAL TERMINATION EVENT will/will not* apply. The following shall
constitute an Additional Termination Event:
---------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
For the purpose of the foregoing Termination Event, the Affected Party or
Affected Parties shall be:
- ----------------------------------------------------------------------------
- ---------------
* Delete as applicable
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Part 2. TAX REPRESENTATIONS.
(a) PAYER REPRESENTATIONS. For the purpose of Section 3(e) of this Agreement
Party A will/will not* make the following representation and Party B
will/will not* make the following representation:
It is not required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, of any Relevant Jurisdiction
to make any deduction or withholding for or on account of any Tax from
any payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of
this Agreement) to be made by it to the other party under this Agreement.
In making this representation, it may rely on (i) the accuracy of any
representations made by the other party
pursuant to Section 3(f) of this Agreement, (ii) the satisfaction of the
agreement contained in Section 4(a)(i) or 4(a)(iii) of this Agreement and
the accuracy and effectiveness of any document provided by the other
party pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement and
(iii) the satisfaction of the agreement of the other party contained in
Section 4(d) of this Agreement, provided that it shall not be a breach of
this representation where reliance is placed on clause (ii) and the other
party does not deliver a form or document under Section 4(a)(iii) by
reason of material prejudice to its legal or commercial position.
(b) PAYEE REPRESENTATIONS. For the purpose of Section 3(f) of this
Agreement, Party A and Party B make the representations specified below,
if any:
(i) The following representation will/will not* apply to Party A and
will/will not* apply to Party B:
It is fully eligible for the benefits of the "Business Profits" or
"Industrial and Commercial Profits" provision, as the case may be, the
"Interest" provision or the "Other Income" provision (if any) of the
Specified Treaty with respect to any payment described in such provisions
and received or to be received by it in connection with this Agreement
and no such payment is attributable to a trade or business carried on by
it through a permanent establishment in the Specified Jurisdiction.
If such representation applies, then:
"SPECIFIED TREATY" means with respect to Party A
------------------------------
"SPECIFIED JURISDICTION" means with respect to Party A
------------------------
"SPECIFIED TREATY" means with respect to Party B
------------------------------
"SPECIFIED JURISDICTION" means with respect to Party B
------------------------
(ii) The following representation will/will not* apply to Party A and
will/will not* apply to Party B:
Each payment received or to be received by it in connection with this
Agreement will be effectively connected with its conduct of a trade or
business in the Specified Jurisdiction.
- ---------------
* Delete as applicable.
26
<PAGE> 27
If such representation applies, then:
"SPECIFIED JURISDICTION" means with respect to Party A
------------------------
"SPECIFIED JURISDICTION" means with respect to Party B
------------------------
(iii) The following representation will/will not* apply to Party A and
will/will not* apply to Party B:
(A) It is entering into each Transaction in the ordinary course of its
trade as, and is, either (l) a recognized U.K. bank or (2) a recognized
U.K. swaps dealer (in either case (1) or (2), for purposes of the United
Kingdom Inland Revenue extra statutory concession C 17 on interest and
currency swaps dated March 14, 1989), and (B) it will bring into account
payments made and received in respect of each Transaction in computing
its income for United Kingdom tax purposes.
(iv) Other Payee Representations:
---------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
N.B. The above representations may need modification if either party is a
Multibranch Party.
27
<PAGE> 28
Part 3. AGREEMENT TO DELIVER DOCUMENTS.
For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each party
agrees to deliver the following documents, as applicable:
(a) Tax forms, documents or certificates to be delivered are:
PARTY REQUIRED TO FORM/DOCUMENT/ DATE BY WHICH
DELIVER DOCUMENT CERTIFICATE TO BE DELIVERED
- --------------------- ------------------- ---------------------------
- --------------------- ------------------- ---------------------------
- --------------------- ------------------- ---------------------------
- --------------------- ------------------- ---------------------------
- --------------------- ------------------- ---------------------------
(b) Other documents to be delivered are:
PARTY REQUIRED TO FORM/DOCUMENT/ DATE BY WHICH COVERED BY SECTION
DELIVER DOCUMENT CERTIFICATE TO BE DELIVERED 3(d) REPRESENTATION
- ------------------ ----------------- ----------------- Yes/No*
- ------------------ ----------------- ----------------- Yes/No*
- ------------------ ----------------- ----------------- Yes/No*
- ------------------ ----------------- ----------------- Yes/No*
- ------------------ ----------------- ----------------- Yes/No*
Part 4. MISCELLANEOUS.
(a) ADDRESSES FOR NOTICES. For the purpose of Section 12(a) of this Agreement:
Address for notices or communications to Party A:
Address:
---------------------------------------------------------------
Attention:
-------------------------------------------------------------
Telex No.: Answerback:
----------------------------------------- ---------
Facsimile No.: Telephone No.:
------------------------------------- ------
- --------------
* Delete as applicable.
28
<PAGE> 29
Electronic Messaging System Details:
------------------------------------
Address for notices or communications to Party B:
Address:
-------------------------------------------------
Attention:
-----------------------------------------------
Telex No.: Answerback:
----------------------------------------- ---------
Facsimile No.: Telephone No.:
------------------------------------- ------
Electronic Messaging System Details:
-----------------------------------
(b) PROCESS AGENT. For the purpose of Section 13(c) of this Agreement:
Party A appoints as its Process Agent
------------------------------------
Party B appoints as its Process Agent
------------------------------------
(c) OFFICES. The provisions of Section 10(a) will/will not* apply to this
Agreement.
(d) MULTIBRANCH PARTY. For the purpose of Section 10(c) of this Agreement:
Party A is/is not* a Multibranch Party and, if so, may act through the
following Offices:
- ------------------------- ------------------------ -------------------------
- ------------------------- ------------------------ -------------------------
- ------------------------- ------------------------ -------------------------
Party B is/is not* a Multibranch Party and, if so, may act through the
following Offices:
- ------------------------- ------------------------ -------------------------
- ------------------------- ------------------------ -------------------------
- ------------------------- ------------------------ -------------------------
(e) CALCULATION AGENT. The Calculation Agent is ,
------------------------
unless otherwise specified in a Confirmation in relation to the relevant
Transaction.
(f) CREDIT SUPPORT DOCUMENT. Details of any Credit Support Document:
---------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ---------------
* Delete as applicable.
29
<PAGE> 30
(g) CREDIT SUPPORT PROVIDER. Credit Support Provider means in relation to
Party A,
-----------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Credit Support Provider means in relation to Party B,
--------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(h) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with English law/the laws of the State of New York (without
reference to choice of law doctrine).*
(i) NETTING OF PAYMENTS. Subparagraph (ii) of Section 2(c) of this Agreement
will not apply to the following Transactions or groups of Transactions (in
each case starting from the date of this Agreement in each case starting
from*)
------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(j) "AFFILIATE" will have the meaning specified in Section 14 of this Agreement
unless another meaning is specified here
---------------------------------
-------------------------------------------------------------------------
Part 5. OTHER PROVISIONS.
- ---------------------
* Delete as applicable
30
<PAGE> 31
________ __, 199_
Ford Credit Auto Owner Trust 199_
c/o Ford Motor Credit Company
The American Road
Dearborn, MI 48121
Ladies and Gentlemen:
The purpose of this letter agreement is to set forth the terms and conditions
of the Interest Swap Transaction entered into between us on the Trade Date
referred to below (the "Swap Transaction"). This letter agreement constitutes
a "Confirmation" as referred to in the Agreement specified below.
1. The definitions and provisions contained in the 199_ ISDA Definitions
(the "Definitions"), as published by the International Swap Dealers
Association, Inc. ("ISDA"), are incorporated into this Confirmation. In
the event of any inconsistency between the Definitions and this
Confirmation, this Confirmation will prevail.
This Confirmation supplements, forms part of, and is subject to the
Master Agreement dated as of ________ __, 199_, as amended and
supplemented from time to time (the "Agreement"), between you and us.
All provisions contained in the Agreement govern this Confirmation except
as expressly modified below.
Party A and Party B acknowledge that this Swap Transaction relates to the
Floating Rate Class A-2 Asset Backed Notes (the "Notes") issued by Ford
Credit Auto Owner Trust 199_ (the "Trust") for value pursuant to the
Indenture as described in the Prospectus Supplement in relation thereto
dated ________ __, 199_.
Capitalized terms used herein and not otherwise defined herein, in the
Agreement or in the Definitions shall have the meanings assigned to them
in Exhibit A hereto.
IN THIS CONFIRMATION, "PARTY A" MEANS [SWAP COUNTERPARTY] AND "PARTY B"
MEANS FORD CREDIT AUTO OWNER TRUST 199_.
Party A and Party B expressly acknowledge that, in reliance upon the
other party's entering into the Swap Transaction evidenced by this
Confirmation, each party has made (or refrained from making) substantial
financial commitments and has taken (or refrained from taking) other
material actions.
<PAGE> 32
2. The terms of the particular Swap Transaction to which this
Confirmation relates are as follows:
Transaction Type: Swap Transaction
Notional Amount: USD ____________, with respect to the
initial Calculation Period. The Notional
Amount with respect to each Calculation
Period thereafter shall be equal to the
Outstanding Amount (as defined in Exhibit
A) in respect of the Class A-2 Notes as
of the close of business on such
Distribution Date (as set forth in the
Calculation Statement (defined below)
delivered by Party B to Party A on or
prior to the Determination Date relating
to such Calculation Period pursuant to
Section 3 below).
Trade Date: _________ __, 199_
Effective Date: _________ __, 199_
Termination Date: The earlier of the close of business on
(i) _______ __, 199_, and (ii) the
Floating Rate Payer Payment Date on which
the Notional Amount is reduced to zero.
Fixed Amounts:
Fixed Rate Payer: Party B
Fixed Rate Payer
Payment Date: __________ __, 199_
Fixed Amount: USD _________
Floating Amounts:
Floating Rate Payer: Party A
Floating Rate Payer
Payment Dates: Each Distribution Date, commencing on
________ __, 1996, and ending on the
Termination Date, inclusive, subject to
adjustment
<PAGE> 33
in accordance with the
Following Business Day Convention.
Floating Rate: Interest Rate (as defined in Exhibit A).
Period End Dates: Each Distribution Date
Floating Rate
Day Count Fraction: Actual/360
Compounding: Inapplicable
Default Rate: Notwithstanding anything to the contrary
in the Agreement, "Default Rate" shall
mean the rate determined by reference to
the Rate Option "USD Federal Funds - H.
15" plus one percent (1%) using daily
Reset Dates. The Default Rate will be
applied on the basis of Compounding as if
the overdue amount were a Notional Amount
and using daily Compounding Dates.
Interest shall accrue and be payable
before as well as after judgement.
Business Days: New York (New York), Detroit (Michigan)
and Chicago (Illinois)
Calculation Agent: Party B, or Ford Motor Credit Company, as
agent for and on behalf of Party B.
3. Calculations and Notifications: On or before each Determination Date, the
Calculation Agent shall determine the
Floating Amount, if any, due to Party B
on the next succeeding Floating Rate
Payer Payment Date and the Calculation
Agent shall notify Party A and Party B in
writing of both (i) the Floating Rate,
and (ii) the amount, if any, of such
payment.
In addition, on each Determination Date
Party B shall deliver to Party A (by
facsimile with hard copy to follow)
a statement (the "Calculation Statement")
setting forth with respect to the close
of business on the immediately preceding
Distribution Date the Outstanding Amount
of the Notes as of such Distribution
Date.
3
<PAGE> 34
4. Credit Downgrade: In the event that either (i) the commercial
paper or certificate of deposit rating of
Party A is reduced below A- 1 + by
Standard & Poor's Corporation (or the
equivalent rating by Moody's Investors
Services, Inc. ("Moody's") or Fitch's
Investors Services, Inc.
("Fitch")) or (ii) if Party A does not have
such a rating by the relevant rating
agency, the long-term unsecured debt or
certificate of deposit rating of Party A is
withdrawn or reduced below AA- by Standard
& Poor's Corporation or Aa3 by Moody's (or
the equivalent rating by Fitch), Party A
shall promptly notify Party B (and any
permitted assignee or transferee of Party
B) of such event (a "Downgrade") and shall
within sixty (60) days of the date of such
Downgrade, with the prior written
confirmation of the relevant rating agency
that such arrangement will not result in
the reduction or withdrawal of the
then-current rating of the Notes as a
direct result of the Downgrade, either (i)
obtain a substitute cap provider ("X")
acceptable to Party B (such acceptance not
to be unreasonably withheld) and replace
this Swap Transaction with a swap
transaction on identical terms except that
X shall be "Party A", or (ii) enter into a
"Qualifying Substitute Arrangement" (as
defined below) to assure performance by
Party A of its obligations under this Swap
Transaction.
"Qualifying Substitute Arrangement" shall
include, without limitation, any
arrangement satisfactory to the relevant
rating agency, including collateral,
guarantees or letters of credit.
In the event that Party A fails to satisfy
its obligations under either (i) or (ii)
above, Party B shall have the option,
exercisable in its discretion, within ten
(10) Business Days following the date of
expiry of the sixty (60) day period after
the date of the Downgrade, to designate (in
writing) an Early Termination Date on the
basis that such failure shall be treated as
a Termination Event with Party A as the
Affected Party. For the
4
<PAGE> 35
avoidance of doubt, Party B acknowledges
and agrees that any such failure shall not
constitute an Event of Default.
5. Novation: Subject to payment by Party B of the Fixed
Amount, Party A to the novation of all
rights and obligations in this Swap
Transaction immediately after execution
hereof such that identical rights and
obligations shall exist thereafter between
Party A and the Trust. Party A agrees to
do all things reasonably necessary to give
full force and effect to such novation,
including the execution of a novation
agreement.
6. Account Details:
Payments to Party A:
------------------------------
------------------------------
------------------------------
A/c No:
-----------------------
Payments to Party B:
------------------------------
------------------------------
------------------------------
A/c No:
-----------------------
is a member of The Securities and Futures Authority and
- -----------------------
has entered into this transaction as principal. The time at which the above
transaction was executed will be notified to Party B on request.
5
<PAGE> 36
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us.
Yours sincerely,
------------------------------
By:
-----------------------------
Name:
Title:
Confirmed as of the date first written above:
FORD CREDIT AUTO OWNER TRUST 199_,
By:
------------------------------------
Name:
Title:
6
<PAGE> 37
EXHIBIT A
The following terms shall have the following meanings in this Confirmation:
"DETERMINATION DATE": the tenth (10th) day of each calendar month occurring
during each Calculation Period, or, if such tenth (10th) day is not a
Business Day, the next succeeding Business Day;
"DISTRIBUTION DATE": the fifteenth (15th) day of each succeeding calendar
month following the Effective Date or, if such fifteenth (15th) day is not a
Business Day, the next such succeeding Business Day, commencing __________ __,
199_;
"FLOATING RATE NOTES": the Notes issued pursuant to the Indenture;
"INDENTURE": the Indenture, dated as of ________ __, 199_, between the Trust
and the Indenture Trustee, as amended and supplemented from time to time;
"INDENTURE TRUSTEE": ______________________, not in its individual capacity
but solely as trustee under the Indenture, or any successor trustee under the
Indenture;
"INTEREST RATE": the Interest Rate shall be _____% per annum for each
Calculation Period from the Effective Date to and including the Calculation
Period ending on the Distribution Date occurring in ______ 199_, and shall be
equal to LIBOR plus ____% for each Calculation Period thereafter.
"LIBOR": with respect to each Calculation Period, the rate for deposits in
U.S. Dollars for a period of three (3) months (in the case of quarterly Note
Payment Dates) or one (1) month (in the case of monthly Note Payment Dates)
which appears on the Dow Jones Telerate Service Page 3750 as of 11:00 am,
London time, on the day that is two (2) LIBOR Business Days prior to the Note
Payment Date occurring on or immediately preceding the start of such
Calculation Period. If such rate does not appear on such page (or if such
other page as may replace that page on that service), or if such service is no
longer offered, such other service for displaying LIBOR or comparable rates as
may be selected by the Indenture Trustee (after consultation with Party B), the
rate will be the Reference Bank Rate;
"LIBOR BUSINESS DAY": any day other than a Saturday, Sunday or any other day
on which banking institutions in the City of London, England are required or
authorized by law to be closed;
"NOTE PAYMENT DATE": The fifteenth (15th) day of each February, May, August
and November or, if such fifteenth (15th) day is not a Business Day, the next
succeeding Business Day, commencing ________ __, 199_; provided, however, that
if on any two (2)
7
<PAGE> 38
consecutive Distribution Dates any amount is withdrawn from the Reserve Account
(as defined in Appendix A to the Sale and Servicing Agreement) pursuant to
subsection ______ of the Sale and Servicing Agreement, then each subsequent
Distribution Date shall constitute a Note Payment Date, until the quarterly
Note Payment Date following the first Distribution Date on which (i) no
amount is withdrawn from the Reserve Account pursuant to subsection _____ of
the Sale and Servicing Agreement and (ii) the amount on deposit in the Reserve
Account is equal to the Specified Reserve Account Balance (as defined in
Appendix A to the Sale and Servicing Agreement);
"OUTSTANDING AMOUNT": as of any Distribution Date, the aggregate outstanding
principal balance of the Notes as of the close of business on such Distribution
Date;
"REFERENCE BANK RATE": the interest rate equal to the arithmetic mean, rounded
upwards to the nearest one-sixteenth of one percent, of all quotations received
from four major banks selected by the Indenture Trustee (after consultation
with the Seller), that engage in transactions in the London interbank market,
for United Stated dollar deposits for a period of three (3) months (in the case
of quarterly Note Payment Dates) or one (1) month (in the case of monthly Note
Payment Dates) in amounts approximately equal to the principal amount of the
Notes then outstanding offered to prime banks in the London interbank market as
of 11:00 am London time on the day that is two (2) LIBOR Business Days prior to
the immediately preceding Note Payment Date; provided, however that if fewer
than two (2) such quotations are received by the Indenture Trustee, the rate
shall be the arithmetic mean, rounded upwards to the nearest one-sixteenth of
one percent, of the offered per annum rates which one or more major banks in
the City of New York selected by the Indenture Trustee (after consultation with
the Seller) are quoting as of 11:00 am, New York City time, on such date to
leading European banks for United States dollar deposits for a period of three
(3) months (in the case of quarterly Note Payment Dates) or one (1) month (in
the case of monthly Note Payment Dates) in amounts approximately equal to the
principal amount of the Notes then outstanding; provided, however that if such
banks are not quoting as described herein, the Reference Bank Rate shall be
LIBOR for the preceding Note Payment Date;
"SELLER": Ford Credit Auto Receivables Two L.P., which has executed the Sale
and Servicing Agreement as the Seller, or its successor in interest pursuant to
Section ___ of the Sale and Servicing Agreement;
"SERVICER": Ford Motor Credit Company;
"TRUST": Ford Credit Auto Owner Trust 199_, a Delaware business trust created
by the Trust Agreement;
"TRUST AGREEMENT": the trust agreement, dated as of _________ __, 199_,
between the Seller and ________________, as the Owner Trustee, as amended and
supplemented from time to time;
8
<PAGE> 39
"SALE AND SERVICING AGREEMENT": the Sale and Servicing Agreement, dated as of
______ __ 199_, between the Seller, the Servicer, and the Trust, as amended and
supplemented from time to time.
9
<PAGE> 1
EXHIBIT 10.3
[LETTERHEAD OF INVESTMENT PROVIDER]
Address
________ __, ____
Ford Motor Credit Company,
as Servicer
The American Road
Dearborn, Michigan 48121
____________________,
as Indenture Trustee
__________
__________
____________________,
as Owner Trustee
___________
___________
Ford Credit Auto Owner Trust ____-__
Guaranteed Rate Agreement
Ladies and Gentlemen:
We hereby confirm arrangements made as of the date hereof with you to be
effective upon receipt by us of the enclosed copy of this letter agreement (the
"Guaranteed Rate Agreement"), executed by you. Capitalized terms used herein
and not otherwise defined herein shall have the respective meanings given to
them in the Sale and Servicing Agreement, dated as of _______ __, ____, (as
amended and supplemented from time to time, the "Sale and Servicing
Agreement"), among Ford Credit Auto Owner Trust ____-__, (the "Trust"), Ford
Credit Auto Receivables Two L.P. (the "Seller"), and Ford Motor Credit Company
(the "Servicer").
1. (a) On the Determination Date including and after the Determination
Date preceding the ______ ____ [Distribution] [Payment] Date, the Servicer
shall notify the Indenture Trustee and us of the amount to be
<PAGE> 2
deposited into the [Collection] [Note Payment] Account on such [Distribution]
[Payment] Date. On the Business Day following such Determination Date, we
shall provide written notice to the Indenture Trustee (with a copy to the
Servicer) directing the Indenture Trustee to invest the funds that will be on
deposit in the [Collection] [Note Payment] Account on such [Distribution]
[Payment] Date in Eligible Investments (as defined in Exhibit A hereto). Our
notice to the Indenture Trustee will specifically identify each such Eligible
Investment (including its principal amount and maturity). In addition, we
shall from time to time provide written notice to the Indenture Trustee (with a
copy to the Servicer) directing the Indenture Trustee to reinvest funds
representing principal, interest or other investment income received by it (or
the Servicer) with respect to such Eligible Investments (whether upon maturity
or otherwise) in additional Eligible Investments.
All such investments will be made either by the Indenture Trustee or, at
the direction of the Indenture Trustee, by the Servicer, on behalf of the
Indenture Trustee. We understand that funds from the [Collection] [Note
Payment] Account which are to be invested pursuant to this Agreement, and
accrued interest on such funds, must mature and be available for payment to the
Securityholders not later than the close of business on the [ ] Business Day
preceding each [Distribution] [Payment] Date. We will select Eligible
Investments which will be consistent with such requirements.
(b) In the event that we fail to direct the Indenture Trustee to invest
or reinvest any funds which are deposited in the [Collection] [Note Payment]
Account or which are received by it (or the Servicer) with respect to Eligible
Investments, the Indenture Trustee shall invest, or the Servicer, at the
direction of the Indenture Trustee, shall invest such funds overnight in one or
more Eligible Investments until such time as the Indenture Trustee receives the
required notice from us.
(c) The aggregate amount to be invested pursuant to this Agreement at any
time shall not exceed $___________ (excluding any amounts constituting interest
or investment income on funds invested pursuant to this Agreement or reinvested
interest or investment income).
2
<PAGE> 3
2. We agree to make a payment to the Indenture Trustee on the Business
Day preceding each Settlement Date equal to (a) the Guaranteed Return for the
Interest Period ending on such Settlement Date, less (b) the amount of interest
and other investment income (net of investment expenses) which will be received
by the Indenture Trustee on or prior to, and which will be available to the
Indenture Trustee on, such Settlement Date with respect to the funds on deposit
in the [Collection] [Note Payment] Account during the Interest Period. In the
event that for the Interest Period the amount computed pursuant to the
preceding sentence is a negative number, the Indenture Trustee shall pay to us
by 11:00 a.m. on such Settlement Date, out of such interest and investment
income, _____ percent of the absolute value of such amount, with the remainder
of such amount to be paid to the Seller within such time period.
3. All payments pursuant hereto shall be made by wire transfer of same
day funds, if to the Indenture Trustee, to the [Collection] [Note Payment]
Account, and if to the Seller or to us, to such account as the Seller or we may
designate in writing to the Indenture Trustee not less than [ ] Business Days
preceding the relevant Settlement Date.
4. (a) In the event at any time we do not satisfy the conditions of
Section ____ of the Sale and Servicing Agreement, we shall promptly notify the
Indenture Trustee and the Servicer of such event and we shall reimburse the
Indenture Trustee on demand for any loss incurred in connection with the
Indenture Trustee's purchase of a Replacement Guaranteed Rate Agreement
pursuant to the terms of such Section ____ of the Sale and Servicing Agreement.
Such loss shall be equal to the Indenture Trustee's net cost of obtaining the
new Replacement Guaranteed Rate Agreement.
(b) You or we may terminate the Guaranteed Rate Agreement at any time as
provided for in subsections ____, ____ and ____ of the Sale and Servicing
Agreement.
5. Our agreements set forth in this Agreement are our primary obligations
and such obligations are irrevocable, absolute and unconditional, shall not be
subject to any counterclaim, setoff or defense (other than full and strict
compliance by us with our obliga-
3
<PAGE> 4
tions hereunder) and shall remain in full force and effect without regard to,
and shall not be released, discharged or in any way affected by, any
circumstance or condition whatsoever.
6. The Indenture Trustee's interest in this Agreement shall be
transferable to any successor Indenture Trustee under the Indenture.
7. This Agreement will be governed by and construed in accordance with
the laws of the State of New York.
8. In addition to the termination right described in subsection 4(b)
hereof, this Agreement shall terminate on the earlier of (a) notice from the
Indenture Trustee or the Servicer of the termination of the Sale and Servicing
Agreement or (b) the Final Scheduled Maturity Date.
9. Except as otherwise provided herein, all notices pursuant to this
Agreement, shall be in writing and shall be effective upon receipt thereof.
All notices shall be directed as set forth below, or to such other address or
to the attention of such other person as the relevant party shall have
designated for such purpose in a written notice.
The Servicer: Ford Motor Credit Company
The American Road
Dearborn, Michigan 48121
Telephone No.: (313) ___-____
Telecopier No.: (313) ___-____
Attention: J.D. Bringard, Esq.
The [Indenture]
Trustee:
Telephone No.: ( ) ___-____
Telecopier No.: ( ) ___-____
Attention:
The [Owner]
Trustee:
4
<PAGE> 5
Telephone No.: ( ) ___-____
Telecopier No.: ( ) ___-____
Attention:
The Seller: Ford Credit Auto Receivables Two L.P.
The American Road
Dearborn, Michigan 48121
Telephone No.: (313) ___-____
Telecopier No.: (313) ___-____
Attention:
10. This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, all of which shall be deemed
to be one and the same document.
11. Whenever used in this Agreement, the following words and phrases
shall have the following meanings:
"Guaranteed Rate" shall mean the weighted average of the Note Interest
Rates [and the Certificate Rate].
"Guaranteed Return" shall mean, for the Interest Period, an amount equal
to [1/12] of the product of (a) the amount deposited into the [Collection]
[Note Payment] Account (excluding any investment earnings) as of the end of the
first day of the Interest Period, and (b) the Guaranteed Rate.
"Interest Period" shall mean the period from, and including, the
[Distribution] [Payment] Date falling in _____ ____ to, but excluding, the
first Settlement Date and (b) from, and including, each Settlement Date to, but
excluding, the next succeeding Settlement Date.
"Settlement Date" shall mean each [Distribution] [Payment] Date commencing
with the [Distribution] [Payment] Date falling in ____ ____ and ending on the
[Distribution] [Payment] Date falling in ____ ____.
5
<PAGE> 6
If the foregoing satisfactorily sets forth the terms and conditions of our
agreement, please indicate your acceptance thereof by signing in the space
provided below and returning to us the enclosed duplicate original of this
letter.
Very truly yours,
as Investment Provider
By:________________________
Title:
Agreed and accepted as of ____ __, ____
FORD MOTOR CREDIT COMPANY,
as Servicer
By:_________________________
Title:
as Indenture Trustee
By:_________________________
Title:
as Owner Trustee
By:_________________________
Title:
6
<PAGE> 7
EXHIBIT A
"Eligible Investments shall mean (a) negotiable instruments or securities
represented by instruments in bearer or registered form which evidence (i)
obligations fully guaranteed as to timely payment by the United States of
America; (ii) certificates of deposit of, or bankers' acceptances issued by,
any depository institution or trust company incorporated under the laws of the
United States of America or any state thereof and subject to supervision and
examination by federal or state banking or depository institution authorities;
provided, however, that at the time of investment or contractual commitment to
invest therein, such depository institution or trust company shall have the
highest short-term rating granted by the applicable Rating Agency; (iii)
commercial paper having, at the time of investment or contractual commitment to
invest therein, a rating from the applicable Rating Agency in the highest
category granted by such Rating Agency; (iv) investments in money market funds
having the highest short-term rating granted by the applicable Rating Agency;
and (v) any other investment, if the applicable Rating Agency confirms in
writing that such investment will not adversely affect any ratings with respect
to the Notes or the Certificates, and (b) demand deposits or time deposits in
the name of the Trust or the Indenture Trustee in any depository institution or
trust company referred to in (a)(ii) above.
7
<PAGE> 1
EXHIBIT 25.1
___________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
___________________________________________
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
________________________________________
CHEMICAL BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
_____________________________________________
FORD CREDIT AUTO OWNER TRUST
(Exact name of obligor as specified in its charter)
DELAWARE APPLIED FOR
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
THE AMERICAN ROAD
DEARBORN, MI 48121
(Address of principal executive offices) (Zip Code)
___________________________________________
ASSET BACKED NOTES
(Title of the indenture securities)
_____________________________________________________
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GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
New York State Banking Department, State House, Albany, New York 12110.
Board of Governors of the Federal Reserve System, Washington, D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New
York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
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Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985 and December 2, 1991 (see Exhibit 1 to Form T-1 filed in
connection with Registration Statement No. 33-50010, which is incorporated by
reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference).
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 33-84460, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, Chemical Bank, a corporation organized and existing under the laws of
the State of New York, has duly caused this statement of eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all in the
City of New York and State of New York, on the 24TH day of APRIL, 1996.
CHEMICAL BANK
By /s/ Michael A. Smith
--------------------------
Michael A. Smith
Vice President
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<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
Chemical Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business December 31, 1995, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ................................. $6,390
Interest-bearing balances ......................... 2,544
Securities: .........................................
Held to maturity securities........................... 3,807
Available for sale securities......................... 26,522
Federal Funds sold and securities purchased under
agreements to resell in domestic offices of the
bank and of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds sold ................................ 750
Securities purchased under agreements to resell ... 259
Loans and lease financing receivables:
Loans and leases, net of unearned income $72,938
Less: Allowance for loan and lease losses 1,917
Less: Allocated transfer risk reserve ... 104
-------
Loans and leases, net of unearned income,
allowance, and reserve ............................ 70,917
Trading Assets ....................................... 27,963
Premises and fixed assets (including capitalized
leases)............................................ 1,355
Other real estate owned .............................. 21
Investments in unconsolidated subsidiaries and
associated companies............................... 171
Customer's liability to this bank on acceptances
outstanding ....................................... 1,166
Intangible assets .................................... 433
Other assets ......................................... 4,822
---------
TOTAL ASSETS ......................................... $147,120
=========
</TABLE>
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<TABLE>
<S> <C>
LIABILITIES
Deposits
In domestic offices ................................ $47,524
Noninterest-bearing .........................$17,041
Interest-bearing ............................ 30,483
-------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's .......................................... 37,690
Noninterest-bearing ............................$ 147
Interest-bearing ............................... 37,543
-------
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of the
bank and of its Edge and Agreement subsidiaries, and
in IBF's Federal funds purchased ...................... 9,384
Securities sold under agreements to repurchase ..... 2,166
Demand notes issued to the U.S. Treasury .............. 741
Trading liabilities ................................... 21,847
Other Borrowed money:
With original maturity of one year or less ......... 9,669
With original maturity of more than one year ....... 146
Mortgage indebtedness and obligations under capitalized
leases ............................................. 14
Bank's liability on acceptances executed and outstanding 1,180
Subordinated notes and debentures ...................... 3,411
Other liabilities ...................................... 5,290
TOTAL LIABILITIES ...................................... 139,062
--------
EQUITY CAPITAL
Common stock ........................................... 620
Surplus ................................................ 4,665
Undivided profits and capital reserves ................. 3,055
Net unrealized holding gains (Losses)
on available-for-sale securities ....................... (290)
Cumulative foreign currency translation adjustments .... 8
TOTAL EQUITY CAPITAL ................................... 8,058
--------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL .......................... $147,120
========
</TABLE>
I, Joseph L. Sclafani, S.V.P. & Controller of the
above-named bank, do hereby declare that this Report of
Condition has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true to the best of my knowledge and
belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness
of this Report of Condition and declare that it has been
examined by us, and to the best of our knowledge and
belief has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true and correct.
WALTER V. SHIPLEY )
EDWARD D. MILLER )DIRECTORS
WILLIAM B. HARRISON )
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<PAGE> 1
EXHIBIT 99.1
================================================================================
SALE AND SERVICING AGREEMENT
by and among
--------------------
FORD CREDIT AUTO OWNER TRUST - ,
------ -
as Issuer,
FORD CREDIT AUTO RECEIVABLES TWO L.P.,
as Seller
and
--------------------
FORD MOTOR CREDIT COMPANY,
as Servicer
Dated as of ,
------------ ----
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
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 .............................. 8
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 ......................................................
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 .................................... 13
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;
Notice of Event of Servicing
Termination ............................................. 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
i
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Page
----
ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS TO
NOTEHOLDERS AND CERTIFICATEHOLDERS ...................................
SECTION 4.1. Accounts .................................................... 19
SECTION 4.2. Collections ................................................. 23
SECTION 4.3. Application of Collections .................................. 24
SECTION 4.4. Advances .................................................... 24
SECTION 4.5. Additional Deposits ......................................... 25
SECTION 4.6. Distributions ............................................... 26
SECTION 4.7. Reserve Account ............................................. 28
SECTION 4.8. Net Deposits ................................................ 31
SECTION 4.9. Statements to Noteholders and
Certificateholders ........................................ 31
ARTICLE V
YIELD SUPPLEMENT LETTER OF CREDIT; YIELD SUPPLEMENT ACCOUNT
SECTION 5.1. Yield Supplement Letter of Credit
and the Yield Supplement Account .......................... 34
ARTICLE VI
THE SELLER ................................................................
SECTION 6.1. Representations and Warranties of Seller .................... 38
SECTION 6.2. Liability of Seller; Indemnities ............................ 40
SECTION 6.3. Merger or Consolidation of, or
Assumption of the Obligations
of, Seller ................................................ 41
SECTION 6.4. Limitation on Liability of
Seller and Others ......................................... 42
SECTION 6.5. Seller May Own Notes or Certificates ........................ 42
ARTICLE VII
THE SERVICER ..............................................................
SECTION 7.1. Representations of Servicer ................................. 44
SECTION 7.2. Indemnities of Servicer ..................................... 45
SECTION 7.3. Merger or Consolidation of, or
Assumption of the Obligations
of, Servicer .............................................. 48
SECTION 7.4. Limitation on Liability of
Servicer and Others ....................................... 49
SECTION 7.5. Delegation of Duties ........................................ 49
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Page
----
SECTION 7.6. Ford Credit Not to Resign as Servicer ....................... 50
SECTION 7.7. Servicer May Own Notes or Certificates ...................... 50
ARTICLE VIII
SERVICING TERMINATION .....................................................
SECTION 8.1. Events of Servicing Termination ............................. 51
SECTION 8.2. Appointment of Successor Servicer ........................... 53
SECTION 8.3. Repayment of Advances ....................................... 54
SECTION 8.4. Notification to Noteholders
and Certificateholders .................................... 54
SECTION 8.5. Waiver of Past Events of Servicing
Termination ................................................ 54
ARTICLE IX
TERMINATION ................................................................
SECTION 9.1. Optional Purchase of All Receivables ........................ 56
SECTION 9.2. Succession Upon Satisfaction and
Discharge of Indenture ................................... 56
ARTICLE X
MISCELLANEOUS PROVISIONS ...................................................
SECTION 10.1. Amendment ................................................... 57
SECTION 10.2. Protection of Title to Trust ................................ 58
SECTION 10.3. Governing Law ............................................... 62
SECTION 10.4. Notices ..................................................... 62
SECTION 10.5. Severability of Provisions .................................. 62
SECTION 10.6. Assignment .................................................. 63
SECTION 10.7. Further Assurances .......................................... 63
SECTION 10.8. No Waiver; Cumulative Remedies .............................. 63
SECTION 10.9. Third-Party Beneficiaries ................................... 63
SECTION 10.10. Actions by Noteholders or
Certificateholders ........................................ 64
SECTION 10.11. Agent for Service ........................................... 64
SECTION 10.12. No Bankruptcy Petition. ..................................... 64
SECTION 10.13. Limitation of Liability of
Owner Trustee and Indenture Trustee ...................... 64
iii
<PAGE> 5
SALE AND SERVICING AGREEMENT, dated as of _______ __, ____ (as from time
to time amended, supplemented or otherwise modified and in effect, this
"Agreement"), by and among FORD CREDIT AUTO OWNER TRUST ____-_ (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 purchase 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 sold to
the Seller;
WHEREAS, the Seller is willing to sell 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> 6
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 Notes and
Certificates, in aggregate principal amounts equal to the initial principal
amount of the Notes and the Initial Certificate Balance, respectively, the
Seller does hereby irrevocably sell, 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 sale, 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.
It is the intention of the Seller and the Issuer that the transfer of the
Trust Property contemplated herein constitute a sale 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 to secure the
payment of the Notes and the Certificates, 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 the payment of the Notes and the Certificates, and in such event, this
Agreement shall constitute a security agreement under applicable law.
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 sale, transfer,
assignment and conveyance of the Receivables to the Issuer and the pledge
thereof to the Indenture Trustee pursuant to the Indenture.
2
<PAGE> 7
(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 has been assigned by
Ford Credit to the Seller, which in turn shall be assignable by the Seller to
the Indenture Trustee, (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
execu-
3
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tion 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 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
sale, 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.
4
<PAGE> 9
(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
acceleration under the terms of any Receivable shall have arisen; and the
Seller 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 a sale 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 sold, 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.
5
<PAGE> 10
(xiv) Valid Assignment. No Receivable shall have been originated in,
or shall be subject to the laws of, any jurisdiction under which the sale,
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.
(xvii) One Original. There shall be only one original executed copy of
each Receivable.
(xviii) New and Used Vehicles. Approximately ___% of the aggregate
Principal Balance of the Receivables, constituting ___% 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. Approximately ____% of the aggregate Principal
Balance of the Receivables as of the Cutoff Date constitute Precomputed
Receivables, and the remainder of the Receivables constitute Simple Interest
Receivables.]
(xx) Origination. Each Receivable shall have an origination date on or
after ______ __, ____.
(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 ___%.
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(xxiii) Scheduled Payments. Each Receivable shall have a first Scheduled
Payment due[, in the case of Precomputed Receivables, or a scheduled due date,
in the case of Simple Interest Receivables,] on or prior to ______ __, ____ 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 shall not have
been extended on any Receivable on or before the Cutoff Date.
(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 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,
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<PAGE> 12
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 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
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<PAGE> 13
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, the Owner Trustee 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 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 Owner Trustee 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
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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 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 to the Owner Trustee for any
portion of any such amount resulting from the willful misfeasance, bad faith,
or negligence of the Indenture Trustee or the Owner Trustee and shall not be
liable to the Indenture Trustee for any portion of any such amount resulting
from the willful misfeasance, bad faith, or negligence of the Indenture Trustee
or the Owner Trustee.
SECTION 2.8. Effective Period and Termination. The Servicer's appointment
as custodian shall become
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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 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 instruments 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), he 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.
(b) In the event that the Obligor with respect to a Receivable shall have
been declared bankrupt and at such time or thereafter the Servicer's records
relating to such Receivable shall record that the periodic payment thereon has
been reduced at or since such declaration and that such Receivable has been
extended beyond the Final Scheduled Maturity Date, the Servicer shall pay an
amount equal to the amount of a prepayment which would cause such a reduction
in the amount of the new periodic payment over the remainder of the original
scheduled life of the Receivable.
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 Collection 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 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
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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.
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, ____, 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 or Person
certifying that it is a Certificate Owner 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 9.1. The Seller shall deliver to the Owner
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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 9.1
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 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, ____ 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.
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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.
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 of the
Indenture Trustee, at a Qualified Institution or Qualified Trust Institution
(which shall initially be ), which shall be designated as the
"Collection Account". The Collection Account shall be held in trust for the
benefit of the Noteholders and the Certificateholders. 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. All monies deposited from
time to time in the Collection Account shall be held by the Indenture Trustee
as part of the Trust Property and all deposits to and withdrawals therefrom
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 (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 . In the event that the Collection Account
is no longer to be maintained at , 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).
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(b) The Servicer shall, prior to the Closing Date, establish and maintain
a segregated trust account in the name of the Indenture Trustee at a Qualified
Institution or Qualified Trust Institution (which shall initially be ),
which shall be designated as the "Note Payment Account". The Note
Payment Account shall be held in trust for the benefit of the Noteholders. 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 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 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).
(c) The Servicer shall, prior to the Closing Date, establish and maintain
a segregated trust account in the name of the Owner Trustee at a Qualified
Institution or Qualified Trust Institution (which shall initially be ),
which shall be designated as the "Certificate Distribution Account".
Except as provided in the Trust Agreement, the Certificate Distribution Account
shall be held in trust for the benefit of the Certificateholders. 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
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).
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(d) The Servicer shall, prior to the Closing Date, establish and maintain
a segregated trust account in the name of the Indenture Trustee at a Qualified
Institution or Qualified Trust Institution (which shall initially be ),
which shall be designated as the "Payahead Account" (the Payahead
Account, together with the Collection Account and the Note Payment Account, the
"Trust Accounts"). The Payahead Account shall be held in trust for the benefit
of the Securityholders. 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. All monies
deposited from time to time in the Payahead Account shall be held by the
Indenture Trustee as part of the Trust Property and all deposits to and
withdrawals therefrom 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 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 . In the event that the Payahead Account is no
longer to be maintained at , 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
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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 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 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 daily to the
Collection Account (i) all payments by or on behalf of the Obligors (including
Payaheads on the Receivables and Rule of 78's Payments, but excluding Pur-
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chased 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 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 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 daily remittance
by the Servicer to the Collection 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 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 col-
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lections 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 Section 4.4(a) 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 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. The Servicer will be obligated to make
an Advance in respect of a Receivable only to the extent that the Servicer, in
its sole discretion, shall determine that the Advance shall be recoverable from
subsequent collections or recoveries on any Receivable.
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With respect to each Receivable, the Advance shall increase Outstanding
Advances. Outstanding 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 Advance with respect
to any Receivable shall not be recoverable, the Servicer shall be reimbursed
from any collections made on other Receivables in the Trust, and Outstanding
Advances with respect to such Receivable shall be reduced accordingly.
(b) 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 Annual Percentage Rate, 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 Section 4.4(a) and the
aggregate advances pursuant to Section 4.4(b). To the extent that the Servicer
fails to make an advance pursuant to Section 4.4(b) on the date required, the
Indenture Trustee shall withdraw such amount from the Reserve Account and
deposit such amount in the Collection Account. 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 Sections 9.1 and 3.7(b). The Indenture Trustee shall
deposit in the Collection Account the aggregate of amounts received pursuant to
the Yield Supplement Agreement, if any, and amounts received from the Letter of
Credit Bank or the Yield Supplement Account, if any, pursuant to Article V.
All such deposits with respect to a Collection Period shall be made, in
immediately available funds, 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 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.
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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)Ethe 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 Section
4.4(a).
(b) Prior to each Distribution Date, the Servicer shall on each
Determination Date calculate the Available Funds, the Available Interest, the
Available Principal, the Scheduled Principal, the Servicing Fee, the Accrued
Note Interest, the Noteholders' Regular Principal, the Noteholders' Accelerated
Principal, the Principal Distribution Amount, the Accrued Certificate Interest,
the Certificateholders' Regular Principal and the Yield Supplement Amount, if
any. In addition, the Servicer shall calculate on each Determination Date the
difference between the Total Required Payment (together with, after the Notes
have been paid in full, the Certificateholders' Regular Principal) and
Available Funds.
(c) On each Distribution Date, the Servicer shall instruct the Indenture
Trustee (based on the information contained in the Servicer's Certificate
delivered on the related Determination Date pursuant to Section 3.9), to make
the following withdrawals from the Collec-
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tion Account and make deposits, distributions and payments, to the extent of
funds on deposit in the Collection Account, 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, to the Note Payment Account, the Noteholders'
Regular Principal;
(iv) fourth, to the Certificate Distribution Account, the
Accrued Certificate Interest;
(v) fifth, on or after the Distribution Date on which the
outstanding principal amount of all the Notes is reduced to zero,
to the Certificate Distribution Account, the Certificateholders'
Regular Principal;
(vi) sixth, to the Reserve Account, the amount, if any,
necessary to reinstate the balance in the Reserve Account up to
the Specified Reserve Balance;
(vii) seventh, to the Note Payment Account, the Noteholders'
Accelerated Principal; and
(viii) eighth, 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 Available Funds 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 until
the principal amount
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and accrued interest on all the Notes have 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 of the Indenture
Trustee at a Qualified Institution or Qualified Trust Institution (which shall
initially be ), which shall be designated as the "Reserve Account".
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. On the Closing 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 hereby be sold, conveyed and transferred by the Seller to the
Trust. Pursuant to the Indenture, the Trust will pledge all of its right,
title and interest in, to and under the Reserve Account and the Reserve Account
Property to the Indenture Trustee on behalf of the Noteholders to secure the
Trust's obligations under the Notes and the Indenture.
The Reserve Account Property 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 Reserve Account in
Permitted Investments that mature not later than 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, upon the written direction of the Servicer, be paid to
the Seller on any Distribution Date to the extent funds on deposit therein, as
certified by the Servicer, exceed the Specified Reserve Balance. In the event
the Reserve Account is no longer to be maintained at ,
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
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(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.
(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
disposi-
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tion, 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.
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 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) If the amount on deposit in the Reserve Account on any Distribution
Date (after giving effect to all deposits thereto or withdrawals therefrom on
such Distribution Date) is greater than 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; and provided further, that any portion of such excess attributable to
investment income (net of losses and investment expenses) shall be paid 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 rather than daily basis, 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. The Seller may make the remittances pursuant to
Sections 4.2 and 4.5 above, net of amounts to be distributed to the Seller
pursuant to Sections 4.6(c) and 4.7(c). Nonetheless, the Seller shall account
for all of the above described remittances and distributions 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;
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(ii) the amount of such distribution allocable to interest
allocable to the Notes and the Certificates;
(iii) the amount of such distribution allocable to the Yield
Supplement Amount;
(iv) the Pool Balance as of the close of business on the last day
of the preceding Collection Period;
(v) 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;
(vi) 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;
(vii) 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;
(viii) 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;
(ix) the amount of the aggregate Realized Losses, if any, with
respect to the related Collection Period;
(x) 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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(xi) the amount of Advances, if any, on such Distribution Date.
Each amount set forth on the Distribution Date statement pursuant to
clauses (i), (ii), (v) or (vi) 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
YIELD SUPPLEMENT LETTER OF CREDIT
SECTION 5.1. Yield Supplement Letter of Credit and the Yield Supplement
Account.
(a) The Servicer shall, prior to the Closing Date, establish and maintain
an account in the name of the Indenture Trustee at a Qualified Institution or
Qualified Trust Institution (which shall initially be ),
which shall be designated as the "Yield Supplement Account". Amounts on
deposit in the Yield Supplement Account will be used for the payment of any
Yield Supplement Amounts required to be paid on any Distribution Date pursuant
to the Yield Supplement Agreement which Ford Credit has not paid as of such
Distribution Date. The Yield Supplement 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 to make withdrawals from the
Yield Supplement Account in accordance with the Basic Documents. On the
Closing Date, the Seller will deposit the Yield Supplement Initial Deposit into
the Yield Supplement Account from the net proceeds of the sale of the Notes and
the Certificates. To the extent, on any Distribution Date, the amount on
deposit in the Yield Supplement Account (after giving effect to any withdrawals
to be made on such Distribution Date, but exclusive of net investment income)
is greater than the Specified Yield Supplement Balance, then, in such event,
the Servicer shall instruct the Indenture Trustee in writing to pay such excess
amount to the Seller. In the event that the Yield Supplement Account is no
longer to be maintained at ,
the Servicer shall, with the Indenture Trustee's assistance as necessary,
cause the Yield Supplement 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 Seller hereby sells, conveys and transfers to the Trust the Yield
Supplement Account, all funds and investments on deposit therein or credited
thereto and
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all proceeds thereof, subject, however, to the limitations set forth below.
Pursuant to the Indenture, the Trust will pledge its rights under the
Yield Supplement Agreement (including its rights to amounts on deposit in the
Yield Supplement Account) to the Indenture Trustee to secure its obligations
under the Notes and the Indenture. Such sale, conveyance and transfer of the
Yield Supplement Account by the Seller to the Trust, and such pledge by the
Trust of its rights to amounts in the Yield Supplement Account to the Indenture
Trustee, shall be subject to the following limitations:
(i) All or a portion of the Yield Supplement Account may be
invested and reinvested in the manner specified in Section 4.1(a) in
accordance with written instructions from the Servicer. All such
investments shall be made in the name of the Indenture Trustee and
all income and gain realized thereon shall be solely for the benefit
of and shall be payable by the Indenture Trustee to
upon written direction of the Servicer in the manner specified in
Section 4.1(a);
(ii) If, with respect to any Collection Period, Ford Credit
shall have failed to make or cause to be made in full the remittance
of the Yield Supplement Amount on the date required by the Yield
Supplement Agreement, the Indenture Trustee on the related
Distribution Date, shall, upon the written direction of the Servicer,
withdraw from the Yield Supplement Account and deposit into the
Collection Account the amount of the shortfall between the amount of
funds that are required to be remitted by Ford Credit with respect to
the Yield Supplement Agreement as set forth in the Servicer's
Certificate and the amount of funds actually so remitted and to the
extent of any remaining shortfall, the Indenture Trustee shall
withdraw an amount equal thereto from the Reserve Account and deposit
such amount in the Collection Account; and
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(iii) Upon termination of this Agreement in accordance with
Section 9.1 or (a) in the event that the Seller obtains a Yield
Supplement Letter of Credit or (b) the Seller otherwise satisfies the
requirements with respect to the Yield Supplement Agreement
established by the Rating Agencies, in either case as evidenced by
satisfaction of the Rating Agency Condition and, in either case,
delivers to the Indenture Trustee an Opinion of Counsel to the effect
that the contemplated action will not adversely affect the status of
the Trust as a partnership for federal income and Applicable Tax
State income and franchise tax purposes and an Officer's Certificate
of the Seller that all conditions precedent to the liquidation of the
Yield Supplement Account have been satisfied, any amounts on deposit
in the Yield Supplement Account shall, upon written request of the
Seller, be paid to the Seller.
(b) If a Yield Supplement Letter of Credit has been obtained by Ford
Credit, and if, with respect to any Collection Period, Ford Credit shall have
failed to make or cause to be made in full the remittance of the Yield
Supplement Amount, upon written notice by the Servicer of such failure (which
notice shall be given on the Distribution Date for such Collection Period), the
Indenture Trustee shall draw on the Yield Supplement Letter of Credit in
accordance with the terms thereof, in the amount of the shortfall between the
amount of funds with respect to the Yield Supplement Amount that are required
to be remitted by Ford Credit with respect to the Yield Supplement Agreement as
set forth in the Servicer's Certificate and the amount of funds actually so
remitted as set forth in the Servicer's Certificate. Any such draw on the
Yield Supplement Letter of Credit shall be made after receipt of the related
Servicer's Certificate on the Distribution Date for such Collection Period.
Upon receipt of a request for a draw by the Indenture Trustee under the Yield
Supplement Letter of Credit, the Letter of Credit Bank is to promptly make a
payment to the Indenture Trustee in an amount equal to the Yield Supplement
Amount (minus payments made on the Yield Supplement Agreement), and the
Indenture Trustee shall deposit into the Collection Account pursuant to Section
4.5 the amount received from the Letter of Credit Bank in
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respect of such drawing. The Servicer shall include in each Servicer's
Certificate, or in an Officer's Certificate provided to the Indenture Trustee
with each Servicer's Certificate, the Stated Amount (as defined in the Yield
Supplement Letter of Credit) of the Yield Supplement Letter of Credit as of the
close of business on the last day of the Collection Period preceding the date
of such Servicer's Certificate. In the event that the rating of the Letter of
Credit Bank declines below the Required Rating, the Servicer shall promptly
notify the Indenture Trustee in writing of such decline, and upon receipt of
such notification, the Indenture Trustee shall, unless a suitable replacement
letter of credit shall have been delivered, promptly draw the full amount
available under the Yield Supplement Letter of Credit and deposit such amount
in the Yield Supplement Account.
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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 sale 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 sell and assign the property to be sold and assigned to and
deposited with the Issuer and has duly authorized such sale 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 shall have been duly authorized by the Seller by all necessary action.
(d) Valid Sale; Binding Obligation. This Agreement shall evidence a
valid sale, transfer, and assignment of the Receivables and the other Trust
Property
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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 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 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
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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 sale 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 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
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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 negligence (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 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
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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 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 Seller or any such Affiliate shall have an equal and
proportionate benefit under the provisions of this Agreement and the
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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 sale 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 Owner Trustee 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 sale 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.
In addition to the foregoing indemnities, if the Owner Trustee or the
Indenture Trustee is entitled to indemnification by the Seller pursuant to
Section 6.2 and the Seller is unable for any reason to provide such
indemnification to the Owner Trustee or the Indenture Trustee, then the
Servicer shall be liable for any indemnification that the Owner Trustee or the
Indenture Trustee is entitled to under Section 6.2.
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 8.3) 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.
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Indemnification under this Section 7.2 by Ford Credit (or any successor
thereto pursuant to Section 8.3) 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.
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
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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. 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 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 resulting therefrom
shall be expenses, costs and liabilities of the Servicer.
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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 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
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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 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 continuance of any
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such decree or order unstayed and in effect for a period of sixty (60)
consecutive days; or
(iv) The consent by the Servicer 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 Trustee or such successor Servicer for
administration of
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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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(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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tificate Distribution Account, the Yield Supplement Account or the
Reserve 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.
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ARTICLE IX
TERMINATION
SECTION 9.1. Optional Purchase of All Receivables. (a) 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, the Certificateholders will
succeed to the rights of the Noteholders hereunder, and the Indenture Trustee
will, continue to carry out its obligations hereunder with respect to the
Certificateholders, 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.
(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 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
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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 the 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.
(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 Depository Agreements.
(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
59
<PAGE> 64
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 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 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
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<PAGE> 65
or recoveries on (or with respect to) each Receivable and the amounts from time
to time deposited in the Collection Account, Payahead Account, the Yield
Supplement 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 sale 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 sold 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.
(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.
61
<PAGE> 66
(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 (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.
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<PAGE> 67
(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 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,
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<PAGE> 68
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 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 permit-
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<PAGE> 69
ted 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 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
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<PAGE> 70
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 _____ not in its individual capacity but
solely in its capacity as Owner Trustee of the Issuer and in no event shall
_____ in its individual capacity or, except as expressly provided in the Trust
Agreement, as beneficial owner 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 _____, not in its individual capacity but solely
as Indenture Trustee, and in no event shall _____ 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.
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<PAGE> 71
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 L.P.,
as General Partner
By:
---------------------------------
Name:
Title:
FORD CREDIT AUTO OWNER TRUST
- ;
----- --
as Issuer
By:
----------------------,
as Owner Trustee
By:
-----------------------------------
Name:
Title:
FORD MOTOR CREDIT COMPANY,
as Servicer
By:
------------------------------------
Name:
Title:
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<PAGE> 72
Accepted and agreed:
,
- -------------------------
as Indenture Trustee
By:
-----------------------------
Name:
Title:
,
- -------------------------
as Owner Trustee
By:
-----------------------------
Name:
Title:
68
<PAGE> 73
SCHEDULE A
[SCHEDULE OF RECEIVABLES]
Delivered to Indenture Trustee at Closing
<PAGE> 74
SCHEDULE B
LOCATION OF RECEIVABLES
Indianapolis
5875 Castle Creek Pkwy. North Drive
Suite 240
Indianapolis, IN 46250-4308
Detroit-North
580 Kirts Boulevard
Suite 300
Troy, MI 48084
Chicago-North
9700 Higgins Road
Suite 720
Rosemont, IL 60018
Ohio South
9797 Springboro Pike
Suite 302
Miamisburg, OH 45343
Detroit/West
One ParkLane Blvd.
Suite 405E
Dearborn, MI 48126
Chicago South
The Office of Waterfall Glen I
Suite 310
900 South Frontage Road
Woodridge, IL 60517
Grand Rapids
2851 Charlevoix Drive SE
Suite 300
Grand Rapids, MI 49546
Chicago - East
One River Place, Suite A
Lansing, IL 60438
<PAGE> 75
Akron
175 Montrose West Avenue
Suite 300 Crown Pointe
Copley, OH 44321
Louisville
502 Executive Park
Louisville, KY 40207
Milwaukee
10850 W. Park Place
Suite 110
Milwaukee, WI 53224
Chicago West
2500 W. Higgins Rd.
Suite 280
Hoffman Estates, IL 60195-2008
Saginaw
4901 Towne Centre Rd.
Suite 200
Saginaw, MI 48605
Findlay
3500 North Main Street
Findlay, OH 45840-1447
Cleveland
5700 Lombardo Centre
Suite 101
Seven Hills, OH 44131-2581
Philadelphia
Bay Colony Executive Park
575 E. Swedesford
Suite 100
Wayne, PA 19087
New Jersey South
5000 Dearborn Circle
Suite 200
Mt. Laurel, NJ 08054
Baltimore-West
1829 Reistertown Road
Baltimore, MD 21208-8861
B-2
<PAGE> 76
Long Island
972 Brush Hollow Road
5th Floor
Westbury, NY 11590-1740
Washington, D.C.
2440 Research Blvd.
Suite 150
Rockville, MD 20850-3293
New Haven
116 Washington Ave.
Floor #4
North Haven, CT 06473
Norfolk
Greenbrier Pointe
1401 Greenbrier Pkwy.
Suite 350
Chesapeake, VA 23320
New Jersey North
103 Eisenhower Parkway
4th Floor
Roseland, NJ 07068-1069
Pittsburgh
Foster Plaza 9
750 Holiday Drive
4th Floor, Suite 420
Pittsburgh, PA 15220-2783
Richmond
300 Arboretum Place
Suite 320
Richmond, VA 23236
Syracuse
5788 Widewaters Pkwy.
DeWitt, NY 13214
Westchester
660 White Plains Road
Tarrytown, NY 10591-0010
B-3
<PAGE> 77
Mobile
1201 Montlimar Dr.
Suite 700
Mobile, AL 36609
Birmingham
3535 Grandview Parkway
Suite 340
Birmingham, AL 35243
Orlando
2600 Lake Lucien Drive
Suite 306, The Forum Bldg.
Maitland, FL 32751
Memphis
6555 Quince Road
Suite 300
Memphis, TN 38119
Atlanta - North
North Park Town Center
1000 Abernathy Rd. N.E.
Bldg. 400, Suite 180
Atlanta, GA 30328
Greensboro
1500 Pinecroft Rd.
Suite 220
Greensboro, NC 27407
Charlotte
5832 Farm Pond Lane
Suite 200
Charlotte, NC 28212
Jacksonville
9485 Regency Square Boulevard
Jacksonville, FL 32225
Jackson
Highland Village Center
4500 I-55 North
Suite 292
Jackson, MS 39211
B-4
<PAGE> 78
Columbia
250 Berryhill Road
Suite 201
Columbia, SC 29210
Miami
6303 Blue Lagoon Drive
Suite 200
Miami, FL 33126
Dothan
3160 West Main Street
Suite 1
Dothan, AL 36301-1180
Nashville
565 Marriott Drive
Suite 190, Highland Ridge
Nashville, TN 37210
Raleigh
3651 Trust Drive
Raleigh, NC 27604
Tampa
Lincoln Pointe, Suite 800
2502 Rocky Point Drive
Tampa, FL 33607
Odessa
Ashford Park Office Center
Suite 201A
2626 John Ben Sheppard Parkway
Odessa, TX 79762
Lubbock
Suite 200
4010 82nd Street
Lubbock, TX 79424
Dallas
801 E. Campbell Road
Suite 600, Campbell Forum
Richardson, TX 75081
B-5
<PAGE> 79
Austin
1701 Directors Blvd.
Suite 320
Austin, TX 78744
Fort Worth
2350 W. Airport Hwy.
Suite 400, Center Park Tower
Bedford, TX 76022
Beaumont
2615 Calder
Suite 715
Beaumont, TX 77704
Houston-West
820 Gessner
Suite 700
Houston, TX 77024
Harlingen
1916 East Harrison
Harlingen, TX 78550
Corpus Christi
5350 South Staples
Suite 225
Corpus Christi, TX 78411
Little Rock
1701 Centerview Dr.
Suite 301
Little Rock, AR 72211
Amarillo
1616 S. Kentucky
Suite 130 Bldg. D
Amarillo, TX 79102
El Paso
1200 Golden Key Circle
Suite 104
El Paso, TX 79925
B-6
<PAGE> 80
Albuquerque
6100 Uptown Blvd., NE
Suite 300
Albuquerque, NM 87110
Houston-North
363 N. Sam Houston Pkwy. E.
Suite 700
Houston, TX 77060
San Antonio
1600 N.E. Loop 410
Suite 200
San Antonio, TX 78209
Tulsa
9820 East 41st St.
Suite 300
Tulsa, OK 74145
Minneapolis
11095 Viking Drive
Suite 308, One Southwest Crossing
Eden Prairie, MN 55344-7290
Wichita
7570 West 21st Street
Wichita, KS 67212
St. Louis
4227 Earth City Exp.
Suite 100
Earth City, MO 63045
Jefferson City
210 Prodo Drive
Jefferson City, MO 65109
Kansas City
8717 West 110th Street
Bldg. #14, Suite 550
Overland Park, KS 66210
B-7
<PAGE> 81
Des Moines
4200 Corporate Drive
Suite 107
West Des Moines, IA 50266
Omaha
10040 Regency Circle
Suite 100
Omaha, NE 68114-3786
Davenport
2535 Tech Drive
Suite 300, Commerce Exch. Bldg.
Bettendorf, IA 52722
Denver
6300 S. Syracuse Way
Suite 195
Englewood, CO 80111
Fargo
3100 13th Ave. South
Suite 304
Fargo, ND 58103
Springfield
3275 E. Ridgeview
Springfield, MO 65804-1816
Waterloo
211 E. San Marnan Dr.
Waterloo, IA 50702
San Bernadino
1615 Orange Tree Lane
Suite 215
Redlands, CA 92374
Salt Lake City
310 E. 4500 South
Suite 340
Murray, UT 84017
B-8
<PAGE> 82
Honolulu
1585 Kapiolani Blvd.
Suite 922, Ala Moano Pacific Center
Honolulu, HI 96814
Spokane
North 901 Monroe
Suite 350
Spokane, WA 99210-2148
Grand Junction
744 Horizon Ct.
Suite 330
Grand Junction, CO 81506
San Francisco
4301 Hacienda Dr.
Suite 400
Pleasanton, CA 94588
Portland
10220 S.W. Greenburg Rd.
Suite 415
Portland, OR 97223-5506
Sacramento
2720 Gateway Oaks Dr.
Suite 200
Sacramento, CA 95833
San Diego
3111 Camino Del Rio N.
Suite 1333
San Diego, CA 92108
Phoenix
4742 North 24th Street
Suite 215
Phoenix, AZ 85016
San Jose
1900 McCarthy Blvd.
Suite 400
Milpitas, CA 95035
B-9
<PAGE> 83
Seattle
13555 S.E. 36th Street
Suite 350
Bellevue, WA 98006
Orange
765 The City Drive
Suite 200
Orange, CA 92668
Anchorage
3201 C Street
Suite 203
Anchorage, AK 99503
Appleton
54 Park Place
Appleton, WI 54915-8861
South Bend
4215 Edison Lakes Parkway
Suite 140
Mishawaka, IN 46545
Columbus
655 Metro Place South
Suite 470, Metro V
Dublin, OH 43017-0792
Henderson
618 North Green Street
Henderson, KY 42420
Lansing
2140 University Park Drive
Okemos, MI 48864
Marshall
1408 North Michigan
Marshall, IL 62441
New Jersey-Central
101 Interchange Plaza
Cranbury, NJ 08512
B-10
<PAGE> 84
Huntington
3425 U.S. Route 60 East
Barboursville, WV 25504
Buffalo
95 John Muir Drive
Suite 102
Amherst, NY 14228
Manchester
4 Bedford Farms
Bedford, NH 03110
Harrisburg
4900 Ritter Road
Mechanicsburg, PA 17055
Boston South
Southboro Place, 2nd Floor
352 Turnpike Road
Southboro, MA 01772
Boston North
One Tech Drive, 3rd Floor
Andover, MA 01810-2497
Portland
2401 Congress Street
Portland, ME 04102
Albany
5 Pine West Plaza
Albany, NY 12205
Roanoke
5238 Valley Pointe Pkwy.
Roanoke, VA 24019
Falls Church
1420 Springhill Road
Suite 550
McLean, VA 22102
B-11
<PAGE> 85
Bristol
Landmark Center - Suite A
113 Landmark Lane
Bristol, TN 37620
Chattanooga
6025 Lee Highway
Suite 443
Chattanooga, TN 37421
Decatur
401 Lee Street
Suite 500
Decatur, AL 35602
Fayetteville
4317 Ramsey Street
Suite 300
Fayetteville, NC 28311
Athens
3708 Atlanta Highway
Athens, GA 30604
Knoxville
5500 Lonas Drive
Suite 260
Knoxville, TN 37909
Macon
5400 Riverside Drive
Suite 201
Macon, GA 31210
Pensacola
25 W. Cedar Street
Suite 316
Pensacola, Fl 32501
Savannah
6600 Abercorn Street
Suite 206
Savannah, GA 31405
B-12
<PAGE> 86
Tyler
821 East SE Loop 323
Suite 300
Tyler, TX 75701
Oklahoma City
4101 Perimeter Ctr Dr.
Suite 300, Perimeter Center
Oklahoma City, OK 73112-2304
Baltimore-East
Campbell Corporate Center One
4940 Campell Blvd., Suite 140
Whitemarsh Business Community
Baltimore, MD 21236
Billings
1643 Lewis Avenue
Suite 201
Billings, MT 59102
Cheyenne
6234 Yellowstone
Cheyenne, WY 82009
Cape Girardeau
2851 Independence
Cape Girardeau, MO 63701
Atlanta -South
1691 Phoenix Blvd.
Suite 300
Atlanta, GA 30349
Pasadena
800 East Colorado Blvd.
Suite 400
Pasadena, CA 91109
Colorado Springs
5575 Tech Center Dr.
Suite 220
Colorado Springs, CO 80919
B-13
<PAGE> 87
South Bay
301 E. Ocean Boulevard
Suite 1900
Long Beach, CA 90802
Ventura
260 Maple court
Suite 210
Ventura, CA 93003
Las Vegas
3900 Paradise Road
Suite 239
Las Vegas, NV 89109
Eugene
1600 Valley River Drive
Suite 190
Eugene, OR 97401
Tupelo
One Mississippi Plaza
Tupelo, MS 38801
Charleston
4975 Lacross Road
Suite 150, Rivergate Center
North Charleston, SC 29418-6518
Western Carolina
215 Thompson Street
Hendersonville, NC 28739-2828
B-14
<PAGE> 88
New Orleans
3838 N. Causeway Blvd.
Suite 3000
Metairie, LA 70002
Lafayette
Saloom Office Park
Suite 350
100 Asma Boulevard
Lafayette, LA 70508
Shreveport
South Pointe Centre, Suite 200
3007 Knight Street
Shreveport, LA 71105
B-15
<PAGE> 89
EXHIBIT A
[FORM OF YIELD SUPPLEMENT AGREEMENT]
________, _____
Ford Credit Auto Receivables Two L.P.
The American Road
Dearborn, Michigan 48212
Re: Ford Credit Auto Owner Trust -
Ladies and Gentlemen:
We hereby confirm arrangements made as of the date hereof with you to be
effective upon (i) receipt by us of the enclosed copy of this letter agreement
(as from time to time amended, supplemented or otherwise modified and in
effect, the "Yield Supplement Agreement"), executed by you, and (ii) execution
of the Purchase Agreement referred to below and payment of the purchase price
specified thereunder. Capitalized terms used and not otherwise defined herein
shall have the meanings assigned to such terms in the Purchase Agreement, dated
as of _______, ____ (as from time to time amended, supplemented or otherwise
modified and in effect, the "Purchase Agreement"), between Ford Motor Credit
Company, as seller (the "Seller"), and Ford Credit Auto Receivables Two L.P. as
purchaser (the "Purchaser").
1. On or prior to the Determination Date preceding each Distribution Date,
the Servicer shall notify the Purchaser and the Seller of the Yield Supplement
Amount for such Distribution Date.
2. In consideration for the Purchaser entering into the Purchase Agreement
and the purchase price paid to the Seller for the Receivables under the
Purchase Agreement, we agree to make a payment of the Yield Supplement Amount
to the Purchaser, or to the pledgee of the assignee of the Purchaser referred
to in Section 5 hereof, on the Business Day prior to each Distribution Date.
3. All payments pursuant hereto shall be made by federal wire transfer
(same day) funds or in immediately available funds, to such account as the
Purchaser
A-1
<PAGE> 90
Ford Credit Auto Receivables Two L.P.
______, ____
Page 2
or the pledgee of the assignee of the Purchaser referred to in Section 5
hereof, may designate in writing to the Seller, prior to the relevant
Distribution Date.
4. Our agreements set forth in this Yield Supplement Agreement are our
primary obligations and such obligations are irrevocable, absolute and
unconditional, shall not be subject to any counterclaim, setoff or defense and
shall remain in full force and effect without regard to, and shall not be
released, discharged or in any way affected by, any circumstances or condition
whatsoever.
5. Pursuant to the Sale and Servicing Agreement, the Purchaser will sell,
transfer, assign and convey its interest in this Yield Supplement Agreement to
Ford Credit Auto Owner Trust ____-__ (the "Trust"), and the Seller hereby
acknowledges and consents to such sale, transfer, assignment and conveyance.
Concurrent with such sale, transfer, assignment and conveyance, pursuant to the
Indenture, the Trust will pledge its rights under this Yield Supplement
Agreement, along with certain other assets of the Trust, to __________, as
Indenture Trustee, to secure its obligations under the Notes and the Indenture,
and the Seller hereby acknowledges and consents to such pledge. The Seller
hereby agrees, for the benefit of the Trust, that following such sale,
transfer, assignment, conveyance and pledge, this Yield Supplement Agreement
shall not be amended, modified or terminated without the consent of _________,
as Owner Trustee on behalf of the Trust, and, prior to the payment in full of
the Notes, the Indenture Trustee.
6. This Yield Supplement Agreement will be governed by, and construed in
accordance with, the laws of the State of New York.
7. Except as otherwise provided herein, all notices pursuant to this Yield
Supplement Agreement shall be in writing and shall be effective upon receipt
thereof. All notices shall be directed as set forth below, or to such other
address or to the attention of such other person as the relevant party shall
have designated for such purpose in a written notice.
A-2
<PAGE> 91
Ford Credit Auto Receivables Two L.P.
______, ____
Page 3
If to the Purchaser:
Ford Credit Auto Receivables Two L.P.
The American Road
Dearborn, Michigan 48121
Attention: Secretary
Telephone: (313) 594-7765
Telecopy: (313) 248-7613
If to the Seller:
Ford Motor Credit Company
The American Road
Dearborn, Michigan 48121
Attention: Secretary
Telephone: (313) 594-9876
Telecopy: (313) 248-7613
8. This Yield Supplement Agreement may be executed in one or more
counterparts and by the different parties hereto on separate counterparts, all
of which shall be deemed to be one and the same document.
A-3
<PAGE> 92
Ford Credit Auto Receivables Two L.P.
,
- ------ ----
Page 4
If the foregoing satisfactorily sets forth the terms and conditions of our
agreement, please indicate your acceptance thereof by signing in the space
provided below and returning to us the enclosed duplicate original of this
letter.
Very truly yours,
FORD MOTOR CREDIT COMPANY,
as Seller
By:
-----------------------------
Name:
Title:
Agreed and accepted as of
the date first above written:
FORD CREDIT AUTO RECEIVABLES TWO L.P.,
as Purchaser
By:
----------------------------
Name:
Title:
A-4
<PAGE> 1
EXHIBIT 99.2
ADMINISTRATION AGREEMENT
This ADMINISTRATION AGREEMENT, dated as of ______ __, ____ (as
from time to time amended, supplemented or otherwise modified and in
effect, this "Agreement"), is by and among FORD CREDIT AUTO OWNER
TRUST ____-_, a Delaware business trust (the "Issuer"), FORD MOTOR
CREDIT COMPANY, a Delaware corporation, as administrator (the
"Administrator"), and _______, a ______ banking 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 Depository
Agreements, and (iii) the Indenture (the Sale and Servicing
Agreement, the Depository Agreements 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
<PAGE> 2
contains rules as to usage that shall be applicable herein.
2. Duties of the Administrator. (a) Duties with Respect to the
Indenture and the Depository Agreements. (i) The Administrator agrees
to perform all its duties as Administrator and the duties of the Issuer
under the Depository Agreements. In addition, the Administrator shall
consult with the Owner Trustee regarding the duties of the Issuer under
the Indenture and the Depository Agreements. 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 Depository Agreements. 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
Depository Agreements. 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 notification of Noteholders of the final
principal payment on their Notes (Section 2.8(b));
(C) 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);
(D) 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);
2
<PAGE> 3
(E) the preparation of Definitive Notes in accordance
with the instructions of the Clearing Agency (Section 2.13);
(F) the maintenance of an office in the Borough of
Manhattan, City of New York, for registration of transfer or
exchange of Notes (Section 3.2);
(G) 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);
(H) the direction to the Indenture Trustee to deposit
monies with Note Paying Agents, if any, other than the
Indenture Trustee (Section 3.3);
(I) 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);
(J) 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
(Section 3.5);
(K) 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);
(L) 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));
(M) the notification of the Indenture Trustee and the
Rating Agencies of an Event of Servicing Termination under the
Sale and Servicing Agreement
3
<PAGE> 4
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));
(N) the preparation and obtaining of documents and
instruments required for the transfer by the Issuer of its
properties or assets (Section 3.10(b));
(O) 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);
(P) 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);
(Q) 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);
(R) 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 confirmation thereof
and the Opinions of Counsel relating thereto (Section 4.2);
(S) the preparation and delivery 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);
4
<PAGE> 5
(T) 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);
(U) 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);
(V) 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);
(W) 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);
(X) 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);
(Y) 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);
(Z) 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);
5
<PAGE> 6
(AA) 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);
(BB) the execution and delivery of new Notes conforming
to any supplemental indenture (Section 9.6);
(CC) the notification of Noteholders of redemption of the
Notes or duty to cause the Indenture Trustee to provide such
notification (Section 10.2);
(DD) the preparation and delivery of all Officer's
Certificates 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));
(EE) the preparation and delivery 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));
(FF) 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);
(GG) 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
(HH) 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
6
<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 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 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 Trustee
shall take all appropriate action that it is the
7
<PAGE> 8
duty of the Issuer or the Owner Trustee to take pursuant to the Related
Agreements. Subject to Section 5 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 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.
(iii) 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.
(iv) The Administrator will provide prior to __________ __,
____, 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 subsequently
required or any previously required tax withholding shall no longer
be required.
(v) 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.
8
<PAGE> 9
(vi) 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 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
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<PAGE> 10
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
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
10
<PAGE> 11
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 dissolution
of the Issuer, 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), the Issuer may remove
the Administrator without cause by providing the Administrator with
at least sixty (60) days' prior written notice.
(d) 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, it 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
(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,
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<PAGE> 12
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.
(e) 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.
(f) The appointment of any successor Administrator shall be
effective only after satisfaction of the Rating Agency Condition
with respect to the proposed appointment.
(g) 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 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), respec-
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<PAGE> 13
tively, 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 ____-_
c/o _______
_________
Attention: ______
Telephone: ______
Telecopy: ______
(b) if to the Administrator, to:
Ford Motor Credit Company
The American Road
Dearborn, Michigan 48121
Attention: ______
Telephone: ______
Telecopy: ______
(c) If to the Indenture Trustee, to:
______
______
Attention: ______
Telephone: ______
Telecopy: ______
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
13
<PAGE> 14
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 of
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. Notwithstanding the foregoing, the Administrator
may not amend this Agreement without the consent of the Seller, which
permission shall not be unreasonably withheld.
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 hereunder 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
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<PAGE> 15
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 ______ not in
its individual capacity but solely in its capacity as Owner Trustee
of the Issuer and in no event shall ______ in its individual
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
15
<PAGE> 16
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 ______ not in its
individual capacity but solely as Indenture Trustee and in no event
shall ______ 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 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,
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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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<PAGE> 18
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 ____-_
By: ______, not in its individual capacity but
solely as Owner Trustee
By: __________________________________________
Name:
Title:
______, not in its individual capacity but
solely as Indenture Trustee
By: __________________________________________
Name:
Title:
FORD MOTOR CREDIT COMPANY, as Administrator
By: __________________________________________
Name:
Title:
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APPENDIX A
Definitions and Usage
AA-1
<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 ___ day of ______ ____, 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 sold
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 ____-_ 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.]
[WHEREAS, the Seller and the Purchaser wish to set forth the
terms pursuant to which the Receivables (as hereinafter defined) are to be sold
by the Seller to the Purchaser, which Receivables will be transferred by the
Purchaser, pursuant to the Pooling and Servicing Agreement (as hereinafter
defined) to the Ford Credit Auto Grantor Trust ______-____ to be created
thereunder, which Trust will issue certificates representing fractional
undivided interests in such Receivables and the other property of the Trust
(the "Certificates")].
NOW, THEREFORE, in consideration of the foregoing, other good
and valuable consideration, and the
<PAGE> 2
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.]
[CERTAIN DEFINITIONS
Terms not defined in this Agreement shall have the meaning set
forth in the Pooling and Servicing Agreement. As used in this Agreement, the
following terms shall, unless the context otherwise requires, have the
following meanings (such meanings to be equally applicable to the singular and
plural forms of the terms defined):
"Agreement" shall mean this Purchase Agreement and all
amendments hereof and supplements hereto.
"Assignment" shall mean the document of assignment attached to
this Agreement as Exhibit A.
"Class A Certificate" shall have the meaning specified in the
Pooling and Servicing Agreement.
"Class B Certificate" shall have the meaning specified in the
Pooling and Servicing Agreement.
"Closing Date" shall mean ______ __, ____.
"Collections" shall mean all amounts collected by the Servicer
(from whatever source) on or with respect to the Receivables.
"Cutoff Date" shall mean ______ __, ____.
"Distribution Date" shall mean, for each Collection Period,
the ____ day of the following month or,
2
<PAGE> 3
if such _________ day is not a Business Day, the next succeeding Business Day.
"Obligor" shall have the meaning specified in the Pooling and
Servicing Agreement.
"Person" shall have the meaning specified in the Pooling and
Servicing Agreement.
"Pooling and Servicing Agreement" shall mean the Pooling and
Servicing Agreement by and among the Seller, as servicer, the Purchaser, as
seller, and ______, as trustee and as agent for the holders of the Class A
Certificates, dated as of ______ __, ____.
"Prospectus" shall have the meaning assigned to such term in
the Underwriting Agreement.
"Purchaser" shall mean Ford Credit Auto Receivables Two L.P.,
a Delaware limited partnership, its successors and assigns.
"Rating Agency" shall mean Moody's Investors Service, Inc. and
Standard & Poor's Ratings Group or any successors thereto.
"Receivable" shall mean any retail installment sale contract
which appears on Exhibit B hereto and any amendments, modifications or
supplements to such retail installment sale contract.
"Receivable Files" shall have the meaning specified in the
Pooling and Servicing Agreement.
"Receivables Purchase Price" shall mean $__________.
"Repurchase Event" shall have the meaning specified in Section
6.2 hereof.
"Schedule of Receivables" shall mean the list of Receivables
annexed hereto as Exhibit B.
"Seller" shall mean Ford Motor Credit Company, a Delaware
corporation, its successors and assigns.
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<PAGE> 4
"Servicing Fee" shall have the meaning specified in the
Pooling and Servicing Agreement.
"Trust" shall mean the Ford Credit Auto Grantor Trust
_____-___.
"UCC" shall mean the Uniform Commercial Code, as in effect
from time to time in the relevant jurisdictions.
"Underwriting Agreement" shall mean the Underwriting Agreement
by and between _________, as representatives of the several underwriters, and
the Purchaser, as seller, dated ______ __, ____.]
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
2.1 Purchase and Sale of Receivables
On the Closing Date, subject to the terms and conditions of
this Agreement, the Seller agrees to sell to the Purchaser, and the Purchaser
agrees to purchase from the Seller, the Receivables and the other property
relating thereto (as defined below).
(a) Sale of Receivables. Effective as of the
Closing Date and simultaneously with the transactions pursuant to the
[Indenture, the Sale and Servicing Agreement and the Trust Agreement] [Pooling
and Servicing Agreement], the Seller hereby sells, 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[, and all monies paid thereon and due thereon
on or after the Cutoff Date][; (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
4
<PAGE> 5
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) 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 Servicer or purchased 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 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 approximately ______% [(representing the
proceeds from the sale of the Notes and the Certificates less the Reserve
Initial Deposit)] [(representing the proceeds from the sale of the Class A
Certificates less the Subordination Initial Deposit)] of the Receivables
Purchase Price shall be paid to the Seller in cash. The remaining
approximately _____% 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.
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<PAGE> 6
2.2 The Closing. The sale and purchase 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, the Yield
Supplement Agreement and 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, the Yield Supplement Agreement 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 Purchaser will sell
to the Certificate Underwriters the Certificates] [(a) the Pooling and
Servicing Agreement pursuant to which (i) the Purchaser will assign all of its
right, title and interests in and to the Receivables and other property to the
Trustee for the benefit of the Certificateholders; and (ii) the Purchaser will
deposit the foregoing into the Trust in exchange for the Class A Certificates
and Class B Certificates; and (b) the Underwriting Agreement, pursuant to which
the Purchaser will sell to the underwriters named therein (the "Underwriters")
the Class A 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.
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<PAGE> 7
(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 thereof, 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 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
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<PAGE> 8
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 sell and assign the property sold 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 ful- fillment of
the terms thereof, 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 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
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<PAGE> 9
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 sale,
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] [pursuant to the Pooling and Servicing Agreement]:
(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 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, [and] (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.]
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<PAGE> 10
(ii) Schedule of Receivables. The
information set forth in [the Schedule of Receivables] [Exhibit B to
this Agreement] 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.
(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 sale, transfer,
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<PAGE> 11
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.
(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.
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<PAGE> 12
(xiii) Title. It is the intention of the
Seller that the transfer and assignment herein contemplated constitute
a sale 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 sold, 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 sale, 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 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 ____% of the aggregate Principal
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<PAGE> 13
Balance of the Receivables, constituting ____% 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. Approximately
____% of the aggregate Principal Balance of the Receivables as of the
Cutoff Date constitute Precomputed Receivables, and the remainder of
the Receivables constitute Simple Interest Receivables.]
(xx) Origination. Each Receivable shall
have an origination date on or after ______ __, ____.
(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 ___%.
(xxiii) Scheduled Payments. Each Receivable
shall have a first Scheduled Payment due on or prior to ______ __,
____ 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 A hereto.
(xxv) No Extensions. The number of
Scheduled Payments 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) No Simple Interest Receivables.
None of the Receivables are Simple Interest Receivables.]
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(xxviii) Agreement. The representations and
warranties in this Agreement shall be true.
[(xxix) No Receivables Originated in Alabama
or Pennsylvania. No Receivable shall have been originated in Alabama
or Pennsylvania.]
ARTICLE IV
CONDITIONS
4.1 Conditions to Obligation of the Purchaser. The
obligation of the Purchaser to purchase 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 sold 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
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<PAGE> 15
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
sale, 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.
(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] [Pooling and Servicing Agreement] shall be consummated on the
Closing Date.
4.2 Conditions to Obligation of the Seller. The
obligation of the Seller to sell 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).
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] [Pooling] and Servicing Agreement,
the [Sale] [Pooling] and Servicing Agreement shall govern:
15
<PAGE> 16
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.
(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 sale hereunder of the Receivables
to the Purchaser, the Seller's master computer records (including any back-up
16
<PAGE> 17
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 sold 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] [Pooling and Servicing
Agreement], 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 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] [Pooling and
Servicing Agreement].
5.3 Costs and Expenses. The Seller agrees to pay all
reasonable costs and disbursements in connection
17
<PAGE> 18
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 its duties under this Agreement [or the Yield Supplement
Agreement] or by reason of reckless disregard of the Seller's obligations and
duties under this Agreement [or the Yield Supplement 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
18
<PAGE> 19
Servicer under the [Sale] [Pooling] 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 Sale. Seller agrees to treat this conveyance for all
purposes (including without limitation tax and financial accounting purposes)
as a sale on all relevant books, records, tax returns, financial statements and
other applicable documents.
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] [the Trustee 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 [the
Purchaser, the Trust, the Owner Trustee, the Indenture Trustee, the Noteholders
or the Certificateholders] [Certificateholders, the Trustee, or the Purchaser]
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
warran-
19
<PAGE> 20
ty, 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: [the Purchaser
will, pursuant to the Pooling and Servicing Agreement, sell the Receivables to
the Trust and assign its rights under this Agreement to the Trustee for the
benefit of 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 such Trust and any Certificateholder.
The Seller hereby consents to such sales and assignments.]
[(a) The Purchaser will, pursuant to the Sale and Servicing
Agreement, sell the Receivables to the Trust and assign its rights under this
Agreement and the Yield Supplement 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 sale and assignment.
(b) The Trust will, pursuant to the Indenture, pledge the
Receivables and its rights under this Agreement and the Yield Supplement
Agreement 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 51% of the
Notes Outstanding and the Certificateholders of Certificates evidencing not
less than 51% of the Certificate
20
<PAGE> 21
Balance] [Certificateholders under the Pooling and Servicing Agreement must be
consented to by the Holders of 51% of the Class A Certificate Balance and 51%
of the Class B 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 set
forth as Exhibit B hereto 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] [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 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
21
<PAGE> 22
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] [Pooling] 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.
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.
22
<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: _________________________
Name:
Title:
FORD CREDIT AUTO RECEIVABLES TWO L.P.
By: _________________________
Name:
Title:
23
<PAGE> 24
Exhibit A
ASSIGNMENT
For value received, in accordance with the Purchase Agreement
dated as of _______ __, ____ (the "Purchase Agreement"), between the
undersigned and FORD CREDIT AUTO RECEIVABLES TWO L.P. (the "Purchaser"), the
undersigned does hereby sell, 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[, and all monies paid thereon and due thereon on or after the
Cutoff Date][; (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 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) 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 Servicer or purchased 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
<PAGE> 25
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. The foregoing sale 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 _______ __, ____.
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
Indianapolis
5875 Castle Creek Pkwy. North Drive
Suite 240
Indianapolis, IN 46250-4308
Detroit-North
580 Kirts Boulevard
Suite 300
Troy, MI 48084
Chicago-North
9700 Higgins Road
Suite 720
Rosemont, IL 60018
Ohio South
9797 Springboro Pike
Suite 302
Miamisburg, OH 45343
Detroit/West
One ParkLane Blvd.
Suite 405E
Dearborn, MI 48126
Chicago South
The Office of Waterfall Glen I
Suite 310
900 South Frontage Road
Woodridge, IL 60517
Grand Rapids
2851 Charlevoix Drive SE
Suite 300
Grand Rapids, MI 49546
Chicago - East
One River Place, Suite A
Lansing, IL 60438
<PAGE> 29
Akron
175 Montroes West Avenue
Suite 300 Crown Pointe
Copley, OH 44321
Louisville
502 Executive Park
Louisville, KY 40207
Milwaukee
10850 W. Park Place
Suite 110
Milwaukee, WI 53224
Chicago West
2500 W. Higgins Rd.
Suite 280
Hoffman Estates, IL 60195-2008
Saginaw
4901 Towne Centre Rd.
Suite 200
Saginaw, MI 48605
Findlay
3500 North Main Street
Findlay, OH 45840-1447
Cleveland
5700 Lombardo Centre
Suite 101
Seven Hills, OH 44131-2581
Philadelphia
Bay Colony Executive Park
575 E. Swedesford
Suite 100
Wayne, PA 19087
New Jersey South
5000 Dearborn Circle
Suite 200
Mt. Laurel, NJ 08054
A-2
<PAGE> 30
Baltimore-West
1829 Reistertown Road
Baltimore, MD 21208-8861
Long Island
972 Brush Hollow Road
5th Floor
Westbury, NY 11590-1740
Washington, D.C.
2440 Research Blvd.
Suite 150
Rockville, MD 20850-3293
New Haven
116 Washington Ave.
Floor #4
North Haven, CT 06473
Norfolk
Greenbrier Pointe
1401 Greenbrier Pkwy.
Suite 350
Chesapeake, VA 23320
New Jersey North
103 Eisenhower Parkway
4th Floor
Roseland, NJ 07068-1069
Pittsburgh
Foster Plaza 9
750 Holiday Drive
4th Floor, Suite 420
Pittsburgh, PA 15220-2783
Richmond
300 Arboretum Place
Suite 320
Richmond, VA 23236
Syracuse
5788 Widewaters Pkwy.
DeWitt, NY 13214
A-3
<PAGE> 31
Westchester
660 White Plains Road
Tarrytown, NY 10591-0010
Mobile
1201 Montlimar Dr.
Suite 700
Mobile, AL 36609
Birmingham
3535 Grandview Parkway
Suite 340
Birmingham, AL 35243
Orlando
2600 Lake Lucien Drive
Suite 306, The Forum Bldg.
Maitland, FL 32751
Memphis
6555 Quince Road
Suite 300
Memphis, TN 38119
Atlanta - North
North Park Town Center
1000 Abernathy Rd. N.E.
Bldg. 400, Suite 180
Atlanta, GA 30328
Greensboro
1500 Pinecroft Rd.
Suite 220
Greensboro, NC 27407
Charlotte
5832 Farm Pond Lane
Suite 200
Charlotte, NC 28212
Jacksonville
9485 Regency Square Boulevard
Jacksonville, FL 32225
A-4
<PAGE> 32
Jackson
Highland Village Center
4500 I-55 North
Suite 292
Jackson, MS 39211
Columbia
250 Berryhill Road
Suite 201
Columbia, SC 29210
Miami
6303 Blue Lagoon Drive
Suite 200
Miami, FL 33126
Dothan
3160 West Main Street
Suite 1
Dothan, AL 36301-1180
Nashville
565 Marriott Drive
Suite 190, Highland Ridge
Nashville, TN 37210
Raleigh
3651 Trust Drive
Raleigh, NC 27604
Tampa
Lincoln Pointe, Suite 800
2502 Rocky Point Drive
Tampa, FL 33607
Odessa
Ashford Park Office Center
Suite 201A
2626 John Ben Sheppard Parkway
Odessa, TX 79762
Lubbock
Suite 200
4010 82nd Street
Lubbock, TX 79424
A-5
<PAGE> 33
Dallas
801 E. Campbell Road
Suite 600, Campbell Forum
Richardson, TX 75081
Austin
1701 Directors Blvd.
Suite 320
Austin, TX 78744
Fort Worth
2350 W. Airport Hwy.
Suite 400, Center Park Tower
Bedford, TX 76022
Beaumont
2615 Calder
Suite 715
Beaumont, TX 77704
Houston-West
820 Gessner
Suite 700
Houston, TX 77024
Harlingen
1916 East Harrison
Harlingen, TX 78550
Corpus Christi
5350 South Staples
Suite 225
Corpus Christi, TX 78411
Little Rock
1701 Centerview Dr.
Suite 301
Little Rock, AR 72211
Amarillo
1616 S. Kentucky
Suite 130 Bldg. D
Amarillo, TX 79102
A-6
<PAGE> 34
El Paso
1200 Golden Key Circle
Suite 104
El Paso, TX 79925
Albuquerque
6100 Uptown Blvd., NE
Suite 300
Albuquerque, NM 87110
Houston-North
363 N. Sam Houston Pkwy. E.
Suite 700
Houston, TX 77060
San Antonio
1600 N.E. Loop 410
Suite 200
San Antonio, TX 78209
Tulsa
9820 East 41st St.
Suite 300
Tulsa, OK 74145
Minneapolis
11095 Viking Drive
Suite 308, One Southwest Crossing
Eden Prairie, MN 55344-7290
Wichita
7570 West 21st Street
Wichita, KS 67212
St. Louis
4227 Earth City Exp.
Suite 100
Earth City, MO 63045
Jefferson City
210 Prodo Drive
Jefferson City, MO 65109
Kansas City
8717 West 110th Street
Bldg. #14, Suite 550
Overland Park, KS 66210
A-7
<PAGE> 35
Des Moines
4200 Corporate Drive
Suite 107
West Des Moines, IA 50266
Omaha
10040 Regency Circle
Suite 100
Omaha, NE 68114-3786
Davenport
2535 Tech Drive
Suite 300, Commerce Exch. Bldg.
Bettendorf, IA 52722
Denver
6300 S. Syracuse Way
Suite 195
Englewood, CO 80111
Fargo
3100 13th Ave. South
Suite 304
Fargo, ND 58103
Springfield
3275 E. Ridgeview
Springfield, MO 65804-1816
Waterloo
211 E. San Marnan Dr.
Waterloo, IA 50702
San Bernadino
1615 Orange Tree Lane
Suite 215
Redlands, CA 92374
Salt Lake City
310 E. 4500 South
Suite 340
Murray, UT 84017
Honolulu
1585 Kapiolani Blvd.
Suite 922, Ala Moano Pacific Center
Honolulu, HI 96814
A-8
<PAGE> 36
Spokane
North 901 Monroe
Suite 350
Spokane, WA 99210-2148
Grand Junction
744 Horizon Ct.
Suite 330
Grand Junction, CO 81506
San Francisco
4301 Hacienda Dr.
Suite 400
Pleasanton, CA 94588
Portland
10220 S.W. Greenburg Rd.
Suite 415
Portland, OR 97223-5506
Sacramento
2720 Gateway Oaks Dr.
Suite 200
Sacramento, CA 95833
San Diego
3111 Camino Del Rio N.
Suite 1333
San Diego, CA 92108
Phoenix
4742 North 24th Street
Suite 215
Phoenix, AZ 85016
San Jose
1900 McCarthy Blvd.
Suite 400
Milpitas, CA 95035
Seattle
13555 S.E. 36th Street
Suite 350
Bellevue, WA 98006
A-9
<PAGE> 37
Orange
765 The City Drive
Suite 200
Orange, CA 92668
Anchorage
3201 C Street
Suite 203
Anchorage, AK 99503
Appleton
54 Park Place
Appleton, WI 54915-8861
South Bend
4215 Edison Lakes Parkway
Suite 140
Mishawaka, IN 46545
Columbus
655 Metro Place South
Suite 470, Metro V
Dublin, OH 43017-0792
Henderson
618 North Green Street
Henderson, KY 42420
Lansing
2140 University Park Drive
Okemos, MI 48864
Marshall
1408 North Michigan
Marshall, IL 62441
New Jersey-Central
101 Interchange Plaza
Cranbury, NJ 08512
Huntington
3425 U.S. Route 60 East
Barboursville, WV 25504
A-10
<PAGE> 38
Buffalo
95 John Muir Drive
Suite 102
Amherst, NY 14228
Manchester
4 Bedford Farms
Bedford, NH 03110
Harrisburg
4900 Ritter Road
Mechanicsburg, PA 17055
Boston South
Southboro Place, 2nd Floor
352 Turnpike Road
Southboro, MA 01772
Boston North
One Tech Drive, 3rd Floor
Andover, MA 01810-2497
Portland
2401 Congress Street
Portland, ME 04102
Albany
5 Pine West Plaza
Albany, NY 12205
Roanoke
5238 Valley Pointe Pkwy.
Roanoke, VA 24019
Falls Church
1420 Springhill Road
Suite 550
McLean, VA 22102
Bristol
Landmark Center - Suite A
113 Landmark Lane
Bristol, TN 37620
A-11
<PAGE> 39
Chattanooga
6025 Lee Highway
Suite 443
Chattanooga, TN 37421
Decatur
401 Lee Street
Suite 500
Decatur, AL 35602
Fayetteville
4317 Ramsey Street
Suite 300
Fayetteville, NC 28311
Athens
3708 Atlanta Highway
Athens, GA 30604
Knoxville
5500 Lonas Drive
Suite 260
Knoxville, TN 37909
Macon
5400 Riverside Drive
Suite 201
Macon, GA 31210
Pensacola
25 W. Cedar Street
Suite 316
Pensacola, Fl 32501
Savannah
6600 Abercorn Street
Suite 206
Savannah, GA 31405
Tyler
821 East SE Loop 323
Suite 300
Tyler, TX 75701
A-12
<PAGE> 40
Oklahoma City
4101 Perimeter Ctr Dr.
Suite 300, Perimeter Center
Oklahoma City, OK 73112-2304
Baltimore-East
Campbell Corporate Center One
4940 Campell Blvd., Suite 140
Whitemarsh Business Community
Baltimore, MD 21236
Billings
1643 Lewis Avenue
Suite 201
Billings, MT 59102
Cheyenne
6234 Yellowstone
Cheyenne, WY 82009
Cape Girardeau
2851 Independence
Cape Girardeau, MO 63701
Atlanta -South
1691 Phoenix Blvd.
Suite 300
Atlanta, GA 30349
Pasadena
800 East Colorado Blvd.
Suite 400
Pasadena, CA 91109
Colorado Springs
5575 Tech Center Dr.
Suite 220
Colorado Springs, CO 80919
South Bay
301 E. Ocean Boulevard
Suite 1900
Long Beach, CA 90802
A-13
<PAGE> 41
Ventura
260 Maple court
Suite 210
Ventura, CA 93003
Las Vegas
3900 Paradise Road
Suite 239
Las Vegas, NV 89109
Eugene
1600 Valley River Drive
Suite 190
Eugene, OR 97401
Tupelo
One Mississippi Plaza
Tupelo, MS 38801
Charleston
4975 Lacross Road
Suite 150, Rivergate Center
North Charleston, SC 29418-6518
Western Carolina
215 Thompson Street
Hendersonville, NC 28739-2828
New Orleans
3838 N. Causeway Blvd.
Suite 3000
Metairie, LA 70002
Lafayette
Saloom Office Park
Suite 350
100 Asma Boulevard
Lafayette, LA 70508
Shreveport
South Pointe Centre, Suite 200
3007 Knight Street
Shreveport, LA 71105
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[APPENDIX A
Definitions and Usage]
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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
"Accrual Period" shall mean, with respect to any Distribution Date and any
Class of Notes, the period from and including the previous Distribution Date
(or, in the case of the first Distribution Date, the Closing Date) to but
excluding such Distribution Date.
"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 multi-
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plied 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
payment with respect thereto allocable to principal is determined in accordance
with the Actuarial Method.
"Administration Agreement" shall mean the Administration Agreement, dated
as of _________ __, ____, 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 the amount, as of the last day of a Collection
Period, which the Servicer is required to advance on the respective Receivable
pursuant to Section 4.4(a) of the Sale and Servicing Agreement.
"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 ownership 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
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state in which the Owner Trustee maintains its principal executive offices,
and (c) a state in which the Servicer regularly conducts servicing and
collection operations other than purely ministerial activities and which relate
to a material portion of the Receivables.
"Assignment" shall mean the document of assignment attached as Exhibit A
to the Purchase Agreement.
"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 of the Owner Trustee who is authorized to act for or on behalf of the
Owner Trustee in matters relating to the Issuer and who is identified on the
list of Authorized Officers delivered by the Owner Trustee to the Indenture
Trustee on the Closing Date (as such list may be modified or supplemented from
time to time thereafter) 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) that
portion of all collections on Receivables allocable to
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interest (including amounts withdrawn from the Payahead Account but
excluding amounts deposited into the Payahead Account, in each case to the
extent allocable to interest), (ii) Liquidation Proceeds to the extent
allocable to interest due thereon in accordance with the Servicer's customary
servicing procedures, (iii) all Advances made by the Servicer of interest due
on Receivables and all amounts advanced by the Servicer pursuant to Section
4.4(b) of the Sale and Servicing Agreement, (iv) the Purchase Amount of each
Receivable that became a Purchased Receivable during the related Collection
Period to the extent attributable to accrued interest thereon, and (v) amounts
paid pursuant to the Yield Supplement Agreement (including amounts, if any,
withdrawn from the Yield Supplement Account or the Reserve Account pursuant to
Section 5.1(a)(ii) of the Sale and Servicing Agreement); provided, however that
in calculating the Available Interest the following will be excluded: (i)
amounts received on Receivables to the extent that the Servicer has previously
made an unreimbursed Advance of interest; and (ii) Liquidation Proceeds with
respect to a particular Receivable to the extent of any unreimbursed Advances
of interest.
"Available Principal" shall mean, for any Distribution Date, the sum of
the following amounts with respect to the preceding Collection Period: (i)
that portion of all collections on Receivables allocable to principal
(including amounts withdrawn from the Payahead Account but excluding amounts
deposited into the Payahead Account, in each case to the extent allocable to
principal), (ii) Liquidation Proceeds attributable to principal in accordance
with the Servicer's customary servicing procedures, (iii) all Advances made by
the Servicer of principal due on the Receivables, (iv) to the extent
attributable to principal, the Purchase Amount of each Receivable that became a
Purchased Receivable during such Collection Period, and (v) partial prepayments
attributable to any refunded item included in the Amount Financed, 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 below the Scheduled Payment as
of the Cutoff Date; provided, however, that in calculating the Available
Principal the following will be excluded: (i) amounts received on Receivables
to the extent that the Servicer has previous-
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ly made an unreimbursed Advance of principal; and (ii) Liquidation
Proceeds with respect to a particular Receivable to the extent of any
unreimbursed Advances of principal.
"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 Yield Supplement Agreement, the Note Depository
Agreement, the Certificate Depository Agreement and the other documents and
certificates delivered in connection therewith.
"Benefit Plan" shall have the meaning specified in Section 3.4(b) of the
Trust Agreement.
"Book-Entry Certificates" shall mean a beneficial interest in the
Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 3.11 of the Trust
Agreement.
"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 or trust companies in New York, New York 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.
"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 or Exhibit B to the Trust Agreement, as applicable. Such
certificate shall entitle the Certificateholder thereof to distributions of
principal and
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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 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 Responsible 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.
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"Certificate Depository Agreement" shall mean the agreement dated the
Closing Date, by and among the Trust, the Owner Trustee, the Administrator and
The Depository Trust Company, as the initial Clearing Agency, relating to the
Certificates, substantially in the form of Exhibit D to the Trust Agreement.
"Certificate Distribution Account" shall mean the account established and
maintained as such pursuant to Section 4.1(c) of the Sale and Servicing
Agreement.
"Certificate Final Scheduled Distribution Date" shall mean the
____________ Distribution Date.
"Certificate Indemnification Agreement" shall mean the Certificate
Indemnification Agreement, dated as of _____________, ____, by and between Ford
Credit and the Note Underwriters.
"Certificate Underwriting Agreement" shall mean the Certificate
Underwriting Agreement by and among the Seller, the General Partner and _____,
as representative of the several Certificate Underwriters.
"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 Distribution
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 at the Certificate Rate on
the Certificate Balance as of the immediately preceding Distribution Date,
after giving effect to all distributions of principal to the Certificateholders
on or prior to such Distribution Date (or, in the case of the first
Distribu-
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tion Date, __________ (__) days of interest at the Certificate Rate on the
Initial Certificate Balance).
"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 Notes are paid in full, the sum of (i) the
Scheduled Principal for such Distribution Date (less, on the Distribution Date
on which the Notes are paid in full, the portion thereof payable on the Notes)
plus (ii) any outstanding Certificateholders' Principal Carryover Shortfall
from the close of business on the preceding Distribution Date; provided,
however, that the Certificateholders' Regular Principal shall not exceed the
Certificate Balance; and provided, further, that on the Certificate 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 amount 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.
"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 C to the Trust
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Agreement filed for the Trust pursuant to Section 3810(a) of the Business
Trust Statute.
"Certificate Owner" shall mean, with respect to any Book-Entry
Certificate, the Person who is the beneficial owner of such Book-Entry
Certificate, 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).
"Certificate Paying Agent" shall mean any paying agent or co-paying agent
appointed pursuant to Section 3.9 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 ____% 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 this Agreement and the other Basic
Documents.
"Certificate Register" and "Certificate Registrar" shall have the
respective meanings specified in Section 3.4 of the Trust Agreement.
"Certificate Underwriters" shall mean the underwriters named in Schedule
I to the Certificate Underwriting Agreement.
"Certificate Underwriting Agreement" shall mean the Certificate
Underwriting Agreement, dated __________ __, ____, between the Depositor and
____________________, as representative of the several Certificate
Underwriters.
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"Class" means a class of Notes, which may be the Class A-1 Notes, the
Class A-2 Notes or the Class A-3 Notes.
"Class A-1 Final Scheduled Distribution Date" shall mean the ____________
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 $______ __% Class A-1 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 __% per annum. Interest with respect to the
Notes shall be computed on the basis of a 360-day year consisting of twelve
30-day months for all purposes of this Agreement and the other Basic Documents.
"Class A-2 Final Scheduled Distribution Date" shall mean the ____________
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 $______ __% Class A-2 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 __% per annum. Interest with respect to the
Notes shall be computed on the basis of a 360-day year consisting of twelve
30-day months for all purposes of this Agreement and the other Basic Documents.
"Class A-3 Final Scheduled Distribution Date" shall mean the ____________
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 $______ __% Class A-3 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 __% per annum. Interest with respect to the
Notes shall be computed on the basis of a 360-day year consisting of twelve
30-day months for all purposes of this Agreement and the other 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 _________ __, ____.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
Treasury Regulations promulgated thereunder.
"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 calculations 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.
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"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
___________ _______________, Delaware _____ 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 ______________, or at such other address as the
Indenture Trustee may designate from time to time by 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).
"Cutoff Date" shall mean _________ __, ____.
"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.
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"Default" shall mean any occurrence that is, or with notice or the lapse
of time or both would become, an Event of Default.
"Deficiency Amount" shall have the meaning assigned to such term in the
definition of "Noteholders' Accelerated Principal" below.
"Definitive Certificates" shall have the meaning specified in Section 3.11
of the Trust Agreement.
"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 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
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account of a financial intermediary by the amount of such certificated
security, the identification by the clearing corporation of the
certificated 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, consistent
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 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
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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.
"Depositor" shall mean the Seller in its capacity as Depositor under the
Trust Agreement.
"Depository Agreements" shall mean the Note Depository Agreement and the
Certificate Depository Agreement, collectively.
"Determination Date" shall mean, with respect to any Collection Period,
the eighth Business Day of the next succeeding calendar month (but not later
than the tenth calendar day of such month).
"Distribution Date" shall mean the _________ (_____) 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.
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"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 Maturity Date" shall mean the last day of the Collection
Period immediately preceding the Certificate Final Scheduled Distribution Date.
"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
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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 _______ __, ____, by and
between the Trust and the Indenture Trustee.
"Indenture Trustee" shall mean __________, a _________ banking
corporation, as Indenture Trustee under the Indenture, or any successor
Indenture Trustee under the Indenture.
"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
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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, $_____________ or (ii) with respect to
any Certificate, an amount equal to the initial denomination of such
Certificate.
"Initial Pool Balance" shall mean $______________.
"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 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.
"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.
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"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.
"Letter of Credit Bank" shall mean any Person having the Required Rating
that has provided a Yield Supplement Letter of Credit in accordance with
Section 5.1 of the Sale and Servicing Agreement.
"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 Agreement of Limited
Partnership of Ford Credit Auto Receivables Two L.P., dated as of February 23,
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.
"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.
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"Note Depository Agreement" shall mean the agreement dated __________ __,
____, by and among the Trust, 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" means (a) with respect to each
Distribution Date on which the difference between the Pool Balance and the
aggregate outstanding principal balance of the Notes and the Certificate
Balance on such Distribution Date (before giving effect to any distribution of
principal of the Notes or the Certificates on such Distribution Date) is less
than $_____________ (such deficiency with respect to any Distribution Date is
referred to as the "Deficiency Amount"), ___% of the portion, if any, of
Available Funds remaining for such Distribution Date, and (b) with respect to
the Distribution Date on which the difference between the Pool Balance and the
aggregate outstanding principal balance of the Notes and the Certificate
Balance on such Distribution Date (before giving effect to any distribution of
principal of the Notes or the Certificates on such Distribution Date) equals or
exceeds $______________ and on each Distribution Date following such
Distribution Date, __% of the portion, if any, of Available Funds remaining for
such Distribution Date, in each case after giving effect to the payment of (i)
the Servicing Fee and any overdue Servicing Fees, (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, on any
Distribution Date that the Noteholders' Accelerated Principal is calculated
pursuant to clause (a) above, the Noteholders' Accelerated Principal shall not
exceed the Deficiency Amount with respect to such Distribution Date; provided,
further, however, that the Noteholders' Accelerated Principal shall not exceed
the outstanding principal amount of the Notes (after giving effect to payments
of Noteholders' Regular Principal on such Distribution Date).
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"Noteholders' Interest Carryover Shortfall" shall mean, with respect to
any Distribution Date, the excess of the sum of the Noteholders' Monthly
Accrued Interest for the preceding Distribution Date and any outstanding
Noteholders' 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 Note Payment Account on such preceding Distribution
Date, plus thirty (30) days' 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 applicable Note Interest Rate borne by each Class of Notes.
"Noteholders' Monthly Accrued Interest" shall mean, with respect to any
Distribution Date, thirty (30) days of interest at the applicable Note Interest
Rate on the aggregate principal balance of each Class of Notes as of 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, _________ (__) days of interest at the
applicable Note Interest Rate on the initial principal balance of each Class of
Notes).
"Noteholders' Principal Carryover Shortfall" shall mean, as of the close
of business on any Distribution Date, the excess of the Principal Distribution
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' Regular Principal" shall mean, with respect to any
Distribution Date, the sum of (i) the Scheduled Principal for such Distribution
Date plus (ii) the Noteholders' Principal Carryover Shortfall as of the close
of business on the preceding Distribution Date; provided, however, that the
Noteholders' Regular Principal shall not exceed the outstanding principal
balance of the Notes; and provided, further, that, (a) on the Class A-1 Final
Scheduled Distribution Date, the principal required to be deposited in the Note
Payment Account will include the amount necessary (after giving effect to the
other amounts to be deposited in the Note Payment Account on such Distribution
Date and allocable to principal) to reduce the outstanding principal amount of
the Class A-1
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Notes to zero; (b) on the Class A-2 Final Scheduled Distribution Date, the
principal required to be deposited in the Note Payment Account will include
the amount necessary (after giving effect to the other amounts to be deposited
in the Note Payment Account on such Distribution Date and allocable to
principal) to reduce the outstanding principal amount of the Class A-2 Notes to
zero; and (c) on the Class A-3 Final Scheduled Distribution Date, the principal
required to be deposited in the Note Payment Account will include the amount
necessary (after giving effect to the other amounts to be deposited in the Note
Payment Account on such Distribution Date and allocable to principal) to reduce
the outstanding principal amount of the Class A-3 Notes to zero.
"Note Indemnification Agreement" shall mean the Note Indemnification
Agreement, dated as of___________,_______,by and between Ford Credit and the
Note Underwriters.
"Note Interest Rate" shall mean the Class A-1 Rate, the Class A-2 Rate or
the Class A-3 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.
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"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
immediately 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.
"Note Register" and "Note Registrar" shall have the respective meanings
specified in Section 2.5 of the Indenture.
"Note Underwriting Agreement" shall mean the Note Underwriting Agreement
by and among the Seller, the General Partner and _______, as representative of
the several Note Underwriters.
"Notes" shall mean the Class A-1 Notes, the Class A-2 Notes and the Class
A-3 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 there-
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tofore authenticated and delivered under the Indenture except:
Notes theretofore cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation;
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.
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"Outstanding Advances" on a Receivable shall mean the sum, as of the close
of business on the last day of a Collection Period, of all Advances as reduced
by payments as specified in Section 14.4(a) of the Sale and Servicing
Agreement with respect to such Receivable.
"Owner Trustee" shall mean ___________________, 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 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 next
Distribution Date which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
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(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 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 down-
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grading 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 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.
"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 meth-
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od, (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 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.
"Principal Distribution Amount" shall mean, with respect to any
Distribution Date, the sum of (i) the Noteholders' Regular Principal plus (ii)
the Noteholders' Accelerated Principal; provided, however, that after the
Distribution Date on which the Notes have been paid in full, the Principal
Distribution Amount with respect to the Certificates shall equal the
Certificateholders' Regular Principal.
"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
________ __, ____, 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 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.
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"Purchaser" shall mean the Seller in its capacity as Purchaser under the
Purchase Agreement.
"Qualified Institution" shall mean __________
______________________________ or 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
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
___________________________________________ 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) has not less than one billion dollars in
assets under fiduciary management, 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
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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 (as reduced by any Payaheads) 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 Receivables 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 $__________.
"Receivable Yield Supplement Amount" shall mean, with respect to any
Receivable and the related Distribution Date (other than a Liquidated
Receivable or a Purchased Receivable, for Collection Periods after the
Collection Period in which such Receivable became a Liquidated Receivable or a
Purchased Receivable), for any Collection Period the amount (if positive)
calculated by the Servicer equal to the product of one-twelfth (1/12) times (i)
interest at a rate equal to the sum of (A) the Weighted Average Rate and (B)
the Servicing Fee Rate minus (ii) interest on such Receivable at its APR,
multiplied by such Receivable's Principal Balance as of the first day of the
related Collection Period.
"Record Date" shall mean, with respect to any Distribution Date or
Redemption Date and any Note or Certificate, the close of business on the day
prior to such Distribution Date or Redemption Date or, with respect to any
Definitive Note or Definitive Certificate, the _______ (____) day of the month
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preceding the month in which such Distribution Date or Redemption Date occurs.
"Redemption Date" shall mean (i) in the case of 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 such Section 10.1(a) or (b), as applicable, or (ii)
in the case of a redemption 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 such Section 9.3(a) or 9.1(c), as applicable.
"Redemption Price" shall mean (i) with respect to the Notes, 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 to but excluding
the Redemption Date and (ii) with respect to the Certificates, an amount equal
to the Certificate Balance plus accrued and unpaid interest thereon at the
Certificate Rate 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.
"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.
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"Reserve Account Property" shall have the meaning specified in Section
4.7(a) of the Sale and Servicing Agreement.
"Reserve Initial Deposit" shall mean, with respect to the Closing Date,
$________________.
"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 _________ __, ____, by and among the Trust, 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
rescheduling in any insolvency or similar proceedings).
"Scheduled Principal" shall mean, with respect to any Distribution Date,
the sum of (a) Available Principal for such Distribution Date and (b) the
Principal Balance of each Receivable liquidated during the preceding Collection
Period, without duplication.
"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.
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"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securityholders" shall mean the Noteholders and the Certificateholders,
collectively.
"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 7.3 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 18.3
or 19.2 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 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.
"Specified Reserve Balance" shall mean, with respect to any Distribution
Date, $_______________; except that in the event that on any Distribution Date
(i) the annualized average for the preceding three Collection Periods (or such
shorter number of Collection Periods as have elapsed since the Cutoff Date) of
the ratios of net losses (i.e., the net balances of all
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Receivables which are determined to be uncollectible in the Collection Period,
less any recoveries on Receivables charged off in the period or prior periods)
to the Pool Balance as of the first day of each such Collection Period exceeds
____% or (ii) the average for the preceding three Collection Periods (or such
shorter number of Collection Periods as have elapsed since the Cutoff Date) of
the ratios of the number of Receivables that have been repossessed but not yet
sold or are delinquent 60 days or more to the outstanding number of Receivables
exceeds ___%, then the Specified Reserve Balance for such Distribution Date
shall be an amount equal to $___________.
"Specified Yield Supplement Balance" shall mean, on the Closing Date,
$____________ and, as of the close of business on any Distribution Date, an
amount equal to the sum of all projected Yield Supplement Amounts for all
future Distribution Dates, assuming that future Scheduled Payments on the
Receivables are made on their scheduled due dates; provided that if, on any
date, Ford Credit shall fail to pay the amount payable under the Yield
Supplement Agreement in accordance with the terms thereof, then, in such event,
the Specified Yield Supplement Balance shall not be reduced thereafter.
"Standard & Poor's" shall mean Standard & Poor's Ratings Group, 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 (i) the Servicing Fee and any overdue Servicing Fees, (ii) the
Accrued Note Interest, (iii) the Noteholders' Regular Principal and (iv) the
Accrued Certificate Interest with respect to such Distribution Date.
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"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 ____-_, a Delaware
business trust established pursuant to the Trust Agreement.
"Trust Accounts" shall have the meaning specified in Section 4.1(d) of the
Sale and Servicing Agreement.
"Trust Agreement" shall mean the Amended and Restated Trust Agreement
dated as of __________ __, ____, 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 (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
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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, the Certificate Distribution
Account, the Reserve Account and the Yield Supplement 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
Yield Supplement Agreement and 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.
"Weighted Average Rate" shall mean, with respect to any Collection Period,
a per annum rate equal to (i) the sum of (a) the product of the applicable Note
Interest Rate and the outstanding principal amount of each Class of Notes as of
the preceding Distribution Date (after giving effect to any principal payment
made on such Distribution Date) and (b) the product of the Certificate Rate and
the Certificate Balance as of the
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preceding Distribution Date (after giving effect to any principal payment made
on such Distribution Date), divided by (ii) the sum of the outstanding
principal amount of each Class of Notes and the Certificate Balance as of the
preceding Distribution Date (after giving effect to any principal payment made
on such Distribution Date).
"Yield Supplement Account" shall have the meaning specified in Section
5.1(a) of the Sale and Servicing Agreement.
"Yield Supplement Agreement" shall mean the Yield Supplement Agreement,
dated as of _________ __, ____, by and between the Seller and Ford Credit,
substantially in the form of Exhibit A to the Sale and Servicing Agreement.
"Yield Supplement Amount" shall mean, with respect to any Distribution
Date, the sum of all Receivable Yield Supplement Amounts for the related
Collection Period.
"Yield Supplement Initial Deposit" shall mean $______________.
"Yield Supplement Letter of Credit" shall mean any letter of credit issued
by the Letter of Credit Bank, as permitted by Section 5.1 of the Sale and
Servicing Agreement, to support payments of the Yield Supplement Amount under
the Yield Supplement Agreement.
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