<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 29, 1998
FORD CREDIT AUTO OWNER TRUST Series 1998-C
(Ford Credit Auto Receivables Two L.P. - Originator)
-------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 333-1245 38-3295857
- -------- ------------ ----------
(State or other juris- (Commission File Number) (IRS Employer
diction of incorporation I.D. No.)
The American Road, Dearborn, Michigan 48121
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 313-322-3000
<PAGE> 2
Item 5. Other Events
In connection with the issuance by Ford Credit Auto Owner Trust 1998-C
(the "Trust") of Asset Backed Securities pursuant to the Prospectus dated July
16, 1998 and the Prospectus Supplement dated July 20, 1998 filed with the
Securities and Exchange Commission pursuant to its Rule 424(b)(2), Ford Credit
Auto Receivables Two L.P. ("FCARTLP") is filing the exhibits listed below to
this Current Report on Form 8-K which are incorporated by reference herein.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
EXHIBITS
<TABLE>
<CAPTION>
Designation Description Method of
Filing
- ----------- ------------ ----------------
<S> <C> <C>
Exhibit 4.1 Conformed copy of the Indenture Filed with
dated as of July 1, 1998 between this Report.
the Trust and Indenture Trustee.
Exhibit 4.2 Conformed copy of the Amended and Filed with
Restated Trust Agreement dated as this Report.
of July 1, 1998 between FCARTLP
and PNC Bank, Delaware.
Exhibit 8.1 Opinion of Skadden, Arps, Slate, Filed with
Meagher & Flom LLP with respect to this Report.
certain federal income tax matters.
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Designation Description Method of
Filing
- ----------- ------------ --------------
<S> <C> <C>
Exhibit 8.2 Opinion of H.D. Smith, Secretary Filed with
and Corporate Counsel of Ford this Report.
Credit relating to certain
Michigan tax matters.
Exhibit 23.1 Consent of Skadden, Arps, Slate,
Meagher & Flom LLP (included as part
of Exhibit 8.1).
Exhibit 23.2 Consent of H.D. Smith, Secretary
and Corporate Counsel of Ford
Credit (included as part of
Exhibit 8.2).
Exhibit 99.1 Conformed copy of the Sale and Filed with
Servicing Agreement dated as of this Report.
July 1, 1998 among FCARTLP,
Ford Credit and the Trust.
Exhibit 99.2 Conformed copy of the Administration Filed with
Agreement dated as of July 1, 1998 this Report.
among Ford Credit, as administrator,
the Indenture Trustee and the Trust.
Exhibit 99.3 Conformed copy of the Purchase Filed with
Agreement dated as of July 1, 1998 this Report.
between Ford Credit and FCARTLP.
Exhibit 99.4 Appendix A - Defined Terms. Filed with
this Report.
</TABLE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized on the date indicated.
Ford Credit Auto Receivables Two L.P.
(Registrant)
By: Ford Credit Auto Receivables
Two, Inc., General Partner
Date: August 11, 1998 By:/s/R. P. Conrad
----------------------------------------
Assistant Secretary
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
Designation Description
- ----------- -----------
<S> <C>
Exhibit 4.1 Conformed copy of the Indenture
dated as of July 1, 1998 between
the Trust and Indenture Trustee.
Exhibit 4.2 Conformed copy of the Amended and
Restated Trust Agreement dated as of
July 1, 1998 between FCARTLP and PNC
Bank, Delaware.
Exhibit 8.1 Opinion of Skadden, Arps, Slate,
Meagher & Flom LLP with respect to
certain federal income tax matters.
Exhibit 8.2 Opinion of H.D. Smith, Secretary
and Corporte Counsel of Ford Credit,
relating to certain Michhigan tax
matters.
Exhibit 23.1 Consent of Skadden, Arps, Slate,
Meagher & Flom LLP (included as part
of Exhibit 8.1).
Exhibit 23.2 Consent of H.D. Smith, Secretary and
Corporate Counsel of Ford Credit
(included as part of Exhibit 8.2).
Exhibit 99.1 Conformed copy of the Sale and Servicing
Agreement dated as of July 1, 1998
among FCARTLP, Ford Credit and the
Trust.
Exhibit 99.2 Conformed copy of the Administration
Agreement dated as of July 1, 1998
among Ford Credit, as administrator,
the Indenture Trustee and the Trust.
Exhibit 99.3 Conformed copy of the Purchase Agreement
dated as of July 1, 1998 between
Ford Credit and FCARTLP.
Exhibit 99.4 Appendix A - Defined Terms.
</TABLE>
<PAGE> 1
EXHIBIT 4.1
================================================================================
INDENTURE
between
FORD CREDIT AUTO OWNER TRUST 1998-C,
as Issuer
and
THE CHASE MANHATTAN BANK,
as Indenture Trustee
Dated as of July 1, 1998
================================================================================
<PAGE> 2
CROSS REFERENCE TABLE(1)
TIA Indenture
Section Section
- ------- -------
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
- ----------------
(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 . . . . . . . . . . . . . . . . . . . . . . .10
SECTION 2.9. Cancellation . . . . . . . . . . . . . . . . . . . . .11
SECTION 2.10. Release of Collateral . . . . . . . . . . . . . . . . .12
SECTION 2.11. Book-Entry Notes . . . . . . . . . . . . . . . . . . .12
SECTION 2.12. Notices to Clearing Agency . . . . . . . . . . . . . .13
SECTION 2.13. Definitive Notes . . . . . . . . . . . . . . . . . . .14
ARTICLE III
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
SECTION 3.1. Payment of Principal and Interest . . . . . . . . . . .16
SECTION 3.2. Maintenance of Office or Agency . . . . . . . . . . . .16
SECTION 3.3. Money for Payments To Be Held in Trust . . . . . . . .16
SECTION 3.4. Existence . . . . . . . . . . . . . . . . . . . . . . .19
SECTION 3.5. Protection of Indenture Trust Estate . . . . . . . . .19
SECTION 3.6. Opinions as to Indenture Trust Estate . . . . . . . . .20
SECTION 3.7. Performance of Obligations; Servicing of Receivables .21
SECTION 3.8. Negative Covenants . . . . . . . . . . . . . . . . . .24
SECTION 3.9. Annual Statement as to Compliance . . . . . . . . . . .25
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms . .25
i
<PAGE> 4
Page
----
SECTION 3.11. Successor or Transferee . . . . . . . . . . . . . . . .28
SECTION 3.12. No Other Business . . . . . . . . . . . . . . . . . . .28
SECTION 3.13. No Borrowing ... . . . . . . . . . . . . . . . . . . .28
SECTION 3.14. Servicer's Obligations . . . . . . . . . . . . . . . .28
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities . . .28
SECTION 3.16. Capital Expenditures . . . . . . . . . . . . . . . . .29
SECTION 3.17. Further Instruments and Acts . . . . . . . . . . . . .29
SECTION 3.18. Restricted Payments . . . . . . . . . . . . . . . . . .29
SECTION 3.19. Notice of Events of Default . . . . . . . . . . . . . .30
SECTION 3.20. Removal of Administrator . . . . . . . . . . . . . . .30
ARTICLE IV
SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . . . . . . .31
SECTION 4.1. Satisfaction and Discharge of Indenture . . . . . . . .31
SECTION 4.2. Satisfaction, Discharge and Defeasance of Notes . . . .33
SECTION 4.3. Application of Trust Money . . . . . . . . . . . . . .34
SECTION 4.4. Repayment of Monies Held by Note Paying Agent . . . . .34
ARTICLE V
REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
SECTION 5.1. Events of Default . . . . . . . . . . . . . . . . . . .36
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment . .38
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee . . . . . . . . . . . . . . . . .39
SECTION 5.4. Remedies; Priorities . . . . . . . . . . . . . . . . .42
SECTION 5.5. Optional Preservation of the Receivables. . . . . . . .45
SECTION 5.6. Limitation of Suits . . . . . . . . . . . . . . . . . .46
SECTION 5.7. Unconditional Rights of Noteholders To Receive
Principal and Interest . . . . . . . . . . . . . . . .47
SECTION 5.8. Restoration of Rights and Remedies . . . . . . . . . .47
SECTION 5.9. Rights and Remedies Cumulative . . . . . . . . . . . .48
SECTION 5.10. Delay or Omission Not a Waiver . . . . . . . . . . . .48
SECTION 5.11. Control by Noteholders . . . . . . . . . . . . . . . .48
SECTION 5.12. Waiver of Past Defaults . . . . . . . . . . . . . . . .49
SECTION 5.13. Undertaking for Costs . . . . . . . . . . . . . . . . .50
SECTION 5.14. Waiver of Stay or Extension Laws . . . . . . . . . . .50
SECTION 5.15. Action on Notes . . . . . . . . . . . . . . . . . . . .51
ii
<PAGE> 5
Page
----
SECTION 5.16. Performance and Enforcement of Certain Obligations . .51
ARTICLE VI
THE INDENTURE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . .53
SECTION 6.1. Duties of Indenture Trustee . . . . . . . . . . . . . .53
SECTION 6.2. Rights of Indenture Trustee . . . . . . . . . . . . . .54
SECTION 6.3. Individual Rights of Indenture Trustee . . . . . . . .56
SECTION 6.4. Indenture Trustee's Disclaimer . . . . . . . . . . . .56
SECTION 6.5. Notice of Defaults; Insolvency or Dissolution of
Depositor or General Partner . . . . . . . . . . . . .56
SECTION 6.6. Reports by Indenture Trustee to Noteholders . . . . . .57
SECTION 6.7. Compensation and Indemnity . . . . . . . . . . . . . .57
SECTION 6.8. Replacement of Indenture Trustee . . . . . . . . . . .58
SECTION 6.9. Successor Indenture Trustee by Merger . . . . . . . . .60
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee . . . . . . . . . . . . . . . . . . .61
SECTION 6.11. Eligibility; Disqualification . . . . . . . . . . . . .62
SECTION 6.12. Preferential Collection of Claims Against Issuer . . .64
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS . . . . . . . . . . . . . . . . . . .65
SECTION 7.1. Issuer To Furnish Indenture Trustee Names and
Addresses of Noteholders . . . . . . . . . . . . . . .65
SECTION 7.2. Preservation of Information; Communications to
Noteholders . . . . . . . . . . . . . . . . . . . . . .65
SECTION 7.3. Reports by Issuer . . . . . . . . . . . . . . . . . . .66
SECTION 7.4. Reports by Indenture Trustee . . . . . . . . . . . . .66
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES . . . . . . . . . . . . . . . .68
SECTION 8.1. Collection of Money . . . . . . . . . . . . . . . . . .68
SECTION 8.2. Trust Accounts and Payahead Account . . . . . . . . . .68
SECTION 8.3. General Provisions Regarding Accounts . . . . . . . . .72
SECTION 8.4. Release of Indenture Trust Estate . . . . . . . . . . .74
SECTION 8.5. Opinion of Counsel . . . . . . . . . . . . . . . . . .75
ARTICLE IX
SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . . . . . .76
iii
<PAGE> 6
Page
----
SECTION 9.1. Supplemental Indentures Without Consent of
Noteholders . . . . . . . . . . . . . . . . . . . . .76
SECTION 9.2. Supplemental Indentures with Consent of
Noteholders . . . . . . . . . . . . . . . . . . . . .78
SECTION 9.3. Execution of Supplemental Indentures . . . . . . . .80
SECTION 9.4. Effect of Supplemental Indenture . . . . . . . . . .81
SECTION 9.5. Conformity with Trust Indenture Act . . . . . . . . .81
SECTION 9.6. Reference in Notes to Supplemental Indentures . . . .81
ARTICLE X
REDEMPTION OF NOTES . . . . . . . . . . . . . . . . . . . . . . . .83
SECTION 10.1. Redemption . . . . . . . . . . . . . . . . . . . . .83
SECTION 10.2. Form of Redemption Notice . . . . . . . . . . . . . .83
SECTION 10.3. Notes Payable on Redemption Date . . . . . . . . . .84
ARTICLE XI
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . .85
SECTION 11.1. Compliance Certificates and Opinions, etc. . . . . .85
SECTION 11.2. Form of Documents Delivered to Indenture Trustee . .87
SECTION 11.3. Acts of Noteholders . . . . . . . . . . . . . . . . .89
SECTION 11.4. Notices, etc., to Indenture Trustee, Issuer and
Rating Agencies . . . . . . . . . . . . . . . . . . .89
SECTION 11.5. Notices to Noteholders; Waiver . . . . . . . . . . .90
SECTION 11.6. Alternate Payment and Notice Provisions . . . . . . .91
SECTION 11.7. Conflict with Trust Indenture Act . . . . . . . . . .92
SECTION 11.8. Effect of Headings and Table of Contents . . . . . .92
SECTION 11.9. Successors and Assigns . . . . . . . . . . . . . . .92
SECTION 11.10. Separability . . . . . . . . . . . . . . . . . . . .92
SECTION 11.11. Benefits of Indenture . . . . . . . . . . . . . . . .92
SECTION 11.12. Legal Holidays . . . . . . . . . . . . . . . . . . .93
SECTION 11.13. Governing Law . . . . . . . . . . . . . . . . . . . .93
SECTION 11.14. Counterparts . . . . . . . . . . . . . . . . . . . .93
SECTION 11.15. Recording of Indenture . . . . . . . . . . . . . . .93
SECTION 11.16. Trust Obligation . . . . . . . . . . . . . . . . . .93
SECTION 11.17. No Petition . . . . . . . . . . . . . . . . . . . . .94
iv
<PAGE> 7
Page
----
SECTION 11.18. Inspection . . . . . . . . . . . . . . . . . . . . 94
EXHIBIT A-1
[FORM OF CLASS A-1 NOTE] . . . . . . . . . . . . . . . . . . . . . A-1-1
EXHIBIT A-2
[FORM OF CLASS A-2 NOTE] . . . . . . . . . . . . . . . . . . . . . A-2-1
EXHIBIT A-3
[FORM OF CLASS A-3 NOTE] . . . . . . . . . . . . . . . . . . . . . A-3-1
EXHIBIT A-4
[FORM OF CLASS A-4 NOTE] . . . . . . . . . . . . . . . . . . . . . A-4-1
EXHIBIT A-5
[FORM OF CLASS A-5 NOTE] . . . . . . . . . . . . . . . . . . . . . A-5-1
EXHIBIT A-6
[FORM OF CLASS B NOTE] . . . . . . . . . . . . . . . . . . . . . . A-6-1
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 July 1, 1998, (as from time to time amended,
supplemented or otherwise modified and in effect, this "Indenture") between
FORD CREDIT AUTO OWNER TRUST 1998-C, a Delaware business trust, as Issuer, and
THE CHASE MANHATTAN BANK, a New York corporation, as trustee and not in its
individual capacity (in such capacity, the "Indenture Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the holders of the Issuer's Class A-1 5.608% Asset
Backed Notes (the "Class A-1 Notes"), Class A-2 5.670% Asset Backed Notes (the
"Class A-2 Notes"), Class A-3 5.73% Asset Backed Notes (the "Class A-3 Notes"),
Class A-4 5.81% Asset Backed Notes (the "Class A-4 Notes"), Class A-5 5.86%
Asset Backed Notes (the "Class A-5 Notes" and, together with the Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes, the
"Class A Notes") and Class B 6.06% Asset Backed Notes (the "Class B Notes" and,
together with the Class A Notes, the "Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing Date, as
Indenture Trustee for the benefit of the Noteholders, all of the Issuer's
right, title and interest in, to and under, whether now owned or existing or
hereafter acquired or arising, (a) the Receivables; (b) with respect to
Precomputed Receivables, monies due thereunder on or after the Cutoff Date
(including Payaheads) and, with respect to Simple Interest Receivables, monies
due or received thereunder on or after the Cutoff Date (including in each case
any monies received prior to the Cutoff Date that are due on or after the
Cutoff Date and were not used to reduce the principal balance of the
Receivable); (c) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Receivables and any other interest of the Issuer in
the Financed Vehicles; (d) rights to receive proceeds with respect to the
Receivables from claims on any physical damage, credit life, credit disability,
or other insurance policies covering Financed Vehicles or Obligors; (e) Dealer
Recourse; (f) all of the Seller's rights to the Receivable Files; (g) the Trust
Accounts and all amounts, securities, investments and other property deposited
in or credited to any of the foregoing and
<PAGE> 9
all proceeds thereof; (h) the Sale and Servicing Agreement; (i) all of the
Seller's rights under the Purchase Agreement, including the right of the Seller
to cause Ford Credit to repurchase Receivables from the Seller; (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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ARTICLE I
DEFINITIONS, USAGE AND INCORPORATION BY REFERENCE
SECTION 1.01. 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 1.02. 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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ARTICLE II
THE NOTES
SECTION 2.01. Form. (a) The Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes and the Class B
Notes, together with the Indenture Trustee's certificates of authentication,
shall be in substantially the form set forth in Exhibit A- 1, Exhibit A-2,
Exhibit A-3, Exhibit A-4, Exhibit A-5 and Exhibit A-6, respectively, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture, and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon
as may, consistently herewith, be determined by the officers executing such
Notes, as evidenced by their execution thereof. Any portion of the text of any
Note may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Note.
(b) The definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
(c) Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in Exhibit A-1, Exhibit A-2, Exhibit A-3, Exhibit A-4,
Exhibit A-5 and Exhibit A-6 are part of the terms of this Indenture and are
incorporated herein by reference.
SECTION 2.02. Execution, Authentication and Delivery. (a) The Notes shall
be executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
(b) Notes bearing the manual or facsimile signature of individuals who were
at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
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(c) The Indenture Trustee shall, upon Issuer Order, authenticate and
deliver Class A-1 Notes for original issue in an aggregate principal amount of
$300,000,000, Class A-2 Notes for original issue in an aggregate principal
amount of $300,000,000, Class A-3 Notes for original issue in an aggregate
principal amount of $650,000,000, Class A-4 Notes for original issue in an
aggregate principal amount of $712,000,000, Class A- 5 Notes for original issue
in an aggregate principal amount of $200,000,000 and Class B Notes for original
issue in an aggregate principal amount of $92,000,000. The aggregate principal
amount of Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes,
Class A-5 Notes and Class B Notes outstanding at any time may not exceed those
respective amounts except as provided in Section 2.6.
(d) The Notes shall be issuable as registered Notes in minimum
denominations of $1,000 and in integral multiples of $1,000 in excess thereof.
(e) No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
SECTION 2.03. Temporary Notes. (a) Pending the preparation of definitive
Notes, the Issuer may execute, and upon receipt of an Issuer Order the
Indenture Trustee shall authenticate and deliver, temporary Notes that are
printed, lithographed, typewritten, mimeographed or otherwise produced,
substantially of the tenor of the definitive Notes in lieu of which they are
issued and with such variations not inconsistent with the terms of this
Indenture as the officers executing the temporary Notes may determine, as
evidenced by their execution of such temporary Notes.
If temporary Notes are issued, the Issuer shall cause definitive Notes
to be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive
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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
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 2.04. 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 2.05. 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. If a Person other than the Indenture Trustee is appointed
by the Issuer as Note Registrar, (i) the Issuer shall give the Indenture
Trustee prompt written notice of the appointment of such Note Registrar and of
the location, and any change in the location, of the Note Register, (ii) the
Indenture Trustee shall have the right to inspect the Note Register at all
reasonable times and to obtain copies thereof, and (iii) the Indenture Trustee
shall have the right to rely upon a certificate executed on behalf of the Note
Registrar by an Executive Officer thereof as to the names and addresses of the
Noteholders and the principal amounts and number of such Notes.
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(b) [Reserved]
(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(1) 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(1) of the UCC are met, the Issuer shall execute,
the Indenture Trustee shall authenticate, and the Noteholder shall obtain from
the Indenture Trustee, the Notes which the Noteholder making such exchange is
entitled to receive.
(e) All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture as the Notes surrendered
upon such registration of transfer or exchange.
(f) Every Note presented or surrendered for registration of transfer or
exchange shall be (i) duly endorsed by, or be accompanied by a written
instrument of transfer in form satisfactory to the Indenture Trustee duly
executed by, the Noteholder thereof or such Noteholder's attorney duly
authorized in writing, with such signature guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar and (ii)
accompanied by such other documents or evidence as the Indenture Trustee may
require.
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(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 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 2.06. 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
protected purchaser, as defined in Section 8-303 of the UCC, and provided that
the requirements of Section 8-405 of the UCC are met, the Issuer shall execute,
and upon Issuer Request the Indenture Trustee shall authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Note, a replacement Note of the same Class; provided, however, that if any such
destroyed, lost or stolen Note, but not a mutilated Note, shall have become or
within seven (7) days shall be due and payable, or shall have been called for
redemption, instead of issuing a replacement Note, the Issuer may pay such
destroyed, lost or stolen Note when so due or payable or upon the Redemption
Date without surrender thereof. If, after the delivery of such replacement
Note or payment of a destroyed, lost or stolen Note pursuant to the proviso to
the preceding sentence, a protected 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
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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 protected purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
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 2.07. 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.
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SECTION 2.08. Payment of Principal and Interest; Defaulted Interest.
(a) The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class
A-4 Notes, the Class A-5 Notes and the Class B Notes shall accrue interest at
the Class A-1 Rate, the Class A-2 Rate, the Class A-3 Rate, the Class A-4 Rate,
the Class A-5 Rate and the Class B Rate, respectively, as set forth in Exhibit
A-1, Exhibit A-2, Exhibit A- 3, Exhibit A-4, Exhibit A-5 and Exhibit A-6,
respectively, and such interest shall be due and payable on each Distribution
Date as specified therein, subject to Section 3.1. Any installment of interest
or principal, if any, payable on any Note that is punctually paid or duly
provided for by the Issuer on the applicable Distribution Date shall be paid to
the Person in whose name such Note (or one or more Predecessor Notes) is
registered on the Record Date either by wire transfer in immediately available
funds, to the account of such Noteholder at a bank or other entity having
appropriate facilities therefor, if such Noteholder shall have provided to the
Note Registrar appropriate written instructions at least five (5) Business Days
prior to such Distribution Date and such Noteholder's Notes in the aggregate
evidence a denomination of not less than $1,000,000, or, if not, 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 to Note Owners pursuant to Section 2.13, with respect to Notes
registered on the Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be Cede & Co.), payment shall be made by wire
transfer in immediately available funds to the account designated by such
nominee, and except for the final installment of principal payable with respect
to such Note on a Distribution Date, Redemption Date or the applicable Final
Scheduled Distribution Date, which shall be payable as provided below. The
funds represented by any such checks returned undelivered shall be held in
accordance with Section 3.3.
(b) The principal of each Note shall be payable in installments on each
Distribution Date as provided in the forms of Notes set forth in Exhibit A-1,
Exhibit A-2, Exhibit A-3, Exhibit A-4, Exhibit A-5 and Exhibit A-6 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
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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 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 2.09. 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
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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 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
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Indenture (including the payment of principal of and interest on the
Book-Entry 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 to Note Owners 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
principal of and interest on the Book-Entry 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 of Book-Entry Notes is required under this
Indenture, unless and until Definitive Notes shall have been issued to the Note
Owners pursuant to Section 2.13,
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the Indenture Trustee shall give all such notices and communications specified
herein to be given to Noteholders of Book-Entry Notes 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 Book-Entry
Notes and the Administrator is unable to locate a qualified successor, (ii) the
Administrator, at its option, advises the Indenture Trustee in writing that it
elects to terminate the book-entry system through the Clearing Agency or (iii)
after the occurrence of an Event of Default or an Event of Servicing
Termination, Note Owners of Book-Entry Notes evidencing beneficial interests
aggregating not less than a majority of the principal amount of the Book-Entry
Notes Outstanding advise the Indenture Trustee and the Clearing Agency in
writing that the continuation of a book-entry system through the Clearing
Agency is no longer in the best interests of the Note Owners, then the Clearing
Agency shall notify all Note Owners and the Indenture Trustee of the occurrence
of such event and of the availability of Definitive Notes to Note Owners
requesting the same. Upon surrender to the Indenture Trustee of the
typewritten Notes representing the Book-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 to Note
Owners, the Indenture Trustee shall recognize the holders of such Definitive
Notes as Noteholders.
SECTION 2.14. Authenticating Agents. (a) The Indenture Trustee may
appoint one or more Persons (each, an "Authenticating Agent") with power to act
on its behalf and subject to its direction in the authentication of Notes in
connection with issuance, transfers and exchanges under Sections 2.2, 2.3, 2.5,
2.6 and 9.6, as fully to all intents and purposes as though each such
Authenticating Agent had been expressly authorized by
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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 successor 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 3.01. 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 and subject to Section 8.2, on each Distribution Date the Issuer
shall cause to be paid all amounts on deposit in the Collection Account and the
Principal Distribution Account with respect to the Collection Period preceding
such Distribution Date and deposited therein pursuant to the Sale and Servicing
Agreement. 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 3.02. 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 3.03. Money for Payments To Be Held in Trust. (a) As provided in
Sections 8.2 and 5.4(b), all payments of amounts due and payable with respect
to any Notes that are to be made from amounts withdrawn from the Trust Accounts
and the Payahead Account shall be made on behalf of the Issuer by the Indenture
Trustee or by another Note Paying Agent, and no amounts so with-
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drawn from the Trust Accounts and the Payahead Account for payments of Notes
shall be paid over to the Issuer, except as provided in this Section 3.3.
(b) On or before each Distribution Date and Redemption Date, the Issuer
shall deposit or cause to be deposited in the Collection 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
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meet the standards required to be met by a Note 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
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repaid to the Issuer. The Indenture Trustee shall also adopt and 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 3.04. 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 3.05. 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
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(iv) preserve and defend title to the Indenture Trust Estate and the
rights of the Indenture Trustee and the Noteholders in such Indenture Trust
Estate against the claims of all Persons.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required to be executed pursuant to this Section 3.5;
provided, however, that the Indenture Trustee shall be under no obligation to
file any such financing statement, continuation statement or other instrument
required to be executed pursuant to this Section 3.5.
SECTION 3.6. Opinions as to Indenture Trust Estate. (a) On the Closing
Date, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel
either stating that, in the opinion of such counsel, such action has been taken
with respect to the recording and filing of this Indenture, any indentures
supplemental hereto, and any other requisite documents, and with respect to the
execution and filing of any financing statements and continuation statements,
as are necessary to perfect and make effective the lien and security interest
of this Indenture and reciting the details of such action, or stating that, in
the opinion of such counsel, no such action is necessary to make such lien and
security interest effective.
(b) On or before April 30 in each calendar year, beginning in 1999, the
Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken with
respect to the recording, filing, re-recording and refiling of this Indenture,
any indentures supplemental hereto and any other requisite documents and with
respect to the execution and filing of any financing statements and
continuation statements and any other action that may be required by law as is
necessary to maintain the lien and security interest created by this Indenture
and reciting the details of such action or stating that in the opinion of such
counsel no such action is necessary to maintain such lien and security
interest. Such Opinion of Counsel shall also describe the recording, filing,
re- recording and refiling of this Indenture, any indentures supplemental
hereto and any
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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 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.
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(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.
(e) As promptly as possible after the giving of notice of termination to
the Servicer of the Servicer's rights and powers pursuant to Section 8.1 of the
Sale and Servicing Agreement or the Servicer's resignation in accordance with
the terms of the Sale and Servicing Agreement, the Issuer shall appoint a
successor servicer (the "Successor Servicer") meeting the requirements of the
Sale and Servicing Agreement, and such Successor Servicer shall accept its
appointment by a written assumption in a form acceptable to the Indenture
Trustee. In the event that a Successor Servicer has not been appointed at the
time when the Servicer ceases to act as Servicer, the Indenture Trustee without
further action shall automatically be appointed the Successor Servicer. If the
Indenture Trustee shall be legally unable to act as Successor Servicer, it may
appoint, or petition a court of competent jurisdiction to appoint, a Successor
Servicer. The Indenture Trustee may resign as the Servicer by giving written
notice of such resignation to the Issuer and in such event shall be released
from such duties and obligations, such release not to be effective until the
date a new servicer enters into a servicing agreement with the Issuer as
provided below. Upon delivery of any such notice to the Issuer, the Issuer
shall obtain a new servicer as the Successor Servicer under the Sale and
Servicing Agreement. Any Successor Servicer (other than the Indenture Trustee)
shall (i) be an established institution having a net worth of not less than
$100,000,000 and whose regular business shall include the servicing of
automotive receivables and (ii) enter into a servicing agreement with the
Issuer having substantially the same provisions as the provisions of the Sale
and Servicing Agreement applicable to the Servicer. If, within thirty
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(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 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
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of, the terms of any Collateral (except to the extent otherwise provided in the
Sale and Servicing Agreement or the other Basic Documents).
SECTION 3.08. 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;
(ii) claim any credit on, or make any deduction from the principal or
interest payable in respect of, the Notes (other than amounts properly
withheld from such payments under the Code) or assert any claim against any
present or former Noteholder by reason of the payment of the taxes levied or
assessed upon the Trust or the Indenture Trust Estate;
(iii) dissolve or liquidate in whole or in part; or
(iv) (A) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien of this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released
from any covenants or obligations with respect to the Notes under this
Indenture except as may be expressly permitted hereby, (B) permit any lien,
charge, excise, claim, security interest, mortgage or other encumbrance
(other than the lien of this Indenture) to be created on or extend to or
otherwise arise upon or burden the assets of the Issuer, including those
included in the Indenture Trust Estate, or any part thereof or any interest
therein or the proceeds thereof (other than tax liens, mechanics' liens and
other liens that arise by operation of law, in each case on any of the
Financed Vehicles and aris-
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ing 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 3.09. 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 1999), an Officer's Certificate stating, as to the
Authorized Officer signing such Officer's Certificate, that:
(i) a review of the activities of the Issuer during such year and of its
performance under this Indenture has been made under such Authorized
Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on such
review, the Issuer has complied with all conditions and covenants under this
Indenture throughout such year, or, if there has been a default in its
compliance with any such condition or covenant, specifying each such default
known to such Authorized Officer and the nature and status thereof.
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms. (a)
The Issuer shall not consolidate or merge with or into any other Person,
unless:
(i) the Person (if other than the Issuer) formed by or surviving such
consolidation or merger shall be a Person organized and existing under the
laws of the United States of America or any State and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Indenture Trustee, in form satisfactory to the Indenture Trustee, the due
and punctual payment of the principal of and interest on all Notes and the
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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
(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 ex
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isting 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;
(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
conveyance or transfer and such supplemental indenture comply with this
Article III and that all conditions precedent herein provided for relating to
such transaction have been complied with (including any filing required by
the Exchange Act).
SECTION 3.11. Successor or Transferee. (a) Upon any consolidation or
merger of the Issuer in 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.
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
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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 or equity interest or security in or of the Issuer or
to the Servicer or the Administrator, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security
or (iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made, (x) payments
to the Servicer, the Administrator, the Owner Trustee, the Indenture Trustee,
the Noteholders and the Certificateholders as contemplated by, and to the
extent funds are available for such purpose under, this Indenture and the other
Basic Documents and (y) payments to the Indenture Trustee pursuant to Section
2(a)(ii) of the Administration Agreement. The Issuer shall not, directly or
indirectly, make payments to or distributions from the Collection Account or
the Principal Distribution Account
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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 pur-
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pose, in an amount sufficient without reinvestment to pay and discharge the
entire indebtedness on such Notes not theretofore delivered to the Indenture
Trustee for cancellation when due to the applicable Final Scheduled
Distribution Date or Redemption Date (if Notes shall have been called for
redemption pursuant to Section 10.1(a)), as the case may be, and all fees due
and payable to the Indenture Trustee;
(B) the Issuer has paid or caused to be paid all other sums payable
hereunder and under any of the other Basic Documents by the Issuer;
(C) the Issuer has delivered to the Indenture Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA or the
Indenture Trustee) an Independent Certificate from a firm of certified
public accountants, each meeting the applicable requirements of Section
11.1(a) and, subject to Section 11.2, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture have been complied with; and
(D) the Issuer has delivered to the Indenture Trustee an Opinion of Counsel
to the effect that the satisfaction and discharge of the Notes pursuant to
this Section 4.1 will not cause any Noteholder to be treated as having sold
or exchanged any of its Notes for purposes of Section 1001 of the Code.
Upon the satisfaction and discharge of the Indenture pursuant to this Section
4.1, at the request of the Owner Trustee, the Indenture Trustee shall deliver
to the Owner Trustee a certificate of a Trustee Officer stating that all
Noteholders have been paid in full and stating whether, to the best knowledge
of such Trustee Officer, any claims remain against the Issuer in respect of the
Indenture and the Notes.
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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 3.2, 3.3, 3.4, 3.5, 3.8, 3.10, 3.12 and 3.13, (v) the rights,
obligations and immunities of the Indenture Trustee hereunder (including the
rights of the Indenture Trustee under Section 6.7 and the obligations of the
Indenture Trustee under Section 4.3), and (vi) the rights of Noteholders as
beneficiaries hereof with respect to the property so deposited with the
Indenture Trustee payable to all or any of them.
(b) The satisfaction, discharge and defeasance of the Notes pursuant to
subsection (a) of this Section 4.2 is subject to the satisfaction of all of the
following conditions:
(i) the Issuer has deposited or caused to be deposited irrevocably
(except as provided in Section 4.4) with the Indenture Trustee as trust funds
in trust, specifically pledged as security for, and dedicated solely to, the
benefit of the Noteholders, which, through the payment of interest and
principal in respect thereof in accordance with their terms will provide, not
later than one day prior to the due date of any payment referred to below,
money in an amount sufficient, in the opinion of a nationally recognized firm
of independent certified public accountants expressed in a written
certification thereof delivered to the Indenture Trustee, to pay and
discharge the entire indebtedness on the outstanding Notes, for principal
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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 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
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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 5.01. Events of Default. "Event of Default," wherever used herein,
means the occurrence of any one of the following events (whatever the reason
for such Event of Default and whether it shall be voluntary or involuntary or
be effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):
(i) default in the payment of any interest on any Note when the same
becomes due and payable on each Distribution Date, and such default shall
continue for a period of five (5) days or more; provided that a default in
the payment of interest on the Class B Notes shall not be an Event of
Default until the principal amount of the outstanding Class A-5 Notes has
been reduced to zero; 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
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(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 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.
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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.
SECTION 5.02. 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
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(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.
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee. (a) The Issuer covenants that if (i) default is made in
the payment of any interest on any Note when the same becomes due and payable,
and such default continues for a period of five (5) days, or (ii) default is
made in the payment of the principal of or any installment of the principal of
any Note when the same becomes due and payable, the Issuer shall, upon demand
of the Indenture Trustee, pay to the Indenture Trustee, for the benefit of the
Noteholders, the whole amount then due and payable on such Notes for principal
and interest, with interest upon the overdue principal and, to the extent
payment at such rate of interest shall be legally enforceable, upon overdue
installments of interest at the applicable Note Interest Rate borne by the
Notes and in addition thereto such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee and
its agents, attorneys and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Indenture Trustee, in its own name and as trustee of an express
trust, may institute a Proceeding for the collection of the sums so due and
unpaid, and may prosecute such Proceeding to judgment or final decree, and may
enforce the same against the Issuer or other obligor upon such Notes and collect
in the manner provided by law out of the property of the Issuer or other obligor
upon such Notes, wherever situated, the monies adjudged or decreed to be
payable.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee may, as more particularly provided in Section 5.4, in its discretion,
proceed to protect and enforce its rights and the rights of
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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 Person having or claiming an ownership interest
in the Indenture Trust Estate, Proceedings under Title 11 of the United States
Code or any other applicable federal or State bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in case of any other comparable judicial Proceedings
relative to the Issuer or other obligor upon the Notes, or to the creditors or
property of the Issuer or such other obligor, the Indenture Trustee,
irrespective of whether the principal of any Notes shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Indenture Trustee shall have made any demand pursuant to the
provisions of this Section 5.3, shall be entitled and empowered, by
intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to file
such other papers or documents as may be necessary or advisable in order to
have the claims of the Indenture Trustee (including any claim for reasonable
compensation to the Indenture Trustee and each predecessor Indenture Trustee,
and their respective agents, attorneys and counsel, and for reimbursement of
all expenses and liabilities incurred, and all advances and disbursements
made, by the Indenture Trustee and each predecessor Indenture Trustee, except
as a result of negligence or bad faith) and of the Noteholders allowed in
such Proceedings;
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(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
(iv) to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Indenture
Trustee or the Noteholders allowed in any judicial proceedings relative to
the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances and disbursements made, by the Indenture
Trustee and each predecessor Indenture Trustee, except as a result of
negligence or bad faith, and any other amounts due the Indenture Trustee
pursuant to Section 6.7.
(e) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Noteholder or to authorize
the Indenture Trustee to vote in respect of the claim of any Noteholder in any
such proceeding except, as aforesaid, to vote for the election of a trustee in
bankruptcy or similar Person.
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(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, attorneys and counsel, shall be
for the ratable benefit of the Noteholders in respect of which such judgment has
been recovered.
(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Noteholders, and it shall not be necessary to make
any Noteholder a party to any such Proceedings.
SECTION 5.04. 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
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(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 (x)(A) the Noteholders of Notes
evidencing 100% of the principal amount of the Notes Outstanding consent
thereto, (B) the proceeds of such sale or liquidation are sufficient to pay in
full the principal of and the accrued interest on the outstanding Notes or (C)
the Indenture Trustee determines (but shall have no obligation to make such
determination) that the Indenture Trust Estate will not continue to provide
sufficient funds for the payment of principal of and interest on the Notes as
they would have become due if the Notes had not been declared due and payable,
and the Indenture Trustee obtains the consent of Noteholders of Notes
evidencing not less than 66 2/3% of the principal amount of the Notes
Outstanding and (y) with respect to an Event of Default described in Section
5.1(iii), (A) the Certificateholders of all outstanding Certificates consent
thereto or (B) the proceeds of such sale or liquidation are sufficient to pay
in full the principal of and accrued interest on the outstanding Notes and
Certificates. In determining such sufficiency or insufficiency with respect to
clauses (x)(B), (x)(C) and (y)(B) 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:
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(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 of the Class A Notes for amounts due and
unpaid on the Class A Notes in respect of interest, ratably, without
preference or priority of any kind, according to the amounts due and payable
on the Class A 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 Class A-2 Notes for principal, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Class
A-2 Notes for principal, until the principal amount of the outstanding Class
A-2 Notes is reduced to zero;
(vi) sixth, to Noteholders of the Class A-3 Notes for amounts due and
unpaid on the Class A-3 Notes for principal, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Class
A-3 Notes for principal, until the principal amount of the outstanding Class
A-3 Notes is reduced to zero;
(vii) seventh, to Noteholders of the Class A-4 Notes for amounts due
and unpaid on the Class A-4 Notes for principal, ratably, without preference
or priority of any kind,
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according to the amounts due and payable on the Class A-4 Notes for
principal, until the principal amount of the outstanding Class A-4 Notes is
reduced to zero;
(viii) eighth, to Noteholders of the Class A-5 Notes for amounts due
and unpaid on the Class A-5 Notes for principal, ratably, without preference
or priority of any kind, according to the amounts due and payable on the
Class A-5 Notes for principal, until the principal amount of the outstanding
Class A-5 Notes is reduced to zero;
(ix) ninth, to Noteholders of the Class B Notes for amounts due and
unpaid on the Class B Notes in respect of interest, ratably, without
preference or priority of any kind, according to the amounts due and payable
on the Class B Notes for interest;
(x) tenth, to Noteholders of the Class B Notes for amounts due and
unpaid on the Class B Notes for principal, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Class B
Notes for principal, until the principal amount of the outstanding Class B
Notes is reduced to zero; and
(xi) eleventh, 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
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not been rescinded and annulled, the Indenture Trustee may, but need not, elect
to maintain possession of the Indenture Trust Estate and apply proceeds as if
there had been no declaration of acceleration; provided, however, that funds on
deposit in the Collection Account (including funds, if any, deposited therein
from the Reserve Account and the Payahead Account) shall be applied in
accordance with such declaration of acceleration in the manner specified in
Section 4.6(c) of the Sale and Servicing Agreement. It is the desire of the
parties hereto and the Noteholders that there be at all times sufficient funds
for the payment of principal of and interest on the Notes, and the Indenture
Trustee shall take such desire into account when determining whether or not to
maintain possession of the Indenture Trust Estate. In determining whether to
maintain possession of the Indenture Trust Estate, the Indenture Trustee may,
but need not, obtain and rely upon an opinion of an Independent investment
banking or accounting firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Indenture Trust Estate for
such purpose.
SECTION 5.6. Limitation of Suits. No Noteholder shall have any right to
institute any Proceeding, judicial or otherwise, with respect to this Indenture
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless:
(a) such Noteholder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(b) the Noteholders of Notes evidencing not less than 25% of the
principal amount of the Notes Outstanding have made written request to the
Indenture Trustee to institute such Proceeding in respect of such Event of
Default in its own name as Indenture Trustee hereunder;
(c) such Noteholder or Noteholders have offered to the Indenture
Trustee reasonable indemnity against the costs, expenses and liabilities to
be incurred in complying with such request;
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(d) the Indenture Trustee for sixty (60) days after its receipt of
such notice, request and offer of indemnity has failed to institute such
Proceedings; and
(e) no direction inconsistent with such written request has been
given to the Indenture Trustee during such sixty-day period by the
Noteholders of Notes evidencing not less than a majority of the principal
amount of the Notes Outstanding.
It is understood and intended that no one or more Noteholders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other
Noteholders or to obtain or to seek to obtain priority or preference over any
other Noteholders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Indenture Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Noteholders, each evidencing
less than a majority of the principal amount of the Notes Outstanding, the
Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
SECTION 5.07. 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 5.08. 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 deter-
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mined 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 5.09. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.10. Delay or Omission Not a Waiver. No delay or omission of the
Indenture Trustee or any Noteholder to exercise any right or remedy accruing
upon any Default or Event of Default shall impair any such right or remedy or
constitute a waiver of any such Default or Event of Default or any acquiescence
therein. Every right and remedy given by this Article V or by law to the
Indenture Trustee or to the Noteholders may be exercised from time to time, and
as often as may be deemed expedient, by the Indenture Trustee or by the
Noteholders, as the case may be.
SECTION 5.11. Control by Noteholders. The Noteholders of Notes evidencing
not less than a majority of the principal amount of the Notes Outstanding shall
have the right to direct the time, method and place of conducting any
Proceeding for any remedy available to the Indenture Trustee with respect to
the Notes or exercising any trust or power conferred on the Indenture Trustee;
provided that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture;
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(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 Trustee that is not inconsistent with such direction.
Notwithstanding the rights of Noteholders set forth in this Section 5.11,
subject to Section 6.1, the Indenture Trustee need not take any action that it
determines might involve it in costs or expenses for which it would not be
adequately indemnified or expose it to personal liability or might materially
adversely affect or unduly prejudice the rights of any Noteholders not
consenting to such action.
SECTION 5.12. Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.2, the
Noteholders of Notes evidencing not less than a majority of the principal
amount of the Notes Outstanding may waive any past Default or Event of Default
and its consequences except a Default (a) in the payment of principal of or
interest on any of the Notes or (b) in respect of a covenant or provision
hereof that cannot be amended, supplemented or modified without the consent of
each Noteholder. In the case of any such waiver, the Issuer, the Indenture
Trustee and the Noteholders shall be restored to their former positions and
rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereto.
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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, 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
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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 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.
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(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;
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(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 that the
Indenture Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.11.
(d) The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing with the
Issuer.
(e) Money held in trust by the Indenture Trustee need not be segregated
from other funds except to the extent required by law or the terms of this
Indenture or the Sale and Servicing Agreement.
(f) No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(g) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Indenture Trustee shall be
subject to the provisions of this Section 6.1 and to the provisions of the TIA.
(h) The Indenture Trustee shall not be charged with knowledge of any Event
of Default unless either (1) a Trustee Officer shall have actual knowledge of
such Event of Default or (2) written notice of such Event of Default shall have
been given to the Indenture Trustee in accordance with the provisions of this
Indenture.
SECTION 6.2. Rights of Indenture Trustee. (a) The Indenture Trustee may
rely and shall be protected in acting or refraining from acting upon any
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resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Indenture Trustee need not investigate any fact or matters stated
in any such document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on an Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Indenture Trustee shall not be
responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that such action or omission by the
Indenture Trustee does not constitute willful misconduct, negligence or bad
faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
(f) The Indenture Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture or to honor the request or
direction of any of the Noteholders pursuant to this Indenture unless such
Noteholders shall have offered to the Indenture Trustee reasonable security or
indemnity against the reasonable costs, expenses, disbursements,
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advances and liabilities which might be incurred by it, its agents and its
counsel in compliance with such request or direction.
(g) Any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by an Issuer Request.
SECTION 6.3. Individual Rights of Indenture Trustee. The Indenture
Trustee, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with the Issuer or its Affiliates with
the same rights it would have if it were not Indenture Trustee. Any Note
Paying Agent, Note Registrar, co-registrar or co-paying agent hereunder may do
the same with like rights.
SECTION 6.4. Indenture Trustee's Disclaimer. The Indenture Trustee (i)
shall not be responsible for, and makes no representation as to, the validity
or adequacy of this Indenture or the Notes and (ii) shall not be accountable
for the Issuer's use of the proceeds from the Notes, or responsible for any
statement of the Issuer in this Indenture or in any document issued in
connection with the sale of the Notes or in the Notes (all of which shall be
taken as statements of the Issuer) other than the Indenture Trustee's
certificate of authentication.
SECTION 6.5. Notice of Defaults; Insolvency or Dissolution of Depositor or
General Partner. (a) If a Default occurs and is continuing and if it is known
to a Trustee Officer of the Indenture Trustee, the Indenture Trustee shall mail
to each Noteholder notice of such Default within ninety (90) days after it
occurs. Except in the case of a Default in payment of principal of or interest
on any Note (including payments pursuant to the mandatory redemption provisions
of such Note), the Indenture Trustee may withhold the notice if and so long as
a committee of its Trustee Officers in good faith determines that withholding
the notice is in the interests of Noteholders.
(b) If the Indenture Trustee receives notice from the Owner Trustee of the
occurrence of an Insolvency Event or a dissolution with respect to the
Depositor or the General Partner pursuant to Section 9.2 of
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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 and each Certificate
Distribution Account) in a commercially reasonable manner and on commercially
reasonable terms. The proceeds of such a sale of the assets of the Trust shall
be treated as collections of Receivables under the Sale and Servicing Agreement
and deposited in the Collection Account and the Notes and Certificates shall be
paid in accordance with Section 4.6 of the Sale and Servicing Agreement.
SECTION 6.6. Reports by Indenture Trustee to Noteholders. Upon delivery to
the Indenture Trustee by the Servicer of such information prepared by the
Servicer pursuant to Section 3.9 of the Sale and Servicing Agreement as may be
required to enable each Noteholder to prepare its federal and State income tax
returns, the Indenture Trustee shall deliver such information to the
Noteholders.
SECTION 6.7. Compensation and Indemnity. (a) The Issuer shall, or shall
cause the Administrator to, pay to the Indenture Trustee from time to time
reasonable compensation for its services. The Indenture
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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
for, and to hold it harmless against, any and all loss, liability or expense
(including attorneys' fees) incurred by it in connection with the
administration of this trust and the performance of its duties hereunder,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder. The Indenture Trustee shall notify the Issuer and the
Administrator promptly of any claim for which it may seek indemnity. Failure
by the Indenture Trustee to so notify the Issuer and the Administrator shall
not relieve the Issuer or the Administrator of its obligations hereunder. The
Issuer shall, or shall cause the Administrator to, defend any such claim, and
the Indenture Trustee may have separate counsel and the Issuer shall, or shall
cause the Administrator to, pay the fees and expenses of such counsel. Neither
the Issuer nor the Administrator need reimburse any expense or indemnity
against any loss, liability or expense incurred by the Indenture Trustee
through the Indenture Trustee's own willful misconduct, negligence or bad
faith.
(b) The Issuer's payment obligations to the Indenture Trustee pursuant to
this Section 6.7 shall survive the resignation or removal of the Indenture
Trustee and the discharge of this Indenture. When the Indenture Trustee incurs
expenses after the occurrence of a Default specified in Section 5.1(iv) or (v)
with respect to the Issuer, the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other applicable
federal or State bankruptcy, insolvency or similar law.
SECTION 6.8. Replacement of Indenture Trustee. (a) No resignation or
removal of the Indenture Trustee, and no appointment of a successor Inden-
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ture Trustee, shall become effective until the acceptance of appointment by the
successor Indenture Trustee pursuant to this Section 6.8 and payment in full of
all sums due to the Indenture Trustee pursuant to Section 6.7. The Indenture
Trustee may resign at any time by so notifying the Issuer. The Noteholders of
Notes evidencing not less than a majority in principal amount of the Notes
Outstanding may remove the Indenture Trustee without cause by so notifying the
Indenture Trustee and the Issuer and may appoint a successor Indenture Trustee.
The Issuer shall remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) an Insolvency Event occurs with respect to the Indenture Trustee;
(iii) a receiver or other public officer takes charge of the
Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in the
office of Indenture Trustee for any reason (the Indenture Trustee in such event
being referred to herein as the retiring Indenture Trustee), the Issuer shall
promptly appoint a successor Indenture Trustee.
(b) Any successor Indenture Trustee shall deliver a written acceptance of
its appointment to the retiring Indenture Trustee and to the Issuer.
Thereupon, if all sums due the retiring Indenture Trustee pursuant to Section
6.7 have been paid in full, the resignation or removal of the retiring
Indenture Trustee shall become effective, and the successor Indenture Trustee
shall have all the rights, powers and duties of the Indenture Trustee under
this Indenture. The successor Indenture Trustee shall mail a notice of its
succession to Noteholders. If all sums due the retiring Indenture Trustee
pursuant to Section 6.7 have been paid in full, the retiring Indenture Trustee
shall promptly transfer all property held by it as Indenture Trustee to the
successor Indenture Trustee.
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(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 who has been a bona fide Noteholder for at least six (6) months
may petition any court of competent jurisdiction for the removal of the
Indenture Trustee and the appointment of a successor Indenture Trustee.
(d) Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section 6.8, the obligations of the Issuer and the Administrator under
Section 6.7 shall continue for the benefit of the retiring Indenture Trustee.
SECTION 6.9. Successor Indenture Trustee by Merger. (a) If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation or banking association without any further act shall be the
successor Indenture Trustee; provided that such corporation or banking
association shall be otherwise qualified and eligible under Section 6.11. The
Indenture Trustee shall provide the Rating Agencies with prior written notice
of any such transaction.
(b) In case at the time such successor or successors by merger,
conversion or consolidation to the Indenture Trustee shall succeed to the trusts
created by this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the certificate
of authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in
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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.
(b) Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Indenture Trustee shall be conferred or imposed upon and exercised
or performed by the Indenture Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee shall
not be authorized to act separately without the Indenture Trustee joining in
such act), except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed the Indenture Trustee
shall be incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties and obligations (including the
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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, 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
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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).
Within ninety (90) days after ascertaining the occurrence of an Event of
Default which shall not have been cured or waived, unless authorized by the
Commission, the Indenture Trustee shall resign with respect to the Class A
Notes and/or the Class B Notes in accordance with Section 6.8 of this
Indenture, and the Issuer shall appoint a successor Indenture Trustee for one
or both of such Classes, as applicable, so that there will be separate
Indenture Trustees for the Class A Notes and the Class B Notes. In the event
the Indenture Trustee fails to comply with the terms of the preceding sentence,
the Indenture Trustee shall comply with clauses (ii) and (iii) of TIA Section
310(b).
In the case of the appointment hereunder of a successor Indenture Trustee
with respect to any Class of Notes pursuant to this Section 6.11, the Issuer,
the retiring Indenture Trustee and the successor Indenture Trustee with respect
to such Class of Notes shall execute and deliver an indenture supplemental
hereto wherein each successor Indenture Trustee shall accept such appointment
and which (i) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, the successor Indenture Trustee all
the rights, powers, trusts and duties of the retiring Indenture Trustee with
respect to the Notes of the Class to which the appointment of such successor
Indenture Trustee relates, (ii) if the retiring Indenture Trustee is not
retiring with respect to all Classes of Notes, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights, powers,
trusts and duties of the retiring Indenture Trustee with respect to the Notes
of each Class as to which the retiring Indenture Trustee is not retiring shall
continue to be vested in the Indenture Trustee and (iii) shall add to or change
any of the provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by
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more than one Indenture Trustee, it being understood that nothing herein or in
such supplemental indenture shall constitute such Indenture Trustees
co-trustees of the same trust and that each such Indenture Trustee shall be a
trustee of a trust or trusts hereunder separate and apart from any trust or
trusts hereunder administered by any other such Indenture Trustee; and upon the
removal of the retiring Indenture Trustee shall become effective to the extent
provided herein.
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 (i) so long as the Indenture Trustee
is the Note Registrar, no such list shall be required to be furnished and (ii)
no such list shall be required to be furnished with respect to Noteholders of
Book-Entry Notes.
SECTION 7.2. Preservation of Information; Communications to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Noteholders contained in
the most recent list furnished to the Indenture Trustee as provided in Section
7.1 and the names and addresses of Noteholders received by the Indenture
Trustee in its capacity as Note Registrar. The Indenture Trustee may destroy
any list furnished to it as provided in such Section 7.1 upon receipt of a new
list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes. Upon receipt by the Indenture Trustee of any request by three or more
Noteholders or by one or more Noteholders of Notes evidencing not less than 25%
of the Notes Outstanding to receive a copy of the current list of Noteholders
(whether or not made pursuant to TIA Section 312(b)), the Indenture Trustee
shall promptly notify the Administrator thereof by providing to the
Administrator a copy of such request and a copy of the list of Noteholders
produced in response thereto.
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(c) The Issuer, the Indenture Trustee and the Note Registrar shall have the
protection of TIA Section 312(c).
SECTION 7.3. Reports by Issuer. (a) The Issuer shall:
(i) file with the Indenture Trustee, within fifteen (15) days after the
Issuer is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) that the Issuer may be
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act;
(ii) file with the Indenture Trustee and the Commission in accordance
with the rules and regulations prescribed from time to time by the
Commission such additional information, documents and reports with respect
to compliance by the Issuer with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee shall
transmit by mail to all Noteholders described in TIA Section 313(c)) such
summaries of any information, documents and reports required to be filed by
the Issuer pursuant to clauses (i) and (ii) of this Section 7.3(a) and by
rules and regulations prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall correspond to the calendar year.
SECTION 7.4. Reports by Indenture Trustee. (a) If required by TIA Section
313(a), within sixty (60) days after each May 15, beginning with May 15, 1999,
the Indenture Trustee shall mail to each
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Noteholder as required by TIA Section 313(c) a brief report dated as of such
date that complies with TIA Section 313(a). The Indenture Trustee also shall
comply with TIA Section 313(b).
(b) A copy of each report at the time of its mailing to Noteholders shall
be filed by the Indenture Trustee with the Commission and each stock exchange,
if any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
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ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1. Collection of Money. Except as otherwise expressly provided
herein, the Indenture Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Indenture Trustee pursuant to this Indenture and the Sale and
Servicing Agreement. The Indenture Trustee shall apply all such money received
by it as provided in this Indenture and the Sale and Servicing Agreement.
Except as otherwise expressly provided in this Indenture, if any default occurs
in the making of any payment or performance under any agreement or instrument
that is part of the Indenture Trust Estate, the Indenture Trustee may take such
action as may be appropriate to enforce such payment or performance, including
the institution and prosecution of appropriate Proceedings. Any such action
shall be without prejudice to any right to claim a Default or Event of Default
under this Indenture and any right to proceed thereafter as provided in Article
V.
SECTION 8.2. Trust Accounts and Payahead Account. (a) On or prior to the
Closing Date, the Issuer shall cause the Servicer to establish and maintain the
Trust Accounts and the Payahead Account as provided in Sections 4.1 and 4.7 of
the Sale and Servicing Agreement.
(b) On or before each Distribution Date, the Servicer shall deposit all
Available Collections with respect to the Collection Period preceding such
Distribution Date in the Collection Account as provided in Sections 4.2, 4.3,
4.4 and 4.5 of the Sale and Servicing Agreement. On or before each
Distribution Date, all amounts required to be withdrawn from the Reserve
Account and deposited in the Collection Account pursuant to Section 4.5 of the
Sale and Servicing Agreement shall be withdrawn by the Indenture Trustee from
the Reserve Account and deposited to the Collection Account.
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(c) On each Distribution Date, the Indenture Trustee (based on the
information contained in the Servicer's Certificate delivered on or before the
related Determination Date pursuant to Section 3.9 of the Sale and Servicing
Agreement) shall make the following withdrawals from the Collection Account and
make deposits, distributions and payments, to the extent of funds on deposit in
the Collection Account with respect to the Collection Period preceding such
Distribution Date (including funds, if any, deposited therein from the Reserve
Account and the Payahead 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 Noteholders of Class A Notes, the Accrued Class A
Note Interest; provided that if there are not sufficient funds available to
pay the entire amount of the Accrued Class A Note Interest, the amounts
available shall be applied to the payment of such interest on the Class A
Notes on a pro rata basis;
(iii) third, to the Principal Distribution Account, the First Priority
Principal Distribution Amount, if any;
(iv) fourth, to the Noteholders of Class B Notes, the Accrued Class B
Note Interest; provided that if there are not sufficient funds available to
pay the entire amount of the Accrued Class B Note Interest, the amounts
available shall be applied to the payment of such interest on the Class B
Notes on a pro rata basis;
(v) fifth, to the Principal Distribution Account, the Second Priority
Principal Distribution Amount, if any;
(vi) sixth, to the Certificate Interest Distribution Account, the
Accrued Class C Certificate Interest;
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(vii) seventh, to the Certificate Interest Distribution Account, the
Accrued Class D Certificate Interest;
(viii) eighth, to the Reserve Account, the amount, if any, required to
reinstate the amount in the Reserve Account up to the Specified Reserve
Balance;
(ix) ninth, to the Principal Distribution Account, the Regular
Principal Distribution Amount, if any; and
(x) tenth, to the Seller, any funds remaining on deposit in the
Collection Account with respect to the Collection Period preceding such
Distribution Date.
Notwithstanding the foregoing, (A) following the occurrence and during the
continuation of an Event of Default specified in Section 5.1(i) or (ii) of the
Indenture or an Insolvency Event with respect to the Issuer, in each case 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
Servicer shall instruct the Indenture Trustee to transfer the funds on deposit
in the Collection Account remaining after the application of clauses (i) and
(ii) above to the Principal Distribution Account to the extent necessary to
reduce the principal amount of all the Notes to zero, (B) following the
occurrence and during the continuation of any other Event of Default, which has
resulted in an acceleration of the Notes, the Servicer shall instruct the
Indenture Trustee to transfer the funds on deposit in the Collection Account
remaining after the application of clauses (i), (ii), (iii) and (iv) above to
the Principal Distribution Account to the extent necessary to reduce the
principal amount of all the Notes to zero, and (C) in the case of an event
described in clause (A) or (B), the Certificateholders will not receive any
distributions of principal or interest until the principal amount and accrued
interest on all the Notes has been paid in full.
(d) On each Distribution Date, the Indenture Trustee (based on the
information contained in the Servicer's Certificate delivered on or before the
re-
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lated Determination Date pursuant to Section 3.9 of the Sale and Servicing
Agreement) shall withdraw the funds on deposit in the Principal Distribution
Account with respect to the Collection Period preceding such Distribution Date
and make distributions and payments in the following order of priority:
(i) first, to the Noteholders of the Class A-1 Notes in reduction of
principal until the principal amount of the outstanding Class A-1 Notes has
been paid in full; provided that if there are not sufficient funds available
to pay the principal amount of the outstanding Class A-1 Notes in full, the
amounts available shall be applied to the payment of principal on the Class
A-1 Notes on a pro rata basis;
(ii) second, to the Noteholders of the Class A-2 Notes in reduction of
principal until the principal amount of the outstanding Class A-2 Notes has
been paid in full; provided that if there are not sufficient funds available
to pay the principal amount of the outstanding Class A-2 Notes in full, the
amounts available shall be applied to the payment of principal on the Class
A-2 Notes on a pro rata basis;
(iii) third, to the Noteholders of the Class A-3 Notes in reduction of
principal until the principal amount of the outstanding Class A-3 Notes has
been paid in full; provided that if there are not sufficient funds available
to pay the principal amount of the outstanding Class A-3 Notes in full, the
amounts available shall be applied to the payment of principal on the Class
A-3 Notes on a pro rata basis;
(iv) fourth, to the Noteholders of the Class A-4 Notes in reduction of
principal until the principal amount of the outstanding Class A-4 Notes has
been paid in full; provided that if there are not sufficient funds available
to pay the principal amount of the outstanding Class A-4 Notes in full, the
amounts available shall be applied to the payment of principal on the Class
A-4 Notes on a pro rata basis;
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(v) fifth, to the Noteholders of the Class A-5 Notes in reduction of
principal until the principal amount of the outstanding Class A-5 Notes has
been paid in full; provided that if there are not sufficient funds available
to pay the principal amount of the outstanding Class A-5 Notes in full, the
amounts available shall be applied to the payment of principal on the Class
A-5 Notes on a pro rata basis;
(vi) sixth, to the Noteholders of the Class B Notes in reduction of
principal until the principal amount of the outstanding Class B Notes has
been paid in full; provided that if there are not sufficient funds available
to pay the principal amount of the outstanding Class B Notes in full, the
amounts available shall be applied to the payment of principal on the Class B
Notes on a pro rata basis;
(vii) seventh, to the Certificate Principal Distribution Account, in
reduction of the Certificate Balance of the Class C Certificates, until the
Certificate Balance of the Class C Certificates has been reduced to zero;
(viii) eighth, to the Certificate Principal Distribution Account, in
reduction of the Certificate Balance of the Class D Certificates, until the
Certificate Balance of the Class D Certificates has been reduced to zero; and
(ix) ninth, to the Seller, any funds remaining on deposit in the Principal
Distribution Account.
SECTION 8.3. General Provisions Regarding Accounts. (a) So long as no
Default or Event of Default shall have occurred and be continuing, all or a
portion of the funds in the Collection Account, the Payahead Account and the
Reserve Account shall be invested by the Indenture Trustee at the direction of
the Servicer in Permitted Investments as provided in Sections 4.1 and 4.7 of the
Sale and Servicing Agreement. All income or other gain (net of losses and
investment expenses) from investments of monies deposited in the Collection
Account, the Payahead Account and the Reserve
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Account shall be withdrawn by the Indenture Trustee from such accounts (but
only under the circumstances set forth in the Sale and Servicing Agreement in
the case of the Reserve Account) and distributed as provided in Sections 4.1
and 4.7 of the Sale and Servicing Agreement. The Servicer shall not direct the
Indenture Trustee to make any investment of any funds or to sell any investment
held in any of the Trust Accounts unless the security interest Granted and
perfected in such account will continue to be perfected in such investment or
the proceeds of such sale, in either case without any further action by any
Person, and, in connection with any direction to the Indenture Trustee to make
any such investment or sale, if requested by the Indenture Trustee, the Issuer
shall deliver to the Indenture Trustee an Opinion of Counsel, acceptable to the
Indenture Trustee, to such effect.
(b) Subject to Section 6.1(c), the Indenture Trustee shall not in any way
be held liable by reason of any insufficiency in any of the Trust Accounts or
in the Payahead Account resulting from any loss on any Permitted Investment
included therein, except for losses attributable to the Indenture Trustee's
failure to make payments on such Permitted Investments issued by the Indenture
Trustee, in its commercial capacity as principal obligor and not as trustee, in
accordance with their terms.
(c) If (i) the Servicer shall have failed to give investment directions for
any funds on deposit in the Collection Account, the Payahead Account or the
Reserve Account to the Indenture Trustee by 11:00 a.m. New York Time (or such
other time as may be agreed by the Issuer and Indenture Trustee) on the
Business Day preceding each Distribution Date or (ii) to the knowledge of a
Trustee Officer of the Indenture Trustee, a Default or Event of Default shall
have occurred and be continuing with respect to the Notes but the Notes shall
not have been declared due and payable pursuant to Section 5.2 or (iii) if such
Notes shall have been declared due and payable following an Event of Default,
amounts collected or receivable from the Indenture Trust Estate are being
applied in accordance with Section 5.4 as if there had not been such a
declaration, then the Indenture Trustee shall, to the fullest extent
practicable, invest and reinvest funds in the Collection Account, the
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Payahead Account or the Reserve Account, as the case may be, in one or more
Permitted Investments described in clause (b) of the definition thereof.
SECTION 8.04. 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.
(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.
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SECTION 8.05. 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 9.01. Supplemental Indentures Without Consent of Noteholders. (a)
Without the consent of the Noteholders but with prior notice to the Rating
Agencies, the Issuer and the Indenture Trustee, when authorized by an Issuer
Order, at any time and from time to time, may enter into one or more indentures
supplemental hereto (which shall conform to the provisions of the Trust
Indenture Act as in force at the date of the execution thereof), in form
satisfactory to the Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at any time
subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subjected to the lien of this Indenture, or to subject to the lien of this
Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another Person to the Issuer, and the assumption by
any such successor of the covenants of the Issuer herein and in the Notes
contained;
(iii) to add to the covenants of the Issuer, for the benefit of the
Noteholders, or to surrender any right or power herein conferred upon the
Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to or
with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any provision herein
or in any supplemental indenture that may be inconsistent with any other
provision herein or in any supplemental indenture or to make any other
provisions with respect to matters or questions arising under this Indenture
or under any sup-
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plemental indenture which shall not be inconsistent with the provisions of
the Indenture; provided that such action shall not materially adversely
affect the interests of the Noteholders;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor trustee with respect to the Notes and to add to or
change any of the provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions of this Indenture to
such extent as shall be necessary to affect the qualification of this
Indenture under the TIA or under any similar federal statute hereafter
enacted and to add to this Indenture such other provisions as may be
expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Noteholders but with prior
notice to the Rating Agencies, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner (other than the modifications set forth in Section 9.2)
the rights of the Noteholders under this Indenture; provided, however, that (i)
such action shall not, as evidenced by an Opinion of Counsel, adversely affect
in any material respect the interests of any Noteholder, (ii) the Rating Agency
Condition shall have been satisfied with respect to such action and (iii) such
action shall not, as evidenced by an Opinion of Counsel, cause the Issuer to be
characterized for federal or any then Applicable Tax State income tax purposes
as an association taxable as a corporation or otherwise have any material
adverse impact on the fed-
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eral or any then Applicable Tax State income taxation of any Notes Outstanding
or outstanding Certificates or any Noteholder or Certificateholder.
SECTION 9.02. 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) modify or alter provisions of this Section 9.2;
(ii) 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
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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);
(iii) reduce the percentage of the principal amount of the Notes
Outstanding, the consent of the Noteholders of which is required for any
such supplemental indenture, or the consent of the Noteholders of which is
required for any waiver of compliance with certain provisions of this
Indenture or certain Defaults or Events of Default hereunder and their
consequences provided for in this Indenture;
(iv) modify or alter the provisions of the proviso to the definition of
the term "Outstanding";
(v) reduce the percentage of the principal amount of the Notes
Outstanding required to direct the Indenture Trustee to sell or liquidate
the Indenture Trust Estate pursuant to Section 5.4 if the proceeds of such
sale or liquidation would be insufficient to pay the principal amount and
accrued but unpaid interest on the Notes and the Certificates;
(vi) 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;
(vii) 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
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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
(viii) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to any part of the Indenture
Trust Estate or, except as otherwise permitted or contemplated herein,
terminate the lien of this Indenture on any such collateral at any time
subject hereto or deprive any Noteholder of the security provided by the
lien of this Indenture.
The Indenture Trustee may in its discretion or upon receipt of an Opinion of
Counsel determine whether or not any Notes would be affected by any
supplemental indenture and any such determination shall be conclusive upon the
Noteholders of all Notes, whether theretofore or thereafter authenticated and
delivered hereunder. The Indenture Trustee shall not be liable for any such
determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section 9.2
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of any
supplemental indenture pursuant to this Section 9.2, the Indenture Trustee
shall mail to the Noteholders of the Notes to which such amendment or
supplemental indenture relates a notice setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture Trustee
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
SECTION 9.03. 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
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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, liabilities or immunities under this
Indenture or otherwise.
SECTION 9.04. 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 9.05. 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 9.06. 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
inden-
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ture 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 10.01. Redemption. (a) The Class A-5 Notes and the Class B Notes
are subject to redemption in whole, but not in part, at the direction of the
Servicer pursuant to Section 9.1 of the Sale and Servicing Agreement, on any
Distribution Date on which the Servicer exercises its option to purchase the
assets of the Issuer pursuant to such Section 9.1, and the amount paid by the
Servicer shall be treated as collections of Receivables and applied to pay the
unpaid principal amount of the Notes and the Aggregate 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 Class A-5 Notes and the Class B Notes are to be redeemed
pursuant to this Section 10.1(a), the Servicer or the Issuer shall furnish
notice of such election to the Indenture Trustee not later than forty (40) days
prior to the Redemption Date and the Issuer shall deposit by 10:00 a.m. (New
York City time) on the Redemption Date with the Indenture Trustee in the
Collection Account the Redemption Price of the Class A-5 Notes and the Class B
Notes to be redeemed, whereupon all such Class A-5 Notes and Class B 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 Collection Account
and the Principal Distribution Account shall be paid to the Noteholders up to
an amount equal to the unpaid principal amount of the Notes and all accrued and
unpaid interest thereon. If the amounts in the Collection Account and the
Principal Distribution Account are to be paid to Noteholders pursuant to this
Section 10.1(b), the Servicer or the Issuer shall, to the extent practicable,
furnish notice of such event to the Indenture Trustee not later than forty (40)
days prior to the Redemption Date, whereupon all such amounts shall be payable
on the Redemption Date.
SECTION 10.02. Form of Redemption Notice. Notice of redemption under
Section 10.1(a) shall be given by the Indenture Trustee by first-class mail,
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postage prepaid, or by facsimile mailed or transmitted promptly following
receipt of notice from the Issuer or Servicer pursuant to Section 10.1(a), but
not later than thirty (30) days prior to the applicable Redemption Date, to
each Noteholder as of the close of business on the Record Date preceding the
applicable Redemption Date, at such Noteholder's address or facsimile number
appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the place where such Notes are to be surrendered for payment of
the Redemption Price (which shall be the office or agency of the Issuer to be
maintained as provided in Section 3.2); and
(iv) that on the Redemption Date, the Redemption Price will become due
and payable upon each such Note and that interest thereon shall cease to
accrue for and after said date.
Notice of redemption of the Notes shall be given by the Indenture Trustee in
the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Noteholder shall not impair or affect
the validity of the redemption of any other Note.
SECTION 10.03. 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 11.01. 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
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of such person the proposed release will not impair the security under
this Indenture in contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause (iii)
above, the Issuer shall also furnish to the Indenture Trustee an
Independent Certificate as to the same matters if the fair value of the
property or securities and of all other property, other than property as
contemplated by clause (v) below or securities released from the lien of
this Indenture since the commencement of the then-current calendar year,
as set forth in the certificates required by clause (iii) above and this
clause (iv), equals ten percent (10%) or more of the principal amount of
the Notes Outstanding, but such certificate need not be furnished in the
case of any release of property or securities if the fair value thereof
as set forth in the related Officer's Certificate is less than $25,000 or
less than one percent (1%) of the principal amount of the Notes
Outstanding.
(v) Notwithstanding Section 2.10 or any other provisions of
this Section 11.1, the Issuer may, without compliance with the
requirements of the other provisions of this Section 11.1, (A) collect,
liquidate, sell or otherwise dispose of Receivables and Financed Vehicles
as and to the extent permitted or required by the Basic Documents and (B)
make cash payments out of the Trust Accounts and the Payahead Account as
and to the extent permitted or required by the Basic Documents.
SECTION 11.02. 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
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Person may certify or give an opinion with respect to 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.
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SECTION 11.03. Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by 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 11.04. 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
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permitted by this Indenture shall be in writing and if such request, demand,
authorization, direction, notice, consent, waiver or Act of Noteholders is to
be made upon, given or furnished to or filed with:
(i) the Indenture Trustee by any Noteholder, the
Servicer, the Administrator or the Issuer shall be sufficient
for every purpose hereunder if made, given, furnished or 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 1998-C, in
care of PNC Bank, Delaware, 222 Delaware Avenue, Wilmington,
Delaware 19801, Attention: Michael B. McCarthy, with a copy
to the Administrator at The American Road, Dearborn, Michigan
48121, Attention: Secretary, or at any other address
previously furnished in writing to the Indenture Trustee by
the Issuer or the Administrator. The Issuer shall promptly
transmit any notice received by it from the Noteholders to the
Indenture Trustee.
Notices required to be given to the Rating Agencies by the
Issuer, the Indenture Trustee or the Owner Trustee shall be in writing,
personally delivered, telecopied or mailed by certified mail, return receipt
requested, to (i) in the case of Moody's, at the following address: Moody's
Investors Service, Inc., ABS Monitoring Department, 99 Church Street, New York,
New York 10007, (ii) in case of Standard & Poor's, at the following address:
Standard & Poor's Ratings Services, 26 Broadway (15th Floor), New York, New
York 10004, Attention: Asset Backed Surveillance Department and (iii) in the
case of Fitch, at the following address: Fitch IBCA, Inc., 1201 East 7th
Street, Powell, Wyoming 82435, Attention: Asset Backed Surveillance.
SECTION 11.05. Notices to Noteholders; Waiver. (a) Where this
Indenture provides for notice to Noteholders of any event, such notice shall be
suffi-
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ciently given (unless otherwise herein expressly provided) if in writing and
mailed, first-class, postage prepaid to each Noteholder affected by such event,
at his address as it appears on the Note Register, not later than the latest
date, and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Noteholders is given by mail, neither the
failure to mail such notice nor any defect in any notice so mailed to any
particular Noteholder shall affect the sufficiency of such notice with respect
to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
(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 11.06. 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
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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 11.07. Conflict with Trust Indenture Act. If any
provision hereof limits, qualifies or conflicts with another provision hereof
that is required or deemed to be included in this Indenture by any of the
provisions of the Trust Indenture Act, such required or deemed provision shall
control.
The provisions of TIA Sections 310 through 317 that impose
duties on any Person (including the provisions automatically deemed included
herein unless expressly excluded by this Indenture) are a part of and govern
this Indenture, whether or not physically contained herein.
SECTION 11.08. 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 11.09. 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.
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<PAGE> 100
SECTION 11.12. Legal Holidays. In any case where the date on
which any payment is due shall not be a Business Day, then (notwithstanding any
other provision of the Notes or this Indenture) payment need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on the date on which nominally due, and no interest
shall accrue for the period from and after any such nominal date.
SECTION 11.13. Governing Law. This Indenture shall be
construed in accordance with the laws of the State of New York, without
reference to its conflict of law provisions.
SECTION 11.14. Counterparts. This Indenture may be executed
in any number of counterparts, each of which so executed shall be deemed to be
an original, but all such counterparts shall together constitute but one and
the same instrument.
SECTION 11.15. Recording of Indenture. If this Indenture is
subject to recording in any appropriate public recording offices, such
recording is to be effected by the Issuer and at its expense accompanied by an
Opinion of Counsel (which may be counsel to the Indenture Trustee or any other
counsel reasonably acceptable to the Indenture Trustee) to the effect that such
recording is necessary either for the protection of the Noteholders or any
other Person secured hereunder or for the enforcement of any right or remedy
granted to the Indenture Trustee under this Indenture.
SECTION 11.16. Trust Obligation. No recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer, the
Owner Trustee or the Indenture Trustee on the Notes or under this Indenture or
any certificate or other writing delivered in connection herewith or therewith,
against (i) the Indenture Trustee or the Owner Trustee in their individual
capacities, (ii) any owner of a beneficial interest in the Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director, employee or agent of the
Indenture Trustee or the Owner Trustee in their individual capaci-
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ties, any holder of a beneficial interest in the Issuer, the Owner Trustee or
the Indenture Trustee or of any successor or assign of the Indenture Trustee or
the Owner Trustee in their individual capacities, except as any such Person may
have expressly agreed (it being understood that the Indenture Trustee and the
Owner Trustee have no such obligations in their individual capacities), and
except that any such partner, owner or beneficiary shall be fully liable, to
the extent provided by applicable law, for any unpaid consideration for stock,
unpaid capital contribution or failure to pay any installment or call owing to
such entity. For all purposes of this Indenture, in the performance of any
duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Article VI, VII and VIII of the Trust Agreement.
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 con-
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fidential 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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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 1998-C
By: PNC BANK, DELAWARE,
not in its individual
capacity but solely as Owner
Trustee of Ford Credit Auto
Owner Trust 1998-C
By: /s/ M.B. McCarthy
-----------------------------
Name: Michael B. McCarthy
Title: Vice President
THE CHASE MANHATTAN BANK,
not in its individual
capacity but solely as
Indenture Trustee
By: /s/ Andrew M. Deck
----------------------------------
Name: Andrew M. Deck
Title: Vice President
<PAGE> 104
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. R-_
CUSIP NO. 34527RBG7
FORD CREDIT AUTO OWNER TRUST 1998-C
CLASS A-1 5.608% ASSET BACKED NOTES
Ford Credit Auto Owner Trust 1998-C, 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 [______________] payable on each
Distribution Date in an amount equal to the result obtained by multiplying (i)
a fraction the numerator of which is $[______] (the original face amount of
this Note) and the denominator of which is $[_____] by (ii) the aggregate
amount, if any, payable to Noteholders of Class A-1 Notes on such Distribution
Date from the Principal Distribution Account in respect of principal on the
Class A-1 Notes pursuant to Section 3.1 of the Indenture dated as of July 1,
1998 (as from time to time
A-1-1
<PAGE> 105
amended, supplemented or otherwise modified and in effect, the " Indenture"),
between the Issuer and The Chase Manhattan Bank, a New York corporation, as
Indenture Trustee (in such capacity the " Indenture Trustee"); provided,
however, that the entire unpaid principal amount of this Note shall be due and
payable on the January 1999 Distribution Date (the " Class A-1 Final Scheduled
Distribution Date"). Capitalized terms used but not defined herein are defined
in Article I of the Indenture, which also contains rules as to construction that
shall be applicable herein.
The Issuer shall pay interest on this Note at the rate per
annum shown above on each Distribution Date until the principal of this Note is
paid or made available for payment, on the principal amount of this Note
outstanding on the preceding Distribution Date (after giving effect to all
payments of principal made on the preceding Distribution Date), subject to
certain limitations contained in Section 3.1 of the Indenture. Interest on
this Note will accrue for each Distribution Date from and including the
previous Distribution Date on which interest has been paid (or, in the case of
the initial Distribution Date, from the Closing Date) to but excluding such
Distribution Date. Interest will be computed on the basis of actual days
elapsed and a 360-day year. Such principal of and interest on this Note shall
be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of this
Note.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Note.
A-1-2
<PAGE> 106
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> 107
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: July 29, 1998
FORD CREDIT AUTO OWNER TRUST 1998-C
By: PNC BANK, DELAWARE,
not in its individual capacity
but solely as Owner Trustee
under the Trust Agreement
By:
---------------------------
Authorized Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A-1 Notes designated above and referred to in the
within-mentioned Indenture.
Date: July 29, 1998
THE CHASE MANHATTAN BANK,
not in its individual capacity but
solely as Indenture Trustee
By:
-----------------------------------
Authorized Officer
<PAGE> 108
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the
Issuer, designated as its Class A-1 5.608% Asset Backed Notes (the "Class A-1
Notes") which, together with the Issuer's Class A-2 5.670% Asset Backed Notes
(the "Class A-2 Notes"), Class A-3 5.73% Asset Backed Notes (the "Class A-3
Notes"), Class A-4 5.81% Asset Backed Notes (the "Class A-4 Notes"), Class A-5
5.86% Asset Backed Notes (the "Class A-5 Notes" and, together with the Class
A-1 Notes , the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes,
the "Class A Notes") and Class B 6.06% Asset Backed Notes (the "Class B Notes"
and, together with the Class A Notes, the "Notes"), are issued under the
Indenture, to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Indenture Trustee and the Noteholders. The Notes
are subject to all terms of the Indenture.
The Class A-1 Notes are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture. The Class A-1 Notes are senior in right of payment to the Class A-2
Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes and the
Class B Notes, each as and to the extent provided in the Indenture.
Principal of the Class A-1 Notes will be payable on each
Distribution Date in an amount described on the face hereof. "Distribution
Date" means the fifteenth day of each month, or, if any such day is not a
Business Day, the next succeeding Business Day, commencing August 15, 1998.
As described on the face hereof, the entire unpaid principal
amount of this Note shall be due and payable on the Class A-1 Final Scheduled
Distribution Date. 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
A-1-5
<PAGE> 109
principal payments on the Class A-1 Notes shall be made pro rata to the
Noteholders entitled thereto.
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 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 either by wire
transfer in immediately available funds, to the account of such Noteholder at a
bank or other entity having appropriate facilities therefor, if such Noteholder
shall have provided to the Note Registrar appropriate written instructions at
least five (5) Business Days prior to such Distribution Date and such
Noteholder's Notes in the aggregate evidence a denomination of not less than
$1,000,000, or, if not, 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 to Note Owners, 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 payments will be made 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.
A-1-6
<PAGE> 110
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, and subject to certain
limitations set forth therein, the transfer of this Note may be registered on
the Note Register upon surrender of this Note for registration of transfer at
the office or agency designated by the Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Noteholder hereof
or such Noteholder's attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, and thereupon one or more new Notes of the same Class in
authorized denominations and in the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such
registration of transfer or exchange.
Each Noteholder or Note Owner, by its acceptance of a Note or,
in the case of a Note Owner, a beneficial interest in a Note, covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on
the Notes or under the Indenture or any certificate or other writing delivered
in connection therewith, against (i) the Indenture Trustee or the Owner
Trustee, each in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent,
officer, director or employee of the Indenture Trustee or the Owner Trustee,
each in its individual capaci- ty, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee, each in its individual
capacity, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution for
A-1-7
<PAGE> 111
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 Owner
will not at any time institute against the Seller, the General Partner or the
Issuer, or join in any institution against the Seller, the General Partner or
the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or State bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the other Basic Documents.
The Issuer has entered into the Indenture and this Note is
issued with the intention that, for federal, State and local income, and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Indenture Trust Estate. Each Noteholder, by its acceptance of a
Note (and each Note Owner by its acceptance of a beneficial interest in a
Note), will be deemed to agree to treat the Notes for federal, State and local
income, single business and franchise tax purposes as indebtedness of the
Issuer.
Prior to the due presentment for registration of transfer of
this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day
of determination or as of such other date as may be specified in the Indenture)
is registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Noteholders under the Indenture
at any time by the Issuer with the consent of the Noteholders of Notes
evidencing not less than a majority of the principal amount of the Notes
Outstanding. The Indenture also contains provisions permitting the Noteholders
of Notes evidencing specified percentages of the principal amount
A-1-8
<PAGE> 112
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 Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent or
waiver is made upon this Note. The Indenture also permits the Indenture
Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of the Noteholders.
The term "Issuer", as used in this Note, includes any
successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the Noteholders under the Indenture.
The Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.
This Note and the Indenture shall be governed by, and
construed in accordance with the laws of the State of New York, without
reference to its conflicts of law provisions.
No reference herein to the Indenture, and no provision of this
Note or of the Indenture, shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the times, place and rate, and in the coin or currency herein
prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Basic Documents, none of The Chase Manhattan Bank, in
its individual capacity, PNC Bank, Delaware, in its individual capacity, any
owner of a beneficial interest in the Issuer, or any of their respective
partners, beneficiaries, agents, officers, directors, employees or successors
or assigns shall be personally liable for, nor shall recourse be had
A-1-9
<PAGE> 113
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 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> 114
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> 115
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. R-_
CUSIP NO. 34527RBH5
FORD CREDIT AUTO OWNER TRUST 1998-C
CLASS A-2 5.670% ASSET BACKED NOTES
Ford Credit Auto Owner Trust 1998-C, 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 [______________] payable on each
Distribution Date in an amount equal to the result obtained by multiplying (i)
a fraction the numerator of which is $ (the original face amount of this
Note) and the denominator of which is $[_____] by (ii) the aggregate amount, if
any, payable to Noteholders of Class A-2 Notes on such Distribution Date from
the Principal Distribution Account in respect of principal on the Class A-2
Notes pursuant to Section 3.1 of the Indenture dated as of July 1, 1998 (as
from time to time
A-2-1
<PAGE> 116
amended, supplemented or otherwise modified and in effect, the " Indenture"),
between the Issuer and The Chase Manhattan Bank, a New York corporation, as
Indenture Trustee (in such capacity the " Indenture Trustee"); provided,
however, that the entire unpaid principal amount of this Note shall be due and
payable on the June 1999 Distribution Date (the " Class A-2 Final Scheduled
Distribution Date"). Capitalized terms used but not defined herein are defined
in Article I of the Indenture, which also contains rules as to construction that
shall be applicable herein.
The Issuer shall pay interest on this Note at the rate per
annum shown above on each Distribution Date until the principal of this Note is
paid or made available for payment, on the principal amount of this Note
outstanding on the preceding Distribution Date (after giving effect to all
payments of principal made on the preceding Distribution Date), subject to
certain limitations contained in Section 3.1 of the Indenture. Interest on
this Note will accrue for each Distribution Date from and including the
previous Distribution Date on which interest has been paid (or, in the case of
the initial Distribution Date, from the Closing Date) to but excluding such
Distribution Date. Interest will be computed on the basis of actual days
elapsed and a 360-day year. Such principal of and interest on this Note shall
be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of this
Note.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Note.
A-2-2
<PAGE> 117
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> 118
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: July 29, 1998
FORD CREDIT AUTO OWNER TRUST 1998-C
By: PNC BANK, DELAWARE,
not in its individual capacity
but solely as Owner Trustee under
the Trust Agreement
By: ____________________________
Authorized Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A-2 Notes designated above and referred to in the
within-mentioned Indenture.
Date: July 29, 1998
THE CHASE MANHATTAN BANK,
not in its individual capacity but
solely as Indenture Trustee
By: ____________________________
Authorized Officer
<PAGE> 119
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the
Issuer, designated as its Class A-2 5.670% Asset Backed Notes (the "Class A-2
Notes") which, together with the Issuer's Class A-1 5.608% Asset Backed Notes
(the "Class A-1 Notes"), Class A-3 5.73% Asset Backed Notes (the "Class A-3
Notes"), Class A-4 5.81% Asset Backed Notes (the "Class A-4 Notes"), Class A-5
5.86% Asset Backed Notes (the "Class A-5 Notes" and, together with the Class
A-1 Notes , the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes,
the "Class A Notes") and Class B 6.06% Asset Backed Notes (the "Class B Notes"
and, together with the Class A 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 are senior in right of payment to the Class A-3 Notes, the
Class A-4 Notes, the Class A-5 Notes and the Class B Notes, each as and to the
extent provided in the Indenture.
Principal of the Class A-2 Notes will be payable on each
Distribution Date in an amount described on the face hereof. "Distribution
Date" means the fifteenth day of each month, or, if any such day is not a
Business Day, the next succeeding Business Day, commencing August 15, 1998.
As described on the face hereof, the entire unpaid principal
amount of this Note shall be due and payable on the Class A-2 Final Scheduled
Distribution Date. 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
A-2-5
<PAGE> 120
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.
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 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 either by wire
transfer in immediately available funds, to the account of such Noteholder at a
bank or other entity having appropriate facilities therefor, if such Noteholder
shall have provided to the Note Registrar appropriate written instructions at
least five (5) Business Days prior to such Distribution Date and such
Noteholder's Notes in the aggregate evidence a denomination of not less than
$1,000,000, or, if not, 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 to Note Owners, 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 payments will be made 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 Inden-
A-2-6
<PAGE> 121
ture 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, and subject to certain
limitations set forth therein, the transfer of this Note may be registered on
the Note Register upon surrender of this Note for registration of transfer at
the office or agency designated by the Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Noteholder hereof
or such Noteholder's attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, and thereupon one or more new Notes of the same Class in
authorized denominations and in the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such
registration of transfer or exchange.
Each Noteholder or Note Owner, by its acceptance of a Note or,
in the case of a Note Owner, a beneficial interest in a Note, covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on
the Notes or under the Indenture or any certificate or other writing delivered
in connection therewith, against (i) the Indenture Trustee or the Owner
Trustee, each in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent,
officer, director or employee of the Indenture Trustee or the Owner Trustee,
each in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee, each in its individual
capacity, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to
A-2-7
<PAGE> 122
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 Owner
will not at any time institute against the Seller, the General Partner or the
Issuer, or join in any institution against the Seller, the General Partner or
the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or State bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the other Basic Documents.
The Issuer has entered into the Indenture and this Note is
issued with the intention that, for federal, State and local income, and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Indenture Trust Estate. Each Noteholder, by its acceptance of a
Note (and each Note Owner by its acceptance of a beneficial interest in a
Note), will be deemed to agree to treat the Notes for federal, State and local
income, single business and franchise tax purposes as indebtedness of the
Issuer.
Prior to the due presentment for registration of transfer of
this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day
of determination or as of such other date as may be specified in the Indenture)
is registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Noteholders under the Indenture
at any time by the Issuer with the consent of the Noteholders of Notes
evidencing not less than a majority of the principal amount of the Notes
Outstanding. The Indenture also
A-2-8
<PAGE> 123
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 Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The
Indenture also permits the Indenture Trustee to amend or waive certain terms
and conditions set forth in the Indenture without the consent of the
Noteholders.
The term "Issuer", as used in this Note, includes any
successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the Noteholders under the Indenture.
The Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.
This Note and the Indenture shall be governed by, and
construed in accordance with the laws of the State of New York, without
reference to its conflicts of law provisions.
No reference herein to the Indenture, and no provision of this
Note or of the Indenture, shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the times, place and rate, and in the coin or currency herein
prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Basic Documents, none of The Chase Manhattan Bank, in
its individual capacity, PNC Bank, Delaware, in its individual capacity, any
owner of a beneficial interest in the Issuer, or any of their respective
partners, beneficiaries, agents,
A-2-9
<PAGE> 124
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 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> 125
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> 126
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. R-_
CUSIP NO. 34527RBJ1
FORD CREDIT AUTO OWNER TRUST 1998-C
CLASS A-3 5.73% ASSET BACKED NOTES
Ford Credit Auto Owner Trust 1998-C, 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 [______________] payable on each
Distribution Date in an amount equal to the result obtained by multiplying (i)
a fraction the numerator of which is $[________] (the original face amount of
this Note) and the denominator of which is $[_________] by (ii) the aggregate
amount, if any, payable to Noteholders of Class A-3 Notes on such Distribution
Date from the Principal Distribution Account in respect of principal on the
Class A-3 Notes pursuant to Section 3.1 of the Indenture dated as of July 1,
1998 (as from time
A-3-1
<PAGE> 127
to time amended, supplemented or otherwise modified and in effect, the
"Indenture"), between the Issuer and The Chase Manhattan Bank, a New York
corporation, as Indenture Trustee (in such capacity the "Indenture Trustee");
provided, however, that the entire unpaid principal amount of this Note shall be
due and payable on the November 2000 Distribution Date (the "Class A-3 Final
Scheduled Distribution Date"). Capitalized terms used but not defined herein are
defined in Article I of the Indenture, which also contains rules as to
construction that shall be applicable herein.
The Issuer shall pay interest on this Note at the rate per
annum shown above on each Distribution Date until the principal of this Note is
paid or made available for payment, on the principal amount of this Note
outstanding on the preceding Distribution Date (after giving effect to all
payments of principal made on the preceding Distribution Date), subject to
certain limitations contained in Section 3.1 of the Indenture. Interest on
this Note will accrue for each Distribution Date from and including the
fifteenth day of the calendar month immediately preceding such Distribution
Date (or, in the case of the initial Distribution Date, from the Closing Date)
to but excluding the fifteenth day of the following calendar month. Interest
will be computed on the basis of a 360-day year of twelve 30-day months. Such
principal of and interest on this Note shall be paid in the manner specified on
the reverse hereof.
The principal of and interest on this Note are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of this
Note.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Note.
A-3-2
<PAGE> 128
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> 129
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: July 29, 1998
FORD CREDIT AUTO OWNER TRUST 1998-C
By: PNC BANK, DELAWARE,
not in its individual capacity
but solely as Owner Trustee
under the Trust Agreement
By: _______________________
Authorized Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A-3 Notes designated above and referred to in the
within-mentioned Indenture.
Date: July 29, 1998
THE CHASE MANHATTAN BANK,
not in its individual capacity but
solely as Indenture Trustee
By: _____________________________
Authorized Officer
<PAGE> 130
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the
Issuer, designated as its Class A-3 5.73% Asset Backed Notes (the "Class A-3
Notes") which, together with the Issuer's Class A-1 5.608% Asset Backed Notes
(the "Class A-1 Notes"), Class A-2 5.670% Asset Backed Notes (the "Class A-2
Notes"), Class A-4 5.81% Asset Backed Notes (the "Class A-4 Notes"), Class A-5
5.86% Asset Backed Notes (the "Class A-5 Notes" and, together with the Class
A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes,
the "Class A Notes") and Class B 6.06% Asset Backed Notes (the "Class B Notes"
and, together with the Class A Notes, the "Notes"), are issued under the
Indenture, to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Indenture Trustee and the Noteholders. The Notes
are subject to all terms of the Indenture.
The Class A-3 Notes are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture. The Class A-3 Notes are subordinated in right of payment to the
Class A-1 Notes and the Class A-2 Notes and are senior in right of payment to
the Class A-4 Notes, the Class A-5 Notes and the Class B Notes, each as and to
the extent provided in the Indenture.
Principal of the Class A-3 Notes will be payable on each
Distribution Date in an amount described on the face hereof. "Distribution
Date" means the fifteenth day of each month, or, if any such day is not a
Business Day, the next succeeding Business Day, commencing August 15, 1998.
As described on the face hereof, the entire unpaid principal
amount of this Note shall be due and payable on the Class A-3 Final Scheduled
Distribution Date. 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
A-3-5
<PAGE> 131
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.
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 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 either by wire
transfer in immediately available funds, to the account of such Noteholder at a
bank or other entity having appropriate facilities therefor, if such Noteholder
shall have provided to the Note Registrar appropriate written instructions at
least five (5) Business Days prior to such Distribution Date and such
Noteholder's Notes in the aggregate evidence a denomination of not less than
$1,000,000, or, if not, 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 to Note Owners, 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 payments will be made 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 Inden-
A-3-6
<PAGE> 132
ture 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, and subject to certain
limitations set forth therein, the transfer of this Note may be registered on
the Note Register upon surrender of this Note for registration of transfer at
the office or agency designated by the Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Noteholder hereof
or such Noteholder's attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, and thereupon one or more new Notes of the same Class in
authorized denominations and in the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such
registration of transfer or exchange.
Each Noteholder or Note Owner, by its acceptance of a Note or,
in the case of a Note Owner, a beneficial interest in a Note, covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on
the Notes or under the Indenture or any certificate or other writing delivered
in connection therewith, against (i) the Indenture Trustee or the Owner
Trustee, each in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent,
officer, director or employee of the Indenture Trustee or the Owner Trustee,
each in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee, each in its individual
capacity, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to
A-3-7
<PAGE> 133
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 Owner
will not at any time institute against the Seller, the General Partner or the
Issuer, or join in any institution against the Seller, the General Partner or
the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or State bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the other Basic Documents.
The Issuer has entered into the Indenture and this Note is
issued with the intention that, for federal, State and local income, and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Indenture Trust Estate. Each Noteholder, by its acceptance of a
Note (and each Note Owner by its acceptance of a beneficial interest in a
Note), will be deemed to agree to treat the Notes for federal, State and local
income, single business and franchise tax purposes as indebtedness of the
Issuer.
Prior to the due presentment for registration of transfer of
this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day
of determination or as of such other date as may be specified in the Indenture)
is registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Noteholders under the Indenture
at any time by the Issuer with the consent of the Noteholders of Notes
evidencing not less than a majority of the principal amount of the Notes
Outstanding. The Indenture also
A-3-8
<PAGE> 134
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 Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The
Indenture also permits the Indenture Trustee to amend or waive certain terms
and conditions set forth in the Indenture without the consent of the
Noteholders.
The term "Issuer", as used in this Note, includes any
successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the Noteholders under the Indenture.
The Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.
This Note and the Indenture shall be governed by, and
construed in accordance with the laws of the State of New York, without
reference to its conflicts of law provisions.
No reference herein to the Indenture, and no provision of this
Note or of the Indenture, shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the times, place and rate, and in the coin or currency herein
prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Basic Documents, none of The Chase Manhattan Bank, in
its individual capacity, PNC Bank, Delaware, in its individual capacity, any
owner of a beneficial interest in the Issuer, or any of their respective
partners, beneficiaries, agents,
A-3-9
<PAGE> 135
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 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> 136
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> 137
EXHIBIT A-4
[FORM OF CLASS A-4 NOTE]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
REGISTERED $[___________]
No. R-_ CUSIP NO. 34527RBK8
FORD CREDIT AUTO OWNER TRUST 1998-C
CLASS A-4 5.81% ASSET BACKED NOTES
Ford Credit Auto Owner Trust 1998-C, 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 [______________] payable on each
Distribution Date in an amount equal to the result obtained by multiplying (i)
a fraction the numerator of which is $[________] (the original face amount of
this Note) and the denominator of which is $[_________] by (ii) the aggregate
amount, if any, payable to Noteholders of Class A-4 Notes on such Distribution
Date from the Principal Distribution Account in respect of principal on the
Class A-4 Notes pursuant to Section 3.1 of the Indenture dated as of July 1,
1998 (as from time
A-4-1
<PAGE> 138
to time amended, supplemented or otherwise modified and in effect, the
"Indenture"), between the Issuer and The Chase Manhattan Bank, a New York
corporation, as Indenture Trustee (in such capacity the "Indenture Trustee");
provided, however, that the entire unpaid principal amount of this Note shall be
due and payable on the March 2002 Distribution Date (the " Class A-4 Final
Scheduled Distribution Date"). Capitalized terms used but not defined herein
are defined in Article I of the Indenture, which also contains rules as to
construction that shall be applicable herein.
The Issuer shall pay interest on this Note at the rate per
annum shown above on each Distribution Date until the principal of this Note is
paid or made available for payment, on the principal amount of this Note
outstanding on the preceding Distribution Date (after giving effect to all
payments of principal made on the preceding Distribution Date), subject to
certain limitations contained in Section 3.1 of the Indenture. Interest on
this Note will accrue for each Distribution Date from and including the
fifteenth day of the calendar month immediately preceding such Distribution
Date (or, in the case of the initial Distribution Date, from the Closing Date)
to but excluding the fifteenth day of the following calendar month. Interest
will be computed on the basis of a 360-day year of twelve 30-day months. Such
principal of and interest on this Note shall be paid in the manner specified on
the reverse hereof.
The principal of and interest on this Note are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of this
Note.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Note.
A-4-2
<PAGE> 139
Unless the certificate of authentication hereon has been
executed by the Indenture Trustee whose name appears below by manual signature,
this Note shall not be entitled to any benefit under the Indenture referred to
on the reverse hereof, or be valid or obligatory for any purpose.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
A-4-3
<PAGE> 140
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: July 29, 1998
FORD CREDIT AUTO OWNER TRUST 1998-C
By: PNC BANK, DELAWARE,
not in its individual capacity
but solely as Owner Trustee
under the Trust Agreement
By: ___________________
Authorized Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A-4 Notes designated above and referred to in the
within-mentioned Indenture.
Date: July 29, 1998
THE CHASE MANHATTAN BANK,
not in its individual capacity but
solely as Indenture Trustee
By: __________________________
Authorized Officer
<PAGE> 141
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the
Issuer, designated as its Class A-4 5.81% Asset Backed Notes (the "Class A-4
Notes") which, together with the Issuer's Class A-1 5.608% Asset Backed Notes
(the "Class A-1 Notes"), Class A-2 5.670% Asset Backed Notes (the "Class A-2
Notes"), Class A-3 5.73% Asset Backed Notes (the "Class A-3 Notes"), Class A-5
5.86% Asset Backed Notes (the "Class A-5 Notes" and, together with the Class
A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes,
the "Class A Notes") and Class B 6.06% Asset Backed Notes (the "Class B Notes"
and, together with the Class A Notes, the "Notes"), are issued under the
Indenture, to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Indenture Trustee and the Noteholders. The Notes
are subject to all terms of the Indenture.
The Class A-4 Notes are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture. The Class A-4 Notes are subordinated in right of payment to the
Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes and are senior in
right of payment to the Class A-5 Notes and the Class B Notes, each as and to
the extent provided in the Indenture.
Principal of the Class A-4 Notes will be payable on each
Distribution Date in an amount described on the face hereof. "Distribution
Date" means the fifteenth day of each month, or, if any such day is not a
Business Day, the next succeeding Business Day, commencing August 15, 1998.
As described on the face hereof, the entire unpaid principal
amount of this Note shall be due and payable on the Class A-4 Final Scheduled
Distribution Date. 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
A-4-5
<PAGE> 142
the manner provided in Section 5.2 of the Indenture. All principal payments on
the Class A-4 Notes shall be made pro rata to the Noteholders entitled thereto.
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 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 either by wire
transfer in immediately available funds, to the account of such Noteholder at a
bank or other entity having appropriate facilities therefor, if such Noteholder
shall have provided to the Note Registrar appropriate written instructions at
least five (5) Business Days prior to such Distribution Date and such
Noteholder's Notes in the aggregate evidence a denomination of not less than
$1,000,000, or, if not, 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 to Note Owners, 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 payments will be made 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 Inden-
A-4-6
<PAGE> 143
ture Trustee's agent appointed for such purposes located in The City of New
York.
The Issuer shall pay interest on overdue installments of
interest at the Class A-4 Rate to the extent lawful.
As provided in the Indenture, and subject to certain
limitations set forth therein, the transfer of this Note may be registered on
the Note Register upon surrender of this Note for registration of transfer at
the office or agency designated by the Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Noteholder hereof
or such Noteholder's attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, and thereupon one or more new Notes of the same Class in
authorized denominations and in the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such
registration of transfer or exchange.
Each Noteholder or Note Owner, by its acceptance of a Note or,
in the case of a Note Owner, a beneficial interest in a Note, covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on
the Notes or under the Indenture or any certificate or other writing delivered
in connection therewith, against (i) the Indenture Trustee or the Owner
Trustee, each in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent,
officer, director or employee of the Indenture Trustee or the Owner Trustee,
each in its individual capaci- ty, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee, each in its individual
capacity, except as any such Person may have expressly agreed and except that
any such partner, owner or beneficiary shall be fully liable, to
A-4-7
<PAGE> 144
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 Owner
will not at any time institute against the Seller, the General Partner or the
Issuer, or join in any institution against the Seller, the General Partner or
the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or State bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the other Basic Documents.
The Issuer has entered into the Indenture and this Note is
issued with the intention that, for federal, State and local income, and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Indenture Trust Estate. Each Noteholder, by its acceptance of a
Note (and each Note Owner by its acceptance of a beneficial interest in a
Note), will be deemed to agree to treat the Notes for federal, State and local
income, single business and franchise tax purposes as indebtedness of the
Issuer.
Prior to the due presentment for registration of transfer of
this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day
of determination or as of such other date as may be specified in the Indenture)
is registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Noteholders under the Indenture
at any time by the Issuer with the consent of the Noteholders of Notes
evidencing not less than a majority of the principal amount of the Notes
Outstanding. The Indenture also
A-4-8
<PAGE> 145
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 Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note. The
Indenture also permits the Indenture Trustee to amend or waive certain terms
and conditions set forth in the Indenture without the consent of the
Noteholders.
The term "Issuer", as used in this Note, includes any
successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the Noteholders under the Indenture.
The Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.
This Note and the Indenture shall be governed by, and
construed in accordance with the laws of the State of New York, without
reference to its conflicts of law provisions.
No reference herein to the Indenture, and no provision of this
Note or of the Indenture, shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the times, place and rate, and in the coin or currency herein
prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Basic Documents, none of The Chase Manhattan Bank, in
its individual capacity, PNC Bank, Delaware, in its individual capacity, any
owner of a beneficial interest in the Issuer, or any of their respective
partners, beneficiaries, agents,
A-4-9
<PAGE> 146
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 deficiency, loss or claim therefrom; provided, however,
that nothing contained herein shall be taken to prevent recourse to, and
enforcement against, the assets of the Issuer for any and all liabilities,
obligations and undertakings contained in the Indenture or in this Note.
A-4-10
<PAGE> 147
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
__________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
________________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _________________, attorney, to transfer said Note on the books
kept for registration thereof, with full power of substitution in the premises.
Dated: ___________________________ ___________________________*/
Signature Guaranteed
__________________________*/
__________________________________
*/ NOTICE: The signature to this assignment must correspond with the
name of the registered owner as it appears on the face of the within
Note in every particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the Note Registrar.
A-4-11
<PAGE> 148
EXHIBIT A-5
[FORM OF CLASS A-5 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. R-_ CUSIP NO. 34527RBL6
FORD CREDIT AUTO OWNER TRUST 1998-C
CLASS A-5 5.86% ASSET BACKED NOTES
Ford Credit Auto Owner Trust 1998-C, 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 [______________] payable on each
Distribution Date in an amount equal to the result obtained by multiplying (i)
a fraction the numerator of which is $[_________] (the original face amount of
this Note) and the denominator of which is $[______] by (ii) the aggregate
amount, if any, payable to Noteholders of Class A-5 Notes on such Distribution
Date from the Principal Distribution Account in respect of principal on the
Class A-5 Notes pursuant to Section 3.1 of the Indenture dated as of July 1,
1998 (as from time
A-5-1
<PAGE> 149
to time amended, supplemented or otherwise modified and in effect, the "
Indenture"), between the Issuer and The Chase Manhattan Bank, a New York
corporation, as Indenture Trustee (in such capacity the "Indenture Trustee");
provided, however, that the entire unpaid principal amount of this Note shall be
due and payable on the earlier of the October 2002 Distribution Date (the
"Class A-5 Final Scheduled Distribution Date") and the Redemption Date, if any,
pursuant to Section 10.1(a) of the Indenture. Capitalized terms used but not
defined herein are defined in Article I of the Indenture, which also contains
rules as to construction that shall be applicable herein.
The Issuer shall pay interest on this Note at the rate per
annum shown above on each Distribution Date until the principal of this Note is
paid or made available for payment, on the principal amount of this Note
outstanding on the preceding Distribution Date (after giving effect to all
payments of principal made on the preceding Distribution Date), subject to
certain limitations contained in Section 3.1 of the Indenture. Interest on
this Note will accrue for each Distribution Date from and including the
fifteenth day of the calendar month immediately preceding such Distribution
Date (or, in the case of the initial Distribution Date, from the Closing Date)
to but excluding the fifteenth day of the following calendar month. Interest
will be computed on the basis of a 360-day year of twelve 30-day months. Such
principal of and interest on this Note shall be paid in the manner specified on
the reverse hereof.
The principal of and interest on this Note are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of this
Note.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Note.
A-5-2
<PAGE> 150
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-5-3
<PAGE> 151
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: July 29, 1998
FORD CREDIT AUTO OWNER TRUST 1998-C
By: PNC BANK, DELAWARE,
not in its individual capacity
but solely as Owner Trustee
under the Trust Agreement
By: ________________________
Authorized Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A-5 Notes designated above and referred to in the
within-mentioned Indenture.
Date: July 29, 1998
THE CHASE MANHATTAN BANK,
not in its individual capacity but
solely as Indenture Trustee
By: ___________________________
Authorized Officer
<PAGE> 152
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the
Issuer, designated as its Class A-5 5.86% Asset Backed Notes (the "Class A-5
Notes") which, together with the Issuer's Class A-1 5.608% Asset Backed Notes
(the "Class A-1 Notes"), Class A-2 5.670% Asset Backed Notes (the "Class A-2
Notes"), Class A-3 5.73% Asset Backed Notes (the "Class A-3 Notes"), Class A-4
5.81% Asset Backed Notes (the "Class A-4 Notes" and, together with the Class
A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes,
the "Class A Notes") and Class B 6.06% Asset Backed Notes (the "Class B Notes"
and, together with the Class A 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-5 Notes are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture. The Class A-5 Notes are subordinated in right of payment to the
Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4
Notes and are senior in right of payment to the Class B Notes, each as and to
the extent provided in the Indenture.
Principal of the Class A-5 Notes will be payable on each
Distribution Date in an amount described on the face hereof. "Distribution
Date" means the fifteenth day of each month, or, if any such day is not a
Business Day, the next succeeding Business Day, commencing August 15, 1998.
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-5
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
A-5-5
<PAGE> 153
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-5 Notes shall be made pro rata to the
Noteholders entitled thereto.
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 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 either by wire
transfer in immediately available funds, to the account of such Noteholder at a
bank or other entity having appropriate facilities therefor, if such Noteholder
shall have provided to the Note Registrar appropriate written instructions at
least five (5) Business Days prior to such Distribution Date and such
Noteholder's Notes in the aggregate evidence a denomination of not less than
$1,000,000, or, if not, 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 to Note Owners, 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 payments will be made 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 princi-
A-5-6
<PAGE> 154
pal 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-5 Rate to the extent lawful.
As provided in the Indenture, the Class A-5 Notes and the
Class B Notes may be redeemed, in whole but not in part, in the manner and to
the extent described in the Indenture and the Sale and Servicing Agreement.
The transfer of this Note is subject to the restrictions on
transfer specified on the face hereof and to the other limitations set forth in
the Indenture. Subject to the satisfaction of such restrictions and
limitations, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or
agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Noteholder hereof or such Noteholder's
attorney duly authorized in writing, with such signature guaranteed by an
"eligible guarantor institution" meeting the requirements of the Note
Registrar, and thereupon one or more new Notes of the same Class in authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for
any registration of transfer or exchange of this Note, but the transferor may
be required to pay a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any such registration of transfer
or exchange.
Each Noteholder or Note Owner, by its acceptance of a Note or,
in the case of a Note Owner, a beneficial interest in a Note, covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on
the Notes or under the Indenture or any certificate or other writing delivered
in connection therewith, against (i) the Indenture Trustee or the Owner
Trustee, each in its individual capacity, (ii) any owner of a beneficial
interest in the
A-5-7
<PAGE> 155
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 Owner
will not at any time institute against the Seller, the General Partner or the
Issuer, or join in any institution against the Seller, the General Partner or
the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or State bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the other Basic Documents.
The Issuer has entered into the Indenture and this Note is
issued with the intention that, for federal, State and local income, and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Indenture Trust Estate. Each Noteholder, by its acceptance of a
Note (and each Note Owner by its acceptance of a beneficial interest in a
Note), will be deemed to agree to treat the Notes for federal, State and local
income, single business and franchise tax purposes as indebtedness of the
Issuer.
Prior to the due presentment for registration of transfer of
this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day
of determination or as of such other date as may be specified in the Indenture)
is registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee
A-5-8
<PAGE> 156
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 Note and
of any Note issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof whether or not notation of such consent or waiver is
made upon this Note. The Indenture also permits the Indenture Trustee to amend
or waive certain terms and conditions set forth in the Indenture without the
consent of the Noteholders.
The term "Issuer", as used in this Note, includes any
successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the Noteholders under the Indenture.
The Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.
This Note and the Indenture shall be governed by, and
construed in accordance with the laws of the State of New York, without
reference to its conflicts of law provisions.
No reference herein to the Indenture, and no provision of this
Note or of the Indenture, shall alter or impair the obligation of the Issuer,
which is absolute
A-5-9
<PAGE> 157
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 The Chase Manhattan Bank, in
its individual capacity, PNC Bank, Delaware, in its individual capacity, any
owner of a beneficial interest in the Issuer, or any of their respective
partners, beneficiaries, agents, officers, directors, employees or successors
or assigns shall be personally liable for, nor shall recourse be had to any of
them for, the payment of principal or of interest on this Note or performance
of, or omission to perform, any of the covenants, obligations or
indemnifications contained in the Indenture. The Noteholder of this Note, by
his acceptance hereof, agrees that, except as expressly provided in the Basic
Documents, in the case of an Event of Default under the Indenture, the
Noteholder shall have no claim against any of the foregoing for any deficiency,
loss or claim therefrom; provided, however, that nothing con- tained 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-5-10
<PAGE> 158
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-5-11
<PAGE> 159
EXHIBIT A-6
[FORM OF CLASS B 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. R-_ CUSIP NO. 34527RBM4
FORD CREDIT AUTO OWNER TRUST 1998-C
CLASS B 6.06% ASSET BACKED NOTES
Ford Credit Auto Owner Trust 1998-C, 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 $[__________] (the original face
amount of this Note) and the denominator of which is $[______] by (ii) the
aggregate amount, if any, payable to Noteholders of Class B Notes on such
Distribution Date from the Principal Distribution Account in respect of
principal on the Class B Notes pursuant to Section 3.1 of the Indenture dated
as of July 1, 1998 (as
A-6-1
<PAGE> 160
from time to time amended, supplemented or otherwise modified and in effect, the
"Indenture"), between the Issuer and The Chase Manhattan Bank, a New York
corporation, as Indenture Trustee (in such capacity the "Indenture Trustee");
provided, however, that the entire unpaid principal amount of this Note shall be
due and payable on the earlier of the February 2003 Distribution Date (the
"Class B Final Scheduled Distribution Date") and the Redemption Date, if any,
pursuant to Section 10.1(a) of the Indenture. Capitalized terms used but not
defined herein are defined in Article I of the Indenture, which also contains
rules as to construction that shall be applicable herein.
The Issuer shall pay interest on this Note at the rate per
annum shown above on each Distribution Date until the principal of this Note is
paid or made available for payment, on the principal amount of this Note
outstanding on the preceding Distribution Date (after giving effect to all
payments of principal made on the preceding Distribution Date), subject to
certain limitations contained in Section 3.1 of the Indenture. Interest on
this Note will accrue for each Distribution Date from and including the
fifteenth day of the calendar month immediately preceding such Distribution
Date (or, in the case of the initial Distribution Date, from the Closing Date)
to but excluding the fifteenth day of the following calendar month. Interest
will be computed on the basis of a 360-day year of twelve 30-day months. Such
principal of and interest on this Note shall be paid in the manner specified on
the reverse hereof.
The principal of and interest on this Note are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of this
Note.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Note.
A-6-2
<PAGE> 161
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-6-3
<PAGE> 162
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: July 29, 1998
FORD CREDIT AUTO OWNER TRUST 1998-C
By: PNC BANK, DELAWARE,
not in its individual capacity
but solely as Owner Trustee
under the Trust Agreement
By: ________________________
Authorized Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class B Notes designated above and referred to in the
within-mentioned Indenture.
Date: July 29, 1998
THE CHASE MANHATTAN BANK,
not in its individual capacity but
solely as Indenture Trustee
By: ___________________________
Authorized Officer
<PAGE> 163
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the
Issuer, designated as its Class B 6.06% Asset Backed Notes (the "Class B Notes"
and, together with the Class A Notes referred to below, the "Notes") which,
together with the Issuer's Class A-1 5.608% Asset Backed Notes (the "Class A-1
Notes"), Class A-2 5.670% Asset Backed Notes (the "Class A-2 Notes"), Class A-3
5.73% Asset Backed Notes (the "Class A-3 Notes"), Class A-4 5.81% Asset Backed
Notes (the "Class A-4 Notes") and Class A-5 5.86% Asset Backed Notes (the
"Class A-5 Notes" and, together with the Class A-1 Notes, the Class A-2 Notes,
the Class A-3 Notes and the Class A-4 Notes, the "Class A 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 B Notes are and will be equally and ratably secured
by the collateral pledged as security therefor as provided in the Indenture.
The Class B Notes are subordinated in right of payment to the Class A Notes as
and to the extent provided in the Indenture.
Principal of the Class B Notes will be payable on each
Distribution Date in an amount described on the face hereof. "Distribution
Date" means the fifteenth day of each month, or, if any such day is not a
Business Day, the next succeeding Business Day, commencing August 15, 1998.
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 B
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
A-6-5
<PAGE> 164
on the Class B Notes shall be made pro rata to the Noteholders entitled
thereto.
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 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 either by wire
transfer in immediately available funds, to the account of such Noteholder at a
bank or other entity having appropriate facilities therefor, if such Noteholder
shall have provided to the Note Registrar appropriate written instructions at
least five (5) Business Days prior to such Distribution Date and such
Noteholder's Notes in the aggregate evidence a denomination of not less than
$1,000,000, or, if not, 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 to Note Owners, 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 payments will be made 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.
A-6-6
<PAGE> 165
The Issuer shall pay interest on overdue installments of
interest at the Class B Rate to the extent lawful.
As provided in the Indenture, the Class A-5 Notes and the
Class B Notes may be redeemed, in whole but not in part, in the manner and to
the extent described in the Indenture and the Sale and Servicing Agreement.
As provided in the Indenture, and subject to certain
limitations set forth therein, the transfer of this Note may be registered on
the Note Register upon surrender of this Note for registration of transfer at
the office or agency designated by the Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Noteholder hereof
or such Noteholder's attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, and thereupon one or more new Notes of the same Class in
authorized denominations and in the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such
registration of transfer or exchange.
Each Noteholder or Note Owner, by its acceptance of a Note or,
in the case of a Note Owner, a beneficial interest in a Note, covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on
the Notes or under the Indenture or any certificate or other writing delivered
in connection therewith, against (i) the Indenture Trustee or the Owner
Trustee, each in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent,
officer, director or employee of the Indenture Trustee or the Owner Trustee,
each in its individual capaci- ty, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee, each in its individual
capacity, except as any such
A-6-7
<PAGE> 166
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 Owner
will not at any time institute against the Seller, the General Partner or the
Issuer, or join in any institution against the Seller, the General Partner or
the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States federal or State bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the other Basic Documents.
The Issuer has entered into the Indenture and this Note is
issued with the intention that, for federal, State and local income, and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Indenture Trust Estate. Each Noteholder, by its acceptance of a
Note (and each Note Owner by its acceptance of a beneficial interest in a
Note), will be deemed to agree to treat the Notes for federal, State and local
income, single business and franchise tax purposes as indebtedness of the
Issuer.
Prior to the due presentment for registration of transfer of
this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day
of determination or as of such other date as may be specified in the Indenture)
is registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Noteholders under the Indenture
at any time by the Issuer with the consent of the Noteholders of Notes
evidencing not less than a majority of the principal amount of the Notes
Outstanding. The Indenture also contains provisions permitting the Noteholders
of
A-6-8
<PAGE> 167
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 Note and
of any Note issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof whether or not notation of such consent or waiver is
made upon this Note. The Indenture also permits the Indenture Trustee to amend
or waive certain terms and conditions set forth in the Indenture without the
consent of the Noteholders.
The term "Issuer", as used in this Note, includes any
successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the Noteholders under the Indenture.
The Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.
This Note and the Indenture shall be governed by, and
construed in accordance with the laws of the State of New York, without
reference to its conflicts of law provisions.
No reference herein to the Indenture, and no provision of this
Note or of the Indenture, shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the times, place and rate, and in the coin or currency herein
prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Basic Documents, none of The Chase Manhattan Bank, in
its individual capacity, PNC Bank, Delaware, in its individual capacity,
A-6-9
<PAGE> 168
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 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-6-10
<PAGE> 169
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-6-11
<PAGE> 170
EXHIBIT B
[FORM OF NOTE DEPOSITORY AGREEMENT]
B-1
<PAGE> 171
SCHEDULE A
Schedule of Receivables
[Provided to the Indenture Trustee at the Closing]
SA-1
<PAGE> 172
APPENDIX A
Definitions and Usage
AA-1
<PAGE> 1
EXHIBIT 4.2
AMENDED AND RESTATED
TRUST AGREEMENT
between
FORD CREDIT AUTO RECEIVABLES TWO L.P.
as Depositor,
and
PNC BANK, DELAWARE,
as Owner Trustee
Dated as of July 1, 1998
<PAGE> 2
AMENDED AND RESTATED TRUST AGREEMENT, dated as of July 1, 1998
(as from time to time amended, supplemented or otherwise modified and in effect,
this "Agreement"), between FORD CREDIT AUTO RECEIVABLES TWO L.P., a Delaware
limited partnership, as Depositor, having its principal executive office at The
American Road, Dearborn, Michigan 48121; and PNC BANK, DELAWARE, a Delaware
banking corporation (the "Bank"), not in its individual capacity but solely as
trustee under this Agreement (in such capacity, the "Owner Trustee"), having its
principal corporate trust office at 222 Delaware Avenue, Wilmington, Delaware
19801.
WHEREAS, the parties hereto intend to amend and restate that
certain Trust Agreement, dated as of July 1, 1998, 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.
1
<PAGE> 3
ARTICLE II
ORGANIZATION OF THE TRUST
SECTION 2.01. Name. The Trust created hereby shall be known as
"Ford Credit Auto Owner Trust 1998-C", 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 2.02. 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 2.03. Purposes and Powers. (a) The purpose of the
Trust is, and the Trust shall have the power and authority, to engage in the
following activities:
(i) to issue the Notes pursuant to the Indenture, and the
Certificates pursuant to this Agreement, and to sell the Notes and the
Certificates upon the written order of the Depositor;
(ii) with the proceeds of the sale of the Notes and the
Certificates, to fund the Reserve Account, to pay the organizational,
start-up and transactional expenses of the Trust, and to pay the
balance to the Depositor pursuant to the Sale and Servicing Agreement;
(iii) to pay interest on and principal of the Notes and
distributions on the Certificates;
(iv) to Grant the Owner Trust Estate (other than the
Certificate Distribution Account and the proceeds thereof) to the
Indenture Trustee pursuant to the Indenture;
(v) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
2
<PAGE> 4
(vi) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith; and
(vii) subject to compliance with the Basic Documents, to
engage in such other activities as may be required in connection with
conservation of the Owner Trust Estate and the making of distributions
to the Noteholders and the Certificateholders.
The Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement or the other
Basic Documents.
SECTION 2.04. 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 2.05. Capital Contribution of Owner Trust Estate. As
of July 1, 1998, the Depositor sold, assigned, transferred, conveyed and set
over to the Owner Trustee the sum of $1. The Owner Trustee hereby acknowledges
receipt in trust from the Depositor, as of such date, of the foregoing
contribution, which shall constitute the initial Owner Trust Estate and shall be
deposited in the Certificate Distribution Account. The Depositor shall pay the
organizational expenses of the Trust as they may arise or shall, upon the
request of the Owner Trustee, promptly reimburse the Owner Trustee for any such
expenses paid by the Owner Trustee. On the Closing Date, the Depositor shall
convey to the Trust the Trust Property and the Owner Trustee shall convey to the
Depositor the Notes and the Certificates.
SECTION 2.06. 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
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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 the Certificateholders and the Depositor and the Notes constituting
indebtedness of the partnership. The parties agree that, unless otherwise re-
quired by the appropriate tax authorities, the Depositor, on behalf of the
Trust, will file or cause to be filed annual or other necessary returns, reports
and other forms consistent with the characterization of the Trust as a
partnership for such tax purposes. Effective as of the date hereof, the Owner
Trustee shall have the rights, powers and duties set forth herein and in the
Business Trust Statute with respect to accomplishing the purposes of the Trust.
The Owner Trustee has filed the Certificate of Trust with the Secretary of
State.
SECTION 2.07. Liability of the Depositor. (a)
Notwithstanding Section 3803 of the Business Trust Statute, the Depositor in
its capacity as the holder of the interests described in Section 3.11 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 for if the Trust were a partnership under the
Limited Partnership Act in which the Depositor were a general partner; provided,
however, that the Depositor shall not be liable to or indemnify Noteholders or
Note Owners for any losses incurred by Noteholders or Note Owners in their
capacity as holders of or beneficial owners of interests in limited recourse
debt secured by the Owner Trust Estate or be liable to or indemnify
Certificateholders for any losses incurred by the Certificateholders if such
losses would nevertheless have been incurred if the Certificates were limited
recourse debt secured by the Owner Trust Estate. In addition, any third-party
creditors of the Trust, or the arrangement between the Depositor and the
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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.
(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 2.08. 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 2.09. Situs of Trust. The Trust shall be located and
administered in the State of Delaware. All bank accounts maintained by the Owner
Trustee on behalf of the Trust shall be located in the State of Delaware or the
State of New York. The Trust shall not have any employees in any state other
than the State of Delaware; provided, however, that nothing herein shall
restrict or prohibit the Bank or the Owner Trustee from having employees within
or without the State of Delaware. Payments will be received by the Trust only in
Delaware or New York, and payments will be made by the Trust only from Delaware
or New York. The only office of the Trust will be at the Corporate Trust Office
in the State of Delaware.
SECTION 2.10. Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants to the Owner Trustee that:
(a) The Depositor is duly organized and validly existing as a
limited partnership in good standing under the laws of the State of Delaware,
with power and authority to own its properties and to conduct its business as
such properties are currently owned and such business is presently conducted.
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(b) The Depositor is duly qualified to do business as a
foreign limited partnership in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business shall require such qualifications.
(c) The Depositor has the power and authority to execute and
deliver this Agreement and to carry out its terms, and the Depositor has full
power and authority to sell and assign the property to be sold and assigned to,
and deposited with, the Trust, and the Depositor has duly authorized such sale
and assignment and deposit to the Trust; and the execution, delivery and
performance of this Agreement has been duly authorized by the Depositor.
(d) This Agreement constitutes a legal, valid, and binding
obligation of the Depositor, enforceable against the Depositor in accordance
with its terms, subject, as to enforceability, to applicable bankruptcy,
insolvency, reorganization, conservatorship, receivership, liquidation and
other similar laws and to general equitable principles.
(e) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time or both) a default under, the Certificate of
Limited Partnership or the Limited Partnership Agreement, or any indenture,
agreement or other instrument to which the Depositor is a party or by which it
is bound; nor result in the creation or imposition of any lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than pursuant to the Basic Documents); nor violate any law
or, to the best of the Depositor's knowledge, any order, rule or regulation
applicable to the Depositor of any court or of any federal or state regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Depositor or its properties.
(f) There are no proceedings or investigations pending or, to
the Depositor's best knowledge, threatened before any court, regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
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over the Depositor or its properties: (i) asserting the invalidity of this
Agreement, the Indenture, any of the other Basic Documents, the Notes or the
Certificates, (ii) seeking to prevent the issuance of the Notes or the
Certificates or the consummation of any of the transactions contemplated by
this Agreement, the Indenture or any of the other Basic Documents, (iii) seeking
any determination or ruling that might materially and adversely affect the
performance by the Depositor of its obligations under, or the validity or
enforceability of, this Agreement or (iv) which might adversely affect the
federal income tax attributes, or Applicable Tax State franchise or income tax
attributes, of the Notes and the Certificates.
(g) The representations and warranties of the Depositor in
Section 3.1 of the Purchase Agreement are true and correct.
SECTION 2.11. Federal Income Tax Matters. The
Cetificateholders 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
and the Depositor will be treated as partners in that partnership. The Deposi-
tor hereby agrees and the Certificateholders by acceptance of a Certificate
agree to such treatment and each agrees 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 Certificate holders of each
Class of Certificates as of the Record Date occurring within such
month, in proportion to their ownership of the Aggregate Certificate
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Balance on such date, in an amount up to the sum of (i) the Accrued
Class C Certificate Interest or Accrued Class D Certificate Interest,
as applicable, for such Class for such month, (ii) the portion of the
market discount on the Receivables accrued during such month that is
allocable to the excess, if any, of the aggregate Initial Certificate
Balance of such class of Certificates over the initial aggregate issue
price of such Class of Certificates and (iii) any amount expected to be
distributed to the Certificateholders of such Class pursuant to
Sections 4.6(c) and (d) 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 of such Class (to the extent not previously reversed
pursuant to this clause (iii)); and
(c) thereafter all remaining net income of the Trust (subject
to the modifications set forth below) for such month as determined for
federal income tax purposes (and each item of income, gain, credit,
loss or deduction entering into the computation thereof) shall be
allocated to the Depositor, to the extent thereof.
If the gross ordinary income of the Trust for any month is insufficient for the
allocations described in paragraph (b) above, subsequent gross ordinary income
shall first be allocated to make up such shortfall before any allocation
pursuant to paragraph (c) above. Net losses of the Trust, if any, for any month
as determined for federal income tax purposes (and each item of income, gain,
credit, loss or deduction entering into the computation thereof) shall be
allocated to the Depositor to the extent the Depositor, in its capacity as
"general partner," is reasonably expected to bear the economic burden of such
net losses, and any remaining net losses shall be allocated among the
Certificateholders as of the Record Date occurring within such month in
proportion to their ownership of the Aggregate Certificate Balance on such
Record Date. The Depositor is authorized to modify the allocations in this
paragraph if necessary or appropriate, in its sole discretion, for the
allocations to fairly reflect the economic income, gain or loss to the
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Depositor or the Certificateholders or as otherwise required by the Code.
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ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.01. 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 3.02. Capital Accounts. (a) The Owner Trustee shall
establish and maintain a separate bookkeeping account (a "Capital Account") for
the Depositor and each Certificateholder. The initial balance of the Capital
Account for (i) each Certificateholder shall be the amount initially paid for
such Certificateholder's Certificates and (ii) the Depositor shall be (x) the
fair market value of the Receivables minus (y) the proceeds of the sale of Notes
and Certificates net of the Reserve Initial Deposit. The Capital Account of the
Depositor or each Certificateholder shall also be increased by (i) the dollar
amount of any additional cash contributions made by the Depositor or such
Certificateholder, as the case may be, (ii) the fair market value of any
property (other than cash) contributed to the Trust by the Depositor or such
Certificateholder, as the case may be (net of any liabilities to which the
property is subject), and (iii) allocations to the Depositor or such
Certificateholder, as the case may be, of income and gain (including income
exempt from tax). The Capital Account of the Depositor or each Certificateholder
shall be decreased by (i) the dollar amount of any cash distributions made to
the Depositor or such Certificateholder, as the case may be, (ii) the fair
market value of any property (other than cash) distributed to the Depositor or
such Certificateholder, as the case may be (net of any liabil ities to which the
property is subject), (iii) allocations to the Depositor or such
Certificateholder, as the case may be, of loss or deductions (or items thereof),
and (iv) any allocations of expenditures of the Trust described in Section
705(a)(2)(B) of the Code.
(b) Notwithstanding any other provision
of this Agreement to the contrary, the foregoing provisions of this Section 3.2
regarding the maintenance of Capital Accounts shall be construed so as to comply
with the provisions of the Treasury Regulations promulgated
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pursuant to Section 704 of the Code. The Depositor is hereby authorized to
modify these provisions to the minimum extent necessary to comply with such
regulations.
SECTION 3.03. The Certificates. The Class C Certificates and
the Class D Certificates shall each be issued in one or more registered,
definitive, physical certificates, in the form set forth in Exhibit A and
Exhibit B, respectively, in denominations of at least $20,000 and in integral
multiples of $1,000 in excess thereof. No Certificate may be sold, transferred,
assigned, participated, pledged, or otherwise disposed of (any such act, a
"Transfer") to any Person except in accordance with the provisions of Section
3.5 and any attempted Transfer in violation of Section 3.5 shall be null and
void (each a "Void Transfer").
The Certificates shall be executed on behalf of the Trust by
manual or facsimile signature of an authorized officer of the Owner Trustee.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures shall have been affixed, authorized to sign on
behalf of the Trust, shall be validly issued and entitled to the benefits of
this Agreement, notwithstanding that such individuals or any of them shall have
ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of authentication and
delivery of such Certificates.
If Transfer of the Certificates is permitted pursuant to
Section 3.5, a transferee of a Certificate shall become a Certificateholder, and
shall be entitled to the rights and subject to the obligations of a
Certificateholder hereunder upon such transferee's acceptance of a Certificate
duly registered in such transferee's name pursuant to Section 3.5.
SECTION 3.04. 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 Class C
Certificates, in an aggregate principal balance equal to the Initial
Certificate Balance of such Class C Certificates, and the Class D Certificates,
in an aggregate principal balance equal to the Initial Certificate Balance of
such Class D Certificates, to be executed on behalf of the Trust,
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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
or Exhibit B, as applicable, attached hereto executed by the Owner Trustee by
manual signature; such authentication shall constitute conclusive evidence that
such Certificate shall have been duly authenticated and delivered hereunder.
All Certificates shall be dated the date of their authentication.
SECTION 3.05. Registration of Certificates; Transfer and
Exchange of Certificates. (a) The Certificate Registrar shall keep or cause to
be kept, at the office or agency maintained pursuant to Section 3.9, a
Certificate Register in which, subject to such reasonable regulations as it may
prescribe, the Trust shall provide for the registration of Certificates and of
Transfers and exchanges of Certificates as herein provided. The Bank shall be
the initial Certificate Registrar. No Transfer of a Certificate shall be
recognized except upon registration of such Transfer in the Certificate
Register.
(b) No Transfer of any Class C Certificate shall be permitted,
recognized or recorded unless the prospective transferee of such Class C
Certificate shall provide a letter in the form of Exhibit C hereof to the Trust,
the Owner Trustee and the Certificate Registrar, in which such prospective
transferee shall represent the following:
(i) It is not, and each account (if any) for which it is
purchasing the Class C Certificates is not, (A) an employee benefit
plan, as defined in Section 3(3) of ERISA, that is subject to Title I
of ERISA, (B) a plan described in Section 4975(e)(1) of the Code that
is subject to Section 4975 of the Code, (C) a governmental plan, as
defined in Section 3(32) of ERISA, subject to any federal, State or
local law which is, to a material extent, similar to
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the provisions of Section 406 of ERISA or Section 4975 of the Code, (D)
an entity whose underlying assets include plan assets by reason of a
plan's investment in the entity (within the meaning of Department of
Labor Regulation 29 C.F.R. Section 2510.3-101 or otherwise under
ERISA) or (E) a person investing "plan assets" of any such plan
(including without limitation, for purposes of this clause (E), any
insurance company general account, but excluding any entity registered
under the Investment Company Act of 1940, as amended).
(ii) It is, and each account (if any) for which it is
purchasing the Class C Certificates is, a Person who is (A) a citizen
or resident of the United States, (B) a corporation or partnership
organized in or under the laws of the United States or any political
subdivision thereof, (C) an estate the income of which is includible in
gross income for United States tax purposes, regardless of its source,
(D) a trust if a U.S. court is able to exercise primary supervision
over the administration of such trust and one or more Persons meeting
the conditions of clause (A), (B), (C) or (E) of this paragraph (ii)
has the authority to control all substantial decisions of the trust or
(E) a Person not described in clauses (A) through (D) above whose
ownership of the Class C Certificates is effectively connected with
such Person's conduct of a trade or business within the United States
(within the meaning of the Code) and who provides the Owner Trustee
and the Depositor with an IRS Form 4224 (and such other certifications,
representations, or opinions of counsel as may be requested by the
Owner Trustee or the Depositor).
(iii) It understands that any purported Transfer of any Class
C Certificate (or any interest therein) to any Person who does not meet
the conditions of paragraphs (i) and (ii) above shall be a Void
Transfer, and the purported transferee in a Void Transfer shall not be
recognized by the Trust or any other Person as a Certificateholder for
any purpose.
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(iv) It agrees that if it determines to Transfer any of the
Class C Certificates it will cause its proposed transferee to provide
to the Trust, the Owner Trustee and the Certificate Registrar a letter
substantially in the form of Exhibit C hereof or such other written
statement as the Depositor shall prescribe.
(c) Each Class D Certificate shall bear a legend to the
following effect unless determined otherwise by the Administrator (as certified
to the Owner Trustee in an Officer's Certificate) and the Owner Trustee
consistent with applicable law:
"THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER
ANY STATE SECURITIES OR BLUE SKY LAW OF ANY STATE OF THE UNITED STATES. THE
HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES FOR THE BENEFIT OF THE
TRUST AND THE DEPOSITOR THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS, AND ONLY (1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A") TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER, WITHIN THE MEANING OF RULE 144A (A "QIB"), PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN
EACH CASE, THAT THE REOFFER, RESALE, PLEDGE, OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, SUBJECT TO (A) THE RECEIPT BY THE TRUST AND THE
CERTIFICATE REGISTRAR OF A CERTIFICATE SUBSTANTIALLY IN THE FORM ATTACHED AS
EXHIBIT F TO THE TRUST AGREEMENT AND (B) THE RECEIPT BY THE TRUST AND THE
CERTIFICATE REGISTRAR OF A LETTER SUBSTANTIALLY IN THE FORM ATTACHED AS EXHIBIT
D TO THE TRUST AGREEMENT, WITH SUCH CHANGES THEREIN AS MAY BE APPROVED BY THE
DEPOSITOR, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE), SUBJECT TO THE RECEIPT BY THE TRUST,
THE INITIAL PURCHASER AND THE CERTIFICATE REGISTRAR OF SUCH EVIDENCE ACCEPTABLE
TO THE TRUST AND THE INITIAL PURCHASER THAT SUCH REOFFER, RESALE, PLEDGE OR
TRANSFER IS IN COMPLIANCE WITH THE TRUST AGREEMENT AND THE SECURITIES ACT AND
OTHER APPLICABLE LAWS, (3) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING THEREOF IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT PURSUANT TO ANY OTHER EXEMPTION FROM THE REGISTRATION
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REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY THE TRUST AND
THE CERTIFICATE REGISTRAR OF A LETTER SUBSTANTIALLY IN THE FORM ATTACHED AS
EXHIBIT E TO THE TRUST AGREEMENT OR (B) THE RECEIPT BY THE TRUST, THE INITIAL
PURCHASER AND THE CERTIFICATE REGISTRAR OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE
TRUST AND THE INITIAL PURCHASER THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS
IN COMPLIANCE WITH THE TRUST AGREEMENT AND THE SECURITIES ACT AND OTHER
APPLICABLE LAWS, OR (4) TO THE DEPOSITOR OR ITS AFFILIATES, IN EACH CASE IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND
SECURITIES AND BLUE SKY LAWS OF THE STATES OF THE UNITED STATES."
As a condition to the registration of any Transfer of a Class
D Certificate, the prospective trans feree of such a Class D Certificate shall
be required to represent in writing to the Owner Trustee, the Certifi cate
Registrar and the Initial Purchaser the following, unless determined otherwise
by the Administrator (as certified to the Owner Trustee in an Officer's Certifi
cate):
(i) It understands that no subsequent Transfer of the
Class D Certificates is permitted unless it causes its proposed
transferee to provide to the Trust, the Certificate Registrar and the
Initial Purchaser a letter substantially in the form of Exhibit D or
Exhibit E hereof (with such changes therein as may be approved by the
Depositor), as applicable, or such other written statement as the
Depositor shall prescribe.
(ii) It is not (A) an employee benefit plan, as
defined in Section 3(3) of ERISA, that is subject to Title I of ERISA,
(B) a plan described in Section 4975(e)(1) of the Code that is subject
to Section 4975 of the Code, (C) a governmental plan, as defined in
Section 3(32) of ERISA, subject to any federal, State or local law
which is, to a material extent, similar to the provisions of Section
406 of ERISA or Section 4975 of the Code, (D) an entity whose
underlying assets include plan assets by reason of a plan's investment
in the entity (within the meaning of Department of Labor Regulation 29
C.F.R. Section 2510.3-101 or otherwise under ERISA) or (E) a person
investing "plan assets"
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of any such plan (including without limitation, for purposes of this
clause (E), subject to any exceptions approved by the Depositor, any
insurance company general account, but excluding any entity registered
under the Investment Company Act of 1940, as amended).
(iii) It is a person who is (A) a citizen or resident
of the United States, (B) a corporation or partnership organized in or
under the laws of the United States or any political subdivision
thereof, (c) an estate the income of which is includible in gross
income for United States tax purposes, regardless of its source, (D) a
trust if a U.S. court is able to exercise primary supervision over the
administration of such trust and one or more persons described in
clause (A), (B), (C) or (E) of this paragraph (iii) has the authority
to control all substantial decisions of the trust or (E) a person not
described in clauses (A) though (D) of this paragraph (iii) whose
ownership of the Class D Certificates is effectively connected with
such person's conduct of a trade or business within the United States
(within the meaning of the Code) and who provides the Trust and the
Depositor with an IRS Form 4224 (and such other certifications,
representations, or opinions of counsel as may be requested by the
Trust or the Depositor).
(iv) It understands that any purported Transfer of
any Class D Certificate (or any interest therein) in contravention of
any of the restrictions and conditions contained in this Section will
be a Void Transfer, and the purported transferee in a Void Transfer
will not be recognized by the Trust or any other person as a
Certificateholder for any purpose.
(d) By acceptance of any Class D Certificate, the
Certificateholder thereof specifically agrees with and represents to the
Depositor, the Trust and the Certificate Registrar, that no Transfer of such
Class D Certificate shall be made unless the registration requirements of the
Securities Act and any applicable State
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<PAGE> 18
securities laws are complied with, or such Transfer is exempt from the
registration requirements under the Securities Act because the Transfer
satisfies one of the following:
(i) such Transfer is in compliance with Rule 144A
under the Securities Act ("Rule 144A"), to a transferee who the
transferor reasonably believes is a Qualified Institutional Buyer that
is purchasing for its own account or for the account of a Qualified
Institutional Buyer and to whom notice is given that such Transfer is
being made in reliance upon Rule 144A under the Securities Act and (x)
the transferor executes and delivers to the Trust and the Certificate
Registrar, a Rule 144A transferor certificate substantially in the form
attached as Exhibit F and (y) the transferee executes and delivers to
the Trust and the Certificate Registrar an investment letter
substantially in the form attached as Exhibit D.
(ii) after the appropriate holding period, such
Transfer is pursuant to an exemption from registration under the
Securities Act provided by Rule 144 under the Securities Act and the
transferee, if requested by the Trust, the Certificate Registrar or
the Initial Purchaser, delivers an Opinion of Counsel in form and
substance satisfactory to the Trust and the Initial Purchaser; and
(iii) such Transfer is to an institutional accredited
investor as defined in rule 501(a)(1), (2), (3) or (7) of Regulation D
promulgated under the Securities Act in a transaction exempt from the
registration requirements of the Securities Act, such Transfer is in
accordance with any applicable securities laws of any State of the
United States or any other jurisdiction, and such investor executes and
delivers to the Trust and the Certificate Registrar an investment
letter substantially in the form attached as Exhibit E.
(e) The Owner Trustee shall make available to the prospective
transferor and transferee of a Class D
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Certificate information requested to satisfy the requirements of paragraph
(d)(4) of Rule 144A (the "Rule 144A Information"). The Rule 144A Information
shall include any or all of the following items requested by the prospective
transferee:
(i) the private placement memorandum relating to the
Class D Certificates dated July 20, 1998, and any amendments or
supplements thereto;
(ii) each statement delivered to Certificateholders
pursuant to Section 5.2(b) on each Distribution Date preceding such
request; and
(iii) such other information as is reasonably
available to the Owner Trustee in order to comply with requests for
information pursuant to Rule 144A under the Securities Act.
None of the Depositor, the Certificate Registrar or the Owner
Trustee is under an obligation to register any Class D Certificate under the
Securities Act or any other securities law.
(f) Upon surrender for registration of Transfer of any
Certificate at the office or agency maintained pursuant to Section 3.9 and upon
compliance with any provisions of this Agreement relating to such Transfer, the
Owner Trustee shall execute, authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates in
authorized denominations of a like Class and aggregate amount dated the date of
authentication by the Owner Trustee or any authenticating agent. At the option
of a Certificateholder, Certificates may be exchanged for other Certificates of
authorized denominations of a like Class and aggregate amount upon surrender of
the Certificates to be exchanged at the office or agency maintained pursuant to
Section 3.9.
Every Certificate presented or surrendered for registration of
Transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Owner Trustee and the Certificate Registrar, duly
executed by the Certificateholder or his attorney duly authorized in writing,
with such signature guaranteed by a member firm of the New York Stock Exchange
or a commer-
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cial bank or trust company. Each Certificate surrendered for registration of
Transfer or exchange shall be cancelled and subsequently disposed of by the
Certificate Registrar in accordance with its customary practice.
No service charge shall be made for any registration of
Transfer or exchange of Certificates, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or govern-
mental charge that may be imposed in connection with any Transfer or exchange of
Certificates.
The preceding provisions of this Section 3.5 notwithstanding,
the Owner Trustee shall not make and the Certificate Registrar need not register
any Transfer or exchange of Certificates for a period of fifteen (15) days
preceding any Distribution Date for any payment with respect to the
Certificates.
SECTION 3.06. 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 protected purchaser, the Owner Trustee on behalf of the Trust shall execute
and the Owner Trustee shall authenticate and deliver, in exchange for, or in
lieu of, any such mutilated, destroyed, lost or stolen Certificate a new Cer-
tificate of like Class, tenor and denomination. In connection with the issuance
of any new Certificate under this Section 3.6, the Owner Trustee or the
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Certificate issued pursuant to this Section 3.6 shall constitute
conclusive evidence of ownership in the Trust, as if originally issued, whether
or not the lost, stolen or destroyed Certificate shall be found at any time.
SECTION 3.07. Persons Deemed Owners of Certificates. Prior to
due presentation of a Certificate for registration of Transfer, the Owner
Trustee, the Certifi-
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cate 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 3.08. Access to List of Certificateholders' Names and
Addresses. The Owner Trustee shall furnish or cause to be furnished to the
Servicer and the Depositor, or to the Indenture Trustee, within fifteen (15)
days after receipt by the Owner Trustee of a written request therefor from the
Servicer or the Depositor, or the Indenture Trustee, as the case may be, a list,
in such form as the requesting party may reasonably require, of the names and
addresses of the Certificateholders as of the most recent Record Date. If three
or more Certificateholders or one or more Certificateholders of Certificates
evidencing not less than 25% of the Aggregate 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 3.09. Maintenance of Office or Agency. The Owner
Trustee shall maintain in the State of Delaware, an office or offices or agency
or agencies where Certificates may be surrendered for registration of Transfer
or exchange and where notices and demands to or upon the Owner Trustee in
respect of the Certificates and the Basic Documents may be served. The Owner
Trustee initially designates PNC Bank, Delaware, 222 Delaware
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Avenue, Wilmington, Delaware 19801, Attention: Michael B. McCarthy as its
principal corporate trust office for such purposes. The Owner Trustee shall give
prompt written notice to the Depositor and to the Certificateholders of any
change in the location of the Certificate Registrar or any such office or
agency.
SECTION 3.10. Appointment of Certificate Paying Agent. The
Certificate Paying Agent shall make distributions to Certificateholders from
each 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 each Certificate
Distribution Account for the purpose of making the distributions referred to
above. The Owner Trustee may revoke such power and remove the Certificate Paying
Agent if the Owner Trustee determines in its sole discretion that the
Certificate Paying Agent shall have failed to perform its obligations under this
Agreement in any material respect. The Certificate Paying Agent shall initially
be the Owner Trustee, and any co-paying agent chosen by the Owner Trustee. The
Owner Trustee shall be permitted to resign as Certificate Paying Agent upon
thirty (30) days' written notice to the Owner Trustee. In the event that the
Bank shall no longer be the Certificate Paying Agent, the Owner Trustee shall
appoint a successor to act as Certificate Paying Agent (which shall be a bank or
trust company). The Owner Trustee shall cause such successor Certificate Paying
Agent or any additional Certificate Paying Agent appointed by the Owner Trustee
to execute and deliver to the Owner Trustee an instrument in which such
successor Certificate Paying Agent or additional Certificate Paying Agent shall
agree with the Owner Trustee that as Certificate Paying Agent, 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
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Trustee shall act as Certificate Paying Agent and, to the extent applicable, to
any other paying agent appointed hereunder. Any reference in this Agreement to
the Certificate Paying Agent shall include any co-paying agent unless the
context requires otherwise.
SECTION 3.11. Certain Rights of Depositor. The Depositor shall
be entitled to 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, and to receive
amounts remaining in the Reserve Account following the payment in full of the
aggregate principal amount of the Notes and the Aggregate Certificate Balance
and of all other amounts owing or to be distributed hereunder or under the
Indenture or the Sale and Servicing Agreement to Noteholders and
Certificateholders and the termination of the Trust. The Depositor may not
Transfer any such rights unless it shall have received an Opinion of Counsel
that such Transfer shall not cause the Trust to be classified as an association
(or publicly traded partnership) taxable as a corporation.
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ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.01. 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)
Certificate-holders 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 afore mentioned 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
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amend or supplement any provision in a manner or to add any provision
that would not materially adversely 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 4.02. 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 4.03. Action by Certificateholders with Respect to
Bankruptcy. The Owner Trustee shall not have the power to commence a voluntary
proceeding in bank ruptcy 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 4.04. 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
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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.
SECTION 4.05. 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 Aggregate 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 Aggregate Certificate
Balance at the time of the delivery of such notice.
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ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.01. 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 two segregated trust ac-
counts, each in the name of "PNC Bank, Delaware, as Owner Trustee" at a
Qualified Institution or Qualified Trust Institution (which shall initially be
the corporate trust department of the Bank), which shall be designated as the
"Certificate Interest Distribution Account" and the "Certificate Principal
Distribution Account," respectively (each of the Certificate Interest
Distribution Account and the Certificate Principal Distribution Account, a
"Certificate Distribution Account"). Except as expressly provided in Section
3.10, the Certificate Distribution Account shall be under the sole dominion and
control of the Owner Trustee. All monies deposited from time to time in each
Certificate Distribution Account pursuant to the Sale and Servicing Agreement
shall be applied as provided in the Basic Documents. In the event that either
Certificate Distribution Account is no longer to be maintained at the corporate
trust department of the Bank, the Servicer shall, with the Owner Trustee's
assistance as necessary, cause such 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). Each Certificate Distribution
Account will be established and maintained pursuant to an account agreement
which specifies New York law as the governing law.
SECTION 5.02. Application of Trust Funds. (a) On each
Distribution Date, the Owner Trustee 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:
(i) withdraw the amounts deposited into the
Certificate Interest Distribution Account
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pursuant to Section 4.6(c) of the Sale and Servicing Agreement
on or prior to such Distribution Date and make or cause to be
made distributions and payments in the following order of
priority:
(1) first, to the Certificateholders of
Class C Certificates, an amount equal to the Accrued
Class C Certificate Interest, provided that if there
are not sufficient funds available to pay the entire
amount of the Accrued Class C Certificate Interest,
the amounts available shall be applied to the payment
of such interest on the Class C Certificates on a pro
rata basis;
(2) second, to the Certificateholders of
Class D Certificates, an amount equal to the Accrued
Class D Certificate Interest; provided that if there
are not sufficient funds available to pay the entire
amount of the Accrued Class D Certificate Interest,
the amounts available shall be applied to the payment
of such interest on the Class D Certificates on a pro
rata basis; and
(3) third, to the Depositor, any funds
remaining on deposit in the Certificate Interest
Distribution Account.
(ii) withdraw the amounts deposited into the
Certificate Principal Distribution Account pursuant to Section
4.6(c) and (d) of the Sale and Servicing Agreement on or prior
to such Distribution Date and make or cause to be made
distributions and payments in the following order of priority:
(1) first, to the Certificateholders of the
Class C Certificates in reduction of the Certificate
Balance of the Class C Certificates, until the
Certificate Balance of the Class C Certificates has
been reduced to zero; provided that if there are not
sufficient funds available to
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reduce the Certificate Balance of the Class C
Certificates to zero, the amounts available shall be
applied to the reduction of the Certificate Balance
of the Class C Certificates on a pro rata basis;
(2) second, to the Certificateholders of the
Class D Certificates in reduction of the Certificate
Balance of the Class D Certificates, until the Cer-
tificate Balance of the Class D Certificates has
been reduced to zero; provided that if there are not
sufficient funds available to reduce the Certificate
Balance of the Class D Certificates to zero, the
amounts available shall be applied the reduction of
the Certificate Balance of the Class D Certificates
on pro rata basis; and
(3) third, to the Depositor, any funds
remaining on deposit in the Certificate Principal
Distribution Account.
(b) On each Distribution Date, the Owner Trustee shall, or
shall cause the Certificate Paying Agent to, send to each Certificateholder as
of the related Record Date the statement provided to the Owner Trustee by the
Servicer pursuant to Section 4.9 of the Sale and Servicing Agreement with
respect to such Distribution Date.
(c) In the event that any withholding tax is imposed on the
Trust's payment (or allocations of income) to a 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
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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 (c). 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 5.03. 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 funds, to the account of such
Certificateholder at a bank or other entity having appropriate facilities
therefor, if (i) such Certificateholder shall have provided to the Certificate
Registrar appropriate written instructions at least five (5) Business Days prior
to such Distribution Date and such Certificateholder's Certificates in the
aggregate evidence a denomination of not less than $1,000,000, or (ii) such
Certificateholder is the Depositor or, if not, by check mailed to such
Certificateholder at the address of such Certificateholder appearing in the
Certificate Register. Notwithstanding the foregoing, the final distribution in
respect of any Certificate (whether on the applicable Final Scheduled
Distribution Date or otherwise) will be payable only upon presentation and
surrender of such Certificate at the office or agency maintained for that
purpose by the Owner Trustee pursuant to Section 3.9.
SECTION 5.04. 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.
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SECTION 5.05. Accounting and Reports to Noteholders,
Certificateholders, Internal Revenue Service and Others. The Owner Trustee
shall, based on information provided by or on behalf of the Depositor, (a)
maintain (or cause to be maintained) the books of the Trust on a calendar year
basis on the accrual method of accounting, (b) deliver (or cause to be
delivered) to each Certificateholder, as may be required by the Code and
applicable Treasury Regulations, such information as may be required (including
Schedule K-1) to enable each Certificateholder to prepare its federal and State
income tax returns, (c) file (or cause to be filed) such tax returns relating to
the Trust (including a partnership information return, IRS Form 1065), and make
such elections as may from time to time be required or appropriate under any
applicable State or federal statute or rule or regulation thereunder so as to
maintain the Trust's characterization as a partnership for federal income tax
purposes, (d) cause such tax returns to be signed in the manner required by law
and (e) collect (or cause to be collected) any withholding tax as described in
and in accordance with Section 5.2(c) with respect to income or distributions to
Certificateholders. The Owner Trustee shall elect under Section 1278 of the Code
to include in income currently any market discount that accrues with respect to
the Receivables. The Owner Trustee shall not make the election provided under
Section 754 of the Code.
SECTION 5.06. Signature on Returns; Tax Matters Partner. (a)
(a) The Depositor, as general partner for income tax purposes, shall
prepare (or cause to be pre pared) and sign, on behalf of the Trust,
the tax returns of the Trust.
(b) The Depositor shall be designated the "tax matters
partner" of the Trust pursuant to Section 6231(a)(7)(A) of the Code and
applicable Treasury Regulations.
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ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.01. General Authority. The Owner Trustee is
authorized and directed to execute and deliver the Basic Documents to which the
Trust is to be a party and each certificate or other document attached as an
exhibit to or contemplated by the Basic Documents to which the Trust is to be a
party and any amendment or other agreement, in each case, in such form as the
Depositor shall approve, as evidenced conclusively by the Owner Trustee's
execution thereof and the Depositor's execution of this Agreement, and to direct
the Indenture Trustee to authenticate and deliver (i) Class A-1 Notes in the
aggregate principal amount of $300,000,000, (ii) Class A-2 Notes in the
aggregate principal amount of $300,000,000, (iii) Class A-3 Notes in the
aggregate principal amount of $650,000,000, (iv) Class A-4 Notes in the
aggregate principal amount of $712,000,000, (v) Class A-5 Notes in the aggregate
principle amount of $200,000,000 and (vi) Class B Notes in the aggregate
principal amount of $92,000,000. In addition to the foregoing, the Owner Trustee
is authorized to take all actions required of the Trust pursuant to the Basic
Documents. The Owner Trustee is further authorized from time to time to take
such action on behalf of the Trust as is permitted by the Basic Documents and
which the Servicer or the Administrator recommends with respect to the Basic
Documents, except to the extent that this Agreement expressly requires the
consent of Certificateholders for such action.
SECTION 6.02. 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
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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, monitor or otherwise supervise the administration,
servicing or collection of the Receivables.
SECTION 6.03. 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.
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(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 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 6.04. 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
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<PAGE> 35
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.
SECTION 6.05. 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 6.06. 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 7.01. Acceptance of Trusts and Duties. The Owner
Trustee accepts the trusts hereby created and agrees to perform its duties
hereunder with respect to such trusts but only upon the terms of this Agreement.
The Owner Trustee also agrees to disburse all monies actually received by it
constituting part of the Owner Trust Estate upon the terms of this Agreement to
which the Trust or Owner Trustee is a party and the other Basic Documents. The
Owner Trustee shall not be answerable or accountable hereunder or under any
other Basic Document under any circumstances, except (i) for its own willful
misconduct, bad faith or negligence or (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 7.3 expressly made by the Owner
Trustee. In particular, but not by way of limitation (and subject to the
exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of
judgment made by a responsible officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in accordance with the
instructions of any Certificateholder, the Indenture Trustee, the
Depositor, the Administrator or the Servicer;
(c) no provision of this Agreement or any other Basic Document
shall require the Owner Trustee to expend or risk funds or otherwise
incur any financial liability in the performance of any of its rights
or powers hereunder or under any other Basic Document if the Owner
Trustee shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable
for indebtedness evidenced by or arising under any of the Basic
Documents, including the principal of and interest on the Notes or
amounts distributable on the Certificates;
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(e) the Owner Trustee shall not be responsible for or in
respect of the validity or sufficiency of this Agreement or for the due
execution hereof by the Depositor or for the form, character,
genuineness, sufficiency, value or validity of any of the Owner Trust
Estate or for or in respect of the validity or sufficiency of the
other Basic Documents, other than the certificate of authentication
on the Certificates, and the Owner Trustee shall in no event assume or
incur any liability, duty, or obligation to any Noteholder or to any
Certificateholder, other than as expressly provided for herein and in
the other Basic Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Servicer, the Administrator, the Depositor or the
Indenture Trustee under any of the Basic Documents or otherwise and
the Owner Trustee shall have no obligation or liability to perform the
obligations of the Trust under this Agreement or the other Basic
Documents that are required to be performed by the Administrator under
the Administration Agreement, the Servicer under the Sale and Servicing
Agreement or the Indenture Trustee under the Indenture; and
(g) the Owner Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement, or
to institute, conduct or defend any litigation under this Agreement or
otherwise or in relation to this Agreement or any other Basic Document,
at the request, order or direction of any of the Certificateholders,
unless such Certificateholders have offered to the Owner Trustee
security or indemnity satisfactory to it against the costs, expenses
and liabilities that may be incurred by the Owner Trustee therein or
thereby. The right of the Owner Trustee to perform any discretionary
act enumerated in this Agreement or in any other Basic Document shall
not be construed as a duty, and the Owner Trustee shall not be
answerable for other than its willful misconduct, bad faith or
negligence in the performance of any such act.
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SECTION 7.02. Furnishing of Documents. The Owner Trustee shall
furnish to the Certificateholders, promptly upon receipt of a written request
therefor, duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to the
Owner Trustee under the Basic Documents.
SECTION 7.03. 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 exe cuted 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 7.04. Reliance; Advice of Counsel.
(a) The Owner Trustee may rely upon, shall be protected in relying upon, and
shall incur no liability to anyone in acting upon any signature, instrument,
notice, resolution, request, consent, order, certificate, report, opinion,
bond, or other document or paper believed by it to be genuine and believed by it
to be signed by the proper party or parties. The Owner Trustee may accept a
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certified copy of a resolution of the board of directors or other governing body
of any corporate party as conclusive evidence that such resolution has been
duly adopted by such body and that the same is in full force and effect. As to
any fact or matter the method of the determination of which is not specifically
prescribed herein, the Owner Trustee may for all purposes hereof rely on a
certificate, signed by the president or any vice president or by the treasurer
or other authorized officers of the relevant party, as to such fact or matter
and such certificate shall constitute full protection to the Owner Trustee for
any action taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder
and in the performance of its duties and obligations under this Agreement or the
other Basic Documents, the Owner Trustee (i) may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them, and
the Owner Trustee shall not be liable for the conduct or misconduct of such
agents or attorneys if such agents or attorneys shall have been selected by the
Owner Trustee with reasonable care, and (ii) may consult with counsel,
accountants and other skilled Persons to be selected with reasonable care and
employed by it. The Owner Trustee shall not be liable for anything done,
suffered or omitted in good faith by it in accordance with the written opinion
or advice of any such counsel, accountants or other such Persons and not
contrary to this Agreement or any other Basic Document.
SECTION 7.05. Not Acting in Individual Capacity. Except as
provided in this Article VII, in accepting the trusts hereby created, the Bank
acts solely as Owner Trustee hereunder and not in its individual capacity, and
all Persons having any claim against the Owner Trustee by reason of the
transactions contemplated by this Agreement or any other Basic Document shall
look only to the Owner Trust Estate for payment or satisfaction thereof.
SECTION 7.06. 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,
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and the Owner Trustee assumes no responsibility for the correctness thereof. The
Owner Trustee makes no representations as to the validity or sufficiency of
this Agreement, of any other Basic Document or of the Certifi cates (other than
the signature and countersignature of the Owner Trustee on the Certificates) or
the Notes, or of any Receivable or related documents. The Owner Trustee and the
Bank shall at no time have any responsibility or liability for or with respect
to the legality, validity and enforceability of any Receivable, or the
perfection and priority of any security interest created by any Receivable in
any Financed Vehicle or the maintenance of any such perfection and priority, or
for or with respect to the sufficiency of the Owner Trust Estate or its ability
to generate the payments to be distributed to Certificateholders under this
Agreement or the Noteholders under the Indenture, including, without limitation:
the existence, condition and ownership of any Financed Vehicle; the existence
and enforceability of any insurance thereon; the existence and contents of any
Receivable on any computer or other record thereof; the validity of the
assignment of any Receivable to the Trust or any intervening assignment; the
completeness of any Receivable; the performance or enforcement of any
Receivable; the compliance by the Depositor or the Servicer with any warranty or
representation made under any Basic Document or in any related document, or the
accuracy of any such warranty or representation or any action of the Indenture
Trustee, the Administrator or the Servicer or any subservicer taken in the name
of the Owner Trustee.
SECTION 7.07. Bank May Own Certificates and Notes. The Bank,
in its individual or any other capac ity, 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 8.01. Owner Trustee's Fees and Expenses. The Owner
Trustee shall receive as compensation for its services hereunder such fees as
have been separately agreed upon before the date hereof between the Depositor
and the Owner Trustee, and the Owner Trustee shall be entitled to and reimbursed
by the Depositor for its other reasonable expenses hereunder, including the
reasonable compensation, expenses and disbursements of such agents,
representatives, experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its rights and its duties
hereunder. Such amounts shall be treated for tax purposes as having been
contributed to the Trust by the Depositor and the tax deduction for such amounts
shall be allocated to the Depositor.
SECTION 8.2. Indemnification. The Depositor shall be liable as
prime obligor for, and shall indemnify the Owner Trustee, the Bank and their
respective 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, the Bank
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
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choice of legal counsel shall be subject to the approval of the Depositor, which
approval shall not be unreasonably withheld.
SECTION 8.03. Payments to Owner Trustee. Any amounts paid to
the Owner Trustee pursuant to this Article VIII shall be deemed not to be a
part of the Owner Trust Estate immediately after such payment.
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ARTICLE IX
TERMINATION
SECTION 9.01. Termination of Trust Agreement. (a) This
Agreement (other than the provisions of Article VIII) shall terminate and be of
no further force or effect and the Trust shall dissolve, (i) upon the maturity
or other liquidation of the last remaining Receivable and the disposition of
any amounts received upon such maturity or liquidation, (ii) upon the payment to
the Noteholders and the Certificateholders of all amounts required to be paid to
them pursuant to the terms of the Indenture, the Sale and Servicing Agreement
and Article V or (iii) 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. Upon dissolution of
the Trust, the Owner Trustee shall wind up the business and affairs of the Trust
as required by Section 3808 of the Business Trust Statute.
(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
(after reservation of sums sufficient to pay all claims and obligations, if
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any, known to the Owner Trustee and payable by the Trust) 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
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. Upon
the satisfaction and discharge of the Indenture, and receipt of a certificate
from the Indenture Trustee stating that all Noteholders have been paid in full
and that the Indenture Trustee is aware of no claims remaining against the Trust
in respect of the Indenture and the Notes, the Owner Trustee, in the absence of
actual knowledge of any other claim against the Trust, shall be deemed to have
made reasonable provision to pay all claims and obligations (including
conditional, contingent or unmatured obligations) for purposes of Section
3808(e) of the Business Trust Statute.
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 Certifi-
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cate of Trust to be cancelled by filing a certifi cate of cancellation with the
Secretary of State in accordance with the provisions of Section 3810(c) of the
Business Trust Statute.
SECTION 9.02. Dissolution upon Insolvency or Dissolution of
Depositor or General Partner. Notwithstanding the provisions of Section 3808 of
the Business Trust Statute, in the event that an Insolvency Event or a
dissolution shall occur with respect to the Depositor or the General Partner,
the Receivables shall be sold and this Agreement and the Trust shall be
terminated in accordance with Section 9.1 ninety (90) days after the date of
such Insolvency Event or the event giving rise to such dissolution, unless,
before the end of such 90-day period, the Owner Trustee shall have received
written instructions from (a) the Certificateholders (other than the Depositor)
of each Class of Certificates evidencing not less than a majority of the
Certificate Balance of such Class and a majority of the right to receive
distributions in respect of interest on the Certificate Balance of such Class
(including in each case the Certificate Balance of Certificates owned by the
Servicer and any of its Affiliates other than the Depositor), (b) the
Noteholders (other than the Depositor) of each Class of Notes evidencing not
less than a majority of the principal amount of the outstanding Notes of such
Class and a majority of the right to receive interest on the outstanding Notes
of such Class (including in each case the Notes owned by the Servicer and any of
its Affiliates other than the Depositor), with each of the Class A-1 Notes, the
Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes
and the Class B Notes treated as a separate Class of Notes for this purpose, and
(c) holders of other interests, if any (the existence of which interests the
Administrator will have advised the Owner Trustee in writing), in the Reserve
Account (other than the Depositor) having interests with a value not less than a
majority of the value of all interests in the Reserve Account (other than any
such interests held by the Depositor), to the effect that each such party
disapproves of the liquidation of the Receivables and termination of the Trust
and in connection therewith the Indenture Trustee (i) appoints an entity
acceptable to Ford Credit to acquire an interest in the Trust and to act as
substitute "general partner" of the Trust for federal income tax purposes and
(ii) obtains an Opinion of Counsel that the Trust will not thereafter be
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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 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 9.03. Prepayment of Certificates. (a)
The Certificates shall be prepaid in whole, but not in part, at the direction of
the Servicer pursuant to Section 9.1 of the Sale and Servicing Agreement, on
any Distribution Date on which the Servicer exercises its option to purchase the
assets of the Trust pursuant to said Section 9.1, and the amount paid by the
Servicer shall be treated as collections of Receivables and applied to pay the
unpaid principal amount of the Notes and the Aggregate Certificate Balance plus
accrued and unpaid
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interest (including any overdue interest) thereon. The Servicer shall furnish
the Rating Agencies and the Certificateholders notice of such prepayment. If the
Certificates are to be prepaid pursuant to this Section 9.3(a), the Servicer
shall furnish notice of such election to the Owner Trustee not later than
twenty (20) days prior to the Prepayment Date and the Trust shall deposit by
10:00 A.M. (New York City time) on the Prepayment Date in the Certificate
Distribution Account the Prepayment Price of the Certificates to be redeemed,
whereupon all such Certificates shall be due and payable on the Prepayment
Date.
(b) Notice of prepayment under Section 9.3(a) shall be given
by the Owner Trustee by first-class mail, postage prepaid, or by facsimile
mailed or transmitted immediately following receipt of notice from the Trust or
Servicer pursuant to Section 9.3(a), but not later than ten (10) days prior to
the applicable Prepayment Date, to each Certificateholder as of the close of
business on the Record Date preceding the applicable Prepayment Date, at such
Certificateholder's address or facsimile number appearing in the Certificate
Register.
All notices of prepayment shall state:
(i) the Prepayment Date;
(ii) the Prepayment Price; and
(iii) the place where such Certificates are to be
surrendered for payment of the Prepayment Price (which
shall be the office or agency of the Owner Trustee to be
maintained as provided in Section 3.9).
Notice of prepayment of the Certificates shall be given by the Owner Trustee in
the name and at the expense of the Trust. Failure to give notice of prepayment,
or any defect therein, to any Certificateholder shall not impair or affect the
validity of the prepayment of any other Certificate.
(c) Following notice of prepayment as required by Section
9.3(b), the Certificates shall on the Prepayment Date be paid by the Trust at
the Prepayment Price and (unless the Trust shall default in the payment of the
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Prepayment Price) no interest shall accrue on the Prepayment Price for any
period after the date to which accrued interest is calculated for purposes of
calculating the Prepayment Price. Following payment in full of the Prepayment
Price, this Agreement and the Trust shall terminate.
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ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.01. 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 condi tion 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 10.02. 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 sucessor 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 10.04. 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 10.05. 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
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co-trustee, jointly with the Owner Trustee, or separate 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 resigna-
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tion of or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Owner
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article X. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Owner Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Owner Trustee. Each such instrument shall be filed with the
Owner Trustee and a copy thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the
Owner Trustee as its agent or attorney-in-fact with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Owner Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.01. 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
chang ing 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
Aggregate 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 Outstand-
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ing and the Aggregate Certificate Balance required to consent to any such
amendment, without the consent of all the Noteholders and Certificateholders
affected thereby; and provided further, that an Opinion of Counsel shall be
furnished to the Indenture Trustee and the Owner Trustee to the effect that such
amendment (A) will not materially adversely affect the federal or any Applicable
Tax State income or franchise taxation of any outstanding Note or Certificate,
or any Noteholder or Certificateholder and (B) will not cause the Trust to be
taxable as a corporation for federal or any Applicable Tax State income or
franchise tax purposes.
(c) Promptly after the execution of any such amendment or
consent, the Owner Trustee shall furnish written notification of the substance
of such amendment or consent to each Certificateholder, the Indenture Trustee
and each of the Rating Agencies.
(d) It shall not be necessary for the consent of
Certificateholders, the Noteholders or the Indenture Trustee pursuant to this
Section 11.1 to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents (and any other consents of
Certificateholders provided for in this Agreement or in any other Basic
Document) and of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable requirements as the Owner
Trustee may prescribe.
(e) Promptly after the execution of any amendment to the
Certificate of Trust, the Owner Trustee shall cause the filing of such amendment
with the Secretary of State.
(f) Prior to the execution of any amendment to this Agreement
or the Certificate of Trust, the Owner Trustee shall be entitled to receive and
rely upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall not
be obligated to, enter into any such amendment which affects the Owner Trustee's
own rights, duties or immunities under this Agreement or otherwise.
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<PAGE> 56
(g) In connection with the execution of any amendment to this
Agreement or any amendment to any other agreement to which the Trust is a party,
the Owner Trustee shall be entitled to receive and conclusively rely upon an
Opinion of Counsel to the effect that such amendment is authorized or permitted
by the Basic Documents and that all conditions precedent in the Basic Documents
for the execution and delivery thereof by the Trust or the Owner Trustee, as the
case may be, have been satisfied.
SECTION 11.02. 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 11.03. 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 11.04. Notices. (a) Unless otherwise expressly
specified or permitted by the terms hereof, all notices shall be in writing and
shall be deemed given upon receipt by the intended recipient or three (3)
Business Days after mailing if mailed by certified mail, postage prepaid (except
that notice to the Owner Trustee shall be deemed given only upon actual receipt
by the Owner Trustee), if to the Owner Trustee, addressed to the Corporate Trust
Office; if to the Depositor, addressed to
55
<PAGE> 57
Ford Credit Auto Receivables Two L.P. at the address of its principal executive
office first above written; or, as to each party, at such other address as shall
be designated by such party in a written notice to each other party.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage prepaid, at the
address of such Certificateholder as shown in the Certificate Register. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
SECTION 11.05. 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 11.06. 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 11.07. 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 11.08. No Petition. The Owner Trustee (not in its
individual capacity but solely as Owner Trustee), by entering into this
Agreement, and each Certificateholder, by accepting a Certificate, hereby
covenant and agree that they will not, until after the
56
<PAGE> 58
Notes have been paid in full, institute against the Depositor, the General
Partner or the Trust, or join in any institution against the Depositor, the
General Partner or the Trust of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States federal or State bankruptcy or similar law in connection with any
obligations relating to the Certificates, the Notes, this Agreement or any of
the other Basic Documents.
SECTION 11.09. No Recourse. Each Certificateholder, by
accepting a Certificate, acknowledges that such Certificateholder's
Certificates represent beneficial interests in the Trust only and do not
represent interests in or obligations of the Depositor, the General Partner, the
Servicer, the Administrator, the Owner Trustee, the Indenture Trustee or any
Affiliate thereof, and no recourse may be had against such parties or their
assets, except as may be expressly set forth or contemplated in this Agreement,
the Certificates or the other Basic Documents.
SECTION 11.10. Headings. The headings of the various
Articles and Sections herein are for convenience of reference only and shall
not define or limit any of the terms or provisions hereof.
SECTION 11.11. Governing Law. This Agreement shall be
construed in accordance with the laws of the State of Delaware and the
obligations, rights and remedies of the parties hereunder shall be determined
in accordance with such laws.
57
<PAGE> 59
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
FORD CREDIT AUTO RECEIVABLES
TWO L.P., as Depositor
By: FORD CREDIT AUTO RECEIVABLES
TWO, INC.,
as General Partner
By: /s/ Ann O. Lee
-----------------------------------
Name: A. O. Lee
Title: Assistant Secretary
PNC BANK, DELAWARE,
not in its individual capacity
but solely as Owner Trustee
By: /s/ M.B. McCarthy
-----------------------------------
Name: Michael B. McCarthy
Title: Vice President
<PAGE> 60
EXHIBIT A
[FORM OF CLASS C CERTIFICATE]
NUMBER $______
R-_________ CUSIP NO. 34527RBN2
THE PRINCIPAL OF THIS CERTIFICATE IS DISTRIBUTABLE AS SET FORTH IN THE TRUST
AGREEMENT. ACCORDINGLY, THE OUTSTANDING PRINCIPAL BALANCE OF THIS CERTIFICATE
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
FORD CREDIT AUTO OWNER TRUST 1998-C
CLASS C 6.30% ASSET BACKED CERTIFICATE
evidencing a beneficial interest in the property of the Trust, as defined below,
which property includes a pool of motor vehicle retail installment sale
contracts, secured by security interests in the motor vehicles financed thereby,
conveyed to Ford Credit Auto Receivables Two L.P. by Ford Motor Credit Company
and conveyed by Ford Credit Auto Receivables Two L.P. to the Trust. The property
of the Trust has been pledged to the Indenture Trustee pursuant to the
Indenture to secure the payment of the Notes issued thereunder.
(This Certificate does not represent an interest in or obligation of Ford Motor
Credit Company, Ford Credit Auto Receivables Two L.P. or any of their respective
Affiliates, except to the extent described below.)
THIS CERTIFIES THAT __________ is the registered owner
of_________ DOLLARS nonassessable, fully-paid, beneficial interest in Class C
Certificates of Ford Credit Auto Owner Trust 1998-C (the "Trust") formed by
Ford Credit Auto Receivables Two L.P., a Delaware limited partnership (the
"Depositor"). The Class C Certificates have an aggregate Initial Certificate
Balance of $46,000,000 and bear interest at a rate of 6.30% per annum (the
"Class C Rate").
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<PAGE> 61
The Trust was created pursuant to an Amended and Restated
Trust Agreement, dated as of July 1, 1998 (as from time to time amended,
supplemented or otherwise modified and in effect, the "Trust Agreement"), by and
between the Depositor and PNC Bank, Delaware, not in its individual capacity but
solely as owner trustee (the "Owner Trustee"), a summary of certain of the
pertinent provisions of which is set forth below. To the extent not otherwise
defined herein, the capitalized terms used herein have the meanings assigned to
them in the Trust Agreement.
This Certificate is one of the duly authorized Certificates
designated as "Class C 6.30% Asset Backed Certificates" (herein called the
"Class C Certificates") which, together with the Certificates designated as
"Class D 7.70% Asset Backed Certificates" (the "Class D Certificates" and,
together with the Class C Certificates, the "Certificates") are issued under
and are 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. Also
issued under the Indenture, dated as of July 1, 1998 (as from time to time
amended, supplemented or otherwise modified and in effect, the "Indenture"),
between the Trust and The Chase Manhattan Bank, as indenture trustee (in such
capacity, the "Indenture Trustee"), are the Notes designated as "Class A-1
5.608% Asset Backed Notes", "Class A-2 5.670% Asset Backed Notes", "Class A-3
5.73% Asset Backed Notes", "Class A-4 5.81% Asset Backed Notes", "Class A-5
5.86% Asset Backed Notes" and "Class B 6.06% Asset Backed Notes" (collectively,
the "Notes"). The property of the Trust includes (i) a pool of motor vehicle
retail installment sale contracts for new and used automobiles and light trucks
and certain rights and obligations thereunder (the "Receivables"); (ii) with
respect to Precomputed Receivables, all monies due thereunder on or after the
Cutoff Date and, with respect to Simple Interest Receivables, all monies due or
received thereunder on or after the Cutoff Date; (iii) the security interests in
the Financed Vehicles granted by Obligors pursuant to the Receivables and any
other interest of the Trust in the Financed Vehicles; (iv) rights to proceeds
from claims on certain physical damage, credit life, credit disability or other
insurance policies, if any, covering Financed
A-2
<PAGE> 62
Vehicles or Obligors; (v) Dealer Recourse; (vi) all of the Seller's rights to
the Receivable Files; (vii) such amounts as from time to time may be held in one
or more accounts maintained pursuant to the Sale and Servicing Agreement, dated
as of July 1, 1998 (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 servicer (the "Servicer"), including the Reserve Account;
(viii) the Seller's rights under the Sale and Servicing Agreement; (ix) the
Seller's rights under the Purchase Agreement; (x) payments and proceeds with
respect to the Receivables held by the Servicer; (xi) all property (including
the right to receive Liquidation Proceeds) securing a Receivable (other than a
Receivable repurchased by the Servicer or purchased by the Seller); (xii)
rebates of premiums and other amounts relating to insurance policies and other
items financed under the Receivables in effect as of the Cutoff Date; and
(xiii) any and all proceeds of the foregoing. THE RIGHTS OF THE OWNER TRUSTEE IN
THE FOREGOING PROPERTY OF THE TRUST HAVE BEEN PLEDGED TO THE INDENTURE TRUSTEE
TO SECURE THE PAYMENT OF THE NOTES.
Under the Trust Agreement, there will be distributed on the
fifteenth day of each month or, if such fifteenth day is not a Business Day, the
next Business Day (each, a "Distribution Date"), commencing August 15, 1998, to
the Person in whose name this Certificate is registered at the close of business
on the last day of the preceding month (the "Record Date") such
Certificateholder's percentage interest in the amount to be distributed to Class
C Certificateholders on such Distribution Date; provided, however, that
principal will be distributed to the Class C 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
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<PAGE> 63
Depositor or the General Partner, no distributions of principal or interest will
be made on the Certificates until all principal and interest on the Notes has
been paid in full.
THE HOLDER OF THIS CERTIFICATE ACKNOWLEDGES AND AGREES THAT
ITS RIGHTS TO RECEIVE DISTRIBUTIONS IN RESPECT OF THIS CERTIFICATE ARE
SUBORDINATED TO THE RIGHTS OF THE NOTEHOLDERS AS DESCRIBED IN THE SALE AND
SERVICING AGREEMENT, THE INDENTURE AND THE TRUST AGREEMENT.
It is the intent of the Depositor, the Servicer and the
Certificateholders that, for purposes of federal income, state and local
franchise and income tax and any other income taxes, the Trust will be treated
as a partnership and the Certificateholders (including the Depositor) will be
treated as partners in that partnership. The Depositor and the other
Certificateholders by accep tance of a Certificate agree to treat, and to take
no action inconsistent with the treatment of, the Certificates for such tax
purposes as partnership interests in the Trust.
Each Certificateholder, by its acceptance of a Certificate,
covenants and agrees that such Certificateholder will not, until after the Notes
have been paid in full, institute against the Depositor, the General Partner or
the Trust, or join in any institution against the Depositor, the General Partner
or the Trust of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States federal or
state bankruptcy or similar law in connection with any obligations relating to
the Notes, the Certificates, the Trust Agreement or any of the other Basic
Documents.
Distributions on this Certificate will be made as provided in
the Trust Agreement by the Owner Trustee or the Certificate Paying Agent by wire
transfer or check mailed to the Certificateholder of record in the Certificate
Register without the presentation or surrender of this Certificate or the making
of any notation hereon. Except as otherwise provided in the Trust Agreement and
notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Owner Trustee of the pendency of such distribution
and only
A-4
<PAGE> 64
upon presentation and surrender of this Certificate at the office or agency
maintained for the purpose by the Owner Trustee in Wilmington, Delaware.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Owner Trustee, by manual
signature, this Certificate shall not entitle the Certificateholder hereof to
any benefit under the Trust Agreement or the Sale and Servicing Agreement or be
valid for any purpose.
This Certificate shall be construed in accordance with the
laws of the State of Delaware and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
A-5
<PAGE> 65
In WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust
and not in its individual capacity, has caused this Class C Certificate to be
duly executed.
FORD CREDIT AUTO OWNER
TRUST 1998-C
By: PNC BANK, DELAWARE,
not in its individual
capacity but solely as
Owner Trustee
By:
-----------------------------
Authorized Officer
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class C Certificates referred to in the within-mentioned
Trust Agreement.
Dated: July 29, 1998
PNC BANK, DELAWARE,
not in its individual capacity
but solely as Owner Trustee
By:
----------------------------
Authorized Officer
<PAGE> 66
[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 Class C 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 Aggregate
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.
As provided in the Trust Agreement and subject to certain
limitations therein set forth, the Transfer of the Certificates are registrable
in the Certificate Register upon surrender of this Certificate for registration
of Transfer at the offices or agencies maintained by PNC Bank, Delaware in its
capacity as Certificate Regis trar, or by any successor Certificate Registrar,
in Wilmington, Delaware, accompanied by a written instrument
A-7
<PAGE> 67
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.
The Certificates are issuable as registered Certificates
without coupons in denominations of at least $20,000 and in integral multiples
of $1,000 in excess thereof. Certificates are exchangeable for new Certificates
of like Class and 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.
The Owner Trustee, the Certificate Registrar and any agent of
the Owner Trustee or the Certificate Registrar may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Owner Trustee, the Certificate Registrar or any such agent shall be
affected by any notice to the contrary.
The Certificates may not be acquired by or on behalf of (A) an
employee benefit plan, as defined in Section 3(3) of ERISA, that is subject to
Title I of ERISA, (B) a plan described in Section 4975(e)(1) of the Code that is
subject to Section 4975 of the Code, (C) a governmental plan, as defined in
Section 3(32) of ERISA, subject to any federal, state or local law which is, to
a material extent, similar to the provisions of Section 406 of ERISA or Section
4975 of the Code, (D) an entity whose underlying assets include plan assets by
reason of a plan's investment in the entity (within the meaning of Department of
Labor Regulation 29 C.F.R. Section 2510.3-101 or otherwise under ERISA) or (E) a
person investing "plan assets" of any such plan (including without limitation,
for purposes of this clause (E), any insurance company general account, but
excluding any entity registered under the Investment Company Act of 1940, as
amended).
A-8
<PAGE> 68
In addition, the Certificates may not be acquired by or on
behalf of a Person other than (A) a citizen or resident of the United States,
(B) a corporation or partnership organized in or under the laws of the United
States or any political subdivision thereof, (C) an estate the income of which
is includible in gross income for United States tax purposes, regardless of its
source, (D) a trust if a U.S. court is able to exercise primary supervision over
the administration of such trust and one or more Persons meeting the conditions
of this paragraph has the authority to control all substantial decisions of the
trust or (E) a Person not described in clauses (A) through (D) above whose
ownership of the Certificates is effectively connected with such Person's
conduct of a trade or business within the United States (within the meaning of
the Code) and who provides the Owner Trustee and the Depositor with an IRS Form
4224 (and such other certifications, representations, or opinions of counsel as
may be requested by the Owner Trustee or the Depositor).
The obligations and responsibilities created by the Trust
Agreement and the Trust created thereby shall terminate (i) upon the maturity or
other liquidation of the last remaining Receivable and the disposition of any
amounts received upon such maturity or liquidation or (ii) upon the payment to
the Noteholders and the Certificateholders of all amounts required to be paid to
them pursuant to the Indenture, the Trust Agreement and the Sale and Servicing
Agreement, and upon such termination any remaining assets of the Trust shall be
distributed to the Depositor. The Servicer of the Receivables may at its option
purchase the assets of the Trust at a price specified in the Sale and Servicing
Agreement, and such purchase of the Receivables and other property of the Trust
will effect early retirement of the Notes and the Certificates; however, such
right of purchase is exercisable only as of the last day of any Collection
Period as of which the Pool Balance is less than or equal to 10% of the Initial
Pool Balance.
A-9
<PAGE> 69
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 pre mises.
Dated:
*/
-----------------------------
Signature Guaranteed:
*/
-----------------------------
-----------------------------
*/ NOTICE: The signature to this assignment must corre spond with the name as it
appears upon the face of the within Certificate in every particular, without
alter ation, enlargement or any change whatever. Such signa ture must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
A-10
<PAGE> 70
EXHIBIT B
[FORM OF CLASS D CERTIFICATE]
$_________
NUMBER
R-_______ Private Placement
CUSIP No.________
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE SECURITIES
OR BLUE SKY LAW OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY
PURCHASING THIS CERTIFICATE, AGREES FOR THE BENEFIT OF THE TRUST AND THE
DEPOSITOR THAT THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE
LAWS, AND ONLY (1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A")
TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER, WITHIN THE MEANING OF RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT
THE REOFFER, RESALE, PLEDGE, OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, SUBJECT TO (A) THE RECEIPT BY THE TRUST AND THE CERTIFICATE REGISTRAR OF
A CERTIFICATE SUBSTANTIALLY IN THE FORM ATTACHED AS EXHIBIT F TO THE TRUST
AGREEMENT AND (B) THE RECEIPT BY THE TRUST AND THE CERTIFICATE REGISTRAR OF A
LETTER SUBSTANTIALLY IN THE FORM ATTACHED AS EXHIBIT D TO THE TRUST AGREEMENT,
(2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), SUBJECT TO THE RECEIPT BY THE TRUST, THE INITIAL
PURCHASER AND THE CERTIFICATE REGISTRAR OF SUCH EVIDENCE ACCEPTABLE TO THE TRUST
AND THE INITIAL PURCHASER THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN
COMPLIANCE WITH THE TRUST AGREEMENT AND THE SECURITIES ACT AND OTHER APPLICABLE
LAWS, (3) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF
IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT
PURSUANT TO ANY OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY THE TRUST AND THE CERTIFICATE
REGISTRAR OF A LETTER SUBSTANTIALLY IN THE FORM ATTACHED AS EXHIBIT E TO THE
TRUST AGREEMENT OR (B) THE RECEIPT BY THE TRUST, THE INITIAL PURCHASER AND THE
CERTIFICATE REGISTRAR OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUST AND THE
INITIAL PURCHASER THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE
WITH THE TRUST AGREEMENT AND THE
B-1
<PAGE> 71
SECURITIES ACT AND OTHER APPLICABLE LAWS, OR (4) TO THE DEPOSITOR OR ITS
AFFILIATES, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF
THE UNITED STATES AND SECURITIES AND BLUE SKY LAWS OF THE STATES OF THE UNITED
STATES.
THE PRINCIPAL OF THIS CERTIFICATE IS DISTRIBUTABLE AS SET FORTH IN THE TRUST
AGREEMENT. ACCORDINGLY, THE OUTSTANDING PRINCIPAL BALANCE OF THIS CERTIFICATE
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
FORD CREDIT AUTO OWNER TRUST 1998-C
CLASS D 7.70% ASSET BACKED CERTIFICATE
evidencing a beneficial interest in the property of the Trust, as defined below,
which property includes a pool of motor vehicle retail installment sale
contracts, secured by security interests in the motor vehicles financed thereby,
conveyed to Ford Credit Auto Receivables Two L.P. by Ford Motor Credit Company
and conveyed by Ford Credit Auto Receivables Two L.P. to the Trust. The property
of the Trust has been pledged to the Indenture Trustee pursuant to the
Indenture to secure the payment of the Notes issued thereunder.
(This Certificate does not represent an interest in or obligation of Ford Motor
Credit Company, Ford Credit Auto Receivables Two L.P. or any of their respective
Affiliates, except to the extent described below.)
THIS CERTIFIES THAT __________ is the registered owner of
DOLLARS nonassessable, fully-paid, beneficial interest in Class D Certificates
of Ford Credit Auto Owner Trust 1998-C (the "Trust") formed by Ford Credit Auto
Receivables Two L.P., a Delaware limited partnership (the "Depositor"). The
Class D Certificates have an aggregate Initial Certificate Balance of
$46,000,000 and bear interest at a rate of 7.70% per annum (the "Class D Rate").
B-2
<PAGE> 72
The Trust was created pursuant to an Amended and Restated
Trust Agreement, dated as of July 1, 1998 (as from time to time amended,
supplemented or otherwise modified and in effect, the "Trust Agreement"), by and
between the Depositor and PNC Bank, Delaware, not in its individual capacity but
solely as owner trustee (the "Owner Trustee"), a summary of certain of the
pertinent provisions of which is set forth below. To the extent not otherwise
defined herein, the capitalized terms used herein have the meanings assigned to
them in the Trust Agreement.
This Certificate is one of the duly authorized Certificates
designated as "Class D 7.70% Asset Backed Certificates" (herein called the
"Class D Certificates") which, together with the Certificates designated as
"Class C 6.30% Asset Backed Certificates" (the "Class C Certificates" and,
together with the Class D Certificates, the "Certificates") are issued under and
are 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. Also
issued under the Indenture, dated as of July 1, 1998 (as from time to time
amended, supplemented or otherwise modified and in effect, the "Indenture"),
between the Trust and The Chase Manhattan Bank, as indenture trustee (in such
capacity, the "Indenture Trustee"), are the Notes designated as "Class A-1
5.608% Asset Backed Notes", "Class A-2 5.670% Asset Backed Notes", "Class A-3
5.73% Asset Backed Notes", "Class A-4 5.81% Asset Backed Notes", "Class A-5
5.86% Asset Backed Notes" and "Class B 6.06% Asset Backed Notes" (collectively,
the "Notes"). The property of the Trust includes (i) a pool of motor vehicle
retail installment sale contracts for new and used automobiles and light trucks
and certain rights and obligations thereunder (the "Receivables"); (ii) with
respect to Precomputed Receivables, all monies due thereunder on or after the
Cutoff Date and, with respect to Simple Interest Receivables, all monies due or
received thereunder on or after the Cutoff Date; (iii) the security interests in
the Financed Vehicles granted by Obligors pursuant to the Receivables and any
other interest of the Trust in the Financed Vehicles; (iv) rights to proceeds
from claims on certain physical damage, credit life, credit disability or other
insurance policies, if any, covering Financed Vehicles or Obligors; (v) Dealer
Recourse; (vi) all of the Seller's rights to the Receivable Files; (vii) such
amounts as from time to time may be held in one or more accounts maintained
pursuant to the Sale and Servicing Agreement, dated as of July 1, 1998 (as from
time
B-3
<PAGE> 73
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 servicer (the
"Servicer"), including the Reserve Account; (viii) the Seller's rights under the
Sale and Servicing Agreement; (ix) the Seller's rights under the Purchase
Agreement; (x) payments and proceeds with respect to the Receivables held by the
Servicer; (xi) all property (including the right to receive Liquidation
Proceeds) securing a Receivable (other than a Receivable repurchased by the
Servicer or purchased by the Seller); (xii) rebates of premiums and other
amounts relating to insurance policies and other items financed under the
Receivables in effect as of the Cutoff Date; and (xiii) any and all proceeds of
the foregoing. THE RIGHTS OF THE OWNER TRUSTEE IN THE FOREGOING PROPERTY OF THE
TRUST HAVE BEEN PLEDGED TO THE INDENTURE TRUSTEE TO SECURE THE PAYMENT OF THE
NOTES.
Under the Trust Agreement, there will be distributed on the
fifteenth day of each month or, if such fifteenth day is not a Business Day, the
next Business Day (each, a "Distribution Date"), commencing August 15, 1998, to
the Person in whose name this Certificate is registered at the close of business
on the last day of the preceding month (the "Record Date") such
Certificateholder's percentage interest in the amount to be distributed to
Class D Certificateholders on such Distribution Date; provided, however, that
principal will be distributed to the Class D Certificateholders on each
Distribution Date on (to the extent of funds remaining after all classes of the
Notes and the Class C Certificates have been paid in full) and after the date on
which all classes of the Notes and the Class C Certificates have been paid in
full. Notwithstanding the foregoing, following the occurrence and during the
continuation of an event of default under the Indenture which has resulted in an
acceleration of the Notes or following certain events of insolvency or a
dissolution with respect to the Depositor or the General Partner, no
distributions of principal or interest will be made on the Certificates until
all principal and interest on the Notes has been paid in full.
B-4
<PAGE> 74
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 AND THE CLASS C CERTIFICATEHOLDERS
AS DESCRIBED IN THE SALE AND SERVICING AGREEMENT, THE INDENTURE AND THE TRUST
AGREEMENT.
It is the intent of the Depositor, the Servicer and the
Certificateholders that, for purposes of federal income, state and local
franchise and income tax and any other income taxes, the Trust will be treated
as a partnership and the Certificateholders (including the Depositor) will be
treated as partners in that partnership. The Depositor and the other
Certificateholders by acceptance of a Certificate agree to treat, and to take no
action inconsistent with the treatment of, the Certificates for such tax
purposes as partnership interests in the Trust.
Each Certificateholder, by its acceptance of a Certificate,
covenants and agrees that such Certificateholder will not, until after the Notes
have been paid in full, institute against the Depositor, the General Partner or
the Trust, or join in any institution against the Depositor, the General Partner
or the Trust of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States federal or
state bankruptcy or similar law in connection with any obligations relating to
the Notes, the Certificates, the Trust Agreement or any of the other Basic
Documents.
Distributions on this Certificate will be made as provided in
the Trust Agreement by the Owner Trustee or the Certificate Paying Agent by wire
transfer or check mailed to the Certificateholder of record in the Certificate
Register without the presentation or surrender of this Certificate or the making
of any notation hereon. Except as otherwise provided in the Trust Agreement and
notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Owner Trustee of the pendency of such distribution
and only upon presentation and surrender of this Certificate at the office or
agency maintained for the purpose by the Owner Trustee in Wilmington, Delaware.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof,
B-5
<PAGE> 75
which further provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Owner Trustee, by manual
signature, this Certificate shall not 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.
B-6
<PAGE> 76
In WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust
and not in its individual capacity, has caused this Class D Certificate to be
duly executed.
FORD CREDIT AUTO OWNER
TRUST 1998-C
By: PNC BANK, DELAWARE,
not in its individual capacity
but solely as Owner Trustee
By:
--------------------------------
Authorized Officer
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class D Certificates referred to in the
within-mentioned Trust Agreement.
Dated: July 29, 1998
PNC BANK, DELAWARE,
not in its individual capacity
but solely as Owner Trustee
By:
--------------------------------
Authorized Officer
B-7
<PAGE> 77
[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 Agree-
ment as an exhibit thereto, has been filed with the Securities and Exchange
Commission with respect to the Notes and the Class C 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 Aggregate
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.
As provided in the Trust Agreement and subject to certain
limitations therein set forth, the Transfer of the Certificates are registrable
in the Certificate Register upon surrender of this Certificate for registration
of Transfer at the offices or agencies maintained by PNC Bank, Delaware in its
capacity as Certificate Registrar, or by any successor Certificate Registrar, in
Wilmington, Delaware, accompanied by a written instrument of transfer in form
satisfactory to the Owner Trustee and the Certificate Registrar duly executed
by the holder hereof or such
B-8
<PAGE> 78
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.
The Certificates are issuable as registered Certificates
without coupons in denominations of at least $20,000 and in integral multiples
of $1,000 in excess thereof. Certificates are exchangeable for new Certificates
of like Class and 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.
The Owner Trustee, the Certificate Registrar and any agent of
the Owner Trustee or the Certificate Registrar may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
none of the Owner Trustee, the Certificate Registrar or any such agent shall be
affected by any notice to the contrary.
The Certificates may not be acquired by or on behalf of (A) an
employee benefit plan, as defined in Section 3(3) of ERISA, that is subject to
Title I of ERISA, (B) a plan described in Section 4975(e)(1) of the Code that is
subject to Section 4975 of the Code, (C) a governmental plan, as defined in
Section 3(32) of ERISA, subject to any federal, state or local law which is, to
a material extent, similar to the provisions of Section 406 of ERISA or Section
4975 of the Code, (D) an entity whose underlying assets include plan assets by
reason of a plan's investment in the entity (within the meaning of Department of
Labor Regulation 29 C.F.R. Section 2510.3-101 or otherwise under ERISA) or (E) a
person investing "plan assets" of any such plan (including without limitation,
for purposes of this clause (E), any insurance company general account, but
excluding any entity registered under the Investment Company Act of 1940, as
amended).
In addition, the Certificates may not be acquired by or on
behalf of a Person other than (A) a citizen or resident of the United States,
(B) a corporation or partnership organized in or under the laws of the United
States or any political subdivision thereof, (C) an estate the income of which
is includible in gross income for United States tax purposes, regardless of its
source, (D)
B-9
<PAGE> 79
a trust if a U.S. court is able to exercise primary supervision over the
administration of such trust and one or more Persons meeting the conditions of
this paragraph has the authority to control all substantial decisions of the
trust or (E) a Person not described in clauses (A) through (D) above whose
ownership of the Certificates is effectively connected with such Person's
conduct of a trade or business within the United States (within the meaning of
the Code) and who provides the Owner Trustee and the Depositor with an IRS Form
4224 (and such other certifications, representations, or opinions of counsel as
may be requested by the Owner Trustee or the Depositor).
The obligations and responsibilities created by the Trust
Agreement and the Trust created thereby shall terminate (i) upon the maturity or
other liquidation of the last remaining Receivable and the disposition of any
amounts received upon such maturity or liquidation or (ii) upon the payment to
the Noteholders and the Certificateholders of all amounts required to be paid to
them pursuant to the Indenture, the Trust Agreement and the Sale and Servicing
Agreement, and upon such termination any remaining assets of the Trust shall be
distributed to the Depositor. The Servicer of the Receivables may at its option
purchase the assets of the Trust at a price specified in the Sale and Servicing
Agreement, and such purchase of the Receivables and other property of the Trust
will effect early retirement of the Notes and the Certificates; however, such
right of purchase is exercisable only as of the last day of any Collection
Period as of which the Pool Balance is less than or equal to 10% of the Initial
Pool Balance.
B-10
<PAGE> 80
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.
B-11
<PAGE> 81
EXHIBIT C
[FORM OF INVESTMENT LETTER - CLASS C CERTIFICATES]
[Date]
Ford Credit Auto Owner Trust 1998-C,
as Issuer
PNC Bank, Delaware,
as Owner Trustee and
as Certificate Registrar
222 Delaware Avenue
Wilmington, Delaware 19801
Ladies and Gentlemen:
In connection with our proposed purchase of the Class C 6.30% Asset
Backed Certificates (the "Certificates") of Ford Credit Auto Owner Trust 1998-C
(the "Issuer"), a trust formed by Ford Credit Auto Receivables Two L.P. (the
"Depositor" or "Seller"), we confirm that:
1. We are not, and each account (if any) for which we are
purchasing the Certificates is not, (A) an employee benefit plan (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) that is subject to Title I of ERISA, (B) a plan described in Section
4975(e)(1) of the Internal Revenue Code of 1986, as amended (the "Code"), that
is subject to Section 4975 of the Code, (C) a governmental plan, as defined in
Section 3(32) of ERISA, subject to any federal, state or local law which is, to
a material extent, similar to the provisions of Section 406 of ERISA or Section
4975 of the Code, (D) an entity whose underlying assets include plan assets by
reason of a plan's investment in the entity (within the meaning of Department of
Labor Regulation 29 C.F.R. Section 2510.3-101 or otherwise under ERISA) or (E) a
person investing "plan assets" of any such plan (including without limitation,
for purposes of this clause (E), any insurance company general account, but
excluding any entity registered under the Investment Company Act of 1940, as
amended).
2. We are, and each account (if any) for which we are
purchasing the Certificates is, a person who is (A) a citizen or resident of the
United States, (B) a corporation or partnership organized in or under the laws
of the United States or any political subdivision thereof, (C) an estate the
income of which is includible in gross income for United States tax purposes,
regardless of its source, (D) a trust if a U.S. court is able to exercise
primary supervision over the administration of such trust
C-1
<PAGE> 82
and one or more Persons meeting the conditions of clause (A), (B), (C) or (E) of
this paragraph 2 has the authority to control all substantial decisions of the
trust or (E) a Person not described in clauses (A) through (D) above whose
ownership of the Certificates is effectively connected with such Person's
conduct of a trade or business within the United States (within the meaning of
the Code) and who provides the Issuer and the Depositor with an IRS Form 4224
(and such other certifications, representations, or opinions of counsel as may
be requested by the Issuer or the Depositor).
3. We understand that any purported resale, transfer,
assignment, participation, pledge, or other disposal of (any such act, a
"Transfer") of any Certificate (or any interest therein) to any person who does
not meet the conditions of paragraphs 1 and 2 above shall be null and void
(each, a "Void Transfer"), and the purported transferee in a Void Transfer shall
not be recognized by the Issuer or any other person as a Certificateholder for
any purpose.
4. We agree that if we determine to Transfer any of the
Certificates we will cause our proposed transferee to provide to the Issuer and
the Certificate Registrar a letter substantially in the form of this letter.
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
Very truly yours,
By:_________________________
Name:
Title:
Securities To Be Purchased:
$ principal balance of Certificates
Annex A attached hereto lists the name of the account and principal balance of
Certificates purchased for each account (if any) for which we are purchasing
Certificates.
C-2
<PAGE> 83
EXHIBIT D
[FORM OF INVESTMENT LETTER - CLASS D CERTIFICATES
QUALIFIED INSTITUTIONAL BUYER]
[Date]
Ford Credit Auto Owner Trust 1998-C
as Issuer
PNC Bank, Delaware
as Owner Trustee and
Certificate Registrar
222 Delaware Avenue
Wilmington, Delaware 19801
Salomon Brothers Inc
J.P. Morgan Securities Inc.
as Initial Purchasers in connection with
the Private Placement Memorandum referred to below
Asset Backed Operations
c/o Salomon Smith Barney
Seven World Trade Center
New York, New York 10048
Re: Ford Credit Auto Owner Trust 1998-C
Class D 7.70% Asset Backed Certificates
Ladies and Gentlemen:
In connection with our proposed purchase of the Class D 7.70% Asset
Backed Certificates (the "Certificates") of Ford Credit Auto Owner Trust 1998-C
(the "Issuer"), a trust formed by Ford Credit Auto Receivables Two L.P. (the
"Depositor"), we confirm that:
1. We have received a copy of the Private Placement Memorandum
(the "Private Placement Memorandum") dated July 20, 1998, relating to
the Certificates and such other information as we deem necessary in
order to make our investment decision. We understand that the Private
Placement Memorandum speaks only as of its date and that the information
contained therein may not be correct or complete as of any time
subsequent to such date.
2. We agree to be bound by the restrictions and conditions set
forth under the heading "Notice to Investors" in the Private Placement
Memorandum and the undersigned agrees to the bound by, and not to
resell,
D-1
<PAGE> 84
transfer, assign, participate, pledge or otherwise dispose of (any such
act, a "Transfer") the Certificates except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended
(the "Securities Act").
3. We understand that no subsequent Transfer of the Certificates
is permitted unless we cause our proposed transferee to provide to the
Issuer, the Certificate Registrar and the Initial Purchaser a letter
substantially in the form of Exhibit B or Exhibit C to the Private
Placement Memorandum, as applicable, or such other written statement as
the Depositor shall prescribe.
4. We are a "qualified institutional buyer" (within the meaning
of Rule 144A under the Securities Act) (a "QIB") and we are acquiring
the Certificates for our own account or for a single account (which is a
QIB) as to which we exercise sole investment discretion.
5. We are not (A) an employee benefit plan (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) that is subject to Title I of ERISA, (B) a plan described in
Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (the
"Code") that is subject to Section 4975 of the Code, (C) a governmental
plan, as defined in Section 3(32) of ERISA, subject to any federal,
State or local law which is, to a material extent, similar to the
provisions of Section 406 of ERISA or Section 4975 of the Code, (D) an
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (within the meaning of Department of Labor
Regulation 29 C.F.R. Section 2510.3-101 or otherwise under ERISA) or (E)
a person investing "plan assets" of any such plan (including without
limitation, for purposes of this clause (E), any insurance company
general account, but excluding any entity registered under the
Investment Company Act of 1940, as amended).
6. We are a person who is (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, (iii) an
estate the income of which is includible in gross income for United
States tax purposes, regard less of its source, (iv) a trust if a U.S.
court is able to exercise primary supervision over the administration
of such trust and one or more persons de-
D-2
<PAGE> 85
scribed in clauses (i) to (iii) above or clause (v) below has the
authority to control all substantial decisions of the trust or (v) a
person not described in clauses (i) to (iv) above whose ownership of the
Certificates is effectively connected with such person's conduct of a
trade or business within the United States (within the meaning of the
Code) and who provides the Issuer and the Depositor with a Form 4224
(and such other certifications, representations, or opinions of counsel
as may be requested by the Issuer or the Depositor).
7. We understand that any purported Transfer of any Certificate
(or any interest therein) in contravention of the restrictions and
conditions above will be null and void (each, a "Void Transfer"), and
the purported transferee in a Void Transfer will not be recognized by
the Issuer or any other person as a Certificateholder for any purpose.
You are entitled to rely upon this letter and are irrevocably authorized
to produce this letter or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
Very truly yours,
By:
----------------------
Name:
Title:
Securities To Be Purchased:
$ principal amount of Certificates
D-3
<PAGE> 86
EXHIBIT E
[FORM OF INVESTMENT LETTER - CLASS D CERTIFICATES
INSTITUTIONAL ACCREDITED INVESTOR]
[Date]
Ford Credit Auto Owner Trust 1998-C
as Issuer
PNC Bank, Delaware
as Owner Trustee and
Certificate Registrar
222 Delaware Avenue
Wilmington, Delaware 19801
Salomon Brothers Inc
J.P. Morgan Securities Inc.
as Initial Purchasers in connection with
the Private Placement Memorandum referred to below
Asset Backed Operations
c/o Salomon Smith Barney
Seven World Trade Center
New York, New York 10048
Re: Ford Credit Auto Owner Trust 1998-C
Class D 7.70% Asset Backed Certificates
Ladies and Gentlemen:
In connection with our proposed purchase of the Class D 7.70% Asset
Backed Certificates (the "Certificates") of Ford Credit Auto Owner Trust 1998-C
(the "Issuer"), a trust formed by Ford Credit Auto Receivables Two L.P. (the
"Depositor"), we confirm that:
1. We have received a copy of the Private Placement Memorandum
(the "Private Placement Memorandum") dated July 20, 1998, relating to
the Certificates and such other information as we deem necessary in
order to make our investment decision. We understand that the Private
Placement Memorandum speaks only as of its date and that the information
contained therein may not be correct or complete as of any time
subsequent to such date.
2. We agree to be bound by the restrictions and conditions set
forth under the heading "Notice to Investors" in the Private Placement
Memorandum and the
E-1
<PAGE> 87
undersigned agrees to the bound by, and not to resell, transfer, assign,
participate, pledge or otherwise dispose of (any such act, a "Transfer")
the Certificates except in compliance with, such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities
Act").
3. We understand that no subsequent Transfer of the Certificates
is permitted unless we cause our proposed transferee to provide to the
Issuer, the Certificate Registrar and the Initial Purchaser a letter
substantially in the form of Exhibit B or Exhibit C to the Private
Placement Memorandum, as applicable, or such other written statement as
the Depositor shall prescribe.
4. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and we are
acquiring the Certificates for our own account.
5. We are not (A) an employee benefit plan (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) that is subject to Title I of ERISA, (B) a plan described in
Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (the
"Code") that is subject to Section 4975 of the Code, (C) a governmental
plan, as defined in Section 3(32) of ERISA, subject to any federal,
State or local law which is, to a material extent, similar to the
provisions of Section 406 of ERISA or Section 4975 of the Code, (D) an
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (within the meaning of Department of Labor
Regulation 29 C.F.R. Section 2510.3-101 or otherwise under ERISA) or (E)
a person investing "plan assets" of any such plan (including without
limitation, for purposes of this clause (E), any insurance company
general account, but excluding any entity registered under the
Investment Company Act of 1940, as amended).
6. We are a person who is (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, (iii) an
estate the income of which is includible in gross income for United
States tax purposes, regard lessof its source, (iv) a trust if a U.S.
court is able to exercise primary supervision over the administration
of such trust and one or more persons described in clauses (i) to (iii)
above or clause (v)
E-2
<PAGE> 88
below has the authority to control all substantial decisions of the
trust or (v) a person not described in clauses (i) to (iv) above whose
ownership of the Certificates is effectively connected with such
person's conduct of a trade or business within the United States (within
the meaning of the Code) and who provides the Issuer and the Depositor
with a Form 4224 (and such other certifications, representations, or
opinions of counsel as may be requested by the Issuer or the Depositor).
7. We understand that any purported Transfer of any Certificate
(or any interest therein) in contravention of the restrictions and
conditions above will be null and void (each, a "Void Transfer"), and
the purported transferee in a Void Transfer will not be recognized by
the Issuer or any other person as a Certificateholder for any purpose.
You are entitled to rely upon this letter and are irrevocably authorized
to produce this letter or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
Very truly yours,
By:
----------------------------
Name:
Title:
Securities To Be Purchased:
$ principal amount of Certificates
E-3
<PAGE> 89
EXHIBIT F
FORM OF RULE 144A TRANSFEROR CERTIFICATE -
CLASS D CERTIFICATES
[Date]
PNC Bank, Delaware
as Owner Trustee and
Certificate Registrar
222 Delaware Avenue
Wilmington, Delaware 19801
Re: Ford Credit Auto Owner Trust 1998-C
Class D 7.70% Asset Backed Certificates
Ladies and Gentlemen:
This is to notify you as to the transfer of $ [*] in denomination of
Class D 7.70% Asset Backed Certificates (the "Certificates") of Ford Credit Auto
Owner Trust 1998-C
(the "Issuer").
The undersigned is the holder of the Certificates and with this notice
hereby deposits with the Owner Trustee $ [*] in denomination of Certificates and
requests that Certificates of the same class in the same aggregate denomination
be issued, executed and authenticated and registered to the purchaser on , 199[
], as specified in the Trust Agreement dated as of July 1, 1998 relating to the
Certificates, as follows:
Name: Denominations:
Address:
Taxpayer I.D. No:
The undersigned represents and warrants that the undersigned (i)
reasonably believes the purchaser is a "qualified institutional buyer," as
defined in Rule 144A under the Securities Act of 1933 (the "Act"), (ii) such
purchaser has acquired the Certificates in a transaction effected in accordance
with the exemption from the registration requirements of the Act provided by
Rule 144A, (iii) if the purchaser has purchased the Certificates for
F-1
<PAGE> 90
an account for which it is acting as fiduciary or agent, such account is a
qualified institutional buyer and (iv) the purchaser is acquiring Certificates
for its own account or for an institutional account for which it is acting as
fiduciary or agent.
Very truly yours,
[NAME OF HOLDER OF
CERTIFICATES]
By:
-----------------------------
Name:
Title:
[*] authorized denomination
F-2
<PAGE> 91
EXHIBIT G
[FORM OF CERTIFICATE OF TRUST]
CERTIFICATE OF TRUST OF
FORD CREDIT AUTO OWNER TRUST 1998-C
This Certificate of Trust of FORD CREDIT AUTO OWNER TRUST
1998-C (the "Trust"), dated as of July 1, 1998, is being duly executed and filed
by PNC Bank, Delaware, a Delaware banking corporation, as trustee, to form a
business trust under the Delaware Business Trust Act (12 Del. Code, Section
3801 et seq.).
1. Name. The name of the business trust formed
hereby is FORD CREDIT AUTO OWNER TRUST 1998-C.
2. Delaware Trustee. The name and business address of the
trustee of the Trust in the State of Delaware is PNC Bank, Delaware, 222
Delaware Avenue, Wilmington, Delaware 19801.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of
the Trust, has executed this Certificate of Trust as of the date first above
written.
PNC BANK, DELAWARE, not in its
individual capacity but solely as
owner trustee under a Trust
Agreement dated as of July 1,
1998
By:
-----------------------------
Name:
Title:
G-1
<PAGE> 92
APPENDIX A
Definitions and Usage
AA-1
<PAGE> 93
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND USAGE
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. Capital Contribution of Owner Trust
Estate............................................. 3
SECTION 2.6. Declaration of Trust............................... 3
SECTION 2.7. Liability of the Depositor......................... 4
SECTION 2.8. Title to Trust Property............................ 5
SECTION 2.9. Situs of Trust..................................... 5
SECTION 2.10. Representations and Warranties of the
Depositor.......................................... 5
SECTION 2.11. Federal Income Tax Matters......................... 7
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1. Initial Beneficial Ownership...................... 10
SECTION 3.2. Capital Accounts.................................. 10
SECTION 3.3. The Certificates.................................. 11
SECTION 3.4. Authentication of Certificates.................... 11
SECTION 3.5. Registration of Certificates; Transfer
and Exchange of Certificates...................... 12
SECTION 3.6. Mutilated, Destroyed, Lost or Stolen
Certificates...................................... 19
SECTION 3.7. Persons Deemed Owners of Certificates............. 19
SECTION 3.8. Access to List of Certificateholders'
Names and Addresses............................... 20
SECTION 3.9. Maintenance of Office or Agency................... 20
SECTION 3.10. Appointment of Certificate Paying
Agent............................................. 21
SECTION 3.11. Certain Rights of Depositor....................... 22
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1. Prior Notice to Certificateholders with
Respect to Certain Matters........................ 23
SECTION 4.2. Action by Certificateholders with
Respect to Certain Matters........................ 24
i
<PAGE> 94
SECTION 4.3. Action by Certificateholders with
Respect to Bankruptcy.............................. 24
SECTION 4.4. Restrictions on Certificateholders'
Power.............................................. 24
SECTION 4.5. Majority Control................................... 25
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1. Establishment of Certificate Distribution Account.. 26
SECTION 5.2. Application of Trust Funds......................... 26
SECTION 5.3. Method of Payment.................................. 29
SECTION 5.4. No Segregation of Monies; No Interest.............. 29
SECTION 5.5. Accounting and Reports to Noteholders,
Certificateholders, Internal Revenue Service and
Others............................................. 30
SECTION 5.6. Signature on Returns; Tax Matters
Partner............................................ 30
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1. General Authority.................................. 31
SECTION 6.2. General Duties..................................... 31
SECTION 6.3. Action upon Instruction............................ 32
SECTION 6.4. No Duties Except as Specified in this
Agreement or in Instructions....................... 33
SECTION 6.5. No Action Except Under Specified Docu-
ments or Instructions.............................. 34
SECTION 6.6. Restrictions....................................... 34
ARTICLE VII
REGARDING THE OWNER TRUSTEE
SECTION 7.1. Acceptance of Trusts and Duties.................... 35
SECTION 7.2. Furnishing of Documents............................ 37
SECTION 7.3. Representations and Warranties..................... 37
SECTION 7.4. Reliance; Advice of Counsel........................ 37
SECTION 7.5. Not Acting in Individual Capacity.................. 38
SECTION 7.6. Owner Trustee Not Liable for Certificates
or Receivables..................................... 38
SECTION 7.7. Bank May Own Certificates and Notes................ 39
ARTICLE VIII
COMPENSATION AND INDEMNITY OF OWNER TRUSTEE
SECTION 8.1. Owner Trustee's Fees and Expenses.................. 40
SECTION 8.2. Indemnification.................................... 40
SECTION 8.3. Payments to Owner Trustee.......................... 41
ii
<PAGE> 95
ARTICLE IX
TERMINATION
SECTION 9.1. Termination of Trust Agreement..................... 42
SECTION 9.2. Dissolution upon Insolvency or Dissolution
of Depositor or General Partner.................... 44
SECTION 9.3. Prepayment of Certificates......................... 45
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1. Eligibility Requirements for Owner
Trustee........................................... 48
SECTION 10.2. Resignation or Removal of Owner
Trustee........................................... 48
SECTION 10.3. Successor Owner Trustee........................... 49
SECTION 10.4. Merger or Consolidation of Owner
Trustee........................................... 50
SECTION 10.5. Appointment of Co-Trustee or Separate
Trustee........................................... 50
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Supplements and Amendments........................ 53
SECTION 11.2. No Legal Title to Owner Trust Estate
in Certificateholders............................. 55
SECTION 11.3. Limitation on Rights of Others.................... 55
SECTION 11.4. Notices........................................... 55
SECTION 11.5. Severability...................................... 56
SECTION 11.6. Separate Counterparts............................. 56
SECTION 11.7. Successors and Assigns............................ 56
SECTION 11.8. No Petition....................................... 56
SECTION 11.9. No Recourse....................................... 57
SECTION 11.10. Headings.......................................... 57
SECTION 11.11. Governing Law..................................... 57
EXHIBIT A
[FORM OF CLASS C CERTIFICATE].......................... A-1
EXHIBIT B
[FORM OF CLASS D CERTIFICATE].......................... B-1
EXHIBIT C
[FORM OF INVESTMENT LETTER - CLASS C CERTIFICATES]..... C-1
EXHIBIT D
[FORM OF INVESTMENT LETTER - CLASS D CERTIFICATES
QUALIFIED INSTITUTIONAL BUYER]......................... D-1
iii
<PAGE> 96
EXHIBIT E
[FORM OF INVESTMENT LETTER - CLASS D CERTIFICATES
INSTITUTIONAL ACCREDITED INVESTOR]..................... E-1
EXHIBIT F
FORM OF RULE 144A TRANSFEROR CERTIFICATE -
CLASS D CERTIFICATES.................................... F-1
EXHIBIT G
[FORM OF CERTIFICATE OF TRUST].......................... G-1
APPENDIX A
Definitions and Usage.................................. AA-1
iv
<PAGE> 97
EXHIBIT F Form of Rule 144A Transferor
Certificate...................................... F-1
EXHIBIT G Form of Certificate of Trust........................ G-1
APPENDIX A Definitions and Usage............................... AA-1
v
<PAGE> 1
EXHIBIT 8.1
July 29, 1998
To the Addressees Indicated
on Schedule A hereto
Re: Ford Credit Auto Owner Trust 1998-C
Asset Backed Notes
Ladies and Gentlemen:
You have requested our opinion as to certain federal income tax
consequences in connection with the issuance of the Class A-1 5.608% Asset
Backed Notes (the "Class A-1 Notes"), the Class A-2 5.67% Asset Backed Notes
(the "Class A-2 Notes"), the Class A-3 5.73% Asset Backed Notes (the "Class A-3
Notes"), the Class A-4 5.81% Asset Backed Notes (the "Class A-4 Notes"), the
Class A-5 5.86% Asset Backed Notes (the "Class A-5 Notes" and, together with
the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4
Notes, the "Class A Notes"), the Class B 6.06% Asset Backed Notes (the "Class B
Notes" and, together with the Class A Notes, the "Notes"), the Class C 6.30%
Asset Backed Certificates (the "Class C Certificates") and the Class D 7.70%
Asset Backed Certificates (the "Class D Certificates" and, together with the
Class C Certificates, the "Certificates") by Ford Credit Auto Owner Trust
1998-C (the "Trust") pursuant to the terms of, (a) with respect to the Notes,
an Indenture dated as of July 1, 1998 (the "Indenture") between the Trust and
The Chase Manhattan Bank, as Indenture Trustee (the "Indenture Trustee"), and
(b) with respect to the Certificates, an Amended and Restated Trust Agreement
dated as of July 1, 1998 (the "Trust Agreement") between Ford Credit Auto
Receivables Two L.P. (the "Seller") and PNC Bank, Delaware, as Owner Trustee
(the "Owner Trustee"). The Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes, the Class A-4 Notes and the Class B Notes will be sold to the
underwriters (the "Note Underwriters") who are named in Schedule I pursuant to
an underwriting agreement (the "Note Underwriting Agreement") between the
Seller, Salomon Brothers Inc ("Salomon") and J.P. Morgan Securities, Inc.
("J.P. Morgan"), as representatives of the several Note Underwriters. The
Class A-5 Notes will be
<PAGE> 2
To the Addressees Indicated
on Schedule A hereto
July 29, 1998
Page 2
purchased directly from the Seller by Ford Motor Credit Company ("Ford
Credit"). The Class C Certificates will be sold to Salomon and J.P. Morgan,
as Class C Certificate underwriters (the "Certificate Underwriters" and,
together with the Note Underwriters, the "Underwriters" ) pursuant to an
underwriting agreement (the "Certificate Underwriting Agreement") among the
Seller, Salomon and J.P. Morgan. A portion of the Class D Certificates will be
sold to Salomon and J.P. Morgan, as Initial Purchasers (the "Initial
Purchaser") pursuant to a certificate purchase agreement (the "Certificate
Purchase Agreement") among the Seller, Salomon and J.P. Morgan and the
remaining portion of the Class D Certificates will initially be retained by the
Seller.(1)
The rights of the holders of the Class A Notes (the "Class A
Noteholders") will be senior to the rights of the holders of the Class B Notes
(the "Class B Noteholders" and, together with the Class A Noteholders, the
"Noteholders"). The rights of the Noteholders will be senior to the rights of
the holders of the Certificates (the "Certificateholders"). The rights of the
Class C Certificates (the "Class C Certificateholders") will be senior to the
rights of the holders of the Class D Certificates (the "Class D
Certificateholders"). Each payment period, the Seller will be entitled to
receive any remaining portion of funds on deposit in the Collection Account
after (i) the Total Required Payment has been made, (ii) the Reserve Account's
balance has been restored, if necessary, to the Specified Reserve Balance and
(iii) the Regular Principal Distribution Amount has been deposited into the
Principal Distribution Account. The Seller will at all times hold the right to
receive all such excess amounts.
____________________
(1) Terms not otherwise defined herein have the meanings assigned to them in
the Indenture (as defined above).
<PAGE> 3
To the Addressees Indicated
on Schedule A hereto
July 29, 1998
Page 3
You have asked us whether, for federal income tax purposes, the Class A
Notes and the Class B Notes will be characterized as debt and whether the Trust
will be classified as an association (or publicly traded partnership) taxable
as a corporation. In rendering our opinion, we have examined and relied upon
the registration statement for the Notes and the Class C Certificates on Form
S-3, Registration No. 333-40421, filed with the Securities and Exchange
Commission (the "SEC") on January 20, 1998 (the "Registration Statement"),
including the prospectus dated July 20, 1998 as supplemented by the prospectus
supplement dated July 16, 1998 included therein (the "Prospectus"), the
Indenture, the Trust Agreement, the Sale and Servicing Agreement, and such
other documents as we have deemed necessary or appropriate as a basis for the
opinion set forth below, and we have assumed that the parties to such documents
will comply with the terms thereof, that such documents are not amended and
that such documents are enforceable in accordance with their respective terms.
In connection therewith, we note that you will receive an opinion from this
firm regarding such enforceability.
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 certain
calculations performed by Salomon. In addition, our opinion is premised on the
accuracy of the facts set forth in the Prospectus and the facts set forth in
the representations referred to in the Prospectus.
In rendering our opinion, we have also considered and relied upon the
Internal Revenue Code of 1986, as amended (the "Code"), administrative rulings,
judicial decisions, Treasury Regulations, and such other authorities as we have
<PAGE> 4
To the Addressees Indicated
on Schedule A hereto
July 29, 1998
Page 4
deemed appropriate. The statutory provisions, Treasury 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.
I. Federal Income Tax Characterization of the Notes.
Whether the Class A Notes and the Class B Notes are debt or equity
interests in the Trust Property is determined both by the terms of the Notes
and by whether the "substantial incidents of ownership" of the Trust Property
have been transferred to the Noteholders. See, Watts Copy Systems, Inc. v.
Commissioner, 67 TCM 2480, 2483 (1994); Coulter Electronics, Inc. v.
Commissioner, 59 TCM 350 (1990), aff'd, 943 F.2d 1318 (11th Cir. 1991); United
Surgical Steel Co. v. Commissioner, 54 T.C. 1215 (1970), acq., 1971-2 C.B. 3;
Town & Country Food Co. v. Commissioner, 51 T.C. 1049 (1969), acq., 1969-2
C.B. xxv; GCM 39567 (June 10, 1986); and GCM 39584 (December 3, 1986). Thus,
the most important considerations are: (i) whether the Noteholders bear the
burdens of ownership of the Trust Property, (ii) whether the Noteholders have
any of the benefits of ownership of the Trust Property, and (iii) whether the
terms of the Notes have features which are more characteristic of debt than of
equity. As discussed below, the Class A Noteholders do not obtain, and the
Class B Noteholders should not be viewed as obtaining, the benefits and burdens
of ownership of the Trust Property.
<PAGE> 5
To the Addressees Indicated
on Schedule A hereto
July 29, 1998
Page 5
A. The Benefits and Burdens of the Trust Property are Retained by the
Seller.
1. Burdens of Ownership. The principal burden of ownership with
respect to the Trust Property is the risk of loss arising from shortfalls in
the payments on the Receivables. As described below, the transaction pursuant
to which the Notes are issued has been structured so that the risk of loss is
borne by the Seller and the holders of the Certificates.
The Class A Notes will initially be supported by the Class B Notes and
the Certificates which, together, have a face amount equal to 8% of the initial
Pool Balance, and the principal of which will not be paid until the Class A
Notes are paid in full. (2) The Class B Notes will be supported by the
Certificates having a face amount equal to 4% of the initial Pool Balance, the
principal of which will not be paid until the Notes are paid in full. The
Notes (and the Certificates) will also be supported by the Reserve Account,
which may be drawn upon to make required payments of principal and interest to
Noteholders, and which will initially be funded by a portion of the proceeds of
the Notes and Certificates in the amount of $11,500,109, or 0.5% of the initial
Pool Balance. Thus, the initial total credit enhancement supporting the
Class A Notes is equal to 8.5% of the initial Pool Balance, and the initial
total credit enhancement supporting the Class B Notes is equal to 4.5% of the
initial Pool Balance. In addition, the Notes will have the benefit, on each
payment date, of the "spread" as is further discussed below.
On each Distribution Date, any shortfalls in amounts available to make
required payments of principal and interest to Noteholders will first be ab-
____________________
(2) The initial aggregate face amount of the Notes and the Certificates will
equal 102% of the Initial Pool Balance (the "Over-issuance").
<PAGE> 6
To the Addressees Indicated
on Schedule A hereto
July 29, 1998
Page 6
sorbed by the portion of the monthly payments from the Receivables which are
attributable to the "spread" between the income from the Receivables (less
certain Trust expenses) and the weighted average rate on the Notes and the
Certificates (the "Spread"). In such a case, and in general, the rights of the
Class B Noteholders will be subordinate to the rights of the Class A
Noteholders (the rights of the holders of each Class of Class A Notes are pari
passu with the rights of the holders of each other Class of Class A Notes).
Any amounts remaining in the Collection Account after giving effect to the
payment of the Total Required Payment and depositing amounts in the Reserve
Account to the extent necessary to replenish it to the Specified Reserve
Balance will first be applied to retire the Class A-1 Notes and the Class A-2
Notes in full. Thereafter, amounts remaining in the Collection Account are to
be deposited in the Principal Distribution Account to the extent of the Regular
Principal Distribution Amount which amount will equal the amount necessary to
permit payments of principal to the Noteholders in an amount sufficient to
cause the then Pool Balance to exceed the aggregate outstanding principal
amount of the Notes and the Certificate Balance generally by the difference
between (i) 1% of the Pool Balance and (ii) the Specified Reserve Balance.
Thus, amounts otherwise distributable to the Seller will be applied to
establish and maintain a "cushion" of 1% (including the Reserve Account) of
the Pool Balance in addition to the credit enhancement of (i) with respect to
the Class A Notes, 8% of the initial Pool Balance (provided by the Class B
Notes and the Certificates), and (ii) with respect to the Class B Notes, 4% of
the initial Pool Balance (provided by the Certificates). Based on calculations
provided by Salomon (calculated using the pricing prepayment assumption and
historic loss levels) the excess of the Pool Balance over the outstanding
amount of the Class A Notes at the end of one year will have increased to
13.78% of the then Pool Balance and at the end of two years will have increased
to approximately 27.10% of the then Pool Balance, while the
overcollateralization supporting the Class B Notes (i.e., the excess of the
Pool Balance over the outstanding amount of the Class A Notes and the Class B
Notes) at the end of one year will have increased to 6.97% of the then Pool
Balance and at the end of two years such
<PAGE> 7
To the Addressees Indicated
on Schedule A hereto
July 29, 1998
Page 7
overcollateralization will have increased to approximately 13.55% of the then
Pool Balance.
While the Indenture permits interest to be paid on the Certificates
ahead of principal on the Class A Notes and the Class B Notes in some
circumstances, such right will be curtailed in any period in which the
aggregate outstanding principal balance of the Class A Notes is greater than
the current Pool Balance.
Based on the amounts of credit support and overcollateralization
described above, the Class A-1 Notes and the Class A-2 Notes will be given a
rating in the highest short-term rating category, the Class A-3 Notes, the
Class A-4 Notes and the Class A-5 Notes will be given a rating in the highest
long-term rating category and the Class B Notes will be given a rating of "A"
or their respective equivalents from at least two nationally recognized rating
agencies. These investment grade ratings indicate a very high likelihood that
all interest and principal will be timely paid with respect to the Notes and
that the Noteholders do not bear any significant risk of loss associated with
ownership of the Trust Property (although, obviously the risk of loss with
respect to the Class B Notes is greater than the risk associated with the Class
A Notes).
2. Benefits of Ownership. The primary benefits of ownership of
the Trust Property are the payments due from Obligors with respect to the
Receivables. If market interest rates for comparable receivables decrease in
relation to the yield on the Receivables, the Receivables will increase in
value. The Indenture, the Trust Agreement and the Sale and Servicing Agreement
together provide that the rate of return to the Noteholders is, for each of the
Classes of the Notes, a fixed rate set at the time of the pricing of the Notes
and the Seller receives the remaining proceeds from the Receivables (after
payment of fixed costs including interest on the Certificates). Thus the
economic return to a Noteholder is the result not of any change in
<PAGE> 8
To the Addressees Indicated
on Schedule A hereto
July 29, 1998
Page 8
the value of the Receivables but rather reflects the rate of interest payable
on a fixed rate debt instrument.
As described above, the Seller retains an ownership interest in the
Trust Property in the form of the right to receive, on a periodic basis,
amounts not used to make payments on the Notes or Certificates and, upon
payment in full of the Notes and Certificates, any Receivables remaining in the
Trust.(3)
3. Default Rights. In the event that the Trust defaults in the
payment of any interest (however, a default in the payment of interest on the
Class B Notes will not constitute an Event of Default until all of the Class A
Notes have been paid in full) and such default is not remedied within five
days, or the Trust defaults in the payment of the full amount of the principal
or any installment of the principal of any Note when the same becomes due and
payable, an Event of Default will occur and either the Indenture Trustee or the
holders of Notes representing not less than a majority of the outstanding
amount of the Notes may declare all of the Notes, including interest accrued
and unpaid, to be immediately due and payable (however, if an Event of Default
occurs, the Class B Noteholders will not have any right to direct or to consent
to any actions by the Indenture Trustee until the Class A Notes have been paid
in full). Upon such a declaration, the Indenture Trustee could sell the Trust
Property and the proceeds therefrom would be applied to pay the Noteholders to
the extent of the outstanding amount and any accrued and unpaid interest,
before making any payments to Certificateholders.
____________________
(3) The Over-issuance will cause the value of this interest to be less than
the net present value of the Spread by an amount equal to 2% of the
initial Pool Balance. Nevertheless, the net present value of the
Seller's interest in the Spread (determined at a discount rate of
5.9%) equals approximately 2.77% of the Initial Pool Balance.
<PAGE> 9
To the Addressees Indicated
on Schedule A hereto
July 29, 1998
Page 9
B. Other Factors.
A number of other factors support the conclusion that the Class A Notes
are, in substance, debt and that the Class B Notes should also be considered
debt. The Notes are denominated as indebtedness and the Seller and the
Noteholders, by their purchase of the Notes, will agree to treat the Notes for
federal, state and local income and franchise tax purposes as indebtedness of
the Trust. The terms of the Receivables differ materially from the terms of
the Notes with regard to their respective interest rates. Moreover, Salomon
has informed us that the Receivables will have a weighted average life of 2.21
years (based on the pricing prepayment assumption). On the other hand, the
Notes, of which there will be six classes, will have weighted average lives of
0.14 years for the Class A-1 Notes, 0.44 years for the Class A-2 Notes, 1.00
years for the Class A-3 Notes, 2.00 years for the Class A-4 Notes, 2.97 years
for the Class A-5 Notes, and 3.49 years for the Class B Notes (based on the
pricing prepayment assumption). The Trust will retain control and possession
of the Receivables. The Servicer is responsible for servicing, collection and
administration of the Receivables and will bear all costs and expenses incurred
in connection with such activities, although an amount to compensate the
Servicer for collection activity is permitted by the Sale and Servicing
Agreement to be periodically withdrawn by the Servicer from the assets
otherwise held by the Trust for the benefit of the Noteholders. The Indenture
Trustee, on behalf of the Noteholders, has the right to inspect the
documentation with respect to the Receivables that the Servicer will maintain
on behalf of the Trust, a right which is common in loan transactions. The
foregoing additional factors support the conclusion that the transaction
described in the Indenture, the Trust Agreement and the Sale and Servicing
Agreement with respect to the Notes constitutes an issuance of debt. Moreover,
the substance of the transaction is consistent with the characterization of the
Notes as debt.
<PAGE> 10
To the Addressees Indicated
on Schedule A hereto
July 29, 1998
Page 10
Based on and subject to the foregoing, although there are no
authorities involving closely comparable situations, in our opinion the Class A
Notes will be treated as indebtedness for federal income tax purposes.
The Class B Notes are subordinate to the Class A Notes, and are
supported, as described above, by less credit enhancement than the Class A
Notes. In addition, the rights of holders of Class B Notes as creditors are
limited while the Class A Notes are outstanding. For these reasons, the Class
B Notes could be viewed as bearing certain burdens of ownership of the
Receivables. However, despite the foregoing factors, the Class B Notes are
rated "A" or its equivalent by at least two nationally recognized rating
agencies evidencing a high degree of certainty that they will be repaid (and
thus do not bear any expected risk of losses with respect to the Receivables).
In addition, the Class B Notes do not receive any benefits of ownership of the
Receivables. Accordingly, while the issue is not free from doubt, in our
opinion the Class B Notes should be characterized as indebtedness for federal
income tax purposes.
II. Federal Income Tax Characterization of the Trust.
The Certificates are denominated as equity interests in the Trust, and
the Seller and the Certificateholders, in purchasing the Certificates, agree to
treat the Trust as a partnership for federal income tax purposes, with the
partners being the Seller and the Certificateholders. The Seller will at all
times, possess the right to receive all of the Trust Property not used to pay
the Notes and Certificates.
Although, in some respects, the Trust is similar to trusts established
to hold collateral pledged as security in connection with lending transactions,
because the Trust will issue and distribute the Certificates to third parties,
and no opinion of counsel is sought that such Certificates are debt, the Trust
must be viewed as an
<PAGE> 11
To the Addressees Indicated
on Schedule A hereto
July 29, 1998
Page 11
entity whose characterization will be determined under Sections 7701 or 7704
and applicable Treasury Regulations promulgated thereunder.(4)
Section 7704 of the Code provides that, subject to certain exceptions,
a partnership the interests in which are (i) traded on an established
securities market or (ii) readily tradable on a secondary market (or the
substantial equivalent thereof) will be treated as a corporation for federal
income tax purposes. Section 7704(c), however, excepts certain publicly traded
partnerships ("PTPs") from treatment as a corporation for tax purposes if they
have sufficient passive-type income. Specifically, Section 7704(c) provides
that a PTP shall not be treated as a corporation for tax purposes if 90 percent
or more of its gross income consists of "qualifying income." Qualifying income
is defined by Section 7704(d) to include interest and any gain from the sale or
disposition of a capital asset. The Trust's sole source of income will derive
from interest paid with regard to and gain resulting from the disposition of
the Receivables.
We note that Section 7704(d)(2) disqualifies from the category of
otherwise "qualifying income" interest that is derived in the conduct of a
"financial or insurance business." In our view, because the Indenture Trustee,
Owner Trustee and Servicer cannot manage the assets of the Trust in any
ordinary sense, and in particular, cannot sell the Receivables (except in the
event of an Event of Default or dissolution of the Trust) and cannot acquire
additional assets, the Trust should not be found to be carrying on a financial
business. However, the Service has not provided guidance as to what
constitutes a financial or insurance business and accordingly our conclusion is
based on our interpretation of the statutory language of Section 7704 and not
on authorities construing the statute. Accordingly, we believe that since the
____________________
(4) Unless otherwise indicated, all "Section" references hereinafter shall
be to the Code.
<PAGE> 12
To the Addressees Indicated
on Schedule A hereto
July 29, 1998
Page 12
Trust should not be found to be engaged in a financial business the interest
received on the Receivables will constitute qualifying income.
Accordingly, the Trust would qualify for the Section 7704(c) exception
to the PTP rules and would not be taxable as a corporation thereunder, assuming
that it otherwise would qualify as a partnership for federal income tax
purposes.
"Eligible entities" (i.e.,entities not explicitly classified as a
corporation under Treas. Reg. Section 301.7701-2(b)) with at least two members
are, by default, treated as partnerships for federal income taxation purposes.
Treas. Reg. Section 301.7701-3(b). The Trust, which is a business trust
formed under the laws of the State of Delaware pursuant to the Trust Agreement,
may not be treated as a trust for federal income taxes because it may not be
"simply an arrangement to protect or conserve [the Trust Property] for
beneficiaries". Treas Reg. Section 301.7701-4(b). Therefore, because the
Trust is not included in the list of corporate entities described in Treas.
Reg. Section 301.7701-2(b), it will be treated as a partnership for federal
income tax purposes under Treas. Reg. Section 301.7701-3(b), if it (i) is not
a trust for federal income tax purposes and (ii) is treated as having multiple
owners. In such a case, in our opinion the Trust will not be classified as an
association or a PTP taxable as a corporation for federal income tax purposes.
III. Federal Tax Matters in Prospectus
Based on and subject to the foregoing, it is our opinion that, under
present law, the discussions presented under the captions "SUMMARY -- Tax
Status" and "CERTAIN FEDERAL INCOME TAX CONSEQUENCES" in the Prospectus,
although general in nature, to the extent that they address matters of federal
income tax law or legal conclusions with respect thereto, are correct in all
material respects.
<PAGE> 13
To the Addressees Indicated
on Schedule A hereto
July 29, 1998
Page 13
* * *
We express no opinion with respect to the matters addressed in this
opinion other than as set forth above, and this opinion is not to be used,
circulated, quoted or otherwise referred to for any other purpose without prior
written consent in each instance. We hereby consent to the filing of this
opinion as an exhibit to material filed in accordance with the Securities
Exchange Act of 1934, as amended, to be incorporated by reference in the
Registration Statement. We disclaim any obligation to update this opinion
letter for events occurring or coming to our attention after the date hereof.
Very truly yours,
Skadden, Arps, Slate, Meagher & Flom LLP
<PAGE> 14
Schedule A
Ford Credit Auto Receivables Two L.P.
The American Road
Dearborn, Michigan 48121
Ford Credit Auto Owner Trust 1998-C
c/o PNC Bank, Delaware,
as Owner Trustee
222 Delaware Avenue
Wilmington, Delaware 19801
The Chase Manhattan Bank,
as Indenture Trustee
Corporate Trust Administration
450 West 33rd Street, 15th floor
New York, New York 10001-2697
Salomon Brothers Inc
J.P. Morgan Securities, Inc.
as Representatives of the several Note Underwriters,
and as Certificate Underwriters
c/o Salomon Brothers Inc
Seven World Trade Center, 33rd Floor
New York, New York 10048
Salomon Brothers Inc
J.P. Morgan Securities, Inc.
as Initial Purchasers
Seven World Trade Center, 33rd Floor
New York, New York 10048
Standard & Poor's Ratings Services
25 Broadway
New York, New York 10004
<PAGE> 15
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Fitch IBCA, Inc.
One State Street Plaza
New York, New York 10004
<PAGE> 1
EXHIBIT 8.2
Ford Credit Auto Receivables Two L.P. July 29, 1998
The American Road
Dearborn, Michigan 48121
Re: Ford Credit Auto Owner Trust 1998-C
-----------------------------------
Ladies and Gentlemen:
I do hereby confirm that the statements set forth in the Prospectus
dated July 16, 1998, as supplemented by Prospectus Supplement dated
July 20, 1998 under the caption "Summary-Tax Status" as they relate to
Michigan state tax matters and in the Prospectus Supplement under the caption
"Certain State Tax Consequences," to the extent they constitute matters of law
or legal conclusions with respect thereto, have been prepared, reviewed or
caused to be reviewed by me and are correct in all material respects.
I consent to the reference to me under the captions "Certain State Tax
Consequences" in the Prospectus Supplement and "Legal Opinions" in the
Prospectus and the Prospectus Supplement.
Very truly yours,
/s/ Hurley D. Smith
<PAGE> 1
EXHIBIT 99.1
===========================================================
SALE AND SERVICING AGREEMENT
by and among
FORD CREDIT AUTO OWNER TRUST 1998-C,
as Issuer,
FORD CREDIT AUTO RECEIVABLES TWO L.P.,
as Seller
and
FORD MOTOR CREDIT COMPANY,
as Servicer
Dated as of July 1, 1998
===========================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE I
DEFINITIONS AND USAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
TRUST PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.1. Conveyance of Trust Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.2. Representations and Warranties of the Seller as to the Receivables . . . . . . . . . . . . . . 2
SECTION 2.3. Repurchase upon Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.4. Custody of Receivable Files . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.5. Duties of Servicer as Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.6. Instructions; Authority to Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.7. Custodian's Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.8. Effective Period and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE III
ADMINISTRATION AND SERVICING OF
RECEIVABLES AND TRUST PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.1. Duties of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.2. Collection of Receivable Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.3. Realization Upon Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.4. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.5. Maintenance of Security Interests in Financed Vehicles . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.6. Covenants of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.7. Purchase of Receivables Upon Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.8. Servicer Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.9. Servicer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.10. Annual Statement as to Compliance; Notice of Event of Servicing Termination . . . . . . . . . 16
SECTION 3.11. Annual Independent Certified Public Accountant's Report . . . . . . . . . . . . . . . . . . . 16
SECTION 3.12. Access to Certain Documentation and Information Regarding Receivables . . . . . . . . . . . . 17
SECTION 3.13. Servicer Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
i
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ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO NOTEHOLDERS AND CERTIFICATEHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.1. Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.2. Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.3. Application of Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.4. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.5. Additional Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.6. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.7. Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.8. Net Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.9. Statements to . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE V
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VI
THE SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.1. Representations and Warranties of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.2. Liability of Seller; Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.3. Merger or Consolidation of, or Assumption of the Obligations of, Seller . . . . . . . . . . . 40
SECTION 6.4. Limitation on Liability of Seller and Others . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.5. Seller May Own Notes or Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE VII
THE SERVICER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.1. Representations of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.2. Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 7.3. Merger or Consolidation of, or Assumption of the Obligations of, Servicer . . . . . . . . . . 47
SECTION 7.4. Limitation on Liability of Servicer and Others . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 7.5. Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 7.6. Ford Credit Not to Resign as Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.7. Servicer May Own Notes or Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
</TABLE>
ii
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ARTICLE VIII
SERVICING TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.1. Events of Servicing Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.2. Appointment of Successor Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.3. Repayment of Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.4. Notification to Noteholders and Certificateholders . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.5. Waiver of Past Events of Servicing Termination . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE IX
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.1. Optional Purchase of All Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.2. Succession Upon Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . 55
ARTICLE X
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 10.1. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 10.2. Protection of Title to Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.3. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.5. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 10.6. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 10.7. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 10.8. No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 10.9. Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 10.10. Actions by Noteholders or Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . 63
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
SECTION 10.14. Third-Party Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 10.15. Savings Clause. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
</TABLE>
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<PAGE> 5
SALE AND SERVICING AGREEMENT, dated as of July 1, 1998 (as from time to
time amended, supplemented or otherwise modified and in effect, this
"Agreement"), by and among FORD CREDIT AUTO OWNER TRUST 1998-C (the "Issuer"), a
Delaware business trust, FORD CREDIT AUTO RECEIVABLES TWO L.P., a Delaware
limited partnership, as seller (the "Seller"), and FORD MOTOR CREDIT COMPANY, a
Delaware corporation, as servicer (the "Servicer").
WHEREAS, the Issuer desires to acquire a portfolio of receivables
arising in connection with motor vehicle retail installment sale contracts
generated by Ford Motor Credit Company in the ordinary course of its business
and conveyed to the Seller;
WHEREAS, the Seller is willing to convey such receivables to the Issuer;
and
WHEREAS, Ford Motor Credit Company is willing to service such
receivables on behalf of the Issuer;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS AND USAGE
Except as otherwise specified herein or as the context may otherwise
require, capitalized terms used but not otherwise defined herein are defined in
Appendix A hereto, which also contains rules as to usage that shall be
applicable herein.
<PAGE> 6
ARTICLE II
TRUST PROPERTY
SECTION 2.01. Conveyance of Trust Property. In consideration of the
Issuer's delivery to, or upon the order of, the Seller of the Notes and the
Certificates in an aggregate principal amount equal to approximately 102% of the
Initial Pool Balance, the Seller does hereby irrevocably transfer, assign and
otherwise convey to the Issuer without recourse (subject to the obligations
herein) all right, title and interest of the Seller, whether now owned or
hereafter acquired, in and to the Trust Property. The transfer, assignment and
conveyance made hereunder shall not constitute and is not intended to result in
an assumption by the Issuer of any obligation of the Seller to the Obligors, the
Dealers or any other Person in connection with the Receivables and the other
Trust Property or any agreement, document or instrument related thereto.
SECTION 2.02. Representations and Warranties of the Seller as to the
Receivables. The Seller makes the following representations and warranties as
to the Receivables on which the Issuer shall be deemed to have relied in
accepting the Receivables. Such representations and warranties speak as of the
execution and delivery of this Agreement, but shall survive the transfer,
assignment and conveyance of the Receivables to the Issuer and the pledge
thereof to the Indenture Trustee pursuant to the Indenture.
(i) Characteristics of Receivables. Each Receivable (a) shall have
been originated in the United States of America by a Dealer for the retail sale
of a Financed Vehicle in the ordinary course of such Dealer's business, shall
have been fully and properly executed by the parties thereto, shall have been
purchased by the Seller from Ford Credit, which in turn shall have purchased
such Receivable from such Dealer under an existing dealer agreement with Ford
Credit, and shall have been validly assigned by such Dealer to Ford Credit,
which in turn shall have been validly assigned by Ford Credit to the Seller in
accordance with its terms, (b) shall have created or shall create a valid,
subsisting, and enforceable first priority security interest in favor of Ford
2
<PAGE> 7
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 Issuer, (c) shall contain customary and enforceable provisions such that the
rights and remedies of the holder thereof shall be adequate for realization
against the collateral of the benefits of the security, (d) shall provide for
level monthly payments (provided that the payment in the first or last month in
the life of the Receivable may be minimally different from the level payment)
that fully amortize the Amount Financed by maturity and yield interest at the
Annual Percentage Rate, (e) shall provide for, in the event that such contract
is prepaid, a prepayment that fully pays the Principal Balance, and (f) is a
Precomputed Receivable or a Simple Interest Receivable.
(ii) Schedule of Receivables. The information set forth in the
Schedule of Receivables shall be true and correct in all material respects as of
the opening of business on the Cutoff Date, and no selection procedures believed
to be adverse to the Noteholders or the Certificateholders shall have been
utilized in selecting the Receivables from those receivables which meet the
criteria contained herein. The computer tape or other listing regarding the
Receivables made available to the Issuer and its assigns (which computer tape or
other listing is required to be delivered as specified herein) is true and
correct in all respects.
(iii) Compliance with Law. Each Receivable and the sale of the
Financed Vehicle shall have complied at the time it was originated or made and
at the execution of this Agreement shall comply in all material respects with
all requirements of applicable federal, State, and local laws, and regulations
thereunder, including, without limitation, usury laws, the Federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's
Regulations B and Z, and State adaptations of the National Consumer Act and of
the Uniform Consumer Credit Code, and other consumer credit laws and equal
credit opportunity and disclosure laws.
3
<PAGE> 8
(iv) Binding Obligation. Each Receivable shall represent the genuine,
legal, valid, and binding payment obligation in writing of the Obligor,
enforceable by the holder thereof in accordance with its terms subject to the
effect of bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditors' rights generally.
(v) No Government Obligor. None of the Receivables shall be due from
the United States of America or any State or from any agency, department, or
instrumentality of the United States of America or any State.
(vi) Security Interest in Financed Vehicle. Immediately prior to the
transfer, assignment and conveyance thereof, each Receivable shall be secured by
a validly perfected first security interest in the Financed Vehicle in favor of
Ford Credit as secured party or all necessary and appropriate actions shall have
been commenced that would result in the valid perfection of a first security
interest in the Financed Vehicle in favor of Ford Credit as secured party.
(vii) Receivables in Force. No Receivable shall have been satisfied,
subordinated, or rescinded, nor shall any Financed Vehicle have been released
from the lien granted by the related Receivable in whole or in part.
(viii) No Waiver. No provision of a Receivable shall have been waived.
(ix) No Defenses. No right of rescission, setoff, counterclaim, or
defense shall have been asserted or threatened with respect to any Receivable.
(x) No Liens. To the best of the Seller's knowledge, no liens or
claims shall have been filed for work, labor, or materials relating to a
Financed Vehicle that shall be liens prior to, or equal or coordinate with, the
security interest in the Financed Vehicle granted by the Receivable.
(xi) No Default. Except for payment defaults continuing for a period
of not more than thirty (30) days as of the Cutoff Date, no default, breach,
violation, or event permitting acceleration under the terms of any
4
<PAGE> 9
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 Ford Credit shall not waive any of the foregoing.
(xii) Insurance. Ford Credit, in accordance with its customary
procedures, shall have determined that the Obligor has obtained or agreed to
obtain physical damage insurance covering the Financed Vehicle.
(xiii) Title. It is the intention of the Seller that the transfer and
assignment herein contemplated constitute an absolute transfer of the
Receivables from the Seller to the Issuer and that the beneficial interest in
and title to the Receivables not be part of the Seller's estate in the event of
the filing of a bankruptcy petition by or against the Seller under any
bankruptcy law. No Receivable has been conveyed, transferred, assigned, or
pledged by the Seller to any Person other than the Issuer. Immediately prior to
the transfer and assignment herein contemplated, the Seller had good and
marketable title to each Receivable free and clear of all Liens, encumbrances,
security interests, and rights of others and, immediately upon the transfer
thereof, the Issuer shall have good and marketable title to each Receivable,
free and clear of all Liens, encumbrances, security interests, and rights of
others; and the transfer has been perfected under the UCC.
(xiv) Valid Assignment. No Receivable shall have been originated in,
or shall be subject to the laws of, any jurisdiction under which the transfer,
assignment and conveyance of such Receivable under this Agreement or pursuant to
transfers of the Notes or the Certificates shall be unlawful, void, or
voidable. The Seller has not entered into any agreement with any account debtor
that prohibits, restricts or conditions the assignment of any portion of the
Receivables.
(xv) All Filings Made. All filings (including, without limitation, UCC
filings) necessary in any jurisdiction to give the Issuer a first perfected
ownership interest in the Receivables, and to give the Indenture Trustee a first
perfected security interest therein, shall have been made.
5
<PAGE> 10
(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 69.8% of the aggregate
Principal Balance of the Receivables, constituting 62.2% of the number of
Receivables, as of the Cutoff Date, represent vehicles financed at new vehicle
rates, and the remainder of the Receivables represent vehicles financed at used
vehicle rates.
(xix) Amortization Type. By aggregate Principal Balance as of the
Cutoff Date, approximately 15.0% of the Receivables constitute Precomputed
Receivables and 85.0% of the Receivables constitute Simple Interest Receivables.
(xx) Origination. Each Receivable shall have an origination date on or
after April 1, 1996.
(xxi) Maturity of Receivables. Each Receivable shall have an original
maturity of not greater than sixty (60) months.
(xxii) Minimum Annual Percentage Rate. Each Receivable shall have an
Annual Percentage Rate equal to or greater than 7.75%.
(xxiii) Scheduled Payments. Each Receivable shall have a first
Scheduled Payment due, in the case of Precomputed Receivables, or a first
scheduled due date, in the case of Simple Interest Receivables, on or prior to
July 31, 1998 and no Receivable shall have a payment that is more than thirty
(30) days overdue as of the Cutoff Date.
(xxiv) Location of Receivable Files. The Receivable Files shall be
kept at one or more of the locations listed in Schedule B hereto.
(xxv) No Extensions. The number of Scheduled Payments, in the case of
Precomputed Receivables, and the number of scheduled due dates, in the case of
Simple Interest Receivables, shall not have been extended on any Receivable on
or before the Cutoff Date.
6
<PAGE> 11
(xxvi) Rating Agencies. The rating agencies rating the Notes and the
Class C Certificates are Moody's, Standard & Poor's and Fitch and the rating
agencies rating the Class D Certificates are Standard & Poor's and Fitch.
(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 2.03. Repurchase upon Breach. The Seller, the Servicer, the
Issuer or the Owner Trustee, as the case may be, shall inform the other parties
to this Agreement, the Indenture Trustee and Ford Credit promptly, in writing,
upon the discovery of any breach of the Seller's representations and warranties
made by the Seller pursuant to Section 2.2. Unless the breach shall have been
cured by the last day of the second Collection Period following the discovery,
the Indenture Trustee shall enforce the obligation of the Seller under this
Section 2.3, and, if necessary, the Seller or the Indenture Trustee shall
enforce the obligation of Ford Credit under the Purchase Agreement, to
repurchase any Receivable materially and adversely affected by the breach as of
such last day (or, at the Seller's option, the last day of the first Collection
Period following the discovery). In consideration of the purchase of the
Receivable, the Seller shall remit the Purchase Amount, in the manner specified
in Section 4.5. The sole remedy of the Issuer, the Owner Trustee, the Indenture
Trustee, the Noteholders or the Certificateholders with respect to a breach of
the Seller's representations and warranties pursuant to Section 2.2 shall be to
require the Seller to repurchase Receivables pursuant to this Section 2.3 or to
enforce the obligation of Ford Credit to the Seller to repurchase such
Receivables pursuant to the Purchase Agreement. Neither the Owner Trustee nor
the Indenture Trustee shall have any duty to conduct an affirmative
investigation as to the occurrence of any condition requiring the repurchase of
any Receivable pursuant to this Section 2.3 or the eligibility of any Receivable
for purposes of this Agreement.
SECTION 2.04. Custody of Receivable Files. To assure uniform quality
in servicing the Receivables and to reduce administrative costs, the Issuer,
upon the execution
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and delivery of this Agreement, hereby revocably appoints the Servicer, and the
Servicer hereby accepts such appointment, to act as the agent of the Issuer and
the Indenture Trustee as custodian of the following documents or instruments,
which are hereby constructively delivered to the Indenture Trustee, as pledgee
of the Issuer pursuant to the Indenture, with respect to each Receivable:
(i) The original of the Receivable.
(ii) The original credit application fully executed by the
Obligor or a photocopy thereof or a record thereof on a computer file
or disc or on microfiche.
(iii) The original certificate of title or such documents that
the Servicer or Ford Credit shall keep on file, in accordance with its
customary procedures, evidencing the security interest of Ford Credit
in the Financed Vehicle.
(iv) Any and all other documents (including any computer file
or disc or microfiche) that the Servicer or the Seller shall keep on
file, in accordance with its customary procedures, relating to a
Receivable, an Obligor, or a Financed Vehicle.
The Servicer shall provide an Officer's Certificate to the Issuer and
the Indenture Trustee confirming that the Servicer has received on behalf of the
Issuer and the Indenture Trustee all the documents and instruments necessary for
the Servicer to act as the agent of the Issuer and the Indenture Trustee for the
purposes set forth in this Section 2.4, including the documents referred to
herein, and the Issuer and the Indenture Trustee are hereby authorized to rely
on such Officer's Certificate.
SECTION 2.05. 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
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custodian the Servicer shall act with reasonable care, using that degree of
skill and attention that the Servicer exercises with respect to the receivable
files relating to all comparable automotive receivables that the Servicer
services for itself or others. In accordance with its customary practices with
respect to its retail installment sale contracts, the Servicer shall conduct,
or cause to be conducted, periodic audits of the Receivable Files held by it
under this Agreement, and of the related accounts, records, and computer
systems, in such a manner as shall enable the Issuer or the Indenture Trustee
to verify the accuracy of the Servicer's record keeping. The Servicer shall
promptly report to the Issuer and the Indenture Trustee any failure on its part
to hold the Receivable Files and maintain its accounts, records, and computer
systems as herein provided and promptly take appropriate action to remedy any
such failure. Nothing herein shall be deemed to require an initial review or
any periodic review by the Issuer, the Owner Trustee or the Indenture Trustee
of the Receivable Files.
(b) Maintenance of and Access to Records. The Servicer shall maintain
each Receivable File at one of its offices specified in Schedule B to this
Agreement, or at such other office as shall be specified to the Issuer and the
Indenture Trustee by written notice not later than ninety (90) days after any
change in location. The Servicer shall make available to the Issuer and the
Indenture Trustee or their duly authorized representatives, attorneys, or
auditors a list of locations of the Receivable Files, the Receivable Files, and
the related accounts, records, and computer systems maintained by the Servicer
at such times as the Issuer or the Indenture Trustee shall instruct.
(c) Release of Documents. Upon written instructions from the Indenture
Trustee, the Servicer shall release any document in the Receivable Files to the
Indenture Trustee, the Indenture Trustee's agent or the Indenture Trustee's
designee, as the case may be, at such place or places as the Indenture Trustee
may designate, as soon thereafter as is practicable. Any document so released
shall be handled by the Indenture Trustee with 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.
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SECTION 2.06. 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 2.07. Custodian's Indemnification. The Servicer as custodian
shall indemnify the Issuer, the Owner Trustee and the Indenture Trustee for any
and all liabilities, obligations, losses, compensatory damages, payments, costs,
or expenses of any kind whatsoever that may be imposed on, incurred, or asserted
against the Issuer, the Owner Trustee or the Indenture Trustee as the result of
any improper act or omission in any way relating to the maintenance and custody
by the Servicer as custodian of the Receivable Files; provided, however, that
the Servicer shall not be liable (i) to the Issuer for any portion of any such
amount resulting from the willful misfeasance, bad faith, or negligence of the
Indenture Trustee, the Owner Trustee or the Issuer, (ii) to the Owner Trustee
for any portion of any such amount resulting from the willful misfeasance, bad
faith, or negligence of the Indenture Trustee, the Owner Trustee or the Issuer
and (iii) to the Indenture Trustee for any portion of any such amount resulting
from the willful misfeasance, bad faith, or negligence of the Indenture Trustee,
the Owner Trustee or the Issuer.
SECTION 2.08. Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and shall
continue in full force and effect until terminated pursuant to this Section 2.8.
If Ford Credit shall resign as Servicer in accordance with the provisions of
this Agreement or if all of the rights and obligations of the Servicer shall
have been terminated under Section 8.1, the appointment of the Servicer as
custodian hereunder may be terminated by the Indenture Trustee, or by the
Noteholders of Notes evidencing not less than 25% of the principal amount of the
Notes Outstanding or, with the consent of Noteholders of Notes evidencing not
less than 25% of the principal amount of the Notes Outstanding, by the Owner
Trustee or by Certificateholders of Certificates evidencing not less than 25% of
the Aggregate 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
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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 3.01. 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
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Servicer, at its 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 3.02. Collection of Receivable Payments. The Servicer shall
make reasonable efforts to collect all payments called for under the terms and
provisions of the Receivables as and when the same shall become due and shall
follow such collection procedures as it follows with respect to all comparable
receivables that it services for itself or others. Subject to Sections 3.6(iii)
and (iv), the Servicer may grant extensions, rebates, or adjustments on a
Receivable; provided, however, that if the Servicer extends the date for final
payment by the Obligor of any Receivable beyond the Final Scheduled Maturity
Date, it shall promptly purchase the Receivable in the manner provided in
Section 3.7. The Servicer may in its discretion waive any late payment charge
or any other fees that may be collected in the ordinary course of servicing a
Receivable.
SECTION 3.03. 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 3.04. [Reserved].
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SECTION 3.05. 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 reperfect 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 3.06. 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 3.07. 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
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breach pursuant to Section 3.2, 3.5 or 3.6 shall be to require the Servicer to
purchase Receivables pursuant to this Section 3.7.
SECTION 3.08. 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 3.09. Servicer's Certificate. (a) On or about the tenth day
of each calendar month, the Servicer shall deliver to the Owner Trustee, each
Note Paying Agent and Certificate Paying Agent, the Indenture Trustee and the
Seller, with a copy to the Rating Agencies, a Servicer's Certificate containing
all information (including all specific dollar amounts) necessary to make the
transfers and distributions pursuant to Sections 4.3, 4.4, 4.5, 4.6 and 4.7 for
the Collection Period preceding the date of such Servicer's Certificate,
together with the written statements to be furnished by the Owner Trustee to
Certificateholders pursuant to Section 4.9 and by the Indenture Trustee to the
Noteholders pursuant to Section 4.9 hereof and Section 6.6 of the Indenture.
Receivables purchased or to be purchased by the Servicer or the Seller shall be
identified by the Servicer by the Seller's account number with respect to such
Receivable (as specified in the Schedule of Receivables).
(b) On or about the fifth (but in no event later than the tenth)
calendar day of each calendar month, the Servicer shall deliver to the
respective underwriters of the Notes and the Certificates the Note Pool Factor
for each Class of Notes and the Certificate Pool Factor for each Class of
Certificates as of the close of business on the Distribution Date occurring in
that month.
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SECTION 3.10. Annual Statement as to Compliance; Notice of Event of
Servicing Termination. (a) The Servicer shall deliver to the Owner Trustee,
the Indenture Trustee and each Rating Agency on or before April 30 of each year
beginning April 30, 1999, an Officer's Certificate, dated as of December 31 of
the preceding calendar year, stating that (i) a review of the activities of the
Servicer during the preceding 12-month (or shorter) period and of its
performance under the Agreement has been made under such officer's supervision
and (ii) to the best of such officer's knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement throughout such
year, or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof. A copy of such Officer's Certificate and the report referred to in
Section 3.11 may be obtained by any Certificateholder by a request in writing to
the Owner Trustee, or by any Noteholder or Person certifying that it is a Note
Owner by a request in writing to the Indenture Trustee, in either case addressed
to the applicable Corporate Trust Office. Upon the telephone request of the
Owner Trustee, the Indenture Trustee shall promptly furnish the Owner Trustee a
list of Noteholders as of the date specified by the Owner Trustee.
(b) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee and each Rating Agency promptly after having obtained knowledge
thereof, but in no event later than five (5) Business Days thereafter, written
notice in an Officer's Certificate of any event which with the giving of notice
or lapse of time, or both, would become an Event of Servicing Termination under
Section 8.1. The Seller shall deliver to the Owner Trustee, the Indenture
Trustee and each Rating Agency promptly after having obtained knowledge thereof,
but in no event later than five (5) Business Days thereafter, written notice in
an Officer's Certificate of any event which with the giving of notice or lapse
of time, or both, would become an Event of Servicing Termination under clause
(ii) of Section 8.1
SECTION 3.11. Annual Independent Certified Public Accountant's Report.
The Servicer shall cause a firm of independent certified public accountants, who
may also render other services to the Servicer or to the Seller or to Ford
Credit, to deliver to the Owner Trustee and the Indenture Trustee on or before
April 30 of each year
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beginning April 30, 1999 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 Attestation 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 such firm is required to report under the Program.
The report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 3.12. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to the Certificateholders, the
Indenture Trustee and the Noteholders access to the Receivable Files in such
cases where the Certificateholders, the Indenture Trustee or the Noteholders
shall be required by applicable statutes or regulations to review such
documentation. Access shall be afforded without charge, but only upon
reasonable request and during the normal business hours at the respective
offices of the Servicer. Nothing in this Section 3.12 shall affect the
obligation of the Servicer to observe any applicable law prohibiting disclosure
of information regarding the Obligors, and the failure of the Servicer to
provide access to information as a result of such obligation shall not
constitute a breach of this Section 3.12. The Servicer shall provide such
information with respect to the Receivables as the Rating Agencies may
reasonably request, including as soon as practicable a periodic report of the
aggregate principal balance of Receivables which become Liquidated Receivables
during each Collection Period.
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
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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 4.01. Accounts. (a) The Servicer shall, prior to the Closing
Date, establish and maintain a segregated trust account in the name "The Chase
Manhattan Bank as Indenture Trustee, as secured party from Ford Credit Auto
Owner Trust 1998-C", at a Qualified Institution or Qualified Trust Institution
(which shall initially be the corporate trust department of The Chase Manhattan
Bank), which shall be designated as the "Collection Account". Initially, the
Collection Account shall be account number C-27892 and shall include any
successor or replacement accounts thereto. The Collection Account shall be
under the sole dominion and control of the Indenture Trustee; provided, that the
Servicer may make deposits to and direct the Indenture Trustee in writing to
make withdrawals from the Collection Account in accordance with the terms of the
Basic Documents. The Collection Account will be established and maintained
pursuant to an account agreement which specifies New York law as the governing
law. In addition, the Collection Account shall be established and maintained at
a Qualified Institution or Qualified Trust Institution which agrees in writing
that for so long as the Notes are outstanding it will comply with entitlement
orders (as defined in Article 8 of the UCC) originated by the Indenture Trustee
without further consent of the Issuer. All monies deposited from time to time
in the Collection Account shall be held by the Indenture Trustee as secured
party for the benefit of the Noteholders and, after payment in full of the
Notes, as agent of the Owner Trustee and as part of the Trust Property. All
deposits to and withdrawals from the Collection Account shall be made only upon
the terms and conditions of the Basic Documents.
If the Servicer is required to remit collections pursuant to the first
sentence of Section 4.2, all amounts held in the Collection Account shall, to
the extent permitted by applicable law, rules and regulations, be invested, as
directed in writing by the Servicer, by the bank or trust company then
maintaining the Collection Account in Permitted Investments that mature not
later than the Business Day immediately prior to the Distribution Date for the
Collection Period to which such amounts relate and
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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 Servicer. In the
event that the Collection Account is no longer to be maintained at the
corporate trust department of The Chase Manhattan Bank, the Servicer shall,
with the Indenture Trustee's or Owner Trustee's assistance as necessary, cause
the Collection Account to be moved to a Qualified Institution or a Qualified
Trust Institution within ten (10) Business Days (or such longer period not to
exceed thirty (30) calendar days as to which each Rating Agency may consent).
(b) The Servicer shall, prior to the Closing Date, establish and
maintain an administrative subaccount within the Collection Account at the bank
or trust company then maintaining the Collection Account, which subaccount shall
be designated as the "Principal Distribution Account". The Principal
Distribution Account is established and maintained solely for administrative
purposes.
(c) The Servicer shall, prior to the Closing Date, establish and
maintain two segregated trust accounts, each in the name "PNC Bank, Delaware as
Owner Trustee" at a Qualified Institution or Qualified Trust Institution (which
shall initially be the corporate trust department of PNC Bank, Delaware), which
shall be designated as the "Certificate Interest Distribution Account" and the
"Certificate Principal Distribution Account", respectively. Each Certificate
Distribution Account shall be under the sole dominion and control of the Owner
Trustee. All monies deposited from time to time in each 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 either Certificate
Distribution Account is no longer to be maintained at the corporate trust
department of PNC Bank, Delaware, the Servicer shall, with the Owner Trustee's
assistance as necessary, cause such Certificate Distribution Account to be moved
to a Qualified Institution or a Qualified Trust Institution within ten (10)
Business Days (or such longer
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period not to exceed thirty (30) calendar days as to which each Rating Agency
may consent). Each Certificate Distribution Account will be established and
maintained pursuant to an account agreement which specifies New York law as the
governing law.
(d) The Servicer shall, prior to the Closing Date, establish and
maintain a segregated trust account in the name of "The Chase Manhattan Bank as
Indenture Trustee" at a Qualified Institution or Qualified Trust Institution
(which shall initially be the corporate trust department of The Chase Manhattan
Bank), which shall be designated as the "Payahead Account". The Payahead Account
shall be held in trust for the benefit of the Obligors. The Payahead Account
shall be under the sole dominion and control of the Indenture Trustee; provided
that the Servicer may make deposits to and direct the Indenture Trustee in
writing to make withdrawals from the Payahead Account in accordance with the
Basic Documents. The Payahead Account shall not be a part of the Trust
Property. All deposits to and withdrawals from the Payahead Account shall be
made only upon the terms and conditions of the Basic Documents.
If the Servicer is required to remit collections pursuant to the first
sentence of Section 4.2, all amounts held in the Payahead Account shall, to the
extent permitted by applicable law, rules and regulations, be invested, as
directed in writing by the Servicer, by the bank or trust company then
maintaining the Payahead Account in Permitted Investments that mature not later
than the Business Day immediately prior to the Distribution Date for the
Collection Period to which such amounts relate and such Permitted Investments
shall be held to maturity. All interest and other income (net of losses and
investment expenses) on funds on deposit in the Payahead Account shall be
withdrawn from the Payahead Account at the direction of the Servicer and shall
be paid to the Servicer. In the event that the Payahead Account is no longer to
be maintained at the corporate trust department of The Chase Manhattan Bank, the
Servicer shall, with the Indenture Trustee's or Owner Trustee's assistance as
necessary, cause the Payahead Account to be moved to a Qualified Institution or
a Qualified Trust Institution within ten (10) Business Days (or such longer
period not to exceed thirty (30) calendar days as to which each Rating Agency
may consent).
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(e) Notwithstanding the provisions of clause (d) above and of Section
4.6(a)(ii), for so long as (i) Ford Credit is the Servicer, (ii) the rating of
Ford Credit's short-term unsecured debt is at least P-1 by Moody's, is at least
A-1 by Standard & Poor's and is at least F-1 by Fitch 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 Aggregate 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.
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SECTION 4.02. Collections. The Servicer shall remit to the Collection
Account within two (2) Business Days of the receipt thereof (i) all payments by
or on behalf of the Obligors (including Payaheads on the Receivables and Rule of
78's Payments, but excluding Purchased Receivables) and (ii) all Liquidation
Proceeds, both as collected during the Collection Period. Ford Credit, so long
as it is acting as the Servicer, may make remittances of collections on a less
frequent basis than that specified in the immediately preceding sentence. It is
understood that such less frequent remittances may be made only on the specific
terms and conditions set forth below in this Section 4.2 and only for so long as
such terms and conditions are fulfilled. Accordingly, notwithstanding the
provisions of the first sentence of this Section 4.2, the Servicer shall remit
collections received during a Collection Period to the Collection Account in
immediately available funds on the Business Day preceding the related
Distribution Date (or, with the prior consent of the Rating Agencies, on the
related Distribution Date) but only for so long as each Monthly Remittance
Condition is satisfied. Notwithstanding the foregoing, if a Monthly Remittance
Condition is not satisfied the Servicer may utilize an alternative remittance
schedule (which may include the remittance schedule utilized by the Servicer
before the Monthly Remittance Condition became unsatisfied), if the Servicer
provides to the Owner Trustee and the Indenture Trustee written confirmation
from each Rating Agency that such alternative remittance schedule will not
result in the downgrading or withdrawal by such Rating Agency of the ratings
then assigned to the Notes and the Certificates. The Owner Trustee or the
Indenture Trustee shall not be deemed to have knowledge of any event or
circumstance under clause (iii) of the definition of Monthly Remittance
Condition that would require remittance by the Servicer to the Collection
Account within two Business Days of receipt as aforesaid unless the Owner
Trustee or the Indenture Trustee has received notice of such event or
circumstance from the Seller or the Servicer in an Officer's Certificate or from
the Noteholders of Notes evidencing not less than 25% of the principal amount of
the Notes Outstanding or from the Certificateholders of Certificates evidencing
not less than 25% of the Aggregate Certificate Balance or a Trustee Officer in
the Corporate Trust Office with knowledge hereof or
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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 4.03. Application of Collections. For the purposes of this
Agreement, as of the close of business on the last day of each Collection
Period, all collections for the Collection Period with respect to each
Receivable (other than a Purchased Receivable) shall be applied by the Servicer
as follows:
Payments by or on behalf of the Obligor which are not late fees,
prepayment charges, or other administrative fees and expenses, or
similar charges which constitute the Supplemental Servicing Fee shall
be applied first to reduce Outstanding Advances made with respect to
such Receivable, as described in Sections 4.4(a) and (b) below. Next,
any excess shall be applied (i) in the case of Simple Interest
Receivables, to interest and principal on the Receivable in accordance
with the Simple Interest Method and (ii) in the case of Precomputed
Receivables, to the Scheduled Payment with respect to such Receivable
and any remaining excess (except for partial prepayments which cause a
reduction in 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 4.04. 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,
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subject to the following sentence, the Servicer shall make an advance of any
remaining shortfall (such amount, a "Precomputed Advance"). The Servicer will
be obligated to make a Precomputed Advance in respect of a Precomputed
Receivable only to the extent that the Servicer, in its sole discretion, shall
determine that the Precomputed Advance shall be recoverable from subsequent
collections or recoveries on any Precomputed Receivable. With respect to each
Precomputed Receivable, the Precomputed Advance shall increase Outstanding
Precomputed Advances. Outstanding Precomputed Advances shall be reduced by
subsequent payments by or on behalf of the Obligor, collections of Liquidation
Proceeds and payments of the Purchase Amount.
If the Servicer shall determine that an Outstanding Precomputed Advance
with respect to any Precomputed Receivable shall not be recoverable, the
Servicer shall be reimbursed from any collections made on other Receivables in
the Trust, and Outstanding Precomputed Advances with respect to such Precomputed
Receivable shall be reduced accordingly.
(b) As of the close of business on the last day of each Collection
Period, the Servicer shall advance an amount equal to the amount of interest due
on the Simple Interest Receivables at their respective APRs for the related
Collection Period (assuming the Simple Interest Receivables pay on their
respective due dates) minus the amount of interest actually received on the
Simple Interest Receivables during the related Collection Period (such amount, a
"Simple Interest Advance"). With respect to each Simple Interest Receivable,
the Simple Interest Advance shall increase Outstanding Simple Interest
Advances. If such calculation results in a negative number, an amount equal to
such negative number shall be paid to the Servicer and the amount of
Outstanding Simple Interest Advances shall be reduced by such amount. In
addition, in the event that a Simple Interest Receivable becomes a Liquidated
Receivable, Liquidation Proceeds with respect to a Simple Interest
Receivable attributable to accrued and unpaid interest thereon (but not
including interest for the then current Collection Period) shall be paid to the
Servicer to reduce Outstanding Simple Interest Advances, but only to the extent
of any Outstanding Simple Interest Advances. The Servicer shall not make any
advance in respect of principal of Simple Interest Receivables.
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If the Servicer shall determine that an Outstanding Simple Interest
Advance with respect to any Simple Interest Receivable shall not be recoverable,
the Servicer shall be reimbursed from any collections made on other Receivables
in the Trust, but only to the extent that such Outstanding Simple Interest
Advance represents accrued and unpaid interest on such Simple Interest
Receivable. Outstanding Simple Interest Advances with respect to such Simple
Interest Receivable shall be reduced by the amount of such reimbursement.
(c) In the event that an Obligor shall prepay a Receivable in full, if
the related contract did not require such Obligor to pay a full month's
interest, for the month of prepayment, at the APR, the Servicer shall make an
unreimbursable advance of the amount of such interest.
SECTION 4.05. Additional Deposits. (a) The Servicer shall deposit in
the Collection Account the aggregate Advances pursuant to Sections 4.4(a) and
(b) and the aggregate advances pursuant to Section 4.4(c). The Servicer and the
Seller shall deposit in the Collection Account the aggregate Purchase Amounts
with respect to Purchased Receivables and the Servicer shall deposit therein all
amounts to be paid under Section 9.1. All such deposits with respect to a
Collection Period shall be made, in immediately available funds, on the Business
Day preceding the Distribution Date (or, with the prior consent of the Rating
Agencies, on the Distribution Date) related to such Collection Period.
(b) The Indenture Trustee shall on the Distribution Date relating to
each Collection Period make withdrawals from the Reserve Account (i) first, in
an amount equal to the Reserve Account Release Amount, (ii) second, in an amount
equal to the amount (if positive) calculated by the Servicer pursuant to the
second sentence of Section 4.6(b), (iii) third, in an amount equal to the amount
(if positive) calculated by the Servicer pursuant to the third sentence of
Section 4.6(b) and (iv) fourth, in an amount equal to the amount (if positive)
calculated by the Servicer pursuant to the fourth sentence of Section 4.6(b),
and, in each case, shall deposit such funds into the Collection Account.
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SECTION 4.06. Distributions. (a) On each Distribution Date, the
Indenture Trustee shall cause to be made the following transfers and
distributions in the amounts set forth in the Servicer's Certificate for such
Distribution Date:
(i) From the Payahead Account, or from the Servicer in the
event the provisions of Section 4.1(e) above are applicable, to the
Collection Account, in immediately available funds, (x) the portion of
Payaheads constituting Scheduled Payments or prepayments in full,
required by Sections 4.3 and 4.4(a), and (y) the Payahead Balance, if
any, relating to any Purchased Receivable.
(ii) From the Collection Account to the Payahead Account, or to
the Servicer in the event the provisions of Section 4.1(e) above are
applicable, in immediately available funds, the aggregate Payaheads
required by Section 4.3 for the Collection Period related to such
Distribution Date.
(iii) From the Collection Account to the Servicer, in
immediately available funds, repayment of Outstanding Advances pursuant
to Sections 4.4(a) and (b).
(b) Prior to each Distribution Date, the Servicer shall on or before
each Determination Date calculate the Available Collections, the Reserve Account
Release Amount, the Available Funds, the Servicing Fee and all unpaid Servicing
Fees from prior Collection Periods, if any, the Accrued Class A Note Interest,
the First Priority Principal Distribution Amount, the Accrued Class B Note
Interest, the Second Priority Principal Distribution Amount, the Accrued Class C
Certificate Interest, the Accrued Class D Certificate Interest and the Regular
Principal Distribution Amount. In addition, the Servicer shall calculate on or
before each Determination Date the difference, if any, between the Total
Required Payment and the Available Funds and, pursuant to Section 4.5(b), the
Indenture Trustee shall withdraw funds from the Reserve Account in the amount of
such difference (if positive). On or before the Determination Date immediately
preceding the Final Scheduled Distribution Date with respect to any Class of
Notes or either Class of Certificates, the Servicer shall calculate the
difference, if any, between (i) the
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amount required to pay such Class of Notes or such Class of Certificates in
full in accordance with the priorities set forth in Sections 4.6(c) and (d),
and (ii) the sum of the Available Funds plus the amount withdrawn from the
Reserve Account in accordance with the preceding sentence, and pursuant to
Section 4.5(b), the Indenture Trustee shall withdraw funds from the Reserve
Account in the amount of such difference (if positive). The Servicer also
shall calculate, on or before each Determination Date, (i) the sum of the
Available Funds plus the amounts withdrawn from the Reserve Account in
accordance with the two immediately preceding sentences plus the amount
remaining on deposit in the Reserve Account after the withdrawal of such
amounts, and (ii) the amount required to pay the Servicing Fee and principal
and interest of each Class of Notes and Certificates in full in accordance with
the priorities set forth in Sections 4.6(c) and (d), and, if the amount
determined pursuant to clause (i) of this sentence is greater than the amount
determined pursuant to clause (ii) of this sentence, the Indenture Trustee,
pursuant to Section 4.5(b), shall withdraw funds from the Reserve Account in an
amount which is, together with Available Funds and the amounts withdrawn from
the Reserve Account in accordance with the two immediately preceding sentences,
sufficient to pay the amount specified in clause (ii) of this sentence.
(c) On each Distribution Date, the Servicer shall instruct the
Indenture Trustee (based on the information contained in the Servicer's
Certificate delivered on or before the related Determination Date pursuant to
Section 3.9), to make the following withdrawals from the Collection Account and
make deposits, distributions and payments, to the extent of funds on deposit in
the Collection Account with respect to the Collection Period preceding such
Distribution Date (including funds, if any, deposited therein from the Reserve
Account pursuant to Section 4.5(b) and from the Payahead Account pursuant to
this Section 4.6), in the following order of priority:
(i) first, to the Servicer, the Servicing Fee and all unpaid
Servicing Fees from prior Collection Periods;
(ii) second, to the Noteholders of Class A Notes, the Accrued
Class A Note Interest; provided that if there are not sufficient funds
available to pay the entire amount of the Accrued Class A Note
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Interest, the amounts available shall be applied to the payment of
such interest on the Class A Notes on a pro rata basis;
(iii) third, to the Principal Distribution Account, the First
Priority Principal Distribution Amount;
(iv) fourth, to the Noteholders of Class B Notes, the Accrued
Class B Note Interest; provided that if there are not sufficient funds
available to pay the entire amount of the Accrued Class B Note
Interest, the amounts available shall be applied to the payment of such
interest on the Class B Notes on a pro rata basis;
(v) fifth, to the Principal Distribution Account, the Second
Priority Principal Distribution Amount;
(vi) sixth, to the Certificate Interest Distribution Account,
the Accrued Class C Certificate Interest;
(vii) seventh, to the Certificate Interest Distribution
Account, the Accrued Class D Certificate Interest.
(viii) eighth, to the Reserve Account, the amount, if any,
required to reinstate the amount in the Reserve Account up to the
Specified Reserve Balance;
(ix) ninth, to the Principal Distribution Account, the Regular
Principal Distribution Amount; and
(x) tenth, to the Seller, any funds remaining on deposit in the
Collection Account with respect to the Collection Period preceding such
Distribution Date.
Notwithstanding the foregoing, (A) following the occurrence and during
the continuation of an Event of Default specified in Section 5.1(i) or (ii) of
the Indenture or an Insolvency Event with respect to the Issuer, in each case
which has resulted in an acceleration of the
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Notes, or following an Insolvency Event or a dissolution with respect to the
Seller or the General Partner, the Servicer shall instruct the Indenture
Trustee to transfer the funds on deposit in the Collection Account remaining
after the application of clauses (i) and (ii) above to the Principal
Distribution Account to the extent necessary to reduce the principal amount of
all the Notes to zero, (B) following the occurrence and during the continuation
of any other Event of Default, which has resulted in an acceleration of the
Notes, the Servicer shall instruct the Indenture Trustee to transfer the funds
on deposit in the Collection Account remaining after the application of clauses
(i), (ii), (iii) and (iv) above to the Principal Distribution Account to the
extent necessary to reduce the principal amount of all the Notes to zero, and
(C) in the case of an event described in clause (A) or (B), the
Certificateholders will not receive any distributions of principal or interest
until the principal amount and accrued interest on all the Notes has been paid
in full.
(d) On each Distribution Date, the Servicer shall instruct the
Indenture Trustee (based on the information contained in the Servicer's
Certificate delivered on or before the related Determination Date pursuant to
Section 3.9), to withdraw the funds on deposit in the Principal Distribution
Account with respect to the Collection Period preceding such Distribution Date
and make distributions and payments in the following order of priority:
(i) first, to the Noteholders of the Class A-1 Notes in
reduction of principal until the principal amount of the outstanding
Class A-1 Notes has been paid in full; provided that if there are not
sufficient funds available to pay the principal amount of the
outstanding Class A-1 Notes in full, the amounts available shall be
applied to the payment of principal on the Class A-1 Notes on a pro
rata basis;
(ii) second, to the Noteholders of the Class A-2 Notes in
reduction of principal until the principal amount of the outstanding
Class A-2 Notes has been paid in full; provided that if there are not
sufficient funds available to pay the principal amount of the
outstanding Class A-2 Notes in full, the amounts available shall be
applied to the payment of principal on the Class A-2 Notes on a pro
rata basis;
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(iii) third, to the Noteholders of the Class A-3 Notes in
reduction of principal until the principal amount of the outstanding
Class A-3 Notes has been paid in full; provided that if there are not
sufficient funds available to pay the principal amount of the
outstanding Class A-3 Notes in full, the amounts available shall be
applied to the payment of principal on the Class A-3 Notes on a pro
rata basis;
(iv) fourth, to the Noteholders of the Class A-4 Notes in
reduction of principal until the principal amount of the outstanding
Class A-4 Notes has been paid in full; provided that if there are not
sufficient funds available to pay the principal amount of the
outstanding Class A-4 Notes in full, the amounts available shall be
applied to the payment of principal on the Class A-4 Notes on a pro
rata basis;
(v) fifth, to the Noteholders of the Class A-5 Notes in
reduction of principal until the principal amount of the outstanding
Class A-5 Notes has been paid in full; provided that if there are not
sufficient funds available to pay the principal amount of the
outstanding Class A-5 Notes in full, the amounts available shall be
applied to the payment of principal on the Class A-5 Notes on a pro
rata basis;
(vi) sixth, to the Noteholders of the Class B Notes in reduction
of principal until the principal amount of the outstanding Class B
Notes has been paid in full; provided that if there are not sufficient
funds available to pay the principal amount of the outstanding Class B
Notes in full, the amounts available shall be applied to the payment of
principal on the Class B Notes on a pro rata basis;
(vii) seventh, to the Certificate Principal Distribution
Account, in reduction of the Certificate Balance of the Class C
Certificates, until the Certificate Balance of the Class C Certificates
has been reduced to zero;
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(viii) eighth, to the Certificate Principal Distribution
Account, in reduction of the Certificate Balance of the Class D
Certificates, until the Certificate Balance of the Class D Certificates
has been reduced to zero; and
(ix) ninth, to the Seller, any funds remaining on deposit in the
Principal Distribution Account.
SECTION 4.07. Reserve Account. (a) (i) The Seller shall, prior to the
Closing Date, establish and maintain an account in the name "The Chase Manhattan
Bank as Indenture Trustee, as secured party from Ford Credit Auto Owner Trust
1998-C" at a Qualified Institution or Qualified Trust Institution (which shall
initially be the corporate trust department of The Chase Manhattan Bank), which
shall be designated as the "Reserve Account" (the Reserve Account, together with
the Collection Account (including the Principal Distribution Account), the
"Trust Accounts"). The Reserve Account shall be under the sole dominion and
control of the Indenture Trustee; provided, that the Servicer may make deposits
to the Reserve Account in accordance with the Basic Documents. The Reserve
Account will be established and maintained pursuant to an account agreement
which specifies New York law as the governing law. In addition, the Reserve
Account shall be established and maintained at a Qualified Institution or
Qualified Trust Institution which agrees in writing that for so long as the
Notes are outstanding it will comply with entitlement orders (as defined in
Article 8 of the UCC) originated by the Indenture Trustee without further
consent of the Issuer. 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. The Reserve Account and all amounts,
securities, investments, financial assets and other property deposited in or
credited to the Reserve Account (such amounts, the "Reserve Account Property")
shall be held by the Indenture Trustee as secured party for the benefit of the
Noteholders and, after payment in full of the Notes, as agent of the Owner
Trustee and as part of the Trust Property, and all deposits to and withdrawals
from therefrom shall be made only upon the terms and conditions of the Basic
Documents.
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The Reserve Account Property shall, to the extent permitted by
applicable law, rules and regulations, be invested, as directed in writing by
the Seller, by the bank or trust company then maintaining the Reserve Account in
Permitted Investments that mature not later than the Business Day preceding the
next Distribution Date, and such Permitted Investments shall be held to
maturity. All interest and other income (net of losses and investment expenses)
on funds on deposit in the Reserve Account shall be deposited therein. In the
event the Reserve Account is no longer to be maintained at the corporate trust
department of The Chase Manhattan Bank, the Servicer shall, with the Indenture
Trustee's or Owner Trustee's assistance as necessary, cause the Reserve Account
to be moved to a Qualified Institution or a Qualified Trust Institution within
ten (10) Business Days (or such longer period not to exceed thirty (30) calendar
days as to which each Rating Agency may consent).
(ii) With respect to Reserve Account Property:
(A) any Reserve Account Property that is a "financial
asset" as defined in Section 8-102(a)(9) of the UCC shall
be physically delivered to, or credited to an account in
the name of, the Qualified Institution or Qualified Trust
Institution maintaining the Reserve Account in accordance
with such institution's customary procedures such that
such institution establishes a "securities entitlement" in
favor of the Indenture Trustee with respect thereto; and
(B) 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 and 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.
(iii) Except for any deposit accounts specified in clause
(ii)(B) above, the Reserve Account shall only be invested in securities
or in other assets
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which the Qualified Institution or Qualified Trust Institution
maintaining the Reserve Account agrees to treat as "financial assets"
as defined in Section 8-102(a)(9) of the UCC.
(b) If the Servicer pursuant to Section 4.4 determines on or before any
Determination Date that it is required to make an Advance and does not do so
from its own funds, the Servicer shall promptly instruct the Indenture Trustee
in writing to withdraw funds, in an amount specified by the Servicer, from the
Reserve Account and deposit them in the Collection Account to cover any
shortfall. Such payment shall be deemed to have been made by the Servicer
pursuant to Section 4.4 for purposes of making distributions pursuant to this
Agreement, but shall not otherwise satisfy the Servicer's obligation to deliver
the amount of the Advances to the Indenture Trustee, and the Servicer shall
within two Business Days replace any funds in the Reserve Account so used.
(c) Following the payment in full of the aggregate principal amount of
the Notes and the Aggregate 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 4.08. Net Deposits. For so long as (i) Ford Credit shall be
the Servicer, (ii) the Servicer shall be entitled pursuant to Section 4.2 to
remit collections on a monthly basis rather than within two Business Days of
receipt, and (iii) the Servicer shall be entitled pursuant to Section 4.1(e) to
retain Payaheads rather than deposit them in the Payahead Account, Ford Credit
may make the remittances pursuant to Sections 4.2 and 4.5 above, net of amounts
to be distributed to Ford Credit pursuant to Section 4.6(c). Nonetheless, the
Servicer shall account for all of the above described remittances and
distributions except for the Supplemental Servicing Fee in the Servicer's
Certificate as if the amounts were deposited and/or transferred separately.
SECTION 4.09. 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)
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for the Indenture Trustee to forward to each Noteholder of record as of the
most recent Record Date and to the Owner Trustee (with copies to the Rating
Agencies and to each Certificate Paying Agent) for the Owner Trustee to forward
to each Certificateholder of record as of the most recent Record Date a
statement based on information in the Servicer's Certificate furnished pursuant
to Section 3.9, setting forth for the Collection Period relating to such
Distribution Date the following information as to the Notes and the
Certificates to the extent applicable:
(i) the amount of such distribution allocable to principal
allocable to the Notes and to the Certificates;
(ii) the amount of such distribution allocable to interest
allocable to the Notes and the Certificates;
(iii) the amount of such distribution allocable to draws from
the Reserve Account, if any;
(iv) the Pool Balance as of the close of business on the last
day of the preceding Collection Period;
(v) the Specified Overcollateralization Amount and the
Specified Credit Enhancement Amount as of such Distribution Date;
(vi) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period and the amount of any unpaid
Servicing Fees and the change in such amount from that of the prior
Distribution Date;
(vii) the amounts of the Noteholders' Interest Carryover
Shortfall and the Certificateholders' Interest Carryover Shortfall, if
any, on such Distribution Date and the change in such amounts from the
preceding Distribution Date;
(viii) the aggregate outstanding principal amount of each Class
of Notes, the Note Pool Factor for each Class of Notes, the Certificate
Balance of
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each Class of Certificates and the Certificate Pool Factor for each
Class of Certificates as of such Distribution Date;
(ix) the balance of the Reserve Account on such Distribution
Date, after giving effect to distributions made on such Distribution
Date and the change in such balance from the preceding Distribution
Date;
(x) the amount of the aggregate Realized Losses, if any, with
respect to the related Collection Period;
(xi) the aggregate Purchase Amount of Receivables repurchased
by the Seller or purchased by the Servicer, if any, with respect to the
related Collection Period; and
(xii) the amount of Advances, if any, on such Distribution Date
(stating separately the amount of Precomputed Advances and Simple
Interest Advances).
Each amount set forth on the Distribution Date statement pursuant to
clauses (i), (ii), (vi) or (vii) above shall be expressed as a dollar amount per
$1,000 of original principal amount or original Certificate Balance of a Note or
a Certificate, as applicable.
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ARTICLE V
[Intentionally Omitted]
ARTICLE VI
THE SELLER
SECTION 6.1. Representations and Warranties of Seller. The
Seller makes the following representations and warranties on which the Issuer
is deemed to have relied in acquiring the Trust Property. The representations
and warranties speak as of the execution and delivery of this Agreement and
shall survive the conveyance of the Trust Property to the Issuer and the pledge
thereof by the Issuer to the Indenture Trustee pursuant to the Indenture:
(a) Organization and Good Standing. The Seller shall have been duly
organized and shall be validly existing as a limited partnership in good
standing under the laws of the State of Delaware, with power and authority to
own its properties and to conduct its business as such properties shall be
currently owned and such business is presently conducted, and had at all
relevant times, and shall have, power, authority, and legal right to acquire
and own the Receivables.
(b) Due Qualification. The Seller shall be duly qualified to do
business as a foreign limited partnership in good standing, and shall have
obtained all necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall require
such qualifications.
(c) Power and Authority. The Seller shall have the power and
authority to execute and deliver this Agreement and the other Basic Documents
to which it is a party and to carry out their terms. The Seller shall have
full power and authority to convey and assign the property to be conveyed and
assigned to and deposited with the Issuer and has duly authorized such
conveyance and assignment to the Issuer by all necessary action; and
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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 Conveyance; Binding Obligation. This Agreement shall
evidence a valid transfer, assignment and conveyance of the Receivables and the
other Trust Property conveyed by the Seller to the Issuer hereunder,
enforceable against creditors of and purchasers from the Seller; and this
Agreement and the other Basic Documents to which the Seller is a party
constitute legal, valid, and binding obligations of the Seller, enforceable
against the Seller in accordance with their terms, subject, as to
enforceability, to applicable bankruptcy, insolvency, reorganization,
conservatorship, receivership, liquidation and other similar laws and to
general equitable principles.
(e) No Violation. The consummation of the transactions contemplated
by this Agreement and the other Basic Documents to which the Seller is a party
and the fulfillment of the terms hereof and thereof will not conflict with,
result in any breach of any of the terms and provisions of, nor constitute
(with or without notice or lapse of time or both) a default under, the
Certificate of Limited Partnership or Limited Partnership Agreement, any
indenture, agreement, or other instrument to which the Seller is a party or by
which the Seller is bound; nor result in the creation or imposition of any lien
upon any of its properties pursuant to the terms of any such indenture,
agreement, or other instrument; nor violate any law or, to the best of the
Seller's knowledge, any order, rule, or regulation applicable to the Seller of
any federal or State regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over the Seller or its
properties.
(f) No Proceedings. To the Seller's best knowledge, there are no
proceedings or investigations pending, or threatened, before any court,
regulatory body, administrative agency, or other governmental instrumentality
having jurisdiction over the Seller or its properties: (i) asserting the
invalidity of this Agreement, the Indenture, any of the other Basic Documents,
the Notes or the Certificates, (ii) seeking to prevent the issuance of the
Notes or the Certificates or the con-
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summation of any of the transactions contemplated by this Agreement, the
Indenture or any of the other Basic Documents, (iii) seeking any determination
or ruling that might materially and adversely affect the performance by the
Seller of its obligations under, or the validity or enforceability of, this
Agreement, the Indenture, any of the other Basic Documents, the Notes or the
Certificates, or (iv) relating to the Seller and which might adversely affect
the federal or Applicable Tax State income, excise, franchise or similar tax
attributes of the Notes or the Certificates.
SECTION 6.02. Liability of Seller; Indemnities. The Seller shall be
liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Seller under this Agreement, and hereby agrees
to the following:
(a) The Seller shall indemnify, defend, and hold harmless the Issuer,
the Owner Trustee and the Indenture Trustee from and against any taxes that may
at any time be asserted against any such Person with respect to, and as of the
date of, the conveyance of the Receivables to the Issuer or the issuance and
original sale of the Notes and the Certificates, including any sales, gross
receipts, general corporation, tangible personal property, privilege, or
license taxes (but, in the case of the Issuer, not including any taxes asserted
with respect to ownership of the Receivables or federal or other Applicable Tax
State income taxes arising out of the transactions contemplated by this
Agreement and the other Basic Documents) and costs and expenses in defending
against the same.
(b) The Seller shall indemnify, defend, and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders from and against any loss, liability or expense incurred by
reason of (i) the Seller's willful misfeasance, bad faith, or negligence (other
than errors in judgment) in the performance of its duties under this Agreement,
or by reason of reckless disregard of its obligations and duties under this
Agreement and (ii) the Seller's violation of federal or State securities laws
in connection with the registration or the sale of the Notes or the
Certificates.
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(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 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 6.03. 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
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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 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 6.04. 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 6.05. Seller May Own Notes or Certificates. The Seller, and
any Affiliate of the Seller, may
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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 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 7.01. Representations of Servicer. The Servicer makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Trust Property. The representations speak as of the execution
and delivery of this Agreement and shall survive the conveyance of the Trust
Property to the Issuer and the pledge thereof by the Issuer pursuant to the
Indenture:
(a) Organization and Good Standing. The Servicer shall have been duly
organized and shall be validly existing as a corporation in good standing under
the laws of the State of its incorporation, with power and authority to own its
properties and to conduct its business as such properties shall be currently
owned and such business is presently conducted, and had at all relevant times,
and shall have, power, authority, and legal right to acquire, own, sell, and
service the Receivables and to hold the Receivable Files as custodian on behalf
of the Issuer and the Indenture Trustee.
(b) Due Qualification. The Servicer shall be duly qualified to do
business as a foreign corporation in good standing, and shall have obtained all
necessary licenses and approvals in all jurisdictions in which the ownership or
lease of property or the conduct of its business (including the servicing of
the Receivables as required by this Agreement) shall require such
qualifications.
(c) Power and Authority. The Servicer shall have the power and
authority to execute and deliver this Agreement and the other Basic Documents
to which it is a party and to carry out their terms, and the execution,
delivery and performance of this Agreement and the other Basic Documents to
which it is a party shall have been duly authorized by the Servicer by all
necessary corporate action.
(d) Binding Obligation. This Agreement and the other Basic Documents
to which the Servicer is a party constitute legal, valid, and binding
obligations of the Servicer, enforceable against the Servicer in accor-
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dance 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 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.
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SECTION 7.02. Indemnities of Servicer. The Servicer shall be liable
in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement, and hereby agrees to the
following:
(a) The Servicer shall defend, indemnify and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee, the Noteholders, the
Certificateholders and the Seller from and against any and all costs, expenses,
losses, damages, claims and liabilities, arising out of or resulting from the
use, ownership or operation by the Servicer or any Affiliate thereof of a
Financed Vehicle.
(b) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee and the Indenture Trustee from and against any taxes that may
at any time be asserted against any such Person with respect to the
transactions contemplated herein or in the other Basic Documents, if any,
including, without limitation, any sales, gross receipts, general corporation,
tangible personal property, privilege, or license taxes (but, in the case of
the Issuer, not including any taxes asserted with respect to, and as of the
date of, the conveyance of the Receivables to the Issuer or the issuance and
original sale of the Notes and the Certificates, or asserted with respect to
ownership of the Receivables, or federal or other Applicable Tax State income
taxes arising out of the transactions contemplated by this Agreement and the
other Basic Documents) and costs and expenses in defending against the same.
(c) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee, the Noteholders, the
Certificateholders and the Seller from and against any and all costs, expenses,
losses, claims, damages, and liabilities to the extent that such cost, expense,
loss, claim, damage, or liability arose out of, or was imposed upon any such
Person through, the negligence, willful misfeasance, or bad faith (other than
errors in judgment) of the Servicer in the performance of its duties under this
Agreement or any other Basic Document to which it is a party, or by reason of
reckless disregard of its obligations and duties under this Agreement or any
other Basic Document to which it is a party.
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(d) The Servicer shall indemnify, defend, and hold harmless the Owner
Trustee and the Indenture Trustee, as applicable, from and against all costs,
expenses, losses, claims, damages, and liabilities arising out of or incurred
in connection with the acceptance or performance of the trusts and duties
contained herein and in the other Basic Documents, if any, except to the extent
that such cost, expense, loss, claim, damage, or liability: (i) shall be due
to the willful misfeasance, bad faith, or negligence (except for errors in
judgment) of the Owner Trustee or the Indenture Trustee, as applicable; (ii)
relates to any tax other than the taxes with respect to which either the Seller
or the Servicer shall be required to indemnify the Owner Trustee or the
Indenture Trustee, as applicable; (iii) in the case of the Owner Trustee, shall
arise from the Owner Trustee's breach of any of its representations or
warranties set forth in Section 7.3 of the Trust Agreement or, in the case of
the Indenture Trustee, from the Indenture Trustee's breach of any of its
representations or warranties set forth in the Indenture; or (iv) in the case
of the Indenture Trustee, shall arise out of or be incurred in connection with
the performance by the Indenture Trustee of the duties of a successor Servicer
hereunder.
For purposes of this Section 7.2, in the event of the termination of
the rights and obligations of Ford Credit (or any successor thereto pursuant to
Section 8.2) as Servicer pursuant to Section 8.1, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to continue
to be the Servicer pending appointment of a successor Servicer (other than the
Indenture Trustee) pursuant to Section 8.2.
Indemnification under this Section 7.2 by Ford Credit (or any successor
thereto pursuant to Section 8.2) as Servicer, with respect to the period such
Person was (or was deemed to be) the Servicer, shall survive the termination of
such Person as Servicer or a resignation by such Person as Servicer as well as
the termination of this Agreement or the resignation or removal of the Owner
Trustee or the Indenture Trustee and shall include reasonable fees and expenses
of counsel and expenses of litigation. If the Servicer shall have made any
indemni-
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ty 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 7.03. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer. Any Person (i) into which the Servicer may be merged
or consolidated, (ii) resulting from any merger, conversion, or consolidation
to which the Servicer shall be a party, (iii) succeeding to the business of the
Servicer, or (iv) so long as Ford Credit acts as Servicer, any corporation more
than 50% of the voting stock of which is owned directly or indirectly by Ford
Motor Company, which Person in any of the foregoing cases executes an agreement
of assumption to perform every obligation of the Servicer under this Agreement,
will be the successor to the Servicer under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties to this Agreement; provided, however, that (x) the Servicer shall have
delivered to the Owner Trustee and the Indenture Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such merger,
conversion, consolidation, or succession and such agreement of assumption
comply with this Section 7.3 and that all conditions precedent provided for in
this Agreement relating to such transaction have been complied with and (y) the
Servicer shall have delivered to the Owner Trustee and the Indenture Trustee an
Opinion of Counsel either (A) stating that, in the opinion of such counsel, all
financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary fully to preserve and protect the
interest of the Issuer and the Indenture Trustee, respectively, in the
Receivables, and reciting the details of such filings, or (B) stating that, in
the opinion of such counsel, no such action shall be necessary to preserve and
protect such interests. The Servicer shall provide notice of any merger,
conversion, consolidation or succession pursuant to this Section 7.3 to the
Rating Agencies. Notwithstanding anything herein to the contrary, the
execution of the foregoing agreement or assumption and compliance with clauses
(x) and (y) above shall be conditions to the consummation of the transactions
referred to in clauses (i), (ii), or (iii) above.
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SECTION 7.04. Limitation on Liability of Servicer and Others. (a)
Neither the Servicer nor any of the directors or officers or employees or
agents of the Servicer shall be under any liability to the Issuer, the
Noteholders or the Certificateholders, except as provided under this Agreement,
for any action taken or for 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 of
the Seller 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.
SECTION 7.05. 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
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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 7.06. 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 7.07. Servicer May Own Notes or Certificates. The Servicer,
and any Affiliate of the Servicer, may, in its individual or any other
capacity, become the owner or pledgee of Notes or Certificates with the same
rights as it would have if it were not the Servicer or an Affiliate thereof,
except as otherwise expressly provided herein or in the other Basic Documents.
Except as set forth herein or in the other Basic Documents, Notes and
Certificates so owned by or pledged to the Servicer or such Affiliate shall
have an equal and proportionate benefit under the provisions of this Agreement,
without preference, priority or distinction as among all of the Notes and
Certificates.
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ARTICLE VIII
SERVICING TERMINATION
SECTION 8.01. 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
Aggregate Certificate Balance; or
(iii) The entry of a decree or order by a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver, or liquidator for the Servicer
or the Seller in any insolvency, readjustment of debt, marshalling of
assets and liabilities, or similar proceedings, or for the winding up
or
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liquidation of its respective affairs, and the continuance of any such
decree or order unstayed and in effect for a period of sixty (60)
consecutive days; or
(iv) The consent by the Servicer or the Seller to the
appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings of or relating to the Servicer of
or relating to substantially all of its property; or the Servicer
shall admit in writing its inability to pay its debts generally as
they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntary suspend payment of its
obligations;
then the Indenture Trustee shall promptly notify each Rating Agency, 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 respon-
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sibilities and rights of the predecessor Servicer under this Agreement,
including the transfer to the Indenture Trustee or such successor Servicer for
administration of all cash amounts that shall at the time be held by the
predecessor Servicer for deposit, or shall thereafter be received with respect
to a Receivable and the delivery of the Receivable Files and the related
accounts and records maintained by the Servicer. All reasonable costs and
expenses (including attorneys' fees) incurred in connection with transferring
the Receivable Files to the successor Servicer and amending this Agreement to
reflect such succession as Servicer pursuant to this Section 8.1 shall be paid
by the predecessor Servicer upon presentation of reasonable documentation of
such costs and expenses.
SECTION 8.02. 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 (with a copy to each Rating Agency). 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, if it
shall be legally unable so to act, shall appoint, or petition a court of
competent
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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.
(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 8.03. 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 8.04. 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 8.05. 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 Aggregate Certificate Balance (in
the case of an Event of Servicing
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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, either Certificate Distribution Account or the
Payahead Account in accordance with this Agreement. Upon any such waiver of a
past Event of Servicing Termination, such Event of Servicing Termination shall
cease to exist, and shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other event
or impair any right consequent thereon. The Issuer shall provide written
notice of any such waiver to the Rating Agencies.
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ARTICLE IX
TERMINATION
SECTION 9.01. Optional Purchase of All Receivables. On the last day
of any Collection Period as of which the Pool Factor shall be less than the
Optional Purchase Percentage, the Servicer shall have the option to purchase
the corpus of the Trust. To exercise such option, the Servicer shall deposit
pursuant to Section 4.5 in the Collection Account an amount equal to the
aggregate Purchase Amount for the Receivables, plus the appraised value of any
other property held by the Trust, such value to be determined by an appraiser
mutually agreed upon by the Servicer, the Owner Trustee and the Indenture
Trustee, and shall succeed to all interests in and to the Trust.
Notwithstanding the foregoing, the Servicer shall not be permitted to exercise
such option unless the amount to be deposited in the Collection Account
pursuant to the preceding sentence is greater than or equal to the sum of the
outstanding principal amount of the Notes and the Aggregate 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 9.02. Succession Upon Satisfaction and Discharge of Indenture.
Following the satisfaction and discharge of the Indenture and the payment in
full of the principal of and interest on the Notes, to the extent permitted by
applicable law, the Indenture Trustee will continue to carry out its
obligations hereunder as agent for the Owner Trustee, including without
limitation making distributions from the Payahead Account and the Collection
Account in accordance with Section 4.6 and making withdrawals from the Reserve
Account in accordance with Section 4.5(b) and Section 4.7.
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ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment. (a) This Agreement may be amended by the
Seller, the Servicer and the Issuer, with the consent of the Indenture Trustee
and the Owner Trustee to the extent that their respective rights or obligations
may be affected thereby (which consent may not be unreasonably withheld), but
without the consent of any of the Noteholders or the Certificateholders, to
cure any ambiguity, to correct or supplement any provisions in this Agreement,
or to add any other provisions with respect to matters or questions arising
under this Agreement that shall not be inconsistent with the provisions of this
Agreement; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel delivered to the Owner Trustee and the Indenture Trustee,
adversely affect in any material respect the interests of any Noteholder or
Certificateholder; and provided further that such action shall not, as
evidenced by an Opinion of Counsel, cause the Issuer to be characterized for
federal or any then Applicable Tax State income tax purposes as an association
taxable as a corporation.
(b) This Agreement may also be amended from time to time by the
Seller, the Servicer and the Issuer, with the consent of the Indenture Trustee
and the Owner Trustee to the extent that their respective rights or obligations
may be affected thereby (which consent may not be unreasonably withheld) and
with the consent of (i) the Noteholders of Notes evidencing not less than a
majority of the principal amount of the Notes Outstanding and (ii) the
Certificateholders of Certificates evidencing not less than a majority of the
Aggregate 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
56
<PAGE> 61
the provisions of this Agreement, or of modifying in any manner the rights of
the Noteholders or the Certificateholders; provided, however, that no such
amendment shall (A) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, or change the allocation or priority of,
collections of payments on Receivables or distributions that shall be required
to be made on any Note or Certificate or change any Note Interest Rate or any
Certificate Rate or, without the prior consent of the Rating Agencies, 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; and provided further that such action shall not, as evidenced by an
Opinion of Counsel, cause the Issuer to be characterized for federal or any
then Applicable Tax State income tax purposes as an association taxable as a
corporation.
(c) Prior to the execution of any such amendment or consent the
Servicer will provide, and the Owner Trustee shall distribute, written
notification of the substance of such amendment or consent to each Rating
Agency.
(d) Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee and each
Rating Agency. It shall not be necessary for the consent of Noteholders or the
Certificateholders pursuant to this Section 10.1 to approve the particular form
of any proposed amendment or consent, but it shall be sufficient if such
consent shall approve the substance thereof. The manner of obtaining such
consents (and any other consents of Noteholders and Certificateholders provided
for in this Agreement) and of evidencing the authorization of the execution
thereof by Noteholders and Certificateholders shall be subject to such
reasonable requirements as the Owner Trustee and the Indenture Trustee may
prescribe, including the establishment of record dates pursuant to paragraph
number 2 of the Note Depository Agreement.
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<PAGE> 62
(e) Prior to the execution of any amendment to this Agreement, the
Owner Trustee and the Indenture Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and the Opinion of Counsel referred
to in Section 10.2(i)(1). The Owner Trustee or the Indenture Trustee may, but
shall not be obligated to, enter into any such amendment which affects such
Owner Trustee's or Indenture Trustee's own rights, duties or immunities under
this Agreement or otherwise.
SECTION 10.02. Protection of Title to Trust. (a) The Seller shall
execute and file such financing statements and cause to be executed and filed
such continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain, and protect the interest of the
Issuer and the Indenture Trustee for the benefit of the Noteholders in the
Receivables and in the proceeds thereof. The Seller shall deliver (or cause to
be delivered) to the Owner Trustee and the Indenture Trustee file-stamped
copies of, or filing receipts for, any document filed as provided above, as
soon as available following such filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity, or corporate structure in any manner that would, could, or might make
any financing statement or continuation statement filed by the Seller in
accordance with paragraph (a) above seriously misleading within the meaning of
Section 9-402(7) of the UCC, unless it shall have given the Owner Trustee and
the Indenture Trustee at least five (5) days' prior written notice thereof,
with a copy to the Rating Agencies, and shall have promptly filed appropriate
amendments to all previously filed financing statements or continuation
statements.
(c) The Seller and the Servicer shall give the Owner Trustee and the
Indenture Trustee at least sixty (60) days' prior written notice of any
relocation of its principal executive office if, as a result of such
relocation, the applicable provisions of the UCC would require the filing of
any amendment of any previously filed financing or continuation statement or of
any new financing statement and shall promptly file any such amendment or new
financing statement. The Servicer shall at all
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<PAGE> 63
times maintain each office from which it shall service Receivables, and its
principal executive office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection
Account, the Payahead Account and the Reserve Account in respect of such
Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of conveyance under this Agreement of the Receivables to the
Issuer, the Servicer's master computer records (including any back-up archives)
that refer to a Receivable shall indicate clearly the interest of the Issuer
and the Indenture Trustee in such Receivable and that such Receivable is owned
by the Issuer and has been pledged to the Indenture Trustee pursuant to the
Indenture. Indication of the Issuer's and the Indenture Trustee's interest in
a Receivable shall be deleted from or modified on the Servicer's computer
systems when, and only when, the Receivable shall have been paid in full or
repurchased.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender, or other transferee, the
Servicer shall give to such prospective purchaser, lender, or other transferee
computer tapes, records, or print-outs (including any restored from back-up
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been conveyed to and is owned
by the Issuer and has been pledged to the Indenture Trustee.
(g) The Servicer shall permit the Owner Trustee, the Indenture Trustee
and their respective agents at any time during normal business hours to
inspect, audit, and make copies of and to obtain abstracts from the Servicer's
records regarding any Receivable.
59
<PAGE> 64
(h) Upon request, the Servicer shall furnish to the Owner Trustee and
the Indenture Trustee, within twenty (20) Business Days, a list of all
Receivables (by contract number and name of Obligor) then held as part of the
Trust, together with a reconciliation of such list to the Schedule of
Receivables and to each of the Servicer's Certificates furnished before such
request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee and the Indenture
Trustee:
(1) promptly after the execution and delivery of this
Agreement and of each amendment thereto, an Opinion of Counsel either
(A) stating that, in the opinion of such Counsel, all financing
statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the
Issuer and the Indenture Trustee in the Receivables, and reciting the
details of such filings or referring to prior Opinions of Counsel in
which such details are given, or (B) stating that, in the opinion of
such Counsel, no such action shall be necessary to preserve and
protect such interest; and
(2) within 120 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three
months after the Cutoff Date, an Opinion of Counsel, dated as of a
date during such 120-day period, either (A) stating that, in the
opinion of such counsel, all financing statements and continuation
statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Issuer and the Indenture
Trustee in the Receivables, and reciting the details of such filings
or referring to prior Opinions of Counsel in which such details are
given, or (B) stating that, in the opinion of such Counsel, no such
action shall be necessary to preserve and protect such interest.
60
<PAGE> 65
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.
(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 10.03. 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 10.04. 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,
(e) in the case of Standard & Poor's Ratings Services, at the following
address: Standard & Poor's Ratings Services, 25 Broadway, 20th Floor, New
York, New York 10004, Attention: Asset Backed Surveillance Department and (f)
in the case of Fitch IBCA, Inc., at the following address: Fitch IBCA, Inc.,
1201
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<PAGE> 66
East 7th Street, Powell, Wyoming 82435, Attention: Asset Backed Surveillance.
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 10.05. Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the Notes,
the Certificates or the rights of the holders thereof.
SECTION 10.06. 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 Aggregate Certificate Balance.
SECTION 10.07. 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.
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<PAGE> 67
SECTION 10.08. 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 10.09. Third-Party Beneficiaries. This Agreement will inure
to the benefit of and be binding upon the parties hereto, the Noteholders, the
Certificateholders, and their respective successors and permitted assigns.
Except as otherwise provided in this Article X, no other Person will have any
right or obligation hereunder. The parties hereto hereby acknowledge and
consent to the pledge of this Agreement by the Issuer to the Indenture Trustee
for the benefit of the Noteholders pursuant to the Indenture.
SECTION 10.10. Actions by Noteholders or Certificateholders. (a)
Wherever in this Agreement a provision is made that an action may be taken or a
notice, demand, or instruction given by Noteholders or Certificateholders, such
action, notice, or instruction may be taken or given by any Noteholder or
Certificateholder, as applicable, unless such provision requires a specific
percentage of Noteholders or Certificateholders.
(b) Any request, demand, authorization, direction, notice, consent,
waiver, or other act by a Noteholder or Certificateholder shall bind such
Noteholder or Certificateholder and every subsequent holder of such Note or
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done or omitted to be done
by the Owner Trustee, the Indenture Trustee or the Servicer in reliance
thereon, whether or not notation of such action is made upon such Note or
Certificate.
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<PAGE> 68
SECTION 10.11. Agent for Service. The agent for service of the Seller
and the Servicer in respect of this Agreement shall be Hurley D. Smith,
Secretary, 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
Trust Agreement or the Indenture Trustee under the Indenture or the termination
of this Agreement.
SECTION 10.13. Limitation of Liability of Owner Trustee and Indenture
Trustee. (a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by PNC Bank, Delaware not in its individual
capacity but solely in its capacity as Owner Trustee of the Issuer and in no
event shall PNC Bank, Delaware in its individual capacity or, except as
expressly provided in the Trust Agreement, as Owner Trustee of the Issuer have
any liability for the representations, warranties, covenants, agreements or
other obligations of the Issuer hereunder or in any of the certificates,
notices or agreements delivered pursuant hereto, as to all of which recourse
shall be had solely to the assets of the Issuer. For all purposes of this
Agreement, in the performance of its duties or obligations hereunder or in the
performance of any duties or obligations of the Issuer hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits of, the terms and
provisions of Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by The Chase Manhattan Bank, not in its individual
capacity but
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<PAGE> 69
solely as Indenture Trustee, and in no event shall The Chase Manhattan Bank
have any liability for the representations, warranties, covenants, agreements
or other obligations of the Issuer hereunder or in any of the certificates,
notices or agreements delivered pursuant hereto, as to all of which recourse
shall be had solely to the assets of the Issuer.
SECTION 10.14. Third-Party Beneficiary. The Indenture Trustee is a
third-party beneficiary to this Agreement and is entitled to the rights and
benefits hereunder and may enforce the provisions hereof as if it were a party
hereto.
SECTION 10.15. Savings Clause. It is the intention of the Seller and
the Issuer that the transfer of the Trust Property contemplated herein
constitute an absolute transfer of the Trust Property, conveying good title to
the Trust Property from the Seller to the Issuer. However, in the event that
such transfer is deemed to be a pledge, the Seller hereby grants to the Issuer
a first priority security interest in all of the Seller's right, title and
interest in, to and under the Trust Property, and all proceeds thereof, to
secure a loan in an amount equal to all amounts payable under the Notes and the
Certificates, and in such event, this Agreement shall constitute a security
agreement under applicable law.
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<PAGE> 70
IN WITNESS WHEREOF, the parties have caused this Sale and Servicing
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
FORD CREDIT AUTO RECEIVABLES
TWO L.P.,
as Seller
By: FORD CREDIT AUTO
RECEIVABLES TWO, INC.,
as General Partner
By: /s/ Ann O. Lee
---------------------------------
Name: A. O. Lee
Title: Assistant Secretary
FORD CREDIT AUTO OWNER TRUST
1998-C,
as Issuer
By: PNC BANK, DELAWARE,
not in its individual
capacity but solely as Owner
Trustee
By: /s/ M.B. McCarthy
--------------------------------
Name: Michael B. McCarthy
Title: Vice President
FORD MOTOR CREDIT COMPANY,
as Servicer
By: /s/ Ann O. Lee
-----------------------------------
Name: A. O. Lee
Title: Assistant Secretary
<PAGE> 71
Accepted and agreed:
THE CHASE MANHATTAN BANK,
not in its individual capacity
but solely as Indenture Trustee
By: /s/ Andrew M. Deck
------------------------------
Name: Andrew M. Deck
Title: Vice President
PNC BANK, DELAWARE,
not in its individual capacity
but solely as Owner Trustee
By: /s/ M.B. McCarthy
------------------------------
Name: Michael B. McCarthy
Title: Vice President
<PAGE> 72
SCHEDULE A
[SCHEDULE OF RECEIVABLES]
Delivered to Indenture Trustee at Closing
<PAGE> 73
SCHEDULE B
LOCATION OF RECEIVABLE FILES
Akron
175 Montrose West Avenue
Crown Pointe Building
Suite 300
Copley, OH 44321
Albany
5 Pine West Plaza
Albany, NY 12205
Albuquerque
6100 Uptown Blvd., N.E.
Suite 300
Albuquerque, NM 87110
Amarillo
1616 S. Kentucky
Bldg. D, Suite 130
Amarillo, TX 79102
Anchorage
3201 C Street
Suite 303
Anchorage, AK 99503
Appleton
54 Park Place
Appleton, WI 54915-8861
Athens
3708 Atlanta Highway
Athens, GA 30604
Atlanta-North
North Park Town Center
Bldg. 400, Suite 180
1000 Abernathy Rd. N.E.
Atlanta, GA 30328
SB-1
<PAGE> 74
Atlanta-South
1691 Phoenix Blvd.
Suite 300
Atlanta, GA 30349
Atlanta/CL
1117 Perimeter Ctr. W
Suite 404 West
Atlanta, GA 30338
Atlantic Region District Office
14104 Newbrook Drive
Chantilly, VA 22021
Austin
1701 Directors Blvd.
Suite 320
Austin, TX 78744
Baltimore-East
Campbell Corporate
Center One
4940 Campbell Blvd.
Suite 140
Whitemarsh Business Community
Baltimore, MD 21236
Beaumont
2615 Calder
Suite 715
Beaumont, TX 77704
Billings
1643 Lewis Avenue
Suite 201
Billings, MT 59102
Birmingham
3535 Grandview Parkway
Suite 340
Birmingham, AL 35243
Boston-North
One Tech Drive
3rd Floor
Andover, MA 01810-2497
SB-2
<PAGE> 75
Boston-South
Southboro Place
2nd Floor
352 Turnpike Road
Southboro, MA 01772
Bristol
Landmark Center-
Suite A
113 Landmark Lane
Bristol, TN 37620
Buffalo
95 John Muir Drive
Suite 102
Amherst, NY 14228
Cape Girardeau
1409-C N. Mt. Auburn Rd.
Cape Girardeau, MO 63701
Charleston
Rivergate Center
Suite 150
4975 LaCross Road
North Charleston, SC 29418
Charlotte
6302 Fairview Road
Suite 500
Charlotte, NC 28210
Charlotte/CL
6302 Fairview Road
Suite 510
Charlotte, NC 28210
Chattanooga
6025 Lee Highway
Suite 443
Chattanooga, TN 37421
Cheyenne
6234 Yellowstone Road
Cheyenne, WY 82009
SB-3
<PAGE> 76
Chicago-East
One River Place
Suite A
Lansing, IL 60438
Chicago-North
9700 Higgins Road
Suite 720
Rosemont, IL 60018
Chicago-South
The Office of Waterfall Glen I
Suite 310
900 South Frontage Road
Woodridge, IL 60517
Chicago-West
2500 W. Higgins Rd.
Suite 280
Hoffman Estates, IL 60195
Chicago/CL
745 McClintock Drive
Suite 300
Burr Ridge, IL 60521
Cincinnati
8805 Governors Hill Dr.
Suite 230
Cincinnati, OH 45249
Cleveland
5700 Lombardo Centre
Suite 101
Seven Hills, OH 44131-2581
Colorado Springs
5575 Tech Center Dr.
Suite 220
Colorado Springs, CO 80919
Columbia
250 Berryhill Road
Suite 201
Columbia, SC 29210
SB-4
<PAGE> 77
Columbus
Metro V, Suite 470
655 Metro Place S
Dublin, OH 43017
Coral Springs-East
3111 N. University Dr.
Suite 800
Coral Springs, FL 33065
Corpus Christi
5350 South Staples
Suite 225
Corpus Christi, TX 78411
Dallas
Campbell Forum
Suite 600
801 E. Campbell Road
Richardson, TX 75081
Dallas
Campbell Forum
Suite 650
801 E. Campbell Road
Richardson, TX 75081
Davenport
5405 Utica Ridge Road
Suite 200
Davenport, IA 52807
Decatur
401 Lee Street
Suite 500
Decatur, AL 35602
Denver
6300 S. Syracuse Way
Suite 195
Englewood, CO 80111
Des Moines
4200 Corporate Drive
Suite 107
W. Des Moines, IA 50266
SB-5
<PAGE> 78
Detroit-North
1301 Longlake Road
Suite 150
Troy, MI 48098
Detroit-West
1655 Fairlane Circle
Suite 900
Allen Park, MI 48101
Detroit/CL
One Parklane Blvd.
Suite 301E
Dearborn, MI 48126
Dothan
137 Clinic Drive
Dothan, AL 36303
El Paso
1200 Golden Key Circle
Suite 104
El Paso, TX 79925
Eugene
1600 Valley River Drive
Suite 190
Eugene, OR 97401
Falls Church
1420 Springhill Road
Suite 550
McLean, VA 22102
Fargo
3100 13th Ave. South
Suite 304
Fargo, ND 58103
SB-6
<PAGE> 79
Fayetteville
4317 Ramsey Street
Suite 300
Fayetteville, NC 28311
Findlay
3500 North Main Street
Findlay, OH 45840-1447
Ft. Myers
11935 Fairway Lakes Dr.
Fort Myers, FL 33913
Ft. Worth
Center Park Tower
Suite 400
2350 West Airport Frwy.
Bedford, TX 76022
Grand Junction
744 Horizon Court
Suite 330
Grand Junction, CO 81506
Grand Rapids
2851 Charlevoix Drive SE
Suite 300
Grand Rapids, MI 49546
Greensboro
1500 Pinecroft Rd.
Suite 220
Greensboro, NC 27407
Harlingen
1916 East Harrison
Harlingen, TX 78550
Harrisburg
4900 Ritter Road
Mechanicsburg, PA 17055
Henderson
618 North Green Street
Henderson, KY 42420
SB-7
<PAGE> 80
Honolulu
Ala Moano Pacific Center
Suite 922
1585 Kapiolani Blvd.
Honolulu, HI 96814
Houston-North
363 N. Sam Houston Pkwy. E.
Suite 700
Houston, TX 77060
Houston-West
820 Gessner
Suite 700
Houston, TX 77024
Huntington
3425 U.S. Route 60 East
Barboursville, WV 25504
Indianapolis
5875 Castle Creek Pkwy.
North Drive
Suite 240
Indianapolis, IN 46250
Jackson
800 Avery Blvd.
Suite B
Ridgeland, MS 39157
Jacksonville
Suite 310
9485 Regency Square Boulevard
Jacksonville, FL 32225
Jefferson City
210 Prodo Drive
Jefferson City, MO 65109
SB-8
<PAGE> 81
Kansas City
8717 West 110th Street
Bldg. #14, Suite 550
Overland Park, KS 66210
Knoxville
5500 Lonas Drive
Suite 260
Knoxville, TN 37909
Lafayette
Saloom Office Park
Suite 350
100 Asthma Boulevard
Lafayette, LA 70508
Lansing
2140 University Park Drive
Okemos, MI 48864
Las Vegas
500 N Rainbow Blvd.
Suite 312
Las Vegas, NV 89107
Little Rock
1701 Centerview Dr.
Suite 301
Little Rock, AR 72211
Long Island
One Jericho Plaza
2nd Floor Wing B
Jericho, NY 11753
Louisville
502 Executive Park
Louisville, KY 40207
Lubbock
4010 82nd Street
Suite 200
Lubbock, TX 79424
SB-9
<PAGE> 82
Macon
5400 Riverside Drive
Suite 201
Macon, GA 31210
Manchester
4 Bedford Farms
Bedford, NH 03110
Marshall
1408 North Michigan
Marshall, IL 62441
Memphis
6555 Quince Road
Suite 300
Memphis, TN 38119
Miami
6303 Blue Lagoon Drive
Suite 200
Miami, FL 33126
Milwaukee
10850 W. Park Place
Suite 110
Milwaukee, WI 53224
Minneapolis
One Southwest Crossing
Suite 308
11095 Viking Drive
Eden Prairie, MN 55344
Mobile
1201 Montlimar Dr.
Suite 700
Mobile, AL 36609-1718
Nashville
Highland Ridge
Suite 190
565 Marriott Drive
Nashville, TN 37214
SB-10
<PAGE> 83
New Haven
35 Thorpe Ave.
Wallingford, CT 06492
New Jersey-Central
101 Interchange Plaza
Cranbury, NJ 08512
New Jersey-North
103 Eisenhower Parkway
4th Floor
Roseland, NJ 07068
New Jersey-South
10000 MidAtlantic Dr.
Suite 401 West
Mt. Laurel, NJ 08054
New Orleans
Lakeway III
3838 N. Causeway Blvd.
Suite 3200
Metairie, LA 70002
Norfolk
Greenbrier Pointe
Suite 350
1401 Greenbrier Pkwy.
Chesapeake, VA 23320
Odessa
Ashford Park Office Center
Suite 201A
2626 John B. Sheprd Parkway
Odessa, TX 79762
Oklahoma City
Perimeter Center
Suite 300
4101 Perimeter Ctr Dr.
Oklahoma City, OK 73112
SB-11
<PAGE> 84
Omaha
10040 Regency Circle
Suite 100
Omaha, NE 68114-3786
Omaha Customer Service Center
12110 Emmet Street
Omaha, NB 68164
Orange
765 The City Drive
Suite 400
Orange, CA 92668
Orange/CL
765 The City Drive
Suite 401
Orange, CA 92668
Orlando
1060 Maitland Ctr Commons
Suite 210
Maitland, FL 32751
Pasadena
225 S. Lake Avenue
Suite 1200
Pasadena, CA 91101
Pensacola
25 W. Cedar Street
Suite 316
Pensacola, Fl 32501
Philadelphia
Bay Colony Executive Park
Suite 100
575 E. Swedesford Rd.
Wayne, PA 19087
Philadelphia/CL
500 N. Gulph Rd.
Suite 110
King of Prussia, PA 19406
SB-12
<PAGE> 85
Phoenix
4742 North 24th Street
Suite 215
Phoenix, AZ 85016
Pittsburgh
Foster Plaza 9
750 Holiday Drive
4th Floor, Suite 420
Pittsburgh, PA 15220
Portland
2401 Congress Street
Portland, ME 04102
Portland
10220 S.W. Greenburg Blvd.
Suite 415
Portland, OR 97223
Raleigh
3651 Trust Drive
Raleigh, NC 27604
Regional Opers Center
7090 Columbia Gateway Dr.
Columbia, MD 21046
Richmond
300 Arboretum Place
Suite 320
Richmond, VA 23236
Roanoke
5238 Valley Pointe Pkwy.
Suite 6
Roanoke, VA 24019
Sacramento
2720 Gateway Oaks Dr.
Suite 200
Sacramento, CA 95833
Saginaw
4901 Towne Centre Rd.
Suite 200
Saginaw, MI 48605
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Salt Lake City
310 E. 4500 S.
Suite 340
Murray, UT 84107
Santa Ana Central Collections
765 The City Drive
Suite 402
Orange. CA 92668
San Antonio
100 N.E. Loop 410
Suite 625
San Antonio, TX 78216-4742
San Bernardino
1615 Orange Tree Lane
Suite 215
Redlands, CA 92374
San Diego
3111 Camino Del Rio N.
Suite 1333
San Diego, CA 92108
San Francisco
4301 Hacienda Dr.
Suite 400
Pleasanton, CA 94588
San Francisco/CL
4900 Hopyard Road
Suite 220
Pleasanton CA 94588
San Jose
1900 McCarthy Blvd.
Suite 400
Milpitas, CA 95035
Savannah
6600 Abercorn Street
Suite 206
Savannah, GA 31405
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Seattle
13555 S.E. 36th Street
Suite 350
Bellevue, WA 98006
Shreveport
South Pointe Centre
Suite 200
3007 Knight Street
Shreveport, LA 71105
South Bay
301 E. Ocean Boulevard
Suite 1900
Long Beach, CA 90802
South Bend
4215 Edison Lakes Parkway
Suite 140
Mishawaka, IN 46545
Spokane
901 North Monroe Ct.
Suite 350
Spokane, WA 99201-2148
Springfield
3275 E. Ridgeview
Springfield, MO 65804
St. Louis
4227 Earth City Expressway
Suite 100
Earth City, MO 63045
St. Paul
7760 France Avenue South
Suite 920
Bloomington, MN 55435
Syracuse
5788 Widewaters Pkwy.
DeWitt, NY 13214
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Tampa
Lincoln Pointe, Suite 800
2502 Rocky Point Drive
Tampa, FL 33607
Tulsa
9820 East 41st St.
Suite 300
Tulsa, OK 74145
Tupelo
One Mississippi Plaza
Tupelo, MS 38801
Tyler
821 East SE Loop 323
Suite 300
Tyler, TX 75701
Ventura
260 Maple Court
Suite 210
Ventura, CA 93003
Washington, D.C.
2440 Research Blvd.
Suite 150
Rockville, MD 20850
Westchester
660 White Plains Road
Tarrytown, NY 10591
Western Carolina
215 Thompson Street
Hendersonville, NC 28792
Wichita
7570 West 21st
Wichita, KS 67212
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APPENDIX A
Definitions and Usage
AA-1
<PAGE> 1
EXHIBIT 99.2
ADMINISTRATION AGREEMENT
This ADMINISTRATION AGREEMENT, dated as of July 1, 1998 (as from time
to time amended, supplemented or otherwise modified and in effect, this
"Agreement"), is by and among FORD CREDIT AUTO OWNER TRUST 1998-C, a Delaware
business trust (the "Issuer"), FORD MOTOR CREDIT COMPANY, a Delaware
corporation, as administrator (the "Administrator"), and THE CHASE MANHATTAN
BANK, a New York corporation, not in its individual capacity but solely as
Indenture Trustee (the "Indenture Trustee").
WHEREAS, the Issuer is issuing the Notes pursuant to the Indenture and
the Certificates pursuant to the Trust Agreement and has entered into certain
agreements in connection therewith, including (i) the Sale and Servicing
Agreement, (ii) the Note Depository Agreement and (iii) the Indenture (the Sale
and Servicing Agreement, the Note Depository Agreement and the Indenture being
referred to hereinafter collectively as the "Related Agreements");
WHEREAS, the Issuer and the Owner Trustee desire to have the
Administrator perform certain duties of the Issuer and the Owner Trustee under
the Related Agreements and to provide such additional services consistent with
the terms of this Agreement and the Related Agreements as the Issuer and the
Owner Trustee may from time to time request; and
WHEREAS, the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and the
Owner Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto, intending to be legally
bound, agree as follows:
1. Definitions and Usage. Except as otherwise specified herein or as
the context may otherwise require, capitalized terms used but not otherwise
defined herein are defined in Appendix A hereto, which also contains rules as to
usage that shall be applicable herein.
<PAGE> 2
2. Duties of the Administrator. (0a) Duties with Respect to the
Indenture and the Note Depository Agreement. (i) The Administrator agrees to
perform all its duties as Administrator and the duties of the Issuer under the
Note Depository Agreement. In addition, the Administrator shall consult with the
Owner Trustee regarding the duties of the Issuer under the Indenture and the
Note Depository Agreement. The Administrator shall monitor the performance of
the Issuer and shall advise the Owner Trustee when action is necessary to comply
with the Issuer's duties under the Indenture and the Note Depository Agreement.
The Administrator shall prepare for execution by the Issuer, or shall cause the
preparation by other appropriate Persons of, all such documents, reports,
filings, instruments, certificates and opinions that it shall be the duty of the
Issuer to prepare, file or deliver pursuant to the Indenture and the Note
Depository Agreement. In furtherance of the foregoing, the Administrator shall
take all appropriate action that is the duty of the Issuer to take pursuant to
the Indenture including, without limitation, such of the foregoing as are
required with respect to the following matters under the Indenture (references
are to sections of the Indenture):
(A) the duty to cause the Note Register to be kept and to give
the Indenture Trustee notice of any appointment of a new Note Registrar
and the location, or change in location, of the Note Register (Section
2.5);
(B) the determination as to whether the requirements of UCC
Section 8-401(1) are met and the preparation of an Issuer Request
requesting the Indenture Trustee to authenticate and deliver
replacement Notes in lieu of mutilated, destroyed, lost or stolen Notes
(Section 2.6);
(C) the notification of Noteholders of the final principal
payment on their Notes (Section 2.8(b));
(D) the preparation of or obtaining of the documents and
instruments required for authentication of the Notes and delivery of
the same to the Indenture Trustee (Section 2.2);
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<PAGE> 3
(E) the preparation, obtaining or filing of the instruments,
opinions and certificates and other documents required for the release
of property from the lien of the Indenture (Section 2.10);
(F) the preparation of Definitive Notes in accordance with the
instructions of the Clearing Agency (Section 2.13);
(G) the maintenance of an office in the Borough of Manhattan,
The City of New York, for registration of transfer or exchange of Notes
if the Indenture Trustee ceases to maintain such an office (Section
3.2);
(H) the duty to cause newly appointed Note Paying Agents, if
any, to deliver to the Indenture Trustee the instrument specified in
the Indenture regarding funds held in trust (Section 3.3);
(I) the direction to the Indenture Trustee to deposit monies
with Note Paying Agents, if any, other than the Indenture Trustee
(Section 3.3);
(J) the obtaining and preservation of the Issuer's
qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of the Indenture, the Notes, the Collateral and each
other instrument or agreement included in the Indenture Trust Estate
(Section 3.4);
(K) the preparation of all supplements and amendments to the
Indenture and all financing statements, continuation statements,
instruments of further assurance and other instruments and the taking
of such other action as is necessary or advisable to protect the
Indenture Trust Estate (Sections 3.5 and 3.7(c));
(L) the delivery of the Opinion of Counsel on the Closing Date
and the annual delivery of Opinions of Counsel as to the Indenture
Trust Estate, and the annual delivery of the Officer's Certificate and
certain other statements as to compliance with the Indenture (Sections
3.6 and 3.9);
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<PAGE> 4
(M) the identification to the Indenture Trustee in an
Officer's Certificate of any Person with whom the Issuer has contracted
to perform its duties under the Indenture (Section 3.7(b));
(N) the notification of the Indenture Trustee and the Rating
Agencies of an Event of Servicing Termination under the Sale and
Servicing Agreement and, if such Event of Servicing Termination arises
from the failure of the Servicer to perform any of its duties under the
Sale and Servicing Agreement with respect to the Receivables, the
taking of all reasonable steps available to remedy such failure
(Section 3.7(d));
(O) the preparation and obtaining of documents and
instruments required for the consolidation or merger of the Issuer
with another entity or the transfer by the Issuer of its properties or
assets (Section 3.10);
(P) the duty to cause the Servicer to comply with Sections
3.9, 3.10, 3.11, 3.12, 3.13 and 4.9 and Article VII of the Sale and
Servicing Agreement (Section 3.14);
(Q) the delivery of written notice to the Indenture Trustee
and the Rating Agencies of each Event of Default under the Indenture
and each default by the Servicer or the Seller under the Sale and
Servicing Agreement and by Ford Credit or the Seller under the Purchase
Agreement (Section 3.19);
(R) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation of an
Officer's Certificate and the obtaining of the Opinions of Counsel
and the Independent Certificate relating thereto (Section 4.1);
(S) the monitoring of the Issuer's obligations as to the
satisfaction, discharge and defeasance of the Notes and the preparation
of an Officer's Certificate and the obtaining of an opinion of a
nationally recognized firm of independent certified public accountants,
a written certification thereof and the Opinions of Counsel relating
thereto (Section 4.2);
4
<PAGE> 5
(T) the preparation of an Officer's Certificate to the
Indenture Trustee after the occurrence of any event which with the
giving of notice and the lapse of time would become an Event of Default
under Section 5.1(iii) of the Indenture, its status and what action the
Issuer is taking or proposes to take with respect thereto (Section
5.1);
(U) the compliance with any written directive of the Indenture
Trustee with respect to the sale of the Indenture Trust Estate at one
or more public or private sales called and conducted in any manner
permitted by law if an Event of Default shall have occurred and be
continuing (Section 5.4);
(V) the preparation and delivery of notice to Noteholders of
the removal of the Indenture Trustee and the appointment of a successor
Indenture Trustee (Section 6.8);
(W) the preparation of any written instruments required to
confirm more fully the authority of any co-trustee or separate trustee
and any written instruments necessary in connection with the
resignation or removal of any co-trustee or sepa rate trustee (Sections
6.8 and 6.10);
(X) the furnishing of the Indenture Trustee with the names and
addresses of Noteholders during any period when the Indenture Trustee
is not the Note Registrar (Section 7.1);
(Y) the preparation and, after execution by the Issuer, the
filing with the Commission, any applicable state agencies and the
Indenture Trustee of documents required to be filed on a periodic basis
with, and summaries thereof as may be required by rules and
regulations prescribed by, the Commission and any applicable state
agencies and the transmission of such summaries, as necessary, to the
Noteholders (Section 7.3);
(Z) the opening of one or more accounts in the Issuer's name,
the preparation and delivery of Issuer Orders, Officer's Certificates
and Opinions of Counsel and all other actions necessary with respect to
investment and reinvestment, to the extent permitted, of funds in such
accounts (Sections 8.2 and 8.3);
5
<PAGE> 6
(AA) the preparation of an Issuer Request and Officer's
Certificate and the obtaining of an Opinion of Counsel and Independent
Certificates, if necessary, for the release of the Indenture Trust
Estate (Sections 8.4 and 8.5);
(BB) the preparation of Issuer Orders and the obtaining of
Opinions of Counsel with respect to the execution of supplemental
indentures and the mailing to the Noteholders of notices with respect
to such supplemental indentures (Sections 9.1, 9.2 and 9.3);
(CC) the execution and delivery of new Notes conforming
to any supplemental indenture (Section 9.6);
(DD) the notification of Noteholders of redemption of the
Notes or duty to cause the Indenture Trustee to provide such
notification (Section 10.2);
(EE) the preparation of all Officer's Certificates, Issuer
Requests and Issuer Orders and the obtaining of Opinions of Counsel and
Independent Certificates with respect to any requests by the Issuer to
the Indenture Trustee to take any action under the Indenture (Section
11.1(a));
(FF) the preparation of Officer's Certificates and the
obtaining of Independent Certificates, if necessary, for the release of
property from the lien of the Indenture (Section 11.1(b));
(GG) the notification of the Rating Agencies, upon the failure
of the Indenture Trustee to give such notification, of the information
required pursuant to Section 11.4 of the Indenture (Section 11.4);
(HH) the preparation and delivery to Noteholders and the
Indenture Trustee of any agreements with respect to alternate payment
and notice provisions (Section 11.6); and
(II) the recording of the Indenture, if applicable (Section
11.15).
(ii) The Administrator will:
6
<PAGE> 7
(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 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 Inden-
ture Trustee in accordance with any provision of the Indenture
(including the reasonable compensation, expenses and disbursements of
its agents and counsel), except any such expense, disbursement or
advance as may be attributable to its negligence or bad faith;
(C) indemnify the Indenture Trustee and its agents for, and
hold them harmless against, any losses, liability or expense incurred
without negligence or bad faith on their part, arising out of or in
connection with the acceptance or administration of the transactions
contemplated by the Indenture, including the reasonable costs and
expenses (including reasonable attorneys' fees) of defending themselves
against any claim or liability in connection with the exercise or
performance of any of their powers or duties under the Indenture; and
(D) indemnify the Owner Trustee and its agents for, and hold
them harmless against, any losses, liability or expense incurred
without negligence or bad faith on their part, arising out of or in
connection with the acceptance or administration of the transactions
contemplated by the Trust Agreement, including the reasonable costs and
expenses (including reasonable attorneys' fees) of defending
themselves against any claim or liability in connection with the
exercise or performance of any of their powers or duties under the
Trust Agreement.
(Ob) 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 appro-
priate persons of, and shall execute on behalf of the Issuer or the Owner
Trustee, all such documents, re-
7
<PAGE> 8
ports, 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 duty of the Issuer or the Owner Trustee to
take pursuant to the Related Agreements. Subject to Section 6 of this Agreement,
and in accordance with the directions of the Owner Trustee, the Administrator
shall administer, perform or supervise the performance of such other activities
in connection with the Collateral (including the Related Agreements) as are not
covered by any of the foregoing provisions and as are expressly requested by the
Owner Trustee and are reasonably within the capability of the Administrator.
(ii) Notwithstanding anything in this Agreement or the
Related Agreements to the contrary, the Administrator shall be responsible for
performance of the duties of the Owner Trustee set forth in Section 3.2 of the
Trust Agreement with respect to establishing and maintaining a Capital Account
for each Certificateholder.
(iii) Notwithstanding anything in this Agreement or the
Related Agreements to the contrary, the Administrator shall be responsible for
promptly notifying the Owner Trustee in the event that any withholding tax is
imposed on the Trust's payments (or allocations of income) to a
Certificateholder as contemplated in Section 5.2(c) of the Trust Agreement. Any
such notice shall specify the amount of any withholding tax required to be
withheld by the Owner Trustee pursuant to such provision.
(iv) Notwithstanding anything in this Agreement or the
Related Agreements to the contrary, the Administrator shall be responsible for
performance of the duties of the Trust or the Owner Trustee set forth in Section
5.5(a), (b), (c) and (d), the penultimate sentence of Section 5.5 and Section
5.6(a) of the Trust Agreement with respect to, among other things, account ing
and reports to Certificateholders.
(v) The Administrator will provide prior to August 15, 1998 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
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<PAGE> 9
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.
(vi) The Administrator shall perform the duties of the
Administrator specified in Section 10.2 of the Trust Agreement required to be
performed in connection with the resignation or removal of the Owner Trustee,
and any other duties expressly required to be performed by the Administrator
pursuant to the Trust Agreement.
(vii) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Administrator may enter into transactions
or otherwise deal with any of its Affiliates; provided, however, that the terms
of any such transactions or dealings shall be in accordance with any directions
received from the Issuer and shall be, in the Administrator's opinion, no less
favorable to the Issuer than would be available from unaffiliated parties.
(Oc) 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 Re-
ceivables or Permitted Investments);
(C) the amendment, change or modification of the Related
Agreements;
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<PAGE> 10
(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 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.
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<PAGE> 11
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 similar to those of the Issuer, the Owner Trustee or the Indenture
Trustee.
9. Term of Agreement; Resignation and Removal of Administrator. (0a)
This Agreement shall continue in force until the termination of the Issuer in
accordance with Section 9.1 of the Trust Agreement, upon which event this
Agreement shall automatically terminate.
(0b) 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.
(0c) Subject to Sections 9(e) and 9(f), at the sole option of the
Issuer, the Administrator may be removed immediately upon written notice of
termination from the Issuer to the Administrator if any of the following events
shall occur:
(i) the Administrator shall default in the performance of any
of its duties under this Agreement and, after notice of such default,
shall not cure such default within ten (10) days (or, if such default
cannot be cured in such time, shall not give within ten (10) days such
assurance of cure as shall be reasonably satisfactory to the Issuer);
(ii) a court having jurisdiction in the premises shall enter
a decree or order for relief, and such decree or order shall not have
been vacated within sixty (60) days, in respect of the Administrator
in any involuntary case under any applicable
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<PAGE> 12
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 sub
stantial 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, 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 prop-
erty, 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.
(0d) No resignation or removal of the Administrator pursuant to this
Section 9 shall be effective until (i) a successor Administrator shall have been
appointed by the Issuer and (ii) such successor Administrator shall have agreed
in writing to be bound by the terms of this Agreement in the same manner as the
Administrator is bound hereunder. The Issuer shall provide written notice of any
such resignation or removal to the Indenture Trustee, with a copy to the Rating
Agencies.
(0e) The appointment of any successor Administrator shall be effective
only after satisfaction of the Rating Agency Condition with respect to the
proposed appointment.
(0f) 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.
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<PAGE> 13
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), respectively, the Administrator shall cooperate with the Issuer and
take all reasonable steps requested to assist the Issuer in making an orderly
transfer of the duties of the Administrator.
11. Notices. Any notice, report or other communication given
hereunder shall be in writing and addressed of follows:
(0a) if to the Issuer or the Owner Trustee, to:
Ford Credit Auto Owner Trust 1998-C
c/o PNC Bank, Delaware
222 Delaware Avenue
Wilmington, Delaware 19801
Attention: Michael B. McCarthy
Telephone: (302) 429-1546
Facsimile: (302) 429-7118
(0b) if to the Administrator, to:
Ford Motor Credit Company
The American Road
Dearborn, Michigan 48121
Attention: Richard P. Conrad
Telephone: (313) 594-7765
Facsimile: (313) 248-7613
(0c) if to the Indenture Trustee, to:
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<PAGE> 14
The Chase Manhattan Bank
Corporate Trust Administration
450 West 33rd Street, 15th floor
New York, New York 10001
Attention: Michael A. Smith
Telephone: (212) 946-3346
Facsimile: (212) 946-8158
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed given
if such notice is mailed by certified mail, postage prepaid, or hand-delivered
to the address of such party as provided above.
12. Amendments. This Agreement may be amended from time to time by a
written amendment duly executed and delivered by the Issuer, the Administrator
and the Indenture Trustee, with the written consent of the Owner Trustee,
without the consent of the Noteholders and the Certificateholders, for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or of modifying in any manner the rights
of the Noteholders or Certificateholders; provided that such amendment will not,
as set forth in an Opinion of Counsel satisfactory to the Indenture Trustee and
the Owner Trustee, materially and adversely affect the interest of any
Noteholder or Certificateholder. This Agreement may also be amended by the
Issuer, the Administrator and the Indenture Trustee with the written consent of
the Owner Trustee and the Noteholders of Notes evidencing not less than a
majority of the Notes Outstanding and the Certificateholders of Certificates
evidencing not less than a majority of the Certificate Balance for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of
Noteholders or the Certificateholders; provided, however, that no such
amendment may (i) increase or reduce in any manner the amount of, or accelerate
or delay the timing of, collections of payments on Receivables or distributions
that are required to be made for the benefit of the Noteholders or
Certificateholders or (ii)
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<PAGE> 15
reduce the aforesaid percentage of the Noteholders and Certificateholders which
are required to consent to any such amendment, without the consent of the
Noteholders of all the Notes Outstanding and Certificateholders of Certificates
evidencing all the Certificate Balance.
13. Successors and Assigns. This Agreement may not be assigned by the
Administrator unless such assignment is previously consented to in writing by
the Issuer and the Owner Trustee and subject to the satisfaction of the Rating
Agency Condition in respect thereof. An assignment with such consent and
satisfaction, if accepted by the assignee, shall bind the assignee hereun der
in the same manner as the Administrator is bound hereunder. Notwithstanding the
foregoing, this Agreement may be assigned by the Administrator without the
consent of the Issuer or the Owner Trustee to a corporation or other
organization that is a successor (by merger, consolidation or purchase of
assets) to the Administrator; provided that such successor organization executes
and delivers to the Issuer, the Owner Trustee and the Indenture Trustee an
agreement in which such corporation or other organization agrees to be bound
hereunder by the terms of said assignment in the same manner as the
Administrator is bound hereunder. Subject to the foregoing, this Agreement shall
bind any successors or assigns of the parties hereto.
14. Governing Law. This agreement shall be construed in accordance
with the laws of the State of New York, and the obligations, rights and remedies
of the parties hereunder shall be determined in accordance with such laws.
15. Headings. The Section headings hereof have been inserted for
convenience of reference only and shall not be construed to affect the meaning,
construction or effect of this Agreement.
16. Counterparts. This Agreement may be executed in counterparts, each
of which when so executed shall be an original, but all of which together shall
constitute but one and the same agreement.
17. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall be ineffective to the extent of such
prohibition
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<PAGE> 16
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.
(0a) Notwithstanding anything con tained herein to the contrary, this
instrument has been countersigned by PNC Bank, Delaware not in its individual
capacity but solely in its capacity as Owner Trustee of the Issuer and in no
event shall PNC Bank, Delaware in its 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 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.
(0b) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by The Chase Manhattan Bank not in its
individual capacity but solely as Indenture Trustee and in no event shall The
Chase Manhattan Bank have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any of
the certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
20. Third-Party Beneficiary. The Owner Trustee is a third-party
beneficiary to this Agreement and is entitled to the rights and benefits
hereunder and may enforce the provisions hereof as if it were a party hereto.
21. Nonpetition Covenants. (a) Notwithstanding any prior termination of
this Agreement, the Seller, the Administrator, the Owner Trustee and the
Indenture Trustee shall not, prior to the date which is one year
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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 bank-
ruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Seller or the General Partner or any substantial part of their respective
property, or ordering the winding up or liquidation of the affairs of the Seller
or the General Partner.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
FORD CREDIT AUTO OWNER TRUST 1998-C
By: PNC BANK, DELAWARE, not in its
individual capacity but solely
as Owner Trustee
By: /s/ M.B. McCarthy
--------------------------------
Name: Michael B. McCarthy
Title: Vice President
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as
Indenture Trustee
By: /s/ Andrew M. Deck
--------------------------------
Name: Andrew M. Deck
Title: Vice President
FORD MOTOR CREDIT COMPANY, as Admin
istrator
By: /s/ Ann O. Lee
--------------------------------
Name: A. O. Lee
Title: Assistant Secretary
<PAGE> 19
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 1st day
of July 1998, by and between FORD MOTOR CREDIT COMPANY, a Delaware corporation
(the "Seller"), having its principal executive office at The American Road,
Dearborn, Michigan 48121, and FORD CREDIT AUTO RECEIVABLES TWO L.P., a Delaware
limited partnership (the "Purchaser"), having its principal executive office at
The American Road, Dearborn, Michigan 48121.
WHEREAS, in the regular course of its business, the Seller purchases
certain motor vehicle retail installment sale contracts secured by new and used
automobiles and light trucks from motor vehicle dealers.
WHEREAS, the Seller and the Purchaser wish to set forth the terms
pursuant to which the Receivables (as hereinafter defined) are to be conveyed by
the Seller to the Purchaser, which Receivables will be transferred by the
Purchaser pursuant to the Sale and Servicing Agreement (as hereinafter defined)
to the Ford Credit Auto Owner Trust 1998-C to be created pursuant to the Trust
Agreement (as hereinafter defined), which Trust will issue notes secured by such
Receivables and certain other property of the Trust, pursuant to the Indenture
(as hereinafter defined), and will issue certificates representing beneficial
interests in such Receivables and certain other property of the Trust, pursuant
to the Trust Agreement.
NOW, THEREFORE, in consideration of the foregoing, other good and
valuable consideration, and the mutual terms and covenants contained herein, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND USAGE
Except as otherwise specified herein or as the context may otherwise
require, capitalized terms used but not otherwise defined herein are defined in
Appendix A
<PAGE> 2
hereto, which also contains rules as to usage that shall be applicable herein.
The term "Seller" herein shall mean Ford Motor Credit Company.
ARTICLE II
CONVEYANCE AND ACQUISITION OF RECEIVABLES
2.1 Conveyance and Acquisition of Receivables
On the Closing Date, subject to the terms and conditions of this
Agreement, the Seller agrees to convey to the Purchaser, and the Purchaser
agrees to acquire from the Seller, the Receivables and the other property
relating thereto (as defined below).
(a) Conveyance of Receivables. Effective as of the Closing Date
and simultaneously with the transactions pursuant to the Indenture, the Sale and
Servicing Agreement and the Trust Agreement, the Seller hereby transfers,
assigns and otherwise conveys to the Purchaser, without recourse, all right,
title and interest of the Seller, whether now owned or hereafter acquired, in
and to the following: (i) the Receivables; (ii) with respect to Precomputed
Receivables, monies due thereunder on or after the Cutoff Date (including
Payaheads) and, with respect to Simple Interest Receivables, monies due or
received thereunder on or after the Cutoff Date (including in each case any
monies received prior to the Cutoff Date that are due on or after the Cutoff
Date and were not used to reduce the principal balance of the Receivable); (iii)
the security interests in the Financed Vehicles granted by Obligors pursuant to
the Receivables and any other interest of the Seller in the Financed Vehicles;
(iv) rights to receive proceeds with respect to the Receivables from claims on
any physical damage, credit life, credit disability, or other insurance policies
covering Financed Vehicles or Obligors; (v) Dealer Recourse; (vi) all of the
Seller's rights to the Receivable Files; (vii) payments and proceeds with
respect to the Receivables held by the Seller; (viii) all property (including
the right to receive Liquidation Proceeds) securing a Receivable (other than a
Receivable repurchased by the Seller); (ix) rebates of premiums and other
amounts relating to insurance policies and other items financed under the
Receivables in effect as of the Cutoff
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<PAGE> 3
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. As
detailed on Schedule B hereto, an amount equal to approximately
$2,101,769,232.59 (representing the net cash proceeds from the sale of the Notes
and Certificates offered to the public, plus the amount of the cash capital
contribution by the General Partner to the Purchaser on the Closing Date, minus
the Reserve Initial Deposit) of the Receivables Purchase Price shall be paid to
the Seller in cash. In addition, $199,963,456.00 of the Receivables Purchase
Price will be paid by delivery to the Seller of $200,000,000 principal amount of
Class A-5 5.86% Asset Backed Notes of Ford Credit Auto Owner 1998-C. The
remaining portion of the Receivables Purchase Price ($113,290,266.72) 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 paid by federal wire transfer (same day) funds.
2.02 The Closing. The conveyance and acquisition of the Receivables
shall take place at a closing (the "Closing") at the offices of Skadden, Arps,
Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022 on the
Closing Date, simultaneously with the closings under: (a) the Sale and Servicing
Agreement pursuant to which the Purchaser will assign all of its right, title
and interest in, to and under the Receivables and certain other property to the
Trust in exchange for the Notes and the Certificates; (b) the Indenture,
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<PAGE> 4
pursuant to which the Trust will issue the Notes and pledge all of its right,
title and interest in, to and under the Receivables and certain other property
to secure the Notes; (c) the Trust Agreement, pursuant to which the Trust will
issue the Certificates; (d) the Note Underwriting Agreement, pursuant to which
the Purchaser will sell to the Note Underwriters the Underwritten Notes; (e) the
Certificate Underwriting Agreement, pursuant to which the Purchaser will sell
to the Certificate Underwriters the Class C Certificates; and (f) the
Certificate Purchase Agreement, pursuant to which the Purchaser will sell to the
Initial Purchasers a portion of the Class D Certificates.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Warranties of the Purchaser. The Purchaser hereby represents and
warrants to the Seller as of the date hereof and as of the Closing Date:
(a) Organization, etc. The Purchaser has been duly organized and
is validly existing as a limited partnership in good standing under the laws of
the State of Delaware, and has full power and authority to execute and deliver
this Agreement and to perform the terms and provisions hereof and thereof.
(b) Due Authorization and No Violation. This Agreement has been
duly authorized, executed and delivered by the Purchaser, and is the valid,
binding and enforceable obligation of the Purchaser except as the same may be
limited by insolvency, bankruptcy, reorganization or other laws relating to or
affecting the en forcement of creditors' rights or by general equity principles.
The consummation of the transactions contemplated by this Agreement, and the
fulfillment of the terms hereof, will not conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under (in each case
material to the Purchaser), or result in the creation or imposition 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
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<PAGE> 5
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 Proceedings. 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.
3.02 Representations and Warranties of the
Seller.
(a) The Seller hereby represents and warrants to the Purchaser as
of the date hereof and as of the Closing Date:
(i) Organization, etc. The Seller has been duly incorporated
and is validly existing as a corporation in good standing under the laws of
the State of Delaware, and is duly qualified to transact business and is in
good standing in each jurisdiction in the United States of America in which
the conduct of its business or the ownership of its property requires such
qualification.
(ii) Power and Authority. The Seller has full power and
authority to convey and assign the property conveyed and assigned to the
Purchaser hereunder and has duly authorized such sale and assignment to the
Purchaser by all necessary corporate action. This Agreement has been duly
authorized, executed and delivered by the Seller and shall constitute the
legal, valid and binding obligation of the Seller except as the same may be
limited by insolvency, bankruptcy, reorganization or
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<PAGE> 6
other laws relating to or affecting the enforcement of creditors' rights or
by general equity principles.
(iii) No Violation. The consummation of the transactions
contemplated by this Agreement, and the fulfillment of the terms hereof,
will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under (in each case material to the
Seller and its subsidiaries considered as a whole), or result in the
creation or imposition of any lien, charge or encumbrance (in each case
material to the Seller and its subsidiaries considered as a whole) upon any
of the property or assets of the Seller pursuant to the terms of, any
indenture, mortgage, deed of trust, loan agreement, guarantee, lease
financing agreement or similar agreement or instrument under which the
Seller is a debtor or guarantor, nor will such action result in any
violation of the provisions of the Certificate of Incorporation or the
By-Laws of the Seller.
(iv) No Proceedings. No legal or governmental proceedings
are pending to which the Seller is a party or of which any property of the
Seller is the subject, and no such proceedings are threatened or
contemplated by governmental authorities or threatened by others, other
than such proceedings which will not have a material adverse effect upon
the general affairs, financial position, net worth or results of operations
(on an annual basis) of the Seller and its subsidiaries considered as a
whole and will not materially and adversely affect the performance by the
Seller of its obligations under, or the validity and enforceability of,
this Agreement.
(b) The Seller makes the following representations and warranties
as to the Receivables on which the Purchaser relies in accepting the
Receivables. Such representations and warranties speak as of the execution and
delivery of this Agreement, but shall survive the transfer, assignment and
conveyance of the Receivables to
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<PAGE> 7
the Purchaser and the subsequent assignment and transfer to the Trust pursuant
to the Sale and Servicing Agreement and the pledge thereof to the Indenture
Trustee pursuant to the Indenture:
(i) Characteristics of Receivables. Each Receivable (a)
shall have been originated in the United States of America by a Dealer for
the retail sale of a Financed Vehicle in the ordinary course of such
Dealer's business, shall have been fully and properly executed by the
parties thereto, shall have been purchased by the Seller from such Dealer
under an existing dealer agreement with the Seller, shall have been validly
assigned by such Dealer to the Seller, (b) shall have created or shall
create a valid, subsisting, and enforceable first priority security interest
in favor of the Seller in the Financed Vehicle, which security interest
shall be assignable by the Seller to the Purchaser, (c) shall contain
customary and enforceable provisions such that the rights and remedies of
the holder thereof shall be adequate for realization against the collateral
of the benefits of the security, (d) shall provide for level monthly
payments (provided that the payment in the first or last month in the life
of the Receivable may be minimally different from the level payment) that
fully amortize the Amount Financed by maturity and yield interest at the
Annual Percentage Rate, (e) shall provide for, in the event that such
contract is prepaid, a prepayment that fully pays the Principal Balance, and
(f) is a Precomputed Receivable or a Simple Interest Receivable.
(ii) Schedule of Receivables. The information set forth in
the Schedule of Receivables shall be true and correct in all material
respects as of the opening of business on the Cutoff Date, and no selection
procedures believed to be adverse to the Noteholders or the
Certificateholders shall have been utilized in selecting the Receivables
from those receivables which meet the criteria contained herein. The
computer tape or other listing regarding the Receivables made available to
the Purchaser and its assigns is true and correct in all respects.
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<PAGE> 8
(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 bank ruptcy, insolvency, reorganization, or other
similar laws affecting the enforcement of creditors' rights generally.
(v) No Government Obligor. None of the Receivables shall
be due from the United States of America or any State or from any agency,
department, or instrumentality of the United States of America or any
State.
(vi) Security Interest in Financed Vehicle. Immediately
prior to the transfer, assignment and conveyance thereof, each Receivable
shall be secured by a validly perfected first security interest in the
Financed Vehicle in favor of the Seller as secured party or all necessary
and appropriate actions shall have been commenced that would result in the
valid perfection of a first security interest in the Financed Vehicle in
favor of the Seller as secured party.
8
<PAGE> 9
(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.
(xiii) Title. It is the intention of the Seller that the
transfer and assignment herein contemplated constitute an absolute transfer
of the Receivables from the Seller to the Purchaser and that the beneficial
interest in and title to the Receivables not be part of the Seller's estate
in the event of the filing of a bankruptcy petition by or against the Seller
under any bankruptcy law. No Receivable has been transferred, assigned, or
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<PAGE> 10
pledged by the Seller to any Person other than the Purchaser. Immediately
prior to the transfer and assignment herein contemplated, the Seller had
good and marketable title to each Receivable free and clear of all Liens,
encumbrances, security interests, and rights of others and, immediately
upon the transfer thereof, the Purchaser shall have good and marketable
title to each Receivable, free and clear of all Liens, encumbrances,
security interests, and rights of others; and the transfer has been
perfected under the UCC.
(xiv) Valid Assignment. No Receivable shall have been
originated in, or shall be subject to the laws of, any jurisdiction under
which the transfer, assignment and conveyance of such Receivable under this
Agreement or pursuant to transfers of the Notes or the Certificates shall be
unlawful, void, or voidable. The Seller has not entered into any agreement
with any account debtor 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 69.8% of the
aggregate Principal Balance of the Receivables, constituting 62.2% 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.
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<PAGE> 11
(xix) Amortization Type. By aggregate Principal Balance as
of the Cutoff Date, approximately 15% of the Receivables constitute
Precomputed Receivables and 85% of the Receivables constitute Simple
Interest Receivables.
(xx) Origination. Each Receivable shall have an origination
date on or after April 1, 1996.
(xxi) Maturity of Receivables. Each Receivable shall have an
original maturity of not greater than sixty (60) months.
(xxii) Minimum Annual Percentage Rate. Each Receivable shall
have an Annual Percentage Rate equal to or greater than 7.75%.
(xxiii) Scheduled Payments. Each Receivable shall have a
first Scheduled Payment due, in the case of Precomputed Receivables, or a
first scheduled due date, in the case of Simple Interest Receivables, on or
prior to July 31, 1998 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, in
the case of Precomputed Receivables, and the number of scheduled due dates,
in the case of Simple Interest Receivables, shall not have been extended on
any Receivable on or before the Cutoff Date.
(xxvi) Other Data. The numerical data relating to the
characteristics of the Receivables contained in the Prospectus are true and
correct in all material respects.
(xxvii) Agreement. The representations and warranties in
this Agreement shall be true.
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(xxviii) No Receivables Originated in Alabama or
Pennsylvania. No Receivable shall have been originated in Alabama or
Pennsylvania.
12
<PAGE> 13
ARTICLE IV
CONDITIONS
4.01 Conditions to Obligation of the Purchaser. The obligation of the
Purchaser to acquire the Receivables is subject to the satisfaction of the
following conditions:
(a) Representations and Warranties True. The representations and
warranties of the Seller hereunder shall be true and correct on the Closing
Date with the same effect as if then made, and the Seller shall have performed
all obligations to be performed by it hereunder on or prior to the Closing Date.
(b) Computer Files Marked. The Seller shall, at its own expense,
on or prior to the Closing Date, indicate in its computer files that the
Receivables have been conveyed to the Purchaser pursuant to this Agreement and
deliver to the Purchaser the Schedule of Receivables certified by an officer of
the Seller to be true, correct and complete.
(c) Documents to be Delivered by the Seller at the Closing.
(i) The Assignment. At the Closing, the Seller will execute
and deliver the Assignment. The Assignment shall be substantially in the
form of Exhibit A hereto.
(ii) Evidence of UCC Filing. On or prior to the Closing Date,
the Seller shall record and file, at its own expense, a UCC-1 financing
statement in each jurisdiction in which required by applicable law, executed
by the Seller, as seller or debtor, and naming the Purchaser, as purchaser
or secured party, naming the Receivables and the other property conveyed
hereunder as collateral, meeting the requirements of the laws of each such
jurisdiction and in such manner as is necessary to perfect the transfer,
assignment and conveyance of such Receivables to the Purchaser. The Seller
shall deliver a file-stamped copy, or other evidence satisfactory to the
Purchaser of such filing, to the Purchaser on or prior to the Closing Date.
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(iii) Other Documents. Such other documents as the Purchaser
may reasonably request.
(d) Other Transactions. The transactions contemplated by the Sale
and Servicing Agreement, the Indenture and the Trust Agreement shall be
consummated on the Closing Date.
4.02 Conditions to Obligation of the Seller. The obligation of the
Seller to convey the Receivables to the Purchaser is subject to the satisfaction
of the following conditions:
(a) Representations and Warranties True. The representations and
warranties of the Purchaser hereunder shall be true and correct on the Closing
Date with the same effect as if then made, and the Purchaser shall have
performed all obligations to be performed by it hereunder on or prior to the
Closing Date.
(b) Receivables Purchase Price. At the Closing Date, the
Purchaser will deliver to the Seller the Receivables Purchase Price, as provided
in Section 2.1(b).
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ARTICLE V
COVENANTS OF THE SELLER
The Seller covenants and agrees with the Purchaser as follows,
provided, however, that to the extent that any provision of this ARTICLE V
conflicts with any provision of the Sale and Servicing Agreement, the Sale and
Servicing Agreement shall govern:
5.01 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.
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(d) The Seller shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit the reader thereof to
know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each).
(e) The Seller shall maintain its computer systems so that, from
and after the time of conveyance hereunder of the Receivables to the Purchaser,
the Seller's master computer records (including any back-up archives) that refer
to a Receivable shall indicate clearly the interest of the Purchaser in such
Receivable and that such Receivable is owned by the Purchaser. Indication of the
Purchaser's ownership of a Receivable shall be deleted from or modified on the
Seller's computer systems when, and only when, the Receivable shall have been
paid in full or repurchased.
(f) If at any time the Seller shall propose to sell, grant a
security interest in, or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender, or other transferee, the
Seller shall give to such prospective purchaser, lender, or other transferee
computer tapes, records, or print-outs (including any restored from back-up
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been conveyed to and is owned by
the Purchaser.
(g) The Seller shall permit the Purchaser and its agents at any
time during normal business hours to inspect, audit, and make copies of and
abstracts from the Seller's records regarding any Receivable.
(h) Upon request, the Seller shall furnish to the Purchaser,
within twenty (20) Business Days, a list of all Receivables (by contract number
and name of Obligor) then owned by the Purchaser, together with a reconciliation
of such list to the Schedule of Receivables.
5.02 Other Liens or Interests. Except for the conveyances hereunder and
pursuant to the other Basic Documents, the Seller will not sell, pledge, assign
or transfer any Receivable to any other Person, or grant, create, incur, assume
or suffer to exist any Lien on any interest therein, and the Seller shall defend
the right,
16
<PAGE> 17
title, and interest of the Purchaser in, to and under such Receivables against
all claims of third parties claiming through or under the Seller; provided,
however, that the Seller's obligations under this Section 5.2 shall terminate
upon the termination of the Trust pursuant to the Trust Agreement.
5.03 Costs and Expenses. The Seller agrees to pay all reasonable costs
and disbursements in connection with the perfection, as against all third
parties, of the Purchaser's right, title and interest in and to the Receivables.
5.04 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 misfea-
17
<PAGE> 18
feasance, or bad faith of the Seller in the performance of its duties under this
Agreement or by reason of reckless disregard of the Seller's obligations and
duties under this Agreement.
(e) The Seller shall defend, indemnify, and hold harmless the
Purchaser from and against all costs, expenses, losses, claims, damages, and
liabilities arising out of or incurred in connection with the acceptance or
performance of the Seller's trusts and duties as Servicer under the Sale and
Servicing Agreement, except to the extent that such cost, expense, loss, claim,
damage, or liability shall be due to the willful misfeasance, bad faith, or
negligence (except for errors in judgment) of the Purchaser.
These indemnity obligations shall be in addition to any obligation
that the Seller may otherwise have.
5.05 Treatment. The Seller agrees to treat this conveyance as (i) an
absolute transfer for tax purposes and (ii) a sale for all other purposes
(including without limitation financial accounting purposes), in each case on
all relevant books, records, tax returns, financial statements and other
applicable documents.
18
<PAGE> 19
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.01 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.
6.02 Repurchase Events. The Seller hereby covenants and agrees with the
Purchaser for the benefit of the Purchaser, the Trust, the Owner Trustee, the
Indenture Trustee, the Noteholders and the Certificateholders, that the
occurrence of a breach of any of the Seller's representations and warranties
contained in Section 3.2(b) hereof shall constitute events obligating the
Seller to repurchase Receivables hereunder ("Repurchase Events"), at the
Purchase Amount from the Purchaser or from the Trust. The repurchase obligation
of the Seller shall constitute the sole remedy to the Purchaser, the Trust, the
Owner Trustee, the Indenture Trustee, the Noteholders or the Certificateholders
against the Seller with respect to any Repurchase Event.
6.03 Seller's Assignment of Purchased Receivables. With respect to all
Receivables repurchased by the Seller pursuant to this Agreement, the Purchaser
shall assign, without recourse, representation or warranty, to the Seller all
the Purchaser's right, title and interest in and to such Receivables, and all
security and documents relating thereto.
6.04 Trust. The Seller acknowledges that:
(a) The Purchaser will, pursuant to the Sale and Servicing Agreement,
convey the Receivables to the Trust and assign its rights under this Agreement
to the Owner Trustee for the benefit of the Noteholders and the
Certificateholders, and that the representations and warranties contained in
this Agreement and the rights of the Purchaser under Sections 6.2 and 6.3 hereof
are intended to benefit the Trust, the Owner Trustee, the Noteholders and the
Certificateholders. The Seller hereby consents to such conveyance and
assignment.
(b) The Trust will, pursuant to the Indenture, pledge the Receivables
and its rights under this Agreement to the Indenture Trustee for the benefit of
the
19
<PAGE> 20
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.
6.05 Amendment. This Agreement may be amended from time to time by a
written amendment duly executed and delivered by the Seller and the Purchaser;
provided, however, that any such amendment that materially adversely affects
the rights of the Noteholders or the Certificateholders under the Indenture,
Sale and Servicing Agreement or Trust Agreement shall be consented to by the
Noteholders of Notes evidencing not less than a majority of the Notes
Outstanding and the Certificateholders of Certificates evidencing not less than
a majority of the Certificate Balance.
6.06 Accountants' Letters.
(a) PricewaterhouseCoopers LLP will review the characteristics of
the Receivables described in the Schedule of Receivables and will compare those
characteristics to the information with respect to the Receivables contained in
the Prospectus.
(b) The Seller will cooperate with the Purchaser and
PricewaterhouseCoopers LLP in making available all information and taking all
steps reasonably necessary to permit such accountants to complete the review set
forth in Section 6.6(a) above and to deliver the letters required of them under
the Note Underwriting Agreement and the Certificate Underwriting Agreement.
(c) PricewaterhouseCoopers LLP 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.
6.07 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
20
<PAGE> 21
any such power, right or remedy preclude any other or further exercise thereof
or the exercise of any other power, right or remedy.
6.08 Notices. All communications and notices pursuant hereto to either
party shall be in writing or by telegraph or telex and addressed or delivered to
it at its address (or in case of telex, at its telex number at such address)
shown in the opening portion of this Agreement or at such other address as may
be designated by it by notice to the other party and, if mailed or sent by
telegraph or telex, shall be deemed given when mailed, communicated to the
telegraph office or transmitted by telex.
6.09 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 Pur chaser, 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 Receiv-
ables and the enforcement of any obligation of the Seller hereunder.
6.10 Representations to the Seller. The respective agreements,
representations, warranties and other statements by the Seller and the Purchaser
set forth in or made pursuant to this Agreement shall remain in full force and
effect and will survive the closing under Section 2.2 hereof.
6.11 Confidential Information. The Purchaser agrees that it will
neither use nor disclose to any Person the names and addresses of the Obligors,
except in connection with the enforcement of the Purchaser's rights hereunder,
under the Receivables, under any Sale and Servicing Agreement or as required by
law.
6.12 Headings and Cross-References. The various headings in this
Agreement are included for convenience only and shall not affect the meaning or
interpretation of any provision of this Agreement. References in this Agreement
to Section names or numbers are to such Sections of this Agreement.
21
<PAGE> 22
6.13 GOVERNING LAW. THIS AGREEMENT AND THE ASSIGNMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
6.14 Counterparts. This Agreement may be executed in two or more
counterparts and by different parties on separate counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
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: /s/ Ann O. Lee
-------------------------------
Name: A. O. Lee
Title: Assistant Secretary
FORD CREDIT AUTO RECEIVABLES
TWO L.P.
By: FORD CREDIT AUTO RECEIVABLES
TWO, INC.,
as General Partner
By: /s/ Ann O. Lee
---------------------------
Name: A. O. Lee
Title: Assistant Secretary
<PAGE> 24
EXHIBIT A
ASSIGNMENT
For value received, in accordance with the Purchase Agreement dated as
of July 1, 1998 (the "Purchase Agreement"), between the undersigned and FORD
CREDIT AUTO RECEIVABLES TWO L.P. (the "Purchaser"), the undersigned does hereby
assign, transfer and otherwise convey unto the Purchaser, without recourse, all
right, title and interest of the undersigned, whether now owned or hereafter
acquired, in and to the following: (i) the Receivables; (ii) with respect to
Precomputed Receivables, monies due thereunder on or after the Cutoff Date
(including Payaheads) and, with respect to Simple Interest Receivables, monies
due or received thereunder on or after the Cutoff Date (including in each case
any monies received prior to the Cutoff Date that are due on or after the Cutoff
Date and were not used to reduce the principal balance of the Receivable);
(iii) the security interests in the Financed Vehicles granted by Obligors
pursuant to the Receivables and any other interest of the Seller in the Financed
Vehicles; (iv) rights to receive proceeds with respect to the Receivables from
claims on any physical damage, credit life, credit disability, or other
insurance policies covering Financed Vehicles or Obligors; (v) Dealer Recourse;
(vi) all of the Seller's rights to the Receivable Files; (vii) payments and
proceeds with respect to the Receivables held by the Seller; (viii) all property
(including the right to receive Liquidation Proceeds) securing a Receivable
(other than a Receivable repurchased by the Seller); (ix) rebates of premiums
and other amounts relating to insurance policies and other items financed under
the Receivables in effect as of the Cutoff Date; and (x) all present and future
claims, demands, causes of action and choses in action in respect of any or all
of the foregoing and all payments on or under and all proceeds of every kind and
nature whatsoever in respect of any or all of the foregoing, including all
proceeds of the conversion thereof, voluntary or involuntary, into cash or other
liquid property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind and other
forms of obligations and receivables, instruments and other property which at
any time constitute all or part of or are
<PAGE> 25
included in the proceeds of any of the foregoing. The foregoing conveyance does
not constitute and is not intended to result in any assumption by the Purchaser
of any obligation of the undersigned to the Obligors, insurers or any other
Person in connection with the Receivables, Receivable Files, any insurance
policies or any agreement or instrument relating to any of them.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the
Purchase Agreement and is to be governed by the Purchase Agreement.
2
<PAGE> 26
Capitalized terms used herein and not otherwise defined shall have the
meaning assigned to them in the Purchase Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed as of July 1, 1998.
FORD MOTOR CREDIT COMPANY
By: _______________________
Name:
Title:
3
<PAGE> 27
EXHIBIT B
Schedule of Receivables
DELIVERED TO PURCHASER
AT CLOSING
<PAGE> 28
Schedule A
Location of Receivable Files
Akron
175 Montrose West Avenue
Crown Pointe Building
Suite 300
Copley, OH 44321
Albany
5 Pine West Plaza
Albany, NY 12205
Albuquerque
6100 Uptown Blvd., N.E.
Suite 300
Albuquerque, NM 87110
Amarillo
1616 S. Kentucky
Bldg. D, Suite 130
Amarillo, TX 79102
Anchorage
3201 C Street
Suite 303
Anchorage, AK 99503
Appleton
54 Park Place
Appleton, WI 54915-8861
Athens
3708 Atlanta Highway
Athens, GA 30604
Atlanta-North
North Park Town Center
Bldg. 400, Suite 180
1000 Abernathy Rd. N.E.
Atlanta, GA 30328
A-1
<PAGE> 29
Atlanta-South
1691 Phoenix Blvd.
Suite 300
Atlanta, GA 30349
Atlanta/CL
1117 Perimeter Ctr. W
Suite 404 West
Atlanta, GA 30338
Atlantic Region District Office
14104 Newbrook Drive
Chantilly, VA 22021
Austin
1701 Directors Blvd.
Suite 320
Austin, TX 78744
Baltimore-East
Campbell Corporate
Center One
4940 Campbell Blvd.
Suite 140
Whitemarsh Business Community
Baltimore, MD 21236
Beaumont
2615 Calder
Suite 715
Beaumont, TX 77704
Billings
1643 Lewis Avenue
Suite 201
Billings, MT 59102
Birmingham
3535 Grandview Parkway
Suite 340
Birmingham, AL 35243
Boston-North
One Tech Drive
3rd Floor
Andover, MA 01810-2497
Boston-South
A-2
<PAGE> 30
Southboro Place
2nd Floor
352 Turnpike Road
Southboro, MA 01772
Bristol
Landmark Center-
Suite A
113 Landmark Lane
Bristol, TN 37620
Buffalo
95 John Muir Drive
Suite 102
Amherst, NY 14228
Cape Girardeau
1409-C N. Mt. Auburn Rd.
Cape Girardeau, MO 63701
Charleston
Rivergate Center
Suite 150
4975 LaCross Road
North Charleston, SC 29418
Charlotte
6302 Fairview Road
Suite 500
Charlotte, NC 28210
Charlotte/CL
6302 Fairview Road
Suite 510
Charlotte, NC 28210
Chattanooga
6025 Lee Highway
Suite 443
Chattanooga, TN 37421
Cheyenne
6234 Yellowstone Road
Cheyenne, WY 82009
A-3
<PAGE> 31
Chicago-East
One River Place
Suite A
Lansing, IL 60438
Chicago-North
9700 Higgins Road
Suite 720
Rosemont, IL 60018
Chicago-South
The Office of Waterfall Glen I
Suite 310
900 South Frontage Road
Woodridge, IL 60517
Chicago-West
2500 W. Higgins Rd.
Suite 280
Hoffman Estates, IL 60195
Chicago/CL
745 McClintock Drive
Suite 300
Burr Ridge, IL 60521
Cincinnati
8805 Governors Hill Dr.
Suite 230
Cincinnati, OH 45249
Cleveland
5700 Lombardo Centre
Suite 101
Seven Hills, OH 44131-2581
Colorado Springs
5575 Tech Center Dr.
Suite 220
Colorado Springs, CO 80919
Columbia
250 Berryhill Road
Suite 201
Columbia, SC 29210
A-4
<PAGE> 32
Columbus
Metro V, Suite 470
655 Metro Place S
Dublin, OH 43017
Coral Springs-East
3111 N. University Dr.
Suite 800
Coral Springs, FL 33065
Corpus Christi
5350 South Staples
Suite 225
Corpus Christi, TX 78411
Dallas
Campbell Forum
Suite 600
801 E. Campbell Road
Richardson, TX 75081
Dallas
Campbell Forum
Suite 650
801 E. Campbell Road
Richardson, TX 75081
Davenport
5405 Utica Ridge Road
Suite 200
Davenport, IA 52807
Decatur
401 Lee Street
Suite 500
Decatur, AL 35602
Denver
6300 S. Syracuse Way
Suite 195
Englewood, CO 80111
Des Moines
4200 Corporate Drive
Suite 107
W. Des Moines, IA 50266
Detroit-North
A-5
<PAGE> 33
1301 Longlake Road
Suite 150
Troy, MI 48098
Detroit-West
1655 Fairlane Circle
Suite 900
Allen Park, MI 48101
Detroit/CL
One Parklane Blvd.
Suite 301E
Dearborn, MI 48126
Dothan
137 Clinic Drive
Dothan, AL 36303
El Paso
1200 Golden Key Circle
Suite 104
El Paso, TX 79925
Eugene
1600 Valley River Drive
Suite 190
Eugene, OR 97401
Falls Church
1420 Springhill Road
Suite 550
McLean, VA 22102
Fargo
3100 13th Ave. South
Suite 304
Fargo, ND 58103
A-6
<PAGE> 34
Fayetteville
4317 Ramsey Street
Suite 300
Fayetteville, NC 28311
Findlay
3500 North Main Street
Findlay, OH 45840-1447
Ft. Myers
11935 Fairway Lakes Dr.
Fort Myers, FL 33913
Ft. Worth
Center Park Tower
Suite 400
2350 West Airport Frwy.
Bedford, TX 76022
Grand Junction
744 Horizon Court
Suite 330
Grand Junction, CO 81506
Grand Rapids
2851 Charlevoix Drive SE
Suite 300
Grand Rapids, MI 49546
Greensboro
1500 Pinecroft Rd.
Suite 220
Greensboro, NC 27407
Harlingen
1916 East Harrison
Harlingen, TX 78550
Harrisburg
4900 Ritter Road
Mechanicsburg, PA 17055
Henderson
618 North Green Street
Henderson, KY 42420
A-7
<PAGE> 35
Honolulu
Ala Moano Pacific Center
Suite 922
1585 Kapiolani Blvd.
Honolulu, HI 96814
Houston-North
363 N. Sam Houston Pkwy. E.
Suite 700
Houston, TX 77060
Houston-West
820 Gessner
Suite 700
Houston, TX 77024
Huntington
3425 U.S. Route 60 East
Barboursville, WV 25504
Indianapolis
5875 Castle Creek Pkwy.
North Drive
Suite 240
Indianapolis, IN 46250
Jackson
800 Avery Boulevard
Suite B
Ridgeland, MS 39157
Jacksonville
Suite 310
9485 Regency Square Boulevard
Jacksonville, FL 32225
Jefferson City
210 Prodo Drive
Jefferson City, MO 65109
A-8
<PAGE> 36
Kansas City
8717 West 110th Street
Bldg. #14, Suite 550
Overland Park, KS 66210
Knoxville
5500 Lonas Drive
Suite 260
Knoxville, TN 37909
Lafayette
Saloom Office Park
Suite 350
100 Asthma Boulevard
Lafayette, LA 70508
Lansing
2140 University Park Drive
Okemos, MI 48864
Las Vegas
500 N Rainbow Blvd.
Suite 312
Las Vegas, NV 89107
Little Rock
1701 Centerview Dr.
Suite 301
Little Rock, AR 72211
Long Island
One Jericho Plaza
2nd Floor Wing B
Jericho, NY 11753
Louisville
502 Executive Park
Louisville, KY 40207
Lubbock
4010 82nd Street
Suite 200
Lubbock, TX 79424
A-9
<PAGE> 37
Macon
5400 Riverside Drive
Suite 201
Macon, GA 31210
Manchester
4 Bedford Farms
Bedford, NH 03110
Marshall
1408 North Michigan
Marshall, IL 62441
Memphis
6555 Quince Road
Suite 300
Memphis, TN 38119
Miami
6303 Blue Lagoon Drive
Suite 200
Miami, FL 33126
Milwaukee
10850 W. Park Place
Suite 110
Milwaukee, WI 53224
Minneapolis
One Southwest Crossing
Suite 308
11095 Viking Drive
Eden Prairie, MN 55344
Mobile
1201 Montlimar Dr.
Suite 700
Mobile, AL 36609-1718
Nashville
Highland Ridge
Suite 190
565 Marriott Drive
Nashville, TN 37214
A-10
<PAGE> 38
New Haven
35 Thorpe Ave.
Wallingford, CT 06492
New Jersey-Central
101 Interchange Plaza
Cranbury, NJ 08512
New Jersey-North
103 Eisenhower Parkway
4th Floor
Roseland, NJ 07068
New Jersey-South
10000 MidAtlantic Dr.
Suite 401 West
Mt. Laurel, NJ 08054
New Orleans
Lakeway III
3838 N. Causeway Blvd.
Suite 3200
Metairie, LA 70002
Norfolk
Greenbrier Pointe
Suite 350
1401 Greenbrier Pkwy.
Chesapeake, VA 23320
Odessa
Ashford Park Office Center
Suite 201A
2626 John B. Sheprd Parkway
Odessa, TX 79762
Oklahoma City
Perimeter Center
Suite 300
4101 Perimeter Ctr Dr.
Oklahoma City, OK 73112
Omaha
10040 Regency Circle
Suite 100
Omaha, NE 68114-3786
Omaha Customer Service Center
A-11
<PAGE> 39
12110 Emmet Street
Omaha, NB 68164
Orange
765 The City Drive
Suite 400
Orange, CA 92668
Orange/CL
765 The City Drive
Suite 401
Orange, CA 92668
Orlando
1060 Maitland Ctr Commons
Suite 210
Maitland, FL 32751
Pasadena
225 S. Lake Avenue
Suite 1200
Pasadena, CA 91101
Pensacola
25 W. Cedar Street
Suite 316
Pensacola, Fl 32501
Philadelphia
Bay Colony Executive Park
Suite 100
575 E. Swedesford Rd.
Wayne, PA 19087
Philadelphia/CL
500 N. Gulph Rd.
Suite 110
King of Prussia, PA 19406
A-12
<PAGE> 40
Phoenix
4742 North 24th Street
Suite 215
Phoenix, AZ 85016
Pittsburgh
Foster Plaza 9
750 Holiday Drive
4th Floor, Suite 420
Pittsburgh, PA 15220
Portland
2401 Congress Street
Portland, ME 04102
Portland
10220 S.W. Greenburg Blvd.
Suite 415
Portland, OR 97223
Raleigh
3651 Trust Drive
Raleigh, NC 27604
Regional Opers Center
7090 Columbia Gateway Dr.
Columbia, MD 21046
Richmond
300 Arboretum Place
Suite 320
Richmond, VA 23236
Roanoke
5238 Valley Pointe Pkwy.
Suite 6
Roanoke, VA 24019
Sacramento
2720 Gateway Oaks Dr.
Suite 200
Sacramento, CA 95833
Saginaw
4901 Towne Centre Rd.
Suite 200
Saginaw, MI 48605
A-13
<PAGE> 41
Salt Lake City
310 E. 4500 S.
Suite 340
Murray, UT 84107
Santa Ana Central Collections
765 The City Drive
Suite 402
Orange. CA 92668
San Antonio
100 N.E. Loop 410
Suite 625
San Antonio, TX 78216-4742
San Bernardino
1615 Orange Tree Lane
Suite 215
Redlands, CA 92374
San Diego
3111 Camino Del Rio N.
Suite 1333
San Diego, CA 92108
San Francisco
4301 Hacienda Dr.
Suite 400
Pleasanton, CA 94588
San Francisco/CL
4900 Hopyard Road
Suite 220
Pleasanton CA 94588
San Jose
1900 McCarthy Blvd.
Suite 400
Milpitas, CA 95035
Savannah
6600 Abercorn Street
Suite 206
Savannah, GA 31405
A-14
<PAGE> 42
Seattle
13555 S.E. 36th Street
Suite 350
Bellevue, WA 98006
Shreveport
South Pointe Centre
Suite 200
3007 Knight Street
Shreveport, LA 71105
South Bay
301 E. Ocean Boulevard
Suite 1900
Long Beach, CA 90802
South Bend
4215 Edison Lakes Parkway
Suite 140
Mishawaka, IN 46545
Spokane
901 North Monroe Ct.
Suite 350
Spokane, WA 99201-2148
Springfield
3275 E. Ridgeview
Springfield, MO 65804
St. Louis
4227 Earth City Expressway
Suite 100
Earth City, MO 63045
St. Paul
7760 France Avenue South
Suite 920
Bloomington, MN 55435
Syracuse
5788 Widewaters Pkwy.
DeWitt, NY 13214
Tampa
Lincoln Pointe, Suite 800
2502 Rocky Point Drive
Tampa, FL 33607
A-15
<PAGE> 43
Tulsa
9820 East 41st St.
Suite 300
Tulsa, OK 74145
Tupelo
One Mississippi Plaza
Tupelo, MS 38801
Tyler
821 East SE Loop 323
Suite 300
Tyler, TX 75701
Ventura
260 Maple Court
Suite 210
Ventura, CA 93003
Washington, D.C.
2440 Research Blvd.
Suite 150
Rockville, MD 20850
Westchester
660 White Plains Road
Tarrytown, NY 10591
Western Carolina
215 Thompson Street
Hendersonville, NC 28792
Wichita
7570 West 21st
Wichita, KS 67212
A-16
<PAGE> 44
APPENDIX A
Definitions and Usage
AA-1
<PAGE> 45
Schedule B Receivables Purchase Price
<TABLE>
<S> <C>
Total net cash proceeds of offering $2,099,457,186.33
of Notes and Certificates received
by Purchaser after funding Reserve
Account
plus Value of Class A-5 Notes $ 199,963,456.00
------------------
Total value received by Purchaser $2,299,420,642.33
available for transfer to Ford ==================
Credit as Seller
Receivables Purchase Price $ 2,415,022,955.31
(equal to 105% of principal
amount of Receivables)
minus Total value received by $ 2,299,420,642.33
Purchaser available for transfer to
Ford Credit as Seller
Difference(1) $ 115,602,312.98
==================
Total portion of Receivables $ 2,101,769,232.59(2)
Purchase Price paid by the
Seller in cash(3)
plus Value of Class A-5 Notes $ 199,963,456.00
------------------
plus Capital Contribution from $ 113,290,266.72
-----------------
Ford Credit
$ 2,415,022,955.31
------------------
</TABLE>
- -------------------
(1)In order to maintain the 98% interest of Ford Credit as the limited
partner of the Purchaser and the 2% interest of Ford Credit Auto Receivables
Two, Inc. ("FCARTI") as the general partner of the Purchaser, FCARTI must
contribute 2% of $115,602,312.98 to the Purchaser. FCARTI will obtain such
amount ($2,312,046.26) through a capital contribution from Ford Credit.
(2)Representing the sum of the total net proceeds received by the Purchaser
after the funding of the Reserve Account (equal to $2,099,457,186.33) and the
capital contribution from FCARTI to the Purchaser (equal to $2,312,046.26).
(3)This amount includes the capital contribution from FCARTI.
B-1
<PAGE> 1
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:
(0a) 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.
(0b) 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.
(0c) 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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(0d) 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.
(0e) Any agreement, instrument or statute defined or referred to
below or in any agreement or instrument that is governed by this Appendix means
such agreement or instrument or statute as from time to time amended, modified
or supplemented, including (in the case of agreements or instruments) by waiver
or consent and (in the case of statutes) by succession of comparable successor
statutes and includes (in the case of agreements or instruments) references to
all attachments thereto and instruments incorporated therein. References to a
Person are also to its permitted successors and assigns.
Definitions
"Accrued Class A Note Interest" shall mean, with respect to any
Distribution Date, the sum of the Class A Noteholders' Monthly Accrued Interest
for such Distribution Date and the Class A Noteholders' Interest Carryover
Shortfall for such Distribution Date.
"Accrued Class B Note Interest" shall mean, with respect to any
Distribution Date, the sum of the Class B Noteholders' Monthly Accrued Interest
for such Distribution Date and the Class B Noteholders' Interest Carryover
Shortfall for such Distribution Date.
"Accrued Class C Certificate Interest" shall mean, with respect to
any Distribution Date, the sum of the Class C Certificateholders' Monthly
Accrued Interest for such Distribution Date and the Class C Certificateholders'
Interest Carryover Shortfall for such Distribution Date.
"Accrued Class D Certificate Interest" shall mean, with respect to
any Distribution Date, the sum of the Class D Certificateholders' Monthly
Accrued Interest for such Distribution Date and the Class D Certificateholders'
Interest Carryover Shortfall for such Distribution Date.
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"Act" shall have the meaning specified in
Section 11.3(a) of the Indenture.
"Actuarial Method" shall mean the method of allocating a fixed level
payment on a Receivable between principal and interest, pursuant to which the
portion of such payment that is allocated to interest is the product of
one-twelfth (1/12) of the APR on the Receivable multiplied by the scheduled
principal balance of the Receivable.
"Actuarial Receivable" shall mean any Receivable under which the
portion of a payment with respect thereto allocable to interest and the portion
of a 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 July 1, 1998, by and among the Administrator, the Issuer and the
Indenture Trustee.
"Administrator" shall mean Ford Credit, in its capacity as
administrator under the Administration Agreement, or any successor Administrator
thereunder.
"Advance" shall mean either a Precomputed Advance or a Simple
Interest Advance or both, as applicable.
"Affiliate" shall mean, with respect to any specified Person, any
other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used with
respect to any Person shall mean the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing.
"Aggregate Certificate Balance" shall mean, as of any date of
determination, the sum of the Certificate Balance as of such date of the Class C
Certificates and the Certificate Balance as of such date of the Class D
Certificates.
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"Amount Financed" shall mean, with respect to a Receivable, the
amount advanced under the Receivable toward the purchase price of the Financed
Vehicle and any related costs.
"Annual Percentage Rate" or "APR" of a Receivable shall mean the
annual rate of finance charges stated in the Receivable.
"Applicable Tax State" shall mean, as of any date of determination,
each State as to which any of the following is then applicable: (a) a State in
which the Owner Trustee maintains its Corporate Trust Office, (b) a State in
which the Owner Trustee maintains its principal executive offices, and (c) the
State of Michigan.
"Assignment" shall mean the document of assignment attached as
Exhibit A to the Purchase Agreement.
"Authenticating Agent" shall have the meaning
specified in Section 2.14 of the Indenture.
"Authorized Officer" shall mean, (i) with respect to the Issuer, any
officer within the Corporate Trust Office of the Owner Trustee, including any
vice president, assistant vice president, secretary, assistant secretary or any
other officer of the Owner Trustee customarily performing functions similar to
those performed by any of the above designated officers and, for so long as the
Administration Agreement is in full force and effect, any officer of the
Administrator who is authorized to act for the Administrator in matters relating
to the Issuer and to be acted upon by the Administrator pursuant to the
Administration Agreement; and (ii) with respect to the Indenture Trustee or the
Owner Trustee, any officer within the Corporate Trust Office of the Indenture
Trustee or the Owner Trustee, as the case may be, including any vice president,
assistant vice president, secretary, assistant secretary or any other officer of
the Indenture Trustee or the Owner Trustee, as the case may be, customarily
performing functions similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject and shall also mean, with respect to the
Owner Trustee, any officer of the Administrator.
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"Available Funds" shall mean, for any Distribution Date, the sum of
the Available Collections for such Distribution Date and the Reserve Account
Release Amount for such Distribution Date.
"Available Collections" shall mean, for any Distribution Date, the
sum of the following amounts with respect to the Collection Period preceding
such Distribution Date: (i) all scheduled payments and all prepayments in full
collected with respect to Precomputed Receivables (including amounts withdrawn
from the Payahead Account but excluding amounts deposited into the Payahead
Account) and all payments collected with respect to Simple Interest Receivables;
(ii) all Liquidation Proceeds attributable to Receivables which became
Liquidated Receivables during such Collection Period 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 Precomputed Advances made by the Servicer of principal due on the
Precomputed Receivables; (iv) all Advances made by the Servicer of interest due
on the Receivables and all amounts advanced by the Servicer pursuant to Section
4.4(c) of the Sale and Servicing Agreement; (v) the Purchase Amount received
with respect to each Receivable that became a Purchased Receivable during such
Collection Period; and (vi) partial prepayments of any refunded item included in
the principal balance of a Receivable, such as extended warranty protection plan
costs, or physical damage, credit life, disability insurance premiums, or any
partial prepayment which causes a reduction in the Obligor's periodic payment to
an amount below the Scheduled Payment as of the Cutoff Date; provided however,
that in calculating the Available Collections the following will be excluded:
(i) amounts received on any Receivable to the extent that the Servicer has
previously made an unreimbursed Advance on such Receivable; (ii) amounts
received on any Receivable to the extent that the Servicer has previously made
an unreimbursed Advance on a Receivable which is not recoverable from
collections on the particular Receivable; (iii) Liquidation Proceeds with
respect to a particular Precomputed Receivable to the extent of any
unreimbursed Precomputed Advances thereon; (iv) all payments and proceeds
(including Liquidation Proceeds) of any Receivables the Purchase Amount of which
has been included in the Available Funds in a prior Collection Period; (v)
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Liquidation Proceeds with respect to a Simple Interest Receivable attributable
to accrued and unpaid interest thereon (but not including interest for the then
current Collection Period) but only to the extent of any unreimbursed Simple
Interest Advances; and (vi) amounts constituting the Supplemental Servicing Fee.
"Bankruptcy Code" shall mean the United States
Bankruptcy Code, 11 U.S.C. 101 et seq., as amended.
"Basic Documents" shall mean the Certificate of Limited Partnership,
the Limited Partnership Agreement, the Certificate of Trust, the Trust
Agreement, the Purchase Agreement, the Sale and Servicing Agreement, the
Indenture, the Administration Agreement, the Note Depository Agreement, the
Control Agreement and the other documents and certificates delivered in
connection therewith.
"Book-Entry Class A-1 Note" shall mean a beneficial interest in the
Class A-1 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.
"Book-Entry Class A-2 Note" shall mean a beneficial interest in the
Class A-2 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.
"Book-Entry Class A-3 Note" shall mean a beneficial interest in the
Class A-3 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.
"Book-Entry Class A-4 Note" shall mean a beneficial interest in the
Class A-4 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.
"Book-Entry Class A-5 Note" shall mean a beneficial interest in the
Class A-5 Notes, ownership and transfers of which shall be made through book
entries by
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a Clearing Agency as described in Section 2.11 of the Indenture.
"Book-Entry Class B Note" shall mean a beneficial interest in the
Class B 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.
"Book-Entry Notes" shall mean the Book-Entry Class A-1 Notes, the
Book-Entry Class A-2 Notes, the Book-Entry Class A-3 Notes, the Book-Entry Class
A-4 Notes, the Book-Entry Class A-5 Notes and the Book-Entry Class B Notes,
collectively.
"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 or
the State of Delaware are authorized or obligated by law, regulation or
executive order to remain closed.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Delaware Code Sections 3801 et seq., as amended.
"Capital Account" shall mean the account established pursuant to
Section 3.2 of the Trust Agreement and the amount of any Certificateholder's
Capital Account shall be the amount determined in accordance with such Section
3.2 of the Trust Agreement.
"Certificates" shall mean the Class C Certificates and the Class D
Certificates, collectively.
"Certificate Balance" shall mean, with respect to each Class of
Certificates and as the context so requires, (i) with respect to all
Certificates of such Class, an amount equal to, initially, the Initial Certif-
icate Balance of such Class of Certificates and, thereafter, an amount equal to
the Initial Certificate Balance of such Class of Certificates, reduced by all
amounts distributed to Certificateholders of such Class of Certificates and
allocable to principal or (ii) with respect to any Certificate of such Class, 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
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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 of the applicable Class, except that, in determining whether the
Indenture Trustee and Owner Trustee shall be protected in relying on any such
request, demand, authorization, direction, notice, consent, or waiver, only
Certificates that a Trustee Officer of the Indenture Trustee, if applicable,
and an Authorized Officer of the Owner Trustee with direct responsibility for
the administration of the Trust Agreement, if applicable, knows to be so owned
shall be so disregarded; provided, further that at any time following an Event
of Servicing Termination, in determining whether the Certificateholders of the
requisite portion or percentage of the Aggregate Certificate Balance may
terminate all the rights and obligations of the Servicer or waive any Event of
Servicing Termination to the extent set forth in Section 8.1 of the Sale and
Servicing Agreement, the Class D Certificates shall be disregarded and deemed to
have a Certificate Balance of zero until the Certificate Balance of the Class C
Certificates has been reduced to zero. Certificates so owned that have been
pledged in good faith may be regarded as included in the Certificate Balance of
the applicable Class if the pledgee establishes to the satisfaction of the
Indenture Trustee or the Owner Trustee, as applicable, the pledgee's right so
to act with respect to such Certificates and that the pledgee is not the Issuer,
any other obligor upon the Certificates, the Seller, the Servicer or any
Affiliate of any of the foregoing Persons.
"Certificate Distribution Account" shall mean each of the
Certificate Interest Distribution Account and the Certificate Principal
Distribution Account.
"Certificate Interest Distribution Account" shall mean the account
established and maintained as such pursuant to Section 4.1(c) of the Sale and
Servicing Agreement.
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"Certificate Principal Distribution Account" shall mean the account
established and maintained as such pursuant to Section 4.1(c) of the Sale and
Servicing Agreement.
"Certificateholder" shall mean a Person in whose name a Certificate
is registered in the Certificate Register.
"Certificate Indemnification Agreement" shall mean each of the
Certificate Indemnification Agreements, each dated as of July 20, 1998,(i) by
and between Ford Credit and the Certificate Underwriters and (ii) by and between
Ford Credit and the Initial Purchaser.
"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 G to the Trust Agreement filed for the Trust pursuant to Section
3810(a) of the Business Trust Statute.
"Certificate Paying Agent" shall mean any paying agent or co-paying
agent appointed pursuant to Section 3.10 of the Trust Agreement and shall
initially be the Owner Trustee.
"Certificate Pool Factor" shall mean, with respect to each Class of
Certificates as of the close of business on the last day of a Collection Period,
a seven-digit decimal figure equal to the Certificate Balance of such Class of
Certificates (after giving effect to any reductions therein to be made on the
immediately following Distribution Date) divided by the Initial Certificate
Balance of such Class of Certificates. Each Certificate Pool Factor will be
1.0000000 as of the Closing Date; thereafter, each Certificate Pool Factor will
decline to reflect reductions in the Certificate Balance of the applicable Class
of Certificates.
"Certificate Purchase Agreement" shall mean the Certificate Purchase
Agreement, dated as of July 20, 1998, among the Seller, Salomon Brothers Inc and
J.P. Morgan Securities Inc., as Initial Purchasers.
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"Certificate Register" and "Certificate Registrar" shall have the
respective meanings specified in Section 3.5 of the Trust Agreement.
"Certificate Underwriters" shall mean Salomon Brothers Inc and J.P.
Morgan Securities, Inc., as underwriters of the Class C Certificates pursuant
to the Certificate Underwriting Agreement.
"Certificate Underwriting Agreement" shall mean the Certificate
Underwriting Agreement, dated as of July 20, 1998, between the Seller and the
Certificate Underwriters.
"Class" shall mean (i) a class of Notes, which may be the Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class
A-5 Notes or the Class B Notes or (ii) a class of Certificates, which may be the
Class C Certificates or the Class D Certificates.
"Class A Noteholders' Interest Carryover Shortfall" shall mean,
with respect to any Distribution Date, the excess of the Class A Noteholders'
Monthly Accrued Interest for the preceding Distribution Date and any outstanding
Class A Noteholders' Interest Carryover Shortfall on such preceding Distribution
Date, over the amount in respect of interest that is actually paid to
Noteholders of Class A Notes on such preceding Distribution Date, plus interest
on the amount of interest due but not paid to Noteholders of Class A Notes on
the preceding Distribution Date, to the extent permitted by law, at the
respective Note Interest Rates borne by such Class A Notes for the related
Interest Period.
"Class A Noteholders' Monthly Accrued Interest" shall mean, with
respect to any Distribution Date, the aggregate interest accrued for the related
Interest Period on the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes, the Class A-4 Notes and the Class A-5 Notes at the respective Note
Interest Rate for such Class on the outstanding principal amount of the Notes of
each such Class on the immediately preceding Distribution Date or the Closing
Date, as the case may be, after giving effect to all payments of principal to
the Noteholders of the Notes of such Class on or prior to such preceding
Distribution Date.
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"Class A-1 Final Scheduled Distribution Date" shall mean the January
1999 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 $300,000,000 aggregate initial
principal amount Class A-1 5.608% Asset Backed Notes issued by the Trust
pursuant to the Indenture, substantially in the form of Exhibit A-1 to the
Indenture.
"Class A-1 Rate" shall mean 5.608% per annum. Interest with respect
to the Class A-1 Notes shall be computed on the basis of actual days elapsed and
a 360-day year for all purposes of the Basic Documents.
"Class A-2 Final Scheduled Distribution Date"
shall mean the June 1999 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 $300,000,000 aggregate initial
principal amount Class A-2 5.670% 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 5.670% per annum. Interest with respect
to the Class A-2 Notes shall be computed on the basis of actual days elapsed and
a 360-day year for all purposes of the Basic Documents.
"Class A-3 Final Scheduled Distribution Date"
shall mean the November 2000 Distribution Date.
"Class A-3 Noteholder" shall mean the Person in whose name a Class
A-3 Note is registered on the Note Register.
"Class A-3 Notes" shall mean the $650,000,000 aggregate initial
principal amount Class A-3 5.73% Asset Backed Notes issued by the Trust pursuant
to the Inden-
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ture, substantially in the form of Exhibit A-3 to the Indenture.
"Class A-3 Rate" shall mean 5.73% per annum. Interest with respect
to the Class A-3 Notes shall be computed on the basis of a 360-day year
consisting of twelve 30-day months for all purposes of the Basic Documents.
"Class A-4 Final Scheduled Distribution Date" shall mean the March
2002 Distribution Date.
"Class A-4 Noteholder" shall mean the Person in whose name a Class
A-4 Note is registered on the Note Register.
"Class A-4 Notes" shall mean the $712,000,000 aggregate initial
principal amount Class A-4 5.81% Asset Backed Notes issued by the Trust pursuant
to the Indenture, substantially in the form of Exhibit A-4 to the Indenture.
"Class A-4 Rate" shall mean 5.81% per annum. Interest with respect
to the Class A-4 Notes shall be computed on the basis of a 360-day year
consisting of twelve 30-day months for all purposes of the Basic Documents.
"Class A-5 Final Scheduled Distribution Date" shall mean the
October 2002 Distribution Date.
"Class A-5 Noteholder" shall mean the Person in whose name a Class
A-5 Note is registered on the Note Register.
"Class A-5 Notes" shall mean the $200,000,000 aggregate initial
principal amount Class A-5 5.86% Asset Backed Notes issued by the Trust pursuant
to the Indenture, substantially in the form of Exhibit A-5 to the Indenture.
"Class A-5 Rate" shall mean 5.86% per annum. Interest with respect
to the Class A-5 Notes shall be computed on the basis of a 360-day year
consisting of twelve 30-day months for all purposes of the Basic Documents.
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"Class B Final Scheduled Distribution Date" shall mean the february
2003 Distribution Date.
"Class B Noteholder" shall mean the Person in whose name a Class B
Note is registered on the Note Register.
"Class B Noteholders' Interest Carryover Shortfall" shall mean,
with respect to any Distribution Date, the excess of the Class B Noteholders'
Monthly Accrued Interest for the preceding Distribution Date and any outstanding
Class B Noteholders' Interest Carryover Shortfall on such preceding Distribution
Date, over the amount in respect of interest that is actually paid to
Noteholders of Class B Notes on such preceding Distribution Date, plus interest
on the amount of interest due but not paid to Noteholders of Class B Notes on
the preceding Distribution Date, to the extent permitted by law, at the Class B
Rate for the related Interest Period.
"Class B Noteholders' Monthly Accrued Interest" shall mean, with
respect to any Distribution Date, the aggregate interest accrued for the related
Interest Period on the Class B Notes at the Class B Rate on the outstanding
principal amount of the Class B Notes on the immediately preceding Distribution
Date or the Closing Date, as the case may be, after giving effect to all
payments of principal to the Noteholders of the Class B Notes on or prior to
such preceding Distribution Date.
"Class B Notes" shall mean the $92,000,000 aggregate initial
principal amount Class B 6.06% Asset Backed Notes issued by the Trust pursuant
to the Indenture, substantially in the form of Exhibit A-6 to the Indenture.
"Class B Rate" shall mean 6.06% per annum. Interest with respect to
the Class B Notes shall be computed on the basis of a 360-day year consisting of
twelve 30-day months for all purposes of the Basic Documents.
"Class C Certificateholder" shall mean the Person in whose name a
Class C Certificate is registered in the Certificate Register.
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"Class C Certificateholders' Interest Carryover Shortfall" shall
mean, with respect to any Distribution Date, the excess of the sum of the Class
C Certificateholders' Monthly Accrued Interest for the preceding Distribution
Date and any outstanding Class C Certificateholders' Interest Carryover
Shortfall from the close of business on such preceding Distribution Date, over
the amount in respect of interest that is actually paid to Class C
Certificateholders on such preceding Distribution Date, plus thirty (30) days of
interest on such excess, to the extent permitted by law, at the Class C Rate.
"Class C Certificateholders' Monthly Accrued Interest" shall mean,
with respect to any Distribution Date, thirty (30) days of interest (or, in the
case of the first Distribution Date, interest accrued from and including the
Closing Date to but excluding such Distribution Date) at the Class C Rate on
the Certificate Balance of the Class C Certificates on the immediately preceding
Distribution Date or the Closing Date, as the case may be, after giving effect
to all distributions allocable to the reduction of the Certificate Balance of
the Class C Certificates made on or prior to such preceding Distribution Date.
"Class C Certificates" shall mean the $46,000,000 aggregate initial
principal balance Class C 6.30% Asset Backed Certificates evidencing the
beneficial interest of a Class C Certificateholder in the property of the Trust,
substantially in the form of Exhibit A to the Trust Agreement; 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 the 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.
"Class C Final Scheduled Distribution Date" shall mean the April
2003 Distribution Date.
"Class C Rate" shall mean 6.30% per annum. Interest with respect to
the Class C Certificates shall be computed on the basis of a 360-day year
consisting of twelve 30-day months for all purposes of the Basic Documents.
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"Class D Certificateholder" shall mean the Person in whose name a
Class D Certificate is registered in the Certificate Register.
"Class D Certificateholders' Interest Carryover Shortfall" shall
mean, with respect to any Distribution Date, the excess of the sum of the Class
D Certificateholders' Monthly Accrued Interest for the preceding Distribution
Date and any outstanding Class D Certificateholders' Interest Carryover
Shortfall from the close of business on such preceding Distribution Date, over
the amount in respect of interest that is actually paid to Class D
Certificateholders on such preceding Distribution Date, plus thirty (30) days of
interest on such excess, to the extent permitted by law, at the Class D Rate.
"Class D Certificateholders' Monthly Accrued Interest" shall mean,
with respect to any Distribution Date, thirty (30) days of interest (or, in the
case of the first Distribution Date, interest accrued from and including the
Closing Date to but excluding such Distribution Date) at the Class D Rate on
the Certificate Balance of the Class D Certificates on the immediately preceding
Distribution Date or the Closing Date, as the case may be, after giving effect
to all distributions allocable to the reduction of the Certificate Balance of
the Class D Certificates made on or prior to such preceding Distribution Date.
"Class D Certificates" shall mean the $46,000,000 aggregate initial
principal balance Class D 7.70% Asset Backed Certificates evidencing the
beneficial interest of a Class D Certificateholder in the property of the Trust,
substantially in the form of Exhibit B to the Trust Agreement; 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 the 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.
"Class D Final Scheduled Distribution Date" shall mean the January
2004 Distribution Date.
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"Class D Rate" shall mean 7.70% per annum. Interest with respect to
the Class D Certificates shall be computed on the basis of a 360-day year
consisting of twelve 30-day months for all purposes of the Basic Documents.
"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 July 29, 1998.
"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.
"Collections" shall mean all amounts collected by the Servicer (from
whatever source) on or with respect to the Receivables.
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"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.
"Control Agreement" shall mean the Securities Account Control
Agreement, dated as of July 29, 1998, by and among the Seller, the Issuer, the
Indenture Trustee and The Chase Manhattan Bank in its capacity as a securities
intermediary.
"Corporate Trust Office" shall mean, (i) with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located at
222 Delaware Avenue, Wilmington, Delaware 19801 or at such other address as the
Owner Trustee may designate from time to time by notice to the
Certificateholders and the Depositor, or the principal corporate trust office
of any successor Owner Trustee (the address of which the successor Owner
Trustee will notify the Certificateholders and the Depositor); and (ii) with
respect to the Indenture Trustee, the principal corporate trust office of the
Indenture Trustee located at 450 West 33rd Street, New York, New York 10001, or
at such other address as the Indenture Trustee may designate from time to time
by 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 July 1, 1998.
"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
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(ii) all recourse rights against the Dealer which originated the Receivable and
any successor Dealer.
"Default" shall mean any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
"Definitive Notes" shall have the meaning specified in Section 2.11
of the Indenture.
"Depositor" shall mean the Seller in its capacity as Depositor under
the Trust Agreement.
"Determination Date" shall mean, with respect to any Collection
Period, the Business Day immediately preceding the Distribution Date following
such Collection Period.
"Distribution Date" shall mean the fifteenth (15th) day of each
calendar month or, if such day is not a Business Day, the next succeeding
Business Day.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"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 December 31, 2003.
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"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.
"First Priority Principal Distribution Amount" shall mean, with
respect to any Distribution Date, an amount equal to the excess, if any, of (a)
the aggregate outstanding principal amount of the Class A Notes as of the
preceding Distribution Date (after giving effect to any principal payments made
on the Class A Notes on such preceding Distribution Date) over (b) the Pool
Balance at the end of the Collection Period preceding such Distribution Date;
provided, however, that (i) the First Priority Principal Distribution Amount on
the Class A-1 Final Scheduled Distribution Date shall not be less than the
amount that is necessary to reduce the outstanding principal amount of the
Class A-1 Notes to zero; (ii) the First Priority Principal Distribution Amount
on the Class A-2 Final Scheduled Distribution Date shall not be less than the
amount that is necessary to reduce the outstanding principal amount of the Class
A-2 Notes to zero; (iii) the First Priority Principal Distribution Amount on the
Class A-3 Final Scheduled Distribution Date shall not be less than the amount
that is necessary to reduce the outstanding principal amount of the Class A-3
Notes to zero; (iv) the First Priority Principal Distribution Amount on the
Class A-4 Final Scheduled Distribution Date shall not be less than the amount
that is necessary to reduce the outstanding principal amount of the Class A-4
Notes to zero; and (v) the First Priority Principal Distribution Amount on the
Class A-5 Final Scheduled Distribution Date shall not be less than the amount
that is necessary to reduce the outstanding principal amount of the Class A-5
Notes to zero.
"Fitch" shall mean Fitch IBCA, Inc.
"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.
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"Grant" shall mean to mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create, and to grant a lien
upon and a security interest in and right of set-off against, and to deposit,
set over and confirm pursuant to the Indenture. A Grant of the Collateral or of
any other agreement or instrument shall include all rights, powers and options
(but none of the obligations) of the granting party thereunder, including the
immediate and continuing right to claim for, collect, receive and give receipt
for principal and interest payments in respect of the Collateral and all other
monies payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring Proceedings in the name of the granting party or otherwise, and generally
to do and receive anything that the granting party is or may be entitled to do
or receive thereunder or with respect thereto.
"Indemnified Parties" shall have the meaning assigned to such term
in Section 8.2 of the Trust Agreement.
"Indenture" shall mean the Indenture, dated as of July 1, 1998, by
and between the Trust and the Indenture Trustee.
"Indenture Trustee" shall mean The Chase Manhattan Bank, a New York
corporation, not in its individual capacity but solely as Indenture Trustee
under the Indenture, or any successor Indenture Trustee under the Indenture.
"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
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the Issuer, any such other obligor, the Seller or any Affiliate of any of the
foregoing Persons and (c) is not connected with the Issuer, any such other
obligor, the Seller or any Affiliate of any of the foregoing Persons as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
"Independent Certificate" shall mean a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1 of the
Indenture, made by an Independent appraiser or other expert appointed by an
Issuer Order and approved by the Indenture Trustee in the exercise of reasonable
care, and such opinion or certificate shall state that the signer has read the
definition of "Independent" in this Indenture and that the signer is Independent
within the meaning thereof.
"Initial Certificate Balance" shall mean, with respect to each Class
of Certificates and as the context so requires, (i) with respect to all
Certificates of such Class, $46,000,000 or (ii) with respect to any Certificate
of such Class, an amount equal to the initial denomination of such Certificate.
"Initial Pool Balance" shall mean $2,300,021,862.20
"Initial Purchasers" shall mean Salomon Brothers Inc and J.P.
Morgan Securities Inc., as initial purchasers of a portion of the Class D
Certificates pursuant to the Certificate Purchase Agreement.
"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
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specified in (vii) below, (vi) seeking, consent to or acquiescing in the
appointment of a trustee, receiver or liquidator of such Person or of all or
any substantial part of the assets of such Person or (vii) the failure to
obtain dismissal within 60 days of the commencement of any proceeding against
such Person seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law or
regulation, or the entry of any order appointing a trustee, liquidator or
receiver of such Person or of such Person's assets or any substantial portion
thereof.
"Interest Period" shall mean, with respect to any Distribution Date
(i) with respect to the Class A-1 Notes and the Class A-2 Notes, from and
including the Closing Date (in the case of the first Distribution Date) or from
and including the most recent Distribution Date on which interest has been paid
to but excluding the following Distribution Date and (ii) with respect to each
Class of Notes other than the Class A-1 Notes and the Class A-2 Notes, from and
including the Closing Date (in the case of the first Distribution Date) or from
and including the fifteenth day of the calendar month preceding each
Distribution Date to but excluding the fifteenth day of the following calendar
month.
"IRS" shall mean the Internal Revenue Service.
"Issuer" shall mean the Trust unless a successor replaces it and,
thereafter, shall mean the successor and for purposes of any provision contained
in the Indenture and required by the TIA, each other obligor on the Notes.
"Issuer Order" and "Issuer Request" shall mean a written order or
request signed in the name of the Issuer by any one of its Authorized Officers
and delivered to the Indenture Trustee.
"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.
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"Limited Partnership Act" shall mean the Delaware Revised Uniform
Limited Partnership Act, Chapter 17 of Title 6 of the Delaware Code, 17 Delaware
Code Section 101 et seq., as amended.
"Limited Partnership Agreement" shall mean the Amended and Restated
Agreement of Limited Partnership of Ford Credit Auto Receivables Two L.P., dated
as of June 1, 1996, by and between Ford Credit Auto Receivables Two, Inc., as
general partner, and Ford Credit, as limited partner.
"Liquidated Receivable" shall mean a Receivable which, by its terms,
is in default and as to which the Servicer has determined, in accordance with
its customary servicing procedures, that eventual payment in full is unlikely or
has repossessed and disposed of the Financed Vehicle.
"Liquidation Proceeds" shall mean the monies collected from whatever
source, during the respective Collection Period, on a Liquidated Receivable, net
of the sum of any amounts expended by the Servicer for the account of the
Obligor plus any amounts required by law to be remitted to the Obligor.
"Monthly Remittance Condition" shall have the meaning specified in
Section 4.1(e) of the Sale and Servicing Agreement.
"Moody's" shall mean Moody's Investors Service, Inc.
"Note Depository Agreement" shall mean the agreement dated July 29,
1998, 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.
"Note Indemnification Agreement" shall mean the Note Indemnification
Agreement, dated as July 20, 1998, by and between Ford Credit and the Note
Underwriters.
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"Note Interest Rate" shall mean the Class A-1 Rate, the Class A-2
Rate, the Class A-3 Rate, the Class A-4 Rate, the Class A-5 Rate or the Class B
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 (including the
Principal Distribution Account), including payment of principal of or interest
on the Notes on behalf of the Issuer.
"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 Underwriters" shall mean the underwriters named in Schedule I
to the Note Underwriting Agreement.
"Note Underwriting Agreement" shall mean the Note Underwriting
Agreement, dated as of July 20, 1998, among the Seller, Salomon Brothers Inc and
J.P. Morgan Securities Inc., as representatives of the several Note
Underwriters.
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"Notes" shall mean the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes and the Class B Notes,
collectively.
"Obligor" on a Receivable shall mean the purchaser or co-purchasers
of the Financed Vehicle or any other Person who owes payments under the
Receivable (not including any Dealer in respect of Dealer Recourse).
"Officer's Certificate" shall mean (i) with respect to the Trust, a
certificate signed by any Authorized Officer of the Trust and (ii) with respect
to the Seller or the Servicer, a certificate signed by the chairman of the
board, the president, any executive vice president, any vice president, the
treasurer, any assistant treasurer, or the controller of the Seller or the
Servicer, as applicable.
"Opinion of Counsel" shall mean a written opinion of counsel which
counsel shall be acceptable to the Indenture Trustee, the Owner Trustee or the
Rating Agencies, as applicable.
"Optional Purchase Percentage" shall mean 10%.
"Outstanding" shall mean with respect to the Notes, as of the date
of determination, all Notes theretofore authenticated and delivered under the
Indenture except:
(a) Notes theretofore cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(b) 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
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(c) 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; provided, further that (i) at any time following an
Event of Default, in determining whether the Noteholders of the requisite
principal amount of Notes Outstanding have given any request, demand,
authorization, direction, notice, consent, or waiver under any Basic Document
and (ii) at any time following an Event of Servicing Termination, in determining
whether the Noteholders of the requisite principal amount of Notes Outstanding
may terminate all the rights and obligations of the Servicer or waive any Event
of Servicing Termination to the extent set forth in Section 8.1 of the Sale and
Servicing Agreement, the Class B Notes shall be disregarded and deemed not to be
Outstanding until the principal amount of the outstanding Class A-5 Notes has
been reduced to zero. Notes owned by the Issuer, any other obligor upon the
Notes, the Seller, the Servicer or any Affiliate of any of the foregoing Persons
that have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Indenture Trustee the pledgee's
right so to act with respect to such Notes and that the pledgee is not the
Issuer, any other obligor upon the Notes, the Seller, the Servicer or any
Affiliate of any of the foregoing Persons.
"Outstanding Advances" shall mean either Outstanding Precomputed
Advances or Outstanding Simple Interest Advances or both, as applicable.
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"Outstanding Precomputed Advances" on the Precomputed Receivables
shall mean the sum, as of the close of business on the last day of a Collection
Period, of all Precomputed Advances as reduced as provided in Section 4.4(a) of
the Sale and Servicing Agreement.
"Outstanding Simple Interest Advances" on the Simple Interest
Receivables shall mean the sum, as of the close of business on the last day of a
Collection Period, of all Simple Interest Advances as reduced as provided in
Section 4.4(b) of the Sale and Servicing Agreement.
"Owner Trustee" shall mean PNC Bank, Delaware, a Delaware banking
corporation, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement, or any successor Owner Trustee under the Trust Agreement.
"Owner Trust Estate" shall mean all right, title and interest of the
Trust in, to and under the property and rights assigned to the Trust pursuant to
Article II of the Sale and Servicing Agreement.
"Payahead" on a Receivable shall mean the amount, as of the close of
business on the last day of a Collection Period, specified in Section 4.3 of the
Sale and Servicing Agreement with respect to such Receivable.
"Payahead Account" shall mean the account established and maintained
as such pursuant to Section 4.1(d) of the Sale and Servicing Agreement.
"Payahead Balance" on a Receivable shall mean the sum, as of the
close of business on the last day of a 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.
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"Permitted Investments" shall mean, on any date of determination,
book-entry securities, negotiable instruments or securities represented by
instruments in bearer or registered form with maturities not exceeding the
Business Day preceding the next Distribution Date which evidence:
(a) direct non-callable obligations of, and obligations fully
guaranteed as to timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of
any depository institution or trust company incorporated under the laws of
the United States of America or any state thereof (or any domestic branch
of a foreign bank) and subject to supervision and examination by Federal
or State banking or depository institution authorities; provided, however,
that at the time of the investment or contractual commitment to invest
therein, the commercial paper or other short-term unsecured debt
obligations (other than such obligations the rating of which is based on
the credit of a Person other than such depository institution or trust
company) thereof shall have a credit rating from each of the Rating
Agencies in the highest investment category granted thereby;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each of the Rating
Agencies in the highest investment category granted thereby;
(d) investments in money market funds having a rating from each of
the Rating Agencies in the highest investment category granted thereby
(including funds for which the Indenture Trustee or the Owner 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 non-callable obligation of, or fully guaranteed by, the United
States of
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America or any agency or instrumentality thereof the obligations of which
are backed by the full faith and credit of the United States of America,
in either case entered into with a depository institution or trust
company (acting as principal) described in clause (b); and
(g) any other investment with respect to which the Issuer or the
Servicer has received written notification from the Rating Agencies that
the acquisition of such investment as a Permitted Investment will not
result in a withdrawal or downgrading of the ratings on the Notes or the
Certificates.
"Person" shall mean any individual, corporation, estate,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, or government or any agency or political
subdivision thereof.
"Physical Property" shall have the meaning assigned to such term in
the definition of "Delivery" above.
"Pool Balance" as of the close of business of the last day of a
Collection Period shall mean the aggregate Principal Balance of the Receivables
(excluding Purchased Receivables and Liquidated Receivables).
"Pool Factor" as of the last day of a Collection Period shall mean
a seven-digit decimal figure equal to the Pool Balance divided by the Initial
Pool Balance.
"Precomputed Advance" shall mean the amount, as of the last day of a
Collection Period, which the Servicer is required to advance on the respective
Precomputed Receivable pursuant to Section 4.4(a) of the Sale and Servicing
Agreement.
"Precomputed Receivable" shall mean any Receivable under which the
portion of a payment allocable to earned interest (which may be referred to in
the related contract as an add-on finance charge) and the portion
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allocable to the Amount Financed are determined according to the sum of periodic
balances or the sum of monthly balances or any equivalent method, or which is an
Actuarial Receivable.
"Predecessor Note" shall mean, with respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note and, for purposes of this definition, any Note
authenticated and delivered under Section 2.6 of the Indenture in lieu of a
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note.
"Prepayment Date" shall mean, with respect to a prepayment of the
Certificates pursuant to Section 9.3(a) of the Trust Agreement or a distribution
to Certificateholders pursuant to Section 9.1(c) of the Trust Agreement, the
Distribution Date specified by the Owner Trustee pursuant to said Section 9.3(a)
or 9.1(c), as applicable.
"Prepayment Price" shall mean an amount equal to the Certificate
Balance of the Class of Certificates to be prepaid plus accrued and unpaid
interest thereon at the applicable Certificate Rate plus interest on any overdue
interest at the applicable Certificate Rate (to the extent lawful) to but
excluding the Prepayment Date.
"Principal Balance" of a Receivable, as of the close of business on
the last day of a Collection Period, shall mean the Amount Financed minus the
sum of (a) in the case of a Precomputed Receivable, that portion of all
Scheduled Payments due on or prior to such day allocable to principal using the
actuarial or constant yield method, (b) in the case of a Simple Interest
Receivable, that portion of all Scheduled Payments actually received on or prior
to such date allocable to principal using the Simple Interest Method, (c) any
refunded portion of extended warranty protection plan costs, or of physical
damage, credit life, or disability insurance premiums 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.
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"Principal Distribution Account" shall mean the administrative
subaccount of the Collection Account established and maintained as such pursuant
to Section 4.1(b) of the Sale and Servicing Agreement.
"Private Placement Memorandum" shall have the meaning specified in
the Certificate Purchase Agreement.
"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
July 1, 1998, by and between the Seller and Ford Credit.
"Purchase Amount" shall mean the amount, as of the close business on
the last day of a Collection Period, required to be paid by an Obligor to
prepay in full the respective Receivable under the terms thereof (which amount
shall include a full month's interest, in the month of payment, at the Annual
Percentage Rate).
"Purchased Receivable" shall mean a Receivable purchased as of the
close of business on the last day of the respective Collection Period by the
Servicer pursuant to Section 3.7 of the Sale and Servicing Agreement or by the
Seller pursuant to Section 2.2 of the Purchase Agreement.
"Purchaser" shall mean the Seller in its capacity as Purchaser
under the Purchase Agreement.
"Qualified Institution" shall mean any depository institution
organized under the laws of the United States of America or any one of the
states thereof or incorporated under the laws of a foreign jurisdiction with a
branch or agency located in the United States of America or one of the states
thereof and subject to supervision and examination by federal or state banking
authorities which at all times has a short-term deposit
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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 PNC Bank, Delaware, The Chase Manhattan Bank, or any institution
organized under the laws of the United States of America or any one of the
states thereof or incorporated under the laws of a foreign jurisdiction with a
branch or agency located in the United States of America or one of the states
thereof and subject to supervision and examination by federal or state banking
authorities which at all times (i) is authorized under such laws to act as a
trustee or in any other fiduciary capacity, (ii) holds not less than one billion
dollars in assets in its fiduciary capacity, and (iii) has a long-term deposit
rating of not less than Baa3 from Moody's.
"Rating Agency" shall mean each of the nationally recognized
statistical rating organizations designated by the Seller or an Affiliate to
provide a rating on the Notes or the Certificates which is then rating such
Notes or Certificates. If no such organization or successor is any longer in
existence, "Rating Agency" shall be a nationally recognized statistical rating
organization or other comparable Person designated by the Seller or an
Affiliate, notice of which designation shall be given to the Indenture Trustee,
the Owner Trustee and the Servicer.
"Rating Agency Condition" shall mean, with respect to any action,
that each Rating Agency shall have been given prior notice thereof and that each
of the Rating Agencies shall have notified the Seller, the Servicer, the Owner
Trustee and the Indenture Trustee in writing that such action will not result in
a reduction or withdrawal of the then current rating of the Notes or the
Certificates.
"Realized Losses" shall mean, the excess of the Principal Balance of
any Liquidated Receivable over Liquidation Proceeds to the extent allocable to
principal received in the Collection Period.
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"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 the fair market value of the
Receivables on the Closing Date, as mutually agreed by the Seller and Ford
Credit.
"Record Date" shall mean, (i) with respect to any Distribution Date
or Redemption Date and any Book-Entry Note, the close of business on the day
prior to such Distribution Date or Redemption Date or, with respect to any
Definitive Note, the last day of the month preceding the month in which such
Distribution Date or Redemption Date occurs and (ii) with respect to any
Distribution Date or Prepayment Date and any Certificate, the close of business
on the last day of the month preceding the month in which such Distribution
Date or Prepayment Date occurs.
"Redemption Date" shall mean with respect to a redemption of the
Class A-5 Notes and Class B Notes pursuant to Section 10.1(a) of the Indenture
or a payment to Noteholders pursuant to Section 10.1(b) of the Indenture, the
Distribution Date specified by the Servicer pursuant to said Section 10.1(a) or
(b), as applicable.
"Redemption Price" shall mean an amount equal to the unpaid
principal amount of the Class of Notes to be redeemed plus accrued and unpaid
interest thereon at the applicable Note Interest Rate plus interest on any
overdue interest at the applicable Note Interest Rate (to the extent lawful) to
but excluding the Redemption Date.
"Registered Noteholder" shall mean the Person in whose name a Note
is registered on the Note Register on the applicable Record Date.
"Regular Principal Distribution Amount" shall mean, with respect to
any Distribution Date, an amount
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not less than zero equal to the difference between (i) the greater of (1) the
aggregate outstanding principal amount of the Class A-1 Notes and the A-2 Notes
as of the preceding Distribution Date (after giving effect to any principal
payments made on the Class A-1 Notes and the A-2 Notes on such Distribution
Date) or the Closing Date, as the case may be, and (2) the excess, if any, of
(a) the sum of the aggregate outstanding principal amount of all the Notes and
the Aggregate Certificate Balance as of the preceding Distribution Date (after
giving effect to any principal payments made on the Securities on such
Distribution Date) or the Closing Date, as the case may be, over (b) the
difference between (x) the Pool Balance at the end of the Collection Period
preceding such Distribution Date minus (y) the Specified Overcollateralization
Amount with respect to such Distribution Date, minus (ii) the sum of the First
Priority Principal Distribution Amount, if any, and the Second Priority
Principal Distribution Amount, if any, each with respect to such Distribution
Date; provided, however, that the Regular Principal Distribution Amount shall
not exceed the sum of the aggregate outstanding principal amount of all the
Notes and the Aggregate Certificate Balance (after giving effect to any
principal payments made on the Securities on such Distribution Date in respect
of the First Priority Principal Distribution Amount, if any, and the Second
Priority Principal Distribution Amount, if any); and provided, further, (i)
that the Regular Principal Distribution Amount on the Class C Final Scheduled
Distribution Date shall not be less than the amount that is necessary to reduce
the Certificate Balance of the Class C Certificates to zero; and (ii) the
Regular Principal Distribution Amount on the Class D Final Scheduled
Distribution Date shall not be less than the amount that is necessary to reduce
the Certificate Balance of the Class D Certificates to zero.
"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, (ii) short-term unsecured debt obligations
of A-1+ by Standard & Poor's and (iii) short-term unsecured debt obligations of
F-1+ by Fitch, if rated by Fitch; and any requirement that short-term unsecured
debt obliga-
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tions have the "Required Rating" shall mean that such short-term unsecured debt
obligations have the foregoing required ratings from each of such Rating
Agencies.
"Reserve Account" shall mean the account established and maintained
as such pursuant to Section 4.7(a) of the Sale and Servicing Agreement.
"Reserve Account Property" shall have the meaning specified in
Section 4.7(a) of the Sale and Servicing Agreement.
"Reserve Account Release Amount" shall mean, with respect to any
Distribution Date, an amount equal to the excess, if any, of (i) the amount of
cash or other immediately available funds in the Reserve Account on such
Distribution Date (prior to giving effect to any withdrawals therefrom relating
to such Distribution Date over (ii) the Specified Reserve Balance with respect
to such Distribution Date.
"Reserve Initial Deposit" shall mean, with respect to the Closing
Date, $11,500,109.
"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 July 1, 1998, by and among the Trust, as issuer, the
Depositor, as seller, and Ford Credit, as servicer.
"Scheduled Payment" shall mean, for any Collection Period for any
Receivable, the amount indicated in such Receivable as required to be paid by
the Obligor in such Collection Period (without giving effect to deferments of
payments pursuant to Section 3.2 of the Sale and Servicing Agreement or any
rescheduling in any insolvency or similar proceedings).
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"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, disk or other means acceptable to the Trustee).
"Second Priority Principal Distribution Amount" shall mean, with
respect to any Distribution Date, an amount not less than zero equal to the
difference between (i) the excess, if any, of (a) the aggregate outstanding
principal amount of the Notes as of the preceding Distribution Date (after
giving effect to any principal payments made on the Notes on such preceding
Distribution Date) over (b) the Pool Balance at the end of the Collection
Period preceding such Distribution Date, minus (ii) the First Priority Principal
Distribution Amount, if any, with respect to such Distribution Date; provided,
however, that the Second Priority Principal Distribution Amount on the Class B
Final Scheduled Distribution Date shall not be less than the amount that is
necessary to reduce the outstanding principal amount of the Class B Notes to
zero.
"Secretary of State" shall mean the Secretary of State of the State
of Delaware.
"Securities" shall mean the Notes and the Certificates,
collectively.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securityholders" shall mean the Noteholders
and the Certificateholders, collectively.
"Seller" shall mean Ford Credit Auto Receivables Two L.P. as the
seller of the Receivables under the Sale and Servicing Agreement, and each
successor to Ford Credit Auto Receivables Two L.P. (in the same capacity)
pursuant to Section 6.3 of the Sale and Servicing Agreement.
"Servicer" shall mean Ford Credit as the servicer of the
Receivables, and each successor to Ford Credit (in the same capacity) pursuant
to Section 7.3 of the Sale and Servicing Agreement.
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"Servicer's Certificate" shall mean a certificate completed and
executed by the Servicer by any executive vice president, any vice president,
the treasurer, any assistant treasurer, the controller, or any assistant
controller of the Servicer pursuant to Section 3.9 of the Sale and Servicing
Agreement.
"Servicing Fee" shall mean, with respect to a Collection Period, the
fee payable to the Servicer for services rendered during such Collection Period,
which shall be equal to one-twelfth of the Servicing Fee Rate multiplied by the
Pool Balance as of the first day of the Collection Period.
"Servicing Fee Rate" shall mean 1.0% per annum.
"Simple Interest Advance" shall mean the amount of interest, as of
the close of business on the last day of a Collection Period, which the Servicer
is required to advance on the Simple Interest Receivables pursuant to Section
4.4(b) of the Sale and Servicing Agreement.
"Simple Interest Method" shall mean the method of allocating a fixed
level payment to principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the fixed rate
of interest multiplied by the unpaid principal balance multiplied by the period
of time elapsed since the preceding payment of interest was made.
"Simple Interest Receivable" shall mean any Receivable under which
the portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"Specified Credit Enhancement Amount" shall mean, with respect to
any Distribution Date, the greatest of (i) $11,500,109, (ii) 1.0% of the Pool
Balance at the end of the Collection Period preceding such Distribution Date or
(iii) the aggregate principal balance of the Receivables that are delinquent 91
days or more and are not Liquidated Receivables at the end of the Collection
Period preceding such Distribution Date; provided, however, that the Specified
Credit Enhancement Amount with respect to any Distribution Date shall not exceed
the sum of the aggregate outstanding principal amount of all the Notes and the
aggregate Certificate Balance of all the
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Certificates as of the preceding Distribution Date (after giving effect to any
principal payments made on the Securities on such preceding Distribution Date).
"Specified Overcollateralization Amount" shall mean, with respect to
any Distribution Date, the excess, if any, of (a) the Specified Credit
Enhancement Amount over (b) the Specified Reserve Balance, each with respect to
such Distribution Date.
"Specified Reserve Balance" shall mean $11,500,109; provided,
however, that the Specified Reserve Balance with respect to any Distribution
Date shall not exceed the sum of the aggregate outstanding principal amount of
all the Notes and the aggregate Certificate Balance of all the Certificates as
of the preceding Distribution Date (after giving effect to any principal
payments made on the Securities on such preceding Distribution Date).
"Standard & Poor's" shall mean Standard & Poor's Ratings Services,
a division of The McGraw-Hill Companies, Inc.
"State" shall mean any state or commonwealth of the United State of
America, or the District of Columbia.
"Successor Servicer" shall have the meaning specified in Section
3.7(e) of the Indenture.
"Supplemental Servicing Fee" shall mean, the fee payable to the
Servicer for certain services rendered during the respective Collection Period,
determined pursuant to and defined in Section 3.8 of the Sale and Servicing
Agreement.
"Total Required Payment" shall mean, with respect to any
Distribution Date, the sum of the Servicing Fee and all unpaid Servicing Fees
from prior Collection Periods, the Accrued Class A Note Interest, the First
Priority Principal Distribution Amount, the Accrued Class B Note Interest, the
Second Priority Principal Distribution Amount, the Accrued Class C Certificate
Interest and the Accrued Class D Certificate Interest; provided, however, that
following the occurrence and during the continuation of an Event of Default
which has resulted in an acceleration of the Notes or following an
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<PAGE> 39
Insolvency Event or a dissolution with respect to the Seller or the General
Partner, on any Distribution Date until the Distribution Date on which the
outstanding principal amount of all the Notes has been paid in full, the Total
Required Payment shall mean the sum of the Servicing Fee and all unpaid
Servicing Fees from prior Collection Periods, the Accrued Class A Note Interest,
the Accrued Class B Note Interest and the amount necessary to reduce the
outstanding principal amount of all the Notes to zero.
"Transfer" shall have the meaning specified in Section 3.3 of the
Trust Agreement.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean Ford Credit Auto Owner Trust 1998-C, a Delaware
business trust established pursuant to the Trust Agreement.
"Trust Accounts" shall have the meaning specified in Section 4.7(a)
of the Sale and Servicing Agreement.
"Trust Agreement" shall mean the Amended and Restated Trust
Agreement dated as of July 1, 1998, 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
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<PAGE> 40
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 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 Interest Distribution Account, the Certificate
Principal Distribution Account and all amounts, securities, investments,
investment property and other property deposited in or credited to any of the
foregoing, all security entitlements relating to the foregoing and all proceeds
thereof; (viii) all of the Seller's rights under the Sale and Servicing
Agreement; (ix) all of the Seller's rights under the Purchase Agreement,
including the right of the Seller to cause Ford Credit to repurchase
Receivables from the Seller; (x) payments and proceeds with respect to the
Receivables held by the Servicer; (xi) all property (including the right to
receive Liquidation Proceeds) securing a Receivable (other than a Receivable
repurchased by the Servicer or purchased by the Seller); (xii) rebates of
premiums and other amounts relating to insurance policies and other items
financed under the Receivables in effect as of the Cutoff Date; and (xiii) all
present and future claims, demands, causes of action and choses in action in
respect of any or all of the foregoing and all payments on or under and all
proceeds of every kind and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion thereof, voluntary or
involuntary, into cash or other liquid property, all cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts,
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insurance proceeds, condemnation awards, rights to payment of any and every
kind and other forms of obligations and receivables, instruments and other
property which at any time constitute all or part of or are included in the
proceeds of any of the foregoing.
"UCC" shall mean the Uniform Commercial Code as in effect in any
relevant jurisdiction.
"Void Transfer" shall have the meaning specified in Section 3.3 of
the Trust Agreement.
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