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REGISTRATION NO. 333-11167
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-1
AMENDMENT NO. 2
TO
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FORD CREDIT AUTO LEASE TRUST 1996-1
(Issuer of the Senior Notes)
------------------------
RCL TRUST 1996-1
(Originator of the Trust described herein)
(Exact name of registrant as specified in
its charter)
<TABLE>
<S><C>
FORD MOTOR CREDIT A Delaware Trust FORD CREDIT LEASING COMPANY, INC.
COMPANY Primary Standard Industrial Classification (Originator of the Registrant; originator
(Originator of the Registrant; originator Code Number 6733 of Ford Credit Titling Trust)
of Ford Credit Titling Trust) IRS Employer No. Applied For
The American Road A Delaware Corporation
A Delaware Corporation Dearborn, Michigan 48121 Primary Standard Industrial Classification
Primary Standard Industrial Classification (313) 594-9876 Code Number 6159
Code Number 6153 IRS Employer No. 38-3156318
IRS Employer No. 38-1612444 The American Road
The American Road Dearborn, Michigan 48121
Dearborn, Michigan 48121 (313) 845-4072
(313) 322-3000
</TABLE>
____________
J. D. BRINGARD, ESQ.
Ford Motor Credit Company
The American Road
Dearborn, Michigan 48121
(313) 594-7742
(Name and Address of Agent for Service
for each of the above named entities)
Copy to:
SUSAN M. CURTIS, ESQ.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
(212) 735-3000
____________
Approximate date of commencement of proposed sale to the public: As
soon as practicable on or after the effective date of this Registration
Statement.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. [ ]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement number of the
effective registration statement for the same offering. [ ]_____
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]_____
If delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
===================================================================================================================================
Proposed Proposed
Maximum Maximum
Title of Securities Amount Being Offering Price Aggregate Amount of
Being Registered Registered Per Unit (1) Offering Price (1) Registration Fee (2)
===================================================================================================================================
<S> <C> <C> <C> <C>
Class A-1 Asset Backed Senior Notes . $500,000.00 100% $500,000.00 $151.51
- -----------------------------------------------------------------------------------------------------------------------------------
Class A-2 Asset Backed Senior Notes . $500,000.00 100% $500,000.00 $151.52
- -----------------------------------------------------------------------------------------------------------------------------------
Series 1996-1 Certificates (3) . . . (4) (4) (4) (4)
TOTAL . . . . . . . . . . . . . . . . $1,000,000.00 $1,000,000.00 $1,000,000.00 $303.03
===================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) $344.83 of which was previously paid.
(3) The Series 1996-1 Certificates issued by Ford Credit Titling Trust
represent a beneficial interest in Series 1996-1 Assets (including
Series 1996-1 Leases and Series 1996-1 Leased Vehicles). The Series
1996-1 Certificates are not being offered to investors hereunder, but
will be pledged to the Indenture Trustee to secure the payment of
interest on and principal of the Senior Notes.
(4) Not applicable.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
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WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PRELIMINARY PROSPECTUS Subject to Completion, Dated
_______ __, 1996
$ __________________________
FORD CREDIT AUTO LEASE TRUST 1996-1
ISSUER
$__________ CLASS A-1 ___% ASSET BACKED SENIOR NOTES
$__________ CLASS A-2 ___% ASSET BACKED SENIOR NOTES
RCL TRUST 1996-1
TRANSFEROR
FORD MOTOR CREDIT COMPANY
ADMINISTRATIVE AGENT
Ford Credit Auto Lease Trust 1996-1 (the "Issuer") will be formed pursuant to a
Lease Trust Agreement to be dated as of ______ __, 1996 between First Union
Bank of Delaware (the "RCL Trustee") in its capacity as trustee of the RCL
Trust 1996-1 (the "Transferor") and PNC Bank, Delaware (the "Lease Trustee") in
its capacity as trustee of the Issuer. Pursuant to an Indenture to be dated
as of ______ ___, 1996 between the Lease Trustee, on behalf of the Issuer, and
The Chase Manhattan Bank, as Indenture Trustee, the Issuer will issue notes
secured by interests in certain retail automotive leases and leased vehicles,
including $_______ initial principal balance of __% Class A-1 Asset Backed
Senior Notes (the "Class A-1 Senior Notes") and $_______ initial principal
balance of __% Class A-2 Asset Backed Senior Notes (the "Class A-2 Senior
Notes" and, together with the Class A-1 Senior Notes, the "Senior Notes"). The
Issuer also will issue $_____ initial principal balance of __% Asset Backed
Subordinated Notes (the "Subordinated Notes") and $_____ initial principal
balance of __ % Asset Backed Lease Trust Certificates (the "Lease Trust
Certificates"). The Subordinated Notes and the Lease Trust Certificates are
not being offered hereby.
(cover continued on following page)
FOR INFORMATION CONCERNING THE RISKS OF AN INVESTMENT IN THE SENIOR NOTES, SEE
"RISK FACTORS" BEGINNING ON PAGE 17 HEREIN.
EXCEPT TO THE EXTENT DESCRIBED HEREIN, THE SENIOR NOTES REPRESENT OBLIGATIONS
OF THE ISSUER ONLY AND DO NOT REPRESENT INTERESTS IN, RECOURSE TO OR
OBLIGATIONS OF THE TRANSFEROR, FORD MOTOR CREDIT COMPANY OR ANY OF THEIR
RESPECTIVE AFFILIATES.
THE RIGHTS OF HOLDERS OF THE SUBORDINATED NOTES AND THE LEASE TRUST
CERTIFICATES ARE SUBORDINATED TO THE RIGHTS OF HOLDERS OF THE SENIOR NOTES TO
THE EXTENT DESCRIBED HEREIN.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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INITIAL PRICE TO UNDERWRITING PROCEEDS TO
PRINCIPAL BALANCE PUBLIC (1) DISCOUNT THE ISSUER (1)(2)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A-1 Senior Notes $ % % %
- -----------------------------------------------------------------------------------------------------------
Class A-2 Senior Notes $ % % %
- -----------------------------------------------------------------------------------------------------------
Total $ $ $ $
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, calculated from ______ ___, 1996.
(2) Before deducting expenses payable by the Issuer estimated at
$____________.
The Senior Notes are offered by the Underwriters when, as, and if issued and
accepted by them and subject to their right to reject orders in whole or in
part. The Underwriters reserve the right to withdraw, cancel or modify such
offer. It is expected that the Senior Notes will be delivered in book-entry
form through the facilities of The Depository Trust Company on or about
_________ __, 1996 against payment therefor in immediately available funds.
<PAGE> 4
J.P. Morgan & Co.
_________ __, 1996
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As more fully described herein, the assets of the Issuer will include
certificates (the "Series 1996-1 Certificates") transferred to the Issuer by
the Transferor representing a 100% undivided beneficial interest in specified
retail automobile and light truck leases (the "Series 1996-1 Leases"), all
payments from lessees (the "Obligors") thereunder, the related leased vehicles
(the "Series 1996-1 Leased Vehicles") and all proceeds from the sale of Series
1996-1 Leased Vehicles upon termination of the related Series 1996-1 Leases.
Subject to the security interest granted to the Indenture Trustee pursuant to
the Indenture to secure the Senior Notes, the Issuer will enter into the
Program Operating Lease with the Transferor pursuant to which the Transferor
will be entitled to the benefits of the Series 1996-1 Certificates during the
term of the underlying Series 1996-1 Leases in exchange for the payment by the
Transferor of certain amounts paid under the underlying Series 1996-1 Leases
and paid from the sale of Series 1996-1 Leased Vehicles. These payments will
be applied by the Issuer, together with other amounts payable on the Series
1996-1 Certificates, to pay interest on and principal of the Senior Notes, the
Subordinated Notes and the Lease Trust Certificates. See "Series 1996-1
Certificates--Lease of the Series 1996-1 Certificates to the Transferor." The
Issuer will have the benefit of the Cash Collateral Account established by the
Transferor to secure the Transferor's payment obligations under the Program
Operating Lease. As outlined above and as more fully described herein, the
sources of payments on the Senior Notes will be limited to the amounts payable
to the Issuer under the Series 1996-1 Certificates, the payments by the
Transferor under the Program Operating Lease and the benefits provided by the
Cash Collateral Account, including the deposit therein of payments of interest
on and principal of the Subordinated Notes.
Interest on the Senior Notes will accrue at the respective fixed per
annum interest rates specified above and generally will be payable quarterly on
_________ 15, _________ 15, _________ 15 and _________ 15 of each year,
commencing _________ 15, 199_ or, if any such day is not a business day, on the
next succeeding business day (each, a "Payment Date"). Principal of the Senior
Notes will be payable on each Payment Date to the extent described herein. No
principal payments will be made on the Class A-2 Senior Notes until the Class
A-1 Senior Notes have been paid in full; provided that if an Event of Default
under the Indenture has occurred and the maturity of the Senior Notes has been
accelerated, principal payments will be made on the Senior Notes on a pro rata
basis based on their respective principal balances, without any distinction
between Classes. No principal will be payable on the Subordinated Notes until
the Senior Notes have been paid in full. No principal will be payable on the
Lease Trust Certificates until the Senior Notes and the Subordinated Notes have
been paid in full.
The Stated Maturity of the Class A-1 Senior Notes will be the _____
1997 Payment Date. The Stated Maturity of the Class A-2 Senior Notes will be
the ____________ Payment Date. However, payment in full of either Class of
Senior Notes could occur earlier than such date as described herein.
There is currently no secondary market for the Senior Notes offered
hereby. The Underwriters expect, but will not be obligated, to make a market
in the Senior Notes. There can be no assurance that a secondary market for any
of the Senior Notes will develop or, if one does develop, that it will provide
the Senior Noteholders with liquidity of investment or that it will continue
for the life of the Senior Notes offered hereby.
AVAILABLE INFORMATION
The Transferor, as originator of the Issuer, has filed a Registration
Statement under the Securities Act of 1933, as amended (the "Securities Act"),
with the Securities and Exchange Commission (the "Commission") on behalf of the
Issuer with respect to the Senior Notes offered pursuant to this Prospectus.
For further information, reference is made to the Registration Statement and
amendments thereof and to the exhibits thereto, which are available for
inspection without charge at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549; 7 World Trade
Center, 13th Floor, New York, New York 10048; and Northwest Atrium Center, 500
West Madison Street, Chicago, Illinois 60661. Copies of the Registration
Statement and amendments thereof and exhibits thereto may be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates. In addition, the Commission maintains a
public access site on the Internet through the World Wide Web at which the
Registration Statement and amendments thereof and exhibits thereto may be
viewed. The Internet address of such World Wide Web site is
http://www.sec.gov.
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SENIOR
NOTES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
No dealer, salesman or other person has been authorized to give any
information or to make any representation not contained in this Prospectus and,
if given or made, such information or representation must not be relied upon as
having been authorized by the Transferor, the Issuer, the Administrative Agent
or the Underwriters. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this Prospectus,
nor any sale made hereunder, shall, under any circumstances, create any
implication that the information herein is correct as of any time subsequent to
the date hereof.
UNTIL _____ __, 199_ (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE SENIOR NOTES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. UPON RECEIPT OF A REQUEST BY AN INVESTOR
OR HIS OR HER REPRESENTATIVE WITHIN THE PERIOD DURING WHICH THERE IS A
PROSPECTUS DELIVERY OBLIGATION, THE ISSUER OR THE UNDERWRITERS WILL TRANSMIT OR
CAUSE TO BE TRANSMITTED PROMPTLY, WITHOUT CHARGE, AND IN ADDITION TO ANY SUCH
DELIVERY REQUIREMENTS, A PAPER COPY OF A PROSPECTUS, OR A PROSPECTUS ENCODED IN
AN ELECTRONIC FORMAT.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE PAGE
---- ----
<S> <C> <C> <C>
Summary . . . . . . . . . . . . . . . . . . . . 6 Description of the Administrative Agency
Risk Factors . . . . . . . . . . . . . . . . . 17 Agreement . . . . . . . . . . . . . . . . 59
Ford Credit . . . . . . . . . . . . . . . . . . 24 Additional Document Provisions . . . . . . 67
The Issuer . . . . . . . . . . . . . . . . . . 25 Ratings of the Senior Notes . . . . . . . . 74
Property of the Issuer . . . . . . . . . . . . 25 Certain Legal Aspects of FCTT and the Series
Use of Proceeds . . . . . . . . . . . . . . . . 26 1996-1 Certificates . . . . . . . . . . . 74
FCTT . . . . . . . . . . . . . . . . . . . . . 26 Certain Legal Aspects of the Leases and
The Transferor . . . . . . . . . . . . . . . . 28 Leased Vehicles . . . . . . . . . . . . . . 78
Series 1996-1 Certificates . . . . . . . . . . 29 Federal Income Tax Consequences . . . . . . 81
The Leases and Leased Vehicles . . . . . . . . 32 Certain State Tax Consequences . . . . . . 85
Maturity, Prepayment and Yield Considerations . 41 ERISA Considerations . . . . . . . . . . . 87
Pool Factors and Trading Information . . . . . 43 Underwriting . . . . . . . . . . . . . . . 87
Management's Discussion and Analysis of Finan- Legal Matters . . . . . . . . . . . . . . . 88
cial Condition and Results of Operations . . 43 Glossary of Terms . . . . . . . . . . . . . 89
Description of the Senior Notes . . . . . . . . 44
</TABLE>
REPORTS TO SENIOR NOTEHOLDERS
Unless and until Definitive Senior Notes are issued, quarterly
unaudited reports containing information concerning the Issuer will be prepared
by the Administrative Agent and sent by the Indenture Trustee on behalf of the
Issuer only to Cede & Co. ("Cede"), as nominee of The Depository Trust Company
("DTC") and registered holder of the Senior Notes. See "Description of the
Senior Notes -- Book-Entry Registration." Such reports will not constitute
financial statements prepared in accordance with generally accepted accounting
principles. See "Pool Factors and Trading Information" for additional
information concerning periodic reports to Senior Noteholders.
4
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OVERVIEW -- TRANSFER OF SERIES 1996-1 CERTIFICATES
<TABLE>
<S><C>
98% Beneficial Interest in FCTT 2% Beneficial Interest in FCTT
- - Exchangeable Beneficial Certificate - Exchangeable Beneficial Certificate
- - Series 1996-1 Certificate - Series 1996-1 Certificate
FORD CREDIT
FORD CREDIT LEASING
| | | | | |
| | | Series 1996-1 Series 1996-1 | | |
| | | Certificate Certificate | | |
| | |___________________ SERIES 1996-1 ____________________| | |
| |__________________________ ASSETS _________________________| |
Contribution of | Exchangeable FCTT Exchangeable | Contribution of
Series 1996-1 | Beneficial Beneficial | Series 1996-1
Certificate | Certificate Certificate | Certificate
|_____________________________ RCL TRUST _____________________________|
____________________________________ 1996-1
| (TRANSFEROR)
| | |
| Transfer and Program | | Program Operating
Subordinated | Operating Lease of | | Lease Payments
Notes | Series 1996-1 Certificates | | (secured by Cash
| | | Collateral Account)
| FORD CREDIT
|_____________________________________ AUTO LEASE ________________________
TRUST 1996-1 Senior Notes INDENTURE
(ISSUER) ________________________ TRUSTEE
| Please of Lease |
| Trust Estate |
| |
Lease Trust Certificates| |Senior
| |Notes
| |
| |
LEASE TRUST SENIOR
CERTIFICATEHOLDERS NOTEHOLDERS
</TABLE>
5
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SUMMARY
The following summary is qualified in its entirety by
reference to the detailed information appearing elsewhere in this Prospectus.
Certain capitalized terms used herein are defined in the "Glossary of Terms" or
elsewhere in this Prospectus.
OVERVIEW . . . . . . . As more fully described herein, Dealers in fifteen
states have originated certain retail lease
contracts for automobiles and light trucks on or
after _________ __, 199_ and have assigned and
will assign such lease contracts and the related
vehicles to the Ford Credit Titling Trust
("FCTT"), a trust established by Ford Credit and
Ford Credit Leasing, a special purpose
wholly-owned subsidiary of Ford Credit. Ford
Credit and Ford Credit Leasing are the
beneficiaries of the interests in FCTT which have
not previously been securitized and have
instructed the Administrative Agent to select, in
accordance with certain eligibility criteria,
Leases and Leased Vehicles held by FCTT to be
designated as Series 1996-1 Assets. On the
Closing Date, the Series 1996-1 Certificates
representing the beneficial interest in the Series
1996-1 Assets will be issued to Ford Credit and
Ford Credit Leasing. Immediately thereafter, Ford
Credit and Ford Credit Leasing will contribute
their Series 1996-1 Certificates to the Transferor
which in turn will transfer the Series 1996-1
Certificates to the Issuer. The Issuer will issue
the Senior Notes pursuant to the Indenture and
will pledge the Series 1996-1 Certificates to the
Indenture Trustee as security for such Senior
Notes. The Issuer also will issue the
Subordinated Notes and the Lease Trust
Certificates, which are not offered hereby.
Pursuant to the Program Operating Lease the Issuer
will lease the Series 1996-1 Certificates,
subject to the lien securing the Senior Notes,
back to the Transferor in exchange for the
obligation of the Transferor to make certain
payments during the period that each underlying
Series 1996-1 Leased Vehicle is subject to the
Program Operating Lease. Such payments (the
"Program Operating Lease Payments") will consist
of a Required Interest Payment portion and an
Additional Payment portion. The "Required
Interest Payment" generally will be equal to the
sum for the related three months of the
Administrative Agent Fee and three months of
interest accrued on the Senior Notes, the
Subordinated Notes and the Lease Trust
Certificates. The "Additional Payment" generally
will be equal to the amount, if any, by which the
amount on deposit in the Cash Collateral Account
on any Payment Date (after giving effect to any
withdrawals therefrom to pay the Required Interest
Payment and any deposits therein with respect to
such Payment Date) exceeds the Required Cash
Collateral Amount for such Payment Date. The
Issuer will apply such Program Operating Lease
Payments, together with certain proceeds (as
described in "--Transferor Leased Vehicle Purchase
Option") from Series 1996-1 Leased Vehicles which
are sold on or after their Scheduled Lease End
Dates, to pay interest on and principal of the
Senior Notes, the Subordinated Notes and the Lease
Trust Certificates in accordance with their
respective terms.
On the Closing Date, the Transferor will make an
initial deposit to the Cash Collateral Account of
$_____. The Cash Collateral Account will secure
the Transferor's obligation to make Program
Operating Lease Payments on a quarterly basis.
The Transferor initially will retain the
Subordinated Notes and will be required to deposit
payments of interest on and principal of the
Subordinated Notes into the Cash Collateral
Account. The Transferor will
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pledge the Subordinated Notes to the Issuer to
secure the Transferor's obligation to make Program
Operating Lease Payments on a quarterly basis.
Amounts payable to the Issuer with respect to the
Series 1996-1 Certificates and the Program
Operating Lease (including amounts withdrawn from
the Cash Collateral Account) will be applied to
pay interest on and principal of the Senior Notes,
the Subordinated Notes and the Lease Trust
Certificates and certain other amounts as more
fully described herein. The Issuer has pledged
amounts payable to it to the Indenture Trustee to
secure payment of the Senior Notes. Ford Credit
and Ford Credit Leasing intend that the
securitization described in this prospectus will
result in a sale of the Series 1996-1 Assets for
accounting purposes and a financing of the Series
1996-1 Leases and Series 1996-1 Leased Vehicles
for tax purposes.
THE ISSUER . . . . . . Ford Credit Auto Lease Trust 1996-1, established
pursuant to the Lease Trust Agreement.
THE LEASE TRUSTEE . . . PNC Bank, Delaware, as Lease Trustee under the
Lease Trust Agreement.
THE INDENTURE TRUSTEE . The Chase Manhattan Bank, as Indenture Trustee
under the Indenture.
THE ADMINISTRATIVE
AGENT . . . . . . . Ford Credit, a wholly owned indirect subsidiary of
Ford Motor Company, is the Administrative Agent.
See "Description of the Administrative Agency
Agreement."
FORD CREDIT LEASING . . Ford Credit Leasing Company, Inc., a wholly owned
special purpose subsidiary of Ford Credit.
THE TRANSFEROR . . . . The Transferor will be formed by Ford Credit and
Ford Credit Leasing as a Delaware business trust
pursuant to the RCL Trust Agreement. The RCL
Trustee is First Union Bank of Delaware, a
Delaware banking corporation. See "The
Transferor."
THE SENIOR NOTES . . . On the Closing Date the Issuer will issue,
pursuant to the Indenture, Class A-1 Senior Notes
in an initial principal balance of $__________ and
Class A-2 Senior Notes in an initial principal
balance of $__________. Concurrently with the
issuance of the Senior Notes, the Issuer will
issue Subordinated Notes in an initial principal
balance of $__________ and Lease Trust
Certificates in an initial principal balance of
$__________. The Subordinated Notes and the Lease
Trust Certificates are not being offered hereby.
INTEREST . . . . . . . The Class A-1 Senior Notes will bear interest at
the rate of ____% per annum and the Class A-2
Senior Notes will bear interest at the rate of
____% per annum. Interest on the principal
balance of the Senior Notes will accrue at the
applicable interest rate (i) with respect to the
Class A-1 Senior Notes, either from and including
the Closing Date (in the case of the first Payment
Date) or from and including the most recent
Payment Date on which interest has been paid to
but excluding the following Payment Date and (ii)
with respect to the Class A-2 Senior Notes, either
from and including the Closing Date (in the case
of the first Payment Date) or from and including
the fifteenth day of the third calendar month
preceding the calendar month in which each
Payment Date occurs, to but excluding the
fifteenth day of the calendar month in which such
Payment Date occurs. Interest will be payable on
each Payment Date to Senior Noteholders of record
on the related Record
7
<PAGE> 10
Date. Interest accrued but not paid as of any
Payment Date will be due on the next Payment Date
together with interest on such amount (to the
extent lawful) at a rate per annum equal to the
interest rate for the applicable Class. Interest
on the Class A-1 Senior Notes will be calculated
on the basis of actual days elapsed and a 360-day
year. Interest on the Class A-2 Senior Notes will
be calculated on the basis of a 360-day year of
twelve 30-day months. See "Description of the
Senior Notes--Interest."
PRINCIPAL . . . . . . . The aggregate amount of principal of the Senior
Notes payable on each Payment Date will equal the
sum of the Available Funds and the Cash
Collateral Additional Draw Amount, if any,
remaining after giving effect on such Payment Date
to (i) the payment of the Administrative Agent Fee
and (ii) the payment of interest accrued on the
Senior Notes, the Subordinated Notes and the
Lease Trust Certificates. See "Description of the
Senior Notes--Indenture Cash Flows."
Principal of the Senior Notes will be paid to
holders of each Class of Senior Notes
sequentially. No principal payments will be made
on the Class A-2 Senior Notes until the principal
balance of the Class A-1 Senior Notes has been
reduced to zero; no principal payments will be
made on the Subordinated Notes until the principal
balance of the Class A-2 Senior Notes has been
reduced to zero; and no principal payments will be
made on the Lease Trust Certificates until the
principal balance of the Subordinated Notes has
been reduced to zero; provided that if an Event of
Default under the Indenture has occurred and the
maturity of the Senior Notes has been accelerated,
principal payments will be made on a pro rata
basis to holders of the Class A-1 Senior Notes and
the Class A-2 Senior Notes based on their
respective principal balances without any
distinction between Classes. See "Description of
the Senior Notes--Indenture" for a discussion of
the Events of Default under the Indenture and the
remedies available to the Indenture Trustee and
the Senior Noteholders.
As described in "--Priority of Payments" and
"Description of the Senior Notes--The Indenture
Cash Flows," amounts payable on any Payment Date
generally will be paid first from Available Funds
and second from the Cash Collateral Additional
Draw Amount, if any. The "Available Funds" on any
Payment Date will be equal to the sum of the
Available Sale Proceeds and the Cash Collateral
Required Draw Amount. The "Available Sale
Proceeds" with respect to any Payment Date will
be equal to the Monthly Scheduled Termination
Sale Proceeds deposited in the Collection
Account on each of the two preceding Distribution
Dates and Monthly Scheduled Termination Sale
Proceeds deposited in the Collection Account on
the business day preceding the Distribution Date
occurring on such Payment Date (or on each
business day during the related Accrual Period if
any Monthly Remittance Condition has not been
satisfied) plus the Aggregate Net Sale Proceeds
Advances deposited in the Collection Account on
the business day preceding such Payment Date .
The "Cash Collateral Required Draw Amount" with
respect to any Payment Date is the lesser of (i)
the Required Interest Payment for such Payment
Date and (ii) the Cash Collateral Amount on the
business day preceding such Payment Date (after
giving effect to all deposits to the Cash
Collateral Account on such business day). See
"Description of the Senior Notes--Cash Collateral
Account Withdrawals and Deposits."
8
<PAGE> 11
The "Cash Collateral Additional Draw Amount" on
any Payment Date will be equal to the Additional
Payment for such Payment Date less the portion
thereof to be applied to make payments on the
Subordinated Notes. See "Description of the
Senior Notes--Cash Collateral Account Withdrawals
and Deposits."
The rate of payment and the yield to maturity on
each Class of Senior Notes generally will be
directly related to the rate at which payments are
made on the Series 1996-1 Leases and in respect of
the Series 1996-1 Leased Vehicles. The rate of
prepayments on the Series 1996-1 Leases may be
influenced by a variety of economic, social and
other factors including competing consumer
finance products and the conditions in the used
car market. If there are prepayments in full of
the Series 1996-1 Leases, Senior Noteholders will
bear the risk of being able to reinvest principal
payments of the Senior Notes at yields at least
equal to the yield on their respective Class of
Senior Notes. For further discussion of the
factors which may affect the amount and timing of
payments of principal of the Senior Notes, see
"Maturity, Prepayment and Yield Considerations."
See also "Description of the Senior
Notes--Principal" and "--The Indenture Cash
Flows."
PRIORITY OF PAYMENTS . On each Payment Date, the Indenture Trustee will
apply first the Available Funds and second the
Cash Collateral Additional Draw Amount, if any, to
the following (in the priority indicated): (i)
the Administrative Agent Fee to the Administrative
Agent; (ii) interest due on the outstanding Senior
Notes (and, to the extent permitted under
applicable law, interest on any overdue interest
at the interest rate for the applicable Class) to
the Senior Noteholders; (iii) interest due on the
outstanding Subordinated Notes (and, to the extent
permitted under applicable law, interest on any
overdue interest at the interest rate for the
Subordinated Notes) to the Lease Trust Paying
Agent for deposit to the Cash Collateral Account;
(iv) interest accrued on the Lease Trust
Certificates (and, to the extent permitted under
applicable law, interest on any overdue interest
at the interest rate for the Lease Trust
Certificates) plus the Certificate Distribution
Draw Amount, if any, to the Certificate
Distribution Account; and (v) principal with
respect to each Class of Senior Notes outstanding,
sequentially, to the Senior Noteholders until the
Senior Notes have been paid in full; provided that
if an Event of Default has occurred under the
Indenture and the maturity of the Senior Notes
has been accelerated, principal payments will be
made on a pro rata basis to holders of the Class
A-1 Senior Notes and the Class A-2 Senior Notes
based on their respective principal balances,
without any distinction between Classes.
Following payment in full of the Class A-2 Senior
Notes, the portion, if any, of the Available Funds
plus the Cash Collateral Additional Draw Amount,
if any, remaining will be applied to pay the
Subordinated Notes and the Lease Trust
Certificates in accordance with the terms thereof.
See "Description of the Senior Notes--The
Indenture Cash Flows."
OPTIONAL
REDEMPTION
OF THE SENIOR NOTES . . The Administrative Agent may, at its option,
purchase the Series 1996-1 Certificates on any
Payment Date on which the Pool Balance has
declined to less than 10% of the Initial Pool
Balance. Because the principal balance of the
Subordinated Notes and the Lease Trust
Certificates exceeds 10% of the Initial Pool
Balance, the Issuer does not anticipate, although
no assurances can be given, that the Pool Balance
will decline to a level permitting the
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<PAGE> 12
Administrative Agent to purchase the Series 1996-1
Certificates while the Senior Notes are
outstanding. If, however, such a decline occurs
and the Administrative Agent exercises such
option, the Senior Notes will be redeemed in
whole, but not in part, on the Payment Date of
such exercise. See "Description of the Senior
Notes--Optional Redemption."
FCTT . . . . . . . FCTT is a trust formed pursuant to the FCTT
Agreement. The FCTT Trustee is Comerica Bank, a
Michigan banking corporation, which may appoint
one or more co-trustees or separate trustees for
the purpose of meeting applicable state
requirements. FCTT was formed for the purpose of
holding title to vehicles subject to leases in
order to enable Ford Credit to obtain the
benefits of financing such vehicles and leases
without retitling. Vehicles which would otherwise
be sold by Dealers to Ford Credit are instead sold
to FCTT. The FCTT Trustee will hold the assets of
FCTT in trust for the benefit of the beneficiaries
of FCTT. As of the date of this Prospectus, the
primary assets of FCTT are Leases and Leased
Vehicles assigned to it by Dealers located in
fifteen states and all amounts payable in
connection therewith. See "FCTT--Creation of FCTT
by Ford Credit and Ford Credit Leasing." Ford
Credit and Ford Credit Leasing were the initial
beneficiaries of FCTT. Ford Credit initially held
an Exchangeable Beneficial Certificate (an "EBC")
representing a 98% beneficial interest in FCTT and
the FCTT Assets and Ford Credit Leasing initially
held an EBC representing a 2% beneficial interest
in FCTT and the FCTT Assets. Ford Credit and Ford
Credit Leasing have previously exchanged a portion
of their EBCs for a Series of Specified Beneficial
Certificates, the Series 1995-1 Certificates, and
contributed such Series 1995-1 Certificates to an
affiliate which deposited them to a securitization
trust in connection with the issuance of a
previous series of asset backed securities.
Similarly, Ford Credit and Ford Credit Leasing
will exchange a portion of their EBCs for the
Series 1996-1 Certificates and contribute them to
the Transferor which will deposit them with the
Issuer. After the issuance of the Series 1996-1
Certificates on the Closing Date, the EBCs will
represent the beneficial interest in the FCTT
Assets other than the Series 1995-1 Assets, the
Series 1996-1 Assets and any other Series
Specified Assets which may be designated from time
to time. See "FCTT--Exchangeable Beneficial
Certificates and Specified Beneficial
Certificates."
Payments by or on behalf of Obligors made on or in
respect of FCTT Assets other than the Series
1996-1 Assets will not be available to make
payments on the Senior Notes, the Subordinated
Notes or the Lease Trust Certificates. Neither
Ford Credit nor Ford Credit Leasing, as holders of
the EBCs, nor holders of any Series of Specified
Beneficial Certificates other than Series 1996-1
(whether issued in connection with a future
securitization or for any other purpose) will have
any interest in the Series 1996-1 Assets.
THE SERIES 1996-1
ASSETS . . . . . . . The Series 1996-1 Leases will consist of a pool of
retail closed-end lease contracts originated by
Dealers and assigned to FCTT. Each Series 1996-1
Lease is an operating lease for accounting
purposes and a "true lease" for tax purposes and
will be purchased by FCTT, together with the
related Series 1996-1 Leased Vehicle, from the
Dealer for an amount equal to the Balance Subject
to Lease Charges. The Obligor under each Series
1996-1 Lease is obligated to make a fixed total
monthly payment (a "Total Monthly Payment") to the
Administrative Agent, acting on behalf of FCTT and
the
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<PAGE> 13
holders of the Series 1996-1 Certificates, equal
to the sum of (i) the Monthly Payment, (ii) the
Use and Lease Tax Amount (payable to tax
authorities), and (iii) the Vehicle Insurance and
Maintenance Amount (payable to Dealers). Only the
Monthly Payment portion of each Total Monthly
Payment is available to holders of the Series
1996-1 Certificates. See "Description of the
Administrative Agency Agreement--Remittance of
Payments; Allocation of Funds."
The Monthly Payments remitted by Obligors will be
deposited into the Cash Collateral Account to
secure the Transferor's obligation to make Program
Operating Lease Payments to the Issuer. See
"Description of the Senior Notes-- Cash Collateral
Account Withdrawals and Deposits."
The Series 1996-1 Leases consist of _______
individual Leases. The aggregate Balance Subject
to Lease Charges of the Series 1996-1 Leases as of
their respective dates of origination was
$____________. As of the Series 1996-1 Cut-Off
Date, the Pool Balance was $____________ (the
"Initial Pool Balance") and the aggregate
Residual Values of the Series 1996-1 Leased
Vehicles were $____________. The Series 1996-1
Leases and Series 1996-1 Leased Vehicles were
selected by the Administrative Agent at the
direction of Ford Credit and Ford Credit Leasing
as holders of the EBCs from FCTT's portfolio of
Leases and Leased Vehicles represented by the
EBCs, based upon the General Eligibility Criteria
and the Specific Eligibility Criteria described
herein. See "The Leases and Leased Vehicles,"
"FCTT--Exchangeable Beneficial Certificates and
Specified Beneficial Certificates" and "Additional
Document Provisions--Representations, Warranties
and Covenants."
THE SERIES 1996-1
CERTIFICATES . . . . . The Series 1996-1 Certificates will represent in
the aggregate a 100% beneficial interest in the
Series 1996-1 Assets and will entitle the holders
thereof to all proceeds of and payments in
connection with the Series 1996-1 Assets. The
Series 1996-1 Certificates will not evidence legal
title to or direct ownership of the Series 1996-1
Assets nor will they represent a beneficial
interest in any FCTT Assets other than the Series
1996-1 Assets. See "FCTT--Exchangeable Beneficial
Certificates and Specified Beneficial
Certificates." The Indenture Trustee as assignee
of the Issuer will have a perfected security
interest in the underlying Series 1996-1 Leases
but will not have a security interest in the
underlying Series 1996-1 Leased Vehicles. For a
discussion of the security interests in the Series
1996-1 Certificates, the Series 1996-1 Leases and
the Series 1996-1 Leased Vehicles, see "Certain
Legal Aspects of the Leases and Leased Vehicles."
CONTRIBUTION, TRANSFER,
AND LEASE OF SERIES
1996-1 CERTIFICATES . . On the Closing Date, Ford Credit and Ford Credit
Leasing each will contribute their respective
Series 1996-1 Certificates to the Transferor
pursuant to the Asset Contribution Agreement. The
Transferor will transfer the Series 1996-1
Certificates to the Issuer pursuant to the
Transfer Agreement. Subject to the pledge by the
Issuer of its interest in such Series 1996-1
Certificates to the Indenture Trustee to secure
payment of the Senior Notes, the Issuer will lease
the Series 1996-1 Certificates back to the
Transferor pursuant to the Program Operating
Lease. The Transferor will assign 1% of all of
its assets and obligations, including its rights
and obligations under the Program Operating Lease,
to Ford Credit Leasing. For conve-
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<PAGE> 14
nience, these rights and obligations of the
Transferor and its assignee, Ford Credit Leasing,
generally are referred to herein as rights and
obligations of the Transferor. In connection with
such assignment, Ford Credit Leasing will hold
$_____ in initial principal balance of
Subordinated Notes and $_____ in initial principal
balance of Lease Trust Certificates representing
1% of the initial principal balance of the
Subordinated Notes and Lease Trust Certificates,
respectively, initially acquired by the
Transferor. See "The Transferor--Creation by Ford
Credit and Ford Credit Leasing; Assignment to Ford
Credit Leasing."
Under the Program Operating Lease, the Transferor
will be entitled to receive all payments and
proceeds with respect to the Series 1996-1
Certificates during the term of the Program
Operating Lease and will be required to deposit
such payments and proceeds into the Cash
Collateral Account to secure its obligation to
make Program Operating Lease Payments to the
Issuer. Because the Program Operating Lease
expires with respect to the portion of the Series
1996-1 Certificates representing the beneficial
interest in a Series 1996-1 Leased Vehicle at the
end of the related Series 1996-1 Lease (and before
such Series 1996-1 Leased Vehicle is sold or a
Sale Proceeds Advance is made in respect thereof),
the Issuer will receive directly the proceeds from
the sale of Series 1996-1 Leased Vehicles
following scheduled termination of the related
Series 1996-1 Leases. See "Series 1996-1
Certificates."
PROPERTY OF THE ISSUER;
PLEDGE TO THE
INDENTURE TRUSTEE . . . Pursuant to the Indenture and prior to entering
into the Program Operating Lease, the Issuer will
pledge its interest in the Lease Trust Estate to
secure its obligation to pay interest on and
principal of the Senior Notes. The "Lease Trust
Estate" consists of (i) the rights of the Issuer
under the Series 1996-1 Certificates, (ii) the
rights under the Program Operating Lease, (iii)
the rights of the Issuer to funds on deposit from
time to time in the Collection Account, the
Payahead Account, the Payment Account, the
Certificate Distribution Account and any other
account or accounts established pursuant to the
Indenture (including investment income on amounts
on deposit in the Collection Account and the
Certificate Distribution Account) and proceeds
thereof, (iv) the rights of the Transferor under
the Asset Contribution Agreement, (v) the rights
as holder of the Series 1996-1 Certificates under
the Administrative Agency Agreement and the Series
1996-1 Supplement, (vi) the security interest of
the Issuer in the Subordinated Notes and the Cash
Collateral Account and the right to make
withdrawals from the Cash Collateral Account and
(vii) all proceeds of the foregoing. See
"Property of the Issuer" and "Series 1996- 1
Certifi cates--Pledge of the Series 1996-1
Certificates to the Indenture Trustee."
TRANSFEROR LEASED
VEHICLE PURCHASE
OPTION . . . . . . . Under the Program Operating Lease, the Transferor
may, at its option, purchase the Issuer's
beneficial interest in any Series 1996-1 Leased
Vehicle which is sold at auction following the
Scheduled Lease End Date of the related Series
1996-1 Lease. The Transferor may exercise such
option (the "Transferor Leased Vehicle Purchase
Option") by paying to the Issuer an amount equal
to the Residual Value of such Series 1996-1 Leased
Vehicle minus any amounts due from the related
Obligor for Uncollected Excess
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<PAGE> 15
Wear and Tear and Excess Mileage (such
amount, the "Transferor Purchase Option Price").
The Transferor will exercise such option only if
neither the Obligor nor the Dealer exercises its
option to purchase the Series 1996-1 Leased
Vehicle, and the Sale Proceeds of such Series
1996-1 Leased Vehicle exceed the Transferor
Purchase Option Price. Because the Transferor
intends to exercise this option when available,
Sale Proceeds received by the Issuer with respect
to any Series 1996-1 Leased Vehicle the related
Series 1996-1 Lease of which terminated on or
after its Scheduled Lease End Date will not exceed
the Transferor Purchase Option Price. With
respect to each Series 1996-1 Leased Vehicle for
which the Transferor exercises its purchase
option, the Transferor will deposit the excess of
the Sale Proceeds of such Series 1996-1 Leased
Vehicle over the related Transferor Purchase
Option Price (the "Transferor Purchase Option Net
Proceeds") into the Cash Collateral Account until
the aggregate cumulative amount deposited in re
spect of such Transferor Purchase Option Net
Proceeds for all such Series 1996-1 Leased
Vehicles equals $_______, which is equal to 10% of
the Initial Pool Balance. Thereafter, the
Transferor will retain any Transferor Purchase
Option Net Proceeds and such amounts will not be
available to pay interest on or principal of the
Senior Notes, the Subordinated Notes or the Lease
Trust Certificates. To the extent that Transferor
Purchase Option Net Proceeds are deposited into
the Cash Collateral Account, such amounts will
secure the Transferor's obligation to make Program
Operating Lease Payments to the Issuer. See
"Series 1996-1 Certificates--Lease of the Series
1996-1 Certificates to the Transferor" for further
discussion of the purchase option of the
Transferor and "Description of the Administrative
Agency Agreement--Sale of Leased Vehicles" for a
discussion of the process by which the
Administrative Agent sells Series 1996-1 Leased
Vehicles after their respective Scheduled Lease
End Dates.
Senior Noteholders will not be subject to delay in
receipt of principal resulting from a delay in the
sale of Series 1996-1 Leased Vehicles after their
respective Scheduled Lease End Dates to the extent
that the Administrative Agent makes Sale Proceeds
Advances of the Residual Values of Series 1996-1
Leased Vehicles as described in "--Sale Proceeds
Advances" and "Description of the Administrative
Agency Agreement--Advances of Sale Proceeds."
CASH COLLATERAL
ACCOUNT . . . . . . . . Amounts on deposit in the Cash Collateral Account
from time to time (the "Cash Collateral Amount")
he Transferor's obligations under the Program
Operating Lease and on each Payment Date will be
applied to pay Program Operating Lease Payments.
On the Closing Date the Transferor will deposit
$________ (the "Initial Cash Collateral Deposit")
in the Cash Collateral Account.
Amounts on deposit in the Cash Collateral Account
will be augmented during each Accrual Period by
the deposit therein of the following amounts with
respect to such Accrual Period: (i) all
Collections other than Monthly Scheduled
Termination Sale Proceeds with respect to Series
1996-1 Assets; (ii) the Aggregate Net Monthly
Payment Advances; (iii) any Transferor Purchase
Option Net Proceeds until the aggregate cumulative
amount deposited in respect of such proceeds
equals $________; (iv) payments of interest on
and principal of the Subordinated Notes; and (v)
any investment earnings (net of losses and
investment expenses) on funds on deposit in the
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<PAGE> 16
Collection Account, the Cash Collateral Account
and the Certificate Distribution Account.
On the business day preceding each Payment Date,
the Indenture Trustee will withdraw the Cash
Collateral Required Draw Amount from the Cash
Collateral Account and use such amount to pay the
Required Interest Payment portion of the Program
Operating Lease Payments. On each Payment
Date, the Indenture Trustee will withdraw the Cash
Collateral Additional Draw Amount from the Cash
Collateral Account and use such amount to pay
the Additional Payment portion, if any, of the
Program Operating Lease Payments. See
"Description of the Senior Notes--Cash Collateral
Account Withdrawals and Deposits" and "--The
Indenture Cash Flows."
The "Required Cash Collateral Amount" as of any
Payment Date will be the greater of (i) ____% of
the Pool Balance as of the last day of the related
Accrual Period and (ii) ____% of the Initial Pool
Balance; provided that the Required Cash Collateral
Amount will equal zero as of any Payment Date
occurring on or after the earlier of the date on
which the last remaining Series 1996-1 Lease
terminated or the date on which the Program
Operating Lease is terminated following an event of
default thereunder.
THE ADMINISTRATIVE
AGENT . . . . . . . The Administrative Agent will act as servicer with
respect to all Leases and Leased Vehicles owned by
FCTT (including the Series 1996-1 Leases and
Series 1996-1 Leased Vehicles) and will be the
custodian of the related Lease Files. The
Administrative Agent will receive the
Administrative Agent Fee and the Supplemental
Administrative Agent Fee as compensation for
servicing the Series 1996-1 Assets (including
disposing of Series 1996-1 Leased Vehicles) and
administering the distribution of funds in respect
thereof. The Administrative Agent Fee as of any
Payment Date will equal the sum, for each of the
three Collection Periods preceding such Payment
Date, of the product of 1/12 of 1.00% and the Pool
Balance as of the beginning of each such
Collection Period. See "Description of the
Administrative Agency Agreement."
ADMINISTRATIVE
PURCHASES . . . . . . . Ford Credit and Ford Credit Leasing, as holders of
the EBCs, will be required to purchase the
beneficial interest in any Series 1996-1 Lease and
Series 1996-1 Leased Vehicle as to which (i) all
of the Specific Eligibility Criteria and General
Eligibility Criteria were not satisfied on the
Series 1996-1 Cut-Off Date, (ii) a breach of
certain covenants has occurred and has not been
cured, (iii) the Administrative Agent has granted
a Term Extension or any Payment Extension over
three months (in the aggregate) or (iv) the Series
1996-1 Leased Vehicle is relocated to a
jurisdiction in which FCTT is not authorized to
hold the related certificate of title. Any such
purchase shall be effected by the deposit of the
Administrative Purchase Amount in the Collection
Account on the business day preceding the Payment
Date relating to the Accrual Period in which any
of the events specified above occurred or were
discovered, as applicable. See "Description of
the Administrative Agency
Agreement--Administrative Purchases."
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<PAGE> 17
MONTHLY
PAYMENT ADVANCES . . . The Administrative Agent will be obligated to make
a Monthly Payment Advance in an amount equal to
any unpaid portion of the Monthly Payments due
under a Series 1996-1 Lease during an Accrual
Period, but only if the Administrative Agent
determines, in its sole discretion, that such
Monthly Payment Advance will be recoverable from
subsequent Collections on such Series 1996-1 Lease
(excluding Sale Proceeds). See "Description of the
Senior Notes--Advances" and "Description of the
Administrative Agency Agreement--Monthly Payment
Advances."
SALE PROCEEDS
ADVANCES . . . . . . . The Administrative Agent will be obligated to make
a Sale Proceeds Advance in an amount equal to the
Residual Value of any Series 1996-1 Leased Vehicle
which has not been sold by the last business day
of the Accrual Period in which the Scheduled Lease
End Date of the related Series 1996-1 Lease
occurred, but only if the Administrative Agent
determines, in its sole discretion, that such
Sale Proceeds Advance will be recoverable from the
Sale Proceeds of such Series 1996-1 Leased
Vehicle. See "Description of the Senior
Notes--Advances" and "Description of the
Administrative Agency Agreement--Advances of Sale
Proceeds."
TAX STATUS . . . . . . Special Tax Counsel will render its opinion,
subject to the matters discussed under "Federal
Income Tax Consequences," that for federal income
tax purposes (i) the Senior Notes will be treated
as debt, (ii) the Lease Trust Certificates (other
than the Lease Trust Certificates initially
acquired by the Transferor) should be treated as
debt and (iii) none of FCTT, the Transferor or the
Issuer will be classified as an association (or
publicly traded partnership) taxable as a
corporation.
The Class A-1 Senior Notes will be treated as
"short-term obligations" issued with acquisition
discount. The Class A-2 Senior Notes will be
issued with a de minimis amount of original issue
discount ("OID"). See "Federal Income Tax
Consequences" for additional information
concerning acquisition discount, OID and the
application of federal income tax laws.
In the opinion of Michigan Tax Counsel, assuming
that the Senior Notes will be treated as debt for
federal income tax purposes, (i) the Senior Notes
will be treated as debt for Michigan income and
single business tax purposes and (ii) Senior Note
Owners not otherwise subject to taxation in
Michigan would not become subject to taxation in
Michigan solely because of a Senior Note Owner's
ownership of a Senior Note. Assuming further that
the Lease Trust Certificates (other than the
Lease Trust Certificates initially acquired by the
Transferor) will be treated as debt for federal
income tax purposes and that none of FCTT, the
Transferor or the Issuer will be subject to
federal income tax at the entity level, none of
FCTT, the Transferor or the Issuer should be
subject to Michigan income and single business tax
at the entity level. See "Certain State Tax
Consequences" for additional information
concerning the application of state tax laws.
ERISA
CONSIDERATIONS . . . . Subject to the considerations discussed under
"ERISA Considerations," the Senior Notes are
eligible for purchase by employee benefit plans.
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<PAGE> 18
RATINGS OF THE
SENIOR NOTES . . . . . It is a condition to the issuance of the Senior
Notes that they be rated in the highest investment
rating category by at least one Rating Agency.
There can be no assurance that such ratings will
not be lowered or withdrawn by a Rating Agency if
circumstances so warrant. See "Ratings of the
Senior Notes" and "Risk Factors--ERISA
Liabilities; Effect on Ratings."
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<PAGE> 19
RISK FACTORS
LIMITED LIQUIDITY
There is currently no secondary market for the Senior Notes offered
hereby. The Underwriters expect, but will not be obligated, to make a market
in the Senior Notes. There can be no assurance that a secondary market for any
of the Senior Notes will develop or, if one does develop, that it will provide
the Senior Noteholders with liquidity of investment or that it will continue
for the life of the Senior Notes offered hereby.
LIMITED ASSETS
The assets of the Issuer, which have been pledged to the Indenture
Trustee to secure the payment of interest on and principal of the Senior Notes,
are limited to the Lease Trust Estate, including the interest in the Series
1996-1 Certificates held by the Issuer under the Program Operating Lease, the
right to receive payments from the Transferor under the Program Operating Lease
and a security interest in the Subordinated Notes and in the amounts credited
to the Cash Collateral Account to secure the payments required under the
Program Operating Lease. The Issuer will not have, nor is it permitted or
expected to have, any other significant assets or other sources of funds. The
Senior Notes represent obligations of the Issuer, and are not insured or
guaranteed by the Transferor, Ford Credit, Ford Credit Leasing, the RCL
Trustee, the Lease Trustee, the Indenture Trustee or any other person or
entity. Moreover, although payment of interest on and principal of the Senior
Notes is ultimately dependent on the payments made under the Series 1996-1
Leases by Obligors and proceeds from the disposition of the Series 1996-1
Leased Vehicles, neither the Issuer nor the Transferor has a direct ownership
interest in any Series 1996-1 Lease or a direct ownership interest or perfected
security interest in any Series 1996-1 Leased Vehicle. Because the interest of
the Indenture Trustee, as pledgee of the Issuer, is in the Series 1996-1
Certificates and other assets described above and not directly in the Series
1996-1 Assets, upon the occurrence of an Event of Default, the Indenture
Trustee would have no rights with respect to either the Series 1996-1 Leases or
the Series 1996-1 Leased Vehicles, but instead would be limited to exercising
its rights with respect to the Series 1996-1 Certificates and the other assets
described above (including the amounts available from the Cash Collateral
Account). To the extent that the exercise of such rights produces
insufficient funds to make all required payments with respect to the Senior
Notes, Senior Noteholders could suffer a loss of all or part of their
investment. See "Property of the Issuer" and "Description of the Senior Notes
- ---- Indenture."
LIMITED OBLIGATIONS OF THE ISSUER, THE TRANSFEROR, FORD CREDIT AND FORD CREDIT
LEASING
The Senior Notes are solely obligations of the Issuer, and neither the
Transferor, Ford Credit nor Ford Credit Leasing is obligated to pay interest on
or principal of the Senior Notes (except indirectly to the extent of payments
required under the Program Operating Lease). The Transferor's obligation to
the Issuer is limited to making Program Operating Lease Payments as required
under the Program Operating Lease. If, after application of amounts on deposit
in the Cash Collateral Account, the Transferor does not have sufficient funds
to pay to the Issuer the Program Operating Lease Payments on any Payment Date,
the Senior Noteholders could incur a loss on their investment.
RESIDUAL VALUE RISK
The Residual Value of each Leased Vehicle, including each Series
1996-1 Leased Vehicle, is stated in the related Lease, including the Series
1996-1 Leases, and is determined by Ford Credit as Administrative Agent for
FCTT. Ford Credit sets the Residual Value for a particular model of Leased
Vehicle by reference to its estimate of the wholesale market value of such
model at the end of the Lease Term. However, in connection with sales
incentive programs for particular models, Ford Credit may increase the Residual
Values set forth in Leases to levels above its estimate of the wholesale market
values of such Leased Vehicles at the end of their respective Lease Terms, in
order to stimulate
17
<PAGE> 20
sales of particular models by reducing the amount of the Total Monthly Payments
which would be owed by Obligors. See "The Leases and the Leased Vehicles ----
Delinquency, Repossession, Residual Value and Loss Data."
At the end of each Series 1996-1 Lease, each Series 1996-1 Leased
Vehicle is either purchased by the Obligor or the Dealer for a price greater
than or equal to its Residual Value or is returned to the Administrative Agent.
For Series 1996-1 Leased Vehicles which are purchased by the Obligor or Dealer,
the full Residual Value of such Series 1996-1 Leased Vehicle is applied to make
distributions on the Series 1996-1 Certificates. To the extent that a Series
1996-1 Leased Vehicle is not purchased by the related Obligor or Dealer, the
Administrative Agent will sell such Series 1996-1 Leased Vehicle at auction and
proceeds of the sale will be applied to make distributions on the Series 1996-1
Certificates. Any shortfalls between (x) proceeds realized from the sale of
Series 1996-1 Leased Vehicles (including amounts collected in respect of Excess
Wear and Tear and Excess Mileage and reduced by amounts required to be remitted
to the Obligor under applicable law) after their respective Scheduled Lease End
Dates and (y) their respective Residual Values (as such Residual Values are
decreased by Uncollected Excess Wear and Tear and Excess Mileage) will reduce
the amounts available for distribution on the Series 1996-1 Certificates, and,
to the extent such reduction causes the Available Sale Proceeds plus amounts
withdrawn from the Cash Collateral Account to be less than the principal and
interest due on the Senior Notes on any Payment Date, the Senior Noteholders
could suffer a loss on their investment. Because the Transferor intends to
exercise its Transferor Leased Vehicle Purchase Option whenever it is
economically advantageous to do so, any Sale Proceeds of a Series 1996-1 Leased
Vehicle which are in excess of its Residual Value minus Uncollected Excess Wear
and Tear and Excess Mileage will be paid to the Transferor, who will deposit
such amounts into the Cash Collateral Account until the cumulative total of
deposits with respect to such amounts equals $______; thereafter, such amounts
will be paid to the Transferor but not deposited into the Cash Collateral
Account and therefore will not be available for distribution on the Series
1996-1 Certificates. To the extent that such amounts are deposited into the
Cash Collateral Account, they will secure the Transferor's obligation to make
Program Operating Lease Payments to the Issuer. See "The Series 1996-1
Certificates ---- Lease of the Series 1996-1 Certificates to the Transferor."
There can be no assurance that the historical realization of the Residual
Values through purchases by the Obligors or Dealers or from sale at auction
will be indicative of future realizations on the Series 1996-1 Leased Vehicles.
In addition, any shortfalls between Liquidation Proceeds and the Adjusted
Balance Subject to Lease Charges of the related Series 1996-1 Leased Vehicle as
of the date the related Series 1996-1 Lease became a Liquidated Lease will
also reduce the amounts available for distribution on the Series 1996-1
Certificates and, to the extent that such reduction causes the Available Sale
Proceeds plus amounts withdrawn from the Cash Collateral Account to be less
than the principal and interest due on the Senior Notes on any Payment Date,
the Senior Noteholders could suffer a loss on their investment.
Because on the business day preceding each Payment Date the
Administrative Agent generally will make a Sale Proceeds Advance of the
Residual Value of each Series 1996-1 Leased Vehicle for which as of the end of
the related Accrual Period the Scheduled Lease End Date has occurred but the
related Sale Proceeds have not been received, Senior Noteholders will not be
subject to delays in the receipt of principal payments due to delays in the
sale of Series 1996-1 Leased Vehicles. The Administrative Agent is obligated
to make a Sale Proceeds Advance with respect to a Series 1996-1 Leased Vehicle
only to the extent that it believes such advances are recoverable from the Sale
Proceeds of such Series 1996-1 Leased Vehicle; if the Administrative Agent
determined that Sale Proceeds Advances were not recoverable from Sale Proceeds
on the Series 1996-1 Leased Vehicles which had not been sold, or if it
otherwise failed to honor its contractual obligation to make Sale Proceeds
Advances, Senior Noteholders could be subject to delays in the receipt of
principal payments to the extent that there is a delay in the receipt of
proceeds from the sale of Series 1996-1 Leased Vehicles. See "Description of
the Administrative Agency Agreement ---- Sale of Leased Vehicles" and "----
Advances of Sale Proceeds."
GEOGRAPHIC, ECONOMIC AND OTHER FACTORS
18
<PAGE> 21
The Dealers which originated the Series 1996-1 Leases are located, and
the Obligors generally are located in one of fifteen states, with the largest
percentage of such Dealers and Obligors being located in California, New York,
Pennsylvania, Minnesota and Colorado. The percentage of such Dealers and
Obligors located in any one of the fifteen states other than California, New
York, Pennsylvania, Minnesota or Colorado is less than 5%. See "The Leases and
Leased Vehicles--Characteristics of the Series 1996-1 Assets." Due to the
geographic concentration in California, New York, Pennsylvania, Minnesota and
Colorado, adverse economic conditions in one or more of these states may have a
disproportionate impact on the performance of the Series 1996-1 Assets.
Economic factors such as unemployment, interest rates, the rate of inflation
and consumer perceptions of the economy may affect the rate of prepayment and
defaults on the Series 1996-1 Leases. In addition, natural disasters in one or
more of the states may affect the rate of prepayment and defaults on the Series
1996-1 Leases and the ability to realize the Residual Values of Series 1996-1
Leased Vehicles upon sale. These economic factors, as well as other factors
such as consumer perceptions of used vehicle values (and Ford vehicles in
particular), may also affect the ability to realize the Residual Values of
Series 1996-1 Leased Vehicles upon sale.
STRUCTURAL CONSIDERATIONS
Beneficial Interests
The Issuer does not directly own the Leases or the Leased Vehicles
which constitute the Series 1996-1 Assets nor does it have a perfected security
interest in the Series 1996-1 Leased Vehicles. Because ownership and,
generally, the perfection of a security interest in a vehicle is governed by
the certificate of title statute of the state in which a vehicle is located,
and because obtaining a perfected security interest or an ownership interest in
a vehicle would result in the administrative burden and expense of retitling
vehicles, title to the Series 1996-1 Assets is held by the FCTT Trustee on
behalf of FCTT which will issue the Series 1996-1 Certificates representing
beneficial interests in the Series 1996-1 Assets. Before the designation of
certain specified Leases and Leased Vehicles as the Series 1996-1 Assets and
the issuance of the Series 1996-1 Certificates, the EBCs, held by Ford Credit
and Ford Credit Leasing, will represent the beneficial interest in all FCTT
Assets other than the Series 1995-1 Assets. Ford Credit and Ford Credit
Leasing had previously exchanged a portion of their EBCs for the Series 1995-1
Certificates in connection with the issuance of an earlier series of asset
backed securities. After the issuance of the Series 1996-1 Certificates, the
FCTT Trustee and the Administrative Agent are required to account separately
for the proceeds relating to the Series 1996-1 Assets and to the other FCTT
Assets. Neither the holders of the EBCs nor the holders of any other Series
will have any rights to the Series 1996-1 Assets, payments relating thereto or
the proceeds thereof. After the contribution of the Series 1996-1 Certificates
by Ford Credit and Ford Credit Leasing to the Transferor and the subsequent
transfer of such Series 1996-1 Certificates to the Issuer, the beneficial
interest in the Series 1996-1 Assets will be held by the Issuer, subject to the
pledge of the Series 1996-1 Certificates to the Indenture Trustee and the
rights of the Transferor under the Program Operating Lease.
Allocation of FCTT Liabilities
The FCTT Agreement provides that the holders of the Series 1996-1
Certificates (which for this purpose includes both the Transferor and the
Issuer) are responsible for liabilities to third parties or to the FCTT Trustee
incurred in connection with any Series 1996-1 Assets. The Transferor (or other
holder of the Lease Trust Certificates and a portion of the Subordinated Notes
initially acquired by the Transferor) will indemnify the Issuer against any
such liabilities. The FCTT Agreement further provides that the holders of the
Series 1996-1 Certificates will not be responsible for liabilities incurred in
connection with the other assets of FCTT. Holders of the EBCs will be
responsible for any liabilities to third parties or liabilities of FCTT
incurred in connection with any Non-Specified Assets, and the holders from time
to time of any other Series will be responsible for any liabilities to third
parties and liabilities of FCTT incurred in connection with the related Series
Specified Assets. Such allocations are not binding on third parties, and to
the extent that liabilities arising with respect to the assets of FCTT or
imposed upon the FCTT Trustee are not satisfied in accordance with the
allocations described above,
19
<PAGE> 22
the Series 1996-1 Assets could be used to satisfy such liabilities. To protect
against such liabilities, Ford Credit maintains self-insurance for the benefit
of itself nd FCTT, and maintains excess liability insurance policies naming
Ford Credit and FCTT as insured parties. In addition, each of Ford Credit and
Ford Credit Leasing will be liable for claims against FCTT as if FCTT were a
partnership and each were a general partner. If the Contingent and Excess
Liability Insurance is insufficient and Ford Credit and Ford Credit Leasing
fail to perform their obligations to indemnify the Issuer against such
liabilities and amounts otherwise distributable to Ford Credit and Ford Credit
Leasing as holders of the EBCs are insufficient to satisfy such liabilities,
the Series 1996-1 Assets, together with the other assets of FCTT, could be used
to satisfy the liabilities to third parties and to the FCTT Trustee, and the
Senior Noteholders could incur a loss on their investment. See "Certain Legal
Aspects of FCTT and the Series 1996-1 Certificates ---- Insurance."
The Issuer does not own the Series 1996-1 Assets but instead has an
indirect beneficial interest therein. Therefore, a third-party creditor or
claimant who has a perfected security interest in or otherwise obtains a lien
on any Series 1996-1 Asset will have priority over the interest of the FCTT
Trustee. If such creditor or claimant has a claim on any Series 1996-1 Asset,
the effect is the same as if such creditor or claimant had a claim on the
Issuer and the Issuer owned such Series 1996-1 Asset (that is, the Issuer's
interest in the Series 1996-1 Asset would be subject to the prior perfected
claim). However, because other assets in addition to the Series 1996-1 Assets
are held by FCTT, and third-party creditors of FCTT are not bound by the
allocation of liabilities described above, a general creditor of FCTT may
obtain a lien either on all or any one of the Series 1996-1 Assets with respect
to a claim unrelated to such Series 1996-1 Assets or on all of the FCTT Assets,
including the Series 1996-1 Assets, regardless of whether such claim would
have been allocated to such Series 1996-1 Assets under the terms of the FCTT
Agreement.
Such liens could include judgment liens arising from either successful
claims under federal and state consumer protection laws with respect to Leases
and Leased Vehicles or from successful claims against FCTT arising from
operation of Leased Vehicles constituting assets of FCTT. Other general liens
which could arise include tax liens arising against the Transferor or the
Issuer, liens arising under various federal and state criminal statutes and
certain liens in favor of the Pension Benefit Guaranty Corporation (the
"PBGC"). See "---- Consumer Protection Laws," "---- ERISA Liabilities; Effect
on Ratings" and "---- Vicarious Tort Liability." Ford Credit and Ford Credit
Leasing have each represented that as of the Series 1996-1 Cut-Off Date, there
were no creditors or claimants with respect to the Series 1996-1 Assets or,
except for those expressly permitted in connection with the issuance of
previous series of asset backed securities, with respect to FCTT.
The FCTT Assets are located in several states, the tax laws of which
vary. In addition, FCTT may in the future purchase Leases and Leased Vehicles
from Dealers located in states other than the fifteen states in which the
Series 1996-1 Leases were originated. In the event that any state imposes a
tax on FCTT at the entity level, Ford Credit and Ford Credit Leasing have
agreed to indemnify the holders of the SBCs for the full amount of such taxes.
If Ford Credit and Ford Credit Leasing should fail to fulfill their respective
indemnification obligations, amounts otherwise distributable to them as holders
of the EBCs will be used to satisfy such indemnification obligations. However,
it is possible that the Senior Noteholders could incur a loss on their
investment in the event Ford Credit and Ford Credit Leasing did not have
sufficient assets available (including distributions on the EBCs) to satisfy
such state tax liabilities.
The FCTT Agreement provides for Ford Credit and Ford Credit Leasing to
be liable as if FCTT were a partnership and each were a general partner to the
extent necessary after giving effect to the payment of liabilities allocated
severally to the holders of certificates representing their respective
beneficial interest in assets of FCTT. However, it is possible that the Senior
Noteholders could incur a loss on their investment to the extent that any such
claim was allocable to the Issuer as holder of the Series 1996-1 Certificates
either because a lien arose in connection with the Series 1996-1 Assets or in
the event Ford Credit and Ford Credit Leasing did not have sufficient assets
available (including distributions on the EBCs) to satisfy such claimant or
creditor in full.
20
<PAGE> 23
TERMINATION OF FCTT IN CERTAIN CIRCUMSTANCES
If a bankruptcy or insolvency occurs with respect to Ford Credit
Leasing (which is intended to be a special purpose corporation), the FCTT
Agreement provides that FCTT will be terminated. In addition, if the
Transferor (which is intended to be a limited purpose business trust) becomes
bankrupt, insolvent or is terminated, or the Issuer becomes bankrupt or
insolvent (or if the Issuer is terminated as a result of the bankruptcy,
insolvency or termination of the Transferor or Ford Credit Leasing), the FCTT
Agreement provides that FCTT will be terminated with respect to holding the
Series 1996-1 Assets. In each case the FCTT Trustee is required to distribute
the Series 1996-1 Assets to the holder of the Series 1996-1 Certificates.
Because the Issuer has pledged its rights to the Series 1996-1 Certificates to
the Indenture Trustee, such distribution would be made to the Indenture Trustee
who would be responsible for retitling the Series 1996-1 Leased Vehicles. The
cost of such retitling would reduce the amounts payable from the Series 1996-1
Assets which are available for payments of interest on and principal of the
Senior Notes, and in such event the Senior Noteholders could suffer a loss on
their investment.
INSOLVENCY OF FORD CREDIT ---- SUBSTANTIVE CONSOLIDATION WITH FORD CREDIT; TRUE
SALE
As described under "Certain Legal Aspects of FCTT and the Se ries
1996-1 Certificates ---- Insolvency Related Matters," the transactions
described herein have been structured and the parties to the Basic Documents
described herein have undertaken to act in a manner such that the voluntary or
involuntary commencement of an insolvency-related case or proceeding under the
Bankruptcy Code or similar state laws by or against Ford Credit should not
result in any of Ford Credit Leasing, FCTT or the Transferor becoming subject
to a similar case or proceeding, and should not result in the substantive
consolidation of the assets and liabilities of Ford Credit Leasing, FCTT or the
Transferor with those of Ford Credit for purposes of such case or proceeding.
Each of Ford Credit and Ford Credit Leasing intends that its transfer of its
Series 1996-1 Certificate to the Transferor be an absolute transfer (a "true
sale") of all its interest in such Series 1996-1 Certificate, and each will so
treat and report such transfer for all relevant purposes. A legal opinion will
be delivered to the effect that (i) the assets and liabilities of each of Ford
Credit Leasing, FCTT and the Transferor would not be substantively consolidated
with those of Ford Credit if Ford Credit were to become the subject of a case
under the Bankruptcy Code, and (ii) the transfer of the Series 1996-1
Certificates by each of Ford Credit and Ford Credit Leasing would constitute an
absolute transfer of all interest in such Series 1996-1 Certificates and,
therefore, such Series 1996-1 Certificates (including payments thereon and the
proceeds thereof) would not be property of either Ford Credit or Ford Credit
Leasing, as the case may be, if either were to become the subject of a case
under the Bankruptcy Code. Such conclusions are reasoned conclusions, based
upon various assumptions regarding factual matters and future events, as to
which there necessarily can be no assurance, and such legal opinion should not
be regarded as a guaranty of the result a court would reach in an actual case
before it. If Ford Credit Leasing, FCTT or the Transferor were to become the
subject of an insolvency-related case or proceeding, or if a bankruptcy
trustee, Ford Credit as debtor in possession, a creditor or other party having
standing were to assert that Ford Credit Leasing, FCTT or the Transferor should
be substantively consolidated with Ford Credit, or that the transfer of the
Series 1996-1 Certificates from Ford Credit (or, if applicable, Ford Credit
Leasing) should be recharacterized as a pledge of such Series 1996-1
Certificates to secure a borrowing, then delays in payments on the Series
1996-1 Certificates or (in the event of such an insolvency-related case or
proceeding or should the court rule in favor of such assertion) reductions in
such payments could occur, resulting in delays (or reductions) in payments on
the Senior Notes and a potential loss to Senior Noteholders on their
investment.
INSOLVENCY OF FORD CREDIT ---- PREFERENCE RISK
If Ford Credit were to become the subject of a case under the
Bankruptcy Code, Administrative Purchase Amounts paid by Ford Credit pursuant
to the Administrative Agency Agreement might be recoverable as preferential
transfers from Ford Credit to the extent made within a year of the commencement
of such case. Such a case (or a similar case or proceeding under applicable
state law) with respect to Ford Credit also would be an event of default under
the Administrative Agency
21
<PAGE> 24
Agreement, which could result in the removal of Ford Credit as Administrative
Agent. Either of such occurrences could adversely affect timely payment to
Senior Noteholders and, if payments previously made by Ford Credit were to be
recovered, losses to Senior Noteholders could result.
REQUIRED SALE OF ASSETS IN CERTAIN CIRCUMSTANCES
If a bankruptcy or insolvency occurs with respect to the Transferor or
Ford Credit Leasing, or the Transferor is terminated (which could occur upon
the bankruptcy or insolvency of Ford Credit Leasing), the Lease Trust Agreement
provides that the Issuer will be dissolved (and the Program Operating Lease
will terminate) and the Indenture Trustee will be required to sell the assets
of the Issuer in a commercially reasonable manner and on commercially
reasonable terms. Because each of the events which requires the Issuer to be
dissolved is also an event which requires either FCTT to be terminated or FCTT
to be terminated with respect to holding the Series 1996-1 Assets, in
connection with such sale, the Series 1996-1 Assets will be distributed from
FCTT to the purchaser and the Series 1996-1 Vehicles will be retitled at the
direction of such purchaser. The proceeds from the sale of the assets of the
Issuer plus amounts on deposit in the Cash Collateral Account and other
accounts of the Issuer will be distributed first to Senior Noteholders, second
to holders of Subordinated Notes (which amounts will be deposited into the Cash
Collateral Account) and third to holders of Lease Trust Certificates in the
priority set forth in the Indenture, and if such proceeds and amounts are not
sufficient to pay the Senior Notes in full, the amount of principal returned to
the Senior Noteholders would be reduced, and the Senior Noteholders would incur
a loss on their investment. See "Additional Document Provisions ---- The Lease
Trust Agreement ---- Termination."
MATURITY, PREPAYMENT AND YIELD CONSIDERATIONS
The rate of payment of principal and the yield to maturity on each
Class of Senior Notes generally will be directly related to the rate at which
payments on the Series 1996-1 Leases and in respect of the Series 1996-1
Leased Vehicles are received. Partial prepayments by Obligors will be treated
as Payaheads and will not increase the rate of payment of principal of the
Senior Notes because such payments will be held and paid out to Senior
Noteholders as principal only when required to meet a shortfall in a subsequent
payment from the related Obligor. However, because the Residual Values of
Series 1996-1 Leased Vehicles account for a large portion of the Pool Balance,
the rate of payment of principal of the Senior Notes increases substantially in
_____ 199_ as a result of Series 1996-1 Leases beginning to reach their
Scheduled Lease End Dates in the related Accrual Period. See "The Leases and
Leased Vehicles." Further, prepayment of the entire Adjusted Balance Subject to
Lease Charges of a Series 1996-1 Lease, whether in the form of Voluntary Early
Termination Proceeds, Liquidation Proceeds or Administrative Purchase Amounts,
will have the effect of increasing the rate of payment of principal on the
Senior Notes. In addition, no principal will be paid on the Class A-2 Senior
Notes until the Class A-1 Senior Notes have been paid in full, unless an Event
of Default under the Indenture has occurred and the maturity of the Senior
Notes has been accelerated, in which case principal will be paid on a pro rata
basis to the holders of the Class A-1 Senior Notes and the Class A-2 Senior
Notes based on their respective principal balances without any distinction
between Classes. The rate of payment of principal of the Senior Notes also
will be increased by the application to the payment of principal on the
Senior Notes (after payment of interest on the Senior Notes, the Subordinated
Notes and the Lease Trust Certificates) of the portion, if any, of the
Available Funds plus the Cash Collateral Additional Draw Amount, if any, which
does not constitute payments by or on behalf of Obligors in reduction of the
Balance Subject to Lease Charges of the related Series 1996-1 Leases and which
is not applied to pay certain fees. To the extent Series 1996-1 Leases which
have higher Retail Operating Lease Factors are prepaid faster than others, the
amount of such additional portion of the Available Funds plus the Cash
Collateral Additional Draw Amount, if any, available to pay principal of the
Senior Notes will be reduced. See "Maturity, Prepayment and Yield
Considerations."
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<PAGE> 25
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and regulations,
including the federal Consumer Leasing Act of 1976 and Regulation M promulgated
by the Board of Governors of the Federal Reserve System, impose requirements on
retail lease contracts such as the Series 1996-1 Leases. These laws apply to
FCTT as the assignee of each Series 1996-1 Lease and may also apply to the
Issuer as holder of the Series 1996-1 Certificates which represent a beneficial
interest in the Series 1996-1 Leases, among other things. The failure of the
Dealer, FCTT, or the Administrative Agent acting on behalf of FCTT, to comply
with such laws and regulations may give rise to liabilities on the part of
FCTT, and claims by FCTT or the Administrative Agent acting on behalf of FCTT
with respect to Obligors may be subject to set-off as a result of such
non-compliance.
Each of the fifteen states in which the Series 1996-1 Leases were
originated has adopted a "Lemon Law" that provides purchasers of vehicles,
including lessees in some states, certain rights with respect to vehicles which
are substandard. Such Lemon Laws apply with respect to the Series 1996-1
Leased Vehicles. A successful claim under a Lemon Law could result in, among
other things, the termination of the related Series 1996-1 Lease and/or the
refunding to the related Obligor of some portion of Total Monthly Payments paid
by such Obligor. Any such refund would reduce the amounts distributed with
respect to the Se ries 1996-1 Certificates, which could, in certain
circumstances, reduce the payments to Senior Noteholders. See "Certain Legal
Aspects of the Leases and Leased Vehicles ---- Consumer Protection Laws."
ERISA LIABILITIES; EFFECT ON RATINGS
It is possible that the PBGC could assert that the assets of FCTT,
including the Series 1996-1 Assets, should be subject to liens in favor of the
PBGC to satisfy any unpaid ERISA liabilities with respect to tax-qualified
defined benefit plans sponsored by any member of an "affiliated group" that
includes Ford Credit, Ford and their respective affiliates. Because such
affiliated group has historically substantially fully funded its ERISA
obligations (none of which arise under multiemployer plans), the Transferor
believes that the likelihood of any such unpaid liability occurring and the
PBGC attempting to assert such a lien (including a lien against the Series
1996-1 Assets) is remote. However, if an unfunded ERISA liability of the type
that can give rise to such a lien existed with respect to any member of such
affiliated group and such a liability were to go unpaid, there can be no
assurance that the PBGC would not attempt to assert such a lien on the assets
of FCTT, in which event the ratings of the Senior Notes might be downgraded.
There are currently no unfunded ERISA liabilities in the Ford affiliated
group, although there can be no assurance that the current level of funding
will continue in the future. See "Ratings of the Senior Notes."
VICARIOUS TORT LIABILITY
Although FCTT will hold title to the Series 1996-1 Leased Vehicles and
the Issuer, as holder of the Series 1996-1 Certificates (subject to the pledge
to the Indenture Trustee and the rights of the Transferor under the Program
Operating Lease), will have a beneficial interest therein, the Series 1996-1
Leased Vehicles will be operated by the related Obligors and their respective
invitees. State laws differ as to whether anyone suffering injury to person or
property involving a leased vehicle may bring an action against the owner of
the vehicle merely by virtue of its ownership of the vehicle. To the extent
that applicable state law permits such an action, FCTT and the FCTT Assets,
including the Series 1996-1 Assets, may be subject to liability to such an
injured party. FCTT is named as an insured party under the Contingent and
Excess Liability Insurance. In the event that vicarious liability was imposed
on FCTT as owner of a Series 1996-1 Leased Vehicle (or, in certain
circumstances a Leased Vehicle that is not a Series 1996-1 Leased Vehicle) and
the coverage provided by the Contingent and Excess Liability Insurance was
insufficient to cover the full amount of such loss, and Ford Credit and Ford
Credit Leasing failed to perform their obligations to indemnify the Issuer, the
Senior Noteholders could incur a loss on their investment. See "----
Structural Considerations," "Certain Legal Aspects of FCTT and the Series
1996-1 Certificates" and "Certain Legal Aspects of the Leases and Leased
Vehicles ---- Vicarious Liability."
23
<PAGE> 26
ADMINISTRATIVE AGENT DEFAULT
Ford Credit is the Administrative Agent with respect to the Leases and
Leased Vehicles, including the Series 1996-1 Leases and Series 1996-1 Leased
Vehicles. Administrative Agent Events of Default may occur with respect to
all beneficiaries of FCTT, including the Issuer, or only with respect to one or
more Series. Upon the occurrence of an Administrative Agent Event of Default
with respect to all beneficiaries of FCTT, the FCTT Trustee, if so directed by
100% of the beneficiaries of FCTT (which, so long as any Senior Notes are
outstanding, will for this purpose include the Indenture Trustee and any other
holder of a Series, but exclude Ford Credit and Ford Credit Leasing), may
terminate all of the rights and obligations of Ford Credit under the
Administrative Agency Agreement. Upon the occurrence of an Administrative
Agent Event of Default with respect to Series 1996-1, the Indenture Trustee may
terminate all of the rights and obligations of Ford Credit with respect to
Series 1996-1 only, and the FCTT Trustee will become the successor
Administrative Agent until such time as a successor Administrative Agent is
appointed pursuant to the terms of the Administrative Agency Agreement. Any
replacement of Ford Credit as Administrative Agent in servicing the Leases and
disposing of the Leased Vehicles could have an adverse effect on the timely
receipt of interest and principal by the Senior Noteholders. See "Description
of the Administrative Agency Agreement ---- Administrative Agent Events of
Default."
BOOK-ENTRY REGISTRATION
Each Class of the Senior Notes will be initially represented by one or
more physical notes registered in the name of Cede or any successor nominee for
DTC and will not be registered in the names of the beneficial owners of Senior
Notes or their nominees. Accordingly, unless and until Definitive Senior Notes
are issued, holders of beneficial interests in Senior Notes will not be
recognized by the Indenture Trustee as Senior Noteholders and will only be able
to exercise the rights of Senior Noteholders indirectly through DTC and its
participants. See "Description of the Senior Notes ---- Book-Entry
Registration."
FORD CREDIT
Ford Credit was incorporated in Delaware in 1959 and is a wholly owned
indirect subsidiary of Ford.
Ford Credit provides wholesale financing and capital loans to
franchised Ford vehicle dealers and other dealers associated with such
franchisees and purchases retail installment sale contracts and retail leases
from them. Ford Credit also makes loans to vehicle leasing companies, the
majority of which are affiliated with such dealers. In addition, a
wholly-owned subsidiary of Ford Credit provides these financing services in the
United States and Canada to other vehicle dealers. Ford Credit also provides
retail financing for used vehicles built by Ford and other manufacturers. In
addition to vehicle financing, Ford Credit makes loans to affiliates of Ford
and finances certain receivables of Ford and its subsidiaries. Ford Credit's
insurance operations, conducted through its wholly owned subsidiary, The
American Road Insurance Company and its subsidiaries, consist primarily of
underwriting floor plan insurance related to substantially all new vehicle
inventories of dealers financed at wholesale by Ford Credit in the United
States and Canada, credit life and disability insurance in connection with
retail vehicle financing, and insurance related to retail contracts sold by
automobile dealers to cover repairs.
The mailing address of Ford Credit's executive offices is The American
Road, Dearborn, Michigan 48121. The telephone number of such offices is (313)
322-3000.
24
<PAGE> 27
THE ISSUER
FORMATION OF THE ISSUER
The Issuer is a trust formed under the laws of the State of Delaware
pursuant to the Lease Trust Agreement solely for the purposes of the
transactions described in this Prospectus. After its formation, the Issuer
will not engage in any activity other than (i) issuing the Senior Notes, the
Subordinated Notes and the Lease Trust Certificates, (ii) acquiring the Series
1996-1 Certificates and the other property of the Lease Trust Estate using the
proceeds from the sale of the Senior Notes and Lease Trust Certificates to
third party investors and from the issuance of the Subordinated Notes and
$__________________ of Lease Trust Certificates to the Transferor, (iii) making
payments on the Senior Notes, the Subordinated Notes and the Lease Trust
Certificates, (iv) assigning and pledging the Lease Trust Estate to the
Indenture Trustee, (v) entering into and performing its obligations under the
Basic Documents to which it is a party and (vi) engaging in other transactions,
including entering into agreements, that are necessary, suitable or convenient
to accomplish the foregoing or are incidental thereto or connected therewith.
CAPITALIZATION OF THE ISSUER
On the Closing Date, the Issuer will be capitalized with $______ of
Senior Notes, $______ of Subordinated Notes and $______ of Lease Trust
Certificates. The Issuer will sell Lease Trust Certificates with an aggregate
initial principal balance of $______ to third party investors that are expected
to be unaffiliated with the Transferor, the Administrative Agent, their
respective affiliates or the Issuer. In exchange for the transfer of the
Series 1996-1 Certificates, the Issuer will pay the proceeds from the sale of
the Senior Notes and the Lease Trust Certificates to the Transferor and will
issue to the Transferor the entire initial principal balance of the
Subordinated Notes and $__________________ initial principal balance of Lease
Trust Certificates.
The following table illustrates the capitalization of the Issuer as of
the Closing Date, as if the issuance and sale of the Senior Notes, the
Subordinated Notes and the Lease Trust Certificates as described above had
taken place on such date:
<TABLE>
<S> <C>
Class A-1 Senior Notes . . . . . . . . . . . . . . $
Class A-2 Senior Notes . . . . . . . . . . . . . .
Subordinated Notes . . . . . . . . . . . . . . . .
Lease Trust Certificates . . . . . . . . . . . . .
--------
Total . . . . . . . . . . . . . . . . . $
========
</TABLE>
THE LEASE TRUSTEE
PNC Bank, Delaware, a Delaware banking corporation, is the Lease
Trustee under the Lease Trust Agreement. The principal offices of the Lease
Trustee are located at 222 Delaware Avenue, Wilmington, Delaware 19801. The
Transferor, Ford Credit and their affiliates may maintain normal commercial
banking relationships with the Lease Trustee and its affiliates. The fees and
expenses of the Lease Trustee will be paid by the Administrative Agent.
PROPERTY OF THE ISSUER
On the Closing Date, the Series 1996-1 Certificates will be
transferred to the Issuer pursuant to the Transfer Agreement. The Issuer will
then pledge its interest in the Series 1996-1 Certificates to the Indenture
Trustee under the Indenture and then, subject to such pledge, will lease the
Series 1996-1 Certificates back to the Transferor pursuant to the Program
Operating Lease. The Program Operating Lease with respect to the beneficial
interest in each Series 1996-1 Leased Vehicle expires with respect to such
Series 1996-1 Leased Vehicle immediately preceding the earlier to occur of (i)
the sale of such Series 1996-1 Leased Vehicle, but only if such sale occurs on
or after the related Scheduled Lease End Date and (ii) the making of a Sale
Proceeds Advance in respect thereof. See "Series 1996-1 Certifi-
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cates." After giving effect to the transactions described herein and effected
by the Basic Documents, the property of the Issuer (the "Lease Trust Estate")
will consist of (i) the rights of the Issuer under the Series 1996-1
Certificates, (ii) the rights under the Program Operating Lease, (iii) the
rights of the Issuer to funds on deposit from time to time in the Collection
Account, the Payahead Account, the Payment Account, the Certificate
Distribution Account and any other account or accounts established pursuant to
the Indenture (including investment income on amounts on deposit in the
Collection Account and the Certificate Distribution Account) and proceeds
thereof, (iv) the rights of the Transferor under the Asset Contribution
Agreement, (v) the rights as holder of the Series 1996-1 Certificates under the
Administrative Agency Agreement and the Series 1996-1 Supplement, (vi) the
security interest of the Issuer in the Subordinated Notes and the Cash
Collateral Account and the right to make withdrawals from the Cash Collateral
Account and (vii) all proceeds of the foregoing. All of the Lease Trust Estate
is pledged to the Indenture Trustee pursuant to the terms of the Indenture.
Because the Series 1996-1 Certificates represent the beneficial
interest in the Series 1996-1 Assets, Senior Noteholders are dependent on
payments made on the Series 1996-1 Leases and proceeds received in connection
with the disposition of Series 1996-1 Leased Vehicles for payment of interest
on and principal of the Senior Notes. The Issuer will not have a direct
ownership interest in the Series 1996-1 Leases, or a direct ownership interest
or perfected security interest in the Series 1996-1 Leased Vehicles (which
will be titled in the name of FCTT), and it is therefore possible that a claim
or lien with respect to the Series 1996-1 Leased Vehicles or on FCTT could
limit the amounts paid to the holders of the Series 1996-1 Certificates to less
than the amount due from the related Obligors or realized from the sale of
Series 1996-1 Leased Vehicles. To the extent that a claim or lien delays
disposition of Series 1996-1 Leased Vehicles or reduces the amount paid to the
holders of the Series 1996-1 Certificates as holders of the beneficial interest
in the Series 1996-1 Assets, Senior Noteholders could be subject to delays in
payment or losses on their investment. See "Risk Factors ---- Structural
Considerations," "Description of the Senior Notes ---- Cash Collateral Account
Withdrawals and Deposits," "Series 1996-1 Certificates" and "Certain Legal
Aspects of FCTT and the Series 1996-1 Certificates."
USE OF PROCEEDS
The net proceeds from the sale of the Senior Notes will be applied,
together with the proceeds from the sale of Lease Trust Certificates to third
party investors and from the issuance of the Subordinated Notes and
$__________________ of Lease Trust Certificates to the Transferor, to acquire
the Series 1996-1 Certificates from the Transferor pursuant to the Transfer
Agreement.
FCTT
CREATION OF FCTT BY FORD CREDIT AND FORD CREDIT LEASING
Ford Credit Titling Trust ("FCTT") was formed by Ford Credit and Ford
Credit Leasing, a special-purpose, wholly-owned subsidiary of Ford Credit,
pursuant to the terms of the FCTT Agreement. The primary purpose of FCTT is to
acquire from Dealers located in specified jurisdictions the Leases and Leased
Vehicles originated by such Dealers and to conserve and hold such Leases and
Leased Vehicles on behalf of the beneficiaries from time to time of FCTT. As
of the date hereof, Ford Credit has directed that each lease under the Red
Carpet Lease Plan which is originated by Dealers in Arizona, Arkansas,
California, Colorado, Kansas, Minnesota, Nebraska, Nevada, New Mexico, New
York, North Dakota, Pennsylvania, South Dakota, Virginia and Washington, and
the related leased vehicle, be assigned by Dealers to FCTT, except that if the
obligor under the lease is located in any other state, such lease and the
related leased vehicle is assigned to Ford Credit instead of FCTT. All the
Series 1996-1 Leases and Series 1996-1 Leased Vehicles were originated in one
of the fifteen states identified above with Obligors located in such states.
The Administrative Agent has advised the Issuer that it anticipates that after
the date hereof, additional states will be added to the list of states in which
Dealers will assign Leases and Leased Vehicles to FCTT. Leases and Leased
Vehicles originated in such
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additional states will constitute FCTT Assets but will not constitute Series
1996-1 Assets. See "---- Lease Origination from Dealers and Assignment to
FCTT."
THE FCTT TRUSTEE
Comerica Bank, a Michigan banking corporation, is the FCTT Trustee.
The principal offices of Comerica Bank are located in Detroit, Michigan. The
Transferor, Ford Credit and their affiliates may maintain normal commercial
banking relationships with Comerica Bank and its affiliates. The FCTT Trustee
may appoint one or more co-trustees or separate trustees for the purpose of
meeting applicable state requirements.
LEASE ORIGINATION FROM DEALERS AND ASSIGNMENT TO FCTT
Dealers originate Leases on a form providing for the assignment
thereof to FCTT. Each Leased Vehicle which is assigned to FCTT previously has
been sold to the Dealer by Ford or, in certain limited circumstances, by
another manufacturer of motor vehicles. The Dealer has negotiated the terms of
the Lease with the Obligor, including an option to purchase the related Leased
Vehicle on the Scheduled Lease End Date for an amount greater than or equal to
the Residual Value of the Leased Vehicle. Upon entering into a Lease with an
Obligor and approval of such Lease by the Administrative Agent, Dealers assign
the Lease, the related Leased Vehicle, the first Total Monthly Payment received
from the Obligor and rights to any security deposit or reconditioning reserve
to FCTT against payment of the related Balance Subject to Lease Charges. As of
the date of the assignment, FCTT holds the title to and is the record owner of
the Lease and Leased Vehicle. Until such date as the Lease and Leased Vehicle
are designated as Series Specified Assets in connection with the issuance of
any Series, the beneficial interest in such Lease and Leased Vehicle is held
by Ford Credit and Ford Credit Leasing as holders of the Exchangeable
Beneficial Certificates. See "---- Exchangeable Beneficial Certificates and
Specified Beneficial Certificates." Pursuant to agreements between Ford Credit
and the Dealers, each Dealer is obligated, after originating and assigning
Leases and Leased Vehicles to FCTT, to repurchase such Leases and Leased
Vehicles which do not meet certain representations and warranties made by such
Dealer. The Administrative Agent or the Dealer has paid or will pay applicable
sales, use and similar taxes to the appropriate authorities from amounts
collected from Obligors or otherwise.
TITLING OF LEASED VEHICLES
The Administrative Agent, on behalf of FCTT, purchases the Leases and
related Leased Vehicles, including the Series 1996-1 Leases and the related
Series 1996-1 Leased Vehicles, from the originating Dealers and causes the
certificate of title for each Leased Vehicle to be issued in the name "Ford
Credit Titling Trust," or "Ford Credit Titling Trust, Comerica Bank [or
applicable co-trustee or separate trustee], Trustee" or in a substantially
similar name acceptable to the relevant governmental departments or agencies.
No lien will be placed on the certificate of title to indicate the interests of
the beneficiaries of FCTT, and new certificates of title will not be issued in
connection with the transfer of any beneficial interests in FCTT. Therefore,
there will be no indication on the certificates of title for the Series 1996-1
Leased Vehicles that the Issuer or any other person has an interest in such
Series 1996-1 Leased Vehicles. In certain circumstances, however, certificates
of title to the Leased Vehicles will reflect a lien recorded in favor of the
Administrative Agent, including therein the address of an office of the
Administrative Agent at which Leases and the certificates of title to Leased
Vehicles are to be delivered. This lien exists only to assure delivery of the
certificates of title to the correct location; the Administrative Agent will
not have an interest in the Leased Vehicles, although for administrative
convenience, it (or a third-party contractor hired by it) will hold the
certificates of title as custodian on behalf of the FCTT Trustee. See "Risk
Factors ---- Structural Considerations" and "Certain Legal Aspects of FCTT and
the Series 1996-1 Certificates."
EXCHANGEABLE BENEFICIAL CERTIFICATES AND SPECIFIED BENEFICIAL CERTIFICATES
The FCTT Trustee initially issued to Ford Credit and Ford Credit
Leasing, as the beneficiaries of FCTT, Exchangeable Beneficial Certificates
(each, an "EBC") representing the entire beneficial interest
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in the FCTT Assets (representing a 98% beneficial interest in the FCTT Assets
in the case of Ford Credit, and a 2% beneficial interest in the case of Ford
Credit Leasing). On May 24, 1995, Ford Credit and Ford Credit Leasing
exchanged a portion of their EBCs for a series of Specified Beneficial
Certificates (the "Series 1995-1 Certificates") representing beneficial
interests in certain FCTT Assets designated as Series 1995- 1 Assets. Such
Series 1995-1 Certificates were contributed to an affiliate which deposited
them into a securitization trust in connection with the issuance of a previous
series of asset backed securities. As described below, the FCTT Trustee may
issue from time to time additional series of Specified Beneficial Certificates
("SBCs") representing beneficial interests in certain designated FCTT Assets.
After the issuance of the Series 1996-1 Certificates and until the next series
of SBCs are issued, the EBCs will represent the beneficial interest in all of
the FCTT Assets other than those FCTT Assets which are designated as Series
1995-1 Assets or Series 1996-1 Assets (such other FCTT Assets, the
"Non-Specified Assets"). The beneficial interest in FCTT and the FCTT Assets
as of any date is represented by the EBCs and each outstanding SBC. Neither
Ford Credit nor Ford Credit Leasing may transfer or assign their respective
EBCs.
Pursuant to the FCTT Agreement, the Administrative Agent, acting at
the unanimous direction of the holders of the EBCs, may at any time deliver to
the FCTT Trustee a Series Specification Notice identifying certain FCTT Assets
to be designated as Series Specified Assets and the date (the "Series Issue
Date") upon which an SBC representing the beneficial interest in such Series
Specified Assets will be issued to each holder of an EBC. Upon delivery of the
SBC, such holder's beneficial interest in the FCTT Assets will be represented
by the EBC (with respect to the Non-Specified Assets) and such SBC (with
respect to Series Specified Assets). As described in "Series 1996-1
Certificates ---- Issuance of Series 1996-1 Certificates to Ford Credit and
Ford Credit Leasing," the Series 1996-1 Certificate to be issued to Ford Credit
will be an SBC representing a 98% beneficial interest in the Series 1996-1
Assets and the Series 1996-1 Certificate to be issued to Ford Credit Leasing
will be an SBC representing a 2% beneficial interest in the Series 1996-1
Assets. Ford Credit and Ford Credit Leasing expect from time to time to
designate other FCTT Assets as Series Specified Assets and to cause FCTT to
issue additional Series representing beneficial interests in such Series
Specified Assets. No Series may be issued unless an Opinion of Counsel is
delivered that such issuance will not cause FCTT to be classified as an
association (or publicly traded partnership) taxable as a corporation for
federal income tax purposes.
As set forth in the FCTT Agreement and the Administrative Agency
Agreement, the holders from time to time of any SBC will have a beneficial
interest in the related Series Specified Assets, will be entitled to receive
such percentage interest of the proceeds of the related Series Specified Assets
set forth in such SBC and, acting together with each other holder of an SBC
representing a beneficial interest in such Series Specified Assets, will be
entitled to direct the FCTT Trustee to take actions or refrain from taking
actions with respect to such Series Specified Assets. The holders from time to
time of any SBCs will not be entitled to receive proceeds from Non-Specified
Assets or from any other Series Specified Assets which may exist from time to
time. However, it is possible in certain circumstances that notwithstanding
the allocations of liabilities and the indemnities set forth in the FCTT
Agreement, certain Series Specified Assets could be attached or proceeds of
such Series Specified Assets could be used to satisfy a claim with respect to
Non-Specified Assets or other Series Specified Assets or a claim assessed on
FCTT generally. See "Risk Factors ---- Structural Considerations."
THE TRANSFEROR
DELAWARE BUSINESS TRUST
The Transferor is a business trust formed under the laws of the State
of Delaware pursuant to the RCL Trust Agreement for purposes of the
transactions described herein. The beneficiaries of the Transferor are Ford
Credit and Ford Credit Leasing. The activities of the Transferor are limited
to (i) acquiring and transferring the Series 1996-1 Certificates and entering
into and performing its obligations under the Program Operating Lease; (ii)
acting as depositor to the Issuer and entering into the Lease Trust Agreement
and acquiring certain Lease Trust Certificates issued thereunder; (iii)
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acquiring the Subordinated Notes; and (iv) making distributions and executing
agreements as are necessary, suitable or convenient to accomplish the
foregoing. In addition, after entering into the Program Operating Lease the
Transferor will assign a 1% interest in all of its assets and obligations to
Ford Credit Leasing. See "---- Creation by Ford Credit and Ford Credit
Leasing; Assignment to Ford Credit Leasing" and "Series 1996-1 Certificates
- ---- Lease of the Series 1996-1 Certificates to the Transferor."
RCL TRUSTEE
The RCL Trustee is First Union Bank of Delaware, a Delaware banking
corporation, with offices located at One Rodney Square, 920 King Street,
Wilmington, Delaware 19801. The Transferor, Ford Credit and their affiliates
may maintain normal commercial banking relationships with the RCL Trustee and
its affiliates. The fees and expenses of the RCL Trustee will be paid by Ford
Credit and Ford Credit Leasing, the beneficiaries of the Transferor.
CREATION BY FORD CREDIT AND FORD CREDIT LEASING; ASSIGNMENT TO FORD CREDIT
LEASING
Prior to the issuance of the Series 1996-1 Certificates and the
securitization described herein, Ford Credit held a 98% beneficial interest in
the Transferor and Ford Credit Leasing held a 2% beneficial interest in the
Transferor. Because the Transferor will assign a 1% interest in its assets and
obligations to Ford Credit Leasing on the Closing Date, the beneficial interest
in the Transferor held by Ford Credit and Ford Credit Leasing will be changed
by the amount so assigned. After giving effect to the assignment on the
Closing Date, Ford Credit Leasing, in addition to a direct right to 1% of all
assets of the Transferor (and an obligation to pay 1% of all obligations of the
Transferor), will retain a 1/99 beneficial interest in the Transferor. After
giving effect to the assignment to Ford Credit Leasing, Ford Credit as a
beneficiary of the Transferor will retain a 98/99 beneficial interest in the
Transferor. As described in "Series 1996-1 Certificates ---- Lease of the
Series 1996-1 Certificates to the Transferor," the primary obligation of the
Transferor after the Closing Date is to make Program Operating Lease Payments
and its primary assets after the Closing Date are the interest it has as lessee
of the Series 1996-1 Certificates pursuant to the Program Operating Lease, its
interest in the Cash Collateral Account, the Subordinated Notes and
$__________________ in initial principal balance of Lease Trust Certificates.
SERIES 1996-1 CERTIFICATES
ISSUANCE OF SERIES 1996-1 CERTIFICATES TO FORD CREDIT AND FORD CREDIT LEASING
On the Closing Date, the FCTT Trustee will (i) issue a Series 1996-1
Certificate to Ford Credit, as holder of an EBC, representing Ford Credit's 98%
beneficial interest in the FCTT Assets which were designated as Series 1996-1
Assets pursuant to the Series Specification Notice relating to Series 1996-1
and (ii) issue a Series 1996-1 Certificate to Ford Credit Leasing, as holder of
an EBC, representing Ford Credit Leasing's 2% beneficial interest in the FCTT
Assets which were designated as Series 1996-1 Assets pursuant to the Series
Specification Notice relating to Series 1996-1. The Series 1996-1 Certificates
will be the second series of SBCs issued by FCTT. See "FCTT ---- Exchangeable
Beneficial Certificates and Specified Beneficial Certificates."
CONTRIBUTION OF SERIES 1996-1 CERTIFICATES TO THE TRANSFEROR
On the Closing Date, Ford Credit and Ford Credit Leasing each will
convey the Series 1996-1 Certificate issued to it to the Transferor pursuant to
the terms of the Asset Contribution Agreement. Ford Credit and Ford Credit
Leasing each will covenant to treat the conveyance of the Series 1996-1
Certificates to the Transferor as an absolute transfer for all purposes. Upon
the conveyance of the Series 1996-1 Certificates, the value of the beneficial
interests of Ford Credit and Ford Credit Leasing in the Transferor will be
increased by the value of the Series 1996-1 Certificates. See "The Transferor
- ---- Creation by Ford Credit and Ford Credit Leasing; Assignment to Ford Credit
Leasing."
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In addition to the conveyance of the Series 1996-1 Certificates, Ford
Credit and Ford Credit Leasing also will convey to the Transferor their rights
under the Series 1996-1 Supplement and the Administrative Agency Agreement with
respect to Series 1996-1.
The Administrative Agent in the Series 1996-1 Supplement and Ford
Credit and Ford Credit Leasing in the Asset Contribution Agreement will make
certain representations, warranties and covenants with respect to the Series
1996-1 Assets. See "The Leases and Leased Vehicles ---- Eligibility Criteria"
and "Additional Document Provisions ---- Representations, Warranties and
Covenants." In the event all of the Specific Eligibility Criteria and General
Eligibility Criteria were not satisfied on the Series 1996-1 Cut-Off Date or
certain covenants are breached, Ford Credit and Ford Credit Leasing, as holders
of the EBCs, will be required to purchase the beneficial interest in the Series
1996-1 Asset to which such breach relates. Any such purchase will be effected
by the deposit of the Administrative Purchase Amount in the Collection Account
on the business day preceding the Payment Date relating to the Accrual Period
in which the breach was discovered or occurred, as applicable. See
"Description of the Administrative Agency Agreement ---- Administrative
Purchases."
TRANSFER OF THE SERIES 1996-1 CERTIFICATES TO THE ISSUER
On the Closing Date, immediately following the conveyance of the
Series 1996-1 Certificates to the Transferor pursuant to the Asset Contribution
Agreement as described in "---- Contribution of Series 1996-1 Certificates to
the Transferor," the Transferor, pursuant to the terms of the Transfer
Agreement, will transfer the Series 1996-1 Certificates to the Issuer. The
Transferor also will assign to the Issuer the rights under the Administrative
Agency Agreement and the Series 1996-1 Supplement conveyed to it by Ford
Credit and Ford Credit Leasing pursuant to the Asset Contribution Agreement.
In exchange for such transfer and assignment, the Issuer will pay to the
Transferor the proceeds from the sale of the Senior Notes and Lease Trust
Certificates to third party investors and will issue to the Transferor the
Subordinated Notes and $__________________ initial principal balance of Lease
Trust Certificates.
PLEDGE OF THE SERIES 1996-1 CERTIFICATES TO THE INDENTURE TRUSTEE
Immediately following the transfer of the Series 1996-1 Certificates
to the Issuer as described in "---- Transfer of the Series 1996-1 Certificates
to the Issuer," the Issuer will pledge its interest in the Series 1996-1
Certificates as part of the Lease Trust Estate pledged to the Indenture Trustee
as security for the repayment of the Senior Notes. See "Property of the
Issuer."
LEASE OF THE SERIES 1996-1 CERTIFICATES TO THE TRANSFEROR
Immediately following the transfer of the Series 1996-1 Certificates
to the Issuer and the pledge to the Indenture Trustee of the Issuer's interest
therein as described in "---- Transfer of the Series 1996-1 Certificates to the
Issuer" and "---- Pledge of the Series 1996-1 Certificates to the Indenture
Trustee," the Issuer and the Transferor will enter into the Program Operating
Lease pursuant to which the Transferor will lease the Series 1996-1
Certificates during the term of the Program Operating Lease. As lessee, the
Transferor will be entitled to receive all proceeds from the Series 1996-1
Certificates during the term of the Program Operating Lease and will be
required to make Program Operating Lease Payments to the Issuer,subject to the
assignment by the Transferor of 1% of its assets and obligations to Ford Credit
Leasing. See "The Transferor ---- Creation by Ford Credit and Ford Credit
Leasing; Assignment to Ford Credit Leasing."
Because the Program Operating Lease expires with respect to the
portion of the Series 1996-1 Certificates representing the beneficial interest
in a Series 1996-1 Leased Vehicle immediately preceding the earlier of (i) the
sale of such Series 1996-1 Leased Vehicle, if such sale occurs on or after such
Series 1996-1 Leased Vehicle's Scheduled Lease End Date or (ii) the date on
which a Sale Proceeds Advance is made relating to such Series 1996-1 Leased
Vehicle, the Transferor will receive and will deposit into the Cash Collateral
Account all Monthly Payments with respect to Series 1996-1 Leases, all Sale
Proceeds of those Series 1996-1 Leased Vehicles the related Series 1996-1
Leases of which
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terminate before their Scheduled Lease End Date and all amounts collected in
respect of Excess Wear and Tear and Excess Mileage. The Transferor is
obligated to make Program Operating Lease Payments to the Issuer for so long as
the Senior Notes, the Subordinated Notes and the Lease Trust Certificates are
outstanding. Amounts in the Cash Collateral Account will secure the
Transferor's obligation to make Program Operating Lease Payments to the Issuer.
The Transferor will not receive the Sale Proceeds of those Series 1996-1 Leased
Vehicles whose Series 1996-1 Leases terminate on or after their respective
Scheduled Lease End Dates. The right to such Sale Proceeds (as limited by the
Transferor Purchase Option Price) is property of the Issuer pledged pursuant to
the Indenture. See "---- Transferor Leased Vehicle Purchase Option" below.
The Program Operating Lease Payment with respect to any Payment Date
will consist of a Required Interest Payment portion and an Additional Payment
portion. The "Required Interest Payment" with respect to any Payment Date
equals the sum of the Administrative Agent Fee plus the amount of interest
accrued on the outstanding Senior Notes, Subordinated Notes and Lease Trust
Certificates since the preceding Payment Date (or, in the case of the first
Payment Date, since the Closing Date) plus any overdue interest and interest
on such overdue interest at the interest rate of the applicable security. The
"Additional Payment" with respect to any Payment Date equals the lesser of
(a) the Cash Collateral Amount on such Payment Date (after giving effect to any
decrease thereof to pay the Required Interest Payment and any increase thereof
as a result of the aggregate amounts required to be deposited in the Cash
Collateral Account with respect to such Payment Date) minus the Required Cash
Collateral Amount and (b) an amount equal to the aggregate outstanding
principal balance of the Senior Notes, Subordinated Notes and Lease Trust
Certificates prior to giving effect to any payments on such Payment Date minus
the sum of the Available Sale Proceeds for the related Accrual Period and the
aggregate Residual Values of all Series 1996-1 Leased Vehicles the related
Series 1996-1 Leases of which have not yet terminated as of the close of the
last day of the preceding Accrual Period; provided, however, that on any
Payment Date on which the Available Funds is less than the Required Interest
Payment, the Additional Payment shall equal the lesser of such shortfall or
the aggregate payments on the Subordinated Notes that are required to be
deposited into the Cash Collateral Account on such Payment Date.
On the business day preceding each Payment Date, the Indenture Trustee
will withdraw from the Cash Collateral Account and deposit into the Payment
Account the Cash Collateral Required Draw Amount, which, to the extent
sufficient, will be deemed to constitute the payment by the Transferor to the
Issuer of the Required Interest Payment portion of the Program Operating Lease
Payment for such Payment Date . On each Payment Date, the Indenture Trustee
will withdraw from the Cash Collateral Account the Cash Collateral Additional
Draw Amount and apply such amount to make payments required on such Payment
Date, which will be deemed to constitute the payment by the Transferor to the
Issuer of the Additional Payment portion, if any, of the Program Operating
Lease Payment for such Payment Date. See "Description of the Senior
Notes--Cash Collateral Account Withdrawals and Deposits" for a description of
how the Cash Collateral Required Draw Amount and the Cash Collateral Additional
Draw Amount are calculated.
Defaults under the Program Operating Lease include, among other
things, failure by the Transferor to pay the Required Interest Payment portion
of the Program Operating Lease Payment to the Issuer, the breach of a
representation or warranty, the failure to observe or perform certain covenants
or the occurrence of an Event of Default under the Indenture. Upon the
occurrence of an event of default under the Program Operating Lease, (i) the
Indenture Trustee as assignee of the rights of the Issuer in the Program
Operating Lease pursuant to the pledge of the Lease Trust Estate would be
entitled to terminate the Program Operating Lease and obtain the right to
receive directly all distributions with respect to the Series 1996-1
Certificates and to apply the Cash Collateral Amount to pay interest on and
principal of the Senior Notes, the Subordinated Notes and the Lease Trust
Certificates and (ii) an Event of Default would occur under the Indenture which
would permit the Senior Noteholders to accelerate the maturity of the Senior
Notes and in certain circumstances cause the sale of the Lease Trust Estate.
See "Description of the Senior Notes ---- Indenture." If, following an event
of default under the Program Operating Lease, the Senior Noteholders accelerate
the maturity of the Senior Notes, the Indenture Trustee as assignee of the
Issuer would be entitled to demand that the
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Transferor pay all unpaid Program Operating Lease Payments plus, as liquidated
damages, an amount equal to the sum of (x) any interest due and unpaid on the
Senior Notes, Subordinated Notes and Lease Trust Certificates, (y) the
remaining principal balance of the Senior Notes, Subordinated Notes and Lease
Trust Certificates and (z) any other amounts payable by the Transferor under
the Basic Documents. Upon payment of such amounts, the Transferor would be
entitled to receive the Series 1996-1 Certificates.
Transferor Leased Vehicle Purchase Option. Under the Program
Operating Lease, the Transferor may, at its option, purchase the Issuer's
beneficial interest in any Series 1996-1 Leased Vehicle not purchased by the
related Obligor or Dealer following the Scheduled Lease End Date of the related
Series 1996-1 Lease by paying to the Issuer an amount equal to the Residual
Value of such Series 1996-1 Leased Vehicle minus any amounts due from the
related Obligor for Uncollected Excess Wear and Tear and Excess Mileage (the
"Transferor Purchase Option Price"). The Transferor will exercise such option
only if neither the Obligor nor the Dealer exercises its option to purchase the
Series 1996-1 Leased Vehicle and the related Sale Proceeds exceed the
Transferor Purchase Option Price. Because the Transferor intends to exercise
this option when available, Sale Proceeds received by the Issuer with respect
to the sale of any Series 1996-1 Leased Vehicle the related Series 1996-1 Lease
of which was terminated on or after its Scheduled Lease End Date will never
exceed the Transferor Purchase Option Price. With respect to each Series
1996-1 Vehicle for which the Transferor exercises its purchase option, the
Transferor will deposit an amount equal to the excess of the related Sale
Proceeds over the Transferor Purchase Option Price (the "Transferor Purchase
Option Net Proceeds") into the Cash Collateral Account until the aggregate
cumulative amount deposited in respect of such Transferor Purchase Option Net
Proceeds equals $______, which is equal to 10% of the Initial Pool Balance.
Thereafter, the Transferor will retain any Transferor Purchase Option Net
Proceeds and such amounts will not be available to pay interest on or principal
of the Senior Notes, the Subordinated Notes and the Lease Trust Certificates.
To the extent that Transferor Purchase Option Net Proceeds are deposited into
the Cash Collateral Account, such amounts will secure the Transferor's
obligation to make Program Operating Lease Payments to the Issuer. See
"Description of the Senior Notes --Cash Collateral Account Withdrawals and
Deposits."
THE LEASES AND LEASED VEHICLES
ORIGINATION PROCEDURES
The Leases, including the Series 1996-1 Leases, were originated under
the Ford Credit Red Carpet Lease Plan (the "Red Carpet Lease Plan"), one of a
number of financing programs offered by Dealers to assist their customers in
the acquisition of new automobiles and light trucks. Under the Red Carpet
Lease Plan, an Obligor enters into a Lease that requires the Obligor to make
Total Monthly Payments for a predetermined number of months ("Lease Term") in
return for the use of the related Leased Vehicle. At the end of the Lease
Term, the Obligor has the option to purchase the Leased Vehicle or return it to
the Dealer. Dealers negotiate the terms of the Lease with prospective lessees
in accordance with guidelines set by Ford Credit.
A credit application completed by a prospective lessee is evaluated by
Ford Credit with consideration given to, among other things, the prospective
lessee's credit history, current income, and years at present address. Ford
Credit uses a proprietary credit scoring model that measures the probability of
payment for each potential obligor given information concerning the prospective
lessee, the price of the Leased Vehicle and terms of the Lease. Credit
analysts at the applicable Ford Credit branch office evaluate credit
applications based on the information set forth therein and the results of the
proprietary credit scoring model or in some cases based on additional
information obtained from the relevant Dealer and make a judgment to accept or
reject such applications. Credit analysts may also propose changes to the
terms of the Lease to increase the probability of payment such as a larger down
payment or a less expensive vehicle.
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If the credit application is approved and the prospective lessee
agrees to the terms of the Lease, the Dealer completes the transaction
documentation and submits it to Ford Credit. Prior to the Obligor taking
possession of the Leased Vehicle, the Dealer must: (i) collect the first Total
Monthly Payment, including a refundable security deposit (which in certain
instances may be waived), (ii) obtain written evidence that the Obligor has
purchased adequate insurance coverage, and (iii) ensure that all required
license fees, registration fees and up-front taxes are paid. Certain fees and
taxes may be financed by the Dealer and included in the Obligor's Total Monthly
Payment (such fees and taxes, the "Use and Lease Tax Amounts"). The Dealer is
responsible for registering and titling the Leased Vehicle; it is registered in
the name of the Obligor, the Obligor and Ford Credit, the Obligor and FCTT,
Ford Credit only or FCTT only and titled in the name of Ford Credit or FCTT,
as the case may be. Titles are mailed directly to the appropriate Ford Credit
branch office or to a central office of an independent contractor hired by Ford
Credit.
SERVICING PROCEDURES
The Leases, including the Series 1996-1 Leases, are serviced through
Ford Credit branch offices. Approximately 19 days before a Total Monthly
Payment is due, Ford Credit sends the Obligor an invoice. The Obligor is
instructed to send the Total Monthly Payment to one of several regional
lockboxes dedicated to the collection of payments for Leases and retail
installment contracts. If an Obligor does not make the payment within 10 days
of its due date, a late fee is assessed. At that time, Ford Credit initiates
collection procedures by mailing a past due notice to the Obligor. In cases
such as chronic delinquency, payment default, multiple returned checks or
bankruptcy, a Lease generally is assigned to a Ford Credit customer service
representative after it has become 15 days delinquent. In other cases,
collection assignments are issued when a Lease becomes 22 days delinquent. The
Obligor will be contacted to determine the cause of the delinquency and to help
the Obligor develop plans to resolve it. If the Obligor cannot make the past
due payment, Ford Credit will either grant a Payment Extension or repossess the
Leased Vehicle. If a Payment Extension is granted, the Obligor is assessed a
fee and the Lease Term is extended (although the Obligor is not permitted to
drive the Leased Vehicle more than the originally agreed upon number of miles
without incurring excess mileage fees). If repossession is necessary, the
Obligor may agree to return the Leased Vehicle or the Leased Vehicle will be
repossessed by a contractor hired by Ford Credit.
Any Obligor not in default is permitted to terminate its Lease before
the Scheduled Lease End Date (a "Voluntary Early Termination") if the Obligor:
(i) returns the Leased Vehicle to the Dealer, (ii) pays to Ford Credit the
difference, if any, between (a) the sum of the Adjusted Balance Subject to
Lease Charges and any past due amounts and (b) the fair market wholesale value
of the Leased Vehicle as agreed to by the Obligor and the Dealer (or if the
Obligor and Dealer fail to agree, the amount received at auction), and (iii)
pays a fee of $200. The Dealer is required to pay an amount equal to such
agreed fair market wholesale value (or the amount received at auction) to Ford
Credit or FCTT, as the case may be. As described in "Description of the Senior
Notes ---- Indenture Cash Flows," Voluntary Early Termination Proceeds with
respect to the Series 1996-1 Leases are included in the Collections deposited
in the Cash Collateral Account. See "Maturity, Prepayment and Yield
Considerations" for a discussion of the effect of prepayments of the Series
1996-1 Leases on the payment of principal of the Senior Notes.
At the Scheduled Lease End Date, the Obligor may (i) purchase the
Leased Vehicle for an amount greater than or equal to its Residual Value or
(ii) return the Leased Vehicle to the Dealer. If the Leased Vehicle is
returned to the Dealer, the Dealer may purchase the Leased Vehicle for an
amount equal to its Residual Value or return it to Ford Credit to be sold at
auction. If the Dealer does not purchase the Vehicle, the Dealer will inspect
the Leased Vehicle, complete a Vehicle Conditioning Report ("VCR") and submit
the VCR to Ford Credit. The Dealer will assess any additional charges for
excess wear and tear or excess mileage on the basis of the VCR. See
"Description of the Senior Notes ---- Indenture Cash Flows" and "Series 1996-1
Certificates ---- Lease of the Series 1996-1 Certificates to the Transferor
- ---- Transferor Leased Vehicle Purchase Option" for a description of how
amounts collected from the sale of Series 1996-1 Leased Vehicles are
distributed as Collections (and therefore are available via the Cash Collateral
Account to make payments to Senior Noteholders) and, in certain
33
<PAGE> 36
circumstances, to the Transferor (and are therefore are not available to make
payments to Senior Noteholders).
All Leased Vehicles that are returned to Ford Credit will be inspected
to ensure that the VCR properly reflects the condition of the Leased Vehicle
and that the Dealer has billed the Obligor for all excess wear and tear and
excess mileage charges due. If the VCR does not properly reflect the condition
of the Leased Vehicle, Ford Credit may seek reimbursement for any discrepancies
from the returning Dealer. The Leased Vehicle is then shipped to one of
several Ford Credit regional auction locations. In an attempt to maximize
proceeds from the auction of Leased Vehicles, Ford Credit has established an
"Extra Step" program to refurbish and recondition vehicles returned at the end
of 24-month leases. The results of each auction are monitored and Leased
Vehicles will generally be transported to the regional auction where Ford
Credit believes the highest auction proceeds will be realized.
The procedures that Ford Credit has applied and will apply in
originating and servicing the Leases assigned to FCTT (including the Series
1996-1 Leases) will be consistent with those that Ford Credit has applied and
will apply to leases under the Red Carpet Lease Plan that are not assigned to
FCTT. For convenience, the discussion under this heading ("--Servicing
Procedures") and under the heading "--Origination Procedures" above uses
capitalized terms which have meanings defined with respect to Leases assigned
to FCTT. Such terms have equivalent meanings when applied to leases under the
Red Carpet Lease Plan that are not assigned to FCTT.
DELINQUENCY, REPOSSESSION, RESIDUAL VALUE AND LOSS DATA
The following tables set forth Ford Credit's average Red Carpet Lease
asset balance and loss experience for each of the periods shown with respect to
the leases and leased vehicles under the Red Carpet Lease Plan (the "Red Carpet
Lease Portfolio") in the fifteen states in which Leases are currently assigned
to FCTT. See "FCTT ---- Creation of FCTT by Ford Credit and Ford Credit
Leasing." There can be no assurance that the loss experience for the Red
Carpet Lease Portfolio or Series 1996-1 Leases in the future will be similar to
the historical experience set forth below.
Because Ford Credit has not historically maintained separate records
based on the term of leases, the data set forth in the following tables
includes data for finance leases (classified by Ford Credit as leases which
have a term of more than 36 months) and operating leases (classified by Ford
Credit as leases which have a term of 36 months or less). However, management
believes that to the extent that there are any material differences between the
historical delinquency and loss statistics for finance leases and operating
leases, the delinquencies and losses would be higher on a mixed pool of finance
leases and operating leases (such as that reflected in the tables) than in a
pool consisting solely of operating leases (such as the Series 1996-1 Leases).
This is because, in the opinion of management based on its experience servicing
both finance leases and operating leases, there is a positive correlation
between increased credit risk and the duration of the lease. In addition,
management believes that the statistics provided in such tables closely
reflect the performance of the Red Carpet Lease Portfolio because the
proportion of originations of operating leases to finance leases in the Red
Carpet Lease Portfolio increased: in 1991, the proportion of originations which
were operating leases was approximately __%, while in 1995 the proportion of
originations which were operating leases was approximately __%. During this
four year period the number of originations grew from approximately ____ to
____ leases per year.
34
<PAGE> 37
RED CARPET LEASE PORTFOLIO
(FIFTEEN STATES IN WHICH LEASES ARE CURRENTLY ASSIGNED TO FCTT(1))
HISTORICAL LOSS EXPERIENCE(2)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, CALENDAR YEAR
----------------------- ------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------ ---- ---- ------ ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Average Contracts Outstanding (000)
California . . . . . . . . . . . . . . . 161 118 73 52 47
New York . . . . . . . . . . . . . . . . 92 78 60 46 38
Pennsylvania . . . . . . . . . . . . . . 35 26 18 15 16
Minnesota . . . . . . . . . . . . . . . . 22 18 12 10 9
Colorado . . . . . . . . . . . . . . . . 17 13 9 7 6
Other(3) . . . . . . . . . . . . . . . . 90 72 48 34 30
------ ------- -------- -------- ------- -------- --------
Total ---- Fifteen State . . . . . . . 417 326 220 163 147
Average Net RCL Assets (Millions)
California . . . . . . . . . . . . . . . $ $ $2,528 $1,849 $1,094 $727 $637
New York . . . . . . . . . . . . . . . . 1,546 1,241 923 635 513
Pennsylvania . . . . . . . . . . . . . . 589 403 264 200 198
Minnesota . . . . . . . . . . . . . . . . 331 252 158 110 98
Colorado . . . . . . . . . . . . . . . . 260 193 123 87 72
Other(3) . . . . . . . . . . . . . . . . 1,405 1,075 668 431 357
------ ------- -------- -------- ------- -------- --------
Total ---- Fifteen State . . . . . . . $ $ $6,661 $5,013 $3,230 $2,190 $1,875
Net Credit Losses as a Percentage of
Average Net RCL Assets(4)
California . . . . . . . . . . . . . . . %(5) %(5) 0.96% 0.62% 0.81% 1.33% 2.01%
New York . . . . . . . . . . . . . . . . 0.43 0.22 0.26 0.47 0.66
Pennsylvania . . . . . . . . . . . . . . 0.43 0.09 0.21 0.25 0.44
Minnesota . . . . . . . . . . . . . . . . 0.33 0.28 0.25 0.27 0.52
Colorado . . . . . . . . . . . . . . . . 0.29 0.21 0.16 0.28 0.40
Other(3) . . . . . . . . . . . . . . . . 0.52 0.40 0.45 0.58 1.05
Weighted Average ---- Fifteen State . %(5) %(5) 0.64% 0.40% 0.48% 0.74% 1.15%
Repossessions as a Percentage of
Average Contracts Outstanding
California . . . . . . . . . . . . . . . %(5) %(5) 4.6% 4.0% 4.6% 5.7% 6.3%
New York . . . . . . . . . . . . . . . . 1.9 1.6 1.6 2.2 2.3
Pennsylvania . . . . . . . . . . . . . . 2.1 1.6 1.4 1.8 2.2
Minnesota . . . . . . . . . . . . . . . . 2.3 2.3 1.8 2.0 2.8
Colorado . . . . . . . . . . . . . . . . 1.7 1.7 1.5 2.1 2.3
Other(3) . . . . . . . . . . . . . . . . 2.7 2.5 2.5 3.0 3.9
Weighted Average ---- Fifteen State . %(5) %(5) 3.1% 2.7% 2.8% 3.5% 3.9%
Average Gross Loss per Repossession
California . . . . . . . . . . . . . . . $ $ $3,597 $3,179 $3,530 $2,699 $3,706
New York . . . . . . . . . . . . . . . . 4,082 3,192 3,344 1,604 2,634
Pennsylvania . . . . . . . . . . . . . . 3,571 2,402 3,168 1,986 2,489
Minnesota . . . . . . . . . . . . . . . . 2,936 2,400 2,736 1,490 2,066
Colorado . . . . . . . . . . . . . . . . 2,907 2,522 3,028 1,995 2,554
Other(3) . . . . . . . . . . . . . . . .
3,410 3,024 3,097 1,999 3,059
Weighted Average ---- Fifteen State . $ $ $3,585 $3,065 $3,361 $2,288 $3,233
Average Delinquency Ratios ---- Fifteen State
31-60 Days Past Due . . . . . . . . . . . % % 1.88% 1.60% 1.63% 1.96% 2.28%
61-90 Days Past Due . . . . . . . . . . . 0.20 0.17 0.15 0.22 0.30
Over 90 Days Past Due . . . . . . . . . . 0.04 0.04 0.05 0.07 0.11
-------- -------- -------- -------- --------
Total . . . . . . . . . . . . . . . . . . . % % 2.12% 1.81% 1.83% 2.25% 2.69%
</TABLE>
(Totals may not equal the sum of the respective columns due to rounding.)
_________________________
(1) Regional data is based on results from branch offices located in the states
of Arizona, Arkansas, California, Colorado, Kansas, Minnesota, Nebraska,
Nevada, New Mexico, New York, North Dakota, Pennsylvania, Virginia and
Washington. and may include a small number of Leases associated with
35
<PAGE> 38
Obligors living outside of such states. Data relating to some Leases
associated with Obligors living in South Dakota are excluded for
administrative reasons but the inclusion of such data would not have a
material effect on the data shown.
(2) Includes operating (original terms less than or equal to 36
months) and finance (original terms greater than 36 months) leases on new
and used vehicles. Only operating leases are part of this securitization
structure.
(3) Each other state represents less than 5% of the Total -- Fifteen State
Average Contracts Outstanding and less than 5% of the Total -- Fifteen
State Average Net RCL Assets for each of the periods shown.
(4) "Net Credit Losses" means with respect to the period (i) the aggregate
adjusted balance subject to lease charges of all lease contracts and
related leased vehicles which are determined to be uncollectible during
such period plus the aggregate amount of uncollected charges for excess
wear and tear and excess mileage relating to lease contracts which
terminated during the period with respect to which proceeds from the sale
of the related leased vehicle were received in the period plus any
uncollected scheduled monthly payments in the period with respect to leased
vehicles sold during the period minus (ii) all amounts received in the
period with respect to lease contracts and related leased vehicles which
were determined to be uncollectible during the period and recoveries
received in the period on lease contracts and related leased vehicles
charged-off in the period or any previous period.
(5) Annualized rate.
The reduction in "Net Credit Losses as a Percentage of Average RCL
Assets" (as set forth in the preceding table entitled Red Carpet Lease
Portfolio) during the period 1991 to 1994 is a result of fewer leased vehicles
being repossessed (as a percentage of the number of leases outstanding) and an
increase in the amount recovered for each vehicle which has been repossessed.
Management of Ford Credit believes that this trend is a result of actions taken
to improve procedures relating to credit quality and collection procedures. In
particular, efforts have been made to reduce the proportion of longer term (and
therefor higher risk) leases as a percentage of the total number of leases,
introduce improved risk rating guides, increase the number of collection
personnel and improve their training, and contact lessees promptly on
delinquent accounts. In addition, the general improvement in the economy,
combined with a reduction in market interest rates, have had a positive effect
on Net Credit Losses. Net Credit Losses increased in 1995 and in the first
three quarters of 1996 as a result of higher repossessions and higher severity
of loss per repossession. Ford Credit expects that the upward trend in
increased Net Credit Losses will continue through the remainder of 1996.
The following tables provide residual value and residual loss
information for each of the periods shown with respect to the portion of the
Red Carpet Lease Portfolio comprised of the fifteen states in which Leases are
currently assigned to FCTT.
RED CARPET LEASE PORTFOLIO(1)
(FIFTEEN STATES IN WHICH LEASES ARE CURRENTLY ASSIGNED TO FCTT(2))
RESIDUAL VALUE ANALYSIS
<TABLE>
<CAPTION>
EIGHT MONTHS ENDED
ENDED AUGUST 31, CALENDAR YEAR
----------------------- -----------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Residual value of all vehicles the related
lease of which terminated in the
period ($000)(3) . . . . . . . . . . . . . . . . . 1,889,774 956,768 515,503 352,402 117,686
========= ======= ======= =======
Residual value as a percentage of MSRP of all
vehicles the related lease of which terminated
in the period(4) . . . . . . . . . . . . . . . . . % % 52.4% 47.8% 42.3% 42.0% 43.1%
== == ==== ==== ==== ==== ====
Aggregate Residual Losses(5) ($000) . . . . . . . . . 75,508 11,913 4,461 7,178 3,448
Aggregate Residual Losses as a percentage of ====== ====== ===== ===== =====
residual value of all vehicles the related lease
of which terminated in the period . . . . . . . . . % % 4.0% 1.3% 0.9% 2.0% 2.9%
Vehicles returned with a Residual Loss as a == == ==== ==== ==== === ====
percentage of all vehicles the related lease
of which terminated in the period . . . . . . . . . % % 19.6% 8.1% 5.4% 12.0% 16.5%
== == ==== ==== ==== ==== ====
</TABLE>
_________________________
(1) Includes only leases on new and used vehicles with original terms of
36 months or less (including the Advance Payment Plan).
(2) Based on results on leases for which the last billing address of the
related obligor is in Arizona, Arkansas, California, Colorado,
Kansas, Minnesota, Nebraska, Nevada, New Mexico, New York, North
Dakota, Pennsylvania, South Dakota, Virginia or Washington.
(3) Terminations include voluntary early terminations, terminations due to
defaults and scheduled terminations.
36
<PAGE> 39
(4) "MSRP" means the Manufacturer's Suggested Retail Price, which will
generally exceed the balance subject to lease charges at inception of
a lease.
(5) "Residual Loss" means the amount by which the residual value of a
leased vehicle the related lease of which terminated on or after the
end of its lease term exceeds the sum of (i) sale proceeds of such
leased vehicle (including collected excess wear and tear and excess
mileage) and (ii) uncollected excess wear and tear and excess mileage.
Based on results for the leases included in the preceding table,
during the period 1991 through the first nine months of 1996 a total of __%
of all leased vehicles subject to 24- and 36-month leases were not purchased
either by the lessee or the dealer and were returned to Ford Credit as of their
respective scheduled lease end dates. Of such leased vehicles returned on or
after their scheduled lease end dates and subsequently sold by Ford Credit at
auction, __% were sold for a loss versus __% which were sold for a gain.
(Due to lessee and dealer purchase options, the opportunity to realize a gain
on a vehicle is given first to the lessee, then to the related dealer, and
finally to Ford Credit.)
Based on results for the leases included in the preceding table,
during the period 1991 through the first nine months of 1996 a total of ____
leased vehicles with a residual exposure (the sum of the residual values of
vehicles under leases which terminated in such period) of $__ billion
experienced aggregate residual losses of $__ million. For all such leased
vehicles with 24- and 36-month leases which terminated between 1991 and
September 30, 1996, annual aggregate Residual Losses as a percent of residual
exposure ranged from __% to __%, with a cumulative average of __%.
ELIGIBILITY CRITERIA
The Series 1996-1 Leases and related Series 1996-1 Leased Vehicles
were purchased by Ford Credit as Administrative Agent on behalf of FCTT, in the
ordinary course of business in accordance with the origination procedures set
forth above. The Series 1996-1 Leases were selected from the Leases in FCTT's
portfolio by several criteria (the "Specific Eligibility Criteria"), including
the following: each related Series 1996-1 Leased Vehicle was an automobile or
light truck which prior to the inception of the related Series 1996-1 Lease had
never been titled, and each Series 1996-1 Lease (a) was entered into by a
Dealer located in and an Obligor with a billing address in Arizona, Arkansas,
California, Colorado, Kansas, Minnesota, Nebraska, Nevada, New Mexico, New
York, North Dakota, Pennsylvania, South Dakota, Virginia or Washington; (b)
provides for Constant Yield Payments that fully amortize the Balance Subject to
Lease Charges of such Series 1996-1 Lease to a final payment equal to the
Residual Value of the related Series 1996-1 Leased Vehicle over the term of
such Series 1996-1 Lease; (c) was not more than 30 days past due as of the
Series 1996-1 Cut-Off Date and has never been extended; (d) was originated on
or after _____ __, 199_; (e) has a Scheduled Lease End Date not later than 36
months from the date it was entered into; (f) has a Retail Operating Lease
Factor equal to or greater than __%; (g) was not originated under the Advance
Payment Plan; (h) is not subject to a holdback of Excess Deferred Gross; and
(i) does not provide for recourse to the related Dealer. (Series 1996-1
Supplement, Section 3.1; Asset Contribution Agreement, Section 3.2). The
Series 1996-1 Leases were selected from FCTT's portfolio of Leases that were
Non-Specified Assets, in each case meeting the Specific Eligibility Criteria
set forth herein and the General Eligibility Criteria set forth in "Additional
Document Provisions ---- Representations, Warranties and Covenants." No
selection procedures believed to be adverse to the Senior Noteholders were
utilized in selecting the Series 1996-1 Leases from qualifying Leases.
CHARACTERISTICS OF THE SERIES 1996-1 ASSETS
The following table provides data with respect to the composition of the Series
1996-1 Assets.
COMPOSITION OF THE SERIES 1996-1 ASSETS
Initial Pool Balance . . . . . . . . . . . . . . . . . . . . . . . $
37
<PAGE> 40
<TABLE>
<S> <C>
Number of Series 1996-1 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average Adjusted Balance Subject to Lease Charges
as of Series 1996-1 Cut-Off Date . . . . . . . . . . . . . . . . . . . . . . . . . $
Average Balance Subject to Lease Charges . . . . . . . . . . . . . . . . . . . . . . $
Weighted Average Original Lease Term(1) . . . . . . . . . . . . . . . . . . . . . . . months
Weighted Average Remaining Lease Term(1) . . . . . . . . . . . . . . . . . . . . . . months
Average Retail Operating Lease Factor(2) . . . . . . . . . . . . . . . . . . . . . . %
Aggregate Residual Value as a Percent of Aggregate MSRP . . . . . . . . . . . . . . . %
Residual Value as a Percent of the Initial Pool Balance . . . . . . . . . . . . . . . %
</TABLE>
_________________________
(1) Weighted by Adjusted Balance Subject to Lease Charges as of the
Series 1996-1 Cut-Off Date.
(2) Excluding a fixed additional fee (the "Additional Fee") included in
the determination of the amount of the Monthly Payment
(generally 0.11% of the Balance Subject to Lease Charges per month).
Including such fee would have the effect of increasing the yield of
Series 1996-1 Assets.
The following tables set forth the distribution of the Series 1996-1
Assets by geographic location, Retail Operating Lease Factor, Lease Term and
vehicle type. Percentages may not total 100% due to rounding.
DISTRIBUTION OF THE SERIES 1996-1 ASSETS BY GEOGRAPHIC LOCATION
<TABLE>
<CAPTION>
AGGREGATE ADJUSTED
BALANCE SUBJECT
TO LEASE CHARGES PERCENTAGE OF
NUMBER OF AS OF SERIES 1996-1 INITIAL
LEASES CUT-OFF DATE POOL BALANCE
------ ------------ ------------
<S> <C> <C> <C>
Arizona . . . . . . . . . . . . . . . . $ %
Arkansas . . . . . . . . . . . . . . . .
California . . . . . . . . . . . . . . .
Colorado . . . . . . . . . . . . . . . .
Kansas . . . . . . . . . . . . . . . .
Minnesota . . . . . . . . . . . . . . . .
Nebraska . . . . . . . . . . . . . . . .
Nevada . . . . . . . . . . . . . . . .
New Mexico . . . . . . . . . . . . . . .
New York . . . . . . . . . . . . . . . .
North Dakota . . . . . . . . . . . . . .
Pennsylvania . . . . . . . . . . . . . .
South Dakota . . . . . . . . . . . . . .
Virginia . . . . . . . . . . . . . . . .
Washington . . . . . . . . . . . . . . .
------ ------------ ------
$ %
Total . . . . . . . . . . . . . ====== ============ ======
</TABLE>
38
<PAGE> 41
DISTRIBUTION OF THE SERIES 1996-1 ASSETS BY RETAIL OPERATING LEASE FACTOR
<TABLE>
<CAPTION>
AGGREGATE ADJUSTED
BALANCE SUBJECT
TO LEASE CHARGES PERCENTAGE OF
NUMBER OF AS OF SERIES 1996-1 INITIAL
LEASES CUT-OFF DATE POOL BALANCE
------ ------------ ------------
<S> <C> <C> <C>
1.50% to 2.00% . . . . . . . . . . . $ %
2.01 to 2.50 . . . . . . . . . . . .
2.51 to 3.00 . . . . . . . . . . . .
3.01 to 3.50 . . . . . . . . . . . .
3.51 to 4.00 . . . . . . . . . . . .
4.01 to 4.50 . . . . . . . . . . . .
4.51 to 5.00 . . . . . . . . . . . .
5.01 to 5.50 . . . . . . . . . . . .
5.51 to 6.00 . . . . . . . . . . . .
6.01 to 6.50 . . . . . . . . . . . .
6.51 to 7.00 . . . . . . . . . . . .
7.01 to 7.50 . . . . . . . . . . . .
7.51 to 8.00 . . . . . . . . . . . .
8.01 to 8.50 . . . . . . . . . . . .
8.51 to 9.00 . . . . . . . . . . . .
9.01 to 9.50 . . . . . . . . . . . .
9.51 to 10.00 . . . . . . . . . . . .
10.01 to 10.50 . . . . . . . . . . . .
10.51 to 11.00 . . . . . . . . . . . .
11.01 to 11.50 . . . . . . . . . . . .
11.51 to 12.00 . . . . . . . . . . . .
12.01 to 12.50 . . . . . . . . . . . .
12.51 to 13.00 . . . . . . . . . . . .
13.01 and above . . . . . . . . . . . . $ %
------ ----------- ------
Total . . . . . . . . . . . . . ====== =========== ======
</TABLE>
DISTRIBUTION OF THE SERIES 1996-1 ASSETS BY LEASE TERM
<TABLE>
<CAPTION>
AGGREGATE ADJUSTED
BALANCE SUBJECT
TO LEASE CHARGES PERCENTAGE OF
NUMBER OF AS OF SERIES 1996-1 INITIAL
LEASES CUT-OFF DATE POOL BALANCE
------ ------------ ------------
<S> <C> <C> <C>
24 Months . . . . . . . . . . . . . . . . $ %
36 Months . . . . . . . . . . . . . . . .
------ ----------- --------
Total . . . . . . . . . . . . . $ %
====== =========== =========
</TABLE>
DISTRIBUTION OF THE SERIES 1996-1 ASSETS BY VEHICLE TYPE
<TABLE>
<CAPTION>
AGGREGATE ADJUSTED
BALANCE SUBJECT
TO LEASE CHARGES PERCENTAGE OF
NUMBER OF AS OF SERIES 1996-1 INITIAL
LEASES CUT-OFF DATE POOL BALANCE
------ ------------ ------------
<S> <C> <C> <C>
</TABLE>
39
<PAGE> 42
<TABLE>
<S> <C> <C> <C>
Ford Automobile . . . . . . . . . . . . . $ %
Ford Light Truck . . . . . . . . . . . .
Lincoln-Mercury . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . .
------ ----------- -------
Total . . . . . . . . . . . . . $ %
====== =========== =======
</TABLE>
The following table depicts the projected cash flows of the Series
1996-1 Certificates assuming no prepayments and no defaults.
SERIES 1996-1 LEASES PROJECTED AMORTIZATION, ASSUMING NO PREPAYMENTS AND NO
DEFAULTS
<TABLE>
<CAPTION>
ADJUSTED BALANCE PRINCIPAL PORTION NON-PRINCIPAL WEIGHTED
SUBJECT TO MONTHLY OF MONTHLY PORTION OF AVERAGE
MONTHS LEASE CHARGES PAYMENTS(1) PAYMENT MONTHLY PAYMENT YIELD(2)
------ ------------- ----------- ------- --------------- --------
<S> <C> <C> <C> <C> <C> <C>
1 . . . . . . . . $ $ $ $ %
2 . . . . . . . .
3 . . . . . . . .
4 . . . . . . . .
5 . . . . . . . .
6 . . . . . . . .
7 . . . . . . . .
8 . . . . . . . .
9 . . . . . . . .
10 . . . . . . . .
11 . . . . . . . .
12 . . . . . . . .
13 . . . . . . . .
14 . . . . . . . .
15 . . . . . . . .
16 . . . . . . . .
17 . . . . . . . .
18 . . . . . . . .
19 . . . . . . . .
20 . . . . . . . .
21 . . . . . . . .
22 . . . . . . . .
23 . . . . . . . .
24 . . . . . . . .
25 . . . . . . . .
26 . . . . . . . .
27 . . . . . . . .
28 . . . . . . . .
29 . . . . . . . .
30 . . . . . . . .
31 . . . . . . . .
32 . . . . . . . .
33 . . . . . . . .
34 . . . . . . . .
35 . . . . . . . .
36 . . . . . . . .
</TABLE>
_________________________
40
<PAGE> 43
(1) Includes the Additional Fee.
(2) Weighted Average Yield is computed by dividing the amount shown as the
Non-Principal Portion of Monthly Payment for the related month by the Adjusted
Balance Subject to Lease Charges for such month and multiplying the result by
twelve.
MATURITY, PREPAYMENT AND YIELD CONSIDERATIONS
The rate of payment of principal and the yield to maturity on each
Class of Senior Notes generally will be directly related to the rate at which
payments on the Series 1996-1 Leases and in respect of the Series 1996-1
Leased Vehicles are received. To the extent that Obligors make Total Monthly
Payments when due (or the Administrative Agent makes Monthly Payment Advances)
and the Residual Values of Series 1996-1 Leased Vehicles are not realized
until their respective Scheduled Lease End Dates, the minimum rate of payment
of principal to Senior Noteholders can be determined with certainty (such
minimum rate of payment of principal is reflected in the data in the column
headed "0% ABS" in the Percentage of Senior Note Balance Outstanding table
shown below). However, the rate of payment of principal on the Senior Notes
will be shifted forward to the prepayment date to the extent that any Series
1996-1 Lease is prepaid in full, whether due to the receipt of Voluntary Early
Termination Proceeds, Administrative Purchase Amounts or Liquidation Proceeds.
Partial prepayments will be treated as Payaheads and will not increase the rate
of payment of principal of the Senior Notes because such payments will be held
and paid out to Senior Noteholders as principal only when required to meet a
shortfall in a subsequent payment from the related Obligor.
Additionally, an investor's expected yield will be affected by (i) the
price the investor paid for the Senior Notes, (ii) the rate of prepayments of
the Series 1996-1 Leases and (iii) the investor's assumed reinvestment rate.
For example, if prepayments on the Series 1996-1 Leases are slower than
anticipated, the investor's yield will be lower if interest rates are higher
than the investor anticipated and higher if interest rates are lower than the
investor anticipated. Conversely, if prepayments on the Series 1996-1 Leases
are faster than anticipated, the investor's yield will be higher if interest
rates are higher than the investor anticipated and lower if interest rates are
lower than the investor anticipated.
Because Residual Value is a large component of the Adjusted Balance
Subject to Lease Charges, the timing of the cashflows generated by the Series
1996-1 Assets will be heavily weighted toward the Scheduled Lease End Dates
when the Residual Values of the Series 1996-1 Leased Vehicles are expected to
be realized. The rate of payment of principal on the Senior Notes increases
substantially in ____199_ as a result of Series 1996-1 Leases beginning to
reach their Scheduled Lease End Dates in the related Accrual Period. In
general, prepayments of Series 1996-1 Leases in full will have the effect of
shortening the weighted average life of the Senior Notes (the average amount of
time during which each dollar of the principal balance of Senior Notes is
outstanding). Additionally, holders of the Class A-2 Senior Notes will not
receive any principal payments until the Class A-1 Senior Notes have been paid
in full, unless an Event of Default under the Indenture has occurred and the
maturity of the Senior Notes has been accelerated, in which case principal will
be paid pro rata to the holders of the Class A-1 Senior Notes and Class A-2
Senior Notes without distinction between Classes. As the rate of payment of
principal on each Class of Senior Notes depends primarily on the rate of
payment (including prepayments) of the Series 1996-1 Leases, final payment on
each Class of Senior Notes could occur significantly earlier than the
respective Stated Maturities. If there are prepayments in full of Series
1996-1 Leases which cause principal of the Senior Notes to be paid earlier than
projected, Senior Noteholders will bear the risk of being able to reinvest
principal payments of the Senior Notes at yields at least equal to the yield on
their respective Class of Senior Notes.
A prepayment of a Series 1996-1 Lease in full may be in the form of
Voluntary Early Termination Proceeds resulting from a Voluntary Early
Termination of such Series 1996-1 Lease, Liquidation Proceeds following a
bankruptcy of or default by the Obligor, or Administrative Purchase Amounts
following the occurrence of certain events set forth in "Description of the
Administrative Agency Agreement ---- Administrative Purchases." The rate of
prepayments on the Series 1996-1
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<PAGE> 44
Leases may be influenced by a variety of economic, social and other factors
including competing consumer finance products and the conditions in the used
car market. For 24-month leases originated between ____ and ____, Ford Credit
believes approximately __% of the leases prepaid in full before their
respective scheduled lease end dates. For 36-month leases originated between
____ and ____, Ford Credit believes approximately __% of the leases prepaid in
full before their respective scheduled lease end dates.
Additionally, the rate of payment of principal of each Class of Senior
Notes will be increased by the application to pay principal of the Senior Notes
(after payment of interest on the Senior Notes, the Subordinated Notes and
the Lease Trust Certificates) of the portion, if any, of the Available Funds
plus the Cash Collateral Additional Draw Amount, if any, which does not
constitute payments by or on behalf of Obligors in reduction of the Balance
Subject to Lease Charges of the related Series 1996-1 Leases and which is not
applied to pay certain fees in any given month. To the extent Series 1996-1
Leases which have higher Retail Operating Lease Factors are prepaid faster than
others, the amount of such additional portion of the Available Funds plus the
Cash Collateral Additional Draw Amount, if any, available to pay principal of
the Senior Notes will be reduced. See "Description of the Senior Notes ----
The Indenture Cash Flows."
The Percentage of Senior Note Balance Outstanding table shown below
was prepared on the basis of certain assumptions, including that (i) all
Collections and Sale Proceeds are timely received, and that no Series 1996-1
Lease is ever delinquent, (ii) none of the Series 1996-1 Leases is repurchased
by the Administrative Agent, (iii) there are no Series 1996-1 Credit Losses or
Series 1996-1 Residual Losses, (iv) the Administrative Agent does not exercise
its option to redeem the Series 1996-1 Certificates as described herein, (v)
distribution of principal and interest on the Senior Notes is made on _______
15, _______ 15, _______ 15 and _______ 15 of each year starting on ________ 15,
199_, (vi) the Administrative Agent Fee is 1.00% per annum, (vii) all
prepayments are prepayments in full and (viii) the Cash Collateral Account is
funded in an amount equal to the Initial Cash Collateral Deposit and the
Required Cash Collateral Amount decreases in accordance with the formulas
described herein.
<TABLE>
<CAPTION>
PERCENTAGE OF SENIOR NOTE BALANCE OUTSTANDING
PREPAYMENT SPEEDS(1)
--------------------------------------------------------------------------------------------------
CLASS A-1 SENIOR NOTES CLASS A-2 SENIOR NOTES
----------------------------------------------- ------------------------------------------------
PAYMENT DATE 0.0% 0.3% 0.5% 0.8% 1.0% 0.0% 0.3% 0.5% 0.8% 1.0%
------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Initial . . . . . . . . 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
__/15/__ . . . . . . . .
__/15/__ . . . . . . . .
__/15/__ . . . . . . . .
__/15/__ . . . . . . . .
__/15/__ . . . . . . . .
__/15/__ . . . . . . . .
__/15/__ . . . . . . . .
__/15/__ . . . . . . . .
Weighted Average Life
(years)(2) . . . . . .
</TABLE>
___________________
(1) Prepayment speeds are expressed in terms of percentages of ABS. As
used herein, "ABS" refers to a prepayment model which assumes a
constant percentage of the original number of leases in a pool prepay
each month. ABS does not purport to be either an historical
description of the prepayment experience of any pool of leases or a
prediction of the anticipated rate of prepayment of any pool of
leases, including the Series 1996-1 Leases.
(2) The weighted average life of each Class of Senior Notes is determined
by (i) multiplying the amount of each distribution in reduction of
principal balance by the number of years from the date of the issuance
of the Senior Notes to the related Payment Date, (ii) adding the
results and (iii) dividing the sum by the aggregate distributions in
reduction of principal balance referred to in clause (i).
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<PAGE> 45
POOL FACTORS AND TRADING INFORMATION
The Note Pool Factor for each Class of Senior Notes will be a seven digit
decimal which the Administrative Agent will compute prior to each Payment Date.
The "Note Pool Factor" with respect to each Class of Senior Notes as of any
applicable Payment Date represents the remaining outstanding principal balance
of such Class of Senior Notes as of the applicable Payment Date (after giving
effect to payments made on such Payment Date), expressed as a fraction of the
initial outstanding principal balance of such Class of Senior Notes. Each Note
Pool Factor will initially be 1.0000000 and thereafter will decline to reflect
reductions in the outstanding principal balance of the applicable Class of
Senior Notes. A Senior Noteholder's portion of the principal balance of the
related Class of Senior Notes is the product of (i) the original denomination
of such Senior Noteholder's Senior Note and (ii) the applicable Note Pool
Factor.
The Senior Noteholders will receive reports on or about each Payment Date
for the Accrual Period immediately preceding such Payment Date containing
information regarding: (i) payments received on Series 1996-1 Assets, (ii) the
Pool Balance, (iii) the Note Pool Factor of each Class of Senior Notes (as of
such Payment Date after giving effect to payments made on such Payment Date)
and (iv) various other information. See "Description of the Senior Notes ----
Statements to Senior Noteholders" for a description of the additional
information provided to Senior Noteholders on each Payment Date. In addition,
Senior Noteholders of record during any calendar year will be furnished
information for tax reporting purposes not later than the latest date permitted
by law.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SOURCES OF CAPITAL AND LIQUIDITY
The Issuer's primary sources of capital will be (i) the net proceeds of
the Senior Notes offered hereby, (ii) the net proceeds of the Lease Trust
Certificates sold to third party investors and (iii) the Subordinated Notes and
$__________________ of Lease Trust Certificates issued to the Transferor See
"The Issuer ---- Capitalization of the Issuer."
The Issuer's primary sources of liquidity will be payments on the Series
1996-1 Certificates received either directly by the Issuer or indirectly
pursuant to payments under the Program Operating Lease (including amounts
available from the Cash Collateral Account).
RESULTS OF OPERATIONS
The Issuer is newly formed and, accordingly, has no results of operations
as of the date of this Prospectus. Because the Issuer does not have any
operating history, there has not been included in this Prospectus any
historical or pro forma ratio of earnings to fixed charges. The payments
received under the Program Operating Lease and payments on other assets owned
by the Issuer and the interest costs of the Senior Notes, the Subordinated
Notes and the Lease Trust Certificates will determine the Issuer's results of
operations in the future. The income generated from the Issuer's assets will
be used to pay interest on and principal of the Senior Notes and the
Subordinated Notes, related costs and expenses of the Issuer (to the extent not
included in items payable by the Administrative Agent pursuant to the
Administrative Agency Agreement), and distributions to the holders of the Lease
Trust Certificates. The principal periodic expense of the Issuer is expected
to be, but is not limited to, the Administrative Agent Fee.
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<PAGE> 46
DESCRIPTION OF THE SENIOR NOTES
GENERAL
The Senior Notes will be issued pursuant to the terms of the Indenture. A
copy of the Indenture will be filed with the Commission following the issuance
of the Senior Notes. The following description summarizes the material terms
of the Senior Notes and the Indenture. The summary does not purport to be
complete and is qualified in its entirety by reference to the provisions of the
Senior Notes, the Indenture and the other Basic Documents.
The Senior Notes will be issued in denominations of $1,000 and integral
multiples thereof in book-entry form through the facilities of DTC.
(Indenture, Sections 2.2 and 2.10). Each Class of Senior Notes will
initially be represented by one or more Senior Notes, in each case registered
in the name of Cede, the nominee of DTC. Accordingly, Cede is expected to be
the holder of record of the Senior Notes of each Class. Unless and until
Definitive Senior Notes are issued under the limited circumstances described
herein, no beneficial owner of a Senior Note (each, a "Senior Note Owner") will
be entitled to receive a physical certificate representing such owner's Senior
Note, except as set forth in "---- Definitive Senior Notes." Unless and until
the Senior Notes are issued in fully registered, certificated form
("Definitive Senior Notes") under the limited circumstances described in "----
Definitive Senior Notes," all references herein to distributions, notices,
reports and statements to Senior Noteholders will refer to the same actions
made with respect to DTC or Cede, as the case may be, for the benefit of Senior
Note Owners in accordance with DTC procedures. (Indenture, Sections 2.10 and
2.12).
BOOK-ENTRY REGISTRATION
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the UCC in effect in the State of New York
and a "clearing agency" registered pursuant to the provisions of Section 17A of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). DTC
holds securities for its participating members (the "Participants") and
facilitates the clearance and settlement of securities transactions between
Participants through electronic book-entry changes in accounts of its
Participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers (including
the Underwriters), banks, trust companies and clearing corporations. Indirect
access to the DTC system also is available to banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly (the "Indirect Participants"). The
rules applicable to DTC and its Participants are on file with the Commission.
Senior Note Owners that are not Participants or Indirect Participants but
that desire to purchase, sell or otherwise transfer ownership of or an interest
in the Senior Notes may do so only through Participants or Indirect
Participants. Participants receive a credit for the Senior Notes in DTC's
records. The ownership interest of each Senior Note Owner is in turn recorded
on the Participants' and Indirect Participants' respective records. Senior
Note Owners will not receive written confirmation from DTC of their purchase,
but Senior Note Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their holdings,
from the Participant or Indirect Participant through which the Senior Note
Owner entered into the transaction. Transfers of ownership interests in the
Senior Notes will be accomplished by entries made on the books of Participants
acting on behalf of Senior Note Owners.
To facilitate subsequent transfers, all Senior Notes deposited by
Participants with DTC will be registered in the name of Cede, as nominee of
DTC. The deposit of Senior Notes with DTC and their registration in the name
of Cede will effect no change in beneficial ownership. DTC has no knowledge
44
<PAGE> 47
of the actual Senior Note Owners and its records reflect only the identity of
the Participants to whose accounts such Senior Notes are credited, which may or
may not be the Senior Note Owners. Participants and Indirect Participants
will remain responsible for keeping account of their holdings on behalf of
their customers.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants and by Participants and Indirect
Participants to Senior Note Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
DTC's practice is to credit Participants' accounts on each Payment Date in
accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payment on such Payment Date.
Payments by Participants and Indirect Participants to Senior Note Owners will
be governed by standing instructions and customary practices, as in the case
with securities held for the accounts of customers in bearer form or registered
in "street name", and will be the responsibility of such Participant and not of
DTC, the Indenture Trustee, the Lease Trustee, the RCL Trustee, the
Administrative Agent, the Transferor or the Issuer, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal of and interest on the Senior Notes to DTC will be the responsibility
of the Indenture Trustee, disbursement of such payments to Participants will be
the responsibility of DTC and disbursement of such payments to Senior Note
Owners will be the responsibility of Participants and Indirect Participants.
As a result, under the book-entry format, Senior Note Owners may experience
some delay in their receipt of payments.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a Senior Note
Owner to pledge Senior Notes to persons or entities that do not participate in
the DTC system, or otherwise take actions with respect to such Senior Notes,
may be limited due to the lack of a physical certificate for such Senior Notes.
Neither DTC nor Cede will consent or vote with respect to the Senior
Notes. Under its usual procedures, DTC mails an "Omnibus Proxy" to the
Indenture Trustee as soon as possible after any applicable record date for such
a consent or vote. The Omnibus Proxy assigns Cede's consenting or voting
rights to those Participants to whose accounts the Senior Notes are credited on
that record date (identified in a listing attached to the Omnibus Proxy).
Neither the Indenture Trustee, the Lease Trustee, the RCL Trustee, the
Administrative Agent, the Transferor or the Issuer will have any liability for
any aspect of the records relating to or payments made on account of beneficial
ownership interests of the Senior Notes held by Cede, as nominee of DTC, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
DEFINITIVE SENIOR NOTES
Definitive Senior Notes will be issued to Senior Note Owners rather than
to DTC only if (i) DTC is no longer willing or able to discharge its
responsibilities with respect to the Senior Notes and the Administrative Agent
is not able to locate a qualified successor, (ii) the Administrative Agent, at
its option, elects to terminate book-entry registration through DTC or (iii)
after an Event of Default, Senior Note Owners representing not less than a
majority of the aggregate principal balance of the Senior Notes advise the
Indenture Trustee through DTC or its successor in writing that the continuation
of book-entry registration through DTC or its successor is no longer in the
best interest of Senior Note Owners. (Indenture, Section 2.12).
Upon the occurrence of any of the events described in the immediately
preceding paragraph, DTC will notify all Senior Note Owners, through
Participants, of the availability through DTC of
45
<PAGE> 48
Definitive Senior Notes. Upon surrender by DTC of the notes representing the
Senior Notes and the receipt of instructions for re-registration, the Indenture
Trustee will issue Definitive Senior Notes to Senior Note Owners, who thereupon
will become Senior Noteholders for all purposes of the Indenture. (Indenture,
Section 2.12).
Payments on the Senior Notes will thereafter be made by the Indenture
Trustee directly to Senior Noteholders in accordance with the procedures set
forth herein and in the Indenture. Interest payments and any principal
payments on the Definitive Senior Notes on each Payment Date will be made to
holders in whose names the Definitive Senior Notes were registered at the close
of business on the Record Date with respect to such Payment Date. Payments
will be made by check mailed to the address of such holders as they appear on
the Senior Note Register or, under certain circumstances as provided in the
Indenture, by wire transfer to a bank or depository institution located in the
United States and having appropriate facilities therefor. (Indenture, Section
2.7). The final payment on any Senior Notes (whether Definitive Senior Notes
or global notes registered in the name of Cede representing the Senior Notes),
however, will be made only upon presentation and surrender of such Definitive
Senior Notes or global notes at the office or agency specified in the notice of
final distribution to Senior Noteholders. (Indenture, Section 2.7).
Definitive Senior Notes will be transferable and exchangeable at the
offices of the Indenture Trustee or the Senior Note Registrar to be set forth
in the Indenture. No service charge will be imposed for any registration of
transfer or exchange, but the Indenture Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith. (Indenture, Section 2.4).
INTEREST
Interest on the principal balance of the Class A-1 Senior Notes will
accrue at the rate of ____% per annum and interest on the principal balance of
the Class A-2 Senior Notes will accrue at the rate of ____% per annum.
(Indenture, Section 2.1). Interest on the Senior Notes will be payable to
the Senior Noteholders quarterly on each Payment Date to Senior Noteholders of
record on the Record Date preceding such Payment Date. Interest on the
principal balance of the Senior Notes will accrue at the applicable interest
rate (i) with respect to the Class A-1 Senior Notes, either from and including
the Closing Date (in the case of the first Payment Date) or from and including
the most recent Payment Date on which interest has been paid to but excluding
the following Payment Date and (ii) with respect to the Class A-2 Senior Notes,
either from and including the Closing Date (in the case of the first Payment
Date) or from and including the fifteenth day of the third calendar month
preceding the calendar month in which each Payment Date occurs, to but
excluding the fifteenth day of the calendar month in which such Payment Date
occurs. Interest accrued but not paid as of any Payment Date will be due on
the next Payment Date together with interest on such overdue amount (to the
extent lawful) at a rate per annum equal to the interest rate for the
applicable Class. (Indenture, Section 2.7). Interest on the Class A-1 Senior
Notes will be calculated on the basis of actual days elapsed and a 360-day
year. Interest on the Class A-2 Senior Notes will be calculated on the basis
of a 360-day year of twelve 30-day months. (Indenture, Section 1.1).
Interest payments on the Senior Notes generally will be made from the
Available Funds as described in "---- The Indenture Cash Flows."
Interest payments to all Classes of Senior Noteholders will have the same
priority. If the amount of interest on the principal balance of the Class A-1
Senior Notes and on the principal balance of the Class A-2 Senior Notes exceeds
the Available Funds with respect to such Payment Date (after giving effect to
payment of the Administrative Agent Fee), each Senior Noteholder will receive
its pro rata share (based on the total amount of interest due to all Senior
Noteholders) of the amount available to be distributed in respect of interest
on the aggregate principal balance of the Senior Notes.
PRINCIPAL
46
<PAGE> 49
Principal payments will be made to the Senior Noteholders sequentially on
each Payment Date in an amount equal to the Available Funds plus the Cash
Collateral Additional Draw Amount, if any, with respect to such Payment Date
after giving effect to the payment to the Administrative Agent of the
Administrative Agent Fee with respect to such Payment Date, the payment of
interest to Senior Noteholders, the deposit of interest due on the Subordinated
Notes into the Cash Collateral Account and the deposit of accrued interest on
the Lease Trust Certificates plus the Certificate Distribution Draw Amount, if
any, into the Certificate Distribution Account for payment to Lease Trust
Certificateholders when due. No principal payments will be made to the Class
A-2 Senior Noteholders until the principal balance of the Class A-1 Senior
Notes has been reduced to zero (Indenture, Section 8.4); provided that if an
Event of Default under the Indenture has occurred and the maturity of the
Senior Notes has been accelerated, principal payments will be made to the
holders of the Class A-1 Senior Notes and the Class A-2 Senior Notes on a pro
rata basis based on their respective principal balances without any distinction
between Classes (Indenture, Section 5.4). Payments of principal with respect
to the Subordinated Notes and the Lease Trust Certificates will not be made
until the aggregate principal balance of the Senior Notes has been reduced to
zero. See "---- The Indenture Cash Flows" and "---- The Accounts ---- The Cash
Collateral Account."
OPTIONAL REDEMPTION
If the Administrative Agent exercises its option to purchase the Series
1996-1 Certificates on any Payment Date on which the Pool Balance has declined
to less than 10% of the Initial Pool Balance, the Senior Notes will be redeemed
on such date in whole, but not in part, for the Redemption Price. The
Administrative Agent or the Lease Trustee will provide at least 45 days' prior
notice of the redemption of the Senior Notes to the Indenture Trustee (who will
provide at least 30 days' notice to the Senior Noteholders). On such Payment
Date the aggregate principal balance of the Senior Notes will be due and
payable at the Redemption Price and unless all the Senior Notes are not
redeemed on such Payment Date no interest will accrue on the Senior Notes after
such Payment Date. (Indenture, Section 10.1 ; Series 1996-1 Supplement,
Section 7.1).
Because the initial principal balance of the Subordinated Notes and the
Lease Trust Certificates exceeds 10% of the Initial Pool Balance, absent
substantial shortfalls in amounts available from the Series 1996-1
Certificates, it is likely that the Senior Notes will have been paid in full on
or before the Payment Date on which the Administrative Agent is permitted to
exercise its option to purchase the Series 1996-1 Certificates. See "The
Issuer ---- Capitalization of the Issuer."
THE INDENTURE TRUSTEE
The Chase Manhattan Bank is the Indenture Trustee under the Indenture.
The Indenture Trustee is a New York corporation and its corporate trust offices
are located at 450 West 33rd Street, New York, New York 10001. The fees and
expenses of the Indenture Trustee will be paid by the Administrative Agent,
acting on behalf of the Issuer. The Transferor, Ford Credit and their
respective affiliates may maintain normal commercial banking relationships with
the Indenture Trustee and its affiliates.
THE ACCOUNTS
The Collection Account. The Collection Account will be established at an
Eligible Institution in the name of the Indenture Trustee. Amounts deposited
therein will be invested in Permitted Investments, upon instructions from Ford
Credit and Ford Credit Leasing, with a maturity no later than the business day
preceding the next Payment Date. Income (or losses, if any) on such
investments, if any, will be credited (or charged) to the Collection Account
and will be available to make payments on the Senior Notes, the Subordinated
Notes and the Lease Trust Certificates. (Series 1996-1 Supplement, Section
5.1). The Collection Account will initially be established with the Indenture
47
<PAGE> 50
Trustee. If the Indenture Trustee ceases to be an Eligible Institution, the
Collection Account will be moved to an Eligible Institution. (Series 1996-1
Supplement, Section 5.1).
The Payahead Account. The Payahead Account will be established at an
Eligible Institution in the name of the Indenture Trustee. Payaheads deposited
therein will be invested in Permitted Investments, upon instructions from Ford
Credit and Ford Credit Leasing, with a maturity no later than the business day
preceding the next Distribution Date. Income (or losses, if any) on such
investments, if any, will be distributed to the beneficiaries of the Transferor
(or, in the case of losses, deducted from distributions to such beneficiaries).
The Payahead Account will be initially established with the Indenture Trustee.
If the Indenture Trustee ceases to be an Eligible Institution, the Payahead
Account will be moved to an Eligible Institution. The Administrative Agent is
required to deposit Payaheads in the Payahead Account only if it has failed to
meet a Monthly Remittance Condition. Payahead Credits will be applied by the
Administrative Agent on each Distribution Date if any Monthly Payment with
respect to a Series 1996-1 Lease has not been paid in the related Collection
Period. (Series 1996-1 Supplement, Section 5.1).
The Payment Account. The Payment Account will be an Eligible Account
established in the name of the Indenture Trustee in trust for the benefit of
the Senior Noteholders, the Subordinated Noteholders and the Lease Trust
Certificateholders. Amounts deposited therein may be invested in Permitted
Investments, upon instructions from the Administrative Agent, with a maturity
no later than the next Payment Date. Income (or losses, if any) on such
investments, if any, will be credited (or charged) to the Administrative Agent.
(Lease Trust Agreement, Sections 5.1). The Payment Account will be initially
established with the Indenture Trustee. If the Payment Account may no longer
be maintained at the Indenture Trustee as an Eligible Account, the Payment
Account will be moved to another institution and established as an Eligible
Account. (Lease Trust Agreement, Section 5.1).
The Cash Collateral Account. The Cash Collateral Account will be an
account established at an Eligible Institution in the name of the Indenture
Trustee. Amounts deposited therein will be invested in Cash Collateral Account
Investments, upon instructions from Ford Credit and Ford Credit Leasing.
Income (or losses, if any) on such investments, if any, will be credited (or
charged) to the Cash Collateral Account. The Cash Collateral Account will be
initially established with the Indenture Trustee. If the Indenture Trustee
ceases to be an Eligible Institution, the Cash Collateral Account will be moved
to an Eligible Institution. (Program Operating Lease, Section 3.5). The
Cash Collateral Account is established to secure the Transferor's obligations
under the Program Operating Lease, and on each Payment Date amounts on deposit
therein are available to pay the Program Operating Lease Payments required to
be made by the Transferor under the Program Operating Lease. See "---- Cash
Collateral Account Withdrawals and Deposits" for a description of the amounts
to be deposited to and withdrawn from the Cash Collateral Account.
The Certificate Distribution Account. The Certificate Distribution
Account will be an Eligible Account established in the name of the Indenture
Trustee in trust for the benefit of the Senior Noteholders, the Subordinated
Noteholders and the Lease Trust Certificateholders. Amounts deposited therein
may be invested in Permitted Investments, upon instructions from the
Administrative Agent, with a maturity no later than the next Payment Date.
Income (or losses, if any) on such investments, if any, will be credited (or
charged) to the Cash Collateral Account. The Certificate Distribution Account
will initially be established with the Indenture Trustee. If the Certificate
Distribution Account may no longer be maintained at the Indenture Trustee as an
Eligible Account, the Certificate Distribution Account will be moved to
another institution and established as an Eligible Account. (Lease Trust
Agreement, Section 5.1). Amounts deposited in the Certificate Distribution
Account pursuant to the terms of the Indenture will be available for
distribution to Lease Trust Certificateholders semiannually on the Payment
Dates occurring in the months of ____ and ____ in accordance with the terms of
the Lease Trust Agreement; provided, however, that amounts deposited in the
Certificate Distribution Account on the Payment Dates occurring in the months
of ____ and ____ in respect of accrued interest
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on the Lease Trust Certificates will be withdrawn on the business day preceding
the following Payment Date in an amount equal to the Certificate Distribution
Draw Amount, if any, for such Payment Date. See "Description of the Senior
Notes----The Indenture Cash Flows ---- Certificate Distribution Draw Amount."
THE INDENTURE CASH FLOWS
Monthly or Daily Deposits to Collection Account. On each Distribution
Date (or on the business day preceding such Distribution Date, if such
Distribution Date is a Payment Date), or on each business day if each Monthly
Remittance Condition has not been satisfied, the Administrative Agent will
deposit all Collections with respect to Series 1996-1 Assets into the
Collection Account. (Series 1996-1 Supplement, Section 5.2).
"Collections" means with respect to Series 1996-1 Assets and any
Collection Period, all of the following amounts received by the
Administrative Agent in such Collection Period: (i) all Monthly Payments
and Payahead Credits; (ii) all Administrative Purchase Amounts; (iii) all
Monthly Scheduled Termination Sale Proceeds; (iv) all Voluntary Early
Termination Proceeds; (v) all Liquidation Proceeds; and (vi) all
Recoveries.
"Monthly Payment" means with respect to any Lease, the amount payable
monthly by the Obligor equal to the Constant Yield Payment and the
Additional Fee and certain other fees and charges for such month.
"Payahead Credits" means with respect to any Series 1996-1 Lease the
amount of a Payahead with respect to an Obligor either paid by the
Administrative Agent (if each Monthly Remittance Condition is satisfied)
or withdrawn from the Payahead Account, and applied against the Monthly
Payment due in such Collection Period with respect to such Lease.
"Administrative Purchase Amount" means with respect to any Lease as of the
end of a Collection Period as to which a breach of certain
representations, warranties or covenants has occurred (including those
resulting from a Term Extension, Payment Extensions in excess of, in the
aggregate, three months or the relocation of a Leased Vehicle to a
jurisdiction in which FCTT is not qualified or authorized to maintain
evidence of the ownership interest of FCTT in such Leased Vehicle), the
Adjusted Balance Subject to Lease Charges as of such date plus any overdue
Monthly Payments which have not been paid by the Obligor.
"Monthly Scheduled Termination Sale Proceeds" means with respect to a
Collection Period, all Sale Proceeds received by the Administrative Agent
in such Collection Period for Series 1996-1 Leased Vehicles which were
sold on or after the termination of the related Series 1996-1 Leases at
their respective Scheduled Lease End Dates (increased by amounts collected
in connection with Excess Wear and Tear and Excess Mileage and reduced by
amounts required to be remitted to the related Obligors under applicable
law); provided that to the extent the Transferor exercises its option to
purchase a Series 1996-1 Leased Vehicle, the Sale Proceeds for any such Se
ries 1996-1 Leased Vehicle will not exceed the Transferor Purchase Option
Price. See "Series 1996-1 Certificates ---- Lease of the Series 1996-1
Certificates to the Transferor."
"Voluntary Early Termination Proceeds" means all amounts received in
connection with a Voluntary Early Termination, which amount includes the
Adjusted Balance Subject to Lease Charges at the time of termination plus
all Monthly Payments due but not paid as of the date of termination.
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"Liquidation Proceeds" means all amounts received with respect to a
Liquidated Lease and the related Leased Vehicle in the month in which such
Lease became a Liquidated Lease, net of any amounts remitted to the
Obligor as required by law.
"Recoveries" means, with respect to any Collection Period, (i) all amounts
received during such Collection Period (net of taxes) with respect to
Leases which became Liquidated Leases before such Collection Period plus
(ii) all amounts received with respect to Leases which expired on their
respective Scheduled Lease End Dates before such Collection Period and
with respect to which the proceeds from the sale of the related Leased
Vehicles were received before such Collection Period, minus any amounts
remitted to the Obligor as required by law.
Quarterly Deposits to Collection Account. On the second business day
preceding each Payment Date, the Administrative Agent acting on behalf of the
Issuer will deliver to the Indenture Trustee instructions setting forth the
information necessary to make all disbursements and payments with respect to
such Payment Date. (Indenture, Section 8.3).
On the business day preceding each Payment Date, the Administrative Agent
will make a deposit or withdrawal from the Collection Account in an amount
equal to the sum of the Aggregate Net Sale Proceeds Advances and Aggregate Net
Monthly Payment Advances to be made by the Administrative Agent for the
preceding Accrual Period. (Series 1996-1 Supplement, Sections 5.2 and
5.4).
"Aggregate Net Sale Proceeds Advances" means, with respect to any Accrual
Period, the aggregate Sale Proceeds Advances made by the Administrative
Agent with respect to such Accrual Period minus the amount received by the
Administrative Agent in such Accrual Period as repayment of Sale Proceeds
Advances which were made with respect to previous Accrual Periods. See
"Description of the Administrative Agency Agreement ---- Advances of Sale
Proceeds."
"Aggregate Net Monthly Payment Advances" means, with respect to any
Accrual Period, the aggregate Monthly Payment Advances made by the
Administrative Agent with respect to such Accrual Period minus the amount
received by the Administrative Agent in such Accrual Period as repayment
of Monthly Payment Advances which were made with respect to previous
Accrual Periods. See "Description of the Administrative Agency Agreement
---- Monthly Payment Advances."
On the business day preceding each Payment Date, based on the instructions
of the Administrative Agent, the Indenture Trustee will determine the aggregate
amount of Available Sale Proceeds on deposit in the Collection Account (after
giving effect to all deposits of Collections on the business day preceding such
Payment Date and the deposit or withdrawal of the Aggregate Net Monthly Payment
Advances and the Aggregate Net Sale Proceeds Advances on such day).
The "Available Sale Proceeds" means, with respect to any Payment Date,
the Monthly Scheduled Termination Sale Proceeds deposited in the
Collection Account on each of the two preceding Distribution Dates and
Monthly Scheduled Termination Sale Proceeds deposited in the Collection
Account on the business day preceding the Distribution Date occurring on
such Payment Date (or on each business day during the related Accrual
Period if any Monthly Remittance Condition has not been satisfied) plus
the Aggregate Net Sale Proceeds Advances deposited in the Collection
Account on the business day preceding such Payment Date .
Monthly or Daily Deposits to Cash Collateral Account. On each
Distribution Date (or on the business day preceding such Distribution Date, if
such Distribution Date is a Payment Date), or on each business day if each
Monthly Remittance Condition has not been satisfied, the Administrative Agent
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will deposit any Transferor Purchase Option Net Proceeds with respect to the
Series 1996-1 Leased Vehicles into the Cash Collateral Account until the
aggregate cumulative amount deposited in the Cash Collateral Account in
respect of such proceeds equals $_____, which is equal to 10% of the Initial
Pool Balance. (Series 1996-1 Supplement, Section 5.3).
Withdrawals from Collection Account/Deposits to Cash Collateral Account.
On the business day preceding each Payment Date and prior to the Indenture
Trustee's withdrawal of any amounts from the Cash Collateral Account on such
day, the Administrative Agent will withdraw from the Collection Account (after
giving effect to all deposits of Collections therein and the deposit or
withdrawal of the Aggregate Net Monthly Payment Advances and the Aggregate Net
Sale Proceeds Advances on such day) and deposit to the Cash Collateral Account
the sum for the related Accrual Period of (i) the Collections other than
Monthly Scheduled Termination Sale Proceeds , (ii) the Aggregate Net Monthly
Payment Advances and (iii) any investment earnings (net of losses and
investment expenses) on funds on deposit in the Collection Account. (Series
1996-1 Supplement, Section 5.2).
Withdrawals from Collection Account/Deposits to Payment Account. On the
business day preceding each Payment Date, the Administrative Agent will
withdraw from the Collection Account and deposit to the Payment Account the
Available Sale Proceeds on deposit in the Collection Account. (Series 1996-1
Supplement, Section 5.2).
Withdrawals from Certificate Distribution Account/Deposits to Cash
Collateral Account. On the business day preceding each Payment Date, the
Indenture Trustee will withdraw from the Certificate Distribution Account and
deposit to the Cash Collateral Account any investment earnings (net of losses
and investment expenses) on funds on deposit in the Certificate Distribution
Account. (Indenture, Section 8.2).
Withdrawals from Cash Collateral Account/Deposits to Payment Account
and Application of Cash Collateral Additional Draw Amount. On the business day
preceding each Payment Date, the Indenture Trustee will withdraw from the Cash
Collateral Account and deposit to the Payment Account the Cash Collateral
Required Draw Amount and apply such amount as described under "---- Payments"
below . On each Payment Date, the Indenture Trustee will withdraw from the
Cash Collateral Account the Cash Collateral Additional Draw Amount and apply
such amount as described under "---- Payments" below. See "---- Cash
Collateral Account Withdrawals and Deposits" for a description of how the Cash
Collateral Required Draw Amount and the Cash Collateral Additional Draw Amount
are calculated. (Indenture, Section 8.3).
Payments. On each Payment Date, the Indenture Trustee will apply
first the aggregate Available Sale Proceeds and Cash Collateral Required Draw
Amount from the Payment Account (such amount, the "Available Funds") and
second the Cash Collateral Additional Draw Amount, if any, from the Cash
Collateral Account, in the following order of priority:
(i) to the Administrative Agent, the Administrative Agent
Fee;
(ii) to the Senior Noteholders, pro rata without any priority
between Classes, to pay interest due on the outstanding Senior Notes
on such Payment Date (and, to the extent permitted under applicable
law, interest on any overdue interest at the interest rate for the
applicable Class);
(iii) to the Lease Trust Paying Agent for deposit to the Cash
Collateral Account, an amount equal to the interest due on the
outstanding Subordinated Notes with respect to such Payment Date (and,
to the extent permitted under applicable law, interest on any overdue
interest at the interest rate for the Subordinated Notes);
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(iv) to the Certificate Distribution Account, an amount equal
to the interest accrued (including any overdue interest) on the Lease
Trust Certificates with respect to such Payment Date (and, to the
extent permitted under applicable law, interest on any overdue
interest at the interest rate for the Lease Trust Certificates) plus
the Certificate Distribution Draw Amount, if any, with respect to such
Payment Date; and
(v) to the Senior Noteholders, to pay principal with respect
to each Class of Senior Notes outstanding, sequentially, until the
Senior Notes have been paid in full; provided that if an Event of
Default has occurred under the Indenture and the maturity of the
Senior Notes has been accelerated, principal payments will be made on
a pro rata basis to holders of the Class A-1 Senior Notes and the
Class A-2 Senior Notes based on their respective principal balances,
without any distinction between Classes.
Any Available Funds plus the Cash Collateral Additional Draw Amount,
if any, remaining after the Class A-2 Senior Notes have been paid in full will
be applied to pay the Subordinated Notes and the Lease Trust Certificates in
accordance with the terms thereof. Amounts deposited in the Cash Collateral
Account in accordance with clause (iii) above will be deemed to have been
distributed to the Subordinated Noteholders as payments in respect of interest
(and overdue interest) and the Subordinated Noteholders will not be entitled to
any further interest on such amounts after the related Payment Date. For
administrative convenience, amounts due to the Transferor in respect of
payments on the Subordinated Notes on a Payment Date may be netted against
Additional Payments owed by the Transferor to the Issuer with respect to such
Payment Date. All such amounts will be recorded and accounted for as if they
were paid separately.
Certificate Distribution Draw Amount. To the extent that with respect
to any Payment Date occurring in the months of ____ and ____ the sum of the
amounts required to be paid under clauses (i), (ii) and (iii) of "----
Payments" above exceeds the Available Funds for such Payment Date, on the
business day preceding such Payment Date the Indenture Trustee will withdraw
from the Certificate Distribution Account the Certificate Distribution Draw
Amount and, after applying the Available Funds but before applying the Cash
Collateral Additional Draw Amount, if any, on the related Payment Date, will
apply the Certificate Distribution Draw Amount on such Payment Date to make the
payments described under "---- Payments" above, in the order of priority
indicated. The "Certificate Distribution Draw Amount" with respect to (a) any
Payment Date occurring in the months of ______ and ______, will be equal to the
lesser of (i) the shortfall, if any, between (x) the Available Funds and (y)
the sum of the Administrative Agent Fee and interest due on the Senior Notes
and the Subordinated Notes on such Payment Date and (ii) the amount on deposit
in the Certificate Distribution Account on the business day preceding such
Payment Date, and (b) any other Payment Date, will be equal to zero.
CASH COLLATERAL ACCOUNT WITHDRAWALS AND DEPOSITS
Amounts on deposit in the Cash Collateral Account from time to time
(the "Cash Collateral Amount") secure the Transferor's obligations under the
Program Operating Lease, and on each Payment Date are available to pay the
Program Operating Lease Payments. The initial amount deposited in the Cash
Collateral Account on the Closing Date will be $______ (the "Initial Cash
Collateral Deposit"). The Cash Collateral Amount will be increased from time
to time by the deposit in the Cash Collateral Account of the following amounts
with respect to each Accrual Period: (i) all Collections other than Monthly
Scheduled Termination Sale Proceeds; (ii) the Aggregate Net Monthly Payment
Advances; (iii) any Transferor Purchase Option Net Proceeds until the aggregate
cumulative amount deposited therein in respect of such proceeds equals $______;
(iv) payments of interest on and principal of the Subordinated Notes; and (v)
any investment earnings (net of losses and investment expenses) on funds on
deposit in the Collection Account, the Cash Collateral Account and the
Certificate Distribution Account. The Cash Collateral Amount will be decreased
by the amount of each Cash Collateral
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Required Draw Amount and the Cash Collateral Additional Draw Amount, if any,
with respect to each Payment Date.
"Cash Collateral Required Draw Amount" means, with respect to any
Payment Date , an amount equal to the lesser of (i) the Required
Interest Payment for such Payment Date and (ii) the Cash Collateral
Amount on the business day preceding such Payment Date (after giving
effect to amounts deposited in the Cash Collateral Account on such
business day).
"Cash Collateral Additional Draw Amount" means, with respect to any
Payment Date, an amount equal to the Additional Payment less the
portion thereof to be applied to make payments on the Subordinated
Notes. The Additional Payment will be zero (i) on any Payment Date on
which the Available Funds is less than or equal to the sum of the
Administrative Agent Fee and interest due on the Senior Notes and
(ii) generally on any other Payment Date on which (x) the Cash
Collateral Amount is less than or equal to the Required Cash
Collateral Amount or (y) the aggregate outstanding principal balance
of the Senior Notes, Subordinated Notes and Lease Trust Certificates
prior to giving effect to any payments on such Payment Date is less
than or equal to the sum of the Available Sale Proceeds for the
related Accrual Period and the aggregate Residual Values of all Series
1996-1 Leased Vehicles the related Series 1996-1 Leases of which have
not yet terminated as of the close of the last day of the preceding
Accrual Period.
"Required Cash Collateral Amount" means, as of any Payment Date, the
greater of (i) ____% of the Pool Balance as of the last day of the
related Accrual Period and (ii) ____% of the Initial Pool Balance;
provided that the Required Cash Collateral Amount will equal zero as
of any Payment Date occurring on or after the earlier of the date on
which the last remaining Series 1996-1 Lease terminated (as a result
of voluntary early termination, termination due to default, scheduled
termination or otherwise) or the date on which the Program Operating
Lease is terminated following an event of default thereunder.
On the Payment Date on which the Senior Notes, Subordinated Notes and
Lease Trust Certificates are paid in full and following payment in full of any
remaining obligations of the Transferor under the Basic Documents, any amounts
remaining on deposit in the Cash Collateral Account (after giving effect to any
deposits therein or withdrawals therefrom with respect to such Payment Date)
will be paid to the Transferor.
ADVANCES
The Administrative Agent will make a Monthly Payment Advance on the
business day preceding each Payment Date with respect to Monthly Payments not
received with respect to a Series 1996-1 Lease as of the end of the related
Accrual Period but only if the Administrative Agent determines in its sole
discretion that such Monthly Payment Advance will be recoverable from
subsequent Monthly Payments on such Series 1996-1 Lease. The Administrative
Agent will make Sale Proceeds Advances for Sale Proceeds which have not been
received as of the end of the related Accrual Period with respect to Series
1996-1 Leased Vehicles which were sold in such Accrual Period on or after their
respective Scheduled Lease End Dates. On the business day preceding each
Payment Date, the Administrative Agent will deposit to, or withdraw from, the
Collection Account the Aggregate Net Sale Proceeds Advances and the Aggregate
Net Monthly Payment Advances. (Series 1996-1 Supplement, Section 5.2). See
"---- The Indenture Cash Flows," "Description of the Administrative Agency
Agreement ---- Advances of Sale Proceeds" and "Description of the
Administrative Agency Agreement ---- Monthly Payment Advances."
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MONTHLY REMITTANCE CONDITION
The Administrative Agency Agreement requires the Administrative Agent
to make all deposits of amounts received from Obligors and proceeds from the
sale of Series 1996-1 Leased Vehicles during each Collection Period on each
business day. However, so long as each Monthly Remittance Condition is
satisfied, the Administrative Agent may retain such amounts until the related
Distribution Date (or until the business day preceding such Distribution Date,
if such Distribution Date is a Payment Date). Pending deposit into the
Collection Account or the Cash Collateral Account, collections of amounts
received from Obligors and proceeds from the sale of Series 1996-1 Leased
Vehicles may be employed by the Administrative Agent at its own risk and for
its own benefit and will not be segregated from its own funds. Deposits or
withdrawals from the Collection Account with respect to Monthly Payment
Advances and Sale Proceeds Advances will be made on the business day preceding
each Payment Date on a net basis. (Series 1996-1 Supplement, Section 5.2).
STATEMENTS TO SENIOR NOTEHOLDERS
On or prior to each Payment Date, the Administrative Agent will
prepare and provide the Indenture Trustee a statement to be included with the
report delivered to Senior Noteholders described in "Pool Factors and Trading
Information" setting forth the following information with respect to such
Payment Date, the related Accrual Period and Series 1996-1: (i) the amount of
the distribution allocable to principal and interest with respect to each Class
of Senior Notes outstanding; (ii) the aggregate amount of Collections
deposited in the Collection Account (stating separately the components
thereof); (iii) the amount of Available Sale Proceeds deposited in the
Collection Account (stating separately the components thereof); (iv) the
Aggregate Net Sale Proceeds Advances and Aggregate Net Monthly Payment Advances
deposited in the Collection Account; (v) the Available Funds; (vi) the Cash
Collateral Amount, the Cash Collateral Required Draw Amount and the Cash
Collateral Additional Draw Amount, if any, each separately stated; (vii) the
amount of interest accrued on each Class of Senior Notes, the Subordinated
Notes and the Lease Trust Certificates; (viii) the aggregate outstanding
balance of each Class of Senior Notes, the Subordinated Notes and the Lease
Trust Certificates ; and (ix) the aggregate Series 1996-1 Credit Losses and
Series 1996-1 Residual Losses (separately stated) for each of the three
preceding Collection Periods. (Indenture, Section 8.4)
INDENTURE
Events of Default. The "Events of Default" in the Indenture consist
of (i) a default for five days or more in the payment of interest on any Senior
Note; (ii) a default in the payment of principal of any Senior Note at its
Stated Maturity or on the Redemption Date; (iii) the occurrence of an event of
default under the Program Operating Lease; (iv) a default in the observance or
performance of any material covenant or agreement, or any representation or
warranty made in the Indenture or in any certificate or writing delivered
pursuant thereto proves to have been incorrect in any material respect as of
the time when made, and the continuation of such default for a period of 60
days or in the case of a materially incorrect representation or warranty, 30
days, after notice thereof is given to the Lease Trustee by the Indenture
Trustee or the Lease Trustee and the Indenture Trustee by the holders of not
less than 25% of the aggregate principal balance of the Senior Notes or (v)
certain events of bankruptcy, insolvency, receivership or liquidation of the
Issuer. (Indenture, Section 5.1).
Senior Noteholders holding not less than a majority of the aggregate
principal balance of the Senior Notes may waive any past default or Event of
Default prior to the declaration of the acceleration of the maturity of the
Senior Notes, except a default (i) in payment of principal of or interest on
any of the Senior Notes or (ii) in respect of any covenant or provision in the
Indenture which cannot be modified or amended without unanimous consent of the
Senior Noteholders. (Indenture, Section 5.12). Such a waiver could be
treated, for federal income tax purposes, as a constructive exchange of the
Senior Notes by the Senior Noteholders for deemed new Senior Notes upon which
gain or loss
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would be recognized if such waiver were to continue for a period that exceeds
two years and any additional period during which the Senior Noteholders conduct
good faith negotiations.
Remedies. If an Event of Default should occur and be continuing, the
Indenture Trustee or the holders of a majority of the aggregate principal
balance of the Senior Notes may declare the principal of the Senior Notes to be
immediately due and payable. Such declaration may be rescinded by the holders
of a majority of the aggregate principal balance of the Senior Notes before a
judgment or decree for payment of the amount due has been obtained by the
Indenture Trustee if (i) the Issuer has deposited with the Indenture Trustee
an amount sufficient to pay (x) all interest on and principal of the Senior
Notes as if the Event of Default giving rise to such declaration had not
occurred and (y) all amounts advanced by the Indenture Trustee and its costs
and expenses and (ii) all Events of Default (other than the nonpayment of
principal of the Senior Notes that has become due solely by such acceleration)
have been cured or waived. (Indenture, Section 5.2).
If the Senior Notes have been declared due and payable following an
Event of Default, the Indenture Trustee may institute proceedings to collect
amounts due, exercise remedies as a secured party including foreclosure or sale
of the Lease Trust Estate, or elect to maintain the Lease Trust Estate and
continue to apply proceeds from the Lease Trust Estate as if there had been no
declaration of acceleration. The Indenture Trustee may not, however, unless it
is required to sell the Lease Trust Estate pursuant to the Lease Trust
Agreement as a result of the bankruptcy, insolvency or termination of the
Transferor or the bankruptcy or insolvency of Ford Credit Leasing, sell the
Lease Trust Estate following an Event of Default (other than the occurrence of
an Event of Default described in clauses (i) or (ii) above) unless (i) 100% of
the Senior Noteholders consent thereto, (ii) the proceeds of such sale are
sufficient to pay in full the principal of and the accrued interest on the then
outstanding Senior Notes, Subordinated Notes and Lease Trust Certificates or
(iii) the Indenture Trustee determines that the Lease Trust Estate would not be
sufficient on an ongoing basis to make all payments on the Senior Notes as such
payments would have become due if such obligations had not been declared due
and payable, and the Indenture Trustee obtains the consent of holders of
66-2/3% of the aggregate principal balance of the Senior Notes. The Indenture
Trustee may, but need not, obtain and rely upon an opinion of an independent
accountant or investment banking firm as to the sufficiency of the Lease Trust
Estate to pay interest and principal on the Senior Notes on an ongoing basis.
(Indenture, Section 5.4). Any sale of the Lease Trust Estate, other than a
sale resulting from the bankruptcy, insolvency or termination of Ford Credit
Leasing or the Transferor, is subject to a requirement that an Opinion of
Counsel be delivered to the effect that such sale will not cause FCTT or the
Issuer to be classified as an association (or publicly traded partnership)
taxable as a corporation for federal income tax purposes.
In the event of a sale of the Lease Trust Estate, either as a result
of the bankruptcy, insolvency or termination of the Transferor or the
bankruptcy or insolvency of Ford Credit Leasing, or following the occurrence of
an Event of Default under the circumstances described in the preceding
paragraph pursuant to the direction of the Indenture Trustee or the Senior
Noteholders, the proceeds of such sale will be distributed first to the
Indenture Trustee for amounts due as compensation or indemnity payments
pursuant to the terms of the Indenture; second to the Administrative Agent for
reimbursement of all outstanding Sale Proceeds Advances and Monthly Payment
Advances; third to the Administrative Agent for amounts due in respect of
unpaid Administrative Agent Fees; fourth to the Senior Noteholders to pay
interest which is due and unpaid (including any overdue interest), ratably,
without preference or priority between Classes; fifth to the Lease Trust
Paying Agent for deposit to the Cash Collateral Account for the payment of
interest which is due and unpaid (including any overdue interest) on the
Subordinated Notes; sixth to the Certificate Distribution Account for the
payment of interest which is due and unpaid (including any overdue interest) on
the Lease Trust Certificates; and seventh to the Senior Noteholders to pay
principal which is due and unpaid, ratably, without any distinction between
Classes. Any remaining amounts will be distributed to the Subordinated
Noteholders and the Lease Trust Certificateholders for amounts due and unpaid
in accordance with the
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terms of the Subordinated Notes and the Lease Trust Certificates, respectively.
(Indenture, Section 5.4).
Subject to the provisions of the Indenture relating to the duties of
the Indenture Trustee, in case an Event of Default occurs and is continuing
with respect to the Senior Notes, the Indenture Trustee will be under no
obligation to exercise any of the rights or powers under the Indenture at the
request or direction of any of the Senior Noteholders, if the Indenture Trustee
reasonably believes it will not be adequately indemnified against the costs,
expenses and liabilities which might be incurred by it in complying with such
request. Subject to such provisions for indemnification and certain
limitations contained in the Indenture, the holders of not less than a majority
of the aggregate principal balance of the Senior Notes will have the right to
direct the time, method and place of conducting any proceeding or any remedy
available to the Indenture Trustee or exercising any trust power conferred on
the Indenture Trustee, and the holders of not less than a majority of the
aggregate principal balance of the Senior Notes may, in certain cases, waive
any default with respect thereto, except a default in the payment of principal
or interest or a default in respect of a covenant or provision of the Indenture
that cannot be modified without the waiver or consent of all of the holders of
the outstanding Senior Notes. Until such time, if any, as Definitive Senior
Notes have been issued, the Indenture Trustee will act only in accordance with
the instructions of Cede, as nominee for DTC. However, under the rules,
regulations and procedures creating and affecting DTC and its operations, DTC
will act only in accordance with the instructions of the Participants to whom
Senior Notes are credited, which will in turn act in accordance with the
instructions of persons holding beneficial interests in such Senior Notes
through such Participants. Accordingly, although only Cede will be entitled to
vote under the Indenture, Senior Note Owners will be entitled to instruct DTC
as to the manner in which to vote. (Indenture, Sections 5.11 and 5.12).
No Senior Noteholder will have the right to institute any proceeding
with respect to the Indenture, unless (i) such Senior Noteholder previously has
given to the Indenture Trustee written notice of a continuing Event of Default,
(ii) the holders of not less than 25% of the aggregate principal balance of the
Senior Notes have made written request of the Indenture Trustee to institute
such proceeding in its own name as Indenture Trustee, (iii) such Senior
Noteholder or Senior Noteholders have offered the Indenture Trustee reasonable
indemnity, (iv) the Indenture Trustee has for 60 days failed to institute such
proceeding and (v) no direction inconsistent with such written request has been
given to the Indenture Trustee during such 60-day period by the holders of a
majority of the aggregate principal balance of the Senior Notes. (Indenture,
Section 5.6).
Neither the Indenture Trustee nor the Lease Trustee in their
respective individual capacities, nor any holder of a Subordinated Note or a
Lease Trust Certificate, nor any of their respective owners, beneficiaries,
agents, officers, directors, employees, successors or assigns will, in the
absence of an express agreement to the contrary, be personally liable for the
payment of interest on or principal of the Senior Notes or for the agreements
of the Issuer and the Lease Trustee, in its capacity as trustee, contained in
the Indenture.
Certain Covenants. The Issuer will not, among other things, (i)
except as expressly permitted by the Indenture, the Program Operating Lease and
the other Basic Documents, sell, transfer, exchange or otherwise dispose of any
of the assets of the Issuer, (ii) claim any credit on or make any deduction
from the principal and interest payable in respect of the Senior Notes (other
than amounts withheld under the Code or applicable state law) or assert any
claim against any present or former Senior Noteholder because of the payment of
taxes levied or assessed upon the Issuer or (iii) permit (x) the validity or
effectiveness of the Indenture to be impaired, (y) any person to be released
from any covenants or obligations with respect to the Senior Notes under the
Indenture except as may be expressly permitted thereby or (z) any lien, charge,
excise, claim, security interest, mortgage or other encumbrance to be created
on or extend to or otherwise arise upon or burden the assets of the Issuer or
any part thereof, or any interest therein or the proceeds therefrom.
(Indenture, Section 3.8).
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The Issuer may not engage in any activities other than financing,
acquiring, owning, leasing (subject to the lien of the Indenture), pledging and
managing the Series 1996-1 Certificates as contemplated by the Indenture and
the other Basic Documents. (Indenture, Section 3.12).
The Issuer will not incur, assume or guarantee any indebtedness other
than indebtedness incurred pursuant to the Senior Notes, the Subordinated Notes
and the Lease Trust Certificates or otherwise in accordance with the Basic
Documents. (Indenture, Section 3.13).
The Issuer will or will cause the Administrative Agent to deliver to
the Indenture Trustee on the second business day preceding each Payment Date
the Cash Collateral Account certificates and disbursement and payment
instructions as required pursuant to the Indenture. (Indenture, Section 8.3).
Replacement of the Indenture Trustee. Senior Noteholders holding not
less than a majority of the aggregate principal balance of the Senior Notes may
remove the Indenture Trustee without cause by so notifying the Indenture
Trustee and the Lease Trustee, and following such removal may appoint a
successor Indenture Trustee. Any successor Indenture Trustee must at all times
satisfy the requirements of Section 310(a) of Trust Indenture Act of 1939, as
amended and, in addition, have a combined capital and surplus of at least
$50,000,000 and a long term debt rating of investment grade or better by each
Rating Agency. (Indenture, Sections 6.8 and 6.11).
The Indenture Trustee may resign at any time by so notifying the Lease
Trustee and the Senior Noteholders. The Lease Trustee is required to remove
the Indenture Trustee if the Indenture Trustee (i) ceases to be eligible to
continue as the Indenture Trustee, (ii) is adjudged to be bankrupt or
insolvent, or (iii) otherwise becomes incapable of acting. Upon the
resignation or required removal of the Indenture Trustee, or the failure of the
Senior Noteholders to appoint a successor Indenture Trustee following the
removal without cause of the Indenture Trustee, the Lease Trustee will be
required promptly to appoint a successor Indenture Trustee. (Indenture,
Section 6.8).
Duties of Indenture Trustee. Except during the continuance of an
Event of Default, the Indenture Trustee will (i) perform such duties and only
such duties as are specifically set forth in the Indenture, (ii) rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, on certificates or opinions furnished to the Indenture Trustee which
conform to the requirements of the Indenture, and (iii) examine any such
certificates and opinions which are specifically required to be furnished to
the Indenture Trustee by the Indenture to determine whether or not they conform
to the requirements of the Indenture. Upon the continuance of an Event of
Default, the Indenture Trustee will be required to exercise the rights and
powers vested in it by the Indenture and use the same degree of care and skill
in the exercise thereof as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs. (Indenture, Section
6.1).
Compensation and Indemnity. The Administrative Agent will (i) pay to
the Indenture Trustee from time to time reasonable compensation for its
services, (ii) reimburse the Indenture Trustee for all expenses, advances and
disbursements reasonably incurred and (iii) indemnify the Indenture Trustee
for, and hold it harmless against, any and all losses, liability or expense
(including attorneys' fees) incurred by it in connection with the performance
of its duties. The Indenture Trustee will not be indemnified against any
loss, liability or expense incurred by it through its own willful misconduct,
negligence or bad faith, except that, the Indenture Trustee will not be liable
(i) for any error of judgment made by it in good faith unless it is proved that
the Indenture Trustee was negligent in ascertaining the pertinent facts, (ii)
with respect to any action it takes or omits to take in good faith in
accordance with a direction received by it from Senior Noteholders in
accordance with the terms of the Indenture, and (iii) for interest on any money
received by it except as the Indenture Trustee and the Lease Trustee may agree
in writing. The Indenture Trustee will not be deemed to have knowledge of any
event unless an
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officer of the Indenture Trustee has actual knowledge thereof or has received
written notice thereof in accordance with the provisions of the Indenture.
(Indenture, Sections 6.1 and 6.7).
Access to Senior Noteholder Lists. If Definitive Senior Notes are
issued in the limited circumstances set forth in "---- Definitive Senior
Notes," and the Indenture Trustee is not the Senior Note Registrar, the Lease
Trustee will furnish or cause to be furnished to the Indenture Trustee a list
of the names and addresses of the Senior Noteholders (i) as of each Record
Date, within five days thereafter and (ii) as of not more than 10 days prior to
the time such list is furnished, within 30 days after receipt by the Lease
Trustee of a written request therefor. (Indenture, Section 7.1).
Annual Compliance Statement. The Issuer will be required to file
annually with the Indenture Trustee a written statement as to the fulfillment
of its obligations under the Indenture. (Indenture, Section 3.9).
Satisfaction and Discharge of Indenture. The Indenture will be
discharged with respect to the collateral securing the Senior Notes upon the
delivery to the Indenture Trustee for cancellation of all the Senior Notes or,
with certain limitations, including receipt of certain opinions with respect to
tax matters, upon deposit with the Indenture Trustee of funds sufficient for
the payment in full of all of the Senior Notes (including interest and any fees
due and payable to the Lease Trustee or the Indenture Trustee). (Indenture,
Section 4.1).
Modification of Indenture. Without the consent of the Senior
Noteholders, the Lease Trustee, on behalf of the Issuer, and the Indenture
Trustee, upon request by the Issuer, may execute a supplemental indenture for
the purpose of adding to the covenants of the Issuer, curing any ambiguity,
correcting or supplementing any provision which may be inconsistent with any
other provision or making any other provision with respect to matters or
questions arising under the Indenture which will not be inconsistent with other
provisions of the Indenture. (Indenture, Section 9.1).
Without the consent of the holder of each outstanding Senior Note
affected thereby, however, no supplemental indenture may (i) change the Stated
Maturity of or interest on any Senior Note or reduce the principal amount
thereof, the interest rate specified thereon or the Redemption Price with
respect thereto or change any place of payment where, or the coin or currency
in which, any Senior Note or any interest thereon is payable, (ii) impair the
right to institute suit for the enforcement of certain provisions of the
Indenture regarding payment, (iii) reduce the percentage of the aggregate
principal balance of the Senior Notes the consent of the holders of which is
required for any such supplemental indenture or the consent of the holders of
which is required for any waiver of compliance with certain provisions of the
Indenture or of certain defaults thereunder and their consequences as provided
for in the Indenture, (iv) modify or alter the provisions of the Indenture
regarding the voting of Senior Notes held by the Issuer, the Transferor, the
Administrative Agent, an affiliate of any of them or any obligor on the Senior
Notes, (v) reduce the percentage of the aggregate principal balance of the
Senior Notes the consent of the holders of which is required to direct the
Indenture Trustee to sell or liquidate the Lease Trust Estate if the proceeds
of such sale would be insufficient to pay the principal balance and accrued but
unpaid interest on the Senior Notes, (vi) decrease the percentage of the
aggregate principal balance of the Senior Notes required to amend the sections
of the Indenture which specify the applicable percentage of the aggregate
principal balance of the Senior Notes necessary to amend the Indenture or the
other Basic Documents or (vii) permit the creation of any lien ranking prior to
or on a parity with the lien of the Indenture with respect to any of the
collateral for the Senior Notes or, except as otherwise permitted or
contemplated in the Indenture, terminate the lien of the Indenture on any such
collateral or deprive the holder of any Senior Note of the security afforded by
the lien of the Indenture. (Indenture, Section 9.2).
The Lease Trustee, on behalf of the Issuer, and the Indenture Trustee,
upon request by the Issuer, may also enter into supplemental indentures, with
the consent of holders of not less than a
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majority of the aggregate principal balance of the Senior Notes, and with
written notice to the Rating Agencies, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of the
Indenture or of modifying in any manner the rights of Senior Noteholders;
provided, that (x) such action will not, (i) as evidenced by an Opinion of
Counsel, materially adversely affect the interests of any Senior Noteholder and
(ii) as confirmed by each Rating Agency rating the Senior Notes, cause the then
current rating assigned to either Class of Senior Notes to be withdrawn or
reduced and (y) an Opinion of Counsel as to certain tax matters is delivered.
(Indenture, Section 9.1).
The Lease Trust Agreement requires the Lease Trustee to give the Lease
Trust Certificateholders 30 days written notice of any proposed supplemental
indenture if it materially adversely affects the Lease Trust Certificateholders
or if Senior Noteholders' consent is required and provides that the Lease
Trustee will not enter into such amendment unless Lease Trust
Certificateholders holding 25% or more of the principal balance of Lease Trust
Certificates consent in writing. See "Additional Document Provisions ---- The
Lease Trust Agreement."
Senior Notes Owned by Issuer, Transferor , Administrative Agent or
their Affiliates. Any Senior Notes owned by the Issuer, the Transferor , the
Administrative Agent or any of their affiliates will be entitled to benefits
under the Indenture equal and proportionate to the Senior Notes owned by others
(if any), except that such Senior Notes owned by the Issuer, the Transferor ,
the Administrative Agent or any of their affiliates will be deemed not to be
outstanding for the purpose of determining whether the requisite percentage of
Senior Noteholders have given any request, demand, authorization, direction,
notice, consent or other action under the Indenture and the other Basic
Documents (other than the commencement by the Issuer of a voluntary proceeding
in bankruptcy as described under "Additional Document Provisions ----
Bankruptcy Provisions ---- Issuer").
DESCRIPTION OF THE ADMINISTRATIVE AGENCY AGREEMENT
DUTIES OF THE ADMINISTRATIVE AGENT
The duties of the Administrative Agent with respect to the Series
1996-1 Assets are set forth in the Administrative Agency Agreement and the
Series 1996-1 Supplement. The Administrative Agent will manage, service,
administer, and make collections on the Series 1996-1 Leases using the same
degree of skill and attention that it exercises with respect to all comparable
retail automotive leases and retail installment sales contracts that it
services for itself or others ("Accepted Servicing Practices"). The
Administrative Agent will collect and post all payments, respond to inquiries
of Obligors, investigate delinquencies, commence legal proceedings to enforce
Series 1996-1 Leases against delinquent Obligors, send invoices to Obligors,
account for collections, furnish monthly and annual statements to the FCTT
Trustee with respect to distributions, make Sale Proceeds Advances and Monthly
Payment Advances, and pay Administrative Purchase Amounts. The Administrative
Agent will be required to take all necessary steps to maintain evidence of
FCTT's ownership on the certificate of title of each Series 1996-1 Leased
Vehicle. The Administrative Agent will obtain all licenses required to be held
by FCTT in connection with the ownership of Series 1996-1 Leases and Series
1996-1 Leased Vehicles. The Administrative Agent may contract with third
parties to perform its duties under the Administrative Agency Agreement, but
shall remain responsible for the performance of such duties. (Administrative
Agency Agreement, Sections 4.1 and 4.5).
The Administrative Agency Agreement also sets forth the duties of the
Administrative Agent with respect to the origination and purchase of Leases and
Leased Vehicles by FCTT and the obtaining of certificates of title for such
Leased Vehicles. See "FCTT ---- Lease Origination from Dealers and Assignment
to FCTT" and "---- Titling of Leased Vehicles."
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COLLECTION OF TOTAL MONTHLY PAYMENTS; EXTENSION OF LEASES
The Administrative Agent will collect all payments under the Series
1996-1 Leases. The Administrative Agent may grant extensions, rebates, or
adjustments on Series 1996-1 Leases in accordance with Accepted Servicing
Practices and in its discretion waive any late payment charge or any other fees
that may be collected in the ordinary course of servicing a Series 1996-1
Lease. (Administrative Agency Agreement, Section 4.2).
The Administrative Agent may grant an extension of the Lease Term (a
"Term Extension") if the Obligor requesting such extension is not in default
under the Series 1996-1 Lease at the time of such request and agrees to
continue to make Total Monthly Payments in the same amount as required under
the original terms of such Series 1996-1 Lease. Because the granting of a Term
Extension with respect to any Series 1996-1 Lease would be deemed to have a
material adverse effect on holders of the Series 1996-1 Certificates, the
Administrative Agent will be required to purchase the beneficial interest in
the related Series 1996-1 Leased Vehicle as of the date of such Term Extension.
See "---- Administrative Purchases."
The Administrative Agent may also extend the term of a Series 1996-1
Lease in accordance with Accepted Servicing Practices, by waiving the Total
Monthly Payment due in any month in exchange for extending the term of the
Series 1996-1 Lease for one or more additional months beyond the Scheduled
Lease End Date for each month for which the Total Monthly Payment is waived
(such extension, a "Payment Extension"). The Obligor under any Payment
Extension does not receive an increase in the aggregate number of miles which
the Series 1996-1 Leased Vehicle may be driven by the Obligor without incurring
an additional charge for excess mileage under the related Series 1996-1 Lease.
If the Administrative Agent grants Payment Extensions in excess of, in the
aggregate, three months beyond the Scheduled Lease End Date of a related Series
1996-1 Lease, it will purchase the beneficial interest in such Series 1996-1
Leased Vehicle as of the date of the granting of such extension.
(Administrative Agency Agreement, Sections 4.2 and 4.7).
REALIZATION ON LIQUIDATED LEASES
The Administrative Agent will use reasonable efforts (i) to repossess
any Series 1996-1 Leased Vehicle if it determines that eventual payment in full
of the related Series 1996-1 Lease is unlikely and (ii) to maximize Liquidation
Proceeds. Upon repossession, the Administrative Agent has discretion to repair
a damaged Series 1996-1 Leased Vehicle or sell such vehicle without repairs.
This determination will be based on whether the Administrative Agent believes
repairs will increase the related Liquidation Proceeds by an amount greater
than the cost of such repairs. (Administrative Agency Agreement, Section
4.3).
ADMINISTRATIVE PURCHASES
The Administrative Agent on behalf of Ford Credit and Ford Credit
Leasing, as holders of the EBCs, will be required to purchase the Issuer's
beneficial interest in any Series 1996-1 Asset as to which: either (i) any of
the Specific Eligibility Criteria and General Eligibility Criteria were not
satisfied on the Series 1996-1 Cut-Off Date; (ii) the Administrative Agent has
breached certain covenants in the Administrative Agency Agreement by either (a)
failing to make reasonable efforts to collect Total Monthly Payments from the
related Obligor, (b) failing to maintain record ownership in such Series 1996-1
Leased Vehicle, (c) changing the Retail Operating Lease Factor of such Series
1996-1 Lease, (d) modifying the number or amount of Monthly Payments due under
the Series 1996-1 Lease, except in connection with a Payment Extension, or (e)
otherwise impairing the rights of FCTT or the Issuer in such Series 1996-1
Lease or Series 1996-1 Leased Vehicle and, in each case, such breach continues
unremedied for a specified period; (iii) the related Series 1996-1 Leased
Vehicle has been relocated to a jurisdiction where FCTT is not qualified or
authorized to maintain evidence of the ownership of Series
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1996-1 Leased Vehicles; or (iv) the Administrative Agent has granted a Term
Extension. In addition, because the granting of Payment Extensions in excess
of, in the aggregate, three months would be deemed to breach a material
covenant of the Administrative Agent, the Administrative Agent will be required
to purchase the beneficial interest in the related Series 1996-1 Leased Vehicle
as of the date the proscribed Payment Extension is granted. The amount payable
for each such purchase will be the Administrative Purchase Amount of the Series
1996-1 Lease and Series 1996-1 Leased Vehicle. (Administrative Agency
Agreement, Sections 4.2, 4.5, 4.6 and 4.7; Series 1996-1 Supplement, Section
5.5).
SALE OF LEASED VEHICLES
On the Scheduled Lease End Date of a Series 1996-1 Lease, the Obligor
has the option to purchase the related Series 1996-1 Leased Vehicle for an
amount equal to or greater than its Residual Value. If the Obligor does not
purchase the Leased Vehicle, the Dealer may, at its option, purchase the Leased
Vehicle. If either the Obligor or the Dealer exercises such option, the
Administrative Agent, on behalf of FCTT will sell the Series 1996-1 Leased
Vehicle to the Dealer for an amount equal to the Residual Value thereof plus
any unpaid amounts owing from the related Obligor. If neither the related
Obligor nor the Dealer elects to purchase a Series 1996-1 Leased Vehicle upon
termination of the related Lease, the Dealer will inspect the Series 1996-1
Leased Vehicle and assess any charges in respect of Excess Wear and Tear and
Excess Mileage, and the Administrative Agent will sell such Series 1996-1
Leased Vehicle at auction, or otherwise in accordance with Accepted Servicing
Practices. The Sale Proceeds received by the Issuer with respect to a Series
1996-1 Leased Vehicle sold at auction will be limited to the Transferor
Purchase Option Price. With respect to each Series 1996-1 Leased Vehicle for
which the Transferor exercises its Transferor Leased Vehicle Purchase Option,
the Transferor will deposit the related Transferor Purchase Option Net Proceeds
into the Cash Collateral Account until the aggregate cumulative amount
deposited in respect of such Transferor Purchase Option Net Proceeds for all
such Series 1996-1 Leased Vehicles equals $_______, which is equal to 10% of
the Initial Pool Balance. Thereafter, the Transferor will retain any
Transferor Purchase Option Net Proceeds. To the extent that Transferor
Purchase Option Net Proceeds are deposited into the Cash Collateral Account,
such amounts will secure the Transferor's obligation to make Program Operating
Lease Payments to the Issuer. See "Series 1996-1 Certificates ---- Lease of
the Series 1996-1 Certificates to the Transferor" and "Risk Factors ----
Residual Value Risk." (Administrative Agency Agreement, Sections 5.1, 5.2 and
5.3; Series 1996-1 Supplement, Section 5.3).
If the Dealer determines that a Series 1996-1 Leased Vehicle requires
repairs in respect of Excess Wear and Tear and Excess Mileage, either the
Obligor will pay the estimated costs of such repairs or the Administrative
Agent will grant the Obligor a one-month Term Extension to permit the Obligor
to effect such repairs at its own expense. The Administrative Agent will
purchase the beneficial interest in the Series 1996-1 Leased Vehicle for the
Administrative Purchase Amount if it grants a Term Extension. See "----
Administrative Purchases." The Administrative Agent will apply any security
deposit or reconditioning reserve to pay any amounts owed in respect of
Uncollected Excess Wear and Tear or Excess Mileage which are not paid by the
Obligor. (Administrative Agency Agreement, Section 5.1).
Upon receipt of Sale Proceeds, the Administrative Agent will deliver
the related certificate of title to the Obligor, Dealer or other purchaser, as
the case may be. The Administrative Agent will deposit the Sale Proceeds from
the sale of Series 1996-1 Leased Vehicles (but not an amount in excess of the
Transferor Purchase Option Price) in the Collection Account and any Transferor
Purchase Option Net Proceeds in the Cash Collateral Account (but only to the
extent the aggregate cumulative amount deposited in respect of such Transferor
Purchase Option Net Proceeds is less than $_______) on the next following
Distribution Date (or on the business day preceding such Distribution Date, if
such Distribution Date is a Payment Date), or on the date it receives such
proceeds if any Monthly
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Remittance Condition has not been satisfied. (Administrative Agency Agreement,
Sections 5.2 and 5.3). See "Series 1996-1 Certificates ---- Lease of the
Series 1996-1 Certificates to the Transferor."
ADVANCES OF SALE PROCEEDS
If the Scheduled Lease End Date with respect to a Series 1996-1 Lease
occurs and the related Series 1996-1 Leased Vehicle is not sold by the last
business day of the Accrual Period in which the related Scheduled Lease End
Date occurred, the Administrative Agent will, on the business day preceding the
related Payment Date, make an advance (a "Sale Proceeds Advance") equal to the
Residual Value of such Series 1996-1 Leased Vehicle, but only if the
Administrative Agent determines, in its sole discretion, that such Sale
Proceeds Advance will be recoverable from the Sale Proceeds of the related
Series 1996-1 Leased Vehicle. To the extent such Sale Proceeds are
insufficient to reimburse the Sale Proceeds Advance, such Sale Proceeds
Advance will be reimbursed first from the Sale Proceeds of other Series 1996-1
Leased Vehicles and then, if required after the Senior Notes, Subordinated
Notes and Lease Trust Certificates have been paid in full, from a draw on the
Cash Collateral Account. (Administrative Agency Agreement, Section 5.4;
Series 1996-1 Supplement, Section 5.4).
VOLUNTARY EARLY TERMINATIONS, LIQUIDATED LEASES AND RECOVERIES
Upon termination of a Series 1996-1 Lease prior to its Scheduled Lease
End Date and receipt by the Administrative Agent of the related Voluntary Early
Termination Proceeds or Liquidation Proceeds, as the case may be, the
Administrative Agent will deliver the related certificate of title to the
purchaser, if any, of the related Series 1996-1 Leased Vehicle. From and after
such date the Series 1996-1 Certificates will represent a beneficial interest
in the Voluntary Early Termination Proceeds or Liquidation Proceeds and
Recoveries received with respect to such Series 1996-1 Asset and will no
longer represent an interest in such Series 1996-1 Lease or Series 1996-1
Leased Vehicle. (Administrative Agency Agreement, Section 5.5).
REMITTANCE OF PAYMENTS; ALLOCATION OF FUNDS
The Administrative Agent will apply Total Monthly Payments received
during each Collection Period from each Obligor in the following order of
priority to pay (i) current and overdue Monthly Payments and Use and Lease Tax
Amounts, in the chronological order in which such payments were due; and (ii)
current and overdue Vehicle Insurance and Maintenance Amounts due to the
related Dealer. (Administrative Agency Agreement, Section 6.1; Series 1996-1
Supplement, Section 5.2).
If on any Distribution Date any portion of a Monthly Payment due on a
Series 1996-1 Lease during the related Collection Period has not been received
from the Obligor, the Administrative Agent will apply an amount equal to the
lesser of (i) the amount of Payaheads credited to such Obligor and (ii) the
portion of such Monthly Payment not received to pay the Monthly Payment with
respect to such Series 1996-1 Lease, and reduce the amount credited to such
Obligor by the amount so applied. Payaheads received from an Obligor in any
Collection Period will be credited to such Obligor. (Administrative Agency
Agreement, Section 6.1).
The Administrative Agent will apply Sale Proceeds (up to the
Transferor Purchase Option Price, if applicable), Voluntary Early Termination
Proceeds and Recoveries which are not from Liquidated Leases received during a
Collection Period in the following order of priority: (i) to pay any sales, use
and lease taxes; (ii) to reduce the Adjusted Balance Subject to Lease Charges
of the related Series 1996-1 Lease until such Adjusted Balance Subject to Lease
Charges has been reduced to zero; (iii) to pay Uncollected Excess Wear and Tear
and Excess Mileage charges, if any; and (iv) as a Total Monthly Payment until
an amount equal to the Total Monthly Payment due in such Collection Period has
been
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credited as set forth in the first paragraph of this section. (Administrative
Agency Agreement, Section 6.1).
The Administrative Agent will apply Liquidation Proceeds and
Recoveries from Liquidated Leases received during a Collection Period in the
following order of priority: (i) to pay any sales, use and lease taxes; (ii) to
reduce the Adjusted Balance Subject to Lease Charges until such Adjusted
Balance Subject to Lease Charges has been reduced to zero and (iii) as a Total
Monthly Payment until an amount equal to the Total Monthly Payment due in such
Collection Period has been credited as set forth in the first paragraph of this
section. (Administrative Agency Agreement, Section 6.1).
The Administrative Agent will pay any Use and Lease Tax Amounts and
any other sales, use and lease taxes and any Vehicle Insurance and Maintenance
Amounts due in connection with a payment received from an Obligor to the
appropriate tax authorities and originating Dealers, respectively, and such
amounts will not be available to pay interest on and principal of the Senior
Notes, the Subordinated Notes or the Lease Trust Certificates. (Administrative
Agency Agreement, Section 6.1).
MONTHLY PAYMENT ADVANCES
If one or more Monthly Payments due (or any portion thereof) with
respect to a Series 1996-1 Lease during any Accrual Period has not been
deposited to the Collection Account as of the last day of such Accrual Period,
the Administrative Agent will make an advance (a "Monthly Payment Advance") in
an amount equal to the sum of the Monthly Payments due with respect to such
Series 1996-1 Lease during such Accrual Period minus amounts received from the
related Obligor, but only if the Administrative Agent determines, in its sole
discretion, that such Monthly Payment Advance will be recoverable from
subsequent Monthly Payments on such Series 1996-1 Lease. To the extent
subsequent Monthly Payments with respect to such Series 1996-1 Lease are
insufficient to reimburse the Monthly Payment Advance, such Monthly Payment
Advance will be reimbursed first from Collections (other than Sale Proceeds)
with respect to other Series 1996-1 Leases and then, if required after the
Senior Notes, Subordinated Notes and Lease Trust Certificates have been paid in
full, from a draw on the Cash Collateral Account. (Administrative Agency
Agreement, Section 6.3; Series 1996-1 Supplement, Section 5.4).
STATEMENTS TO HOLDERS
On each Distribution Date, the FCTT Trustee will deliver to the Lease
Trustee a statement relying on the information included in the certificate of
the Administrative Agent described in "---- Reporting" for the related
Collection Period, setting forth for such Collection Period the following
information with respect to the Series 1996-1 Assets: (i) the aggregate Monthly
Payments received by the Administrative Agent with respect to the Series 1996-1
Assets; (ii) the Pool Balance as of the beginning and end of such Collection
Period and the portion of such Pool Balance constituting the aggregate Residual
Values of the Series 1996-1 Leased Vehicles; (iii) the amount of the
Administrative Agent Fee payable to the Administrative Agent; (iv) the Series
1996-1 Credit Loss; (v) the aggregate Administrative Purchase Amounts paid;
(vi) the aggregate Monthly Scheduled Termination Sale Proceeds, Voluntary Early
Termination Proceeds, Liquidation Proceeds and Recoveries received by the
Administrative Agent (separately stated); (vii) the aggregate amount of
Payaheads credited to Obligors and the aggregate amount of Payaheads either
held by the Administrative Agent or on deposit in the Payahead Account as of
the beginning and end of the related Collection Period; (viii) the outstanding
Sale Proceeds Advances as of the beginning and end of the related Collection
Period and the aggregate Residual Values of those Series 1996-1 Leased Vehicles
with respect to which the related Series 1996-1 Leases have expired but have
not been sold as of the beginning and end of the related Collection Period; and
(ix) the outstanding Monthly Payment Advances as of the beginning and end of
the related Collection Period and the outstanding amount of Monthly Payments
which were due but
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not collected from the related Obligors as of the beginning and end of the
related Collection Period. In addition to the foregoing, on each Payment Date
the FCTT Trustee will include in such statement: (i) the Series 1996-1 Credit
Loss with respect to each of the three preceding Collection Periods; and (ii)
the Series 1996-1 Residual Loss with respect to each of the three preceding
Collection Periods. (Administrative Agency Agreement, Section 6.4; Series
1996-1 Supplement, Section 6.1).
NO RESIGNATION
The Administrative Agent may not resign from its obligations and
duties under the Administrative Agency Agreement unless, as evidenced by an
Opinion of Counsel, the performance of its duties is no longer permissible
under applicable law. No such resignation will become effective until the FCTT
Trustee or a successor Administrative Agent has assumed the responsibilities
and obligations of the Administrative Agent. (Administrative Agency Agreement,
Section 7.2).
ADMINISTRATIVE AGENT EVENTS OF DEFAULT
Each of the following will constitute an event of default under the
Administrative Agency Agreement (each, an "Administrative Agent Event of
Default"): (i) failure by the Administrative Agent to make any distribution
required by the Administrative Agency Agreement or the Series 1996-1 Supplement
for three business days after written notice of such failure to the
Administrative Agent or after discovery of such failure by the Administrative
Agent; (ii) any failure by the Administrative Agent to observe or to perform in
any material respect any of its covenants or agreements in the Administrative
Agency Agreement or the Series 1996-1 Supplement, which failure materially
adversely affects the holders of the EBCs, the Issuer, as holder of the Series
1996-1 Certificates, or any other holder of an SBC, and continues for a period
of 30 days after written notice of such failure to the Administrative Agent or
after discovery of such failure by the Administrative Agent; (iii) any
representation, warranty, report or certification of the Administrative Agent
in, or pursuant to, the Administrative Agency Agreement or the Series 1996-1
Supplement was incorrect when made, which has a material adverse effect on any
holder of an EBC, the Issuer, or any other holder of an SBC, and continues for
a period of 30 days after written notice thereof to the Administrative Agent or
after discovery of such failure by the Administrative Agent; or (iv) the
occurrence of certain events of bankruptcy, insolvency, receivership or
liquidation with respect to the Administrative Agent; provided, however, that
the occurrence of an event set forth in clauses (i), (ii), and (iii) with
respect to Series 1996-1 will be an Administrative Agent Event of Default only
with respect to Series 1996-1 and will not be an Administrative Agent Event of
Default with respect to any other Series or the EBCs. (Administrative Agency
Agreement, Section 7.1).
Upon the occurrence of any Administrative Agent Event of Default the
sole remedy available to the holders of the EBCs and the SBCs will be to remove
the Administrative Agent and appoint a successor Administrative Agent. See
"---- Removal of the Administrative Agent."
REMOVAL OF THE ADMINISTRATIVE AGENT
The Transferor, with the consent of the Indenture Trustee, acting at
the direction of 100% of the Senior Noteholders, and the Lease Trustee, acting
at the direction of 66-2/3% of the Lease Trust Certificateholders, may at any
time, for any reason, with respect to the Series 1996-1 Assets only, remove the
Administrative Agent and appoint a substitute Administrative Agent. Upon
appointment, the substitute Administrative Agent will assume the rights and
obligations of the Administrative Agent under the Administrative Agency
Agreement with respect to administering and servicing the Series 1996-1 Assets.
Until the appointment of such substitute Administrative Agent, the predecessor
Administrative Agent will continue to perform its duties and obligations with
respect to administering and servicing the Series 1996-1 Assets. No substitute
Administrative Agent will have any
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responsibilities with respect to the purchase of additional Leases and Leased
Vehicles by FCTT. (Administrative Agency Agreement, Section 7.1; Indenture,
Section 6.13).
Upon the occurrence of an Administrative Agent Event of Default, the
FCTT Trustee may, to the extent such Administrative Agent Event of Default
relates (i) to all FCTT Assets, upon direction of the holders of the Series
1996-1 Certificates (which for this purpose will be the Indenture Trustee
acting at the direction of a majority by outstanding principal balance of the
Senior Noteholders so long as any of the Senior Notes are outstanding), all
holders of any other SBCs and the holders of the EBCs (excluding Ford Credit
and Ford Credit Leasing or any other affiliate of the Administrative Agent),
terminate all of the rights and obligations of the Administrative Agent under
the Administrative Agency Agreement with respect to all FCTT Assets, or (ii)
only to the Series 1996-1 Assets, upon direction of the holders of the Series
1996-1 Certificates (which for this purpose will be the Indenture Trustee
acting at the direction of a majority by outstanding principal balance of the
Senior Noteholders, so long as any of the Senior Notes are outstanding),
terminate all of the rights and obligations of the Administrative Agent under
the Administrative Agency Agreement and the Series 1996-1 Supplement, with
respect to the Series 1996-1 Assets. In each case, the FCTT Trustee will
effect such termination by delivering notice thereof to the Administrative
Agent (with a copy to each Rating Agency then rating the Senior Notes, the
Lease Trust Certificates and any other securities based on any SBCs affected by
such Administrative Agent Event of Default). (Administrative Agency Agreement,
Section 7.1).
APPOINTMENT OF A SUCCESSOR
Upon termination or resignation of the Administrative Agent, the
predecessor Administrative Agent will continue to perform its functions as
Administrative Agent, in the case of termination of the Administrative Agent,
until the earlier of the date specified in the termination notice or, if no
such date is specified therein, the date of the Administrative Agent's receipt
of such notice and, in the case of resignation of the Administrative Agent,
until the later of (i) 45 days after the delivery to the FCTT Trustee of the
written resignation notice and (ii) the date upon which the predecessor
Administrative Agent becomes unable to act as Administrative Agent, as
specified in the resignation notice and accompanying Opinion of Counsel.
(Administrative Agency Agreement, Section 7.3).
In the event of the Administrative Agent's termination with respect to
all FCTT Assets as a result of an Administrative Agent Event of Default or
resignation, the FCTT Trustee, acting at the direction of the holders of the
EBCs and the outstanding SBCs will appoint a successor Administrative Agent.
In the event of a termination of the Administrative Agent with respect to the
Series 1996-1 Assets only, the FCTT Trustee, acting at the direction of the
holders of the Series 1996-1 Certificates (which for this purpose will be the
Indenture Trustee so long as any of the Senior Notes are outstanding) will
appoint a successor Administrative Agent. In each such case, the FCTT Trustee
will have the right to approve the successor Administrative Agent, such
approval not to be unreasonably withheld. If a successor Administrative Agent
is not appointed by the effective date of the predecessor Administrative
Agent's resignation or termination, then the FCTT Trustee will act as successor
Administrative Agent. If the FCTT Trustee is legally unable to act as
Administrative Agent, then the FCTT Trustee will be required to appoint, or
petition a court of competent jurisdiction to appoint, any established
institution, having a net worth of not less than $100,000,000 and whose regular
business includes the servicing of retail automotive leases and selling
vehicles at the termination of leases, as the successor Administrative Agent.
(Administrative Agency Agreement, Section 7.3).
Upon appointment, the successor Administrative Agent will assume all
of the rights and obligations of the Administrative Agent under the
Administrative Agency Agreement; provided, however, that no successor
Administrative Agent will have any responsibilities with respect to the
purchase of additional Leases and Leased Vehicles by FCTT or with respect to
making Monthly Payment Advances or Sale Proceeds Advances. (Administrative
Agency Agreement, Section 7.3).
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Any compensation payable to a successor Administrative Agent may not
be in excess of that permitted the predecessor Administrative Agent unless the
holders of the EBCs bear such excess costs exclusively. (Administrative Agency
Agreement, Section 7.3).
Any predecessor Administrative Agent will be entitled to reimbursement
for any outstanding Sale Proceeds Advances and Monthly Payment Advances to the
extent funds are available therefor. (Administrative Agency Agreement, Section
7.4).
CUSTODY OF LEASE FILES
The Administrative Agent will be the custodian of the Lease Files
(including certificates of title) for FCTT, including with respect to the
Series 1996-1 Assets. The Administrative Agent will be required to maintain
accurate and complete accounts, records, and computer systems pertaining to
each Lease File and to conduct, or cause to be conducted, periodic audits of
the Lease Files and of the related accounts, records, and computer systems.
The Administrative Agent will maintain each Lease File at (i) one of
the offices specified in the Administrative Agency Agreement, (ii) at such
other office (which may be a third party contracted by the Administrative Agent
to hold Lease Files) as the Administrative Agent specifies to the FCTT Trustee
by written notice not later than 90 days after any change in location or (iii)
at one of the offices included in a list delivered to the FCTT Trustee not less
frequently than every 90 days. The Administrative Agent will make available
to the FCTT Trustee, the Lease Trustee, and the Indenture Trustee a list of
locations of the Lease Files, the Lease Files, and the related accounts,
records, and computer systems maintained by the Administrative Agent at such
times as the FCTT Trustee, the Lease Trustee or the Indenture Trustee may
instruct. As soon as practicable after any termination or resignation of the
Administrative Agent, the Administrative Agent will deliver the Lease Files and
the related accounts and records maintained by the Administrative Agent to the
FCTT Trustee or any successor Administrative Agent.
The Administrative Agent as custodian of the Lease Files will
indemnify the FCTT Trustee, the Issuer, and the Indenture Trustee for any and
all liabilities that result from any improper act or omission of the
Administrative Agent with respect to the Lease Files pertaining to the Series
1996-1 Assets. The Administrative Agent will not be liable for claims
resulting from the willful misfeasance, bad faith, or negligence of the FCTT
Trustee with respect to the Lease Files. (Administrative Agency Agreement,
Section 4.4).
REPORTING
On or before the tenth day of each calendar month, the Administrative
Agent will deliver to the FCTT Trustee a certificate containing information
relating to the distribution, on the following Distribution Date (or on the
business day preceding such Distribution Date, if such Distribution Date is a
Payment Date), of Collections from the preceding Collection Period and the
information the FCTT Trustee will provide to the Lease Trustee on such
Distribution Date, as described in "---- Statements to Holders."
(Administrative Agency Agreement, Section 4.9).
On or before April 30th of each year, the Administrative Agent will
deliver to the FCTT Trustee an officer's certificate, dated as of December 31
of the preceding calendar year, stating that (i) a review of the activities of
the Administrative Agent during the preceding 12-month period and of its
performance under the Administrative Agency Agreement and the Series 1996-1
Supplement has been made under such officer's supervision and (ii) to the best
of such officer's knowledge, based on such review, the Administrative Agent
has fulfilled all of its obligations under the Administrative Agency Agreement
and the Series 1996-1 Supplement throughout such period, or, if there has been
a default
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in the fulfillment of any such obligation, specifying each such default known
to such officer and the nature and status thereof. (Administrative Agency
Agreement, Section 4.10).
The Administrative Agent will be required to deliver to the FCTT
Trustee, within five business days of having obtained knowledge thereof,
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 Administrative Agent Event
of Default. (Administrative Agency Agreement, Section 4.10).
On or before April 30 of each year beginning April 30, 199_, a firm of
independent certified public accountants, who may also render other services to
the Administrative Agent or to Ford or any affiliate of either of them, will
deliver a report to the Administrative Agent, the FCTT Trustee, the Lease
Trustee and the Indenture Trustee (with a copy to each Rating Agency then
rating the Senior Notes and the Lease Trust Certificates), stating that such
firm has audited the financial statements of the Administrative Agent for the
prior calendar year and that such audit (i) was made in accordance with
generally accepted auditing standards, (ii) included procedures relating to
retail automotive leases serviced for others in accordance with applicable
industry standards, and (iii) except as described in such report, disclosed no
exceptions or errors in the records relating to the Series 1996-1 Leases
serviced that, in the firm's opinion, should be included in such report.
(Administrative Agency Agreement, Section 4.11).
ADDITIONAL DOCUMENT PROVISIONS
THE LEASE TRUST AGREEMENT
Authority and Duties of the Lease Trustee. The Lease Trustee will
administer the Issuer in the interest of the Lease Trust Certificateholders,
subject to the lien of the Indenture and to the obligations of the Issuer
under the Subordinated Notes , in accordance with the Lease Trust Agreement and
the other Basic Documents. (Lease Trust Agreement, Section 6.2).
The Transferor, in its capacity as holder of the Lease Trust
Certificates initially acquired by it, may, by written instruction, direct the
Lease Trustee in the administration of the Issuer; provided, that such
instruction shall not, as evidenced by an Opinion of Counsel, materially
adversely affect the Senior Noteholders, Subordinated Noteholders or Lease
Trust Certificateholders. However, the Lease Trustee will not be required to
follow any such instruction if it reasonably determines or is advised by
counsel that so doing (i) is likely to result in liability to the Lease
Trustee, (ii) is contrary to the terms of the Lease Trust Agreement or any
other Basic Document, or (iii) is unlawful. (Lease Trust Agreement, Section
6.3).
The Lease Trustee will not be required to perform any of the
obligations of the Issuer under the Lease Trust Agreement or the other Basic
Documents that are required to be performed by (i) the Administrative Agent
under the Administrative Agency Agreement or the Series 1996-1 Supplement, (ii)
the Transferor under the Transfer Agreement or the Program Operating Lease or
(iii) the Indenture Trustee under the Indenture. (Lease Trust Agreement,
Section 7.1).
Restrictions on Actions by Lease Trustee. The Lease Trustee may not
(i) initiate or settle any claim or lawsuit involving the Issuer (unless
brought by the Administrative Agent to collect amounts owed under a Series
1996-1 Lease), (ii) amend the Indenture where Senior Noteholder consent is
required, (iii) amend the Indenture where Senior Noteholder consent is not
required if such amendment materially adversely affects the Lease Trust
Certificateholders or (iv) amend any Basic Document other than the Indenture
if such amendment materially adversely affects the Lease Trust
Certificateholders, unless (a) the Lease Trustee provides 30 days written
notice thereof to the Lease Trust Certificateholders and the Rating Agencies
and (b) Lease Trust Certificateholders holding at least 25% of the
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aggregate principal balance of the Lease Trust Certificates do not object in
writing to any such proposed amendment within 30 days of such notice. (Lease
Trust Agreement, Section 4.1).
Actions by Lease Trust Certificateholders with Respect to Certain
Matters. The Lease Trustee may not, except upon the occurrence of an
Administrative Agent Event of Default subsequent to the payment in full of the
Senior Notes and in accordance with the written directions of Lease Trust
Certificateholders holding 100% of the aggregate principal balance of the Lease
Trust Certificates, remove the Administrative Agent with respect to the Series
1996-1 Assets or appoint a successor Administrative Agent with respect thereto;
provided, however, that the Lease Trustee will not be required to follow any
directions of the Lease Trust Certificateholders if so doing would be contrary
to any obligation of the Lease Trustee or the Issuer. The Lease Trustee may
not sell the Series 1996-1 Certificates except in the event of the bankruptcy
and dissolution of the Issuer or Ford Credit Leasing or upon an event of
default under the Program Operating Lease. Upon a sale of the Series 1996-1
Certificates following such a bankruptcy or dissolution, the Series 1996-1
Assets will be distributed to the purchaser and will no longer constitute FCTT
Assets, and the Series 1996-1 Vehicles will be retitled as directed by the
purchaser. (Lease Trust Agreement, Sections 4.2 and 4.4).
The right of the Transferor or Lease Trust Certificateholders to take
any action affecting the Lease Trust Estate will be subject to the rights of
the Indenture Trustee under the Indenture.
Resignation and Removal of the Lease Trustee. The Lease Trustee may
resign at any time upon written notice to the Administrative Agent, the
Transferor and the Lease Trust Certificateholders, whereupon the Transferor
will be obligated to appoint a successor Lease Trustee. The Transferor or the
Lease Trust Certificateholders holding not less than a majority of the
aggregate principal balance of the Lease Trust Certificates may remove the
Lease Trustee if the Lease Trustee ceases to be eligible, becomes insolvent or
becomes legally unable to act. Upon removal of the Lease Trustee, the
Transferor or the Lease Trust Certificateholders holding not less than a
majority of the aggregate principal balance of the Lease Trust Certificates
will appoint a successor Lease Trustee. The Transferor will be required to
deliver written notice to the Rating Agencies of any resignation or removal of
the Lease Trustee. (Lease Trust Agreement, Section 10.2).
The Lease Trustee, and any successor thereto, must at all times (i) be
able to exercise corporate trust powers, (ii) be subject to supervision or
examination by federal or state authorities, (iii) have a combined capital and
surplus of $50,000,000 and (iv) have a long-term debt rating of investment
grade by each of the Rating Agencies or be otherwise acceptable to the Rating
Agencies. (Lease Trust Agreement, Section 10.1). Any co-trustee or separate
trustee appointed for the purpose of meeting applicable state requirements will
not be required to meet these eligibility requirements. (Lease Trust
Agreement, Section 10.5).
Termination. The Lease Trust Agreement will terminate (i) upon the
final distribution of all funds or other property or proceeds of the Lease
Trust Estate in accordance with the terms of the Indenture and the final
distribution on the Subordinated Notes and the Lease Trust Certificates
pursuant to the Lease Trust Agreement, (ii) upon the occurrence of certain
events of bankruptcy, insolvency, receivership or liquidation with respect to
the Transferor or Ford Credit Leasing, or (iii) upon the exercise by the
Administrative Agent of its option to purchase the Series 1996-1 Certificates
on any Payment Date on which the Pool Balance has declined to less than 10% of
the Initial Pool Balance. Upon termination of the Lease Trust Agreement
pursuant to clause (ii), the Lease Trustee will direct the Indenture Trustee to
sell the assets of the Lease Trust Estate, other than amounts on deposit in the
Payment Account, in a commercially reasonable manner and on commercially
reasonable terms. (Lease Trust Agreement, Sections 9.1 and 9.2). The
Indenture Trustee will apply the proceeds of such sale to pay amounts owed to
the Indenture Trustee and interest on and principal of the Senior Notes,
Subordinated Notes and Lease Trust Certificates in accordance with the terms of
the Indenture. See "Description of the Senior Notes ---- Indenture ----
Remedies."
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Liabilities and Indemnification. The Transferor as holder of the
Lease Trust Certificates and a portion of the Subordinated Notes initially
acquired by it and Ford Credit Leasing as an assignee of an interest therein
will each be directly liable for any claims against the Issuer (not including
payment of principal and interest on the Senior Notes, Subordinated Notes and
Lease Trust Certificates), as if the Issuer were a partnership and the
Transferor and Ford Credit Leasing were general partners thereof. (Lease Trust
Agreement, Section 2.7). The Transferor and Ford Credit Leasing, in such
capacities, will indemnify the Lease Trustee for any expenses incurred by the
Lease Trustee in the performance of its duties under the Lease Trust Agreement.
The Transferor and Ford Credit Leasing will not be entitled to make any claim
upon the Lease Trust Estate for the payment of any such liabilities or
indemnified expenses. (Lease Trust Agreement, Section 8.2). The Transferor
and Ford Credit Leasing will not indemnify the Lease Trustee for expenses
resulting from the willful misconduct, bad faith or negligence of the Lease
Trustee, or for the inaccuracy of any representation or warranty of the Lease
Trustee in the Lease Trust Agreement. The Lease Trustee will not be liable for
(i) any error of judgment made by an officer of the Lease Trustee, (ii) any
action taken or omitted to be taken in accordance with the instructions of any
Lease Trust Certificateholder or Subordinated Noteholder, the Indenture
Trustee, the Transferor or the Administrative Agent, (iii) the interest on or
principal of the Senior Notes, the Subordinated Notes or the Lease Trust
Certificates and (iv) the default or misconduct of the Administrative Agent,
the Transferor or the Indenture Trustee. (Lease Trust Agreement, Section
7.1).
Subordinated Notes. The Subordinated Notes will be issued pursuant to
the Lease Trust Agreement and initially will be retained by the Transferor.
The Subordinated Notes are unsecured and are subordinated in right of payment
to the Senior Notes to the extent described herein. See "Description of the
Senior Notes ---- The Indenture Cash Flows." If a default occurs with respect
to the Issuer's obligations under the Subordinated Notes while the Senior Notes
are outstanding, the Subordinated Noteholders are not permitted to declare the
principal balance of the Subordinated Notes to be immediately due and payable.
Lease Trust Certificates Owned by Issuer, Transferor , Administrative
Agent or their Affiliates. Any Lease Trust Certificates owned by the Issuer,
the Transferor , the Administrative Agent or any of their affiliates will be
entitled to benefits under the Lease Trust Agreement equal and proportionate to
the Lease Trust Certificates owned by others, except that such Lease Trust
Certificates owned by the Issuer, the Transferor , the Administrative Agent or
any of their affiliates will be deemed not to be outstanding for the purpose of
determining whether the requisite percentage of Lease Trust Certificateholders
have given any request, demand, authorization, direction, notice, consent or
other action under the Lease Trust Agreement and the other Basic Documents
(other than the commencement by the Issuer of a voluntary proceeding in
bankruptcy as described under "---- Bankruptcy Provisions ---- Issuer").
REPRESENTATIONS, WARRANTIES AND COVENANTS
The Administrative Agent, in the Series 1996-1 Supplement, and each of
Ford Credit and Ford Credit Leasing, in the Asset Contribution Agreement, will
represent and warrant that each Se ries 1996-1 Lease and Series 1996-1 Leased
Vehicle meet the Specific Eligibility Criteria set forth in "The Leases and the
Leased Vehicles ---- Eligibility Criteria" and certain other eligibility
criteria (the "General Eligibility Criteria") including, among other things,
that (i) each Series 1996-1 Leased Vehicle was titled in the name of "Ford
Credit Titling Trust," "Ford Credit Titling Trust, Comerica Bank [or applicable
co-trustee or separate trustee], Trustee" or such substantially similar words
acceptable to the relevant governmental authority; (ii) the Residual Value of
each Series 1996-1 Leased Vehicle does not exceed an amount established by the
Administrative Agent consistent with its policies and practices regarding the
setting of residual values as applied with respect to closed-end retail
automobile and light truck leases; (iii) all of the originating Dealer's right,
title and interest in such Series 1996-1 Lease and the related Series 1996-1
Leased Vehicle was validly assigned by such Dealer to FCTT; (iv) each Series
1996-1 Lease was originated by a Dealer in the ordinary course of its business
and in compliance
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with the Administrative Agent's normal credit and collection policies and
practices and contains customary and enforceable provisions; (v) at its
inception, and at the Series 1996-1 Cut-Off Date, each Series 1996-1 Lease
complied in all material respects with all requirements of applicable federal,
state, and local laws and regulations; (vi) each Series 1996-1 Lease represents
the genuine, legal, valid and binding payment obligation in writing of the
related 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
and general principles of equity; (vii) none of the Series 1996-1 Leases is an
obligation of the United States of America or any state or of any agency,
department, or instrumentality of the United States of America or any state;
(viii) as of the date of the Series Specification Notice with respect to Series
1996-1, no Series 1996-1 Lease had been satisfied, subordinated, rescinded,
cancelled or terminated; (ix) no provision (other than the assessment of a
security deposit or reconditioning reserve) of a Series 1996-1 Lease has been
waived; (x) no right of rescission, setoff, counterclaim, or defense has been
asserted or threatened with respect to any Series 1996-1 Lease; (xi) each
Obligor, to the best knowledge of the Administrative Agent, has obtained or
agreed to obtain physical damage insurance and liability insurance covering the
Series 1996-1 Leased Vehicle as required under the related Series 1996-1 Lease;
(xii) no Series 1996-1 Asset has been sold, transferred, assigned, or pledged
by any Dealer to any person or entity other than FCTT; (xiii) the FCTT Trustee,
for the benefit of the Issuer, has good and marketable title to each Series
1996-1 Lease and each Series 1996-1 Leased Vehicle, free and clear of all
liens, encumbrances, security interests, and rights of others, including liens
or claims for work, labor or material relating to such Series 1996-1 Leased
Vehicle; (xiv) no Series 1996-1 Leased Vehicle or Series 1996-1 Lease is
subject to the laws of, and no Series 1996-1 Lease was originated in, any
jurisdiction under which the sale, transfer, and assignment of such Series
1996-1 Lease and Series 1996-1 Leased Vehicle to FCTT or of a beneficial
interest in such Series 1996-1 Lease or Series 1996-1 Leased Vehicle pursuant
to transfers of Series 1996-1 Certificates is unlawful, void, or voidable; (xv)
no Dealer has entered into any agreement with any Obligor that prohibits,
restricts or conditions the assignment of any portion of the related Series
1996-1 Lease; (xvi) all filings (including, without limitation, UCC filings)
necessary in any jurisdiction to give the FCTT Trustee, on behalf of FCTT, a
first perfected ownership interest in each Series 1996-1 Lease have been made;
(xvii) each Series 1996-1 Lease constitutes "chattel paper" as defined in the
UCC; (xviii) there is only one original of each Series 1996-1 Lease, which is
held by the Administrative Agent on behalf of FCTT; and (xix) each Series
1996-1 Lease is a "true lease" for federal income tax purposes. (Series 1996-1
Supplement, Section 3.1; Asset Contribution Agreement, Section 3.2). See
"Description of Administrative Agency Agreement ---- Administrative Purchases"
for circumstances in which a breach of the foregoing representations will cause
a purchase of the beneficial interest in a Series 1996-1 Lease and Series
1996-1 Leased Vehicle.
AMENDMENT PROVISIONS
General. So long as any of the Senior Notes are outstanding, the
Issuer's rights in the Series 1996-1 Certificates will be subject to the lien
of the Indenture, and after the Senior Notes have been paid in full will be
subject to the Program Operating Lease. The Indenture Trustee will be the
holder of the Series 1996-1 Certificates for purposes of determining whether
any proposed amendment to the FCTT Agreement, the Administrative Agency
Agreement, the Series 1996-1 Supplement and the RCL Trust Agreement will
materially adversely affect the interests of the holder of the Series 1996-1
Certificates.
The FCTT Agreement, the RCL Trust Agreement and the Administrative
Agency Agreement (including the Series 1996-1 Supplement) each may be amended
without the consent of the holder of the Series 1996-1 Certificates; provided,
however, (x) that such amendment may not, as evidenced by an Opinion of
Counsel, materially adversely affect the interests of the holder of the Series
1996-1 Certificates, (y) as confirmed by each Rating Agency, such amendment may
not cause the then current rating assigned to either Class of Senior Notes or
the Lease Trust Certificates to be withdrawn or reduced and (z) an Opinion of
Counsel as to certain tax matters is delivered. Notwithstanding the
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foregoing, the FCTT Agreement, the RCL Trust Agreement and the Administrative
Agency Agreement may be amended at any time by the parties thereto to the
extent reasonably necessary to assure that none of FCTT, the Issuer or the
Transferor will be classified as an association (or publicly traded
partnership) taxable as a corporation for federal income tax purposes.
The Program Operating Lease and Asset Contribution Agreement each may
be amended without the consent of the Noteholders or Lease Trust
Certificateholders; provided, however, (x) that such amendment may not, as
evidenced by an Opinion of Counsel, materially adversely affect the interests
of the Senior Noteholders or Lease Trust Certificateholders (unless 100% of the
Senior Noteholders and Lease Trust Certificateholders materially adversely
affected consent thereto), (y) as confirmed by each Rating Agency, that such
amendment may not cause the then current rating assigned to either Class of
Senior Notes or the Lease Trust Certificates to be withdrawn or reduced and (z)
an Opinion of Counsel as to certain tax matters is delivered. Notwithstanding
the foregoing, the Program Operating Lease and the Asset Contribution Agreement
may be amended at any time by the parties thereto to the extent reasonably
necessary to assure that none of FCTT, the Issuer or the Transferor will be
classified as an association (or publicly traded partnership) taxable as a
corporation for federal income tax purposes.
Amendment of the Lease Trust Agreement and Lease Trust Paying Agent
Agreement. The Lease Trust Agreement and Lease Trust Paying Agent Agreement
each may be amended by the Transferor and the Lease Trustee, with prior
written notice to the Rating Agencies, without the consent of any of the Senior
Noteholders, the Subordinated Noteholders or the Lease Trust
Certificateholders, to cure any ambiguity or defect therein, to correct or
supplement any provisions therein, to add any provisions thereto or change in
any manner or eliminate any of the provisions therein or to modify in any
manner the rights of the Senior Noteholders, the Subordinated Noteholders or
the Lease Trust Certificateholders; provided, however, that (x) no such
amendment may, as evidenced by an Opinion of Counsel, materially adversely
affect the interests of the Indenture Trustee, any Senior Noteholder or Lease
Trust Certificateholder (unless 100% of the Senior Noteholders and Lease Trust
Certificateholders materially adversely affected consent thereto), (y) as
confirmed by each Rating Agency, cause the then current rating of either Class
of Senior Notes or the Lease Trust Certificates to be withdrawn or reduced and
(z) an Opinion of Counsel as to certain tax matters is delivered. (Lease Trust
Agreement, Section 12.1). Notwithstanding the foregoing, the Lease Trust
Agreement may be amended at any time by the Transferor, in its capacity as
holder of the Lease Trust Certificates initially acquired by it, and the Lease
Trustee to the extent reasonably necessary to assure that none of FCTT, the
Issuer or the Transferor will be classified as an association (or publicly
traded partnership) taxable as a corporation for federal income tax purposes.
The Lease Trust Agreement and Lease Trust Paying Agent Agreement each
may be amended by the Transferor and the Lease Trustee, with prior written
notice to each Rating Agency, with the consent of the Senior Noteholders
holding not less than a majority of the aggregate principal balance of each
Class of Senior Notes and, to the extent affected thereby, the consent of Lease
Trust Certificateholders holding not less than a majority of the aggregate
principal balance of the Lease Trust Certificates, to add any provisions
thereto or change in any manner or eliminate any of the provisions therein or
modify in any manner the rights of the Senior Noteholders, the Subordinated
Noteholders or the Lease Trust Certificateholders; provided, that (x) no such
amendment may increase or reduce in any manner the amount of, or accelerate or
delay the timing of distributions that are required to be made for the benefit
of the Senior Noteholders or the Lease Trust Certificateholders or reduce the
percentage of the aggregate principal balance of each Class of Senior Notes or
the Lease Trust Certificates required to consent to any such amendment, without
the consent of the holders of 100% of all outstanding Senior Notes or Lease
Trust Certificates, as the case may be, and (y) an Opinion of Counsel as to
certain tax matters is delivered. (Lease Trust Agreement, Section 12.1).
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BANKRUPTCY PROVISIONS
Ford Credit Leasing. The FCTT Trustee, the Lease Trustee, the
Transferor, the Indenture Trustee, the RCL Trustee, Ford Credit, the
Administrative Agent, and each holder of an SBC, and each Lease Trust
Certificateholder (other than Ford Credit Leasing) by accepting a Lease Trust
Certificate, each Senior Noteholder by accepting a Senior Note and each
Subordinated Noteholder by accepting a Subordinated Note, will covenant that
for a period of one year and one day after payment in full of all amounts due
to each holder of an SBC, they will not institute, or join in instituting, any
bankruptcy, reorganization, insolvency or liquidation proceeding, or other
similar proceeding against Ford Credit Leasing without the consent of 100% of
the holders of the SBCs (excluding Ford Credit Leasing, the Transferor or any
of their affiliates). (RCL Trust Agreement, Section 10.8; Administrative
Agency Agreement, Section 8.9; FCTT Agreement, Section 9.8; Lease Trust
Agreement, Section 12.8).
FCTT. The FCTT Trustee and the Administrative Agent each will not
have the power to commence a voluntary bankruptcy proceeding with respect to
FCTT unless each holder of an EBC (Ford Credit and Ford Credit Leasing) and
each holder of an SBC (which with respect to Series 1996-1 for this purpose is
the Indenture Trustee) approves such commencement and certifies to the FCTT
Trustee or the Administrative Agent, as the case may be, that it reasonably
believes that FCTT is insolvent. (FCTT Agreement, Section 9.8; Administrative
Agency Agreement, Section 8.9).
The FCTT Trustee, the Lease Trustee, the Transferor, the Indenture
Trustee, the RCL Trustee, Ford Credit, Ford Credit Leasing, the Administrative
Agent, each holder of an EBC and each holder of an SBC, will covenant that for
a period of one year and one day after payment in full of all distributions
owing to each holder of an SBC, they will not institute, or join in
instituting, any bankruptcy, reorganization, insolvency or liquidation
proceeding, or other similar proceeding against FCTT without the consent of
100% of the holders of the SBCs (excluding Ford Credit Leasing, the Transferor
or any of their affiliates). (RCL Trust Agreement, Section 10.8;
Administrative Agency Agreement, Section 8.9; FCTT Agreement, Section 9.8;
Lease Trust Agreement, Section 12.8).
The Transferor. The RCL Trustee will not commence a voluntary
bankruptcy proceeding with respect to the Transferor unless it reasonably
believes that the Transferor is insolvent and each beneficiary of the
Transferor approves such commencement and certifies to the RCL Trustee that it
reasonably believes that the Transferor is insolvent. (RCL Trust Agreement,
Section 10.8).
The Lease Trustee, the Transferor, the Indenture Trustee, each Lease
Trust Certificateholder by accepting a Lease Trust Certificate, each Senior
Noteholder by accepting a Senior Note and each Subordinated Noteholder by
accepting a Subordinated Note, will covenant not to institute or join in the
institution of any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding, or other similar proceeding against the Transferor for
a period of one year and a day after the Series 1996-1 Certificates have been
paid in full; provided, however, that 100% of the Senior Noteholders (or, if no
Senior Notes are then outstanding, 100% of the Subordinated Noteholders), or if
no Senior Notes or Subordinated Notes are then outstanding, 100% of the Lease
Trust Certificateholders (in each case, excluding Ford Credit Leasing, the
Transferor or any of their affiliates) may at any time institute, or join in
instituting, any bankruptcy, reorganization, insolvency or liquidation
proceeding against the Transferor. (Lease Trust Agreement, Section 12.8;
Indenture, Section 11.16).
The Issuer. The Lease Trustee will not commence a voluntary
bankruptcy proceeding with respect to the Issuer unless each Lease Trust
Certificateholder, each Senior Noteholder and each Subordinated Noteholder
approves such commencement and certifies to the Lease Trustee that it
reasonably believes that the Issuer is insolvent. (Lease Trust Agreement,
Section 4.3).
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The Lease Trustee, the Transferor, the Indenture Trustee and each
Lease Trust Certificateholder by accepting a Lease Trust Certificate, each
Senior Noteholder by accepting a Senior Note and each Subordinated Noteholder
by accepting a Subordinated Note, will covenant not to institute, or join in
instituting, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding, against the Issuer for a period of one year and a day
after the Series 1996-1 Certificates have been paid in full; provided, however,
that 100% of the Senior Noteholders (or, if no Senior Notes are then
outstanding, 100% of the Subordinated Noteholders) may institute, or join in
instituting any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding against the Issuer. (Lease Trust Agreement, Section
12.8; Indenture, Section 11.16).
FEES AND EXPENSES
FCTT Trustee. On each Payment Date, the FCTT Trustee will be entitled
to a fee for its services with respect to Series 1996-1 Assets, which will be
paid by the Administrative Agent on behalf of the holders of the EBCs. The
amount of such fee will equal a pro rata percentage of the total fees and
expenses payable to the FCTT Trustee with respect to all FCTT Assets (excluding
any extraordinary items relating only to specific Series or the EBCs), the
amount of which will be agreed upon from time to time by the FCTT Trustee and
the holders of the EBCs. (FCTT Agreement, Section 6.8; Series 1996-1
Supplement, Section 4.1).
The Administrative Agent. On each Payment Date, as compensation for
servicing the Series 1996-1 Assets and administering the distribution of funds
in respect thereof, the Administrative Agent will be paid the Administrative
Agent Fee (equal to the sum, for each of the three Collection Periods
preceding such Payment Date, of the product of 1/12 of 1.00% and the Pool
Balance as of the beginning of each such Collection Period) from the Total
Available Funds distributed on such Payment Date. The Administrative Agent
also will receive the Supplemental Administrative Agent Fee and certain other
fees collected in connection with Series 1996-1 Assets. (Administrative Agency
Agreement, Section 4.8; Series 1996-1 Supplement, Section 4.3).
The Administrative Agent also will receive fees with respect to the
servicing and administration of the Non-Specified Assets and other Series
Specified Assets from payments and proceeds of such Non-Specified Assets and
other Series Specified Assets.
The Administrative Agent will pay all expenses incurred by it in the
performance of its duties under the Administrative Agency Agreement, including
fees and disbursements of independent accountants, taxes imposed on the
Administrative Agent and expenses incurred in connection with distributions and
reports to the FCTT Trustee, the Lease Trustee and the Indenture Trustee. The
Administrative Agent will pay the fees and expenses of the Lease Trustee, the
Indenture Trustee and the FCTT Trustee. The Administrative Agent will be
required to pay all expenses relating to the sale or disposition of any Series
1996-1 Leased Vehicle after the termination of the related Series 1996-1 Lease.
(Administrative Agency Agreement, Section 4.13).
The RCL Trustee. The RCL Trustee will receive such fees as Ford
Credit, Ford Credit Leasing and the RCL Trustee from time to time agree and
will be reimbursed for all reasonable expenses. Such fees and reimbursements
will be paid first from amounts available for distribution to the beneficiaries
of the Transferor and second, to the extent such amounts are insufficient,
directly by Ford Credit and Ford Credit Leasing. (RCL Trust Agreement, Section
6.9).
The Lease Trustee. The Administrative Agent will pay the Lease
Trustee such fees as have been agreed among the Transferor, the Administrative
Agent and the Lease Trustee and will reimburse the Lease Trustee for all
reasonable expenses. The Administrative Agent will not be entitled to be
reimbursed from the Lease Trust Estate for the payment of such expenses.
(Lease Trust Agreement, Section 8.1).
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GOVERNING LAW
The FCTT Agreement will be governed by the laws of the State of
Michigan.
The Administrative Agency Agreement, the Series 1996-1 Supplement, the
Asset Contribution Agreement, the Transfer Agreement, the Program Operating
Lease, the Lease Trust Paying Agent Agreement and the Indenture each will be
governed by the laws of the State of New York.
The RCL Trust Agreement and the Lease Trust Agreement each will be
governed by the laws of the State of Delaware.
RATINGS OF THE SENIOR NOTES
It is a condition to the issuance of the Senior Notes that they be
rated in the highest investment rating category by at least one Rating Agency.
The ratings of the Senior Notes could be downgraded in the event of any
unfunded ERISA liability of the Ford affiliated group. See "Risk Factors ----
ERISA Liabilities; Effect on Ratings."
The rating assigned to either Class of Senior Notes is not a
recommendation to purchase, hold or sell such Class of Senior Notes, inasmuch
as such rating does not comment as to market price of suitability for a
particular investor. There is no assurance that the rating with respect to
either Class of Senior Notes will remain for any given period of time or that
the rating will not be lowered or withdrawn entirely by such Rating Agency if
in its judgment circumstances in the future so warrant.
CERTAIN LEGAL ASPECTS OF FCTT
AND THE SERIES 1996-1 CERTIFICATES
SERIES 1996-1 CERTIFICATES
The Series 1996-1 Certificates will be issued pursuant to the FCTT
Agreement and will evidence a beneficial interest in FCTT and the Series 1996-1
Assets. The Series 1996-1 Certificates will not represent a direct interest in
the Series 1996-1 Assets or any other assets of FCTT the beneficial interest in
which is represented by the EBCs or any other Series issued pursuant to the
FCTT Agreement. Pursuant to the FCTT Agreement, the Lease Trustee with the
consent of the Indenture Trustee and the Transferor (or, upon the occurrence of
an Event of Default, with the consent of only the Indenture Trustee) or the
Transferor, with the consent of the Indenture Trustee and the Lease Trustee,
may at any time direct the FCTT Trustee to distribute the Series 1996-1 Assets
to the Issuer. Any such distribution will be at the expense of the Transferor,
and the Series 1996-1 Assets will remain subject to the lien of the Indenture
and the rights of the Transferor under the Program Operating Lease. Except in
certain limited circumstances as described in "Risk Factors ---- Structural
Considerations," proceeds from assets of FCTT other than the Series 1996-1
Assets will not be available to make payments with respect to the Series 1996-1
Certificates or to cover expenses and liabilities of FCTT allocable to the
Series 1996-1 Assets. See "FCTT ---- Exchangeable Beneficial Certificates and
Specified Beneficial Certificates."
INSOLVENCY RELATED MATTERS
Each of Ford Credit, Ford Credit Leasing, FCTT (or the FCTT Trustee
when acting on its behalf) and the Transferor (or the RCL Trustee when acting
on its behalf) has taken steps in structuring the
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transactions described herein and has undertaken to act throughout the life of
such transactions in a manner intended to ensure that the voluntary or
involuntary commencement of a case or proceeding by or against Ford Credit
under the Bankruptcy Code or similar applicable state laws ("Insolvency Laws")
will not result in the commencement of a similar case or proceeding under such
Insolvency Laws with respect to any of Ford Credit Leasing, FCTT or the
Transferor, and that the separate legal existence of each of Ford Credit
Leasing, FCTT and the Transferor will be respected such that none of their
respective assets and liabilities will be consolidated with the assets and
liabilities of Ford Credit.
Ford Credit Leasing has been formed as a separate, limited-purpose
corporate subsidiary of Ford Credit pursuant to a certificate of incorporation
containing certain limitations (including restrictions on the nature of Ford
Credit Leasing's business and its ability to incur indebtedness, a requirement
that it have at least two "Independent Directors" and a restriction on its
ability to voluntarily commence a case or proceeding under any Insolvency Law
without the unanimous affirmative vote of all of its directors, including each
Independent Director). Ford Credit Leasing has represented that it has no
intention of voluntarily commencing a case or proceeding under any Insolvency
Law for so long as it is solvent and it does not reasonably foresee becoming
insolvent.
The activities of FCTT are limited by the terms of the FCTT Agreement
which also provides that FCTT is not intended to be and shall not constitute a
"business trust" within the meaning of the Bankruptcy Code (which provision, if
respected, would result in FCTT not being eligible to become a debtor in a case
under the Bankruptcy Code). To the extent that FCTT may be eligible for relief
under any Insolvency Law, the FCTT Trustee is not authorized to commence a case
or proceeding thereunder without the consent of each holder of an EBC and each
holder of an SBC. Each of the FCTT Trustee, Ford Credit, Ford Credit Leasing
and the holders from time to time of the Series 1996-1 Certificates have
agreed not to institute a case or proceeding against FCTT under any Insolvency
Law for a period of one year and a day after payment in full of all
distributions to holders of SBCs under the FCTT Agreement.
The activities of the Transferor are limited by the terms of the RCL
Trust Agreement. The Transferor has been formed as a Delaware business trust
pursuant to the applicable statute. To the extent that the Transferor may be
eligible for relief under any Insolvency Law, the RCL Trustee is not authorized
to commence a case or proceeding thereunder without the consent of Ford Credit
and Ford Credit Leasing, as the sole beneficiaries of the Transferor. Each of
the RCL Trustee, Ford Credit and Ford Credit Leasing has agreed not to
institute a case or proceeding against the Transferor under any Insolvency Law
for a period of one year and a day after payment in full of the Series 1996-1
Certificates.
There can be no assurance, however, that the limitations on the
activities of Ford Credit Leasing, FCTT and the Transferor, as well as the
restrictions on their respective abilities to obtain relief under Insolvency
Laws or lack of eligibility thereunder, as described above, would prevent a
court from concluding that their respective assets and liabilities should be
consolidated with those of Ford Credit if Ford Credit becomes the subject of a
case or proceeding under any Insolvency Law. Skadden, Arps, Slate, Meagher &
Flom LLP will deliver an opinion based on a reasoned analysis of analogous case
law (although there is no precedent based on directly similar facts) to the
effect that, subject to certain facts, assumptions and qualifications specified
therein, under present reported decisional authority and statutes applicable to
federal bankruptcy cases, if Ford Credit were to become the subject of a case
under the Bankruptcy Code, it would not be a proper exercise by a court of its
equitable discretion to disregard the separate legal existence of any of Ford
Credit Leasing, FCTT or the Transferor from that of Ford Credit and to require
the consolidation of the assets and liabilities of any of Ford Credit Leasing,
FCTT or the Transferor with the assets and liabilities of Ford Credit. Among
other things, such opinion will assume that each of Ford Credit Leasing, FCTT
(or the FCTT Trustee when acting on its behalf) and the Transferor (or the RCL
Trustee when acting on its behalf) will follow certain procedures in the
conduct of its affairs, including maintaining records and books of account
separate from those of Ford
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Credit, refraining from commingling its respective assets with those of Ford
Credit, doing business from an office separate from that of Ford Credit and
refraining from holding itself out as having agreed to pay, or being liable
for, the debts of Ford Credit. In addition, such opinion will assume that
other than as expressly provided by the FCTT Agreement and the Administrative
Agency Agreement (each of which contains terms and conditions consistent with
those that would be arrived at on an arms' length basis between unaffiliated
entities in the belief of the parties thereto), Ford Credit will not generally
guaranty the obligations of Ford Credit Leasing, FCTT or the Transferor to
third parties, and will not conduct the day-to-day business or activities of
any thereof other than in its capacity as Administrative Agent acting under and
in accordance with the Administrative Agency Agreement. Each of Ford Credit,
Ford Credit Leasing, FCTT and the Transferor intends to follow and has
represented to such counsel that it will follow these and other procedures
related to maintaining the separate identity and legal existences of each of
Ford Credit Leasing, FCTT and the Transferor. Such a legal opinion, however,
is not binding on any court.
If a case or proceeding under any Insolvency Law were to be commenced
by or against any of Ford Credit Leasing, FCTT or the Transferor, or if a court
were to conclude in favor of the consolidation of the assets and liabilities
of any thereof with those of Ford Credit, or if an attempt were made to
litigate any of the foregoing issues, delays in distributions on the Series
1996-1 Certificates (and possible reductions in the amount of such
distributions) to the Issuer (either directly or, if the Program Operating
Lease remains in effect, indirectly to the extent resulting in delayed or
reduced payments from the Transferor to the Issuer under the Program Operating
Lease), and therefore to the Senior Noteholders, could occur. In addition, if
a bankruptcy or insolvency occurs with respect to Ford Credit Leasing, the FCTT
Agreement provides that FCTT will be terminated, and if the Transferor or the
Issuer becomes bankrupt or insolvent, or is terminated (which could occur as a
result of the bankruptcy or insolvency of Ford Credit Leasing or the
bankruptcy, insolvency or termination of the Transferor), the FCTT Agreement
provides that FCTT will be terminated with respect to holding the Series 1996-1
Assets. In each case the FCTT Trustee is required to distribute the Series
1996-1 Assets to the holder of the Series 1996-1 Certificates. Because the
Issuer has pledged its rights to the Series 1996-1 Certificates to the
Indenture Trustee, such distribution would be made to the Indenture Trustee who
would be responsible for retitling the Series 1996-1 Leased Vehicles. The cost
of such retitling would reduce the amounts payable from the Series 1996-1
Assets which are available for payments of interest on and principal of the
Senior Notes, and in such event Senior Noteholders could suffer a loss on their
investment.
Each of Ford Credit and Ford Credit Leasing will treat its conveyance
of the Series 1996-1 Certificates to the Transferor as an absolute transfer of
all of its interest therein for all purposes, including without limitation tax
and financial accounting purposes. If such conveyances constitute absolute
transfers, the Series 1996-1 Certificates and the proceeds thereof would not be
part of Ford Credit's or Ford Credit Leasing's bankruptcy estate under Section
541 of the Bankruptcy Code should Ford Credit or Ford Credit Leasing become the
subject of a case thereunder. However, if a case or proceeding under any
Insolvency Law were commenced by or against Ford Credit or Ford Credit Leasing,
and a creditor, receiver or trustee-in-bankruptcy of Ford Credit or Ford Credit
Leasing were to take the position that the transfer of the Series 1996-1
Certificates by Ford Credit and Ford Credit Leasing to the Transferor should
instead be treated as a pledge of such Series 1996-1 Certificates to secure a
borrowing by Ford Credit and Ford Credit Leasing, delays in payments of
proceeds of such Series 1996-1 Certificates to the Issuer, and therefore to the
Senior Noteholders, could occur or (should the court rule in favor of such
creditor, receiver or trustee-in-bankruptcy) reductions in the amount of such
payments could result. Skadden, Arps, Slate, Meagher & Flom LLP will deliver
an opinion to the effect that, subject to certain facts, assumptions and
qualifications specified therein, in the event that either Ford Credit or Ford
Credit Leasing were to become the subject of a case under the Bankruptcy Code
subsequent to the transfer of the Series 1996-1 Certificates to the Transferor,
the transfer of the Series 1996-1 Certificates from Ford Credit and Ford Credit
Leasing would be respected as an absolute transfer (a "true sale") of the
Series 1996-1 Certificates from Ford Credit and Ford Credit Leasing to
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the Transferor, and the Series 1996-1 Certificates and the proceeds thereof
would not be included in Ford Credit's or Ford Credit Leasing's bankruptcy
estate pursuant to Section 541 of the Bankruptcy Code. As indicated above,
such a legal opinion is not binding on any court.
As a precautionary measure, the Transferor will take the actions
requisite to obtaining a perfected security interest in the Series 1996-1
Certificates as against Ford Credit and Ford Credit Leasing. Accordingly, if
the conveyances of the Series 1996-1 Certificates by Ford Credit and Ford
Credit Leasing to the Transferor were not respected as absolute transfers, the
Transferor (and ultimately the Issuer and the Indenture Trustee as successors
in interest) should be treated as a secured creditor of Ford Credit and Ford
Credit Leasing, although a case or proceeding under any Insolvency Law with
respect to Ford Credit or Ford Credit Leasing could result in delays or
reductions in distributions under the Series 1996-1 Certificates as indicated
above notwithstanding such perfected security interest.
In the event that Ford Credit were to become subject to a case under
the Bankruptcy Code, certain payments made within one year of the commencement
of such case may be recoverable by Ford Credit as debtor-in-possession or by a
creditor or a trustee in bankruptcy as a preferential transfer from Ford
Credit. These payments include the portion of payments of Administrative
Purchase Amounts allocable to Ford Credit in respect of the purchase of
beneficial interests in certain Series 1996-1 Assets as to which an uncured
breach of certain representations and warranties or certain servicing covenants
has occurred. See "Description of the Administrative Agency Agreement ----
Administrative Purchases."
In addition, the commencement of a case or proceeding under any
Insolvency Law with respect to Ford Credit is an Administrative Agent Event of
Default, and if so directed by the holders of the Series 1996-1 Certificates
(which for such purpose will be the Indenture Trustee so long as the Senior
Notes are outstanding), Ford Credit may be removed as the Administrative Agent,
which may have an adverse impact on timely payments to Senior Noteholders.
However, if the commencement of such a case or proceeding were the only
default, Ford Credit (or its trustee-in-bankruptcy) may have the power to
prevent any such removal. See "Description of the Administrative Agency
Agreement ---- Administrative Agent Events of Default" and "---- Removal of the
Administrative Agent."
INSURANCE
Each Obligor is required to maintain liability, collision and
comprehensive insurance coverage in certain amounts on its Leased Vehicle at
all times during the term of the related Lease. The cost of such insurance is
borne solely by the Obligor. Failure to comply with stipulated insurance
requirements may result in early termination of the Lease.
The failure of Obligors to maintain the required insurance coverage
for claims arising from injuries caused by the Series 1996-1 Leased Vehicles
could result in reductions in distributions on the Series 1996-1 Certificates
and losses to Senior Noteholders on their investment.
To protect against such losses, Ford Credit self-insures against the
first $5 million per occurrence for property damage or personal liability
suffered by third persons caused by any vehicle owned by Ford Credit or FCTT.
Additionally, Ford maintains excess insurance policies which name FCTT as an
additional insured party. These policies cover claims in excess of $5 million
per occurrence (together with the self-insurance of Ford Credit, the
"Contingent and Excess Liability Insurance"). The Administrative Agent will
covenant that, so long as the Series 1996-1 Certificates are outstanding, it
will (i) maintain or cause to be maintained Contingent and Excess Liability
Insurance with respect to third party claims relating to the Series 1996-1
Leased Vehicles, FCTT or the FCTT Trustee in such amounts as it deems
reasonable and prudent and (ii) not amend or terminate any such Contingent and
Excess Liability Insurance unless (x) after giving effect to such amendment or
termination, there remains coverage of at least $25 million per occurrence and
$50 million annually in the aggregate or (y) as
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confirmed by each Rating Agency, such amendment or termination will not cause
the rating of any of the Senior Notes or Lease Trust Certificates to be reduced
or withdrawn. To the extent the Contingent and Excess Liability Insurance is
insufficient to cover the full amount of any claims and no third party
reimbursement for such claims is available and Ford Credit and Ford Credit
Leasing fail to perform their obligations to indemnify the Issuer, the Senior
Noteholders could incur a loss on their investment to the extent that payment
of such claims reduce the amounts otherwise distributable to the Senior
Noteholders from the Series 1996-1 Certificates.
In the event that a Series 1996-1 Leased Vehicle is damaged, the
failure of the related Obligor to maintain the required collision insurance
coverage could result in a reduction of amounts distributable with respect to
the related Series 1996-1 Assets and therefore a reduction in the aggregate
amount distributable on the Series 1996-1 Certificates. In the event that
collision coverage is exhausted and no third-party reimbursement for such
damage to a Series 1996-1 Leased Vehicle is available, the Senior Noteholders
could incur a loss on their investment.
Ford Credit provides Obligors with Guaranteed Automobile Protection
("GAP") coverage on Leased Vehicles, including the Series 1996-1 Leased
Vehicles. In the event a Leased Vehicle is destroyed or stolen, GAP coverage
would reimburse the Obligor for the difference between the insurance valuation
of the Leased Vehicle and the remaining amount required to be paid under the
Lease.
CERTAIN LEGAL ASPECTS OF THE LEASES
AND LEASED VEHICLES
UCC FILINGS
The Series 1996-1 Certificates are either certificated securities or
general intangibles under the UCC. To the extent that the Series 1996-1
Certificates are certificated securities, the Indenture Trustee has perfected
its interest by possession. To the extent that the Series 1996-1 Certificates
are general intangibles and the transfer thereof is deemed to be a transfer
for security, the Transferor will file UCC-1 financing statements against both
Ford Credit and Ford Credit Leasing to perfect its interest in such Series
1996-1 Certificates. The Transferor will assign its perfected security
interest to the Issuer and the Indenture Trustee, and the Issuer in turn will
assign its interest to the Indenture Trustee. Financing statements covering
the Series 1996-1 Certificates will also be filed naming (i) the Transferor as
debtor and the Issuer as secured party, which financing statement will be
assigned to the Indenture Trustee, (ii) the Transferor as debtor and the
Indenture Trustee as secured party and (iii) the Issuer as debtor and the
Indenture Trustee as secured party.
The FCTT Assets consist principally of the Leases and the ownership
interest in the Leased Vehicles (subject to the rights of the Obligors under
the Leases). To the extent that the Series 1996-1 Certificates were viewed as
representing a transfer of the assets of FCTT, the Series 1996-1 Leases would
be "chattel paper" as defined in the UCC. Pursuant to the UCC a non-possessory
security interest in chattel paper may be perfected by filing a UCC-1 financing
statement with the appropriate filing office in the state where the debtor has
its chief executive office. Accordingly, as a precaution, UCC-1 financing
statements relating to the Series 1996-1 Leases will be filed naming: (i) FCTT
as debtor and Ford Credit and Ford Credit Leasing as secured parties, which
financing statements will be assigned to the Transferor, the Issuer and then
the Indenture Trustee; (ii) each of Ford Credit and Ford Credit Leasing as
debtors and the Transferor as secured party, which financing statement has been
assigned to the Issuer and then the Indenture Trustee; (iii) the Transferor as
debtor and the Issuer as secured party, which financing statement will be
assigned to the Indenture Trustee, (iv) the Transferor as debtor and the
Indenture Trustee as secured party and (v) the Issuer as debtor and the
Indenture Trustee as secured party. Perfection and the effect of perfection
or non-perfection of a security interest
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in the Series 1996-1 Leased Vehicles are governed by the certificate of title
statutes of the states in which such Series 1996-1 Leased Vehicles are located.
Because of the administrative burden and expense of perfecting an interest in
motor vehicles under the certificate of title statutes in the fifteen states in
which the Series 1996-1 Leases were originated, the Indenture Trustee's
interest in the Series 1996-1 Leased Vehicles will be unperfected, and if the
transfer of the Series 1996-1 Certificates were viewed as a transfer of the
Series 1996-1 Assets, the Indenture Trustee would only have a perfected
security interest in the Series 1996-1 Leases. However, the Indenture
Trustee's security interest in the Series 1996-1 Leases could be subordinate to
persons who take actual possession of the Series 1996-1 Leases without
knowledge of such security interest. The Series 1996-1 Leases will not be
stamped to indicate these precautionary security arrangements.
VICARIOUS TORT LIABILITY
The Series 1996-1 Leased Vehicles will be operated by the Obligors and
their respective invitees. State laws differ as to whether anyone suffering
injury to person or property as a result of an accident involving a leased
vehicle may bring an action against the person who, holding title to the
vehicle, is its legal owner.
In California, under Section 17150, California Vehicle Code, the owner
of a motor vehicle that is subject to a lease is responsible for injuries to
persons or property resulting from the negligent or wrongful operation of the
vehicle by any person using the vehicle with the owner's permission. The
owner's liability for personal injuries is limited to $15,000 per person and
$30,000 in total per accident and for property damage is limited to $5,000 per
accident. Recourse for any judgment arising out of the operation of the
vehicle must first be had against the operator's property, if the operator is
within the court's jurisdiction.
In New York, under Section 388, New York Vehicle and Traffic Law, the
owner of a motor vehicle that is subject to a lease is responsible for injuries
to persons or property resulting from the negligent operation of the vehicle by
any person using the vehicle with the owner's permission. A lessee of a motor
vehicle is considered an owner of the vehicle if the lessee has the exclusive
use of the vehicle for a period greater than 30 days. In situations involving
more than one owner of the same vehicle, the liability of the owners for
negligent operation of the vehicle is joint and several.
In Nebraska, under Section 25-21,239, Revised Statutes of Nebraska,
the owner of a light truck that is subject to a lease is responsible for
injuries to persons or property resulting from the negligent or wrongful
operation of the light truck by any person using the light truck with the
owner's permission. In Nebraska, the owner of a leased automobile is not
generally liable for the negligent operation of such leased automobile unless
the owner has negligently entrusted or negligently continues to entrust the
automobile to an inappropriate lessee
In each of the other 12 states in which the Series 1996-1 Leases were
originated, a victim of such an accident has no cause of action against the
owner of a leased vehicle arising from the negligent operation of such leased
vehicle unless the owner has negligently entrusted or negligently continues to
entrust the vehicle to an inappropriate lessee.
Following an accident involving a Series 1996-1 Leased Vehicle, under
certain circumstances FCTT may be the subject of an action for damages as a
result of its ownership of such Series 1996-1 Leased Vehicle. In the event
that liability on FCTT were imposed and the coverage provided by the Contingent
and Excess Liability Insurance was insufficient to cover the full amount of
such claims (or, in certain circumstances claims arising from ownership of
Leased Vehicles that are not Series 1996-1 Leased Vehicles), claims could be
imposed against the assets of FCTT, including the Series 1996-1 Leased
Vehicles. The Senior Noteholders could incur a loss on their investment to the
extent that payment of such claims reduced the amounts otherwise distributable
to the Senior Noteholders.
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REPOSSESSION OF LEASED VEHICLES
In the event of a default by an Obligor, the Administrative Agent will
notify the Obligor and, after affording the Obligor an opportunity to cure,
will repossess the Series 1996-1 Leased Vehicle if the Obligor remains in
default. Under the laws of the states in which the 1996-1 Leases were
originated, generally repossession may take place without notice, but only if
it can be accomplished without a breach of the peace. If repossession cannot
be achieved peaceably, court action would be required. In Pennsylvania, a writ
of replevin may be necessary to accomplish repossession.
After repossession, the Administrative Agent may afford the Obligor an
opportunity to cure the default. Absent cure, the Administrative Agent will
ordinarily attempt to sell the Series 1996-1 Leased Vehicle. There is no
assurance that the proceeds from such a sale will equal or exceed the remaining
amounts due under the related Series 1996-1 Lease at the time of the Obligor's
default.
DEFICIENCY JUDGMENTS
Once a repossessed Series 1996-1 Leased Vehicle is sold, the proceeds
from the sale will be used to cover the expenses of repossession and resale and
then to satisfy any remaining amounts due under the related Series 1996-1
Lease. If the proceeds from the sale of the Series 1996-1 Leased Vehicle are
insufficient to satisfy the remaining amount due under the related Series
1996-1 Lease, the amount of such shortfall will be reported as a Series 1996-1
Credit Loss in the Collection Period in which the related Series 1996-1 Lease
became a Liquidated Lease. The Administrative Agent may seek a deficiency
judgment for the amount of any such shortfall. To the extent such deficiency
judgment is collected in a Collection Period other than the Collection Period
in which such Series 1996-1 Lease became a Liquidated Lease, such amount shall
be treated as a Recovery.
However, each of the states in which the Series 1996-1 Leases were
originated places limits on a secured party's ability to obtain a deficiency
judgment. In such states, a deficiency judgment may be prohibited or reduced
in amount if the Obligor was not given proper notice of the resale or if the
terms of the resale were not commercially reasonable. Even if a deficiency
judgment is obtained, there is no assurance that the full amount of the
judgment would ultimately be collected. A deficiency judgment is a personal
judgment against the defaulting Obligor, who generally has few remaining assets
or sources of income after repossession. As a result, obtaining a deficiency
judgment may not be useful in that only a small portion of it, or perhaps none
of it, will ever be collected.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and regulations
impose requirements on retail lease contracts such as the Series 1996-1 Leases.
The federal Consumer Leasing Act of 1976 and Regulation M promulgated by the
Board of Governors of the Federal Reserve System, for example, require that a
number of disclosures be made at the time a vehicle is leased, including the
amount of any periodic payments and the circumstances under which the lessee
may terminate the lease prior to the end of the lease term. The various
consumer protection laws would apply to FCTT as the assignee of each Series
1996-1 Lease and may also apply to the Issuer as holder of the Series 1996-1
Certificates which represent a beneficial interest in the Series 1996-1 Leases,
among other things. The failure of FCTT, or the Administrative Agent acting on
behalf of FCTT, to comply with such laws and regulations may give rise to
liabilities on the part of FCTT, and claims by FCTT or the Administrative Agent
acting on behalf of FCTT with respect to Obligors may be subject to set-off as
a result of non-compliance with such laws and regulations.
Courts have applied general equitable principles in litigation
relating to repossession and deficiency balances. These equitable principles
may have the effect of relieving a lessee from some or all of the legal
consequences of a default.
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In several cases, consumers have asserted that the self-help remedies
of lessors violate the due process protection provided under the Fourteenth
Amendment to the Constitution of the United States. Courts have generally
found that repossession and resale by a lessor do not involve sufficient state
action to afford constitutional protection to consumers.
Each of the states in which the Series 1996-1 Leases were originated
has adopted a law (each, a "Lemon Law") providing redress to consumers who
purchase or in some cases lease a vehicle which remains out of conformance with
its manufacturer's warranty after a specified number of attempts to correct a
problem or after a specific time period. A successful claim under a Lemon Law
with respect to a Series 1996-1 Leased Vehicle could result in, among other
things, the termination of the related Series 1996-1 Lease and/or the refunding
to the related Obligor of some portion of the Total Monthly Payments paid by
such Obligor. To the extent an Obligor is no longer required to make Total
Monthly Payments with respect to a Series 1996-1 Lease subject to a Lemon Law,
or amounts are refunded to such Obligor, such Series 1996-1 Lease will be
deemed to be a Liquidated Lease and the amounts received with respect to such
lease will be limited to Liquidation Proceeds and Recoveries. The net amount
lost will be reported as a Series 1996-1 Credit Loss. Although FCTT or the
Administrative Agent acting on behalf of FCTT may be able to assert a claim
against the manufacturer of any such defective Series 1996-1 Leased Vehicle,
there can be no assurance that any such claim would be successful.
FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a summary of certain United States federal income
tax consequences of the purchase, ownership and disposition of the Senior
Notes. This discussion is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), existing and proposed Treasury
Regulations thereunder, current administrative rulings, judicial decisions and
other applicable authorities in effect as of the date hereof, all of which are
subject to change, possibly with retroactive effect. There can be no
assurance that the Internal Revenue Service ("IRS") will not challenge the
conclusions reached herein, and no ruling from the IRS has been or will be
sought on any of the issues discussed below.
This summary does not purport to deal with all aspects of federal
income taxation that may be relevant to Senior Note Owners in light of their
personal investment circumstances nor, except for certain limited discussions
of particular topics, to certain types of Senior Note Owners subject to special
treatment under the federal income tax laws (e.g., financial institutions,
broker-dealers, life insurance companies and tax-exempt organizations). This
information is directed to Senior Note Owners who hold the Senior Notes as
"capital assets" within the meaning of Section 1221 of the Code.
GENERAL
Tax Status of the Senior Notes, FCTT, the Transferor and the Issuer.
On the Closing Date, Skadden, Arps, Slate, Meagher & Flom LLP ("Special Tax
Counsel"), will render its opinion that for federal income tax purposes under
existing law, and subject to the assumptions and qualifications therein: (i)
the Senior Notes will be treated as debt and (ii) none of FCTT, the Transferor
or the Issuer will be classified as an association (or publicly traded
partnership) taxable as a corporation.
Tax Status of the Lease Trust Certificates. On the Closing Date,
Special Tax Counsel will render its opinion that for federal income tax
purposes under existing law, and subject to the assumptions and qualifications
therein, that although no specific authority exists as to the characterization
for federal income tax purposes of securities having the same terms as the
Lease Trust Certificates and accordingly, although the matter is not free from
doubt, under current law the Lease Trust Certificates (other than the Lease
Trust Certificates initially acquired by the Transferor) should properly
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be treated as debt for federal income tax purposes. Special Tax Counsel will
opine further that, if the Lease Trust Certificates (other than the Lease Trust
Certificates initially acquired by the Transferor) were found not to
constitute indebtedness for federal income tax purposes, such Lease Trust
Certificates would be classified as interests in a partnership (other than a
publicly traded partnership taxable as a corporation) or, possibly, as
beneficial interests in a grantor trust.
Stated Interest. Stated interest on the Senior Notes will be taxable
as ordinary income for federal income tax purposes when received or accrued in
accordance with a Senior Note Owner's method of tax accounting.
Original Issue Discount. A Class A-2 Senior Note will be treated as
issued with Original Issue Discount ("OID") if the excess of the Class A-2
Senior Note's "stated redemption price at maturity" over its issue price equals
or exceeds a de minimis amount equal to 1/4 of 1 percent of the Class A-2
Senior Note's stated redemption price at maturity multiplied by the number of
complete years (based on the anticipated weighted average life of a Class A-2
Senior Note) to its maturity. The Class A-2 Senior Notes will be issued with
de minimis OID. Generally, the issue price of a Class A-2 Senior Note should
be the first price at which a substantial amount of the Class A-2 Senior Notes
included in the issue of which the Class A-2 Senior Note is a part is sold to
other than bond houses, brokers or similar persons or organizations acting in
the capacity of underwriters, placement agents or wholesalers. The stated
redemption price at maturity of a Class A-2 Senior Note is expected to equal
the principal amount of the Class A-2 Senior Note. Any amount not treated as
OID because it is de minimis OID must be included in income as principal
payments are received on the Class A-2 Senior Notes in the proportion that each
such payment bears to the original principal balance of the Class A-2 Senior
Note.
If the Class A-2 Senior Notes are treated as issued with OID, a Senior
Note Owner of a Class A-2 Senior Note will be required to include OID in income
before the receipt of cash attributable to such income using the constant-yield
method. The amount of OID includible in income is the sum of the daily
portions of OID with respect to a Class A-2 Senior Note for each day during the
taxable year or portion of the taxable year in which the Senior Note Owner
holds the Class A-2 Senior Note. The amount of OID includible in income by a
Senior Note Owner of a Class A-2 Senior Note will be computed by allocating to
each day during a taxable year a pro rata portion of the OID that accrued
during the relevant "accrual period." Such OID is generally equal to the
product of the yield to maturity of the Class A-2 Senior Note (adjusted for the
length of the accrual period) and its adjusted issue price at the beginning of
the accrual period, reduced by any payments of "qualified stated interest."
Accrual periods with respect to a Class A-2 Senior Note may be any set of
periods (which may be of varying lengths) selected by the Senior Note Owner of
such Class A-2 Senior Note as long as (i) no accrual period is longer than one
year and (ii) each scheduled payment of interest or principal on the Class A-2
Senior Note occurs on either the final or first day of an accrual period.
The adjusted issue price of a Class A-2 Senior Note is the sum of its
issue price plus prior accruals of OID, reduced by the total payments made with
respect to such Class A-2 Senior Note in all prior periods, other than
"qualified stated interest payments." Qualified stated interest payments are
interest payments on the Class A-2 Senior Notes that are unconditionally
payable at least annually at a single fixed rate applied to the outstanding
principal amount of the obligation.
Market Discount. The Senior Notes, whether or not issued with
original issue discount, will be subject to the "market discount rules" of
section 1276 of the Code. In general, these rules provide that if the Senior
Note Owner purchases a Senior Note at a market discount (that is, a discount
from its stated redemption price at maturity or, if the Senior Notes were
issued with OID, its original issue price plus any accrued original issue
discount, that exceeds a de minimis amount specified in the Code) and
thereafter (a) recognizes gain upon a disposition, or (b) receives payments of
principal, the lesser
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of (i) such gain or principal payment, or (ii) the accrued market discount,
will be taxed as ordinary interest income. Generally, the accrued market
discount will be the total market discount on the Senior Note multiplied by a
fraction, the numerator of which is the number of days the Senior Note Owner
held the Senior Note and the denominator of which is the number of days from
the date the Senior Note Owner acquired the Senior Note until its maturity
date. The Senior Note Owner may elect, however, to determine accrued market
discount under the constant-yield method.
Limitations imposed by the Code which are intended to match deductions
with the taxation of income may defer deductions for interest on indebtedness
incurred or continued, or short-sale expenses incurred, to purchase or carry a
Senior Note with accrued market discount. A Senior Note Owner may elect to
include market discount in gross income as it accrues and, if such Senior Note
Owner makes such an election, is exempt from this rule. Any such election will
apply to all debt instruments acquired by the taxpayer on or after the first
day of the first taxable year to which such election applies. The adjusted
basis of a Senior Note subject to such election will be increased to reflect
market discount included in gross income, thereby reducing any gain or
increasing any loss on a sale or taxable disposition.
Short-Term Obligations. Under the Code, special rules apply to notes
that have a maturity of one year or less from their date of original issue,
such as the Class A-1 Senior Notes. Such notes are treated as issued with
"acquisition discount" which is calculated and included in income under
principles similar to those governing OID except that "acquisition discount" is
equal to the excess of all payments of principal and interest on the Class A-1
Senior Notes over their issue price. In general, an individual or other cash
basis holder of a short-term obligation (such as a Class A-1 Senior Note) is
not required to accrue acquisition discount for federal income tax purposes
unless it elects to do so. Accrual basis Senior Note Owners and certain other
Senior Note Owners, including banks, regulated investment companies, dealers in
securities and cash basis Senior Note Owners who so elect, are required to
accrue acquisition discount on the Class A-1 Senior Notes on either a
straight-line basis or under a constant yield method (based on daily
compounding), at the election of the Senior Note Owner. In the case of a
Senior Note Owner not required and not electing to include acquisition discount
in income currently, any gain realized on the sale or retirement of the Class
A-1 Senior Note will be ordinary income to the extent of the acquisition
discount accrued on a straight line basis (unless an election is made to accrue
the acquisition discount under the constant yield method) through the date of
sale or retirement. Senior Note Owners who are not required and do not elect
to accrue acquisition discount on Class A-1 Senior Notes will be required to
defer deductions for interest on borrowings allocable to short-term obligations
in an amount not exceeding the deferred income until the deferred income is
realized.
Total Accrual Election . A Senior Note Owner may elect to include in
gross income all interest that accrues on a Senior Note using the
constant-yield method described above under the heading "---- Original Issue
Discount," with modifications described below. For purposes of this election,
interest includes stated interest, acquisition discount, OID, de minimis
original issue discount, market discount, de minimis market discount and
unstated interest, as adjusted by any amortizable bond premium (described below
under "---- Amortizable Bond Premium") or acquisition premium.
In applying the constant-yield method to a Senior Note with respect to
which this election has been made, the issue price of the Senior Note will
equal the electing Senior Note Owner's adjusted basis in the Senior Note
immediately after its acquisition, the issue date of the Senior Note will be
the date of its acquisition by the electing Senior Note Owner, and no payments
on the Senior Note will be treated as payments of qualified stated interest.
This election will generally apply only to the Senior Note with respect to
which it is made and may not be revoked without the consent of the IRS. Senior
Note Owners should consult with their own tax advisers as to the effect in
their circumstances of making this election.
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Amortizable Bond Premium. In general, if a Senior Note Owner
purchases a Senior Note at a premium (that is, an amount in excess of the
amount payable upon the maturity thereof), such Senior Note Owner will be
considered to have purchased such Senior Note with "amortizable bond premium"
equal to the amount of such excess. Such Senior Note Owner may elect to
amortize such bond premium as an offset to interest income and not as a
separate deduction item as it accrues under a constant-yield method over the
remaining term of the Senior Note. Such Senior Note Owner's tax basis in the
Senior Note will be reduced by the amount of the amortized bond premium. Any
such election shall apply to all debt instruments (other than instruments the
interest on which is excludible from gross income) held by the Senior Note
Owner at the beginning of the first taxable year for which the election applies
or thereafter acquired and is irrevocable without the consent of the IRS. Bond
premium on a Senior Note held by a Senior Note Owner who does not elect to
amortize the premium will decrease the gain or increase the loss otherwise
recognized on the disposition of the Senior Note.
Disposition of Senior Notes. A Senior Note Owner's adjusted tax basis
in a Senior Note will be its cost, increased by the amount of any OID, market
discount, acquisition discount and gain previously included in income with
respect to the Senior Note, and reduced by the amount of any payments on the
Senior Note that is not qualified stated interest and the amount of bond
premium previously amortized with respect to the Senior Note. A Senior Note
Owner will generally recognize gain or loss on the sale or retirement of a
Senior Note equal to the difference between the amount realized on the sale or
retirement and the tax basis of the Senior Note. Such gain or loss will be
capital gain or loss (except to the extent attributable to accrued but unpaid
interest or as described above under "---- Market Discount") and will be
long-term capital gain or loss if the Senior Note was held for more than one
year.
WAIVERS AND AMENDMENTS
The Indenture permits the Senior Noteholders to waive an Event of
Default in some circumstances upon a vote of the requisite percentage of Senior
Noteholders. Such a waiver, if it were to continue for a period that exceeds
two years and any additional period during which the Senior Noteholders conduct
good faith negotiations, or certain amendments to the terms of the Senior
Notes, would be treated for federal income tax purposes as a constructive
exchange by a Senior Noteholder of the Senior Notes for new notes, upon which
gain or loss would be recognized.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Indenture Trustee will be required to report annually to the IRS,
and to each Senior Note Owner, the amount of interest paid on the Senior Notes
(and the amount withheld for federal income taxes, if any) for each calendar
year, except as to exempt recipients (generally, corporations, tax-exempt
organizations, qualified pension and profit-sharing trusts, individual
retirement accounts, or nonresident aliens who provide certification as to
their status). Each Senior Note Owner (other than Senior Note Owners who are
not subject to the reporting requirements) will be required to provide, under
penalties of perjury, a certificate containing the Senior Note Owner's name,
address, correct federal taxpayer identification number (which includes a
social security number) and a statement that the Senior Note Owner is not
subject to backup withholding. Should a non-exempt Senior Note Owner fail to
provide the required certification or should the IRS notify the Indenture
Trustee or the Issuer that the Senior Note Owner has provided an incorrect
federal taxpayer identification number or is otherwise subject to backup
withholding, the Indenture Trustee will be required to withhold (or cause to be
withheld) 31% of the interest otherwise payable to the Senior Note Owner, and
remit the withheld amounts to the IRS as a credit against the Senior Note
Owner's federal income tax liability.
TAX CONSEQUENCES TO FOREIGN INVESTORS
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The following information describes the U.S. federal income tax
treatment of investors that are not U.S. persons (each, a "Foreign Person").
The term "Foreign Person" means any person other than (i) a citizen or resident
of the United States, (ii) a corporation, partnership or other entity organized
in or under the laws of the United States or any political subdivision thereof
or (iii) an estate or trust the income of which is includible in gross income
for U.S. federal income tax purposes, regardless of its source.
(a) Interest paid or accrued to a Foreign Person that is not
effectively connected with the conduct of a trade or business within
the United States by the Foreign Person, will generally be considered
"portfolio interest" and generally will not be subject to United States
federal income tax and withholding tax, as long as the Foreign Person
(i) is not actually or constructively a "10 percent shareholder" of the
Issuer or a "controlled foreign corporation" with respect to which the
Issuer is a "related person" within the meaning of the Code, and (ii)
provides an appropriate statement (Form W-8), signed under penalties of
perjury, certifying that the Senior Note Owner is a Foreign Person and
providing that Foreign Person's name and address. If the information
provided in this statement changes, the Foreign Person must so inform
the Indenture Trustee within 30 days of such change. The statement
generally must be provided in the year a payment occurs or in either of
the two preceding years. If such interest were not portfolio interest,
then it would be subject to United States federal income and
withholding tax at a rate of 30 percent unless reduced or eliminated
pursuant to an applicable income tax treaty.
(b) Any capital gain realized on the sale or other taxable
disposition of a Senior Note by a Foreign Person will be exempt from
United States federal income and withholding tax, provided that (i) the
gain is not effectively connected with the conduct of a trade or
business in the United States by the Foreign Person, and (ii) in the
case of an individual Foreign Person, the Foreign Person is not present
in the United States for 183 days or more in the taxable year and
certain other requirements are met.
(c) If the interest, gain or income on a Senior Note held by
a Foreign Person is effectively connected with the conduct of a trade
or business in the United States by the Foreign Person, the Senior
Note Owner (although exempt from the withholding tax previously
discussed if a duly executed Form 4224 is furnished) generally will
be subject to United States federal income tax on the interest, gain or
income at regular federal income tax rates. In addition, if the
Foreign Person is a foreign corporation, it may be subject to a branch
profits tax equal to 30 percent of its "effectively connected earnings
and profits" within the meaning of the Code for the taxable year, as
adjusted for certain items, unless it qualifies for a lower rate under
an applicable tax treaty.
On April 15, 1996, the IRS issued proposed Treasury regulations (the
"Proposed Regulations") which, if enacted in their proposed form, would
substantially revise some aspects of the current system for withholding on, and
reporting of, amounts paid to Foreign Persons. For example, the certification
procedures described above (i.e., Forms W-8, 4224, etc.) would be unified and
combined into a single form (Form W-8) under the Proposed Regulations. As a
general rule, the Proposed Regulations are proposed to be effective for
payments to Foreign Persons made after December 31, 1997. There is no
assurance that the Proposed Regulations will be adopted or, if adopted, will be
adopted in their proposed form.
CERTAIN STATE TAX CONSEQUENCES
Set forth below is a summary of certain state income tax consequences
of the purchase, ownership and disposition of the Senior Notes. This
discussion is based upon current law,
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administrative rulings, judicial decisions and other applicable authorities in
effect as of the date hereof, all of which are subject to change, possibly with
retroactive effect. There can be no assurance that state income tax
authorities will not challenge the conclusions reached herein, and no ruling
from state income tax authorities has been or will be sought on any of the
issues discussed below. Because of the variation in each state's income tax
laws, it is impossible to predict tax consequences to Senior Note Owners in all
states. Senior Note Owners are urged to consult their own tax advisors with
respect to state tax consequences arising out of the purchase, ownership and
disposition of Senior Notes.
Michigan. In general, state tax laws conform to federal income tax
principles, and partnerships, grantor trusts and mere security devices are not
subject to tax at the entity level. The State of Michigan, however, imposes a
single business tax on corporations, partnerships and other entities doing
business in Michigan. Because the Administrative Agent is headquartered in
Michigan, tax authorities in Michigan may attempt to assert that FCTT, the
Transferor or the Issuer is subject to an entity level tax.
In the opinion of J. D. Bringard, Esq., the Vice President ---- General
Counsel of Ford Credit ("Michigan Tax Counsel"), assuming that the Senior Notes
will be treated as debt for federal income tax purposes, (i) the Senior Notes
will be treated as debt for Michigan income and single business tax purposes
and (ii) Senior Note Owners not otherwise subject to taxation in Michigan would
not become subject to taxation in Michigan solely because of a Senior Note
Owner's ownership of a Senior Note. Assuming further that the Lease Trust
Certificates (other than the Lease Trust Certificates initially acquired by the
Transferor) will be treated as debt for federal income tax purposes and that
none of FCTT, the Transferor or the Issuer will be subject to federal income
tax at the entity level, none of FCTT, the Transferor or the Issuer should be
subject to Michigan income and single business tax at the entity level.
Delaware. The Transferor has been organized as a Delaware business
trust. In the opinion of Special Tax Counsel, assuming that the Senior Notes
are treated as debt for federal income tax purposes, the Senior Notes will be
treated as debt for Delaware state income tax purposes. Assuming further that
none of FCTT, the Transferor or the Issuer will be subject to federal income
taxes at the entity level, none of FCTT, the Transferor or the Issuer will be
subject to the Delaware state income tax at the entity level. Further, in the
opinion of Special Tax Counsel, Senior Note Owners not otherwise subject to
taxation in Delaware would not become subject to taxation in Delaware solely
because of a Senior Note Owner's ownership of a Senior Note.
* * *
In the event that any state imposes a tax on FCTT, the Transferor or
the Issuer at the entity level, Ford Credit and Ford Credit Leasing have agreed
to indemnify the holders of the SBCs for the full amount of such taxes. If
Ford Credit and Ford Credit Leasing should fail to fulfill their respective
indemnification obligations, amounts otherwise distributable to them as holders
of the EBCs will be used to satisfy such indemnification obligations. However,
it is possible that the Senior Noteholders could incur a loss on their
investment in the event Ford Credit and Ford Credit Leasing did not have
sufficient assets available (including distributions on the EBCs) to satisfy
such state tax liabilities.
THE FEDERAL AND STATE TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR
GENERAL INFORMATION ONLY, DO NOT PURPORT TO ADDRESS THE APPLICABILITY OF STATE
TAX LAWS OTHER THAN THE TREATMENT OF THE TRUSTS AND THE SENIOR NOTE OWNERS
UNDER THE LAWS OF MICHIGAN AND DELAWARE AND MAY NOT BE APPLICABLE DEPENDING
UPON A SENIOR NOTE OWNER'S PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS
SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM
OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF SENIOR NOTES, INCLUDING THE TAX
CONSE-
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QUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS
OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and/or Section 4975 of the Code, prohibit a pension,
profit-sharing or other employee benefit plan, as well as individual retirement
accounts and Keogh Plans (each a "Benefit Plan") from engaging in certain
transactions with persons that are "parties in interest" under ERISA or
"disqualified persons" under the Code with respect to such Benefit Plan. A
violation of these "prohibited transaction" rules may result in an excise tax
or other penalties and liabilities under ERISA and the Code for such persons.
Title I of ERISA also requires that fiduciaries of a Benefit Plan subject to
ERISA make investments that are prudent, diversified (except if prudent not to
do so) and in accordance with governing plan documents.
Certain transactions involving the Issuer might be deemed to constitute
prohibited transactions under ERISA and the Code if assets of the Issuer were
deemed to be assets of a Benefit Plan. Under a regulation issued by the United
States Department of Labor (the "Plan Assets Regulation"), the assets of the
Issuer would be treated as plan assets of a Benefit Plan for purposes of ERISA
and the Code only if the Benefit Plan acquires an "Equity Interest" in the
Issuer and none of the exceptions contained in the Plan Assets Regulation
(discussed below) is applicable. An Equity Interest is defined under the Plan
Assets Regulation as an interest other than an instrument which is treated as
indebtedness under applicable local law and which has no substantial equity
features. The Transferor believes that the Senior Notes should be treated as
indebtedness without substantial equity features for purposes of the Plan
Assets Regulation. However, without regard to whether the Senior Notes are
treated as an Equity Interest for such purposes, the acquisition or holding of
Senior Notes by or on behalf of a Benefit Plan could be considered to give rise
to a prohibited transaction if the Issuer, the Lease Trustee, the RCL Trustee,
the Indenture Trustee, the FCTT Trustee, any Lease Trust Certificateholder, or
any of their respective affiliates, is or becomes a party in interest or a
disqualified person with respect to such Benefit Plan. In such case, certain
exemptions from the prohibited transaction rules could be applicable depending
on the type and circumstances of the plan fiduciary making the decision to
acquire a Senior Note. Included among these exemptions are: Prohibited
Transaction Class Exemption ("PTCE") 90-1, which exempts certain transactions
involving insurance company pooled separate accounts; PTCE 95-60, which exempts
certain transactions involving insurance company general accounts; PTCE 91-38,
which exempts certain transactions involving bank collective investment funds;
PTCE 96-23, which exempts certain transactions effected on behalf of a Benefit
Plan by an "in house" asset manager; and PTCE 84-14, which exempts certain
transactions effected on behalf of a Benefit Plan by a "qualified professional
asset manager."
Employee benefit plans that are governmental plans (as defined in
Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33)
of ERISA) are not subject to ERISA requirements.
A plan fiduciary considering the purchase of Senior Notes should
consult its tax and/or legal advisors regarding whether the assets of the
Issuer would be considered plan assets, the possibility of exemptive relief
from the prohibited transaction rules and other issues and their potential
consequences.
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting
agreement (the "Underwriting Agreement"), the Transferor has agreed to cause
the Issuer to sell to the underwriters named below (the "Underwriters") and
each of the Underwriters has severally agreed to purchase the initial principal
balance of Senior Notes as set forth opposite its name:
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<TABLE>
<CAPTION>
INITIAL PRINCIPAL BALANCE INITIAL PRINCIPAL BALANCE
UNDERWRITERS OF CLASS A-1 SENIOR NOTES OF CLASS A-2 SENIOR NOTES
------------ ------------------------- -------------------------
<S> <C> <C>
J.P. Morgan Securities Inc. . . . . . . $ $
. . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . .
---- -----
Total . . . . . . . . . . . . . $ $
==== ====
</TABLE>
The Transferor has been advised by the several Underwriters that the
several Underwriters propose initially to offer the Class A-1 Senior Notes and
Class A-2 Senior Notes to the public at the respective prices set forth on the
cover page of this Prospectus, and to certain dealers at such prices less an
initial concession not in excess of __% per Class A-1 Senior Note and __% per
Class A-2 Senior Note. The several Underwriters may allow and such dealers may
reallow a concession not in excess of __% per Class A-1 Senior Note and __% per
Class A-2 Senior Note to certain other dealers. After the initial public
offering of the Senior Notes, the public offering prices and such concessions
may be changed.
The closing of the sale of the Senior Notes is conditioned on the
closing of the issuance of the Subordinated Notes and the issuance and sale of
the Lease Trust Certificates.
The Indenture Trustee may, from time to time, invest the funds in the
Collection Account, the Payahead Account, the Cash Collateral Account, the
Payment Account and the Certificate Distribution Account in Eligible
Investments acquired from the Underwriters.
In the ordinary course of business, the Underwriters and their
affiliates have engaged and may engage in investment banking and commercial
banking transactions with Ford and its affiliates.
The Transferor, Ford Credit and Ford Credit Leasing have agreed to
jointly and severally indemnify the Underwriters against certain liabilities,
including civil liabilities under the Securities Act, or to contribute to
payments which the Underwriters may be required to make in respect thereof.
LEGAL MATTERS
Certain legal matters relating to the Senior Notes will be passed upon
for the Issuer and Ford Credit by J.D. Bringard, Esq., Vice President ----
General Counsel of Ford Credit, and for the Underwriters by Skadden, Arps,
Slate, Meagher & Flom LLP, New York, New York. Certain federal income tax and
other matters will be passed upon for the Issuer by Skadden, Arps, Slate,
Meagher & Flom LLP. Certain Michigan income tax and other matters will be
passed upon for the Issuer by Mr. Bringard.
Mr. Bringard is a full time employee of Ford Credit and owns and holds
options to purchase shares of Common Stock of Ford. Skadden, Arps, Slate,
Meagher & Flom LLP has from time to time represented Ford and Ford Credit in
connection with certain transactions.
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GLOSSARY OF TERMS
"Accepted Servicing Practices" is defined on page 59 in "Description
of the Administrative Agency Agreement ---- Duties of the Administrative
Agent."
"Accrual Period" means, (i) with respect to any Payment Date other
than the first Payment Date, the period from and including the first day of the
third preceding Collection Period up to and including the last day of the
preceding Collection Period, and (ii) with respect to the first Payment Date,
the period from and including the Series 1996-1 Cut-Off Date up to and
including the last day of the preceding Collection Period, in each case whether
or not such day is a business day.
"Additional Fee" is defined on page 38 in footnote 2 to the
Composition of the Series 1996-1 Assets in "The Leases and Leased Vehicles ----
Characteristics of the Series 1996-1 Assets."
"Additional Payment" is defined on page 6 in "Summary ---- Overview"
and on page 31 in "Series 1996-1 Certificates ---- Lease of Series 1996-1
Certificates to the Transferor."
"Adjusted Balance Subject to Lease Charges" means, with respect to any
Leased Vehicle as of any date, the Balance Subject to Lease Charges minus the
sum of the principal portion of all Constant Yield Payments which have been
scheduled to have been received as of such date; provided that the Adjusted
Balance Subject to Lease Charges of a Leased Vehicle shall be zero as of the
date on which the related Lease terminates, whether on or after the Scheduled
Lease End Date or earlier, or if an Administrative Purchase Amount has been
received with respect to such Lease and Leased Vehicle.
"Administrative Agency Agreement" means the agreement dated as of
January 31, 1994 among Comerica Bank, as trustee, Ford Credit, as
Administrative Agent, and Ford Credit and Ford Credit Leasing, as
beneficiaries.
"Administrative Agent" is Ford Credit.
"Administrative Agent Event of Default" is defined on page 64 in
"Description of the Administrative Agency Agreement ---- Administrative Agent
Events of Default."
"Administrative Agent Fee" means as of any Payment Date the fee
payable to the Administrative Agent equal to the sum, for each of the three
Collection Periods preceding such Payment Date, of the product of 1/12 of 1.00%
and the Pool Balance as of the beginning of each such Collection Period.
"Administrative Purchase Amount" is defined on page 49 in
"Description of the Senior Notes ---- The Indenture Cash Flows."
"Advance Payment Plan" means, with respect to any lease originated
under the Red Carpet Lease Plan, a payment option of the related lessee
pursuant to which such lessee prepays all monthly payments in a single advance
payment, generally discounted to reflect the present value of such single
advance payment and the reduction in the risk of credit loss.
"Aggregate Net Monthly Payment Advances" is defined on page 50 in
"Description of the Senior Notes ---- The Indenture Cash Flows."
"Aggregate Net Sale Proceeds Advances" is defined on page 50 in
"Description of the Senior Notes ---- The Indenture Cash Flows."
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"Asset Contribution Agreement" means the agreement dated as of ____ __,
1996 among Ford Credit, as a contributor, Ford Credit Leasing, as a contributor
and the Transferor, as contributee.
"Available Funds is defined on page 8 in "Summary ---- Principal" and
on page 51 in "Description of the Senior Notes ---- The Indenture Cash Flows."
"Available Sale Proceeds" is defined on page 8 in "Summary ----
Principal" and on page 50 in "Description of the Senior Notes ---- The
Indenture Cash Flows."
"Balance Subject to Lease Charges" means the amount paid by FCTT to
the Dealer in connection with the acquisition of the Lease and Leased Vehicle,
which is the total acquisition cost used to calculate the Monthly Payment.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C.
Section Section 101-1330.
"Basic Documents" means the FCTT Agreement, the Administrative Agency
Agreement, the Series 1996-1 Supplement, the Program Operating Lease, the Asset
Contribution Agreement, the Transfer Agreement, the RCL Trust Agreement, the
Lease Trust Agreement, the Lease Trust Paying Agent Agreement, the Indenture,
and each instrument and certificate delivered in connection therewith.
"Benefit Plan" is defined on page 87 in "ERISA Considerations."
"Cash Collateral Account" means the Cash Collateral Account
established pursuant to the Program Operating Lease.
"Cash Collateral Account Investments" means (i) the Hanover 100% U.S.
Treasury Securities Fund, (ii) if the Hanover 100% U.S. Treasury Securities
Fund is not available, the Hanover U.S. Treasury Fund or (iii) if the Hanover
100% U.S. Treasury Securities Fund and the Hanover U.S. Treasury Fund both are
not available, the Fidelity U.S. Government Reserve Fund.
"Cash Collateral Additional Draw Amount" is defined on page 9 in
"Summary ---- Principal" and on page 53 in "Description of the Senior Notes
- ---- Cash Collateral Account Withdrawals and Deposits."
"Cash Collateral Amount" is defined on page 13 in "Summary ---- Cash
Collateral Account" and on page 52 in "Description of the Senior Notes ----
Cash Collateral Account Withdrawals and Deposits."
"Cash Collateral Required Draw Amount" is defined on page 8 in
"Summary ---- Principal" and on page 53 in "Description of the Senior Notes
- ---- Cash Collateral Account Withdrawals and Deposits."
"Cede" means Cede & Co.
"Certificate Distribution Account" means the Certificate Distribution
Account established pursuant to the Lease Trust Agreement.
"Certificate Distribution Draw Amount" is defined on page 52 in
"Description of the Senior Notes ---- The Indenture Cash Flows."
"Class" means a class of Senior Notes; as the case may be, the Class
A-1 Senior Notes or the Class A-2 Senior Notes.
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"Class A-1 Senior Notes" means the Class A-1 __% Asset Backed Notes of
the Issuer.
"Class A-2 Senior Notes" means the Class A-2 __% Asset Backed Notes of
the Issuer.
"Closing Date" means ____ __, 1996, or such other day as the
Underwriters and the Transferor shall determine.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collections" is defined on page 49 in "Description of the Senior
Notes ---- The Indenture Cash Flows."
"Collection Account" means the Series 1996-1 Collection Account
established pursuant to the Series 1996-1 Supplement.
"Collection Period" means any calendar month.
"Commission" means the Securities and Exchange Commission.
"Constant Yield Payment" means the payment made by the Obligor which
provides a fixed internal rate of return equal to the Retail Operating Lease
Factor and amortizes the Balance Subject to Lease Charges of the related Leased
Vehicle to the Residual Value over the term of the Lease.
"Contingent and Excess Liability Insurance" is defined on page 77 in
"Certain Legal Aspects of FCTT and the Series 1996-1 Certificates ----
Insurance."
"Dealer" means a motor vehicle dealer who, in the ordinary course of
business, leases automobiles and light trucks to lessees pursuant to the Red
Carpet Lease Plan or such other plan as Ford Credit or its affiliates may
implement from time to time.
"Definitive Senior Notes" is defined on page 44 in "Description of
the Senior Notes ---- General."
"Distribution Date" means the date on which distributions are made
with respect to the Series 1996-1 Certificates, which shall be the 15th day of
each month, and if such day is not a business day, the next succeeding business
day.
"DTC" means The Depository Trust Company.
"EBC" means an Exchangeable Beneficial Certificate.
"Eligible Account" means a segregated trust account at a financial
institution having a long-term debt rating by each Rating Agency of at least
"Baa3" or the equivalent.
"Eligible Institution" means a depository institution organized under
the laws of the United States of America or any one of the states thereof or
incorporated under the laws of a foreign jurisdiction with a branch or agency
located in the United States of America or one of the States thereof and
subject to supervision and examination by federal or state banking authorities
which at all times has a short-term deposit rating of P-1 and a long-term
deposit rating of A2 by Moody's Investors Service, Inc. and a short-term
deposit rating of A-1+ by Standard and Poor's Ratings Group 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.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Events of Default" means any of the events of default under the
Indenture as set forth on page 54 in "Description of the Senior Notes ----
Indenture."
"Excess Deferred Gross" means, with respect to any Lease and Leased
Vehicle, the amount, if any, withheld from the total amount paid to the related
Dealer in connection with assignment of such Lease and Leased Vehicle. Excess
Deferred Gross is withheld if the acquisition cost of a Leased Vehicle exceeds
the MSRP of a Leased Vehicle, if the Residual Value of a Leased Vehicle as set
forth in the related Lease exceeds the maximum amount permitted for such Leased
Vehicle by the Administrative Agent, or the security deposit or reconditioning
reserve for such Lease is waived by the Dealer.
"Excess Wear and Tear and Excess Mileage" means, with respect to any
Lease and Leased Vehicle, amounts due from an Obligor upon termination of such
Lease on or after the Scheduled Lease End Date (i) as a result of excess wear
and tear with respect to the related Leased Vehicle and (ii) mileage charges
incurred in excess of the amount permitted pursuant to the related Lease.
"Exchangeable Beneficial Certificate" or "EBC" means a certificate of
beneficial interest in FCTT and the Non-Specified Assets.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FCTT" means Ford Credit Titling Trust, formed pursuant to the FCTT
Agreement.
"FCTT Agreement" means the Amended and Restated Trust Agreement dated
as of January 31, 1994 among the FCTT Trustee, Ford Credit and Ford Credit
Leasing.
"FCTT Assets" means (i) each Lease and related Leased Vehicle, (ii)
all collections of monies with respect to such Lease and related Leased
Vehicle, (iii) the related certificates of title, (iv) the rights of the lessor
to any security deposit or reconditioning reserve, (v) any recourse to Dealers
with respect to such Leases and Leased Vehicles and (vi) all proceeds of the
foregoing.
"FCTT Trustee" means Comerica Bank, in its capacity as trustee of
FCTT, and any co-trustee or separate trustee appointed for the purpose of
meeting applicable state requirements.
"Ford" means Ford Motor Company.
"Ford Credit" means Ford Motor Credit Company.
"Ford Credit Leasing" means Ford Credit Leasing Company, Inc.
"Foreign Person" is defined on page 84 in "Federal Income Tax
Consequences ---- Tax Consequences to Foreign Investors."
"GAP" is defined on page 78 in "Certain Legal Aspects of FCTT and
the Series 1996-1 Certificates ---- Insurance."
"General Eligibility Criteria" is defined on page 69 in "Additional
Document Provisions ---- Representations, Warranties and Covenants."
"Indenture" means the Indenture dated as of ____ __, 1996 between the
Issuer and the Indenture Trustee.
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<PAGE> 95
"Indenture Trustee" is The Chase Manhattan Bank.
"Indirect Participants" is defined on page 44 in "Description of the
Senior Notes ---- Book-Entry Registration."
"Initial Cash Collateral Deposit" is defined on page 13 in "Summary
- ---- Cash Collateral Account" and on page 52 in "Description of the Senior
Notes ---- Cash Collateral Account Withdrawals and Deposits."
"Initial Pool Balance" is defined on page 11 in "Summary ---- The
Series 1996-1 Assets."
"Insolvency Laws" is defined on page 74 in "Certain Legal Aspects of
FCTT and the Series 1996-1 Certificates ---- Insolvency Related Matters."
"IRS" means the Internal Revenue Service.
"Issuer" is Ford Credit Auto Lease Trust 1996-1.
"Lease" means any retail lease contract for an automobile or a light
truck which has been entered into between an Obligor and a Dealer and assigned
by the Dealer to FCTT.
"Leased Vehicle" means any automobile or light truck which is subject
to a Lease.
"Lease Files" means the certificate of title (or application
therefor), the original of the Lease and related documentation with respect to
a Lease and Leased Vehicle.
"Lease Term" is defined on page 32 in "The Leases and Leased
Vehicles ---- Origination Procedures."
"Lease Trust Agreement" means the Ford Credit Auto Lease Trust 1996-1
Trust Agreement dated as of ____ __, 1996 between the RCL Trustee and the Lease
Trustee.
"Lease Trust Certificates" means the __% Asset Backed Lease Trust
Certificates of the Issuer.
"Lease Trust Certificateholders" means the holders of any Lease Trust
Certificates.
"Lease Trustee" is PNC Bank, Delaware.
"Lease Trust Estate" is defined on page 12 in "Summary ---- Property
of the Issuer; Pledge to the Indenture Trustee" and on page 26 in "Property
of the Issuer."
"Lease Trust Paying Agent" is The Chase Manhattan Bank.
"Lease Trust Paying Agent Agreement" means the agreement dated as of
______ __, 199_ between the Lease Trustee and the Lease Trust Paying Agent.
"Lemon Law" is defined on page 81 in "Certain Legal Aspects of the
Lease and Leased Vehicles ---- Consumer Protections Laws."
"Liquidated Lease" means a Lease which is in default and with respect
to which the Administrative Agent has repossessed or attempted to repossess the
related Leased Vehicle or the related Obligor is the subject of a bankruptcy
proceeding, or a Lease subject to a Lemon Law with
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<PAGE> 96
respect to which amounts have either been refunded to the related Obligor or
such Obligor is no longer obligated to make Total Monthly Payments.
"Liquidation Proceeds" is defined on page 45 in "Description of the
Senior Notes ---- The Indenture Cash Flows."
"Michigan Tax Counsel" is J.D. Bringard, Esq., Vice President ----
General Counsel of Ford Credit.
"Monthly Payment" is defined on page 49 in "Description of the
Senior Notes ---- The Indenture Cash Flows."
"Monthly Payment Advance" is defined on page 63 in "Description of
the Administrative Agency Agreement ---- Monthly Payment Advances."
"Monthly Remittance Condition" means that (i) Ford Credit is the
Administrative Agent, (ii) the rating of Ford Credit's short-term unsecured
debt is at least P-1 by Moody's Investors Service, Inc. and A-1 by Standard &
Poor's Ratings Group and (iii) no Administrative Agent Event of Default with
respect to Series 1996-1 shall have occurred under the Administrative Agency
Agreement.
"Monthly Scheduled Termination Sale Proceeds" is defined on page 49
in "Description of the Senior Notes ---- The Indenture Cash Flows."
"MSRP" means the Manufacturer's Suggested Retail Price.
"Net Credit Losses" is defined on page 36 in footnote 4 to the Red
Carpet Lease Portfolio table in "The Leases and Leased Vehicles ----
Delinquency, Repossession, Residual Value and Loss Data."
"Non-Specified Assets" is defined on page 28 in "FCTT ----
Exchangeable Beneficial Certificates and Specified Beneficial Certificates."
"Note Pool Factor" is defined on page 43 in "Pool Factors and Trading
Information."
"Obligor" means the lessee under a Lease.
"OID" means Original Issue Discount.
"Opinion of Counsel" means a written opinion of counsel which may be
counsel to Ford Credit.
"Participants" is defined on page 44 in "Description of the Senior
Notes ---- Book-Entry Registration."
"Payahead Account" means the Series 1996-1 Payahead Account
established pursuant to the Series 1996-1 Supplement.
"Payahead Credits" is defined on page 49 in "Description of the
Senior Notes ---- The Indenture Cash Flows."
"Payaheads" are amounts received in a Collection Period from Obligors
in excess of the amount required to be currently applied against such Obligor's
current and past due Monthly Payments and which are not proceeds from the
disposition of the related Leased Vehicle.
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"Payment Account" means the Series 1996-1 Payments Account established
pursuant to the Indenture.
"Payment Date" means ____ 15, ____ 15, ____ 15 and ____ 15 of each
year, commencing ____ 15, 199_ or, if any such day is not a business day, the
next succeeding business day.
"Payment Extension" is defined on page 55 in "Description of the
Administrative Agency Agreement ---- Collection of Total Monthly Payments;
Extension of Leases."
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Investments" means (i) direct obligations of, and
obligations fully guaranteed by, the United States of America or any agency or
instrumentality of the United States the obligations of which are backed by the
full faith and credit of the United States; (ii) commercial paper issued by any
corporation incorporated under the laws of the United States or any State so
long as at the time such commercial paper is issued it is rated at least P-1 by
Moody's Investors Service, Inc. and A-1 by Standard and Poor's Ratings Group;
or (iii) any other investment otherwise approved by any Rating Agency.
"Plan Asset Regulations" is defined on page 87 in "ERISA
Considerations."
"Pool Balance" means, as of any date of determination, the aggregate
Adjusted Balance Subject to Lease Charges of Series 1996-1 Leased Vehicles as
of such date.
"Program Operating Lease" means the agreement dated as of ____ __,
1996 between the Issuer as lessor and the Transferor as lessee.
"Program Operating Lease Payments" is defined on page 6 in "Summary
- ---- Overview."
"Proposed Regulations" is defined on page 85 in "Federal Income Tax
Consequences ---- Tax Consequences to Foreign Investors."
"Prospectus" means this prospectus relating to the Senior Notes.
"PTCE" means Prohibited Transaction Class Exemption.
"Rating Agency" means a nationally recognized rating agency rating the
Senior Notes and/or the Lease Trust Certificates at the request of the Issuer.
"RCL Trust Agreement" means the Amended and Restated Trust Agreement
dated as of ____ __, 1996 by and among Ford Credit, Ford Credit Leasing and the
RCL Trustee.
"RCL Trustee" is First Union Bank of Delaware.
"Record Date" means, with respect to any Payment Date or Redemption
Date, the close of business on the fourteenth day of the calendar month in
which such Payment Date or Redemption Date occurs (or, if Definitive Senior
Notes are issued, the last day of the preceding calendar month).
"Recoveries" is defined on page 50 in "Description of the Senior
Notes ---- The Indenture Cash Flows."
"Red Carpet Lease Plan" is defined on page 32 in "The Leases and
Leased Vehicles ---- Origination Procedures."
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<PAGE> 98
"Red Carpet Lease Portfolio" is defined on page 34 in "The Leases
and Leased Vehicles ---- Delinquency, Repossession, Residual Value and Loss
Data."
"Redemption Date" means the Payment Date on which the Series 1996-1
Certificates are purchased by the Administrative Agent pursuant to the Series
1996-1 Supplement, which Payment Date shall be the date on which the Senior
Notes and Subordinated Notes are redeemed pursuant to the Indenture and the
Lease Trust Agreement, respectively.
"Redemption Price" means the outstanding principal amount of the
Senior Notes plus accrued and unpaid interest thereon to but not including the
Redemption Date.
"Required Cash Collateral Amount" is defined on page 14 in "Summary
- ---- Cash Collateral Account" and on page 53 in "Description of the Senior
Notes ---- Cash Collateral Account Withdrawals and Deposits."
"Required Interest Payment" on any Payment Date means the
Administrative Agent Fee plus the amount of interest accrued on the outstanding
Senior Notes, Subordinated Notes and Lease Trust Certificates since the
preceding Payment Date (or, in the case of the first Payment Date, since the
Closing Date) plus any overdue interest and interest on such overdue
interest at the interest rate of the applicable security.
"Residual Loss" is defined on page 37 in footnote 5 to the Red
Carpet Lease Portfolio table in "The Leases and Leased Vehicles ----
Delinquency, Repossession, Residual Value and Loss Data."
"Residual Value" means the value of the Leased Vehicle at its
Scheduled Lease End Date as calculated by the Administrative Agent at the
inception of the related Lease and set forth in the related Lease.
"Retail Operating Lease Factor" means the per annum yield of a Lease
determined by the Administrative Agent.
"Sale Proceeds" means all amounts realized from the sale of Leased
Vehicles.
"Sale Proceeds Advance" is defined on page 62 in "Description of the
Administrative Agency Agreement ---- Advances of Sale Proceeds."
"SBC" means a Specified Beneficial Certificate.
"Scheduled Lease End Date" means with respect to any Lease, the date set
forth in such Lease as the termination date for such Lease.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Noteholder" means, as of any date, the individual or entity in
whose name a Senior Note is registered on the Senior Note Register.
"Senior Note Owner" is defined on page 44 in "Description of the
Senior Notes ---- General."
"Senior Note Register" means the Senior Note register maintained
pursuant to the Indenture.
"Senior Note Registrar" means, initially, the Indenture Trustee.
"Senior Notes" means the Class A-1 Senior Notes and the Class A-2
Senior Notes.
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"Series" means any series of Specified Beneficial Certificates.
"Series 1995-1" means the Series 1995-1 Certificates and the related
Series 1995-1 Assets.
"Series 1995-1 Assets" are the Series Specified Assets with respect to
Series 1995-1.
"Series 1995-1 Certificates" means the series of Specified Beneficial
Certificates designated as Series 1995-1 representing an interest in the Series
1995-1 Assets.
"Series 1996-1" means the Series 1996-1 Certificates and the related
Series 1996-1 Assets.
"Series 1996-1 Assets" are the Series Specified Assets with respect to
Series 1996-1, including the Series 1996-1 Leases and Series 1996-1 Leased
Vehicles.
"Series 1996-1 Certificates" means the series of Specified Beneficial
Certificates designated as Series 1996-1 representing an interest in the Series
1996-1 Assets.
"Series 1996-1 Credit Loss" means with respect to any Collection Period
and Series 1996-1 Assets, (i) the aggregate Adjusted Balance Subject to Lease
Charges of all Series 1996-1 Leases and Series 1996-1 Leased Vehicles which
become Liquidated Leases during such Collection Period, plus the aggregate
amount of Uncollected Excess Wear and Tear and Excess Mileage relating to Series
1996-1 Leased Vehicles which were sold in such Collection Period with respect to
which Sale Proceeds of the related Series 1996-1 Leased Vehicle were received
plus any uncollected Monthly Payments minus (ii) Liquidation Proceeds and
Recoveries received during such Collection Period.
"Series 1996-1 Cut-Off Date" means ____ __, 1996.
"Series 1996-1 Leased Vehicles" means the Leased Vehicles designated in
the Series Specification Notice relating to Series 1996-1 and the Series 1996-1
Supplement.
"Series 1996-1 Leases" means the Leases designated in the Series
Specification Notice relating to Series 1996-1 and the Series 1996-1 Supplement.
"Series 1996-1 Residual Loss" means the aggregate Residual Values of
all Series 1996-1 Leased Vehicles the related Series 1996-1 Leases of which
terminated on or after their respective Scheduled Lease End Dates in a
Collection Period minus Sale Proceeds of such Series 1996-1 Leased Vehicles
(but in no event for any Series 1996-1 Leased Vehicle, an amount greater than
the Transferor Purchase Option Price) minus amounts assessed against Obligors
with respect to Excess Wear and Tear and Excess Mileage with respect to such
Series 1996-1 Leased Vehicles.
"Series 1996-1 Supplement" means the Series 1996-1 Supplement to the
Administrative Agency Agreement.
"Series Issue Date" is defined on page 28 in "FCTT ---- Exchangeable
Beneficial Certificates and Specified Beneficial Certificates."
"Series Specified Assets" means the Leases and Leased Vehicles
designated in the Series Specification Notice and the Supplement to the
Administrative Agency Agreement relating to such Series, including the related
certificates of title and all other FCTT Assets relating to such Leases and
Leased Vehicles.
"Series Specification Notice" means a notice delivered by the
Administrative Agent, acting at the unanimous direction of the holders of the
EBCs, to the FCTT Trustee directing such FCTT Trustee
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to (i) designate certain FCTT Assets as Series Specified Assets, (ii) designate
a date on which SBCs representing the interest in such Series Specified Assets
are to be issued to the holders of the EBCs and (iii) set the date on which
payments related to such Series Specified Assets shall be allocated to the
related SBCs. The Series Specification Notice relating to Series 1996-1 shall
contain such additional information as is reasonably necessary for the FCTT
Trustee to identify separately the Series 1996-1 Assets and to allocate
proceeds from such Series 1996-1 Assets.
"Special Tax Counsel" is Skadden, Arps, Slate, Meagher & Flom LLP.
"Specific Eligibility Criteria" is defined on page 37 in "The Leases
and Leased Vehicles ---- Eligibility Criteria."
"Specified Beneficial Certificate" or "SBC" means a certificate
representing a beneficial interest in FCTT and certain designated Series
Specified Assets.
"Stated Maturity" means with respect to the Class A-1 Senior Notes, the
____ __, 1997 Payment Date, with respect to the Class A-2 Senior Notes, the ____
__, 199_ Payment Date and with respect to the Subordinated Notes, the ____ __,
199_ Payment Date.
"Subordinated Noteholder" means, as of any date, the individual or
entity in whose name a Subordinated Note is registered pursuant to the Lease
Trust Agreement.
"Subordinated Notes" means the __% Asset Backed Subordinated Notes of
the Issuer.
"Supplemental Administrative Agent Fee" means, with respect to any
Collection Period, all late fees, prepayment charges and certain other
administrative fees and expenses or similar charges allowed by applicable law
with respect to Leases and Leased Vehicles, and interest on amounts invested in
the Payment Account.
"Term Extension" is defined on page 60 in "Description of the
Administrative Agency Agreement ---- Collection of Total Monthly Payments;
Extension of Leases."
"Total Monthly Payment" is defined on page 10 in "Summary ---- The
Series 1996-1 Assets."
"Transfer Agreement" means the Transfer Agreement dated as of ____ __,
1996 between the Transferor, as transferor, and the Issuer, as transferee.
"Transferor" is RCL Trust 1996-1.
"Transferor Leased Vehicle Purchase Option" is defined on page 12 in
"Summary ---- Transferor Leased Vehicle Purchase Option."
"Transferor Purchase Option Net Proceeds" is defined on page 13 in
"Summary ---- Transferor Leased Vehicle Purchase Option" and on page 32 in
"Series 1996-1 Certificates ---- Lease of the Series 1996-1 Certificates to the
Transferor."
"Transferor Purchase Option Price" is defined on page 13 in "Summary
- ---- Transferor Leased Vehicle Purchase Option" and on page 32 in "Series
1996-1 Certificates ---- Lease of the Series 1996-1 Certificates to the
Transferor."
"UCC" means the Uniform Commercial Code.
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"Uncollected Excess Wear and Tear and Excess Mileage" means, with
respect to any Payment Date and the related Accrual Period, all amounts which
are due but not collected from an Obligor with respect to a Series 1996-1 Lease
which terminated on its Scheduled Lease End Date as a result of (i) excess wear
and tear with respect to such Series 1996-1 Leased Vehicle and (ii) mileage
charges incurred in excess of the amount permitted pursuant to the related
Series 1996-1 Lease.
"Underwriters" are J.P. Morgan Securities Inc. and ______.
"Underwriting Agreement" is defined on page 87 in "Underwriting."
"Use and Lease Tax Amounts" is defined on page 33 in "The Leases and
Leased Vehicles ---- Origination Procedures."
"VCR" is defined on page 33 in "The Leases and Leased Vehicles ----
Servicing Procedures."
"Vehicle Insurance and Maintenance Amounts" means, with respect to any
Lease, any payment due in connection with a Monthly Payment for remittance to
the related Dealer in connection with servicing of the related Leased Vehicle or
the provision of vehicle insurance.
"Voluntary Early Termination" is defined on page 33 in "The Leases and
Leased Vehicles ---- Servicing Procedures."
"Voluntary Early Termination Proceeds" is defined on page 49 in
"Description of the Senior Notes ---- The Indenture Cash Flows."
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PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection with
the offering described in this Registration Statement.
<TABLE>
<S> <C>
Securities and Exchange Commission . . . . . . . . . . . . . . . $______
Rating agency fees . . . . . . . . . . . . . . . . . . . . . . . $______
Printing . . . . . . . . . . . . . . . . . . . . . . . . . . . . $______
Accountants' fees . . . . . . . . . . . . . . . . . . . . . . . . $______
Fees and expenses of the RCL Trustee . . . . . . . . . . . . . . $______
Fees and expenses of the Lease Trustee . . . . . . . . . . . . . $______
Fees and expenses of the Indenture Trustee . . . . . . . . . . . $______
Miscellaneous expenses . . . . . . . . . . . . . . . . . . . . . $______
Total . . . . . . . . . . . . . . . . . . . . . . . . . $
======
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 3803 of the Delaware Business Trust Statute
provides as follows:
3803. Liability of Beneficial Owners and Trustees.
(a) Except to the extent otherwise provided in the governing
instrument of the business trust, the beneficial owners shall be entitled to
the same limitation of personal liability extended to stockholders of private
corporations for profit organized under the general corporation law of the
State.
(b) Except to the extent otherwise provided in the governing
instrument of a business trust, a trustee, when acting in such capacity, shall
not be personally liable to any person other than the business trust or a
beneficial owner for any act, omission or obligation of the business trust or
any trustee thereof.
(c) Except to the extent otherwise provided in the governing
instrument of a business trust, an officer, employee, manager or other person
acting pursuant to Section 3806(b)(7), when acting in such capacity, shall not
be personally liable to any person other than the business trust or a
beneficial owner for any act, omission or obligation of the business trust or
any trustee thereof.
Section 3817 of the Delaware Business Trust Statute
provides as follows:
3817. Indemnification.
(a) Subject to such standards and restrictions, if any, as
are set forth in the governing instrument of a business trust, a business trust
shall have the power to indemnify and hold harmless any trustee or beneficial
owner or other person from and against any and all claims and demands
whatsoever.
(b) The absence of a provision for indemnity in the
governing instrument of a business trust shall not be construed to deprive any
trustee or beneficial owner or other person of any right to indemnity which is
otherwise available to such person under the laws of this State.
<PAGE> 103
Section 2.7 of the Amended and Restated Trust Agreement of RCL
Trust 1996-1 provides as follows:
Section 2.7 Liability and Indemnification. (a)
Notwithstanding Section 3803 of the Trust Statute, Ford Credit Leasing shall be
directly liable to any claimant for all losses, claims, damages, liabilities and
expenses ("Liabilities") of RCL, or incurred in connection with RCL Assets and
this Agreement and the Basic Documents to the extent that Ford Credit Leasing
would be liable if RCL were a partnership under the Delaware Revised Uniform
Limited Partnership Act or the Delaware Uniform Partnership Law and Ford Credit
Leasing were a general partner thereof, and Ford Credit Leasing hereby covenants
and agrees that it will maintain net worth in an amount sufficient to maintain
its status as a "general partner" of RCL and the Lease Trust for federal income
tax purposes. Any third party creditors of RCL shall be deemed to be third
party beneficiaries for purposes of this Section 2.7.
(b) The RCL Beneficiaries shall indemnify, defend and hold harmless
the RCL Trustee, including its successors, assigns, officers, directors,
shareholders, employees and agents for all Liabilities, penalties and taxes
(other than income taxes relating to the fees paid to it hereunder) incurred by
it in connection with the administration of the RCL Trust (including attorneys'
fees) and the performance of its duties thereunder; provided, however, that in
no event shall the RCL Trustee be indemnified or held harmless for any
Liabilities incurred (i) by reason of the RCL Trustee's willful misconduct, bad
faith or negligence or (ii) incurred by reason of the RCL Trustee's breach of
its representations and warranties set forth in Section 6.6. The RCL Trustee
shall notify the RCL Beneficiaries promptly of any claim for which the RCL
Trustee may seek indemnity. Failure by the RCL Trustee to so notify the RCL
Beneficiaries shall not relieve the RCL Beneficiaries of their obligations
hereunder. If necessary, to the extent not otherwise reimbursed, the RCL
Trustee shall be entitled to indemnification from amounts on deposit in the RCL
Account for any claims against the RCL Trustee the indemnification for which is
provided pursuant to this Section 2.7. Any claim against the RCL Trustee shall
be defended by the RCL Beneficiaries and the RCL Trustee shall be entitled to
separate counsel, the fees and expenses of which shall be paid by such RCL
Beneficiaries. The indemnities contained in this Section 2.7 shall survive the
resignation or termination of the RCL Trustee or the termination of this
Agreement. Any amounts paid to the RCL Trustee pursuant to this Section 2.7
shall be deemed not to be RCL Assets immediately after such payment. The RCL
Trustee acknowledges that funds may be deposited in the RCL Account only as
specifically provided in the Basic Documents, and that certain funds paid to
RCL in respect of the Series 1996-1 Certificates have been pledged to the Lease
Trustee on behalf of the Lease Trust and the Indenture Trustee on behalf of
Senior Noteholders in accordance with the terms of the Basic Documents.
Section 145 of the General Corporation Law of Delaware
provides as follows:
145. Indemnification of officers, directors, employees and agents; insurance --
(a) A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea
II-2
<PAGE> 104
of nolo contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (2) if there are no such directors, or if such directors
so direct, by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending a civil, criminal, administrative or investigative action,
suit or proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such director or officer to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized in this section. Such expenses (including attorneys'
fees) incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and
II-3
<PAGE> 105
incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee, or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees).
Article Ninth, Section 5 of the Certificate of Incorporation
of Ford Motor Credit Company provides as follows:
SECTION 5.
Indemnification
5.1. Directors, Officers and Employees of the Corporation. Every
person now or hereafter serving as a director, officer or employee of the
corporation shall be indemnified and held harmless by the corporation from and
against any and all loss, cost, liability and expense that may be imposed upon
or incurred by him in connection with or resulting from any claim, action,
suit, or proceeding, civil or criminal, in which he may become involved, as a
party or otherwise, by reason of his being or having been a director, officer
or employee of the corporation, whether or not he continues to be such at the
time such loss, cost, liability or expense shall have been imposed or incurred.
As used herein, the term "loss, cost, liability and expense" shall include, but
shall not be limited to, counsel fees and disbursements and amounts of
judgments, fines or penalties against, and amounts paid in settlement by, any
such director, officer or employee; provided, however, that no such director,
officer or employee shall be entitled to claim such indemnity: (1) with
respect to any matter as to which there shall have been a final adjudication
that he has committed or allowed some act or omission, (a) otherwise than in
good faith in what he considered to be the best interests of the corporation,
and (b)without reasonable
II-4
<PAGE> 106
cause to believe that such act or omission was proper and legal; or (2) in the
event of a settlement of such claim, action, suit, or proceeding unless (a) the
court having jurisdiction thereof shall have approved of such settlement with
knowledge of the indemnity provided herein, or (b) a written opinion of
independent legal counsel, selected by or in manner determined by the Board of
Directors, shall have been rendered substantially concurrently with such
settlement, to the effect that it was not probable that the matter as to which
indemnification is being made would have resulted in a final adjudication as
specified in clause (1) above, and that the said loss, cost, liability or
expense may properly be borne by the corporation. A conviction or judgment
(whether based on a plea of guilty or nolo contendere or its equivalent, or
after trial) in a criminal action, suit or proceeding shall not be deemed an
adjudication that such director, officer or employee has committed or allowed
some act or omission as hereinabove provided if independent legal counsel,
selected as hereinabove set forth, shall substantially concurrently with such
conviction or judgment give to the corporation a written opinion that such
director, officer or employee was acting in good faith in what he considered to
be the best interests of the corporation or was not without reasonable cause to
believe that such act or omission was proper and legal.
5.2. Directors, Officers and Employees of Subsidiaries. Every person
(including a director, officer or employee of the corporation) who at the
request of the corporation acts as a director, officer or employee of any other
corporation in which the corporation owns shares of stock or of which it is a
creditor shall be indemnified to the same extent and subject to the same
conditions that the directors, officers and employees of the corporation are
indemnified under the preceding paragraph, except that the amounts of such loss,
cost, liability or expense paid to any such director, officer or employee shall
be reduced by and to the extent of any amounts which may be collected by him
from such other corporation.
5.3. Miscellaneous. The provisions of this Section 5 of Article NINTH
shall cover claims, actions, suits and proceedings, civil or criminal, whether
now pending or hereafter commenced and shall be retroactive to cover acts or
omissions or alleged acts or omissions which heretofore have taken place. In
the event of death of any person having a right of indemnification under the
provisions of this Section 5 of Article NINTH, such right shall inure to the
benefit of his heirs, executors, administrators and personal representatives.
If any part of this Section 5 of Article NINTH should be found to be invalid or
ineffective in any proceeding, the validity and effect of the remaining
provisions shall not be affected.
5.4. Indemnification Not Exclusive. The foregoing right of
indemnification shall not be deemed exclusive of any other right to which those
indemnified may be entitled, and the corporation may provide additional
indemnity and rights to its directors, officers or employees.
Article V of the Certificate of Incorporation of Ford Credit
Leasing Company, Inc. provides as follows:
ARTICLE V
(a) A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability
(i) for any breach of the director's duty
of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware
General Corporation Law or
II-5
<PAGE> 107
(iv) for any transaction from which the
director derived an improper personal benefit.
If the Delaware General Corporation Law is amended
after approval by the stockholders of this Article V to authorize corporate
action further eliminating or limiting the personal liability of directors,
then the liability of a director of the corporation shall be eliminated or
limited to the fullest extent permitted by the Delaware General Corporation
Law, as so amended.
(b) Any repeal or modification of paragraph (a) of this Article V by
the stockholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.
(c) (i) Each person who was or is made a party or is threatened to be
made a party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative, investigative or otherwise (hereinafter a
"proceeding"), by reason of the fact that he or she, or a person of whom he or
she is the legal representative, is or was a director, officer or employee of
the corporation or is or was serving at the request of the corporation as a
director, officer or employee of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to employee
benefit plans, whether the basis of such proceeding is alleged action in an
official capacity as a director, officer or employee or in any other capacity
while serving as a director, officer or employee, shall be indemnified and held
harmless by the corporation to the fullest extent authorized by the Delaware
General Corporation Law, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment permits
the corporation to provide broader indemnification rights than said law
permitted the corporation to provide prior to such amendment), against all
expense, liability and loss (including penalties, fines, judgments, attorneys'
fees, amounts paid or to he paid in settlement and excise taxes imposed on
fiduciaries with respect to (i) employee benefit plans, (ii) charitable
organizations or (iii) similar matters) reasonably incurred or suffered by such
person in connection therewith and such indemnification shall continue as to a
person who has ceased to be a director, officer or employee and shall inure to
the benefit of his or her heirs, executors and administrators; provided,
however, that the corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person (other than pursuant to subparagraph (c)(ii) of this Article V) only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the corporation. The right to indemnification conferred in this subparagraph
(c)(i) of Article V shall be a contract right and shall include the right to be
paid by the corporation the expenses incurred in defending any such proceeding
in advance of its final disposition; provided, however, that, if the Delaware
General Corporation Law so requires, the payment of such expenses incurred by a
director or officer in his or her capacity as a director or officer (and not in
any other capacity in which service was or is rendered by such person while a
director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding shall be made
only upon delivery to the corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this subparagraph (c)(i) of Article V or otherwise.
(ii) If a claim which the corporation is
obligated to pay under subparagraph (c)(i) of this Article V is not
paid in full by the corporation within 60 days after a written claim
has been received by the corporation, the claimant may at any time
thereafter bring suit against the corporation to recover the unpaid
amount of the claim and, if successful in whole or in part, the
claimant shall be entitled to be paid also the expense of prosecuting
such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending
any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the corporation)
that
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<PAGE> 108
the claimant has not met the standards of conduct which make it
permissible under the Delaware General Corporation Law for the
corporation to indemnify the claimant for the amount claimed, but the
burden of proving such defense shall be on the corporation. Neither
the failure of the corporation (including its Board of Directors,
independent legal counsel or its stockholders) to have made a
determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because
he or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the
corporation (including its Board of Directors, independent legal
counsel or its stockholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the action or
create a presumption that the Claimant has not met the applicable
standard of conduct.
(iii) The provisions of this paragraph (c)
of Article V shall cover claims, actions, suits and proceedings, civil
or criminal, whether now pending or hereafter commenced, and shall be
retroactive to cover acts or omissions or alleged acts or omissions
which heretofore have taken place. If any part of this paragraph (c)
of Article V should be found to be invalid or ineffective in any
proceeding, the validity and effect of the remaining provisions shall
not be affected.
(iv) The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of
its final disposition conferred in this paragraph (c) of Article V
shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, By-Law, agreement, vote of stockholders or
disinterested directors or otherwise.
(v) The corporation may maintain insurance,
at its expense, to protect itself and any director, officer, employee
or agent of the corporation or another corporation, partnership, joint
venture, trust or other enterprise against any such expense, liability
or loss, whether or not the corporation would have the power to
indemnify such person against such expense, liability or loss under
the Delaware General Corporation Law.
(vi) The corporation may, to the extent
authorized from time to time by the Board of Directors, grant rights
to indemnification, and rights to be paid by the corporation the
expenses incurred in defending any proceeding in advance of its final
disposition, to any agent of the corporation to the fullest extent of
the provisions of this paragraph (c) of Article V with respect to the
indemnification and advancement of expenses of director, officers and
employees of the corporation.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Not Applicable
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS.
(A) EXHIBITS:
<TABLE>
<S> <C> <C>
1.1 - Form of Underwriting Agreement.
3.1 - Form of Amended and Restated Trust Agreement of RCL Trust 1996-1, among Ford Credit,
Ford Credit Leasing and the RCL Trustee.
3.2 - Restated Certificate of Incorporation of Ford Motor Credit Company.*
3.3 - By-Laws of Ford Motor Credit Company.*
3.4 - Certificate of Incorporation of Ford Credit Leasing Company, Inc.**
</TABLE>
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<PAGE> 109
<TABLE>
<S> <C> <C>
3.5 - By-Laws of Ford Credit Leasing Company, Inc.**
4.1 - Form of Trust Agreement of the Issuer, between the RCL Trustee and the Lease Trustee.
4.2 - Form of Trust Indenture, between the Lease Trustee and the Indenture Trustee.
4.3 - Form of Class A-1 Senior Note (included as part of Exhibit 4.2).
4.4 - Form of Class A-2 Senior Note (included as part of Exhibit 4.2).
5.1 - Opinion of J.D. Bringard, Esq., Vice President-General Counsel of Ford Motor Credit Company
with respect to legality.
8.1 - Opinion of Skadden, Arps, Slate, Meagher & Flom LLP with respect to tax matters.
8.2 - Opinion of J.D. Bringard, Esq., Vice President-General Counsel of Ford Motor Credit Company
with respect to Michigan income tax matters.
10.1 - FCTT Trust Agreement, among Ford Credit, Ford Credit Leasing and Comerica.
10.2 - Administrative Agency Agreement, among Comerica, Ford Credit and Ford Credit Leasing.
10.3 - Form of Series 1996-1 Supplement, among Comerica, Ford Credit and Ford Credit Leasing.
10.4 - Form of Asset Contribution Agreement, among Ford Credit, Ford Credit Leasing and the RCL Trustee.
10.5 - Form of Transfer Agreement, between the RCL Trustee and the Lease Trustee.
10.6 - Form of Program Operating Lease, between the RCL Trustee and the Lease Trustee.
10.7 - Form of Lease Trust Paying Agent Agreement between the Lease Trustee and the Lease Trust Paying Agent.
10.8 - Form of Appendix A and Appendix I - Definitions.
23.1 - Consent of J.D. Bringard Esq., Vice President - General Counsel of Ford Motor Credit Company
(included as part of Exhibit 5.1).
23.2 - Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included as part of Exhibit 8.1).
24.1 - Powers of Attorney of officers and directors of Ford Motor Credit Company.***
24.2 - Powers of Attorney of officers and directors Ford Credit Leasing Company, Inc.***
25.1 - Form T-1 of The Chase Manhattan Bank.
</TABLE>
* Incorporated by reference to Exhibits 3.1 (Restated Certificate of
Incorporation) and 3.2 (By-Laws) to Ford Motor Credit Company's
Registration Statement on Form S-1 (Registration No. 33-25082)
** Incorporated by reference to Exhibits 3.4 (Certificate of Incorporation)
and 3.5 (By-Laws) to Ford Motor Credit Company's and Ford Credit Leasing
Company, Inc.'s Registration Statement on Form S-1/S-3 (Registration No.
33-57827)
*** Previously filed
(B) FINANCIAL STATEMENTS:
[Not Applicable]
ITEM 17. UNDERTAKINGS.
(a) To provide to the Underwriter at the closing specified in the
Underwriting Agreement certificates in such denominations and registered in such
names as required by the Underwriter to permit prompt delivery to each
purchaser.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 14
above, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the
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<PAGE> 110
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(b) under the
Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under
the Securities Act of 1933 each post-effective amendment that contains
a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
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<PAGE> 111
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant has duly caused this Amendment No. 2 to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Detroit and the State of Michigan on the 1st day
of November, 1996.
RCL TRUST 1996-1
By FORD MOTOR CREDIT COMPANY,
Depositor and Beneficiary of the Registrant
By WILLIAM E. ODOM *
-----------------------------------
(William E. Odom, Chairman
of the Board of Directors of
Ford Motor Credit Company)
By FORD CREDIT LEASING COMPANY,
INC., Depositor and Beneficiary
of the Registrant
By KENNETH J. COATES *
-----------------------------------
(Kenneth J. Coates, Chairman
of the Board of Directors of
Ford Credit Leasing Company, Inc.)
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-1 and has duly caused this
Amendment No. 2 to the Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Detroit and the
State of Michigan on the 1st day of November, 1996.
FORD MOTOR CREDIT COMPANY
By WILLIAM E. ODOM *
--------------------------------
(William E. Odom, Chairman
of the Board of Directors of
Ford Motor Credit Company)
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<PAGE> 112
Pursuant to the requirements of the Securities Act of 1933,
this Amendment No. 2 to the Registration Statement has been signed below by
the following officers and directors of FORD MOTOR CREDIT COMPANY, in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
WILLIAM E. ODOM * Chairman of the November 1, 1996
- ----------------------------------- Board of Directors
(William E. Odom) and Director (princi-
pal executive officer)
KENNETH J. COATES * Director and Executive November 1, 1996
- ------------------------------------ Vice President-Finance
(Kenneth J. Coates) (principal financial
officer)
TERRENCE F. MARRS * Controller (principal November 1, 1996
- ----------------------------------- accounting officer)
(Terrence F. Marrs)
JOHN G. CLISSOLD * Director November 1, 1996
- -------------------------------------
(John G. Clissold)
EDSEL B. FORD II * Director November 1, 1996
- --------------------------------------
(Edsel B. Ford II)
DAVID N. MCCAMMON * Director November 1, 1996
- --------------------------------
(David N. McCammon)
GREGORY C. SMITH * Director November 1, 1996
- -------------------------------------
(Gregory C. Smith)
DAVID J. WENNERBERG * Director November 1, 1996
- ----------------------------------
(David J. Wennerberg)
* By /s/ R. P. CONRAD
--------------------------------
(R. P. Conrad, Attorney in Fact)
</TABLE>
II-11
<PAGE> 113
Pursuant to the requirements of the Securities Act of 1933,
this Amendment No. 2 to the Registration Statement has been signed below by
the following officers and directors of FORD CREDIT LEASING COMPANY, INC., in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
KENNETH J. COATES * Chairman of the Board of November 1, 1996
- ----------------------------------- Directors and Director
(Kenneth J. Coates) (principal executive
officer)
THOMAS W. PARKINSON * Controller (principal November 1, 1996
- --------------------------------- financial officer)
(Thomas W. Parkinson) and Director
PETER W. ATWATER * Director November 1 , 1996
- -----------------------------------
(Peter W. Atwater)
THEODORE F. BRECK * Director November 1, 1996
- -----------------------------------
(Theodore F. Breck)
JOHN P. BURKHARD * Director November 1, 1996
- ------------------------------------
(John P. Burkhard)
* By /s/ R. P. CONRAD
-------------------------------
(R. P. Conrad, Attorney in Fact)
</TABLE>
II-12
<PAGE> 114
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION PAGE
- -------- ----------- ----
<S> <C> <C> <C>
1.1 - Form of Underwriting Agreement.
3.1 - Form of Amended and Restated Trust Agreement of RCL Trust 1996-1, among Ford
Credit, Ford Credit Leasing and the RCL Trustee.
3.2 - Restated Certificate of Incorporation of Ford Motor Credit Company.*
3.3 - By-Laws of Ford Motor Credit Company.*
3.4 - Certificate of Incorporation of Ford Credit Leasing Company, Inc.**
3.5 - By-Laws of Ford Credit Leasing Company, Inc.**
4.1 - Form of Trust Agreement of the Issuer, between the RCL Trustee and the Lease
Trustee.
4.2 - Form of Trust Indenture, between the Lease Trustee and the Indenture Trustee.
4.3 - Form of Class A-1 Senior Note (included as part of Exhibit 4.2).
4.4 - Form of Class A-2 Senior Note (included as part of Exhibit 4.2).
5.1 - Opinion of J.D. Bringard, Esq., Vice President-General Counsel of Ford Motor Credit
Company with respect to legality.
8.1 - Opinion of Skadden, Arps, Slate, Meagher & Flom LLP with respect to tax matters.
8.2 - Opinion of J.D. Bringard, Esq., Vice President-General Counsel of Ford Motor Credit
Company with respect to Michigan income tax matters.
10.1 - FCTT Agreement, among Ford Credit, Ford Credit Leasing and Comerica.
10.2 - Administrative Agency Agreement, among Comerica, Ford Credit and Ford Credit
Leasing.
10.3 - Form of Series 1996-1 Supplement, among Comerica, Ford Credit and Ford Credit
Leasing.
10.4 - Form of Asset Contribution Agreement, among Ford Credit, Ford Credit Leasing and the
RCL Trustee.
10.5 - Form of Transfer Agreement, between the RCL Trustee and the Lease Trustee.
10.6 - Form of Program Operating Lease, between the RCL Trustee and the Lease
Trustee.
10.7 - Form of Lease Trust Paying Agent Agreement between the Lease Trustee and the Lease
Trust Paying Agent.
10.8 - Form of Appendix A and Appendix I - Definitions.
23.1 - Consent of J.D. Bringard Esq., Vice President - General Counsel of Ford Motor Credit
Company (included as part of Exhibit 5.1).
23.2 - Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included as part of Exhibit
8.1).
24.1 - Powers of Attorney of officers and directors of Ford Motor Credit Company.***
===
24.2 - Powers of Attorney of officers and directors of Ford Credit Leasing Company, Inc.***
===
25.1 - Form T-1 of The Chase Manhattan Bank.
</TABLE>
* Incorporated by reference to Exhibits 3.1 (Restated Certificate of
Incorporation) and 3.2 (By-Laws) to Ford Motor Credit Company's
Registration Statement on Form S-1 (Registration No. 33-25082)
** Incorporated by reference to Exhibits 3.4 (Certificate of Incorporation)
and 3.5 (By-Laws) to Ford Motor Credit Company's and Ford Credit Leasing
Company, Inc.'s Registration Statement on Form S-1/S-3 (Registration No.
33-57827)
*** Previously filed
<PAGE> 1
EXHIBIT 1.1
FORD CREDIT AUTO LEASE TRUST 1996-1
$_______ ASSET BACKED SENIOR NOTES
CLASS A-1, CLASS A-2
RCL TRUST 1996-1
(Seller)
FORD MOTOR CREDIT COMPANY
UNDERWRITING AGREEMENT
November __, 1996
J.P. Morgan Securities Inc.
As Representative of the Several Underwriters
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
1. Introductory. RCL Trust 1996-1, a Delaware business trust (the
"Seller"), proposes to sell to the several underwriters named on Schedule I
attached hereto (the "Underwriters") $______ initial principal balance of ___%
Class A-1 Asset Backed Senior Notes and $ ____ initial principal balance of __%
Class A-2 Asset Backed Senior Notes (collectively, the "Senior Notes"), issued
by Ford Credit Auto Lease Trust 1996-1 (the "Issuer"). Each Senior Note will
be secured by the assets of the Issuer (the "Lease Trust Estate"), which
include, among other things, certificates (the "Series 1996-1 Certificates")
representing a 100% undivided beneficial interest in specified retail
automobile and light truck leases (the "Series 1996-1 Leases"), certain monies
due thereunder on or after __________, 1996 (the "Series 1996-1 Cut-Off Date"),
the related leased vehicles (the "Series 1996-1 Leased Vehicles") and all
proceeds from the sale of Series 1996-1 Leased Vehicles upon termination of the
related Series 1996-1 Leases. The Series 1996-1 Leases are to be administered
for the Issuer by Ford Motor Credit Company (the "Administrative Agent" or
"Ford Credit"). The Senior Notes will be issued pursuant to an Indenture to be
dated as of November __, 1996 (the "Indenture"), between PNC Bank, Delaware
(the "Lease Trustee"), on behalf
<PAGE> 2
of the Issuer, and The Chase Manhattan Bank as Indenture Trustee (the
"Indenture Trustee"). Simultaneously with the issuance and sale of the Senior
Notes as contemplated herein, the Issuer will also issue $_______ initial
principal balance of __% Asset Backed Subordinated Notes and $_ ________
initial principal balance of ___% Asset Backed Lease Trust Certificates (the
"Lease Trust Certificates"), payments in respect of which are, to the extent
specified in the Indenture and the Lease Trust Agreement, subordinated to the
rights of the holders of the Senior Notes.
Capitalized terms used herein and not otherwise defined shall have the
meanings given them in the Indenture. For purposes of this Agreement, the
"Basic Documents" mean, collectively, the Indenture, the FCTT Agreement, the
Administrative Agency Agreement, the Series 1996-1 Supplement, the RCL Trust
Agreement, the Asset Contribution Agreement, the Transfer Agreement, the
Program Operating Lease, the Lease Trust Agreement and the Lease Trust Paying
Agent Agreement.
2. Representations and Warranties of the Seller. The Seller represents and
warrants to and agrees with the Underwriters:
(a) A registration statement (No. 333-11167), including a prospectus, on
Form S-1 relating to the Senior Notes has been filed with the Securities and
Exchange Commission (the "Commission") in the form heretofore delivered to the
Underwriters. Such registration statement in such form, including all exhibits
thereto but excluding Form T-1, is hereinafter referred to as the "Registration
Statement," and such prospectus, as first filed, or mailed for filing, with the
Commission pursuant to Rule 424(b) ("Rule 424(b)") under the Securities Act of
1933, as amended (the "Act") is hereinafter referred to as the "Prospectus."
For purposes of this Agreement, "Effective Time" means the date and time as of
which such Registration Statement is declared effective by the Commission, and
"Effective Date" means the date of the Effective Time.
(b) On the Effective Date, the Registration Statement will conform, in
all material respects to the requirements of the Act, the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), where applicable, and the rules
and regulations of the Commission under the Act or the Exchange Act, as
applicable, and will not, as of the Effec-
2
<PAGE> 3
tive Date, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and
warranty shall not apply to any statement or omission made in reliance upon and
in conformity with information furnished in writing to the Seller, Ford Credit
or Ford Credit Leasing by the Underwriters expressly for use in the
Registration Statement; when the Registration Statement became effective the
Indenture was, and at all times thereafter the Indenture has been and will be,
duly qualified under the Trust Indenture Act, and when the Registration
Statement became effective the Indenture conformed, and at all times thereafter
the Indenture has conformed and will conform, in all material respects to the
requirements of the Trust Indenture Act. On the date of this Agreement, the
Registration Statement conforms, and at the time of filing of the Prospectus
pursuant to Rule 424(b), the Registration Statement and the Prospectus will
conform, in all material respects to the requirements of the Act and the rules
and regulations of the Commission thereunder (the "Rules and Regulations"),
and, except as aforesaid, neither of such documents includes, or will include,
any untrue statement of a material fact or omits, or will omit, to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading.
(c) The Seller has been duly formed and is validly existing as a business
trust in good standing under the laws of the State of Delaware, and is duly
qualified to transact business and is in good standing in each jurisdiction in
the United States of America in which the conduct of its business or the
ownership of its property requires such qualification.
(d) The consummation by the Seller of the transactions contemplated by
this Agreement and the Basic Documents, and the fulfillment of the terms
thereof, will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, or result in the creation of any
lien, charge, or encumbrance upon any of the property or assets of the Seller
pursuant to the terms of, any indenture, mortgage, deed of trust, loan
agreement, guarantee, lease financing agreement, or similar agreement or
instrument under which the Seller is a debtor or guarantor.
3
<PAGE> 4
(e) This Agreement has been duly authorized, executed and delivered by
the Seller; on the Closing Date, the Senior Notes will have been duly executed,
authenticated, issued and delivered; on the Closing Date, the Basic Documents
to which the Seller is a party will have been duly authorized, executed and
delivered by and will constitute valid and binding obligations of the Seller in
accordance with their terms except as the same may be limited by bankruptcy,
insolvency, reorganization or other similar laws relating to or affecting the
enforcement of creditors' rights generally and by general equitable principles,
regardless of whether such enforceability is considered in a proceeding in
equity or at law; and the Basic Documents will conform to the description
thereof in the Prospectus in all material respects.
(f) The computer tape with respect to the Series 1996-1 Assets (the
"Computer Tape") to be delivered by Ford Credit as Administrative Agent to the
Lease Trustee, the Indenture Trustee and J.P. Morgan Securities Inc., as
representative of the Underwriters (the "Representative"), will be complete and
accurate in all material respects as of the date thereof.
3. Representations and Warranties of Ford Credit. Ford Credit represents
and warrants to and agrees with the Underwriters that:
(a) The Registration Statement has been filed with the Commission in the
form heretofore delivered to the Underwriters.
(b) On the Effective Date, the Registration Statement will conform, in
all material respects to the requirements of the Act, the Exchange Act, where
applicable, and the rules and regulations of the Commission under the Act or
the Exchange Act, as applicable, and will not, as of the Effective Date,
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that this representation and warranty shall
not apply to any statement or omission made in reliance upon and in conformity
with information furnished in writing to the Seller, Ford Credit or Ford Credit
Leasing by the Underwriters expressly for use in the Registration Statement;
when the Registration Statement became effective the Indenture was, and at all
times thereafter the Indenture has been and will be, duly qualified under the
Trust Indenture Act, and when the Registration Statement became effective the
Indenture conformed, and at all times there
4
<PAGE> 5
after the Indenture has conformed and will conform, in all material respects to
the requirements of the Trust Indenture Act. On the date of this Agreement,
the Registration Statement conforms, and at the time of filing of the
Prospectus pursuant to Rule 424(b), the Registration Statement and the
Prospectus will conform, in all material respects to the requirements of the
Act and the Rules and Regulations, and, except as aforesaid, neither of such
documents includes, or will include, any untrue statement of a material fact or
omits, or will omit, to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
(c) Ford Credit has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware; and has
corporate power and authority, and has all licenses, permits, orders and other
governmental and regulatory approvals, to own or lease its properties and
conduct its business and is in good standing in each jurisdiction in the United
States of America in which the conduct of its business or the ownership of its
property requires such qualification, with only such exceptions as are not
material to the business of Ford Credit and its subsidiaries considered as a
whole.
(d) This Agreement has been duly authorized, executed and delivered by
Ford Credit; on the Closing Date, the Basic Documents to which Ford Credit is a
party will have been duly authorized, executed and delivered by and will
constitute valid and binding obligations of Ford Credit in accordance with
their terms except as the same may be limited by bankruptcy, insolvency,
reorganization or other similar laws relating to or affecting the enforcement
of creditors' rights generally and by general equitable principles, regardless
of whether such enforceability is considered in a proceeding in equity or at
law; and the Basic Documents will conform to the description thereof in the
Prospectus in all material respects.
(e) There is no consent, approval, authorization, order, registration or
qualification of or with any court or any regulatory authority or other
governmental body having jurisdiction over Ford Credit which is required for,
and the absence of which would materially affect, the
5
<PAGE> 6
consummation of the transactions contemplated herein or in the Basic Documents,
except the registration under the Act of the Senior Notes, the qualification of
the Indenture under the Trust Indenture Act, such consents, approvals,
authorizations, registrations or qualifications as may be required under the
securities or Blue Sky laws of any jurisdiction in connection with the public
offering of the Senior Notes by the Underwriters and the filing of any
financing statements required to perfect the Seller's interest in the Series
1996-1 Certificates or the Issuer's or Indenture Trustee's interest in the
Lease Trust Estate and such other consents, approvals, authorizations,
registrations or qualifications as have been obtained.
(f) The Computer Tape to be delivered by Ford Credit as Administrative
Agent to the Lease Trustee, the Indenture Trustee and the Representative will
be complete and accurate in all material respects as of the date thereof.
(g) On or before the Closing Date, Ford Credit as Administrative Agent
for FCTT will mark the books and records of FCTT (in whatever medium
maintained) to show that the Series 1996-1 Assets are Series Specified Assets
with respect to Series 1996-1.
4. Purchase, Sale and Delivery of Senior Notes. On the basis of the
representations, warranties, and agreements herein contained, but subject to
the terms and conditions herein set forth, the Seller agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to
purchase from the Seller, the aggregate principal amounts of each Class of
Senior Notes set forth opposite the names of the Underwriters in Schedule I
hereto. The Class A-1 Senior Notes are to be purchased at the purchase price
of _______% of the aggregate principal amount thereof and the Class A-2 Senior
Notes are to be purchased at the purchase price of _______% of the aggregate
principal amount thereof, in each case plus accrued interest at the interest
rate of _____% for the Class A-1 Senior Notes and _____% for the Class A-2
Senior Notes calculated from (and including) November __, 1996.
Against payment of the purchase price in immediately available funds drawn
to the order of the Seller, the Seller will deliver the Senior Notes to the
Representative, for the account of the Underwriters, at the office of
6
<PAGE> 7
Skadden, Arps, Slate, Meagher & Flom LLP on November __, 1996, at 10:00 a.m.,
New York time, or at such other time not later than seven full business days
thereafter as the Representative and the Seller determine, such time being
herein referred to as the "Closing Date." The Senior Notes to be so delivered
will be initially represented by one or more Senior Notes registered in the
name of Cede & Co., the nominee of The Depository Trust Company ("DTC"). The
interests of beneficial owners of the Senior Notes will be represented by book
entries on the records of DTC and participating members thereof. Definitive
Senior Notes will be available only under limited circumstances.
5. Offering by Underwriters. It is understood that, after the Registration
Statement becomes effective, the Underwriters propose to offer the Senior Notes
for sale to the public (which may include selected dealers), as set forth in
the Prospectus.
6. Covenants of the Seller. The Seller covenants and agrees with the
Underwriters that it will do or cause to be done the following:
(a) If required, to file the Prospectus with the Commission pursuant to
and in accordance with Rule 424(b) not later than the time specified therein.
The Seller will advise the Underwriters promptly of any such filing pursuant to
Rule 424(b).
(b) To make no amendment or any supplement to the Registration Statement
or the Prospectus as amended or supplemented prior to the Closing Date, without
furnishing the Representative with a copy of the proposed form thereof and
providing the Representative with a reasonable opportunity to review the same;
and during such same period to advise the Representative, promptly after it
receives notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to the
Prospectus as amended or supplemented or any amended Prospectus has been filed
or mailed for filing, of the issuance of any stop order by the Commission, of
the suspension of the qualification of the Senior Notes for offering or sale in
any jurisdiction, of the initiation or threatening of any proceeding for any
such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus as amended or
supplemented or for additional information; and,
7
<PAGE> 8
in the event of the issuance of any such stop order or of any order preventing
or suspending the use of any prospectus relating to the Senior Notes or
suspending any such qualification, to use promptly its best efforts to obtain
its withdrawal.
(c) Promptly from time to time to take such action as the Representative
may reasonably request in order to qualify the Senior Notes for offering and
sale under the securities laws of such states as the Representative may request
and to continue such qualifications in effect so long as necessary under such
laws for the distribution of such Senior Notes, provided that in connection
therewith the Seller shall not be required to qualify as a foreign corporation
to do business, or to file a general consent to service of process in any
jurisdiction, and provided further that the expense of maintaining any such
qualification more than one year from the Closing Date with respect to such
Senior Notes shall be at the Representative's expense.
(d) To furnish the Underwriters with copies of the Registration Statement
(including exhibits) and copies of the Prospectus as amended or supplemented in
such quantities as the Representative may from time to time reasonably request;
and if, before a period of six months shall have elapsed after the Effective
Date and the delivery of a prospectus shall be at the time required by law in
connection with sales of any such Senior Notes, either (i) any event shall have
occurred as a result of which the Prospectus would include any untrue statement
of a material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, or (ii) for any other reason it shall be necessary
during such same period to amend or supplement the Prospectus as amended or
supplemented, to notify the Representative and to prepare and furnish to the
Representative as the Representative may from time to time reasonably request
an amendment or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance; and in case any Underwriter is
required by law to deliver a prospectus in connection with sales of any of such
Senior Notes at any time six months or more after the Closing Date, upon the
Representative's request, but at the expense of such Underwriter, to prepare
and deliver to such Underwriter as many copies as the Representative may
request of an amended or
8
<PAGE> 9
supplemented prospectus complying with Section 10(a)(3) of the Act.
(e) To make generally available to the Senior Noteholders as soon as
practicable after the Effective Date of the Registration Statement (as such
date is defined in Rule 158(c) under the Act), an earnings statement of the
Seller complying with Rule 158 under the Act and covering a period of at least
twelve consecutive months beginning after such Effective Date.
(f) To furnish to the Representative copies of the Registration Statement
(one of which will be signed and will include all exhibits), each related
preliminary prospectus, the Prospectus and all amendments and supplements to
such documents, in each case as soon as available and in such quantities as the
Representative reasonably requests.
(g) So long as any of the Senior Notes are outstanding, to furnish the
Representative copies of all reports or other communications (financial or
other) furnished to Senior Noteholders, and to deliver to the Representative
during such same period, (i) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the Commission by
the Seller or Ford Credit and (ii) such additional information concerning the
business and financial condition of the Seller, Ford Credit or Ford Credit
Leasing as the Representative may from time to time reasonably request.
(h) To pay the following costs and expenses incident to the performance
of its obligations under this Agreement: (i) the Commission's filing fees with
respect to the Registration Statement; (ii) all fees of the Rating Agency;
(iii) all fees and expenses of the Indenture Trustee, the Lease Trustee and the
Lease Trust Paying Agent; (iv) all reasonable fees and expenses of Kelley Drye
& Warren, as counsel to the Indenture Trustee and the Lease Trust Paying Agent,
Bayard Handelman & Murdoch, P.C., as counsel to the Lease Trustee, Morris,
James, Hitchens & Williams, as counsel to the RCL Trustee and Bodman, Longley &
Dahling LLP, as counsel to the FCTT Trustee; (v) the amount by which the
reasonable fees and expenses of Skadden, Arps, Slate, Meagher & Flom LLP
exceeds $________; (vi) all fees and expenses of Coopers & Lybrand relating to
the letter referred to in Section 7(a) of this Agreement; (vii) all fees and
9
<PAGE> 10
expenses of accountants incurred in connection with the delivery of any
accountant's or auditor's reports required pursuant to the Indenture or the
Administrative Agency Agreement; (viii) the cost of printing any preliminary
and final prospectus relating to the Senior Notes and the Registration
Statement; and (ix) any other fees and expenses incurred in connection with the
performance of its obligations under this Agreement.
The Underwriters will pay the following costs and expenses incident to the
performance of their obligations under this Agreement: (x) all Blue Sky fees
and expenses as well as reasonable fees and expenses of counsel in connection
with state securities law qualifications and any legal investment surveys; and
(y) the reasonable fees and expenses of Skadden, Arps, Slate, Meagher & Flom
LLP up to an amount equal to $_______. Except as provided in this Section 6(h)
and Sections 8 and 10 of this Agreement, the Underwriter will pay all its own
costs and expenses, including, without limitation, the cost of printing any
agreement among underwriters, any transfer taxes on resale of the Senior Notes
by the Underwriters and any advertising expenses connected with any offers that
the Underwriters may make.
(i) For a period from the date of this Agreement until the retirement of
the Senior Notes, or until such time as the Underwriters shall cease to
maintain a secondary market in the Senior Notes, whichever occurs first, Ford
Credit as the Administrative Agent will furnish to the Representative (i)
copies of each certificate, the annual statements of compliance and the annual
independent certified public accountant's servicing reports delivered to the
FCTT Trustee pursuant to Article IV of the Administrative Agency Agreement, by
first-class mail as soon as practicable after such statements and reports are
furnished to the FCTT Trustee, (ii) copies of each certificate and the annual
statements of compliance delivered to the Indenture Trustee pursuant to Article
III of the Indenture, by first-class mail as soon as practicable after such
statements and reports are furnished to the Indenture Trustee, (iii) copies of
each amendment to any Basic Document and (iv) on or about each Payment Date, a
copy of the report to Senior Noteholders delivered to each Senior Noteholder
pursuant to Article VIII of the Indenture, by telex or telecopy.
(j) On or before the Closing Date, the Seller shall cause Ford Credit as
Administrative Agent to
10
<PAGE> 11
(i) deliver the Computer Tape to the Lease Trustee, the Indenture Trustee and
the Representative and (ii) mark the books and records of FCTT (in whatever
medium maintained) to show that the Series 1996-1 Assets are Series Specified
Assets with respect to Series 1996-1. From and after the Closing Date, neither
the Seller nor Ford Credit shall take any action inconsistent with the
specification of the Series 1996-1 Assets as Series Specified Assets with
respect to Series 1996-1 and the provisions of the Basic Documents relating to
such specification, except as permitted by the Basic Documents.
(k) To the extent, if any, that the rating provided with respect to the
Senior Notes by the rating agency or agencies that initially rate the Senior
Notes is conditional upon the furnishing of documents or the taking of any
other actions by the Seller or Ford Credit, the Seller or Ford Credit, as the
case may be, shall furnish such documents and take any such other actions.
7. Conditions of the Obligation of the Underwriters. The obligation of the
Underwriters to purchase and pay for the Senior Notes will be subject to the
accuracy of the representations and warranties on the part of the Seller and
Ford Credit herein, to the accuracy of the statements of officers of the
Seller, Ford Credit and Ford Credit Leasing pursuant to the provisions hereof,
to the performance by the Seller, Ford Credit and Ford Credit Leasing of their
respective obligations hereunder and to the following additional conditions
precedent:
(a) On or prior to the Closing Date, Coopers & Lybrand shall have
furnished to the Representative a letter dated as of the Closing Date
substantially in the form and substance of the draft to which the
Representative previously agreed.
(b) The Registration Statement shall have become effective not later than
5:30 p.m., New York time, on _____, 1996, or such later date as shall have
been consented to by the Representative; prior to the Closing Date no stop
order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been instituted or,
to the knowledge of the Seller, shall be contemplated by the Commission; and
all requests for additional information from the Commission with
11
<PAGE> 12
respect to the Registration Statement shall have been complied with to the
satisfaction of the Representative.
(c) The Representative shall have received a officer's certificate, dated
the Closing Date, signed by the beneficiaries of the Seller representing and
warranting that, as of the Closing Date, except to the extent that they relate
expressly to another date in which case they will be true and correct as of
such date on the Closing Date, the representations and warranties of the Seller
in this Agreement, the Asset Contribution Agreement and the Lease Trust
Agreement are true and correct, that the Seller has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date, that no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or, to the best of their
knowledge, are contemplated by the Commission.
(d) Since the respective dates as of which information is given in the
Prospectus as amended or supplemented, there shall not have occurred any
material adverse change, or any development involving a prospective material
adverse change, in or affecting particularly the business or assets of the
Seller, Ford Credit or Ford Credit Leasing, or any material adverse change in
the financial position or results or operations of the Seller, Ford Credit or
Ford Credit Leasing, otherwise than as set forth or contemplated in the
Prospectus, which in any such case makes it impracticable or inadvisable in the
Representative's reasonable judgment to proceed with the public offering or the
delivery of the Senior Notes on the terms and in the manner contemplated in the
Prospectus as amended or supplemented.
(e) Subsequent to the execution and delivery of this Agreement, the
United States shall not have become engaged in hostilities which have resulted
in the declaration of a national emergency or a declaration of war, which makes
it impracticable or inadvisable in the Representative's reasonable judgment to
proceed with the public offering of the Senior Notes on the terms and in the
manner contemplated in the Prospectus as amended or supplemented.
(f) J.D. Bringard, Esq., Vice President-General Counsel of Ford Credit
and Ford Credit Leasing, or other counsel satisfactory to the Representative in
its rea-
12
<PAGE> 13
sonable judgment, shall have furnished to the Underwriter, his written opinion,
dated the Closing Date, in form satisfactory to the Representa- tive in its
reasonable judgment, to the effect that:
(i) The Seller has been duly formed and is validly existing as a
business trust 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) FCTT has been duly formed and is validly existing as a trust under
the laws of the State of Michigan, and is duly qualified to transact business
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.
(iii) The FCTT Agreement has been duly authorized, executed and
delivered by, and constitutes a valid and binding obligation of, each of Ford
Credit and Ford Credit Leasing.
(iv) This Agreement has been duly authorized, executed and delivered by
the Seller.
(v) The Program Operating Lease, the Asset Contribution Agreement, the
Transfer Agreement, the RCL Trust Agreement, the RCL Assignment and the Lease
Trust Agreement have been duly authorized, executed and delivered by, and
each constitutes a valid and binding obligation of, the Seller.
(vi) The consummation of the transactions contemplated by this Agreement
and the Basic Documents and the fulfillment of the terms thereof, will not
conflict with or result in a material breach of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any material lien, charge or encumbrance upon any of the
property or assets of the Seller pursuant to the terms of, any
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<PAGE> 14
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 Trust of the Seller.
(vii) The Seller has full power and authority to transfer and assign the
Series 1996-1 Certificates to the Issuer pursuant to the Transfer Agreement
and has duly authorized such transfer and assignment to the Issuer by all
necessary trustee action.
(viii) The Seller has full power and authority to transfer and assign a
1% interest in its assets and liabilities to Ford Credit Leasing pursuant to
the RCL Assignment and has duly authorized such transfer and assignment to
Ford Credit Leasing by all necessary trustee action.
(ix) Such counsel does not know of any legal or governmental proceedings
pending to which the Seller is a party or of which any property of the Seller
is the subject, and no such proceedings are known by such counsel to be
threatened or contemplated by governmental authorities or threatened by
others, other than as set forth or contemplated in the Prospectus as amended
or supplemented and other than such proceedings which, in his opinion, will
not have a material adverse effect upon the general affairs, business,
prospects, management, financial position, net worth or results of operations
(on an annual basis) of the Seller and will not materially and adversely
affect the performance by the Seller of its obligations under, or the
validity and enforceability of, the Basic Documents or the Senior Notes.
(x) The Senior Notes have been duly authorized; when executed by the
Lease Trustee and authenticated by the Indenture Trustee in accordance with
the Indenture and delivered and paid for pursuant to this Agreement, the
Senior Notes will constitute valid and binding obliga-
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<PAGE> 15
tions of the Issuer enforceable in accordance with their terms.
(xi) The Registration Statement has become effective under the Act and,
to the best knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceeding
for that purpose has been instituted or threatened by the Commission; the
Registration Statement and the Prospectus as amended or supplemented and any
further amendments and supplements thereto made by the Seller prior to the
Closing Date (other than the financial statements and other accounting
information contained in the Registration Statement or the Prospectus as
amended or supplemented or any further amendments or supplements thereto, or
omitted therefrom, as to which such counsel need express no opinion) comply
as to form in all material respects with the requirements of the Act and the
Trust Indenture Act.
(xii) Such counsel believes that the Registration Statement (other than
the financial statements and other accounting information contained therein
or omitted therefrom, as to which such counsel need express no opinion), at
the time the same became effective, did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
(xiii) Such counsel believes that the Prospectus as amended or
supplemented as of its date and as of the Closing Date (other than the
financial statements and other accounting information contained therein or
omitted therefrom, as to which such counsel need express no opinion) does not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
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<PAGE> 16
(xiv) Such counsel does not know of any contract or other document of a
character required to be filed as an exhibit to the Registration Statement or
required to be incorporated by reference into the Prospectus as amended or
supplemented or required to be described in the Registration Statement or the
Prospectus as amended or supplemented which is not filed or incorporated by
reference or described as required.
(xv) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the
transactions contemplated herein or in the Basic Documents, except such as
have been obtained and made under the Act, the Trust Indenture Act and as may
be required under state securities laws, and the filing of any financing
statements required to perfect the Seller's interest in the Series 1996-1
Certificates or the Issuer's or Indenture Trustee's interest in the Lease
Trust Estate and such other approvals as have been obtained.
(xvi) Neither the issuance or sale of the Senior Notes, nor the
execution and delivery of the Senior Notes, this Agreement or the Basic
Documents, nor the consummation of any of the other transactions contemplated
herein or in the Basic Documents by the Seller will contravene the terms of
any material provision of any statute, order, or regulation applicable to the
Seller, the failure with which to comply could have a material adverse effect
on the Seller.
(xvii) The Senior Notes, the Basic Documents and this Agreement each
conforms in all material respects with the descriptions thereof contained in
the Registration Statement and the Prospectus.
(xviii) The Seller is not required to be registered under the Investment
Company Act of 1940, as amended.
(xix) Each Series 1996-1 Lease constitutes "chattel paper" as defined in
the Michigan UCC.
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(xx) The Series 1996-1 Certificates are either "certificated securities"
or "general intangibles" as defined in the Michigan UCC.
Such opinion may be made subject to the qualifications that the
enforceability of the terms of the Indenture, the Program Operating Lease,
the Asset Contribution Agreement, the Transfer Agreement, the RCL Trust
Agreement, the RCL Assignment, the Lease Trust Agreement and the Senior Notes
may be limited by bankruptcy, insolvency, reorganizations or other similar
laws relating to or affecting the enforcement of creditors' rights generally
and by general equitable principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(g) J.D. Bringard, Esq., Vice President-General Counsel of Ford Credit,
or other counsel satisfactory to the Representative in its reasonable judgment,
shall have furnished to the Representative his written opinion, dated as of the
Closing Date, in form satisfactory to the Representative in its reasonable
judgment, to the effect that:
(i) Ford Credit has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, and is
duly qualified to transact business and is in good standing in each
jurisdiction in the United States of America in which the conduct of its
business or the ownership of its property requires such qualification, with
only such exceptions as are not material to the business of Ford Credit and
its subsidiaries considered as a whole.
(ii) This Agreement has been duly authorized, executed and delivered by
Ford Credit.
(iii) The FCTT Agreement, the Administrative Agency Agreement, the
Series 1996-1 Supplement, the Asset Contribution Agreement and the RCL Trust
Agreement have been duly authorized, executed and delivered by, and each
constitutes a valid and binding obligation of, Ford Credit.
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<PAGE> 18
(iv) The consummation of the transactions contemplated by this Agreement
and the Basic Documents, and the fulfillment of the terms thereof, will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under (in each case material to Ford Credit and its
subsidiaries considered as a whole), or result in the creation or imposition
of any lien, charge or encumbrance (in each case material to Ford Credit
and its subsidiaries considered as a whole) upon any of the property or
assets of Ford Credit pursuant to the terms of, any indenture, mortgage, deed
of trust, loan agreement, guarantee, lease financing agreement or similar
agreement or instrument known to such counsel under which Ford Credit is a
debtor or guarantor, nor will such action result in any violation of the
provisions of the Certificate of Incorporation or By-Laws of Ford Credit.
(v) Such counsel does not know of any legal or governmental proceedings
pending to which Ford Credit is a party or of which any property of Ford
Credit is the subject, and no such proceedings are known by such counsel to
be threatened or contemplated by governmental authorities or threatened by
others, other than as set forth or contemplated in the Prospectus as amended
or supplemented and other than such proceedings which, in his opinion, will
not have a material adverse effect upon the general affairs, financial
position, net worth or results of operations (on an annual basis) of Ford
Credit and its subsidiaries considered as a whole and will not materially and
adversely affect the performance by Ford Credit of its obligations under, or
the validity and enforceability of, the Basic Documents.
(vi) Ford Credit has full power and authority to contribute and assign
its interest in the Series 1996-1 Certificates to the Seller pursuant to the
Asset Contribution Agreement and has duly authorized such contribution and
assignment to the Seller by all necessary corporate action.
(vii) The Issuer has full power and authority to grant a security
interest in the
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<PAGE> 19
Series 1996-1 Certificates to the Indenture Trustee pursuant to the Indenture
and, subject to such security interest, to grant to the Seller the right to
the use of and proceeds from the Series 1996-1 Certificates pursuant to the
Program Operating Lease and has duly authorized each such grant by all
necessary trustee action.
(viii) The statements in the Prospectus under the caption "Certain
Legal Aspects of FCTT and the Series 1996-1 Certificates" and "Certain Legal
Aspects of the Leases and Leased Vehicles," to the extent they constitute
matters of law or legal conclusions, are correct in all material respects.
(ix) Immediately prior to the transfer of its interest in the Series
1996-1 Certificates to the Seller, Ford Credit owned its interest in the
Series 1996-1 Certificates free and clear of any lien, security interest or
charge; immediately prior to the transfer and assignment of the Series 1996-1
Certificates to the Issuer, the Seller owned the Series 1996-1 Certificates
free and clear of any lien, security interest or charge; and immediately
prior to the grant of a security interest in the Series 1996-1 Certificates
to the Indenture Trustee, the Issuer owned the Series 1996-1 Certificates
free and clear of any lien, security interest or charge. The Series 1996-1
Certificates have been duly and validly assigned to the Seller by Ford Credit
and Ford Credit Leasing and to the Issuer by the Seller, and a security
interest in the Series 1996-1 Certificates has been duly and validly granted
to the Indenture Trustee by the Issuer. Subject to such security interest,
the right to the use of and proceeds from the Series 1996-1 Certificates has
been duly and validly granted to the Seller by the Issuer.
(x) All filings necessary under applicable law to perfect the
assignment of the Series 1996-1 Certificates by Ford Credit and Ford Credit
Leasing to the Seller pursuant to the Asset Contribution Agreement, the
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<PAGE> 20
assignment of the Series 1996-1 Certificates by the Seller to the Issuer
pursuant to the Transfer Agreement and the grant of a security interest in
the Series 1996-1 Certificates to the Indenture Trustee pursuant to the
Indenture have been made and, provided that neither Ford Credit nor Ford
Credit Leasing relocates its principal place of business in a state other
than Michigan, no other filings (other than the filing of continuation
statements) need be made to maintain the perfection of the assignment of the
Series 1996-1 Certificates to the Seller pursuant to the Asset Contribution
Agreement or to the Issuer pursuant to the Transfer Agreement and of the
grant of a security interest in the Series 1996-1 Certificates to the
Indenture Trustee pursuant to the Indenture.
(xi) The Indenture is qualified under the Trust Indenture Act, and
neither the Issuer nor Ford Credit is required to be registered under the
Investment Company Act of 1940, as amended.
(xii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the
transactions contemplated herein or in the Basic Documents, except such as
have been obtained and made under the Act, the Trust Indenture Act and as may
be required under state securities laws, and the filing of any financing
statements required to perfect the Seller's interest in the Series 1996-1
Certificates or the Issuer's or Indenture Trustee's interest in the Lease
Trust Estate and such other approvals as have been obtained.
(xiii) Such counsel does not know of any legal or governmental
proceedings pending to which either Ford Credit or the Seller is a party or
of which any property of either Ford Credit or the Seller is the subject, and
no such proceedings are known by such counsel to be threatened or
contemplated by governmental authorities or threatened by others (1) seeking
to prevent the issuance of the
20
<PAGE> 21
Senior Notes or the consummation of any of the transactions contemplated by
this Agreement and the Basic Documents or (2) seeking adversely to affect the
federal income tax attributes of the Senior Notes as described in the
Prospectus under the heading "Federal Income Tax Consequences."
(xiv) Neither the issuance or sale of the Senior Notes, nor the
execution and delivery of the Senior Notes, this Agreement or the Basic
Documents, nor the consummation of any of the other transactions contemplated
herein or in the Basic Documents by Ford Credit will contravene the terms of
any material provision of any statute, order, or regulation applicable to
Ford Credit, the failure with which to comply could have a material adverse
effect on Ford Credit and its subsidiaries considered as a whole.
(h) J.D. Bringard, Esq., Vice President-General Counsel of Ford Credit
Leasing, or other counsel satisfactory to the Representative in its reasonable
judgment, shall have furnished to the Representative his written opinion, dated
as of the Closing Date, in form satisfactory to the Representative in its
reasonable judgment, to the effect that:
(i) Ford Credit Leasing has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, and is duly qualified to transact business and is in good standing
in each jurisdiction in the United States of America in which the conduct of
its business or the ownership of its property requires such qualification.
(ii) This Agreement has been duly authorized, executed and delivered by
Ford Credit Leasing.
(iii) The FCTT Agreement, the Administrative Agency Agreement, the
Series 1996-1 Supplement, the Asset Contribution Agreement, the RCL Trust
Agreement and the RCL
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<PAGE> 22
Assignment have been duly authorized, executed and delivered by, and each
constitutes a valid and binding obligation of, Ford Credit Leasing.
(iv) The consummation of the transactions contemplated by this Agreement
and the Basic Documents, and the fulfillment of the terms thereof, will not
conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any of the property or assets of Ford Credit
Leasing pursuant to the terms of, any indenture, mortgage, deed of trust,
loan agreement, guarantee, lease financing agreement or similar agreement or
instrument known to such counsel under which Ford Credit Leasing is a debtor
or guarantor, nor will such action result in any violation of the provisions
of the Certificate of Incorporation or By-Laws of Ford Credit Leasing.
(v) Ford Credit Leasing is not required to be registered under the
Investment Company Act of 1940, as amended.
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation of the
transactions contemplated herein or in the Basic Documents, except such as
have been obtained and made under the Act, the Trust Indenture Act and as may
be required under state securities laws, and the filing of any financing
statements required to perfect the Seller's interest in the Series 1996-1
Certificates or the Issuer's or Indenture Trustee's interest in the Lease
Trust Estate and such other approvals as have been obtained.
(vii) Such counsel does not know of any legal or governmental
proceedings pending to which Ford Credit Leasing is a party or of which any
property of Ford Credit Leasing is the subject, and no such proceedings are
known by such counsel to be threatened or contemplated by governmental
authorities or threatened by
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others, other than as set forth or contemplated in the Prospectus as amended
or supplemented and other than such proceedings which, in his opinion, will
not have a material adverse effect upon the general affairs, financial
position, net worth or results of operations (on an annual basis) of Ford
Credit Leasing and will not materially and adversely affect the performance
by Ford Credit Leasing of its obligations under, or the validity and
enforceability of, the Basic Documents.
(viii) Ford Credit Leasing has full power and authority to contribute
and assign its interest in the Series 1996-1 Certificates to the Seller
pursuant to the Asset Contribution Agreement and has duly authorized such
contribution and assignment to the Seller by all necessary corporate action.
(ix) Immediately prior to the transfer of its interest in the Series
1996-1 Certificates to the Seller, Ford Credit Leasing owned its interest in
the Series 1996-1 Certificates free and clear of any lien, security interest
or charge.
(x) Such counsel does not know of any legal or governmental proceedings
pending to which Ford Credit Leasing is a party or of which any property of
Ford Credit Leasing is the subject, and no such proceedings are known by such
counsel to be threatened or contemplated by governmental authorities or
threatened by others (1) seeking to prevent the issuance of the Senior Notes
or the consummation of any of the transactions contemplated by this Agreement
and the Basic Documents or (2) seeking adversely to affect the federal income
tax attributes of the Senior Notes as described in the Prospectus under the
heading "Federal Income Tax Consequences."
(xi) Neither the issuance or sale of the Senior Notes, nor the execution
and delivery of the Senior Notes, this Agreement or the Basic Documents, nor
the consummation of
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<PAGE> 24
any of the other transactions contemplated herein or in the Basic Documents
by Ford Credit Leasing will contravene the terms of any material provision of
any statute, order, or regulation applicable to Ford Credit Leasing, the
failure with which to comply could have a material adverse effect on Ford
Credit Leasing.
(i) Skadden, Arps, Slate, Meagher & Flom LLP shall have furnished their
written opinion, dated the Closing Date, with respect to the characterization
of the transfer of the Series 1996-1 Certificates by Ford Credit and Ford
Credit Leasing to the Seller as an absolute transfer (a "true sale"), and with
respect to the characterization under the Uniform Commercial Code of the
transfer of the Series 1996-1 Certificates from the Seller to the Issuer (which
opinion shall state that it may be relied upon by the Indenture Trustee) to the
Representative, the Rating Agency, Ford Credit and Ford Credit Leasing, and
such opinion shall be in substantially the form previously discussed with the
Representative and in any event satisfactory in form and in substance to the
Representative.
(j) Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to Ford
Credit, shall have furnished their written opinion, dated the Closing Date,
with respect to the nonconsolidation under the Bankruptcy Code of the assets
and liabilities of any of Ford Credit Leasing, FCTT or the Seller with the
assets and liabilities of Ford Credit in the event that Ford Credit were to
become the subject of a case under the Bankruptcy Code to the Representative,
the Rating Agency, Ford Credit and Ford Credit Leasing, and such opinion shall
be in substantially the form previously discussed with the Representative and
in any event satisfactory in form and in substance to the Representative.
(k) Skadden, Arps, Slate, Meagher & Flom LLP, special tax counsel to Ford
Credit, shall have furnished to the Representative their written opinion, dated
as of the Closing Date, in form and in substance satisfactory to the
Representative in its reasonable judgment, to the effect that:
(i) FCTT, the Seller and the Issuer will each not be classified as
an asso-
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ciation taxable as a corporation for federal income tax purposes and the
Senior Notes will be characterized as debt for federal income tax purposes.
(ii) The statements in the Registration Statement and Prospectus under
the heading "Federal Income Tax Consequences," to the extent that they
constitute matters of law or legal conclusions with respect thereto, have
been prepared or reviewed by such counsel and are correct in all material
respects.
(l) J.D. Bringard, Esq., Vice President-General Counsel of Ford Credit
and Ford Credit Leasing, shall have furnished to the Representative his written
opinion, dated as of the Closing Date, in form satisfactory to the
Representative in its reasonable judgment, to the effect that, assuming FCTT,
the Seller and the Issuer will each not be classified as an association
taxable as a corporation for federal income tax purposes and the Senior Notes
will be characterized as debt for federal income tax purposes:
(i) None of FCTT, the Seller or the Issuer will be classified as a
separate entity subject to Michigan single business tax or the Michigan
income tax.
(ii) The Senior Notes will be characterized as debt for Michigan income
and single business tax purposes.
(iii) Holders of Senior Notes who would not otherwise be subject to tax
in Michigan will not be subject to tax in Michigan solely because of a
Holder's ownership of the Senior Notes.
(iv) The statements in the Registration Statement and Prospectus under
the headings "Certain State Tax Consequences," to the extent that they relate
to Michigan tax matters and constitute matters of law or legal conclusions
with respect thereto, have been prepared or reviewed by such counsel and are
correct in all material respects.
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(m) The Representative shall have received an opinion addressed to the
Representative of Skadden, Arps, Slate, Meagher & Flom LLP, dated the Closing
Date, with respect to the validity of the Senior Notes and such other related
matters as the Representative shall require and the Seller, Ford Credit and
Ford Credit Leasing shall have furnished or caused to be furnished to such
counsel such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters.
(n) The Representative shall have received an opinion addressed to the
Representative, the Seller, Ford Credit and Ford Credit Leasing of Bayard
Handelman & Murdoch, P.A., counsel to the Lease Trustee, dated the Closing Date
and satisfactory in form and substance to the Representative and to counsel to
the Representative, to the effect that:
(i) The Lease Trustee has been duly incorporated and is validly
existing as a banking corporation in good standing under the laws of the
State of Delaware with full corporate trust power and authority to enter into
and perform its obligations under the Lease Trust Agreement and the Lease
Trust Paying Agent Agreement and, on behalf of the Issuer, under the
Indenture, the Transfer Agreement and the Program Operating Lease.
(ii) The Lease Trust Agreement duly creates for the benefit of the
Seller and the Lease Trust Certificateholders the interests in the Lease
Trust Estate which the Lease Trust Agreement purports to create, and the
trust purported to be created by the Lease Trust Agreement is validly formed
and is validly existing.
(iii) The Lease Trust Agreement authorizes the Issuer to execute and
deliver the Indenture, the Transfer Agreement, and the Program Operating
Lease, to issue the Senior Notes and to grant the Lease Trust Estate to the
Indenture Trustee as security for the Senior Notes.
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(iv) The execution and delivery of the Lease Trust Agreement and the
Lease Trust Paying Agent Agreement and, on behalf of the Issuer, the
Indenture, the Transfer Agreement and the Program Operating Lease and the
performance by the Lease Trustee of its obligations under the Lease Trust
Agreement, the Indenture, the Transfer Agreement and the Program Operating
Lease have been duly authorized by all necessary corporate action of the
Lease Trustee and each has been duly executed and delivered by the Lease
Trustee.
(v) Assuming due authorization, execution and delivery thereof by the
parties thereto, the Lease Trust Agreement, the Lease Trust Paying Agent
Agreement, the Indenture, the Transfer Agreement and the Program Operating
Lease each constitutes a legal, valid and binding obligation of the Lease
Trustee, enforceable against the Lease Trustee in accordance with its terms,
except (1) the enforceability thereof may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights, and (2) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(vi) Neither the execution nor delivery by the Lease Trustee of the
Lease Trust Agreement and the Lease Trust Paying Agent Agreement and, on
behalf of the Issuer, the Indenture, the Transfer Agreement and the Program
Operating Lease, nor the consummation of any of the transactions by the Lease
Trustee contemplated thereby required the consent or approval of, the giving
of notice to, the registration with, or the taking of any other action with
respect to, any governmental authority or agency under any existing federal
or Delaware State law governing the trust powers of the Lease Trustee, except
such as have been obtained, made or taken.
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(vii) The Lease Trustee has duly authorized, issued, executed and
delivered each of the Senior Notes pursuant to the terms and provisions of
the Indenture; each of such Senior Notes is a legal, valid and binding
obligation of the Lease Trustee, enforceable against the Lease Trustee in
accordance with its terms and the terms of the Indenture; and each of such
Senior Notes is entitled to the benefits and security afforded by the
Indenture in accordance with the terms of the Indenture.
(viii) The execution and delivery by the Lease Trustee of the Lease
Trust Agreement and the Lease Trust Paying Agent Agreement and, on behalf of
the Issuer, the Indenture, the Transfer Agreement and the Program Operating
Lease, and the performance by the Lease Trustee of its obligations thereunder
do not conflict with or result in a breach or violation of any of the terms,
conditions or provisions of any law, governmental rule or regulation of the
United States or the State of Delaware governing the banking or trust powers
of the Lease Trustee or the Certificate of Incorporation or By-Laws of the
Lease Trustee or, to such counsel's knowledge, any order writ, injunction or
decree of any court or governmental authority against the Lease Trustee or by
which it or any of its properties is bound or, to such counsel's knowledge,
any indenture, mortgage or contract or other agreement or instrument to which
the Lease Trustee is a party or by which it or any of its properties is
bound, or constitute a default thereunder.
(ix) The Lease Trustee has acquired such title to the Series 1996-1
Certificates as has been conveyed to the Lease Trustee on the date hereof,
subject to the rights of the Seller under the Program Operating Lease and the
security interest created pursuant to the Indenture; and, to such counsel's
knowledge, there exist no liens, security interests or charges affecting the
title of the Lease Trustee to the Series 1996-1 Certificates resulting from
acts of or claims against the
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Lease Trustee except liens, security interests or charges contemplated by the
Basic Documents.
(o) The Representative shall have received an opinion addressed to the
Representative, the Seller and Ford Credit of Kelley Drye & Warren, counsel to
the Indenture Trustee, dated the Closing Date and satisfactory in form and
substance to the Representative and to counsel to the Representative, to the
effect that:
(i) The Indenture Trustee has been duly incorporated and is validly
existing as a banking corporation in good standing under the laws of the
State of New York with full corporate trust power and authority to enter into
and perform its obligations under the Indenture.
(ii) The Lease Trust Paying Agent has been duly incorporated and is
validly existing as a banking corporation in good standing under the laws of
the State of New York with full corporate trust power and authority to enter
into and perform its obligations under the Indenture.
(iii) The Indenture has been duly executed and delivered by the
Indenture Trustee, and, insofar as the laws governing the trust powers of the
Indenture Trustee are concerned and assuming due authorization, execution and
delivery thereof by the Lease Trustee, the Indenture constitutes a legal,
valid and binding obligation of the Indenture Trustee, enforceable against
the Indenture Trustee in accordance with its terms, except (1) the
enforceability thereof may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights, and (2) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefor may be brought.
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(iv) The Lease Trust Paying Agent Agreement has been duly executed and
delivered by the Lease Trust Paying Agent, and, insofar as the laws
governing the trust powers of the Lease Trust Paying Agent are concerned
and assuming due authorization, execution and delivery thereof by the Lease
Trustee, the Lease Trust Paying Agent Agreement constitutes a legal, valid
and binding obligation of the Lease Trust Paying Agent, enforceable against
the Lease Trust Paying Agent in accordance with its terms, except (1) the
enforceability thereof may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights, and (2) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(v) The Senior Notes have been duly authenticated and delivered by the
Indenture Trustee.
(vi) Neither the execution nor delivery by the Indenture Trustee of the
Indenture nor the consummation of any of the transactions by the Indenture
Trustee contemplated thereby required the consent or approval of, the giving
of notice to, the registration with, or the taking of any other action with
respect to, any governmental authority or agency under any existing federal
or New York State law governing the trust powers of the Indenture Trustee,
except such as have been obtained, made or taken.
(vii) Neither the execution nor delivery by the Lease Trust Paying
Agent of the Lease Trust Paying Agent Agreement nor the consummation of any
of the transactions by the Lease Trust Paying Agent contemplated thereby
required the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with respect to, any
30
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governmental authority or agency under any existing federal or New York State
law governing the trust powers of the Lease Trust Paying Agent, except such
as have been obtained, made or taken.
(viii) The execution and delivery by the Indenture Trustee of the
Indenture and the performance by the Indenture Trustee of its obligations
thereunder do not conflict with or result in a breach or violation of any of
the terms, conditions or provisions of any law, governmental rule or
regulation of the United States or the State of New York governing the
banking or trust powers of the Indenture Trustee or the Certificate of
Incorporation or By-Laws of the Indenture Trustee or, to such counsel's
knowledge, any order writ, injunction or decree of any court or governmental
authority against the Indenture Trustee or by which it or any of its
properties is bound or, to such counsel's knowledge, any indenture, mortgage
or contract or other agreement or instrument to which the Indenture Trustee
is a party or by which it or any of its properties is bound, or constitute a
default thereunder.
(ix) The execution and delivery by the Lease Trust Paying Agent of the
Lease Trust Paying Agent Agreement and the performance by the Lease Trust
Paying Agent of its obligations thereunder do not conflict with or result in
a breach or violation of any of the terms, conditions or provisions of any
law, governmental rule or regulation of the United States or the State of New
York governing the banking or trust powers of the Lease Trust Paying Agent or
the Certificate of Incorporation or By-Laws of the Lease Trust Paying Agent
or, to such counsel's knowledge, any order writ, injunction or decree of any
court or governmental authority against the Lease Trust Payment Agent or by
which it or any of its properties is bound or, to such counsel's knowledge,
any indenture, mortgage or contract or other agreement or instrument to which
the Lease Trust Payment Agent is a party or by which it or any of its
31
<PAGE> 32
properties is bound, or constitute a default thereunder.
(p) The Representative shall have received an opinion addressed to the
Representative, the Seller, Ford Credit and Ford Credit Leasing of Morris,
James, Hitchens & Williams, counsel to the RCL Trustee, dated the Closing Date
and satisfactory in form and substance to the Representative and to counsel to
the Representative, to the effect that:
(i) The RCL Trustee has been duly incorporated and is validly existing
as a banking corporation in good standing under the laws of the State of
Delaware with full corporate trust power and authority to enter into and
perform its obligations under the RCL Trust Agreement and, on behalf of the
Seller, under this Agreement, the Transfer Agreement, the Program Operating
Lease, the Asset Contribution Agreement, the RCL Assignment and the Lease
Trust Agreement.
(ii) The RCL Trust Agreement duly creates for the benefit of Ford Credit
and Ford Credit Leasing the interests in the Seller's assets which the RCL
Trust Agreement purports to create, and the trust purported to be created by
the RCL Trust Agreement is validly formed and is validly existing as a
business trust in good standing under the laws of the State of Delaware.
(iii) The RCL Trust Agreement authorizes the Seller to execute and
deliver this Agreement, the Transfer Agreement, the Program Operating Lease,
the Asset Contribution Agreement, the RCL Assignment and the Lease Trust
Agreement.
(iv) The execution and delivery of the RCL Trust Agreement and, on
behalf of the Seller, this Agreement, the Transfer Agreement, the Program
Operating Lease, the Asset Contribution Agreement, the RCL Assignment and the
Lease Trust Agreement and the performance by the RCL Trustee of its
obligations under the
32
<PAGE> 33
RCL Trust Agreement, this Agreement, the Transfer Agreement, the Program
Operating Lease, the Asset Contribution Agreement, the RCL Assignment and the
Lease Trust Agreement have been duly authorized by all necessary corporate
action of the RCL Trustee and each has been duly executed and delivered by
the RCL Trustee.
(v) Assuming due authorization, execution and delivery thereof by the
parties thereto, the RCL Trust Agreement, this Agreement, the Transfer
Agreement, the Program Operating Lease, the Asset Contribution Agreement, the
RCL Assignment and the Lease Trust Agreement each constitutes a legal, valid
and binding obligation of the RCL Trustee, enforceable against the RCL
Trustee in accordance with its terms, except (1) the enforceability thereof
may be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights, and
(2) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
(vi) Neither the execution nor delivery by the RCL Trustee of the RCL
Trust Agreement and, on behalf of the Seller, this Agreement, the Transfer
Agreement, the Program Operating Lease, the Asset Contribution Agreement, the
RCL Assignment and the Lease Trust Agreement, nor the consummation of any of
the transactions by the RCL Trustee contemplated thereby required the consent
or approval of, the giving of notice to, the registration with, or the taking
of any other action with respect to, any governmental authority or agency
under any existing federal or Delaware State law governing the trust powers
of the RCL Trustee, except such as have been obtained, made or taken.
(vii) The execution and delivery by the RCL Trustee of the RCL Trust
Agreement and, on behalf of the Seller, this Agreement,
33
<PAGE> 34
the Transfer Agreement, the Program Operating Lease, the Asset Contribution
Agreement, the RCL Assignment and the Lease Trust Agreement, and the
performance by the RCL Trustee of its obligations thereunder do not conflict
with or result in a breach or violation of any of the terms, conditions or
provisions of any law, governmental rule or regulation of the United States
or the State of Delaware governing the banking or trust powers of the RCL
Trustee or the Certificate of Incorporation or By-Laws of the RCL Trustee or,
to such counsel's knowledge, any order writ, injunction or decree of any
court or governmental authority against the RCL Trustee or by which it or any
of its properties is bound or, to such counsel's knowledge, any indenture,
mortgage or contract or other agreement or instrument to which the RCL
Trustee is a party or by which it or any of its properties is bound, or
constitute a default thereunder.
(q) The Representative shall have received an opinion addressed to the
Representative, the Seller, Ford Credit and Ford Credit Leasing of Bodman,
Longley & Dahling LLP, counsel to the FCTT Trustee, dated the Closing Date and
satisfactory in form and substance to the Representative and to counsel to the
Representative, to the effect that:
(i) The FCTT Trustee has been duly incorporated and is validly existing
as a banking corporation in good standing under the laws of the State of
Michigan with full corporate trust power and authority to enter into and
perform its obligations under the FCTT Agreement and, on behalf of FCTT,
under the Administrative Agency Agreement and the Series 1996-1 Supplement.
(ii) The FCTT Agreement duly creates for the benefit of Ford Credit and
Ford Credit Leasing the interests in the assets of FCTT which the FCTT
Agreement purports to create, and the trust purported to be created by the
FCTT Agreement is validly formed and is validly existing.
34
<PAGE> 35
(iii) The FCTT Agreement authorizes FCTT to execute and deliver the
Administrative Agency Agreement and the Series 1996-1 Supplement.
(iv) The execution and delivery of the FCTT Agreement and, on behalf of
FCTT, the Administrative Agency Agreement and the Series 1996- 1 Supplement
and the performance by the FCTT Trustee of its obligations under the FCTT
Agreement, the Administrative Agency Agreement and the Series 1996-1
Supplement have been duly authorized by all necessary corporate action of the
FCTT Trustee and each has been duly executed and delivered by the FCTT
Trustee.
(v) Assuming due authorization, execution and delivery thereof by the
parties thereto, the FCTT Agreement, the Administrative Agency Agreement and
the Series 1996-1 Supplement each constitutes a legal, valid and binding
obligation of the FCTT Trustee, enforceable against the FCTT Trustee in
accordance with its terms, except (1) the enforceability thereof may be
subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights, and
(2) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
(vi) Neither the execution nor delivery by the FCTT Trustee of the FCTT
Agreement and, on behalf of FCTT, the Administrative Agency Agreement and the
Series 1996-1 Supplement, nor the consummation of any of the transactions by
the FCTT Trustee contemplated thereby required the consent or approval of,
the giving of notice to, the registration with, or the taking of any other
action with respect to, any governmental authority or agency under any
existing federal or Michigan State law govern-
35
<PAGE> 36
ing the trust powers of the FCTT Trustee, except such as have been obtained,
made or taken.
(vii) The execution and delivery by the FCTT Trustee of the FCTT
Agreement and, on behalf of FCTT, the Administrative Agency Agreement and the
Series 1996-1 Supplement, and the performance by the FCTT Trustee of its
obligations thereunder do not conflict with or result in a breach or
violation of any of the terms, conditions or provisions of any law,
governmental rule or regulation of the United States or the State of Michigan
governing the banking or trust powers of the FCTT Trustee or the Certificate
of Incorporation or By-Laws of the FCTT Trustee or, to such counsel's
knowledge, any order writ, injunction or decree of any court or governmental
authority against the FCTT Trustee or by which it or any of its properties is
bound or, to such counsel's knowledge, any indenture, mortgage or contract or
other agreement or instrument to which the FCTT Trustee is a party or by
which it or any of its properties is bound, or constitute a default
thereunder.
(r) The Representative shall have received an officer's certificate dated
the Closing Date of the Chairman of the Board, the President, the Executive
Vice President-Finance or the Treasurer of:
(i) Ford Credit, in which such officer shall state that, to the best of
such officer's knowledge after reasonable investigation, the representations
and warranties of Ford Credit contained in the FCTT Agreement, the RCL Trust
Agreement, the Administrative Agency Agreement, the Series 1996-1 Supplement
and the Asset Contribution Agreement are true and correct in all material
respects, and that Ford Credit has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied under such agreements
at or prior to the Closing Date in all material respects; and
36
<PAGE> 37
(ii) Ford Credit Leasing, in which such officer shall state that, to the
best of such officer's knowledge after reasonable investigation, the
representations and warranties of Ford Credit Leasing contained in the FCTT
Agreement, the RCL Trust Agreement, the Series 1996-1 Supplement and the
Asset Contribution Agreement are true and correct in all material respects,
and that Ford Credit Leasing has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied under such agreements
at or prior to the Closing Date in all material respects.
(s) The Senior Notes shall have been rated in the highest investment
rating category by at least one Rating Agency.
(t) The Representative shall have received a letter or letters from each
counsel delivering any written opinion to any Rating Agency in connection with
the transaction described herein which is not otherwise described in this
Agreement allowing the Representative to rely on such opinion as if it were
addressed to the Representative.
(u) Any taxes, fees and other governmental charges which are due and
payable in connection with the execution, delivery and performance of this
Agreement, the Indenture and the Senior Notes shall have been paid by the
Seller at or prior to the Closing Date.
(v) At the Closing Date, the Lease Trust Certificates shall have been
purchased and paid for by J.P. Morgan Securities Inc. in accordance with the
Lease Trust Certificate Purchase Agreement of even date herewith and the
Subordinated Notes shall have been issued to the Seller in accordance with the
Lease Trust Agreement.
(w) On or prior to the Closing Date, the Seller, Ford Credit or Ford
Credit Leasing, as the case may be, shall have furnished to the Representative
such further certificates and documents as the Representative shall reasonably
request.
37
<PAGE> 38
8. Indemnification and Contribution. (a) The Seller, Ford Credit and Ford
Credit Leasing will jointly and severally indemnify and hold each Underwriter
harmless against any losses, claims, damages, or liabilities, joint or several,
to which such Underwriter may become subject, under the Act or otherwise,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, the
Prospectus, or any amendment or supplement thereto, or any related preliminary
prospectus, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Seller, Ford Credit and Ford
Credit Leasing will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in conformity with written
information furnished to the Seller, Ford Credit or Ford Credit Leasing by any
Underwriter through the Representative specifically for use therein; and
provided further, that the Seller, Ford Credit and Ford Credit Leasing shall
not be liable to any Underwriter or any person controlling any Underwriter
under the indemnity agreement in this subsection (a) with respect to any of
such documents to the extent that any such loss, claim, damage or liability of
the Underwriters or such controlling person results from the fact that such
Underwriter sold the Senior Notes to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of the
Prospectus or of the Prospectus as then amended or supplemented, whichever is
most recent, if the Seller has previously furnished copies thereof to such
Underwriter.
The indemnity agreement in this subsection (a) shall be in addition to any
liability which the Seller, Ford Credit or Ford Credit Leasing may otherwise
have and shall extend, upon the same terms and conditions, to each
38
<PAGE> 39
person, if any, who controls any Underwriter within the meaning of the Act.
(b) Each Underwriter will indemnify and hold harmless the Seller, Ford
Credit and Ford Credit Leasing against any losses, claims, damages or
liabilities to which the Seller, Ford Credit or Ford Credit Leasing may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or the alleged omissions to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information furnished
to the Seller, Ford Credit or Ford Credit Leasing by such Underwriter through
the Representative specifically for use therein, and will reimburse any legal
or other expenses reasonably incurred by the Seller, Ford Credit or Ford Credit
Leasing in connection with investigating or defending any such action or claim.
The indemnity agreement in this subsection (b) shall be in addition to any
liability which each Underwriter may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls the Seller,
Ford Credit or Ford Credit Leasing within the meaning of the Act.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) of written notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under subsection (a) or (b) above, notify the indemnifying
party of the commencement thereof, and in the event that such indemnified party
shall not so notify the indemnifying party within 30 days following receipt of
any such notice by such indemnified party, the indemnifying party shall have no
further liability under such subsection to such indemnified party unless the
indemnifying party shall have received other
39
<PAGE> 40
notice addressed and delivered in the manner provided in Section 11 hereof of
the commencement of such action; but the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party otherwise than under such subsection. In case any such
action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party in its reasonable
judgment, and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under such subsection for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation.
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above in respect of any losses, claims, damages or liabilities (or actions in
respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Seller, Ford Credit and Ford Credit Leasing on the one hand and the
Underwriters on the other from the offering of the Senior Notes. If, however,
the allocation provided by the immediately preceding sentence is not permitted
by applicable law, then each indemnifying party shall contribute to such amount
paid or payable by such indemnified party in such proportion as is appropriate
to reflect not only such relative benefits but also the relative fault of the
Seller, Ford Credit and Ford Credit Leasing on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages, or liabilities (or actions in respect
thereof) as well as any other relevant equitable considerations. The relative
benefits received by the Seller, Ford Credit and Ford Credit Leasing on the one
hand and the Underwriters on the other
40
<PAGE> 41
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Seller bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus as amended
or supplemented with respect to the Senior Notes. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Seller, Ford
Credit or Ford Credit Leasing or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission, including, with respect to any Underwriter,
the extent to which such losses, claims, damages or liabilities (or actions in
respect thereof) result from the fact that such Underwriter sold such Senior
Notes to a person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the Prospectus or the Prospectus
as then supplemented or amended, whichever is more recent, if the Seller has
previously furnished copies thereof to such Underwriter. The Seller, Ford
Credit and Ford Credit Leasing and the Underwriters, severally and not jointly,
agree that it would not be just and equitable if contribution pursuant to this
subsection (d) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (d). The amount paid by an indemnified party as a
result of the losses, claims, damages, or liabilities (or actions in respect
thereof) referred to above in this subsection (d) shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any action or claim.
Notwithstanding the provisions of this subsection (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Senior Notes underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to
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<PAGE> 42
contribution from any person who was not guilty of such fraudulent
misrepresentation.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements
(including, without limitation, Section 6(k)) of the Seller, Ford Credit and
Ford Credit Leasing or their respective officers and of the Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation or statement as to the results thereof,
made by or on behalf of any Underwriter, the Seller, Ford Credit or Ford Credit
Leasing or any of their respective representatives, officers, directors or
controlling persons, and will survive delivery of and payment for the Senior
Notes.
10. Failure to Purchase the Senior Notes. If the purchase of the Senior
Notes shall not be consummated because the circumstances described in Section
7(e) shall have occurred, then neither the Seller, Ford Credit nor Ford Credit
Leasing shall have any liability to the Underwriters except as set forth in
Section 6(h) and Section 8 hereof; but if for any other reason the Senior Notes
are not delivered to the Underwriters as provided herein, the Seller, Ford
Credit and Ford Credit Leasing will be liable to reimburse the Underwriters,
through the Representative, for all out-of-pocket expenses, including counsel
fees and disbursements reasonably incurred by the Underwriters in making
preparations for the offering of the Senior Notes, but neither the Seller, Ford
Credit nor Ford Credit Leasing shall then have any further liability to any
Underwriter with respect to the Senior Notes except as provided in Section 6(h)
and Section 8 hereof. If any Underwriter or Underwriters default on their
obligations to purchase Senior Notes hereunder and the aggregate principal
balance of the Senior Notes that such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed 10% of the total principal
balance of such Senior Notes, the Representative may make arrangements
satisfactory to the Seller, Ford Credit and Ford Credit Leasing for the
purchase of such Senior Notes by other persons, including the non-defaulting
Underwriter or Underwriters, but if no such arrangements are made by the
Closing Date, the non-defaulting Underwriter or Underwriters shall be
obligated, in proportion to their commitments hereunder, to purchase the Senior
Notes
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<PAGE> 43
that such defaulting Underwriter or Underwriters agreed but failed to purchase.
If any Underwriter or Underwriters so default and the aggregate principal
balance of the Senior Notes with respect to which such default or defaults
occur exceeds 10% of the total principal balance of such Senior Notes and
arrangements satisfactory to the non-defaulting Underwriter or Underwriters,
the Seller, Ford Credit and Ford Credit Leasing for the purchase of such Senior
Notes by other persons are not made within 36 hours after such default, this
Agreement will terminate without liability on the part of any non-defaulting
Underwriter, the Seller, Ford Credit and Ford Credit Leasing except as provided
in Section 6(h) and Section 8 hereof. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter or Underwriters
from liability for its default.
11. Limitation of Liability. It is expressly understood by the parties
hereto that (a) this Agreement is executed and delivered by First Union Bank of
Delaware not individually or personally but solely in its capacity as trustee
of the Seller under the RCL Trust Agreement, in the exercise of the powers and
authority conferred and vested in it thereunder, (b) each of the
representations, undertakings, covenants (including but not limited to the
covenants set forth in Section 6 hereof) and agreements herein made on the part
of the Seller in this Agreement is made and intended not as personal
representations, undertakings, covenants, and agreements by First Union Bank of
Delaware, individually or personally, but is made and intended for the purpose
of binding only the Seller, (c) nothing contained herein shall be construed as
creating any liability on First Union Bank of Delaware, individually or
personally, to perform any covenant of the Seller either expressed or implied
contained herein, all such liability, if any, being expressly waived by the
Representative, Ford Credit and Ford Credit Leasing and by any person claiming
by, through or under the Representative, Ford Credit or Ford Credit Leasing and
(d) under no circumstances shall First Union Bank of Delaware be personally
liable for the breach or failure of any obligation, representation, warranty or
covenant made or undertaken by the Seller under this Agreement or the Basic
Documents.
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<PAGE> 44
12. Notices. All communications hereunder will be in writing and will be
mailed, delivered or sent by facsimile transmission and confirmed.
Communications to the Underwriter shall be given to J.P. Morgan Securities
Inc., 60 Wall Street, New York, New York 10260 (Facsimile No.: 212-648-5909),
Attention: Syndicate Desk. Communications to the Seller shall be given to it
at The American Road, FMCC Building, Dearborn, Michigan 48121 (Facsimile No.:
313-337-1160), Attention: President. Communications to Ford Credit shall be
given to it at The American Road, FMCC Building, Dearborn, Michigan 48121
(Facsimile No.: 313-337-1160), Attention: Secretary. Communications to Ford
Credit Leasing shall be given to it at The American Road, FMCC Building,
Dearborn, Michigan 48121 (Facsimile No.: 313-594-0735), Attention: Treasurer.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the Underwriters, the Seller, Ford Credit, Ford Credit Leasing and
their respective successors and the officers and directors and controlling
persons referred to in Section 8, and no other person will have any right or
obligations hereunder.
14. Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.
15. Counterparts. This Agreement may be executed by each of the parties
hereto in any number of counterparts, and by each of the parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
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<PAGE> 45
If the foregoing is in accordance with your understanding, please sign and
return to us a counterpart hereof, whereupon this letter and your acceptance
hereof shall constitute a binding agreement.
Very truly yours,
RCL TRUST 1996-1
By: FIRST UNION BANK OF DELAWARE
not in its individual
capacity but solely in its
capacity as trustee of
RCL Trust 1996-1, as Seller
By:___________________________
Name:
Title:
FORD MOTOR CREDIT COMPANY
By:__________________________
Name:
Title:
FORD CREDIT LEASING COMPANY, INC.
By:__________________________
Name:
Title:
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first above written.
J.P. MORGAN SECURITIES INC.
Acting on behalf of itself
and as the Representative
of the several Underwriters
By:_________________________
Name:
Title:
<PAGE> 46
SCHEDULE I
<TABLE>
<CAPTION>
Initial Initial
Principal Principal
Balance of Balance of
Class A-1 Class A-2
Senior Notes Senior Notes
<S> <C> <C>
J.P. Morgan Securities Inc. $ $
Total -------------- ---------------
============== ===============
</TABLE>
46
<PAGE> 1
EXHIBIT 3.1
[RCL 1996-1 TRUST AGREEMENT]
AMENDED AND RESTATED TRUST AGREEMENT
dated as of November __, 1996
among
FORD MOTOR CREDIT COMPANY
and
FORD CREDIT LEASING COMPANY, INC.
As Grantors and RCL Beneficiaries
and
FIRST UNION BANK OF DELAWARE
As Trustee
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . 2
Section 1.1 Definitions . . . . . . . . . . . . . . . . . 2
ARTICLE II
ORGANIZATION . . . . . . . . . . . . . 3
Section 2.1 Organization and Name . . . . . . . . . . . . 3
Section 2.2 Office . . . . . . . . . . . . . . . . . . . 3
Section 2.3 Purposes and Powers . . . . . . . . . . . . . 3
Section 2.4 Confirmation of Appointment of Trustee . . . 4
Section 2.5 RCL Assets . . . . . . . . . . . . . . . . . 4
Section 2.6 Declaration of Trust . . . . . . . . . . . . 5
Section 2.7 Liability and Indemnification . . . . . . . . 5
Section 2.8 Title to Trust Property . . . . . . . . . . . 7
ARTICLE III
THE RCL BENEFICIARIES . . . . . . . . . . 7
Section 3.1 Restrictions on Transfer . . . . . . . . . . 7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES . . . . . . . 8
Section 4.1 Representations and Warranties of the Grant-
ors . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES . . . . 9
Section 5.1 Establishment of RCL Account . . . . . . . . 9
Section 5.2 Application of RCL Assets . . . . . . . . . . 9
Section 5.3 Accounting and Reports to RCL Beneficiaries,
the Internal Revenue Service and Others . . . 10
Section 5.4 Signature on Returns; Tax Matters Partner . . 11
ARTICLE VI
RCL TRUSTEE . . . . . . . . . . . . . 11
Section 6.1 Duties of RCL Trustee . . . . . . . . . . . . 11
Section 6.2 Rights of RCL Trustee . . . . . . . . . . . . 12
i
<PAGE> 3
Page
Section 6.3 Acceptance of Trusts and Duties . . . . . . . 12
Section 6.4 Action upon Instruction by RCL
Beneficiaries . . . . . . . . . . . . . . . . 14
Section 6.5 Furnishing of Documents . . . . . . . . . . . 15
Section 6.6 Representations and Warranties of RCL Trust-
ee . . . . . . . . . . . . . . . . . . . . . 15
Section 6.7 Reliance; Advice of Counsel . . . . . . . . . 16
Section 6.8 RCL Trustee May Own Lease Trust Certificates
and Senior Notes . . . . . . . . . . . . . . 17
Section 6.9 Compensation . . . . . . . . . . . . . . . . 17
Section 6.10 Resignation or Removal of RCL Trustee . . . . 18
Section 6.11 Merger or Consolidation of RCL Trustee . . . 20
Section 6.12 Appointment of Co-Trustee or Separate Trust-
ee . . . . . . . . . . . . . . . . . . . . . 20
Section 6.13 Eligibility Requirements for RCL Trustee . . 22
ARTICLE VII
TERMINATION OF TRUST AGREEMENT . . . . . . . 22
Section 7.1 Termination of Trust Agreement . . . . . . . 22
ARTICLE VIII
AMENDMENTS . . . . . . . . . . . . 23
Section 8.1 Amendments . . . . . . . . . . . . . . . . . 23
ARTICLE IX
TAX MATTERS . . . . . . . . . . . . 24
SECTION 9.1 Tax Characterization . . . . . . . . . . . . 24
ARTICLE X
MISCELLANEOUS . . . . . . . . . . . . 24
Section 10.1 No Legal Title to RCL Assets; Direction of
RCL Trustee Actions . . . . . . . . . . . . . 24
Section 10.2 Limitations on Rights of Others . . . . . . . 24
Section 10.3 Notices . . . . . . . . . . . . . . . . . . . 24
Section 10.4 Severability . . . . . . . . . . . . . . . . 26
Section 10.5 Counterparts . . . . . . . . . . . . . . . . 26
Section 10.6 Successors and Assigns . . . . . . . . . . . 26
Section 10.7 No Recourse . . . . . . . . . . . . . . . . . 26
Section 10.8 No Petition . . . . . . . . . . . . . . . . . 26
Section 10.9 Covenant of Ford Credit Leasing . . . . . . . 27
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Page
Section 10.10 Headings . . . . . . . . . . . . . . . . . 27
Section 10.11 Governing Law . . . . . . . . . . . . . . . 27
Exhibit A Form of RCL Assignment Agreement . . . . . A-1
Schedule I Demand Notes
iii
<PAGE> 5
AMENDED AND RESTATED TRUST AGREEMENT, dated and effective as of
November __, 1996 (as modified, supplemented or amended from time to time, this
"Agreement") among (i) FORD MOTOR CREDIT COMPANY, a Delaware corporation ("Ford
Credit") as a Grantor and as a RCL Beneficiary, (ii) FORD CREDIT LEASING
COMPANY, INC., a Delaware corporation ("Ford Credit Leasing") as a Grantor and
a RCL Beneficiary and (iii) FIRST UNION BANK OF DELAWARE, a Delaware banking
corporation, as trustee (the "RCL Trustee").
WHEREAS, the parties hereto intend to amend and restate, on the terms
and conditions set forth herein, that certain Trust Agreement, dated as of
October __, 1996, among Ford Credit, Ford Credit Leasing and the RCL Trustee
(the "Original Agreement"), pursuant to which this trust was created;
WHEREAS, Ford Credit and Ford Credit Leasing intend to transfer their
respective Series 1996-1 Certificates to RCL pursuant to the terms of the Asset
Contribution Agreement;
WHEREAS, it is intended that RCL transfer the Series 1996-1
Certificates to the Lease Trust pursuant to the Transfer Agreement and,
immediately thereafter, that an interest in the Series 1996-1 Certificates be
acquired from the Lease Trust pursuant to the terms of the Program Operating
Lease; and
WHEREAS, it is intended that Ford Credit Leasing acquire from RCL a 1%
interest in (i) all assets, rights, and obligations of RCL, including, but not
limited to, the Subordinated Notes, and each other asset of RCL (other than
certain demand notes listed on Schedule I hereto upon which Ford Credit is
maker and RCL or Ford Credit Leasing is payee) and (ii) the obligations of RCL
under the Program Operating Lease, in accordance with the terms of the RCL
Assignment Agreement.
NOW THEREFORE, Ford Credit, Ford Credit Leasing and the RCL Trustee
hereby agree as follows:
<PAGE> 6
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Whenever used in this Agreement capitalized
terms have the meanings assigned to them herein or, if not defined herein, as
defined in Appendix A attached hereto. To the extent that the definitions set
forth herein conflict with the definitions set forth in Appendix A, or
incorporated by reference therein, the definitions set forth herein shall be
controlling. All references herein to "this Agreement" are to this Amended and
Restated Trust Agreement, and all references herein to Articles, Sections and
subsections are to Articles, Sections and subsections of this Agreement unless
otherwise specified.
"Grantors" means Ford Credit and Ford Credit Leasing in their capacities as
grantors of the RCL Assets to RCL. "Liabilities" has the meaning set forth in
Section 2.7.
"Percentage Interest" means, (i) when used with respect to Ford Credit, (x)
prior to the effective date of the RCL Assignment Agreement, 98% and (y) after
the effective date of the RCL Assignment Agreement, the percentage equivalent
of a fraction, the numerator of which is 98 and the denominator of which is 99,
and (ii) when used with respect to Ford Credit Leasing, (x) prior to the
effective date of the RCL Assignment Agreement, 2% and (y) after the effective
date of the RCL Assignment Agreement, the percentage equivalent of a fraction,
the numerator of which is 1 and the denominator of which is 99.
"RCL" means the trust created pursuant to and named "RCL Trust 1996-1" in
the Original Agreement.
"RCL Assets" means (i) cash and any amounts on deposit in or credited to
the RCL Account from time to time, (ii) the interest of RCL from time to time
in the Series 1996-1 Certificates and all proceeds thereof, as set forth in
Section 5.1, (iii) the Subordinated Notes and (iv) the Cash Collateral Account
and all amounts deposited therein.
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<PAGE> 7
"RCL Assignment Agreement" means the assignment made by RCL to Ford Credit
Leasing in the form attached hereto as Exhibit A.
"RCL Beneficiaries" means Ford Credit and Ford Credit Leasing.
"RCL Trustee" means First Union Bank of Delaware, in its capacity as
trustee under this Agreement, together with its successors and any permitted
assigns.
"RCL Trustee Office" means the office of the RCL Trustee at which any
particular time its corporate trust business shall be administered, which at
the date hereof is One Rodney Square, 920 King Street, Wilmington, Delaware
19801.
"Trust Statute" means 12 Del. Code Section Section 3801 et. seq., as
amended or supplemented from time to time.
ARTICLE II
ORGANIZATION
Section 2.1 Organization and Name. The trust created pursuant to
this Agreement shall be known as "RCL Trust 1996-1" in which name the RCL
Trustee may conduct the activities of RCL. It is the intention of the parties
hereto that RCL shall constitute a trust under the Trust Statute and that this
Agreement constitute the governing instrument of such trust.
Section 2.2 Office. The office of RCL shall be in care of RCL
Trustee at the RCL Trustee Office or at such other address as the RCL Trustee
may designate by written notice to the Grantors and the RCL Beneficiaries.
Section 2.3 Purposes and Powers. The purpose of RCL is to engage
solely in the following activities, all in accordance with the terms of this
Agreement:
(a) to pay the organizational, start-up and transactional expenses of
RCL;
(b) to acquire the Series 1996-1 Certificates pursuant to the Asset
Contribution Agreement, transfer the Series 1996-1 Certificates to the
Lease
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<PAGE> 8
Trust pursuant to the Transfer Agreement and acquire an interest in the
Series 1996-1 Certificates from the Lease Trust pursuant to the Program
Operating Lease;
(c) to assign, pursuant to the RCL Assignment Agreement, a 1%
interest to Ford Credit Leasing in the RCL Assets and the obligations of
RCL;
(d) to perform its obligations under agreements, instruments or other
documents to which it is to be a party, including but not limited to the
Asset Contribution Agreement, the RCL Assignment Agreement, the Transfer
Agreement, the Program Operating Lease and the Lease Trust Agreement;
(e) to hold the Subordinated Notes (other than the Subordinated Note
assigned to Ford Credit Leasing);
(f) to establish the Cash Collateral Account; and
(g) to engage in those activities, including making distributions to
RCL Beneficiaries, executing agreements, and executing and filing documents
with regulatory agencies relating to the issuance of securities by the
Lease Trust that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith.
Section 2.4 Confirmation of Appointment of Trustee. The RCL
Beneficiaries hereby confirm their appointment of First Union Bank of Delaware
as trustee of RCL and, First Union Bank of Delaware hereby confirms its
acceptance of such appointment. Effective as of the date hereof, the RCL
Trustee shall have all the rights, powers and duties set forth herein.
Section 2.5 RCL Assets. (a) As of the date hereof, Ford Credit as a
Grantor hereby sells, assigns, transfers, conveys and sets over to RCL the sum
of $9800. Ford Credit Leasing as a Grantor hereby sells, assigns, transfers,
conveys and sets over to RCL the sum of $200. The RCL Trustee hereby
acknowledges receipt in trust from each Grantor, as of the date hereof, of the
foregoing contributions, which constitute the initial RCL Assets.
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<PAGE> 9
The RCL Trustee shall deposit such contributions in the RCL Account upon
receipt thereof.
(b) On the Closing Date, each of Ford Credit and Ford Credit Leasing,
as Grantors, shall contribute and transfer the Series 1996-1 Certificates to
RCL pursuant to the Asset Contribution Agreement, and then RCL shall transfer
the Series 1996-1 Certificates to the Lease Trust pursuant to the Transfer
Agreement and then, pursuant to the Program Operating Lease, the Lease Trust
shall lease the Series 1996-1 Certificates to RCL and then, pursuant to the RCL
Assignment Agreement, RCL shall assign to Ford Credit Leasing, and Ford Credit
Leasing shall accept, 1% of the assets and obligations of RCL. For purposes of
Section 7.1 of the FCTT Agreement, RCL and Ford Credit Leasing (after the
assignment) shall be the "initial transferees" of the Series 1996-1
Certificates.
(c) Certain organizational expenses of RCL have been paid by the
grantors of RCL. The Grantors shall capitalize RCL with an amount sufficient
to pay administrative expenses of RCL, including expenses of the RCL Trustee
incurred on behalf of RCL, as they may arise.
Section 2.6 Declaration of Trust. The RCL Trustee hereby declares
that it shall hold all the RCL Assets, including all monies and proceeds of
such RCL Assets, in trust for the benefit of the RCL Beneficiaries in
accordance with their respective Percentage Interests from time to time.
Effective as of the date hereof, the RCL Trustee shall have all rights, powers
and duties set forth herein with respect to accomplishing the purposes of RCL
set forth in Section 2.3.
Section 2.7 Liability and Indemnification. (a) Notwithstanding
Section 3803 of the Trust Statute, Ford Credit Leasing shall be directly liable
to any claimant for all losses, claims, damages, liabilities and expenses
("Liabilities") of RCL, or incurred in connection with RCL Assets and
this Agreement and the Basic Documents to the extent that Ford Credit Leasing
would be liable if RCL were a partnership under the Delaware Revised Uniform
Limited Partnership Act or the Delaware Uniform Partnership Law and Ford Credit
Leasing were a general partner thereof, and Ford Credit Leasing hereby
covenants and agrees that it will maintain net worth in
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<PAGE> 10
an amount sufficient to maintain its status as a "general partner" of RCL and
the Lease Trust for federal income tax purposes. Any third party creditors of
RCL shall be deemed to be third party beneficiaries for purposes of this
Section 2.7.
(b) The RCL Beneficiaries shall indemnify, defend and hold harmless
the RCL Trustee, including its successors, assigns, officers, directors,
shareholders, employees and agents for all Liabilities, penalties and taxes
(other than income taxes relating to the fees paid to it hereunder) incurred by
it in connection with the administration of the RCL Trust (including attorneys'
fees) and the performance of its duties thereunder; provided, however, that in
no event shall the RCL Trustee be indemnified or held harmless for any
Liabilities incurred (i) by reason of the RCL Trustee's willful misconduct, bad
faith or negligence or (ii) incurred by reason of the RCL Trustee's breach of
its representations and warranties set forth in Section 6.6. The RCL Trustee
shall notify the RCL Beneficiaries promptly of any claim for which the RCL
Trustee may seek indemnity. Failure by the RCL Trustee to so notify the RCL
Beneficiaries shall not relieve the RCL Beneficiaries of their obligations
hereunder. If necessary, to the extent not otherwise reimbursed, the RCL
Trustee shall be entitled to indemnification from amounts on deposit in the RCL
Account for any claims against the RCL Trustee the indemnification for which is
provided pursuant to this Section 2.7. Any claim against the RCL Trustee shall
be defended by the RCL Beneficiaries and the RCL Trustee shall be entitled to
separate counsel, the fees and expenses of which shall be paid by such RCL
Beneficiaries. The indemnities contained in this Section 2.7 shall survive the
resignation or termination of the RCL Trustee or the termination of this
Agreement. Any amounts paid to the RCL Trustee pursuant to this Section 2.7
shall be deemed not to be RCL Assets immediately after such payment. The RCL
Trustee acknowledges that funds may be deposited in the RCL Account only as
specifically provided in the Basic Documents, and that certain funds paid to
RCL in respect of the Series 1996-1 Certificates and funds paid to RCL as
holder of the Subordinated Notes and deposited in the Cash Collateral Account
have been pledged to the Lease Trustee on behalf of the Lease Trust and the
Indenture Trustee on behalf of Senior Noteholders in accordance with the terms
of the Basic Documents.
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<PAGE> 11
Section 2.8 Title to Trust Property. Legal title to all the RCL
Assets shall be vested at all times in RCL or, if required by applicable law,
the RCL Trustee or a co-trustee and/or a separate trustee, as the case may be.
The RCL Trustee or any such co-trustee and/or separate trustee shall at all
times hold the RCL Assets on behalf of the RCL Beneficiaries.
ARTICLE III
THE RCL BENEFICIARIES
Section 3.1 Restrictions on Transfer. Neither Ford Credit nor Ford
Credit Leasing may sell, transfer, assign, hypothecate, pledge or otherwise
convey its beneficial interest in RCL to any Person. There shall be no
restriction on the ability of RCL, acting upon the joint instructions of the
RCL Beneficiaries, to transfer, convey, assign, lease and otherwise enter into
agreements with respect to any or all of the RCL Assets as contemplated by the
Basic Documents; provided however, that except pursuant to, or as specifically
contemplated by, the Basic Documents, RCL (and Ford Credit Leasing, after the
assignment) shall not transfer, convey, assign, lease or otherwise enter into
agreements with respect to the RCL Assets.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the Grantors. Ford
Credit and Ford Credit Leasing (each only as to itself) as Grantors hereunder
hereby each represent and warrant to the RCL Trustee that:
(a) it has been duly organized and is validly existing as a
corporation 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 presently owned and such business is presently conducted;
(b) it is duly qualified to do business as a foreign corporation in
good standing, and has obtained all necessary licenses and approvals in all
jurisdictions
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<PAGE> 12
in which the ownership or lease of property or the conduct of its business
requires such qualifications;
(c) it has the full power and authority to execute and deliver this
Agreement, to carry out its terms and to transfer, convey and deposit the RCL
Assets to be deposited with the RCL Trustee as part of RCL and has duly
authorized such acts by all necessary corporate action;
(d) the consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms of this Agreement do not conflict
with, result in any breach of any of the terms and provisions of or constitute
(with or without notice or lapse of time) a default under, its certificate of
incorporation or by-laws, or any indenture, agreement or other instrument to
which it is a party or by which it is bound, or result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of any
such indenture, agreement or other instrument, or violate any law or, to the
best of its knowledge, any order, rule or regulation applicable to it of any
court or of any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over it or any of its
properties; and
(e) this Agreement has been duly authorized, executed and delivered
by it and constitutes the legal, valid and binding agreement of it, enforceable
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other similar laws affecting the
enforcement of creditors' rights in general and by general principles of
equity, regardless of whether such enforceability is considered in a proceeding
in equity or at law.
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ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.1 Establishment of RCL Account.
(a) The RCL Trustee, for the benefit of RCL, shall establish and
maintain in the name of the RCL Trustee an account known as the RCL Account
(the "RCL Account") in an office of the RCL Trustee, bearing an additional
designation clearly indicating that the funds deposited therein are held for
the benefit of RCL and Ford Credit Leasing as assignee under the RCL Assignment
Agreement.
(b) RCL and Ford Credit Leasing as assignee under the RCL Assignment
Agreement shall possess all right, title and interest in and to all funds on
deposit from time to time in the RCL Account and in all proceeds thereof. The
RCL Account shall be under the sole dominion and control of the RCL Trustee for
the benefit of the RCL Beneficiaries.
Section 5.2 Application of RCL Assets.
(a) All investment earnings on amounts deposited in the Series
1996-1 Payahead Account pursuant to Section 5.2(b) of the Series 1996-1
Supplement and any Transferor Purchase Option Net Proceeds not required to be
deposited into the Cash Collateral Account pursuant to Section 9.2 of the
Program Operating Lease shall be deposited into the RCL Account. The RCL
Trustee shall not invest any amounts deposited in the RCL Account. The RCL
Trustee shall have no liability for (i) the failure to invest amounts deposited
in the RCL Account, or (ii) for failing to take any action or to refrain from
taking any action for the reasons described in Sections 6.4(b) and 6.4(c).
(b) On each Distribution Date, the RCL Trustee shall withdraw all
amounts on deposit in the RCL Account and apply such amounts in the following
order of priority:
(i) to the RCL Trustee an amount equal to the sum of (x) the
fees payable to the RCL Trustee for its services hereunder and (y) its
reasonable
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<PAGE> 14
expenses incurred in connection with the exercise and performance of its
rights and duties hereunder;
(ii) to pay any other amounts then owing by RCL to any
Person;
(iii) to Ford Credit Leasing, pursuant to the RCL Assignment
Agreement, 1% of the amount remaining after giving effect to the payment of
items (i) and (ii) above; and
(iv) to the RCL Beneficiaries in accordance with their
respective Percentage Interests in RCL, the amount remaining after giving
effect to the payment of items (i), (ii) and (iii).
(c) In connection with each distribution of funds, the RCL Trustee
shall deliver to each RCL Beneficiary and Ford Credit Leasing as assignee under
the RCL Assignment Agreement a report setting forth the amounts distributed
pursuant to Section 5.2(b).
Section 5.3 Accounting and Reports to RCL Beneficiaries, the Internal
Revenue Service and Others. The RCL Trustee shall (a) maintain (or cause to be
maintained) the books of RCL on a calendar year basis on the accrual method of
accounting, (b) deliver or cause to be delivered to each RCL Beneficiary such
information as may be required by the Code and applicable Treasury Regulations
or otherwise, including such information as may be required to enable each RCL
Beneficiary to prepare its federal income tax returns, (c) file or cause to be
filed any tax returns relating to RCL 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 in accordance with Section 11.1 and
(d) cause such tax returns to be signed in the manner required by law.
Section 5.4 Signature on Returns; Tax Matters Partner. The RCL
Trustee shall sign on behalf of RCL any and all tax returns of RCL, unless
applicable law requires a RCL Beneficiary to sign such documents, in which case
such documents shall be signed by Ford Credit Leasing. To the extent one may
be required, Ford Credit Leasing shall be the "tax matters partner" of RCL
pursuant to the Code.
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ARTICLE VI
RCL TRUSTEE
Section 6.1 Duties of RCL Trustee. (a) The RCL Trustee shall
perform such duties, and only such duties, as are specifically set forth in
this Agreement, including the conservation of RCL and the RCL Assets in the
interest of the RCL Beneficiaries. No implied covenants or obligations shall
be read into this Agreement.
(b) In the absence of bad faith on its part, the RCL Trustee may
conclusively rely upon certificates or opinions furnished to the RCL Trustee
and conforming to the requirements of this Agreement in determining the truth
of the statements and the correctness of the opinions contained therein;
provided, however, that the RCL Trustee shall have examined such certificates
or opinions so as to determine compliance of the same with the requirements of
this Agreement.
(c) The RCL 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 Section 6.1(c) shall not limit the effect of Sections 6.1(a)
or (b);
(ii) the RCL Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that the
RCL Trustee was grossly negligent in ascertaining the pertinent facts; and
(iii) the RCL 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 6.4.
(d) Subject to Sections 5.1, 5.2, 5.5 and 5.6, the RCL Trustee need
not segregate funds received hereunder in any manner except to the extent
required by law and may deposit such funds under such general conditions as
may be prescribed by law, and the RCL Trustee shall not be liable for any
interest thereon.
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(e) No RCL Beneficiary shall direct the RCL Trustee to take any
action that (i) is inconsistent with the purposes of RCL set forth in Section
2.3 or (ii) would result in RCL becoming taxable as an "association" for
federal income tax or state income or franchise tax purposes. The RCL Trustee
shall not take any action that (i) is inconsistent with the purposes of RCL set
forth in Section 2.3 or (ii) would, to the actual knowledge of a Responsible
Officer of the RCL Trustee, result in RCL's becoming taxable as an
"association" for federal income tax or state income or franchise tax purposes.
Section 6.2 Rights of RCL Trustee. The RCL Trustee is authorized and
directed to execute and deliver this Agreement, the Underwriting Agreement
dated as of November __, 1996 (the "Underwriting Agreement") among J.P. Morgan
Securities Inc., the RCL Trustee, Ford Credit and Ford Credit Leasing, the
Certificate Purchase Agreement dated as of November __, 1996 (the "Purchase
Agreement") among J.P. Morgan Securities Inc., the RCL Trustee, Ford Credit and
Ford Credit Leasing, and each certificate or other document attached as an
exhibit to or contemplated by this Agreement or the Basic Documents to which
RCL is to be a party, in such form as the RCL Beneficiaries shall approve as
evidenced conclusively by the RCL Trustee's execution thereof. The RCL
Beneficiaries shall be responsible for causing the RCL Trustee to comply with
its covenants under the Underwriting Agreement and the Purchase Agreement. The
RCL Beneficiaries shall not direct the RCL Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any
obligation of RCL or the RCL Trustee under this Agreement or the Basic
Documents or would be contrary to Section 2.3, nor shall the RCL Trustee be
obligated to follow any such direction, if given.
Section 6.3 Acceptance of Trusts and Duties. Except as otherwise
provided in this Article VI, in accepting the trusts hereby created, First
Union Bank of Delaware acts solely as the RCL Trustee hereunder and not in its
individual capacity and all Persons having any claim against the RCL Trustee by
reason of the transactions contemplated by this Agreement or the Basic
Documents and shall look only to the RCL Assets available for payment or
satisfaction thereof. The RCL Trustee accepts the trusts hereby created and
agrees to perform its duties hereunder with respect to such trusts but only
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upon the terms of this Agreement. The RCL Trustee also agrees to disburse all
moneys actually received by it constituting part of the RCL Assets upon the
terms of this Agreement. The RCL Trustee shall not be liable or accountable
hereunder under any circumstances, except (i) for its own negligent action, its
own negligent failure to act or its own willful misconduct or (ii) in the case
of the inaccuracy of its representations or warranties contained in Section
6.6. In particular, but not by way of limitation (and subject to the
exceptions set forth in the preceding sentence):
(a) the RCL 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 RCL Beneficiary;
(b) no provision of this Agreement shall require the RCL Trustee to
expend or risk funds or otherwise incur any financial liability in the
performance of any of its rights or powers hereunder, if the RCL 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;
(c) the RCL Trustee shall not be responsible for or in respect of and
makes no representation as to the validity or sufficiency of any provision
of this Agreement or for the due execution hereof by Ford Credit and Ford
Credit Leasing or for the form, character, genuineness, sufficiency, value
or validity of any of the RCL Assets or any related documents, and the RCL
Trustee shall in no event assume or incur any liability, duty or obligation
to any RCL Beneficiary, other than as expressly provided for herein; and
(d) the RCL 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, at the request, order or direction of any RCL
Beneficiary, unless such RCL Beneficiary has offered to the RCL Trustee
security or indemnity satisfactory to it against the costs, expenses and
liabilities
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that may be incurred by the RCL Trustee therein or thereby. The right of
the RCL Trustee to perform any discretionary act enumerated in this
Agreement shall not be construed as a duty, and the RCL Trustee shall not
be answerable for other than its negligence or willful misconduct in the
performance of any such act.
Section 6.4 Action upon Instruction by RCL Beneficiaries.
(a) The RCL Beneficiaries may direct the RCL Trustee to take action
or refrain from taking action permitted hereunder and under the other Basic
Documents with respect to the RCL Assets in which they have a beneficial
interest except to the extent that such action or inaction would conflict with
any provision hereof or of the Basic Documents (including, without limitation,
Section 3.1 and Section 7.1(b) hereof). Such direction may be exercised at any
time by written instructions of the RCL Beneficiaries holding a 100% beneficial
interest in RCL.
(b) Notwithstanding the foregoing, the RCL Trustee shall not be
required to take any action or refrain from taking any action hereunder if the
RCL 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
RCL Trustee or is contrary to the terms hereof or is otherwise contrary to law.
(c) Whenever the RCL Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement, or is
unsure as to the application, intent, interpretation or meaning of any
provision of this Agreement, the RCL Trustee may request an Opinion of Counsel
as to such application, intent, interpretation or meaning, or may give notice
(in such form as shall be appropriate under the circumstances) to the RCL
Beneficiaries requesting instruction as to the course of action to be adopted,
and, to the extent the RCL Trustee acts in good faith in accordance with such
Opinion of Counsel or any such instruction received from such RCL Beneficia-
ries, as the case may be, the RCL Trustee shall not be liable on account of
such action to any Person. If the RCL Trustee shall not have received
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an Opinion of Counsel or appropriate instructions within ten 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 which is consistent,
in its view, with this Agreement, and as it shall deem to be in the best
interests of the RCL Beneficiaries, and the RCL Trustee shall have no liability
to any Person for any such action or inaction.
Section 6.5 Furnishing of Documents. The RCL Trustee shall furnish
to the RCL Beneficiaries, 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 RCL Trustee by
the Administrative Agent or otherwise.
Section 6.6 Representations and Warranties of RCL Trustee. The RCL
Trustee hereby represents and warrants to the RCL Beneficiaries that:
(a) it is a banking corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
(b) it has full power, authority and legal right to execute, deliver
and perform this Agreement, and has taken all necessary action to authorize the
execution, delivery and performance by it of this Agreement;
(c) the execution, delivery and performance by it of this Agreement
(i) shall not violate any provision of any law or regulation governing the
banking and trust powers of the RCL Trustee or any order, writ, judgment or
decree of any court, arbitrator or governmental authority applicable to the RCL
Trustee or any of its assets, (ii) shall not violate any provision of the
corporate charter or by-laws of the RCL Trustee, and (iii) shall not violate
any provision of, or constitute, with or without notice or lapse of time, a
default under, any mortgage, indenture, contract, agreement or other
undertaking to which the RCL Trustee is a party;
(d) the execution, delivery and performance by the RCL Trustee of
this Agreement shall not require the authorization, consent or approval of, the
giving of
15
<PAGE> 20
notice to, the filing or registration with, or the taking of any other action
in respect of, any governmental authority or agency regulating the banking and
corporate trust activities of banks or trust companies in the jurisdiction in
which RCL was formed;
(e) this Agreement has been duly executed and delivered by the RCL
Trustee and constitutes the legal, valid and binding agreement of the RCL
Trustee, enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such enforceability is considered
in a proceeding in equity or at law; and
(f) no legal or governmental proceedings are pending to which the
RCL Trustee is a party or of which any property of the RCL Trustee 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 RCL Trustee and
will not materially and adversely affect the performance by the RCL Trustee of
its obligations under, or the validity and enforceability of this Agreement.
Section 6.7 Reliance; Advice of Counsel.
(a) The RCL Trustee 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 and
need not investigate any fact or matter in any such document. The RCL Trustee
may accept a 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 RCL 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 offi-
16
<PAGE> 21
cers of the relevant party, as to such fact or matter, and such certificate
shall constitute full protection to the RCL 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, the RCL
Trustee: (i) may act directly or through its agents, attorneys, custodians or
nominees pursuant to agreements entered into with any of them, and the RCL
Trustee shall not be liable for the conduct or misconduct of such agents,
attorneys, custodians or nominees if such agents, attorneys, custodians or
nominees shall have been selected by the RCL Trustee with reasonable care and
(ii) may consult with counsel, accountants and other skilled professionals to
be selected with reasonable care and employed by it. The RCL Trustee shall not
be liable for anything done, suffered or omitted in good faith by it in
accordance with any Opinion of Counsel or advice of any accountants or other
such skilled professionals and not contrary to this Agreement.
Section 6.8 RCL Trustee May Own Lease Trust Certificates and Senior
Notes. The RCL Trustee in its individual or any other capacity may become the
owner or pledgee of Lease Trust Certificates or Senior Notes and may deal with
the RCL Beneficiaries, the Administrative Agent, the Lease Trustee and the
Indenture Trustee in transactions in the same manner as it would have if it
were not the RCL Trustee.
Section 6.9 Compensation. The RCL Trustee shall receive as
compensation for its services hereunder such fees as shall be separately agreed
upon from time to time between the RCL Beneficiaries and the RCL Trustee. The
RCL Trustee shall be entitled at all times to be reimbursed for its reasonable
expenses hereunder, including the reasonable compensation, expenses and
disbursements of such agents, custodians, nominees, representatives, experts
and counsel as the RCL Trustee may employ in connection with the exercise and
performance of its rights and its duties hereunder. Such fees and
reimbursements shall be paid first, from the RCL Account in accordance with
Section 5.2(c) (which amounts, following the execution of the RCL Assignment
Agreement, shall be charged 99% to amounts beneficially owned by RCL and 1%
17
<PAGE> 22
to amounts beneficially owned by Ford Credit Leasing), and second, to the
extent of any shortfall, directly by the RCL Beneficiaries in accordance with
their respective Percentage Interests.
Section 6.10 Resignation or Removal of RCL Trustee. (a) The RCL
Trustee shall not resign without the consent of the RCL Beneficiaries unless
(i) the RCL Trustee shall cease to be eligible in accordance with the
provisions of Section 6.13, (ii) the RCL Trustee shall be incapable of acting
or it shall be illegal for the RCL Trustee to act, or (iii) the RCL Trustee
shall have given at least 60 days' prior written notice to the RCL
Beneficiaries (who shall promptly notify the Lease Trustee and the Indenture
Trustee).
(b) The RCL Beneficiaries may remove the RCL Trustee (and shall
remove the RCL Trustee in the case of the occurrence of an event described in
clause (i) or (iv)):
(i) if the RCL Trustee shall cease to be eligible in accordance with
the provisions of Section 6.13 and shall fail to resign after written
request therefor by the RCL Beneficiaries;
(ii) if the RCL Trustee shall become bankrupt or insolvent;
(iii) if a receiver or other public officer shall be appointed or
takes charge or control of the RCL Trustee or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation; or
(iv) if the RCL Trustee shall otherwise be incapable of acting or it
shall be illegal for the RCL Trustee to act.
(c) If the RCL Trustee is removed or if a vacancy exists in the
office of trustee for any reason, the RCL Beneficiaries shall promptly appoint
a successor trustee by written instrument, in duplicate (one copy of which
instrument shall be delivered to the outgoing trustee so removed and one copy
to the successor trustee). If a successor trustee shall not have been
appointed within 30 days after the giving of a written notice of
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<PAGE> 23
resignation or the delivery of the written instrument with respect to such
removal, the RCL Trustee or the RCL Beneficiaries may apply to any court of
competent jurisdiction to appoint a successor trustee to act until such time,
if any, as a successor trustee shall have been appointed as provided above.
Any successor trustee so appointed by such court shall upon 30 days written
notice from the RCL Beneficiaries be superseded by any successor trustee
appointed as provided above within one year from the date of the appointment by
such court.
(d) Any resignation or removal of the RCL Trustee and appointment of
a successor trustee pursuant to any of the provisions of this Section 6.10
shall not become effective until a written acceptance of appointment is
delivered by the successor trustee. Any successor trustee appointed pursuant
to this Section 6.10 shall be eligible to act in such capacity in accordance
with Section 6.13 and, following compliance with the preceding sentence, 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
trustee.
(e) The predecessor trustee shall upon payment of its fees and
expenses deliver to the successor trustee all books, records, accounts,
documents and statements and monies held by it under this Agreement. The
predecessor trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for fully and certainly vesting and
confirming in the successor trustee all such rights, powers, duties and
obligations. The predecessor trustee shall cooperate with the successor
trustee to ensure that the successor trustee has all books, records, accounts,
documents, statements and other relevant information relating to the RCL
Assets.
Section 6.11 Merger or Consolidation of RCL Trustee. Any corporation
or other Person into which the RCL 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 RCL Trustee shall be a party, or any
corporation or other Person succeeding to all or substantially all of the
corporate trust business of the RCL Trustee, shall be the successor of the RCL
Trustee hereunder, provided such
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<PAGE> 24
corporation shall be eligible in accordance with the provisions of Section
6.13, without, unless otherwise required by law, the execution or filing of
any instrument or any further act on the part of any of the parties hereto.
Section 6.12 Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provision of this Agreement, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any RCL
Assets may at the time be located, the RCL Beneficiaries acting jointly shall
have the power and shall execute and deliver all instruments to appoint one or
more Persons approved by the RCL Beneficiaries to act as co-trustee, jointly
with the RCL Trustee, or as separate trustee or trustees, of all or any part of
RCL and the RCL Assets, and to vest in such Person, in such capacity, such
title to RCL, or any RCL Asset, and, subject to the other provisions of this
Section 6.12, such powers, duties, obligations, rights and trusts as the RCL
Beneficiaries and the RCL Trustee may consider necessary or desirable. No
co-trustee or separate trustee under this Agreement shall be required to be
eligible in accordance with the provisions of Section 6.13; provided that no
co-trustee or separate trustee under this Agreement may be a RCL Beneficiary or
any Affiliate thereof.
(b) Each co-trustee and separate 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 RCL Trustee shall be conferred upon and exercised or performed by
the RCL Trustee and such co-trustee or separate trustee jointly (it being
understood that such co-trustee or separate trustee is not authorized to
act separately without the RCL 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 RCL 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 RCL or
any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such co-trustee or
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<PAGE> 25
separate trustee, but solely at the direction of the RCL 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 RCL Beneficiaries and the RCL Trustee acting jointly may at
any time accept the resignation of or remove any co-trustee or separate
trustee.
(c) Any notice, request or other writing given to the RCL 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 co-trustee or separate trustee shall refer to this Agreement and
the conditions of this Article. Each co-trustee and separate 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
RCL 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 RCL Trustee. Each such instrument shall be filed with the
RCL Trustee and a copy thereof given to each RCL Beneficiary.
(d) Any co-trustee or separate trustee may at any time appoint the
RCL 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 co-trustee or separate
trustee shall 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 RCL Trustee, to the extent permitted by law, without the appointment of
a new or successor trustee.
Section 6.13 Eligibility Requirements for RCL Trustee. The RCL
Trustee or any successor trustee, as the case may be, shall at all times: (a)
be a corporation or a banking association organized under the laws
of the United States of America or any state thereof; (b) be
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<PAGE> 26
authorized to exercise corporate trust powers; (c) be qualified to act as a
trustee and hold RCL Assets in those states in which RCL Assets are located (or
have appointed a co-trustee or separate trustee to hold RCL Assets in such
state); (d) have its principal place of business in the State of Delaware and
(e) have a long-term debt rating of at least Baa3 by Moody Investors Service,
Inc.
ARTICLE VII
TERMINATION OF TRUST AGREEMENT
Section 7.1 Termination of Trust Agreement. (a) This Agreement
(other than Section 2.7) and RCL shall terminate and RCL shall dissolve and be
of no further force or effect on the earlier of: (i) the final distribution by
the RCL Trustee of all moneys or other property constituting RCL Assets; and
(ii) notwithstanding the provisions of Section 3808 of the Trust Statute,
the Bankruptcy or insolvency of Ford Credit Leasing. This Agreement and RCL
may also terminate at the express written direction of the RCL Beneficiaries at
such time as the Series 1996-1 Certificates are not outstanding.
Notwithstanding the foregoing, in no event, however, shall RCL continue beyond
the expiration of 21 years from the death of the last survivor of the
descendants of Hurley David Smith, currently residing in Clarkston, Michigan,
living on the date of this Agreement.
(b) Upon termination of RCL, (i) after satisfaction of all creditors,
if any, of RCL, the RCL Trustee shall distribute the RCL Assets to the RCL
Beneficiaries in accordance with Section 5.2(b) and (ii) a certificate of
cancellation shall be filed with the Delaware Secretary of State pursuant to 12
Del. Code Section 3810(c).
ARTICLE VIII
AMENDMENTS
Section 8.1 Amendments. This Agreement may be amended by the RCL
Beneficiaries and the RCL Trustee at any time; provided, however, that such
action shall not, (x) as evidenced by an Opinion of Counsel, materially and
adversely affect the interests of any Holder of a
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<PAGE> 27
Series 1996-1 Certificate (unless each such Holder has consented thereto), (y)
as confirmed by each Rating Agency rating the Senior Notes and the Lease Trust
Certificates, cause the then current rating of any Class of Senior Notes or the
Lease Trust Certificates to be withdrawn or reduced, or (z) as evidenced by an
Opinion of Counsel, (i) affect the treatment of the Senior Notes as debt for
federal income tax purposes, (ii) be deemed to cause a taxable exchange of the
Senior Notes for federal income tax purposes or (iii) cause RCL, FCTT or the
Lease Trust to be classified as an association (or publicly traded partnership)
taxable as a corporation for federal income tax purposes.
Notwithstanding the foregoing, this Agreement may be amended (with
notice of such amendment being delivered to each Rating Agency) at any time by
the RCL Beneficiaries and the RCL Trustee to the extent reasonably necessary to
assure that none of FCTT, the Lease Trust, or RCL will be classified as an
association (or publicly traded partnership) taxable as a corporation for
federal income tax purposes.
ARTICLE IX
TAX MATTERS
SECTION 9.1 Tax Characterization. It is the intention of the parties
hereto that, for purposes of federal, state and local income taxes and state
franchise taxes, and the Michigan Single Business Tax, RCL shall be treated as
a grantor trust. The parties agree that, unless otherwise required by
appropriate tax authorities, RCL shall file or cause to be filed annual or
other necessary returns, reports and other forms consistent with the
characterization of RCL as a grantor trust for such tax purposes. If, however,
RCL is characterized as a separate entity for federal income tax or state
income or franchise tax purposes other than a grantor trust, it is the
intention of the parties hereto that it qualify as a partnership for such
purposes.
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ARTICLE X
MISCELLANEOUS
Section 10.1 No Legal Title to RCL Assets; Direction of RCL Trustee
Actions. The RCL Beneficiaries shall not have legal title to any RCL Assets.
The RCL Beneficiaries shall be entitled to receive distributions with respect
to their undivided beneficial interest therein only in accordance with Articles
V and VII. Notwithstanding anything herein to the contrary, the RCL Trustee
shall take no action with respect to any RCL Asset except as provided in the
Basic Documents or upon direction of the RCL Beneficiaries.
Section 10.2 Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the RCL Trustee, the Grantors and the
RCL Beneficiaries and nothing in this Agreement, whether express or implied,
shall be construed to give to any other Person any legal or equitable right,
remedy or claim in RCL or the RCL Assets or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein.
Section 10.3 Notices. All demands, notices and communications upon
or to the Grantors, the RCL Beneficiaries and the RCL Trustee shall be in
writing, and shall be personally delivered, sent by electronic facsimile or
overnight delivery service or mailed by certified mail-return receipt
requested, and shall be deemed to have been duly given to the intended
recipient upon receipt at the respective addresses listed below, or at such
other address as shall be designated by such Person in a written notice to the
other parties to this Agreement.
(i) In the case of Ford Credit Leasing:
Ford Credit Leasing Company, Inc.
The American Road
FMCC Building
Dearborn, Michigan 48121
Attention: Treasurer
Fax: 313-594-0735
Telephone: 313-248-6722
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<PAGE> 29
(ii) In the case of Ford Credit:
Ford Motor Credit Company
The American Road
FMCC Building
Dearborn, Michigan 48121
Attention: Secretary
Fax: 313-248-7613
Telephone: 313-594-7765
(iii) In the case of the RCL Trustee
First Union Bank of Delaware
One Rodney Square
920 King Street
Wilmington, Delaware 19801
Attention: Trust Department
with a copy to:
First Union National Bank of North Carolina
230 South Tryon Street CMC-9
Charlotte, North Carolina 28288
Attention: Pablo de La Canal
Any notice to be delivered to any RCL Beneficiary which is a
permitted assignee hereunder of either initial RCL Beneficiary, shall be
delivered at the address provided to the RCL Trustee by such Person.
Section 10.4 Severability. 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 the rights of
any RCL Beneficiaries.
Section 10.5 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 one and the same instrument.
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<PAGE> 30
Section 10.6 Successors and Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of
the RCL Trustee and each RCL Beneficiary and their respective successors and
permitted assigns. Any request, notice, direction, consent, waiver or other
instrument or action by a RCL Beneficiary shall bind the successors and assigns
of such RCL Beneficiary.
Section 10.7 No Recourse. Each RCL Beneficiary, acknowledges
that such RCL Beneficiary holds a beneficial interest in RCL only and does not
have any other interest in the property or assets of RCL or the RCL Trustee.
Section 10.8 No Petition. The RCL Trustee shall not commence
a voluntary proceeding in bankruptcy relating to RCL without having an
independent reasonable good faith belief that RCL is insolvent and having
received the unanimous prior approval of all RCL Beneficiaries and the delivery
to the RCL Trustee by each such RCL Beneficiary of a certificate certifying
that such RCL Beneficiary reasonably believes that RCL is insolvent.
Notwithstanding the foregoing, the RCL Trustee and Ford Credit each hereby
covenants that for a period of one year and one day after payment in full of
the Series 1996-1 Certificates pursuant to the terms of this Agreement, it will
not institute against, or join any Person in instituting against, FCTT or Ford
Credit Leasing any bankruptcy, reorganization, insolvency or liquidation
proceeding, or other similar proceeding, under the laws of the United States
without the consent of 100% of the Holders of the Specified Beneficial
Certificates (excluding Ford Credit Leasing, RCL Trust 1996-1, or any of their
Affiliates).
Section 10.9 Covenant of Ford Credit Leasing. Ford Credit
Leasing covenants (for the benefit of Ford Credit, the Lease Trust, RCL and the
Indenture Trustee) to maintain at all times a net worth (exclusive of its
interest in RCL, the Lease Trust or FCTT or any other entity in which it may be
treated for federal income tax purposes as a "general partner") at least equal
to $[10,000,000], THIS AMOUNT IS TO BE INCREASED IN PROPORTION TO THE INCREASE
IN THE 1996-1 OFFERING OVER THE 1995-1 OFFERING] unless an Opinion of Counsel
is delivered to the effect that not maintaining such net worth
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<PAGE> 31
would not cause FCTT, RCL or the Lease Trust to be classified as an association
(or publicly traded partnership) taxable as a corporation for federal income
tax purposes.
Section 10.10 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 10.11 GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
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<PAGE> 32
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.
FIRST UNION BANK OF DELAWARE,
as trustee
By:___________________________
Name:
Title:
FORD CREDIT LEASING COMPANY, INC.,
as a Grantor and RCL Beneficiary
By:___________________________
Name: [_______]
Title:
FORD MOTOR CREDIT COMPANY,
as a Grantor and RCL Beneficiary
By:___________________________
Name: Hurley D. Smith
Title: Secretary
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<PAGE> 33
EXHIBIT A
Form of RCL Assignment Agreement
Reference is made to RCL Trust 1996-1 ("RCL"), established
pursuant to the Trust Agreement, dated as of ______ ___, 1996 (the "RCL Trust
Agreement"), among Ford Motor Credit Company ("Ford Credit"), Ford Motor Credit
Leasing, Inc. ("Ford Credit Leasing") and First Union Bank of Delaware, as
trustee (in such capacity, the "RCL Trustee"). Terms which are used in this
RCL Assignment Agreement but are not defined herein have the meanings assigned
to them in the RCL Trust Agreement.
As contemplated by Section 2.3 of the RCL Trust Agreement, RCL
hereby assigns, transfers and otherwise conveys to Ford Credit Leasing a 1%
interest in each asset, right, and liability of RCL, including without
limitation the Cash Collateral Account (subject to the pledge to the Lease
Trustee and the Indenture Trustee pursuant to the Program Operating Lease and
the Indenture) and the obligations of RCL under the Program Operating Lease and
Section 2.3(c) of the Transfer Agreement, but excluding those certain demand
notes listed on Schedule I to the RCL Trust Agreement and Ford Credit Leasing
hereby accepts such assignment, transfer and conveyance. Such assignment,
transfer and conveyance shall include the assignment of a Subordinated Note
evidencing 1% of the initial Outstanding Amount of the Subordinated Notes and
any amounts payable to RCL pursuant to the Transfer Agreement. RCL and Ford
Credit Leasing hereby agree that following such assignment, Ford Credit Leasing
shall be a "Holder" of the Series 1996-1 Certificates to the same extent as RCL
Trust 1996-1. Ford Credit and Ford Credit Leasing hereby agree that after
giving effect to such assignment, transfer and conveyance, Ford Credit
Leasing's percentage beneficial interest in RCL shall be reduced from 2% to the
percentage equivalent of a fraction, the numerator of which is 1 and the
denominator of which is 99, and Ford Credit's percentage beneficial interest in
RCL shall be increased from 98% to the percentage equivalent of a fraction, the
numerator of which is 98 and the denominator of which is 99. Accordingly, 1%
of all funds coming into the possession of RCL that are not required to be held
or paid over to the Lease Trust or deposited in the Cash Collateral Account
shall be the property of Ford Credit Leasing and shall be paid by the RCL
Trustee to Ford Credit Leasing.
A-1
<PAGE> 34
This RCL Assignment Agreement is made pursuant to and in
reliance upon the representations, warranties and agreements set forth in the
RCL Trust Agreement.
THIS RCL ASSIGNMENT AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF
LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
A-2
<PAGE> 35
IN WITNESS WHEREOF, the parties hereto have caused this RCL
Assignment Agreement to be duly executed as of November __, 1996.
RCL TRUST 1996-1,
assignor
By: FIRST UNION BANK OF DELAWARE,
not in its individual capacity but
solely as RCL Trustee,
By: ______________________
Name:
Title:
FORD CREDIT LEASING COMPANY, INC.,
as assignee and RCL Beneficiary,
By: ______________________
Name:
Title:
FORD MOTOR CREDIT COMPANY, as
RCL Beneficiary
By: ______________________
Name:
Title:
A-3
<PAGE> 36
Schedule I
1. Demand Note dated November __, 1996 from Ford Credit as maker and Ford
Credit Leasing as payee in a principal amount of $_______ and assigned
to RCL Trust.
2. Demand Note dated November __, 1996 from Ford Credit as maker and Ford
Credit Leasing as payee in a principal amount of $_______ and assigned
to RCL Trust.
3. Demand Note dated November __, 1996 from Ford Credit as maker and RCL
Trust as payee in a principal amount of $__________.
4. Demand Note dated November __, 1996 from Ford Credit as maker and RCL
Trust as payee in a principal amount of $__________.
<PAGE> 1
EXHIBIT 4.1
[LEASE TRUST AGREEMENT]
FORD CREDIT AUTO LEASE TRUST 1996-1
TRUST AGREEMENT
Dated as of November __, 1996
between
FIRST UNION BANK OF DELAWARE,
as Trustee of
RCL TRUST 1996-1,
as Depositor
and
PNC BANK, DELAWARE,
as Lease Trustee
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Capitalized Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.2 Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.3 Purposes and Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.4 Appointment of Lease Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.5 Initial Capital Contribution of Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.6 Declaration of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.7 Liability of the Depositor and Ford Credit Leasing . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.8 Title to Trust Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.9 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.10 Representations and Warranties of the Depositor . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.11 Tax Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III
LEASE TRUST CERTIFICATES, SUBORDINATED NOTES
AND TRANSFER OF INTERESTS . . . . . . . . . . . . . . . . . . . . . 9
Section 3.1 Initial Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.2 The Lease Trust Certificates and the Subordinated Notes . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.3 Authentication of Lease Trust Certificates and Subordinated Notes . . . . . . . . . . . . . . . . . 12
Section 3.4 Registration of Transfer and Exchange of Lease Trust Certificates and Subordinated Notes . . . . . 12
Section 3.5 Mutilated, Destroyed, Lost or Stolen Lease Trust Certificates or Subordinated Notes . . . . . . . . 20
Section 3.6 Persons Deemed Lease Trust Certificateholders or Subordinated Noteholders . . . . . . . . . . . . . 20
Section 3.7 Access to List of Lease Trust Certificateholders' and Subordinated Noteholders' Names and Addresses. 21
Section 3.8 Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.9 Appointment of Lease Trust Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
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Section 3.10 Ownership of Lease Trust Certificates and
Subordinated Notes by Depositor and Ford Credit Leasing. . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE IV
ACTIONS BY LEASE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.1 Prior Notice to Lease Trust Certificateholders with Respect to Certain Matters . . . . . . . . . . 24
Section 4.2 Action by Lease Trust Certificateholders with Respect to Certain Matters . . . . . . . . . . . . . 25
Section 4.3 Restrictions on Action by Lease Trustee with Respect to Bankruptcy . . . . . . . . . . . . . . . . 25
Section 4.4 Restrictions on Lease Trust Certificateholders' Power . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.5 Majority Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE V
APPLICATION OF TRUST FUNDS, CERTAIN DUTIES
AND SUBORDINATED NOTE EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.1 Establishment of Certificate Distribution Account . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.2 Application of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.3 Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.4 Accounting and Reports to the Senior Noteholders, Subordinated Noteholders, Lease
Trust Certificateholders, the Internal Revenue Service and Others . . . . . . . . . . . . . . . . . 31
Section 5.5 Subordinated Note Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.6 Acceleration of Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.7 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VI
AUTHORITY AND DUTIES OF LEASE TRUSTEE . . . . . . . . . . . . . . . . . . 34
Section 6.1 General Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 6.2 General Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 6.4 No Duties Except as Specified in this Agreement or in Instructions . . . . . . . . . . . . . . . . . 36
Section 6.5 No Action Unless Specifically Authorized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 6.6 Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VII
CONCERNING THE LEASE TRUSTEE . . . . . . . . . . . . . . . . . . . . . 37
Section 7.1 Acceptance of Trusts and Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
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Section 7.2 Furnishing of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 7.4 Reliance; Advice of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 7.5 Not Acting in Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 7.6 Lease Trustee Not Liable for Lease Trust Certificates or Subordinated Notes. . . . . . . . . . . . . 41
Section 7.7 Lease Trustee May Own Lease Trust Certificates, Subordinated Notes and Senior Notes . . . . . . . . 42
ARTICLE VIII
COMPENSATION OF LEASE TRUSTEE . . . . . . . . . . . . . . . . . . . . 42
Section 8.1 Lease Trustee's Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE IX
TERMINATION OF TRUST AGREEMENT . . . . . . . . . . . . . . . . . . . . 43
Section 9.1 Termination of Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.2 Dissolution upon Bankruptcy of the Depositor or Ford Credit Leasing. . . . . . . . . . . . . . . . . 45
Section 9.3 Redemption of the Subordinated Notes; Prepayment of the Lease Trust Certificates . . . . . . . . . . 46
ARTICLE X
SUCCESSOR LEASE TRUSTEES AND ADDITIONAL LEASE TRUSTEES . . . . . . . . . . . . . . 47
Section 10.1 Eligibility Requirements for Lease Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 10.2 Resignation or Removal of Lease Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 10.3 Successor Lease Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 10.4 Merger or Consolidation of Lease Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 10.5 Appointment of Co-Trustee or Separate Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE XI
TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 11.1 Income Tax Characterization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 11.2 Annex A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE XII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 12.1 Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 12.2 No Legal Title to Lease Trust Estate in Lease Trust Certificateholders or Subordinated Noteholders. 55
Section 12.3 Limitations on Rights of Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 12.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
</TABLE>
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Section 12.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 12.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 12.7 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 12.8 No Petition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 12.9 No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 12.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 12.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
</TABLE>
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ANNEX
Annex A Partnership Matters
EXHIBITS
Exhibit A Form of Lease Trust Certificate
Exhibit B Form of Subordinated Note
Exhibit C Form of Rule 144A Transferor Certificate
Exhibit D Form of Investment Letter - Qualified
Institutional Buyer
Exhibit E Form of Investment Letter - Institutional
Accredited Investor
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TRUST AGREEMENT dated as of _______ __, 1996 between (i) FIRST
UNION BANK OF DELAWARE, not in its individual capacity but solely as trustee of
RCL TRUST 1996-1, a Delaware business trust, as Depositor and (ii) PNC BANK,
DELAWARE, a Delaware banking corporation, not in its individual capacity but
solely as trustee under this Agreement (in such capacity, together with any
successor or permitted assign, "Lease Trustee").
ARTICLE I
DEFINITIONS
Section 1.1 Capitalized Terms. Unless otherwise defined
herein, capitalized terms used in this Agreement shall have the respective
meanings assigned to them, or incorporated by reference, in Appendix A attached
hereto. References to "this Agreement" are to this Lease Trust Agreement, and
all references to Articles, Sections and subsections are to Articles, Sections
and subsections of this Agreement unless otherwise specified provided, that
references to Sections and subsections in Annex A attached hereto and
incorporated herein are to Sections and subsections of such Annex A unless
otherwise specified.
"Authenticating Agent" shall mean any Person authorized by the
Lease Trustee to act on behalf of the Lease Trustee to authenticate and deliver
the Lease Trust Certificates and the Subordinated Notes.
"Certificate Pool Factor" shall mean, with respect to the
Lease Trust Certificates on any Semiannual Payment Date, the seven digit
decimal equivalent of a fraction the numerator of which is the Aggregate
Certificate Balance on such Semiannual Payment Date (after giving effect to any
payment of principal on such Semiannual Payment Date) and the denominator of
which is the Aggregate Certificate Balance on the Closing Date.
"Certificate Purchase Agreement" shall mean the Purchase
Agreement dated as of ______ __, 1996 among J.P. Morgan Securities Inc., Ford
Credit, Ford Credit Leasing and RCL Trust 1996-1.
"Corporate Trust Office" shall mean, with respect to the Lease
Trustee, the principal corporate trust office of the Lease Trustee located at
222 Delaware Avenue, Wilmington, Delaware 19801; or at such other address as
the
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Lease Trustee may designate by notice to the Lease Trust Certificateholders,
the Subordinated Noteholders and the Depositor, or the principal corporate
trust office of any successor Lease Trustee (the address of which the successor
Lease Trustee will notify the Lease Trust Certificateholders, the Subordinated
Noteholders and the Depositor).
"Depositor" shall mean the RCL Trust 1996-1 in its capacities
as depositor, as holder of the Lease Trust Certificates issued to it pursuant
to Section 3.10(a) and as holder of the Subordinated Notes issued to it
pursuant to Section 3.10(b).
"Expenses" shall mean all liabilities, obligations, losses,
damages, taxes, claims, actions and suits, and any and all costs, expenses and
disbursements (including legal fees and expenses) of any kind and nature
whatsoever.
"Indemnified Parties" shall have the meaning set forth in
Section 8.2.
"Initial Purchaser" shall mean J.P. Morgan Securities Inc. as
initial purchaser pursuant to the Certificate Purchase Agreement.
"Lease Trust" shall mean the Ford Credit Auto Lease Trust
1996-1 established pursuant to this Agreement.
"Lease Trust Distribution Statement" shall mean the statement
delivered pursuant to Section 5.2(b).
"Lease Trust Paying Agent" shall mean any paying agent or
co-paying agent appointed pursuant to Section 3.9 and shall initially be The
Chase Manhattan Bank.
"Lease Trust Register" and "Lease Trust Registrar" shall mean
the register mentioned and the registrar appointed pursuant to Section 3.4(a).
"Opinion of Counsel" shall mean one or more written opinions
of legal counsel who may, except as otherwise expressly provided for herein, be
employees of or counsel to the Depositor, the Administrative Agent or an
Affiliate of either, and which opinion or opinions shall be satisfactory to the
Lease Trustee.
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<PAGE> 9
"Prepayment Price" shall mean an amount, equal to Aggregate
Certificate Balance plus accrued and unpaid interest thereon at the Certificate
Interest Rate to but excluding the Redemption Date.
"Redemption Date" shall mean the Payment Date specified by the
Administrative Agent or the Lease Trustee pursuant to Section 9.3(a).
"Redemption Price" shall mean an amount equal to the unpaid
principal amount of the Subordinated Notes redeemed plus accrued and unpaid
interest thereon at the Subordinated Note Interest Rate, to but excluding the
Redemption Date.
"Responsible Officer" shall mean any officer of the Lease
Trustee, including any Vice President, Assistant Vice President, Assistant
Treasurer, Assistant Secretary or any other officer of the Lease Trustee
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.
"Rule 144A" shall have the meaning set forth in Section
3.4(c).
"Rule 144A Information" shall have the meaning set forth in
Section 3.4(d).
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Subordinated Note Default" shall mean any occurrence that is,
or with notice or the lapse of time or both would become, a Subordinated Note
Event of Default.
"Subordinated Note Event of Default" shall have the meaning
set forth in Section 5.5.
"Subordinated Note Pool Factor" shall mean, with respect to
the Subordinated Notes on any Semiannual Payment Date, the seven digit decimal
equivalent of a fraction the numerator of which is the Outstanding Amount of
the Subordinated Notes on such Semiannual Payment Date (after giving effect to
any payment of principal on such Semiannual Payment Date) and the denominator
of which is the Outstanding Amount of the Subordinated Notes on the Closing
Date.
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<PAGE> 10
"Transfer" shall have the meaning set forth in Section 3.2(a).
"Treasury Regulations" shall mean regulations, including
proposed or temporary regulations, promulgated under the Code. References
herein to specific provisions of proposed or temporary regulations shall
include analogous provisions of final Treasury Regulations or other successor
Treasury Regulations.
"Void Transfer" shall have the meaning set forth in Section
3.2(a).
Section 1.2 Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.
(b) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.
ARTICLE II
ORGANIZATION
Section 2.1 Name. The trust created hereby shall be known as
"Ford Credit Auto Lease Trust 1996-1", in which name the Lease Trustee may
engage in activities as permitted by the Basic Documents on behalf of the Lease
Trust, make and execute contracts and other instruments on behalf of the Lease
Trust and sue and be sued, to the extent provided herein.
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<PAGE> 11
Section 2.2 Office. The office of the Lease Trust shall be
in care of the Lease Trustee at the Corporate Trust Office or at such other
address in Delaware as the Lease Trustee may designate by written notice to the
Lease Trust Certificateholders, the Subordinated Noteholders and the Depositor.
Section 2.3 Purposes and Powers. (a) The purpose of the
Lease Trust is, and the Lease Trust shall have the power and authority, to
engage solely in the following:
(i) to issue the Senior Notes pursuant to the
Indenture, the Subordinated Notes and the Lease Trust Certificates
pursuant to this Agreement, and to sell or transfer the Senior Notes,
the Subordinated Notes and the Lease Trust Certificates upon the
written order of the Depositor;
(ii) to acquire the Series 1996-1 Certificates and
other assets from the Depositor pursuant to Section 2 of the Transfer
Agreement in exchange for the Senior Notes, the Subordinated Notes and
the Lease Trust Certificates;
(iii) to pay interest and principal on the Senior
Notes, the Subordinated Notes and the Lease Trust Certificates;
(iv) to assign, grant, transfer, pledge, mortgage and
convey the Lease Trust Estate pursuant to the Indenture as security
for the Senior Notes and to hold, and distribute to the Subordinated
Noteholders and the Lease Trust Certificateholders pursuant to the
terms of this Agreement any portion of the Lease Trust Estate released
from the Lien of, and remitted to the Lease Trust pursuant to, the
Indenture;
(v) to execute, deliver and perform its obligations
under the Basic Documents to which it is to be a party; and
(vi) to engage in other transactions, including
entering into agreements, that are necessary, suitable or convenient
to accomplish the foregoing or are incidental thereto or connected
therewith.
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<PAGE> 12
The Lease Trust is hereby authorized to engage in the
foregoing. The Lease Trust shall not engage in any activity other than in
connection with the foregoing or other than as required or authorized by the
terms of this Agreement or the other Basic Documents.
Section 2.4 Appointment of Lease Trustee. The Depositor
hereby appoints the Lease Trustee as trustee of the Lease Trust effective as of
the date hereof, to have all the rights, powers and duties set forth herein.
Section 2.5 Initial Capital Contribution of Trust Estate.
The Depositor hereby sells, assigns, transfers, conveys and sets over to the
Lease Trustee, as of the date hereof, the sum of $10. The Lease Trustee hereby
acknowledges receipt in trust from the Depositor, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Lease Trust Estate
and shall be deposited in the Certificate Distribution Account.
Section 2.6 Declaration of Trust. PNC Bank, Delaware hereby
declares and agrees that it will, and in its capacity the Lease Trustee does,
hold the Lease Trust Estate in trust upon and subject to the conditions set
forth herein for the benefit of the Lease Trust Certificateholders, the
Subordinated Noteholders and the Depositor, subject, however, to the lien of
the Indenture and to the obligations of the Lease Trust under the other Basic
Documents.
Section 2.7 Liability of the Depositor and Ford Credit
Leasing. (a) The holders of the Lease Trust Certificates and Subordinated Notes
issued to and required to be retained by the Depositor and Ford Credit Leasing
pursuant to Section 3.10 shall be liable directly to and will indemnify any
party entitled thereto for all Expenses of the Lease Trust incurred in
connection with the Series 1996-1 Assets to the extent that each such holder
would be liable if the Lease Trust were a partnership under the Delaware
Revised Uniform Limited Partnership Act (or the Delaware Uniform Partnership
Law) in which each such holder were a general partner (other than losses
incurred by Senior Noteholders in their capacity as holders of limited recourse
debt secured by the Lease Trust Estate or incurred by the Subordinated
Noteholders or the Lease Trust Certificateholders if such losses would
nevertheless have been incurred if the Subordinated Noteholders and the Lease
Trust Certificateholders were holders of limited recourse debt secured by the
Lease Trust Estate). In addition, any third party creditors of the Lease Trust
(other than the Subordinated
6
<PAGE> 13
Noteholders and the Lease Trust Certificateholders, to the extent that they are
not indemnified for investment losses, as set forth above) shall be deemed
third party beneficiaries of this Section 2.7(a). Such holders of the Lease
Trust Certificates and Subordinated Notes issued to the Depositor and Ford
Credit Leasing shall make no claim upon the Lease Trust Estate for the
reimbursement of amounts paid pursuant to this Section.
(b) No Subordinated Noteholder or Lease Trust
Certificateholder, other than the holders of the Lease Trust Certificates and
Subordinated Notes issued to and required to be retained by the Depositor and
Ford Credit Leasing pursuant to Section 3.10 to the extent set forth in Section
2.7(a), shall have any personal liability for any liability or obligation of
the Lease Trust.
Section 2.8 Title to Trust Property. Legal title to all the
Lease Trust Estate shall be vested at all times in the Lease Trust, except
where applicable law in any jurisdiction requires title to any part of the
Lease Trust Estate to be vested in a trustee or trustees, in which case title
shall be deemed to be vested in the Lease Trustee, a co-trustee and/or a
separate trustee, as the case may be.
Section 2.9 [Reserved].
Section 2.10 Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants to the Lease Trustee that:
(a) The Depositor is duly organized and validly existing as a
trust in good standing under the laws of the State of Delaware, with the power
and authority to own its properties and to conduct its activities as such
properties are currently owned and such activities is presently conducted.
(b) The Depositor is duly qualified, is in good standing, and
has obtained all necessary licenses and approvals in all jurisdictions in which
the failure to so qualify or to obtain such license or approval would (i)
render unenforceable any rights the Lease Trust may have under any of the Basic
Documents which would otherwise be enforceable by the Depositor, the
Administrative Agent or the Lease Trustee, or (ii) otherwise have a material
adverse effect on the Lease Trust.
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<PAGE> 14
(c) The Depositor has the power and authority to execute and
deliver this Agreement and to carry out its terms; the Depositor has full power
and authority to transfer the Series 1996-1 Certificates to and deposit them
with the Lease Trust and the Depositor shall have duly authorized such transfer
and deposit to the Lease Trust by all necessary action; and the execution,
delivery and performance of this Agreement has been duly authorized by the
Depositor by all necessary action.
(d) This Agreement constitutes a legal, valid and binding
obligation of the Depositor enforceable in accordance with its terms.
(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, nor constitute (with or
without notice or lapse of time) a default under, the RCL Trust Agreement, or
any indenture, agreement or other instrument to which the Depositor is a party
or by which it is bound; nor result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of any such indenture,
agreement or other instrument (other than pursuant to the Basic Documents); nor
violate any law or, to the best of the Depositor's knowledge, any order, rule
or regulation applicable to the Depositor of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Depositor or its properties.
(f) There are no proceedings or investigations pending, or to
the Depositor's best knowledge, threatened, before any court, regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Depositor or its properties: (i) asserting the invalidity of this
Agreement, the Indenture or any of the other Basic Documents, the Senior Notes,
the Subordinated Notes or the Lease Trust Certificates, (ii) seeking to prevent
the issuance of the Senior Notes, the Subordinated Notes or the Lease Trust
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, the Indenture, any of the other Basic
Documents, the Senior Notes, the Subordinated Notes or the Lease Trust
Certificates or (iv) which might adversely affect the federal
8
<PAGE> 15
income tax or State income or franchise tax attributes of the Senior Notes or
the Lease Trust Certificates.
Section 2.11 Tax Reporting. Consistent with the treatment of
the Lease Trust as a security device for income and franchise tax purposes,
unless otherwise required by appropriate tax authorities, the Lease Trust will
not file or cause to be filed annual or other income or franchise tax returns
and will not obtain any taxpayer identification numbers.
ARTICLE III
LEASE TRUST CERTIFICATES, SUBORDINATED NOTES
AND TRANSFER OF INTERESTS
Section 3.1 Initial Ownership. Upon the formation of the
Lease Trust by the contribution by the Depositor pursuant to Section 2.5 and
until the issuance of the Lease Trust Certificates, the Depositor shall be the
sole beneficiary of the Lease Trust.
Section 3.2 The Lease Trust Certificates and the Subordinated
Notes. (a) The Lease Trust Certificates shall be issued in one or more
registered, definitive, physical certificates, in the form set forth in Exhibit
A, in minimum denominations of at least $[1,000,000] and multiples of $1,000 in
excess thereof; provided, however, that Lease Trust Certificates may be issued
to the Depositor and Ford Credit Leasing pursuant to Section 3.10(a) in such
denominations as to represent in the aggregate at least 1% of the Aggregate
Certificate Balance. The Subordinated Notes shall be issued in one or more
registered, definitive, physical certificates, in the form set forth in Exhibit
B, in minimum denominations of at least $[1,000,000] and multiples of $1,000 in
excess thereof; provided, however, that Subordinated Notes may be issued to the
Depositor and Ford Credit Leasing pursuant to Section 3.10(b) in such
denominations as to represent in the aggregate at least 1% of the Outstanding
Amount of the Subordinated Notes. Except for (i) the transfer of Lease Trust
Certificates to the Initial Purchaser and the subsequent transfer to Lease
Trust Certificateholders as contemplated by the Certificate Purchase Agreement,
(ii) the transfer of Lease Trust Certificates to the Depositor and Ford Credit
Leasing pursuant to Section 3.10(a), (iii) the transfer of the Subordinated
Notes to the Depositor and Ford Credit Leasing pursuant to Section 3.10(b) and
(iv) the assignment and pledge of the Subordinated Notes to the Lease
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Trust and the Indenture Trustee pursuant to the Program Operating Lease, no
Lease Trust Certificate or Subordinated Note 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
3.4 and any attempted Transfer in violation of Section 3.4 shall be null and
void (each, a "Void Transfer").
The Lease Trust Certificates issued to the Depositor and Ford
Credit Leasing pursuant to Section 3.10(a) or any beneficial interest therein
may not be Transferred to any Person, and any attempted Transfer shall be null
and void; provided, that upon a dissolution of or termination of the Depositor,
any Lease Trust Certificates issued pursuant to Section 3.10(a) and held by the
Depositor shall be distributed to the beneficiaries of the Depositor in
accordance with their percentage beneficial interests therein. Each Lease
Trust Certificate (other than the Lease Trust Certificates issued to the
Depositor and Ford Credit Leasing pursuant to Section 3.10(a)) shall be issued
in the name of the Initial Purchaser, or upon delivery to the Initial
Purchaser, the Lease Trustee and the Lease Trust Registrar of a letter in the
form of Exhibit D or Exhibit E, shall be issued in the name and in the
denomination set forth in such letter.
The Subordinated Notes issued to and required to be retained
by the Depositor and Ford Credit Leasing pursuant to Section 3.10(b) or any
beneficial interest therein may not be Transferred to any Person, and any
attempted Transfer shall be a Void Transfer; provided, that upon a dissolution
of or termination of the Depositor, any such Subordinated Notes held by the
Depositor shall be distributed to the beneficiaries of the Depositor in
accordance with their percentage beneficial interests therein. The
Subordinated Notes shall be issued in the name of the Depositor pursuant to
Section 3.10(b).
The Lease Trust Certificates and the Subordinated Notes may be
in printed or in typewritten form, and may be executed on behalf of the Lease
Trust by manual or facsimile signature of an Authenticating Agent. Lease Trust
Certificates and Subordinated Notes 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 Lease 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
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so authorized prior to the authentication and delivery of such Lease Trust
Certificates or Subordinated Notes or did not hold such offices at the date of
authentication and delivery of such Lease Trust Certificates or Subordinated
Notes.
If Transfer of the Lease Trust Certificates or the
Subordinated Notes is permitted pursuant to Section 3.4, a transferee of a
Lease Trust Certificate or a Subordinated Note shall become a Lease Trust
Certificateholder or Subordinated Noteholder, as the case may be, and shall be
entitled to the rights and subject to the obligations hereunder of a Lease
Trust Certificateholder or Subordinated Noteholder, as applicable, upon due
registration of such Lease Trust Certificate or Subordinated Note in such
transferee's name pursuant to Section 3.4.
(b) Interest shall accrue on the Subordinated Notes at the
Subordinated Note Interest Rate during each Interest Accrual Period based on
the Outstanding Amount of the Subordinated Notes as of the close of business on
the Payment Date occurring in the calendar month in which such Interest Accrual
Period commences. Interest accrued during each Interest Accrual Period on the
Subordinated Notes shall be due and payable on each Payment Date. Interest
will be calculated on the basis of a 360-day year of twelve 30-day months. To
the extent that interest on the Subordinated Notes is accrued but not paid in
full on any Payment Date, such overdue interest will be due on the next Payment
Date together with interest on such amount (to the extent lawful) at the
Subordinated Note Interest Rate. Payments of interest and principal will be
payable to Subordinated Noteholders in accordance with Section 5.2.
(c) Interest shall accrue on the Lease Trust Certificates at
the Certificate Interest Rate during each Semiannual Interest Accrual Period
based on the Aggregate Certificate Balance of the Lease Trust Certificates as
of the close of business on the Semiannual Payment Date occurring in the
calendar month in which such Semiannual Interest Accrual Period commences.
Interest accrued during each Semiannual Interest Accrual Period on the Lease
Trust Certificates shall be due and payable on each Semiannual Payment Date.
Interest will be calculated on the basis of a 360-day year of twelve 30-day
months. To the extent that interest on the Lease Trust Certificates is accrued
but not paid in full on any Semiannual Payment Date, such overdue interest will
be due on the next Semiannual Payment Date together with interest on such
amount (to the extent lawful)
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at the Certificate Interest Rate. Payments of interest and principal will be
payable to Lease Trust Certificateholders in accordance with Section 5.2.
Section 3.3 Authentication of Lease Trust Certificates and
Subordinated Notes. Concurrently with the transfer of the Series 1996-1
Certificates to the Lease Trust pursuant to the Transfer Agreement, the Lease
Trustee shall cause Lease Trust Certificates in an aggregate principal amount
equal to the initial Aggregate Certificate Balance and Subordinated Notes in an
aggregate principal amount equal to $___________________ be executed on behalf
of the Lease Trust, authenticated and delivered to or upon the written order of
the Depositor, in authorized denominations. No Lease Trust Certificate or
Subordinated Note shall entitle its holder to any benefit under this Agreement,
or shall be valid for any purpose, unless there shall appear on such Lease
Trust Certificate or Subordinated Note a certificate of authentication
substantially in the form set forth in Exhibit A or Exhibit B, as applicable,
executed by the Authenticating Agent, by manual signature; such authentication
shall constitute conclusive evidence that such Lease Trust Certificate or
Subordinated Note shall have been duly authenticated and delivered hereunder.
All Lease Trust Certificates and Subordinated Notes shall be dated the date of
their authentication.
Section 3.4 Registration of Transfer and Exchange of Lease
Trust Certificates and Subordinated Notes. (a) The Lease Trust Registrar
shall keep or cause to be kept at the office or agency maintained pursuant to
Section 3.8, a Lease Trust Register in which, subject to such reasonable
regulations as it may prescribe, the Lease Trustee shall provide for the
registration of Lease Trust Certificates and Subordinated Notes and of
Transfers and exchanges of Lease Trust Certificates and Subordinated Notes as
herein provided. The Lease Trustee shall be the initial Lease Trust Registrar
and shall maintain such register as agent for the Depositor and Ford Credit
Leasing. No Transfer of a Lease Trust Certificate or Subordinated Note shall
be recognized except upon registration of such Transfer.
(b) The Subordinated Notes may not be Transferred unless an
Opinion of Counsel in form and content acceptable to the Lease Trustee and, if
any Senior Notes are then Outstanding, to the Indenture Trustee is delivered to
the Lease Trustee and, if any Senior Notes are then Outstanding, to the
Indenture Trustee. Among other things, such Opinion of Counsel shall state
that such Transfer shall not (i)
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affect the treatment of the Senior Notes and the Lease Trust Certificates as
debt for federal income tax purposes and (ii) cause either the Lease Trust or
FCTT to be classified as an association (or publicly traded partnership)
taxable as a corporation for federal income tax purposes; provided, however,
that the Subordinated Notes issued to and required to be retained by the
Depositor and Ford Credit Leasing pursuant to Section 3.10(b) may not be
Transferred except upon a dissolution of or termination of the Depositor as
provided in Section 3.2(a) above.
(c) Each Lease Trust Certificate (other than the Lease Trust
Certificates issued to the Depositor and Ford Credit Leasing pursuant to
Section 3.10(a)) shall bear a legend to the following effect unless determined
otherwise by the Administrative Agent (as certified to the Lease Trust
Registrar in an Officer's Certificate) consistent with applicable law:
"THIS LEASE TRUST 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 LEASE TRUST CERTIFICATE, AGREES
FOR THE BENEFIT OF THE LEASE TRUST AND THE DEPOSITOR THAT THIS LEASE TRUST
CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN
A DENOMINATION OF AT LEAST $[1,000,000], 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 LEASE
TRUST AND THE LEASE TRUST REGISTRAR OF A CERTIFICATE SUBSTANTIALLY IN THE FORM
ATTACHED AS EXHIBIT C TO THE LEASE TRUST AGREEMENT AND (B) THE RECEIPT BY THE
LEASE TRUST AND THE LEASE TRUST REGISTRAR OF A LETTER SUBSTANTIALLY IN THE FORM
ATTACHED AS EXHIBIT D TO THE LEASE 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 LEASE TRUST, THE INITIAL PURCHASER
AND THE LEASE TRUST REGISTRAR OF SUCH EVIDENCE ACCEPTABLE TO THE LEASE TRUST
AND THE INITIAL PURCHASER THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN
COMPLIANCE WITH THE LEASE TRUST AGREEMENT AND THE SECURITIES ACT AND OTHER
APPLICABLE LAWS, (3) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN
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<PAGE> 20
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 LEASE
TRUST AND THE LEASE TRUST REGISTRAR OF A LETTER SUBSTANTIALLY IN THE FORM
ATTACHED AS EXHIBIT E TO THE LEASE TRUST AGREEMENT OR (B) THE RECEIPT BY THE
LEASE TRUST, THE INITIAL PURCHASER AND THE LEASE TRUST REGISTRAR OF SUCH OTHER
EVIDENCE ACCEPTABLE TO THE LEASE TRUST AND THE INITIAL PURCHASER THAT SUCH
REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE LEASE TRUST
AGREEMENT AND THE SECURITIES ACT AND OTHER APPLICABLE LAWS, OR (4) TO THE
DEPOSITOR OR ITS AFFILI- ATES, 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 Lease
Trust Certificate, the prospective transferee of such a Lease Trust Certificate
shall be required to represent in writing to the Lease Trustee and the Lease
Trust Registrar the following:
(i) It has neither acquired nor will it Transfer any
Lease Trust Certificate it purchases (or any interest therein) or
cause any such Lease Trust Certificates (or any interest therein) to
be marketed on or through an "established securities market" within
the meaning of Section 7704(b)(1) of the Code, including, without
limitation, an over-the-counter-market or an interdealer quotation
system that regularly disseminates firm buy or sell quotations.
(ii) It either (A) is not, and will not become, a
partnership, Subchapter S corporation, or grantor trust for U.S.
federal income tax purposes, or (B) is such an entity, but none of the
direct or indirect beneficial owners of any of the interests in such
transferee have allowed or caused, or will allow or cause, [80]% or
more (or such other percentage as the Depositor may establish prior to
the time of such proposed Transfer) of the value of such interests to
be attributable to such transferee's ownership of Lease Trust
Certificates [and each beneficial owner is purchasing a principal
amount of Lease Trust Certificates at least equal to the minimum
denomination].
(iii) It understands that no subsequent Transfer of
the Lease Trust Certificates is permitted unless (A) such Transfer is
of a Lease Trust Certifi-
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cate with a denomination of at least $[1,000,000] and (B) the
Depositor and the Lease Trustee each consent in writing to the
proposed Transfer, which consent shall be granted unless either the
Depositor or the Lease Trustee, acting pursuant to an Opinion of
Counsel, determines that such Transfer would create a material risk
that the Lease Trust or FCTT would be classified for federal or any
applicable State tax purposes as an association or publicly traded
partnership taxable as a corporation; provided, however, that any
attempted Transfer that would either cause (i) the number of Targeted
Holders of Lease Trust Certificates and Subordinated Notes to exceed
[ten] or, (ii) the number of Targeted Holders of interests in FCTT for
which an Opinion of Counsel is not obtained to the effect that such
interests would be characterized as debt for federal income tax
purposes to exceed ninety-nine, shall be a Void Transfer. As used
herein, "Targeted Holder" means each holder of a right to receive
interest or principal with respect to Lease Trust Certificates or a
Subordinated Note, including any holder of a right to receive any
amount in respect of Lease Trust Certificates and Subordinated Notes
issued to the Depositor and Ford Credit Leasing pursuant to Section
3.10; and provided further that any person holding more than one
interest each of which would cause such person to be a Targeted Holder
shall be treated as a single Targeted Holder.
(iv) It understands that the Opinion of Counsel
that the Lease Trust is not a publicly traded partnership taxable as a
corporation is dependent in part on the accuracy of the
representations in paragraphs (i), (ii) and (iii) above.
(v) If it is acquiring any Lease Trust Certificates
as a fiduciary as agent for an investor account, it has sole
investment discretion with respect to such account and it has full
power to make the acknowledgements, representations and agreements
contained herein on behalf of such account.
(vi) It is not (A) an employee benefit plan, as
defined in Section 3(3) of ERISA, that is subject to Title I of ERISA,
(B) a plan described in Section 4975(e)(1) of the Code, (C) a
governmental plan, as defined in Section 3(32) of ERISA, subject to
any federal, State or local law which is, to a material extent,
similar to the provisions of Section 406 of
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<PAGE> 22
ERISA or Section 4975 of the Code, (D) an entity whose underlying
assets include plan assets by reason of a plan's investment in the
entity (within the meaning of Department of Labor Regulation 29 C.F.R.
Section 2510.3-101) or (E) a person investing "plan assets" of any
such plan (excluding, for purposes of this clause (E), any entity
registered under the Investment Company Act of 1940, as amended).
(vii) It is a Person who is either (A)(1) a citizen
or resident of the United States, (2) a corporation, partnership or
other entity organized in or under the laws of the United States or
any political subdivision thereof or (3) a Person not described in (1)
or (2) whose ownership of the Lease Trust 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 its ownership of
any interest in a Lease Trust Certificate will not result in any
withholding obligation with respect to any payments with respect to
the Lease Trust Certificates by any Person (other than withholding, if
any, under Section 1446 of the Code) or (B) an estate or trust the
income of which is includible in gross income for United States
federal income tax purposes, regardless of source. It agrees that it
will provide a certification of non-foreign status signed under
penalties of perjury and, alternatively, that if it is a person
described in clause (A)(3) above, it will furnish to the Depositor and
the Lease Trustee a properly executed IRS Form 4224 and a new IRS Form
4224 upon the expiration or obsolescence of any previously delivered
form (and such other certifications, representations or opinions of
counsel as may be requested by the Depositor and the Lease Trustee).
(viii) It understands that any purported Transfer of
any Lease Trust Certificate (or any interest therein) in contravention
of any of the restrictions and conditions (including any violation of
the representation in paragraph (ii) above by an investor who
continues to hold such Lease Trust Certificates occurring any time
after the Transfer in which it acquired such Lease Trust Certificates)
in this Section 3.4 shall be a Void Transfer, and the purported
transferee in a Void Transfer shall not be recognized by the Lease
Trust or any other Person as a Lease Trust Certificateholder for any
purpose.
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(ix) It agrees that if it determines to Transfer any of the
Lease Trust Certificates it will cause its proposed transferee to
provide to the Lease Trust and the Lease Trust Registrar a letter
substantially in the form of Exhibit D or Exhibit E hereof, as
applicable, or such other written statement as the Depositor shall
prescribe.
(d) By acceptance of any Lease Trust Certificate, the Lease
Trust Certificateholder thereof specifically agrees with and represents to the
Depositor, the Lease Trust and Lease Trust Registrar, that no Transfer of such
Lease Trust Certificate shall be made unless the registration requirements of
the Securities Act and any applicable State 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 Lease Trust and the Lease
Trust Registrar, a Rule 144A transferor certificate substantially in
the form attached as
Exhibit C and (y) the transferee executes and
delivers to the Lease Trust and the Lease Trust 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 Lease Trust, the Lease Trust Registrar
or the Initial Purchaser, delivers an Opinion of Counsel in form and
substance satisfactory to the Lease 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
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<PAGE> 24
any State of the United States or any other jurisdiction, and such
investor executes and delivers to the Lease Trust and the Lease Trust
Registrar an investment letter substantially in the form attached as
Exhibit E.
(e) The Lease Trustee shall make available to the
prospective transferor and transferee of a Lease Trust 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 offering circular relating to the Lease
Trust Certificates dated _____________ _____, 1996, and any amendments
or supplements thereto;
(ii) each Lease Trust Distribution Statement
delivered to Lease Trust Certificateholders on each Semiannual Payment
Date preceding such request; and
(iii) such other information as is reasonably
available to the Lease Trustee in order to comply with requests for
information pursuant to Rule 144A under the Securities Act.
None of the Depositor, the Lease Trust Registrar or the Lease
Trustee is under an obligation to register any Lease Trust Certificate under
the Securities Act or any other securities law.
(f) Upon surrender for registration of Transfer of any Lease
Trust Certificate or Subordinated Note at the office or agency maintained
pursuant to Section 3.8 and upon compliance with any provisions of this
Agreement relating to such Transfer, the Lease Trustee shall, or shall cause
the Authenticating Agent to, execute, authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Lease Trust
Certificates or Subordinated Notes, as the case may be, in authorized
denominations of a like class and aggregate face amount dated the date of such
authentication.
Subject to Section 3.4(b), at the option of a Subordinated
Noteholder, Subordinated Notes (other than the Subordinated Notes issued to and
required to be retained by the Depositor and Ford Credit Leasing pursuant to
Section 3.10(b)) may be exchanged for other Subordinated Notes in
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<PAGE> 25
authorized denominations of a like aggregate amount upon surrender of the
Subordinated Notes to be exchanged at the office or agency maintained pursuant
to Section 3.8. Subject to Section 3.4(c), at the option of a Lease Trust
Certificateholder, Lease Trust Certificates (other than the Lease Trust
Certificates issued to the Depositor and Ford Credit Leasing pursuant to
Section 3.10(a)) may be exchanged for other Lease Trust Certificates in
authorized denominations of a like aggregate amount upon surrender of the Lease
Trust Certificates to be exchanged at the office or agency maintained pursuant
to Section 3.8.
Whenever any Lease Trust Certificates or Subordinated Notes
are so surrendered for exchange, the Authenticating Agent shall execute and
authenticate and the Lease Trust Registrar shall deliver the Lease Trust
Certificates or Subordinated Notes, as the case may be, which the Lease Trust
Certificateholder or Subordinated Noteholder making the exchange is entitled to
receive.
The Lease Trust Registrar shall require that every Lease Trust
Certificate or Subordinated Note presented or surrendered for registration of
Transfer or exchange shall be accompanied by a written instrument of transfer
and accompanied by IRS Form 4224 or W-9 in form satisfactory to the Lease Trust
Registrar duly executed by the Lease Trust Certificateholder or Subordinated
Noteholder, as the case may be, or such Person's attorney duly authorized in
writing.
No service charge shall be made to a Lease Trust
Certificateholder or Subordinated Noteholder for any registration of Transfer
or exchange of Lease Trust Certificates or Subordinated Notes, as the case may
be, but the Lease Trustee or the Lease Trust Registrar may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any registration of Transfer or exchange of Lease Trust
Certificates or Subordinated Notes.
The Lease Trust Registrar shall cancel and retain or destroy,
in accordance with the Lease Trust Registrar's retention policy then in effect,
all Lease Trust Certificates and Subordinated Notes surrendered for
registration of Transfer or exchange and shall upon written request certify to
the Depositor as to such retention or destruction.
(g) The provisions of this Section 3.4 and of this
Agreement generally are intended to prevent the Lease
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<PAGE> 26
Trust from being characterized as a "publicly traded partnership" within the
meaning of Section 7704 of the Code, in reliance on Treas. Reg. Section Section
1.7704-1(e) and (h), and the Depositor shall take such intent into account in
determining whether or not to consent to any proposed Transfer of any Lease
Trust Certificate or Subordinated Note.
The preceding provisions of this Section 3.4 notwithstanding,
the Lease Trustee shall not make and the Lease Trust Registrar shall not
register any Transfer or exchange of Lease Trust Certificates or Subordinated
Notes for a period of fifteen (15) days preceding the due date for any payment
with respect to the Lease Trust Certificates or Subordinated Notes, as the case
may be.
Section 3.5 Mutilated, Destroyed, Lost or Stolen Lease Trust
Certificates or Subordinated Notes. If (a) any mutilated Lease Trust
Certificate or Subordinated Note is surrendered to the Lease Trust Registrar,
or if the Lease Trust Registrar receives evidence to its satisfaction of the
destruction, loss or theft of any Lease Trust Certificate or Subordinated Note
and (b) there is delivered to the Lease Trust Registrar and the Lease 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 Lease Trust Certificate or
Subordinated Note has been transferred to or is in the possession of a third
party purchaser, the Lease Trustee on behalf of the Lease Trust shall execute
and the Authenticating Agent shall authenticate and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Lease Trust
Certificate or Subordinated Note, a new Lease Trust Certificate or Subordinated
Note, as the case may be, of like class, tenor and denomination. In connection
with the issuance of any new Lease Trust Certificate or Subordinated Note under
this Section 3.5, the Lease Trustee or the Lease Trust 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 Lease Trust
Certificate issued pursuant to this Section 3.5 shall constitute conclusive
evidence of an ownership interest in the Lease Trust, and any duplicate
Subordinated Note issued pursuant to this Section 3.5 shall constitute
conclusive evidence of an additional contractual obligation of the Lease Trust,
in each case as if originally issued, whether or not the lost, stolen or
destroyed Lease Trust Certificate or Subordinated Note shall be found at any
time.
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Section 3.6 Persons Deemed Lease Trust Certificateholders or
Subordinated Noteholders. Prior to due presentation of a Lease Trust
Certificate or Subordinated Note for registration of Transfer, the Lease
Trustee or the Lease Trust Registrar may treat the Person in whose name any
Lease Trust Certificate or Subordinated Note shall be registered in the Lease
Trust Register as the owner of such Lease Trust Certificate or Subordinated
Note for the purpose of receiving distributions pursuant to Section 5.2 and for
all other purposes whatsoever, and neither the Lease Trustee nor the Lease
Trust Registrar shall be bound by any notice to the contrary.
Section 3.7 Access to List of Lease Trust Certificateholders'
and Subordinated Noteholders' Names and Addresses. The Lease Trustee shall
furnish or cause to be furnished to the Administrative Agent and the Depositor,
or to the Indenture Trustee, as the case may be, within 15 days after receipt
by the Lease Trustee of a request therefor from the Administrative Agent or the
Depositor or the Indenture Trustee in writing, a list, in such form as the
requesting party may reasonably require, of the names and addresses of the
Lease Trust Certificateholders and/or the Subordinated Noteholders as of the
most recent Record Date. If (i) two or more Lease Trust Certificateholders or
(ii) one or more Lease Trust Certificateholders of Lease Trust Certificates
evidencing not less than 25% of the Aggregate Certificate Balance apply in
writing to the Lease Trustee, and such application states that the applicants
desire to communicate with other Lease Trust Certificateholders with respect to
their rights under this Agreement or under the Lease Trust Certificates and
such application is accompanied by a copy of the communication that such
applicants propose to transmit, then the Lease Trustee shall, within five
Business Days after the receipt of such application, afford such applicants
access during normal business hours to the current list of Lease Trust
Certificateholders. If (x) two or more Subordinated Noteholders or (y) one or
more Subordinated Noteholders of Subordinated Notes evidencing not less than
25% of the Outstanding Amount of the Subordinated Notes apply in writing to the
Lease Trustee, and such application states that the applicants desire to
communicate with other Subordinated Noteholders with respect to their rights
under this Agreement or under the Subordinated Notes and such application is
accompanied by a copy of the communication that such applicants propose to
transmit, then the Lease Trustee shall, within five Business Days after the
receipt of such application, afford such applicants access during normal
business hours to the current list of Subordinated
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<PAGE> 28
Noteholders. Each Lease Trust Certificateholder, by receiving and holding a
Lease Trust Certificate, and each Subordinated Noteholder, by receiving and
holding a Subordinated Note, shall be deemed to have agreed not to hold either
the Depositor or the Lease Trustee, or the Indenture Trustee, as the case may
be accountable by reason of the disclosure of its name and address, regardless
of the source from which such information was derived.
Section 3.8 Maintenance of Office or Agency. The Lease
Trustee shall maintain in the State of Delaware, an office or offices or agency
or agencies where Lease Trust Certificates may be surrendered for registration
of Transfer or exchange and where notices and demands to or upon the Lease
Trustee in respect of the Lease Trust Certificates, the Subordinated Notes and
the Basic Documents to which the Lease Trustee is a party may be served. The
Lease Trustee initially designates PNC Bank, Delaware, 222 Delaware Avenue,
Wilmington, Delaware 19801, Attention: Michael B. McCarthy as its principal
corporate trust office for such purposes. The Lease Trustee shall give prompt
written notice to the Depositor, the Lease Trust Certificateholders and the
Subordinated Noteholders of any change in the location of the Lease Trust
Register or any such office or agency.
Section 3.9 Appointment of Lease Trust Paying Agent. The
Lease Trust Paying Agent shall make distributions to Subordinated Noteholders
and Lease Trust Certificateholders pursuant to Section 5.2 and shall report the
amounts of such distributions to the Lease Trustee. Any Lease Trust Paying
Agent shall have the revocable power to withdraw funds from the Certificate
Distribution Account for the purpose of making the distributions referred to
above. The Lease Trustee may revoke such power and remove the Lease Trust
Paying Agent if the Lease Trustee determines in its sole discretion that the
Lease Trust Paying Agent has failed to perform its obligations under this
Agreement in any material respect. The Lease Trust Paying Agent shall
initially be The Chase Manhattan Bank. Any co-paying agent chosen by the
Depositor, and acceptable to the Lease Trustee shall also be a Lease Trust
Paying Agent. The Chase Manhattan Bank may resign as Lease Trust Paying Agent
upon 30 days' written notice to the Lease Trustee. In the event that The Chase
Manhattan Bank shall no longer be the Lease Trust Paying Agent, the Lease
Trustee shall appoint a successor to act as Lease Trust Paying Agent (which
shall be a bank or trust company). The Lease Trustee shall cause such
successor Lease Trust Paying Agent or any additional Lease
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<PAGE> 29
Trust Paying Agent appointed by the Lease Trustee to execute and deliver to the
Lease Trustee an instrument in which such successor Lease Trust Paying Agent or
additional Lease Trust Paying Agent shall agree with the Lease Trustee that as
Lease Trust Paying Agent, such successor Lease Trust Paying Agent or additional
Lease Trust Paying Agent will hold all sums, if any, held by it for payment to
the Subordinated Noteholders or Lease Trust Certificateholders, as applicable,
in trust for the benefit of the Subordinated Noteholders or Lease Trust
Certificateholders, as applicable, entitled thereto until such sums are paid to
such Subordinated Noteholders or Lease Trust Certificateholders. The Lease
Trust Paying Agent shall return all unclaimed funds to the Lease Trustee and
upon removal of a Lease Trust Paying Agent such Lease Trust Paying Agent shall
also return all funds in its possession to the Lease Trustee. The provisions
of Sections 7.1, 7.3, 7.4 and 8.2 shall apply to the Lease Trustee also in its
role as Lease Trust Paying Agent (if it is so appointed), for so long as the
Lease Trustee shall act as Lease Trust Paying Agent and, to the extent
applicable, to any other paying agent appointed hereunder.
Section 3.10 Ownership of Lease Trust Certificates and
Subordinated Notes by Depositor and Ford Credit Leasing. (a) On and after the
Closing Date, the Depositor shall acquire and retain beneficial and record
ownership of Lease Trust Certificates evidencing at least 1% of the Aggregate
Certificate Balance; provided, that the Depositor shall Transfer a Lease Trust
Certificate evidencing 1/100 of its Lease Trust Certificates to Ford Credit
Leasing. Any other attempted Transfer of such Lease Trust Certificates
initially held by the Depositor or Ford Credit Leasing shall be a Void
Transfer. Notwithstanding the foregoing, upon a dissolution or termination of
the Depositor, the Lease Trust Certificates held by it shall be distributed to
the beneficiaries of the Depositor without regard to the provisions of Section
3.2. The Lease Trustee shall cause the Lease Trust Certificates held by the
Depositor and Ford Credit Leasing pursuant to this Section 3.10(a) to bear a
legend stating "THIS LEASE TRUST CERTIFICATE IS NOT TRANSFERABLE EXCEPT IN THE
EVENT OF THE DISSOLUTION OR TERMINATION OF RCL TRUST 1996-1 WHEN IT IS THE
HOLDER HEREOF, AND ANY TRANSFER IN VIOLATION OF THIS PROVISION SHALL BE NULL
AND VOID."
(b) On the Closing Date, the Depositor shall acquire
beneficial and record ownership of the entire initial principal amount of the
Subordinated Notes; provided, that the Depositor shall Transfer a Subordinated
Note evi-
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dencing 1/100th of its Subordinated Notes to Ford Credit Leasing. On and after
the Closing Date, the Depositor shall be required to retain beneficial and
record ownership of Subordinated Notes evidencing at least 1% of the
Outstanding Amount of the Subordinated Notes; provided, that Ford Credit
Leasing may hold 1/100th of the Subordinated Notes that would otherwise be
required to be retained by the Depositor. Any attempted Transfer of the
Subordinated Notes required to be retained by the Depositor or Ford Credit
Leasing shall be a Void Transfer. Notwithstanding the foregoing, upon a
dissolution or termination of the Depositor, the Subordinated Notes required to
be retained by it shall be distributed to the beneficiaries of the Depositor
without regard to the provisions of Section 3.2.
ARTICLE IV
ACTIONS BY LEASE TRUSTEE
Section 4.1 Prior Notice to Lease Trust Certificateholders
with Respect to Certain Matters. With respect to the following matters, the
Lease Trustee shall not take action unless (i) the Lease Trustee has notified
the Lease Trust Certificateholders and the Rating Agencies in writing of the
proposed action at least 30 days before the taking of such action, and (ii)
Lease Trust Certificateholders representing at least 25% of the Aggregate
Certificate Balance have not notified the Lease Trustee in writing prior to the
30th day after such notice is given that such Lease Trust Certificateholders
have withheld consent or provided alternative direction:
(a) the initiation of any claim or lawsuit by the Lease Trust
and the compromise of any action, claim or lawsuit brought by or against the
Lease Trust (other than an action brought by the Administrative Agent on behalf
of FCTT and Persons having interests in the Series 1996-1 Certificates to
collect amounts owed under a Series 1996-1 Lease);
(b) the amendment of the Indenture by a supplemental
indenture in circumstances where the consent of any Senior Noteholder is
required;
(c) the amendment of the Indenture by a supplemental
indenture in circumstances where the consent of any Senior Noteholder is not
required and such amendment materially adversely affects the interests of the
Lease Trust Certificateholders; or
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(d) the amendment of any other Basic Document if such
amendment materially adversely affects the interests of the Lease Trust
Certificateholders.
Section 4.2 Action by Lease Trust Certificateholders with
Respect to Certain Matters. To the extent that the Lease Trustee is deemed to
be the "Holder" of the Series 1996-1 Certificates pursuant to Section 8.6 of
the Series 1996-1 Supplement, the Lease Trustee shall take such actions as
directed (in writing) by Lease Trust Certificateholders holding Lease Trust
Certificates evidencing at least 66 2/3% of the Aggregate Certificate Balance;
provided, however, that so long as the lien of the Indenture is outstanding,
such direction shall be subject to the consent of the Indenture Trustee.
Section 4.3 Restrictions on Action by Lease Trustee with
Respect to Bankruptcy. The Lease Trustee shall not have the power to commence
a voluntary proceeding in bankruptcy relating to the Lease Trust without the
unanimous prior approval of all Lease Trust Certificateholders, Subordinated
Noteholders and Senior Noteholders and the delivery to the Lease Trustee by
each such Lease Trust Certificateholder, Subordinated Noteholder and Senior
Noteholder of a certificate certifying that such Lease Trust Certificateholder,
Subordinated Noteholder or Senior Noteholder reasonably believes that the Lease
Trust is insolvent.
Section 4.4 Restrictions on Lease Trust Certificateholders'
Power. The Lease Trust Certificateholders shall not direct the Lease Trustee
to take or refrain from taking any action if such action or inaction would be
contrary to any obligation of the Lease Trust or the Lease Trustee under this
Agreement or any of the other Basic Documents nor shall the Lease Trustee be
obligated to follow any such direction, if given.
Section 4.5 Majority Control. (a) Except as expressly
provided herein, any action that may be taken by the Lease Trust
Certificateholders under this Agreement may be taken by the Lease Trust
Certificateholders holding not less than a majority of the Aggregate
Certificate Balance. Except as expressly provided herein, any written notice
of the Lease Trust Certificateholders delivered pursuant to this Agreement
shall be effective if signed by Lease Trust Certificateholders holding not less
than a majority of the Aggregate Certificate Balance at the time of the
delivery of such notice.
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(b) Except as expressly provided herein, any action that may
be taken by the Subordinated Noteholders under this Agreement may be taken by
the Subordinated Noteholders holding not less than a majority of the
Outstanding Amount of the Subordinated Notes. Except as expressly provided
herein, any written notice of the Subordinated Noteholders delivered pursuant
to this Agreement shall be effective if signed by Subordinated Noteholders
holding not less than a majority of the Outstanding Amount of the Subordinated
Notes at the time of the delivery of such notice.
ARTICLE V
APPLICATION OF TRUST FUNDS, CERTAIN DUTIES
AND SUBORDINATED NOTE EVENTS OF DEFAULT
Section 5.1 Establishment of Certificate Distribution
Account. The Lease Trustee shall establish and maintain an Eligible Account in
the name of the Indenture Trustee until the Outstanding Amount of the Senior
Notes has been reduced to zero, and thereafter in the name of the Lease
Trustee, at an Eligible Institution (which initially shall be The Chase
Manhattan Bank), which is designated as the "Certificate Distribution Account".
The Certificate Distribution Account shall be under the sole dominion and
control of the Indenture Trustee until the Outstanding Amount of the Senior
Notes has been reduced to zero, and thereafter under the sole dominion and
control of the Lease Trustee; provided, that while the Senior Notes are
Outstanding the Lease Trustee may make withdrawals from the Certificate
Distribution Account pursuant to Section 5.2(b). All deposits to and
withdrawals from the Certificate Distribution Account shall be made only upon
the terms and conditions of the Basic Documents.
Any amounts on deposit in the Certificate Distribution Account
shall be invested by the Indenture Trustee until the Outstanding Amount of the
Senior Notes has been reduced to zero, and thereafter by the Lease Trustee, and
at the direction of the Administrative Agent, in Permitted Investments with a
maturity date no later than the Business Day preceding the next succeeding
Payment Date. No such investment shall be sold prior to maturity. All
investment earnings on amounts deposited to the Certificate Distribution
Account, including any proceeds thereof, shall be credited to the Cash
Collateral Account, and losses, if any, resulting from Permitted Investments in
the Certificate Distribution Account shall be charged to the Cash Collateral
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Account. All such investment income shall be reported for federal income tax
purposes as earned (i) 99% by RCL Trust 1996-1 and (ii) 1% by Ford Credit
Leasing; the 99% accruing to RCL Trust 1996-1 shall be reported by Ford Credit
and Ford Credit Leasing in accordance with their respective Percentage
Interests in RCL Trust 1996-1. If the institution at which the Certificate
Distribution Account is established ceases to be an Eligible Institution, then
the Certificate Distribution Account shall be moved to an Eligible Institution
within 10 Business Days (or such longer period not to exceed 30 calendar days
as to which each Rating Agency may consent).
Section 5.2 Application of Funds.
(a) Payments on Subordinated Notes and Lease Trust
Certificates.
The Lease Trustee shall make payments with respect to the
Subordinated Notes and the Lease Trust Certificates at the times and in the
amounts and priorities set forth in the Lease Trust Paying Agent Agreement.
(b) Lease Trust Distribution Statements. The Lease Trustee
shall send to each Subordinated Noteholder on each Payment Date and to each
Lease Trust Certificateholder on each Semiannual Payment Date a report (a
"Lease Trust Distribution Statement") based on information supplied by the
Administrative Agent. Such Lease Trust Distribution Statement shall include
the following information as to the Subordinated Notes and the Lease Trust
Certificates to the extent applicable:
(i) the Outstanding Amount of the Subordinated Notes
on the immediately preceding Semiannual Payment Date, or if the first
Semiannual Payment Date has not yet occurred, on the Closing Date;
(ii) the Aggregate Certificate Balance of the Lease
Trust Certificates on the immediately preceding Semiannual Payment
Date, or if the current Semiannual Payment Date is the first
Semiannual Payment Date, on the Closing Date;
(iii) the aggregate amount of interest accrued and
paid on the Subordinated Notes and the Lease Trust Certificates during
the preceding Accrual Period (separately stated);
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(iv) the aggregate amount of principal paid with
respect to the Subordinated Notes and the Lease Trust Certificates on
such Semiannual Payment Date (separately stated);
(v) the Outstanding Amount of the Subordinated Notes
and the Aggregate Certificate Balance of the Lease Trust Certificates
after giving effect to any payments of principal on such Semiannual
Payment Date;
(vi) the Note Pool Factor for the Subordinated Notes
and the Certificate Pool Factor (after giving effect to payments made
on such Semiannual Payment Date);
(vii) the aggregate amount of Series 1996-1
Collections deposited in the Series 1996-1 Collection Account;
(viii) the aggregate Net Sale Proceeds Advances
deposited in the Series 1996-1 Collection Account;
(ix) the aggregate Net Monthly Payment Advances
deposited in the Series 1996-1 Collection Account;
(x) the amount of Available Sale Proceeds;
(xi) the Cash Collateral Required Draw Amount and
the Cash Collateral Additional Draw Amount (separately stated);
(xii) the amount of Available Funds;
(xiii) the Series 1996-1 Administrative Agent Fee
for the preceding Accrual Period;
(xiv) the Outstanding Amount of each Class of Senior
Notes and the Pool Balance (separately stated);
(xv) the Cash Collateral Amount (after giving effect
to any withdrawals and deposits to the Cash Collateral Account for
such Payment Date);
(xvi) the aggregate of Series 1996-1 Credit Losses
for each of the three preceding Collection Periods; and
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(xvii) the aggregate of the Series 1996-1 Residual
Losses for each of the three preceding Collection Periods.
The information required to be reported in such Lease Trust
Distribution Statement may be included with such other information or reports
delivered by the Administrative Agent to the Lease Trustee in connection with
the making of payments pursuant to the Basic Documents.
(c) Withholding Taxes. In the event that any withholding tax
is imposed on the Lease Trust's payment (or, if the Lease Trust is treated as a
partnership for federal income tax purposes, allocations of income) to a Lease
Trust Certificateholder or a Subordinated Noteholder, such tax shall reduce the
amount otherwise distributable to such Lease Trust Certificateholder or
Subordinated Noteholder in accordance with this Section 5.2. The Lease Trustee
is hereby authorized and directed to retain from amounts otherwise
distributable to such Lease Trust Certificateholder or Subordinated Noteholder
sufficient funds for the payment of any withholding tax that is legally owed by
the Lease Trust (but such authorization shall not prevent the Lease 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
Lease Trust Certificateholder or a Subordinated Noteholder shall be treated as
cash distributed to such Lease Trust Certificateholder or Subordinated
Noteholder, as the case may be, at the time it is withheld by the Lease Trust
for remittance to the appropriate taxing authority. If the Lease Trustee
determines that there is a possibility that withholding tax is payable with
respect to a distribution, the Lease Trustee may in its sole discretion
withhold such amounts in accordance with this Section 5.2(h). In the event
that a Lease Trust Certificateholder or Subordinated Noteholder wishes to apply
for a refund of any such withholding tax, the Lease Trustee shall reasonably
cooperate with such Lease Trust Certificateholder or Subordinated Noteholder in
making such claim so long as such Lease Trust Certificateholder or Subordinated
Noteholder agrees to reimburse the Lease Trustee for any out- of-pocket
expenses incurred.
(d) Lease Trustee Not Liable for Losses on Investments.
Subject to Section 7.1, the Lease Trustee shall not in any way be held liable
by reason of any insufficiency in the Series 1996-1 Payments Account, the
Series 1996-1 Collection Account, the Series 1996-1 Payahead Account, the
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Certificate Distribution Account or the Cash Collateral Account resulting from
any loss on any Permitted Investment or Cash Collateral Account Investment, as
applicable, included therein except for losses attributable to the Lease
Trustee's failure to make payments on any such Permitted Investments or Cash
Collateral Account Investments issued by the Lease Trustee, in its commercial
capacity as principal obligor and not as trustee, in accordance with their
terms.
(e) Indenture Trustee's Duties and Obligations. The
Indenture Trustee, in such capacity, shall have no duties or obligations to the
Subordinated Noteholders or Lease Trust Certificateholders except as set forth
in Sections 5.2(a)(ii), (b), (c) and (e)(i).
Section 5.3 Method of Payment. (a) Subject to Section
9.1(c), distributions required to be made to Lease Trust Certificateholders on
any Semiannual Payment Date shall be made to each Lease Trust Certificateholder
of record on the preceding Record Date either by wire transfer, in immediately
available funds, to the account of such Lease Trust Certificateholder at a bank
or other entity having appropriate facilities therefor, if such Lease Trust
Certificateholder shall have provided to the Lease Trust Registrar appropriate
written instructions at least five Business Days prior to such Semiannual
Payment Date and such Lease Trust Certificateholder's Lease Trust Certificates
in the aggregate evidence a denomination of not less than $[1,000,000] (or if
such Lease Trust Certificateholder is the Depositor or an Affiliate thereof),
or, if not, by check mailed to such Lease Trust Certificateholder at the
address of such Lease Trust Certificateholder appearing in the Lease Trust
Register.
(b) Subject to Section 9.1(c), distributions required to be
made to Subordinated Noteholders on any Payment Date or Semiannual Payment Date
shall be made to each Subordinated Noteholder of record on the preceding Record
Date either by wire transfer, in immediately available funds, to the account of
such Subordinated Noteholder at a bank or other entity having appropriate
facilities therefor, if such Subordinated Noteholder shall have provided to the
Lease Trust Registrar appropriate written instructions at least five Business
Days prior to such Payment Date or Semiannual Payment Date and such
Subordinated Noteholder's Subordinated Notes in the aggregate evidence a
denomination of not less than $[1,000,000] (or if such Subordinated Noteholder
is the Depositor or an Affiliate thereof), or, if not, by check mailed to such
Subordinated
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Noteholder at the address of such Subordinated Noteholder appearing in the
Lease Trust Register.
Section 5.4 Accounting and Reports to the Senior Noteholders,
Subordinated Noteholders, Lease Trust Certificateholders, the Internal Revenue
Service and Others. (a) The Lease Trustee shall, based on information
provided by the Depositor, (i) maintain (or cause to be maintained) the books
of the Lease Trust on a calendar year basis on the accrual method of accounting
(except as required by Annex A), (ii) deliver to each Lease Trust
Certificateholder and Subordinated Noteholder such information as may be
required by the Code and applicable Treasury Regulations with respect to
instruments such as the Lease Trust Certificates or Subordinated Notes, as the
case may be, that is consistent with the position that the Lease Trust
Certificates (other than the Lease Trust Certificates issued to the Depositor
and Ford Credit Leasing pursuant to Section 3.10(a)) will be treated as debt
for federal income tax and state income and franchise tax purposes, and (iii)
in addition to the Lease Trustee's rights under Section 5.2, take such action
as instructed jointly by the holders of the Lease Trust Certificates issued to
the Depositor and Ford Credit Leasing pursuant to Section 3.10(a) to collect or
cause to be collected and paid over to applicable authorities any withholding
tax as described in and in accordance with Section 5.2 or Annex A with respect
to income or distributions to Lease Trust Certificateholders or Subordinated
Noteholders. The Lease Trustee shall make all elections pursuant to Annex A as
directed by the Depositor.
(b) The Depositor shall maintain such books and records, and
shall prepare and file such reports and returns, as are required pursuant to
Sections 2.11, 5.2 and 11.2.
Section 5.5 Subordinated Note Events of Default. The
following events constitute "Subordinated Note Events of Default" (whatever the
reason for such Subordinated Note 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
Subordinated Note when the same becomes due and payable on each
Payment Date, and such default shall continue for a period of five
days;
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(ii) default in the payment of the principal of any
Subordinated Note at Stated Maturity;
(iii) the filing of a decree or order for relief by
a court having jurisdiction in the premises in respect of the Lease
Trust or any substantial part of the Lease 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 Lease Trust or for any
substantial part of the Lease Trust Estate, or the winding-up or
liquidation of the Lease Trust's affairs, and such decree or order
shall remain unstayed and in effect for a period of 60 consecutive
days; or
(iv) the commencement by the Lease Trust 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 Lease Trust to the entry of an order for relief in an
involuntary case under any such law, or the consent by the Lease Trust
to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Lease Trust or for any substantial part of the Lease Trust Estate, or
the making by the Lease Trust of any general assignment for the
benefit of creditors, or the failure by the Lease Trust generally to
pay its debts as such debts become due, or the taking of action by the
Lease Trust in furtherance of any of the foregoing.
Section 5.6 Acceleration of Maturity. If a Subordinated Note
Event of Default should occur and be continuing, then and in each such case the
Subordinated Noteholders holding not less than a majority of the Outstanding
Amount of the Subordinated Notes may declare all the Subordinated Notes to be
immediately due and payable, by a notice in writing to the Lease Trustee, and
upon any such declaration the unpaid principal amount of such Subordinated
Notes, together with accrued and unpaid interest thereon through the date of
acceleration, shall become immediately due and payable; provided, however, that
so long as any Senior Notes are Outstanding, no such declaration of
acceleration of the Subordinated Notes is permitted to be made.
At any time after a declaration of acceleration of maturity of
the Subordinated Notes has been made and before
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a judgment or decree for payment of the money due has been obtained by the
Subordinated Noteholders, the Subordinated Noteholders holding not less than a
majority of the Outstanding Amount of the Subordinated Notes, by written notice
to the Lease Trustee, may rescind and annul such declaration and its
consequences if:
(i) the Lease Trust has paid all payments of
principal of and interest on all Subordinated Notes and all other
amounts that would then be due upon such Subordinated Notes if the
Subordinated Note Event of Default giving rise to such acceleration
had not occurred; and
(ii) all Subordinated Note Events of Default, other
than the nonpayment of the principal of the Subordinated Notes that
has become due solely by such acceleration, have been cured or waived.
No such rescission shall affect any subsequent default or
impair any right consequent thereto.
Section 5.7 Waiver of Past Defaults. Prior to the
declaration of the acceleration of the maturity of the Senior Notes as provided
above, Subordinated Noteholders holding not less than a majority of the
Outstanding Amount of the Subordinated Notes may waive any past Subordinated
Note Default or Subordinated Note Event of Default and its consequences except
a Subordinated Note Default in payment of principal of or interest on any of
the Subordinated Notes. In the case of any such waiver, the Lease Trust and
the Subordinated Noteholders shall be restored to their former positions and
rights under the Subordinated Notes and under this Agreement; but no such
waiver shall extend to any subsequent or other Subordinated Note Default or
impair any right consequent thereto.
Upon any such waiver, such Subordinated Note Default shall
cease to exist and be deemed to have been cured and not to have occurred, and
any Subordinated Note Event of Default arising therefrom shall be deemed to
have been cured and not to have occurred, for every purpose of the Subordinated
Notes and this Agreement; but no such waiver shall extend to any subsequent or
other Subordinated Note Default or Subordinated Note Event of Default or impair
any right consequent thereto.
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ARTICLE VI
AUTHORITY AND DUTIES OF LEASE TRUSTEE
Section 6.1 General Authority. To the extent permitted by
Section 2.3, the Lease Trustee is authorized and directed to execute and
deliver the Basic Documents to which the Lease 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 Lease Trust is to be a party, in each case, in
such form as the Depositor shall approve as evidenced conclusively by the Lease
Trustee's execution thereof and the Depositor's execution of this Agreement,
and to direct the Indenture Trustee to authenticate and deliver Senior Notes in
the aggregate principal amount not to exceed $___________. In addition to the
foregoing, the Lease Trustee is authorized to take all actions required of the
Lease Trust pursuant to the Basic Documents. The Lease Trustee is further
authorized from time to time to take such action on behalf of the Lease Trust
as is permitted by the Basic Documents and which the Administrative Agent
recommends with respect to the Basic Documents, except to the extent that this
Agreement expressly requires the consent of Lease Trust Certificateholders or
Subordinated Noteholders for such action.
Section 6.2 General Duties. It shall be the duty of the
Lease 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 it is to be a party and to administer the Lease Trust in the
interest of the Lease Trust Certificateholders, subject to the lien of the
Indenture and to the obligations of the Lease Trust under the Subordinated
Notes, and in accordance with provisions of this Agreement and the other Basic
Documents.
Section 6.3 Action upon Instruction. (a) Subject to Article
IV, the holders of the Lease Trust Certificates issued to the Depositor and
Ford Credit Leasing pursuant to Section 3.10(a) may by written instruction,
direct the Lease Trustee in the administration of the Lease Trust, subject to,
and in accordance with the terms of this Agreement; provided, that no such
instruction shall, as evidenced by an Opinion of Counsel, materially adversely
affect the Senior Noteholders, Subordinated Noteholder or Lease Trust
Certificateholders.
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(b) The Lease Trustee shall not be required to take any
action hereunder or under any Basic Document if the Lease 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 Lease Trustee or is
contrary to the terms hereof or of any Basic Document or is otherwise contrary
to law.
(c) Whenever the Lease Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or any Basic Document, the Lease Trustee shall promptly give notice
(in such form as shall be appropriate under the circumstances) to the Lease
Trust Certificateholders requesting instruction as to the course of action to
be adopted, and to the extent the Lease Trustee acts in good faith in
accordance with any written instruction of the Lease Trust Certificateholders
holding not less than a majority of the Aggregate Certificate Balance, the
Lease Trustee shall not be liable on account of such action to any Person. If
the Lease Trustee shall not have received appropriate instruction within ten
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 Lease Trust Certificateholders, and shall
have no liability to any Person for such action or inaction.
(d) In the event that the Lease 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 or any other Basic Document permits any determination by the Lease
Trustee or is silent or is incomplete as to the course of action that the Lease
Trustee is required to take with respect to a particular set of facts, the
Lease Trustee may give notice (in such form as shall be appropriate under the
circumstances) to the Lease Trust Certificateholders requesting instruction
and, to the extent that the Lease Trustee acts or refrains from acting in good
faith in accordance with any such instruction received from Lease Trust
Certificateholders holding not less than a majority of the Aggregate
Certificate Balance and in accordance with Sections 6.4 and 6.5, the Lease
Trustee shall not be liable, on account of such action or inaction, to any
Person. If the Lease Trustee shall not have received appro-
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priate instruction within 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 Lease Trust
Certificateholders, and shall have no liability to any Person for such action
or inaction.
Section 6.4 No Duties Except as Specified in this Agreement
or in Instructions. The Lease Trustee shall not have any right, duty, or
obligation to manage, make any payment with respect to, register, record, sell,
dispose of or otherwise deal with the Lease Trust Estate, or to otherwise take
or refrain from taking any action under, or in connection with, any document
contemplated hereby to which the Lease Trustee is a party, except as expressly
provided by the terms of this Agreement or in any document or written
instruction received by the Lease 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 Lease Trustee. The Lease 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
ownership or security interest in the Lease Trust Estate or to prepare or file
any Securities and Exchange Commission filing, if any, for the Lease Trust or
to record this Agreement or any other Basic Document. The Lease Trustee
nevertheless agrees that it will, at its own cost and expense, promptly take
all action as may be necessary to discharge any liens (other than the lien of
the Indenture) on any part of the Lease Trust Estate that result from actions
by, or claims against, the Lease Trustee that are not related to the ownership
or the administration of the Lease Trust Estate.
Section 6.5 No Action Unless Specifically Authorized. The
Lease Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Lease Trust Estate except (a) in accordance with the
powers granted to and the authority conferred upon the Lease Trustee pursuant
to this Agreement, (b) in accordance with the other Basic Documents to which
the Lease Trust or the Lease Trustee is a party and (c) in accordance with any
document or instruction delivered to the Lease Trustee pursuant to Section 6.3.
In particular, the Lease Trustee shall not transfer, sell, pledge, assign or
convey the Series 1996-1
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Certificates except as specifically required or permitted by the Basic
Documents.
Section 6.6 Restrictions. The Lease Trustee shall not take
any action (a) that is contrary to the purposes of the Lease Trust set forth in
Section 2.3 or (b) that, to the actual knowledge of the Lease Trustee, would
(i) affect the treatment of the Senior Notes as debt for federal income tax
purposes, (ii) be deemed to cause a taxable exchange of the Senior Notes for
federal income tax purposes or (iii) cause the Lease Trust, the Depositor or
FCTT or any portion thereof to be taxable as an association or publicly traded
partnership taxable as a corporation for federal or Delaware income tax
purposes. The Lease Trust Certificateholders and Subordinated Noteholders
shall not direct the Lease Trustee to take action that would violate the
provisions of this Section 6.6.
ARTICLE VII
CONCERNING THE LEASE TRUSTEE
Section 7.1 Acceptance of Trusts and Duties. The Lease
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 Lease Trustee also agrees to disburse all moneys actually
received by it constituting part of the Lease Trust Estate upon the terms of
this Agreement and the other Basic Documents to which the Lease Trust or the
Lease Trustee is a party. The Lease 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 Lease Trustee. In
particular, but not by way of limitation (and subject to the exceptions set
forth in the preceding sentence):
(a) the Lease Trustee shall not be liable for any error
of judgment made by a responsible officer of the Lease Trustee;
(b) the Lease 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 Lease Trust Certificateholder or Subordinated Noteholder,
the Indenture Trustee, the Depositor or the Administrative Agent;
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(c) no provision of this Agreement or any other Basic
Document shall require the Lease 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 Lease 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 Lease Trustee be liable
for indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Senior Notes, the Subordinated
Notes or the Lease Trust Certificates;
(e) the Lease 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 Lease Trust Estate or for or in
respect of the validity or sufficiency of the other Basic Documents, other than
the certificates of authentication on the Lease Trust Certificates and the
Subordinated Notes, and the Lease Trustee shall in no event be deemed to have
assumed or incurred any liability, duty or obligation to any Senior Noteholder,
Subordinated Noteholder or Lease Trust Certificateholder or any third party
dealing with the Lease Trust or the Lease Trust Estate, other than as expressly
provided for herein and in the other Basic Documents;
(f) the Lease Trustee shall not be liable for the
misfeasance, malfeasance or nonfeasance of the Administrative Agent, the
Depositor or the Indenture Trustee, under any of the Basic Documents or
otherwise, and the Lease Trustee shall have no obligation or liability to
perform the obligations of the Lease Trust under this Agreement or the Basic
Documents that are required to be performed by the Administrative Agent under
the Administrative Agency Agreement or the Series 1996-1 Supplement, the
Depositor under the Transfer Agreement or the Program Operating Lease, or the
Indenture Trustee under the Indenture; and
(g) the Lease 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 Lease Trust Certificateholders or Subordinated
Noteholders, unless such
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Lease Trust Certificateholders or Subordinated Noteholders, as the case may be,
have offered to the Lease Trustee security or indemnity satisfactory to it
against the Expenses that may be incurred by the Lease Trustee therein or
thereby. The right of the Lease 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 Lease Trustee shall not be answerable for other
than its bad faith, negligence or willful misconduct in the performance of any
such act.
Section 7.2 Furnishing of Documents. The Lease Trustee shall
furnish to any Lease Trust Certificateholder or Subordinated Noteholder
promptly upon receipt of a written request by such Lease Trust
Certificateholder or Subordinated Noteholder (at the expense of the requesting
Lease Trust Certificateholder or Subordinated Noteholder) therefor, duplicates
or copies of all reports, notices, requests, demands, certificates, financial
statements and any other instruments furnished to the Lease Trustee under the
Basic Documents.
Section 7.3 Representations and Warranties. The Lease
Trustee hereby represents and warrants to the Depositor, for the benefit of the
Lease Trust Certificateholders and Subordinated Noteholders, that:
(a) It is a banking corporation duly organized and validly
existing in good standing under the laws of the State of Delaware. It has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated hereby
nor compliance by it with any of the terms or provisions hereof will contravene
any federal or Delaware law, governmental rule or regulation governing the
banking or trust powers of the Lease 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.
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(d) This Agreement has been duly executed and delivered by it
and constitutes the legal, valid and binding agreement of it, enforceable
against the Lease Trustee in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization, or
other similar laws affecting the enforcement of creditors' rights in general
and by general principles of equity, regardless of whether such enforceability
is considered in a proceeding in equity or at law.
Section 7.4 Reliance; Advice of Counsel. (a) The Lease
Trustee may rely upon, and shall be protected in relying upon, and shall incur
no liability to anyone in acting or refraining from 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 Lease Trustee
may accept a 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 Lease 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 Lease 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 Lease Trustee (i) may act directly or through
its agents or attorneys pursuant to agreements entered into with any of them,
and the Lease 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
Lease 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 Lease Trustee shall not be liable for anything done,
suffered or omitted in good faith by it in accordance with the opinion or
advice of any such counsel, accountants or other such persons and not contrary
to this Agreement or any other Basic Document.
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Section 7.5 Not Acting in Individual Capacity. Except as
provided in this Article VII, in accepting the trusts hereby created PNC Bank,
Delaware acts solely as Lease Trustee hereunder and not in its individual
capacity and all Persons having any claim against the Lease Trustee by reason
of the transactions contemplated by this Agreement or any Basic Document shall
look only to the Lease Trust Estate for payment or satisfaction thereof.
Section 7.6 Lease Trustee Not Liable for Lease Trust
Certificates or Subordinated Notes. The recitals contained herein and in the
Lease Trust Certificates and the Subordinated Notes (other than the signature
and countersignature of the Lease Trustee on the Lease Trust Certificates and
the Subordinated Notes and its representations and warranties in Section 7.3)
shall be taken as the statements of the Depositor and the Lease Trustee assumes
no responsibility for the correctness thereof. The Lease Trustee makes no
representations as to the validity or sufficiency of this Agreement, of any
other Basic Document or of the Lease Trust Certificates or Subordinated Notes
(other than the signature and countersignature of the Lease Trustee on the
Lease Trust Certificates and Subordinated Notes) or the Senior Notes or any
offering document relating to any of them. The Lease Trustee shall at no time
have any responsibility or liability for or with respect to the legality,
validity or enforceability of any Basic Document to which the Lease Trustee is
to be a party (except for enforceability against the Lease Trustee), or the
perfection and priority of any security interest created by or under any Basic
Document, or the maintenance of any such perfection and priority, or for or
with respect to the sufficiency of the Lease Trust Estate or its ability to
generate the payments to be distributed to Subordinated Noteholders or Lease
Trust Certificateholders under this Agreement or the Senior Noteholders under
the Indenture, or for the validity of the transfer of the Series 1996-1
Certificates to the Lease Trust pursuant to the Transfer Agreement, or for the
lease of the Series 1996-1 Certificates to RCL Trust 1996-1 pursuant to the
Program Operating Lease, or for the compliance by the Depositor or the
Administrative Agent with any warranty or representation made under any Basic
Document or for the accuracy of any such warranty or representation or for any
action of the Administrative Agent or the Indenture Trustee taken in the name
of the Lease Trustee.
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Section 7.7 Lease Trustee May Own Lease Trust Certificates,
Subordinated Notes and Senior Notes. The Lease Trustee in its individual or
any other capacity may become the owner or pledgee of Lease Trust Certificates,
Subordinated Notes or Senior Notes and may deal with the Depositor, the
Administrative Agent and the Indenture Trustee, and their respective
Affiliates, in banking transactions with the same rights as it would have if it
were not Lease Trustee.
ARTICLE VIII
COMPENSATION OF LEASE TRUSTEE
Section 8.1 Lease Trustee's Fees and Expenses. The Lease
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 Lease Trustee. The Administrative Agent (in exchange for receipt of
the Series 1996-1 Administrative Fee) has agreed pursuant to the Series 1996-1
Supplement to pay such fees of the Lease Trustee as are agreed upon by the
Depositor and the Lease Trustee, and shall reimburse the Lease Trustee for its
other reasonable expenses hereunder, including the reasonable compensation,
expenses and disbursements of such agents, representatives, experts and counsel
as the Lease Trustee may employ in connection with the exercise and performance
of its rights and its duties hereunder. The Administrative Agent shall make no
claim upon the Lease Trust Estate for the payment or reimbursement of such fees
and expenses.
Section 8.2 Indemnification. The holders of the Lease Trust
Certificates and Subordinated Notes issued to and required to be retained by
the Depositor and Ford Credit Leasing pursuant to Section 3.10 shall be liable
as primary obligor for, and shall indemnify the Lease Trustee and its
successors, assigns, agents, servants, officers and employees (collectively,
the "Indemnified Parties") from and against any Expenses which may at any time
be imposed on, incurred by, or asserted against the Lease Trustee or any
Indemnified Party in any way relating to or arising out of this Agreement, the
other Basic Documents, the Lease Trust Estate, the administration of the Lease
Trust Estate or the action or inaction of the Lease Trustee hereunder, except
only that the holders of such Lease Trust Certificates shall not be liable for
or required to indemnify the Lease Trustee from and against Expenses arising or
resulting from any of
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the matters described in the second clause of the third sentence of Section
7.1. The indemnities contained in this Section 8.2 shall survive the
resignation or termination of the Lease Trustee or the termination of this
Agreement. In any event of any claim, action or proceeding for which indemnity
will be sought pursuant to this Section 8.2, the Lease Trustee's choice of
legal counsel shall be subject to the approval of the Depositor, which approval
shall not be unreasonably withheld. The holders of the Lease Trust
Certificates and Subordinated Notes issued to and required to be retained by
the Depositor and Ford Credit Leasing pursuant to Section 3.10 shall make no
claim upon the Lease Trust Estate for the payment of such Expenses.
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
Section 9.1 Termination of Trust Agreement. (a) This
Agreement (other than Article VIII) and the Lease Trust shall terminate and be
of no further force or effect, (i) upon the final distribution by the Lease
Trustee of all moneys or other property or proceeds of the Lease Trust Estate
in accordance with the terms of the Indenture and this Agreement or (ii) at the
times provided in Section 9.2 or 9.3. The bankruptcy, liquidation,
dissolution, or termination, death or incapacity of any Subordinated Noteholder
or Lease Trust Certificateholder, other than the holders of the Lease Trust
Certificates and Subordinated Notes issued to and required to be retained by
the Depositor and Ford Credit Leasing pursuant to Section 3.10 as described in
Section 9.2 or 9.3, shall not (x) operate to terminate this Agreement or the
Lease Trust, nor (y) entitle such Subordinated Noteholder's or Lease Trust
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 Lease Trust or Lease Trust Estate nor (z) otherwise affect
the rights, obligations and liabilities of the parties hereto.
(b) Except as provided in Section 9.1(a), none of the
Depositor, any Lease Trust Certificateholder or any Subordinated Noteholder
shall be entitled to revoke or terminate the Lease Trust.
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(c) Notice of any termination of the Lease Trust Agreement
pursuant to Section 9.1(a) shall be given by the Lease Trustee by letter to
Lease Trust Certificateholders and Subordinated Noteholders mailed within five
Business Days of receipt of notice of such termination from the Administrative
Agent, stating (i) the Payment Date upon or with respect to which final payment
of the Subordinated Notes and Lease Trust Certificates shall be made upon
presentation and surrender of the Subordinated Notes and Lease Trust
Certificates at the office of the Lease Trust Paying Agent therein designated,
(ii) the amount of any such final payment with respect to the Subordinated
Notes or Lease Trust Certificates, as applicable; and (iii) that the Record
Date otherwise applicable to such Payment Date is not applicable, payments
being made only upon presentation and surrender of the Subordinated Notes and
Lease Trust Certificates at the office of the Lease Trust Paying Agent therein
specified. The Lease Trustee shall give such notice to the Lease Trust
Registrar (if other than the Lease Trustee) and the Lease Trust Paying Agent at
the time such notice is given to Subordinated Noteholders and Lease Trust
Certificateholders. Upon presentation and surrender of the Subordinated Notes
or the Lease Trust Certificates, the Lease Trust Paying Agent shall cause to be
paid to Subordinated Noteholders or Lease Trust Certificateholders, as
applicable, amounts payable to them on such Payment Date pursuant to Section
5.2.
In the event that all of the Subordinated Noteholders and
Lease Trust Certificateholders shall not surrender their Subordinated Notes or
Lease Trust Certificates, as the case may be, for cancellation within six
months after the date specified in the above mentioned written notice, the
Lease Trustee shall give a second written notice to the remaining Subordinated
Noteholders and Lease Trust Certificateholders to surrender their Subordinated
Notes or Lease Trust Certificates, as the case may be, for cancellation and
receive the final distribution with respect thereto. If within one year after
the second notice all the Subordinated Notes or Lease Trust Certificates shall
not have been surrendered for cancellation, the Lease Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Subordinated Notes or Lease Trust Certificateholders, as
the case may be, concerning surrender of their Subordinated Notes or Lease
Trust Certificates, as applicable, and the cost thereof shall be paid out of
the funds and other assets that shall remain subject to this Agreement. Any
funds remaining in the Lease Trust after exhaustion of such remedies shall
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be distributed by the Lease Trustee to the Edison Institute in Dearborn,
Michigan.
Section 9.2 Dissolution upon Bankruptcy of the Depositor or
Ford Credit Leasing. In the event that a Bankruptcy, insolvency, or
termination shall occur with respect to a holder of a Lease Trust Certificate
or a Subordinated Note issued to and required to be retained by the Depositor
and Ford Credit Leasing pursuant to Section 3.10(a), this Agreement and the
Lease Trust shall terminate in accordance with Section 9.1. Promptly after the
occurrence of any Bankruptcy, insolvency, or termination with respect to a
holder of such a Lease Trust Certificate or Subordinated Note, (i) the
Depositor or Ford Credit Leasing, as the case may be, shall give the Indenture
Trustee, the Lease Trustee and the Rating Agencies written notice of such
Bankruptcy, insolvency, or termination, (ii) the Lease Trustee shall, upon the
receipt of such written notice from the Depositor or Ford Credit Leasing, give
prompt written notice to the Subordinated Noteholders and Lease Trust
Certificateholders of the occurrence of such Bankruptcy, insolvency, or
termination and (iii) the Indenture Trustee shall, upon receipt of written
notice of such Bankruptcy, insolvency, or termination from the Lease Trustee,
the Depositor or Ford Credit Leasing, give prompt written notice to the Senior
Noteholders of the occurrence of such Bankruptcy, insolvency, or termination;
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 Lease Trust
pursuant to the first sentence of this Section 9.2. Upon the receipt of such
notice or actual knowledge of a termination pursuant to this Section 9.2, the
Lease Trustee shall promptly sell, or if the lien of the Indenture is
outstanding shall direct the Indenture Trustee promptly to sell, the assets of
the Lease Trust (other than the Series 1996-1 Payments Account) in a
commercially reasonable manner and on commercially reasonable terms. In
connection with any such sale the Series 1996-1 Assets shall be distributed out
of FCTT and the purchaser shall take delivery of such Series 1996-1 Assets and,
with respect to the Series 1996-1 Leased Vehicles, shall cause the related
Certificates of Title to be reregistered in the name of or at the direction of
the purchaser. The proceeds of such sale shall be deposited in the Series
1996-1 Payments Account for distribution in accordance with the terms of the
Indenture and the Lease Trust Agreement. The Lease Trustee has no liability
with respect to the procedures of the Indenture Trustee in connection with such
sale or the sufficiency or adequacy of the proceeds therefrom.
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Section 9.3 Redemption of the Subordinated Notes; Prepayment
of the Lease Trust Certificates.
(a) The Subordinated Notes shall be redeemed in whole,
but not in part, at the Redemption Price and the Lease Trust Certificates shall
be prepaid in whole, but not in part, at the Prepayment Price on any Payment
Date on which the Administrative Agent exercises its option to purchase the
Series 1996-1 Certificates pursuant to Section 7.1 of the Series 1996-1
Supplement; provided, however, that the Lease Trust has available funds
sufficient to pay the Redemption Price and the Prepayment Price. The
Administrative Agent or the Lease Trustee shall furnish the Rating Agencies
notice of such redemption and prepayment. In accordance with Section 7.1 of
the Series 1996-1 Supplement, if any of the Senior Notes are outstanding on the
Redemption Date, then on the Business Day preceding the Redemption Date the
Administrative Agent shall deposit the Series 1996-1 Asset Amount plus an
amount equal to one month's interest at a rate equal to the weighted average
Retail Operating Lease Factor for such Series 1996-1 Assets in the Series
1996-1 Collection Account, and if none of the Senior Notes are outstanding on
the Redemption Date, then on the Business Day preceding the Redemption Date the
Administrative Agent shall deposit the Series 1996-1 Asset Amount plus an
amount equal to one month's interest at a rate equal to the weighted average
Retail Operating Lease Factor for such Series 1996-1 Assets in the Series
1996-1 Payments Account, whereupon all of the Subordinated Notes and Lease
Trust Certificates shall be due and payable on the Redemption Date upon the
furnishing of a notice complying with Section 9.3(b) to each Subordinated
Noteholder and Lease Trust Certificateholder, as the case may be.
(b) Notice of redemption or prepayment under Section
9.3(a) shall be given by the Lease Trustee by facsimile or by first-class mail,
postage prepaid, transmitted or mailed at least thirty days prior to the
Redemption Date to each Subordinated Noteholder and Lease Trust
Certificateholder, on the Record Date preceding the Redemption Date, at address
of such Subordinated Noteholder or Lease Trust Certificateholder, as the case
may be, appearing in the Lease Trust Register.
All notices of redemption or prepayment shall state:
(i) the Redemption Date;
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(ii) the Redemption Price or Prepayment Price,
as applicable; and
(iii) the place where the Subordinated Notes and
Lease Trust Certificates are to be surrendered for payment of the
Redemption Price or Prepayment Price, as applicable (which shall be
the office or agency of the Lease Trustee to be maintained as provided
in Section 3.8).
Notice of redemption of the Subordinated Notes and of
prepayment of the Lease Trust Certificates shall be given by the Lease Trustee
in the name and at the expense of the Lease Trust. Failure to give notice of
redemption or prepayment, or any defect therein, to any Subordinated Noteholder
or Lease Trust Certificateholder, as the case may be, shall not impair or
affect the validity of the redemption or prepayment of any other Subordinated
Note or Lease Trust Certificate, as applicable.
(c) The Subordinated Notes to be redeemed shall,
following notice of redemption as required by Section 9.3(b) on the Redemption
Date become due and payable at the Redemption Price and (unless the Lease Trust
shall default the Redemption Price) no interest shall accrue on the Redemption
Price for any period from and including the Redemption Date. The Lease Trust
Certificates to be prepaid shall, following notice of prepayment as required by
Section 9.3(b) on the Redemption Date become due and payable at the Prepayment
Price and (unless the Lease Trust shall default in the payment of the
Prepayment Price) no interest shall accrue on the Prepayment Price for any
period from and including the Redemption Date.
ARTICLE X
SUCCESSOR LEASE TRUSTEES AND ADDITIONAL LEASE TRUSTEES
Section 10.1 Eligibility Requirements for Lease Trustee. The
Lease Trustee shall at all times be authorized to exercise corporate trust
powers and be a Person with a long term debt rating of at least Baa3 (or its
equivalent) by Moody's Investors Service, Inc. (or is otherwise acceptable to
Rating Agencies) and having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or State
authorities. If such Person shall publish reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid
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supervising or examining authority, then for the purpose of this Section 10.1,
the combined capital and surplus of such Person shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Lease Trustee shall cease to
be eligible in accordance with the provisions of this Section 10.1, the Lease
Trustee shall resign immediately in the manner and with the effect specified in
Section 10.2.
Section 10.2 Resignation or Removal of Lease Trustee. The
Lease Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Administrative Agent, the
Depositor, the Subordinated Noteholders and the Lease Trust Certificateholders.
The Lease Trustee shall not be obligated to accept record title to the Series
1996-1 Leased Vehicles (or part thereof) after notice of resignation but before
appointment of a successor and shall have no liability to any Person (including
any Subordinated Noteholder or Lease Trust Certificateholder) as a result of
such inaction. Upon receiving such notice of resignation, the Depositor shall
promptly appoint a successor Lease Trustee by written instrument, in duplicate,
one copy of which instrument shall be delivered to the resigning Lease Trustee
and one copy to the successor Lease Trustee. If no successor Lease Trustee
shall have been so appointed and have accepted appointment within 30 days after
the giving of such notice of resignation, the resigning Lease Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Lease Trustee.
If at any time the Lease 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 Administrative Agent, the Depositor or Lease
Trust Certificateholders holding not less than a majority of the Aggregate
Certificate Balance, or if at any time the Lease Trustee shall be legally
unable to act, or shall be adjudged bankrupt or insolvent, or a receiver of the
Lease Trustee or of its property shall be appointed, or any public officer
shall take charge or control of the Lease Trustee or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation, then the
Administrative Agent, the Depositor or such Lease Trust Certificateholders may
remove the Lease Trustee. If the Administrative Agent, the Depositor or Lease
Trust Certificateholders holding not less than a majority of the Aggregate
Certificate Balance shall remove the Lease Trustee under the authority of the
immedi-
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ately preceding sentence, the Administrative Agent or the Depositor shall
promptly appoint a successor Lease Trustee by written instrument, in duplicate,
one copy of which instrument shall be delivered to the outgoing Lease Trustee
so removed and one copy to the successor Lease Trustee.
Any resignation or removal of the Lease Trustee and
appointment of a successor Lease Trustee pursuant to any of the provisions of
this Section 10.2 shall not become effective until acceptance of appointment by
the successor Lease Trustee pursuant to Section 10.3 and payment of all fees
and expenses owed to the outgoing Lease Trustee. The Depositor shall provide
notice of such resignation or removal of the Lease Trustee to each of the
Rating Agencies, the Indenture Trustee, the Subordinated Noteholders and the
Lease Trust Certificateholders.
Section 10.3 Successor Lease Trustee. Any successor Lease
Trustee appointed pursuant to Section 10.2 shall execute, acknowledge and
deliver to the Administrative Agent and to its predecessor Lease Trustee an
instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Lease Trustee shall become effective
and such successor Lease 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 Lease Trustee. The predecessor Lease Trustee shall upon payment of
its fees and expenses deliver to the successor Lease Trustee all documents and
statements and monies held by it under this Agreement; and the Depositor and
the predecessor Lease Trustee shall execute and deliver such instruments and do
such other things as may reasonably be required for fully and certainly vesting
and confirming in the successor Lease Trustee all such rights, powers, duties
and obligations.
No successor Lease Trustee shall accept appointment as
provided in this Section 10.3 unless at the time of such acceptance such
successor Lease Trustee shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Lease Trustee
pursuant to this Section 10.3, the Depositor shall mail notice of the successor
of such Lease Trustee to all Subordinated Noteholders and Lease Trust
Certificateholders, the Indenture Trustee, and the Rating Agencies. If the
Depositor shall fail to mail such notice within 10 days after acceptance of
appointment by the successor Lease
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Trustee, the successor Lease Trustee shall cause such notice to be mailed at
the expense of the Depositor.
Section 10.4 Merger or Consolidation of Lease Trustee. Any
Person into which the Lease Trustee may be merged or converted or with which it
may be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Lease Trustee shall be a party, or any Person
succeeding to all or substantially all of the corporate trust business of the
Lease Trustee, shall be the successor of the Lease Trustee hereunder, provided
such Person shall be eligible pursuant to Section 10.1, 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; provided,
further that the Lease Trustee shall mail notice of such merger, conversion, or
consolidation to the Rating Agencies, the Indenture Trustee, the Subordinated
Noteholders and the Lease Trust Certificateholders.
Section 10.5 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provision of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Lease Trust Estate may at the time be located, the Depositor and the
Lease Trustee acting jointly shall have the power and shall execute and deliver
all instruments to appoint one or more Persons to act as co-trustee, jointly
with the Lease Trustee, or separate trustee or separate trustees, of all or any
part of the Lease Trust Estate, and to vest in such Person, in such capacity,
such title to the Lease Trust, or any part thereof, and, subject to the other
provisions of this Section 10.5, such powers, duties, obligations, rights and
trusts as the Depositor and the Lease Trustee may consider necessary or
desirable. If the Depositor shall not have joined in such appointment within
15 days after the receipt by it of a request so to do, the Lease 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:
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(a) all rights, powers, duties and obligations conferred or
imposed upon the Lease Trustee shall be conferred upon and exercised or
performed by the Lease 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 Lease 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 Lease 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 Lease 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 Lease
Trustee;
(b) no trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under this
Agreement; and
(c) jointly may at any time accept the resignation of or
remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Lease
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 Lease 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 Lease Trustee. Each such instrument shall
be filed with the Lease Trustee and a copy thereof given to the Administrative
Agent and the Depositor.
Any separate trustee or co-trustee may at any time appoint the
Lease 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
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by the Lease Trustee, to the extent permitted by law, without the appointment
of a new or successor trustee.
ARTICLE XI
TAX MATTERS
Section 11.1 Income Tax Characterization. (a) It is the
intention of the parties hereto that the Lease Trust not constitute a separate
entity for federal income tax or state income or franchise taxes. If, however,
the Lease Trust is characterized as a separate entity for federal income tax
purposes, it is the intention of the parties that it qualify as a partnership
for such purposes.
(b) It is the intent of the Depositor and Lease Trust
Certificateholders that the Lease Trust Certificates be treated as indebtedness
of the Depositor and Ford Credit Leasing for purposes of federal income tax or
state income and franchise taxes. If, however, the Lease Trust is
characterized as a separate entity and the Lease Trust Certificates are not
characterized as indebtedness of such entity for federal income tax purposes,
it is the intention of the parties that the Lease Trust qualify as a
partnership for such purposes and the Lease Trust Certificateholders (including
the Depositor and Ford Credit Leasing) will be treated as partners in that
partnership. The Depositor, Ford Credit Leasing, and the other Lease Trust
Certificateholders, by acceptance of a Lease Trust Certificate, agree to take
no action inconsistent with such tax treatment of the Lease Trust Certificates.
(c) It is the intent of the Depositor and Subordinated
Noteholders that the Subordinated Notes be treated as a direct ownership
interest in the assets of the Lease Trust for purposes of federal income tax or
state income and franchise taxes. If, however, the Lease Trust is
characterized as a separate entity for federal income tax purposes, it is the
intention of the parties that it qualify as a partnership for such purposes and
the Subordinated Noteholders (including the Depositor) will be treated as
partners in that partnership. The Depositor and the other Subordinated
Noteholders, by acceptance of a Subordinated Note, agree to take no action
inconsistent with such tax treatment of the Subordinated Notes.
Section 11.2 Annex A. The provisions of Annex A are intended
to apply to the extent the Lease Trust is clas-
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<PAGE> 59
sified as a partnership for federal income tax purposes. Annex A shall be
considered to be a part of this Agreement for all purposes. The Administrative
Agent, on behalf of the Lease Trust, will maintain books and records sufficient
to effectuate the provisions of Annex A.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Supplements and Amendments.
(a) Without Consent of the Senior Noteholders, Subordinated
Noteholders or Lease Trust Certificateholders. This Agreement may be amended
by the Depositor and the Lease Trustee, with prior written notice by the
Depositor to the Rating Agencies, without the consent of any of the Senior
Noteholders, Subordinated Noteholders or Lease Trust Certificateholders, to
cure any ambiguity or defect, to correct or supplement any provisions in this
Agreement, to add any provisions to or change in any manner or eliminate any of
the provisions in this Agreement or to modify in any manner the rights of the
Senior Noteholders, Subordinated Noteholders or Lease Trust Certificateholders;
provided, however, that such action shall not, (i) as evidenced by an Opinion
of Counsel, materially adversely affect the interests of the Indenture Trustee,
any Senior Noteholder, Subordinated Noteholder or Lease Trust Certificateholder
unless 100% of the holders of the Senior Notes, the Subordinated Notes and the
Lease Trust Certificates materially adversely affected thereby have consented
to such amendment, (ii) as confirmed by each Rating Agency then rating the
Senior Notes and the Lease Trust Certificates, cause the then current rating of
either Class of Senior Notes or the Lease Trust Certificates to be withdrawn or
reduced or (iii) cause the Lease Trust, the Depositor or FCTT to be taxable as
an "association" or publicly traded partnership taxable as a corporation for
federal income tax purposes.
(b) With Consent of the Senior Noteholders, Subordinated
Noteholders and Lease Trust Certificateholders. This Agreement may also be
amended from time to time by the Depositor and the Lease Trustee, with prior
written notice to the Rating Agencies, with the consent of Senior Noteholders
holding not less than a majority of the Outstanding Amount of the Senior Notes
and, to the extent affected thereby, the consent of Subordinated Noteholders
holding not less than a majority of the Outstanding Amount
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<PAGE> 60
of the Subordinated Notes and the consent of Lease Trust Certificateholders
holding 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 Senior Noteholders, Subordinated Noteholders or Lease Trust
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 distributions that are required to be made for the benefit of the
Senior Noteholders, Subordinated Noteholders or Lease Trust Certificateholders,
or (b) reduce the percentage of the Outstanding Amount of the Senior Notes and
Subordinated Notes and the Aggregate Certificate Balance of the Lease Trust
Certificates required to consent to any such amendment, without the consent of
the holders of 100% of the Outstanding Amount of the Senior Notes or
Subordinated Notes or of 100% of the Aggregate Certificate Balance, as the case
may be, and provided, further that an Opinion of Counsel shall be furnished to
the Indenture Trustee and the Lease Trustee to the effect that such amendment
shall not (i) affect the treatment of the Senior Notes as debt for federal
income tax purposes, (ii) be deemed to cause a taxable exchange of the Senior
Notes for federal income tax purposes or (iii) cause the Lease Trust or the
Series 1996-1 Certificates to be classified as an association (or publicly
traded partnership) taxable as a corporation for federal income tax purposes.
(c) With Respect to Certain Tax Matters. Notwithstanding the
foregoing, this Agreement may be amended at any time by the Depositor (acting
at the direction of Ford Credit and Ford Credit Leasing) and the Lease Trustee
to the extent reasonably necessary to assure that none of FCTT, the Lease Trust
or the Depositor will be classified as an association (or publicly traded
partnership) taxable as a corporation for federal income tax purposes.
(d) General Matters Concerning Amendments and Consents. The
Lease Trustee and the Depositor shall provide prior written notice of any such
amendment to each Rating Agency, and promptly after the execution of any such
amendment or consent, the Lease Trustee shall furnish written notification of
the substance of such amendment or consent to each Lease Trust
Certificateholder, each Subordinated Noteholder and the Indenture Trustee.
It shall not be necessary for the consent of the Lease Trust
Certificateholders, the Subordinated
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<PAGE> 61
Noteholders, the Senior Noteholders or the Indenture Trustee pursuant to this
Section 12.1 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
Subordinated Noteholders or Lease Trust Certificateholders provided for in this
Agreement or in any other Basic Document) and of evidencing the authorization
of the execution thereof by Subordinated Noteholders or Lease Trust
Certificateholders shall be subject to such reasonable requirements as the
Lease Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the
Lease 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 that all conditions precedent to the execution and delivery of
such amendment have been satisfied. The Lease Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Lease Trustee's
own rights, duties or immunities under this Agreement or otherwise.
Section 12.2 No Legal Title to Lease Trust Estate in Lease
Trust Certificateholders or Subordinated Noteholders. (a) The Lease Trust
Certificateholders shall not have legal title to any part of the Lease Trust
Estate. The Lease Trust Certificateholders shall be entitled to receive
distributions with respect to their undivided ownership interest in the Least
Trust only in accordance with Articles V and IX. No transfer, by operation of
law or otherwise, of any right, title or interest of the Lease Trust
Certificateholders to and in their ownership interest in the Lease 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 Lease Trust Estate.
(b) The Subordinated Noteholders shall not have legal title to
any part of the Lease Trust Estate. The Subordinated Noteholders shall be
entitled to receive payments with respect to their Subordinated Notes only in
accordance with Articles V and IX. No transfer, by operation of law or
otherwise, of any right, title or interest of the Subordinated Noteholders to
and in their Subordinated Notes 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 Lease Trust Estate.
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Section 12.3 Limitations on Rights of Others. Except for
Section 2.7, the provisions of this Agreement are solely for the benefit of the
Lease Trustee, the Depositor, the Subordinated Noteholders, the Lease Trust
Certificateholders, the Administrative Agent, the Indenture Trustee and the
Senior Noteholders, and nothing in this Agreement, whether express or implied,
shall be construed to give to any other Person any legal or equitable right,
remedy or claim in the Lease Trust Estate or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein.
Section 12.4 Notices. (a) Unless otherwise expressly
specified or permitted by the terms hereof, all notices shall be in writing and
shall be deemed given upon receipt by the intended recipient or three Business
Days after mailing if mailed by certified mail, postage prepaid (except that
service of process in connection with any litigation hereunder shall be
effected in accordance with applicable law and that notice to the Lease Trustee
shall be deemed given only upon actual receipt by the Lease Trustee), or, as to
each party, at the address of such party specified below or at such other
address as shall be designated by such party in a written notice to each other
party.
1) If to the Lease Trustee:
PNC Bank, Delaware
222 Delaware Avenue
Wilmington, Delaware 19801
Attention: Michael B. McCarthy
2) If to the Depositor:
RCL Trust 1996-1
c/o First Union Bank of Delaware
One Rodney Square
920 King Street
Wilmington, Delaware 19801
Attention: Trust Department
with a copy to:
First Union National Bank
of North Carolina
230 South Tryon Street CMC-9
Charlotte, North Carolina 28288
Attention: Pablo de La Canal
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<PAGE> 63
(b) Any notice required or permitted to be given to a
Subordinated Noteholder or Lease Trust Certificateholder shall be given by
first-class mail, confirmed, facsimile or overnight courier, postage prepaid,
at the address of such Subordinated Noteholder or Lease Trust Certificateholder
as shown in the Lease Trust 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 Subordinated Noteholder or Lease Trust
Certificateholder receives such notice.
Section 12.5 Severability. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
Section 12.6 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 12.7 Successors and Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the Depositor, the Lease Trustee and its successors, each Subordinated
Noteholder and its successors and permitted assigns and each Lease Trust
Certificateholder and its successors and permitted assigns, all as herein
provided. Any request, notice, direction, consent, waiver or other instrument
or action by a Subordinated Noteholder or Lease Trust Certificateholder shall
bind the successors and assigns of such Subordinated Noteholder or Lease Trust
Certificateholder.
Section 12.8 No Petition. The Lease Trustee and the
Depositor, by entering into this Agreement, each Lease Trust Certificateholder,
by accepting a Lease Trust Certificate, each Subordinated Noteholder, by
accepting a Subordinated Note, the Indenture Trustee and each Senior Noteholder
by accepting the benefits of this Agreement, hereby covenants and agrees that,
for a period of one year and one day after payment in full of the Series 1996-1
Certificates, they will not at any time institute against the Depositor or the
Lease Trust or join in any institution against, the Depositor or the Lease
Trust of any bankruptcy, reorganiza-
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tion, 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 Lease Trust Certificates, the
Subordinated Notes, the Senior Notes, this Agreement or any of the other Basic
Documents; provided, however, that Senior Noteholders holding 100% of the
Outstanding Amount of the Senior Notes, or if the Senior Notes have been paid
in full, Subordinated Noteholders holding 100% of the Outstanding Amount of the
Subordinated Notes or Lease Trust Certificate holders holding 100% of the
Aggregate Certificate Balance (in each case, excluding Ford Credit Leasing, the
Depositor or any of their Affiliates and any Senior Notes, Subordinated Notes
or Lease Trust Certificates held by any of them) may at any time institute, or
join in any institution of, any such proceeding against the Lease Trust or the
Depositor.
The Lease Trustee and the Depositor, by entering into this
Agreement, each Lease Trust Certificateholder, by accepting a Lease Trust
Certificate, each Subordinated Noteholder, by accepting a Subordinated Note,
and each Senior Noteholder, by accepting the benefits of this Agreement, hereby
covenants that for a period of one year and one day after payment in full of
all amounts due under any Series of Specified Beneficial Certificates,
including the Series 1996-1 Certificates, they will not institute or join in
the instituting, any Bankruptcy, reorganization, insolvency or liquidation
proceeding against Ford Credit Leasing without the consent of 100% of the
Holders (excluding Ford Credit Leasing, the Lease Trust or any of their
respective Affiliates) of the then outstanding Specified Beneficial
Certificates.
Section 12.9 No Recourse. Each Lease Trust Certificate and
each Subordinated Note entitles the holder thereof to the respective rights and
benefits set forth in this Agreement and in the Lease Trust Certificates or the
Subordinated Notes, as applicable. The Lease Trust Certificates and the
Subordinated Notes do not represent interests in or obligations of the
Administrative Agent, the Depositor, the Lease 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 Lease Trust Certificates, the Subordinated Notes or the other
Basic Documents.
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Section 12.10 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 12.11 GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
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<PAGE> 66
IN WITNESS WHEREOF the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
PNC BANK, DELAWARE
not in its individual capacity but
solely as Lease Trustee
By:
-----------------------------
Name: Michael B. McCarthy
Title: Vice President
RCL TRUST 1996-1
By: FIRST UNION BANK OF DELAWARE,
not in its individual capacity
but solely as trustee of RCL
Trust 1996-1
By:
------------------------------
Name:
Title:
<PAGE> 67
ANNEX A
Partnership Matters
This Annex A contains provisions accounting for income, gain,
loss, and deductions of the Lease Trust in the event it is classified as a
partnership for federal income tax purposes. The Depositor, on behalf of the
Lease Trust, shall at all times maintain records sufficient to enable it to
calculate Capital Account balances in accordance with the provisions of this
Annex A. This Annex A shall be considered to be a part of the Lease Trust
Agreement for all purposes.
Section 1. Definitions. The following capitalized terms shall have
meanings set forth below:
"Adjusted Capital Account Deficit" means the deficit balance, if any,
in any Lease Trust Certificateholder's Capital Account as of the end of the
relevant Fiscal Year after: (a) crediting to such Capital Account any amounts
which such Lease Trust Certificateholder is obligated to restore pursuant to
any provision of this Agreement or is deemed to be obligated to restore
pursuant to Section Section 1.704-1(b)(2)(ii)(c), 1.704-1(b)(2)(ii)(h),
1.704-2(g) or 1.704-2(i)(5) of the Treasury Regulations and (b) debiting to
such Capital Account the items described in Section Section
1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Treasury Regulations. This
definition of Adjusted Capital Account Deficit is intended to comply with the
provisions of Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations
(captioned "Alternate Test for Economic Effect") and shall be interpreted
consistently therewith.
"Adjusted Fair Market Value" means with respect to any item of Lease
Trust property, the greater of (i) the fair market value of such property or
(ii) the amount of any nonrecourse indebtedness to which such property is
subject within the meaning of Section 7701(g) of the Code.
"Capital Account" means the account maintained for each Lease Trust
Certificateholder as provided in Section 4.
"Capital Contribution" means the amount of cash or the Gross Asset
Value of property contributed to the Lease Trust by any Lease Trust
Certificateholder. Upon initial sale of the Lease Trust Certificates, the
Capital Contribution of each Lease Trust Certificateholder (other than the
holders of the Lease Trust Certificates issued to the Depositor and
Annex-1
<PAGE> 68
Ford Credit Leasing pursuant to Section 3.10(a) of the Agreement) shall equal
the amount paid by such Lease Trust Certificateholder for its Lease Trust
Certificates. The initial Capital Contribution of the Depositor and Ford
Credit Leasing, as holders of the Lease Trust Certificateholders issued to them
pursuant to Section 3.10(a) of the Agreement, shall consist of their respective
shares of (i) the fair market value of the Series 1996-1 Certificates, and (ii)
the amount deemed to be contributed on the Closing Date pursuant to Section
2(c) of the Transfer Agreement for payment of certain expenses.
"Certificateholder Nonrecourse Debt" means "partner nonrecourse debt"
within the meaning of Section 1.704-2(b)(4) of the Treasury Regulations.
"Certificateholder Nonrecourse Deductions" means "partner nonrecourse
deductions" within the meaning of Section Section 1.704-2(i)(1) and (2) of
the Treasury Regulations.
"Depreciation" means, for each fiscal or other period, an amount equal
to the depreciation, amortization or other cost recovery deductions allowable
with respect to an asset for such year or period under the Code, except that if
the Gross Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value as the federal income tax depreciation, amortization or other cost
recovery deduction for such year or other beginning adjusted tax basis;
provided, however, that if the federal income tax depreciation, amortization or
other cost recovery deduction for such year is zero, Depreciation shall be
determined with reference to such beginning Gross Asset Value or any reasonable
method selected by the Depositor.
"Fiscal Year" means the taxable year of the Lease Trust which, except
in the case of a short taxable year, shall be the year as is required by
Section 706(b) of the Code.
"Gross Asset Value" means, with respect to any asset, such asset's
adjusted basis for federal income tax purposes except as follows:
(a) The initial Gross Asset Value of any asset contributed by a
Lease Trust Certificateholder to the Lease Trust shall be the
gross fair market value of such asset at the time of
contribution, as
Annex-2
<PAGE> 69
determined by the contributing Lease Trust Certifi-
cateholder and the Lease Trust.
(b) The Gross Asset Values of all Lease Trust assets shall be
adjusted to equal their respective Adjusted Fair Market
Values, as reasonably determined by the Depositor as of the
liquidation of the Lease Trust within the meaning of Section
1.704-1(b)(2)(ii)(g) of the Treasury Regulations;
(c) If the Gross Asset Value of an asset has been determined or
adjusted pursuant to any of subsections (a), (b) or (d) of
this definition, such Gross Asset Value (if any) shall
thereafter be adjusted by the Depreciation taken into account
with respect to such asset for purposes of computing income,
gain, loss and deduction to be allocated to the Capital
Accounts of the Lease Trust Certificateholders and RCL Trust
1996-1; and
(d) For purposes of allocating Gross Asset Values with respect to
Lease Trust assets, RCL Trust 1996-1 shall make such
allocation in accordance with the respective Adjusted Fair
Market Values of such assets, and such allocations shall be
effective for all purposes under this Agreement.
"Interest" means, as of any date, the ownership interest of a Lease
Trust Certificateholder in the Lease Trust as of such date, including the right
of such Lease Trust Certificateholder to any and all benefits to which such
Lease Trust Certificateholder may be entitled as provided in this Agreement,
together with the obligations of such Lease Trust Certificateholder to comply
with all the terms and provisions of this Agreement.
"Regulatory Allocations" means the allocations set forth in Sections 6
and 7.
Section 2. Initial Capital Contributions. On the Closing Date, the
Capital Account of each Lease Trust Certificateholder will be credited with its
initial Capital Contribution.
Annex-3
<PAGE> 70
Section 3. Capital Accounts.
(a) The Depositor, on behalf of the Lease Trust, shall maintain books
and records sufficient so that a separate Capital Account for each Lease Trust
Certificateholder can be calculated in accordance with federal income tax
accounting principles and Section 704(b) of the Code and Section Section
1.704-1(b) and 1.704-2 of the Treasury Regulations.
(b) If in the opinion of the Lease Trust's outside legal counsel the
manner in which Capital Accounts are to be maintained pursuant to the preceding
provisions of this Section 3 should be modified in order to comply with the
requirements of Section 704(b) of the Code and the Treasury Regulations
thereunder, then notwithstanding anything to the contrary contained herein, RCL
Trust 1996-1 may amend this Agreement to alter the method in which Capital
Accounts are maintained in order to comply with Section 704(b) of the Code;
provided, however, that any change in the manner of maintaining Capital
Accounts shall not materially alter the economic agreement among the Lease
Trust Certificateholders without the consent of such Lease Trust
Certificateholders.
(c) The following rules shall apply in maintaining Capital
Accounts:
(i) If any Interest in the Lease Trust is transferred in
accordance with the terms of this Agreement, the transferee
shall succeed to the Capital Account of the transferor to the
extent it relates to the transferred Interest.
(ii) For purposes of this Section 3, amounts described in Section
709 of the Code (other than amounts with respect to which an
election is in effect under Section 709(b) of the Code) shall
be treated as described in Section 705(a)(2)(B) of the Code.
Section 4. Maintenance of Capital Account Balance of RCL Trust 1996-1;
Restoration of Negative Capital Account Balances. Subject to the following
sentence, at no time during the term of the Lease Trust or upon the dissolution
and liquidation of the Lease Trust shall a Lease Trust Certificateholder with a
negative balance in its Capital Account have any obligation to the Lease Trust
or to any other Lease Trust Certificateholder to restore such negative balance,
except as may be required by law or in respect of any negative balance
resulting from withdrawal of capital or a distribution in contravention of this
Agreement. Notwith-
Annex-4
<PAGE> 71
standing the foregoing, each holder of the Lease Trust Certificates issued to
the Depositor and Ford Credit Leasing pursuant to Section 3.10(a) of the
Agreement shall be obligated to restore any negative balance in its Capital
Account in an amount up to the initial Aggregate Certificate Balance.
Section 5. Allocation of Profits and Losses.
(a) Each item of Lease Trust income, gain, loss and deduction shall
be determined monthly by the Depositor or by accountants designated by it in
accordance with the federal income tax accounting rules in Section 703 of the
Code and Section 1.704-1(b)(2)(iv) of the Treasury Regulations.
(b) It is the intention of the parties that if the Lease Trust
Certificateholders (other than the Depositor and Ford Credit Leasing, as
holders of the Lease Trust Certificates issued to them pursuant to Section
3.10(a) of the Agreement, except to the extent of their share of the Aggregate
Certificate Balance) are classified as partners in a partnership, they shall be
treated as accruing, on a quarterly basis, a right to a guaranteed payment
equal to the sum of (i) all interest accrued on the Lease Trust Certificates
for the related Interest Accrual Period (plus interest accrued on overdue
interest), and (ii) any discount that would have accrued on the Lease Trust
Certificates (other than the Lease Trust Certificates issued to the Depositor
and Ford Credit Leasing pursuant to Section 3.10(a) of the Agreement, except to
the extent of their share of the Aggregate Certificate Balance) if the Lease
Trust Certificates (other than the Lease Trust Certificates issued to the
Depositor and Ford Credit Leasing pursuant to Section 3.10(a) of the Agreement,
except to the extent of their share of the Aggregate Certificate Balance) were
debt. It is the further intention of the parties that the Lease Trust
Certificateholders (other than the Depositor and Ford Credit Leasing, as
holders of the Lease Trust Certificates issued to them pursuant to Section
3.10(a) of the Agreement) shall not otherwise be entitled to any distributive
share of partnership income or loss, except to the extent that it is determined
that such Lease Trust Certificateholders will actually suffer a loss of a
portion of their Certificate Balance (or as otherwise required by the Code),
and that all such items of partnership income, gain, loss, and deduction be
allocated to the Depositor and Ford Credit Leasing, as holders of the Lease
Trust Certificates issued to them pursuant to Section 3.10(a) of the Agreement.
Annex-5
<PAGE> 72
(c) To the extent that the Lease Trust Certificateholders (other than
the Depositor and Ford Credit Leasing, as holders of the Lease Trust
Certificates issued to them pursuant to Section 3.10(a) of the Agreement,
except to the extent of their share of the Aggregate Certificate Balance) are
treated as partners but are not treated as accruing guaranteed payments, except
as provided otherwise in this Annex A (and without duplication of amounts that
are treated as guaranteed payments), on each Payment Date, prior to making
distributions pursuant to Article V:
(i) items of gross income and gain of the Lease Trust shall be
allocated to the Lease Trust Certificateholders (other the
Depositor and Ford Credit Leasing, as holders of the Lease
Trust Certificates issued to them pursuant to Section 3.10(a)
of the Agreement) until the Capital Account of each such Lease
Trust Certificateholder, before taking into account
distributions made on such Payment Date, is equal to the sum
of (x) the initial Capital Contribution credited to such Lease
Trust Certificateholders, (y) any amounts which would be
required to be accrued as discount (including with- out
limitation original issue discount, de minimis original issue
discount and acquisition discount within the meaning of
Section 1281 of the Code) under the Code and the Treasury
Regulations thereunder if the Lease Trust Certificates held by
such Lease Trust Certificateholders were characterized as debt
instruments for federal income tax purposes and the Lease
Trust Certificateholder's adjusted tax basis were equal to its
Capital Account Balance and (z) interest accrued for the
related Interest Accrual Period plus any other interest
previously accrued, but not paid (and accrued interest
thereon) with respect to such Lease Trust Certificates; and
(ii) all other items of income, gain, loss, and deduction, shall be
allocated to the Depositor and Ford Credit Leasing, as holders
of the Lease Trust Certificates issued to them pursuant to
Section 3.10(a) of the Agreement.
(d) Notwithstanding the foregoing, if any allocation in accordance
with Section 5(c) would increase the Adjusted Capital Account Deficit of a
holder of the Lease Trust Certificates issued to the Depositor and Ford Credit
Leasing pursuant to Section 3.10(a) of the Agreement to an amount in
Annex-6
<PAGE> 73
excess of the balance on deposit in the Cash Collateral Account, items of loss
and deduction that would create such excess shall be allocated to Lease Trust
Certificateholders (other than holders of the Lease Trust Certificates issued
to the Depositor and Ford Credit Leasing pursuant to Section 3.10(a) of the
Agreement) until the Capital Accounts of such Lease Trust Certificateholders
have been reduced to zero. To the extent that losses are allocated to a Lease
Trust Certificateholder (other than the Depositor and Ford Credit Leasing, as
holders of the Lease Trust Certificates issued to them pursuant to Section
3.10(a) of the Agreement, except to the extent of their share of the Aggregate
Certificate Balance) items of gross income shall be specially allocated to each
such Lease Trust Certificateholder in an amount equal to such losses as quickly
as possible, consistent with Code Section 704(b) and the Treasury Regulations
thereunder.
Section 6. Additional Special Allocations. (a) This Agreement shall
be deemed to contain (i) a qualified income offset as described in Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Treasury Regulations; (ii) a minimum
gain chargeback as provided in Section 1.704-2(f) of the Treasury Regulations;
and (iii) a partner minimum gain chargeback in accordance with Section
1.704-2(i) of the Treasury Regulations.
(b) Certificateholder Nonrecourse Deductions. Any
Certificateholder Nonrecourse Deductions shall be allocated to the Lease Trust
Certificateholder that bears the economic risk of loss with respect to the
Certificateholder Nonrecourse Debt to which such Certificateholder Nonrecourse
Deductions are attributable in accordance with Section 1.704-2(i)(1) of the
Treasury Regulations.
Section 7. Tax Allocations; Code Section 704(c).
(a) Income, gains, losses and deductions with respect to any property
(other than money) contributed to the capital of the Lease Trust shall, solely
for tax purposes, be allocated among the Lease Trust Certificateholders) so as
to take account of any variation between the adjusted basis of such property to
the Lease Trust for federal income tax purposes and its initial Gross Asset
Value in accordance with Section 704(c) of the Code and the Treasury
Regulations thereunder.
(b) In the event the Gross Asset Value of any Lease Trust asset is
adjusted (pursuant to the definition of Gross Asset Value), subsequent
allocations of income, gain, loss and deduction with respect to such asset
shall take account
Annex-7
<PAGE> 74
of any variation between the adjusted basis of such asset for federal income
tax purposes and its Gross Asset Value in the same manner as under Section
704(c) of the Code and the Treasury Regulations thereunder.
(c) Any elections or other decisions relating to such allocations
shall be made by the Depositor in any manner that reasonably reflects the
purpose and intention of this Agreement. Allocations pursuant to this Section
7(c) are solely for purposes of federal, State and local taxes and shall not
affect, or in any way be taken into account in computing, any Lease Trust
Certificateholder's Capital Account or share of profits, losses, other items or
distributions pursuant to any provision of this Agreement.
Section 8. Code Section 754 Election. No election shall be made on
behalf of the Lease Trust pursuant to Section 754 of the Code.
Section 9. Allocations With Respect to Transferred Interests.
Profits and losses allocable to an Interest transferred or reissued during a
Fiscal Year shall be allocated to each Person who was the holder of such
Interest during such Fiscal Year, in proportion to the number of days that each
such holder was recognized as the owner of such Interest during such Fiscal Year
or by an interim closing of the books or in any other proportion permitted by
the Code and selected by RCL Trust 1996-1 in accordance with this Agreement,
without regard to the results of Lease Trust operations or the date, amount or
recipient of any distributions which may have been made with respect to such
Interest. The effective date of any transfer shall be (i) in the case of a
voluntary transfer, the actual date the transfer is recorded on the books of the
Lease Trust or (ii) in the case of involuntary transfer, the date of the
operative event.
Section 10. Curative Allocations. The Regulatory Allocations are
intended to comply with certain requirements of Section 1.704-1(b) of the
Treasury Regulations. Notwithstanding any other provision of this Appendix A
(other than the Regulatory Allocations), the Regulatory Allocations shall be
taken into account in allocating other Lease Trust items of income, gains, loss
and deduction among the Lease Trust Certificateholders so that, to the extent
possible, the net amount of such allocations of other Lease Trust items and the
Regulatory Allocations shall be equal to the net amount that would have been
allocated to such Lease Trust Certificateholders if the Regulatory Allocations
had not occurred.
Annex-8
<PAGE> 75
Section 11. Books and Records. The Depositor, as a holder of the
Lease Trust Certificates issued to it pursuant to Section 3.10(a) of the
Agreement, shall (a) maintain such information as may be required, if it should
later be determined that the Lease Trust should be classified as a partnership
for federal income tax purposes, to enable each Lease Trust Certificateholder
to prepare its federal and state income tax returns, and (b) if it should be
determined that the Lease Trust is properly classified as a partnership for
federal or other income tax purposes, prepare and file or cause to be prepared
and filed by the Lease Trustee such tax returns, if any, relating to the Lease
Trust, and make such elections as may from time to time be required or
appropriate under any applicable federal or State statute or rule or regulation
thereunder. The Depositor shall elect under Section 1278 of the Code to
include in income currently any market discount that accrues with respect to
the assets of the Lease Trust.
Section 12. Signature on Returns; Tax Matters Partner.
(a) In the event that the Lease Trust shall be required to
file federal or other income tax returns as a partnership, such returns shall
be signed by an authorized signatory for RCL Trust 1996-1, as a holder of the
Lease Trust Certificates issued to it pursuant to Section 3.10(a) of the
Agreement, or such other person as shall be required by law to sign such
returns of the Lease Trust.
(b) By acceptance of its beneficial interest in a Lease Trust
Certificate, each Lease Trust Certificateholder agrees that in the event that
the Lease Trust is classified as a partnership for federal income tax purposes,
RCL Trust 1996-1, as a holder of the Lease Trust Certificates issued to it
pursuant to Section 3.10(a) of the Agreement, shall be the "tax matters
partner" of the Lease Trust pursuant to the Code.
Annex-9
<PAGE> 76
EXHIBIT A
NUMBER $
R- CUSIP NO.__________
THIS LEASE TRUST
CERTIFICATE MAY NOT
BE TRANSFERRED BY A
STOCK POWER BUT ONLY
AS SET FORTH BELOW
SEE REVERSE FOR CERTAIN DEFINITIONS
[TEXT OF LEGEND FOR LEASE TRUST CERTIFICATES ISSUED TO THE
DEPOSITOR AND FORD CREDIT LEASING PURSUANT TO SECTION 3.10(A) OF THE LEASE
TRUST AGREEMENT: THIS LEASE TRUST CERTIFICATE IS NOT TRANSFERABLE EXCEPT IN
THE EVENT OF THE DISSOLUTION OR TERMINATION OF RCL TRUST 1996-1 WHEN IT IS THE
HOLDER HEREOF, AND ANY TRANSFER IN VIOLATION OF THIS PROVISION SHALL BE NULL
AND VOID.]
[TEXT OF LEGEND FOR OTHER LEASE TRUST CERTIFICATES: THIS
LEASE TRUST 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 LEASE TRUST CERTIFICATE, AGREES FOR THE BENEFIT OF
THE LEASE TRUST AND THE DEPOSITOR THAT THIS LEASE TRUST CERTIFICATE MAY BE
REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN A DENOMINATION OF
AT LEAST $[1,000,000], 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 LEASE TRUST AND THE
LEASE TRUST REGISTRAR OF A CERTIFICATE SUBSTANTIALLY IN THE FORM ATTACHED AS
EXHIBIT C TO THE LEASE TRUST AGREEMENT AND (B) THE RECEIPT BY THE LEASE TRUST
AND THE LEASE TRUST REGISTRAR OF A LETTER SUBSTANTIALLY IN THE FORM ATTACHED AS
EXHIBIT D TO THE LEASE TRUST AGREEMENT, (2) PURSUANT TO AN EXEMPTION FROM
A-1
<PAGE> 77
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE),
SUBJECT TO THE RECEIPT BY THE LEASE TRUST, THE INITIAL PURCHASER AND THE LEASE
TRUST REGISTRAR OF SUCH EVIDENCE ACCEPTABLE TO THE LEASE TRUST AND THE INITIAL
PURCHASER THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH
THE LEASE 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 LEASE TRUST AND THE LEASE TRUST REGISTRAR OF
A LETTER SUBSTANTIALLY IN THE FORM ATTACHED AS EXHIBIT E TO THE LEASE TRUST
AGREEMENT OR (B) THE RECEIPT BY THE LEASE TRUST, THE INITIAL PURCHASER AND THE
LEASE TRUST REGISTRAR OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE LEASE TRUST AND
THE INITIAL PURCHASER THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN
COMPLIANCE WITH THE LEASE 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.]
THE PRINCIPAL OF THIS LEASE TRUST CERTIFICATE IS DISTRIBUTABLE
AS SET FORTH IN THE LEASE TRUST AGREEMENT. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL OF THIS LEASE TRUST CERTIFICATE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
FORD CREDIT AUTO LEASE TRUST 1996-1
___% ASSET BACKED LEASE TRUST CERTIFICATE
evidencing an interest in certain distributions of the Lease Trust, as defined
below, the property of which includes: (i) the right to receive certain
payments as program lessor under the Program Operating Lease pursuant to which
trust certificates representing a beneficial interest in certain specified
retail automobile and light truck leases were leased to the program lessee; and
(ii) an interest in such certificates upon the expiration of such Program
Operating Lease. The property of the Lease Trust has been pledged to the
Indenture Trustee pursuant to the Indenture to secure the payment of the Senior
Notes issued thereunder.
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<PAGE> 78
(This Lease Trust Certificate does not represent an interest in or obligation
of the Depositor, Ford Motor Credit Company, Ford Credit Leasing Company, Inc.
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
ownership interest in Lease Trust Certificates having an initial Aggregate
Certificate Balance of $_________ of Ford Credit Auto Lease Trust 1996-1 (the
"Lease Trust") formed by RCL Trust 1996-1 (the "Depositor"). The Aggregate
Certificate Balance of the Lease Trust Certificates bear interest at a rate of
___% per annum (the "Certificate Rate").
A-3
<PAGE> 79
LEASE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Lease Trust Certificates referred to in the
within-mentioned Lease Trust Agreement.
PNC Bank, Delaware or PNC Bank, Delaware
as Lease Trustee as Lease Trustee
By _____________
Authenticating Agent
By By
--------------------------- -------------------------
<PAGE> 80
The Lease Trust was created pursuant to a Lease Trust
Agreement, dated ______ __, 1996 (the "Lease Trust Agreement"), between the
Depositor and PNC Bank, Delaware, as trustee (the "Lease 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 Lease Trust Agreement and the definitions
appendices incorporated by reference therein.
This Certificate is one of the duly authorized Lease Trust
Certificates designated as "___% Asset Backed Lease Trust Certificates" (the
"Lease Trust Certificates"). Also issued under the Lease Trust Agreement are
the __% Subordinated Notes (the "Subordinated Notes") and issued under the
Indenture dated as of _____ __, 1996 (the "Indenture"), between the Lease
Trustee and The Chase Manhattan Bank, as trustee (the "Indenture Trustee"), are
the ____% Class A-1 Senior Notes and the ___% Class A-2 Senior Notes
(collectively, the "Senior Notes"). This Lease Trust Certificate is issued
under and is subject to the terms, provisions and conditions of the Lease Trust
Agreement, to which Lease Trust Agreement the holder of this Lease Trust
Certificate by virtue of the acceptance hereof assents and by which such Lease
Trust Certificateholder is bound. The property of the Lease Trust includes (i)
the rights of the Lease Trust under the Series 1996-1 Certificates, (ii) the
rights as lessor under the Program Operating Lease, (iii) a security interest
with respect to amounts on deposit from time to time in the Series 1996-1
Collection Account, Series 1996-1 Payahead Account, the Series 1996-1 Payments
Account and the Certificate Distribution Account and all investments including
all income thereon and proceeds thereof, (iv) the rights of the Depositor under
the Asset Contribution Agreement, (v) the rights of the Lease Trust as the
holder of the Series 1996-1 Certificates under the Administrative Agency
Agreement and the Series 1996-1 Supplement, (vi) the security interest of the
Lease Trust in amounts credited to the Cash Collateral Account and the right to
make withdrawals therefrom and (vii) all proceeds of the foregoing. THE RIGHTS
OF THE LEASE TRUSTEE IN THE FOREGOING PROPERTY OF THE LEASE TRUST HAVE BEEN
PLEDGED TO THE INDENTURE TRUSTEE TO SECURE THE PAYMENT OF THE SENIOR NOTES.
A-5
<PAGE> 81
The Lease Trust Certificates represent interests in the Lease
Trust only and do not represent interests in, recourse to or obligations of the
Depositor, Ford Credit or any of their respective affiliates.
Under the Lease Trust Agreement, there will be distributed on
______ 15 and _____ 15, of each year, commencing ______ 15, 199_, (or, if such
15th day is not a Business Day, the next Business Day) (each, a "Semiannual
Payment Date"), to the Person in whose name this Lease Trust Certificate is
registered at the close of business on the last day of the preceding calendar
month) (the "Record Date") such Lease Trust Certificateholder's percentage
interest in the amount to be distributed with respect to the Aggregate
Certificate Balance of the Lease Trust Certificates on such Semiannual Payment
Date.
THE HOLDER OF THIS LEASE TRUST CERTIFICATE ACKNOWLEDGES AND
AGREES THAT ITS RIGHTS TO RECEIVE PAYMENTS IN RESPECT OF THIS LEASE TRUST
CERTIFICATE ARE SUBORDINATED TO THE RIGHTS OF THE SENIOR NOTEHOLDERS AND
SUBORDINATED NOTEHOLDER AS DESCRIBED IN THE INDENTURE AND THE LEASE TRUST
AGREEMENT, AS APPLICABLE.
It is the intent of the Depositor and Lease Trust
Certificateholders that the Lease Trust Certificates be treated as indebtedness
of the Depositor and Ford Credit Leasing for purposes of federal income tax or
State income and franchise taxes. If, however, the Lease Trust is
characterized as a separate entity for federal income tax purposes, it is the
intention of the parties that it qualify as a partnership for such purposes and
the Lease Trust Certificateholders (including the Depositor) will be treated as
partners in that partnership. The Depositor and the other Lease Trust
Certificateholders by acceptance of a Lease Trust Certificate, agree to take no
action inconsistent with such tax treatment of the Lease Trust Certificates.
Each Lease Trust Certificateholder by accepting a Lease Trust
Certificate covenants and agrees: (a) for a period of one year and one day
after payment in full of the Series 1996-1 Certificates, it will not institute
against the Depositor or the Lease Trust, or join in the institution against
the Depositor or the Lease 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
A-6
<PAGE> 82
Lease Trust Certificates, the Subordinated Notes, the Senior Notes, the Lease
Trust Agreement or any of the other Basic Documents and (b) for a period of one
year and one day after payment in full of all amounts due under any Series of
Specified Beneficial Certificates, including the Series 1996-1 Certificates,
they will not institute or join in the instituting, any bankruptcy,
reorganization, insolvency or liquidation proceeding against Ford Credit
Leasing without the consent of 100% of the Holders of the then outstanding
Specified Beneficial Certificates (excluding Ford Credit Leasing, the Lease
Trust or any of their respective Affiliates).
Distributions on this Lease Trust Certificate will be made as
provided in the Lease Trust Agreement by the Lease Trustee by wire transfer (to
holders of Lease Trust Certificates in original denominations of $[1,000,000]
or more) or by check mailed to the Lease Trust Certificateholder of record in
the Lease Trust Register without the presentation or surrender of this Lease
Trust Certificate or the making of any notation hereon. Except as otherwise
provided in the Lease Trust Agreement and notwithstanding the above, the final
distribution on this Lease Trust Certificate will be made after due notice by
the Lease Trustee of the pendency of such distribution and only upon
presentation and surrender of this Lease Trust Certificate at the office or
agency maintained for the purpose by the Lease Trustee in Delaware.
Reference is hereby made to the further provisions of this
Lease Trust 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 Lease Trustee, by manual
signature, this Lease Trust Certificate shall not entitle the holder hereof to
any benefit under the Lease Trust Agreement or be valid for any purpose.
THIS LEASE TRUST CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF
LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
A-7
<PAGE> 83
IN WITNESS WHEREOF, the Lease Trustee, on behalf of the Lease
Trust and not in its individual capacity, has caused this Lease Trust
Certificate to be duly executed.
FORD CREDIT AUTO LEASE TRUST 1996-1
By: PNC BANK, DELAWARE
as Lease Trustee
Dated: By: ____________________________
Authorized Officer
A-8
<PAGE> 84
(Reverse of Lease Trust Certificate)
The Lease Trust Certificates do not represent an obligation
of, or an interest in, the Depositor, the Administrative Agent, the Lease
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 or in the Lease Trust Agreement or the other Basic
Documents. In addition, this Lease Trust Certificate is not guaranteed by any
governmental agency or instrumentality and is limited in right of payment to
certain collections and recoveries (and certain other amounts) respecting the
assets of the Lease Trust, all as more specifically set forth in the Indenture
and the Lease Trust Agreement. The Lease Trustee will furnish, upon the
request of any holder of a Lease Trust Certificate, such information as is
specified in paragraph (d)(4) of Rule 144A with respect to the Lease Trust. A
registration statement, which includes the Lease Trust Agreement as an exhibit
thereto, has been filed with the Securities and Exchange Commission with
respect to the Senior Notes of the Lease Trust issued concurrently with this
Lease Trust Certificate.
The Lease Trust Agreement may be amended by the Depositor and
the Lease Trustee, with prior written notice by the Depositor to the Rating
Agencies, without the consent of any of the Senior Noteholders, the
Subordinated Noteholders or the Lease Trust Certificateholders, to cure any
ambiguity or defect, to correct or supplement any provisions in the Lease Trust
Agreement, to add any provisions to or change in any manner or eliminate any of
the provisions in the Lease Trust Agreement or to modify in any manner the
rights of the Senior Noteholders, the Subordinated Noteholders or the Lease
Trust Certificateholders; provided, however, that such action shall not, (i) as
evidenced by an Opinion of Counsel, materially adversely affect the interests
of the Indenture Trustee, any Senior Noteholder, Subordinated Noteholder or
Lease Trust Certificateholder unless 100% of the holders of the Senior Notes,
the Subordinated Notes and the Lease Trust Certificates materially adversely
affected thereby have consented to such amendment, (ii) as confirmed by each
Rating Agency, cause the then current rating of either Class of Senior Notes or
the Lease Trust Certificates to be withdrawn or reduced or (iii) as evidenced
by an Opinion of Counsel cause the
A-9
<PAGE> 85
Lease Trust to be classified as an "association" (or publicly traded
partnership) taxable as a corporation for federal income tax purposes.
The Lease Trust Agreement may also be amended from time to
time by the Depositor and the Lease Trustee, with prior written notice to the
Rating Agencies, with the consent of the Senior Noteholders holding not less
than a majority of the Outstanding Amount of the Senior Notes and, to the
extent affected thereby, the consent of Subordinated Noteholders holding not
less than a majority of the Outstanding Amount of the Subordinated Notes and
the consent of Lease Trust Certificateholders holding 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 the Lease
Trust Agreement or of modifying in any manner the rights of the Senior
Noteholders, the Subordinated Noteholders or the Lease Trust
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 distributions that are required to be made for the benefit of the
Senior Noteholders, the Subordinated Noteholders or the Lease Trust
Certificateholders, (b) reduce the percentage of the Outstanding Amount of the
Senior Notes and the Subordinated Notes and the Aggregate Certificate Balance
required to consent to any such amendment, without the consent of the holders
of 100% of the Outstanding Amount of the Senior Notes or Subordinated Notes or
of 100% of the Aggregate Certificate Balance, as the case may be, or (c) as
evidenced by an Opinion of Counsel to the Indenture Trustee and the Lease
Trustee to the effect that such amendment shall not (i) affect the treatment of
the Senior Notes as debt for federal income tax purposes, (ii) be deemed to
cause a taxable exchange of the Senior Notes for federal income tax purposes or
(iii) cause the Lease Trust to be taxable as an "association" or publicly
traded partnership taxable as a corporation for federal income tax purposes.
Notwithstanding the foregoing, the Lease Trust Agreement may
be amended at any time by the Depositor (acting at the direction of Ford Credit
and Ford Credit Leasing) and the Lease Trustee to the extent reasonably
necessary to assure that none of FCTT, the Lease Trust or the Depositor will be
classified as an association (or publicly traded partnership) taxable as a
corporation for federal income tax purposes.
A-10
<PAGE> 86
[TEXT OF LEASE TRUST CERTIFICATES ISSUED TO THE DEPOSITOR AND
FORD CREDIT LEASING PURSUANT TO SECTION 3.10(A) OF THE LEASE TRUST AGREEMENT:
As provided in the Lease Trust Agreement, the transfer of this Lease Trust
Certificate is prohibited; provided, that upon a dissolution or termination of
the Depositor this Lease Trust Certificate, if held by the Depositor, shall be
distributed to the beneficiaries of the Depositor in accordance with their
percentage interests therein.]
[TEXT OF OTHER LEASE TRUST CERTIFICATES: This Least Trust
Certificate may be transferred only under the circumstances described on the
face of this Lease Trust Certificate and in Section 3.4 of the Lease Trust
Agreement, which, among other things, requires that each prospective transferee
represent in writing in the form provided as an exhibit to the Lease Trust
Agreement that it will not acquire or transfer the Lease Trust Certificate
through an established securities market, is not and will not become, except in
certain circumstances, a partnership, Subchapter S corporation or grantor trust
for U.S. federal income tax purposes, and will not acquire the Lease Trust
Certificate for or on behalf of an employee benefit plan, except in certain
limited circumstances.]
Any attempted transfer in contravention of the restrictions and conditions on
the face of this Lease Trust Certificate and in the Lease Trust Agreement shall
be null and void. As provided in the Lease Trust Agreement, the transfer of
this Lease Trust Certificate is registerable in the Lease Trust Register upon
surrender of this Lease Trust Certificate for registration of transfer at the
offices or agencies of the Lease Trust Registrar maintained by the Lease
Trustee in Wilmington, Delaware, accompanied by the written representations
required by the Lease Trust Agreement and a written instrument of transfer in
form satisfactory to the Lease Trust Registrar duly executed by the Lease Trust
Certifica- teholder hereof or such Lease Trust Certificateholder's attorney
duly authorized in writing, and thereupon one or more new Lease Trust
Certificates of authorized denominations evidencing the same aggregate
denomination will be issued to the designated transferee. The initial Lease
Trust Registrar appointed under the Lease Trust Agreement is PNC Bank,
Delaware, 222 Delaware Avenue, Wilmington, Delaware 19801.
A-11
<PAGE> 87
Except for Lease Trust Certificates issued to the Depositor
and Ford Credit Leasing, the Lease Trust Certificates are issuable only as
registered Lease Trust Certificates without coupons in denominations of
$1,000,000 and in integral multiples of $1,000 in excess thereof. Lease Trust
Certificates are exchangeable for new Lease Trust Certificates of authorized
denominations evidencing the same aggregate denomination, as requested by the
Lease Trust Certificateholder surrendering the same. No service charge will be
made for any such registration of transfer or exchange, but the Lease Trustee
or the Lease Trust Registrar may require payment of a sum sufficient to cover
any tax or governmental charge payable in connection therewith.
The Lease Trustee, the Lease Trust Registrar and any agent of
the Lease Trustee or the Lease Trust Registrar may treat the Person in whose
name this Lease Trust Certificate is registered as the owner hereof for all
purposes, and none of the Lease Trustee, the Lease Trust Registrar or any such
agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Lease
Trust Agreement and the Lease Trust created thereby shall terminate upon the
payment to Lease Trust Certificateholders of all amounts required to be paid to
them pursuant to the Lease Trust Agreement and the Indenture and the
disposition of all property held as part of the Lease Trust.
A-12
<PAGE> 88
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 Lease Trust Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing
__________________________________________________ Attorney to transfer said
Lease Trust Certificate on the books of the Lease Trust 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 Lease Trust Certificate in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by a member firm of the New York Stock Exchange or
a commercial bank or trust company.
A-13
<PAGE> 89
EXHIBIT B
FORM OF SUBORDINATED NOTE
[THIS SUBORDINATED NOTE
MAY NOT BE TRANSFERRED
BY A STOCK POWER]
FORD CREDIT AUTO LEASE TRUST 1996-1
_____% ASSET BACKED SUBORDINATED NOTE
Ford Credit Auto Lease Trust 1996-1 (the "Lease Trust"), a
trust created pursuant to a trust agreement dated as of ______ __, 1996 (the
"Lease Trust Agreement") between ______, not in its individual capacity but
solely as trustee of RCL Trust 1996-1, as Depositor and PNC Bank, Delaware, not
in its individual capacity but solely as trustee of the Lease Trust (the "Lease
Trustee"), for value received, hereby promises to pay to RCL TRUST 1996-1, upon
presentation and surrender of this Subordinated Note the principal sum of _____
DOLLARS (U.S. $_____) on the ______ __, ____ Payment Date, or earlier, all in
accordance with the Lease Trust Agreement and the Lease Trust Paying Agent
Agreement. The Lease Trust will pay interest on this Subordinated Note at the
rate per annum shown above on each Payment Date until the principal of this
Subordinated Note is paid or made available for payment, on the principal
amount of this Subordinated Note outstanding on the preceding Payment Date
(after giving effect to all payments of principal made on such preceding
Payment Date) in accordance with the Lease Trust Agreement and the Lease Trust
Paying Agent Agreement.
THE HOLDER OF THIS SUBORDINATED NOTE ACKNOWLEDGES AND AGREES
THAT ITS RIGHTS TO RECEIVE PAYMENTS IN RESPECT OF THIS SUBORDINATED NOTE ARE
SUBORDINATED TO THE RIGHTS OF THE SENIOR NOTEHOLDERS AS DESCRIBED IN THE
INDENTURE AND THE LEASE TRUST AGREEMENT, AS APPLICABLE.
Unless the certificate of authentication hereon has been
executed by the Lease Trustee whose name appears below by manual signature,
this Subordinated Note shall not be entitled to any benefit under the Lease
Trust
B-1
<PAGE> 90
Agreement referred to on the reverse hereof, or be valid or obligatory for any
purpose.
B-2
<PAGE> 91
IN WITNESS WHEREOF, the Lease Trust has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer as of the date set
forth below.
Date: ____ __, ____ FORD CREDIT AUTO LEASE TRUST 1996-1,
by PNC BANK, DELAWARE, not in its
individual capacity but solely as
Lease Trustee under the Lease Trust
Agreement
By:_________________________
Name: Michael B. McCarthy
Title: Vice President
<PAGE> 92
LEASE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Subordinated Notes designated above and
referred to in the within-mentioned Lease Trust Agreement.
Date: ____ __, ____ PNC BANK, DELAWARE, not in its
individual capacity but solely
as Lease Trustee under the Lease
Trust Agreement
By:______________________________
Authorized Signatory
<PAGE> 93
EXHIBIT C
FORM OF RULE 144A TRANSFEROR CERTIFICATE
[Date]
PNC Bank, Delaware
as Lease Trustee and
Lease Trust Registrar
222 Delaware Avenue
Wilmington, Delaware 19801
Ladies and Gentlemen:
This is to notify you as to the transfer of $ [*] in
denomination of Asset Backed Lease Trust Certificates (the "Certificates") of
Ford Credit Auto Lease Trust 1996-1 (the "Issuer").
The undersigned is the holder of the Certificates and with
this notice hereby deposits with the Lease Trustee $ [*] in denomination of
Certificates and requests that Certificates in the same aggregate denomination
be issued, executed and authenticated and registered to the purchaser on
___________, 199_, as specified in the Lease Trust Agreement dated as of ______
__, 1996 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 and, (iii) if the purchaser has purchased the Certificates for one or
more accounts for which it is acting as fiduciary or agent, (A) each such
account is a qualified institutional buyer and (B) the purchaser is acquiring
Certificates for its own account or for one or more institutional accounts for
which it is acting as fiducia
________
[* minimum of $[1,000,000]] C-1
<PAGE> 94
ry or agent in a minimum amount equivalent to not less than $[1,000,000] for
each such account.
Very truly yours,
[NAME OF HOLDER
OF CERTIFICATES]
By:
---------------------------
Name:
Title:
C-2
<PAGE> 95
EXHIBIT D
FORM OF INVESTMENT LETTER-
QUALIFIED INSTITUTIONAL BUYER
[Date]
Ford Credit Auto Lease Trust 1996-1
as Issuer
PNC Bank, Delaware
as Lease Trustee and
Lease Trust Registrar
222 Delaware Avenue
Wilmington, Delaware 19801
J.P. Morgan Securities Inc.
as Initial Purchaser in connection with
the Offering Circular referred to below
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
In connection with our proposed purchase of the __% Asset Backed Lease
Trust Certificates (the "Certificates") of Ford Credit Auto Lease Trust 1996-1
(the "Issuer"), a trust formed by RCL Trust 1996-1 (the "Depositor"), we
confirm that:
1. We have received a copy of the Offering Circular (the
"Offering Circular") dated ______ __, 1996, relating to the Certificates and
such other information as we deem necessary in order to make our investment
decision. We understand that the Offering Circular 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 in the Lease Trust Agreement dated as of ______ __, 1996 (the "Lease
Trust Agreement") relating to the Certificates and the 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").
D-1
<PAGE> 96
3. We have neither acquired nor will we Transfer any
Certificate we purchase (or any interest therein) or cause any such
Certificates (or any interest therein) to be marketed on or through an
"established securities market" within the meaning of section 7704(b)(1) of the
Internal Revenue Code of 1986, as amended (the "Code"), including, without
limitation, an over-the-counter-market or an interdealer quotation system that
regularly disseminates firm buy or sell quotations.
4. We either (a) are not, and will not become, a partnership,
Subchapter S corporation, or grantor trust for U.S. federal income tax purposes
or (b) are such an entity, but none of the direct or indirect beneficial owners
of any of the interests in us have allowed or caused, or will allow or cause,
[80]% or more (or such other percentage as the Depositor may establish prior to
the time of such proposed Transfer) of the value of such interests to be
attributable to our ownership of Certificates.
5. We understand that no subsequent Transfer of the
Certificates is permitted unless (A) such Transfer is of a Certificate with a
denomination of at least $[1,000,000] and (B) the Depositor and the Lease
Trustee each consent in writing to the proposed Transfer, which consent shall
be granted unless either of the Depositor or the Lease Trustee, acting pursuant
to an opinion of counsel, determines that such Transfer would create a material
risk that the Issuer or Ford Credit Titling Trust would be classified for
federal or any applicable state tax purposes as an association or publicly
traded partnership taxable as a corporation; provided, however, that any
attempted Transfer that would either cause (i) the number of Targeted Holders
of Certificates and the Issuer's subordinated notes to exceed [ten] or, (ii)
the number of Targeted Holders of interests in Ford Credit Titling Trust for
which an opinion of counsel is not obtained to the effect that such interests
would be characterized as debt for federal income tax purposes to exceed
ninety-nine, shall be a Void Transfer. As used herein, "Targeted Holder" means
each holder of a right to receive interest or principal with respect to
Certificates or the Issuer's subordinated notes; and provided further that any
person holding more than one interest each of which would cause such person to
be a Targeted Holder shall be treated as a single Targeted Holder.
D-2
<PAGE> 97
6. We understand that the opinion of counsel that the Issuer
is not a publicly traded partnership taxable as a corporation is dependent in
part on the accuracy of the representations in paragraphs 3, 4 and 5.
7. 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 the account of a QIB for investment
purposes and not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act, and have such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of our investment in the Certificates, and we and any accounts
for which we are acting are each able to bear the economic risk of our or their
investment. We acknowledge that the sale of the Certificates to us is being
made in reliance on Rule 144A.
8. We are acquiring each of the Certificates purchased by us
for our own account or for a single account (which is a QIB and from which no
resale, pledge, or other transfer may be made) as to which we exercise sole
investment discretion.
9. We are not (A) an employee benefit plan (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) that is subject to Title I of ERISA, (B) a plan described in Section
4975(e)(1) of the Internal Revenue Code of 1986, as amended (the "Code"), (C) a
governmental plan, as defined in Section 3(32) of ERISA, subject to any
federal, State or local law which is, to a material extent, similar to the
provisions of Section 406 of ERISA or Section 4975 of the Code, (D) an entity
whose underlying assets include plan assets by reason of a plan investment in
the entity (within the meaning of Department of Labor Regulation 29 C.F.R.
Section 2510.3-101) or (E) a person investing "plan assets" of any such plan
(excluding, for purposes of this clause (E), any entity registered under the
Investment Company Act of 1940, as amended).
10. We are a person who is either (A) (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
organized in or under the laws of the United States or any political
subdivision thereof or (iii) a person not described in (i) or (ii) whose
ownership of the Certificates is effectively connected with such person's
conduct of a trade or business
D-3
<PAGE> 98
within the United States (within the meaning of the Code) and its ownership of
any interest in a Certificate will not result in any withholding obligation
with respect to any payments with respect to the Certificates by any person
(other than withholding, if any, under Section 1446 of the Code) or (B) an
estate or trust the income of which is includible in gross income for United
States federal income tax purposes, regardless of source. We agree that we
will provide a certification of non-foreign status signed under penalties of
perjury and, alternatively, that if we are a person described in clause
(A)(iii) above, we will furnish to the Depositor and the Lease Trustee a
properly executed IRS Form 4224 and a new Form IRS 4224 upon the expiration or
obsolescence of any previously delivered form (and such other certifications,
representations or opinions of counsel as may be requested by the Depositor and
the Lease Trustee).
11. We understand that any purported Transfer of any
Certificate (or any interest therein) in contravention of the restrictions and
conditions (including any violation of the representation in paragraph 4 by an
investor who continues to hold such Certificates occurring any time after the
Transfer in which it acquired such Certificates) in paragraphs 1 through 10
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.
12. 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 Lease Trust Registrar a letter substantially in the form of this Exhibit D
or Exhibit E to the Lease Trust Agreement, as applicable.
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-4
<PAGE> 99
EXHIBIT E
FORM OF INVESTMENT LETTER-
INSTITUTIONAL ACCREDITED INVESTOR
[Date]
Ford Credit Auto Lease Trust 1996-1
as Issuer
PNC Bank, Delaware
as Lease Trustee and
Lease Trust Registrar
222 Delaware Avenue
Wilmington, Delaware 19801
J.P. Morgan Securities Inc.
as Initial Purchaser in connection with
the Offering Circular referred to below
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
In connection with our proposed purchase of the __% Asset Backed Lease
Trust Certificates (the "Certificates") of Ford Credit Auto Lease Trust 1996-1
(the "Issuer"), a trust formed by RCL Trust 1996-1 (the "Depositor"), we
confirm that:
1. We have received a copy of the Offering Circular (the
"Offering Circular") dated ______ __, 1996, relating to the Certificates and
such other information as we deem necessary in order to make our investment
decision. We understand that the Offering Circular 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 in the Lease Trust Agreement dated as of ______ __, 1996 (the "Lease
Trust Agreement") relating to the Certificates and the 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").
E-1
<PAGE> 100
3. We have neither acquired nor will we Transfer any
Certificate we purchase (or any interest therein) or cause any such
Certificates (or any interest therein) to be marketed on or through an
"established securities market" within the meaning of section 7704(b)(1) of the
Internal Revenue Code of 1986, as amended (the "Code"), including, without
limitation, an over-the-counter-market or an interdealer quotation system that
regularly disseminates firm buy or sell quotations.
4. We either (a) are not, and will not become, a partnership,
Subchapter S corporation, or grantor trust for U.S. federal income tax purposes
or (b) are such an entity, but none of the direct or indirect beneficial owners
of any of the interests in us have allowed or caused, or will allow or cause,
[80]% or more (or such other percentage as the Depositor may establish prior to
the time of such proposed Transfer) of the value of such interests to be
attributable to our ownership of Certificates.
5. We understand that no subsequent Transfer of the
Certificates is permitted unless (A) such Transfer is of a Certificate with a
denomination of at least $[1,000,000] and (B) the Depositor and the Lease
Trustee each consent in writing to the proposed Transfer, which consent shall
be granted unless either of the Depositor or the Lease Trustee, acting pursuant
to an opinion of counsel, determines that such Transfer would create a material
risk that the Issuer or Ford Credit Titling Trust would be classified for
federal or any applicable state tax purposes as an association or publicly
traded partnership taxable as a corporation; provided, however, that any
attempted Transfer that would either cause (i) the number of Targeted Holders
of Certificates and the Issuer's subordinated notes to exceed [ten] or, (ii)
the number of Targeted Holders of interests in Ford Credit Titling Trust for
which an opinion of counsel is not obtained to the effect that such interests
would be characterized as debt for federal income tax purposes to exceed
ninety-nine, shall be a Void Transfer. As used herein, "Targeted Holder" means
each holder of a right to receive interest or principal with respect to
Certificates or the Issuer's subordinated notes; and provided further that any
person holding more than one interest each of which would cause such person to
be a Targeted Holder shall be treated as a single Targeted Holder.
E-2
<PAGE> 101
6. We understand that the opinion of counsel that the Issuer
is not a publicly traded partnership taxable as a corporation is dependent in
part on the accuracy of the representations in paragraphs 3, 4 and 5 and that
in addition to being subject to having its purchase rescinded, it will be
liable for damages.
7. 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 investment purposes and not with a view to, or
for offer or sale in connection with, any distribution in violation of the
Securities Act, and have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of our
investment in the Certificates, and we and any accounts for which we are acting
are each able to bear the economic risk of our or their investment.
8. We are acquiring each of the Certificates purchased by us
for our own account or for a single account (each of which is an institutional
"accredited investor" and from which no resale, pledge or other transfer may be
made) as to which we exercise sole investment discretion.
9. We are not (A) an employee benefit plan (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) that is subject to Title I of ERISA, (B) a plan described in Section
4975(e)(1) of the Internal Revenue Code of 1986, as amended (the "Code"), (C) a
governmental plan, as defined in Section 3(32) of ERISA, subject to any
federal, State or local law which is, to a material extent, similar to the
provisions of Section 406 of ERISA or Section 4975 of the Code, (D) an entity
whose underlying assets include plan assets by reason of a plan investment in
the entity (within the meaning of Department of Labor Regulation 29 C.F.R.
Section 2510.3-101) or (E) a person investing "plan assets" of any such plan
(excluding, for purposes of this clause (E), any entity registered under the
Investment Company Act of 1940, as amended).
10. We are a person who is either (A) (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
organized in or under the laws of the United States or any political
subdivision thereof or (iii) a person not described in (i) or (ii) whose
ownership of the Certificates is effectively con
E-3
<PAGE> 102
nected with such person's conduct of a trade or business within the United
States (within the meaning of the Code) and its ownership of any interest in a
Certificate will not result in any withholding obligation with respect to any
payments with respect to the Certificates by any person (other than
withholding, if any, under Section 1446 of the Code) or (B) an estate or trust
the income of which is includible in gross income for United States federal
income tax purposes, regardless of source. We agree that we will provide a
certification of non-foreign status signed under penalties of perjury and,
alternatively, that if we are a person described in clause (A)(iii) above, we
will furnish to the Depositor and the Lease Trustee a properly executed IRS
Form 4224 and a new IRS Form 4224 upon the expiration or obsolescence of any
previously delivered form (and such other certifications, representations or
opinions of counsel as may be requested by the Depositor and the Lease
Trustee).
11. We understand that any purported Transfer of any
Certificate (or any interest therein) in contravention of the restrictions and
conditions (including any violation of the representation in paragraph 4 by an
investor who continues to hold such Certificates occurring any time after the
Transfer in which it acquired such Certificates) in paragraphs 1 through 10
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.
12. 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 Lease Trust Registrar a letter substantially in the form of this
Exhibit E or Exhibit D to the Lease Trust Agreement, as applicable.
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:
E-4
<PAGE> 103
Securities To Be Purchased:
$ principal amount of Certificates
E-5
<PAGE> 1
Exhibit 4.2
===============================================================================
FORD CREDIT AUTO LEASE TRUST 1996-1
__% Class A-1 Asset Backed Senior Notes
__% Class A-2 Asset Backed Senior Notes
------------------------
INDENTURE
Dated as of November __, 1996
------------------------
THE CHASE MANHATTAN BANK
Indenture Trustee
===============================================================================
<PAGE> 2
CROSS REFERENCE TABLE(1)
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ---------
<S> <C>
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.(2)
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8; 6.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.14
(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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7
(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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.6
</TABLE>
__________________________________
1 Note: This Cross Reference Table shall not, for any purpose, be
deemed to be part of this Indenture.
2 N.A. means Not Applicable.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Incorporation by Reference of Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE II
THE SENIOR NOTES
Section 2.1 Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.2 Execution, Authentication and Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.3 Temporary Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.4 Registration; Registration of Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.5 Mutilated, Destroyed, Lost or Stolen Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.6 Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.7 Payment of Principal and Interest; Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.8 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.9 Release of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.10 Book-Entry Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.11 Notices to Clearing Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.12 Definitive Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.13 Authenticating Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE III
COVENANTS
Section 3.1 Payment of Principal and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.2 Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.3 Money for Payments To Be Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.4 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.5 Protection of Indenture Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.6 Opinions as to Indenture Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 3.7 Performance of Obligations; Administration of Specified Assets . . . . . . . . . . . . . . . . . 27
Section 3.8 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 3.9 Annual Statement as to Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3.10 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
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Section 3.11 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.12 No Other Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.13 No Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.14 Administrative Agent's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.15 Guarantees, Loans, Advances and Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.16 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.17 [Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.18 Notice of Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3.19 Further Instruments and Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.1 Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 4.2 Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 4.3 Repayment of Moneys Held by Paying
Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE V
EVENTS OF DEFAULT
Section 5.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.2 Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.3 Collection of Indebtedness and Suits for Enforcement by Indenture Trustee . . . . . . . . . . . . 37
Section 5.4 Remedies; Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.5 Optional Preservation of the Series 1996-1 Assets . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.6 Limitation of Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 5.7 Unconditional Rights of Senior Noteholders To Receive Principal and Interest . . . . . . . . . . 45
Section 5.8 Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 5.9 Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 5.10 Delay or Omission Not a Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 5.11 Control by Senior Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 5.12 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 5.13 Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 5.14 Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 5.15 Action on Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 5.16 Performance and Enforcement of Certain Obligations . . . . . . . . . . . . . . . . . . . . . . . 48
</TABLE>
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ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.1 Duties of Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 6.2 Rights of Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 6.3 Individual Rights of Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 6.4 Indenture Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 6.5 Notice of Defaults; Bankruptcy of RCL Trust 1996-1 or Ford Credit Leasing . . . . . . . . . . . . 53
Section 6.6 Reports by Indenture Trustee to Senior Noteholders . . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.7 Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.8 Replacement of Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 6.9 Successor Indenture Trustee by Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.10 Appointment of Co-Indenture Trustee or Separate Indenture Trustee . . . . . . . . . . . . . . . . 57
Section 6.11 Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 6.12 Preferential Collection of Claims Against Lease Trustee . . . . . . . . . . . . . . . . . . . . . 59
Section 6.13 Indenture Trustee as Holder of Series 1996-1 Certificates . . . . . . . . . . . . . . . . . . . . 60
ARTICLE VII
SENIOR NOTEHOLDERS' LISTS AND REPORTS
Section 7.1 Lease Trustee To Furnish Indenture Trustee Names and Addresses of Senior Noteholders . . . . . . 60
Section 7.2 Preservation of Information; Communications to Senior Noteholders . . . . . . . . . . . . . . . . 61
Section 7.3 Reports by Lease Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 7.4 Reports by Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.1 Collection of Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 8.2 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 8.3 Cash Collateral Account Certificate; Disbursement and Payment Instructions . . . . . . . . . . . 68
Section 8.4 Disbursement of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 8.5 General Provisions Regarding Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 8.6 Release of Indenture Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
</TABLE>
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ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.1 Supplemental Indentures Without Consent of Senior Noteholders . . . . . . . . . . . . . . . . . . 75
Section 9.2 Supplemental Indentures with Consent of Senior Noteholders . . . . . . . . . . . . . . . . . . . 77
Section 9.3 Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 9.4 Effect of Supplemental Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 9.5 Conformity With Trust Indenture Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 9.6 Reference in Senior Notes to Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE X
REDEMPTION OF SENIOR NOTES
Section 10.1 Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 10.2 Form of Redemption Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 10.3 Senior Notes Payable on Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
ARTICLE XI
MISCELLANEOUS
Section 11.1 Compliance Certificates and Opinions, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 11.2 Form of Documents Delivered to Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 11.3 Acts of Senior Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 11.4 Notices, etc., to Indenture Trustee, Lease Trustee and Rating Agencies . . . . . . . . . . . . . 87
Section 11.5 Notices to Senior Noteholders; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 11.6 Conflict with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 11.7 Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 11.8 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 11.9 Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 11.10 Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 11.11 Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 11.12 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 11.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 11.14 Recording of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 11.15 Trust Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 11.16 No Petition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 11.17 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
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Exhibit A-1 Form of Class A-1 Senior Note
Exhibit A-2 Form of Class A-2 Senior Note
Exhibit B Form of Depository Agreement
</TABLE>
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<PAGE> 8
INDENTURE dated as of November __, 1996, between PNC BANK,
DELAWARE, a Delaware banking corporation, not in its individual capacity but
solely as trustee (together with its successors under the Lease Trust
Agreement, the "Lease Trustee") of FORD CREDIT AUTO LEASE TRUST 1996-1 (the
"Lease Trust"), and THE CHASE MANHATTAN BANK, a New York corporation, not in
its individual capacity but solely as trustee hereunder (together with its
successors hereunder, the "Indenture Trustee").
PRELIMINARY STATEMENT
The Lease Trustee is duly authorized to execute and deliver
this Indenture on behalf of the Lease Trust to provide for the Senior Notes
issuable as provided in this Indenture. All covenants and agreements made by
the Lease Trust herein are for the benefit and security of the Senior
Noteholders and the Indenture Trustee. The Lease Trustee is entering into this
Indenture on behalf of the Lease Trust, and the Indenture Trustee is accepting
the trusts created hereby, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged.
All things necessary to make this Indenture a valid agreement
of the Lease Trust in accordance with the agreement's terms have been done.
GRANTING CLAUSE
The Lease Trust hereby Grants to the Indenture Trustee at the
Closing Date, as Indenture Trustee for the benefit of the Senior Noteholders,
all of the Lease Trust's right, title and interest in and to (i) the Lease
Trust Estate and (ii) all present and future claims, demands, causes 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, 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
<PAGE> 9
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
Senior Notes, equally and ratably without prejudice, priority or distinction
except as set forth herein, 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
Senior Noteholders, acknowledges such Grant and accepts the trusts under this
Indenture in accordance with the provisions of this Indenture.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions. (a) Whenever used in this
Indenture capitalized terms have the meanings assigned to them herein or, if
not defined herein, as defined in Appendix A attached hereto. To the extent
that the definitions set forth herein conflict with the definitions set forth
in Appendix A, or incorporated by reference therein, the definitions set forth
herein shall be controlling. All references to Articles, Sections, and
subsections are to Articles, Sections and subsections in this Indenture unless
otherwise specified.
"Act" has the meaning set forth in Section 11.3(a).
"Administrative Agent Default" has the meaning set forth in
Section 3.7(d).
"Authorized Officer" means, with respect to the Lease Trust,
any officer within the Corporate Trust Department (or any successor business
unit) of the Lease Trustee, including without limitation any secretary,
assistant secretary, vice president, assistant vice president, senior corporate
trust officer, corporate trust officer, assistant treasurer, senior trust
adminis-
<PAGE> 10
tration officer, assistant treasurer, senior trust administration officer, trust
administration officer, senior trust operations officer or trust operations
officer and, so long as the Administrative Agency Agreement is in effect, any
person who is authorized to act for the Administrative Agent in matters
relating to the Lease Trust and to be acted upon by the Administrative Agent
pursuant to the Administrative Agency Agreement and who is identified on the
list of authorized persons delivered by the Administrative Agent to the
Indenture Trustee on the Closing Date (as such list may be modified or
supplemented from time to time thereafter); provided, however, that for
purposes of Section 3.9 such officer of the Administrative Agent must be any of
the principal executive officer, the principal financial officer or the
principal accounting officer.
"Book-Entry Senior Notes" means a beneficial interest in the
Senior Notes, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 2.10.
"Class A-1 Senior Notes" means the __% Class A-1 Asset Backed
Senior Notes, substantially in the form of Exhibit A-1.
"Class A-2 Senior Notes" means the __% Class A-2 Asset Backed
Senior Notes, substantially in the form of Exhibit A-2.
"Clearing Agency" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means 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.
"Collateral" has the meaning set forth in the Granting Clause
of this Indenture.
"Commission" means the Securities and Exchange Commission.
3
<PAGE> 11
"Corporate Trust Office" means the principal office of the
Indenture Trustee at which at any particular time its corporate trust business
shall be administered which office at the date of the execution of this
Indenture is 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 Senior Noteholders and the Lease Trustee, or the principal
corporate trust office of any successor Indenture Trustee (the address of which
the successor Indenture Trustee will notify the Senior Noteholders and the
Lease Trustee).
"Default" means any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
"Definitive Senior Notes" has the meaning set forth in Section
2.10.
"Depository Agreement" means the agreement among the Lease
Trust, the Indenture Trustee and The Depository Trust Company, as the initial
Clearing Agency, dated as of the Closing Date, substantially in the form of
Exhibit B.
"Disbursement and Payment Instructions" has the meaning set
forth in Section 8.3(b).
"Event of Default" has the meaning set forth in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Executive Officer" means, 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.
"Grant" means mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create and grant a lien
upon and a security interest in and right of set-off against, deposit, set over
and confirm pursuant to this Indenture. A Grant of
4
<PAGE> 12
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 moneys 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.
"Indenture Trust Estate" means all money, instruments, rights
and other property that are subject or intended to be subject to the lien and
security interest of this Indenture for the benefit of the Senior Noteholders
(including, without limitation, the Collateral Granted to the Indenture
Trustee), including all proceeds.
"Independent" means, when used with respect to any specified
Person, that the Person (a) is in fact independent of the Lease Trust, any
other obligor upon the Senior Notes, the Administrative Agent and any Affiliate
of any of the foregoing Persons, (b) does not have any direct financial
interest or any material indirect financial interest in the Lease Trust, any
such other obligor, the Administrative Agent or any Affiliate of any of the
foregoing Persons and (c) is not connected with the Lease Trust, any such other
obligor, the Administrative Agent 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" means 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, 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.
5
<PAGE> 13
"Issuer Order" and "Issuer Request" means a written order or
request of the Lease Trust signed in the name of the Lease Trust by any one of
its Authorized Officers and delivered to the Indenture Trustee.
"Note Pool Factor" shall mean, with respect to each Class of
Senior Notes on any Payment Date, the seven digit decimal equivalent of a
fraction the numerator of which is the Outstanding Amount of such Class on the
Payment Date (after giving effect to any payment of principal on such Payment
Date) and the denominator of which is the Outstanding Amount of such Class on
the Closing Date.
"Notice of Default" has the meaning set forth in Section
5.1(iv).
"Officers' Certificate" means a certificate signed by any
Authorized Officer of the Lease Trustee, under the circumstances described in,
and otherwise complying with, the applicable requirements of Section 11.1, and
delivered to the Indenture Trustee. Unless otherwise specified, any reference
in this Indenture to an Officers' Certificate shall be to an Officer's
Certificate of any Authorized Officer of the Lease Trustee.
"Opinion of Counsel" means one or more written opinions of
counsel who may, except as otherwise expressly provided in this Indenture, be
employees of or counsel to the Lease Trustee or the Administrative Agent and
who shall be satisfactory to the Indenture Trustee, and which opinion or
opinions shall be addressed to the Indenture Trustee, shall comply with any
applicable requirements of Section 11.1, and shall be in form and substance
satisfactory to the Indenture Trustee.
"Outstanding" means, as of the date of determination, all
Senior Notes theretofore authenticated and delivered under this Indenture
except:
(i) Senior Notes theretofore cancelled by the Senior
Note Registrar or delivered to the Senior Note Registrar for
cancellation;
(ii) Senior Notes or portions thereof the payment
for which money in the necessary amount has been theretofore deposited
with the Indenture Trust-
6
<PAGE> 14
ee or any Paying Agent in trust for the related Senior Noteholders
(provided, however, that if such Senior Notes are to be redeemed,
notice of such redemption has been duly given pursuant to this
Indenture or provision therefor, satisfactory to the Indenture
Trustee); and
(iii) Senior Notes in exchange for or in lieu of
other Senior Notes which have been authenticated and delivered
pursuant to this Indenture unless proof satisfactory to the Indenture
Trustee is presented that any such Senior Notes are held by a bona
fide purchaser;
provided that in determining whether Senior Noteholders holding the requisite
Outstanding Amount of the Senior Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or under any
Basic Document, Senior Notes owned by the Lease Trust, RCL Trust 1996-1, the
Administrative Agent 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 upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Senior Notes that a Responsible Officer knows to be so owned shall be so
disregarded. Senior Notes so owned that have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Indenture Trustee the pledgee's right so to act with respect to such Senior
Notes and that the pledgee is not the Lease Trust, RCL Trust 1996-1, the
Administrative Agent or any Affiliate of any of the foregoing Persons.
"Paying Agent" means the Indenture Trustee or any other Person
that meets the eligibility standards for the Indenture Trustee set forth in
Section 6.11 and is authorized by the Lease Trustee to make the payments to and
distributions from the Series 1996-1 Payments Account, including payment of
principal of or interest on the Senior Notes on behalf of the Lease Trust.
"Predecessor Senior Note" means, with respect to any
particular Senior Note, every previous Senior Note evidencing all or a portion
of the same debt as that evidenced by such particular Senior Note; and, for the
purpose of this definition, any Senior Note authenticated
7
<PAGE> 15
and delivered under Section 2.5 in lieu of a mutilated, destroyed, lost, or
stolen Senior Note shall be deemed to evidence the same debt as the mutilated,
destroyed, lost, or stolen Senior Note.
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"Rating Agency Condition" means, with respect to any action,
that each Rating Agency shall have been given 10 days' prior notice thereof and
that the Rating Agencies shall have notified the Administrative Agent and the
Indenture Trustee in writing that such action will not result in a reduction or
withdrawal of the then current ratings of the Senior Notes.
"Record Date" means, with respect to a Payment Date or
Redemption Date, the close of business on the fourteenth day of the calendar
month in which such Payment Date or Redemption Date occurs (or, if Definitive
Senior Notes are issued, the last day of the preceding calendar month).
"Redemption Date" means the Payment Date specified by the
Administrative Agent or the Lease Trustee pursuant to Section 10.1.
"Redemption Price" means an amount equal to the unpaid
principal amount of the Senior Notes redeemed plus accrued and unpaid interest
thereon at the applicable Senior Note Interest Rate to but excluding the
Redemption Date.
"Registered Holder" means the Person in whose name a Senior
Note is registered on the Senior Note Register on the applicable Record Date.
"Responsible Officer" means any officer of the Indenture
Trustee, including any Vice President, Assistant Vice President, Assistant
Treasurer, Assistant Secretary or any other officer of the Indenture Trustee
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.
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<PAGE> 16
"Senior Note Owner" means, with respect to a Book-Entry Senior
Note, the Person who is the beneficial owner of such Book-Entry Senior 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).
"Senior Note Register" and "Senior Note Registrar" have the
respective meanings set forth in Section 2.4.
"Stamp" has the meaning set forth in Section 2.4.
"State" means any one of the 50 states of the United States of
America or the District of Columbia.
"Stated Maturity" means when used with respect to any
security, including a Senior Note, the date specified in such security as the
fixed date which the final payment of principal on such security is due and
payable or, if such date is not a Business Day, the next following Business
Day.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act
of 1939 as amended and as in force on the date hereof, unless otherwise
specifically provided.
(b) All terms defined in this Indenture shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein.
(c) As used in this Indenture and in any certificate or
other document made or delivered pursuant hereto, accounting terms not defined
in this Indenture or in any such certificate or other document, and accounting
terms partly defined in this Indenture or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Indenture or in any such certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions con-
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<PAGE> 17
tained in this Indenture or in any such certificate or other document shall
control.
(d) Interest on the Senior Notes shall be computed on the
basis of a 360-day year of twelve 30-day months for all purposes of this
Indenture.
Section 1.2 Incorporation by Reference of Trust Indenture
Act. Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Senior Notes.
"indenture security holder" means a Senior Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Indenture Trustee.
"obligor" on the indenture securities means the Lease Trust
and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by Commission
rule have the meaning assigned to them by such definitions.
ARTICLE II
THE SENIOR NOTES
Section 2.1 Form. The form of the Class A-1 Senior Notes and
the Class A-2 Senior Notes, together with the Indenture Trustee's certificate
of authentication, shall be in substantially the form set forth respectively as
Exhibit A-1 and Exhibit A-2, 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
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<PAGE> 18
marks of identification and such legends or endorsements placed thereon as may,
consistently herewith, be determined by the officers executing such Senior
Notes, as evidenced by their execution of the Senior Notes. Any portion of the
text of any Senior Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Senior Note.
The definitive Senior 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 Senior Notes, as evidenced by their execution of such Senior Notes.
Each Senior Note shall be dated the date of its
authentication. The terms of the Class A-1 Senior Notes and the Class A-2
Senior Notes set forth respectively in Exhibit A-1 and Exhibit A-2 are part of
the terms of this Indenture.
<TABLE>
<CAPTION>
Original Senior Note
------------------------------------------------------
Principal Interest Stated
Designation Amount Rate Maturity
- ----------- --------- -------- --------
<S> <C> <C> <C>
Class A-1
Asset Backed
Senior Notes $_________ __% ______ __, ____
Class A-2
Asset Backed
Senior Notes $_________ __% ______ __, ____
</TABLE>
Section 2.2 Execution, Authentication and Delivery. The
Senior Notes shall be executed by the Lease Trustee by any of its Authorized
Officers on behalf of the Lease Trust. The signature of any such Authorized
Officer on the Senior Notes may be manual or facsimile.
Senior Notes bearing the manual or facsimile signature of
individuals who were at any time Authorized Officers of the Lease Trust shall
bind the Lease Trust, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of such
Senior Notes or did not hold such offices at the date of such Senior Notes.
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<PAGE> 19
The Indenture Trustee shall upon Issuer Order authenticate and
deliver the Class A-1 Senior Notes for original issue in an aggregate principal
amount of $______ and the Class A-2 Senior Notes for original issue in an
aggregate principal amount of $______. The aggregate principal amount of Class
A-1 Senior Notes and Class A-2 Senior Notes outstanding at any time may not
exceed those respective amounts except as provided in Section 2.5.
The Senior Notes shall be issuable as registered Senior Notes
in minimum denominations of $1,000 and in integral multiples of $1,000 in
excess thereof.
No Senior Note shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose, unless there appears on
such Senior 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 Senior Note
shall be conclusive evidence, and the only evidence, that such Senior Note has
been duly authenticated and delivered hereunder.
Section 2.3 Temporary Senior Notes. Pending the preparation
of Definitive Senior Notes, the Lease Trustee may execute, on behalf of the
Lease Trust, and upon receipt of an Issuer Order the Indenture Trustee shall
authenticate and deliver, temporary Senior Notes which are printed,
lithographed, typewritten, mimeographed or otherwise produced, substantially of
the tenor of the definitive Senior 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 Senior Notes may determine, as evidenced by
their execution of such temporary Senior Notes.
If temporary Senior Notes are issued, the Lease Trust will
cause definitive Senior Notes to be prepared without unreasonable delay. After
the preparation of definitive Senior Notes, the temporary Senior Notes shall be
exchangeable for definitive Senior Notes upon surrender of the temporary Senior
Notes at the office or agency of the Lease Trustee to be maintained as provided
in Section 3.2, without charge to the Senior Noteholder. Upon surrender for
cancellation of any one or more tempo-
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<PAGE> 20
rary Senior Notes, the Lease Trustee shall execute, on behalf of the Lease
Trust, and the Indenture Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Senior Notes of authorized
denominations. Until so exchanged, the temporary Senior Notes shall in all
respects be entitled to the same benefits under this Indenture as definitive
Senior Notes.
Section 2.4 Registration; Registration of Transfer and
Exchange. The Lease Trustee shall cause to be kept a register (the "Senior
Note Register") in which, subject to such reasonable regulations as it may
prescribe, the Lease Trustee shall provide for the registration of Senior Notes
and the registration of transfers of Senior Notes. The Indenture Trustee is
hereby appointed "Senior Note Registrar" for the purpose of registering Senior
Notes and transfers of Senior Notes as herein provided. Upon any resignation
of any Senior Note Registrar, the Lease Trustee shall promptly appoint a
successor or, if it elects not to make such an appointment, assume the duties
of Senior Note Registrar.
If a Person other than the Indenture Trustee is appointed by
the Lease Trustee as Senior Note Registrar, the Lease Trustee will give the
Indenture Trustee prompt written notice of the appointment of such Senior Note
Registrar and of the location, and any further change in such location, of the
Senior Note Register, and the Indenture Trustee shall have the right to inspect
the Senior Note Register at all reasonable times and to obtain copies thereof,
and the Indenture Trustee shall have the right to rely upon a certificate
executed on behalf of the Senior Note Registrar by an Executive Officer thereof
as to the names and addresses of the Senior Noteholders and the principal
amounts and number of such Senior Notes.
Upon surrender for registration of transfer of any Senior Note
at the office or agency of the Lease Trustee to be maintained as provided in
Section 3.2, if the requirements of Section 8-401(1) of the UCC are met the
Lease Trustee shall execute, on behalf of the Lease Trust, and the Indenture
Trustee shall authenticate and the Senior Noteholder shall obtain from the
Indenture Trustee, in the name of the designated transferee or transferees, one
or more new Senior Notes of the same
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<PAGE> 21
Class in any authorized denominations, of a like aggregate principal amount.
At the option of the Senior Noteholder, Senior Notes may be
exchanged for other Senior Notes of the same Class in any authorized
denominations, of a like aggregate principal amount, upon surrender of the
Senior Notes to be exchanged at such office or agency. Whenever any Senior
Notes are so surrendered for exchange, if the requirements of Section 8-401(1)
of the UCC are met, the Lease Trustee shall execute, on behalf of the Lease
Trust, the Indenture Trustee shall authenticate and the Senior Noteholder shall
obtain from the Indenture Trustee, the Senior Notes which the Senior Noteholder
making the exchange is entitled to receive.
All Senior Notes issued upon any registration of transfer or
exchange of Senior Notes shall be the valid obligations of the Lease Trust,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Senior Notes surrendered upon such registration of transfer
or exchange.
Every Senior 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 Senior Noteholder thereof or such Senior Noteholder's
attorney duly authorized in writing, with such signature guaranteed by an
"eligible guarantor institution" meeting the requirements of the Senior Note
Registrar which requirements include membership or participation in Securities
Transfer Agent's Medallion Program ("Stamp") or such other "signature guarantee
program" as may be determined by the Senior Note Registrar in addition to, or
in substitution for, Stamp, all in accordance with the Exchange Act, and (ii)
accompanied by such other documents as the Indenture Trustee may require.
No service charge shall be made to a Senior Noteholder for any
registration of transfer or exchange of Senior Notes, but the Lease Trustee 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 Senior Notes,
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<PAGE> 22
other than exchanges pursuant to Sections 2.3 or 9.6 not involving any
transfer.
The preceding provisions of this Section 2.4 notwithstanding,
the Lease Trustee shall not be required to make and the Senior Note Registrar
need not register transfers or exchanges of Senior Notes selected for
redemption or of any Senior Note for a period of 15 days preceding the due date
for any payment with respect to the Senior Note.
Section 2.5 Mutilated, Destroyed, Lost or Stolen Senior
Notes. If (i) any mutilated Senior Note is surrendered to the Indenture
Trustee, or the Indenture Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Senior Note, and (ii) there is delivered to
the Indenture Trustee such security or indemnity as may be required by it to
hold the Lease Trust, the Lease Trustee and the Indenture Trustee harmless,
then, in the absence of notice to the Lease Trustee, the Senior Note Registrar
or the Indenture Trustee that such Senior Note has been acquired by a bona fide
purchaser, and provided that the requirements of Section 8-405 of the UCC are
met, the Lease Trustee shall execute, on behalf of the Lease Trust, 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 Senior
Note, a replacement Senior Note of the same Class; provided, however, that if
any such destroyed, lost or stolen Senior Note, but not a mutilated Senior
Note, shall have become or within seven days shall become due and payable, or
shall have been called for redemption, instead of issuing a replacement Senior
Note, the Lease Trust may pay such destroyed, lost or stolen Senior Note when
so due or payable or upon the Redemption Date. If, after the delivery of such
replacement Senior Note or payment of a destroyed, lost or stolen Senior Note
pursuant to the proviso to the preceding sentence, a bona fide pur-
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<PAGE> 23
chaser of the original Senior Note in lieu of which such replacement Senior Note
was issued presents for payment such original Senior Note, the Lease Trust and
the Indenture Trustee shall be entitled to recover such replacement Senior Note
(or such payment) from the Person to whom it was delivered or any Person taking
such replacement Senior Note from such Person to whom such replacement Senior
Note was delivered or any assignee of such Person, except a bona fide purchaser,
and shall be entitled to recover upon the security or indemnity provided
therefor to the extent of any loss, damage, cost or expense incurred by the
Lease Trust or the Indenture Trustee in connection therewith.
Upon the issuance of any replacement Senior Note under this
Section 2.5, the Lease Trustee may require the payment by the Senior Noteholder
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.
Every replacement Senior Note issued pursuant to this Section
2.5 in replacement of any mutilated, destroyed, lost or stolen Senior Note
shall constitute an original additional contractual obligation of the Lease
Trust, whether or not the mutilated, destroyed, lost or stolen Senior 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
Senior Notes duly issued hereunder.
The provisions of this Section 2.5 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 Senior
Notes.
Section 2.6 Persons Deemed Owners. Prior to due presentment
for registration of transfer of any Senior Note, the Lease Trustee, the
Indenture Trustee and any agent of the Lease Trustee or the Indenture Trustee
may treat the Person in whose name any Senior Note is registered (as of the day
of determination) as the owner of such Senior Note for the purpose of receiving
payments of principal of and interest, if any, on such Senior Note and for all
other purposes whatsoever, whether or not such Senior Note be overdue, and
neither the Lease Trustee, the Indenture Trustee nor any agent of the Lease
Trustee or the Indenture Trustee shall be affected by notice to the contrary.
Section 2.7 Payment of Principal and Interest; Defaulted
Interest. (a) The Class A-1 Senior Notes and the Class A-2 Senior Notes shall
accrue interest during each Interest Accrual Period at the applicable Senior
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<PAGE> 24
Note Interest Rate specified in Section 2.1. Interest on the Senior Notes
shall be due and payable on each Payment Date immediately following the related
Interest Accrual Period. Any installment of interest or principal, if any,
payable on any Senior Note which is punctually paid or duly provided for by the
Lease Trust on the applicable Payment Date shall be paid to the Person in whose
name such Senior Note (or one or more Predecessor Senior Notes) is registered
on the Record Date, by check mailed first-class, postage prepaid to such
Person's address as it appears on the Senior Note Register on such Record Date,
except that, unless Definitive Senior Notes have been issued pursuant to
Section 2.12, with respect to Senior Notes registered on the Record Date in the
name of the nominee of the Clearing Agency (initially, such nominee to be Cede
& Co.), payment will 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 Senior Note on a Payment Date or on the
Stated Maturity of such Senior Note (and except for the Redemption Price for
any Senior Note called for redemption pursuant to Section 10.1) 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 the Senior Notes of each Class shall be
payable in installments in accordance with the priorities set forth in Section
8.4(b) on each Payment Date until the Outstanding Amount of each Class of
Senior Notes has been reduced to zero as provided in the forms of the Senior
Notes set forth respectively in Exhibit A-1 and Exhibit A-2. No principal
payments shall be made on the Class A-2 Senior Notes until the principal
balance of the Class A-1 Senior Notes has been reduced to zero; provided that
if an Event of Default has occurred and the entire unpaid principal amounts of
the Senior Notes has become due and payable by declaration of acceleration,
principal payments will be made on a pro rata basis to holders of the Class A-1
Senior Notes and the Class A-2 Senior Notes based on their respective
Outstanding Amounts without any distinction between Classes. All principal
payments on the Senior Notes shall be made pro rata to the Senior Noteholders
of the Class or Classes entitled thereto. The Indenture Trustee shall notify
the Person in whose name a Senior Note is registered on the Record Date
preceding the Payment Date on which the
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<PAGE> 25
Lease Trustee expects that the final installment of principal of and interest
on such Senior Note will be paid. Such notice shall be mailed or transmitted
by facsimile prior to such final Payment Date and shall specify that such final
installment will be payable only upon presentation and surrender of such Senior
Note and shall specify the place where such Senior Note may be presented and
surrendered for payment of such installment. Notices in connection with
redemptions of Senior Notes shall be mailed to Senior Noteholders as provided
in Section 10.2.
(c) If the Lease Trust defaults in a payment of interest on
the Senior Notes, the Lease Trust shall pay defaulted interest (plus interest
on such defaulted interest to the extent lawful) at the applicable Senior Note
Interest Rate specified in Section 2.1 in any lawful manner starting the day
following the day on which such interest was due until such default is cured.
Section 2.8 Cancellation. All Senior 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 Lease
Trustee may at any time deliver to the Indenture Trustee for cancellation any
Senior Notes previously authenticated and delivered hereunder which the Lease
Trustee may have acquired in any manner whatsoever, and all Senior Notes so
delivered shall be promptly cancelled by the Indenture Trustee. No Senior
Notes shall be authenticated in lieu of or in exchange for any Senior Notes
cancelled as provided in this Section 2.8, except as expressly permitted by
this Indenture. All cancelled Senior Notes may be held or disposed of by the
Indenture Trustee in accordance with its standard retention or disposal policy
as in effect at the time unless the Lease Trustee 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 Senior Notes have not been previously disposed of by the
Indenture Trustee.
Section 2.9 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
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<PAGE> 26
accompanied by an Officers' Certificate, an Opinion of Counsel and Independent
Certificates in accordance with TIA Section Section 314(c) and 314(d)(l) 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 Lease
Trustee's obligations under TIA Section Section 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 2.10 Book-Entry Senior Notes. The Senior Notes, upon
original issuance, will be issued in the form of typewritten Senior Notes
representing the Book-Entry Senior Notes, to be delivered to The Depository
Trust Company, the initial Clearing Agency, by, or on behalf of, the Lease
Trust. Such Senior Notes shall initially be registered on the Senior Note
Register in the name of Cede & Co., the nominee of the initial Clearing Agency,
and no Senior Note Owner will receive a Definitive Senior Note (as defined
below) representing such Senior Note Owner's interest in such Senior Note,
except as provided in Section 2.12. Unless and until definitive, fully
registered Senior Notes (the "Definitive Senior Notes") have been issued to
Senior Note Owners pursuant to Section 2.12:
(a) the provisions of this Section 2.10 shall be in full
force and effect;
(b) the Senior Note Registrar and the Indenture Trustee
shall be entitled to deal with the Clearing Agency for all purposes of this
Indenture (including the payment of principal of and interest on the Senior
Notes and the giving of instructions or directions hereunder) as the sole
Senior Noteholder, and shall have no obligation to the Senior Note Owners;
(c) to the extent that the provisions of this Section
2.10 conflict with any other provisions of this Indenture, the provisions of
this Section 2.10 shall control;
(d) the rights of Senior Note Owners shall be exercised
only through the Clearing Agency and shall be
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<PAGE> 27
limited to those established by law and agreements between such Senior Note
Owners and the Clearing Agency and/or the Clearing Agency Participants.
Pursuant to the Depository Agreement, unless and until Definitive Senior Notes
are issued pursuant to Section 2.12, the initial Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and receive and
transmit payments of principal of and interest on the Senior Notes to such
Clearing Agency Participants; and
(e) whenever this Indenture requires or permits actions
to be taken based upon instructions or directions of Senior Noteholders
evidencing a specified percentage of the Outstanding Amount of the Senior
Notes, the Clearing Agency shall be deemed to represent such percentage only to
the extent that it has received instructions to such effect from Senior Note
Owners and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in the Senior
Notes and has delivered such instructions to the Indenture Trustee.
Section 2.11 Notices to Clearing Agency. Whenever a notice or
other communication to the Senior Noteholders is required under this Indenture,
unless and until Definitive Senior Notes shall have been issued to Senior Note
Owners pursuant to Section 2.12, the Indenture Trustee shall give all such
notices and communications specified herein to be given to Senior Noteholders
to the Clearing Agency, and shall have no obligation to the Senior Note Owners.
Section 2.12 Definitive Senior Notes. If (i) the
Administrative Agent 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 Senior Notes, and the Administrative Agent is unable to
locate a qualified successor, (ii) the Administrative Agent 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, Senior Note Owners representing beneficial interests
aggregating at least a majority of the Outstanding Amount of the Senior Notes
advise 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
Senior
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Note Owners, then the Clearing Agency shall notify all Senior Note Owners and
the Indenture Trustee of the occurrence of any such event and of the
availability of Definitive Senior Notes to Senior Note Owners requesting the
same. Upon surrender to the Indenture Trustee of the typewritten Senior Note
or Senior Notes representing the Book-Entry Senior Notes by the Clearing
Agency, accompanied by registration instructions, the Lease Trustee shall
execute, on behalf of the Lease Trust, and the Indenture Trustee shall
authenticate the Definitive Senior Notes in accordance with the instructions of
the Clearing Agency. None of the Lease Trustee, the Senior 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 Senior Notes, the
Indenture Trustee shall recognize as Senior Noteholders the Persons whose names
are registered in the Senior Note Register.
Section 2.13 Authenticating Agents. Upon the request of the
Lease Trustee, the Indenture Trustee shall, and if the Indenture Trustee so
chooses the Indenture Trustee may, appoint one or more Authenticating Agents
with power to act on its behalf and subject to its direction in the
authentication of Senior Notes in connection with issuance, transfers and
exchanges under Sections 2.2, 2.4, 2.5 and 9.6, as fully to all intents and
purposes as though each such Authenticating Agent had been expressly authorized
by those Sections to authenticate such Senior Notes. For all purposes of this
Indenture, the authentication of Senior Notes by an Authenticating Agent
pursuant to this Section 2.13 shall be deemed to be the authentication of
Senior Notes "by the Indenture Trustee."
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 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.
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<PAGE> 29
Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Indenture Trustee and the Lease 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 Lease Trustee. Upon receiving such notice of
resignation or upon such a termination, the Indenture Trustee shall promptly
appoint a successor Authenticating Agent and shall give written notice of such
appointment to the Lease Trustee.
The Indenture Trustee agrees to pay to each Authenticating
Agent from time to time reasonable compensation for its services, and
reimbursement for its reasonable expenses relating thereto and the Indenture
Trustee shall be entitled to be reimbursed for such payments, subject to
Section 6.7. The provisions of Sections 2.8 and 6.4 shall be applicable to any
Authenticating Agent.
ARTICLE III
COVENANTS
Section 3.1 Payment of Principal and Interest. The Lease
Trust will duly and punctually pay the principal of and interest on the Senior
Notes in accordance with the terms of the Senior Notes and this Indenture.
Without limiting the foregoing, the Lease Trustee, on behalf of the Lease
Trust, will cause the Indenture Trustee or the Paying Agent to distribute to
Senior Noteholders, the Lease Trust Paying Agent and the Certificate
Distribution Account all amounts on deposit in the Series 1996-1 Payments
Account payable to the Senior Noteholders, the Subordinated Noteholders and the
Lease Trust Certificateholders pursuant to Section 8.4. Amounts properly
withheld under the Code by any Person from a payment to any Senior Noteholder
of interest and/or principal shall be considered to have been paid by the Lease
Trust to such Senior Noteholder for all purposes of this Indenture.
Section 3.2 Maintenance of Office or Agency. The Senior Note
Registrar, on behalf of the Lease Trustee, will maintain at the Corporate Trust
Office or at such other location in the Borough of Manhattan, The City
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<PAGE> 30
of New York, chosen by the Senior Note Registrar, acting for the Lease Trustee
an office or agency, where Senior Notes may be surrendered for registration of
transfer or exchange, and where notices and demands to or upon the Lease
Trustee in respect of the Senior Notes and this Indenture may be served. The
Lease Trustee hereby appoints the Indenture Trustee as its agent to receive all
such surrenders, notices and demands.
Section 3.3 Money for Payments To Be Held in Trust. As
provided in Sections 8.4(b) and 5.4(b), all payments of amounts due and payable
with respect to any Senior Notes that are to be made from amounts withdrawn
from the Series 1996-1 Payments Account shall be made on behalf of the Lease
Trust by the Indenture Trustee or by another Paying Agent, and no amounts so
withdrawn therefrom for payments of Senior Notes shall be paid over to the
Lease Trust except as provided in this Section 3.3.
On or before each Payment Date and Redemption Date, the Lease
Trustee shall, on behalf of the Lease Trust, deposit or cause to be deposited
in the Series 1996-1 Payments Account an aggregate sum sufficient to pay the
amounts then becoming due under the Senior Notes, such sum to be held in trust
for the benefit of the Persons entitled thereto and (unless the Paying Agent is
the Indenture Trustee) shall promptly notify the Indenture Trustee of its
action or failure so to act.
The Lease Trustee will cause each Paying Agent other than the
Indenture Trustee to execute and deliver to the Indenture Trustee an instrument
in which such Paying Agent shall agree with the Indenture Trustee (and if the
Indenture Trustee acts as Paying Agent, it hereby so agrees to the extent
relevant), subject to the provisions of this Section 3.3, that such Paying
Agent will:
(i) hold all sums held by it for the payment of
amounts due with respect to the Senior 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 Lease Trust of which it has actu-
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<PAGE> 31
al knowledge (or any other obligor upon the Senior Notes) in the making
of any payment required to be made with respect to the Senior 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 Paying
Agent;
(iv) immediately resign as a Paying Agent and
forthwith pay to the Indenture Trustee all sums held by it in trust
for the payment of Senior Notes if at any time it ceases to meet the
standards required to be met by a Paying Agent at the time of its
appointment; and
(v) comply with all requirements of the Code with
respect to the withholding from any payments made by it on any Senior
Notes of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection
therewith.
The Lease Trustee 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 Paying Agent to pay to the Indenture
Trustee all sums held in trust by such 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 Paying Agent; and upon such payment by any Paying Agent to the
Indenture Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Subject to applicable laws with respect to escheat of funds,
any money held by the Indenture Trustee or any Paying Agent in trust for the
payment of any amount due with respect to any Senior Note and remaining
unclaimed for two years after such amount has become due and payable shall be
discharged from such trust and be paid to the Lease Trust on Issuer Request;
and the Senior Noteholder of such Senior Note shall thereafter, as an unsecured
general creditor, look only to the Lease Trust for payment thereof (but only to
the extent of the amounts so paid to the Lease Trust by the Indenture Trustee
or the Paying Agent), and all liability of the
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Indenture Trustee or such Paying Agent with respect to such trust money shall
thereupon cease; provided, however, that the Indenture Trustee or such Paying
Agent, before being required to make any such repayment, may at the expense of
the Lease Trust 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 30 days
from the date of such publication, any unclaimed balance of such money then
remaining will be repaid to the Lease Trust. The Indenture Trustee shall also
adopt and employ, at the expense of the Lease Trust, any other reasonable means
of notification of such repayment (including, but not limited to, mailing
notice of such repayment to Senior Noteholders whose Senior Notes have been
called but have not been surrendered for redemption or whose right to or
interest in moneys due and payable but not claimed is determinable from the
records of the Indenture Trustee or of any Paying Agent, at the last address of
record for each such Senior Noteholder).
Section 3.4 Existence. The Lease Trust will keep in full
effect its existence, rights and franchises under the laws of its jurisdiction
of organization, and will 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 Senior Notes,
the Collateral and the Indenture Trust Estate.
Section 3.5 Protection of Indenture Trust Estate. The Lease
Trustee on behalf of the Lease Trust will 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 will 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;
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(ii) perfect, publish notice of or protect the
validity of any Grant made or to be made by this Indenture;
(iii) enforce any of the Collateral; or
(iv) preserve and defend title to the Indenture
Trust Estate and the rights of the Indenture Trustee and the Senior
Noteholders in such Indenture Trust Estate against the claims of all
Persons and parties.
The Lease Trust hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required by the Indenture Trustee 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 under this Section 3.5.
Section 3.6 Opinions as to Indenture Trust Estate. (a)
Promptly after the execution of this Indenture, the Lease Trustee 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 and any other action that
may be required by law, as are necessary to perfect and make effective the lien
and security interest of this Indenture and reciting the details of such
action, or stating that, in the opinion of such counsel, no such action is
necessary to make such lien and security interest effective.
(b) On or before April 30 in each calendar year, beginning in
1997, the Lease Trustee, 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
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to maintain the lien and security interest created by this Indenture and
reciting the details of such action or stating that in the opinion of such
counsel no such action is necessary to maintain such lien and security
interest. Such Opinion of Counsel shall also describe the recording, filing,
re-recording and refiling of this Indenture, any indentures supplemental hereto
and any other requisite documents and the execution and filing of any financing
statements and continuation statements that will, 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; Administration of
Specified Assets. (a) The Lease Trust will not take any action and will use
its best efforts not to permit any action to be taken by others, including but
not limited to the Administrative Agent, 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 the Basic Documents.
(b) The Lease Trustee 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 Officers'
Certificate of the Lease Trustee shall be deemed to be action taken by the
Lease Trustee. Initially, the Lease Trustee has contracted with the
Administrative Agent and the Administrative Agent has agreed to assist the
Lease Trustee in performing its duties under this Indenture.
(c) The Lease Trust will, and shall cause the
Administrative Agent to, 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 UCC financing
statements and continuation statements required to be filed by the terms of
this Indenture and the other Basic Documents in accordance with and within the
time periods provided for herein and therein. Except as otherwise expressly
provided therein,
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the Lease Trust, as a party to the other Basic Documents and as a Holder of the
Series 1996-1 Certificates, shall not, and shall cause the Administrative Agent
not to, waive, amend, modify, supplement or terminate any Basic Document or any
provision thereof without the consent of the Indenture Trustee or the Senior
Noteholders of Senior Notes evidencing not less than a majority of the
Outstanding Amount of the Senior Notes or such greater percentage as may be
specified in the particular provision.
(d) If the Lease Trustee shall have knowledge of the
occurrence of an event of default by the Administrative Agent under the
Administrative Agency Agreement ("Administrative Agent Default"), the Lease
Trustee shall promptly notify the Indenture Trustee and the Rating Agencies
thereof, and shall specify in such notice the action, if any, the Lease Trustee
is taking in respect of such default. If an Administrative Agent Default shall
arise from the failure of the Administrative Agent to perform any of its duties
or obligations under the Administrative Agency Agreement with respect to the
Series 1996-1 Assets, the Lease Trustee shall take all reasonable steps
available to it to remedy such failure.
(e) Upon any termination of the Administrative Agent's rights
and powers pursuant to Section 7.1 or 7.3 of the Administrative Agency
Agreement or resignation of the Administrative Agent pursuant to Section 7.2 of
the Administrative Agency Agreement, the Lease Trustee shall promptly, but in
any event within two Business Days, notify the Indenture Trustee. As soon as a
substitute Administrative Agent is appointed pursuant to Section 7.1 of the
Administrative Agency Agreement or a successor Administrative Agent is
appointed pursuant to Section 7.3 of the Administrative Agency Agreement, the
Lease Trustee shall notify the Indenture Trustee of such appointment,
specifying in such notice the name and address of such substitute or successor
Administrative Agent.
Section 3.8 Negative Covenants. So long as any Senior Notes
are Outstanding, the Lease Trust shall not:
(i) other than the lease of the Series 1996-1
Certificates pursuant to the Program Operating Lease, which lease is
subject to the lien of
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this Indenture, and except as expressly permitted by this Indenture or
the other Basic Documents, sell, transfer, exchange or otherwise
dispose of any of the properties or assets of the Lease Trust,
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 Senior Notes
(other than amounts properly withheld from such payments under the
Code or applicable State law) or assert any claim against any present
or former Senior Noteholder by reason of the payment of the taxes
levied or assessed upon any part of the Indenture Trust Estate; or
(iii) (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
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
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 Series
1996-1 Assets and arising solely as a result of an action or omission
of the related Lessee) or (C) permit the lien of this Indenture not to
constitute a valid first priority (other than with respect to any such
tax, mechanics' or other lien) security interest in the Indenture
Trust Estate.
Section 3.9 Annual Statement as to Compliance. The Lease
Trustee will deliver to the Indenture Trustee, within 120 days after the end of
each calendar year (commencing with the year 1997), an Officers' Certificate
stating, as to the Authorized Officer signing such Officers' Certificate, that
(i) a review of the activities of the Lease Trust
during such year and of performance
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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 Lease Trust has complied with all
conditions and covenants under this Indenture throughout such year,
or, if there has been a Default in the compliance of any such
condition or covenant, specifying each such Default known to such
Authorized Officer and the nature and status thereof.
Section 3.10 [Reserved].
Section 3.11 [Reserved].
Section 3.12 No Other Activities. The Lease Trust shall not
engage in any activities other than financing, acquiring, owning, leasing
(subject to the lien of this Indenture), pledging and managing the Series
1996-1 Certificates in the manner contemplated by this Indenture and the other
Basic Documents and activities incidental thereto.
Section 3.13 No Borrowing. Other than as contemplated by the
Basic Documents, the Lease Trust shall not issue, incur, assume, guarantee or
otherwise become liable, directly or indirectly, for any indebtedness.
Section 3.14 Administrative Agent's Obligations. The Lease
Trust shall cause the Administrative Agent to comply with the terms and
provisions of the Basic Documents to which the Administrative Agent is a party.
Section 3.15 Guarantees, Loans, Advances and Other
Liabilities. Except as contemplated by the Basic Documents or this Indenture,
the Lease Trust shall not make any loan or advance or credit to, or guarantee
(directly or indirectly or by an instrument having the effect of assuring
another's payment or performance on any obligation or capability of so doing or
otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations,
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assets or securities of, or any other interest in, or make any capital
contribution to, any other Person.
Section 3.16 Capital Expenditures. Except as contemplated by
the Basic Documents, the Lease Trust shall not make any expenditure (by
long-term or operating lease or otherwise) for capital assets (either realty or
personalty).
Section 3.17 [Reserved].
Section 3.18 Notice of Events of Default. The Lease Trustee
agrees to give the Indenture Trustee and the Rating Agencies prompt written
notice of each Event of Default hereunder on the part of the Administrative
Agent and each Lease Event of Default on the part of the RCL Trustee as lessee
under the Program Operating Lease.
Section 3.19 Further Instruments and Acts. Upon request of
the Indenture Trustee, the Lease Trustee, on behalf of the Lease Trust, will
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.
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 Senior Notes
except as to (i) rights of registration of transfer and exchange, (ii)
substitution of mutilated, destroyed, lost or stolen Senior Notes, (iii) rights
of Senior Noteholders to receive payments of principal thereof and interest
thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8, 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 4.2) and (vi) the rights of Senior 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 and at the expense and on behalf of
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the Lease Trust, shall execute proper instruments acknowledging satisfaction
and discharge of this Indenture, when
(A) either
(1) all Senior Notes theretofore authenticated and
delivered (other than (i) Senior Notes that have been
mutilated, destroyed, lost or stolen and that have been
replaced or paid as provided in Section 2.5) and (ii) Senior
Notes for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Lease Trust
and thereafter repaid to the Lease Trust or discharged from
such trust, as provided in Section 3.3) have been delivered to
the Indenture Trustee for cancellation; or
(2) all Senior Notes not theretofore delivered to the
Indenture Trustee for cancellation
(i) have become due and payable,
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Indenture Trustee for the
giving of notice of redemption by the Indenture Trustee in the name,
and at the expense, of the Lease Trust,
and the Lease Trust, in the case of (i), (ii) or
(iii) above, has (x) received an Opinion of Counsel to the effect that
the release of the Collateral or the release of the Lease Trust from
the liability hereunder will not be treated as a repayment of the
Senior Notes or an exchange pursuant to Section 1001 of the Code and
(y) irrevocably deposited or caused to be irrevocably deposited with
the Indenture Trustee cash or direct obligations of or obligations
guaranteed by the United States of America (which will mature prior to
the date such amounts are payable), in trust for such purpose, in an
amount sufficient without reinvestment to pay and discharge the entire
indebtedness on such Senior Notes (including interest) not theretofore
delivered
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to the Indenture Trustee for cancellation when due to their Stated
Maturity or Redemption Date (if Senior Notes shall have been called
for redemption pursuant to Section 10.1), as the case may be, and all
fees due and payable to the Lease Trustee or the Indenture Trustee.
(B) the Lease Trust has paid or caused to be paid all
other sums payable hereunder by the Lease Trust; and
(C) the Lease Trustee has delivered to the Indenture
Trustee an Officers' 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 and each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
Section 4.2 Application of Trust Money. All moneys deposited
with the Indenture Trustee pursuant to Section 4.1 shall be held in trust and
applied by it, in accordance with the provisions of the Senior Notes and this
Indenture, to the payment, either directly or through any Paying Agent, as the
Indenture Trustee may determine, to the Senior Noteholders of the particular
Senior Notes for the payment or redemption of which such moneys have been
deposited with the Indenture Trustee of all sums due and to become due thereon
for principal and interest, but such moneys need not be segregated from other
funds except to the extent required herein or in the Administrative Agency
Agreement or required by law.
Section 4.3 Repayment of Moneys Held by Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect
to the Senior Notes, all moneys then held by any Paying Agent other than the
Indenture Trustee under the provisions of this Indenture with respect to such
Senior Notes shall, upon demand of the Lease Trustee, be paid to the Indenture
Trustee to be held and applied according to Section 3.3 and thereupon such
Paying Agent shall be released from all further liability with respect to such
moneys.
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ARTICLE V
EVENTS OF DEFAULT
Section 5.1 Events of Default. "Event of Default", wherever
used herein, means 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
Senior Note when the same becomes due and payable on each Payment
Date, and such default shall continue for a period of five days;
(ii) default in the payment of the principal of any
Senior Note at Stated Maturity or upon the Redemption Date;
(iii) the occurrence of a Lease Event of Default;
(iv) default in the observance or performance of any
covenant or agreement of the Lease Trust 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 Lease Trust 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 60 days or in the case
of a materially incorrect representation or warranty, 30 days, after
there shall have been given, by registered or certified mail, to the
Lease Trustee by the Indenture Trustee or to the Lease Trustee and the
Indenture Trustee by the Senior Noteholders holding not less than 25%
of the Outstanding Amount of the Senior
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Notes, 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;
(v) the filing of a decree or order for relief by a
court having jurisdiction in the premises in respect of the Lease
Trust 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 Lease Trust or for any
substantial part of the Indenture Trust Estate, or the winding-up or
liquidation of the Lease Trust's affairs, and such decree or order
shall remain unstayed and in effect for a period of 60 consecutive
days; or
(vi) the commencement by the Lease Trust 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 Lease Trust to the entry of an order for relief in an
involuntary case under any such law, or the consent by the Lease Trust
to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Lease Trust or for any substantial part of the Indenture Trust Estate,
or the making by the Lease Trust of any general assignment for the
benefit of creditors, or the failure by the Lease Trust generally to
pay its debts as such debts become due, or the taking of action by the
Lease Trust in furtherance of any of the foregoing.
The Lease Trustee shall deliver to the Indenture Trustee,
within five days after the occurrence thereof, written notice in the form of an
Officers' Certificate of any event which with the giving of notice and the
lapse of time would become an Event of Default under clauses (iii) and (iv)
above, its status and what action the Lease Trustee is taking or proposes to
take with respect thereto.
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Section 5.2 Acceleration of Maturity; Rescission and
Annulment. If an Event of Default should occur and be continuing, then and in
every such case the Indenture Trustee or the Senior Noteholders of Senior Notes
evidencing not less than a majority of the Outstanding Amount of the Senior
Notes may declare all the Senior Notes to be immediately due and payable, by a
notice in writing to the Lease Trustee (and to the Indenture Trustee if given
by Senior Noteholders), and upon any such declaration the unpaid principal
amount of such Senior Notes, together with accrued and unpaid interest thereon
through the date of acceleration, shall become immediately due and payable.
At any time after such declaration of acceleration of maturity
has been made and before a judgment or decree for payment of the money due has
been obtained by the Indenture Trustee as hereinafter set forth in this Article
V, the Senior Noteholders of Senior Notes evidencing not less than a majority
of the Outstanding Amount of the Senior Notes, by written notice to the Lease
Trustee and the Indenture Trustee, may rescind and annul such declaration and
its consequences if:
(i) the Lease Trust has paid or deposited with the
Indenture Trustee a sum sufficient to pay
(A) all payments of principal of and interest on
all Senior Notes and all other amounts that would then be due
hereunder or upon such Senior Notes if the Event of Default
giving rise to such acceleration had not occurred; and
(B) all sums paid or advanced by the Indenture
Trustee hereunder and the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and its
agents and counsel; and
(ii) all Events of Default, other than the
nonpayment of the principal of the Senior Notes that has become due
solely by such acceleration, have been cured or waived as provided in
Section 5.12.
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No such rescission shall affect any subsequent default or
impair any right consequent thereto.
Section 5.3 Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee. (a) The Lease Trust covenants that if (i)
default is made in the payment of any interest on any Senior Note when the same
becomes due and payable, and such default continues for a period of five days,
or (ii) default is made in the payment of the principal of any Senior Note at
Stated Maturity or the Redemption Date, the Lease Trust will, upon demand of
the Indenture Trustee, pay to it, for the benefit of such Senior Noteholders,
the whole amount then due and payable on such Senior 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 Senior Note Interest Rate borne by
the Senior 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 Lease Trust 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 Lease Trust or other obligor upon
such Senior Notes and collect in the manner provided by law out of the property
of the Lease Trust or other obligor upon such Senior Notes, wherever situated,
the moneys adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the
Indenture Trustee may, as more particularly provided in Section 5.4, in its
discretion, proceed to protect and enforce its rights and the rights of the
Senior 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
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Indenture or by law; provided that the Series 1996-1 Certificates may be sold
only as provided in Section 5.4 or Section 7.1 of the Series 1996-1 Supplement,
or as required by Section 9.2 of the Lease Trust Agreement; and provided,
further, that in connection with any sale pursuant to such Section 9.2 of the
Lease Trust Agreement, the Series 1996-1 Assets will be distributed to the
purchaser thereof, in accordance with terms of the FCTT Agreement and such
Section 9.2.
(d) In case there shall be pending, relative to the Lease
Trust or any other obligor upon the Senior 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 Lease Trust
or its property or such other obligor or Person, or in case of any other
comparable judicial Proceedings relative to the Lease Trust or other obligor
upon the Senior Notes, or to the creditors or property of the Lease Trust or
such other obligor, the Indenture Trustee, irrespective of whether the
principal of any Senior 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 Senior 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 Senior
Noteholders allowed in such Proceedings;
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(ii) unless prohibited by applicable law and
regulations, to vote on behalf of the Senior 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 moneys or other
property payable or deliverable on any such claims and to distribute
all amounts received with respect to the claims of the Senior
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 Senior Noteholders allowed in
any judicial proceedings relative to the Lease Trust, 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 Senior 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 Senior
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 under 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 Senior Noteholder any plan of reorganization, arrangement,
adjustment or composition affecting the Senior Notes or the rights of any
related Senior Noteholder or to authorize the Indenture Trustee to vote in
respect of the claim of any Senior 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 Senior Notes, may be enforced by the Indenture
Trustee without the possession of any of the Senior 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, advances, 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 Senior
Noteholde- rs 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 Senior Noteholders, and it shall not
be necessary to make any Senior Noteholder a party to any such Proceedings.
Section 5.4 Remedies; Priorities. (a) If an Event of
Default shall have occurred and be continuing, the Indenture Trustee may do one
or more of the following (subject to Section 5.5):
(i) institute Proceedings in its own name and as
trustee of an express trust for the collection of all amounts then
payable on the Senior Notes or under this Indenture with respect
thereto, whether by declaration or otherwise, enforce any judgment
obtained, and collect from the Lease Trust and any other obligor upon
such Senior Notes moneys 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 Senior
Noteholders; and
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(iv) after a declaration of acceleration of the
maturity of the Senior Notes pursuant to Section 5.2, 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, unless directed to sell the Indenture Trust
Estate in accordance with Section 9.2 of the Lease Trust Agreement,
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), unless (I)(A)
Senior Noteholders holding 100% of the Outstanding Amount of the
Senior Notes consent thereto, (B) the proceeds of such sale or
liquidation are sufficient to discharge in full all amounts then due
and unpaid upon the Senior Notes for principal and interest and all
amounts payable to the Subordinated Noteholders and the Lease Trust
Certificateholders 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 Senior Notes as they would
have become due if the Senior Notes had not been declared due and
payable, and the Indenture Trustee obtains the consent of Senior
Noteholders holding not less than 66-2/3% of the Outstanding Amount of
the Senior Notes and provided further that the Indenture Trustee may
not sell the Indenture Trust Estate except pursuant to Section 9.2 of
the Lease Trust Agreement unless it shall first have obtained an
Opinion of Counsel that such sale will not cause FCTT or an interest
therein or portion thereof to be classified as an association (or
publicly traded partnership) taxable as a corporation for federal
income tax purposes. In determining such sufficiency or insufficiency
with respect to clauses (B) and (C), the Indenture Trustee may, but
need not, obtain, at the expense of the Lease Trust, 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.
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(b) If the Indenture Trustee collects any money or property
pursuant to this Article V upon sale of the Indenture Trust Estate, it shall
pay out such money or property held as Collateral for the benefit of the Senior
Noteholders in the following order:
FIRST: to the Indenture Trustee for all amounts due under
Section 6.7;
SECOND: to the Administrative Agent for reimbursement of all
outstanding Sale Proceeds Advances and Monthly Payment Advances;
THIRD: to the Administrative Agent for due and unpaid Series
1996-1 Administrative Fees;
FOURTH: to Senior Noteholders for amounts due and unpaid on
the Senior Notes for interest, in respect of which or for the benefit
of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Senior Notes for interest;
FIFTH: to the Lease Trust Paying Agent for amounts due and
unpaid on the Subordinated Notes for interest, in respect of which or
for the benefit of which such money has been collected;
SIXTH: to the Certificate Distribution Account for amounts
due and unpaid on the Lease Trust Certificates for interest, in
respect of which or for the benefit of which such money has been
collected;
SEVENTH: to the Class A-1 Senior Noteholders and the Class
A-2 Senior Noteholders in payment of the principal amount due and
unpaid on the Senior Notes, ratably, without preference or priority of
any kind, according to the principal amount due and payable on the
Class A-1 Senior Notes and the Class A-2 Senior Notes; and
EIGHTH: to the Lease Trustee for distributions in respect of
principal to the Subordinated Noteholders and the Lease Trust
Certificateholders in accordance with the terms of the Subordinated
Notes and the Lease Trust Agreement;
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provided, however, that any money or property paid out pursuant to clause FIFTH
above which is thereafter deposited into the Cash Collateral Account by the
Lease Trust Paying Agent in accordance with Section 6.5 of the Program
Operating Lease shall be withdrawn by the Indenture Trustee and paid out in
accordance with clauses FIFTH, SIXTH, SEVENTH and EIGHTH above, in that order
of priority.
The Indenture Trustee may fix a record date and payment date
for any payment to Senior Noteholders pursuant to this Section 5.4(b). At
least 15 days before such record date, the Lease Trustee shall mail to each
Senior 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 Series 1996-1
Assets. If the Senior Notes have been declared to be due and payable under
Section 5.2 following an Event of Default and such declaration and its
consequences have not been rescinded and annulled, the Indenture Trustee may,
unless directed to sell pursuant to Section 9.2 of the Lease Trust Agreement,
but need not, elect to maintain possession of the Indenture Trust Estate. It
is the desire of the parties hereto and the Senior Noteholders that there be at
all times sufficient funds for the payment of principal of and interest on the
Senior 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 at the expense of the
Lease Trust 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. Notwithstanding the foregoing provisions of this Section 5.5 and
Section 5.4, the Indenture Trustee shall sell the Indenture Trust Estate if so
instructed by the Lease Trustee pursuant to Section 9.2 of the Lease Trust
Agreement, and the proceeds of such sale will be deposited in the Series 1996-1
Payments Account and distributed in accordance with Sections 2.7 and 8.4(b).
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Section 5.6 Limitation of Suits. No Senior 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:
(i) such Senior Noteholder has previously given
written notice to the Indenture Trustee of a continuing Event of
Default;
(ii) Senior Noteholders holding not less than 25% of
the Outstanding Amount of the Senior Notes 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;
(iii) such Senior Noteholder or Senior Noteholders
have offered to the Indenture Trustee reasonable indemnity against the
costs, expenses and liabilities to be incurred in complying with such
request;
(iv) the Indenture Trustee for 60 days after its
receipt of such notice, request and offer of indemnity has failed to
institute such Proceedings; and
(v) no direction inconsistent with such written
request has been given to the Indenture Trustee during such 60-day
period by the Senior Noteholders holding not less than a majority of
the Outstanding Amount of the Senior Notes;
it being understood and intended that no Senior Noteholder, or group of Senior
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 Senior Noteholders or to obtain or to seek to obtain
priority or preference over any other Senior 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 Senior
Noteholders, each
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representing less than a majority of the Outstanding Amount of the Senior
Notes, the Indenture Trustee in its sole discretion may determine what action,
if any, shall be taken, notwithstanding any other provisions of this Indenture.
Section 5.7 Unconditional Rights of Senior Noteholders To
Receive Principal and Interest. Notwithstanding any other provisions in this
Indenture, any Senior Noteholder shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest, if any, on
its Senior Note on or after the respective due dates thereof expressed in such
Senior 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
Senior Noteholder.
Section 5.8 Restoration of Rights and Remedies. If the
Indenture Trustee or any Senior Noteholder has instituted any Proceeding to
enforce any right or remedy under this Indenture and such Proceeding has been
discontinued or abandoned for any reason or has been determined adversely to
the Indenture Trustee or to such Senior Noteholder, then and in every such case
the Lease Trust, the Indenture Trustee and the Senior 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 Senior Noteholders shall continue as
though no such Proceeding had been instituted.
Section 5.9 Rights and Remedies Cumulative. No right or
remedy herein conferred upon or reserved to the Indenture Trustee or to the
Senior 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.
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Section 5.10 Delay or Omission Not a Waiver. No delay or
omission of the Indenture Trustee or any Senior 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 an acquiescence therein. Every right and remedy given by this
Article V or by law to the Indenture Trustee or to the Senior Noteholders may
be exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee or by the Senior Noteholders, as the case may be.
Section 5.11 Control by Senior Noteholders. The Senior
Noteholders holding not less than a majority of the Outstanding Amount of the
Senior Notes 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 Senior Notes or exercising any trust or power conferred on
the Indenture Trustee; provided that
(i) such direction shall not be in conflict with any
rule of law or with this Indenture;
(ii) 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 the Senior Noteholders holding not
less than 100% of the Outstanding Amount of the Senior Notes;
(iii) 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, and except in the
case of a sale of the Indenture Trust Estate pursuant to Section 9.2
of the Lease Trust Agreement then any direction to the Indenture
Trustee by Senior Noteholders holding less than 100% of the
Outstanding Amount of the Senior Notes to sell or liquidate the
Indenture Trust Estate shall be of no force and effect; and
(iv) the Indenture Trustee may take any other action
deemed proper by the Indenture Trustee that is not inconsistent with
such direction;
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provided, however, that the Indenture Trustee need not take any action that it
determines might expose it to personal liability or might materially adversely
affect or unduly prejudice the rights of any Senior 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 Senior Notes as provided
in Section 5.2, Senior Noteholders holding not less than a majority of the
Outstanding Amount of the Senior Notes may waive any past Default or Event of
Default and its consequences except a Default (a) in payment of principal of or
interest on any of the Senior Notes or (b) in respect of a covenant or
provision hereof which cannot be modified or amended without the consent of
each Senior Noteholder. In the case of any such waiver, the Lease Trust, the
Indenture Trustee and the Senior Noteholders shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured and not to have occurred,
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereto.
Section 5.13 Undertaking for Costs. All parties to this
Indenture agree, and each Senior Noteholder by such Senior 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
Senior Noteholder, or group of
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Senior Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Senior Notes or (c) any suit instituted by any Senior
Noteholder for the enforcement of the payment of principal of or interest on
any Senior Note on or after the respective Stated Maturity expressed in such
Senior 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 Lease
Trust covenants (to the extent that it may lawfully do so) that it will 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 Lease Trust (to the extent that it may lawfully do
so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it will 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 Senior Notes. The Indenture Trustee's
right to seek and recover judgment on the Senior 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 Senior
Noteholders shall be impaired by the recovery of any judgment by the Indenture
Trustee against the Lease Trust 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 Lease Trust.
Section 5.16 Performance and Enforcement of Certain
Obligations. (a) Promptly following a request from the Indenture Trustee to
do so, the Lease Trustee, on behalf of and at the expense of the Lease Trust,
agrees to take all such lawful action as the Indenture Trustee may request to
compel or secure the performance and observance by RCL Trust 1996-1 and the
Administrative Agent, as applicable, of each of their obligations to the Lease
Trust under or in connection with the Program Operating Lease and the
Administrative Agency Agreement,
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respectively, in accordance with the terms thereof, and to exercise any and all
rights, remedies, powers and privileges lawfully available to the Lease Trust
under or in connection with each such agreement to the extent and in the manner
directed by the Indenture Trustee, including the transmission of notices of
default on the part of RCL Trust 1996-1 or the Administrative Agent, as the
case may be, thereunder and the institution of legal or administrative actions
or proceedings to compel or secure performance by RCL Trust 1996-1 or the
Administrative Agent, as the case may be, of its obligations under the Program
Operating Lease or the Administrative Agency Agreement, as applicable.
(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 Senior
Noteholders holding not less than a majority of the Outstanding Amount of the
Senior Notes shall, exercise all rights, remedies, powers, privileges and
claims of the Lease Trust against the RCL Trustee and the Administrative Agent
under or in connection with the Program Operating Lease and the Administrative
Agency Agreement as supplemented by the Series 1996-1 Supplement, respectively,
including the right or power to take any action to compel or secure performance
or observance by RCL Trust 1996-1 or the Administrative Agent, as the case may
be, of its obligations to the Lease Trust thereunder and to give any consent,
request, notice, direction, approval, extension or waiver under the Program
Operating Lease or the Administrative Agency Agreement, and any right of the
Lease Trust to take such action shall be suspended.
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.
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(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
conforming to the requirements of this Indenture; provided, however,
that the Indenture Trustee shall examine any such certificates and
opinions, which by any provision hereof are specifically required to
be furnished to the Indenture Trustee, 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
wilful misconduct, except that:
(i) this paragraph does not limit the effect of
Section 6.1(b);
(ii) the Indenture Trustee shall not be liable for
any error of judgment made in good faith by a Responsible 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) Every provision of this Indenture that in any way relates
to the Indenture Trustee is subject to Sections 6.1(a), (b), (c) and (g).
(e) The Indenture Trustee shall not be liable for interest on
any money received by it except as the
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Indenture Trustee may agree in writing with the Lease Trustee.
(f) 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 Administrative Agency Agreement.
(g) 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 repayments of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(h) 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.
(i) The Indenture Trustee shall not be deemed to have
knowledge of any Default or other event unless a Responsible Officer has actual
knowledge thereof or has received written notice thereof in accordance with the
provisions of this Indenture.
Section 6.2 Rights of Indenture Trustee. (a) The Indenture
Trustee may rely and shall be protected in acting or refraining from acting
upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper Person. The Indenture Trustee need not investigate any fact or
matter stated in any such document.
(b) Before the Indenture Trustee acts or refrains from
acting, it may require an Officers' 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 the Officers' Certificate or Opinion of Counsel.
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(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, the Administrative Agent, any co-trustee or
separate trustee appointed in accordance with the provisions of Section 6.10 or
any other 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 the Indenture Trustee's
conduct does not constitute wilful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the
advice of such counsel or any Opinion of Counsel relating to this Indenture and
the Senior 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 Senior Noteholders pursuant to this
Indenture unless such Senior Noteholders shall have offered to the Indenture
Trustee reasonable security or indemnity against the reasonable costs,
expenses, disbursements, advances and liabilities which might be incurred by
it, its agents and its counsel in compliance with such request or direction.
(g) Any request or direction of the Lease Trust 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 Senior Notes and may otherwise deal with the Lease Trust or its
Affiliates with the same rights it would have if it were not Indenture Trustee.
Any Paying Agent, Senior Note
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Registrar, co-registrar, co-paying agent, co-trustee or separate trustee agent
may do the same with like rights. However, the Indenture Trustee must comply
with Sections 6.11 and 6.12.
Section 6.4 Indenture Trustee's Disclaimer. The Indenture
Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture or the Senior Notes, it shall not be
accountable for the Lease Trust's use of the proceeds from the Senior Notes,
and it shall not be responsible for any statement in the Indenture or in any
document issued in connection with the sale of the Senior Notes or in the
Senior Notes, all of which shall be taken as the statements of the Lease Trust,
other than the Indenture Trustee's certificate of authentication.
Section 6.5 Notice of Defaults; Bankruptcy of RCL Trust
1996-1 or Ford Credit Leasing. (a) If a Default occurs and is continuing and
if it is known to a Responsible Officer of the Indenture Trustee, the Indenture
Trustee shall notify the Rating Agencies within two Business Days and shall
mail to each Senior Noteholder notice of the Default within 90 days after it
occurs. Except in the case of a Default in payment of principal of or interest
on any Senior Note (including payments pursuant to the mandatory redemption
provisions of such Senior Note), the Indenture Trustee may withhold the notice
if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of Senior
Noteholders; provided, however, that in the case of any Default of the
character specified in Section 5.1(iv), no such notice to Senior Noteholders
shall be given until at least 30 days after the occurrence thereof.
(b) If, pursuant to Section 9.2 of the Lease Trust Agreement,
the Indenture Trustee receives notice from the Lease Trustee, RCL Trust 1996-1
or Ford Credit Leasing of the occurrence of a Bankruptcy, insolvency or
termination with respect to a holder of the Lease Trust Certificates issued to
RCL Trust 1996-1 and Ford Credit Leasing on the Closing Date, the Indenture
Trustee shall give prompt written notice to the Senior Noteholders of the
occurrence of such event. Upon termination of the Trust pursuant to such
Section 9.2, the Indenture Trustee shall, if so directed by the Owner Trustee,
sell the
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assets of the Lease Trust (other than the Series 1996-1 Payments Account) in a
commercially reasonable manner and on commercially reasonable terms. In
connection with any such sale the Series 1996-1 Assets shall be distributed out
of FCTT and the purchaser shall take delivery of such Series 1996-1 Assets and,
with respect to the Series 1996-1 Leased Vehicles, shall cause the related
Certificates of Title to be reregistered in the name of or at the direction of
the purchaser. The proceeds of such sale shall be deposited in the Series
1996-1 Payments Account for distribution in accordance with the terms of this
Indenture.
Section 6.6 Reports by Indenture Trustee to Senior
Noteholders. The Indenture Trustee shall deliver, if provided to the Indenture
Trustee by the Lease Trust, to each Senior Noteholder such information as may
be required to enable such holder to prepare its federal and State income tax
returns.
Section 6.7 Compensation and Indemnity. Pursuant to Section
4.1 of the Series 1996-1 Supplement the Administrative Agent shall pay to the
Indenture Trustee from time to time reasonable compensation for its services
rendered by it hereunder and reimburse the Indenture Trustee for all reasonable
out-of-pocket expenses, advances and disbursements incurred or made by it,
including costs of collection. The Indenture Trustee's compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
expenses of the Indenture Trustee to be reimbursed shall include the reasonable
compensation and expenses, disbursements and advances of the Indenture
Trustee's agents, counsel, accountants and experts. The Lease Trust shall or
shall cause the Administrative Agent to indemnify the Indenture Trustee
individually or in its capacity as 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 acceptance or 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 Lease Trustee and the Administrative Agent
promptly of any claim for which it may seek indemnity. Failure by the
Indenture Trustee to
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so notify the Lease Trustee and the Administrative Agent shall not relieve the
Lease Trust or the Administrative Agent of its obligations hereunder. The
Lease Trust shall or shall cause the Administrative Agent to defend the claim
if so requested by the Indenture Trustee and the Indenture Trustee may have
separate counsel and the Lease Trust shall or shall cause the Administrative
Agent to pay the fees and expenses of such counsel. Neither the Lease Trust
nor the Administrative Agent need reimburse any expense or indemnify against
any loss, liability or expense incurred by the Indenture Trustee through the
Indenture Trustee's own wilful misconduct, negligence or bad faith.
The Lease Trust's payment obligations to the Indenture Trustee
pursuant to this Section 6.7 shall survive the discharge of this Indenture.
When the Indenture Trustee incurs expenses after the occurrence of a Default
set forth in Section 5.l(v) or (vi) with respect to the Lease Trust, 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. Senior
Noteholders holding not less than a majority in Outstanding Amount of the
Senior Notes may remove the Indenture Trustee without cause by so notifying the
Lease Trustee and the Indenture Trustee and following such removal may appoint
a successor Indenture Trustee. The Indenture Trustee may resign at any time by
so notifying the Lease Trustee and the Senior Noteholders. The Lease Trustee
shall remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with
Section 6.11;
(ii) the Indenture Trustee is adjudged to be a
bankrupt or insolvent;
(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.
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If the Indenture Trustee resigns or is removed by Senior
Noteholders holding not less than a majority of the Outstanding Amount of the
Senior Notes or by the Lease Trustee 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 Lease Trustee shall
promptly appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written
acceptance of its appointment to the retiring Indenture Trustee and to the
Lease Trustee. 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, without any further act, deed or conveyance, shall have all
the rights, powers and duties of the Indenture Trustee under this Indenture
subject to satisfaction of the Rating Agency Condition. The successor
Indenture Trustee shall mail a notice of its succession to Senior Noteholders,
which shall include the name of the successor Indenture Trustee and the address
of its principal corporate trust office. 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.
If a successor Indenture Trustee does not take office within
60 days after the retiring Indenture Trustee resigns or is removed, the
retiring Indenture Trustee, the Lease Trust or Senior Noteholders holding not
less than a majority in Outstanding Amount of the Senior Notes 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 Senior Noteholder who has been a bona fide Senior Noteholder for at least
six months may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.
Any resignation or removal of the Indenture Trustee and
appointment of a successor Indenture Trustee pursuant to any of the provisions
of this Section 6.8
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shall not become effective until acceptance of appointment by the successor
Indenture Trustee pursuant to this Section 6.8 and payment in full of all sums
due to the outgoing Indenture Trustee pursuant to Section 6.7. Notwithstanding
the replacement of the Indenture Trustee pursuant to this Section 6.8, the
Lease Trust's and the Administrative Agent's obligations under Section 6.7
shall continue for the benefit of the retiring Indenture Trustee.
Section 6.9 Successor Indenture Trustee by Merger. 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 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 prior written notice of any such transaction.
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 Senior 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 Senior Notes so authenticated; and in case at that time any of the
Senior Notes shall not have been authenticated, any successor to the Indenture
Trustee may authenticate such Senior Notes either in the name of any
predecessor hereunder or in the name of the successor to the Indenture Trustee;
and in all such cases such certificates shall have the full force which it is
anywhere in the Senior 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 of the Collateral may at the time be located, the
Indenture Trustee shall have the power and may execute and deliver all
instruments to appoint one or more Persons to act as a co-trustee or
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co-trustees, or separate trustee or separate trustees, of all or any part of
the Collateral, and to vest in such Person or Persons, in such capacity and for
the benefit of the Senior Noteholders, such title to the Collateral, 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 Senior 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 is not authorized to act
separately without the Indenture Trustee joining in such act), except
to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed the Indenture Trustee shall
be incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties and obligations (including the
holding of title to the Indenture Trust Estate or any portion thereof
in any such jurisdiction) shall be exercised and performed singly by
such separate trustee or co-trustee, but solely at the direction of
the Indenture Trustee;
(ii) no separate trustee or co- 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.
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(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 Indenture on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall vest
in and be exercised by the Indenture Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
Section 6.11 Eligibility; Disqualification. The Indenture
Trustee shall at all times satisfy the requirements of TIA Section 310(a). The
Indenture Trustee 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 it shall have a long term debt rating of investment grade or
better by the Rating Agencies. The Indenture Trustee shall comply with TIA
Section 310(b).
Section 6.12 Preferential Collection of Claims Against Lease
Trustee. 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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Section 6.13 Indenture Trustee as Holder of Series 1996-1
Certificates. So long as any Senior Notes are Outstanding, to the extent that
the Lease Trustee has rights as a "Holder" of the Series 1996-1 Certificates or
is entitled to consent to any actions taken by RCL Trust 1996-1 or the holders
of the Lease Trust Certificates issued to RCL Trust 1996-1 and Ford Credit
Leasing on the Closing Date, the Lease Trustee may initiate such action or
grant such consent only with consent of the Indenture Trustee. To the extent
that the Indenture Trustee has rights as a "Holder" of the Series 1996-1
Certificates, or has the right to consent or withhold consent with respect to
actions taken by RCL Trust 1996-1 or the holders of the Lease Trust
Certificates issued to RCL Trust 1996-1 and Ford Credit Leasing on the Closing
Date or the Lease Trustee (acting on behalf of the Lease Trust), such rights
shall be exercised, or consent granted (or withheld) upon the written direction
of Senior Noteholders holding a majority of the Outstanding Amount of the
Senior Notes; provided that with respect to Section 7.1(b) of the
Administrative Agency Agreement and Section 4.3(f) of the FCTT Agreement, such
direction shall require the written direction of Senior Noteholders holding
100% of the Outstanding Amount of the Senior Notes.
ARTICLE VII
SENIOR NOTEHOLDERS' LISTS AND REPORTS
Section 7.1 Lease Trustee To Furnish Indenture Trustee Names
and Addresses of Senior Noteholders. The Lease Trustee will furnish or cause
to be furnished to the Indenture Trustee (i) not more than five days after each
Record Date, a list, in such form as the Indenture Trustee may reasonably
require, of the names and addresses of the Senior Noteholders as of such Record
Date, (ii) at such other times as the Indenture Trustee may request in writing,
within 30 days after receipt by the Lease Trustee of any such request, a list
of similar form and content as of a date not more than 10 days prior to the
time such list is furnished; provided, however, that so long as (i) the
Indenture Trustee is the Senior Note Registrar or (ii) the Senior Notes are
issued as Book-Entry Senior Notes no such list shall be required to be
furnished to the Indenture Trustee.
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Section 7.2 Preservation of Information; Communications to
Senior Noteholders. (a) The Indenture Trustee shall preserve, in as current a
form as is reasonably practicable, the names and addresses of the Senior
Noteholders contained in the most recent list furnished to the Indenture
Trustee as provided in Section 7.1 and the names and addresses of Senior
Noteholders received by the Indenture Trustee in its capacity as Senior Note
Registrar. The Indenture Trustee may destroy any list furnished to it as
provided in Section 7.1 upon receipt of a new list so furnished.
(b) Senior Noteholders may communicate pursuant to TIA
Section 312(b) with other Senior Noteholders with respect to their rights
under this Indenture or under the Senior Notes. Upon receipt by the Indenture
Trustee of any request by three or more Senior Noteholders or by one or more
Senior Noteholders holding not less than 25% of the Outstanding Amount of the
Senior Notes to receive a copy of the current list of Senior Noteholders
(whether or not made pursuant to TIA Section 312(b)), the Indenture Trustee
shall promptly notify the Administrative Agent by providing to the
Administrative Agent a copy of such request and a copy of the list of Senior
Noteholders produced in response thereto.
(c) The Lease Trustee, the Indenture Trustee and the Senior
Note Registrar shall have the protection of TIA Section 312(c).
Section 7.3 Reports by Lease Trustee. (a) The Lease Trustee,
on behalf of the Lease Trust, shall:
(i) file with the Indenture Trustee, within 15 days
after the Lease Trust 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) which the Lease Trust 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 rules and regulations prescribed from
time to time by the Commission
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such additional information, documents and reports with respect to
compliance by the Lease Trust 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 Senior Noteholders
described in TIA Section 313(c)) such summaries of any information,
documents and reports required to be filed by the Lease Trustee on
behalf of the Lease Trust pursuant to clauses (i) and (ii) of this
Section 7.3(a) as may be required by rules and regulations prescribed
from time to time by the Commission.
(b) Unless the Lease Trust otherwise determines, the fiscal
year of the Lease Trust shall end on December 31 of each year.
Section 7.4 Reports by Indenture Trustee. If required by TIA
Section 313(a), within 60 days after each May 15 beginning with May 15, 1997,
the Indenture Trustee shall mail to each Senior 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).
A copy of each report at the time of its mailing to Senior
Noteholders shall be filed by the Indenture Trustee with the Commission and
each stock exchange, if any, on which the Senior Notes are listed.
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. The Indenture Trustee shall apply all such money received by it as
provided in this Indenture. Except as otherwise expressly
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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 Accounts. (a) Pursuant to Section 5.1(c) of the
Series 1996-1 Supplement, the Administrative Agent shall establish and maintain
an Eligible Account in the name of the Indenture Trustee until the Outstanding
Amount of the Senior Notes has been reduced to zero, and thereafter in the name
of the Lease Trustee, at an Eligible Institution (which initially shall be The
Chase Manhattan Bank) which is designated as the "Series 1996-1 Payments
Account." The Series 1996-1 Payments Account shall be under the sole dominion
and control of the Indenture Trustee, until the Outstanding Amount of the
Senior Notes has been reduced to zero, and thereafter under the sole dominion
and control of the Lease Trustee; provided, that the Administrative Agent may
make deposits to or request the Indenture Trustee to make deposits to or
withdrawals from the Series 1996-1 Payments Account in accordance with Section
5.2(e) of the Series 1996-1 Supplement. All monies deposited from time to time
in the Series 1996-1 Payments Account pursuant to this Indenture and the Series
1996-1 Supplement shall be held by the Indenture Trustee as part of the
Collateral and shall be applied only upon the terms and conditions of the Basic
Documents.
Any amounts on deposit in the Series 1996-1 Payments Account
shall be invested by the Indenture Trustee until the Outstanding Amount of the
Senior Notes has been reduced to zero, and thereafter by the Lease Trustee, and
at the direction of Ford Credit and Ford Credit Leasing, in Permitted
Investments with a maturity date no later than the Business Day preceding the
next succeeding Payment Date. No such investment shall be sold prior to
maturity. All investment earnings on amounts deposited to the Series 1996-1
Payments Account, including any proceeds thereof, shall be credited to the
Administrative Agent, and losses, if any, resulting from
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Permitted Investments in the Series 1996-1 Payments Account shall be charged to
the Administrative Agent. All such investment income shall be reported for
federal income tax purposes as earned by the Administrative Agent. The
authority of the Administrative Agent to make deposits to the Series 1996-1
Payments Account is revocable at any time by the Indenture Trustee until the
Outstanding Amount of Senior Notes has been reduced to zero, and thereafter by
the Lease Trustee. If the institution at which the Series 1996-1 Payments
Account is established ceases to be an Eligible Institution, then the Series
1996-1 Payments Account shall be moved to an Eligible Institution within 10
Business Days (or such longer period not to exceed 30 calendar days as to which
each Rating Agency may consent).
(b) Pursuant to Section 5.1(a) of the Series 1996-1
Supplement, there has been established and there shall be maintained an
Eligible Account in the name of the Indenture Trustee until the Outstanding
Amount of the Senior Notes has been reduced to zero, and thereafter in the name
of the Lease Trustee, at an Eligible Institution (which initially shall be The
Chase Manhattan Bank), which is designated as the FCTT Specified Assets
Collection Account, Series 1996-1 (the "Series 1996-1 Collection Account").
The Series 1996-1 Collection Account shall be under the sole dominion and
control of the Indenture Trustee until the Outstanding Amount of the Senior
Notes has been reduced to zero, and thereafter under the sole dominion and
control of the Lease Trustee; provided, that the Administrative Agent may make
deposits to and withdrawals from or request the Indenture Trustee to make
withdrawals from the Series 1996-1 Collection Account in accordance with
Section 5.2(c) and Section 5.2(d) of the FCTT Agreement, Section 6.2(b) of the
Administrative Agency Agreement and Section 5.2(a) of the Series 1996-1
Supplement. All deposits to and withdrawals from the Series 1996-1 Collection
Account shall be made only upon the terms and conditions of the Basic
Documents.
Any amounts on deposit in the Series 1996-1 Collection Account
shall be invested by the Indenture Trustee until the Outstanding Amount of the
Senior Notes has been reduced to zero, and thereafter by the Lease Trustee, and
at the direction of Ford Credit and Ford Credit Leasing, in Permitted
Investments with a maturity
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date no later than the Business Day preceding the next succeeding Payment Date.
No such investment shall be sold prior to maturity. All investment earnings on
amounts deposited to the Series 1996-1 Collection Account, including any
proceeds thereof, shall be credited to the Series 1996-1 Collection Account,
and losses, if any, resulting from Permitted Investments in the Series 1996-1
Collection Account shall be charged to the Series 1996-1 Collection Account.
All such investment income shall be reported for federal income tax purposes as
earned (i) 99% by RCL Trust 1996-1 and (ii) 1% by Ford Credit Leasing; the 99%
accruing to RCL Trust 1996-1 shall be reported by Ford Credit and Ford Credit
Leasing in accordance with their respective Percentage Interests in RCL Trust
1996-1. The authority of the Administrative Agent to make deposits to and
withdrawals from the Series 1996-1 Collection Account is revocable at any time
by the Indenture Trustee until the Outstanding Amount of Senior Notes has been
reduced to zero, and thereafter by the Lease Trustee. If the institution at
which the Series 1996-1 Collection Account is established ceases to be an
Eligible Institution, then the Series 1996-1 Collection Account shall be moved
to an Eligible Institution within 10 Business Days (or such longer period not
to exceed 30 calendar days as to which each Rating Agency may consent).
(c) Pursuant to Section 5.1(b) of the Series 1996-1
Supplement, there has been established and there shall be maintained an account
in the name of the Indenture Trustee until the Outstanding Amount of the Senior
Notes has been reduced to zero, and thereafter in the name of the Lease
Trustee, at an Eligible Institution (which initially shall be The Chase
Manhattan Bank), which is designated as the "Series 1996-1 Payahead Account."
The Series 1996-1 Payahead Account shall be under the sole dominion and control
of the Indenture Trustee until the Outstanding Amount of the Senior Notes has
been reduced to zero, and thereafter under the sole dominion and control of the
Lease Trustee; provided, that the Administrative Agent may make deposits to and
withdrawals from or request the Indenture Trustee to make withdrawals from the
Series 1996-1 Payahead Account in accordance with Section 6.1(a) of the
Administrative Agency Agreement and Section 5.2(b) of the Series 1996-1
Supplement. All deposits to and withdrawals from the
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Series 1996-1 Payahead Account shall be made only upon the terms and conditions
of the Basic Documents.
Any amounts on deposit in the Series 1996-1 Payahead Account
shall be invested by the Indenture Trustee until the Outstanding Amount of the
Senior Notes has been reduced to zero, and thereafter by the Lease Trustee, and
at the direction of Ford Credit and Ford Credit Leasing, in Permitted
Investments which mature no later than the Business Day preceding the next
succeeding Distribution Date. No such investment shall be sold prior to
maturity. All investment earnings on amounts deposited to the Series 1996-1
Payahead Account, including any proceeds thereof, shall be credited to the RCL
Account, and losses, if any, resulting from Permitted Investments in the Series
1996-1 Payahead Account shall be charged to the RCL Account. All such
investment income shall be reported for federal income tax purposes as earned
(i) 99% by RCL Trust 1996-1 and (ii) 1% by Ford Credit Leasing; the 99%
accruing to RCL Trust 1996-1 shall be reported by Ford Credit and Ford Credit
Leasing in accordance with their respective Percentage Interests in RCL Trust
1996-1. The authority of the Administrative Agent to make deposits to and
withdrawals from the Series 1996-1 Payahead Account is revocable at any time by
the Indenture Trustee until the Outstanding Amount of the Senior Notes has been
reduced to zero, and thereafter by the Lease Trustee. If the institution at
which the Series 1996-1 Payahead Account is established is no longer an
Eligible Institution, then the Series 1996-1 Payahead Account shall be moved to
an Eligible Institution within 10 Business Days (or such longer period not to
exceed 30 calendar days as to which each Rating Agency may consent).
(d) Pursuant to Section 5.1(b) of the Lease Trust Agreement
there has been established and there shall be maintained an Eligible Account in
the name of the Indenture Trustee until the Outstanding Amount of the Senior
Notes has been reduced to zero, and thereafter in the name of the Lease
Trustee, at an Eligible Institution (which initially shall be The Chase
Manhattan Bank), which is designated as the "Certificate Distribution Account".
The Certificate Distribution Account shall be under the sole dominion and
control of the Indenture Trustee until the Outstanding Amount of the Senior
Notes has been reduced to zero, and thereafter under the sole
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dominion and control of the Lease Trustee; provided, that the Lease Trustee may
make withdrawals from the Certificate Distribution Account in accordance with
Sections 5.2(c) and 5.2(g) of the Lease Trust Agreement and the Administrative
Agent may make withdrawals from the Certificate Distribution Account in
accordance with Section 5.2(f) of the Series 1996-1 Supplement. All deposits
to and withdrawals from the Certificate Distribution Account shall be made only
upon the terms and conditions of the Basic Documents.
Any amounts on deposit in the Certificate Distribution Account
shall be invested by the Indenture Trustee until the Outstanding Amount of the
Senior Notes has been reduced to zero, and thereafter by the Lease Trustee, and
at the direction of the Administrative Agent, in Permitted Investments with a
maturity date no later than the Business Day preceding the next succeeding
Payment Date. No such investment shall be sold prior to maturity. All
investment earnings on amounts deposited to the Certificate Distribution
Account, including any proceeds thereof, shall be credited to the Cash
Collateral Account, and losses, if any, resulting from Permitted Investments in
the Certificate Distribution Account shall be charged to the Cash Collateral
Account. All such investment income shall be reported for federal income tax
purposes as earned (i) 99% by RCL Trust 1996-1 and (ii) 1% by Ford Credit
Leasing; the 99% accruing to RCL Trust 1996-1 shall be reported by Ford Credit
and Ford Credit Leasing in accordance with their respective Percentage
Interests in RCL Trust 1996-1. If the institution at which the Certificate
Distribution Account is established ceases to be an Eligible Institution, then
the Certificate Distribution Account shall be moved to an Eligible Institution
within 10 Business Days (or such longer period not to exceed 30 calendar days
as to which each Rating Agency may consent).
(e) Pursuant to Section 3.5(a) of the Program Operating
Lease, there has been established and there shall be maintained an account (the
"Cash Collateral Account") at an Eligible Institution in the name of the
Indenture Trustee until the Outstanding Amount of the Senior Notes has been
reduced to zero and thereafter in the name of the Lease Trustee. The Cash
Collateral Account has been initially established at The Chase Manhattan Bank.
The Cash Collateral Account shall be
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under the sole dominion and control of the Indenture Trustee until the
Outstanding Amount of the Senior Notes has been reduced to zero, and
thereafter, under the sole dominion and control of the Lease Trustee. Cash
Collateral Account Property shall be invested by the Indenture Trustee until
the Outstanding Amount of the Senior Notes has been reduced to zero, and
thereafter by the Lease Trustee, and at the direction of Ford Credit and Ford
Credit Leasing, in Cash Collateral Account Investments. All investment
earnings on amounts deposited to the Cash Collateral Account, including any
proceeds thereof, shall be credited to the Cash Collateral Account, and losses,
if any, resulting from Cash Collateral Account Investments in the Cash
Collateral Account shall be charged to the Cash Collateral Account. All such
investment income shall be reported for federal income tax purposes as earned
(i) 99% by RCL Trust 1996-1 and (ii) 1% by Ford Credit Leasing; the 99%
accruing to RCL Trust 1996-1 shall be reported by Ford Credit and Ford Credit
Leasing in accordance with their respective Percentage Interests in RCL Trust
1996-1. If the institution at which the Cash Collateral Account is maintained
ceases to be an Eligible Institution, then the Cash Collateral Account shall be
moved to an Eligible Institution within ten Business Days (or such longer
period not to exceed 30 calendar days as to which each Rating Agency may
consent).
Section 8.3 Cash Collateral Account Certificate; Disbursement
and Payment Instructions. (a) On the second Business Day preceding each
Payment Date, the Lease Trustee shall cause the Administrative Agent, on behalf
of the Lease Trust, to deliver to the Indenture Trustee a certificate (the
"Cash Collateral Account Certificate") setting forth the following information
with respect to such Payment Date:
(i) the Series 1996-1 Administrative Agent Fee for
the preceding Accrual Period;
(ii) the Required Interest Payment;
(iii) the Cash Collateral Amount on the Business Day
preceding such Payment Date; and
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(iv) the Cash Collateral Required Draw Amount and
the Cash Collateral Additional Draw Amount.
(b) On the second Business Day preceding each Payment Date
the Lease Trustee shall cause the Administrative Agent, on behalf of the Lease
Trust, to deliver to the Indenture Trustee a certificate (the "Disbursement and
Payment Instructions") including the following information with respect to such
Payment Date, the related Accrual Period and Series 1996-1:
(i) the amount of interest accrued during the
preceding Interest Accrual Period on the Class A-1 Senior Notes and
the Class A-2 Senior Notes, respectively, the amounts payable with
respect to such interest, and any resulting shortfall with respect to
each such Class (separately stated);
(ii) the amount of interest accrued during the
preceding Interest Accrual Period on the Subordinated Notes, the
amounts payable with respect to such interest (net of amounts paid
pursuant to Section 6.6 of the Program Operating Lease), and any
resulting shortfall (separately stated);
(iii) the amount of interest accrued during the
preceding Interest Accrual Period on the Lease Trust Certificates, the
amounts payable with respect to such interest, and any resulting
shortfall (separately stated);
(iv) the amount of principal to be paid on the Class
A-1 Senior Notes and the Class A-2 Senior Notes, respectively
(separately stated);
(v) the Series 1996-1 Administrative Fee; and
(vi) the amount, if any, to be distributed to the
Lease Trustee for payment of principal of the Subordinated Notes and
Lease Trust Certificates in accordance with the terms thereof.
(c) The Indenture Trustee shall have no duty or obligation to
verify or confirm the accuracy of any of the information or numbers set forth
in any of the certificates required to be delivered to the Indenture
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Trustee in accordance with this Section 8.3 and the Indenture Trustee shall be
fully protected in relying upon such certificates.
Section 8.4 Disbursement of Funds. (a) Pursuant to Section
5.2(e) of the Series 1996-1 Supplement, on the Business Day preceding each
Payment Date, the Administrative Agent shall withdraw an amount equal to the
Available Sale Proceeds from the Series 1996-1 Collection Account and deposit
such amount in the Series 1996-1 Payments Account. Pursuant to Sections 5.2(e)
and 5.3 of the Series 1996-1 Supplement, on the Business Day preceding each
Payment Date, the Administrative Agent shall withdraw an amount equal to the
Cash Collateral Deposit Amount from the Series 1996-1 Collection Account and
deposit such amount into the Cash Collateral Account.
On the Business Day preceding each Payment Date, the Indenture
Trustee shall, in accordance with the Cash Collateral Account Certificate
received from the Administrative Agent pursuant to Section 8.3(a), withdraw
from the Cash Collateral Account and deposit in the Series 1996-1 Payments
Account the Cash Collateral Required Draw Amount.
(b) On each Payment Date the Indenture Trustee shall, in
accordance with the Disbursement and Payment Instructions received from the
Administrative Agent pursuant to Section 8.3(b), withdraw from the Series
1996-1 Payments Account the Available Funds on deposit therein and apply such
amounts in accordance with the following priorities:
(i) to the Administrative Agent, the Series 1996-1
Administrative Fee for the preceding Accrual Period;
(ii) to the Subordinated Noteholders, pro rata
without any priority between Classes, an amount equal to the interest
accrued at the applicable Senior Note Interest Rate set forth in
Section 2.1 during the preceding Interest Accrual Period on all
Outstanding Classes of Senior Notes plus interest on any defaulted
interest at the applicable Senior Note Interest Rate; provided
however, that if there are not sufficient funds to pay the entire
amount of accrued and unpaid interest then due on the Senior
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Notes, such funds shall be applied to the payment of such interest on
each Class of Senior Notes pro rata on the basis of the total of such
interest due on the Senior Notes including any defaulted interest at
the applicable Senior Note Interest Rate;
(iii) to the Lease Trust Paying Agent, for payment to
the Subordinated Noteholders, pro rata, an amount equal to the Accrued
Subordinated Note Interest (net of amounts paid pursuant to Section
6.6 of the Program Operating Lease);
(iv) to the Certificate Distribution Account, an
amount equal to interest accrued on the Aggregate Certificate Balance
at the Certificate Interest Rate plus interest on any defaulted
interest at the Certificate Interest Rate during the preceding
Interest Accrual Period plus any Certificate Distribution Draw Amount
on such Payment Date;
(v) to the Senior Noteholders, as payments of
principal in the following order of priority:
(A) to the Class A-1 Senior Noteholders pro rata,
until the Class A-1 Senior Notes have been paid in full; and
(B) to the Class A-2 Senior Noteholders pro rata,
until the Class A-2 Senior Notes have been paid in full;
provided, however, that on any Payment Date occurring after
the maturity of the Senior Notes has been accelerated pursuant to Section 5.2,
amounts to be applied pursuant to this clause (v) shall be paid as principal to
the Class A-1 Senior Noteholders and the Class A-2 Senior Noteholders, ratably,
without preference or priority of any kind, according to the principal amount
due and payable on the Class A-1 Senior Notes and the Class A-2 Senior Notes.
Amounts remaining, if any, after the application of funds pursuant to clauses
(i) through (v) above shall be distributed to the Lease Trustee for
distribution in accordance with the terms of the Subordinated Notes and the
Lease Trust Agreement.
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(c) On each Payment Date, the Indenture Trustee shall, in
accordance with the Cash Collateral Account Certificate received from the
Administrative Agent pursuant to Section 8.3(a), withdraw the Cash Collateral
Additional Draw Amount from the Cash Collateral Account and apply such amounts
to pay each of the items specified in Section 8.4(b) without duplication of the
amounts already paid on such Payment Date, in accordance with the priorities
set forth therein.
(d) On the Business Day preceding each Semiannual Payment
Date for which the Available Funds, as set forth in the Disbursement and
Payment Instructions received from the Administrative Agent pursuant to Section
8.3(b), is less than the sum of the amounts specified in clauses (i), (ii) and
(iii) of Section 8.4(b), the Indenture Trustee shall withdraw the Certificate
Distribution Draw Amount, as set forth in the Disbursement and Payment
Instructions, from the Certificate Distribution Account, deposit such amount in
the Series 1996-1 Payments Account and apply such amount on the related
Semiannual Payment Date to pay each of the items set forth in clauses (i), (ii)
and (iii) of Section 8.4(b) without duplication of the amounts already paid on
such Semiannual Payment Date, in accordance with the priorities set forth
therein.
(e) On each Payment Date the Indenture Trustee shall send, by
first class mail, a report to each Person who was a Senior Noteholder on the
prior Record Date including the following information with respect to such
Payment Date and the related Accrual Period:
(i) the Note Pool Factor of each Class of Senior
Notes;
(ii) the amount of interest paid to each Outstanding
Class of Senior Notes;
(iii) the amount of principal paid to each
Outstanding Class of Senior Notes;
(iv) the aggregate amount of Series 1996-1
Collections deposited in the Series 1996-1 Collection Account (stating
separately the components thereof);
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(v) the Aggregate Net Sale Proceeds Advances
deposited in the Series 1996-1 Collection Account;
(vi) the Aggregate Net Monthly Payment Advances
deposited in the Series 1996-1 Collection Account;
(vii) the amount of Available Sale Proceeds (stating
separately the components thereof);
(viii) the Cash Collateral Required Draw Amount and
the Cash Collateral Additional Draw Amount;
(ix) the Available Funds;
(x) the amount distributed to the Lease Trust Paying
Agent for payment of interest (net of amounts paid pursuant to Section
6.6 of the Program Operating Lease) to the Subordinated Noteholders;
(xi) the amount deposited in the Certificate
Distribution Account for payment of interest to the Lease Trust
Certificateholders;
(xii) the Outstanding Amount of each Class of Senior
Notes and of the Subordinated Notes, the Aggregate Certificate Balance
and the Pool Balance (separately stated);
(xiii) the Cash Collateral Amount (after giving
effect to all deposits and withdrawals with respect to such Payment
Date);
(xiv) the aggregate of the Series 1996-1 Credit
Losses for each of the three preceding Collection Periods; and
(xv) the aggregate of the Series 1996-1 Residual
Losses for each of the three preceding Collection Periods.
Section 8.5 General Provisions Regarding Accounts. Subject
to Section 6.1(c), the Indenture Trustee shall not in any way be held liable by
reason of any insufficiency in the Series 1996-1 Payments Account,
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the Series 1996-1 Collection Account, the Series 1996-1 Payahead Account, the
Certificate Distribution Account or the Cash Collateral Account resulting from
any loss on any Permitted Investment or Cash Collateral Account Investment, as
applicable, included therein except for losses attributable to the Indenture
Trustee's failure to make payments on any such Permitted Investments or Cash
Collateral Account Investments issued by the Indenture Trustee, in its
commercial capacity as principal obligor and not as trustee, in accordance with
their terms.
Section 8.6 Release of Indenture Trust Estate. The
Indenture Trustee shall, at such time as there are no Senior Notes Outstanding
and all sums due the Indenture Trustee pursuant to Section 6.7 have been paid,
release any remaining portion of the Indenture Trust Estate that secured the
Senior Notes from the lien of this Indenture and release to the Lease Trustee
or any other Person entitled thereto any funds then on deposit in the Series
1996-1 Payments Account. The Indenture Trustee shall release property from the
lien of this Indenture pursuant to this Section 8.6 only upon receipt of an
Issuer Request accompanied by an Officers' Certificate, an Opinion of Counsel
and (if required by the TIA) Independent Certificates in accordance with TIA
Section Section 314(c) and 314(d)(1) meeting the applicable requirements of
Section 11.1.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.1 Supplemental Indentures Without Consent of Senior
Noteholders. (a) Without the consent of the Senior Noteholders, but with prior
notice to the Rating Agencies, the Lease Trustee, on behalf of the Lease Trust,
and the Indenture Trustee, when requested by an Issuer Request, 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 TIA 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
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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 Lease
Trust, and the assumption by any such successor of the covenants of
the Lease Trust herein and in the Senior Notes contained;
(iii) to add to the covenants of the Lease Trust,
for the benefit of the Senior Noteholders, or to surrender any right
or power herein conferred upon the Lease Trust;
(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 which may be
defective or 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 in any
supplemental indenture which shall not be inconsistent with the
provisions of this Indenture; provided that such other provisions
shall not adversely affect the interests of the Senior Noteholders; or
(vi) to evidence and provide for the acceptance of
the appointment hereunder by a successor trustee with respect to the
Senior 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 effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Inden-
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ture 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 Lease Trustee, on behalf of the Lease Trust, and the
Indenture Trustee, when requested by an Issuer Request, may, also without the
consent of the Senior Noteholders, 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
which require consent of the Holder of each Senior Note affected thereby) the
rights of the Senior Noteholders under this Indenture; provided, however, that
(i) such action shall not, as evidenced by an Opinion of Counsel, materially
adversely affect the interests of any Senior 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, (x) affect the
treatment of the Senior Notes as debt for federal income tax purposes, (y) be
deemed to cause a taxable exchange of the Senior Notes for federal income tax
purposes or (z) cause the Issuer, RCL Trust 1996-1 or FCTT to be taxable as an
"association" or publicly traded partnership taxable as a corporation for
federal income tax purposes.
Section 9.2 Supplemental Indentures with Consent of Senior
Noteholders. The Lease Trustee, on behalf of the Lease Trust, and the
Indenture Trustee, when requested by an Issuer Request, also may, with the
consent of Senior Noteholders holding not less than a majority of the
Outstanding Amount of the Senior Notes, by Act of such Senior Noteholders
delivered to the Lease Trustee 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 of modifying in any manner the rights of the Senior
Noteholders under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the
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Senior Noteholder of each Outstanding Senior Note affected thereby:
(i) change the Stated Maturity of or the date of
payment of any installment of principal of or interest on any Senior
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 Senior Notes, or
change any place of payment where, or the coin or currency in which,
any Senior Note or the interest thereon is payable, or impair the
right to institute suit for the enforcement of the provisions of this
Indenture requiring the application of funds available therefor, as
provided in Article V, to the payment of any such amount due on the
Senior Notes on or after the respective due dates thereof (or, in the
case of redemption, on or after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount
of the Senior Notes, the consent of the Senior Noteholders of which is
required for any such supplemental indenture, or the consent of the
Senior Noteholders of which is required for any waiver of compliance
with provisions of this Indenture or Defaults or Events of Default
hereunder and their consequences provided for in this Indenture;
(iii) modify or alter the provisions of the proviso
to the definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount
of the Senior Notes required to direct the Indenture Trustee to direct
the Lease Trustee to sell or liquidate the Indenture Trust Estate
pursuant to Section 5.4 if the proceeds of such sale would be
insufficient to pay the Outstanding Amount plus accrued but unpaid
interest on the Senior Notes;
(v) modify any provision of this Section 9.2 except
to increase any percentage specified
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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 Senior Noteholder of each Outstanding
Senior Note affected thereby;
(vi) modify any of the provisions of this Indenture
in such manner as to affect the calculation of the amount of any
payment of interest or principal due on any Senior Note on any Payment
Date (including the calculation of any of the individual components of
such calculation);
(vii) permit the creation of any lien ranking prior
to or on a parity with the lien of this Indenture with respect to any
part of the Indenture Trust Estate or, except as otherwise permitted
or contemplated herein, terminate the lien of this Indenture on any
property at any time subject hereto or deprive any Senior Noteholder
of the security provided by the lien of this Indenture; or
(viii) impair the right to institute suit for the
enforcement of payment as provided in Section 5.7.
Any such supplemental indenture shall be executed only upon
delivery of an Opinion of Counsel to the same effect as in Section
9.1(b)(iii)(z) above. The Indenture Trustee may in its discretion determine
whether or not any Senior Notes would be affected by any supplemental indenture
and any such determination shall be conclusive upon all Senior Noteholders,
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 Senior 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 Lease Trustee, on behalf
of the Lease Trust, and the Indenture Trustee of any supplemental indenture
pursuant to this Section 9.2, the Indenture Trustee shall mail to the
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Senior Noteholders to which such amendment or supplemental indenture relates a
notice setting forth in general terms the substance of such supplemental
indenture. Any failure of the Indenture Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture.
Section 9.3 Execution of Supplemental Indentures. In
executing, or permitting the additional trusts created by, any supplemental
indenture permitted by this Article IX or the modifications thereby of the
trusts created by this Indenture, the Indenture Trustee shall be entitled to
receive, and subject to Sections 6.1 and 6.2, shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. 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 indemnities under this Indenture or otherwise.
Section 9.4 Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith with respect to the Senior Notes affected thereby, and the respective
rights, limitations of rights, obligations, duties, liabilities and immunities
under this Indenture of the Indenture Trustee, the Lease Trust, the Lease
Trustee and the Senior Noteholders thereafter be determined, exercised and
enforced hereunder subject in all respects to such modifications and
amendments, and all the terms and conditions of any such supplemental indenture
shall be and be deemed to be part of the terms and conditions of this Indenture
for any and all purposes.
Section 9.5 Conformity With Trust Indenture Act. Every
amendment of this Indenture and every supplemental indenture executed pursuant
to this Article IX shall conform to the requirements of the TIA as then in
effect so long as this Indenture is required to be qualified under the TIA.
Section 9.6 Reference in Senior Notes to Supplemental
Indentures. Senior Notes authenticated and
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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 Lease Trustee or the Indenture Trustee shall so
determine, new Senior Notes so modified as to conform, in the opinion of the
Indenture Trustee and the Lease Trustee, to any such supplemental indenture may
be prepared and executed by the Lease Trustee, on behalf of the Trust, and
authenticated and delivered by the Indenture Trustee in exchange for
Outstanding Senior Notes.
ARTICLE X
REDEMPTION OF SENIOR NOTES
Section 10.1 Redemption. The Senior Notes shall be redeemed
in whole, but not in part, for a purchase price equal to the Redemption Price
on any Payment Date on which the Administrative Agent exercises its option to
purchase the Series 1996-1 Certificates pursuant to Section 7.1 of the Series
1996-1 Supplement; provided, however, that the Lease Trust has available funds
sufficient to pay the Redemption Price. The Administrative Agent or the Lease
Trustee shall furnish the Rating Agencies notice of such redemption. If the
Senior Notes are to be redeemed pursuant to this Section 10.1, the Lease
Trustee shall or shall cause the Administrative Agent to furnish notice of such
election to the Indenture Trustee not later than forty-five days (unless a
shorter notice shall be satisfactory to the Indenture Trustee) prior to the
Redemption Date. Pursuant to Section 7.1 of the Series 1996-1 Supplement, on
the Business Day preceding the Redemption Date the Administrative Agent shall
deposit the Series 1996-1 Asset Amount plus an amount equal to one month's
interest calculated at a rate equal to the weighted average Retail Operating
Lease Factor for such Series 1996-1 Assets with the Indenture Trustee in the
Series 1996-1 Collection Account whereupon all such Senior Notes shall be due
and payable on the Redemption Date upon the furnishing of a notice complying
with Section 10.2 to each Senior Noteholder.
Section 10.2 Form of Redemption Notice. Notice of redemption
under Section 10.1 shall be given by
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the Indenture Trustee by facsimile or by first-class mail, postage prepaid,
transmitted or mailed at least thirty days prior to the Redemption Date to each
Senior Noteholder, on the Record Date immediately preceding the Redemption
Date, at such Senior Noteholder's address appearing in the Senior Note
Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the place where the Senior Notes to be
redeemed are to be surrendered for payment of the Redemption Price
(which shall be the office or agency of the Lease Trustee 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 Senior Note and that
interest thereon shall cease to accrue for and after said date.
Notice of redemption of the Senior Notes shall be given by the
Indenture Trustee in the name and at the expense of the Lease Trust. Failure
to give notice of redemption, or any defect therein, to any Senior Noteholder
shall not impair or affect the validity of the redemption of any other Senior
Note.
Section 10.3 Senior Notes Payable on Redemption Date. The
Senior Notes to be redeemed shall, following notice of redemption as required
by Section 10.2, become due and payable on the Redemption Date at the
Redemption Price and (unless the Lease Trust shall default in the payment of
the Redemption Price) no interest shall accrue on the Redemption Price for any
period from and including the Redemption Date.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Compliance Certificates and Opinions, etc. (a)
Upon any application or request by
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the Lease Trustee to the Indenture Trustee to take any action under any
provision of this Indenture, the Lease Trustee 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:
(i) a statement that each signatory of such
certificate or opinion has read such covenant or condition and the
definitions herein relating thereto;
(ii) 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;
(iii) 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
(iv) a statement as to whether, in the opinion of
each such signatory, such condition or covenant has been complied
with.
(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 Lease Trustee shall, in addition to any
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obligation imposed in Section 11.1(a) or elsewhere in this Indenture, furnish
to the Indenture Trustee an Officers' Certificate certifying or stating the
opinion of each Person signing such certificate as to the fair value (within 90
days of such deposit) to the Lease Trust of the Collateral or other property or
securities to be so deposited.
(ii) Whenever the Lease Trustee is required to
furnish to the Indenture Trustee an Officers' Certificate certifying
or stating the opinion of any signer thereof as to the matters
described in clause (i) above, the Lease Trustee shall also deliver to
the Indenture Trustee an Independent Certificate as to the same
matters, if the fair value of the property or 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
calendar year of the Lease Trust, as set forth in the certificates
delivered pursuant to clause (i) above and this clause (ii), is 10% or
more of the Outstanding Amount of the Senior Notes, but such a
certificate need not be furnished with respect to any securities so
deposited, if the fair value thereof to the Lease Trust as set forth
in the related Officers' Certificate is less than $25,000 or less than
one percent of the Outstanding Amount of the Senior Notes.
(iii) Whenever any property or securities are to be
released from the lien of this Indenture, the Lease Trustee shall also
furnish to the Indenture Trustee an Officers' Certificate certifying
or stating the opinion of each Person signing such certificate as to
the fair value (within 90 days of such release) of the property or
securities proposed to be released and stating that in the opinion of
such Person the proposed release will not impair the security under
this Indenture in contravention of the provisions hereof.
(iv) Whenever the Lease Trustee is required to
furnish to the Indenture Trustee an Officers' Certificate certifying
or stating the opinion of any signer thereof as to the matters
described in clause (iii) above, the Lease Trustee shall also furnish
to the Indenture Trustee an Inde-
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pendent Certificate as to the same matters, if the fair value of the
property or securities and of all other property, 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 10% or more of the
Outstanding Amount of the Senior Notes, 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 Officers'
Certificate is less than $25,000 or less than one percent of the then
Outstanding Amount of the Senior Notes.
(v) Notwithstanding Section 2.9 or any other
provision of this Section 11.1, the Lease Trustee may (A) collect,
liquidate, sell or otherwise dispose of the Collateral as and to the
extent permitted or required by the Basic Documents and (B) make cash
payments out of the Series 1996-1 Payments Account as and to the
extent permitted or required by the Basic Documents.
Section 11.2 Form of Documents Delivered to Indenture
Trustee. In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer 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 his 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 Administrative Agent, the RCL Trustee or the Lease
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Trustee, stating that the information with respect to such factual matters is
in the possession of the Administrative Agent, the RCL Trustee or the Lease
Trustee, unless such officer or counsel knows, or in the exercise of reasonable
care should know, that the certificate or opinion or representations with
respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
Whenever in this Indenture, in connection with any application
or certificate or report to the Indenture Trustee, it is provided that the
Lease Trustee shall deliver, on behalf of the Lease Trust, any document as a
condition of the granting of such application, or as evidence of the Lease
Trust'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 Lease Trust to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however,
be construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
Section 11.3 Acts of Senior Noteholders. (a) Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Senior Noteholders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Senior 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 Lease
Trustee. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Senior
Noteholders signing such instrument or instruments.
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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 Lease
Trustee, 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 Senior Notes shall be proved by the
Senior Note Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the holder of any Senior Note shall bind the
holder of every Senior 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 Lease Trustee in reliance thereon,
whether or not notation of such action is made upon such Senior Note.
Section 11.4 Notices, etc., to Indenture Trustee, Lease
Trustee and Rating Agencies. Any request, demand, authorization, direction,
notice, consent, waiver or Act of Senior Noteholders or other documents
provided or permitted by this Indenture to be made upon, given or furnished to
or filed with:
(a) the Indenture Trustee by any Senior Noteholder, the
Administrative Agent or the Lease Trustee 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
(b) the Lease Trustee by the Indenture Trustee, or by any
Senior Noteholder shall be sufficient for every purpose hereunder if in writing
and mailed, first-class, postage prepaid, to the Lease Trustee addressed to:
Ford Credit Auto Lease Trust 1996-1, in care of PNC Bank, Delaware, 222
Delaware Avenue, Wilmington, Delaware 19801, Attention: Michael B. McCarthy,
or at any other address previously furnished in writing to the Indenture
Trustee by the Lease Trustee. The Lease Trust-
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ee shall promptly transmit any notice received by it from the Senior Noteholders
to the Indenture Trustee;
provided, however, that service of process in connection with any litigation
hereunder shall be effected in accordance with applicable law.
Notices required to be given to the Rating Agencies by the
Lease Trustee or the Indenture Trustee shall be in writing, personally
delivered or mailed by certified mail, return receipt requested to (i) in the
case of Moody's Investors Service, at the following address: 99 Church Street
, New York, NY 10007, Attention: ABS Monitoring Group; with a copy to Christina
Cotton and (ii) in the case of Standard & Poor's Ratings Group, at the
following address: Standard & Poor's Ratings Group, 26 Broadway (15th Floor),
New York, New York 10004, Attention: Asset Backed Surveillance Department; or
as to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.
Section 11.5 Notices to Senior Noteholders; Waiver. Where
this Indenture provides for notice to Senior Noteholders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class, postage prepaid to each Senior
Noteholder affected by such event, at his address as it appears on the Senior
Note Register, not later than the latest and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Senior Noteholders is given by mail, neither the failure to mail such notice
nor any defect in any notice so mailed to any particular Senior Noteholder
shall affect the sufficiency of such notice with respect to other Senior
Noteholders, and any notice that is mailed in the manner herein provided shall
conclusively be presumed to have been duly given.
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 Senior 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.
87
<PAGE> 95
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 of Senior 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.
Where this Indenture provides for notice to the Rating
Agencies, failure to give such notice shall not affect any other rights or
obligations created hereunder, and shall not under any circumstance constitute
a Default or Event of Default.
Section 11.6 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 Section Section 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 11.7 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 11.8 Successors and Assigns. All covenants and
agreements in this Indenture and the Senior Notes by the Lease Trust shall bind
its successors and assigns, whether so expressed or not.
All agreements of the Indenture Trustee in this Indenture
shall bind its successors.
Section 11.9 Separability. In case any provision in this
Indenture or in the Senior 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.
88
<PAGE> 96
Section 11.10 Benefits of Indenture. Nothing in this
Indenture or in the Senior Notes, express or implied, shall give to any Person,
other than the parties hereto and their successors hereunder, and the Senior
Noteholders (and, with respect to Sections 8.3 and 8.4, the Subordinated
Noteholders and the Lease Trust Certificateholders), and any other party
secured hereunder, and any other Person with an ownership interest in any part
of the Indenture Trust Estate, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
Section 11.11 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 Senior 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 11.12 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, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
Section 11.13 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 11.14 Recording of Indenture. If this Indenture is
subject to recording in any appropriate public recording offices, such
recording is to be effected by the Lease Trustee, on behalf of the Lease Trust,
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
Senior Noteholders or any other Person secured hereunder or for the enforcement
of any right or remedy granted to the Indenture Trustee under this Indenture.
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<PAGE> 97
Section 11.15 Trust Obligation. No recourse may be taken,
directly or indirectly, with respect to the obligations of the Lease Trust, the
Lease Trustee, or the Indenture Trustee on the Senior Notes or under this
Indenture or any certificate or other writing delivered in connection herewith
or therewith, against (i) the Indenture Trustee or the Lease Trustee in their
individual capacities, (ii) any Subordinated Noteholder, (iii) any Lease Trust
Certificateholder or (iv) any partner, owner, beneficiary, agent, officer,
director, employee or agent of the Indenture Trustee or the Lease Trustee in
their individual capacities, any Subordinated Noteholder, any Lease Trust
Certifi- cateholder, the Lease Trustee or the Indenture Trustee of any
successor or assign of the Indenture Trustee or the Lease Trustee in their
individual capacities, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Lease 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 Lease Trust hereunder, the Lease Trustee shall be subject
to, and entitled to the benefits of, the terms and provisions of Article VI,
VII and VIII of the Lease Trust Agreement.
Section 11.16 No Petition. The Indenture Trustee, by
entering into this Indenture, and each Senior Noteholder or Note Owner, by
accepting a Senior Note or, in the case of a Note Owner, a beneficial interest
in a Senior Note, hereby covenants and agree that for a period of one year and
one day after payment in full of the Series 1996-1 Certificates they will not
institute against FCTT, RCL Trust 1996-1, Ford Credit Leasing or the Lease
Trust, or join in any institution against FCTT, RCL Trust 1996-1 Ford Credit
Leasing or the Lease 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 Senior Notes, this Indenture or any of the other
Basic Documents; provided, however, that Senior Noteholders holding 100% of the
Outstanding Amount of the Senior Notes may at any time institute, or join in
any
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<PAGE> 98
institution of, any such proceedings. Nothing in this Section 11.16 shall
preclude, or be deemed to stop, the Indenture Trustee (i) from taking any
action prior to the expiration of the aforementioned one year and one day
period in (A) any case or proceeding voluntarily filed by the Lease Trust or
(B) any involuntary insolvency proceeding filed or commenced by a Person other
than the Indenture Trustee, or (ii) from commencing against the Lease Trust or
any of its properties any legal action which is not a bankruptcy, moratorium or
liquidation.
Section 11.17 Inspection. The Lease Trust agrees that, on
reasonable prior notice, it will permit any representative of the Indenture
Trustee, during the Lease Trust's normal business hours, to examine all the
books of account, records, reports, and other papers of the Lease Trust, to
make copies and extracts therefrom, to cause such books to be audited by
Independent certified public accountants, and to discuss the Lease Trust's
affairs, finances and accounts with the Lease Trust's officers, employees, and
Independent certified public accountants, all at such reasonable times and as
often as may be reasonably requested. The Indenture Trustee shall and shall
cause its representatives to hold in confidence all such information except to
the extent disclosure may be required by law (and all reasonable applications
for confidential treatment are unavailing) and except to the extent that the
Indenture Trustee may reasonably determine that such disclosure is consistent
with its obligations hereunder.
[THIS SPACE LEFT INTENTIONALLY BLANK]
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<PAGE> 99
IN WITNESS WHEREOF, the Lease Trustee, on behalf of the Lease
Trust, and the Indenture Trustee have caused this Indenture to be duly executed
by their respective officers, thereunto duly authorized, all as of the day and
year first above written.
FORD CREDIT AUTO LEASE TRUST 1996-1
By PNC BANK, DELAWARE, not in its
individual capacity but solely as
Lease Trustee,
By:
--------------------------------
Name: Michael B. McCarthy
Title: Vice President
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as
Indenture Trustee,
By:
--------------------------------
Name: Michael A. Smith
Title: Vice President
<PAGE> 100
[Form of Class A-1 Senior Note] EXHIBIT A-1
REGISTERED
No. R
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. ______
Unless this Senior Note is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the Lease
Trustee or its agent for registration of transfer, exchange or payment, and any
Senior 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.
AS SET FORTH HEREIN THE OUTSTANDING PRINCIPAL AMOUNT OF THIS
SENIOR NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
FORD CREDIT AUTO LEASE TRUST 1996-1
_____% CLASS A-1 ASSET BACKED SENIOR NOTE
Ford Credit Auto Lease Trust 1996-1 (the "Lease Trust"), a
trust created pursuant to a trust agreement dated as of ______ __, 1996 between
______, not in its individual capacity but solely as trustee of RCL Trust
1996-1, as Depositor and PNC Bank, Delaware, not in its individual capacity but
solely as trustee of the Lease Trust (the "Lease Trustee"), for value received,
hereby promises to pay to CEDE & CO., or registered assigns, upon presentation
and surrender of this Senior Note the principal sum of _____ DOLLARS (U.S.
$_____) on the
A-1-1
<PAGE> 101
earlier of the ______ __, ____ Payment Date (the "Stated Maturity") and the
Redemption Date, if any, pursuant to Section 10.1 of the Indenture. The Lease
Trust will pay interest on this Senior Note at the rate per annum shown above
(the "Senior Note Interest Rate") on each Payment Date until the principal of
this Senior Note is paid or made available for payment, on the principal amount
of this Senior Note outstanding on the preceding Payment Date (after giving
effect to all payments of principal made on the preceding Payment Date).
Interest on this Senior Note will accrue for each Payment Date from and
including the 15th day of the Collection Period third preceding the Collection
Period in which such Payment Date occurs, through and including the 14th day of
the Collection Period in which such Payment Date occurs, or, if no interest has
yet been paid, from ______ __, ____. Interest will be computed on the basis of
a 360-day year of twelve 30-day months. Such principal of and interest on this
Senior Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Senior 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 Lease Trust with respect to this Senior Note shall be applied first
to interest due and payable on this Senior Note as provided above and then to
the unpaid principal of this Senior Note.
Reference is made to the further provisions of this Senior
Note set forth on the reverse hereof, which shall have the same effect as
though fully set forth on the face of this Senior Note.
Unless the certificate of authentication hereon has been
executed by the Indenture Trustee whose name appears below by manual signature,
this Senior 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.
A-1-2
<PAGE> 102
IN WITNESS WHEREOF, the Lease Trust has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer as of the date set
forth below.
Date: ____ __, ____ FORD CREDIT AUTO LEASE TRUST 1996-1,
by PNC BANK, DELAWARE, not in its individual
capacity but solely as Lease Trustee under the
Lease Trust Agreement
By:
-----------------------------------------
Name: Michael B. McCarthy
Title: Vice President
A-1-3
<PAGE> 103
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A-1 Senior Notes designated above and
referred to in the within-mentioned Indenture.
Date: ____ __, ____ THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as
Indenture Trustee
By:
--------------------------------------
Authorized Signatory
<PAGE> 104
[REVERSE OF SENIOR NOTE]
This Senior Note is one of a duly authorized issue of Senior
Notes of the Lease Trust, designated as its "__% Class A-1 Asset Backed Senior
Notes" (herein called the "Class A-1 Senior Notes") issued under an Indenture,
dated as of ______ __, 1996 (such indenture, as supplemented or amended, is
herein called the "Indenture"), between the Lease Trust and The Chase Manhattan
Bank, as trustee (the "Indenture Trustee", which term includes any successor
Indenture Trustee 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 Lease Trust, the Indenture Trustee and
the Senior Noteholders. Also issued under the Indenture are the __% Class A-2
Asset Backed Senior Notes (the "Class A-2 Senior Notes" and together with the
Class A-1 Senior Notes, collectively, the "Senior Notes"). The Senior Notes
are subject to all terms of the Indenture. All terms used in this Senior Note
that are defined in the Indenture, as supplemented or amended, shall have the
meanings assigned to them in or pursuant to the Indenture, as so supplemented
or amended.
The Senior Notes are and will be equally and ratably secured
by the Collateral as provided in the Indenture.
Under the Indenture, interest will be payable on ______ 15,
______ 15, ______ 15, and ______ 15, of each year, commencing ______ 15, 199_,
(or, if such 15th day is not a Business Day, the next Business Day (the
"Payment Date"), to the Person in whose name this Senior Note is registered at
the close of business on the 14th day of the calendar month in which such
Payment Date occurs, or if Definitive Senior Notes have been issued, to the
Person in whose name this Senior Note is registered on the last day of the
calendar month preceding such Payment Date (the "Record Date"). On each
Payment Date, there shall be distributed to such Senior Noteholder the interest
accrued at the Senior Note Interest Rate during the preceding Interest Accrual
Period on the Outstanding Amount of this Senior Note and the principal, if any,
available to be paid on such Payment Date in accordance with the terms of the
Indenture; provided,
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<PAGE> 105
however, that no principal shall be paid on the Class A-2 Senior Notes until
the Class A-1 Senior Notes have been paid in full.
As described above, the entire unpaid principal amount of this
Senior Note shall be due and payable on the earlier of the Stated Maturity and
the Redemption Date, if any, pursuant to Section 10.1 of the Indenture.
Notwithstanding the foregoing, the entire unpaid principal amount of the Senior
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 Senior Noteholders
of Senior Notes evidencing not less than a majority of the Outstanding Amount
of the Senior Notes have declared the Senior Notes to be immediately due and
payable in the manner provided in Section 5.2 of the Indenture. On and after
such date all principal payments on the Senior Notes shall be made to the
Senior Noteholders of the Class A-1 Senior Notes and the Class A-2 Senior Notes
ratably and without preference or priority of any kind until the Outstanding
Amount of the Class A-1 Senior Notes and the Class A- 2 Senior Notes each have
been reduced to zero.
Payments of interest on this Senior Note due and payable on
each Payment Date, together with the payments of principal, if any, to the
extent not in full payment of this Senior Note, shall be made by check mailed
to the Person whose name appears as the Registered Holder of this Senior Note
(or one or more Predecessor Senior Notes) on the Senior Note Register as of the
close of business on each Record Date, except that with respect to Senior Notes
registered on the Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be Cede & Co.), payments will be made by wire
transfer in immediately available funds to the account designated by such
nominee. Such checks shall be mailed to the Person entitled thereto at the
address of such Person as it appears on the Senior Note Register as of the
applicable Record Date without requiring that this Senior Note be submitted for
notation of payment. Any reduction in the principal amount of this Senior Note
(or any one or more Predecessor Senior Notes) effected by any payments made on
any Payment Date shall be binding upon all future Senior Noteholders of this
Senior Note and of any Senior Note issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof, whether
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<PAGE> 106
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 Senior Note on a Payment Date, then the Indenture Trustee, in the name of
and on behalf of the Lease Trust, will notify the Person who was the Registered
Holder hereof as of the Record Date preceding such Payment Date by notice
mailed prior to such Payment Date and the amount then due and payable shall be
payable only upon presentation and surrender of this Senior Note at the
Indenture Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes located in The City of
New York.
The Lease Trust shall pay interest on overdue installments of
interest at the Senior Note Interest Rate to the extent lawful.
As provided in the Indenture, the Senior Notes shall be
redeemed in whole, but not in part, on any Payment Date on or after the date on
which the Pool Balance is less than ten percent of the initial Pool Balance and
on which the Administrative Agent exercises its option to purchase the Series
1996-1 Certificates. The Senior Notes to be redeemed shall, following notice
of redemption as required by Section 10.2 of the Indenture, become due and
payable on the Redemption Date at the Redemption Price and (unless the Lease
Trust shall default in the payment of the Redemption Price) no interest shall
accrue on the Redemption Price for any period from and including the Redemption
Date.
As provided in the Indenture and subject to certain
limitations set forth therein, the transfer of this Senior Note may be
registered on the Senior Note Register upon surrender of this Senior Note for
registration of transfer at the office or agency designated by the Lease
Trustee pursuant to the Indenture, (i) duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Indenture Trustee
duly executed by, the Senior Noteholder of this Senior Note or his attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Senior Note Registrar
which requirements include membership or participation in Securities Transfer
Agent's Medallion Program ("Stamp") or such other "signature guarantee
A-1-7
<PAGE> 107
program" as may be determined by the Senior Note Registrar in addition to, or
in substitution for, Stamp, all in accordance with the Exchange Act, and (ii)
accompanied by such other documents as the Indenture Trustee may require, and
thereupon one or more new Senior Notes of authorized denominations and in the
same aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be charged for any registration of
transfer or exchange of this Senior 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 Senior Noteholder or Senior Note Owner, by acceptance of
a Senior Note or, in the case of a Senior Note Owner, a beneficial interest in
a Senior Note, covenants and agrees that no recourse may be taken, directly or
indirectly, with respect to the obligations of the Lease Trust, the Lease
Trustee or the Indenture Trustee on the Senior Notes or under the Indenture or
any certificate or other writing delivered in connection therewith, against (i)
the Indenture Trustee or the Lease Trustee in their individual capacities, (ii)
any owner of a beneficial interest in the Lease Trust or (iii) any partner,
owner, beneficiary, agent, officer, director or employee of the Indenture
Trustee or the Lease Trustee in their individual capacities, any holder of a
beneficial interest in the Lease Trust, the Lease Trustee or the Indenture
Trustee or of any successor or assign of the Indenture Trustee or the Lease
Trustee in their individual capacities, 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 or failure to pay any
installment or call owing to such entity.
The Senior Notes represent obligations of the Lease Trust only
and do not represent interests in, recourse to or obligations of RCL Trust
1996-1, Ford Credit or any of their respective affiliates.
Each Senior Noteholder or Senior Note Owner, by acceptance of
a Senior Note or, in the case of a Senior Note Owner, a beneficial interest in
a Senior Note covenants and agrees that by accepting the benefits of the
A-1-8
<PAGE> 108
Indenture that such Senior Noteholder will not at any time institute against
the Lease Trust, Ford Credit Leasing, FCTT or RCL Trust 1996-1, or join in any
institution against the Lease Trust, Ford Credit Leasing, FCTT or RCL Trust
1996-1 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 Senior Notes,
the Indenture or the other Basic Documents; provided, however, that Senior
Noteholders holding 100% of the Outstanding Amount of the Senior Notes may
institute or join in any institution of any such proceedings.
Prior to the due presentment for registration of transfer of
this Senior Note, the Lease Trustee, the Indenture Trustee and any agent of the
Lease Trustee or the Indenture Trustee may treat the Person in whose name this
Senior 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 Senior Note be overdue, and neither the Lease Trustee, the
Indenture Trustee nor 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 Lease Trust and the rights of the Senior Noteholders under
the Indenture at any time by the Lease Trust with the consent of Senior
Noteholders holding not less than a majority of the Outstanding Amount of the
Senior Notes. The Indenture also contains provisions permitting Senior
Noteholders holding specified percentages of the Outstanding Amount of the
Senior Notes, on behalf of all Senior Noteholders, to waive compliance by the
Lease Trust with certain provisions of the Indenture and certain past Defaults
under the Indenture and their consequences. Any such consent or waiver by the
Senior Noteholder of this Senior Note (or any one of more Predecessor Senior
Notes) shall be conclusive and binding upon such Senior Noteholder and upon all
future Senior Noteholders of this Senior Note and of any Senior 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
Senior Note. The Indenture also permits the Indenture Trustee to amend
A-1-9
<PAGE> 109
or waive certain terms and conditions set forth in the Indenture without the
consent of the Senior Noteholders.
The term "Lease Trust" as used in this Senior Note includes
any successor to the Lease Trust under the Indenture.
The Senior Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.
THIS SENIOR NOTE AND THE INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
No reference herein to the Indenture and no provision of this
Senior Note or of the Indenture shall alter or impair the obligation of the
Lease Trust, which is absolute and unconditional, to pay the principal of and
interest on this Senior 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, neither PNC Bank, Delaware in its
individual capacity, any owner of a beneficial interest in the Lease Trust, nor
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 of or interest on,
or performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in this Senior Note or the Indenture, it being
expressly understood that said covenants, obligations and indemnifications have
been made by the Lease Trustee for the sole purpose of binding the interests of
the Lease Trustee in the assets of the Lease Trust. The Senior Noteholder of
this Senior Note by the acceptance hereof agrees that except as expressly
provided in the Basic Documents, in the case of an Event of Default under the
Indenture, the Senior 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
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<PAGE> 110
enforcement against, the assets of the Lease Trust for any and all liabilities,
obligations and undertakings contained in the Indenture or in this Senior Note.
A-1-11
<PAGE> 111
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 Senior Note and all rights thereunder, and hereby irrevocably
constitutes and appoints _____________, attorney, to transfer said Senior Note
on the books kept for registration thereof, with full power of substitution in
the premises.
Dated:
------------------------- -----------------------------------
Signature Guaranteed:
-----------------------------------
__________________________________
* Note: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Senior
Note in every particular, without alteration, enlargement or any
change whatsoever.
A-1-12
<PAGE> 112
[Form of Class A-2 Senior Note] EXHIBIT A-2
REGISTERED
No. R
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. ______
Unless this Senior Note is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Lease Trustee or its agent for registration of transfer, exchange or
payment, and any Senior 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.
AS SET FORTH HEREIN THE OUTSTANDING PRINCIPAL AMOUNT OF THIS
SENIOR NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
FORD CREDIT AUTO LEASE TRUST 1996-1
__% CLASS A-2 ASSET BACKED SENIOR NOTE
Ford Credit Auto Lease Trust 1996-1 (the "Lease Trust"), a
trust created pursuant to a trust agreement dated as of ______ __, 1996 between
______, not in its individual capacity but solely as trustee of RCL Trust
1996-1, as Depositor and PNC Bank, Delaware, not in its individual capacity but
solely as trustee of the Lease Trust (the "Lease Trustee"), for value received,
hereby promises to pay to Cede & Co., or registered assigns, upon presentation
and surrender of this Senior Note the
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<PAGE> 113
principal sum of _____________________ DOLLARS (U.S.$______) on the earlier of
the ______ __, ____ Payment Date (the "Stated Maturity") and the Redemption
Date, if any, pursuant to Section 10.1 of the Indenture. The Lease Trust will
pay interest on this Senior Note at the rate per annum shown above (the "Senior
Note Interest Rate") on each Payment Date until the principal of this Senior
Note is paid or made available for payment, on the principal amount of this
Senior Note outstanding on the preceding Payment Date (after giving effect to
all payments of principal made on the preceding Payment Date). Interest on this
Senior Note will accrue for each Payment Date from and including the 15th day
of the Collection Period third preceding the Collection Period in which such
Payment Date occurs, through and including the 14th day of the Collection
Period in which such Payment Date occurs, or, if no interest has yet been paid,
from ______ __, ____. Interest will be computed on the basis of a 360-day year
of twelve 30-day months. Such principal of and interest on this Senior Note
shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Senior 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 Lease Trust with respect to this Senior Note shall be applied first
to interest due and payable on this Senior Note as provided above and then to
the unpaid principal of this Senior Note.
Reference is made to the further provisions of this Senior
Note set forth on the reverse hereof, which shall have the same effect as
though fully set forth on the face of this Senior Note.
Unless the certificate of authentication hereon has been
executed by the Indenture Trustee whose name appears below by manual signature,
this Senior 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.
A-2-2
<PAGE> 114
IN WITNESS WHEREOF, the Lease Trust has caused this instrument
to be signed, manually or in facsimile, by its Authorized Officer as of the
date set forth below.
Date: ____ __, ____ FORD CREDIT AUTO LEASE TRUST 1996-1,
by PNC BANK, DELAWARE, not in its individual
capacity but solely as Lease Trustee under the
Lease Trust Agreement,
By:
--------------------------------------------
Name: Michael B. McCarthy
Title: Vice President
<PAGE> 115
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A-2 Senior Notes designated above and
referred to in the within-mentioned Indenture.
Date: ____ __, ____ THE CHASE MANHATTAN BANK, not in its individual
capacity but solely as Indenture Trustee
By:
---------------------------------------------
Authorized Signatory
<PAGE> 116
[REVERSE OF SENIOR NOTE]
This Senior Note is one of a duly authorized issue of Senior
Notes of the Lease Trust, designated as its "__% Class A-2 Asset Backed Senior
Notes" (herein called the "Class A-2 Senior Notes") issued under an Indenture,
dated as of ______ __, 1996 (such indenture, as supplemented or amended, is
herein called the "Indenture"), between the Lease Trust and The Chase Manhattan
Bank, as trustee (the "Indenture Trustee", which term includes any successor
Indenture Trustee 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 Lease Trust, the Indenture Trustee and
the Senior Noteholders. Also issued under the Indenture are the __% Class A-1
Asset Backed Senior Notes (the "Class A-1 Senior Notes" and together with the
Class A-2 Senior Notes, collectively, the "Senior Notes"). The Senior Notes
are subject to all terms of the Indenture. All terms used in this Senior Note
that are defined in the Indenture, as supplemented or amended, shall have the
meanings assigned to them in or pursuant to the Indenture, as so supplemented
or amended.
The Senior Notes are and will be equally and ratably secured
by the Collateral as provided in the Indenture.
Under the Indenture, interest will be payable on ______ 15,
______ 15, ______ 15, and ______ 15, of each year, commencing ______ 15, 199_,
(or, if such 15th day is not a Business Day, the next Business Day (the
"Payment Date"), to the Person in whose name this Senior Note is registered at
the close of business on the 14th day of the calendar month in which such Date
occurs, or if Definitive Senior Notes have been issued, to the Person in whose
name this Senior Note is registered on the last day of the calendar month
preceding such Payment Date (the "Record Date"). On each Payment Date, there
shall be distributed to such Senior Noteholder the interest accrued at the
Senior Note Interest Rate during the preceding Interest Accrual Period on the
Outstanding Amount of this Senior Note and the principal, if any, available to
be paid on such Payment Date in accordance with the terms of the Indenture;
provided, however, that
A-2-5
<PAGE> 117
no principal shall be paid on the Class A-2 Senior Notes until the Class A-1
Senior Notes have been paid in full.
As described above, the entire unpaid principal amount of this
Senior Note shall be due and payable on the earlier of the Stated Maturity and
the Redemption Date, if any, pursuant to Section 10.1 of the Indenture.
Notwithstanding the foregoing, the entire unpaid principal amount of the Senior
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 Senior Noteholders
of Senior Notes evidencing not less than a majority of the Outstanding Amount
of the Senior Notes have declared the Senior Notes to be immediately due and
payable in the manner provided in Section 5.2 of the Indenture. On and after
such date all principal payments on the Senior Notes shall be made to the
Senior Noteholders of the Class A-1 Senior Notes and the Class A-2 Senior Notes
ratably and without preference or priority of any kind until the Outstanding
Amount of the Class A-1 Senior Notes and the Class A- 2 Senior Notes each have
been reduced to zero.
Payments of interest on this Senior Note due and payable on
each Payment Date, together with the payment of principal, if any, to the
extent not in full payment of this Senior Note, shall be made by check mailed
to the Person whose name appears as the Registered Holder of this Senior Note
(or one or more Predecessor Senior Notes) on the Senior Note Register as of the
close of business on each Record Date, except that with respect to Senior Notes
registered on the Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be Cede & Co.), payments will be made by wire
transfer in immediately available funds to the account designated by such
nominee. Such checks shall be mailed to the Person entitled thereto at the
address of such Person as it appears on the Senior Note Register as of the
applicable Record Date without requiring that this Senior Note be submitted for
notation of payment. Any reduction in the principal amount of this Senior Note
(or any one or more Predecessor Senior Notes) effected by any payments made on
any Payment Date shall be binding upon all future Senior Noteholders of this
Senior Note and of any Senior 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 avail-
A-2-6
<PAGE> 118
able, as provided in the Indenture, for payment in full of the then remaining
unpaid principal amount of this Senior Note on a Payment Date, then the
Indenture Trustee, in the name of and on behalf of the Lease Trust, will notify
the Person who was the Registered Holder hereof as of the Record Date preceding
such Payment Date by notice mailed prior to such Payment Date and the amount
then due and payable shall be payable only upon presentation and surrender of
this Senior Note at the Indenture Trustee's principal Corporate Trust Office or
at the office of the Inden- ture Trustee's agent appointed for such purposes
located in The City of New York.
The Lease Trust shall pay interest on overdue installments of
interest at the Senior Note Interest Rate to the extent lawful.
As provided in the Indenture, the Senior Notes shall be
redeemed in whole, but not in part, on any Payment Date on or after the date on
which the Pool Balance is less than ten percent of the initial Pool Balance and
on which the Administrative Agent exercises its option to purchase the Series
1996-1 Certificates. The Senior Notes to be redeemed shall, following notice
of redemption as required by Section 10.2 of the Indenture, become due and
payable on the Redemption Date at the Redemption Price and (unless the Lease
Trust shall default in the payment of the Redemption Price) no interest shall
accrue on the Redemption Price for any period from and including the Redemption
Date.
As provided in the Indenture and subject to certain
limitations set forth therein, the transfer of this Senior Note may be
registered on the Senior Note Register upon surrender of this Senior Note for
registration of transfer at the office or agency designated by the Lease
Trustee pursuant to the Indenture, (i) duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Indenture Trustee
duly executed by, the Senior Noteholder of this Senior Note or his attorney
duly authorized in writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the Senior Note Registrar
which requirements include membership or participation in Securities Transfer
Agent's Medallion Program ("Stamp") or such other "signature guarantee program"
as may be determined by the Senior Note Regis-
A-2-7
<PAGE> 119
trar in addition to, or in substitution for, Stamp, all in accordance with the
Exchange Act, and (ii) accompanied by such other documents as the Indenture
Trustee may require, and thereupon one or more new Senior Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for
any registration of transfer or exchange of this Senior 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 Senior Noteholder or Senior Note Owner, by acceptance of
a Senior Note or, in the case of a Senior Note Owner, a beneficial interest in
a Senior Note, covenants and agrees that no recourse may be taken, directly or
indirectly, with respect to the obligations of the Lease Trust, the Lease
Trustee or the Indenture Trustee on the Senior Notes or under the Indenture or
any certificate or other writing delivered in connection therewith, against (i)
the Indenture Trustee or the Lease Trustee in their individual capacities, (ii)
any owner of a beneficial interest in the Lease Trust or (iii) any partner,
owner, beneficiary, agent, officer, director or employee of the Indenture
Trustee or the Lease Trustee in their individual capacities, any holder of a
beneficial interest in the Lease Trust, the Lease Trustee or the Indenture
Trustee or of any successor or assign of the Indenture Trustee or the Lease
Trustee in their individual capacities, 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 or failure to pay any
installment or call owing to such entity.
The Senior Notes represent obligations of the Lease Trust only
and do not represent interests in, recourse to or obligations of RCL Trust
1996-1, Ford Credit or any of their respective affiliates.
Each Senior Noteholder or Senior Note Owner, by acceptance of
a Senior Note or, in the case of a Senior Note Owner, a beneficial interest in
a Senior Note covenants and agrees that by accepting the benefits of the
Indenture that such Senior Noteholder will not at any
A-2-8
<PAGE> 120
time institute against the Lease Trust, Ford Credit Leasing, FCTT or RCL Trust
1996-1, or join in any institution against the Lease Trust, Ford Credit Leasing
or the Depositor 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 Senior Notes,
the Indenture or the other Basic Documents; provided, however, that Senior
Noteholders holding 100% of the Outstanding Amount of the Senior Notes may
institute or join in any institution of any such proceedings.
Prior to the due presentment for registration of transfer of
this Senior Note, the Lease Trustee, the Indenture Trustee and any agent of the
Lease Trustee or the Indenture Trustee may treat the Person in whose name this
Senior 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 Senior Note be overdue, and neither the Lease Trustee, the
Indenture Trustee nor 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 Lease Trust and the rights of the Senior Noteholders under
the Indenture at any time by the Lease Trust with the consent of Senior
Noteholders holding not less than a majority of the Outstanding Amount of the
Senior Notes. The Indenture also contains provisions permitting Senior
Noteholders holding specified percentages of the Outstanding Amount of the
Senior Notes, on behalf of all Senior Noteholders, to waive compliance by the
Lease Trust with certain provisions of the Indenture and certain past Defaults
under the Indenture and their consequences. Any such consent or waiver by the
Senior Noteholder of this Senior Note (or any one of more Predecessor Senior
Notes) shall be conclusive and binding upon such Senior Noteholder and upon all
future Senior Noteholders of this Senior Note and of any Senior 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
Senior 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 Senior Noteholders.
A-2-9
<PAGE> 121
The term "Lease Trust" as used in this Senior Note includes
any successor to the Lease Trust under the Indenture.
The Senior Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.
THIS SENIOR NOTE AND THE INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
No reference herein to the Indenture and no provision of this
Senior Note or of the Indenture shall alter or impair the obligation of the
Lease Trust, which is absolute and unconditional, to pay the principal of and
interest on this Senior 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, neither PNC Bank, Delaware in its
individual capacity, any owner of a beneficial interest in the Lease Trust, nor
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 of or interest on,
or performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in this Senior Note or the Indenture, it being
expressly understood that said covenants, obligations and indemnifications have
been made by the Lease Trustee for the sole purposes of binding the interests
of the Lease Trustee in the assets of the Lease Trust. The Senior Noteholder
of this Senior Note by the acceptance hereof agrees that except as expressly
provided in the Basic Documents, in the case of an Event of Default under the
Indenture, the Senior 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 Lease Trust for any and all liabilities, obligations
and undertakings contained in the Indenture or in this Senior Note.
A-2-10
<PAGE> 122
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 Senior Note and all rights thereunder, and hereby irrevocably
constitutes and appoints _____________, attorney, to transfer said Senior Note
on the books kept for registration thereof, with full power of substitution in
the premises.
Dated:
-------------------------- -----------------------------------
Signature Guaranteed:
-----------------------------------
- -------------------------------------------
__________________________________
* Note: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within Senior
Note in every particular, without alteration, enlargement or any
change whatsoever.
A-2-11
<PAGE> 1
EXHIBIT 5.1
(Ford Logo)
FORD MOTOR CREDIT COMPANY
Jerry D. Bringard The American Road
Vice President-General Counsel Dearborn, Michigan 48121-6044
November 1, 1996
Ford Credit Leasing Company, Inc. RCL Trust 1996-1
The American Road c/o First Union Bank of Delaware,
Dearborn, Michigan 48121 as RCL Trustee
One Rodney Square
920 King Street
Ford Motor Credit Company Wilmington, Delaware 19801
The American Road
Dearborn, Michigan 48121
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
The undersigned, Vice President-General Counsel of Ford Credit Leasing
Company, Inc. ("Ford Credit Leasing") and Ford Motor Credit Company ("Ford
Credit"), has acted as counsel for Ford Credit Leasing and Ford Credit in
connection with registration statement No. 333-11167, as amended (the
"Registration Statement"), filed on behalf of Ford Credit Auto Lease Trust
1996-1 (the "Trust") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, respecting the issuance by the Trust of
Class A-1 and Class A-2 Asset Backed Senior Notes. The Senior Notes are to be
issued pursuant to an Indenture to be entered into between the Trust and The
Chase Manhattan Bank, as Indenture Trustee (the "Trustee").
In that connection, I have examined, or caused to be examined,
originals, or copies certified or otherwise identified to my satisfaction, of
such documents, corporate records and other instruments as I have deemed
necessary or appropriate for the purposes of this opinion. Based upon the
foregoing, I am of the opinion that the Senior Notes, when duly executed and
authenticated by the Indenture Trustee in accordance with the terms of the
Indenture and issued and delivered against payment therefor, will be legally
issued, fully paid and nonassessable.
I hereby consent to the use of this opinion as an exhibit to the
Registration Statement. In giving this consent, I do not admit that I am in
the category of persons whose consent is required under Section 7 of the
Securities Act or the Rules and Regulations of the Commission issued
thereunder.
Very truly yours,
/s/ Jerry D. Bringard
<PAGE> 1
EXHIBIT 8.1
November 1, 1996
Ford Credit Leasing RCL Trust 1996-1
Company, Inc. c/o First Union Bank of
The American Road Delaware, as RCL Trustee
Dearborn, Michigan 48121 One Rodney Square
920 King Street
Ford Motor Credit Company Wilmington, Delaware 19801 The
American Road Dearborn, Michigan 48121
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Re: Ford Credit Auto Lease Trust 1996-1
Ladies and Gentlemen:
We have acted as special tax counsel to RCL Trust 1996-1, as
Transferor (the "Transferor"), and to Ford Credit Leasing Company, Inc. ("Ford
Credit Leasing") and Ford Motor Credit Company ("Ford Credit"), as
beneficiaries of the Transferor, in connection with the issuance of the Class
A-1 Asset Backed Senior Notes (the "Class A-1 Senior Notes") and the Class A-2
Asset Backed Senior Notes (the "Class A-2 Senior Notes" and, together with the
Class A-1 Senior Notes, the "Senior Notes") by Ford Credit Auto Lease Trust
1996-1 (the "Trust") pursuant to the terms of an Indenture (the "Indenture") to
be entered into between the Trust and The Chase Manhattan Bank, as Indenture
Trustee. The Senior Notes will be sold to the underwriters (the
"Underwriters") who are parties to an underwriting agreement (the "Underwriting
Agreement") among the Transferor, Ford Credit Leasing, Ford Credit and J.P.
Morgan Securities Inc. ("J.P. Morgan"), as representative of the Underwriters.
In this connection, we have examined and relied upon the
Registration Statement on Form S-1,
<PAGE> 2
RCL Trust 1996-1
Ford Credit Leasing Company, Inc.
Ford Motor Credit Company
J.P. Morgan Securities Inc.
November 1, 1996
Page 2
Registration No. 333-11167, filed with the Securities and Exchange Commission
(the "SEC") on August 30, 1996, as amended (the "Registration Statement"),
including the prospectus contained therein (the "Prospectus"), the Indenture,
the other Basic Documents, and such other documents as we have deemed necessary
or appropriate as a basis for the opinion set forth below, and we have assumed
that such documents will not be amended and that the parties to such documents
will comply with the terms thereof. Capitalized terms used but not defined
herein have the meaning assigned to such terms in the Registration Statement.
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 Transferor, the Administrative Agent, the Underwriters, and others,
including, in particular, (i) certain calculations performed by J.P. Morgan and
(ii) a representation of the Administrative Agent regarding the reasonableness
of certain fees payable to it.
In rendering our opinion, we have also considered and relied
upon the Internal Revenue Code of 1986, as amended, and administrative rulings,
judicial decisions, regulations, and such other authorities as we have deemed
appropriate, all as in effect as of the date hereof. The statutory provisions,
regulations, interpretations, and other authorities upon which our opinion is
based are subject to change, and such changes could apply retroactively. In
addition, there can be no assurance that positions contrary to those stated
<PAGE> 3
RCL Trust 1996-1
Ford Credit Leasing Company, Inc.
Ford Motor Credit Company
J.P. Morgan Securities Inc.
November 1, 1996
Page 3
in our opinion will not be taken by the Internal Revenue Service.
Members of our firm are admitted to the bar in the State of
Delaware and we express no opinions as to the laws of any other jurisdiction
other than the federal laws of the United States of America to the extent
specifically referred to herein.
Based upon and subject to the foregoing, we are of the opinion
that (i) the statements in the Prospectus under the heading "Summary--Tax
Status" to the extent they relate to federal income tax matters and under the
heading "Federal Income Tax Consequences," subject to the qualifications set
forth therein, accurately describe the material federal income tax consequences
to holders of Senior Notes, under existing law and the assumptions stated
therein and (ii) the statements in the Prospectus under the heading "Certain
State Tax Consequences" to the extent they relate to Delaware state income tax
matters, subject to the qualifications set forth therein, accurately describe
the material Delaware state income tax consequences to holders of Senior Notes,
under existing law and the assumptions stated therein.
We consent to the reference to Skadden, Arps, Slate, Meagher &
Flom LLP under the captions "Federal Income Tax Consequences," "Certain State
Tax Consequences" and "Legal Opinions" in the Prospectus.
Very truly yours,
\s\ Skadden, Arps, Slate,
Meagher & Flom LLP
<PAGE> 1
EXHIBIT 8.2
(Ford Logo)
FORD MOTOR CREDIT COMPANY
Jerry D. Bringard The American Road
Vice President-General Counsel Dearborn, Michigan 48121-
6044
November 1, 1996
Ford Credit Leasing Company, Inc. RCL Trust 1996-1
The American Road c/o First Union Bank of Delaware,
Dearborn, Michigan 48121 as RCL Trustee
One Rodney Square
Ford Motor Credit Company 920 King Street
The American Road Wilmington, Delaware 19801
Dearborn, Michigan 48121
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
The undersigned, Vice President-General Counsel of Ford Credit
Leasing Company, Inc. ("Ford Credit Leasing") and Ford Motor Credit Company
("Ford Credit"), has acted as counsel for Ford Credit Leasing and Ford Credit
in connection with registration statement No. 333-11167, as amended (the
"Registration Statement"), filed on behalf of Ford Credit Auto Lease Trust
1996-1 (the "Trust") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, respecting the issuance by the Trust of
Class A-1 and Class A-2 Asset Backed Senior Notes. The Senior Notes are to be
issued pursuant to an Indenture to be entered into between the Trust and The
Chase Manhattan Bank, as Indenture Trustee (the "Trustee").
In that connection, I have examined, or caused to be examined,
originals, or copies certified or otherwise identified to my satisfaction, of
such documents, corporate records and other instruments as I have deemed
necessary or appropriate for the purposes of this opinion.
I hereby (i) confirm to you that the statements set forth
under the headings "Summary -- Tax Status" and "Certain State Tax Consequences"
in the Prospectus included in the Registration Statement, to the extent that
they relate to Michigan tax matters and constitute matters of law or legal
conclusions with respect thereto are correct in all material respects and (ii)
consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to me under the caption "Legal Matters" in the
Prospectus included in the Registration Statement.
I am admitted to the State Bar of Michigan and I express no
opinion as to the laws of any other jurisdiction except the laws of the United
States of America to the extent specifically referred to herein.
Very truly yours,
/s/ Jerry D. Bringard
<PAGE> 1
EXHIBIT 10.1
AMENDED AND RESTATED TRUST AGREEMENT
dated as of January 31, 1994
among
FORD MOTOR CREDIT COMPANY
and
FORD CREDIT LEASING COMPANY, INC.
As Grantors and initial Beneficiaries
and
COMERICA BANK,
as trustee
<PAGE> 2
FCTT AGREEMENT
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
ORGANIZATION . . . . . . . . . . . . . . . . . . . . . 2
Section 2.1 Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.2 Purposes and Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.3 Appointment of Comerica . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.4 FCTT Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.5 Declaration of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.6 Liability of the Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.7 Title to Trust Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.8 Representations and Warranties of the Grantors . . . . . . . . . . . . . . . . . 5
Section 2.9 Tax Reporting and Characterization . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
THE CERTIFICATES . . . . . . . . . . . . . . . . . . . . 6
Section 3.1 Issuance of Exchangeable Beneficial Certificates . . . . . . . . . . . . . . . . 6
Section 3.2 Form of Exchangeable Beneficial Certificates . . . . . . . . . . . . . . . . . . 7
Section 3.3 Issuance and Form of Specified Beneficial Certificates . . . . . . . . . . . . . 7
Section 3.4 Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . 8
Section 3.5 Persons Deemed Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.6 Registration of Transfer and Exchange of Certificates . . . . . . . . . . . . . . 8
Section 3.7 Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV
ADDITION OF FCTT ASSETS; ADMINISTRATIVE
AGENT; SERIES SPECIFIED ASSETS . . . . . . . . . . . . . . . . 10
Section 4.1 Additional Contributions to FCTT Assets . . . . . . . . . . . . . . . . . . . . 10
Section 4.2 Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.3 Designation of Series Specified Assets . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE V
APPLICATION OF FCTT FUNDS; CERTAIN DUTIES . . . . . . . . . . . . . . 14
Section 5.1 Establishment of FCTT Collection Account . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 5.2 Application of FCTT Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.3 Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.4 Accounting and Reports to Beneficiaries, the Internal Revenue Service and Others 18
ARTICLE VI
COMERICA . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6.1 Duties of Comerica . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6.2 Rights of Comerica . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 6.3 Acceptance of Trusts and Duties . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 6.4 Action upon Instruction by Beneficiaries . . . . . . . . . . . . . . . . . . . . 21
Section 6.5 Furnishing of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6.6 Representations and Warranties of Comerica. . . . . . . . . . . . . . . . . . . . 22
Section 6.7 Reliance; Advice of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.8 Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.9 Resignation or Removal of Comerica . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.10 Merger or Consolidation of Comerica . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.11 Appointment of Co-Trustee or Separate Trustee . . . . . . . . . . . . . . . . . . 27
Section 6.12 Eligibility Requirements for Trustee . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VII
TERMINATION OF TRUST AGREEMENT . . . . . . . . . . . . . . . . . 30
Section 7.1 Termination of Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VIII
AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE IX
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 31
Section 9.1 No Legal Title to FCTT Assets; Direction of Comerica Actions . . . . . . . . . . 31
Section 9.2 Limitations on Rights of Others . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 9.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 9.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.6 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.7 No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.8 No Petition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 9.9 Covenant of Ford Credit Leasing . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 9.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 9.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
EXHIBITS
Exhibit A Form of Exchangeable Beneficial Certificate
Exhibit B Form of Specified Beneficial Certificate
</TABLE>
iii
<PAGE> 5
AMENDED AND RESTATED TRUST AGREEMENT, dated and effective as of
January 31, 1994 (as modified, supplemented or amended from time to time, the
"Agreement") among (i) FORD MOTOR CREDIT COMPANY, a Delaware corporation ("Ford
Credit") as a Grantor and as an initial Beneficiary, (ii) FORD CREDIT LEASING
COMPANY, INC., a Delaware corporation ("Ford Credit Leasing") as a Grantor and
an initial Beneficiary and (iii) COMERICA BANK, a Michigan banking corporation,
as trustee under this Agreement (in such capacity, together with any successor
or permitted assign, "Comerica").
WHEREAS, the parties hereto intend to amend and restate, on
the terms and conditions set forth herein, that certain Trust Agreement, dated
as of January 31, 1994, among Ford Credit, Ford Credit Leasing and Comerica.
NOW, THEREFORE, Ford Credit, Ford Credit Leasing and Comerica
hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Certain capitalized terms used in
this Agreement shall have the respective meanings assigned to them in Appendix
I, attached hereto. All references herein to "this Agreement" are to this
Trust Agreement, and all references herein to Articles, Sections and
subsections are to Articles, Sections and subsections of this Agreement unless
otherwise specified.
<PAGE> 6
ARTICLE II
ORGANIZATION
Section 2.1 Office. The office of FCTT shall be in care of
Comerica at the Comerica Office or at such other address as Comerica may
designate by written notice to the Grantors and the Beneficiaries.
Section 2.2 Purposes and Powers. The purpose of FCTT is to
engage solely in the following activities, all in accordance with the terms of
this Agreement:
(a) to acquire from Dealers identified by the Grantors certain
Leased Vehicles and Leases, and to conserve and hold such Leases,
Leased Vehicles and the other FCTT Assets, all in accordance with
terms of this Agreement and in accordance with the Administrative
Agency Agreement;
(b) in exchange for cash or other assets, to issue from time
to time Exchangeable Beneficial Certificates and Specified Beneficial
Certificates representing the respective undivided or divided
interests of the Beneficiaries in FCTT and the FCTT Assets in
accordance with the terms of this Agreement;
(c) to perform its obligations under agreements, instruments
or other documents to which it is to be a party;
(d) to engage in those activities, including executing
agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith; and
(e) to engage in such other activities as may be required in
connection with conservation of the FCTT Assets and the making of
distributions to the Holders of Certificates.
Section 2.3 Appointment of Comerica. The Grantors hereby
appoint Comerica Bank as trustee of FCTT effective as of the date hereof, to
have all the rights, powers and duties set forth herein.
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<PAGE> 7
Section 2.4 FCTT Assets. (a) On the date on which FCTT was
established, Ford Credit as a Grantor sold, assigned, transferred, conveyed and
set over to Comerica, as of the date thereof, the sum of $9800. On such date,
Ford Credit Leasing as a Grantor sold, assigned, transferred, conveyed and set
over to Comerica, as of the date thereof, the sum of $200. Comerica has
acknowledged receipt in trust from each Grantor, as of the date thereof, of the
foregoing contributions, which constituted the initial FCTT Assets. The
Grantors have paid the organizational expenses of FCTT and, prior to the
issuance of any Series of Specified Beneficial Certificates, shall either
continue to pay the organizational expenses of FCTT as they may arise or shall,
upon the request of Comerica, promptly reimburse Comerica for any such expenses
paid by Comerica.
(b) As set forth in Article IV, the Grantors shall sell,
assign, convey and set over to FCTT from time to time additional cash or other
assets in proportion to their respective percentage beneficial interests
represented by the Exchangeable Beneficial Certificates. On any date, the
Exchangeable Beneficial Certificate held by Ford Credit shall represent a 98%
beneficial interest in the Non-Specified Assets and the Exchangeable Beneficial
Certificate held by Ford Credit Leasing shall represent a 2% beneficial
interest in the Non-Specified Assets.
Section 2.5 Declaration of Trust. The trust created by this
Agreement shall be known as "Ford Credit Titling Trust." Comerica hereby
declares that it shall hold all FCTT Assets conveyed or to be conveyed to FCTT,
including all monies and proceeds of such FCTT Assets, in trust for the benefit
of the Beneficiaries. Effective as of the date hereof, Comerica shall have all
rights, powers and duties set forth herein with respect to accomplishing the
purposes of FCTT.
Section 2.6 Liability of the Beneficiaries. (a) Each Holder
of an Exchangeable Beneficial Certificate shall be jointly and severally liable
to third parties and shall indemnify, defend and hold harmless Comerica,
including its officers, directors, employees and agents, for all liabilities,
obligations losses, claims, damages, taxes, actions and suits, expenses and any
and all costs expenses and disbursements (including legal fees and expenses) of
any kind and nature whatsoev-
3
<PAGE> 8
er ("Liabilities") incurred in connection with the Non-Specified Assets; (b)
the Holders of the Exchangeable Beneficial Certificates will indemnify, defend
and hold harmless Comerica and each Holder of a Specified Beneficial
Certificate for all state and local taxes assessed on Comerica or FCTT
resulting from the location of assets of FCTT; (c) each Holder of a Series of
Specified Beneficial Certificate shall be severally liable to third parties and
shall indemnify, defend and hold harmless Comerica, including its officers,
directors, employees and agents, for all Liabilities incurred in connection
with the related Series Specified Assets; (d) no Holder of a Series of
Specified Beneficial Certificates and none of the related Series Specified
Assets shall be subject to Liabilities arising from or with respect to
Comerica, any Non- Specified Assets or the Series Specified Assets relating to
any other Series (except to the extent Ford Credit and Ford Leasing shall hold
Specified Beneficial Certificates and are liable pursuant to clause (e) below);
(e) Ford Credit and Ford Credit Leasing shall each be liable (to the extent
necessary after giving effect to payments made under clauses (a), (b), (c) and
(d) above) directly to third parties and shall indemnify, defend and hold
harmless Comerica, including its officers, directors, employees and agents, for
all Liabilities of FCTT to the extent that Ford Credit and Ford Credit Leasing
would each be liable if FCTT were a partnership under the Michigan Revised
Uniform Limited Partnership Act or the Michigan Uniform Partnership Act and
Ford Credit and Ford Credit Leasing were each a general partner thereof; and
(f) Comerica and its successors, assigns, agents and servants shall be
indemnified, defended and held harmless with respect to any Liabilities arising
out of or incurred in connection with Comerica's acceptance or performance of
the trusts and duties contained in this Agreement and in the Administrative
Agency Agreement, as set forth in clauses (a), (b), (c), (d) and (e) above;
provided, however, that in no event shall Comerica be indemnified or held
harmless for any Liabilities incurred solely (i) by reason of Comerica's
willful malfeasance, bad faith or negligence or (ii) by reason of Comerica's
breach of its representations and warranties set forth in Section 6.6. Any
third party creditors of FCTT shall be deemed to be third party beneficiaries
for purposes of this Section 2.6.
4
<PAGE> 9
Section 2.7 Title to Trust Property. Legal title to all the
FCTT Assets shall be vested at all times in FCTT or Comerica, or, if required
by applicable law, a co-trustee and/or a separate individual trustee, as the
case may be. Comerica or any such co-trustee and/or separate individual
trustee shall at all times hold the FCTT Assets on behalf of the related
Beneficiaries.
Section 2.8 Representations and Warranties of the Grantors.
Ford Credit and Ford Credit Leasing as Grantors hereunder hereby each represent
and warrant (each only as to itself) to Comerica that:
(a) it has been duly organized and is validly existing as a
corporation 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 presently owned and such business is presently conducted;
(b) it is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of property or
the conduct of its business requires such qualifications;
(c) it has the full power and authority to execute and
deliver this Agreement, to carry out its terms and to transfer, convey and
deposit the FCTT Assets to be deposited with Comerica as part of FCTT and has
duly authorized such acts by all necessary corporate action;
(d) the consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms of this Agreement do not conflict
with, result in any breach of any of the terms and provisions of or constitute
(with or without notice or lapse of time) a default under, its certificate of
incorporation or by-laws, or any indenture, agreement or other instrument to
which it is a party or by which it is bound, or result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of any
such indenture, agreement or other instrument, or violate any law or, to the
best its knowledge, any order, rule or regulation applicable to it of any court
or of any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over it or any of its
properties; and
5
<PAGE> 10
(e) this Agreement has been duly executed and delivered by it
and constitutes the legal, valid and binding agreement of it, enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other similar laws affecting the
enforcement of creditors' rights in general and by general principles of
equity, regardless of whether such enforceability is considered in a proceeding
in equity or at law.
Section 2.9 Tax Reporting and Characterization.
(a) Consistent with the treatment of FCTT as a title holder
for tax purposes, unless otherwise required by appropriate tax authorities,
FCTT will not file or cause to be filed any annual or other tax returns.
(b) It is the intention of the parties hereto that FCTT
not constitute a separate entity for federal income tax or state income or
franchise taxes. If, however, FCTT is characterized as a separate entity for
federal income tax purposes, it is the intention of the parties that it qualify
as a partnership for such purposes.
ARTICLE III
THE CERTIFICATES
Section 3.1 Issuance of Exchangeable Beneficial Certificates.
(a) Upon the formation of FCTT by the contribution by the Grantors pursuant to
Section 2.4(a), Comerica issued to each Grantor, as a Beneficiary, a
certificate representing such Beneficiary's interest in FCTT. As of the date
hereof, such certificates are deemed to be Exchangeable Beneficial Certificates
and, as evidenced by the execution of this Agreement, the Beneficiaries hereby
direct Comerica to exchange their respective Exchangeable Beneficial
Certificates for new Exchangeable Beneficial Certificates in substantially the
form attached hereto as Exhibit A. An Exchangeable Beneficial Certificate (or
any interest therein) may not be sold, transferred, assigned, hypothecated,
pledged or otherwise conveyed (each, a "Transfer") by the Holder thereof (and
Comerica shall not register any such transfer); provided, that the interest in
FCTT represented by an Exchangeable Beneficial Certificate will be reduced by
and to the extent that Specified Beneficial Certificates are issued in
accordance with Sections 3.3 and 4.3.
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<PAGE> 11
(b) Upon the issuance of Specified Beneficial Certificates,
the beneficial interest in FCTT and the FCTT Assets represented by the
Exchangeable Beneficial Certificates shall be reduced by the beneficial
interest in FCTT and the related Series Specified Assets represented by such
Specified Beneficial Certificates.
Section 3.2 Form of Exchangeable Beneficial Certificates. (a)
The Exchangeable Beneficial Certificates shall be executed on behalf of FCTT by
manual or facsimile signature of a Responsible Officer. Exchangeable
Beneficial Certificates bearing the manual or facsimile signatures of
individuals who were authorized to sign on behalf of FCTT at the time when such
signatures were affixed, shall be valid and binding representations of
interests in FCTT notwithstanding that any or all of such individuals shall
have ceased to be so authorized prior to or did not hold such offices at the
date of authentication and delivery of such Exchangeable Beneficial
Certificates.
(b) The Exchangeable Beneficial Certificates may be
typewritten or produced by any other method, all as determined by the
Responsible Officer executing such Exchangeable Beneficial Certificates, as
evidenced by their execution of such Exchangeable Beneficial Certificates.
(c) The terms of the Exchangeable Beneficial Certificates set
forth in Exhibit A shall form part of this Agreement.
Section 3.3 Issuance and Form of Specified Beneficial
Certificates. (a) Specified Beneficial Certificates shall be issued on each
Series Issue Date in accordance with the provisions of Section 4.3.
(b) Each Specified Beneficial Certificate shall be
substantially in the form set forth in Exhibit B, subject to modifications as
required by this Agreement or as directed by the Holders of the Exchangeable
Beneficial Certificates. Each Specified Beneficial Certificate shall be
executed on behalf of FCTT by manual or facsimile signature of a Responsible
Officer. Each Specified Beneficial Certificate bearing the manual or facsimile
signatures of individuals who were authorized to sign on behalf of FCTT at the
time when such signa-
7
<PAGE> 12
tures were affixed, shall be valid and binding representations of interests in
FCTT notwithstanding that any or all of such individuals shall have ceased to
be so authorized prior to or did not hold such offices at the date of
authentication and delivery of such Specified Beneficial Certificate.
(c) Specified Beneficial Certificates may be typewritten or
produced by any other method, all as determined by the Responsible Officer
executing such Specified Beneficial Certificates, as evidenced by their
execution of such Specified Beneficial Certificates.
Section 3.4 Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate is surrendered to Comerica, or
Comerica receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate, and (b) there is delivered to Comerica such security
or indemnity as may be required by it to indemnify and hold it harmless, then
Comerica shall execute on behalf of FCTT and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a
replacement Certificate of the same class and proportionate beneficial interest
in FCTT and the Non-Specified Assets or any Series Specified Assets, as the
case may be. Such substitute Certificate shall constitute for all purposes a
substitute for the original Certificate, which original Certificate shall be
deemed canceled and the books and records of Comerica shall indicate such
cancellation.
Section 3.5 Persons Deemed Holders. Prior to due
presentation of a Specified Beneficial Certificate for registration of
transfer, Comerica shall regard the Person in whose name such Specified
Beneficial Certificate shall be registered as the Holder of such Certificate
for the purpose of receiving distributions pursuant to Article V and for all
other purposes whatsoever; provided, that such Holder may covenant or enter
into agreements with any Person with respect to the exercise of any or all of
its rights as Holder of such Specified Beneficial Certificate, and upon receipt
of notification of such arrangements by Comerica, Comerica shall treat Persons
as Holders in accordance with such agreement.
Section 3.6 Registration of Transfer and Exchange of
Certificates. (a) The FCTT Registrar shall keep
8
<PAGE> 13
or cause to be kept, at the office or agency maintained pursuant to Section
3.7, a FCTT Register in which, subject to such reasonable regulations as it may
prescribe, Comerica shall provide for the registration of Certificates and of
Transfers and exchanges of Certificates as herein provided. Comerica shall be
the initial FCTT Registrar. Comerica shall not register any transfer sale,
assignment, hypothecation, pledge or other conveyance of any Specified
Beneficial Certificate unless the request for such transfer, sale, assignment,
hypothecation, pledge or other conveyance is accompanied by written evidence
that it is permitted by the documents pursuant to which such Specified
Beneficial Certificate was issued.
(b) Upon surrender for registration of transfer of any
Specified Beneficial Certificate, at the Comerica Office, a Responsible Officer
shall execute, authenticate, and deliver, in the name of the designated
transferee or transferees, one or more new Certificates in authorized
denominations of a like aggregate amount dated the date of authentication by
Comerica.
(c) Every Specified Beneficial Certificate presented or
surrendered for registration of transfer or exchange shall be accompanied by a
written instrument of transfer in form satisfactory to Comerica and the FCTT
Registrar duly executed by the Holder or his attorney duly authorized in
writing. Each Specified Beneficial Certificate surrendered for registration of
transfer and exchange shall be cancelled and subsequently disposed of by
Comerica.
(d) No service charge shall be made for any registration of
transfer or exchange of Specified Beneficial Certificates, but Comerica may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of Specified
Beneficial Certificates.
Section 3.7 Maintenance of Office or Agency. Comerica shall
maintain in Michigan an office or offices or agency or agencies where Specified
Beneficial Certificates may be surrendered for registration of transfer or
exchange and where notices and demands to or upon Comerica in respect of the
Specified Beneficial Certificates and this Agreement may be served. Comerica
initially designates the Comerica Office as its office for
9
<PAGE> 14
such purposes. The Comerica shall give prompt written notice to the
Administrative Agent and to the Holders of Specified Beneficial Certificates of
any change in the location of the FCTT Register or the Comerica Office.
ARTICLE IV
ADDITION OF FCTT ASSETS; ADMINISTRATIVE
AGENT; SERIES SPECIFIED ASSETS
Section 4.1 Additional Contributions to FCTT Assets. (a)
The parties hereto contemplate that the Grantors will make additional
contributions of assets to FCTT from time to time.
(b) On an ongoing basis Ford Credit and Ford Credit Leasing
shall contribute cash or other assets to FCTT such that Ford Credit has a
capital investment in the Non-Specified Assets equal to a 98% beneficial
interest in the portion of FCTT comprised of the Non- Specified Assets
represented by its Exchangeable Beneficial Certificate and Ford Credit Leasing
has a capital investment in the Non-Specified Assets equal to a 2% beneficial
interest in the portion of FCTT comprised of the Non-Specified Assets
represented by its Exchangeable Beneficial Certificate.
(c) Either Ford Credit or Ford Credit Leasing may, upon at
least 90 days written notice to the other, Comerica and the Administrative
Agent, cease contributing additional cash or other assets to FCTT. As of the
date specified in such notice, no additional Leases or Leased Vehicles may be
added as FCTT Assets, unless and until the party which had delivered such
notice delivers a further notice stating that as of the date set forth in such
further notice, it shall resume making the pro rata contributions specified in
Section 4.1(b); provided, however, that no additional contributions shall be
made to FCTT by either Ford Credit and Ford Credit Leasing until both parties
agree to resume making such contributions. In addition, upon (i) the
occurrence of a Bankruptcy with respect to Ford Credit or (ii) the failure of
Ford Credit to maintain its capital investment in the Non-Specified Assets in
accordance with Section 4.1(b), Ford Credit Leasing and Ford Credit shall cease
making additional contributions of Leases and Leased Vehicles to
10
<PAGE> 15
FCTT as soon as reasonably practicable and shall not thereafter be entitled to
resume making contributions.
Section 4.2 Administrative Agent. (a) Ford Credit and Ford
Credit Leasing hereby direct Comerica to appoint Ford Credit as Administrative
Agent for FCTT and to enter into the Administrative Agency Agreement. The
duties of the Administrative Agent are set forth in the Administrative Agency
Agreement. Each Holder of a Specified Beneficial Certificate, by acceptance
thereof, shall be deemed to have consented to the appointment of Ford Credit as
Administrative Agent; provided, that the Holders of any Series may direct
Comerica to instruct (with notice of such instructions being delivered to any
Rating Agency then rating securities based on such Series) the Administrative
Agent to assign or delegate certain of its servicing functions with respect to
the related Series Specified Assets to another Person, and any such assignment
or delegation shall relieve the Administrative Agent from any responsibility
with respect to such functions; provided, further, that any such assignment or
delegation shall require the assignee or delegee to remit Collections to the
Administrative Agent for remittance to the FCTT Collection Account, or directly
to the FCTT Collection Account, at the times required by this Agreement.
(b) In accordance with procedures set forth in the
Administrative Agency Agreement, the Administrative Agent shall provide
information with respect to FCTT Assets to Comerica in detail sufficient to
permit Comerica to maintain on an ongoing basis adequate records with respect
to the capital investments of Ford Credit and Ford Credit Leasing in FCTT and
to provide Holders with any information required pursuant to this Agreement.
Comerica has no responsibility for determining, monitoring or verifying the
value or quality of any assets contributed to or held by FCTT. Comerica, upon
receipt of all certificates, statements, opinions, reports, documents, orders,
other instru- ments or property furnished to Comerica which are specifically
required to be furnished pursuant to any provision of this Agreement, shall
examine them to determine whether they are on their face in the form required
by this Agreement. If any such item is found on its face not to conform to the
requirements of this Agreement in a material manner, Comerica shall take such
action as it deems appropriate to have the item corrected by the Administrative
Agent, and if the item is
11
<PAGE> 16
not corrected to Comerica's reasonable satisfaction by the Administrative
Agent, Comerica will provide notice thereof to the applicable Beneficiaries.
Section 4.3 Designation of Series Specified Assets. (a) At
least one Business Day prior to any Series Issue Date, the Administrative
Agent, acting at the unanimous direction of the Holders of the Exchangeable
Beneficial Certificates, shall deliver to Comerica a notice (a "Series
Specification Notice") signed by the Administrative Agent identifying (i) the
FCTT Assets to be designated as certain Series Specified Assets as of the
Series Issue Date (by listing the related Specified Leased Vehicles by vehicle
identification number or other identifying characteristic, listing the related
Specified Leases by account number, and including any other information as
reasonably required by Comerica to separately identify such Series Specified
Assets), (ii) the date from which payments are made on the related Specified
Beneficial Certificates with respect to such Series Specified Assets (such
date, the "Series Cut-Off Date") and (iii) the Series Issue Date on which the
related Specified Beneficial Certificates shall be issued. On the Series Issue
Date set forth in such Series Specification Notice, Comerica, at the direction
of the Administrative Agent acting on behalf of Ford Credit and Ford Credit
Leasing, shall, pursuant to the related Supplement, issue to each of Ford
Credit and Ford Credit Leasing, as the Holders of the Exchangeable Beneficial
Certificates, a Specified Beneficial Certificate representing their respective
percentage undivided beneficial interests in the related Series Specified
Assets.
(b) Each Series shall be issued only upon delivery of an
Opinion of Counsel that such issuance and the transactions entered into in
connection therewith (including permitted transfers of the Specified Beneficial
Certificates of such Series permitted by the documents executed in connection
with such transactions) shall not cause FCTT to be classified as an
"association" or a "publicly traded partnership" taxable as a corporation and
that the issuance of such Series will not have a material adverse effect on the
federal income tax classification of any previously issued Series or any
securities issued based on any Series outstanding.
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<PAGE> 17
(c) No Series may be issued (and the Trustee shall not issue
a Specified Beneficial Certificate) unless (x) the issuance of such Series will
not cause the Aggregate Non-Specified Asset Amount outstanding to be less than
21% of the Aggregate FCTT Asset Amount as determined as of the related Series
Issue Date or as of any other date in the reasonable belief of the Holders of
the Exchangeable Beneficial Certificates and (y) each Specified Beneficial
Certificate of such Series represents a beneficial interest in Series Specified
Assets with an Adjusted Balance Subject to Lease Charges equal to or greater
than $20,000.
(d) Specified Beneficial Certificates issued on any Series
Issue Date shall represent a beneficial interest only in the Series Specified
Assets listed in the Schedule of Leases attached to the related Series
Specification Notice and Supplement, and no such Specified Beneficial
Certificate shall represent an interest in any non-related Series Specified
Assets. As of any date, the entire beneficial interest in FCTT and the FCTT
Assets shall be represented by the Exchangeable Beneficial Certificates and all
Specified Beneficial Certificates outstanding as of such date.
(e) Subject to Section 5.1, Comerica shall account for and
record separately all proceeds received by Comerica relating to the Series
Specified Assets of a Series from Series Specified Assets relating to each
other Series and from proceeds relating to Non-Specified Assets.
(f) Specified Beneficial Certificates of a Series may be
sold, pledged, transferred, hypothecated, assigned or conveyed only to the
extent provided in or explicitly contemplated by the related Supplement. For
all purposes of this Agreement, the transferee of a Specified Beneficial
Certificate shall be considered a "Beneficiary" with respect only to those FCTT
Assets constituting the related Series Specified Assets, and shall be entitled
to all rights and privileges of a Beneficiary only with respect to its
beneficial interest in such related Series Specified Assets. The Holders of
all the Specified Beneficial Certificates of any Series may collectively at any
time direct Comerica to distribute to such Holders all or any designated
portion of the related Specified Leased Vehicles and Specified Leases and any
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<PAGE> 18
other related Series Specified Assets and the proceeds of such Series Specified
Assets. Comerica shall effect any such distribution through the Administrative
Agent, and the Administrative Agent shall provide prompt written notice of such
distribution to each Rating Agency then rating any securities based on any
Series.
(g) Ford Credit and Ford Credit Leasing, as the Holders of
the Exchangeable Beneficial Certificates, shall each be considered a
"Beneficiary" with respect to all Non-Specified Assets and shall have the right
at any time to direct Comerica to deliver to them all or any designated portion
of the Leased Vehicles and Leases which are Non-Specified Assets and any other
Non-Specified Assets and the proceeds of the Non-Specified Assets; provided,
however, that for so long as any Specified Beneficial Certificates are
outstanding, Ford Credit and Ford Credit Leasing covenant and agree that they
will maintain an interest in FCTT such that, as of any date of determination,
the Aggregate Non-Specified Asset Amount is at least 21% of the Aggregate FCTT
Asset Amount.
(h) Any notice, direction or instruction of any kind, whether
required hereunder or otherwise, from a Beneficiary to the Administrative
Agent, Comerica or any other party shall be in writing.
ARTICLE V
APPLICATION OF FCTT FUNDS; CERTAIN DUTIES
Section 5.1 Establishment of FCTT Collection Account. (a)
Comerica shall establish and maintain a deposit account initially with Comerica
Bank in the name of Comerica as trustee for FCTT to be designated as the Ford
Credit Titling Trust Collection Account (the "FCTT Collection Account"),
bearing an additional designation clearly indicating that the funds deposited
therein are held by Comerica for the benefit of the Holders of the
Certificates. Comerica shall possess all right, title and interest in and to
all funds on deposit from time to time in the FCTT Collection Account and in
all proceeds thereof. Except as otherwise provided herein, the FCTT Collection
Account shall be under the sole dominion and control of Comerica. Funds shall
be deposited into and transferred from the FCTT Collection Account in
accordance with Sections 5.1(b), 5.2(b) and 5.2(c). Any funds
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remaining in the FCTT Collection Account at the end of any Business Day shall
be invested in Permitted Investments at the direction of the Administrative
Agent. If Comerica Bank is no longer an Eligible Institution, Comerica, with
the assistance of the Administrative Agent, shall within 10 Business Days
following notification of such occurrence (or, if there are securities
outstanding rated on the basis of any Specified Beneficial Certificates, such
longer period which shall be acceptable to each Rating Agency rating such
securities) cause the FCTT Collection Account to be moved to (i) a bank or
trust company which is an Eligible Institution or (ii) segregated trust account
at the corporate trust department of Comerica Bank.
(b) Subject to Section 5.2(d), on each Business Day, the
Administrative Agent, acting on behalf of Comerica, pursuant to the terms of
the Administrative Agency Agreement, shall deposit (i) into the FCTT Collection
Account, all Collections received with respect to FCTT Assets from Lessees or
any other Person and (ii) into an account established pursuant to the
Administrative Agency Agreement, all contributions of capital received from the
Grantors in connection with the maintenance of their respective proportionate
interests in FCTT and the Non-Specified Assets.
Section 5.2 Application of FCTT Assets. (a) On each Business
Day the Administrative Agent, acting on behalf of Comerica, pursuant to the
terms of the Administrative Agency Agreement, shall identify all amounts
deposited in the FCTT Collection Account as either relating to Non-Specified
Assets or Series Specified Assets, and if more than one Series is outstanding,
the Series Specified Assets to which such amounts relate.
(b) On each Business Day the Administrative Agent, acting on
behalf of Comerica, pursuant to the terms of the Administrative Agency
Agreement shall withdraw all amounts on deposit in the FCTT Collection Account
which relate to Non-Specified Assets and apply such amounts in the following
order of priority:
first, after the payment to the appropriate authorities of any
Use and Lease Tax Amounts and other sales, use and lease tax amounts
due in connection with amounts received from Lessees, to the payment
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of any amounts which remain owing and unpaid under any indemnity or
other payment made by the Holders of the Exchangeable Beneficial
Certificates (or by the Administrative Agent acting on behalf of
Holders of the Exchangeable Beneficial Certificates) to the Holder of
any Series Specified Certificate, to any Person with an interest in
any Series Specified Certificate or to any other Person;
second, to the payment of the Non-Specified Asset Comerica Fee
and the Non-Specified Asset Administrative Fee; and
third, to the distribution of any remaining funds to the
Holders of the Exchangeable Beneficial Certificates by depositing such
remaining funds in an account established pursuant to the
Administrative Agency Agreement for the benefit of the Holders of the
Exchangeable Beneficial Certificates for further distribution, as
directed by such Holders; provided, that each such Holder may at any
time direct the Administrative Agent to pay such Holder's proportional
interest in such remaining funds directly to such Holder.
(c) On each Business Day the Administrative Agent, acting on
behalf of Comerica, pursuant to the terms of the Administrative Agency
Agreement, shall, with respect to each Series, withdraw all amounts on deposit
in the FCTT Collection Account which relate to related Series Specified Assets
and pay such amounts, after payment to the appropriate authorities of Use and
Lease Tax Amounts and other sales, use and lease tax amounts due in connection
with amounts received from Lessees, to the Holders of the related Specified
Beneficial Certificates by depositing such amounts in the applicable Series
Collection Account established pursuant to the Administrative Agency Agreement
for the benefit of the Holders of the related Specified Beneficial
Certificates.
(d) Notwithstanding the provisions of Sections 5.2(b) and
(c), for so long as (i) Ford Credit is the Administrative Agent and (ii) with
respect to any Series, unless otherwise provided in the related Supplement (x)
the rating of Ford Credit's short-term unsecured debt is at least P-1 by
Moody's Investors Service, Inc. and is at least A-1 by Standard & Poor's
Ratings Group, (y) no
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Event of Default shall have occurred under the Administrative Agency Agreement
and (z) any other condition defined in the related Supplement as a Monthly
Remittance Condition for such Series is satisfied (each, a "Monthly Remittance
Condition"), Collections and other amounts to be deposited in the FCTT
Collection Account relating to Series Specified Assets need not be remitted to
and deposited in the FCTT Collection Account on a daily basis but instead may
be held by the Administrative Agent and remitted to the FCTT Collection Account
on a less frequent basis, as specified in the related Supplement.
The Administrative Agent shall not be required to segregate or
otherwise hold separate Collections relating to Non-Specified Assets or other
amounts held by the Administrative Agent as described above but shall be
required to deposit such amounts in the FCTT Collection Account on a less
frequent basis as directed by the Holders of the Exchangeable Beneficial
Certificates, but in any event not less than monthly. Any such amounts to be
deposited with respect to Non-Specified Assets may be deposited on a net basis
after subtracting therefrom any amounts to be distributed to Ford Credit and
Ford Credit Leasing as the Holders of the Exchangeable Beneficial Certificates;
provided that the Administrative Agent shall account on its books and records
for such deposits and distributions as if such amounts were deposited or
distributed separately.
So long as each Monthly Remittance Condition is satisfied, the
Administrative Agent shall not be required to segregate or otherwise hold
separate Collections relating to Series Specified Assets or other amounts held
by the Administrative Agent as described above but shall be required to deposit
such amounts in the FCTT Collection Account on the related Distribution Date.
As set forth in the Administrative Agency Agreement, any such amounts retained
by the Administrative Agent shall be distributed to Ford Credit and Ford Credit
Leasing as distributions on their Exchangeable Beneficial Certificates. At any
time that any Monthly Remittance Condition is not satisfied, the Administrative
Agent shall deposit in the FCTT Collection Account the amount of any
Collections or other amounts then held or received by it with respect to Series
Specified Assets.
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(e) Within ten days after the end of each Collection Period,
Comerica, in reliance on a report prepared by the Administrative Agent, shall
send to each Holder of an Exchangeable Beneficial Certificate a statement,
setting forth the aggregate amount deposited in the FCTT Collection Account
during the related Collection Period and each of the amounts distributed during
such Collection Period in accordance with Section 5.2(b). Within ten Business
Days after the end of each Collection Period, Comerica, in reliance on a report
prepared by the Administrative Agent, shall send to each Holder of a Specified
Beneficial Certificate (with a copy to each Rating Agency then rating
securities based on such Specified Beneficial Certificates) a statement setting
forth, among other things, the amount allocated to each such Holder and
deposited in the FCTT Collection Account (or, if the Administrative Agent has
retained such Collections because each Monthly Remittance Condition relating to
such Series has been satisfied, the amount allocated which is to be deposited
in the FCTT Collection Account). Such statement shall include an accounting of
the source of such proceeds as requested by the Holders of the related Series.
Section 5.3 Method of Payment. Distributions required to be
made to or from the FCTT Collection Account shall be made by wire or electronic
transfer, in immediately available funds.
Section 5.4 Accounting and Reports to Beneficiaries, the
Internal Revenue Service and Others. Comerica shall (a) maintain (or cause to
be maintained) the books of FCTT on a calendar year basis on the accrual method
of accounting, (b) deliver to each Beneficiary such information as may be
required by the Code and applicable Treasury Regulations or otherwise,
including such information as may be required to enable each Holder to prepare
its federal income tax returns, (c) file (or cause to be filed) any tax returns
relating to FCTT and make (or cause to be made) such elections as may from time
to time be required or appropriate under any applicable federal or state
statute or rule or regulation thereunder, and (d) cause such tax returns to be
signed in the manner required by law. Comerica, upon request, will furnish the
Administrative Agent with all such information known to Comerica as may be
reasonably required in connection with the preparation of any tax
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returns required to be filed by FCTT. To the extent one may be required, Ford
Credit shall be the "tax matters partner" of FCTT pursuant to the Code.
ARTICLE VI
COMERICA
Section 6.1 Duties of Comerica. (a) Comerica shall perform
such duties, and only such duties, as are specifically set forth in this
Agreement, including the conservation of FCTT and the FCTT Assets in the
interest of the Beneficiaries. No implied covenants or obligations shall be
read into this Agreement.
(b) In the absence of bad faith on its part, Comerica may
conclusively rely upon certificates or opinions furnished to Comerica and
conforming to the requirements of this Agreement in determining the truth of
the statements and the correctness of the opinions contained therein; provided,
however, that Comerica shall have examined such certificates or opinions so as
to determine compliance of the same with the requirements of this Agreement.
(c) Comerica 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 Section 6.1(c) shall not limit the effect of the
other provisions of Article VI;
(ii) Comerica shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that
Comerica was grossly negligent in ascertaining the pertinent facts;
and
(iii) Comerica 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 6.4.
(d) Subject to Sections 5.1 and 5.2, Comerica need not
segregate funds received hereunder in any manner except to the extent required
by law and may deposit such funds under such general conditions as may be
prescribed
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by law, and Comerica shall not be liable for any interest thereon.
(e) A Beneficiary shall not direct Comerica to take any
action that (i) is inconsistent with the purposes of FCTT set forth in Section
2.2 or (ii) would result in FCTT's becoming taxable as an "association" for
federal income tax purposes.
Section 6.2 Rights of Comerica. Comerica is authorized and
directed to execute and deliver this Agreement and each certificate or other
document attached as an exhibit to or contemplated by this Agreement to which
FCTT is to be a party, in such form as the Beneficiaries shall approve, such
approval to be evidenced by the signature of an authorized officer of the
Beneficiaries on the signature page hereto. The Beneficiaries shall not direct
Comerica to take or refrain from taking any action if such action or inaction
would be contrary to any obligation of FCTT or Comerica under this Agreement or
would be contrary to Section 2.2, nor shall Comerica be obligated to follow any
such direction, if given.
Section 6.3 Acceptance of Trusts and Duties. Except as
otherwise provided in this Article VI, in accepting the trusts hereby created
Comerica acts solely as trustee hereunder and not in its individual capacity
and all Persons having any claim against Comerica by reason of the transactions
contemplated by this Agreement shall be entitled to payment or satisfaction
thereof only in the manner and to the extent set forth in Section 2.6.
Comerica 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. Comerica also agrees to disburse all moneys actually received by it
constituting part of the FCTT Assets upon the terms of this Agreement.
Comerica shall not be liable or accountable hereunder under any circumstances,
except (i) for its own negligent action, its own negligent failure to act or
its own willful misconduct or (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 6.6 and expressly made by
Comerica. In particular, but not by way of limitation (and subject to the
exceptions set forth in the preceding sentence):
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(a) Comerica shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the instructions of any
Beneficiary;
(b) no provision of this Agreement shall require Comerica to
expend or risk funds or otherwise incur any financial liability in the
performance of any of its rights or powers hereunder, if Comerica 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;
(c) Comerica shall not be responsible for or in respect of
and makes no representation as to the validity or sufficiency of any provision
of this Agreement or for the due execution hereof by Ford Credit and Ford
Credit Leasing or for the form, character, genuineness, sufficiency, value or
validity of any of the FCTT Assets or for or in respect of the validity or
sufficiency of the Certificates or any related documents, and Comerica shall in
no event assume or incur any liability, duty or obligation to any Beneficiary,
other than as expressly provided for herein; and
(d) Comerica 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, at the request, order or direction of any Beneficiary, unless
such Beneficiary has offered to Comerica security or indemnity satisfactory to
it against the fees, costs, expenses and liabilities that may be incurred by
Comerica therein or thereby. The right of Comerica to perform any
discretionary act enumerated in this Agreement shall not be construed as a
duty, and Comerica shall not be answerable for other than its negligence or
willful misconduct in the performance of any such act.
Section 6.4 Action upon Instruction by Beneficiaries.
(a) Those Beneficiaries holding a beneficial interest in any FCTT Assets may
direct Comerica or the Administrative Agent to take action or refrain from
taking action with respect to those FCTT Assets in which they have a beneficial
interest except to the extent that such action or inaction would conflict with
any provision hereof or of the Basic Documents (including, without
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limitation, Section 7.1(b) and Section 4.3(c) hereof). Such direction may be
exercised at any time by written instructions of the Beneficiaries holding a
100% beneficial interest in such Non-Specified Assets or any Series Specified
Assets.
(b) Notwithstanding the foregoing, and in accordance with
Section 6.3(d), Comerica shall not be required to take any action or refrain
from taking action hereunder if Comerica shall have reasonably determined, or
shall have been advised by counsel, that such action is likely to result in
liability on the part of Comerica or is contrary to the terms hereof or is
otherwise contrary to law.
(c) Whenever Comerica is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement, or is
unsure as to the application, intent, interpretation or meaning of any
provision of this Agreement, Comerica may request an Opinion of Counsel as to
such application, intent, interpretation or meaning, or may give notice (in
such form as shall be appropriate under the circumstances) to the Beneficiaries
requesting instruction as to the course of action to be adopted, and, to the
extent Comerica acts in good faith in accordance with such Opinion of Counsel
or any such instruction received from such Beneficiaries, as the case may be,
Comerica shall not be liable on account of such action to any Person. If
Comerica shall not have received an Opinion of Counsel or appropriate
instructions within ten 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 which is consistent, in its view, with this Agreement, and
as it shall deem to be in the best interests of the Beneficiaries, and Comerica
shall have no liability to any Person for any such action or inaction.
Section 6.5 Furnishing of Documents. Comerica shall furnish
to the Beneficiaries, 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 Comerica by the
Administrative Agent or others.
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Section 6.6 Representations and Warranties of Comerica.
Comerica hereby represents and warrants to the Beneficiaries that:
(a) it is a banking corporation duly organized, validly
existing and in good standing under the laws of the State of Michigan;
(b) it has full power, authority and legal right to execute,
deliver and perform this Agreement, and has taken all necessary action to
authorize the execution, delivery and performance by it of this Agreement;
(c) the execution, delivery and performance by it of this
Agreement (i) shall not violate any provision of any law or regulation
governing the banking and trust powers of Comerica or any order, writ, judgment
or decree of any court, arbitrator or governmental authority applicable to
Comerica or any of its assets, (ii) shall not violate any provision of the
corporate charter or by-laws of Comerica, and (iii) shall not violate any
provision of, or constitute, with or without notice or lapse of time, a default
under, or result in the creation or imposition of any lien on any properties of
Comerica pursuant to the provisions of any mortgage, indenture, contract,
agreement or other undertaking to which it is a party, which violation, default
or lien could reasonably be expected to have a materially adverse effect on
Comerica's performance or ability to perform its duties as trustee under this
Agreement or on the transactions contemplated in this Agreement;
(d) the execution, delivery and performance by Comerica of
this Agreement shall not require the authorization, consent or approval of, the
giving of notice to, the filing or registration with, or the taking of any
other action in respect of, any governmental authority or agency regulating the
banking and corporate trust activities of banks or trust companies in Michigan;
and
(e) this Agreement has been duly executed and delivered by
Comerica and constitutes the legal, valid and binding agreement of Comerica,
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditors' rights in general and by general
principles of
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equity, regardless of whether such enforceability is considered in a proceeding
in equity or at law.
Section 6.7 Reliance; Advice of Counsel. (a) Comerica shall
incur no liability to any Person 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 and need not investigate any fact or
matter in any such document. Comerica may accept a 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,
Comerica 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 Comerica 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,
Comerica: (i) may act directly or through its agents, attorneys, custodians or
nominees pursuant to agreements entered into with any of them, and Comerica
shall not be liable for the conduct or misconduct of such agents, attorneys,
custodians or nominees if such agents, attorneys, custodians or nominees shall
have been selected by Comerica with reasonable care and (ii) may consult with
counsel, accountants and other skilled professionals to be selected with
reasonable care and employed by it. Comerica shall not be liable for anything
done, suffered or omitted in good faith by it in accordance with any Opinion of
Counsel or advice of such accountants or other such skilled professionals and
not contrary to this Agreement.
Section 6.8 Compensation and Indemnity. (a) Comerica shall
receive as compensation for its services hereunder such fees as shall be
separately agreed upon from time to time between the Holders of the
Exchangeable Beneficial Certificates and Comerica. Comerica shall be
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entitled at all times to be reimbursed by the Holders of the Exchangeable
Beneficial Certificates for its reasonable expenses hereunder, including the
reasonable compensation, expenses and disbursements of such agents, custodians,
nominees, representatives, experts and counsel as Comerica may employ in
connection with the exercise and performance of its rights and its duties
hereunder; provided, however, that pursuant to the terms of the Administrative
Agency Agreement, and the Supplement entered into in connection with the
issuance of any Series, the Administrative Agent shall pay the Non-Specified
Asset Comerica Fee and the related Specified Asset Comerica Fees in the manner
and at the times set forth therein.
(b) The Non-Specified Asset Administrative Fee shall accrue
and be payable monthly in arrears to the Administrative Agent in accordance
with the distribution of funds set forth in Section 5.2(b). The Holders of
each Series shall pay the related Specified Asset Administrative Fee in the
manner and at the times set forth in the related Supplement.
Section 6.9 Resignation or Removal of Comerica. (a) Comerica
shall not resign without the consent of the Beneficiaries unless Comerica shall
cease to be eligible in accordance with the provisions of Section 6.12 or
Comerica shall be incapable of acting or it shall be illegal for Comerica to
act.
(b) The Holders of 100% of the Exchangeable Beneficial
Certificates may remove Comerica (and shall remove Comerica in the case of the
occurrence of an event described in clause (i) or (iv)):
(i) if Comerica shall cease to be eligible in accordance with
the provisions of Section 6.12 and shall fail to resign after a
written request therefor by the Holders of 100% of the Exchangeable
Beneficial Certificates;
(ii) if Comerica shall be adjudged bankrupt or insolvent;
(iii) if a receiver or other public officer shall be
appointed or take charge or control of
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Comerica or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
(iv) if Comerica shall otherwise be incapable of acting or it
shall be illegal for Comerica to act; or
(v) at their discretion.
(c) If Comerica is removed or if a vacancy exists in the
office of trustee for any reason, the Holders of the Exchangeable Beneficial
Certificates shall promptly appoint a successor trustee by written instrument,
in duplicate (one copy of which instrument shall be delivered to the outgoing
trustee so removed, one copy to the successor trustee and one copy to each
Rating Agency then rating any securities based on any Specified Beneficial
Certificates). All costs associated with the resignation or removal of
Comerica and the appointment of a successor, including without limitation the
costs associated with retitling any Leased Vehicles in the name of the
successor trustee, shall be borne by the Holders of the Exchangeable Beneficial
Certificates and the Holders of the Specified Beneficial Certificates based on
the Non- Specified Asset Percentage and the related Series Specified Asset
Percentage of such costs, respectively; provided that if the Holders of the
Exchangeable Beneficial Certificates remove Comerica pursuant to Section
6.9(b)(v), all such costs shall be borne exclusively by the Holders of the
Exchangeable Beneficial Certificates (in the proportions 98% by Ford Credit and
2% by Ford Credit Leasing) and shall be accounted for as a contribution to the
capital of the initial transferees of the related Specified Beneficial
Certificates.
(d) Any resignation or removal of Comerica and appointment of
a successor trustee pursuant to any of the provisions of this Section 6.9 shall
not become effective until a written acceptance of appointment is delivered by
the successor trustee. Any successor trustee appointed pursuant to this
Section 6.9 shall be eligible to act in such capacity in accordance with
Section 6.12 and, following compliance with the preceding sentence, 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
trustee.
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(e) The predecessor trustee shall upon payment of its fees
and expenses deliver to the successor trustee all books, records, accounts,
documents, statements and monies held by it under this Agreement. The
predecessor trustee shall execute and deliver such instruments and do such
other things as may reasonably be required to fully and certainly vest and
confirm in the successor trustee all such rights, powers, duties and
obligations. The predecessor trustee shall cooperate with the successor
trustee to ensure that the successor trustee has all books, records, accounts,
documents, statements, monies held by it under this Agreement and any other
relevant information relating to the FCTT Assets.
(f) Upon the acceptance by a successor trustee of its
appointment pursuant to this Section 6.9, the Holders of Exchangeable
Beneficial Certificates shall mail notice of such appointment to each Holder of
a Specified Beneficial Certificate; provided, however, that if a Holder of an
Exchangeable Beneficial Certificate fails to mail such notice with ten (10)
days after the successor trustee has accepted its appointment hereunder, the
successor trustee shall cause such notice to be mailed at the expense of such
Holder.
Section 6.10 Merger or Consolidation of Comerica. Any
corporation or other Person which may be merged, converted or consolidated with
Comerica, or any corporation resulting from any merger, conversion or
consolidation to which Comerica shall be a party, or any corporation or other
Person succeeding to all or substantially all of the corporate trust business
of Comerica, shall be deemed the successor of Comerica hereunder; provided,
however, that such corporation shall be eligible in accordance with the
provisions of Section 6.12, and without the execution or filing of any
instrument or any further act on the part of any of the parties hereto.
Section 6.11 Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provision of this Agreement, at any time, for
the purpose of meeting any legal requirement of any jurisdiction in which any
FCTT Assets may then be located, the Holders of Exchangeable Beneficial
Certificates hereby grant Comerica the authority and power to execute and
deliver all instruments to appoint one or more Persons to act as co-trustee,
jointly with Comerica, or as separate trustee
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or trustees, of all or any part of FCTT and the FCTT Assets, and to vest in
such Person, in such capacity, such title to FCTT, or any FCTT Assets, and,
subject to the other provisions of this Section 6.11, such powers, duties,
obligations, rights and trusts as Comerica may consider necessary or desirable.
No co-trustee or separate trustee under this Agreement shall be required to be
eligible in accordance with the provisions of Section 6.12; provided, however,
that no co-trustee or separate trustee under this Agreement may be a
Beneficiary or any Affiliate thereof.
(b) Each co-trustee and separate 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 Comerica shall be conferred upon and exercised or
performed by Comerica and such co-trustee or separate trustee jointly
(it being understood that such co-trustee or separate trustee is not
authorized to act separately without Comerica 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, Comerica 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 FCTT Assets or any portion thereof in any such jurisdiction)
shall be exercised and performed singly by such co-trustee or separate
trustee, but solely at the direction of Comerica;
(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 Beneficiaries with respect to the affected FCTT
Assets and Comerica acting jointly may at any time accept the
resignation of or remove any co-trustee or separate trustee appointed
with respect to such FCTT Assets.
(c) Any notice, request or other writing given to Comerica
shall be deemed to have been given to each of the then co-trustees and separate
trustees, as effectively as if given to each of them. Comerica shall
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deliver copies of all such notices, requests or other writings to each
Beneficiary to which such notice, request or writing relates. Every instrument
appointing any co-trustee or separate trustee shall refer to this Agreement and
the conditions of this Article VI. Each co-trustee and separate 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
Comerica or separately, as may be provided therein, subject to all the
provisions of this Agreement, specif- ically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, Comerica. Each such instrument shall be filed with Comerica and
a copy thereof given to each related Beneficiary.
(d) Any co-trustee or separate trustee may at any time
appoint Comerica 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 co-trustee
or separate 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 Comerica, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 6.12 Eligibility Requirements for Trustee. The
trustee of FCTT shall at all times: (a) be a corporation or a banking
association organized under the laws of the United States of America or any
state thereof; (b) be authorized to exercise corporate trust powers; (c) be
qualified to act as a trustee and hold FCTT Assets in those states in which
FCTT Assets are located (or have appointed a co-trustee or separate trustee to
hold FCTT Assets in such state) and (d) have, at the time of its appointment, a
long-term unsecured debt rating of at least Baa3 by Moody's Investors Service,
Inc. or be otherwise acceptable to Moody's Investors Service, Inc.
29
<PAGE> 34
ARTICLE VII
TERMINATION OF TRUST AGREEMENT
Section 7.1 Termination of Trust Agreement.
(a) This Agreement (other than Section 2.6) and FCTT shall terminate and be of
no further force or effect on the earlier of: (A) the final distribution by
Comerica of all moneys or other property constituting FCTT Assets or (B) the
Bankruptcy, insolvency or termination of Ford Credit Leasing. With respect to
Series Specified Assets, FCTT shall be deemed terminated solely with respect to
such assets upon the Bankruptcy, insolvency or termination of any Holder of the
related Specified Beneficial Certificates or the Bankruptcy, insolvency or
termination of any initial transferee of any Specified Beneficial Certificates
from the Holders of the Exchangeable Beneficial Certificates or upon the
occurrence of such other events as may be specified in the related Supplement.
Upon such termination of FCTT with respect to any Series Specified Assets,
Comerica shall distribute to Holders of the related Specified Beneficial
Certificates all related Series Specified Assets by causing the Certificates of
Title of the related Specified Leased Vehicles to be reregistered in the name
of, or at the direction of, such Holders. This Agreement and FCTT may also
terminate at the express written direction of the Holders of the Exchangeable
Beneficial Certificates so long as no Series of Specified Beneficial
Certificates are outstanding. Notwithstanding the foregoing, in no event,
however, shall FCTT continue beyond the expiration of 21 years from the death
of the last survivor of the descendants of Hurley David Smith, currently
residing in Clarkston, Michigan, living on the date of this Agreement.
(b) Upon termination of FCTT, Comerica shall distribute (i) to each
Holder of a Specified Beneficial Certificate its interest in the related Series
Specified Assets and (ii) to the Holders of the Exchangeable Beneficial
Certificates their respective interests in the Non- Specified Assets by causing
the Certificates of Title to be reregistered in the name of, or at the
direction of, the Holder.
30
<PAGE> 35
ARTICLE VIII
AMENDMENTS
Section 8.1 Amendments. This Agreement may be amended by the
Holders of the Exchangeable Beneficial Certificates and Comerica without the
consent of any Holder of any Specified Beneficial Certificates at any time;
provided, however, that such action shall not, (w) amend Section 4.3(c)(x) to
reduce the percentage of the Aggregate FCTT Asset Amount that is required to
consist of Non-Specified Assets or Section 4.3(g) to reduce the portion of FCTT
required to consist of Non-Specified Assets, (x) as evidenced by an Opinion of
Counsel, materially and adversely affect the interests of any Holder of an
outstanding Specified Beneficial Certificate (unless each such Holder has
consented thereto), (y) as confirmed by each nationally recognized statistical
rating agency which is then rating securities based on such Specified
Beneficial Certificates, cause the then current rating assigned to such
securities to be withdrawn or reduced or (z) as evidenced by an Opinion of
Counsel, cause FCTT to be classified as an association (or publicly traded
partnership) taxable as a corporation for federal income tax purposes.
Notwithstanding the foregoing, this Agreement may be amended
(with a copy of such amendment being delivered to each Rating Agency then
rating securities at any time by the FCTT Trustee (acting at the direction of
Ford Credit and Ford Credit Leasing) and the Lease Trustee to the extent
reasonably necessary to assure that none of FCTT or any transferee of a
Specified Beneficial Certificate will be classified as an association (or
publicly traded partnership) taxable as a corporation for federal income tax
purposes.
ARTICLE IX
MISCELLANEOUS
Section 9.1 No Legal Title to FCTT Assets; Direction of
Comerica Actions. The Beneficiaries shall not have legal title to any FCTT
Assets. The Beneficiaries shall be entitled to receive distributions with
respect to their ownership interest therein only in accordance with Articles V
and VII and the Administrative Agency Agreement; provided, however, that the
Holders of
31
<PAGE> 36
any Specified Beneficial Certificates and the Holders of Exchangeable
Beneficial Certificates may direct Comerica to deliver the FCTT Assets to such
Holders as set forth in Sections 4.3(f) and (g). Notwithstanding anything
herein to the contrary, Comerica shall take no action with respect to entering
into, disposing of or making any payment or distribution with respect to any
Leased Vehicle, Lease, Certificate of Title or Insurance Policy except in
accordance with the procedures set forth in the Administrative Agency Agreement
or as directed by the related Beneficiaries in accordance with Section 6.4(a).
Section 9.2 Limitations on Rights of Others. The provisions
of this Agreement are solely for the benefit of Comerica, the Grantors and the
Beneficiaries and nothing in this Agreement, whether express or implied, shall
be construed to give to any other Person any legal or equitable right, remedy
or claim in FCTT or the FCTT Assets or under or in respect of this Agreement or
any covenants, conditions or provisions contained herein.
Section 9.3 Notices. All demands, notices and communications
upon or to the Grantors, the Beneficiaries and Comerica shall be in writing,
and shall be personally delivered, sent by electronic facsimile or overnight
delivery service or mailed by certified mail-return receipt requested, and
shall be deemed to have been duly given to the intended recipient upon receipt
at the respective addresses listed below, or at such other address as shall be
designated by such Person in a written notice to the other parties to this
Agreement.
(a) in the case of Ford Credit Leasing:
Ford Credit Leasing Company, Inc.
The American Road
FMCC Building
Dearborn, Michigan 48121
Attention: Treasurer
Fax: 313-594-0735
Telephone: 313-845-4072
(b) In the case of Ford Credit:
Ford Motor Credit Company
The American Road
FMCC Building
32
<PAGE> 37
Dearborn, Michigan 48121
Attention: Secretary
Fax: 313-337-1160
Telephone: 313-594-7765
(c) In the case of Comerica:
Comerica Bank
411 Lafayette - 4th Floor
Detroit, Michigan 48226-3461
Attention: Corporate Trust Department
Fax: 313-222-2985
Telephone: 313-222-4380
Any notice to be delivered to any Beneficiary which is a
permitted assignee hereunder of either initial Beneficiary, shall be delivered
at the address provided to Comerica by such Person.
Section 9.4 Severability. 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
Certificates or the rights of the Holders thereof.
Section 9.5 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 one and the same instrument.
Section 9.6 Successors and Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the Grantors, Comerica and each Beneficiary and (with respect to Comerica and
the Holders of any Specified Beneficial Certificates only) their respective
successors and permitted assigns, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by a Beneficiary shall
bind the successors and assigns of such Beneficiary.
33
<PAGE> 38
Section 9.7 No Recourse. Each Beneficiary by accepting a
Certificate acknowledges that such Beneficiary's Certificate or Certificates
represent a beneficial interest in FCTT only and do not represent interests in
or obligations of the Grantors, Comerica 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 or the Certificates.
Section 9.8 No Petition. Comerica shall not have the power
to commence a voluntary proceeding in bankruptcy relating to FCTT without the
unanimous prior approval of all Beneficiaries and the delivery to Comerica by
each such Beneficiary of a certificate certifying that such Beneficiary
reasonably believes that FCTT is insolvent. Notwithstanding the foregoing,
Comerica and each Beneficiary hereunder each hereby covenants that for a period
of one year and one day after payment in full of all distributions to all
Beneficiaries of Specified Beneficial Certificates pursuant to the terms of
this Agreement, it will not institute against, or join any Person in
instituting against, Ford Credit Leasing or FCTT any bankruptcy,
reorganization, insolvency or liquidation proceeding, or other similar
proceeding, under the laws of the United States without the consent of 100% of
the Holders of Specified Beneficial Certificates (excluding Ford Credit
Leasing, RCL, or any of their Affiliates).
Section 9.9 Covenant of Ford Credit Leasing. Ford Credit
Leasing hereby covenants for the benefit of Ford Credit and the Holders from
time to time of any Specified Beneficial Certificates, to maintain at all times
a net worth of at least $30,100,000 (exclusive of its interest in FCTT or any
other entity in which it may be treated, for federal income tax purposes, as a
general partner).
Section 9.10 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.
34
<PAGE> 39
SECTION 9.11 GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
35
<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
COMERICA BANK,
as trustee
By: \s\ M. Karam
---------------------------------------
Name: Marilyn A. Karam
Title: Vice President
FORD CREDIT LEASING COMPANY, INC.,
as a Grantor and Beneficiary
By: \s\ Mario Spivak
---------------------------------------
Name: Mario Spivak
Title: Assistant Treasurer
FORD MOTOR CREDIT COMPANY,
as a Grantor and Beneficiary
By: \s\ Hurley D. Smith
---------------------------------------
Name: Hurley D. Smith
Title: Secretary
<PAGE> 41
EXHIBIT A
[Form of Exchangeable Beneficial Certificate]
FORD CREDIT TITLING TRUST
EXCHANGEABLE BENEFICIAL CERTIFICATE
No. _
evidencing a fractional undivided interest in all FCTT Assets (as defined
below), other than Series Specified Assets (as defined below).
(This Exchangeable Beneficial Certificate does not represent an interest in or
obligation of Ford Motor Credit Company, Ford Credit Leasing Company, Inc., or
Comerica Bank or any of their respective Affiliates, except to the extent
described below.)
THIS CERTIFIES THAT ________ is the registered owner of a
nonassessable, fully-paid, __% fractional undivided interest in Ford Credit
Titling Trust ("FCTT") and the FCTT Assets deposited therein other than Series
Specified Assets.
FCTT was created pursuant to an Amended and Restated Trust
Agreement, dated as of January 31, 1994 (as amended and supplemented from time
to time, the "FCTT Agreement"), by and among Ford Motor Credit Company ("Ford
Credit") and Ford Credit Leasing Company, Inc. ("Ford Credit Leasing") as
grantors and initial beneficiaries (in their capacities as grantors, each a
"Grantor" and collectively, the "Grantors" and in their capacity as
beneficiaries, each a "Beneficiary" and collectively, the "Beneficiaries") and
Comerica Bank, as trustee ("Comerica"). A summary of certain of the pertinent
provisions of the FCTT Agreement is set forth below. To the extent not
otherwise defined herein, the capitalized terms used herein have the meanings
assigned to them in the FCTT Agreement.
This Certificate is one of the duly authorized Certificates
designated as "Exchangeable Beneficial Certificates" (the "Certificates").
This Certificate is issued under and is subject to the terms, provisions and
conditions of the FCTT Agreement and the Administrative Agency Agreement, dated
as of January 31, 1994 (the "Administrative Agency Agreement"), among Ford
Credit and Ford Credit Leasing, to which FCTT Agreement and Administrative
Agency Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound. The property of FCTT
consists of the FCTT Assets (the "FCTT Assets"), which initially includes only
cash and any amounts on deposit in
A-1
<PAGE> 42
the FCTT Collection Account but will include, in addition, certain retail lease
contracts for automobiles and light-duty trucks ("Leases") and the proceeds
thereof, the automobiles and light-duty trucks (the "Leased Vehicles") which
are subject to the Leases and the proceeds thereof including the proceeds from
the sale of the Leased Vehicles to third parties, certificates of title or
other evidence of ownership of a Leased Vehicle, the benefits of certain
insurance policies, certain other properties and rights, including, but not
limited to, certain rights of recourse, relating to the Leases and the Leased
Vehicles and all proceeds of the foregoing, all as more fully described in the
FCTT Agreement.
It is contemplated under the FCTT Agreement that from time to
time certain Leased Vehicles, Leases and related FCTT Assets will be identified
(such assets, the "Series Specified Assets") and that certificates representing
a beneficial interest in such Series Specified Assets ("Specified Beneficial
Certificates") will be issued to the Holder of this Exchangeable Beneficial
Certificate. Upon the issuance of such Specified Beneficial Certificate, the
beneficial interest in FCTT and the FCTT Assets represented by this
Exchangeable Beneficial Certificate shall be reduced by the amount of the FCTT
Assets represented by such Specified Beneficial Certificates.
Under the FCTT Agreement, there shall be distributed on the
15th day of each month or such other date as may be determined from time to
time pursuant to the Administrative Agency Agreement or, if such day is not a
Business Day, the next Business Day (each, a "Distribution Date"), commencing
on January 15, 1995, to the Person in whose name this Certificate is registered
such Holder's fractional undivided interest in the amount on deposit in the
FCTT Collection Account, subject to the limitations set forth in Section 5.2 of
the FCTT Agreement. Distributions on this Certificate shall be made as
provided in the FCTT Agreement.
The FCTT Agreement may be amended by the Holders of the
Exchangeable Beneficial Certificates and Comerica without the consent of any
Holder of any Specified Beneficial Certificates at any time; provided, however,
that such action shall not, (w) amend Section 4.3(c)(x) of the FCTT Agreement
to reduce the percentage of the aggregate FCTT Asset Amount that is required to
consist of Non-Specified Assets or Section 4.3(g) of the FCTT Agreement to
reduce the portion of FCTT required to consist of Non-Specified Assets, (x) as
evidenced by an Opinion of Counsel, materially and adversely affect the
interests of any Holder of an outstanding Specified Beneficial Certificate
(unless each such Holder has consented thereto), (y) as confirmed by each
nationally recognized statistical rating agency which is then rating securities
based on such Specified Beneficial Certificates, cause the then current rating
assigned to such securities to be with-
A-2
<PAGE> 43
drawn or reduced or (z) as evidenced by an Opinion of Counsel, cause FCTT to be
classified as an association (or publicly traded partnership) taxable as a
corporation for federal income tax purposes.
Each Beneficiary, by acceptance of a Certificate, covenants
that for a period of one year and one day after payment in full of all
distributions to all Beneficiaries of Specified Beneficial Certificates
pursuant to the terms of the FCTT Agreement, it will not institute against, or
join any Person in instituting against, Ford Credit Leasing or FCTT any
bankruptcy, reorganization, insolvency or liquidation proceeding, or other
similar proceeding, under the laws of the United States without the consent of
100% of the Holders of Specified Beneficial Certificates (excluding Ford Credit
Leasing, RCL, or any of their Affiliates).
As provided in the FCTT Agreement, this Certificate or any
interest therein (and the interest in FCTT and the FCTT Assets which it
represents) may not be sold, transferred, assigned, hypothecated, pledged or
otherwise conveyed, and any such purported transfer shall be null, void and of
no effect.
Comerica shall keep the certificate register with respect to
this Certificate, and the Holder of this Certificate shall notify Comerica of
any change of address or instructions on the distribution of funds.
The FCTT Agreement (other than Section 2.6) and FCTT shall
terminate and be of no further force or effect on the earlier of: (i) the final
distribution by Comerica of all moneys or other property constituting FCTT
Assets; (ii) the Bankruptcy, insolvency or termination of Ford Credit Leasing.
With respect to Series Specified Assets, FCTT shall be deemed terminated solely
with respect to such assets upon the Bankruptcy, insolvency or termination any
Holder of the related Specified Beneficial Certificates or the Bankruptcy,
insolvency or termination of any initial transferee of any Specified Beneficial
Certificates from the Holders of the Exchangeable Beneficial Certificates or
upon the occurrence of such other events as may be specified in the related
Supplement. Upon such termination of FCTT with respect to any Series Specified
Assets, Comerica shall distribute to Holders of the related Specified
Beneficial Certificates all related Series Specified Assets by causing the
Certificates of Title of the related Specified Leased Vehicles to be
reregistered in the name of, or at the direction of, such Holders. The FCTT
Agreement and FCTT may also terminate at the express written direction of the
Holders of the Exchangeable Beneficial Certificates so long as no Series of
Specified Beneficial Certificates are outstanding. Notwithstanding the
foregoing, in no event, however, shall FCTT continue beyond the expiration of
21 years from the death of the last survivor of the descendants of Hurley
A-3
<PAGE> 44
David Smith, currently residing in Clarkston, Michigan, living on the date of
the FCTT Agreement. Upon termination of FCTT, Comerica shall distribute (i) to
each Holder of a Specified Beneficial Certificate its interest in the related
Series Specified Assets and (ii) to the Holders of the Exchangeable Beneficial
Certificates their respective interests in the Non-Specified Assets by causing
the Certificates of Title to be reregistered in the name of, or at the
direction of, the Holder.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF MICHIGAN, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Unless this Certificate shall have been executed by a
Responsible Officer, this Certificate shall not entitle the Holder thereof to
any benefit under the FCTT Agreement or be valid for any purpose.
A-4
<PAGE> 45
IN WITNESS WHEREOF, Comerica, on behalf of FCTT and not in its
individual capacity, has caused this Exchangeable Beneficial Certificate to be
duly executed.
FORD CREDIT TITLING TRUST
COMERICA BANK,
not in its individual capacity
but solely as trustee
Dated: ______ __, 199_ By:_____________________________
Name:
Title:
A-5
<PAGE> 46
Schedule A
Series Series Specified
Issue Series Asset Amount as of
Date Designation Series Issue Date
A-6
<PAGE> 47
EXHIBIT B
[Form of Specified Beneficial Certificate]
FORD CREDIT TITLING TRUST
SERIES 199_-_ SPECIFIED BENEFICIAL CERTIFICATE
No. _
evidencing a fractional undivided interest in the Series 199_-_ Assets (as
defined below).
(This Series 199_-_ Specified Beneficial Certificate does not represent an
interest in or obligation of Ford Motor Credit Company, Ford Credit Leasing
Company, Inc., or Comerica Bank or any of their respective affiliates, except
to the extent described below.)
THIS CERTIFIES THAT ________ is the registered owner of a
nonassessable, fully-paid, __% fractional undivided interest in the Series
199_-_ Assets deposited in Ford Credit Titling Trust ("FCTT").
FCTT was created pursuant to an Amended and Restated Trust
Agreement, dated as of January 31, 1994 (as amended and supplemented from time
to time, the "FCTT Agreement"), by and among Ford Motor Credit Company ("Ford
Credit") and Ford Credit Leasing Company, Inc. ("Ford Credit Leasing") as
grantors and initial beneficiaries (in their capacities as grantors, each a
"Grantor" and collectively, the "Grantors" and in their capacity as
beneficiaries, each a "Beneficiary" and collectively, the "Beneficiaries") and
Comerica Bank, as trustee ("Comerica"). A summary of certain of the pertinent
provisions of the FCTT Agreement is set forth below.
This Certificate is one of a duly authorized Series of
Specified Beneficial Certificates (as defined below). This Certificate is
issued under and is subject to the terms, provisions and conditions of the FCTT
Agreement, the Administrative Agency Agreement, dated January 31, 1994 (the
"Administrative Agency Agreement") and the Series 199_-_ Supplement, dated as
of ______ __, 199_, among Ford Credit and Ford Credit Leasing, and _________
(the "RCL Trustee"), as trustee for RCL Trust 199_-_ (the "Supplement"), to
which FCTT Agreement, Administrative Agency Agreement and Supplement the Holder
of this Certificate by virtue of the acceptance hereof assents and by which
such Holder is bound. To the extent not otherwise defined herein, the
B-1
<PAGE> 48
capitalized terms used herein have the meanings assigned to them in the
Supplement.
The property of FCTT consists of the FCTT Assets (the "FCTT
Assets"), which includes cash and any amounts on deposit in the FCTT Collection
Account, certain retail lease contracts for automobiles and light-duty trucks
("Leases") and the proceeds thereof, the automobiles and light-duty trucks (the
"Leased Vehicles") which are subject to the Leases and the proceeds thereof
including the proceeds from the sale of the Leased Vehicles to third parties,
certificates of title or other evidence of ownership of a Leased Vehicle, the
benefits of certain insurance policies, certain other properties and rights,
including, but not limited to, certain rights of recourse, relating to the
Leases and the Leased Vehicles and all proceeds of the foregoing, all as more
fully described in the FCTT Agreement. Ownership of the FCTT Assets was
initially represented by "Exchangeable Beneficial Certificates."
Under the FCTT Agreement from time to time the Holders of
Exchangeable Beneficial Certificates may direct Comerica to issue to such
Holders of the Exchangeable Beneficial Certificates a series of certificates
("Specified Beneficial Certificates") representing a beneficial interest in
certain specified Leased Vehicles, Leases and related FCTT Assets (such assets,
the "Series Specified Assets"). Upon the issuance of such Specified Beneficial
Certificates, the beneficial interest in FCTT and the FCTT Assets represented
by the Exchangeable Beneficial Certificate shall be reduced by the amount of
the FCTT Assets represented by such Specified Beneficial Certificates. This
Certificate was issued pursuant to the Supplement which identified certain
Series Specified Assets therein (the "Series 199_-_ Assets").
Under the Series 199_-_ Supplement, there shall be distributed
on each Business Day, or so long as each Monthly Remittance Condition has been
satisfied, on the 15th day of each month or, if such day is not a Business Day,
the next Business Day (each, a "Distribution Date")(or if such Distribution
Date is a Payment Date, on the Business Day preceding such Distribution Date),
commencing ______ __, 199_ to the Person in whose name this Certificate is
registered such Holder's fractional undivided interest in the amount on deposit
in the Series 199_-_ Collection Account. Distributions on this Certificate
shall be made as provided in the FCTT Agreement and the Supplement.
The FCTT Agreement may be amended by the Holders of the
Exchangeable Beneficial Certificates and Comerica without the consent of any
Holder of any Specified Beneficial Certificates at any time; provided, however,
that such action shall not, (w) amend Section 4.3(c)(x) of the FCTT Agreement
to reduce the percentage of the aggregate FCTT Asset Amount that is required to
B-2
<PAGE> 49
consist of Non-Specified Assets or Section 4.3(g) of the FCTT Agreement to
reduce the portion of FCTT required to consist of Non-Specified Assets, (x) as
evidenced by an Opinion of Counsel, materially and adversely affect the
interests of any Holder of an outstanding Specified Beneficial Certificate
(unless each such Holder has consented thereto), (y) as confirmed by each
nationally recognized statistical rating agency which is then rating securities
based on such Specified Beneficial Certificates, cause the then current rating
assigned to such securities to be withdrawn or reduced or (z) as evidenced by
an Opinion of Counsel, cause FCTT to be classified as an association (or
publicly traded partnership) taxable as a corporation for federal income tax
purposes.
Each Beneficiary, by acceptance of a Certificate, covenants
that for a period of one year and one day after payment in full of all
distributions to all Beneficiaries of Specified Beneficial Certificates
pursuant to the terms of the FCTT Agreement, it will not institute against, or
join any Person in instituting against, Ford Credit Leasing or FCTT any
bankruptcy, reorganization, insolvency or liquidation proceeding, or other
similar proceeding, under the laws of the United States without the consent of
100% of the Holders of Specified Beneficial Certificates (excluding Ford Credit
Leasing or any of its Affiliates).
Comerica shall keep the certificate register with respect to
this Certificate, and the Holder of this Certificate shall notify Comerica of
any change of address or instructions on the distribution of funds.
The FCTT Agreement (other than Section 2.6) and FCTT shall
terminate and be of no further force or effect on the earlier of: (i) the final
distribution by Comerica of all moneys or other property constituting FCTT
Assets; (ii) the Bankruptcy, insolvency or termination of Ford Credit Leasing.
With respect to Series Specified Assets, FCTT shall be deemed terminated solely
with respect to such assets upon the Bankruptcy, insolvency or termination any
Holder of the related Specified Beneficial Certificates or the Bankruptcy,
insolvency or termination of any initial transferee of any Specified Beneficial
Certificates from the Holders of the Exchangeable Beneficial Certificates or
upon the occurrence of such other events as may be specified in the related
Supplement. Upon such termination of FCTT with respect to any Series Specified
Assets, Comerica shall distribute to Holders of the related Specified
Beneficial Certificates all related Series Specified Assets by causing the
Certificates of Title of the related Specified Leased Vehicles to be
reregistered in the name of, or at the direction of, such Holders. The FCTT
Agreement and FCTT may also terminate at the express written direction of the
Holders of the Exchangeable Beneficial Certificates so long as no Series of
Specified Beneficial Certificates
B-3
<PAGE> 50
are outstanding. Notwithstanding the foregoing, in no event, however, shall
FCTT continue beyond the expiration of 21 years from the death of the last
survivor of the descendants of Hurley David Smith, currently residing in
Clarkston, Michigan, living on the date of the FCTT Agreement. Upon
termination of FCTT, Comerica shall distribute (i) to each Holder of a
Specified Beneficial Certificate its interest in the related Series Specified
Assets and (ii) to the Holders of the Exchangeable Beneficial Certificates
their respective interests in the Non- Specified Assets by causing the
Certificates of Title to be reregistered in the name of, or at the direction
of, the Holder.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF MICHIGAN, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Unless this Certificate shall have been executed by a
Responsible Officer, this Certificate shall not entitle the Holder thereof to
any benefit under the FCTT Agreement or be valid for any purpose.
B-4
<PAGE> 51
IN WITNESS WHEREOF, Comerica, on behalf of FCTT and not in its
individual capacity, has caused this Series 199_-_ Specified Beneficial
Certificate to be duly executed.
FORD CREDIT TITLING TRUST
COMERICA BANK,
not in its individual capacity
but solely as trustee
Dated: _______, 199_ By:________________________________
Name:
Title:
B-5
<PAGE> 52
FOR VALUE RECEIVED, The undersigned hereby sells, transfers
and assigns unto _____________ the within Series 19__-_ Certificate, and all
rights thereunder, hereby irrevocably constituting and appointing _____________
as Attorney to transfer said Series 19__-_ Certificate on the books of the FCTT
Registrar, with full power of substitution in the premises.
Dated: ____________, ____
By: _________________________
B-6
<PAGE> 1
EXHIBIT 10.2
ADMINISTRATIVE AGENCY AGREEMENT
dated as of
January 31, 1994
among
COMERICA BANK,
as trustee of Ford Credit Titling Trust,
FORD MOTOR CREDIT COMPANY,
as Administrative Agent,
and
FORD MOTOR CREDIT COMPANY, and
FORD CREDIT LEASING COMPANY, INC.
as initial Beneficiaries of
Ford Credit Titling Trust
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
DEFINITIONS
<S> <C> <C>
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
THE ADMINISTRATIVE AGENT; DESIGNATION OF SERIES
Section 2.1 Representations of the
Administrative Agent . . . . . . . . . . . . . . . . . . 2
Section 2.2 Indemnities of the Administrative
Agent . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.3 Merger or Consolidation of, or
Assumption of the Obligations of,
Administrative Agent . . . . . . . . . . . . . . . . . . 6
Section 2.4 Limitation on Liability of
Administrative Agent and Others . . . . . . . . . . . . 6
Section 2.5 Delegation of Duties . . . . . . . . . . . . . . . . . . 7
Section 2.6 Notification of Third Party Claims . . . . . . . . . . . 8
Section 2.7 Maintenance and Assignment of
Blanket Insurance Policies . . . . . . . . . . . . . . . 8
Section 2.8 Designation of Series . . . . . . . . . . . . . . . . . 8
ARTICLE III
PURCHASE OF LEASES AND LEASED VEHICLES
Section 3.1 Origination by Dealers; Role of
Administrative Agent . . . . . . . . . . . . . . . . . . 9
Section 3.2 Administration and Titling of
Leased Vehicles . . . . . . . . . . . . . . . . . . . . 9
Section 3.3 Vehicle Purchase Account . . . . . . . . . . . . . . . . 10
Section 3.4 Purchase of Leases and Leased
Vehicles; Lease Purchase Advances . . . . . . . . . . . 10
Section 3.5 Vehicle Purchase Certificate . . . . . . . . . . . . . . 11
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE IV
ADMINISTRATION AND SERVICING OF LEASES
<S> <C> <C>
Section 4.1 Duties of Administrative Agent . . . . . . . . . . . . . 12
Section 4.2 Collection of Total Monthly
Payments; Extension of Leases . . . . . . . . . . . . . 13
Section 4.3 Realization on Liquidated Leases . . . . . . . . . . . . 15
Section 4.4 Custody of Lease Files; Custodi
Duties . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.5 Maintenance of Record Ownership
Interests in Leased Vehicles . . . . . . . . . . . . . . 17
Section 4.6 Covenants of Administrative Agent . . . . . . . . . . . 18
Section 4.7 Purchase Upon Breach . . . . . . . . . . . . . . . . . . 18
Section 4.8 Comerica and Administrative Agent Fees . . . . . . . . . 20
Section 4.9 Administrative Agent's Certificate . . . . . . . . . . . 20
Section 4.10 Annual Statement as to Compliance;
Notice of Default . . . . . . . . . . . . . . . . . . . 21
Section 4.11 Annual Independent Certified Public
Accountant's Report . . . . . . . . . . . . . . . . . . 21
Section 4.12 Access to Certain Documentation and
Information Regarding Leases . . . . . . . . . . . . . . 22
Section 4.13 Administrative Agent Expenses . . . . . . . . . . . . . 22
ARTICLE V
SALE OF LEASED VEHICLES
Section 5.1 Expiration of the Lease; Return of Leased Vehicle . . . 23
Section 5.2 Exercise of Dealer Purchase Option
for Leased Vehicles . . . . . . . . . . . . . . . . . . 24
Section 5.3 Sale of Leased Vehicles If Dealer
Purchase Option Is Not Exercised . . . . . . . . . . . . 24
Section 5.4 Advances of Sale Proceeds . . . . . . . . . . . . . . . 24
Section 5.5 Voluntary Early Terminations and
Liquidated Leases . . . . . . . . . . . . . . . . . . . 25
ARTICLE VI
REMITTANCE OF PAYMENTS
Section 6.1 Allocation of Funds . . . . . . . . . . . . . . . . . . 25
Section 6.2 Distributions . . . . . . . . . . . . . . . . . . . . . 29
Section 6.3 Monthly Payment Advances . . . . . . . . . . . . . . . . 30
Section 6.4 Statements to Holders . . . . . . . . . . . . . . . . . 30
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
ARTICLE VII
ADMINISTRATIVE AGENT DEFAULT
<S> <C> <C>
Section 7.1 Events of Default; Removal of Administrative Agent . . . 33
Section 7.2 Administrative Agent Not to Resign . . . . . . . . . . . 37
Section 7.3 Appointment of Successor . . . . . . . . . . . . . . . . 37
Section 7.4 Repayment of Advances . . . . . . . . . . . . . . . . . 39
Section 7.5 Notification to Holders . . . . . . . . . . . . . . . . 39
Section 7.6 Waiver by Beneficiary of Past
Defaults . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . 40
Section 8.2 No Legal Title to FCTT Assets . . . . . . . . . . . . . 40
Section 8.3 Limitations on Rights of Others . . . . . . . . . . . . 41
Section 8.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 8.5 Severability . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.7 Successors and Assigns . . . . . . . . . . . . . . . . . 43
Section 8.8 No Recourse . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.9 No Petition . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.11 Governing Law . . . . . . . . . . . . . . . . . . . . . 44
EXHIBITS
A Form of Lease
B Form of Vehicle Purchase Certificate
C Form of Administrative Agent's Certificate
Schedule I Location of Lease Files
</TABLE>
iii
<PAGE> 5
ADMINISTRATIVE AGENCY AGREEMENT, dated and effective as of
January 31, 1994 among (i) COMERICA BANK, a Michigan banking corporation, not
in its individual capacity but as trustee of Ford Credit Titling Trust (in such
capacity, together with any successor or permitted assign, "Comerica"), (ii)
FORD MOTOR CREDIT COMPANY, a Delaware corporation ("Ford Credit"), as
Administrative Agent (in its capacity as such, the "Administrative Agent") and
as an initial Beneficiary of Ford Credit Titling Trust, and (iii) FORD CREDIT
LEASING COMPANY, INC., a Delaware corporation ("Ford Credit Leasing") as an
initial Beneficiary of Ford Credit Titling Trust. This Administrative Agency
Agreement and any Supplement executed in connection with the issuance of any
Series of Specified Beneficial Certificates are separately and consecutively
paginated, and to the extent there is any conflict between the terms of this
Administrative Agency Agreement and the Supplement, the Supplement shall be
controlling.
WHEREAS, Ford Credit, Ford Credit Leasing and Comerica,
pursuant to the FCTT Agreement, have created Ford Credit Titling Trust ("FCTT")
for the purpose of holding title to and rights under Leases and Leased Vehicles
and other FCTT Assets;
WHEREAS, Ford Credit and Ford Credit Leasing, as Holders of
the Exchangeable Beneficial Certificates, intend from time to time to cause the
issuance of one or more Series of Specified Beneficial Certificates in exchange
for a reduction in the interest in FCTT evidenced by the Exchangeable
Beneficial Certificates;
WHEREAS, the parties desire to enter into this Agreement to
provide for, among other things, the administration and servicing of the FCTT
Assets by the Administrative Agent for the benefit of the Beneficiaries of
FCTT; and
WHEREAS, the parties acknowledge that, in connection with the
issuance of any Series, it may be necessary or desirable to enter into a
Supplement hereto, providing for further specific servicing obligations by the
Administrative Agent with respect to the related Series Specified Assets.
<PAGE> 6
NOW, THEREFORE, the Administrative Agent, Comerica, Ford
Credit and Ford Credit Leasing hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Unless a capitalized term is used
with respect to a particular Series and is otherwise defined in the related
Supplement, the capitalized terms used in this Administrative Agency Agreement
shall have the respective meanings assigned to them in Appendix I, attached
hereto. All references herein to "this Agreement" are to this Administrative
Agency Agreement, including any Supplement issued in connection with the
issuance of any Series, as the same may from time to time be amended,
supplemented or otherwise modified and in effect, and all references herein to
Articles, Sections and subsections are to Articles, Sections and subsections of
this Agreement unless otherwise specified.
ARTICLE II
THE ADMINISTRATIVE AGENT; DESIGNATION OF SERIES
Section 2.1 Representations of the Administrative Agent.
The Administrative Agent makes the following representations on which the
initial Beneficiaries and Comerica rely in connection with the appointment of
the Administrative Agent. The representations speak as of the date of this
Agreement and as of each Series Issue Date and shall survive the transfer or
sale of any Certificate:
(a) Organization and Good Standing. The
Administrative Agent has 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
service the Leases and Leased Vehicles and to hold the Lease Files as
custodian on behalf of Comerica.
2
<PAGE> 7
(b) Due Qualification. The Administrative Agent is
duly qualified to do business as a foreign corporation in good
standing, and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the
conduct of its business (including the servicing of the Leases as
required by this Agreement) shall require such qualifications.
(c) Power and Authority. The Administrative Agent
has the power and authority to execute and deliver this Agreement and
to carry out its terms; and the execution, delivery, and performance
of this Agreement has been duly authorized by the Administrative Agent
by all necessary corporate action.
(d) Binding Obligation. This Agreement constitutes
a legal, valid, and binding obligation of the Administrative Agent
enforceable in accordance with its terms.
(e) No Violation. The consummation of the
transactions contemplated by this Agreement and the fulfillment of the
terms hereof does not conflict with, result in any breach of any of
the terms and provisions of, nor constitute (with or without notice or
lapse of time) a default under, the articles of incorporation or
by-laws of the Administrative Agent, or any indenture, agreement, or
other instrument to which the Administrative Agent 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 Administrative Agent's
knowledge, any order, rule, or regulation applicable to the
Administrative Agent of any court or of any federal or state
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Administrative Agent or
its properties.
3
<PAGE> 8
(f) No Proceedings. There are no proceedings or
investigations pending, or, to the best of the Administrative Agent's
knowledge, threatened, before any court, regulatory body,
administrative agency, or other governmental instrumentality having
jurisdiction over the Administrative Agent or its properties: (i)
asserting the invalidity of this Agreement, the FCTT Agreement or the
Certificates, (ii) seeking to prevent the issuance of the Certificates
or the consummation of any of the transactions contemplated by this
Agreement and the FCTT Agreement, (iii) seeking any determination or
ruling that might materially and adversely affect the performance by
the Administrative Agent of its obligations under, or the validity or
enforceability of, this Agreement, the FCTT Agreement or the
Certificates, or (iv) relating to the Administrative Agent and which
might adversely affect the federal income tax attributes of the
Certificates.
Section 2.2 Indemnities of the Administrative Agent. The
Administrative Agent shall be liable in accordance herewith only to the extent
of the obligations specifically undertaken by the Administrative Agent under
this Agreement.
(a) The Administrative Agent shall defend,
indemnify, and hold harmless Comerica, FCTT, and the Beneficiaries
from and against any and all costs, expenses, losses, damages, claims,
and liabilities, arising out of or resulting from the use or operation
by the Administrative Agent or any Affiliate thereof or any Dealer of
a Leased Vehicle.
(b) The Administrative Agent shall indemnify,
defend, and hold harmless Comerica, FCTT and the Beneficiaries from
and against any and all taxes that may at any time be asserted against
Comerica, FCTT or the Beneficiaries with respect to the transactions
contemplated herein, including any sales, use, gross receipts, general
corporation, tangible personal property, privilege, or license taxes
(but not including any income taxes, taxes on or mea-
4
<PAGE> 9
sured by income, or taxes in the nature of an income tax on the
Beneficiaries or Comerica or any state or local taxes assessed on the
Beneficiaries resulting from the location of assets of FCTT or the
presence of the Administrative Agent) and costs and expenses in
defending against the same.
(c) The Administrative Agent shall indemnify,
defend, and hold harmless Comerica, FCTT, and the Beneficiaries 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 Comerica, FCTT,
or the Beneficiaries (i) through the negligence, willful misfeasance,
or bad faith of the Administrative Agent in the performance of its
duties under this Agreement, (ii) by reason of reckless disregard of
its obligations and duties under this Agreement or (iii) by reason of
any violation or alleged violation of any federal, state or local law
or regulation by the Administrative Agent.
For purposes of this Section 2.2, in the event of the
termination of the rights and obligations of Ford Credit (or any successor
thereto pursuant to Section 2.3) as Administrative Agent pursuant to Section
7.1, or a resignation by such Administrative Agent pursuant to Section 7.2,
such Administrative Agent shall be deemed to be the Administrative Agent
pending appointment of a successor Administrative Agent (other than Comerica)
pursuant to Section 7.3.
Indemnification under this Section 2.2 by Ford Credit (or any
successor thereto pursuant to Section 2.3) as Administrative Agent, with
respect to the period such Person was (or was deemed to be) the Administrative
Agent, shall survive the termination of such Person as Administrative Agent or
a resignation by such Person as Administrative Agent as well as the termination
of this Agreement and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Administrative Agent shall have made any
indemnity payments pursuant to this Section 2.2 and the recipient thereafter
collects any of such amounts from others, the recipient
5
<PAGE> 10
shall promptly repay such amounts to the Administrative Agent, without
interest.
Section 2.3 Merger or Consolidation of, or Assumption of
the Obligations of, Administrative Agent. Any Person (a) into which the
Administrative Agent may be merged or consolidated, (b) resulting from any
merger, conversion, or consolidation to which the Administrative Agent shall be
a party or (c) succeeding to the business of the Administrative Agent, which
Person in any of the foregoing cases executes an agreement of assumption to
perform every obligation of the Administrative Agent under this Agreement, will
be the successor to the Administrative Agent under this Agreement without the
execution or filing of any additional paper or the taking of any further act on
the part of any of the parties to this Agreement; provided, however, that the
Administrative Agent shall have delivered to Comerica an Officer's Certificate
and an Opinion of Counsel each stating that such consolidation, merger or
succession and such agreement of assumption comply with this Section 2.3 and
that all conditions precedent provided for in this Agreement relating to such
transaction have been complied with. The Administrative Agent shall provide
notice of any merger, consolidation or succession pursuant to this Section 2.3
to each Beneficiary and each rating agency then providing a rating for any
securities based on a Specified Beneficial Certificate. Notwithstanding
anything herein to the contrary, the execution of the foregoing agreement of
assumption and delivery of the Officer's Certificate and Opinion of Counsel
referred to above shall be conditions to the consummation of the transactions
referred to in clauses (a), (b), or (c) above.
Section 2.4 Limitation on Liability of Administrative
Agent and Others. Neither the Administrative Agent nor any of the directors or
officers or employees or agents of the Administrative Agent shall be under any
liability to FCTT or the Beneficiaries (except as provided under this
Agreement) or to Comerica (except as provided under this Agreement or otherwise
in writing by the Administrative Agent) for the taking of any action or for
refraining from the taking of any action pursuant to this Agreement or for
errors in judgment; provided, however, that this Section 2.4 shall not protect
the Administrative Agent or any such person against any liability that would
otherwise be imposed by reason of
6
<PAGE> 11
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 Administrative Agent and any director, officer or
employee or agent of the Administrative Agent may rely in good faith on any
Opinion of Counsel or on any Officer's Certificate or certificate of auditors
or accountants believed to be genuine and to have been signed by the proper
party in respect of any matters arising under this Agreement.
Except as provided in this Agreement, the Administrative Agent
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 Leases and
Leased Vehicles in accordance with this Agreement, and that in its opinion may
involve it in any expense or liability; provided, however, that the
Administrative Agent may undertake any reasonable action that it may, in good
faith, 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
Beneficiaries under this Agreement. The Administrative Agent shall be entitled
to reimbursement from the Holders of the Exchangeable Beneficial Certificates
for the legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs, and liabilities of the Holders of the
Exchangeable Beneficial Certificates.
Section 2.5 Delegation of Duties. So long as Ford Credit
acts as Administrative Agent, the Administrative Agent 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 Administrative Agent shall provide
prompt written notice of such action to each Rating Agency then rating any
securities based on any Series. The Administrative Agent may at any time
perform specific duties in connection with the servicing of Leases and the
disposition of Leased Vehicles under this Agreement through sub-contractors;
provided that the Administrative Agent shall at all times retain full
responsibility for the duties performed by such sub-contractors.
7
<PAGE> 12
Section 2.6 Notification of Third Party Claims. The
Administrative Agent shall immediately notify Comerica, upon learning of a
claim by a third party with respect to any Lease, Leased Vehicle or other FCTT
Asset of any kind which might have a material adverse effect on the
Administrative Agent, Comerica, FCTT or any Holder of a Series Specified
Certificate.
Section 2.7 Maintenance and Assignment of Blanket
Insurance Policies. The Administrative Agent shall at all times maintain on
behalf of Comerica and FCTT, Insurance Policies (which may be blanket policies
covering the Administrative Agent and all Affiliates thereof) with respect to
the Leases, the Leased Vehicles and the Lessees, of at least the type and in at
least the same amount as is customary for a lessor of vehicles and is
consistent with the insurance the Administrative Agent has maintained and
maintains from time to time for its own portfolio of retail automotive leases
and related leased vehicles. The Administrative Agent hereby assigns to
Comerica on behalf of FCTT its rights to proceeds under each such Insurance
Policy maintained by it or any of its Affiliates, and further agrees to provide
insurance directly to Comerica and FCTT in at least the amount and of the type
equivalent to the self-insurance provided by the Administrative Agent from time
to time for its own portfolio of retail automotive leases and related leased
vehicles. The Administrative Agent will provide notice of any change in the
amount or type of insurance provided by self-insurance or Insurance Policy to
any Rating Agency then rating any securities based on any Series.
Section 2.8 Designation of Series. (a) From time to
time the Administrative Agent, acting at the direction of the Holders of the
Exchangeable Beneficial Certificates, may deliver to Comerica a Series
Specification Notice in accordance with Section 4.3 of the FCTT Agreement.
Effective as of the Series Cut-Off Date specified in such Series Specification
Notice, a Supplement to this Administrative Agency Agreement relating to the
Series Specified Assets designated in such Series Specification Notice shall be
entered into among Comerica, Ford Credit and Ford Credit Leasing. Such
Supplement, together with this Administrative Agency Agreement, shall provide
for the administration and servicing of the related Series Specified Assets;
provided, that to the extent any of the terms and provisions of
8
<PAGE> 13
this Administrative Agency Agreement and such Supplement conflict, the terms
and provisions of the Supplement shall be controlling.
(b) In connection with the transfer from time to time of any
Series of Specified Beneficial Certificates, the Holders thereof may assign
their respective rights under this Administrative Agency Agreement, including
the Supplement relating to such Series, to such transferees, and such
transferees shall be entitled to the benefits of such Supplement, including the
representations and warranties of the Administrative Agent set forth therein.
ARTICLE III
PURCHASE OF LEASES AND LEASED VEHICLES
Section 3.1 Origination by Dealers; Role of
Administrative Agent. The Administrative Agent shall maintain its relationship
with Dealers in its individual capacity in the ordinary course of its business.
In its capacity as Administrative Agent, the Administrative Agent shall, on
behalf of FCTT, purchase Leases and Leased Vehicles from Dealers on an ongoing
basis during the term of this Agreement in accordance with Section 3.4. The
Administrative Agent shall direct each Dealer to originate Leases on a form
substantially similar to the form attached as Exhibit A, which, in the case of
Vehicles to be acquired by FCTT, shall provide for assignment of such Lease by
the Dealer to FCTT in the manner set forth in Section 3.2.
Section 3.2 Administration and Titling of Leased
Vehicles. The Administrative Agent shall cause the Certificate of Title for
each Leased Vehicle to be issued in the name "Ford Credit Titling Trust," "Ford
Credit Titling Trust, Comerica Bank, Trustee" or such substantially similar
words as the relevant governmental department or agency shall accept, with the
address of the applicable local office of Ford Credit as the address of the
recorded owner of such Leased Vehicle. The Administrative Agent shall also pay
all sales, use, gross receipts, general corporation, tangible personal
property, intangible, franchise, privilege or license taxes to the respective
tax authorities from Use and Lease Tax Amounts collected from Lessees or
otherwise.
9
<PAGE> 14
Section 3.3 Vehicle Purchase Account. Comerica shall
establish and maintain an account in the name of "Ford Credit Titling Trust,
Comerica Bank, Trustee" (the "Vehicle Purchase Account") at an Eligible
Institution, bearing an additional designation clearly indicating that the
funds deposited therein are held by Comerica for the benefit of the Holders of
the Exchangeable Beneficial Certificates. Except as otherwise provided herein,
the Vehicle Purchase Account shall be under the sole dominion and control of
Comerica. The Administrative Agent shall make deposits to, and withdrawals
from, the Vehicle Purchase Account in accordance with the terms of this
Agreement or as directed in writing by the Holders of the Exchangeable
Beneficial Certificates. Any funds on deposit in the Vehicle Purchase Account
may be invested at the direction of the Holders of the Exchangeable Beneficial
Certificates pending application as provided herein. Earnings or interest on
such amounts shall be paid to the Administrative Agent.
Section 3.4 Purchase of Leases and Leased Vehicles; Lease
Purchase Advances. (a) Upon entering into a Lease with a Lessee, a Dealer
shall assign such Lease, the Leased Vehicle and rights to any Security Deposit
or Reconditioning Reserve to FCTT against payment of the related Balance
Subject to Lease Charges. The Administrative Agent, acting on behalf of FCTT
and the Holders of the Exchangeable Beneficial Certificates and subject to
Section 6.2(a), shall withdraw the related Balance Subject to Lease Charges
with respect to such Lease and Leased Vehicle from amounts on deposit in the
Vehicle Purchase Account. In addition to payments to Dealers with respect to
the assignment of Leases and Leased Vehicles to FCTT, the Administrative Agent
shall make all required payments to the relevant state and local tax
authorities with respect to the sale and lease of Leased Vehicles to the
related Lessees.
(b) If on any day funds available for withdrawal from the
Vehicle Purchase Account are insufficient to make all the payments to Dealers
set forth in Section 3.4(a) with respect to new Leases and Leased Vehicles to
be assigned to FCTT on such day, the Administrative Agent, in its sole
discretion, may advance to Dealers on behalf of FCTT an amount equal to such
shortfall (each such payment, a "Lease Purchase Advance"). The Administrative
Agent shall be entitled to reimbursement (with-
10
<PAGE> 15
out interest) for outstanding Lease Purchase Advances from amounts on deposit
in the Vehicle Purchase Account, and is hereby authorized and directed to
withdraw such reimbursement amounts as required. The Administrative Agent
shall cease making Lease Purchase Advances if Ford Credit and Ford Credit
Leasing have ceased contributing assets to FCTT pursuant to Section 4.1(c) of
the FCTT Agreement.
(c) Ford Credit and Ford Credit Leasing, as Holders of
the Exchangeable Beneficial Certificates, agree to deposit or cause to be
deposited in the Vehicle Purchase Account (i) from time to time capital
contributions in such amounts as will be sufficient to permit the
Administrative Agent to withdraw funds from the Vehicle Purchase Account to
make timely payments to the respective Dealers for Leases and Leased Vehicles
(including the related Security Deposits and Reconditioning Reserves) to be
assigned by such Dealers to FCTT pursuant to this Section 3.4 and (ii) on each
Distribution Date an amount sufficient to reimburse the Administrative Agent
for the amount of Lease Purchase Advances made by the Administrative Agent in
the Related Collection Period, as shown in the Lease Purchase Certificate;
provided, that Ford Credit and Ford Credit Leasing shall deposit or cause to be
deposited funds into the Vehicle Purchase Account in such proportions as will
maintain their respective interests in the Non-Specified Assets of FCTT at 98%
and 2%, respectively.
For so long as Ford Credit is the Administrative Agent and a
Holder of an Exchangeable Beneficial Certificate, Ford Credit (in both
capacities) may make the remittances required by this Section 3.4(c) net of
amounts to be reimbursed to Ford Credit as Administrative Agent for Lease
Purchase Advances or paid to Ford Credit as the Non-Specified Asset
Administrative Fee. Nonetheless, the Administrative Agent shall account for
all of the above described remittances and payments as if the amounts were
deposited or paid separately.
Section 3.5 Vehicle Purchase Certificate. On or before
the tenth day of each calendar month, the Administrative Agent shall deliver to
Comerica and the Holders of the Exchangeable Beneficial Certificates a
certificate (a "Vehicle Purchase Certificate") in substantially the form of
Exhibit B identifying or listing
11
<PAGE> 16
(a) the Vehicle Identification Numbers for all Leased Vehicles as of the end of
the preceding Collection Period; (b) the aggregate Book Value of Leases and
Leased Vehicles purchased by FCTT in the preceding Collection Period; (c) the
aggregate Lease Purchase Advances outstanding as of the beginning and end of
the preceding Collection Period; (d) the aggregate amount withdrawn from the
Vehicle Purchase Account to purchase Leases and Leased Vehicles in the
preceding Collection Period; (e) the balance in the Vehicle Purchase Account as
of the beginning and end of the preceding Collection Period; (f) the amount of
capital contributions made to FCTT during the preceding Collection Period by
Ford Credit; (g) the amount of capital contributions made to FCTT during the
preceding Collection Period by Ford Credit Leasing; and (h) if the amount of
capital contributions made by Ford Credit Leasing in such Collection Period is
not equal to 2% of the aggregate capital contributions made in such Collection
Period by Ford Credit and Ford Credit Leasing, the amount to be paid by Ford
Credit Leasing to Ford Credit (or by Ford Credit to Ford Credit Leasing) to
maintain their respective interests in the Exchangeable Beneficial Certificates
and the Non-Specified Assets as 98% Ford Credit and 2% Ford Credit Leasing.
ARTICLE IV
ADMINISTRATION AND SERVICING OF LEASES
This Article IV shall apply with respect to the Exchangeable
Beneficial Certificates and all Non-Specified Assets and, unless and to the
extent otherwise provided in the related Supplement, to each Series of
Specified Beneficial Certificates and the related Series Specified Assets.
Section 4.1 Duties of Administrative Agent. The
Administrative Agent shall manage, service, administer, and make collections on
the Leases with reasonable care, following its customary standards, policies,
and procedures and using that degree of skill and attention that the
Administrative Agent exercises with respect to all comparable retail automotive
leases and retail installment sales contracts that it services for itself or
others ("Accepted Servicing Practices"). The Administrative Agent's duties
shall include, without limitation, collection and posting of all payments,
responding to
12
<PAGE> 17
inquiries of Lessees on such Leases, investigating delinquencies, sending
payment coupons to Lessees, accounting for collections, furnishing monthly and
annual statements to Comerica with respect to distributions, the making of
Lease Purchase Advances, Sale Proceeds Advances and Monthly Payment Advances,
and the provision of Administrative Purchase Amounts. Without limiting the
generality of the foregoing, the Administrative Agent is authorized and
empowered by Comerica to execute and deliver, on behalf of itself, FCTT, the
Beneficiaries, or Comerica 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 Leases or to the related
Leased Vehicles. If the Administrative Agent shall commence a legal proceeding
to enforce a Lease against a Lessee, Comerica shall thereupon be deemed to have
automatically assigned, solely for the purpose of collection, such Lease to the
Administrative Agent. If in any enforcement suit or legal proceeding it shall
be held that the Administrative Agent may not enforce a Lease on the ground
that it shall not be a real party in interest or a Holder entitled to enforce
the Lease, Comerica shall, at the Administrative Agent's expense and direction,
take steps to enforce the Lease, including bringing suit in its name or the
name of the applicable Beneficiaries. Comerica shall furnish the
Administrative Agent with any powers of attorney and other documents reasonably
necessary or appropriate to enable the Administrative Agent to carry out its
servicing and administrative duties hereunder. The Administrative Agent, at
its expense, shall obtain on behalf of FCTT all licenses, if any, required by
the laws of any jurisdiction to be held by FCTT in connection with ownership of
the Leases, and shall make all filings and pay all fees (subject to
reimbursement by the Holders of the Exchangeable Beneficial Certificates by
payment of the Non-Specified Asset Administrative Fee) as may be required in
connection therewith during the term hereof.
Section 4.2 Collection of Total Monthly Payments;
Extension of Leases. (a) In accordance with Accepted Servicing Practices, the
Administrative Agent shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Leases as and when the same
shall become due. Subject to Section 4.2(b), the Administrative Agent may
grant extensions, rebates, or adjustments on a Lease provided that
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any such extension, rebate or adjustment is in accordance with Accepted
Servicing Practices. The Administrative Agent may in its discretion waive any
late payment charge or any other fees that may be collected in the ordinary
course of servicing a Lease.
(b) The Administrative Agent may extend the term of any Specified
Lease. Such extension with respect to a Specified Lease may be either a Term
Extension or a Payment Extension, as defined below.
(i) The Administrative Agent may extend the term of a
Specified Lease (a "Term Extension") if the Lessee requests such
extension and is not in default on any of its obligations under the
Lease at the time of such request and agrees to continue to make Total
Monthly Payments in the same amount as the Total Monthly Payment
required under the original Lease terms. For purposes of Section 4.7,
the granting of a Term Extension with respect to any Specified Lease
shall be deemed to have a material and adverse effect on the interest
of the Holders of the related Specified Beneficial Certificates in
such Specified Leases and Specified Leased Vehicles.
(ii) The Administrative Agent may extend the term of a
Specified Lease (a "Payment Extension") in accordance with Accepted
Servicing Practices, by waiving the Total Monthly Payment due in any
month and extending the term of the Lease for an additional month
beyond the Scheduled Lease End Date for each month for which the Total
Monthly Payment is waived. No Specified Lease shall be granted
Payment Extensions in excess of, in the aggregate, three months beyond
the Scheduled Lease End Date. In connection with any Payment
Extension, the Administrative Agent may not increase the limit on the
aggregate mileage which a Leased Vehicle may be driven without
incurring a charge for Excess Wear and Tear and Excess Mileage. For
purposes of Section 4.7, the granting of Payment Extension in excess
of, in the aggregate, three months with respect to any Specified Lease
shall be deemed to have a material and adverse effect on the interest
of the Holders of the related Specified Beneficial Certificates in
such Specified Leases and Specified Leased Vehicles.
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Section 4.3 Realization on Liquidated Leases. In
accordance with Accepted Servicing Practices, the Administrative Agent shall
use reasonable efforts to repossess or otherwise convert the possession of any
Leased Vehicle as to which the Administrative Agent shall have determined that
eventual payment in full of the Lease is unlikely, to realize upon any recourse
rights against the Dealer who originated such Lease, and to sell such Leased
Vehicle at auction or otherwise. The foregoing shall be subject to the
provision that, in any case in which the related Leased Vehicle shall have
suffered damage, the Administrative Agent shall not incur expenses in
connection with the repair or the repossession of such Leased 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 4.4 Custody of Lease Files; Custodial Duties.
(a) To assure uniform quality in servicing the Leases and to reduce
administrative costs, Comerica, upon the execution and delivery of this
Agreement, hereby revocably appoints the Administrative Agent, and the
Administrative Agent hereby accepts such appointment, to act as the agent of
Comerica as custodian of the Lease Files, which are hereby constructively
delivered to Comerica with respect to each Lease.
(b) On the Series Issue Date, the Administrative Agent shall
provide an Officer's Certificate to Comerica confirming that the Administrative
Agent has received on behalf of Comerica all the documents and instruments
necessary for the Administrative Agent to act as the agent of Comerica for the
purposes set forth in this Section 4.4, including the documents referred to
herein, and Comerica is hereby authorized to rely on such Officer's
Certificate.
(c) The Administrative Agent shall hold the Lease Files on
behalf of Comerica for the use and benefit of all present and future
Beneficiaries with an interest therein, and maintain such accurate and complete
accounts, records, and computer systems pertaining to each Lease File as shall
enable Comerica to comply with this Agreement and the FCTT Agreement. In
accordance with Accepted Servicing Practices, the Administrative Agent shall
perform its duties as custodian of the Lease Files
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and shall conduct, or cause to be conducted, periodic audits of the Lease Files
held by it under this Agreement, and of the related accounts, records, and
computer systems, in such a manner as shall enable Comerica to verify the
accuracy of the Administrative Agent's record keeping. The Administrative
Agent shall promptly report to Comerica any failure on its part to hold the
Lease 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 Comerica of the Lease Files.
(d) The Administrative Agent shall maintain each Lease File
relating to any Specified Lease or Specified Leased Vehicle at one of its
offices specified in Schedule I to this Agreement, or at such other office as
shall be specified to Comerica by written notice not later than 90 days after
any change in location. In lieu of providing notice of any change in the
location of the offices holding Lease Files, the Administrative Agent may
provide Comerica with an updated list of the locations of its offices no less
frequently than every 90 days. The Administrative Agent may sub-contract with
third parties to perform the duties of custodian of the Lease Files, in which
case the name and address of the principal place of business of such third
party, and the location of the offices of such third party where Lease Files
are maintained shall be specified in Schedule I or in any list provided to
Comerica pursuant to this Section 4.4(d). The Administrative Agent shall make
available to Comerica or its duly authorized representatives, attorneys, or
auditors, and with respect to any Series Specified Assets, to the Holders of
the related Specified Beneficial Certificates, a list of locations of the Lease
Files, the Lease Files, and the related accounts, records, and computer systems
maintained by the Administrative Agent or any third party under sub-contract
with the Administrative Agent at such times as Comerica or, with respect to the
Specified Assets, the Holders of the Specified Beneficial Certificates or with
respect to the Non-Specified Assets, Holders of the Exchangeable Beneficial
Certificates, shall instruct.
(e) All instructions from Comerica shall be in writing and
signed by a Responsible Officer, and the Administrative Agent shall be deemed
to have received
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proper instructions with respect to the Lease Files upon its receipt of such
written instructions.
(f) The Administrative Agent as custodian shall indemnify
Comerica and the Beneficiaries 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 Comerica as
the result of any improper act or omission in any way relating to the
maintenance and custody by the Administrative Agent as custodian of the Lease
Files; provided, however, that the Administrative Agent shall not be liable for
any portion of any such amount resulting from the willful misfeasance, bad
faith, or negligence of Comerica.
(g) The Administrative Agent's appointment as custodian shall
become effective as of the date hereof and shall continue in full force and
effect until terminated pursuant to this Section 4.4. If Ford Credit shall
resign as Administrative Agent in accordance with the provisions of this
Agreement or if all of the rights and obligations of Ford Credit as the
Administrative Agent under this Article or this Agreement shall have been
terminated under Section 7.1, the appointment of the Administrative Agent as
custodian with respect to all Lease Files shall be terminated by Comerica
acting at the direction of the Holders of the Exchangeable Beneficial
Certificates. If the rights and obligations of Ford Credit as the
Administrative Agent shall have been terminated with respect to a Series under
Section 7.1, the appointment of the Administrative Agent as custodian with
respect to the Lease Files of the related Series Specified Assets, shall be
terminated by Comerica at the direction of the Holders of the Specified
Beneficial Certificates which effected such removal. As soon as practicable
after any termination of such appointment, the Administrative Agent shall
deliver the Lease Files and the related accounts and records maintained by the
Administrative Agent to Comerica (or such other successor Administrative Agent
as may be appointed) or Comerica's (or such other successor Administrative
Agent) agent at such place or places as Comerica (or such other successor
Administrative Agent) may reasonably designate.
Section 4.5 Maintenance of Record Ownership Interests in
Leased Vehicles. (a) In accordance with
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Accepted Servicing Practices, the Administrative Agent shall take such steps as
are necessary to maintain evidence of the ownership interest of FCTT in each
Leased Vehicle on its Certificate of Title. Comerica hereby authorizes the
Administrative Agent to take such steps as are necessary to record such
ownership interest on behalf of FCTT in the event of the relocation of a Leased
Vehicle or for any other reason, subject to Section 4.5(b).
(b) If a Leased Vehicle is relocated to a jurisdiction in
which FCTT is not qualified or authorized to maintain evidence of the ownership
interest of FCTT in such Leased Vehicle, the beneficial interest of FCTT in
such Leased Vehicle and the related Lease shall be purchased by the
Administrative Agent, acting on behalf of the Holders of the Exchangeable
Beneficial Certificates. In connection with such relocation of a Leased
Vehicle, the Administrative Agent shall (i) deposit the Administrative Purchase
Amount relating to such Leased Vehicle in the Vehicle Purchase Account, if such
relocated Leased Vehicle is a Non-Specified Asset, or in the related Series
Collection Account, if such relocated Leased Vehicle is a Series Specified
Asset, (ii) cause the Certificate of Title of such relocated Leased Vehicle to
be reissued in such form as is determined by the Administrative Agent and (iii)
change its records, and instruct Comerica to change its records, to reflect the
change in ownership and title of such relocated Leased Vehicle. The Holders of
the Exchangeable Beneficial Certificates shall promptly reimburse the
Administrative Agent (in proportion to their respective interests of 98% and 2%
in FCTT and the FCTT Assets represented by the Exchangeable Beneficial
Certificates) for any amounts deposited in the Vehicle Purchase Account or any
Series Collection Account pursuant to this Section 4.5(b).
Section 4.6 Covenants of Administrative Agent. The
Administrative Agent shall not (a) impair the rights of FCTT or the
Beneficiaries in the Leases or the Leased Vehicles, (b) change the Retail
Operating Lease Factor with respect to any Lease, or (c) modify the number or
amount of Monthly Payments due under a Lease except as permitted by Section
4.2.
Section 4.7 Purchase Upon Breach. The Administrative
Agent or Comerica shall inform the other party promptly, in writing, upon the
discovery of any
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breach of the covenants of the Administrative Agent set forth in Section 4.2,
4.5(a) or 4.6 with respect to any Specified Lease and Specified Leased Vehicle.
If such breach materially adversely affects the interests of the Holders of the
related Series Specified Beneficial Certificates, as determined by the Holders
of such Specified Beneficial Certificates in their sole discretion, in such
Specified Lease and Specified Leased Vehicle, unless the breach shall have been
cured by the last day of the first following Collection Period or at such other
date specified in the related Supplement), the Administrative Agent shall
purchase, on behalf of the Holders of the Exchangeable Beneficial Certificates,
the beneficial interest in such Specified Lease and Specified Leased Vehicle by
depositing in the related Series Collection Account on the Distribution Date
relating to the second Collection Period following discovery of such breach (or
such other date as is specified in the related Supplement), for the benefit of
the Holders of the related Specified Beneficial Certificates, the
Administrative Purchase Amount with respect to the beneficial interest in such
Specified Lease and Specified Leased Vehicle. By depositing the Administrative
Purchase Amount in connection with the purchase of the beneficial interest in
any Specified Lease and Specified Leased Vehicle, the Administrative Agent
shall be deemed to have waived its right to reimbursement for any outstanding
Monthly Payment Advances or Sale Proceeds Advances from Monthly Payments or
Sale Proceeds received with respect to such Specified Lease and Leased Vehicle
so purchased. As of the date of such purchase, such Lease and Leased Vehicle
shall cease to be "Series Specified Assets" and shall become "Non-Specified
Assets" and from such date the related Specified Beneficial Certificates shall
no longer represent a beneficial interest in such Lease and Leased Vehicle but
shall instead represent an interest in the related Administrative Purchase
Amount. The sole remedy of Comerica, FCTT, or the Beneficiaries with respect
to a breach pursuant to Section 4.2, 4.5(a) or 4.6 shall be to require the
Administrative Agent, on behalf of the Holders of the Exchangeable Beneficial
Certificates, to purchase the beneficial interest in such Specified Lease and
Specified Leased Vehicle pursuant to this Section 4.7 and the related
Supplement. As of the date of such purchase, the Leases and Leased Vehicles
purchased pursuant to this Section 4.7 shall become Non-Specified Assets. On
the Distribution Date following any Collection Period with
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respect to which the Administrative Agent deposited any Administrative Purchase
Amounts pursuant to this Section 4.7, Ford Credit and Ford Credit Leasing shall
reimburse the Administrative Agent in an amount equal to 98% and 2%,
respectively, of the sum of (x) such Administrative Purchase Amount and (y) any
outstanding Monthly Payment Advances and Sale Proceeds Advances as of the date
of the purchase of a beneficial interest in any Specified Lease or Specified
Leased Vehicles pursuant to this Section 4.7.
Section 4.8 Comerica and Administrative Agent Fees.
(a) The Administrative Agent shall be entitled to all interest and
investment earnings paid on the amounts deposited in the FCTT Collection
Account, any Series Collection Account unless otherwise specified in the
related Supplement, and any Series Payahead Account unless otherwise specified
in the related Supplement during each Collection Period. On each date on which
funds are distributed pursuant to Section 6.2 or the terms of the related
Supplement, the Administrative Agent shall withdraw and retain such interest
and investment earnings. The Administrative Agent shall also be entitled to
all Supplemental Administrative Fees collected during such Collection Period.
(b) The Specified Asset Administrative Fee with respect to each
Series shall be paid in accordance with the terms of the related Supplement.
The Specified Asset Comerica Fee shall be paid by the Administrative Agent to
Comerica on each Distribution Date or as otherwise agreed upon by Comerica and
the Administrative Agent. The Non-Specified Asset Comerica Fee shall be paid
in accordance with Section 5.2(b) of the FCTT Agreement.
Section 4.9 Administrative Agent's Certificate. On or
before the tenth day of each calendar month, the Administrative Agent shall
deliver to Comerica a certificate (the "Administrative Agent's Certificate"), a
form of which is attached as Exhibit C, containing all information necessary to
make the distributions pursuant to Section 6.2 and all information necessary
for Comerica to send statements to Holders pursuant to Section 6.4. In
addition, the Administrative Agent's Certificate shall set forth any
contributions made by Ford Credit and Ford
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Credit Leasing during the Related Collection Period and the interests in FCTT
of each of Ford Credit and Ford Credit Leasing as of the end of the Related
Collection Period.
Section 4.10 Annual Statement as to Compliance; Notice of
Default. (a) The Administrative Agent shall deliver to Comerica and each
Beneficiary on or before April 30th of each year an Officer's Certificate,
dated as of December 31 of the preceding calendar year, stating that (i) a
review of the activities of the Administrative Agent during the preceding
calendar year (or such shorter period from the effective date of this
Agreement) and of its performance under this Agreement has been made under such
officer's supervision and (ii) to the best of such officer's knowledge, based
on such review, the Administrative Agent has fulfilled all its obligations
under this Agreement throughout such period, 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.
(b) The Administrative Agent shall deliver to
Comerica promptly after having obtained knowledge thereof, but in no event
later than five Business Days thereafter, written notice in an Officer's
Certificate of any event which with the giving of notice or lapse of time, or
both, would become an Event of Default under Section 7.1(b).
Section 4.11 Annual Independent Certified Public
Accountant's Report. At any time when a Series is outstanding, the
Administrative Agent shall cause a firm of independent certified public
accountants, who may also render other services to the Administrative Agent or
to Ford Motor Company or any Affiliate of either of them, to deliver to
Comerica, each Beneficiary and each of the rating agencies then rating
securities based on a Specified Beneficial Certificate, on or before April 30
of each year beginning April 30, 1996 with respect to the prior calendar year a
report addressed to the Board of Directors of the Administrative Agent,
Comerica and the Beneficiaries, to the effect that such firm has audited the
financial statements of the Administrative Agent and issued its report thereon
and that such audit (i) was made in accordance with generally accepted auditing
standards, (ii) included tests relating to retail auto-
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motive leases serviced for others in accordance with the requirements of the
Uniform Single Audit Program for Mortgage Bankers (the "Program"), to the
extent the procedures in such Program are applicable to the servicing
obligations set forth in this Agreement, and (iii) except as described in the
report, disclosed no exceptions or errors in the records relating to retail
automotive leases serviced that, in the firm's opinion, paragraph four of such
Program requires such firm to report.
The accountant's report will also indicate that the firm is
independent of the Administrative Agent within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public Accountants.
Section 4.12 Access to Certain Documentation and
Information Regarding Leases. The Administrative Agent shall provide to
Comerica and to the Beneficiaries access to the Lease Files relating to a
Non-Specified Asset or Series Specified Asset at the request of the applicable
Beneficiary. Access shall be afforded without charge, but only upon reasonable
request and during the normal business hours at the respective offices of the
Administrative Agent. Nothing in this Section 4.12 shall affect the obligation
of the Administrative Agent to observe any applicable law prohibiting
disclosure of information regarding the Lessees, and the failure of the
Administrative Agent to provide access to information as a result of such
obligation shall not constitute a breach of this Section 4.12.
Section 4.13 Administrative Agent Expenses. The
Administrative Agent shall be required to pay all expenses incurred by it in
connection with its activities under this Agreement unless otherwise
specifically provided herein, including fees and disbursements of independent
accountants, taxes imposed on the Administrative Agent, expenses incurred in
connection with distributions and reports to Beneficiaries, and expenses
relating to the sale or disposition of any Leased Vehicle after the termination
of the related Lease other than a Liquidated Lease.
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ARTICLE V
SALE OF LEASED VEHICLES
This Article V shall apply with respect to the Exchangeable
Beneficial Certificates and all Non-Specified Assets and, unless otherwise
provided in the related Supplement, to each Series of Specified Beneficial
Certificates and the related Series Specified Assets.
Section 5.1 Expiration of the Lease; Return of Leased
Vehicle. In accordance with its customary policies, practices and procedures,
the Administrative Agent shall contact the applicable Dealer on or before the
Scheduled Lease End Date (or such later Lease Termination Date as may apply if
the Lease has been extended beyond the Scheduled Lease End Date pursuant to
Section 4.2(b)) with respect to each Leased Vehicle. Upon return of the Leased
Vehicle by the Lessee to the Dealer, the Administrative Agent shall cause the
Dealer to inspect the Leased Vehicle for Excess Wear and Tear, Excess Mileage,
and the need for any repairs and shall cause the Dealer to deliver a vehicle
condition report (unless the Dealer is purchasing the Leased Vehicle) to the
Administrative Agent. If the Dealer determines that the Leased Vehicle
requires repairs as a result of Excess Wear and Tear, the Dealer as agent of
the Administrative Agent shall require that the Lessee either pay the estimated
cost of such repairs to the Dealer or, if the Lessee disagrees with the
Dealer's estimate of the cost of such repairs, the Administrative Agent shall
grant a one month Term Extension (at the Total Monthly Payment for such Lease)
to permit the Lessee to have such repairs done at the Lessee's expense. The
beneficial interest in any Specified Lease and Specified Leased Vehicle which
is subject to a Term Extension shall be purchased in accordance with Section
4.7.
In accordance with the terms of the applicable Lease, the
Administrative Agent shall require the Lessee to pay the costs of any Excess
Wear and Tear or Excess Mileage associated with the related Leased Vehicle.
The Administrative Agent shall apply any Security Deposit or Reconditioning
Reserve made by such Lessee to such required payments, as permitted by the
Lease, and return to the Lessee any remaining amounts as required by law.
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Section 5.2 Exercise of Dealer Purchase Option for Leased
Vehicles. If a Dealer advises the Administrative Agent that it wishes to
purchase a Leased Vehicle as of the related Scheduled Lease End Date, the
Administrative Agent, on behalf of FCTT, shall sell the related Leased Vehicle
to such Dealer at the Dealer Purchase Option Price. The Dealer Purchase Option
Price of such Leased Vehicle purchased by such Dealer shall be deposited in the
appropriate account specified in Sections 6.2(a) and (b). Upon receipt of the
Dealer Purchase Option Price with respect to any Leased Vehicle purchased by a
Dealer, the Administrative Agent on behalf of FCTT shall deliver the related
Certif- icate of Title and the related original Lease to such Dealer. The
Administrative Agent shall change its records, and instruct Comerica to change
its records, to reflect the termination of FCTT's ownership interest in the
related Lease and Leased Vehicle.
Section 5.3 Sale of Leased Vehicles If Dealer Purchase
Option Is Not Exercised. If the Dealer does not exercise its purchase option
with respect to a Leased Vehicle within 30 days of the Lease Termination Date,
the Administrative Agent shall take possession of the Leased Vehicle and
prepare such Leased Vehicle for sale at auction. The Auction Proceeds relating
to such Leased Vehicle shall be deposited in the appropriate account specified
in Sections 6.2(a) and (b). Upon deposit of the related Auction Proceeds into
the FCTT Collection Account, or the related Series Collection Account, as the
case may be, the Administrative Agent on behalf of FCTT shall deliver the
related Certificate of Title to the purchaser of such Leased Vehicle. The
Administrative Agent shall change its records, and instruct Comerica to change
its records, to reflect the termination of FCTT's ownership interest in the
related Lease and Leased Vehicle.
Section 5.4 Advances of Sale Proceeds. If, as of a date
of determination specified in the related Supplement, (i) the Scheduled Lease
End Date with respect to a Specified Leased Vehicle has occurred and (ii) the
Sale Proceeds with respect to such Specified Leased Vehicle have not been
deposited into the related Series Collection Account, the Administrative Agent
shall, on the date specified in the related Supplement, advance an amount equal
to the Residual Value (a "Sale Proceeds Ad-
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vance") of such Specified Leased Vehicle by deposit to such Series Collection
Account; provided, however, that the Administrative Agent will be obligated to
make a Sale Proceeds Advance only to the extent that the Administrative Agent,
in its sole discretion, shall determine that such Sale Proceeds Advance shall
be recoverable from Sale Proceeds with respect to such Leased Vehicle. The
Administrative Agent shall be reimbursed for any outstanding Sale Proceeds
Advances in the manner specified in the related Supplement.
Section 5.5 Voluntary Early Terminations; Liquidated Leases.
Upon deposit of Voluntary Early Termination Proceeds and Liquidation Proceeds
in the appropriate accounts specified in Sections 6.2(a) and (b), the
Administrative Agent shall deliver the related Certificates of Title to the
purchaser of the related Leased Vehicles, and the Exchangeable Beneficial
Certificates or Series Specified Beneficial Certificates, as the case may be,
shall represent a beneficial interest in such Voluntary Early Termination
Proceeds or Liquidation Proceeds, as the case may be, and shall no longer
represent an interest in the related Lease or Leased Vehicle. The
Administrative Agent shall change its records, and instruct Comerica to change
its records, to reflect the termination of FCTT's ownership interest in the
related Lease and Leased Vehicle.
ARTICLE VI
REMITTANCE OF PAYMENTS
This Article VI shall apply with respect to the Exchangeable
Beneficial Certificates and all Non-Specified Assets and, unless (and to the
extent) otherwise provided in the related Supplement, to each Series of
Specified Beneficial Certificates and the related Series Specified Assets.
Section 6.1 Allocation of Funds. (a) On any Business Day
during a Collection Period on which Total Monthly Payments are received from a
Lessee (including application in such Collection Period of any Security Deposit
or Reconditioning Reserve and excluding amounts required to be allocated
pursuant to Sections 6.1(b) and (c)), the Administrative Agent shall allocate
and apply such funds in the following order of priority:
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(i) as a credit against any overdue related Monthly
Payments and any Use and Lease Tax Amounts related to such Monthly
Payments; provided, that to the extent such funds are not sufficient
to pay both such amounts in full, such funds shall be applied in the
order in which such overdue Monthly Payments and Use and Lease Tax
Amounts payable in connection therewith were due from the Lessee
(i.e., beginning with the most delinquent Monthly Payment); and to the
extent that the funds so applied to any Monthly Payment and the
related Use and Lease Tax Amounts are insufficient to pay both such
amounts, such funds shall be allocated pro rata between the applicable
Monthly Payment and the related Use and Lease Tax Amount;
(ii) as a credit against the related Monthly Payment due
for such Collection Period and to the Administrative Agent, acting on
behalf of the appropriate tax authorities, as a credit against the Use
and Lease Tax Amount (if any) related to such Monthly Payment, provided
that to the extent that such funds are not sufficient to pay both such
amounts in full, such funds shall be credited pro rata to each such
amount;
(iii) to the Administrative Agent, acting on behalf of the
related Dealer, as a credit against the related Vehicle Insurance and
Maintenance Amount (if any) due with respect to such Leased Vehicle
for such Collection Period; and
(iv) to the Administrative Agent, acting on behalf of the
related Dealer, as a credit against any shortfall in the related
Vehicle Insurance and Maintenance Amounts previously due but unpaid in
any preceding Collection Period.
Amounts remaining after application of clauses (i) through
(iv) above shall be divided by the amount of the related Total Monthly Payment.
Each resulting whole Total Monthly Payment shall be applied (without priority)
(x) as a credit against the related Use and Lease Tax Amount, which amount
shall be paid to the Administrative Agent, acting on behalf of the appropriate
tax authorities, to be used by the Administrative Agent to pay any use or lease
taxes (if any) due with respect to the
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related Monthly Payment, (y) to the Administrative Agent, acting on behalf of
the related Dealer, as a credit against the related Vehicle Insurance and
Maintenance Amount, and (z) as an advance of a Monthly Payment with respect to
such Lease (such advance, a "Payahead") which shall be credited to the Payahead
Balance with respect to such Lease. Any resulting fractional Total Monthly
Payment shall be applied in accordance with the priorities set forth in clauses
(ii) and (iii) above; provided, that the amounts to be credited against the
related Monthly Payment shall instead be treated as a Payahead and a credit to
the Payahead Balance with respect to such Lease.
If on any Distribution Date any portion of a Monthly Payment
due on a Lease during the Related Collection Period has not been paid by the
Lessee, an amount equal to the lesser of the Payahead Balance outstanding on
such Distribution Date with respect to such Lease and the amount of shortfall
with respect to such Monthly Payment shall be applied in accordance with
clauses (ii) and (iii) above, and the Payahead Balance shall be reduced by the
amount so applied. Subject to Section 6.2(c), and unless otherwise specified
in the related Supplement Payaheads with respect to any Specified Lease shall
be deposited on each Business Day in an account established pursuant to the
terms of the related Supplement (each such account established pursuant to the
terms of the related Supplement, a "Series Payahead Account"). Amounts on
deposit in any Series Payahead Account shall be invested in Permitted
Investments which mature no later than the next succeeding Distribution Date.
Amounts applied from the Payahead Balance with respect to any Specified Lease
shall be deposited in the related Series Collection Account.
(b) On any Business Day during a Collection Period on which Sale
Proceeds, Voluntary Early Termination Proceeds or Recoveries with respect to a
Lease other than a Liquidated Lease are received with respect to a Leased
Vehicle (including application of any Security Deposit or Reconditioning
Reserve and any amounts collected from the related Lessee with respect to
Excess Mileage and Excess Wear and Tear charges), the Administrative Agent
shall allocate and apply such funds in the following order of priority:
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(i) as a credit against any sales, use and lease taxes due in
connection with the amounts received from the Lessee, including
amounts applied from any Security Deposit or Reconditioning Reserve;
(ii) as a credit against the Book Value of such Leased
Vehicle until such Book Value has been reduced to zero;
(iii) as a credit against any charges levied against the
Lessee for Excess Wear and Tear and Excess Mileage (but only to the
extent collected from the related Lessee); and
(iv) in the manner set forth in Sections 6.1(a)(i) through
(iv) until an amount equal to the Total Monthly Payment due with
respect to such Collection Period has been credited.
(c) On any Business Day during a Collection Period on which
Liquidation Proceeds (including application of any Security Deposit or
Reconditioning Reserve) or Recoveries with respect to a Liquidated Lease are
received, the Administrative Agent shall allocate and apply such funds in the
following order of priority:
(i) as a credit against any sales, use and lease taxes due in
connection with the amounts received from the Lessee, including
amounts applied from any Security Deposit or Reconditioning Reserve;
(ii) as a credit against the Book Value of such Leased
Vehicle until such Book Value has been reduced to zero;
(iii) in the manner set forth in Sections 6.1(a)(i) through
(iv) until an amount equal to any overdue Total Monthly Payment due
with respect to such Collection Period has been credited.
(d) Any amounts credited to overdue Monthly Payments on a Lease
pursuant to Section 6.1(a)(i) shall be retained by the Administrative Agent to
the extent any outstanding Monthly Payment Advances with respect to such Lease
made by the Administrative Agent have not been reimbursed, in accordance with
Section 6.3. Any amounts credited with respect to Use and Lease Tax Amounts or
any
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other sales, use and lease taxes due in connection with a payment received from
a Lessee shall be paid to the Administrative Agent, acting on behalf of the
appropriate tax authorities, to be used to pay to the applicable state tax
authorities the use or lease taxes due in connection with the related Lease and
Leased Vehicle, in accordance with Section 3.2.
Section 6.2 Distributions. (a) In accordance with
clause third of Section 5.2(b) of the FCTT Agreement, on each Distribution Date
the Administrative Agent shall deposit Collections (net of the payments
specified in clauses first and second of Section 5.2(b) of the FCTT Agreement)
with respect to Non-Specified Assets received during the Related Collection
Period in the Vehicle Purchase Account; provided, that the Holders of the
Exchangeable Beneficial Certificates may (i) direct that the Administrative
Agent make such deposits on a more frequent basis or (ii) in accordance with
clause third of Section 5.2(b) of the FCTT Agreement, direct the Administrative
Agent to pay to each Holder of an Exchangeable Beneficial Certificate such
Holder's proportional interest in such Collections. No funds may be withdrawn
from the Vehicle Purchase Account unless the balance is equal to or greater
than $100,000. Funds in excess of $100,000 on deposit in the Vehicle Purchase
Account may be withdrawn by the Administrative Agent from time to time in
connection with the acquisition of Leases and Leased Vehicles, or reimbursement
for such acquisition, in accordance with Section 3.4 or for distribution to the
Holders of the Exchangeable Beneficial Certificates in accordance with their
respective beneficial interests in FCTT.
(b) Subject to Section 6.2(c) and in accordance with
Section 5.2(c) of the FCTT Agreement, on each Business Day the Administrative
Agent shall deposit Collections with respect to any Series Specified Assets in
the related Series Collection Account for distribution in accordance with the
terms of the related Supplement. Such deposits of Collections shall be made
net of (i) any Use and Lease Tax Amounts credited pursuant to Sections
6.1(a)(i) and (ii) any other amounts due in connection with sales, use and
lease taxes credited pursuant to Sections 6.1(b)(i) and 6.1(c)(i).
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<PAGE> 34
(c) Notwithstanding the provisions of Sections 6.1(a) and
6.2(b), for so long as each Monthly Remittance Condition is satisfied with
respect to a Series, amounts to be deposited in a Series Collection Account
pursuant to Section 6.2(b) or in the Series Payahead Account pursuant to
Section 6.1(a) need not be remitted to and deposited in the related Series
Collection Account or the related Series Payahead Account on a daily basis but
instead may be held by the Administrative Agent and remitted to the Series
Collection Account or the related Series Payahead Account on a less frequent
basis, as specified in the related Supplement. At any time that any Monthly
Remittance Condition is not satisfied with respect to a Series, the
Administrative Agent shall make the deposits specified in Sections 6.1(a) and
6.2(b) in the Series Collection Account and the Series Payahead Account, as
applicable.
Section 6.3 Monthly Payment Advances. If, as of a date of
determination set forth in the related Supplement, insufficient funds are
available to pay the amounts set forth in Section 6.1(a)(ii) with respect to a
Specified Lease (after application of the related Payahead Balance pursuant to
Section 6.1(a)), the Administrative Agent shall advance (a "Monthly Payment
Advance") on the date specified in the related Supplement an amount equal to
the portion of the Monthly Payment due in such period. Each Monthly Payment
Advance shall be deposited by the Administrative Agent in the related Series
Collection Account on the date specified in the related Supplement; provided,
however, that the Administrative Agent will be obligated to make a Monthly
Payment Advance in respect of a Specified Lease only to the extent that the
Administrative Agent, in its sole discretion, shall determine that such Monthly
Payment Advance shall be recoverable from subsequent Collections with respect
to such Specified Lease and provided, further, that no Monthly Payment Advance
shall be made with respect to any Specified Lease which is a Liquidated Lease.
The Administrative Agent shall be reimbursed for any outstanding Monthly
Payment Advances made with respect to any Series in the manner specified in the
related Supplement.
Section 6.4 Statements to Holders. (a) Unless otherwise
directed by the Holders of the Exchangeable Beneficial Certificates, on each
Distribution Date,
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Comerica shall deliver to each Holder of an Exchangeable Beneficial
Certificate, a statement relying on information in the Administrative Agent's
Certificate, setting forth for the Related Collection Period the following
information:
(i) the aggregate Monthly Payments received by the
Administrative Agent with respect to Non-Specified Assets;
(ii) the aggregate Book Value of the Non-Specified
Assets as of the beginning and the end of such Related Collection
Period;
(iii) the amount of the Non-Specified Asset
Administrative Fee required to be paid to the Administrative Agent and
the Non-Specified Asset Comerica Fee paid to Comerica;
(iv) the Non-Specified Asset Charged-Off Amount;
(v) the aggregate Sales Proceeds, Voluntary Early
Termination Proceeds and Liquidation Proceeds received by the
Administrative Agent with respect to Non-Specified Assets;
(vi) the balance of the Vehicle Purchase Account as
of the beginning and end of such Related Collection Period; and
(vii) the net outstanding Lease Purchase Advances
as of the beginning and end of such Related Collection Period.
(b) On each Distribution Date Comerica shall deliver to each
Holder of a Specified Beneficial Certificate of a Series and each Rating Agency
which is then rating any securities based on such Specified Beneficial
Certificate, a statement relying on information in the Administrative Agent's
Certificate, setting forth for the Related Collection Period the following
information:
(i) the aggregate Monthly Payments and the
aggregate Monthly Payments received by the Administrative Agent with
respect to the related Series Specified Assets;
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<PAGE> 36
(ii) the aggregate Adjusted Balance Subject to
Lease Charges of the related Specified Leased Vehicles and the portion
thereof constituting the aggregate Residual Values of such Specified
Leased Vehicles, in each case as of the beginning and end of such
Related Collection Period;
(iii) the amount of the related Specified Asset
Administrative Fee payable to the Administrative Agent;
(iv) the related Specified Asset Charged-Off
Amount;
(v) the aggregate Administrative Purchase Amounts
paid pursuant to Sections 4.5(b) and 4.7 and the terms of the related
Supplement, with respect to beneficial interests in related Specified
Leases and Specified Leased Vehicles;
(vi) the aggregate Sales Proceeds, Voluntary Early
Termination Proceeds, Liquidation Proceeds and Recoveries received by
the Administrative Agent with respect to related Series Specified
Assets (separately stated);
(vii) the aggregate Payahead Balance and the
aggregate amount of Payaheads held by the Administrative Agent as of
the beginning and end of the Related Collection Period with respect to
the related Series Specified Assets;
(viii) the outstanding Sale Proceeds Advances as of
the beginning and end of the Related Collection Period and the
aggregate Residual Values of those Specified Leased Vehicles with
respect to which the related Specified Leases have expired but have
not been sold as of the beginning and end of the Related Collection
Period; and
(ix) the outstanding Monthly Payment Advances and
the outstanding amount of Monthly Payments which were due but not
collected from the related Lessees, in each case as of the beginning
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<PAGE> 37
and end of the Related Collection Period with respect to the related
Series Specified Assets.
Comerica shall not deliver to any Holder of a Specified
Beneficial Certificate of any Series information or certificates relating to
the Exchangeable Beneficial Certificates, the Non-Specified Assets or any
unrelated Series Specified Assets.
ARTICLE VII
ADMINISTRATIVE AGENT DEFAULT
Section 7.1 Events of Default; Removal of Administrative
Agent. (a) If any one of the following events ("Events of Default") shall
occur and be continuing:
(i) any failure by the Administrative Agent to
deliver to Comerica for distribution to Beneficiaries or to distribute
directly to Beneficiaries any proceeds or payment required to be so
delivered under the terms of this Agreement that shall continue
unremedied for a period of three Business Days after written notice of
such failure is received by the Administrative Agent from Comerica or
after discovery of such failure by an officer of the Administrative
Agent, provided, however, that any such failure with respect to any
Series shall be an Event of Default only with respect to such Series,
and no such failure with respect to any Series shall be an Event of
Default with respect to any other Series;
(ii) any failure on the part of the Administrative
Agent duly to observe or to perform in any material respect any other
covenants or agreements of the Administrative Agent set forth in this
Agreement or any Supplement, which failure shall (i) materially
adversely affect the rights of the applicable Beneficiaries and (ii)
continue unremedied for a period of 30 days after discovery of such
failure by the Administrative Agent or the date on which written
notice of such failure, requiring the same to be remedied, shall have
been given (1) to the Administrative Agent by Comerica, or (2) to the
Administrative Agent and to Comerica
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<PAGE> 38
by any applicable Beneficiary, provided, however, that (x) any such
failure with respect to any Series shall be an Event of Default only
with respect to such Series and no such failure with respect to any
Series shall be an Event of Default with respect to any other Series
and (y) the determination of material adverse affect with respect to
any Series shall be determined by reference to the Beneficiaries of
such Series;
(iii) any representation, warranty, report or
certification made by the Administrative Agent in this Agreement, any
Supplement or in any report or certificate delivered pursuant to this
Agreement or any Supplement shall prove to have been incorrect when
made, which has a material adverse effect on any Beneficiary and which
material adverse effect continues for a period of 30 days after
discovery of such failure by the Administrative Agent or the date on
which written notice thereof requiring the same to be reme- died,
shall have been given (x) to the Administrative Agent by Comerica or
(y) to the Administrative Agent and Comerica by any Beneficiary
provided, however, that (1) any such incorrect representation,
warranty, report or certification made with respect to any Series
shall be an Event of Default only with respect to such Series and no
such incorrect representation, warranty, report or certification made
with respect to any Series shall be an Event of Default with respect
to any other Series and (2) the determination of a material adverse
effect with respect to any Series shall be determined by reference to
the Beneficiaries of such Series;
(iv) 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
Administrative Agent in any insolvency, readjustment of debt,
marshalling of assets and liabilities, or similar proceedings, or for
the winding up or liquidation of its respective affairs, and the
continuance of any such decree or order unstayed and in effect for a
period of 90 consecutive days; or
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(v) the consent by the Administrative Agent 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
Administrative Agent or substantially all of its property; or the
Administrative Agent shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage
of any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations;
then, and in each and every case, so long as an Event of Default shall not have
been remedied, (x) Comerica (if so directed by 100% of the Beneficiaries
excluding any Beneficiary which is the Administrative Agent or which is an
Affiliate of the Administrative Agent) by notice then given in writing to the
Administrative Agent (with a copy to each Rating Agency then rating any
securities based on any Series) may terminate all of the rights and obligations
of the Administrative Agent under this Agreement or (y) to the extent the Event
of Default relates to a specific Series, Comerica (if directed by 100% of the
Beneficiaries of such Series) by notice given in writing to the Administrative
Agent (with a copy to each Rating Agency then rating any securities based on
any Series affected by such Event of Default) may terminate all of the rights
and obligations of the Administrative Agent under the Administrative Agency
Agreement and the related Supplement to the extent such rights and obligations
relate to such Series. On or after the receipt by the Administrative Agent of
such written notice, all authority and power of the Administrative Agent under
this Agreement whether with respect to the Leases, Leased Vehicles or
otherwise, or all authority and power of the Administrative Agent under the
Administrative Agency Agreement and the related Supplement to the extent such
authority and power relates to the related Specified Assets or related
Specified Beneficial Certificates, shall, without further action, pass to and
be vested in Comerica or such successor Administrative Agent as may be
appointed under Section 7.3; and, without limitation, Comerica is hereby
authorized and empowered to execute and deliver, on behalf of the predecessor
Administrative Agent, as attorney-in-fact or otherwise, any and all documents
and other instruments, and to do or accomplish
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<PAGE> 40
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 Leases (or related Specified Leases, as applicable) and related documents,
or otherwise.
(b) The Holders of any Series of Specified Beneficial
Certificates may at any time, for any reason, with respect to the servicing of
the related Series Specified Assets only, remove the Administrative Agent and
appoint a substitute Administrative Agent with respect to the duties and
obligations of the Administrative Agent set forth in Articles IV, V and VI;
provided, however, that any such removal of the Administrative Agent with
respect to such duties and obligations shall be effective only with respect to
the related Series Specified Assets, and shall have no effect with respect to
the Exchangeable Beneficial Certificates, the Non-Specified Assets or any other
Series of Specified Beneficial Certificates or Series Specified Assets. The
Administrative Agent shall provide written notice of any removal pursuant to
this Section 7.1(b) to each Rating Agency then rating Securities based on any
Series. The Holders of such Series of Specified Beneficial Certificates shall
appoint any successor to the Administrative Agent with respect to such Articles
IV, V and VI, and until such appointment, the predecessor Administrative Agent
shall continue with respect to such Articles IV, V and VI to perform its duties
and obligations under this Agreement.
(c) The Holders of the Exchangeable Beneficial Certificates
may at any time, for any reason, with respect to the servicing of the related
Non-Specified Assets only, remove the Administrative Agent and appoint a
substitute Administrative Agent with respect to the duties and obligations of
the Administrative Agent set forth in Articles IV, V and VI; provided, however,
(i) that it shall be a condition precedent to such removal that the
Administrative Agent confirm in writing its continued obligation pursuant to
this Agreement to serve as Administrative Agent with respect to each Series
then outstanding and (ii) that any such removal of the Administrative Agent
with respect to such duties and obligations shall be effective only with
respect to the Non-Specified Assets, and shall have no effect with respect to
any Series then outstanding. The Holders of the
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<PAGE> 41
Exchangeable Beneficial Certificates shall appoint any successor to the
Administrative Agent with respect to such Articles IV, V and VI, and until such
appointment, the predecessor Administrative Agent shall continue with respect
to such Articles IV, V and VI to perform its duties and obligations under this
Agreement.
(d) In connection with any termination of the Administrative
Agent by Comerica pursuant to Sections 7.1(a), (b) or (c), the predecessor
Administrative Agent shall cooperate with the successor Administrative Agent
and Comerica in effecting the termination of the responsibilities and rights of
the predecessor Administrative Agent under this Agreement, including the
transfer to the successor Administrative Agent for administration by it of all
cash amounts, or the cash amounts relating to any Series or the Non-Specified
Assets, as applicable, that shall at the time be held by the predecessor
Administrative Agent for deposit, or shall thereafter be received with respect
to FCTT Assets, any related Series Specified Assets or the Non-Specified
Assets, as applicable, and the delivery of the Lease Files or the related Lease
Files, as applicable, and the related accounts and records maintained by the
Administrative Agent. All reasonable costs and expenses (including attorneys'
fees) incurred in connection with transferring such Lease Files to the
successor Administrative Agent and amending this Agreement to reflect such
successor as Administrative Agent pursuant to this Section 7.1 shall be paid by
the predecessor Administrative Agent upon presentation of reasonable
documentation of such costs and expenses.
Section 7.2 Administrative Agent Not to Resign. The
Administrative Agent shall not resign from its obligations and duties under
this Agreement except upon a determination that the performance of its duties
is no longer permissible under applicable law. Any such determination
permitting the resignation of the Administrative Agent shall be evidenced by an
Opinion of Counsel to such effect delivered to Comerica and each Beneficiary.
No such resignation shall become effective until Comerica or a successor
Administrative Agent shall have assumed the responsibilities and obligations of
the Administrative Agent in accordance with Section 7.3.
Section 7.3 Appointment of Successor. (a) Upon the
Administrative Agent's receipt of notice of
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termination pursuant to Section 7.1 or the Administrative Agent's resignation
in accordance with Section 7.2, the predecessor Administrative Agent shall
continue to perform its functions as Administrative Agent 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 such termination notice, until
receipt of such notice and, in the case of resignation, until the later of (i)
the date 45 days from the delivery to Comerica of written notice of such
resignation (or written confirmation of such notice) in accordance with the
terms of this Agreement and (ii) the date upon which the predecessor
Administrative Agent shall become unable to act as Administrative Agent, as
specified in the notice of resignation and accompanying Opinion of Counsel. In
the event of the Administrative Agent's resignation or termination hereunder as
Administrative Agent with respect to all FCTT Assets, Comerica, acting at the
direction of all of the Beneficiaries, or with respect to a termination of the
Administrative Agent with respect to a specific Series, at the direction of the
Beneficiaries of the related Series, shall appoint a successor Administrative
Agent, and the successor Administrative Agent shall accept its appointment by a
written assumption in form acceptable to Comerica. Such successor
Administrative Agent shall be approved by Comerica, such approval not to be
unreasonably withheld. In the event that a successor Administrative Agent has
not been appointed at the time when the predecessor Administrative Agent has
ceased to act as Administrative Agent in accordance with this Section 7.3,
Comerica without further action shall automatically be appointed the successor
Administrative Agent. Notwithstanding the above, Comerica shall, if it shall
be legally unable so to act, appoint, or petition a court of competent
jurisdiction to appoint, any established institution, having a net worth of not
less than $100,000,000 and whose regular business shall include the servicing
of retail automotive leases and selling vehicles at the termination of leases,
as the successor Administrative Agent under this Agreement.
(b) Upon appointment, the successor
Administrative Agent shall be the successor in all respects to the prede-
cessor Administrative Agent and shall be subject to all the responsibilities,
duties, and liabilities arising thereafter relating thereto placed on the
predecessor Administrative Agent, and shall be enti-
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<PAGE> 43
tled to the Non-Specified Asset Administrative Fee, the Specified Asset
Administrative Fee with respect to any Series and all of the rights granted to
the predecessor Administrative Agent, by the terms and provisions of this
Agreement; provided, however, that no successor Administrative Agent shall have
any responsibilities with respect to making Monthly Payment Advances, Sales
Proceeds Advances or the purchase of additional Leases and Leased Vehicles by
FCTT and Article III shall be inapplicable from the date of appointment of such
successor.
(c) In connection with such appointment, Comerica
may make such arrangements for the compensation of such successor
Administrative Agent out of payments on Leases and Leased Vehicles as it and
such successor Administrative Agent shall agree; provided, however, that no
such compensation shall be in excess of that permitted the predecessor
Administrative Agent under this Agreement unless the Holders of the
Exchangeable Beneficial Certificates bear such costs exclusively. Comerica and
such successor Administrative Agent shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession.
Section 7.4 Repayment of Advances. Any predecessor
Administrative Agent shall be entitled to reimbursement for any outstanding
Lease Purchase Advances, Sale Proceeds Advances and outstanding Monthly Payment
Advances pursuant to Sections 3.4, 5.4 and 6.3, to the extent of funds
available therefor in accordance with this Agreement with respect to all Lease
Purchase Advances, Sale Proceeds Advances and Monthly Payment Advances made by
the predecessor Administrative Agent.
Section 7.5 Notification to Holders. Upon any termination
of, or appointment of a successor to, the Administrative Agent pursuant to this
Article VII Comerica shall give prompt written notice thereof to the affected
Beneficiaries of FCTT at their respective addresses appearing in the FCTT
Register, and to each rating agency then rating any securities which are based
on Specified Beneficial Certificates affected by such termination or
appointment of a successor Administrative Agent.
Section 7.6 Waiver by Beneficiary of Past Defaults. A
Beneficiary may, with respect to its Certif-
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icate and no other Certificate, waive any default by the Administrative Agent
in the performance of its obligations hereunder and its consequences, except a
default in making any required deposits to or payments from any accounts in
accordance with this Agreement. Upon any such waiver of a past default, such
default shall cease to exist with respect to such Certificate, and any Event of
Default arising therefrom shall be deemed to have been remedied with respect to
such Certificate for every purpose of this Agreement. The Administrative Agent
shall provide prompt written notice to each Rating Agency then rating any
securities based on any Series of any waiver of a past default of the
Administrative Agent. Such waiver shall not have any effect on any Beneficiary
which has not waived such default, and such waiver shall not extend to any
subsequent or other default or impair any right consequent thereon.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Amendments. This Agreement may be amended by the
parties hereto at any time; provided, however, that such action shall not, (x)
as evidenced by an Opinion of Counsel, materially adversely affect the
interests of any Holder of an outstanding Specified Beneficial Certificate
(unless each such Holder has consented thereto), (y) as confirmed by each
Rating Agency which is then rating securities based on such Specified
Beneficial Certificates, cause the then current rating assigned to such
securities to be withdrawn or reduced, or (z) as evidenced by an Opinion of
Counsel, cause FCTT to be classified as an association (or publicly traded
partnership) taxable as a corporation for federal income tax purposes.
Notwithstanding the foregoing, this Agreement may be amended
(with a copy of such amendment being delivered to each Rating Agency then
rating any securities based on any Series) at any time by Ford Credit and Ford
Credit Leasing to the extent reasonably necessary to assure that none of FCTT
or any Holder of a Specified Beneficial Certificate will be classified as an
association (or publicly traded partnership) taxable as a corporation for
federal income tax purposes.
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Section 8.2 No Legal Title to FCTT Assets. The
Administrative Agent shall not have legal title to any FCTT Assets. Legal
title to the FCTT Assets shall remain with FCTT and Comerica. The
Beneficiaries shall be entitled to receive distributions with respect to their
ownership interest therein only in accordance with this Agreement and the FCTT
Agreement; provided, that if the Holders of any Series or the Holders of
Exchangeable Beneficial Certificates direct Comerica to deliver certain FCTT
Assets to such Holders pursuant to Section 4.3(d) or (e) of the FCTT Agreement,
the Administrative Agent shall assist Comerica in identifying and delivering
the applicable FCTT Assets.
Section 8.3 Limitations on Rights of Others. The provisions
of this Agreement are solely for the benefit of the Administrative Agent,
Comerica, and each Beneficiary and (with respect to Comerica and Holders of any
Specified Beneficial Certificates only) their respective successors and
permitted assigns, and nothing in this Agreement, whether express or implied,
shall be construed to give to any other Person any legal or equitable right,
remedy or claim in FCTT or the FCTT Assets or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein.
Section 8.4 Notices. All demands, notices and communications
upon or to the Administrative Agent, Ford Credit, Ford Credit Leasing and any
other Beneficiary, and Comerica shall be in writing, and shall be personally
delivered, sent by electronic facsimile or overnight delivery service or mailed
by certified mail-return receipt requested, and shall be deemed to have been
duly given to the intended recipient upon receipt at the respective addresses
listed below, or at such other address as shall be designated by such Person in
a written notice to the other parties to this Agreement.
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(i) In the case of the Administrative Agent:
Ford Motor Credit Company
The American Road
FMCC Building
Dearborn, Michigan 48121
Attention: Secretary
Fax: 313-337-1160
Telephone: 313-594-7765
(ii) In the case of Ford Credit Leasing:
Ford Credit Leasing Company, Inc.
The American Road
FMCC Building
Dearborn, Michigan 48121
Attention: Treasurer
Fax: 313-594-0735
Telephone: 313-845-4072
(iii) In the case of Ford Credit:
Ford Motor Credit Company
The American Road
FMCC Building
Dearborn, Michigan 48121
Attention: Secretary
Fax: 313-337-1160
Telephone: 313-594-7765
(iv) In the case of Comerica:
Comerica Bank
411 Lafayette - 4th Floor
Detroit, Michigan 48226-3461
Attention: Corporate Trust Department
Fax: 313-222-2985
Telephone: 313-222-4380
Any notice to be delivered to any Beneficiary which is a
permitted assignee hereunder of either initial Beneficiary, shall be delivered
at the address provided to Comerica by such Person.
Section 8.5 Severability. 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
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<PAGE> 47
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 Certificates
or the rights of the Holders thereof.
Section 8.6 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 one and the same instrument.
Section 8.7 Successors and Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the Administrative Agent, Comerica and each Beneficiary and (with respect to
Comerica and Holders of any Specified Beneficial Certificates only) their
respective successors and permitted assigns, all as herein provided. Any
request, notice, direction, consent, waiver or other instrument or action by a
Beneficiary shall bind the successors and assigns of such Beneficiary.
Section 8.8 No Recourse. Each Beneficiary by accepting a
Certificate acknowledges that such Beneficiary's Certificate or Certificates
represent a beneficial interest in FCTT only and do not represent interests in
or obligations of the Administrative Agent, any Grantor, Comerica 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 FCTT Agreement or the Certificates.
Section 8.9 No Petition. The Administrative Agent shall have
no authority or power to commence a voluntary proceeding in bankruptcy relating
to FCTT without the unanimous prior approval of all Beneficiaries and the
delivery to the Administrative Agent by each such Beneficiary of a certificate
certifying that such Beneficiary reasonably believes that FCTT is insolvent.
The Administrative Agent and each Beneficiary hereunder each hereby covenants
that for a period of one year and one day after payment in full of all
distributions to all Beneficiaries pursuant to the terms of this Agreement, it
will not institute against, or join any Person in instituting against, Ford
Credit Leasing or FCTT any bankruptcy, reorganization, insolvency or
liquidation proceeding,
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or other similar proceeding, under the laws of the United States or any state
thereof without the consent of 100% of the Holders of Specified Beneficial
Certificates (excluding Ford Credit Leasing, RCL, or any of their Affiliates).
Section 8.10 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 8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
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<PAGE> 49
IN WITNESS WHEREOF, the parties hereto have caused this
Administrative Agency Agreement to be duly executed by their respective
officers hereunto duly authorized, as of the day and year first above written.
COMERICA BANK,
as trustee of Ford Credit Titling
Trust
By: \s\ M. Karam
------------------------------------
Name: Marilyn A. Karam
Title: Vice President
FORD MOTOR CREDIT COMPANY,
as Administrative Agent and
as a Grantor and Beneficiary
By: \s\ Hurley D. Smith
------------------------------------
Name: Hurley D. Smith
Title: Secretary
FORD CREDIT LEASING COMPANY, INC.,
as a Grantor and Beneficiary
By: \s\ Mario Spivak
------------------------------------
Name: Mario Spivak
Title: Assistant Treasurer
<PAGE> 50
EXHIBIT A
[FORM OF LEASE]
A-1
<PAGE> 51
EXHIBIT B
[FORM OF VEHICLE PURCHASE CERTIFICATE]
VEHICLE PURCHASE CERTIFICATE
Ford Motor Credit Company ("Ford Credit"), as Administrative
Agent pursuant to an agreement (the "Administrative Agency Agreement"), dated
as of ______ __, 1995 among Comerica Bank, as trustee of Ford Credit Titling
Trust ("FCTT"), Ford Credit, as Administrative Agent and as an initial
beneficiary of FCTT, and Ford Credit Leasing Company, Inc., as an initial
beneficiary of FCTT, does hereby provide the information below with respect to
the Collection Period of ______, 199_ (the "Collection Period"). Capitalized
terms used in this Vehicle Purchase Certificate shall have their respective
meanings set forth in the Administrative Agency Agreement. This Vehicle
Purchase Certificate is delivered pursuant to Section 3.5 of the Administrative
Agency Agreement.
(a) A list of the Vehicle Identification Numbers for all Leased
Vehicles as of end of the Collection Period is attached hereto
and forms an integral part hereof.
(b) Aggregate Book Value of Leases and Leased Vehicles
purchased by FCTT in the Collection Period
$
============
(c) Aggregate Lease Purchase Advances outstanding:
Beginning of the Collection Period
$
============
End of the Collection Period
$
============
(d) Aggregate amount withdrawn from the Vehicle Purchase
Account to purchase Leases and Leased Vehicles
in the Collection Period
$
============
(e) Balance in the Vehicle Purchase Account:
Beginning of the Collection Period
$
============
End of the Collection Period
$
============
B-1
<PAGE> 52
(f) Amount of capital contributions made to FCTT during the
Collection Period by Ford Credit
$
============
(g) Amount of capital contributions made to FCTT during the
Collection Period by Ford Credit Leasing
$
============
(h) If applicable, the amount to be paid by Ford Credit
Leasing to Ford Credit (or by Ford Credit to
Ford Credit Leasing) to maintain their respective
interests in the Exchangeable Beneficial Certificates
and the Non-Specified Assets as 98% Ford Credit
and 2% Ford Credit Leasing:
Amount to be paid by Ford Credit Leasing to Ford Credit
Amount to be paid by Ford Credit to Ford Credit Leasing
$
============
$
============
B-2
<PAGE> 53
IN WITNESS WHEREOF, the undersigned has caused this Vehicle
Purchase Certificate to be duly executed and delivered to Comerica and the
Holders of the Exchangeable Beneficial Certificates by its duly authorized
officer on this __ day of _________, 199_.
FORD MOTOR CREDIT COMPANY,
as Administrative Agent
By:_____________________________________
Name:
Title:
B-3
<PAGE> 54
EXHIBIT C
[FORM OF ADMINISTRATIVE AGENT'S CERTIFICATE]
C-1
<PAGE> 55
Schedule I
LOCATION OF LEASE FILES
I-1
<PAGE> 1
EXHIBIT 10.3
SERIES 1996-1 SUPPLEMENT
dated as of
November __, 1996
to
ADMINISTRATIVE AGENCY AGREEMENT
dated as of
January 31, 1994
among
COMERICA BANK,
as trustee of Ford Credit Titling Trust,
FORD MOTOR CREDIT COMPANY,
as Administrative Agent and initial Beneficiary
of Ford Credit Titling Trust,
and
FORD CREDIT LEASING COMPANY, INC.
as initial Beneficiary of
Ford Credit Titling Trust
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I
DESIGNATION OF SUPPLEMENT FOR
SERIES 1996-1 CERTIFICATES
Section 1.1 Designation . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
DEFINITIONS
Section 2.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III
THE LEASES
Section 3.1 Representations and Warranties of Administrative Agent . . 3
ARTICLE IV
FEES AND EXPENSES
Section 4.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE V
COLLECTIONS
Section 5.1 Establishment of Series Collection Account, Series
Payahead Account and Series 1996-1 Payments Account . . . 7
Section 5.2 Application and Distribution of Funds . . . . . . . . . . . 11
Section 5.3 RCL Trust 1996-1 Purchase Option . . . . . . . . . . . . . 13
Section 5.4 Sale Proceeds Advances and Monthly Payment Advances . . . . 13
Section 5.5 Administrative Purchases . . . . . . . . . . . . . . . . . 14
ARTICLE VI
REPORTS TO CERTIFICATEHOLDERS
Section 6.1 Statements to Certificateholders . . . . . . . . . . . . . 14
i
<PAGE> 3
ARTICLE VII
OPTIONAL PURCHASE
Page
Section 7.1 Optional Purchase of Series 1996-1 Certificates . . . . . 15
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Provision of Information . . . . . . . . . . . . . . . . 16
Section 8.2 Ratification of Administrative Agency Agreement . . . . . 16
Section 8.3 Actions on Behalf of the Lease Trust . . . . . . . . . . 16
Section 8.4 Insurance Policies . . . . . . . . . . . . . . . . . . . 17
Section 8.5 Third Party Beneficiary . . . . . . . . . . . . . . . . . 17
Section 8.6 Holders of the Series 1996-1 Certificates . . . . . . . . 17
Section 8.7 Demand Notes . . . . . . . . . . . . . . . . . . . . . . 19
Section 8.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . 19
Section 8.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 8.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 8.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . 19
Exhibit A - Schedule of Series 1996-1 Leases and Series 1996-1
Leased Vehicles
Exhibit B - Form of Series 1996-1 Certificate
Exhibit C - Form of Lease
ii
<PAGE> 4
SERIES 1996-1 SUPPLEMENT, dated and effective as of November
__, 1996 (this "Supplement"), among FORD MOTOR CREDIT COMPANY, a Delaware
corporation ("Ford Credit"), as Administrative Agent, initial Beneficiary of
Ford Credit Titling Trust ("FCTT") and Holder of an Exchangeable Beneficial
Certificate, FORD CREDIT LEASING COMPANY, INC., a Delaware corporation ("Ford
Credit Leasing") as initial Beneficiary of FCTT and Holder of an Exchangeable
Beneficial Certificate, and COMERICA BANK, a Michigan banking corporation, not
in its individual capacity but as trustee for FCTT ("Comerica").
WHEREAS, pursuant to Section 4.3 of the FCTT Agreement, the
Administrative Agent, acting at the unanimous direction of the Holders of
Exchangeable Beneficial Certificates, has delivered to Comerica a Series
Specification Notice listing certain FCTT Assets which are to be designated as
Series 1996-1 Assets;
WHEREAS, on the Series Issue Date Comerica shall issue a
Series of Specified Beneficial Certificates designated as the "Series 1996-1
Certificates" representing in the aggregate a 100 percent interest in the
Series Specified Assets designated as the Series 1996-1 Assets;
WHEREAS, Ford Credit and Ford Credit Leasing intend to
contribute their interest in their respective Series 1996-1 Certificates to RCL
Trust 1996-1, including their rights under the Administrative Agency Agreement
and this Supplement; and
WHEREAS, in order to administer and service the Series 1996-1
Assets in the manner contemplated by the Administrative Agency Agreement the
parties hereto have determined that it is in the best interests of each of the
Beneficiaries of FCTT, the transferees of such Beneficiaries, the
Administrative Agent and Comerica to enter into this Supplement;
NOW THEREFORE, Ford Credit, Ford Credit Leasing and Comerica
hereby agree as follows:
<PAGE> 5
ARTICLE I
DESIGNATION OF SUPPLEMENT FOR
SERIES 1996-1 CERTIFICATES
Section 1.1 Designation. (a) Pursuant to Sections 3.3 and
4.3 of the FCTT Agreement, the Administrative Agent, acting on behalf of FCTT
and the Holders of Exchangeable Beneficial Certificates, has designated the
Leases and Leased Vehicles listed in the Series 1996-1 Specifications Notice
and in Exhibit A attached hereto, as the Series Specified Assets with respect
to Series 1996-1 (the "Series 1996-1 Assets") and, in accordance with
instructions of the Holders of the Exchangeable Beneficial Certificates set
forth in the Series 1996-1 Specifications Notice, hereby issues to the Holders
of the Exchangeable Beneficial Certificates the Specified Beneficial
Certificates in the form attached hereto as Exhibit B representing the
beneficial interest in such Series 1996-1 Assets to be known as the Series
1996-1 Certificates. The parties hereto agree to the following supplemental
provisions to the Administrative Agency Agreement with respect to the Series
1996-1 Certificates.
(b) In the event that any term or provision contained
herein shall conflict with or be inconsistent with any term or provision
contained in the Administrative Agency Agreement, the terms and provisions of
this Supplement shall govern.
ARTICLE II
DEFINITIONS
Section 2.1 Definitions. All capitalized terms which are
used herein and are not defined herein have the meanings assigned to such terms
in Appendix A attached hereto. References to "this Supplement" are to this
Series 1996-1 Supplement to the Administrative Agency Agreement. References to
"the Administrative Agency Agreement" are to the Administrative Agency
Agreement, as supplemented by this Supplement, and as may be otherwise
supplemented, amended or modified from time to time. To the extent that any
term is defined in both the Administrative Agency Agreement (or Appendix I
attached thereto) and this Supplement (or Appendix A attached hereto), the
definition set forth in this Supplement (or
2
<PAGE> 6
Appendix A) shall be controlling. All references to Articles, Sections,
subsections and schedules are to Articles, Sections, subsections and schedules
of this Supplement unless otherwise specified.
ARTICLE III
THE LEASES
Section 3.1 Representations and Warranties of Administrative
Agent. Ford Credit, in its capacity as Administrative Agent, makes the
following representations and warranties as to the Series 1996-1 Assets, on
which Comerica relies in executing and authenticating the Series 1996-1
Certificates and on which Ford Credit and Ford Credit Leasing, in their
capacities as initial Beneficiaries, rely in making subsequent transfers of the
Series 1996-1 Certificates. Such representations and warranties speak as of
the execution and delivery of this Supplement, and shall survive the sale,
transfer, and assignment of the Series 1996-1 Certificates by Ford Credit and
Ford Credit Leasing to RCL Trust 1996-1 and any subsequent transferee:
(a) New Vehicle. Each Series 1996-1 Leased Vehicle was a new
automobile or light-duty truck at the inception of the related 1996-1 Lease.
(b) Certificate of Title. Each Series 1996-1 Leased Vehicle
was titled in the name of "Ford Credit Titling Trust," "Ford Credit Titling
Trust, Comerica Bank, Trustee" or such substantially similar words acceptable
to the relevant Governmental Authority.
(c) Residual Value. The Residual Value of each Series 1996-1
Leased Vehicle does not exceed an amount established by the Administrative
Agent consistent with its policies and practices regarding the setting of
residual values as applied with respect to closed-end retail automobile and
light-duty truck leases.
(d) Pool Balance. At the Series 1996-1 Cut-Off Date the
Pool Balance was $_______________.
(e) Interest in Lease and Leased Vehicle. Each Series 1996-1
Lease was entered into by a Dealer located in the United States, as lessor, and
a Lessee
3
<PAGE> 7
with a billing address in an Eligible State, as lessee, and all of the Dealer's
right, title and interest in such Series 1996-1 Lease and the related Series
1996-1 Leased Vehicle was validly assigned by such Dealer to FCTT.
(f) Customary and Enforceable Provisions. Each Series 1996-1
Lease (i) was originated by a Dealer in the ordinary course of its business and
in compliance with the Administrative Agent's, normal credit and collection
policies and practices, (ii) contains customary and enforceable provisions
and (iii) is substantially in the form of Exhibit C.
(g) Total Monthly Payments. Each Series 1996-1 Lease
provides for Total Monthly Payments which include Constant Yield Payments that
fully amortize the Balance Subject to Lease Charges of such Series 1996-1 Lease
to a final payment equal to the Residual Value of the related Series 1996-1
Leased Vehicle over the term of such Series 1996-1 Lease.
(h) Compliance with Law. At the time it was originated or
made, and as of the date of this Supplement, each Series 1996-1 Lease complied
in all material respects with all requirements of applicable federal, state,
and local laws, and regulations thereunder.
(i) Binding Obligation. Each Series 1996-1 Lease represents
the genuine, legal, valid and binding payment obligation in writing of the
related Lessee, 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 and
general principles of equity.
(j) No Government Lessee. None of the Series 1996-1 Leases
is an obligation of the United States of America or any state or of any agency,
department, or instrumentality of the United States of America or any state.
(k) Leases in Force. As of the Series 1996-1 Specification
Date, no Series 1996-1 Lease had been satisfied, subordinated, rescinded,
cancelled or terminated.
4
<PAGE> 8
(l) No Waiver. No provision (other than the assessment of a
Security Deposit or Reconditioning Reserve) of a Series 1996-1 Lease has been
waived.
(m) No Defenses. No right of rescission, setoff,
counterclaim, or defense has been asserted or threatened with respect to any
Series 1996-1 Lease.
(n) No Default. As of the Series 1996-1 Specification Date,
no default in payment by any Lessee of any payments due with respect to a
Series 1996-1 Lease had occurred and was continuing for a period of more than
thirty days; and no continuing condition that with notice or the lapse of time
would constitute a default, breach, violation, or event permitting termination
or cancellation under the terms of any Series 1996-1 Lease had arisen.
(o) No Recourse to Dealer. No Series 1996-1 Lease provides
for recourse to the related Dealer.
(p) Insurance. Each Lessee, to the best knowledge of the
Administrative Agent, has obtained or agreed to obtain physical damage
insurance and liability insurance covering the related Series 1996-1 Leased
Vehicle as required under the related Series 1996-1 Lease.
(q) Title. No Series 1996-1 Asset has been sold,
transferred, assigned, or pledged by any Dealer to any Person other than FCTT.
Comerica, as trustee for FCTT and for the benefit of the Holders of Series
1996-1 Certificates, has good and marketable title to each Series 1996-1 Lease
and each Series 1996-1 Leased Vehicle, free and clear of all Liens,
encumbrances, security interests, and rights of others, including liens or
claims for work, labor or material relating to such Series 1996-1 Leased
Vehicle.
(r) Valid Assignment. No Series 1996-1 Lease was originated
in, or is subject to the laws of, any jurisdiction under which the sale,
transfer, and assignment of such Series 1996-1 Lease to FCTT or of a beneficial
interest in such Series 1996-1 Lease pursuant to transfers of Series 1996-1
Certificates is unlawful, void, or voidable. No Series 1996-1 Leased Vehicle
is subject to the laws of any jurisdiction under which the sale, transfer, and
assignment of such Series 1996-1
5
<PAGE> 9
Leased Vehicle to FCTT or of a beneficial interest in such Series 1996-1 Leased
Vehicle pursuant to transfers of Series 1996-1 Certificates is unlawful, void,
or voidable. No Dealer has entered into any agreement with any Lessee that
prohibits, restricts or conditions the assignment of any portion of a Series
1996-1 Lease.
(s) All Filings Made. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give Comerica, on
behalf of FCTT, a first perfected ownership interest in each Series 1996-1
Lease have been made.
(t) Chattel Paper. Each Series 1996-1 Lease constitutes
"chattel paper" as defined in the UCC.
(u) One Original. There is only one original of each Series
1996-1 Lease, which is held by the Administrative Agent on behalf of FCTT.
(v) No Excess Deferred Gross. No Series 1996-1 Lease is
subject to a holdback of Excess Deferred Gross.
(w) Origination. Each Series 1996-1 Lease has an origination
date on or after __________ __, 199_.
(x) Maturity of Leases. Each Series 1996-1 Lease has a
Scheduled Lease End Date of not greater than 36 months from the date on which
it was entered into.
(y) Minimum Retail Operating Lease Factor. Each Series
1996-1 Lease has a Retail Operating Lease Factor equal to or greater than ___%.
(z) Location of Lease Files. The Lease Files relating to
each Series 1996-1 Lease are maintained at the offices of the Administrative
Agent.
(aa) No Delinquency. No Series 1996-1 Lease has a Total
Monthly Payment that was more than 30 days overdue as of the Series 1996-1
Cut-Off Date.
(ab) No Extensions. No Term Extension or Payment Extension
had been granted to the Lessee under any Series 1996-1 Lease prior to the
Series 1996-1 Cut-Off Date.
6
<PAGE> 10
(ac) Advance Payment Program. No Series 1996-1 Lease was
originated under the Advance Payment Program.
(ad) Other Data. The information relating to the Series
1996-1 Leases and Series 1996-1 Leased Vehicles contained in the Schedule of
Series 1996-1 Assets attached hereto as Exhibit A is true and correct in all
material respects and no selection procedures believed to be adverse to the
Holders of Series 1996-1 Certificates were utilized in selecting the Series
1996-1 Assets.
(ae) Administrative Agency Agreement. The representations
and warranties made by the Administrative Agent in the Administrative Agency
Agreement are true and correct.
(af) True Lease. Each Series 1996-1 Lease is a "true lease"
for federal income tax purposes.
ARTICLE IV
FEES AND EXPENSES
Section 4.1 Fees and Expenses. On each Payment Date, the
Administrative Agent shall be paid the Series 1996-1 Administrative Fee in
accordance with terms of the Indenture. In consideration for the payment of
such fee, the Administrative Agent shall pay on each Payment Date (i) the
Series 1996-1 Comerica Fee to Comerica, (ii) the fees and expenses of the
Indenture Trustee as agreed upon in Section 6.7 of the Indenture and (iii) the
fees and expenses of the Lease Trustee as agreed upon in Section 8.1 of the
Lease Trust Agreement.
ARTICLE V
COLLECTIONS
Series 1996-1 Collections shall be allocated to the Series
1996-1 Certificates and distributed as set forth in Article V and Article VI of
the Administrative Agency Agreement, as modified pursuant to this Article V.
Section 5.1 Establishment of Series Collection Account,
Series Payahead Account and Series 1996-1 Payments Account. (a) The
Administrative Agent shall establish and maintain an account in the name of the
7
<PAGE> 11
Indenture Trustee until the Outstanding Amount of the Senior Notes has been
reduced to zero, and thereafter in the name of the Lease Trustee, at an
Eligible Institution (which initially shall be The Chase Manhattan Bank), to be
designated as the FCTT Specified Assets Collection Account, Series 1996-1 (the
"Series 1996-1 Collection Account"). The Series 1996-1 Collection Account is
the "Series Collection Account" for Series 1996-1. The Series 1996-1
Collection Account shall be under the sole dominion and control of the
Indenture Trustee until the Outstanding Amount of the Senior Notes has been
reduced to zero, and thereafter under the sole dominion and control of the
Lease Trustee; provided, that the Administrative Agent may make deposits to and
withdrawals from the Series 1996-1 Collection Account in accordance with
Sections 5.2(c) and 5.2(d) of the FCTT Agreement, Section 6.2(b) of the
Administrative Agency Agreement and Sections 5.2(a), 5.2(c), 5.2(d), 5.2(e),
and 5.4(a) and 5.4(b) hereof. All deposits to and withdrawals from the Series
1996-1 Collection Account shall be made only upon the terms and conditions of
the Basic Documents.
Any amounts on deposit in the Series 1996-1 Collection Account
shall be invested by the Indenture Trustee until the Outstanding Amount of the
Senior Notes has been reduced to zero, and thereafter by the Lease Trustee, and
at the direction of Ford Credit and Ford Credit Leasing, in Permitted
Investments with a maturity date no later than the Business Day preceding the
next succeeding Payment Date. All investment earnings on amounts deposited to
the Series 1996-1 Collection Account, including any proceeds thereof, shall be
credited to the Series 1996-1 Collection Account, and losses, if any, resulting
from Permitted Investments in the Series 1996-1 Collection Account shall be
charged to the Series 1996-1 Collection Account. All such investment income
shall be reported for federal income tax purposes as earned (i) 99% by RCL
Trust 1996-1 and (ii) 1% by Ford Credit Leasing; the 99% accruing to RCL Trust
1996-1 shall be reported in accordance with the Percentage Interests of Ford
Credit and Ford Credit Leasing in RCL Trust 1996-1. The authority of the
Administrative Agent to make deposits to and withdrawals from the Series 1996-1
Collection Account is revocable at any time by the Indenture Trustee until the
Outstanding Amount of the Senior Notes has been reduced to zero, and thereafter
by the Lease Trustee. If the institution at which the
8
<PAGE> 12
Series 1996-1 Collection Account is established ceases to be an Eligible
Institution, then the Series 1996-1 Collection Account shall be moved to an
Eligible Institution within 10 Business Days (or such longer period not to
exceed 30 calendar days as to which each Rating Agency may consent).
(b) The Administrative Agent shall establish and maintain an
account in the name of the Indenture Trustee until the Outstanding Amount of
the Senior Notes has been reduced to zero, and thereafter in the name of the
Lease Trustee, at an Eligible Institution (which initially shall be The Chase
Manhattan Bank), to be designated as the "Series 1996-1 Payahead Account." The
Series 1996-1 Payahead Account is the "Series Payahead Account" for Series
1996-1. The Series 1996-1 Payahead Account shall be under the sole dominion
and control of the Indenture Trustee until the Outstanding Amount of the Senior
Notes has been reduced to zero, and thereafter under the sole dominion and
control of the Lease Trustee; provided, that the Administrative Agent may make
deposits to and withdrawals from the Series 1996-1 Payahead Account in
accordance with Section 6.1(a) of the Administrative Agency Agreement and
Section 5.2(b) hereof. All deposits to and withdrawals from the Series 1996-1
Payahead Account shall be made only upon the terms and conditions of the Basic
Documents.
Any amounts on deposit in the Series 1996-1 Payahead Account
shall be invested by the Indenture Trustee until the Outstanding Amount of the
Senior Notes has been reduced to zero, and thereafter on behalf of the Lease
Trustee, and at the direction of Ford Credit and Ford Credit Leasing, in
Permitted Investments which mature no later than the Business Day preceding the
next succeeding Distribution Date. No such investment shall be sold prior to
maturity. All investment earnings on amounts deposited to the Series 1996-1
Payahead Account, including any proceeds thereof, shall be credited to the RCL
Account, and losses, if any, resulting from Permitted Investments in the Series
1996-1 Payahead Account shall be charged to the RCL Account. All such
investment income shall be reported for federal income tax purposes as earned
(i) 99% by RCL Trust 1996-1 and (ii) 1% by Ford Credit Leasing; the 99%
accruing to RCL Trust 1996-1 shall be reported in accordance with the
Percentage Interests of Ford Credit and Ford Credit Leasing in RCL
9
<PAGE> 13
Trust 1996-1. The authority of the Administrative Agent to make deposits to
and withdrawals from the Series 1996-1 Payahead Account is revocable at any
time by the Indenture Trustee until the Outstanding Amount of the Senior Notes
has been reduced to zero, and thereafter by the Lease Trustee. If the
institution at which the Series 1996-1 Collection Account is established is no
longer an Eligible Institution, then the Series 1996-1 Collection Account shall
be moved to an Eligible Institution within 10 Business Days (or such longer
period not to exceed 30 calendar days) as to which each Rating Agency may
consent.
(c) The Administrative Agent shall establish and maintain an
Eligible Account in the name of the Indenture Trustee until the Outstanding
Amount of the Senior Notes has been reduced to zero, and thereafter in the name
of the Lease Trustee, at an Eligible Institution (which initially shall be The
Chase Manhattan Bank) which is designated as the "Series 1996-1 Payments
Account." The Series 1996-1 Payments Account shall be under the sole dominion
and control of the Indenture Trustee, until the Outstanding Amount of the
Senior Notes has been reduced to zero, and thereafter under the sole dominion
and control of the Lease Trustee; provided, that the Administrative Agent may
make deposits to or request the Indenture Trustee to make deposits to or
withdrawals from the Series 1996-1 Payments Account in accordance with Section
5.2(e). All monies deposited from time to time in the Series 1996-1 Payments
Account pursuant to the Indenture and this Series 1996-1 Supplement shall be
made only upon the terms and conditions of the Basic Documents.
Any amounts on deposit in the Series 1996-1 Payments Account
shall be invested by the Indenture Trustee until the Outstanding Amount of the
Senior Notes has been reduced to zero, and thereafter by the Lease Trustee, and
at the direction of Ford Credit and Ford Credit Leasing, in Permitted
Investments with a maturity date no later than the Business Day preceding the
next succeeding Payment Date. No such investment shall be sold prior to
maturity. All investment earnings on amounts deposited to the Series 1996-1
Payments Account, including any proceeds thereof, shall be credited to the
Administrative Agent, and losses, if any, resulting from Permitted Investments
in the Series 1996-1 Payments Account shall be charged to the Administrative
Agent.
10
<PAGE> 14
All such investment income shall be reported for federal income tax purposes as
earned by the Administrative Agent. The authority of the Administrative Agent
to make deposits to the Series 1996-1 Payments Account is revocable at any time
by the Indenture Trustee until the Outstanding Amount of Senior Notes has been
reduced to zero, and thereafter by the Lease Trustee. If the institution at
which the Series 1996-1 Payments Account is established ceases to be an
Eligible Institution, then the Series 1996-1 Payments Account shall be moved to
an Eligible Institution within 10 Business Days (or such longer period not to
exceed 30 calendar days as to which each Rating Agency may consent).
Section 5.2 Application and Distribution of Funds. (a) On
each Business Day the Administrative Agent shall deposit Series 1996-1
Collections in the Series 1996-1 Collection Account pursuant to Section 6.2(b)
of the Administrative Agency Agreement; provided, however, for so long as each
Monthly Remittance Condition is satisfied, the Administrative Agent may make
such deposits with respect to each Collection Period on the related
Distribution Date; provided, further, that if such Distribution Date is also a
Payment Date, such deposit shall be made on the Business Day preceding the
related Payment Date.
(b) On each Business Day the Administrative Agent shall
deposit Payaheads with respect to Series 1996-1 Assets in the Series 1996-1
Payahead Account pursuant to Section 6.1(a) of the Administrative Agency
Agreement; provided, however, that for so long as each Monthly Remittance
Condition is satisfied, the Administrative Agent shall not be required to
deposit Payaheads in the Series 1996-1 Payahead Account or to segregate or
otherwise hold separate any Payaheads remitted by Lessees, but shall be
required on each Distribution Date (or on the Business Day preceding such
Distribution Date, if such Distribution Date is a Payment Date) to deposit
Payaheads with respect to any Series 1996-1 Lease for which the related Lessee
has failed to remit all or a portion of the Monthly Payment due during the
preceding Collection Period in the Series 1996-1 Collection Account as a Series
1996-1 Collection in an amount equal to the lesser of (x) the Payahead Balance
outstanding on such Distribution Date with respect to such Series 1996-1 Lease
and (y) the portion of such Monthly Payment not
11
<PAGE> 15
received. On the Business Day preceding each Payment Date, the Administrative
Agent shall withdraw all investment income earned on amounts deposited in the
Series 1996-1 Payahead Account during the related Accrual Period and any
proceeds thereof and deposit such amounts in the RCL Account and shall charge
to the RCL Account all losses, if any, resulting from Permitted Investments in
the Series 1996-1 Payahead Account during the related Accrual Period.
(c) In accordance with Section 5.4(a), on the Business
Day preceding each Payment Date, the Administrative Agent shall deposit to, or
withdraw from, the Series 1996-1 Collection Account the Aggregate Net Sale
Proceeds Advances for the preceding Accrual Period.
(d) In accordance with Section 5.4(b), on the Business Day
preceding each Payment Date, the Administrative Agent shall deposit to, or
withdraw from, the Series 1996-1 Collection Account the Aggregate Net Monthly
Payment Advances for the preceding Accrual Period.
(e) On the Business Day preceding each Payment Date, after
making the deposits and withdrawals set forth in Sections 5.2(a), (b), (c) and
(d), the Administrative Agent shall withdraw from the Series 1996-1 Collection
Account an amount equal to (i) the Cash Collateral Deposit Amount and deposit
such amount into the Cash Collateral Account and (ii) the Available Sale
Proceeds and deposit such amount into the Series 1996-1 Payments Account. On
the Business Day preceding each Payment Date, the Administrative Agent shall
charge to the Series 1996-1 Collection Account all losses, if any, resulting
from Permitted Investments in the Series 1996-1 Collection Account during the
related Accrual Period.
(f) On or before the second Business Day preceding each
Payment Date, the Administrative Agent shall prepare and deliver to the
Indenture Trustee, and to the Lease Trustee after the Senior Notes are paid in
full, the Cash Collateral Account Certificate and the Disbursement and Payment
Instructions described in Section 8.3 of the Indenture and Section 2 of the
Lease Trust Paying Agent Agreement.
Section 5.3 RCL Trust 1996-1 Purchase Option. To the extent
that the proceeds received by the Adminis-
12
<PAGE> 16
trative Agent from the sale of any Series 1996-1 Leased Vehicle after the
expiration of the related Series 1996-1 Lease exceeds the Residual Value for
such Series 1996-1 Leased Vehicle, RCL Trust 1996-1 will be assumed to have
exercised its option, granted in the Program Operating Lease, to purchase the
beneficial interest in such Series 1996-1 Leased Vehicle at the RCL Purchase
Option Price, and to have caused the Administrative Agent to have subsequently
sold the beneficial interest in such Series 1996-1 Leased Vehicle on behalf of
RCL Trust 1996-1 for an amount equal to the proceeds from such sale. Such
assumption with respect to the beneficial interest in any Series 1996-1 Leased
Vehicle shall be rebutted upon receipt of written direction from the RCL
Trustee that RCL Trust 1996-1 has not exercised its option to purchase the
beneficial interest in such Series 1996-1 Leased Vehicle. On each Business Day
the Administrative Agent shall deposit any Transferor Purchase Option Net
Proceeds with respect to the Series 1996-1 Leased Vehicles into (i) the Cash
Collateral Account, until the aggregate cumulative amount of Transferor
Purchase Option Net Proceeds deposited in the Cash Collateral Account equals
$____________ and (ii) thereafter, into the RCL Account and any Transferor
Purchase Option Net Proceeds so deposited shall be property of RCL Trust
1996-1; provided, however, for so long as each Monthly Remittance Condition is
satisfied, the Administrative Agent may make such deposits with respect to each
Collection Period on the related Distribution Date; provided, further, that if
such Distribution Date is also a Payment Date, such deposit shall be made on
the Business Day preceding the related Payment Date.
Section 5.4 Sale Proceeds Advances and Monthly Payment
Advances. (a) On the Business Day preceding each Payment Date, the
Administrative Agent shall make a Sale Proceeds Advance with respect to each
Series 1996-1 Leased Vehicle with respect to which the related Scheduled Lease
End Date has occurred in the related Accrual Period and the related Sale
Proceeds have not been deposited in the Series 1996-1 Collection Account.
(b) On the Business Day preceding each Payment Date, the
Administrative Agent shall make Monthly Payment Advances with respect to each
overdue Monthly Payment, determined as of the end of the related Accrual
Period, for all Series 1996-1 Leases (other than Liquidated
13
<PAGE> 17
Leases) in accordance with Section 6.3 of the Administrative Agency Agreement.
(c) The Administrative Agent shall be reimbursed for any
outstanding Monthly Payment Advances and Sale Proceeds Advances with respect to
a Series 1996-1 Lease as follows:
first, by retaining any subsequent Collections with respect to the
related Series 1996-1 Lease or the related Series 1996-1 Leased
Vehicle;
second, by retaining Collections with respect to other Series 1996-1
Leases and Series 1996-1 Leased Vehicles; and
third, from a draw on the Cash Collateral Account after the
Outstanding Amount of the Senior Notes, the Outstanding Amount of the
Subordinated Notes and the Aggregate Certificate Balance each have
been reduced to zero.
Section 5.5 Administrative Purchases. Notwithstanding the
provisions of Section 4.7 of the Administrative Agency Agreement permitting the
deposit of Administrative Purchase Amounts on the Distribution Date, the
Administrative Agent, on behalf of the Holders of Exchangeable Beneficial
Certificates, shall deposit in the Series 1996-1 Collection Account, on the
Business Day preceding each Payment Date, the Administrative Purchase Amount
for each Series 1996-1 Leased Vehicle or Series 1996-1 Lease which has been the
subject of a breach of any of the covenants set forth in Sections 4.2, 4.5 or
4.6 of the Administrative Agency Agreement during the immediately preceding
Collection Period.
ARTICLE VI
REPORTS TO CERTIFICATEHOLDERS
Section 6.1 Statements to Certificateholders. (a) On each
Distribution Date, Comerica shall include with each distribution to each Holder
of a Series 1996-1 Certificate, the information required to be delivered
pursuant to Section 6.4(b) of the Administrative Agency Agreement.
14
<PAGE> 18
(b) In addition to the information delivered pursuant to
Section 6.1(a), the Administrative Agent shall provide to Comerica, and
Comerica shall provide to each Holder of a Series 1996-1 Certificate the
following information in connection with each Payment Date:
(i) the Series 1996-1 Credit Loss with respect to
the preceding Accrual Period; and
(ii) the Series 1996-1 Residual Loss with respect to
the preceding Accrual Period.
ARTICLE VII
OPTIONAL PURCHASE
Section 7.1 Optional Purchase of Series 1996-1 Certificates.
On any Payment Date following the last day of a Collection Period as of which
the Series 1996-1 Asset Amount, as a percentage of the initial Series 1996-1
Asset Amount as of the Series 1996-1 Cut-Off Date, is less than 10%, the
Administrative Agent shall have the option to purchase the Series 1996-1
Certificates; provided, however, that the Administrative Agent may not effect
any such purchase (i) so long as the rating on the Administrative Agent's
long-term debt obligations is less than Baa3 by Moody's Investors Service Inc.
unless Comerica shall have received an Opinion of Counsel to the effect that
such purchase would not constitute a fraudulent conveyance and (ii) unless the
Series 1996-1 Asset Amount is equal to or greater than the sum of the
Outstanding Amount of the Senior Notes, the Outstanding Amount of the
Subordinated Notes and the Aggregate Certificate Balance of the Lease Trust
Certificates plus accrued interest in each case to the Payment Date of
redemption or prepayment, as applicable. To exercise such option, the
Administrative Agent shall give Comerica and the Holders of the Series 1996-1
Certificates (which for such purposes shall be the Lease Trustee, and prior to
the Payment Date on which the Outstanding Amount of the Senior Notes has been
reduced to zero, the Indenture Trustee) at least forty-five days prior written
notice of the Payment Date on which the Administrative Agent intends to
exercise such option, and shall, on the Business Day preceding such Payment
Date, deposit to the Series 1996-1 Collection Account an amount in immediately
available funds equal to the Series 1996-1 Asset Amount as of
15
<PAGE> 19
the last day of the Related Collection Period plus one month's interest thereon
calculated at the weighted average Retail Operating Lease Factor of such Series
1996-1 Assets. Following such optional purchase, the Administrative Agent
shall be the Holder of the Series 1996-1 Certificates. At the request of the
Administrative Agent, Ford Credit Leasing shall purchase a 2% share of the
Series 1996-1 Certificates and thereupon shall be a Holder thereof.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Provision of Information. The Administrative
Agent shall provide such information, reports, certificates and instructions as
is required pursuant to the Basic Documents requested from time to time by the
Holders of the Series 1996-1 Certificates for the purpose of making
distributions with respect to such Series 1996-1 Certificates or with respect
to payment on any securities based on such Series 1996-1 Certificates.
Section 8.2 Ratification of Administrative Agency Agreement.
As supplemented by this Supplement, the Administrative Agency Agreement is in
all respects ratified and confirmed and the Administrative Agency Agreement as
so supplemented by this Supplement shall be read, taken and construed as one
and the same instrument.
Section 8.3 Actions on Behalf of the Lease Trust. The
Administrative Agent hereby accepts the authorization granted pursuant to
Section 12.12 of the Lease Trust Agreement, and agrees that it shall prepare
and execute on behalf of the Lease Trust all such documents, reports, filings,
instruments, certificates and opinions as it shall be the duty of the Lease
Trust to prepare, file or deliver pursuant to the Basic Documents. In
addition, the Administrative Agent shall maintain the books and records
required by Section 11.2 of the Lease Trust Agreement and, so long as the lien
of the Indenture is outstanding, shall forward to the Indenture Trustee all
notices, documents or reports to be delivered to the Lease Trustee.
Section 8.4 Insurance Policies. So long as any Series 1996-1
Certificates are outstanding, the
16
<PAGE> 20
Administrative Agent will maintain insurance (including self-insurance provided
by Ford Credit or any of its Affiliates) with respect to third party claims
which may be raised with respect to the Series 1996-1 Leased Vehicles, FCTT or
Comerica, in such amounts as it deems reasonable and prudent. The
Administrative Agent covenants and agrees to pay when due any and all premiums
for such insurance. The Administrative Agent covenants and agrees that it
shall not amend, terminate or cause the termination of any of its contingent
and excess liability Insurance Policies unless (A) after giving effect to such
amendment or termination, there remains coverage in an aggregate amount of $25
million per claim (up to $5 million of which may be self-insurance provided by
Ford Credit or any of its Affiliates) against third party claims that may be
raised with respect to any Series 1996-1 Leased Vehicle or against FCTT or
Comerica, such coverage being subject to an annual aggregate cap for all claims
in an amount of at least $50 million (which coverage may be a blanket insurance
policy or policies covering the Administrative Agent and one or more of its
Affiliates) or (B) each Rating Agency has delivered a letter to the Indenture
Trustee (for so long as the Outstanding Amount of the Senior Notes is greater
than zero) or to the Lease Trustee (after the Outstanding Amount of the Senior
Notes has been reduced to zero) to the effect that the amendment or termination
of any such Insurance Policy, in and of itself, will not cause the rating of
any of the Senior Notes or Lease Trust Certificates to be reduced or withdrawn.
The obligations of the Administrative Agent pursuant to this Section 8.4 shall
survive any termination of the Administrative Agent's obligations with respect
to the Series 1996-1 Leases and Series 1996-1 Leased Vehicles under this
Supplement or the Agreement.
Section 8.5 Third Party Beneficiary. Each of the Lease
Trustee, the RCL Trustee and the Indenture Trustee shall be a third-party
beneficiary of this Supplement and shall be entitled to rely on the Obligations
of the Administrative Agent set forth herein as if each of them was a party
hereto.
Section 8.6 Holders of the Series 1996-1 Certificates. (a)
Unless otherwise specified in this Section 8.6 or in the applicable Basic
Document, the Lease Trust and RCL Trust 1996-1 (and, following the execution
17
<PAGE> 21
of the RCL Assignment Agreement, Ford Credit Leasing) shall each be the
"Holder" of the Series 1996-1 Certificates and the "Beneficiary" with respect
to Series 1996-1. For purposes of Section 5.2(c) of the FCTT Agreement, the
Lease Trust and RCL Trust 1996-1 shall each be a Holder, but for so long as the
Senior Notes, the Subordinated Notes and Lease Trust Certificates are
outstanding, all amounts paid to "Holders" of the Series 1996-1 Certificates
shall be deposited in the Series 1996-1 Collection Account.
(b) The Holder of the Series 1996-1 Certificates and the
Beneficiary of Series 1996-1 shall be the Lease Trust for the purposes of (i)
with respect to the FCTT Agreement, Sections 3.5, 3.6(c), the third sentence of
Section 7.1(a), and Section 7.1(b) and (ii) with respect to the Administrative
Agency Agreement, Sections 4.4(g) (if the Administrative Agent has been
terminated under Section 7.1(a)), 4.7, the last paragraph of Section 7.1(a),
7.3(a) (if the Administrative Agent has been terminated under Section 7.1(a)),
7.6 and 8.2; provided, that with respect to the third sentence of Section
4.3(f), the third sentence of Section 7.1(a), Section 7.1(b) and the second
sentence of Section 9.1 and Section 7.1(b) of the FCTT Agreement and Section
8.2 of the Administrative Agency Agreement, the Indenture Trustee shall, until
the Outstanding Amount of the Senior Notes has been reduced to zero, have a
lien on the Certificates of Title of all Series 1996-1 Leased Vehicles
distributed pursuant to such Sections, and the Certificate of Title of each
such Series 1996-1 Leased Vehicle shall reflect such lien.
(c) The Holder of the Series 1996-1 Certificates and the
Beneficiary of Series 1996-1 shall be the Indenture Trustee, the Lease Trust
and RCL Trust 1996-1 (and, following the execution of the RCL Assignment
Agreement, Ford Credit Leasing) for the purposes of (i) Sections 6.11(a) of the
FCTT Agreement and (ii) Sections 2.2(c), 2.4, 4.1, 4.4(f), 4.6, 4.12,
7.1(a)(i), 7.1(a)(ii) and 7.2 of the Administrative Agency Agreement.
(d) The Holder of the Series 1996-1 Certificates and the
Beneficiary of Series 1996-1 shall be the Lease Trust and the Indenture Trustee
for the purposes of (i) Section 9.8 of the FCTT Agreement and (ii) Section
18
<PAGE> 22
8.9 and 7.1(a)(iii) of the Administrative Agency Agreement.
(e) For as long as the Senior Notes, Subordinated Notes and
Lease Trust Certificates are outstanding, each Holder of a Series 1996-1
Certificate or Beneficiary of Series 1996-1 shall exercise its respective
rights as Holder and Beneficiary only in accordance with the provisions of the
Basic Documents.
(f) To the extent that a "Holder" or "Beneficiary" is
deemed to refer to more than a single Person pursuant to this Section 8.6 or
any other provision of any Basic Document, actions or directions to be taken by
such Holder or Beneficiary shall be taken only by written directions delivered
by both such Persons.
Section 8.7 Demand Notes. In connection with the
capitalization of Ford Credit Leasing, RCL Trust 1996-1 and the Lease Trust,
Ford Credit has issued to each of Ford Credit Leasing and RCL Trust 1996-1
certain promissory notes allowing the payees thereunder to receive certain sums
upon demand, and Ford Credit hereby covenants to deliver prompt written notice
to each Rating Agency in the event that any payment of principal is made to any
holder of any such promissory notes.
Section 8.8 Counterparts. This Supplement 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 one and the same instrument.
Section 8.9 Notices. All directions, notices and
instructions to the Trustee shall be in writing (which may be facsimile).
Section 8.10 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 8.11 GOVERNING LAW. THIS SUPPLEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES
19
<PAGE> 23
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
20
<PAGE> 24
IN WITNESS WHEREOF, the parties hereto have caused this
Supplement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
COMERICA BANK, as trustee of Ford
Credit Titling Trust
By: ___________________________
Name:
Title:
FORD MOTOR CREDIT COMPANY,
as Administrative Agent
and initial Beneficiary of
Ford Credit Titling Trust
By: ___________________________
Name: Hurley D. Smith
Title: Secretary
FORD CREDIT LEASING COMPANY, INC.,
as initial Beneficiary of Ford
Credit Titling Trust
By: ___________________________
Name:
Title:
<PAGE> 25
EXHIBIT A
[SCHEDULE OF SERIES 1996-1 LEASES
AND SERIES 1996-1 LEASED VEHICLES]
A-1
<PAGE> 26
EXHIBIT B
[FORM OF SERIES 1996-1 CERTIFICATE]
FORD CREDIT TITLING TRUST
SERIES 1996-1 SPECIFIED BENEFICIAL CERTIFICATE
No. __
evidencing a fractional undivided interest in the Series 1996-1 Assets (as
defined below).
(This Series 1996-1 Specified Beneficial Certificate does not represent an
interest in or obligation of Ford Motor Credit Company, Ford Credit Leasing
Company, Inc., or Comerica Bank or any of their respective affiliates, except
to the extent described below.)
THIS CERTIFIES THAT ______ is the registered owner of a
nonassessable, fully-paid, __% fractional undivided interest in the Series
1996-1 Assets deposited in Ford Credit Titling Trust ("FCTT").
FCTT was created pursuant to an Amended and Restated Trust
Agreement, dated as of January 31, 1994 (as amended and supplemented from time
to time, the "FCTT Agreement"), by and among Ford Motor Credit Company ("Ford
Credit") and Ford Credit Leasing Company, Inc. ("Ford Credit Leasing") as
grantors and initial beneficiaries (in their capacities as grantors, each a
"Grantor" and collectively, the "Grantors" and in their capacity as
beneficiaries, each a "Beneficiary" and collectively, the "Beneficiaries") and
Comerica Bank, as trustee ("Comerica"). A summary of certain of the pertinent
provisions of the FCTT Agreement is set forth below.
This Certificate is one of a duly authorized Series of
Specified Beneficial Certificates (as defined below). This Certificate is
issued under and is subject to the terms, provisions and conditions of the FCTT
Agreement, the Administrative Agency Agreement, dated January 31, 1994 (the
"Administrative Agency Agreement") and the Series 1996-1 Supplement, dated as
of November __, 1996, among Ford Credit and Ford Credit Leasing, and First
Union National
B-1
<PAGE> 27
Bank (the "RCL Trustee"), as trustee for RCL Trust 1996-1 (the "Supplement"),
to which FCTT Agreement, Administrative Agency Agreement and Supplement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the
Supplement.
The property of FCTT consists of the FCTT Assets (the "FCTT
Assets"), which includes cash and any amounts on deposit in the FCTT Collection
Account, certain retail lease contracts for automobiles and light-duty trucks
("Leases") and the proceeds thereof, the automobiles and light-duty trucks (the
"Leased Vehicles") which are subject to the Leases and the proceeds thereof
including the proceeds from the sale of the Leased Vehicles to third parties,
certificates of title or other evidence of ownership of a Leased Vehicle, the
benefits of certain insurance policies, certain other properties and rights,
including, but not limited to, certain rights of recourse, relating to the
Leases and the Leased Vehicles and all proceeds of the foregoing, all as more
fully described in the FCTT Agreement. Ownership of the FCTT Assets was
initially represented by "Exchangeable Beneficial Certificates."
Under the FCTT Agreement from time to time the Holders of
Exchangeable Beneficial Certificates may direct Comerica to issue to such
Holders of the Exchangeable Beneficial Certificates a series of certificates
("Specified Beneficial Certificates") representing a beneficial interest in
certain specified Leased Vehicles, Leases and related FCTT Assets (such assets,
the "Series Specified Assets"). Upon the issuance of such Specified Beneficial
Certificates, the beneficial interest in FCTT and the FCTT Assets represented
by the Exchangeable Beneficial Certificate shall be reduced by the amount of
the FCTT Assets represented by such Specified Beneficial Certificates. This
Certificate was issued pursuant to the Supplement which identified certain
Series Specified Assets therein (the "Series 1996-1 Assets").
Under the Series 1996-1 Supplement, there shall be distributed
on each Business Day, or so long as each Monthly Remittance Condition has been
satisfied, on the 15th day of each month or, if such day is not a Business Day,
the next Business Day (each, a "Distribution Date")(or if such Distribution
Date is a Payment Date, on the Business Day pre-
B-2
<PAGE> 28
ceding such Distribution Date), commencing November 15, 1996 to the Person in
whose name this Certificate is registered such Holder's fractional undivided
interest in the amount on deposit in the Series 1996-1 Collection Account.
Distributions on this Certificate shall be made as provided in the FCTT
Agreement and the Supplement.
The FCTT Agreement may be amended by the Holders of the
Exchangeable Beneficial Certificates and Comerica without the consent of any
Holder of any Specified Beneficial Certificates at any time; provided, however,
that such action shall not, (w) amend Section 4.3(c)(x) of the FCTT Agreement
to reduce the percentage of the Aggregate FCTT Asset Amount that is required to
consist of Non-Specified Assets or Section 4.3(g) of the FCTT Agreement to
reduce the percentage of FCTT required to consist of Non-Specified Assets, (x)
as evidenced by an Opinion of Counsel, materially and adversely affect the
interests of any Holder of an outstanding Specified Beneficial Certificate
(unless each such Holder has consented thereto), (y) as confirmed by each
nationally recognized statistical rating agency which is then rating securities
based on such Specified Beneficial Certificates, cause the then current rating
assigned to such securities to be withdrawn or reduced or (z) as evidenced by
an Opinion of Counsel, cause FCTT to be classified as an association (or
publicly traded partnership) taxable as a corporation for federal income tax
purposes.
Each Beneficiary, by acceptance of a Certificate, covenants
that for a period of one year and one day after payment in full of all
distributions to all Beneficiaries of Specified Beneficial Certificates
pursuant to the terms of the FCTT Agreement, it will not institute against, or
join any Person in instituting against, Ford Credit Leasing or FCTT any
bankruptcy, reorganization, insolvency or liquidation proceeding, or other
similar proceeding, under the laws of the United States without the consent of
100% of the Holders of Specified Beneficial Certificates (excluding Ford Credit
Leasing, RCL, or any of their Affiliates).
Comerica shall keep the certificate register with respect to
this Certificate, and the Holder of this Certificate shall notify Comerica of
any change of address or instructions on the distribution of funds.
The FCTT Agreement (other than Section 2.6) and FCTT shall
terminate and be of no further force or effect on
B-3
<PAGE> 29
the earlier of: (i) the final distribution by Comerica of all moneys or other
property constituting FCTT Assets; (ii) the Bankruptcy, insolvency or
termination of Ford Credit Leasing. With respect to Series Specified Assets,
FCTT shall be deemed terminated solely with respect to such assets upon the
Bankruptcy, insolvency or termination any Holder of the related Specified
Beneficial Certificates or the Bankruptcy, insolvency or termination of any
initial transferee of any Specified Beneficial Certificates from the Holders of
the Exchangeable Beneficial Certificates or upon the occurrence of such other
events as may be specified in the related Supplement. Upon such termination of
FCTT with respect to any Series Specified Assets, Comerica shall distribute to
Holders of the related Specified Beneficial Certificates all related Series
Specified Assets by causing the Certificates of Title of the related Specified
Leased Vehicles to be reregistered in the name of, or at the direction of, such
Holders. The FCTT Agreement and FCTT may also terminate at the express written
direction of the Holders of the Exchangeable Beneficial Certificates so long as
no Series of Specified Beneficial Certificates are outstanding.
Notwithstanding the foregoing, in no event, however, shall FCTT continue beyond
the expiration of 21 years from the death of the last survivor of the
descendants of Hurley David Smith, currently residing in Clarkston, Michigan,
living on the date of the FCTT Agreement. Upon termination of FCTT, Comerica
shall distribute (i) to each Holder of a Specified Beneficial Certificate its
interest in the related Series Specified Assets and (ii) to the Holders of the
Exchangeable Beneficial Certificates their respective interests in the
Non-Specified Assets by causing the Certificates of Title to be reregistered in
the name of, or at the direction of, the Holder.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF MICHIGAN, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Unless this Certificate shall have been executed by a
Responsible Officer, this Certificate shall not entitle the Holder thereof to
any benefit under the FCTT Agreement or be valid for any purpose.
B-4
<PAGE> 30
IN WITNESS WHEREOF, Comerica, on behalf of FCTT and not in its
individual capacity, has caused this Series 1996-1 Specified Beneficial
Certificate to be duly executed.
FORD CREDIT TITLING TRUST
COMERICA BANK,
not in its individual
capacity but solely as
trustee
Dated: November __, 1996
By:___________________________
Name:
Title:
B-5
<PAGE> 31
FOR VALUE RECEIVED, the undersigned hereby sells, transfers and assigns unto
__________ the within Series 1996-1 Certificate, and all rights thereunder,
hereby irrevocably constituting and appointing ___________ as Attorney to
transfer said Series 1996-1 Certificate on the books of the FCTT Registrar,
with full power of substitution in the premises.
Dated: November __, 1996 By:
_________________________
B-6
<PAGE> 32
EXHIBIT C
[Form of Lease]
C-1
<PAGE> 1
EXHIBIT 10.4
ASSET CONTRIBUTION AGREEMENT
dated as of
November __, 1996
among
FORD MOTOR CREDIT COMPANY
and
FORD CREDIT LEASING COMPANY, INC.,
as Contributors,
and
RCL TRUST 1996-1,
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
CERTAIN DEFINITIONS . . . . . . . . . . . . 1
Section 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
CONTRIBUTION OF SERIES 1996-1
CERTIFICATES . . . . . . . . . . . . . 2
Section 2.1 Contribution of Series 1996-1
Certificates . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.2 The Closing . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 3
Section 3.1 Warranties of the RCL Trustee . . . . . . . . . . . . . . 3
Section 3.2 Representations and Warranties of
the Contributors . . . . . . . . . . . . . . . . . . . . . 4
Section 3.3 Repurchase upon Breach . . . . . . . . . . . . . . . . . . 10
ARTICLE IV
CONDITIONS . . . . . . . . . . . . . . 11
Section 4.1 Conditions to Obligation of RCL
Trust 1996-1 . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.2 Conditions to Obligation of the
Contributors . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V
COVENANTS OF THE CONTRIBUTORS . . . . . . . . 12
Section 5.1 Protection of Right, Title and
Interest . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.2 Other Liens or Interests . . . . . . . . . . . . . . . . . 14
Section 5.3 Costs and Expenses . . . . . . . . . . . . . . . . . . . . 14
Section 5.4 Indemnification . . . . . . . . . . . . . . . . . . . . . 14
Section 5.5 Absolute Transfer; Sale or
Exchange . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE VI
MISCELLANEOUS PROVISIONS . . . . . . . . . . 16
Section 6.1 Obligations of Contributors . . . . . . . . . . . . . . . 16
Section 6.2 Acknowledgements . . . . . . . . . . . . . . . . . . . . . 16
i
<PAGE> 3
Section 6.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.4 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.5 Costs and Expenses . . . . . . . . . . . . . . . . . . . . 17
Section 6.6 Representations of the
Contributors and the RCL Trustee . . . . . . . . . . . . . 18
Section 6.7 Confidential Information . . . . . . . . . . . . . . . . . 18
Section 6.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.9 Severability . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6.11 Successors and Assigns . . . . . . . . . . . . . . . . . . 19
Section 6.12 Headings . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6.13 Governing Law . . . . . . . . . . . . . . . . . . . . . . 19
Exhibit A-- Schedule of Series 1996-1 Assets . . . . . . . . . . . . A-1
Exhibit B-- Form of Series 1996-1 Lease . . . . . . . . . . . . . . . B-1
ii
<PAGE> 4
ASSET CONTRIBUTION AGREEMENT, dated and effective as of
November __, 1996, among (i) FORD MOTOR CREDIT COMPANY, a Delaware
corporation, as a contributor ("Ford Credit"), (ii) FORD CREDIT
LEASING COMPANY, INC., a Delaware corporation, as a contributor
("Ford Credit Leasing" and, collectively with Ford Credit, in their
capacities as contributors hereunder, the "Contributors"), and (iii)
RCL TRUST 1996-1, a Delaware business trust ("RCL Trust 1996-1").
WHEREAS, Ford Credit, Ford Credit Leasing and Comerica Bank, as
trustee, pursuant to the FCTT Agreement, have created Ford Credit
Titling Trust ("FCTT") for the purpose of holding Leases and Leased
Vehicles and other FCTT Assets;
WHEREAS, pursuant to the FCTT Agreement, Ford Credit and Ford
Credit Leasing, as holders of the Exchangeable Beneficial
Certificates, have directed Comerica Bank to issue to each of them
the Series 1996-1 Certificates representing a beneficial interest in
FCTT and the Series 1996-1 Assets;
WHEREAS, Ford Credit, Ford Credit Leasing and the RCL Trustee
wish to set forth the terms pursuant to which the Series 1996-1
Certificates are to be contributed by Ford Credit and Ford Credit
Leasing to RCL Trust 1996-1; and
WHEREAS, Ford Credit, Ford Credit Leasing and RCL Trust 1996-1
intend to engage in the other transactions contemplated by the Basic
Documents.
NOW, THEREFORE, Ford Credit, Ford Credit Leasing and the RCL
Trustee hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Definitions. Whenever used in this Agreement
capitalized terms have the meanings assigned to them herein or, if
not defined herein, as defined in Appendix A attached hereto. To
the extent that the definitions set forth herein conflict with the
definitions set forth in Appendix A, or incorporated by reference
therein, the definitions set forth herein shall be
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controlling. All references herein to "this Agreement" are to this Asset
Contribution Agreement, and all references herein to Articles, Sections and
subsections are to Articles, Sections and subsections of this Agreement unless
otherwise specified.
"RCL Trustee" means First Union Bank of Delaware not in its
individual capacity but solely as trustee of RCL Trust 1996-1.
"Removal Event" has the meaning set forth in Section 3.3.
"Schedule of Series 1996-1 Assets" means the list of Series
1996-1 Leased Vehicles and Series 1996-1 Leases annexed hereto as
Exhibit A, which may be in the form of microfiche or a computer
tape.
ARTICLE II
CONTRIBUTION OF SERIES 1996-1
CERTIFICATES
Section 2.1 Contribution of Series 1996-1 Certificates. On
the Closing Date, subject to the terms and conditions of this
Agreement, each of the Contributors agrees to contribute to RCL
Trust 1996-1, and the RCL Trustee on behalf of RCL Trust 1996-1
agrees to accept from the Contributors, the Series 1996-1
Certificates and the other property relating thereto, as specified
in the following paragraph.
On the Closing Date and immediately preceding the transactions
contemplated by the Transfer Agreement, the Contributors shall
contribute, transfer, assign and otherwise convey to RCL Trust
1996-1, without recourse, all right, title and interest of the
Contributors, whether now owned or hereafter acquired, in and to the
following: (i) the Series 1996-1 Certificates, including all monies
paid thereon and due thereon on or after the Series 1996-1 Cut-Off
Date (including any monies received prior to the Series 1996-1
Cut-Off Date that are due on or after the Series 1996-1 Cut-Off Date
and were not used to reduce the principal balance of the Series
1996-1 Certificates) and (ii) their respective rights and
obligations under the Administrative Agency Agreement and the Series
1996-1 Supplement. The Series 1996-1 Certificates shall become
property of RCL Trust 1996-1 and the inter-
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ests of the Contributors as beneficiaries of RCL Trust 1996-1 shall reflect
such additions.
Section 2.2 The Closing. The contribution of the Series
1996-1 Certificates shall take place at a closing at the offices of
Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue, New York,
New York 10022 on the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Warranties of the RCL Trustee. The RCL Trustee
hereby represents and warrants to each of the Contributors as of the
date hereof and as of the Closing Date:
(a) Organization and Good Standing. [First Union Bank of
Delaware is a [national] banking corporation duly organized, validly
existing and in good standing under the laws of the [State of
Delaware] [with its principal place of business in Delaware].
(b) Power and Authority. The RCL Trustee has full power,
authority and legal right to execute, deliver and perform this
Agreement, and has taken all necessary action to authorize the
execution, delivery and performance by it of this Agreement.
(c) No Violation. The execution, delivery and performance by
it of this Agreement (i) shall not violate any provision of any law
or regulation governing the banking and trust powers of the RCL
Trustee or any order, writ, judgment or decree of any court,
arbitrator or governmental authority applicable to the RCL Trustee
or any of its assets, (ii) shall not violate any provision of the
corporate charter or by-laws of the RCL Trustee, and (iii) shall not
violate any provision of, or constitute, with or without notice or
lapse of time, a default under, any mortgage, indenture, contract,
agreement or other undertaking to which the RCL Trustee is a party.
(d) Governmental Approvals. The execution, delivery and
performance by the RCL Trustee of this Agreement shall not require
the authorization, consent or approval of, the giving of notice to,
the filing or
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registration with, or the taking of any other action in respect of, any
governmental authority or agency regulating the banking and corporate trust
activities of banks or trust companies in the jurisdiction in which RCL was
formed.
(e) Validity; Binding Obligation. This Agreement has been duly
executed and delivered by the RCL Trustee and constitutes the legal, valid and
binding agreement of the RCL Trustee enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of creditors'
rights in general and by general principles of equity, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
(f) No Litigation. No legal or governmental proceedings are
pending to which the RCL Trustee is a party or of which any property of the RCL
Trustee 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 RCL Trustee and will not materially and adversely affect the
performance by the RCL Trustee of its obligations under, or the validity and
enforceability of this Agreement.
Section 3.2 Representations and Warranties of the Contributors. (a)
Ford Credit and Ford Credit Leasing each hereby represents and warrants, as to
itself, to the RCL Trustee as of the date hereof and as of the Closing Date:
(i) Organization. Such Contributor has been duly
organized and is validly existing as a corporation 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 presently owned and
such business is presently conducted.
(ii) Good Standing. Such Contributor is duly
qualified to do business as a foreign corporation in good
standing, and has obtained all necessary li-
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censes and approvals in all jurisdictions in which the ownership
or lease of property or the conduct of its business requires such
qualifications.
(iii) Power and Authority. Such Contributor has the
full power and authority to execute and deliver this
Agreement, to carry out its terms, and to contribute and
assign the property contributed and assigned by it to RCL
Trust 1996-1 hereunder and has duly authorized such
contribution and assignment by all necessary corporate
action.
(iv) No Violation. The consummation of the
transactions contemplated by this Agreement and the
fulfillment of the terms of this Agreement do not conflict
with, result in any breach of any of the terms and
provisions of or constitute (with or without notice or
lapse of time) a default under, such Contributor's
certificate of incorporation or by-laws, or any indenture,
agreement or other instrument to which it is a party or by
which it is bound, or result in the creation or imposition
of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement or other
instrument, or violate any law or, to the best of such
Contributor's knowledge, any order, rule or regulation
applicable to it of any court or of any federal or state
regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over it
or any of its properties.
(v) Validity; Binding Obligation. This Agreement has
been duly authorized, executed and delivered by it and
constitutes the legal, valid and binding agreement of such
Contributor, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy,
insolvency, reorganization, or other similar laws
affecting the enforcement of creditors' rights in general
and by general principles of equity, regardless of whether
such enforceability is considered in a proceeding in
equity or at law.
(vi) No Proceedings. No legal or governmental
proceedings are pending to which such Contributor is a
party or of which any property of such Contributor is the
subject, and no such proceedings are threat-
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ened 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 such
Contributor and its subsidiaries considered as a whole and will not
materially and adversely affect the performance by such Contributor
of its obligations under, or the validity and enforceability of, this
Agreement.
(b) Each of Ford Credit and Ford Credit Leasing makes the
following representations and warranties as to the Series 1996-1
Assets, on which RCL Trust 1996-1 relies in accepting the Series
1996-1 Certificates. Such representations and warranties speak as
of the execution and delivery of this Agreement, but shall survive the
contribution, transfer, and assignment of the Series 1996-1 Certificates to
RCL Trust 1996-1 and any subsequent assignment or transfer by RCL Trust 1996-1:
(i) New Vehicle. Each Series 1996-1 Leased Vehicle
was a new automobile or light-duty truck at the inception
of the related Series 1996-1 Lease.
(ii) Certificate of Title. Each Series 1996-1 Leased
Vehicle was titled in the name of "Ford Credit Titling
Trust," "Ford Credit Titling Trust, Comerica Bank,
Trustee" or such substantially similar words acceptable to
the relevant Governmental Authority.
(iii) Residual Value. The Residual Value of each
Series 1996-1 Leased Vehicle does not exceed an amount
established by the Administrative Agent consistent with
its policies and practices regarding the setting of
residual values as applied with respect to closed-end
retail automobile and light-duty truck leases.
(iv) Pool Balance. At the Series 1996-1 Cut-Off
Date the Pool Balance was $_____________.
(v) Interest in Lease and Leased Vehicle. Each
Series 1996-1 Lease was entered into by a Dealer located
in the United States, as lessor, and a Lessee with a
billing address in an Eligible
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State, as lessee, and all of the Dealer's right, title and
interest in such Series 1996-1 Lease and the related Series 1996-1
Leased Vehicle was validly assigned by such Dealer to FCTT.
(vi) Customary and Enforceable Provisions. Each
Series 1996-1 Lease (x) was originated by a Dealer in the
ordinary course of its business and in compliance with the
Administrative Agent's normal credit and collection
policies and practices, (y) contains customary and
enforceable provisions and (z) is substantially in the
form of Exhibit B.
(vii) Total Monthly Payments. Each Series 1996-1
Lease provides for Total Monthly Payments which include
Constant Yield Payments that fully amortize the Balance
Subject to Lease Charges of such Series 1996-1 Lease to a
final payment equal to the Residual Value of the
related Series 1996-1 Leased Vehicle over the term of such
Series 1996-1 Lease.
(viii) Compliance with Law. At the time it was
originated or made, and as of the date of this Agreement,
each Series 1996-1 Lease complied in all material respects
with all requirements of applicable federal, state, and
local laws, and regulations thereunder.
(ix) Binding Obligation. Each Series 1996-1 Lease
represents the genuine, legal, valid and binding payment
obligation in writing of the related Lessee, 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 and general
principles of equity.
(x) No Government Lessee. None of the Series 1996-1
Leases is an obligation of the United States of America or
any state or of any agency, department, or instrumentality
of the United States of America or any state.
(xi) Leases in Force. As of the Series 1996-1
Specification Date, no Series 1996-1 Lease had been
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satisfied, subordinated, rescinded, cancelled or
terminated.
(xii) No Waiver. No provision (other than the
assessment of a Security Deposit or Reconditioning
Reserve) of a Series 1996-1 Lease has been waived.
(xiii) No Defenses. No right of rescission, setoff,
counterclaim, or defense has been asserted or threatened
with respect to any Series 1996-1 Lease.
(xiv) No Default. As of the Series 1996-1
Specification Date, no default in payment by any Lessee of
any payments due with respect to a Series 1996-1 Lease had
occurred and was continuing for a period of more than
thirty days; and no continuing condition that with notice
or the lapse of time would constitute a default, breach,
violation, or event permitting termination or cancellation
under the terms of any Series 1996-1 Lease had arisen.
(xv) No Recourse to Dealer. No Series 1996-1 Lease
provides for recourse to the related Dealer.
(xvi) Insurance. Each Lessee, to the best knowledge
of the Administrative Agent, has obtained or agreed to
obtain physical damage insurance and liability insurance
covering the related Series 1996-1 Leased Vehicle as
required under the related Series 1996-1 Lease.
(xvii) Title. No Series 1996-1 Asset has been sold,
transferred, assigned, or pledged by any Dealer to any
Person other than FCTT. Comerica, as trustee for FCTT and
for the benefit of the Holders of Series 1996-1
Certificates, has good and marketable title to each Series
1996-1 Lease and each Series 1996-1 Leased Vehicle, free
and clear of all Liens, encumbrances, security interests,
and rights of others, including liens or claims for work,
labor or material relating to such Series 1996-1 Leased
Vehicle.
(xviii) Valid Assignment. No Series 1996-1 Lease
was originated in, or is subject to the laws of, any
jurisdiction under which the sale, transfer,
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and assignment of such Series 1996-1 Lease to FCTT or of a
beneficial interest in such Series 1996-1 Lease pursuant
to transfers of Series 1996-1 Certificates is unlawful,
void, or voidable. No Series 1996-1 Leased Vehicle is
subject to the laws of any jurisdiction under which the
sale, transfer, and assignment of such Series 1996-1
Leased Vehicle to FCTT or of a beneficial interest in such
Series 1996-1 Leased Vehicle pursuant to transfers of
Series 1996-1 Certificates is unlawful, void, or voidable.
No Dealer has entered into any agreement with any Lessee
that prohibits, restricts or conditions the assignment of
any portion of a Series 1996-1 Lease.
(xix) All Filings Made. All filings (including,
without limitation, UCC filings) necessary in any
jurisdiction to give Comerica, on behalf of FCTT, a first
perfected ownership interest in each Series 1996-1 Lease
have been made.
(xx) Chattel Paper. Each Series 1996-1 Lease
constitutes "chattel paper" as defined in the UCC.
(xxi) One Original. There is only one original of
each Series 1996-1 Lease, which is held by the
Administrative Agent on behalf of FCTT.
(xxii) No Excess Deferred Gross. No Series 1996-1
Lease is subject to a holdback of Excess Deferred Gross.
(xxiii) Origination. Each Series 1996-1 Lease has
an origination date on or after ________ __, 199_.
(xxiv) Maturity of Leases. Each Series 1996-1 Lease
has a Scheduled Lease End Date of not greater than 36
months from the date on which it was entered into.
(xxv) Minimum Retail Operating Lease Factor. Each
Series 1996-1 Lease has a Retail Operating Lease Factor
equal to or greater than __%.
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(xxvi) Location of Lease Files. The Lease Files
relating to each Series 1996-1 Lease are maintained at the
offices of the Administrative Agent.
(xxvii) No Delinquency. No Series 1996-1 Lease has
a Total Monthly Payment that was more than 30 days overdue
as of the Series 1996-1 Cut-Off Date.
(xxviii) No Extensions. No Term Extension or
Payment Extension had been granted to the Lessee under any
Series 1996-1 Lease prior to the Series 1996-1 Cut-Off
Date.
(xxix) Advance Payment Program. No Series 1996-1
Lease was originated under the Advance Payment Program.
(xxx) Other Data. The information relating to the
Series 1996-1 Leases and Series 1996-1 Leased Vehicles
contained in the Schedule of Series 1996-1 Assets attached
hereto as Exhibit A is true and correct in all material
respects and no selection procedures believed to be
adverse to the Holders of Series 1996-1 Certificates were
utilized in selecting the Series 1996-1 Assets.
(xxxi) Administrative Agency Agreement. The
representations and warranties made by the Administrative
Agent in the Administrative Agency Agreement are true and
correct.
(xxxii) True Lease. Each Series 1996-1 Lease is a
"true lease" for federal income tax purposes.
Section 3.3 Repurchase upon Breach. Each of Ford Credit and
Ford Credit Leasing shall inform the parties to this Agreement
promptly in writing, upon the discovery of any breach or failure to
be true of the representations and warranties made by it in Section
3.2(b). Unless the breach or failure to be true of the
representations and warranties contained in Section 3.2(b) shall
have been cured by the last day of the Accrual Period in which such
breach or failure either occurred or was discovered by Ford Credit
(in its capacity as a Contributor or in its capacity as
Administrative Agent) or Ford Credit Leasing each of the Contributors
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hereby agrees that such an occurrence shall constitute an event (a "Removal
Event") obligating the Contributors to (i) instruct Comerica and the
Administrative Agent, in the manner set forth in Section 4.7 of the
Administrative Agency Agreement, to cause the Series 1996-1 Certificates to no
longer represent a beneficial interest in such Series 1996-1 Lease and Series
1996-1 Leased Vehicle and (ii) cause to be deposited in the Series 1996-1
Collection Account on behalf of RCL Trust 1996-1 an amount in exchange therefor
equal to the Administrative Purchase Amount. The removal and payment
obligation of the Contributors pursuant to this Section 3.3 shall constitute
the sole remedy of RCL Trust 1996-1 against the Contributors with respect to
any Removal Event. Upon payment to the RCL Trustee of such Administrative
Purchase Amount with respect to a Series 1996-1 Asset, the Series 1996-1
Certificates shall no longer represent an interest in such asset.
ARTICLE IV
CONDITIONS
Section 4.1 Conditions to Obligation of RCL Trust 1996-1. The obligation
of RCL Trust 1996-1 to accept the contribution of the Series 1996-1
Certificateis subject to the satisfaction of the following conditions:
(a) Representations and Warranties True. The representations
and warranties of each of the contributors hereunder shall be true & correct
on the Closing Date with the same effect as if then made, and each Contributor
shall have performed all obligations to be performed by such Contributor
hereunder on or prior to the Closing Date.
(b) Delivery of Series 1996-1 Certificates and Schedule of
Series 1996-1 Assets. The Contributors shall deliver the Series 1996-1
Certificates registered in the name of the RCL Trustee and the Schedule of
Series 1996-1 Assets certified by an officer of the Administrative Agent to be
true, correct and complete.
(c) Documents to be delivered by the Contributors at the
Closing. (i) On or prior to the Closing Date, each Contributor shall record
and file, at
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its own expense, a UCC-1 financing statement in each jurisdiction in which
required by applicable law, executed by the Contributor, as seller naming the
RCL Trustee, as purchaser, and naming the Series 1996-1 Certificates and the
other property conveyed hereunder as the property sold, meeting the
requirements of the laws of each such jurisdiction and in such manner as is
necessary to perfect the sale, transfer, assignment and conveyance of such
property to the RCL Trustee. The Contributors shall deliver a file-stamped
copy of such filing, or other evidence satisfactory to the RCL Trustee, to the
RCL Trustee on or prior to the Closing Date.
(ii) Such other documents as the RCL Trustee may
reasonably request.
(d) Other Transactions. On or prior to the Closing Date (i)
each of the Basic Documents shall have been executed and delivered
by the parties thereto, and (ii) each of the parties to the Basic
Documents shall have performed all of their respective obligations
thereunder required to be performed on or prior to the Closing Date.
Section 4.2 Conditions to Obligation of the Contributors. The
obligation of each of the Contributors to contribute the Series
1996-1 Certificates to the RCL Trustee is subject to each
representation and warranty of the RCL Trustee hereunder being true
and correct on the Closing Date as if such representation and
warranty was then made, and each obligation to be performed by the
RCL Trustee by the Closing Date having been performed.
ARTICLE V
COVENANTS OF THE CONTRIBUTORS
Ford Credit and Ford Credit Leasing each hereby agrees with the
RCL Trustee as follows, provided, however, that to the extent that
any provision of this Article V conflicts with any provision of the
Administrative Agency Agreement, the Administrative Agency Agreement
shall govern:
Section 5.1 Protection of Right, Title and Interest. (a) Each
Contributor shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in
such manner
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and in such places as may be required by law fully to preserve, maintain, and
protect the interest of RCL Trust 1996-1 in the Series 1996-1 Certificates and
in the proceeds thereof. Each Contributor shall deliver (or cause to be
delivered) to the RCL Trustee file-stamped copies of, or filing receipts for,
any document filed as provided above, as soon as available following such
filing.
(b) Each Contributor 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 such Contributor in
accordance with Section 5.1(a) seriously misleading within the meaning of
Section 9-402(7) of the UCC, unless it shall have given the RCL Trustee at
least five days' prior written notice thereof and shall have promptly filed
appropriate amendments to all previously filed financing statements or
continuation statements.
(c) Each Contributor shall give the RCL Trustee at least 60
days' prior written notice of any relocation of its principal executive office
if, as a result of such relocation, the applicable provisions of the UCC would
require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement and shall promptly
file any such amendment. The Contributors shall cause the Administrative Agent
to at all times maintain each office from which it shall service FCTT Assets,
and its principal executive office, within the United States of America.
(d) If at any time either of the Contributors shall propose to
sell, grant a security interest in, or otherwise transfer any interest in any
other Series of Specified Beneficial Certificates to any prospective purchaser,
lender, or other transferee, such Contributor 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 Series 1996-1 Asset, shall indicate clearly that such
Series 1996-1 Asset is owned by Comerica as trustee for FCTT and that the
beneficial interest in such Series 1996-1 Asset has been transferred to RCL
Trust 1996-1.
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(e) The Contributors shall cause the Administrative Agent to
permit the RCL Trustee and its agents (or any agents of any assignee
of the RCL Trustee contemplated by the Basic Documents) at any time
during normal business hours to inspect, audit, and make copies of
and abstracts from the Administrative Agent's records regarding any
Series 1996-1 Asset.
(f) Upon request of the RCL Trustee, the Contributors shall
cause the Administrative Agent to furnish to the RCL Trustee, within twenty
Business Days, a list of all Series 1996-1 Leases or Series 1996-1 Leased
Vehicles (by vehicle registration number and account number), together with a
reconciliation of such list to the Schedule of Series 1996-1 Leases.
Section 5.2 Other Liens or Interests. Except for the
conveyances hereunder and pursuant to the other Basic Documents,
each of the Contributors will not sell, pledge, assign or transfer
to any other Person, or grant, create, incur, assume or suffer to
exist any Lien on any interest therein, and each of the Contributors
shall defend the right, title, and interest of the RCL Trustee in,
to and under such Series 1996-1 Leases or Series 1996-1 Leased
Vehicles against all claims of third parties claiming through or
under such Contributor; provided, however, that the Contributors'
obligations under this Section 5.2 shall terminate upon the
termination of FCTT pursuant to the FCTT Agreement.
Section 5.3 Costs and Expenses. The Contributors agree to pay
all reasonable costs and disbursements in connection with the
perfection, as against all third parties, of the RCL Trustee's
right, title and interest in and to the Series 1996-1 Certificates.
Section 5.4 Indemnification. (a) Each Contributor shall
defend, indemnify, and hold harmless RCL Trust 1996-1 and the RCL
Trustee from and against any and all costs, expenses,
losses, damages, claims, and liabilities, arising out of or
resulting from the failure of a Series 1996-1 Lease or Series 1996-1
Leased Vehicle to be originated in compliance with all requirements
of law and for any breach of any of the Contributors'
representations and warranties contained herein.
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(b) Each Contributor shall defend, indemnify, and hold harmless
RCL Trust 1996-1 and the RCL Trustee from and against any and all costs,
expenses, losses, damages, claims, and liabilities, arising out of or resulting
from the use or operation by such Contributors or any affiliate of such
contributor or any Dealer of a Series 1996-1 Leased Vehicle.
(c) Each Contributor shall defend, indemnify, and hold harmless
RCL Trust 1996-1 and the RCL Trustee from and against any and all taxes that
may at any time be asserted against RCL Trust 1996-1 and the RCL Trustee with
respect to the transactions contemplated herein, including, without limitation,
any sales, use, gross receipts, general corporation, tangible personal
property, privilege, license or income taxes, taxes on or measured by income,
or any state or local taxes assessed on RCL Trust 1996-1 and the RCL Trustee
resulting from the location of assets of RCL Trust 1996-1 or the presence of
the RCL Trustee and costs and expenses in defending against the same; provided,
however, that the foregoing indemnity shall not include income taxes on any
fees payable to the RCL Trustee.
(d) Each Contributor shall defend, indemnify, and hold harmless
the RCL Trustee 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 RCL Trust 1996-1 and the
RCL Trustee through, the negligence, willful misfeasance, or bad faith of the
Contributors in the performance of their duties under the Agreement or by
reason of reckless disregard of the Contributors' obligations and duties under
the Agreement.
These indemnity obligations shall be in addition to any obligation that
each Contributor may otherwise have.
Section 5.5 Absolute Transfer; Sale or Exchange. Each Contributor agrees
to treat this conveyance for all purposes (including without limitation tax and
financial accounting purposes) as an absolute transfer; which may be either a
sale or exchange on all relevant books, records, tax returns, financial
statements and other applicable documents; provided that for federal
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income tax purposes the Contributors will treat RCL Trust 1996-1 as a grantor
trust.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1 Obligations of Contributors. The obligations of each of the
Contributors under this Agreement shall not be affected by reason of any
invalidity, illegality or irregularity of any Series 1996-1 Asset.
Section 6.2 Acknowledgements. Each Contributor acknowledges that: (a)
Lease Trust. The RCL Trustee will, pursuant to the Transfer Agreement,
transfer the Series 1996-1 Certificates to the Lease Trust and assign its
rights under this Agreement to the Lease Trustee for the benefit of the holders
of the Senior Notes, the Subordinated Notes and the Lease Trust Certificates
and that the representations and warranties contained in this Agreement and the
rights of the RCL Trustee under Sections 3.3 and 5.4 are intended to benefit
such Lease Trust, any holders of Senior Notes, Subordinated Notes or Lease
Trust Certificates and the Indenture Trustee as assignee of the Lease Trustee
pursuant to the terms of the Indenture.
(b) Assignment. The RCL Trustee will, pursuant to the RCL
Assignment Agreement, assign, transfer and convey to Ford Credit Leasing a 1%
interest in the RCL Assets and all of the obligations of RCL Trust 1996-1,
including its rights and obligations under the Program Operating Lease and the
Subordinated Notes and any amounts payable to RCL Trust 1996-1 pursuant to the
Transfer Agreement. After giving effect to such assignment, transfer and
conveyance, Ford Credit Leasing's percentage beneficial interest in RCL Trust
1996-1 will be reduced from 2% to the percentage equivalent of a fraction the
numerator of which is 1, and the denominator of which is 99, and Ford Credit's
percentage beneficial interest in RCL Trust 1996-1 will be increased from 98%
to the percentage equivalent of a fraction, the numerator of which is 98, and
the denominator of which is 99.
(c) Distribution. After the effective date of the RCL
Assignment Agreement, any distribution of property of RCL Trust 1996-1 to Ford
Credit and Ford
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Credit Leasing, as beneficiaries of RCL Trust 1996-1, shall give effect to the
RCL Assignment Agreement as provided in Section 5.2(b) of the RCL Trust
Agreement, such that an amount equal to 1% of the aggregate amount of such
distribution shall be distributed to Ford Credit Leasing, and the remaining 99%
of such aggregate amount shall be distributed to Ford Credit and Ford Credit
Leasing in proportion to their respective percentage beneficial interests in
RCL Trust 1996-1, after giving effect to the RCL Assignment Agreement, as set
forth in Section 6.2(b).
Section 6.3 Amendment. This Agreement may be amended by the parties
hereto at any time; provided, however, that such action shall not, (x) as
evidenced by an Opinion of Counsel, materially adversely affect the interests
of the Senior Noteholders or Lease Trust Certificateholders (unless 100% of the
Senior Noteholders and Lease Trust Certificateholders materially adversely
affected thereby consent thereto), (y) as confirmed by each Rating Agency
rating the Senior Notes or the Lease Trust Certificates, cause the then current
rating of any Class of Senior Notes or the Lease Trust Certificates to be
withdrawn or reduced and (z) as evidenced by an Opinion of Counsel, cause the
Lease Trust, RCL Trust 1996-1 or FCTT to be classified as an "association" (or
publicly traded partnership) taxable as a corporation for federal income tax
purposes.
Section 6.4 Waivers. No failure or delay on the part of the RCL Trustee
in exercising any power, right or remedy under this Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of any such power,
right or remedy preclude any other or further exercise thereof or the exercise
of any other power, right or remedy.
Section 6.5 Costs and Expenses. The Contributors will pay all expenses
incident to the performance of their obligations under this Agreement and the
Contributors agree to pay all reasonable out-of-pocket costs and expenses of
the RCL Trustee, including fees and expenses of counsel, in connection with the
perfection as against third parties of the RCL Trustee's right, title and
interest in and to the Series 1996-1 Assets and the enforcement of any
obligation of the Contributors hereunder.
17
<PAGE> 21
Section 6.6 Representations of the Contributors and the RCL
Trustee. The respective agreements, representations, warranties and
other statements by each of the Contributors and the RCL Trustee 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.
Section 6.7 Confidential Information. The RCL Trustee agrees
that it will neither use nor disclose to any person the names and
addresses of the Lessees, except in connection with the enforcement
of the RCL Trustee's rights hereunder, under the Series 1996-1
Leases and Series 1996-1 Leased Vehicles, under the Administrative
Agency Agreement or as required by law.
Section 6.8 Notices. All demands, notices and communications
upon or to Ford Credit, Ford Credit Leasing and the RCL Trustee
shall be in writing, and shall be personally delivered, sent by
electronic facsimile or overnight delivery service or mailed by
certified mail-return receipt requested, and shall be deemed to have
been duly given to the intended recipient upon receipt at the
respective addresses listed below, or at such other address as shall
be designated by such Person in a written notice to the other
parties to this Agreement.
(i) In the case of Ford Credit:
Ford Motor Credit Company
The American Road
FMCC Building
Dearborn, Michigan 48121
Attention: Secretary
Fax: 313-337-1160
Telephone: 313-594-7765
(ii) In the case of Ford Credit Leasing:
Ford Credit Leasing Company, Inc.
The American Road
FMCC Building
Dearborn, Michigan 48121
Attention: Treasurer
Fax: 313-594-0735
Telephone: 313-845-4072
18
<PAGE> 22
(iii) In the case of RCL Trust 1996-1:
c/o First Union Bank of Delaware
One Rodney Square
920 King Street
Wilmington, Delaware 19801
Attention: Trust Department
with a copy to:
First Union National Bank of North Carolina
230 South Tryon Street CMC-9
Charlotte, North Carolina 28288
Attention: Pablo de La Canal
Section 6.9 Severability. 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 Series 1996-1
Certificates or the rights of the holders thereof.
Section 6.10 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 one and the same instrument.
Section 6.11 Successors and Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors and
permitted assigns, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by a party
hereto shall bind the successors and assigns of such party.
Section 6.12 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 6.13 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE
19
<PAGE> 23
STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.
20
<PAGE> 24
IN WITNESS WHEREOF, the parties hereby have caused this Asset
Contribution Agreement to be executed by their respective officers thereunto
duly authorized as of the date and year first above written.
FORD MOTOR CREDIT COMPANY,
as a Contributor
By: ____________________________
Name: Hurley D. Smith
Title: Secretary
FORD CREDIT LEASING COMPANY,
INC., as a Contributor
By: ____________________________
Name:
Title:
RCL TRUST 1996-1
By: First Union Bank of Delaware,
not in its individual capacity,
but solely as RCL Trustee
By: ____________________________
Name:
Title:
<PAGE> 25
Exhibit A
Schedule of Series 1996-1 Assets
A-1
<PAGE> 26
Exhibit B
Form of Series 1996-1 Lease
B-1
<PAGE> 1
EXHIBIT 10.5
TRANSFER AGREEMENT
dated as of
November __, 1996
between
RCL TRUST 1996-1,
as Transferor,
and
PNC BANK, DELAWARE,
as Trustee of Ford Credit Auto Lease Trust 1996-1,
as Transferee
<PAGE> 2
TABLE OF CONTENTS
Page
----
Section 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Transfer of Series 1996-1 Certificates . . . . . . . . . . . 1
Section 3. Transferor's Warranty; Reservation
of Security Interest . . . . . . . . . . . . . . . . . . . . 2
Section 4. Assignment of Rights . . . . . . . . . . . . . . . . . . . . 3
Section 5. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 6. Confidential Information . . . . . . . . . . . . . . . . . . 3
Section 7. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 8. Signature Constitutes Acceptance . . . . . . . . . . . . . . 4
Section 9. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 10. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 4
<PAGE> 3
TRANSFER AGREEMENT, dated as of November __, 1996, between RCL TRUST
1996-1, as Transferor (the "Transferor"), and PNC BANK, DELAWARE, acting not in
its individual capacity but solely as trustee of Ford Credit Auto Lease Trust
1996-1, as Transferee (the "Transferee").
WHEREAS, the Series 1996-1 Certificates have been contributed to the
Transferor;
WHEREAS, the Transferor and the Transferee wish to set forth the terms
pursuant to which the Series 1996-1 Certificates are to be transferred by the
Transferor to the Transferee;
WHEREAS, immediately following such transfer, the Transferee intends first
to grant to The Chase Manhattan Bank, in its capacity as Indenture Trustee
under the Indenture dated as of November __, 1996 entered into with the
Transferee, a security interest in the Series 1996-1 Certificates and then,
subject to such security interest, grant to the Transferor the right to the use
of, and proceeds from, the Series 1996-1 Certificates for the term set forth
in, and pursuant to the terms and conditions of, the Program Operating Lease
between the Transferee and the Transferor;
NOW, THEREFORE, the Transferor and the Transferee agree as follows:
Section 1. Definitions. Whenever used in this Agreement capitalized terms
have the meanings assigned to them herein or, if not defined herein, as defined
in Appendix A attached hereto. To the extent that the definitions set forth
herein conflict with the definitions set forth in Appendix A, or incorporated
by reference therein, the definitions set forth herein shall be controlling.
"Agreement" means this Transfer Agreement.
"Transfer Price" means the Series 1996-1 Asset Amount net of any purchase
discount and underwriting commissions.
Section 2. Transfer of Series 1996-1 Certificates. (a) In consideration of
the Transfer Price paid
1
<PAGE> 4
by the Transferee to the Transferor, and other good and valuable consideration,
receipt of which is hereby acknowledged, the Transferor does hereby grant,
convey, bargain, assign, transfer, deliver, and set over to the Transferee, its
successors and assigns, all of the Transferor's right, title and interest in
and to the Series 1996-1 Certificates, to have and to hold the same unto the
Transferee, its successors and assigns, forever.
(b) An amount equal to the Transfer Price payable by delivery of (1) the
Class A-1 ___% Asset Backed Notes of the Transferee with a principal balance of
$_________, (2) the Class A-2 ___% Asset Backed Notes of the Transferee with a
principal balance of $_________, (y) the ___% Subordinated Asset Backed Notes
of the Transferee with a principal balance of $_________ and (z) the ___% Asset
Backed Lease Trust Certificates of the Transferee with a principal balance of
$_________, shall be paid by the Transferee to the Transferor on the Closing
Date.
(c) The Transferor agrees to pay on behalf of the Transferee expenses
consisting of accounting, printing and rating agency fees incurred in
connection with the offering of the Notes and the Lease Trust Certificates by
the Transferee, such amounts to be treated as a contribution by the Transferor
to the Transferee.
Section 3. Transferor's Warranty; Reservation of Security Interest. (a)
The Transferor does hereby warrant to the Transferee, its successors and
assigns that (i) it is the true and lawful owner of the Series 1996-1
Certificates and has the legal right to transfer the Series 1996-1
Certificates; (ii) it has good and valid title to the Series 1996-1
Certificates and that the Series 1996-1 Certificates are on the date hereof
free and clear of all Liens; (iii) good, valid and indefeasible title to the
Series 1996-1 Certificates is hereby conveyed to the Transferee; and (iv) the
Transferor will warrant and defend such title against the claims of all
Persons.
(b) To the extent that the conveyance of the Series 1996-1 Certificates
hereunder is characterized by a court or similar Governmental Authority as a
financing, it is intended by the Transferor and the Transferee that the
interest conveyed hereunder constitute a grant of a
2
<PAGE> 5
security interest under the UCC as in effect in the State of New York by the
Transferor to the Transferee to secure a loan by the Transferee of the Transfer
Price to the Transferor. The Transferor hereby grants to the Transferee a
first priority security interest in and against all of the Transferor's right,
title and interest in and to the Series 1996-1 Certificates. To the extent
that the conveyance of the Series 1996-1 Certificates hereunder is
characterized by a court or similar Governmental Authority of competent
jurisdiction as a financing, the parties hereto agree that this Agreement
constitutes a "security agreement" under all applicable laws.
Section 4. Assignment of Rights. The Transferor hereby assigns, transfers
and sets over unto the Transferee all of the Transferor's right, title and
interest in and to the Asset Contribution Agreement, including, without
limitation, all rights of the Transferor, as Holder of the Series 1996-1
Certificates, under the Administrative Agency Agreement and the Series 1996-1
Supplement. Such transfer and assignment includes, without limitation, all
rights, powers and remedies of the Transferor under the Asset Contribution
Agreement and as Holder of the Series 1996-1 Certificates, including any rights
to indemnity or other payments thereunder.
Section 5. Waivers. No failure or delay on the part of the Transferee in
exercising any power, right or remedy under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or remedy preclude any other or further exercise thereof or the exercise
of any other power, right or remedy.
Section 6. Confidential Information. The Transferee agrees that it will
neither use nor disclose to any person the names and addresses of the Lessees
under the Series 1996-1 Leases and Series 1996-1 Leased Vehicles, except in
connection with the enforcement of the Transferee's rights hereunder, under the
Administrative Agency Agreement or as required by law.
Section 7. 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 one
and the same instrument.
3
<PAGE> 6
Section 8. Signature Constitutes Acceptance. By signing this Agreement,
the Transferee hereby acknowledges receipt of and accepts the Series 1996-1
Certificates and the Transferor hereby acknowledges receipt of the Transfer
Price thereof.
Section 9. Headings. The headings of the various Sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
SECTION 10. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF
LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
4
<PAGE> 7
IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
and year first above written.
RCL TRUST 1996-1
By: FIRST UNION BANK OF DELAWARE, not in
its individual capacity, but solely
as trustee of RCL Trust 1996-1, as
Transferor
By: ______________________________
Name:
Title:
PNC BANK, DELAWARE, not in its
individual capacity, but solely as
trustee of Ford Credit Auto Lease Trust
1996-1, as Transferee
By: ______________________________
Name:
Title:
<PAGE> 1
EXHIBIT 10.6
[PROGRAM OPERATING LEASE]
CERTAIN RIGHTS OF THE PROGRAM LESSOR UNDER THIS AGREEMENT AND IN THE SERIES
1996-1 CERTIFICATES COVERED HEREBY HAVE BEEN ASSIGNED TO, AND ARE SUBJECT TO A
SECURITY INTEREST IN FAVOR OF, THE CHASE MANHATTAN BANK AS INDENTURE TRUSTEE
UNDER AN INDENTURE, DATED AS OF NOVEMBER __, 1996. THIS AGREEMENT HAS BEEN
EXECUTED IN MULTIPLE COUNTERPARTS. NO SECURITY INTEREST IN THE PROGRAM
LESSOR'S RIGHT, TITLE AND INTEREST IN AND TO THIS AGREEMENT MAY BE CREATED
THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL
COUNTERPART. THIS IS NOT THE ORIGINAL COUNTERPART UNLESS IT IS SEPARATELY
MARKED "ORIGINAL" AND BEARS THE MANUALLY-SIGNED RECEIPT OF THE INDENTURE
TRUSTEE.
________________________________________________________________________________
AGREEMENT
dated as of November __, 1996
between
RCL TRUST 1996-1,
as Program Lessee
and
PNC BANK, DELAWARE,
as trustee of Ford Credit Auto Lease Trust 1996-1,
as Program Lessor
________________________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
LEASE OF CERTIFICATES
Section 2.1 Lease of Series 1996-1 Certificates . . . . . . . . . . . . 3
ARTICLE III
TERM AND PAYMENTS
Section 3.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.2 Payments . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 3.3 Form of Payment . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.4 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.5 Cash Collateral Account . . . . . . . . . . . . . . . . . . 4
Section 3.6 Release of Cash Collateral Account
Property . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 6
ARTICLE IV
UNCONDITIONAL OBLIGATION
Section 4.1 Unconditional Obligation . . . . . . . . . . . . . . . . . . 7
ARTICLE V
RETURN OF THE SERIES 1996-1 CERTIFICATES
Section 5.1 Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.2 No Liens upon Return . . . . . . . . . . . . . . . . . . . . 9
ARTICLE VI
WARRANTY OF THE PROGRAM LESSOR;
ASSIGNMENT AND PLEDGE OF SERIES 1996-1 CERTIFICATES,
RELATED ACCOUNTS AND SUBORDINATED NOTES
Section 6.1 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . 9
i
<PAGE> 3
Page
Section 6.2 Program Lessee's Rights . . . . . . . . . . . . . . . . . . . 9
Section 6.3 Assignment and Pledge of Series 1996-1 Certificates,
Series 1996-1 Collection Account, Series 1996-1
Payahead Account and Cash Collateral Account . . . . . . . . 10
Section 6.4 Assignment and Pledge of Subordinated Notes . . . . . . . . 10
Section 6.5 Deposits to Cash Collateral Account in Respect of
Subordinated Notes . . . . . . . . . . . . . . . . . . . . 11
Section 6.6 Application of Subordinated Note Payments . . . . . . . . . 11
ARTICLE VII
LIENS; LOCATION AND INSPECTION
Section 7.1 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.2 Change of Location . . . . . . . . . . . . . . . . . . . . . 12
Section 7.3 Inspection and Information . . . . . . . . . . . . . . . . 12
ARTICLE VIII
NO SUBLEASE OR RENEWAL
Section 8.1 No Rights to Sublease or Renew . . . . . . . . . . . . . . 13
ARTICLE IX
PROGRAM LESSEE PURCHASE OPTION
Section 9.1 Program Lessee's Option to Purchase . . . . . . . . . . . . 13
Section 9.2 Transferor Purchase Option Net Proceeds . . . . . . . . . . 14
ARTICLE X
LEASE EVENTS OF DEFAULT
Section 10.1 Lease Events of Default . . . . . . . . . . . . . . . . . . 14
ii
<PAGE> 4
Page
ARTICLE XI
REMEDIES
Section 11.1 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 11.2 No Release . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 11.3 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . 18
Section 11.4 Exercise of Other Rights or Remedies . . . . . . . . . . . 18
ARTICLE XII
ASSIGNMENT OF LEASE
Section 12.1 Program Lessee's Consent to Assignment
by Program Lessor . . . . . . . . . . . . . . . . . . . . . 18
Section 12.2 Program Lessor's Consent to Assignment
by Program Lessee . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 13.2 Distribution of Series 1996-1 Assets . . . . . . . . . . . 20
Section 13.3 Termination of Administrative Agent . . . . . . . . . . . . 21
Section 13.4 Successors and Assigns . . . . . . . . . . . . . . . . . . 21
Section 13.5 Right to Perform for Program Lessee . . . . . . . . . . . . 21
Section 13.6 Amendments . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 13.7 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 13.8 Severability of Provisions . . . . . . . . . . . . . . . . 22
Section 13.9 Original . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 13.10 Single Transaction . . . . . . . . . . . . . . . . . . . . 23
Section 13.11 Headings . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 13.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 23
Section 13.13 Counterpart Execution and Dating . . . . . . . . . . . . . 23
Section 13.14 Concerning the Program Lessor and the Program Lessee . . . 23
Exhibit A Form of Letter to Lease Trust Paying Agent
iii
<PAGE> 5
This agreement, dated as of November __, 1996 (this "Program Operating
Lease"), between (i) PNC BANK, DELAWARE, a Delaware corporation, not in its
individual capacity but solely as trustee of Ford Credit Auto Lease Trust
1996-1 (the "Program Lessor") and (ii) RCL TRUST 1996-1 (the "Program Lessee").
W I T N E S S E T H :
WHEREAS, the Series 1996-1 Certificates (such term and other capitalized
terms used herein without definition having the meanings as provided in Article
I hereof) evidence the beneficial interest in the Series 1996-1 Assets,
including the right to receive any lease payments in connection with the Series
1996-1 Leases and any proceeds from the disposition of Series 1996-1 Leased
Vehicles;
WHEREAS, pursuant to that certain Transfer Agreement between RCL Trust
1996-1 and the Lease Trust, the Series 1996-1 Certificates have been
transferred to the Program Lessor;
WHEREAS, pursuant to the Indenture, the Program Lessor has granted a
security interest in the Series 1996-1 Certificates to The Chase Manhattan
Bank, as Indenture Trustee;
WHEREAS, the Program Lessee desires to obtain certain rights in and to the
Series 1996-1 Certificates from the Program Lessor, including all rights to
payment and distribution on the Series 1996-1 Certificates during the term
hereof, and the Program Lessor is willing to grant to the Program Lessee such
rights in and to the Series 1996-1 Certificates for the period specified herein
on the terms and conditions set forth herein; and
WHEREAS, the Program Lessee is willing to assign and pledge certain rights
in and to the Series 1996-1 Certificates, related accounts and the Subordinated
Notes to the Program Lessor to secure its obligations under this Program
Operating Lease.
NOW, THEREFORE, the Program Lessor and the Program Lessee hereto agree as
follows:
<PAGE> 6
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Whenever used in this Program Operating Lease
capitalized terms have the meanings assigned to them herein or, if not defined
herein, as defined in Appendix A attached hereto. To the extent that the
definitions set forth herein conflict with the definitions set forth in
Appendix A, or incorporated by reference therein, the definitions set forth
herein shall be controlling.
"Lease Term" has the meaning set forth in Section 3.1.
"Notice of Lease Event of Default" has the meaning set forth in Section
11.1.
"Permitted Liens" means the respective rights and interests of the Program
Lessor and the Indenture Trustee in the Series 1996-1 Certificates and this
Program Operating Lease pursuant to the terms of the Basic Documents, including
the rights of any permitted assignee of the Program Lessor or the Indenture
Trustee.
"Program Operating Lease Termination Date" means the termination date of
this Program Operating Lease, which shall be earlier of (i) 240 days after the
latest Scheduled Lease End Date of any Series 1996-1 Lease and (ii) the
termination of the Program Operating Lease pursuant to Section 11.1(a).
Notwithstanding the Program Operating Lease Termination Date, this Program
Operating Lease will expire with respect to any right to receive payments on
the Series 1996-1 Certificates relating to each Series 1996-1 Leased Vehicle
immediately preceding the earlier of (i) the sale of such Series 1996-1 Leased
Vehicle, but only if such sale occurs on or after the related Scheduled Lease
End Date and (ii) the date on which a Sale Proceeds Advance is made with
respect to such Series 1996-1 Leased Vehicle.
"Program Operating Lease Termination Value" means, as of any Payment Date,
an amount equal to the sum of (i) any interest due and payable on the Senior
Notes, the Subordinated Notes and the Lease Trust Certificates, (ii) the
Outstanding Amount of the Senior Notes and the Subordinated Notes and the
Aggregate Certificate Balance
2
<PAGE> 7
of the Lease Trust Certificates and (iii) any other amounts payable by the
Program Lessor under the Basic Documents.
ARTICLE II
LEASE OF CERTIFICATES
Section 2.1 Lease of Series 1996-1 Certificates. Subject to the terms and
conditions hereof, the Program Lessor hereby agrees to lease to the Program
Lessee, and the Program Lessee hereby agrees to lease from the Program Lessor,
for the Lease Term referred to in Section 3.1, the Series 1996-1 Certificates,
including all rights to payment of money on the Series 1996-1 Certificates
during the Lease Term; provided, however, that this Program Operating Lease is
subject to the prior security interest granted pursuant to the Indenture by the
Program Lessor to The Chase Manhattan Bank, as Indenture Trustee.
ARTICLE III
TERM AND PAYMENTS
Section 3.1 Term. The term of this Program Operating Lease (the "Lease
Term") shall begin on the Closing Date and shall end on the earlier of the date
on which (a) all assets of the Program Lessee have been applied to pay its
obligations under the Basic Documents and (b) the Lease Trust Certificates and
the Program Lessee's obligations under the Basic Documents are paid in full.
Section 3.2 Payments. (a) On or before the Business Day preceding each
Payment Date during the Lease Term, the Program Lessee shall pay the Required
Interest Payment due with respect to such Payment Date to the Program Lessor.
(b) In addition to the Required Interest Payment payable by the Program
Lessee to the Program Lessor pursuant to Section 3.2(a), the Program Lessee
shall pay the Additional Payment to the Program Lessor on or before each
Payment Date.
3
<PAGE> 8
(c) On any Payment Date, the Required Interest Payment and the Additional
Payment shall be deemed to have been made by the Program Lessee to the extent
that an amount equal to such Required Interest Payment and Additional Payment
has been withdrawn by the Indenture Trustee or the Lease Trustee from amounts
deposited in the Cash Collateral Account.
Section 3.3 Form of Payment. All payments due under this Program Operating
Lease shall be made to the Program Lessor in immediately available funds prior
to 11:00 A.M., New York City time on the applicable Payment Date.
Section 3.4 Tax Treatment. The Program Lessor and Program Lessee agree to
treat the Series 1996-1 Certificates as being owned by the Program Lessee and,
following the execution of the RCL Assignment Agreement, Ford Credit Leasing
for federal and State income and franchise tax purposes and further agree that
the Program Lessee and Ford Credit Leasing are intended to be the owners of the
Series 1996-1 Certificates for federal and State income and franchise tax
purposes.
Section 3.5 Cash Collateral Account. (a) In order to assure that each
Required Interest Payment and Additional Payment is made on or prior to each
Payment Date, the Program Lessee shall establish and maintain an account (the
"Cash Collateral Account") at an Eligible Institution in the name of the
Indenture Trustee until the Outstanding Amount of the Senior Notes has been
reduced to zero and thereafter in the name of the Lease Trustee. The Cash
Collateral Account shall be under the sole dominion and control of the
Indenture Trustee until the Outstanding Amount of the Senior Notes has been
reduced to zero, and thereafter, under the sole dominion and control of the
Lease Trustee. On the Closing Date, the Program Lessee shall deposit the
Initial Cash Collateral Deposit into the Cash Collateral Account. The Cash
Collateral Account shall not be property of the Program Lessor. All amounts on
deposit in and credited to the Cash Collateral Account, including the Initial
Cash Collateral Deposit and all proceeds thereof (such amounts, the "Cash
Collateral Account Property") shall be invested by the Indenture Trustee until
the Outstanding Amount of the Senior Notes has been reduced to zero, and
thereafter by the Lease Trustee, and at the direction of
4
<PAGE> 9
Ford Credit and Ford Credit Leasing, in Cash Collateral Account Investments.
All investment earnings on amounts deposited to the Cash Collateral Account
shall be credited to the Cash Collateral Account, and losses, if any, resulting
from Cash Collateral Account Investments shall be charged to the Cash
Collateral Account. All such investment income shall be reported for federal
income tax purposes as being earned (i) 99% by RCL Trust 1996-1 and (ii) 1% by
Ford Credit Leasing; the 99% accruing to RCL Trust 1996-1 shall be reported by
Ford Credit and Ford Credit Leasing in accordance with their respective
Percentage Interests in RCL Trust 1996-1. If the institution at which the Cash
Collateral Account is maintained ceases to be an Eligible Institution, then the
Cash Collateral Account shall be moved to an Eligible Institution within ten
Business Days (or such longer period not to exceed 30 calendar days as to which
each Rating Agency may consent).
(b) The Program Lessor agrees that:
(i) pursuant to Section 5.2(e) of the Series 1996-1 Supplement, on or
prior to the Business Day preceding each Payment Date, the Administrative
Agent shall deposit the Cash Collateral Deposit Amount into the Cash
Collateral Account;
(ii) pursuant to Section 8.2(d) of the Indenture, on or prior to the
Business Day preceding each Payment Date, the Indenture Trustee until the
Outstanding Amount of the Senior Notes has been reduced to zero, and
thereafter the Lease Trustee, shall deposit all investment earnings, if any,
on amounts deposited to the Certificate Distribution Account, including any
proceeds thereof, net of losses, if any, resulting from Permitted Investments
in the Certificate Distribution Account, into the Cash Collateral Account;
(iii) pursuant to Section 6.5 of this Program Operating Lease, on each
Payment Date, the Lease Trust Paying Agent shall deposit any payments
received on the Subordinated Notes into the Cash Collateral Account; and
(iv) pursuant to Section 9.2 of this Program Operating Lease, on the
Business Day preced-
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ing each Payment Date, or on each Business Day if each Monthly Remittance
Condition has not been satisfied, the Program Lessee shall deposit or cause
to be deposited any Transferor Purchase Option Net Proceeds into the Cash
Collateral Account until the aggregate cumulative amount deposited into the
Cash Collateral Account in respect of such proceeds equals $______.
All such amounts shall be considered Cash Collateral Account Property subject
to the security interests of the Program Lessor and the Indenture Trustee.
(c) The Program Lessor agrees that the Indenture Trustee shall, (i)
pursuant to Section 8.4(a) of the Indenture, on the Business Day preceding each
Payment Date withdraw from the Cash Collateral Account the Cash Collateral
Required Draw Amount and (ii) pursuant to Section 8.4(c) of the Indenture, on
each Payment Date withdraw from the Cash Collateral Account the Cash Collateral
Additional Draw Amount.
(d) In the event of a Lease Event of Default, any amounts on deposit in the
Cash Collateral Account shall be applied to pay any amounts due and owing
pursuant to Sections 11.1(c) and 11.1(d).
(e) Any Cash Collateral Account Property remaining at the end of the Lease
Term, after payment in full of all Required Interest Payments and Additional
Payments due hereunder and after payment in full to the Administrative Agent of
all outstanding Monthly Payment Advances and Sale Proceeds Advances pursuant to
Section 5.4 of the Series 1996-1 Supplement, shall be released to the Program
Lessee.
Section 3.6 Release of Cash Collateral Account Property. At the close of
business on the Payment Date on which the Lease Trust Certificates and the
Program Lessee's obligations under the Basic Documents (other than the
obligation to make any further or past due Required Interest Payments or
Additional Payments hereunder) have been paid in full, the Program Lessor shall
release to the Program Lessee all of the Program Lessor's right, title and
interest in, to, and under any remaining Cash Collateral Account Property and
the Program Lessee shall have no obligation to make any further or past due
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Required Interest Payments or Additional Payments hereunder.
ARTICLE IV
UNCONDITIONAL OBLIGATION
Section 4.1 Unconditional Obligation. The Program Lessee hereby
acknowledges and agrees that the obligation of the Program Lessee to pay all
Required Interest Payments and Additional Payments due hereunder and any
required Program Operating Lease Termination Value, and the rights of the
Program Lessor in and to such Required Interest Payments and Additional
Payments and Program Operating Lease Termination Value, shall be absolute and
unconditional and shall not be affected by any circumstance of any character,
including, without limitation,
(a) any set-off, abatement, counterclaim, suspension, recoupment,
reduction, defense or other right or claim which the Program Lessee may have
against the Program Lessor, the Indenture Trustee, in its individual capacity
or as Indenture Trustee, any holder of a Senior Note, Subordinated Note or
Lease Trust Certificate, or any other Person for any reason whatsoever;
(b) the breach or failure of any warranty or representation made in, or the
failure to perform or comply with any of the terms of, this Program Operating
Lease by the Program Lessor, the Indenture Trustee, any holder (other than the
Program Lessee) of a Senior Note, Subordinated Note or Lease Trust Certificate
or any other Person;
(c) any amendment or other change of, or any assignment of rights under,
this Program Operating Lease or any other Basic Document, or any waiver, action
or inaction under or in respect of this Program Operating Lease, or any
exercise or non-exercise of any right or remedy under this Program Operating
Lease, including, without limitation, the exercise of any foreclosure or other
remedy under the Indenture, this Program Operating Lease or the sale of the
Series 1996-1 Certificates, or any part thereof or any interest therein;
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(d) any insolvency, bankruptcy or similar law affecting creditors' rights
generally;
(e) any claims as a result of any other business dealings by the Program
Lessor, the Program Lessee or any Affiliate thereof, or the Indenture Trustee;
(f) any defect in or any Lien on the title to the Series 1996-1
Certificates or any part thereof;
(g) any change, waiver, extension, indulgence or other act or omission in
respect of any obligation or liability of the Program Lessor or the Program
Lessee;
(h) any alleged failure on the part of the Program Lessor to perform or
comply with any of the terms hereof or any other agreement;
(i) any invalidity or unenforceability or disaffirmance of this Program
Operating Lease or any provision hereof or any of the other Basic Documents;
(j) any assignment, novation, merger, consolidation, sale or transfer of
assets, leasing or other similar transaction of or affecting the Program Lessee
or Program Lessor, whether with or without the approval of the Indenture
Trustee except as expressly provided in this Program Operating Lease; or
(k) any other circumstance or happening whatsoever whether or not similar
to any of the foregoing.
Each Required Interest Payment and Additional Payment made by the Program
Lessee hereunder shall be final and, absent manifest error, the Program Lessee
shall not seek to have any right to recover all or any part of such payment
from the Program Lessor or any other Person for any reason whatsoever. The
Program Lessee hereby waives, to the extent permitted by Applicable Law, any
and all rights which it may now have or which at any time hereafter may be
conferred upon it, by statute or otherwise, to terminate, cancel, quit or
surrender this Program Operating Lease except in accordance with the express
terms hereof.
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ARTICLE V
RETURN OF THE SERIES 1996-1 CERTIFICATES
Section 5.1 Delivery. The Series 1996-1 Certificates will be delivered to
the Program Lessor in connection with the execution of the Transfer Agreement
and then immediately delivered to the Indenture Trustee. Thereafter, until the
lien of the Indenture is released, the Indenture Trustee will maintain physical
possession of the Series 1996-1 Certificates for the benefit of the Senior
Noteholders; provided that the Program Lessee will continue to have all rights
with respect to the Series 1996-1 Certificates set forth in this Program
Operating Lease. To the extent the Program Lessee has physical possession of
the Series 1996-1 Certificates, then at the end of the Lease Term the Program
Lessee shall deliver the Series 1996-1 Certificates to the Program Lessor.
Section 5.2 No Liens upon Return. At the time of return of the Series
1996-1 Certificates by the Program Lessee each Series 1996-1 Certificate shall,
at the cost and expense of the Program Lessee, be free and clear of all Liens
(other than any Permitted Liens).
ARTICLE VI
WARRANTY OF THE PROGRAM LESSOR;
ASSIGNMENT AND PLEDGE OF SERIES 1996-1 CERTIFICATES,
RELATED ACCOUNTS AND SUBORDINATED NOTES
Section 6.1 Quiet Enjoyment. The Program Lessor warrants that during the
Lease Term, so long as no Lease Event of Default shall have occurred and be
continuing, the Program Lessee's receipt of the benefits of the payments on the
Series 1996-1 Certificates (subject to the pledge under this Program Operating
Lease and to the lien of the Indenture) shall not be interrupted by the Program
Lessor or any Person claiming by, through or under the Program Lessor.
Section 6.2 Program Lessee's Rights. So long as no Lease Event of Default
shall have occurred and be continuing hereunder, the Program Lessee shall enjoy
all rights to the Series 1996-1 Certificates during the Lease Term and, except
as otherwise specifically provided in the Basic Documents, shall have the
exclusive claim (subject to the lien of the Indenture) during the Lease Term
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to receive all distributions and proceeds with respect to the Series 1996-1
Certificates. As provided in Section 8.6 of the Series 1996-1 Supplement, (i)
for purposes of Section 2.6(b) of the FCTT Agreement, the Program Lessor and
the Program Lessee and its permitted assigns shall each be a "Holder", but the
Program Lessee and its permitted assigns shall indemnify the Program Lessor
against any Liabilities pursuant to Section 2.6(b) of the FCTT Agreement, and
(ii) for purposes of Section 7.1 of the FCTT Agreement, the Program Lessor and
the Program Lessee and its permitted assigns shall each be a Holder. Upon the
occurrence and during the continuance of a Lease Event of Default, the Program
Lessee will no longer have any right to vote or direct actions with respect to
any of the Basic Documents. For purposes of Section 6.9(c) of the FCTT
Agreement, the obligations to pay expenses in connection with the removal of
Comerica shall be borne by the Program Lessee.
Section 6.3 Assignment and Pledge of Series 1996-1 Certificates, Series
1996-1 Collection Account, Series 1996-1 Payahead Account and Cash Collateral
Account. The Program Lessee acknowledges that its interest in the Series
1996-1 Certificates and the related accounts under this Program Operating Lease
is subject to the prior pledge by the Program Lessor to the Indenture Trustee
under the Indenture. The Program Lessee hereby pledges, assigns and conveys
its interest in the Series 1996-1 Certificates (i) to the Program Lessor to
secure the Program Lessee's obligations under this Program Operating Lease and
(ii) to the Indenture Trustee to secure the payment of the Senior Notes and the
compliance by the Program Lessor with the provisions of the Indenture. In
addition, the Program Lessee hereby pledges, assigns and conveys all of its
right, title and interest in, to and under the Series 1996-1 Collection
Account, the Series 1996-1 Payahead Account and the Cash Collateral Account to
(i) the Program Lessor to secure the Program Lessee's obligations under this
Program Operating Lease and (ii) to the Indenture Trustee to secure the
obligations of the Program Lessor under the Indenture.
Section 6.4 Assignment and Pledge of Subordinated Notes. Pursuant to
Section 2 of the Transfer Agreement, the Program Lessor has issued the
Subordinated Notes to the Program Lessee as partial payment for the Series
1996-1 Certificates. The Program Lessee hereby
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pledges, assigns and conveys all of its right, title and interest in, to and
under the Subordinated Notes to (i) the Program Lessor to secure the Program
Lessee's obligations under this Program Operating Lease and (ii) to the
Indenture Trustee to secure the obligations of the Program Lessor under the
Indenture.
Section 6.5 Deposits to Cash Collateral Account in Respect of Subordinated
Notes. On each Payment Date, the Program Lessee agrees to deposit or cause to
be deposited into the Cash Collateral Account all payments on the Subordinated
Notes made to it on such date. In furtherance of the foregoing, on the date
hereof the Program Lessee shall deliver a letter to the Lease Trust Paying
Agent in substantially the form attached hereto as Exhibit A, which letter
shall direct the Lease Trust Paying Agent to deposit into the Cash Collateral
Account all payments received with respect to the Subordinated Notes on each
Payment Date.
Section 6.6 Application of Subordinated Note Payments. The Program Lessee
and the Program Lessor agree that amounts payable in respect of the Additional
Payment payable by the Program Lessee to the Program Lessor and the amount
payable by the Program Lessor, as obligor on the Subordinated Notes, to the
Program Lessee, may be paid on a net basis. The Program Lessor and the Program
Lessee shall account for all Additional Payments under this Program Operating
Lease and all payments of principal and interest on the Subordinated Notes as
if such amounts were paid separately.
ARTICLE VII
LIENS; LOCATION AND INSPECTION
Section 7.1 Liens. The Program Lessee will not directly or indirectly
create, assume or suffer to exist any Lien on or with respect to, among other
things, the Series 1996-1 Certificates, any title thereto or any interest
therein (including any rights to payment) other than Permitted Liens. The
Program Lessee will promptly, at its own expense, take such action as may be
necessary to duly discharge any such Lien other than a Permitted Lien.
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Section 7.2 Change of Location. If following the payment in full of the
Senior Notes and the release of the lien of the Indenture, the Program Lessee
shall have obtained possession of the Series 1996-1 Certificates, then the
Program Lessee shall provide the Program Lessor with written notice of its
intention to relocate any Series 1996-1 Certificates in accordance with the
terms hereof at least one month prior to the date such relocation is commenced.
Notwithstanding the previous sentence, no relocation of any Series 1996-1
Certificates by the Program Lessee shall be commenced or made if a Lease Event
of Default shall have occurred and be continuing.
Section 7.3 Inspection and Information. At reasonable intervals during the
Lease Term and at any time a Lease Event of Default has occurred and is
continuing, the Program Lessor and its representatives shall have the right,
but not the duty, to inspect the Series 1996-1 Certificates and all records
related thereto, including all records relating to the receipt or distribution
of funds with respect to the Series 1996-1 Certificates.
ARTICLE VIII
NO SUBLEASE OR RENEWAL
Section 8.1 No Rights to Sublease or Renew. Except as set forth in
Sections 12.1 and 12.2, the Program Lessee shall not assign, pledge, sell,
transfer, sublease or otherwise dispose of its interest under this Program
Operating Lease at any time. Except as provided pursuant to the Basic
Documents, the Program Lessee will not transfer possession or relinquish
control of any Series 1996-1 Certificates. The Program Lessee may not renew
the term of this Program Operating Lease.
ARTICLE IX
PROGRAM LESSEE PURCHASE OPTION
Section 9.1 Program Lessee's Option to Purchase. Upon the occurrence of
the Program Operating Lease Termination Date with respect to any payments
attributable to each Series 1996-1 Leased Vehicle, the Program Lessee may, in
the circumstances set forth in the
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next succeeding sentence, acquire the Program Lessor's beneficial interest in
such Series 1996-1 Leased Vehicle by paying to the Program Lessor an amount
equal to the RCL Purchase Option Price of such Series 1996-1 Leased Vehicle.
The Program Lessee shall acquire the beneficial interest in a Series 1996-1
Leased Vehicle only if (A) (i) the proceeds from the sale or disposition of
such Series 1996-1 Leased Vehicle (including any Insurance Proceeds available
to the Program Lessor relating to loss or damage to such Series 1996-1 Leased
Vehicle), plus (ii) any amounts collected in connection with Excess Wear and
Tear and Excess Mileage with respect to such Series 1996-1 Leased Vehicle,
including by application of any Security Deposit or Reconditioning Reserve, in
each case net of sales or use taxes, minus (iii) amounts refunded pursuant to
the related Series 1996-1 Lease to the related Lessee for prepaid Excess
Mileage and prepaid Excess Wear and Tear, is greater than (B) the RCL Purchase
Option Price. Upon payment by the Program Lessee of the RCL Purchase Option
Price to the Program Lessor, such Series 1996-1 Leased Vehicle shall no longer
be a Series 1996-1 Asset, effective as of the date of such payment, and the
Program Lessor shall instruct the Administrative Agent to change its records
accordingly and deliver the Certificate of Title for such Series 1996-1 Leased
Vehicle to the Program Lessee or its designee. To the extent that the Program
Lessor exercises its option to purchase the beneficial interest in a Series
1996-1 Leased Vehicle as described herein, it shall pay or cause to be paid the
related RCL Purchase Option Price to the Program Lessor either by depositing
such amount in the Series 1996-1 Collection Account or by repaying the related
Sale Proceeds Advance, if any, to the Administrative Agent. The Program Lessor
and the Program Lessee each intend that the Program Lessee shall exercise its
option to purchase a Series 1996-1 Leased Vehicle in each instance where the
amount in clause (A) of the third preceding sentence exceeds the amount in
clause (B) of such sentence (such excess, the "Transferor Purchase Option Net
Proceeds").
Section 9.2 Transferor Purchase Option Net Proceeds. As additional
security for its obligations hereunder, on each Distribution Date (or on the
Business Day preceding such Distribution Date, if such Distribution Date is a
Payment Date), or on each Business Day if each Monthly Remittance Condition has
not been satisfied, the Program Lessee shall deposit or cause to be deposited
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all Transferor Purchase Option Net Proceeds into the Cash Collateral Account
until the aggregate cumulative amount deposited in the Cash Collateral Account
in respect of Transferor Purchase Option Net Proceeds equals $_________. To
the extent that the aggregate cumulative amount deposited in the Cash
Collateral Account in respect of Transferor Purchase Option Net Proceeds equals
$______, any Transferor Purchase Option Net Proceeds shall be deposited in the
RCL Account and any Transferor Purchase Option Net Proceeds so deposited shall
be property of the Program Lessee.
ARTICLE X
LEASE EVENTS OF DEFAULT
Section 10.1 Lease Events of Default. The term "Lease Event of Default,"
means any of the following events:
(a) on any Payment Date, the Program Lessee shall have failed to make, or
cause to be made, the Required Interest Payment due on such Payment Date;
(b) the Program Lessee shall fail to perform or observe any covenant
contained in Articles V or VII;
(c) the Program Lessee shall fail to perform or observe any other material
covenant, condition or agreement to be performed or observed by it under this
Program Operating Lease and such failure shall continue for a period of 30 days
after there shall have been given to the Program Lessee by the Program Lessor a
notice thereof;
(d) any representation or warranty made by the Program Lessee in this
Program Operating Lease or any other Basic Document, or any other agreement,
document or certificate to which the Program Lessee is a party or which is
delivered by the Program Lessee in connection herewith or therewith shall prove
to have been false or incorrect in any material respect when any such
representation or warranty was made or given and shall remain a
misrepresentation or breach of warranty which is material and adverse to the
Program Lessor or its interest in the Series 1996-1 Certificates at the time at
which such misrepresentation or breach of warranty is brought to the
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attention of the Program Lessee; provided, however, that no such
misrepresentation or breach of warranty shall constitute a Lease Event of
Default if such misrepresentation or breach is curable and the Program Lessee
is diligently pursuing the cure of such breach or misrepresentation and has
cured it within 30 days;
(e) a Bankruptcy, insolvency or termination shall have occurred with
respect to the Program Lessee or a Bankruptcy shall have occurred with respect
to Ford Credit Leasing; or
(f) there shall have occurred an Indenture Event of Default.
ARTICLE XI
REMEDIES
Section 11.1 Remedies. Upon the occurrence of any Lease Event of Default
and at any time thereafter so long as the same shall be continuing, the Program
Lessor (or, if the lien of the Indenture is outstanding, the Indenture Trustee
as assignee of the Program Lessor) may, with respect to the Lease Events of
Default set forth in Section 10.1 (a), (b), (c), (d) and (f), at its option,
declare this Program Operating Lease to be in default by written notice to such
effect given to the Program Lessee (a "Notice of Lease Event of Default"), and
upon the occurrence of a Lease Event of Default described in Section 10.1(e),
this Program Operating Lease shall automatically be in default, and at any time
thereafter the Program Lessor may, to the extent permitted by law, exercise one
or more of the following remedies, as the Program Lessor in its sole discretion
shall elect:
(a) the Program Lessor may, by notice to the Program Lessee, rescind or
terminate this Program Operating Lease;
(b) the Program Lessor may demand that (if the Program Lessee has
possession of the Series 1996-1 Certificates) the Program Lessee, and the
Program Lessee shall, upon the demand of the Program Lessor, re-deliver the
Series 1996-1 Certificates to the Program Lessor;
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(c) subject to the terms of the Lease Trust Agreement and the Indenture,
the Program Lessor (or the Indenture Trustee (including the requirement that an
Opinion of Counsel be obtained that such sale will not cause the Lease Trust,
RCL Trust 1996-1, or FCTT to be classified for federal income tax purposes as
an association (or publicly traded partnership) taxable as a corporation)) may
sell the Series 1996-1 Certificates at public or private sale, as the Program
Lessor may determine, in its sole discretion free and clear of any rights of
the Program Lessee in the Series 1996-1 Certificates and without any duty to
account to the Program Lessee with respect to such action or inaction or any
proceeds with respect thereto; provided, that the Program Lessee shall be
entitled to receive any proceeds of such sale remaining after payment in full
of the Program Operating Lease Termination Value plus the expenses of such sale
and any expenses of the RCL Trustee, the Lease Trustee, the Indenture Trustee
or Comerica which have not been otherwise paid;
(d) the Program Lessor may, whether or not the Program Lessor shall have
exercised or shall thereafter at any time exercise its rights under Section
11.1(b) or (c), demand, by written notice to the Program Lessee, that the
Program Lessee pay to the Program Lessor, and the Program Lessee shall pay to
the Program Lessor, on the Payment Date next succeeding such notice, any unpaid
Required Interest Payments and Additional Payments (if any) due through such
Payment Date plus, as liquidated damages for loss of a bargain and not as a
penalty (in lieu of the Required Interest Payments and Additional Payments (if
any) due after such Payment Date), an amount equal to the Program Operating
Lease Termination Value as of such Payment Date in exchange for the transfer to
the Program Lessee of the Series 1996-1 Certificates; provided, however, that
the Program Lessor may exercise the remedy set forth in this Section 11.1(d)
only in the event that the Senior Notes have been declared immediately due and
payable pursuant to Section 5.2 of the Indenture, and such declaration has not
been rescinded and annulled; or
(e) the Program Lessor may, without notice to the Program Lessee (any such
notice being expressly waived by the Program Lessee), exercise its right of
setoff and apply any indebtedness (including on the
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Subordinated Notes held by the Program Lessee and Ford Credit Leasing) at any
time owing by the Program Lessor to the Program Lessee and Ford Credit Leasing
against any and all of the obligations of the Program Lessee and Ford Credit
Leasing now or hereafter existing under this Program Operating Lease,
irrespective of whether or not the Program Lessor shall have made any demand
under this Program Operating Lease and although such obligations may be
unmatured.
Section 11.2 No Release. No rescission or termination of this Program
Operating Lease, in whole or in part, or repossession of the Series 1996-1
Certificates or exercise of any remedy under Section 11.1 shall, except as
specifically provided herein, relieve the Program Lessee of any of its
liabilities and obligations hereunder. In addition, the Program Lessee shall
be liable, except as otherwise provided herein, for any and all unpaid Required
Interest Payments and Additional Payments and payment of the Program Operating
Lease Termination Value, if any, due hereunder before, after or during the
exercise of the foregoing remedies, including all reasonable legal fees and
other costs and expenses incurred by the Program Lessor.
Section 11.3 Remedies Cumulative. No remedy under Section 11.1 is intended
to be exclusive, but each shall, to the fullest extent permitted by, but
subject always to any mandatory requirements of, any applicable law or
government regulation, be cumulative and in addition to any other remedy
provided under Section 11.1 or otherwise available to the Program Lessor at law
or in equity. No express or implied waiver by the Program Lessor of any Lease
Event of Default hereunder shall in any way be, or be construed to be, a waiver
of any future or subsequent Lease Event of Default. The failure or delay of
the Program Lessor in exercising any rights granted it hereunder or any other
Basic Document upon any occurrence of any of the contingencies set forth herein
shall not constitute a waiver of any such right upon the continuation or
recurrence of any such contingencies or similar contingencies and any single or
partial exercise of any particular right by the Program Lessor shall not
exhaust the same or constitute a waiver of any other right provided herein.
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Section 11.4 Exercise of Other Rights or Remedies. In addition to all
other rights and remedies provided in this Article XI, the Program Lessor may
exercise any other rights or remedies that may be available to it under
applicable law or proceed by appropriate court action to enforce the terms
hereof or to recover damages for the breach hereof.
ARTICLE XII
ASSIGNMENT OF LEASE
Section 12.1 Program Lessee's Consent to Assignment by Program Lessor. (a)
The Program Lessee hereby acknowledges, and consents in all respects to, the
assignment of the interest of the Program Lessor in the Program Operating Lease
by the Program Lessor to the Indenture Trustee under and pursuant to the
Indenture and agrees:
(i) to make each Required Interest Payment and Additional Payment due or
to become due hereunder directly to the Indenture Trustee to the account
specified by the Indenture Trustee, so long as any Senior Notes shall be
outstanding and unpaid and thereafter to the Program Lessee, so long as any
Subordinated Notes or Lease Trust Certificates shall be outstanding and
unpaid; and
(ii) not to seek to recover any payment (other than a payment made in
mistake) made to the Indenture Trustee in accordance with the Indenture once
such payment is made.
(b) The Program Lessee hereby consents to and acknowledges the retention
of possession by the Indenture Trustee of the Series 1996-1 Certificates until
such time as the Senior Notes are satisfied in full, the lien of the Indenture
is released, and the Subordinated Notes and Lease Trust Certificates have been
paid in full.
Section 12.2 Program Lessor's Consent to Assignment by Program Lessee. The
Program Lessor hereby consents to the assignment by the Program Lessee to Ford
Credit Leasing Company, Inc. of an undivided 1% interest in the Program
Lessee's interest in this Program Operating Lease, including but not limited to
the right to
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receive distributions and proceeds with respect to the Series 1996-1
Certificates, the right to receive amounts in the Cash Collateral Account as
provided herein and the obligation to make Required Interest Payments,
Additional Payments and any required payment of the Program Operating Lease
Termination Value.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Notices. All communications, notices and consents provided
for herein shall be in writing, including telecopy or other electronic or wire
transmission, and shall be effective upon delivery to the Program Lessee at:
RCL Trust 1996-1
c/o First Union Bank of Delaware
One Rodney Square
920 King Street
Wilmington, Delaware 19801
Attention: Trust Department
with a copy to:
First Union National Bank of North Carolina
230 South Tryon Street CMC-9
Charlotte, North Carolina 28288
Attention: Pablo de La Canal
and to the Program Lessor at:
Ford Credit Auto Lease Trust 1996-1
c/o PNC Bank, Delaware
222 Delaware Avenue
Wilmington, Delaware 19801
Attention: Michael B. McCarthy
All communications (including reports), notices and consents hereunder
shall, so long as any of the Series 1996-1 Certificates is subject to the lien
of the Indenture, be given to the Indenture Trustee as well as to the
appropriate party hereunder.
Section 13.2 Distribution of Series 1996-1 Assets. Consistent with Section
8.6 of the Series 1996-1
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Supplement, Program Lessor and Program Lessee agree that each shall be a
"Holder" of the Series 1996-1 Certificates for purposes of Section 4.3(f) of
the FCTT Agreement; and further agree that, for so long as the Program
Operating Lease is in effect, each shall exercise their joint rights provided
for in such Section only with the consent of the other. In the event that the
Program Lessee and the Program Lessor exercise their joint rights pursuant to
such Section 4.3(f) of the FCTT Agreement, the Series 1996-1 Vehicles shall be
retitled in the name, or at the direction, of the Program Lessor; provided that
the Indenture Trustee shall, until the Outstanding Amount of the Senior Notes
has been reduced to zero, have a Lien on the Series 1996-1 Leased Vehicles
distributed pursuant to such sections and the Certificate of Title of each such
Series 1996-1 Leased Vehicle shall reflect such lien. The foregoing shall not
be construed to require the consent of any party to any distribution of assets
of FCTT pursuant to Section 7.1 of the FCTT Agreement or Section 9.2 of the
Lease Trust Agreement.
Section 13.3 Termination of Administrative Agent. Consistent with Section
8.6 of the Series 1996-1 Supplement, Program Lessor and Program Lessee agree
that each shall be a "Holder" of the Series 1996-1 Certificates for purposes of
Section 7.1(b) of the Administrative Agency Agreement and Section 4.2 of the
FCTT Agreement, (for purposes of terminating the Administrative Agent and for
appointing a successor Administrative Agent), and shall act together in
accordance with Section 8.6(f) of the Series 1996-1 Supplement and further
agree that, for so long as this Program Operating Lease is in effect, each
shall exercise the rights provided for in such section only with the consent of
the other.
Section 13.4 Successors and Assigns. Neither the Program Lessor nor the
Program Lessee may assign its interest in this Program Operating Lease except
as permitted by Sections 12.1 and 12.2. This Program Operating Lease,
including all agreements, covenants, representations and warranties, shall be
binding upon and inure to the benefit of the Program Lessor and its successors
and permitted assigns, and the Program Lessee and its successors and permitted
assigns.
Section 13.5 Right to Perform for Program Lessee. If the Program Lessee
shall fail to make any Re-
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quired Interest Payments or Additional Payments to be made by it hereunder, or
shall fail to perform or comply with any of its other agreements contained
herein or in any other Basic Document or any other agreement entered into in
connection therewith, the Program Lessor may, but shall not be obligated to,
make such payment or perform or comply with such agreement, and the amount of
such payment and the amount of all costs and expenses (including, without
limitation, reasonable attorneys' and other professionals' fees and expenses) of
the Program Lessor incurred in connection with such payment or the performance
of or compliance with such agreement, as the case may be, together with interest
thereon, at the weighted average interest rate of the Senior Notes, shall be due
and payable by the Program Lessee upon demand.
Section 13.6 Amendments. This Program Operating Lease may be amended by
the parties hereto at any time; provided, however, that such action shall not,
(x) as evidenced by an Opinion of Counsel, materially adversely affect the
interests of the Senior Noteholders or the Lease Trust Certificateholders
(unless 100% of the Senior Noteholders and the Lease Trust Certificateholders
materially adversely affected thereby consent thereto), (y) as confirmed by
each Rating Agency then rating the Senior Notes and the Lease Trust
Certificates, cause the then current rating of any Class of Senior Notes or the
Lease Trust Certificates to be withdrawn or reduced or (z) as evidenced by an
Opinion of Counsel, cause the Program Lessee, the Program Lessor, or FCTT to be
classified as an "association" (or publicly traded partnership) taxable as a
corporation for federal income tax purposes.
Section 13.7 Survival. All agreements, indemnities, representations and
warranties contained in this Program Operating Lease and the other Basic
Documents or any agreement, document or certificate delivered pursuant hereto
or thereto or in connection herewith or therewith shall survive the execution
and delivery of this Program Operating Lease and the expiration or other
termination thereof.
Section 13.8 Severability of Provisions. Any provisions of this Program
Operating Lease which may be determined by competent authority to be prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohi-
21
<PAGE> 26
bition 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. To
the extent permitted by applicable law, the Program Lessee hereby waives any
provision of law which renders any provision hereof prohibited or unenforceable
in any respect.
Section 13.9 Original. The single executed original of this Program
Operating Lease marked "Original" and containing the receipt of the Indenture
Trustee thereon shall be the "Original" of this Program Operating Lease. To
the extent that this Program Operating Lease constitutes chattel paper, as such
term is defined in the UCC as in effect in any applicable jurisdiction, no
security interest in this Program Operating Lease may be created through the
transfer or possession of any counterpart other than the "Original."
Section 13.10 Single Transaction. The Program Lessor and the Program
Lessee acknowledge and agree that the Basic Documents and any other agreements
of the Program Lessee entered into by the Program Lessee in connection with the
transactions contemplated by the Basic Documents are intended to be construed
and treated for all purposes as integral and constitutive elements of a single
transaction that cannot be separately assigned, assumed or rejected under the
United States bankruptcy code (Title 11 of the United States Code) or any other
applicable bankruptcy, insolvency or receivership laws.
Section 13.11 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 13.12 GOVERNING LAW. THIS PROGRAM OPERATING LEASE SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
Section 13.13 Counterpart Execution and Dating. This Program Operating
Lease may be executed in any number of counterparts and by each of the parties
hereto
22
<PAGE> 27
on separate counterparts, all such counterparts together constituting but one
and the same instrument, with the counterparts delivered to the Indenture
Trustee pursuant to the Indenture being deemed the "Original" and all other
counterparts being deemed duplicates.
Section 13.14 Concerning the Program Lessor and the Program Lessee. (a)
PNC Bank, Delaware is entering into this Program Operating Lease solely in its
capacity as Lease Trustee and not in its individual capacity and in no case
shall PNC Bank, Delaware (or any entity acting as successor Lease Trustee) be
personally liable for or on account of any of the statements, representations,
warranties, covenants or obligations stated to be those of Program Lessor
hereunder or in the other Basic Documents and that nothing contained herein
shall be construed as creating any liability on PNC Bank, Delaware,
individually or personally, to perform any covenant either express or implied
contained herein, all such liability, if any, being expressly waived by the
Program Lessee and any person claiming by, through or under the Program Lessee;
provided, however, that PNC Bank, Delaware (or any such successor Lease
Trustee) shall be personally liable hereunder for its own gross negligence or
willful misconduct or for its breach of its covenants, representations and
warranties contained herein, to the extent covenanted or made in its individual
capacity.
(b) First Union Bank of Delaware is entering into this Program Operating
Lease solely in its capacity as Trustee of RCL Trust 1996-1 and not in its
individual capacity and in no case shall First Union Bank of Delaware (or any
entity acting as successor RCL Trustee) be personally liable for or on account
of any of the statements, representations, warranties, covenants or obligations
stated to be those of Program Lessee hereunder or in the other Basic Documents
and that nothing contained herein shall be construed as creating any liability
on First Union Bank of Delaware, individually or personally, to perform any
covenant either express or implied contained herein, all such liability, if
any, being expressly waived by the Program Lessor, and any person claiming by,
through or under the Program Lessor; provided, however, that First Union Bank
of Delaware (or any such successor RCL Trustee) shall be personally liable
hereunder for its own gross negligence or willful misconduct or for its breach
of its covenants, representations and warran-
23
<PAGE> 28
ties contained herein, to the extent covenanted or made in its individual
capacity.
24
<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have caused this Program Operating
Lease to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
RCL TRUST 1996-1, as Program
Lessee
By: FIRST UNION BANK OF DELAWARE,
not in its individual capacity, but
solely as trustee of RCL Trust 1996-1
By: __________________________________
Name:
Title:
PNC BANK, DELAWARE, not in its individual
capacity, but solely as trustee of Ford
Credit Auto Lease Trust 1996-1, as Program
Lessor
By: __________________________________
Name: Michael B. McCarthy
Title: Vice President
<PAGE> 30
Receipt of this original counterpart of this Program Operating Lease is
hereby acknowledged on this ____ day of November, 1996.
By: THE CHASE MANHATTAN BANK, not
in its individual capacity but solely as
Indenture Trustee
By: _________________________________________
Name: Michael A. Smith
Title: Vice President
26
<PAGE> 31
EXHIBIT A
DIRECTION
TO: [NAME OF LEASE TRUST PAYING AGENT]
[ADDRESS OF LEASE TRUST PAYING AGENT]
RE: Ford Credit Auto Lease Trust Series 1996-1
___% Asset Backed Subordinated Notes
THIS DIRECTION WITNESSES THAT the undersigned hereby directs you to deposit
all payments with respect to the $______ initial aggregate principal amount of
Ford Credit Auto Lease Trust Series 1996-1 ___% Asset Backed Subordinated
Notes, into the Cash Collateral Account, account number. ______________, ASA
no. ________________, and this direction shall be the undersigned's good and
sufficient authority for so doing.
RCL TRUST 1996-1
By: FIRST UNION BANK OF DELAWARE, not in
its individual capacity, but solely as
trustee of RCL TRUST 1996-1
By _________________________________
Name:
Title:
A-1
<PAGE> 1
EXHIBIT 10.7
LEASE TRUST PAYING AGENT AGREEMENT
dated as of
November __, 1996
between
PNC BANK, DELAWARE,
as Trustee of Ford Credit Auto Lease Trust 1996-1,
and
THE CHASE MANHATTAN BANK,
as Lease Trust Paying Agent
<PAGE> 2
LEASE TRUST PAYING AGENT AGREEMENT, dated as of November __,
1996 (this "Agreement"), between PNC BANK, DELAWARE, acting not in its
individual capacity, but solely as trustee of Ford Credit Auto Lease Trust
1996-1 (the "Lease Trustee") and THE CHASE MANHATTAN BANK, as Lease Trust
Paying Agent (the "Lease Trust Paying Agent").
WHEREAS, the Lease Trust has issued the Subordinated Notes and
a portion of the Lease Trust Certificates to RCL Trust 1996-1 pursuant to the
Transfer Agreement and has issued the remaining Lease Trust Certificates to
certain institutional investors pursuant to the Lease Trust Agreement;
WHEREAS, RCL Trust 1996-1 has pledged the Subordinated Notes
to the Lease Trustee to secure its obligations to the Lease Trustee under the
Program Operating Lease and to the Indenture Trustee to secure the Lease
Trustee's obligations under the Indenture;
WHEREAS, pursuant to the Program Operating Lease, RCL Trust
1996-1 has agreed to deposit into the Cash Collateral Account all amounts paid
to it in respect of principal and interest on the Subordinated Notes (net of
amounts paid pursuant to Section 6.6 of the Program Operating Lease);
WHEREAS, The Chase Manhattan Bank has been appointed Lease
Trust Paying Agent pursuant to Section 3.9 of the Lease Trust Agreement; and
WHEREAS, the Lease Trustee and the Lease Trust Paying Agent
desire to set forth the terms pursuant to which the Lease Trust Paying Agent
shall deposit into the Cash Collateral Account any payments of principal and
interest on the Subordinated Notes and make payments to the Lease Trust
Certificateholders of interest and principal on the Lease Trust Certificates.
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1. Definitions. Whenever used in this Agreement
capitalized terms have the meanings assigned to them herein or, if not defined
herein, as defined in the Lease Trust Agreement or in Appendix A attached
hereto.
<PAGE> 3
To the extent that the definitions set forth herein conflict with the
definitions set forth in the Lease Trust Agreement or in Appendix A, or
incorporated by reference therein, the definitions set forth herein shall be
controlling.
"Cash Collateral Account Statement" has the meaning set forth
in Section 2(a).
"Disbursement and Payment Instructions" has the meaning set
forth in Section 2(b).
Section 2. Cash Collateral Account Certificate; Disbursement
and Payment Instructions. (a) On the second Business Day preceding each
Payment Date, the Lease Trustee shall cause the Administrative Agent, on behalf
of the Lease Trust, to deliver to the Lease Trustee and the Lease Trust Paying
Agent, a certificate (the "Cash Collateral Account Certificate") setting forth
the following information with respect to such Payment Date:
(i) the Series 1996-1 Administrative Agent Fee for
the preceding Accrual Period;
(ii) the Required Interest Payment;
(iii) the Cash Collateral Amount on the Business Day
preceding such Payment Date; and
(iv) the Cash Collateral Required Draw Amount and
the Cash Collateral Additional Draw Amount.
(b) On the second Business Day preceding each Payment Date,
the Lease Trustee shall cause the Administrative Agent, on behalf of the Lease
Trust, to deliver to the Lease Trustee and the Lease Trust Paying Agent a
certificate (the "Disbursement and Payment Instructions") including the
following information with respect to such Payment Date, the related Accrual
Period and Series 1996-1:
(i) the Available Funds;
(ii) the Certificate Distribution Draw Amount;
2
<PAGE> 4
(iii) the amount of interest accrued (including any
overdue interest) on the Subordinated Notes during the preceding
Interest Accrual Period, the amount of interest on any defaulted
interest at the Subordinated Note Interest Rate, the amounts payable
with respect to such interest (net of amounts paid pursuant to
Section 6.6 of the Program Operating Lease), and any resulting
shortfall (separately stated);
(iv) the amount of interest accrued (including any
overdue interest) on the Lease Trust Certificates during the preceding
Interest Accrual Period, the amount of interest on any defaulted
interest at the Certificate Rate, the amounts payable with respect to
such interest, and any resulting shortfall (separately stated);
(v) the Series 1996-1 Administrative Fee;
(vi) the amount, if any, to be distributed to the
Lease Trust Paying Agent for payment of principal of the Subordinated
Notes (net of any amounts paid pursuant to Section 6.6 of the Program
Operating Lease) in accordance with the terms thereof; and
(vii) the amount, if any, to be deposited into the
Certificate Distribution Account for payment in reduction of the
Aggregate Certificate Balance of the Lease Trust Certificates in
accordance with the terms thereof.
(c) Neither the Lease Trustee nor the Lease Trust Paying
Agent shall have any duty or obligation to verify or confirm the accuracy of
any of the information or numbers set forth in any of the certificates required
to be delivered to the Lease Trust Paying Agent in accordance with this Section
2 and each of the Lease Trustee and the Lease Trust Paying Agent shall be fully
protected in relying upon such certificates.
3
<PAGE> 5
Section 3. Application of Funds.
(a) Deposits to Series 1996-1 Payments Account.
(i) Pursuant to Section 5.2(e) of the Series 1996-1
Supplement, the Administrative Agent shall withdraw an amount equal to
the Available Sale Proceeds from the Series 1996-1 Collection Account
and deposit such amount in the Series 1996-1 Payments Account on the
Business Day preceding each Payment Date.
(ii) On the Payment Date on which the Outstanding
Amount of the Senior Notes has been reduced to zero, if such Payment
Date is not also a Semiannual Payment Date, the Lease Trustee shall
deposit into the Series 1996-1 Payments Account (after all other
deposits, withdrawals and payments thereto or therefrom have been made
with respect to such Payment Date) the amount, if any, distributed to
the Lease Trustee by the Indenture Trustee pursuant to the last
sentence of Section 8.4(b) of the Indenture and, if applicable,
clause EIGHTH of Section 5.4(b) of the Indenture.
(iii) On the Business Day preceding each Payment
Date after the Payment Date on which the Outstanding Amount of the
Senior Notes has been reduced to zero, the Lease Trustee shall
withdraw from the Cash Collateral Account and deposit in the Series
1996-1 Payments Account the Cash Collateral Required Draw Amount.
(b) Payments of Interest on Subordinated Notes while Senior
Notes are Outstanding. On each Payment Date on or before the Payment Date on
which the Outstanding Amount of the Senior Notes has been reduced to zero, the
Lease Trust Paying Agent shall, pursuant to Section 6.5 of the Program
Operating Lease, to the extent of the funds available, pay interest due on the
Subordinated Notes (net of amounts paid pursuant to Section 6.6 of the Program
Operating Lease) by depositing to the Cash Collateral Account, the amount, if
any, distributed to it by the Indenture Trustee pursuant to Section 8.4(b)(iii)
of the Indenture and, if applicable, clause FIFTH of Section 5.4(b) of the
Indenture.
4
<PAGE> 6
(c) Payments of Interest on Lease Trust Certificates while
Senior Notes are Outstanding. On each Semiannual Payment Date on or before the
Payment Date on which the Outstanding Amount of the Senior Notes has been
reduced to zero, the Lease Trustee (if other than the Lease Trust Paying Agent)
shall transfer the amounts deposited by the Indenture Trustee into the
Certificate Distribution Account pursuant to Section 8.4(b)(iv) of the
Indenture and, if applicable, clause SIXTH of Section 5.4(b) of the Indenture,
net of amounts, if any, withdrawn by the Indenture Trustee from the Certificate
Distribution Account pursuant to Section 8.4(d) of the Indenture, for the
payment of interest due on the Lease Trust Certificates, to the Lease Trust
Paying Agent, which shall pay such interest to Lease Trust Certificateholders,
on a pro rata basis.
(d) Distribution of Funds on Deposit in Certificate
Distribution Account by Lease Trust Paying Agent after the Senior Notes are
Retired. On each Semiannual Payment Date after the Payment Date on which the
Outstanding Amount of the Senior Notes has been reduced to zero and, if the
Outstanding Amount of the Senior Notes has been reduced to zero on a Semiannual
Payment Date, on such Semiannual Payment Date, the Lease Trustee (if other than
the Lease Trust Paying Agent) shall transfer the funds then on deposit in the
Certificate Distribution Account (after giving effect to any deposits or
withdrawals made on such Semiannual Payment Date) to the Lease Trust Paying
Agent for distribution to Lease Trust Certificateholders, to the extent of
funds available, in accordance with the following priorities:
(i) an amount equal to the interest due and unpaid
on the Lease Trust Certificates on such Semiannual Payment Date shall
be distributed to Lease Trust Certificateholders pro rata; and
(ii) any remaining funds shall be distributed to
Lease Trust Certificateholders pro rata in reduction of the Aggregate
Certificate Balance, until such Aggregate Certificate Balance has been
reduced to zero.
(e) Payments of Interest on Subordinated Notes and Lease
Trust Certificates after Senior Notes are Retired. On each Payment Date after
the Payment Date on
5
<PAGE> 7
which the Outstanding Amount of the Senior Notes has been reduced to zero, the
Lease Trustee shall, in accordance with the Disbursement and Payment
Instructions (as set forth in Section 2(b)), make the following withdrawals
from the Series 1996-1 Payments Account and make deposits, distributions and
payments, to the extent of funds then on deposit in the Series 1996-1 Payments
Account, in accordance with the following priorities:
(i) to the Administrative Agent, the Series 1996-1
Administrative Fee for the preceding Accrual Period;
(ii) to the Lease Trust Paying Agent, for payment
to the Subordinated Noteholders, pro rata, an amount equal to the
interest accrued (including any overdue interest) on the Subordinated
Notes during the preceding Interest Accrual Period plus the interest
on any defaulted interest at the Subordinated Note Interest Rate (net
of amounts paid pursuant to Section 6.6 of the Program Operating
Lease); and
(iii) to the Certificate Distribution Account, an
amount equal to interest accrued (including overdue interest) on the
Aggregate Certificate Balance at the Certificate Interest Rate plus
interest on any defaulted interest at the Certificate Interest Rate
during the preceding Interest Accrual Period plus any Certificate
Distribution Draw Amount on such Payment Date.
Pursuant to Section 6.5 of the Program Operating Lease, on
each Payment Date, the Lease Trust Paying Agent shall deposit to the Cash
Collateral Account any amounts paid to it pursuant to clause (ii) of this
Section 3(e) on such Payment Date. After such deposit, on each Payment Date,
the Lease Trustee shall withdraw the Cash Collateral Additional Draw Amount
from the Cash Collateral Account and apply such amounts to pay each of the
items specified in clauses (ii) and (iii) of this Section 3(e) without
duplication of the amounts already paid on such Payment Date.
Following the Payment Date on which the Outstanding Amount of
the Senior Notes has been reduced to zero, on the Business Day preceding each
Semiannual Pay-
6
<PAGE> 8
ment Date for which the Available Funds, as set forth in the Disbursement and
Payment Instructions, is less than the amounts specified in clauses (i) and
(ii) of this Section 3(e), the Lease Trustee shall withdraw the Certificate
Distribution Draw Amount, as set forth in the Disbursement and Payment
Instructions, from the Certificate Distribution Account and deposit such amount
in the Series 1996-1 Payments Account. On the related Semiannual Payment Date
the Lease Trustee shall apply such amount to pay the amounts specified in
clause (ii) of this Section 3(e) without duplication of the amounts already
paid on such Semiannual Payment Date.
(f) Payments of Principal of Subordinated Notes and Lease
Trust Certificates if Senior Notes are Retired on a Semiannual Payment Date.
Subject to Section 3(h), on the Payment Date on which the Outstanding Amount of
the Senior Notes has been reduced to zero, if such Payment Date is also a
Semiannual Payment Date, the Lease Trustee shall apply the amount, if any,
distributed to it by the Indenture Trustee pursuant to the last sentence of
Section 8.4(b) of the Indenture and, if applicable, clause EIGHTH of Section
5.4(b) of the Indenture, in accordance with the following priorities after
making the deposits, distributions and payments required pursuant to Sections
3(a), (b) and (c):
(i) to the Lease Trust Paying Agent for payment to
Subordinated Noteholders (net of amounts paid pursuant to
Section 6.6 of the Program Operating Lease) pro rata, as
payments of principal, until the Outstanding Amount of the
Subordinated Notes has been reduced to zero; and
(ii) to the Certificate Distribution Account, in
reduction of the Aggregate Certificate Balance of the Lease
Trust Certificates, until such Aggregate Certificate Balance
has been reduced to zero.
Pursuant to Section 6.5 of the Program Operating Lease, on
each Payment Date, the Lease Trust Paying Agent shall deposit to the Cash
Collateral Account any amounts paid to it pursuant to clause (i) of this
Section 3(f) on such Payment Date. After such deposit, on each Payment Date,
the Lease Trustee shall withdraw the Cash
7
<PAGE> 9
Collateral Additional Draw Amount from the Cash Collateral Account and apply
such amounts to pay each of the items specified in clauses (i) and (ii) of this
Section 3(f) without duplication of the amounts already paid on such Payment
Date.
(g) Payments of Principal of Subordinated Notes and Lease
Trust Certificates after Senior Notes are Retired. Subject to Section 3(h), on
each Semiannual Payment Date after the Payment Date on which the Outstanding
Amount of the Senior Notes has been reduced to zero, the Lease Trustee shall,
after making the deposits, distributions and payments required pursuant to
clauses (i), (ii) and (iii) of Section 3(e), make the following additional
deposits, distributions and payments to the extent of the remaining funds on
deposit in the Series 1996-1 Payments Account, in accordance with the following
priorities:
(i) to the Lease Trust Paying Agent for payment to
Subordinated Noteholders (net of amounts paid pursuant to
Section 6.6 of the Program Operating Lease) pro rata, as
payments of principal, until the Outstanding Amount of the
Subordinated Notes has been reduced to zero; and
(ii) to the Certificate Distribution Account, in
reduction of the Aggregate Certificate Balance of the Lease
Trust Certificates, until such Aggregate Certificate Balance
has been reduced to zero.
Pursuant to Section 6.5 of the Program Operating Lease, on
each Payment Date, the Lease Trust Paying Agent shall deposit to the Cash
Collateral Account any amounts paid to it pursuant to clause (i) of this
Section 3(g) on such Payment Date. After such deposit, on each Payment Date,
the Lease Trustee shall withdraw the Cash Collateral Additional Draw Amount
from the Cash Collateral Account and apply such amounts to pay each of the
items specified in clauses (i) and (ii) of this Section 3(g) without
duplication of the amounts already paid on such Payment Date.
(h) In the event that on any Semiannual Payment Date, the
Aggregate Certificate Balance of the Lease
8
<PAGE> 10
Trust Certificates would be greater than zero after giving effect to a payment
to the Lease Trust Certificateholders pursuant to Section 3(f)(ii) or Section
3(g)(ii), as applicable, and the application of the Cash Collateral Additional
Draw Amount, then the Lease Trustee shall not make any payments pursuant to
Section 3(f) or Section 3(g), as applicable, on such Semiannual Payment Date.
The Lease Trustee shall instead deposit such amounts to the Series 1996-1
Payments Account and make such payments in accordance with Section 3(g) on the
earlier to occur of (x) the Semiannual Payment Date on which the Aggregate
Certificate Balance of the Lease Trust Certificates would be reduced to zero
after giving effect to the payment made pursuant to Section 3(g)(ii) and the
application of the Cash Collateral Additional Draw Amount and (y) the
Semiannual Payment Date following the Accrual Period during which the last
Series 1996-1 Lease terminated.
(i) Withholding Taxes. In the event that any withholding tax
is imposed on the Lease Trust's payment (or, if the Lease Trust is treated as a
partnership for federal income tax purposes, allocations of income) to a Lease
Trust Certificateholder or a Subordinated Noteholder, such tax shall reduce the
amount otherwise distributable to such Lease Trust Certificateholder or
Subordinated Noteholder in accordance with this Section 3. The Lease Trust
Paying Agent is hereby authorized and directed to retain from amounts otherwise
distributable to such Lease Trust Certificateholder or Subordinated Noteholder
sufficient funds for the payment of any withholding tax that is legally owed by
the Lease Trust (but such authorization shall not prevent the Lease 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
Lease Trust Certificateholder or a Subordinated Noteholder shall be treated as
cash distributed to such Lease Trust Certificateholder or Subordinated
Noteholder, as the case may be, at the time it is withheld by the Lease Trust
for remittance to the appropriate taxing authority. If the Lease Trust Paying
Agent determines that there is a possibility that withholding tax is payable
with respect to a distribution, the Lease Trust Paying Agent may in its sole
discretion withhold such amounts in accordance with this Section 3(i). In the
9
<PAGE> 11
event that a Lease Trust Certificateholder or Subordinated Noteholder wishes to
apply for a refund of any such withholding tax, the Lease Trustee shall
reasonably cooperate with such Lease Trust Certificateholder or Subordinated
Noteholder in making such claim so long as such Lease Trust Certificateholder
or Subordinated Noteholder agrees to reimburse the Lease Trust Paying Agent for
any out-of-pocket expenses incurred.
Section 4. 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 one and the same instrument.
Section 5. Headings. The headings of the various Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 6. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
10
<PAGE> 12
IN WITNESS WHEREOF, the parties hereby have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date and year first above written.
PNC BANK, DELAWARE, not in its
individual capacity, but solely as
trustee of Ford Credit Auto Lease
Trust 1996-1
By:___________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as Lease
Trust Paying Agent
By: ___________________________
Name:
Title:
<PAGE> 1
EXHIBIT 10.8
APPENDIX A
SERIES 1996-1 DEFINITIONS
Terms used herein and not otherwise defined have the meanings assigned to
such terms in Appendix I to the Administrative Agency Agreement. To the extent
that the definitions set forth herein conflict with the definitions set forth
in Appendix I, or incorporated by reference therein, the definitions set forth
herein shall be controlling.
"Accrual Period" shall mean, with respect to any Payment Date other than the
first Payment Date, the three Collection Periods preceding such Payment Date,
and with respect to the first Payment Date, the period from and including the
Series 1996-1 Cut-Off Date up to and including the last day of the immediately
preceding Collection Period.
"Accrued Subordinated Note Interest" shall mean, with respect to any Payment
Date, an amount equal to interest accrued on the Outstanding Amount of the
Subordinated Notes at the Subordinated Note Interest Rate plus interest on any
defaulted interest at the Subordinated Note Interest Rate during the related
Interest Accrual Period.
"Additional Payment" shall mean, with respect to any Payment Date, the lesser
of (a) an amount equal to the Cash Collateral Amount on such Payment Date
(after giving effect to the aggregate amounts required to be deposited to the
Cash Collateral Account on the Payment Date pursuant to Section 6.5 of the
Program Operating Lease without regard to Section 6.6 thereof) minus the
Required Cash Collateral Amount and (b) an amount equal to the sum of the
Outstanding Amount of the Senior Notes, the Outstanding Amount of the
Subordinated Notes and the Aggregate Certificate Balance of the Lease Trust
Certificates, in each case, prior to any payments on the Payment Date minus the
sum of the Available Sale Proceeds for the related Accrual Period and the
aggregate Residual Values of the Series 1996-1 Leased Vehicles the related
Series 1996-1 Leases of which have not terminated as of the end of the last day
of the preceding Accrual Period; provided that on any Payment Date on which the
Available Funds is
<PAGE> 2
less than the Required Interest Payment, the Additional Payment shall equal the
lesser of such shortfall or the aggregate amounts required to be deposited to
the Cash Collateral Account on the Payment Date pursuant to Section 6.5 of the
Program Operating Lease without regard to Section 6.6 thereof.
"Administrative Agency Agreement" shall mean the Administrative Agency
Agreement as supplemented by the Series 1996-1 Supplement, and as otherwise
amended, modified or supplemented from time to time.
"Aggregate Certificate Balance" shall mean, as of any date, the aggregate
Certificate Balances of the Lease Trust Certificates as of such date; provided,
that in determining whether the holders of Lease Trust Certificates evidencing
the requisite portion or percentage of the Aggregate Certificate Balance have
given any request, demand, authorization, direction, notice, consent, or waiver
under any Basic Document, Lease Trust Certificates owned by the Issuer, the
Depositor, the Administrative Agent or any Affiliate of any of the foregoing
Persons shall be disregarded and deemed to be excluded from the Aggregate
Certificate Balance, except that, in determining whether the Indenture Trustee
and Lease Trustee shall be protected in relying on any such request, demand,
authorization, direction, notice, consent, or waiver, only Lease Trust
Certificates that a Responsible Officer (as defined in the Indenture) of the
Indenture Trustee, if applicable, and a Responsible Officer (as defined in the
Lease Trust Agreement) of the Owner Trustee with direct responsibility for the
administration of the Lease Trust Agreement, if applicable, knows to be so
owned shall be so disregarded.
"Aggregate Net Monthly Payment Advances" shall mean, with respect to any
Accrual Period, an amount, which may be positive or negative, equal to the
aggregate Monthly Payment Advances made with respect to Series 1996-1 Leases in
accordance with Section 5.4(b) of the Series 1996-1 Supplement during the
preceding Accrual Period minus the aggregate Monthly Payment Advances with
respect to Series 1996-1 Leases repaid to the Administrative Agent pursuant to
Section 6.3 of the Administrative Agency Agreement during such Accrual Period.
2
<PAGE> 3
"Aggregate Net Sale Proceeds Advances" shall mean, with respect to any
Accrual Period, an amount, which may be positive or negative, equal to the
aggregate Sale Proceeds Advances with respect to Series 1996-1 Leased Vehicles
made by the Administrative Agent pursuant to Section 5.4 of the Administrative
Agency Agreement during the preceding Accrual Period minus the aggregate Sales
Proceeds Advances with respect to Series 1996-1 Leased Vehicles repaid to the
Administrative Agent pursuant to Section 5.4 of the Administrative Agency
Agreement during such Accrual Period.
"Applicable Law" shall mean all applicable laws, ordinances, judgments,
decrees, injunctions, writs and orders of any Governmental Authority and rules,
regulations, orders, interpretations, licenses and permits of any Governmental
Authority.
"Asset Contribution Agreement" shall mean the agreement dated as of November
__, 1996 between Ford Credit and Ford Credit Leasing, as contributors, and RCL
Trust, as contributee.
"Auction Proceeds" shall mean, with respect to any Series 1996-1 Leased
Vehicle which is sold at auction or otherwise disposed of by the Administrative
Agent on behalf of FCTT, all amounts received by the Administrative Agent in
connection with such sale or disposition; provided, that if RCL Trustee
exercises the purchase option pursuant to Section 9.1 of the Program Operating
Lease, the "Auction Proceeds" shall mean the related RCL Purchase Option Price.
"Available Funds" shall mean, with respect to any Payment Date, the Available
Sale Proceeds plus the Cash Collateral Required Draw Amount.
"Available Sale Proceeds" shall mean, with respect to any Payment Date, the
Sale Proceeds for all Series 1996-1 Leased Vehicles plus the Aggregate Net Sale
Proceeds Advances, in each case with respect to the related Accrual Period.
"Basic Documents" shall mean the FCTT Agreement, the Administrative Agency
Agreement, the Series 1996-1 Supplement, the RCL Trust Agreement, the Program
Operating Lease, the Asset Contribution Agreement, the Transfer
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<PAGE> 4
Agreement, the Lease Trust Agreement, the Lease Trust Paying Agent Agreement,
the Indenture, and each instrument and certificate delivered in connection
therewith.
"Benefit Plan" shall mean (i) an employee benefit plan (as defined in Section
3(3) of ERISA) that is subject to the provisions of Title I of ERISA, (ii) a
plan described in Section 4975(e)(1) of the Code or (iii) any entity whose
underlying assets include plan assets subject to Title I of ERISA by reason of
a plan's investment in the entity.
"Cash Collateral Account" shall mean the account designated as such pursuant
to Section 3.5(a) of the Program Operating Lease.
"Cash Collateral Account Certificate" shall mean the certificate designated
as such pursuant to Section 8.3(a) of the Indenture.
"Cash Collateral Account Investments" shall mean the Hanover 100% U.S.
Treasury Securities Fund; provided, than in the event the Hanover 100% U.S.
Treasury Securities Fund is not available or is no longer rated in the highest
long-term rating category by each Rating Agency, all amounts on deposit in the
Cash Collateral Account shall be invested in the Hanover U.S.Treasury Fund;
provided, further, that if the Hanover U.S. Treasury Fund and the Hanover U.S.
Treasury Securities Fund both are not available, or are both no longer rated in
the highest long-term rating category by each Rating Agency, amounts on deposit
in the Cash Collateral Account shall be invested in the Fidelity U.S.
Government Reserve Fund, provided, that the Fidelity U.S. Government Reserve
Fund is rated in the highest long-term rating category by each Rating Agency.
"Cash Collateral Account Property" has the meaning set forth in Section 3.5(a)
of the Program Operating Lease.
"Cash Collateral Additional Draw Amount" shall mean, with respect to any
Payment Date, an amount equal to the Additional Payment for the Payment Date
less the portion of such Additional Payment to be applied to make payments on
the Subordinated Notes.
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"Cash Collateral Amount" shall mean, with respect to any date of
determination, the amount on deposit in the Cash Collateral Account (including
any investment earnings) at the open of business on such date unless otherwise
specified.
"Cash Collateral Deposit Amount" shall mean, with respect to any Payment
Date, the Series 1996-1 Collections (other than Sale Proceeds) plus the
Aggregate Net Monthly Payment Advances plus all investment earnings on amounts
deposited in the Series 1996-1 Collection Account, in each case with respect to
the related Accrual Period.
"Cash Collateral Required Draw Amount" shall mean, with respect to any
Payment Date, the lesser of (a) the Required Interest Payment for the Payment
Date and (b) the Cash Collateral Amount on the Business Day preceding the
Payment Date (after giving effect to the addition of the Cash Collateral
Deposit Amount, the Transferor Purchase Option Net Proceeds and the investment
earnings on amounts deposited in the Certificate Distribution Account during
the related Accrual Period on such Business Day).
"Certificate Balance" shall mean, with respect to any Lease Trust
Certificate, initially, the principal balance of such Lease Trust Certificate
on the Series 1996-1 Issue Date, and thereafter, as of any date, such amount
minus all amounts distributed with respect to such Lease Trust Certificate as
principal pursuant to the Lease Trust Agreement on or before such date.
"Certificate Distribution Account" shall mean the account designated as such
pursuant to Section 5.1 of the Lease Trust Agreement.
"Certificate Distribution Draw Amount" shall mean, with respect to any
Semiannual Payment Date on which the Available Funds for the Semiannual
Payment Date is less than the amount equal to the Required Interest Payment
less interest accrued on the Lease Trust Certificates, an amount equal to the
lesser of (x) such shortfall and (y) the amount on deposit in the Certificate
Distribution Account on the Business Day preceding such Semiannual Payment
Date.
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<PAGE> 6
"Certificate Interest Rate" shall mean the per annum rate at which interest
accrues on the Lease Trust Certificates, which shall be ____%.
"Class" shall mean, with respect to the Senior Notes, all of the Senior Notes
having the same Senior Note Interest Rate and the same Stated Maturity.
"Closing Date" shall mean November __, 1996.
"Collection Period Settlement Date" shall mean, with respect to any
Collection Period, the Business Day preceding the related Distribution Date.
"Eligible Account" shall mean a segregated trust account at a financial
institution having a long-term debt rating by each Rating Agency of at least
"Baa3" or the equivalent.
"Eligible State" shall mean each of Arizona, Arkansas, California, Colorado,
Kansas, Minnesota, Nebraska, Nevada, New Mexico, New York, North Dakota,
Pennsylvania, South Dakota, Virginia, and Washington.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Indenture" shall mean the indenture dated as of November __, 1996 between
the Lease Trustee and the Indenture Trustee, as amended or supplemented from
time to time.
"Indenture Event of Default" shall mean any Event of Default (as defined in
the Indenture) set forth in Section 5.1 of the Indenture.
"Indenture Trustee" shall mean The Chase Manhattan Bank, a New York
corporation, not in its individual capacity but solely as trustee under the
Indenture, or any successor trustee thereunder.
"Initial Cash Collateral Account Deposit" shall mean $______________.
"Interest Accrual Period" shall mean, with respect to (a) any Payment Date
other than the first Payment Date, the period from and including the 15th day
of the
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<PAGE> 7
third Collection Period preceding the Collection Period in which such Payment
Date occurs, through and including the 14th day of the Collection Period in
which such Payment Date occurs, and (b) the first Payment Date, the period from
and including the Closing Date through and including the 14th day of the
Collection Period in which such first Payment Date occurs, in each case whether
or not such day is a Business Day.
"Lease Event of Default" shall mean each event of default set forth in
Section 10.1 of the Program Operating Lease.
"Lease Trust" shall mean Ford Credit Auto Lease Trust 1996-1 created pursuant
to the Lease Trust Agreement.
"Lease Trust Agreement" shall mean the trust agreement dated as of November
__, 1996 between the RCL Trustee and the Lease Trustee, as amended or
supplemented from time to time.
"Lease Trust Certificate" shall mean a certificate evidencing an interest in
the Lease Trust substantially in the form attached to the Lease Trust Agreement
as Exhibit A.
"Lease Trust Certificateholder" shall mean, as of any date, the Person in
whose name a Lease Trust Certificate is registered on the Lease Trust
Certificate Register.
"Lease Trustee" shall mean PNC Bank, Delaware, not in its individual capacity
but solely as trustee under the Lease Trust Agreement, and any successor
trustee thereunder.
"Lease Trust Estate" shall mean (i) the rights of the Lease Trust under
Series 1996-1 Certificates, (ii) the rights of the Lease Trust as lessor under
the Program Operating Lease and amounts payable to the Lease Trust thereunder,
(iii) all funds on deposit from time to time in the Series 1996-1 Collection
Account, Series 1996-1 Payahead Account, the Series 1996-1 Payments Account,
the Series 1996-1 Certificate Distribution Account and in all investments and
proceeds thereof (including all investment income from amounts on deposit in
the Collection Ac-
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<PAGE> 8
count), (iv) the rights of RCL Trust 1996-1 under the Asset Contribution
Agreement, (v) the rights of Lease Trust as Holder of the Series 1996- 1
Certificates under the Administrative Agency Agreement and the Series 1996-1
Supplement, (vi) the security interest of the Lease Trust in amounts credited
to the Cash Collateral Account and the right to make withdrawals therefrom and
(vii) proceeds of the foregoing.
"Monthly Remittance Conditions" shall mean, with respect to Series 1996-1
Collections, (i) Ford Credit is the Administrative Agent, (ii) the rating of
Ford Credit's short-term unsecured debt is at least P-1 by Moody's Investors
Service, Inc. and A-1 by Standard & Poor's Ratings Group and (iii) no Event of
Default with respect to Series 1996-1 shall have occurred under the
Administrative Agency Agreement.
"Note Depository Agreement" shall mean the agreement among the Lease
Trustee, the Indenture Trustee, and The Depository Trust Company, as the
initial Clearing Agency, dated as of the Closing Date, relating to the Senior
Notes, as the same may be amended or supplemented from time to time.
"Outstanding Amount" shall mean, as of any date with respect to (i) any Class
of Senior Notes, the aggregate principal amount of all Senior Notes of the
Class which are Outstanding (as defined in the Indenture) on such date and with
respect to all of the Senior Notes, the aggregate principal amount of all
Senior Notes which are Outstanding (as defined in the Indenture) on such date,
in each case as reduced by payments of principal previously made on such Senior
Notes and (ii) with respect to the Subordinated Notes, the aggregate principal
amount of all Subordinated Notes which are outstanding on such date, in each
case as reduced by payments of principal previously made on the Subordinated
Notes); provided, that in determining whether the holders of Subordinated Notes
evidencing the requisite portion or percentage of the Outstanding Amount of the
Subordinated Notes have given any request, demand, authorization, direction,
notice, consent, or waiver under any Basic Document, Subordinated Notes owned
by the Issuer, the Depositor, the Administrative Agent or any Affiliate of any
of the foregoing Persons shall be disregarded and deemed to be excluded from
the Outstanding Amount of the Subordinated
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<PAGE> 9
Notes, except that, in determining whether the Indenture Trustee and Lease
Trustee shall be protected in relying on any such request, demand,
authorization, direction, notice, consent, or waiver, only Subordinated Notes
that a Responsible Officer (as defined in the Indenture) of the Indenture
Trustee, if applicable, and a Responsible Officer (as defined in the Lease
Trust Agreement) of the Owner Trustee with direct responsibility for the
administration of the Lease Trust Agreement, if applicable, knows to be so
owned shall be so disregarded.
"Payment Date" shall mean, _____ 15, _____ 15, ______ 15, and ______ 15, of
each year commencing _____ 15, 199_.
"Permitted Investments" shall mean any one of the following instruments,
obligations or securities:
(i) direct obligations of, and obligations fully guaranteed by, the
United States of America or any agency or instrumentality of the
United States the obligations of which are backed by the full faith and
credit of the United States;
(ii) commercial paper issued by any corporation incorporated under
the laws of the United States or any State so long as at the time such
commercial paper is issued such corporation has a long-term rating of A1 by
Moody's Investors Service, Inc. (if such commercial paper has a maturity
greater than 30 days) and such commercial paper is rated at least P-1 by
Moody's Investors Service, Inc. and A-1 by Standard and Poor's Ratings Group;
or
(iii) any other investment otherwise approved by any Rating Agency.
"Pool Balance" shall mean, with respect to any date, the Series Specified
Asset Amount with respect to Series 1996-1 Assets as of such date.
"Program Operating Lease" shall mean the agreement dated November __, 1996
between RCL Trustee, as Program Lessee, and the Lease Trustee, as Program
Lessor, as amended from time to time.
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"Qualified Institutional Buyer" shall mean a "qualified institutional buyer"
as such term is defined in paragraph (a)(1) of Rule 144A of the Securities Act.
"Rating Agency" shall mean Moody's Investors Service, Inc. and Standard &
Poor's Ratings Services. 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 Issuer, notice of
which designation shall be given to the Indenture Trustee, the Lease Trustee
and the Administrative Agent.
"RCL Account" shall mean the account designated as such pursuant to Section 5.1
of the RCL Trust Agreement.
"RCL Assignment Agreement" shall mean the assignment agreement dated as of
November __, 1996 between the RCL Trustee, as assignor, and Ford Credit
Leasing, as assignee, substantially in the form attached as Exhibit B to the
RCL Trust Agreement.
"RCL Purchase Option Price" shall mean, with respect to the beneficial
interest in any Series 1996-1 Leased Vehicle, the Residual Value of such Series
1996-1 Leased Vehicle minus any amounts due from the related Lessee with
respect to Excess Wear and Tear and Excess Mileage which were uncollected as of
the end of the Collection Period in which the related Auction Proceeds were
received.
"RCL Trust 1996-1" shall mean RCL Trust 1996-1 established pursuant to the
RCL Trust Agreement.
"RCL Trust Agreement" shall mean the agreement dated as of November __, 1996
among Ford Credit as Grantor and initial Beneficiary, Ford Credit Leasing as
Grantor and initial Beneficiary, and the RCL Trustee.
"RCL Trustee" shall mean First Union Bank of Delaware, a Delaware banking
corporation, not in its individual capacity but solely as trustee of RCL Trust
1996-1.
"Required Cash Collateral Amount" shall mean, with respect to (i) any Payment
Date occurring prior to the earlier to occur of (a) the date on which the last
remaining Series 1996-1 Lease terminated and (b) the termination of the Program
Operating Lease pursuant to Section 11.1(a) thereof, the greater of (x) the
product of ____%
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and the Pool Balance as of the last day of the related Accrual Period and (y)
the product of ___% and the Pool Balance on the Closing Date and (ii) any
subsequent Payment Date, zero.
"Required Interest Payment" shall mean, with respect to any Payment Date, (i)
the Series 1996-1 Administrative Fee plus (ii) the amount of interest accrued
during the preceding Interest Accrual Period on the Outstanding Amount of each
Class of Senior Notes at their respective Senior Note Interest Rates together
with any overdue interest plus interest on any overdue interest at the
applicable Senior Note Interest Rate, on the Outstanding Amount of the
Subordinated Notes at the Subordinated Note Interest Rate together with any
overdue interest plus interest on any overdue interest at the Subordinated Note
Interest Rate, and on the Aggregate Certificate Balance of the Lease Trust
Certificates at the Certificate Interest Rate together with any overdue
interest plus interest on any overdue interest at the Certificate Rate.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Semiannual Interest Accrual Period" shall mean, with respect to (a) any
Semiannual Payment Date other than the first Semiannual Payment Date, the
period from and including the 15th day of the sixth Collection Period preceding
the Collection Period in which such Semiannual Payment Date occurs, through and
including the 14th day of the Collection Period in which such Semiannual
Payment Date occurs, and (b) the first Semiannual Payment Date, the period from
and including the Closing Date through and including the 14th day of the
Collection Period in which such first Semiannual Payment Date occurs, in each
case whether or not such day is a Business Day.
"Semiannual Payment Date" shall mean each ____ 15 and ___ 15 commencing _____
15, 1997.
"Senior Noteholder" shall mean, as of any date, the Person in whose name a
Senior Note is registered on the Senior Note Register. When used with respect
to any Note, the "related Senior Noteholder" shall mean, as of any date, the
Person registered on the Senior Note Register with respect to such Senior Note.
"Senior Note Interest Rate" shall mean with respect to the Senior Notes of
any Class, the annual rate at which interest accrues on the Senior Notes of the
Class,
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as specified in Section 2.1 of the Indenture and in the Senior Notes.
"Senior Notes" shall mean, the __% Class A-1 Asset Backed Notes and the __%
Class A-2 Asset Backed Notes, each as issued by the Lease Trust pursuant to the
Indenture and each as defined therein.
"Series 1996-1" shall mean the Series of Specified Beneficial Certificates
designated as the Series 1996-1 Specified Beneficial Certificates.
"Series 1996-1 Administrative Fee" shall mean, with respect to any Payment
Date, the Specified Asset Administrative Fee payable to the Administrative
Agent for services rendered in connection with servicing the Series 1996-1
Assets and administering the distributions of funds during such Accrual Period
(including the payment of the fees and expenses of Comerica, the Lease Trustee
and the Indenture Trustee) which shall be equal to the sum, for each of the
three Collection Periods preceding such Payment Date, of the product of (i)
one-twelfth of 1% and (ii) the Pool Balance as of the beginning of each such
Collection Period.
"Series 1996-1 Asset Amount" shall mean the Series Specified Asset Amount
with respect to Series 1996-1.
"Series 1996-1 Assets" has the meaning set forth in Section 1.1 of the
Series 1996-1 Supplement.
"Series 1996-1 Certificates" shall mean the Series of Specified Beneficial
Certificates issued by FCTT and designated as the "Series 1996-1 Specified
Beneficial Certificates" representing in the aggregate a 100% beneficial
interest in the Series 1996-1 Assets.
"Series 1996-1 Collections" shall mean with respect to any Accrual Period,
the sum of the following amounts: (i) the Monthly Payments with respect to
Series 1996-1 Leases and Series 1996-1 Leased Vehicles received by the
Administrative Agent, including applied Payaheads; plus (ii) Administrative
Purchase Amounts deposited in the Series 1996-1 Collection Account pursuant to
Sections 4.2, 4.5 and 4.7 of the Administrative Agency Agreement or Section 3.3
of the Asset Contribution Agreement plus (iii) Sale Proceeds with respect to
Series 1996-1 Leased Vehicles received by the Administrative Agent; plus (iv)
Recoveries with respect to Series 1996-1; plus (v) Liquidation Proceeds with
respect to Series 1996-1; and plus
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(vi) Voluntary Early Termination Proceeds with respect to Series 1996-1.
"Series 1996-1 Collection Account" shall mean the account designated as such
in Section 5.1(a) of the Series 1996-1 Supplement as the Series Collection
Account for Series 1996-1.
"Series 1996-1 Comerica Fee" shall mean the Specified Asset Comerica Fee
relating to the Series 1996-1 Assets, which shall be equal to the Series 1996-1
Percentage of the monthly fees and expenses of Comerica payable pursuant to
Section 6.8 of the FCTT Agreement.
"Series 1996-1 Credit Loss" shall mean, with respect to Series 1996-1 and any
Collection Period, (i) the Specified Asset Charged-Off Amount with respect to
Series 1996-1 for the Collection Period minus (ii) Recoveries with respect to
Series 1996-1 received during the Collection Period.
"Series 1996-1 Cut-Off Date" shall mean the Series Cut-Off Date with respect
to the Series 1996-1 Assets and the Series 1996-1 Certificates, which date is
_________, 1996.
"Series 1996-1 Fees Account" shall mean the account designated as such
pursuant to Section 4.1 of the Series 1996-1 Supplement as the Series Fee
Account for Series 1996-1.
"Series 1996-1 Issue Date" shall mean the date designated by the
Administrative Agent, pursuant to Section 4.3 of the FCTT Agreement, as the
Series Issue Date with respect to the Series 1996-1 Assets and the Series
1996-1 Certificates, which date is November __, 1996.
"Series 1996-1 Lease" shall mean each Specified Lease listed on Schedule A to
the Series 1996-1 Supplement.
"Series 1996-1 Leased Vehicle" shall mean each Specified Leased Vehicle
listed on Schedule A to the Series 1996-1 Supplement.
"Series 1996-1 Payahead Account" shall mean, the account designated as such
pursuant to Section 5.1(b) of the Series 1996-1 Supplement as the Series
Payahead Account for Series 1996-1.
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"Series 1996-1 Payments Account" shall mean the account designated as such
pursuant to Section 8.2(a) of the Indenture.
"Series 1996-1 Percentage" shall mean, as of any date, the percentage
equivalent of a fraction, (i) the numerator of which is the Series 1996-1 Asset
Amount and (ii) the denominator of which is the Aggregate FCTT Asset Amount.
"Series 1996-1 Residual Loss" shall mean, with respect to Series 1996-1 and
any Collection Period, the following amounts with respect to the Collection
Period: (i) the aggregate Residual Values of all Series 1996-1 Leased Vehicles
with respect to which the Scheduled Lease End Dates has occurred and the
related Auction Proceeds have been received minus (ii) Auction Proceeds of such
Series 1996-1 Leased Vehicles and minus (iii) amounts with respect to Excess
Wear and Tear and Excess Mileage assessed in connection with such Series 1996-1
Leased Vehicles.
"Series 1996-1 Specification Notice" shall mean the Series Specification
Notice relating to the Series 1996-1 Assets.
"Series 1996-1 Supplement" shall mean the Series 1996-1 Supplement to the
Administrative Agency Agreement dated as of November __, 1996 among Ford Credit
as Administrative Agent and initial Beneficiary, Ford Credit Leasing as initial
Beneficiary and Comerica Bank as trustee of FCTT.
"Subordinated Noteholder" shall mean, as of any date, the Person in whose
name a Subordinated Note is registered on the Subordinated Note Register. When
used with respect to any Subordinated Note, the "related Subordinated
Noteholder" shall mean, as of any date, the Person registered on the
Subordinated Note Register with respect to such Subordinated Note.
"Subordinated Note Interest Rate" shall mean the annual rate at which
interest accrues on the Subordinated Notes, as specified in the Subordinated
Notes.
"Subordinated Notes" shall mean the __% Subordinated Asset Backed Notes as
issued by the Lease Trust pursuant to the Lease Trust Agreement and each as
defined therein.
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"Transfer Agreement" shall mean the agreement dated as of November __, 1996
between RCL Trust 1996-1, as transferor, and Lease Trustee, as transferee.
"Transferor Purchase Option Net Proceeds" shall have the meaning set forth in
Section 9.1 of the Program Operating Lease.
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APPENDIX I
DEFINED TERMS
"Accepted Servicing Practices" has the meaning set forth in Section
4.1 of the Administrative Agency Agreement.
"Additional Fee" means, with respect to any Lease, an amount payable
monthly or otherwise by the Lessee, calculated as the product of the Balance
Subject to Lease Charges of the related Leased Vehicle and 0.11%, or in such
other amount or manner as shall be established by the Administrative Agent at
the inception of the Lease.
"Adjusted Balance Subject to Lease Charges" means, as of any date with
respect to any Lease and Leased Vehicle, the Balance Subject to Lease Charges
minus the aggregate Retail Operating Lease Principal scheduled to have been
received by such date; provided, that with respect to any Lease which (i) has
become a Liquidated Lease, (ii) has been subject to a Voluntary Early
Termination, (iii) the beneficial interest in which has been purchased pursuant
to Section 4.2, 4.5 or 4.7 of the Administrative Agency Agreement or pursuant
to the terms of any applicable Supplement or (iv) has expired on its Scheduled
Lease End Date, the Adjusted Balance Subject to Lease Charges shall be zero.
"Administrative Agency Agreement" means the Amended and Restated
Administrative Agency Agreement dated as of January 31, 1994 among the
Administrative Agent, the Grantors and Comerica, as supplemented in connection
with each issuance of a Series of Specified Beneficial Certificates, and as
otherwise amended, modified or supplemented from time to time.
"Administrative Agent" means Ford Credit in its capacity as the
administrative agent under the Administrative Agency Agreement.
"Administrative Purchase Amount" means, as of the end of any
Collection Period with respect to any Specified Lease and Specified Leased
Vehicle, the Adjusted Balance Subject to Lease Charges as of such date plus any
<PAGE> 17
scheduled Monthly Payments up to and including such Collection Period which
have not been paid by the related Lessee or advanced by the Administrative
Agent.
"Administrative Agent's Certificate" has the meaning set forth in
Section 4.9 of the Administrative Agency Agreement.
"Advance Payment Plan" means, with respect to any lease originated
under the Red Carpet Lease Plan, a payment option of the related lessee
pursuant to which such lessee prepays all monthly payments in a single advance
payment, generally discounted to reflect the present value of such single
advance payment and the reduction in the risk of credit loss.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such Person. For the purposes of this definition,
"control" when used with respect to any specified Person means 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" have meanings correlative to the
foregoing.
"Aggregate FCTT Asset Amount" means, as of any date, the sum of
Aggregate Non-Specified Asset Amount plus the aggregate of all Series Specified
Asset Amounts, each as of such date.
"Aggregate Non-Specified Asset Amount" means, as of any date, the
aggregate Book Value of the Non-Specified Assets as of such date, as determined
by the Administrative Agent pursuant to the Administrative Agency Agreement.
"Auction Proceeds" means, as modified in connection with the issuance
of any Series, with respect to any Leased Vehicle which is sold at auction or
otherwise disposed of by the Administrative Agent on behalf of FCTT, all
amounts received by the Administrative Agent in connection with such sale or
disposition.
"Balance Subject to Lease Charges" means with respect to any Lease and
Leased Vehicle, the amount which
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FCTT paid (including any amount paid as a deferred purchase price) to the
Dealer for such Lease and Leased Vehicle in accordance with the customary
policies and procedures of the Administrative Agent, which is the total
acquisition cost used to calculate the Monthly Payment.
"Bankruptcy" means, with respect to any Person, (i) the making of a
general assignment for the benefit of creditors, (ii) the filing of a voluntary
petition in bankruptcy, (iii) being adjudged a bankrupt or insolvent, or having
had entered against such Person an order for relief in any bankruptcy or
insolvency proceeding, (iv) the filing by such Person of a petition or answer
seeking reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation, (v) the
filing by such Person of an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against such Person in any
proceeding specified in (vii) below, (vi) seeking, consenting 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 and (vii) the failure
to obtain dismissal within 120 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 failure to have vacated with 90 days any order appointing
a trustee, liquidator or receiver of such Person or of such Person's assets or
any substantial portion thereof.
"Beneficiary" means with respect to any Non-Specified Assets, each
Holder of an Exchangeable Beneficial Certificate, and with respect to any
Series Specified Assets, each Holder of related Specified Beneficial
Certificates.
"Book Value" means, as of any date, (i) with respect to any Specified
Lease and Specified Leased Vehicle, the Adjusted Balance Subject to Lease
Charges and (ii) with respect to any Lease and Leased Vehicle which is a
Non-Specified Asset, the amount recorded on the books and records of the
Administrative Agent as of such date as the Balance Subject to Lease Charges
minus the aggregate amount of depreciation accrued through such date. The
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total depreciation for any Leased Vehicle shall equal the difference between
the Balance Subject to Lease Charges and the Residual Value, which amount shall
accrue over the term of the related Lease computed on a straight line basis or
by such other similar method as may be utilized by the Administrative Agent, at
the direction of the Holders of the Exchangeable Beneficial Certificates, from
time to time.
"Business Day" means any day other than a Saturday or Sunday or a day
on which banks or trust companies in Michigan, New York, New York or
Wilmington, Delaware are authorized or required to close.
"Certificate of Title" means the certificate of title or other
evidence of ownership of a Leased Vehicle issued by the relevant government
department or agency in the jurisdiction in which the Leased Vehicle is
registered or, to the extent that a certificate of title or other evidence of
ownership has not been issued, the application (or copy thereof) for the
foregoing.
"Certificates" means the Exchangeable Beneficial Certificates and the
Specified Beneficial Certificates issued and outstanding.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Collection Period" means each calendar month.
"Collections" means (i) all amounts collected from Lessees with
respect to Total Monthly Payments (other than Vehicle Insurance and Maintenance
Amounts), (ii) Sale Proceeds, (iii) Voluntary Early Termination Proceeds, (iv)
Liquidation Proceeds and (v) Recoveries.
"Comerica" means Comerica Bank, a Michigan banking corporation, in its
capacity as trustee under the FCTT Agreement, together with any successor or
permitted assign in such capacity.
"Comerica Office" means the office of Comerica at which any particular
time its corporate trust business shall be administered, which as of the date
of the Administrative Agency Agreement is 411 W. Lafayette, 4th Floor, Detroit,
Michigan 48226-3461.
4
<PAGE> 20
"Constant Yield Payment" means, with respect to any Lease, a level
amount payable monthly in advance by the related Lessee (except that the first
and last monthly payments may vary, but not substantially) that will provide a
fixed internal rate of return equal to the Retail Operating Lease Factor with
respect to such Lease, and that will amortize the Balance Subject to Lease
Charges of such Lease to a final payment equal to the Residual Value of the
related Leased Vehicle over the term of the related Lease.
"Dealer" means a dealer who in the ordinary course of business leases
automobiles and light-duty trucks to lessees pursuant to the RCL Plan or such
other plan as Ford Credit or its Affiliates may implement from time to time.
"Dealer Purchase Option Price" means, with respect to any Leased
Vehicle purchased as of the related Scheduled Lease End Date, (i) the Residual
Value of such Leased Vehicle, plus (ii) any unpaid amounts due from the related
Lessee, including any unpaid Total Monthly Payments, minus (iii) any Security
Deposit or Reconditioning Reserve not required to be returned to the Lessee and
minus (iv) any Excess Deferred Gross with respect to such Leased Vehicle.
"Dealer Recourse" means, with respect to any Lease, any recourse
rights against the Dealer which originated the Lease and any successor Dealer.
"Distribution Date" means the 15th day of each month, and if such day
is not a Business Day, the next succeeding Business Day, unless otherwise
specified in a Supplement with respect to Series Specified Assets or otherwise
specified in the Administrative Agency Agreement with respect to Non-Specified
Assets; provided that the Distribution Date shall in no event occur less
frequently than quarterly.
"Eligible Institution" means a 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
5
<PAGE> 21
all times has a long term rating of A-2 and short-term deposit rating of P-1 by
Moody's Investors Service, Inc. and a short-term rating of A-1+ by Standard and
Poor's Ratings Group 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.
"Enhancement" means, with respect to any Series, any reserve fund,
overcollateralization, residual value guaranty, letter of credit, guaranteed
investment contract, cash collateral account, cash collateral guaranty,
interest rate swap or other contract or agreement for the benefit of such
Series.
"Events of Default" has the meaning set forth in Section 7.1 of the
Administrative Agency Agreement.
"Excess Deferred Gross" means, with respect to any Lease and Leased
Vehicle, the amount, if any, withheld as excess deferred gross from the total
amount paid to the related Dealer in connection with assignment of such Lease
and Leased Vehicle. Excess Deferred Gross is withheld if the acquisition cost
of a Leased Vehicle exceeds the manufacturer's suggested retail price of a
Leased Vehicle, if the Residual Value of a Leased Vehicle as set forth in the
related Lease exceeds the maximum amount permitted for such Leased Vehicle by
the Administrative Agent, or the security deposit or reconditioning reserve for
such Lease is waived by the Dealer.
"Excess Mileage" means, for any Leased Vehicle, the excess of the
number of miles by which such Leased Vehicle has been driven over the number of
miles such Leased Vehicle may be driven during the term of the related Lease
without incurring an excess mileage charge pursuant to the related Lease.
"Excess Wear and Tear" means, for any Leased Vehicle, all damages to
such Leased Vehicle that are not the result of normal wear and tear as more
specifically described in the related Lease.
"Exchangeable Beneficial Certificates" means certificates issued to
Beneficiaries representing in the aggregate a 100% beneficial interest in that
portion of
6
<PAGE> 22
FCTT which is not represented by any Specified Beneficial Certificates.
"FCTT" means the Ford Credit Titling Trust established pursuant to the
FCTT Agreement.
"FCTT Agreement" means the Amended and Restated Trust Agreement dated
and effective as of January 31, 1994 by and among Comerica, Ford Credit as
Grantor and initial Beneficiary and Ford Credit Leasing as Grantor and initial
Beneficiary, as such agreement may be supplemented, amended or modified from
time to time.
"FCTT Assets" means (i) all contributions of capital to FCTT pursuant
to Section 4.1(b) of the FCTT Agreement, (ii) all Collections (prior to
distribution to the applicable Beneficiaries) and any amounts on deposit in the
FCTT Collection Account; (iii) Leases; (iv) Leased Vehicles; (v) Certificates
of Title; (vi) the lessor's rights under Leases with respect to any Security
Deposits or Reconditioning Reserves; (vii) Dealer Recourse and (viii) all
proceeds of the foregoing.
"FCTT Collection Account" means the account established pursuant to
Section 5.1(a) of the FCTT Agreement.
"Ford Credit" means Ford Motor Credit Company, a Delaware corporation.
"Ford Credit Leasing" means Ford Credit Leasing Company, Inc., a
Delaware corporation.
"FCTT Register" and "FCTT Registrar" mean the register maintained and
the registrar appointed pursuant to Section 3.6 of the FCTT Agreement.
"Grantors" means Ford Credit and Ford Credit Leasing in their
capacities as grantors of the FCTT Assets to FCTT, together with any
corporation into which either such corporation may be merged or consolidated.
"Governmental Authority" means the United States of America, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
7
<PAGE> 23
"Holder" means the holder of a Certificate as indicated in the FCTT
Register.
"Insurance Policies" means any residual value insurance policy,
comprehensive, collision, liability, physical damage, credit or other insurance
policies (including rights under any self-insurance provided by Ford Credit and
assigned to FCTT and Comerica), and all rights thereunder, which are maintained
by the Grantors, any Lessee or any Affiliate of either Grantor or any Lessee,
to the extent such policy or program covers or applies to any Lease, Leased
Vehicle or the ability of any Lessee to make any required payment under the
related Lease or with respect to the related Leased Vehicle, and any contingent
or excess liability insurance policy or program maintained by or on behalf of
FCTT or Comerica with respect thereto.
"Insurance Proceeds" means the proceeds of any Insurance Policy.
"Lease" means any retail lease contract for an automobile or a
light-duty truck which has been entered into between a Lessee and a Dealer and
assigned by the Dealer to FCTT.
"Lease Files" means, with respect to each Lease, Leased Vehicle and
Lessee, (i) the original of the Lease; (ii) the original credit application
fully executed by the Lessee or a photocopy thereof; (iii) the original
Certificate of Title (or application for a Certificate of Title) and all
related documents retained on file by the Administrative Agent, in accordance
with Accepted Servicing Practices, evidencing the ownership of the Leased
Vehicle; and (iv) any and all other documents that the Administrative Agent
shall retain on file, in accordance with Accepted Servicing Practices, relating
to the Lease, the Lessee, or the Leased Vehicle.
"Lease Purchase Advance" has the meaning set forth in Section 3.4(b)
of the Administrative Agency Agreement.
"Lease Termination Date" means, with respect to any Lease, the date
such Lease actually terminates.
8
<PAGE> 24
"Leased Vehicle" means any automobile or light-duty truck, together
will all accessions thereto, which is subject to a Lease.
"Lessee" means the lessee of a Leased Vehicle or any Person who is
obligated to make payments on the related Lease.
"Liabilities" has the meaning set forth in Section 2.6 of the FCTT
Agreement.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever, including, without limitation, any conditional
sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing and the filing
of any financing statement under the UCC or comparable law of any jurisdiction
to evidence any of the foregoing.
"Liquidated Lease" means (i) any Lease which, by its terms, is in
default and as to which the Administrative Agent has determined, in accordance
with Accepted Servicing Practices, that eventual payment in full is unlikely
and has repossessed or attempted to repossess the related Leased Vehicle and
(ii) any Lease the related Lessee of which has become subject to a Bankruptcy.
"Liquidation Proceeds" means with respect to any Collection Period and
any Liquidated Lease and the related Leased Vehicle, (i) all amounts received
from the related Lessee, the Dealer or any other Person in the Collection
Period in which such Lease became a Liquidated Lease, including, without
limitation, (w) Auction Proceeds, (x) the application of any Security Deposit
or Reconditioning Reserve, (y) any Insurance Proceeds relating to loss or
damage to such Leased Vehicle and (z) any other amounts collected, in each case
net of any sales or use taxes minus (ii) the sum, with respect to the
Collection Period in which such Lease became a Liquidated Lease, of (x)
expenses incurred by the Administrative Agent for the account of the related
Lessee in connection with the collection of monies from the Lessee or the
disposition of the related Leased Vehicle and (y) any
9
<PAGE> 25
amounts to be remitted to the related Lessee as required by applicable law.
"Monthly Payment Advance" means the amount which the Administrative
Agent advances pursuant to Section 6.3 of the Administrative Agency Agreement.
"Monthly Payment" means, with respect to any Lease, the amount payable
monthly by the related Lessee equal to the sum of the Constant Yield Payment,
the Additional Fee payable for the applicable month and certain other fees and
charges.
"Monthly Remittance Condition" has the meaning set forth in Section
5.2(d) of the FCTT Agreement.
"Non-Specified Asset Administrative Fee" means, with respect to any
Collection Period, the fee payable to the Administrative Agent in connection
with the administration of FCTT and the servicing and administration of the
Non-Specified Assets equal to 1/12th of the product of 1.00% and the
Non-Specified Asset Amount as of the last day of such Collection Period. In
addition, the Non-Specified Asset Administrative Fee shall include amounts to
be reimbursed pursuant to Section 4.1 of the Administrative Agency Agreement.
"Non-Specified Asset Charged-Off Amount" means, with respect to any
Collection Period, (i) the following amounts as of the end of the Collection
Period (x) the aggregate Book Value of all Non-Specified Assets which become
Liquidated Leases during the Collection Period, plus (y) the aggregate
uncollected Monthly Payments and Excess Wear and Tear and Excess Mileage with
respect to (A) such Liquidated Leases, plus (B) all Non-Specified Assets whose
Scheduled Lease End Date has occurred and with respect to which the related
Auction Proceeds are received during the Collection Period minus (ii) the
aggregate Liquidation Proceeds received during the Collection Period with
respect to Non-Specified Assets.
"Non-Specified Credit Losses" means, with respect to any Collection
Period, the Non-Specified Asset Charged-Off Amount with respect to the
Collection Period minus Recoveries with respect to Non-Specified Assets for the
Collection Period.
10
<PAGE> 26
"Non-Specified Asset Comerica Fee" means with respect to any
Collection Period an amount equal to the Non-Specified Asset Percentage of (i)
the fees of Comerica determined pursuant to the first sentence of Section 6.8
of the FCTT Agreement plus (ii) the expenses of Comerica pursuant to the second
sentence of Section 6.8 of the FCTT Agreement. The Non-Specified Asset
Comerica Fee shall be payable monthly in accordance with Section 5.2(b) of the
FCTT Agreement.
"Non-Specified Asset Fee" means, with respect to any Collection
Period, an amount equal to the sum of the Non-Specified Asset Administrative
Fee and the Non-Specified Asset Comerica Fee each for such Collection Period.
"Non-Specified Asset Percentage" means, as of any date, the percentage
equivalent of a fraction, (i) the numerator of which is the Aggregate
Non-Specified Asset Amount as of such date and (ii) the denominator of which is
the Aggregate FCTT Asset Amount as of such date.
"Non-Specified Assets" means, prior to the first Series Issue Date,
all FCTT Assets, and after any Series Issue Date, all FCTT Assets other than
any Series Specified Assets.
"Officer's Certificate" means a certificate signed by the chairman of
the board, the president, any executive vice president, any vice president, the
treasurer, any assistant treasurer, or the controller of the Administrative
Agent.
"Opinion of Counsel" means a written opinion of legal counsel, which
counsel may be an employee of Ford Credit or an Affiliate or may from time to
time provide legal services to Ford Credit or an Affiliate.
"Payahead" means, with respect to any Lease, the amounts determined in
accordance with Section 6.1(a) of the Administrative Agency Agreement.
"Payahead Balance" means, with respect to any Lease on any Business
Day, the sum of all Payaheads with respect to such Lease, reduced by the amount
of such Payaheads applied with respect to such Lease, pursuant to Sections 6.1
and 6.3 of the Administrative Agency Agreement.
11
<PAGE> 27
"Payment Extension" has the meaning set forth in Section 4.2(b)(ii) of
the Administrative Agency Agreement.
"Permitted Investments" means, unless otherwise specified with respect
to any Series or any securities based on such Series, any investment rated A-1+
by Standard & Poor's Ratings Group and P-1 by Moody's Investors Service, Inc.
or any other investment as may be permitted by each of such rating agencies.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated association, or government
or any agency or political subdivision thereof, or any other entity of whatever
nature.
"Purchased Lease" means a Specified Lease and related Specified Leased
Vehicle the beneficial interest in which has been purchased by the
Administrative Agent pursuant to Section 4.7 of the Administrative Agency
Agreement.
"Rating Agency" means each nationally recognized statistical rating
organization which has been requested by the Administrative Agent to rate any
securities based on any Series, as specified (or incorporated by reference) in
any Supplement.
"RCL Plan" means the Ford Credit Red Carpet Lease Plan, a financing
program offered by Ford Credit and Dealers pursuant to which Dealers enter into
the Leases with Lessees for the lease of the Leased Vehicles.
"Realized Value" means, with respect to any Leased Vehicle which is
the subject of a Voluntary Early Termination, (i) the fair market wholesale
value of the Leased Vehicle as agreed to by the Dealer and the Lessee, (ii) if
the Dealer and the related Lessee do not agree, the appraised wholesale value
of the Leased Vehicle as determined by an independent professional appraiser
hired by the related Lessee and acceptable to the Dealer and the Administrative
Agent, or (iii) if the Realized Value of the Leased Vehicle has not been
determined pursuant to (i) and (ii) above, the Sale Proceeds received with
respect to the Leased Vehicle.
12
<PAGE> 28
"Reconditioning Reserve" means, with respect to any Lease, an amount
paid by the related Lessee and held by the Administrative Agent on behalf of
FCTT to be applied, if necessary, by the Administrative Agent to offset the
cost, if any, of reconditioning the related Leased Vehicle.
"Recoveries" means, with respect to any Collection Period, (i) all
amounts received during such Collection Period, net of any applicable sales and
use taxes, with respect to (x) Leases which became Liquidated Leases prior to
such Collection Period and (y) Leases whose Scheduled Lease End Date has
occurred prior to such Collection Period and with respect to which the related
Auction Proceeds were received prior to the Collection Period minus (ii) the
sum of (x) expenses incurred by the Administrative Agent during such Collection
Period for the account of the related Lessees in connection with (A) the
collection of monies from the Lessee or (B) with respect to Liquidated Leases,
the disposition of the related Leased Vehicles and (y) any amounts remitted to
the related Lessees during the Collection Period as required by applicable law.
"Related Collection Period" means, with respect to any Distribution
Date, the Collection Period immediately preceding such Distribution Date.
"Residual Value" means, with respect to any Leased Vehicle, the
anticipated value of the Leased Vehicle at the Scheduled Lease End Date as
calculated by the Administrative Agent at the inception of the related Lease
and as set forth in such Lease.
"Responsible Officer" when used with respect to Comerica means any
officer in the corporate trust department, including any vice president,
assistant vice president or any other officer of Comerica.
"Retail Operating Lease Charge" means with respect to any month and
any Lease, the portion of the Constant Yield Payment equal to the product of
(i) the Book Value of the related Leased Vehicle as of the end of the
immediately preceding month and (ii) 1/12 of the Retail Operating Lease Factor
with respect to such Lease.
13
<PAGE> 29
"Retail Operating Lease Factor" means, with respect to any Lease, a
per annum yield determined by the Administrative Agent.
"Retail Operating Lease Principal" means, with respect to any Lease,
that portion of each Constant Yield Payment scheduled to be received from a
Lessee which is not the Retail Operating Lease Charge.
"Sale Proceeds" means, with respect to any Lease which terminated on
its Scheduled Lease End Date, (i) the Auction Proceeds, Dealer Purchase Option
Price or Insurance Proceeds (to the extent relating to loss or damage of the
related Leased Vehicle) which are received upon sale or disposition of the
related Leased Vehicle plus (ii) any amounts with respect to Excess Wear and
Tear and Excess Mileage which were collected before the end of the Collection
Period in which the Auction Proceeds are received (including any Security
Deposit or Reconditioning Reserve applied), net of any applicable sales or use
taxes minus (iii) any amounts refunded to the related Lessee in connection with
prepaid Excess Wear and Tear and prepaid Excess Mileage.
"Sale Proceeds Advance" means the amount advanced by the
Administrative Agent pursuant to Section 5.4 of the Administrative Agency
Agreement.
"Scheduled Lease End Date" means, with respect to any Lease, the date
set forth in the Lease as the termination date for such Lease.
"Schedule of Leases" means, with respect to any Series, the schedule
attached to the related Supplement which identifies the related Series
Specified Assets.
"Security Deposit" means, with respect to any Lease, an amount paid by
the related Lessee and held by the Administrative Agent on behalf of FCTT to be
applied, if necessary, by the Administrative Agent to offset any amounts owed
by the Lessee upon termination of such Lease.
"Series" means any series of Specified Beneficial Certificates and the
related Series Specified Assets.
14
<PAGE> 30
"Series Collection Account" means, with respect to any Series, an
account established pursuant to the related Supplement.
"Series Cut-Off Date" has the meaning set forth in Section 4.3(a) of
the FCTT Agreement.
"Series Fee Account" means with respect to any Series (if applicable),
an account established pursuant to the related Supplement.
"Series Issue Date" means with respect to any Series, the date on
which Comerica, pursuant to the joint written instructions of the Holders of
the Exchangeable Beneficial Certificates, issues such Series of Specified
Beneficial Certificates.
"Series Payahead Account" means each account established pursuant to
Section 6.1(a) of the Administrative Agency Agreement.
"Series Specification Notice" has the meaning set forth in Section
4.3(a) of the FCTT Agreement.
"Series Specified Asset Amount" means, as of any date with respect to
any Series, the aggregate Adjusted Balance Subject to Lease Charges for all
related Specified Leased Vehicles.
"Series Specified Asset Percentage" means, as of any date with respect
to any Series, the percentage equivalent of a fraction, (i) the numerator of
which is the Series Specified Asset Amount and (ii) the denominator of which is
the Aggregate FCTT Asset Amount, each as of such date.
"Series Specified Assets" means, with respect to any Series, the
related Specified Leases and Specified Leased Vehicles identified in the Series
Specification Notice and the related Supplement, including the related
Certificates of Title and other FCTT Assets associated with such Specified
Leases and Specified Leased Vehicles, and all proceeds arising therefrom and
associated therewith.
"Specified Asset Administrative Fee" means, with respect to any
Collection Period and any Series, the fee payable to the Administrative Agent
in connection with
15
<PAGE> 31
the administration of the related Series Specified Assets, as set forth in the
related Supplement.
"Specified Asset Charged-Off Amount" means, with respect to any
Collection Period and any Series, (i) the following amounts as of the end of
the Collection Period (x) the aggregate Book Value of all related Specified
Leases and Specified Leased Vehicles which become Liquidated Leases during the
Collection Period, plus (y) the aggregate uncollected Monthly Payments and
amounts relating to Excess Wear and Tear and Excess Mileage with respect to (A)
such Liquidated Leases, plus (B) all related Specified Leases whose Scheduled
Lease End Date has occurred and with respect to which the related Auction
Proceeds are received during the Collection Period minus (ii) the aggregate
Liquidation Proceeds received during the Collection Period with respect to
related Specified Leases.
"Specified Asset Comerica Fee" means, with respect to any Collection
Period and any Series, an amount equal to the related Series Specified Asset
Percentage of (i) the monthly fees and expenses of Comerica determined pursuant
to Section 6.8 of the FCTT Agreement plus (ii) the expenses of Comerica
pursuant to the second sentence of Section 6.8 of the FCTT Agreement.
"Specified Asset Fee" means, with respect to any Collection Period and
any Series, the sum of the Specified Asset Administrative Fee and the Specified
Asset Comerica Fee, each for such Collection Period, related to such Series.
"Specified Beneficial Certificates" means a series of certificates
issued by FCTT representing in the aggregate a 100% beneficial interest in FCTT
Assets which constitute the related Series Specified Assets.
"Specified Lease" means, with respect to any Series, a Lease
specified as a "Specified Lease" in the Schedule of Leases attached to the
related Supplement.
"Specified Leased Vehicle" means, with respect to any Series, a Leased
Vehicle which is leased pursuant to a Specified Lease.
16
<PAGE> 32
"Supplement" means, with respect to any Series, a supplement to the
Administrative Agency Agreement executed in connection with the issuance of
such Series.
"Supplemental Administrative Fee" means, with respect to any
Collection Period, all late fees, prepayment charges and other administrative
fees (including fees charged in connection with Voluntary Early Terminations
but excluding the Additional Fee) and expenses or similar charges allowed by
applicable law with respect to Leases and Leased Vehicles.
"Term Extension" has the meaning set forth in Section 4.2(b)(i) of the
Administrative Agency Agreement.
"Total Monthly Payment" means, with respect to any Lease, the amount
payable monthly by the related Lessee equal to the sum of (i) the Monthly
Payment, (ii) the Use and Lease Tax Amount, and (iii) the Vehicle Insurance and
Maintenance Amount.
"Treasury Regulations" means the regulations promulgated by the U.S.
Department of Treasury.
"UCC" means the Uniform Commercial Code as in effect in any relevant
jurisdiction.
"Use and Lease Tax Amount" means, with respect to any Lease, the
amount to be applied to pay any monthly rental receipts tax levied on the
related Monthly Payment and the related Vehicle Insurance and Maintenance
Amount.
"Vehicle Insurance and Maintenance Amount" means, with respect to any
Lease, any monthly amount payable by the related Lessee to the Administrative
Agent for the account of a Dealer in connection with the monthly servicing
and/or monthly vehicle insurance of the related Leased Vehicle and included in
the Total Monthly Payment due from such Lessee.
"Vehicle Purchase Account" means the account established pursuant to
Section 3.3 of the Administrative Agency Agreement.
"Vehicle Purchase Certificate" means the monthly certificate delivered
by the Administrative Agent pursu-
17
<PAGE> 33
ant to Section 3.5 of the Administrative Agency Agreement.
"Voluntary Early Termination" means, with respect to any Lease, the
voluntary early termination of such Lease by the related Lessee pursuant to the
terms thereof; provided, however, that no termination of a Lease will be
considered a "Voluntary Early Termination" unless the related Lessee has paid
in full all amounts due pursuant to such Lease.
"Voluntary Early Termination Proceeds" means, with respect to any
Lease which is subject to a Voluntary Early Termination, the sum of (i) the
Realized Value of the related Leased Vehicle and (ii) the difference at such
time, if positive, between (x) the sum of (A) the Book Value of such Lease and
Leased Vehicle and (B) any overdue Total Monthly Payments with respect to such
Lease and (y) the Realized Value of the related Leased Vehicle.
18
<PAGE> 1
EXHIBIT 25.1
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-----------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
--------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)
----------
---------------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
</TABLE>
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
------------------------------------------------
FORD CREDIT AUTO LEASE TRUST 1996-1
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
DELAWARE TRUST N/A
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
C/O PNC BANK, DELAWARE
222 DELAWARE AVENUE
WILMINGTON, DE 19801
(Address of principal executive offices) (Zip Code)
</TABLE>
-----------------------------------------
CLASS A-1 ASSET-BACKED SENIOR NOTES
CLASS A-2 ASSET-BACKED SENIOR NOTES
(Title of the indenture securities)
- --------------------------------------------------------------------------------
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising
authority to which it is subject.
New York State Banking Department, State House,
Albany, New York 12110.
Board of Governors of the Federal Reserve System,
Washington, D.C., 20551
Federal Reserve Bank of New York, District No. 2,
33 Liberty Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington,
D.C., 20429.
(b) Whether it is authorized to exercise corporate trust
powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe
each such affiliation.
None.
- 2 -
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996,
in connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank.)
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank.)
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
(On July 14, 1996, in connection with the merger of Chemical Bank and The Chase
Manhattan Bank (National Association), Chemical Bank, the surviving
corporation, was renamed The Chase Manhattan Bank.)
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York and State of New York, on the 28th day
of October, 1996.
THE CHASE MANHATTAN BANK
By /s/Michael A. Smith
--------------------
Michael A. Smith
Vice President
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<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
Chemical Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business June 30, 1996, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ............................................................... $ 4,167
Interest-bearing balances ....................................................... 5,094
Securities: ..........................................................................
Held to maturity securities............................................................ 3,367
Available for sale securities.......................................................... 27,786
Federal Funds sold and securities purchased under
agreements to resell in domestic offices of the
bank and of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds sold .............................................................. 7,204
Securities purchased under agreements to resell ................................. 136
Loans and lease financing receivables:
Loans and leases, net of unearned income $67,215
Less: Allowance for loan and lease losses 1,768
Less: Allocated transfer risk reserve .... 75
-------
Loans and leases, net of unearned income,
allowance, and reserve .......................................................... 65,372
Trading Assets ........................................................................ 28,610
Premises and fixed assets (including capitalized
leases).......................................................................... 1,326
Other real estate owned ............................................................... 26
Investments in unconsolidated subsidiaries and
associated companies............................................................. 68
Customer's liability to this bank on acceptances
outstanding ..................................................................... 995
Intangible assets ..................................................................... 309
Other assets .......................................................................... 6,993
---------
TOTAL ASSETS .......................................................................... $ 151,453
=========
</TABLE>
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<PAGE> 5
LIABILITIES
<TABLE>
<S> <C>
Deposits
In domestic offices ..................................................... $46,917
Noninterest-bearing .....................................$16,711
Interest-bearing ........................................ 30,206
------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's ................................................................. 31,577
Noninterest-bearing ...........................................$ 2,197
Interest-bearing ............................................. 29,380
------
Federal funds purchased and securities sold under agree-
ments to repurchase in domestic offices of the bank and
of its Edge and Agreement subsidiaries, and in IBF's
Federal funds purchased ............................................ 12,155
Securities sold under agreements to repurchase ..................... 8,536
Demand notes issued to the U.S. Treasury ................................. 1,000
Trading liabilities ...................................................... 20,914
Other Borrowed money:
With a remaining maturity of one year or less ....................... 10,018
With a remaining maturity of more than one year ..................... 192
Mortgage indebtedness and obligations under capitalized
leases ............................................................. 12
Bank's liability on acceptances executed and outstanding 1,001
Subordinated notes and debentures ........................................ 3,411
Other liabilities ........................................................ 8,091
TOTAL LIABILITIES ........................................................ 143,824
-------
</TABLE>
EQUITY CAPITAL
<TABLE>
<S> <C>
Common stock ..................................................................... 620
Surplus .......................................................................... 4,664
Undivided profits and capital reserves ........................................... 2,970
Net unrealized holding gains (Losses)
on available-for-sale securities ............................................... (633)
Cumulative foreign currency translation adjustments ............................ 8
TOTAL EQUITY CAPITAL ........................................................... 7,629
-------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL .................................................. $151,453
=======
</TABLE>
I, Joseph L. Sclafani, S.V.P. & Controller of the
above-named bank, do hereby declare that this Report of
Condition has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true to the best of my knowledge and
belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness
of this Report of Condition and declare that it has been
examined by us, and to the best of our knowledge and
belief has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true and correct.
WALTER V. SHIPLEY )
EDWARD D. MILLER )DIRECTORS
THOMAS G. LABRECQUE )
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